Sitting of 20 April 1953

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS
DOVER HARBOUR BILL [Queen's Consent, on behalf of the Crown, signified]
Bill read the Third time, and passed.

METROPOLITAN WATER BOARD BILL
Read the Third time, and passed.
NATIONAL TRUST BILL [Lords]
Read the Third time, and passed, with Amendments.
BROMLEY CORPORATION BILL [Lords] (by Order)
Second Reading deferred till Thursday.
RUNCORN-WIDNES BRIDGE BILL [Lords] (by Order)
Second Reading deferred till Monday next.
ORAL ANSWERS TO QUESTIONS
  NATIONAL INSURANCE

    National Assistance Recipients
    Mr. H. Hyndasked the Minister of National Insurance how many recipients of National Assistance hold certificates showing that they will become entitled to post-war credits.
    The Minister of National Insurance (Mr. Osbert Peake): I regret that this information is not available.
    Mr. Hynd: Will the Minister take note of the suggestion implied in this Question, as many people who have this money owing to them would feel more independent if they could use it rather than accept National Assistance?
    Mr. Peake: I can assure the hon. Gentleman that the holding of a post-war credit certificate is not taken into account
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    in computing the needs of an applicant, and as something like 60 per cent. of those receiving supplementation from the Board are over pensionable age it is highly probable that they have claimed and have already had their post-war credit paid to them.
    Lieut-Colonel Liptonasked the Minister of National Insurance how many persons in the London area were in receipt of National Assistance on the latest date for which figures are available; and how this number compares with the corresponding date last year.
    Mr. Peake: The number of persons receiving regular weekly payments of National Assistance in the inner London region of the Board was 199,055 at the end of March, 1953, compared with 181,448 at the end of March, 1952.
    Lieut-Colonel Lipton: Do not these figures indicate that poverty and hardship in the London area have vastly increased? In this year of so-called incentive and festivity is it not something to be rather ashamed of that the number is still rising?
    Mr. Peake: We are all concerned about the steady growth—which has gone on ever since 1948—in the number of people receiving assistance. If, however, we can succeed in our efforts to stabilise the cost of living we may hope to see a change for the better.

    Old Age and Widows' Pensions
    Mr. Gowerasked the Minister of National Insurance the estimated annual cost to his Department of increasing old-age pensions by 5s. per week and 10s. per week, respectively.
    Mr. Peake: To increase National Insurance retirement pensions by 5s. and 10s. a week would cost an extra £56 million and £112 million a year respectively, rising to about double these amounts in 25 years' time.
    Mr. Gower: Are those figures calculated on the assumption that all pensions are increased by these amounts?
    Mr. Peake: The assumption is that retirement pensions are increased by the flat rate amounts suggested in my hon. Friend's Question.
    Mr. Gowerasked the Minister of National Insurance the estimated annual cost to his Department of increasing the pensions of widows, now in receipt of only 10s. per week, by £1 per week.
    Mr. Peake: The extra cost to the National Insurance Fund would at present be about £11½ million a year.
    Mr. Gower: Will my right hon. Friend consider the peculiar needs of these people, who are often of such a type that they have too much pride to apply for National Assistance? Will he do everything possible for this class of the community?
    Mr. Peake: I think it has often been explained in the House, and from both sides, that it really would not be sensible to increase pensions to a class of person who is not entitled at all under the new scheme which was introduced in 1948.
    Mr. Wade: Is the Minister not aware that among those in receipt of the 10s. a week pension there is a widespread feeling of injustice? The fact that increases in other pensions have been justified by the increased cost of living makes it difficult for these pensioners receiving 10s. a week to understand why they receive no increase.
    Mr. Peake: If the hon. Gentleman gave these pensioners the explanation which I have often furnished, and which was furnished on behalf of the Socialist Government by the right hon. Lady the Member for Fulham, West (Dr. Summerskill), they would better appreciate why they are not entitled to an increase of pension.
    Mr. Shurmer: Is the right hon. Gentleman aware that there is grave discontent at the number of widows who are receiving 10s. a week, some of whom live next door to others who are receiving the full pension? Is there any possibility of reconsidering this matter and putting all widows on to the same basis?
    Mr. Peake: No, Sir. I do not see any possibility of this Question being reopened.
    Mr. Beswick: Does the right hon. Gentleman agree that this category of persons is more deserving than some of the others to whom his right hon. Friend the Chancellor of the Exchequer has been making concessions?
    Mr. Peake: Nearly all of these widows are in employment, are contributing to the scheme and will get their larger pensions on attaining the age of 60. Actually, a much smaller proportion of these widows are on National Assistance than are on National Assistance in supplementation of the old age pension.

    Pneumoconiosis
    Dr. Strossasked the Minister of National Insurance whether he will make a statement on the progress of his discussions which relate to the award of compensation to workers partially disabled by pneumoconiosis who are not entitled to compensation at the present time.
    Mr. Peake: I would refer the hon. Member to the reply given to the hon. Member for Bedwellty (Mr. Finch) on 4th February last.
    Dr. Stross: In determining this matter will the Minister bear in mind that the fears which used to be expressed about the overloading of pneumoconiosis boards have not proved correct, in so far as the pneumoconiosis benefit scheme—which he introduced—is concerned? The work is going on very well and these new cases could be satisfactorily and easily handled.
    Mr. Peake: As the hon. Gentleman knows, I am giving this matter careful and earnest consideration. I shall make a statement as soon as I am in a position to do so.
    Dr. Strossasked the Minister of National Insurance approximately the number of men and women in North Staffordshire who are suffering from some degree of pneumoconiosis, but are no longer employed in the various industries in which they contracted the disease.
    Mr. Peake: I regret that the information is not available.
    Dr. Stross: Will the Minister give us some help and advice on this matter? Is he aware that as mass-radiography examinations take place this information must ultimately be made available. I presume that he will then have it. Can be say whether, when the number of cases is known, those men who fall into the category referred to in Question No. 5—if loss of faculty is shown—would benefit from the scheme?
    Mr. Peake: That goes rather beyond the Question on the Order Paper, which asks about the numbers of sufferers from pneumoconiosis in North Staffordshire. North Staffordshire is rather an ill-defined area, and that is one of the obstacles to giving the hon. Gentleman the information for which he asks; but if he will have a word with myself or the Parliamentary Secretary we will see if any information is available.
    Dr. Stross: I am grateful.

    Older Workers' Retirement Age (Inquiry)
    Mr. Summersasked the Minister of National Insurance what steps he is taking to find out what effect the National Insurance pension conditions are having in persuading people to remain at work beyond the minimum age of retirement.
    Mr. Peake: In consultation with the National Advisory Committee on the Employment of Older Men and Women set up by my right hon. and learned Friend the Minister of Labour and National Service an inquiry is about to be made, through my local offices, on a sample basis to see what information can be obtained about the reasons which lead people to retire or to continue at work after reaching minimum pension age.
    The inquiry is entirely voluntary, but we hope that the people approached will agree to co-operate and thus enable us to obtain worthwhile information on this important subject. Personal details supplied by individuals will, of course, be treated as strictly confidential.
    Mr. Summers: Is my hon. Friend aware that that information will be widely welcomed? Could he say whether the samples to which he refers will be taken from all parts of the country, with difference conditions prevailing?
    Mr. Peake: We are making a start in two areas very shortly. I have no doubt that the inquiry will gradually be extended to a wider area. We shall bear in mind the point which my hon. Friend has made.
    Mr. Gibson: Will this inquiry also take into account the growing difficulty which men between 45 and 65 experience in getting employment, and the repercussion of that problem on the point raised in the Question?
    Mr. Peake: This inquiry will be limited to the purpose I have described—that is to say, trying to find out the reasons which determine whether a man shall retire or remain in work.

    MINISTRY OF FUEL AND POWER (WHITLEY COUNCIL)
    Mr. Pannellasked the Minister of Fuel and Power if he is aware that his Department have refused to have further negotiations with the staff side of his Departmental Whitley Council until they have repudiated an article published in the journal of one of their affiliated unions and until they have agreed to take whatever steps are necessary in future to prevent any recurrence of the publication of similar articles; if he is aware that the staff side have no constitutional authority to express comment on articles published by affiliated unions and no power to take any steps to stop any union publishing what it likes; and if, in these circumstances, he will instruct his officials that the benefits of Whitley Council working are not to be withheld from the whole of his Department's staff because the staff side will not accede to official demands to take action and to give assurances which are outside their constitutional powers.
    The Minister of Fuel and Power (Mr. Geoffrey Lloyd): Relations between the official and staff sides of the Departmental Whitley Council in my Department have never been severed, and I am glad to say that the difficulties caused by the publication of the offending article to which the hon. Member refers have now been settled through Whitley Council procedure.
    Mr. Pannell: Is the right hon. Gentleman aware that I cannot accept the first part of his answer—that negotiations have never been severed—in so far as the trade unions concerned have assured me that that is so? Is he further aware that the fact that negotiations are now proceeding is due in large measure to the continuing postponements of this Question? If I may ask him a rather more serious question, has he brought home to the high grade civil servants who represent the official side of the Whitley Council that they must always presume to speak in his name and never in their

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    own, and that they should not take actions that embarrass the right hon. Gentleman on the Floor of the House and which appear abruptly to break off negotiations with the trade union side? I am flatly asking the Minister whether he has brought home to these people the fact that he is ultimately responsible for their indiscretions.
    Mr. Lloyd: I have no reason to believe that the official side acted incorrectly.
    Mr. Callaghan: Is the Minister aware that the union itself said that the Ministry of Fuel and Power had, in fact, suspended completely the work of their Whitley Council? That is the allegation that was made. Is it not the case that a month elapsed before the Permanent Secretary called the Whitley Council together to explain that they had not been suspended? May I follow up my hon. Friend's Question further by asking whether the Minister has in mind any change in the personnel of the Directorate of Establishments who jeopardised the operations of the Whitley machinery on a very slender complaint?
    Mr. Lloyd: My information is that relations were not severed. I have not in mind any change in the Establishments Division of my Ministry. I should have thought that now that the Whitley Council have themselves—through their own procedure—solved this question, it would be wiser to leave it at that.

  COAL

    Opencast Mining, Amber Valley
    Mr. H. Whiteasked the Minister of Fuel and Power if he is aware of the resentment caused by the proposed requisition of land for opencast operations in the Amber Valley, Derbyshire, which is well known for its beauty; how many protests he has received from local authorities and organisations; and if he will give an assurance that he will not requisition this land, in view of the fact that other available sites are producing the stocks he requires.
    Mr. Oliverasked the Minister of Fuel and Power whether, having regard to the widespread opposition to the intended prospecting for opencast coal in the Derbyshire beauty spot, the Amber
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    Valley, and of the existing large stocks of opencast coal for which there is little demand, he will now consider discontinuing further activities in this regard, particularly in places of historic interest or of great natural beauty.
    Mr. Geoffrey Lloyd: A proposal from the National Coal Board for the working of about 60,000 tons of coal in the Amber Valley has recently been received and forwarded to the other Government Departments and authorities concerned. Until I have their views I shall not be in a position to consider whether working would be justified.
    The coal supply position is such that it is imperative to maintain opencast production at as high a level as possible, and production is now being threatened by lack of sufficient sites to replace those worked out.
    Mr. White: Is the Minister aware that the class of coal he will get from this particular area will be of such low value as to be hardly worth working?
    Mr. Lloyd: It is a class of coal which can be used in industry and also in electric power stations. It has been most valuable to us during the past winter.
    Mr. Oliver: Is the Minister aware that not only the quality but the quantity of coal which he is likely to get from this site is infinitesimal in the sum total of opencast coal produced? Does he not agree that he has a very large stock of opencast coal at the moment, for which there is no great demand?
    Mr. Lloyd: I am very glad that we have had that stock. We have drawn on it considerably during the winter and we may do so again during the coming 12 months.
    Mr. Oliver: Are we not now holding the largest stock of opencast coal ever held in this country?
    Mr. Lloyd: It has been reduced by three quarters of a million tons during the winter.

    French Purchases
    Mr. Gowerasked the Minister of Fuel and Power what steps he will take to deal with the problems arising from the decision of the French Government to restrict purchases of British coal.
    Mr. Geoffrey Lloyd: The present restriction relates to the second quarter of 1953, and I am informed by the National Coal Board that they do not expect to have any difficulties in finding other markets for the coals which France has decided not to buy during this period.
    Mr. Gower: Will my right hon. Friend bear in mind not only the effect on the coal industry, but also on the future of our ports; and in this connection will he consider the very particular dependence of the South Wales ports, including that in my own constituency, Barry, upon coal as an export, for which for them there is no adequate substitute?
    Mr. Lloyd: I am afraid it means that other ports will benefit and that some of the South Wales ports will suffer in this quarter.
    Mr. Bottomley: Will the Minister make the strongest possible representations to the Chancellor of the Exchequer, pointing out that the French are imposing these restrictions and that they ought not to do it in view of the recent decision of O.E.E.C?
    Mr. Lloyd: We have made representations to the French Government.
    Lady Tweedsmuir: Will my right hon. Friend say whether the decision was made by the Coal and Steel Community, and, if so, what were the recommendations of our delegation at Luxembourg?
    Mr. Lloyd: This was a decision by the French Government.

    Mines (Capital Investment)
    Mr. Shepherdasked the Minister of Fuel and Power the average capital investment per 1 million tons of coal raised in the United Kingdom during the last three years.
    Mr. Geoffrey Lloyd: About £140,000.
    Mr. Shepherd: Is it not a fact that this sum is only a small fraction of the amount spent in France and Germany for the same purpose, and is not this the real reason for our failure to produce coal? Is it not ridiculous to spend £48 million per annum upon capital equipment and £200 million on power stations and gas works?
    Mr. Lloyd: It is difficult to make a direct comparison between the capital expenditure on collieries in this country and
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    in European countries, because they are computed upon different bases. For example, in some European countries the expenditure on electric power stations for the service of collieries is included in the figures of colliery investment, whereas in this country it is not, being carried upon the B.E.A.
    Mr. Noel-Baker: Can the Minister say how far investment has been restricted in the last three years by shortages of steel and of specialist mining engineers for planning purposes?
    Mr. Lloyd: I would say not much by the shortage of steel, but much more by the shortage of specialist mining engineers. I would not like to give the impression from my earlier supplementary that I or the National Coal Board or anybody in this House is satisfied with the present rate of capital investment in the coal industry. It is far too low.

    New Pit, Kinneil (German Equipment)
    Mr. Nabarroasked the Minister of Fuel and Power what consultations have taken place between his Department and the National Coal Board regarding the sinking of a new pit at Kinneil, Alloa, West Lothian.
    Mr. Geoffrey Lloyd: After consultation, this work was authorised under Defence Regulation 56A in March, 1951.
    Mr. Nabarro: Is my right hon. Friend aware that at least three British engineering firms tendered competitive prices and only slightly longer delivery dates for these large quantities of mining equipment, and in those circumstances can my right hon. Friend say why the policy of "Buy British" was not supported by the Coal Board as an example to British industry generally?
    Mr. Lloyd: That is a different question from the one on the paper, but it is most definitely one for the commercial judgment of the National Coal Board.
    Colonel Gomme-Duncan: Is my right hon. Friend aware that the finest equipment is made in Scotland, by Scottish engineers, and is not that a good reason for a little more consideration being given to them, particularly in view of the fact that they are so busily engaged on

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    defence work and that probably a little consultation would have resulted in a contract being arranged with the profits going to Scotland and not to our greatest rivals?
    Mr. J. Taylor: Is the right hon. Gentleman aware that the delay would have been greater in this case, and that, although we would have preferred to use native machinery, the economic disadvantage of the long wait would have been more expensive to the nation? Secondly, would the Minister explain to us in which part of West Lothian Alloa is?
    Mr. Lloyd: I would not dare to try to answer the second part of that question. As to the first, I want to make it quite clear that it is most important, when we are considering these matters of the coal industry, that there should be a proper distinction between the functions of the Government and those of the National Coal Board. This is a matter for the Board, and it is only fair to point out that it is not easy to criticise them for this decision and then criticise them for the slowness of their capital investment.
    Mr. Shinwell: Is the right hon. Gentleman aware that some of his hon. Friends are asking him and the National Coal Board to adopt a policy which they complain about when it is adopted in the United States?
    Mr. Nabarro: Is my right hon. Friend aware that the right hon. Gentleman opposite and his hon. Friends are always groaning to high heaven about unemployment in the engineering industry? Why will they not study the implications of full employment?
    Mr. Shinwell: Is the right hon. Gentleman aware that when it comes to a matter of groaning nobody is more capable of that than the hon. Gentleman for Kidderminster (Mr. Nabarro)?

    Summer Stocks
    Mr. Nabarroasked the Minister of Fuel and Power what special arrangements he proposes to make to encourage summer stocking of coal and coke by householders and industrial concerns; whether price incentives for summer stocking will be available; and whether he will make a statement.
    Mr. Geoffrey Lloyd: The summer prices scheme is primarily a trade matter arranged by the National Coal Board and the merchants. It is for them to make the announcement and I understand that they will do so towards the end of this month.
    Mr. Nabarro: In view of the inevitable loss in output caused by the miners' second week's holiday, which we all support, would my right hon. Friend make it clear that there may be a delicate position with regard to the supply next winter of fuel for industry and domestic consumers, and that summer stocking will help very greatly to abate this difficulty?
    Mr. Lloyd: Yes, Sir.
    Mr. Noel-Baker: Have not the Government given their fullest support in the last two years to the summer prices scheme, and will the Minister do everything in his power to ensure that this year householders stock more coal than they did last year?
    Mr. Lloyd: Yes, summer stocking is important, but, as the right hon. Gentleman knows, the details of the scheme are for the Coal Board and the merchants.

    Deep-Mined Output
    Mr. Nabarroasked the Minister of Fuel and Power the deep-mined coal output for this year, to 18th April, 1953, compared with the equivalent period in 1952; what estimate he has made as to loss of deep-mined output on account of the second week's miners' holiday in 1953 and the Coronation period; and to what extent this year's production rate, if maintained, will be sufficient to overtake these losses while achieving an output for 1953 equal to 1952 and a minimum export for the year of 12,000,000 tons of coal.
    Mr. Geoffrey Lloyd: Owing to the different date of Easter and the fact that figures for the period ended 18th April are not yet available, the latest period for which comparison may usefully be made is that ended 21st March. For that period output this year exceeded output last year by 181,000 tons.
    As regards the second and third parts of the Question, it is estimated that the additional holidays to be taken this year may entail a reduction in coal output of about 4½ million tons. Both the National

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    Coal Board and the National Union of Mineworkers are engaged in a pit by pit campaign to increase the present rate of output in order to make good this serious deficiency, and, if possible, to achieve in 1953 output and exports greater than were obtained in 1952.
    Mr. Nabarro: In view of the obvious difficulty in meeting this potential loss of 4½ million tons in the period before the start of the next coal winter, would my right hon. Friend make it clear that the greatest single contribution that industry can make is to look to all their coal-burning equipment with a view to raising its efficiency, and to do so as a matter of great urgency?
    Mr. Lloyd: Yes, that is undoubtedly so, but the nation badly needs increased output, which we hope may come from the campaign of the Coal Board and the National Union of Mineworkers.
    Mr. Snow: With reference to the pit by pit tour the right hon. Gentleman talked about, is he aware that at a pit in my division, which I visited during the week-end. I found that the average weekly wage, contrary to Tory propaganda, is £9 3s.? Will he draw that to the attention of the Chancellor of the Exchequer when he comes to the question of incentives?

  ELECTRICITY CABLE, DRAKELOW-SMETHWICK
  Mr. Snowasked the Minister of Fuel and Power if he will inquire into the circumstances in which a public inquiry into the routing of the Drakelow-Smethwick overhead cable was delayed from May, 1952, when objections were first lodged by certain Elford, Staffordshire, farmers, to 8th January, 1953.
  Mr. Geoffrey Lloyd: The British Electricity Authority applied to me for consent to a compulsory wayleave on 18th December and the inquiry was held on 8th January. There was, therefore, no undue delay.
  Mr. Snow: Is the right hon. Gentleman aware that, although objections were lodged in May at the request of the officials concerned, during the period from May, 1952, to 8th January, work was begun on the interim route to which objection had been taken, thereby prejudicing
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  the whole case of the farmers concerned? Does he consider that this was just?
  Mr. Lloyd: I was not aware about work having begun, but I will make inquiries into that. I think there is some confusion between objections that were made to the British Electricity Authority, and the endeavours of the Authority to meet these objections. This went on between May and December, which is the normal process of negotiation between two parties. In December, B.E.A. decided to ask for an inquiry with regard to a compulsory wayleave, and it was on that that there was no delay. The two processes are distinct.
  Mr. Snow: Will the Minister look into the question of work being started after objections had been lodged?
  Mr. Lloyd: Yes, Sir.
  Mr. Snowasked the Minister of Fuel and Power what information was laid before his inspector as to the additional sum involved in routing the new Drakelow-Smethwick overhead cable in such a way as to avoid Catton Hall, Staffordshire.
  Mr. Geoffrey Lloyd: No proposal to bring the line over Catton Hall was made before my inspector, but the representative of one of the objectors suggested a straighter route to the west of Catton Hall. This route went too near the approach to an aerodrome and involved some difficult construction in the river valley. Moreover, the planning authority considered a line to the west unsightly. My inspector informs me that he considers that there would have been no significant difference in cost.
  Mr. Snow: Is the right hon. Gentleman aware that the direct line would have gone some several hundred yards to the west of Catton Hall? Although I have no desire to alter the beauty of the scenic effects of this house and the locality, is he aware that the line now proposed goes on the skyline and is much more a danger to aircraft?
  Mr. Lloyd: I am not aware of that personally, but I am informed that the alternative proposal would have meant that the Air Ministry would have insisted on taking the line at a lower level than the normal.
  Mr. Snowasked the Minister of Fuel and Power what inquiries were made by his inspector into the methods by which consent for part of the proposed overhead cable from Drakelow to Smethwick was obtained from certain tenants and owners in the Elford District; and if, in this connection, he will examine correspondence sent to him by the hon. Member for Lichfield and Tamworth.
  Mr. Geoffrey Lloyd: Such inquiries are not among the duties of an inspector appointed to inquire into an application for consent to a compulsory wayleave and no such inquiries were made. I will write to the hon. Member about the correspondence which he has sent to me.
  Mr. Snow: While realising this also hinges on the answer given to Question No. 13, may I ask the right hon. Gentleman if he is aware that officials, presumably, in this case, B.E.A. officials, secured consent in a way which is open to very great criticism and is the subject of the correspondence I sent to the Minister? Will he inquire from B.E.A. as to the method in which these consents were obtained?
  Mr. Lloyd: I will inquire.

  PETROLEUM PRODUCTS (PRICES REVIEW)
  Mr. L. Thomasasked the Minister of Fuel and Power whether he is aware that the London Tanker Brokers' Panel has fixed the standard time charter rate for oil tankers at 22s. 3d. per ton per month, as compared with 42s. 6d. previously and 52s. per ton a year ago; and if he will take steps to ensure that this decrease in the charter rate is reflected in an immediate reduction of not less than 1d. per gallon in the price of petrol with a comparable reduction in the price of other oil fuels.
  Mr. Geoffrey Lloyd: I am aware of the recent reduction in the brokers' award and am reviewing the prices of petroleum products in the light of this and other factors.
  Mr. Beswick: Is the right hon. Gentleman aware that this latest award is very much overdue, and that the reduction bears out the figures I gave in a Question last February and which the Minister
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  then controverted? Will he say, if he does agree, as he ought, to reduce the price of pool petrol, that he will expect companies to make a similar reduction in the prices of branded petrol?
  Mr. Lloyd: I think the fact that the brokers' award has taken the turn down that the hon. Gentleman expected, somewhat prematurely, merely shows the fairness of the method adopted.

  MINISTRY OF MATERIALS

    Softwood (Substitutes)
    Mr. Hurdasked the Minister of Materials if he has made an estimate of the increase of consumption of softwood timber that would follow the abolition-of the licensing system; and his estimate-of the probable saving of substitute materials such as steel, aluminium, fibre board and cement.
    The Minister of Materials (Sir Arthur Salter): I understand that various estimates have in the past been made, by both the Government and the timber trade, of the possible increase in softwood consumption and of the reduction in the use of other materials which might result from the abolition of the softwood licensing system. I have discussed this matter with representatives of the Timber Development Association, in consultation with whom my officials are now working on a fresh assessment in the light of today's conditions and timber prices.
    Mr. Hurd: While the Minister is satisfying himself about these figures could he tell us whether we have now reached the point where softwood timber is so plentiful and comparatively economical in use that it will pay the country to do away with the strict rationing of softwood timber and make economies in aluminium and other more costly substitutes?
    Sir A. Salter: So far as I am aware, there is no shortage of softwood in the world. My hon. Friend will be aware that we import for foreign exchange something like 95 per cent. of the softwood we use in this country. As at present advised I do not think we can afford the extra expenditure in foreign exchange that would result from the complete abolition of this system.

    Home-Grown Wood (Box Making)
    Mr. Hector Hughesasked the Minister of Materials on what principle he acts in granting or refusing licences for the use of home-grown softwood; and how he applies that principle in Scotland to wind-blown timber suitable for making boxes and packing cases.
    Sir A. Salter: Departments responsible for issuing timber licences on my behalf have been instructed, where practicable, to make them available only for homegrown timber when these licences are granted to consumers in Scotland and northern England. The detailed application of this scheme is under constant review with representatives of the Scottish home-grown and imported timber trades and the Scottish packing case manufacturers. In general, however, the aim is that home-grown softwood should be used instead of imported in the production of boxes and packing cases to the greatest possible extent.
    Mr. Hughes: Does the Minister realise that it is contrary to the national interest to apply his principles so rigidly that they cannot deal with an emergency such as that created by the recent storm? Will he therefore apply his principles with sufficient elasticity as not to injure the box making industry?
    Sir A. Salter: If the hon. and learned Gentleman will read the answer I have just given he will see that we are not applying the rule rigidly, but that we are attempting to help in the emergency resulting from the gale in Scotland by the licensing of home-grown timber only, which I have explained; in addition to which we have somewhat extended recently the uses for which softwood may be employed.
    Mr. Hector Hughesasked the Minister of Materials if he is aware that the Aberdeen and District Packing Case Manufacturers are in a position to use each month from 70,000 to 80,000 cubic feet of wind-blown timber if his Department's licensing scheme will permit them to do so; that the present licensing scheme is causing unemployment in that industry; and if he will take immediate steps to permit the full use of wind-blown timber in order to avoid such unemployment.
    Sir A. Salter: The use of softwood in packing cases has now been extended and, as I have just said, special arrangements have been made to encourage the use of home timber from the devastated areas. It is, of course, true that a general removal of all consumption restrictions would further accelerate the disposal of the wind-blown timber. This would, however, inevitably result in a higher importation of softwood than is now taking place or than we can afford. I have no evidence of unemployment having arisen in the case-making industry since the Scottish gales as a result of the arrangements for timber licensing.
    Mr. Hughes: Does the Minister realise that the manner in which the licensing system has been implemented has coerced Scottish box making firms to buy foreign timber for box making, thereby using valuable British currency in a way that could be avoided? Will he take action to avoid that?
    Sir A. Salter: No, I am not aware that the way in which the licensing system has been applied has had or could reasonably be thought to have that result, but I shall be very glad to discuss the matter with the hon. and learned Gentleman.
    Lady Tweedsmuir: Has my right hon. Friend recommended to the Minister of Housing and Local Government that all house floors in Scotland should be made of timber only and not cement?
    Sir A. Salter: No, I have not. As I explained to my hon. Friend the Member for Newbury (Mr. Hurd) just now, the great bulk of the softwood timber which we use in this country, 95 per cent. or more, is imported for foreign exchange. The permission to use softwood for floors in houses, which could not be confined to one part of the country, would, I think, gravely endanger the system which is so important to our balance of payments position.

  GERMANY

    Eastern Zone Refugees (Assistance)
    Mr. Bellengerasked the Secretary of State for Foreign Affairs whether he is now in a position to say, as a result of inquiries made of the Federal German

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    Government, what assistance can be rendered by Her Majesty's Government in alleviating the hardship caused to large numbers of refugees from Eastern Germany.
    The Joint Under-Secretary of State for Foreign Affairs (Mr. Anthony Nutting):No, Sir. Although the Federal Chancellor welcomed Her Majesty's Government's approach, no definite suggestions have yet been made by the German Federal Government.
    Mr. Bellenger: Are we to understand from that answer that the Government are doing very little to assist in this matter?
    Mr. Nutting: As the right hon. Gentleman knows, this is a German problem, a responsibility which the German Federal Government have accepted. We have suggested to the German Federal Government that they may be willing to make a suggestion as to what help we could give. The right hon. Gentleman may be interested and gratified to know that we are informing the United Nations High Commissioner for Refugees that if the clothing, which the W.V.S. have collected for the relief of the victims of the floods in this country, and which is found surplus to requirements, is made available for the relief of refugees from Eastern Germany, the Government have offered to pay the costs of transporting it.

    Board of Review (Progress)
    Mr. H. Brookeasked the Secretary of State for Foreign Affairs whether his attention has been called to the slow progress made by the Board of Review now sitting in Germany; how many cases down for hearing before it are still unheard; whether all cases are dealt with in strict rotation according to the date when they were entered; and whether the personnel of the Board can be augmented so that justice can be speeded up.
    Mr. Nutting: Yes, Sir. My right hon. Friend has been concerned at the slow progress which is being made by the Board of Review. There are at present 314 cases submitted for consideration in the United Kingdom zone of Germany and 95 in our sector of Berlin.
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    My right hon. Friend intends to appoint an additional judge to the Board to assist in the discharge of this work as soon as a suitable candidate can be found. It is also intended to set up a separate Supreme Restitution Court for Berlin.
    Cases are normally dealt with in rotation unless their particular difficulty would indefinitely delay the work of the Board, or unless they involve decisions which could not in any event be carried out until the Bonn Conventions have entered into force.
    Mr. Brooke: Is my hon. Friend aware that a constituent of mine has a case pending before this Board which was settled in her favour by the lower court more than two years ago, concerning property confiscated under the Nazis; and is it not extremely important to kill any impression that justice under British auspices moves so slowly that ex-Nazis can get away with their plunder?
    Mr. Nutting: I hope that the answer I have given will help to remove any such misapprehensions which may exist. I am aware of the case to which my hon. Friend refers, but it is a particularly complex one which has been complicated and delayed by the fact that an oral hearing has been requested.

  BELGIUM (BRITISH PRESS ARTICLES)
  Lieut-Colonel Liptonasked the Secretary of State for Foreign Affairs, in which British newspapers articles appeared in respect of which, after complaints by the Belgian Government, apologies were tendered by Her Majesty's Government.
  Mr. Nutting: The hon. and gallant Member is misinformed. No such apologies were made by Her Majesty's Government.
  Lieut-Colonel Lipton: Will the Undersecretary be a little less evasive? Is he not aware that in the House on 1st April he said, in reply to a Question, that the British Ambassador in Brussels had been instructed to deplore the publication of articles in the British Press, and that Her Majesty's Government dissociated themselves entirely from them? Will he please now say what those articles were and in which papers they appeared?
  Mr. Nutting: The hon. and gallant Gentleman, who has obviously shown a great interest in this problem, will have no great difficulty in finding out in which newspapers those articles appeared. So far as Her Majesty's Government's communication with the Belgian Government is concerned, we deplored the publication of these articles, which we considered insulting to the head of a friendly State. That is not an apology, but an expression of Her Majesty's Government's opinion.
  Mr. Shin well: If the hon. Gentleman now admits that the United Kingdom Government did make a communication to the Belgian Government, deploring the appearance of these articles, surely he must know in which newspapers these articles appeared. Obviously, there was no point in deploring the event otherwise. Will he now, therefore, be good enough to say in which newspapers the articles appeared?
  Mr. Nutting: The right hon. Gentleman could find that out very easily by reading the reactions of certain newspapers to the answer which I gave to his hon. and gallant Friend last time.
  Mr. Shinwell: Is there a peculiar reason why the hon. Gentleman refuses to disclose the names of the newspapers? Surely he has no vested interest in the matter. Come on; answer the question.
  Lieut.-Colonel Lipton: Why are Her Majesty's Government apparently so much more ready to grovel abroad than to have the courage to come to the House and say what it is they have been grovelling about?
  Mr. Callaghan: Is it not quite legitimate to ask the Under-Secretary, who says that the Government have deplored certain views that were expressed in certain newspapers, which newspapers they are? Does he not consider that this is information which should properly be given to the House? Why does he deny it to us? Will he not answer and tell us which newspapers the articles were in, or tell us why he is not prepared to give us the answer?
  Mr. Nutting: I do not think that any useful purpose would be served by giving the names of the newspapers. I do not think that on an occasion like this it is common practice to do so. The hon. Gentleman can very easily find out for himself.
  Mr. Callaghan: If I can easily find out for myself, and if the House of Commons is supposed to deduce from that that any article published in any newspaper has been deplored by the Government, it seems to me to be throwing a pretty wide aspersion on the British Press. Does the Under-Secretary not think that it is his duty to the British Press to particularise and tell us which newspaper it is whose views are deplored by Her Majesty's Government? This is a perfectly proper question, and one he should answer. May I press the Under-Secretary to answer the question?
  Hon. Members: Answer.
  Mr. Speaker: There seems to be a distinction drawn between an apology and deploring something else. Perhaps it might be an occasion for another Question.
  Lieut.-Colonel Lipton: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment.

  INTERNATIONAL CHILDREN'S FUND (U.K. CONTRIBUTION)
  Mr. Hamiltonasked the Secretary of State for Foreign Affairs if he is aware that the financial resources of the United Nations International Children's Emergency Fund are at a dangerously low level; and whether, in view of this situation, he will consider increasing the United Kingdom contribution.
  Mr. Nutting: Provided the pledges of Governments are fulfilled the Fund should receive about 15,800,000 dollars for 1953. As this is more than the essential minimum, the Fund's resources cannot be said to be at a dangerously low level. Nevertheless, as I stated in reply to the hon. Member on 23rd February, Her Majesty's Government have decided to make a contribution for this year double that for 1952.
  Mr. Hamilton: Is the Under-Secretary aware that our contribution per capita since the inauguration of the scheme is lower than that of countries like Iceland, Uruguay and Israel; and, in view of the extremely valuable work that this organisation is doing, will he make representations to the Treasury with a view to increasing our contribution, in view of the

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  fact that in relation to the U.S.S.R. we have expressed the opinion that actions speak louder than words?
  Mr. Nutting: I do not consider, as my answer has already indicated, that this Fund is in need of further assistance so long as the pledges of Governments are redeemed and receive, in appropriate cases, the necessary Parliamentary approval.

  ICELANDIC FISHERIES DISPUTE
  Mr. Doddsasked the Secretary of State for Foreign Affairs whether a reply has yet been received from the Icelandic Government to the proposals made by Her Majesty's Government designed to arrive at a settlement of the fisheries dispute; and what progress has been made in this respect.
  Mr. Nutting: No, Sir. Her Majesty's Minister at Reykjavik has been instructed to press for a reply.
  Mr. Dodds: Does the hon. Gentleman appreciate that it is now nearly nine months since he asked me not to press this particular point? If Her Majesty's Government are really serious about this, can we see evidence of a little more enthusiasm than has been shown in the past nine months?
  Mr. Nutting: As the hon. Gentleman knows—and if he does not know he will find out if he looks up my answers—we have made one proposal after another for the settlement of this dispute, and each proposal has been turned down by the Icelandic Government. I made a proposal on 20th January to the Icelandic Minister, but so far we have not received a reply. It does not lie within my power to force the Icelandic Government to give us an early answer.
  Air Commodore Harvey: In the meantime, will my hon. Friend point out to the Icelandic Government that a great many British vessels are being laid up owing to successive German and Danish landings at British ports?
  Mr. Nutting: I should like notice of that, but all relevant considerations have already been brought to the notice of the authorities.
  Mrs. Braddock: In view of the increased landings from British trawlers from Icelandic waters in January and February this year—which makes utter nonsense of the statements made by the British Trawler Owners' Association— will the hon. Gentleman look at this matter again to see whether he can discover what is the true reason for this dispute continuing the length of time it has?
  Mr. Nutting: As the hon. Lady knows, we have made a proposal to the Icelandic Government for a settlement of the dispute. Until we receive the Icelandic Government's answer we cannot take any further initiative.

  AUSTRIAN TREATY (ALLIED COUNCIL MEETINGS)
  Mr. A. J. Irvineasked the Secretary of State for Foreign Affairs if he will make a statement upon the difficulties encountered at the recent meetings of the Allied Council in regard to the Austrian Treaty.
  Mr. Nutting: Yes, Sir. A study of the record of the Allied Council over the past six months reveals persistent obstruction by Soviet representatives to the normal exercise of the Austrian Government's proper authority and to the reasonable development of Austrian economic recovery.
  By way of illustration, I would mention that during this period the Soviet representatives have opposed between 80 and 100 laws introduced by the Austrian Government in proper exercise of their legislative authority; have ignored the inherent authority of the Austrian Government to collect and dispose of revenue; have hindered the Austrian Government in the exercise of its proper authority in the control of its law enforcement agencies; and, as recently as a fortnight ago, have prevented any development of civil aviation in Austria, even to the extent of forbidding the establishment of a meteorological service.
  Mr. Irvine: While thanking the Undersecretary for that statement, may I ask him whether he appreciates that there is great anxiety and difficulty in the Allied Council in this connection? Is he prepared to say whether these difficulties

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  are in any way attributable to temporary changes in the political situation in Austria and the formation of a new Government in that country?
  Mr. Nutting: No, Sir, I do not think that these difficulties are in any way due to any new situation arising in Austria itself. They are due largely to the fact that there has so far been no change in Soviet policy in relation to Austria.

  EUROPEAN DEFENCE COMMUNITY (BRITISH ASSOCIATION)
  Mr. Wyattasked the Secretary of State for Foreign Affairs whether he will now make a statement on the discussions with the French Government with regard to British association with the European Defence Community.
  Mr. Nutting: Her Majesty's Government have made certain proposals to the six Governments concerned for British association with the political institutions of the European Defence Community. These will be discussed shortly in the Interim Commission of the European Defence Community. I can make no statement until these discussions have taken place.

  MINISTRY OF FOOD

    Cheese Consumption
    Mr. F. Willeyasked the Minister of Food the percentage reduction in the consumption of cheese in 1952 compared with 1951; and when he intends to restore cheese consumption to the 1951 level.
    The Minister of Food (Major Lloyd George): Thirty-two per cent. The ration has already been restored to the same level as in September, 1951, and it will be increased to 2 oz. on 17th May for a period of eight weeks.

    Flour Price Increase (Subsidy Saving)
    Mr. Willeyasked the Minister of Food how much he expects to recover towards the reduction of the food subsidy during the year 1953–54 by the increase in the price of flour.
    Major Lloyd George: About £7 million.
    Mr. Willey: Does the right hon. and gallant Gentleman appreciate that this is a price increase which will have very wide repercussions in other price increases? Can he give any estimate of the resultant increase because of this modest saving of £7 million? The confectionary trade have already announced price increases.
    Major Lloyd George: I cannot give that information without notice.

    Eggs
    Mr. Willeyasked the Minister of Food the number of eggs purchased by his Department since the decontrol of eggs.
    Major Lloyd George: About 81 million home-produced eggs, mostly before Easter.

    Coronation Street Parties (Rations)
    Brigadier Clarkeasked the Minister of Food if he will extend the ration concessions for Coronation street tea parties for the whole of the month of June.
    Major Lloyd George: I prefer to concentrate on improving food supplies generally as fast as I can, and I do not feel that any extension of this special arrangement would be justified.
    Brigadier Clarke: Does my right hon. and gallant Friend appreciate the difficulty of having all the Coronation tea parties in the same week? The parties are held street by street, and the same tables, chairs, cups and saucers are used at each. Would he please spread these concessions out over the month?
    Major Lloyd George: My hon. and gallant Friend will appreciate that a great many of the foods involved at these parties are still rationed and, therefore, if one extended the period it would not be reasonable to a great majority of the people who do not have these concessions.

  TRANSPORT

    Maritime Convention (Ratification)
    Sir H. Roperasked the Minister of Transport what response he has received from the Governments approached with

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    regard to the ratification of the Inter-Governmental Maritime Consultative Organisation Convention; and what steps are being taken to secure further acceptances.
    The Parliamentary Secretary to the Ministry of Transport (Mr. Gurney Braithwaite): Replies have not yet been received from all the 47 Governments which Her Majesty's representatives overseas have urged to accept the Convention, but most of those so far received indicate that the question is under consideration. We are not unhopeful that, before long, further acceptances may be forthcoming, but in many countries legislation would be necessary. Her Majesty's Government are continuing their representations and supporting the efforts made by United Nations bodies to bring the Convention into force.
    Sir H. Roper: In view of the importance of international agreement to stop oil pollution at our holiday resorts, and the complete absence of any progress in getting support for this particular Convention, will my hon. Friend consider an alternative method of securing an international agreement?
    Mr. Braithwaite: Eleven States have already accepted the Convention and the replies from the other Governments were given in confidence; some of them refer to legislation which will be necessary.

    Driving Licence (Duration)
    Mr. G. Robertsasked the Minister of Transport if he will take steps to make it possible for vehicle drivers to take out driving licences for periods of more than one year.
    Mr. Braithwaite: No, Sir. It is important that there should be a yearly declaration of physical fitness, and the annual system helps to keep the statement of the holder's address in the licence up-to-date.
    Mr. Roberts: While appreciating what the Parliamentary Secretary has said, may I ask him whether there has been a recent inquiry into the possibility of doing something on these lines, or whether he is content with the purely stereotyped answer which has been given for a number of years?
    Mr. Braithwaite: If the answer is stereotyped, it is because we are bound by Section 4 (4) of the Road Traffic Act, 1930, and legislation would be required to alter that situation. I would be prepared to admit that it is not entirely satisfactory.

    Road Haulage Lorries (Purchase Loans)
    The following Question stood upon the Order Paper:
    Mr. CALLAGHAN: To ask the Chancellor of the Exchequer what considerations of national interest have led the Government to advise the banks that loans advanced by them for the purchase of lorries from the Road Haulage Executive are to be regarded as having the same priority as loans to encourage exports to dollar countries.
    Mr. Callaghan: On a point of order. This Question was put down to the Prime Minister, in view of the response we had last Thursday to a Question asking the Treasury to reverse their decision. Now I see that there is a representative of the Treasury again here—presumably to give the same sort of answer—but as he is not a Member of the Cabinet he cannot be responsible for their decision. [HON. MEMBERS: "The Chancellor is here."] If the Chancellor is here to answer the Question, I am very much obliged to him.
    The Chancellor of the Exchequer (Mr. R. A. Butler): The Government have not advised the banks to give the same priority to loans for the purchase of these lorries as to loans for the export trade. They have advised the banks that it would be consistent with Government policy that loans for such purchases should be made in suitable cases. It is, of course, in the national interest that road transport, by being returned to private enterprise, should be able to give increased help to industry in general whether at home or in efforts to increase exports.
    Mr. Callaghan: Is it not a fact, as the Government spokesman said in the House of Lords—and I am not quoting, but merely referring to what was said— that exports for dollar purposes are to receive only the same degree of priority as credits for the purchase of these vehicles?
    Mr. Butler: No, Sir. I am content to leave this discrimination to the banks, and I am perfectly satisfied that they will so discriminate that our export trade is regarded perpetually as our most important concern.
    Mr. H. Morrison: May I ask the Chancellor of the Exchequer whether or not he identifies himself with the statement on policy which was made in another place by a Member of the Government on this matter?
    Mr. Butler: My answer to that is that I cannot refer to what was said in another place as I am answering in the House of Commons, but I would add that all statements of Government policy are endorsed by Her Majesty's Government.
    Mr. Callaghan: As all statements of policy are endorsed by Her Majesty's Government, is the country to take it that export business which demands credit will get the same facilities only as for purchasing lorries in the break-up of the Road Haulage Executive?
    Mr. Butler: I have already given my answer to that point, which is that I regard export as the first priority, and I am sure the whole House agrees with me in stating that. I have also given my answer to this specific matter, which is that it is in the national interest, and that is our sole governing consideration. I think that my answer is unchallengeable.
    Mr. H. Morrison: Is the Chancellor of the Exchequer aware that when my hon. Friend put a question to the Chancellor last week it was answered by the Economic Secretary to the Treasury, who was completely flummoxed—[HON. MEMBERS: "No."] Yes, he was—as to whether to identify himself with the comment made by a Member of the Government in another place on the Transport Bill? May we assume absolutely that the Chancellor identifies himself with the statement made in another place, which indicated that these investments were on an absolute equality with dollar and export expenditure?
    Mr. Butler: It is very difficult for ordinary people to interpret exactly the manner in which these priorities are interpreted by the banks. I am very well satisfied that the banks have carried out, in general, the policy of Her Majesty's Government, which is to give first
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    priority to exports, and that I repeat now. As regards statements made in another place, I can only repeat what I said earlier, that Her Majesty's Government speak with one voice.
    Mr. Bowles: On a point of order. Might I have your ruling, Mr. Speaker? Am I not correct in saying that statements of policy in another place are quotable verbatim in this House?
    Mr. Speaker: The general rule is that reference should not be made to debates in another place except on matters on which a Minister in another place makes a statement on Government policy.

  KOREA (TRUCE NEGOTIATIONS)
  Mr. Donnellyasked the Prime Minister whether he is yet in a position to make a statement about the truce negotiations in Korea.
  The Prime Minister (Mr. Winston Churchill): On 19th April the liaison groups of the two sides agreed to resume plenary meetings of the Armistice Delegations on 25th April.

  A.N.Z.U.S. DEFENCE PACT (BRITISH PARTICIPATION)
  Mr. Wyattasked the Prime Minister whether he will now make a further statement concerning British participation in the A.N.Z.U.S. Defence Pact.
  The Prime Minister: No, Sir. This matter will however be among those which I hope to discuss with the Prime Minister of Australia and New Zealand when they are over here for the Coronation.
  Mr. Wyatt: As the Prime Minister has now been in office for 18 months, and since he strongly rebuked the Labour Party on this matter and has taken a keen personal interest in it, can be explain why it has not proceeded any further, and whether there is any real desire on the part o f New Zealand and Australia for us to be included in this Defence Pact?
  The Prime Minister: I indicated in my answer that these matters will be the subject of further discussion with the Prime Ministers of Australia, New Zealand and this country.

  UGANDA

    Parliament, Buganda (Composition)
    Mr. Fenner Brockwayasked the Secretary of State for the Colonies what changes are proposed in the composition of the Buganda Parliament.
    The Secretary of State for the Colonies (Mr. Oliver Lyttelton): The number of elected members in the Lukiko is to be increased from 40 to 60.

    Local Government Report (Recommendations)
    Mr. Fenner Brockwayasked the Secretary of State for the Colonies how far the recommendations of the Wallis Report on African local government in the Protectorate of Uganda are to be applied.
    Mr. Lyttelton: The Government of Uganda have published a memorandum setting out their preliminary views on the Report and stating that, in general, they consider that its recommendations should be accepted as the basis for future policy. Before decisions are taken the Report and the memorandum will be open to public discussion, and will be debated in the Legislative Council early in the second half of this year. I have placed copies of both documents in the Library.

STEEL PLATE DISTRIBUTION SCHEME
Mr. Brooman-Whiteasked the Minister of Supply, in view of the shortage of steel plate, what steps are being taken to increase production and to ensure the better distribution of available supplies.
The Minister of Supply (Mr. Duncan Sandys): Since the answer is long, I will, with permission, answer it at the end of Questions.
At the end of Questions—
Mr. Sandys: With your permission, Sir, and that of the House, I will now reply to Question No. 47.
The steel industry have for some time been taking active steps to increase the supplies of steel plate. Whereas, a year ago, production was running at the rate
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of just over 40,000 tons a week, it has now risen to nearly 47,000 tons. It is expected that production in 1953 will be over 2.4 million tons, nearly 200,000 tons more than last year, and it is hoped to increase output by a further 100,000 tons or more during 1954 and 1955.
I am assured that this is the utmost that can be obtained from existing rolling mills. Any further substantial increase in output can be secured only by the provision of additional rolling capacity. I have recently approved a scheme for the extension and modernisation of a plate-rolling mill on the North-East Coast which will product an extra 100,000 tons a year. This should come into operation in 1956. Plans for other expansions are being made, but these cannot become effective before 1957. In addition, there is the possibility of importing more steel plate from abroad. While the shortage of plate is not confined to the United Kingdom, it should be practicable to obtain somewhat increased supplies from certain countries.
Nevertheless, there is still likely to be a marginal shortage of steel plate for some time to come. I have, therefore, recently discussed with the steel industry what action can be taken to mitigate the effects of this shortage and to ensure the best use of available supplies. As a result it has been decided to introduce a steel-plate distribution scheme, to be operated on voluntary lines by the industry itself with guidance from the Government.
An Inter-Departmental Committee composed of officials of the Government Departments principally concerned has been set up. Its task will be to keep under review the needs of the plate-using industries and to consider any adjustments in the pattern of production and deliveries which may be desirable. Mr. Robert Marshall, a Director of Colvilles and a member of the Iron and Steel Corporation, has been good enough to accept my invitation to act as Technical Adviser to the Committee and generally to assist in the operation of the scheme.
On their side, the steel industry have appointed a group of plate-makers to act as a clearing house for consumers' requirements; and they have assured me that they will, to the fullest extent practicable, take all necessary action to comply with any requests made by the Inter-Departmental Committee.

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I trust that these arrangements will ensure improved distribution and that they will be of benefit to the shipbuilding and other important plate-using industries.
Mr. Brooman-White: Is my right hon. Friend aware that his statement will give considerable encouragement to the consumers, and particularly to the shipbuilding industry, which has recently been having special difficulties, and that it will be hoped that, in addition to the measures to increase production and to improve allocations, he will be successful in obtaining an increase in imports to tide over the most immediate shortages?
Mr. Sandys: The steel industry is, of course, very well aware of the importance of supplementing home production at this juncture with imports as far as is practicable, and I can tell my hon. Friend that the British Iron and Steel Federation has recently secured about 10,000 tons of shipbuilding plate from Austria.
Mr. Willey: Is the right hon. Gentleman aware that the evidence has shown that he is not completely doctrinaire in that he is willing to resort to Government interference in the industry to ensure increased production capacity where it is needed in the national interest and to use allocation machinery if material is in short supply? We hope that this will considerably assist us in the North-East.
Mr. Sandys: I thought I made it quite clear that this is a distribution scheme organised on voluntary lines by the industry itself with guidance from the Government. [An HON. MEMBER: "A rose by any other name—"] We believe that that sort of scheme is better than straightforward Government control.
Mr. G. R. Strauss: Does it not really boil down to the imposition of an allocation scheme for steel plate? Is the right hon. Gentleman aware that in all past allocation schemes—I am not blaming the right hon. Gentleman for imposing the scheme now—the views of the consumers were always taken fully into account before the Government decided on the
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allocation? Is not this, in short, a straightforward allocation scheme working as far as possible, as it has always done in the past, with the advice of the consumers concerned?
Mr. Sandys: It is not an allocation scheme in the sense of general steel allocation. There will be no attempt by the Government to allocate so many tons of plate to each consumer. We intend to watch the position and to ask the industry through the machinery which is being set up, to make any adjustments which may be necessary, but it is not our intention to introduce a detailed allocation scheme firm by firm.
Mr. G. R. Strauss: If the demand exceeds supply, surely it means that some people who want certain quantities will be prevented by a committee or body from getting the full quantity which they require in favour of someone else who needs it more. Does not that mean a decision on the part of some authority to allocate steel according to needs?
Mr. Sandys: I thought I had already explained quite clearly. [HON. MEMBERS: "No."] Then I will tell hon. Members again. What it means is that the industry is to be given certain general lines on which to proceed by the Government; that is to say, certain priorities. Within that they will make such adjustments as they consider are necessary. Over and above that, there will be this Inter-Departmental Committee to which I have referred, which will be able to deal with any cases of difficulty which may be submitted to the sponsoring Department. As the right hon. Gentleman knows, each Department sponsors certain industries. The Departments which sponsor the plate-using industries will be represented on this Committee and will be able, through this machinery, to give guidance to the industry; but there is not to be a detailed allocation.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: I do not think we can carry the matter further at this stage.

WORLD PEACE (PRESIDENT EISENHOWER'S DECLARATION)
Mr. H. Morrison(by Private Notice) asked the Prime Minister whether he has any statement to make on Her Majesty's Government's policy regarding the declaration on international affairs made by President Eisenhower on Thursday last.
The Prime Minister (Mr. Winston Churchill): Sir, I have already welcomed the bold and inspiring initiative by the President of the United States of America, In his declaration he seeks to find means of establishing world peace on a genuine and enduring basis. Her Majesty's Government, and probably all the countries of the free world, will be glad to associate themselves with his sincere expression of those ideals and aims to which we all subscribe.
I was glad to see that the acting Leader of the Labour Party and the former Foreign Secretary, according to the report in the "Daily Herald "of 17th April, seems to share these views. I cannot do better than read the words he is reported to have used—I am quoting from the "Daily Herald":
"The British people,"
said the right hon. Gentleman,
"in common with enlightened people all over the world, will welcome this most important statement. It is exactly the plan that was so enthusiastically endorsed by the Labour Party Conference—the World Plan for Mutual Aid—which I introduced on behalf of the National Executive. What is needed now is a forthcoming response from all governments so that the road will be open to a new era of peace. progress and ultimate world prosperity."
They were very well chosen words. I hope, therefore, that at this momentous juncture we shall not be hampered by party controversy. It seems to me that patience is needed rather than haste. In my opinion, no one can measure the extent or purpose of the change which has become apparent in the Soviet mood or even perhaps in their policy. I repeat what I said at Glasgow on Friday; no single hope, however slender, should be cast away. Time may well be needed to enable a sure judgment to be made.
I did not read President Eisenhower's speech as a challenge nor should I expect the Soviet Government to give an immediate categorical reply to the many grave
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and true points which his remarkable and inspiring declaration contained. It is, of course, as yet too soon to consider any relaxation of our efforts for collective defence.
I trust that nothing will be said here or elsewhere which will check or chill the processes of good will which may be at work and my hope is that they may presently lead to conversations on the highest level, even if informal and private, between some of the principal Powers concerned.
There is, however, one sphere which claims priority because it is both practical and urgent. The establishment of a sincere and honourable truce in Korea, with due regard for other Asiatic countries affected, would not only be of the highest value in itself but it might also open the door to further priceless advances towards that general easement of the world situation from which a real and lasting peace might come. We should, therefore, all rejoice at the steps that are being taken to resume the parleys at Panmunjom.
I do not wish to say more today except to assure the House that the whole subject holds the first place in the thoughts and attention of Her Majesty's Government.
Mr. Morrison: On behalf of the Opposition, may I welcome the statement made by the Prime Minister which, I think, commands our general acquiescence and support. In the meantime, let us hope that all the statesmen of all the Western democracies will be equally cooperative and forthcoming, and let us hope that nobody will say anything which is liable to discourage the somewhat improved atmosphere of the international situation. It would be our wish that Her Majesty's Government should be forthcoming on any practicable means of improving the international situation, and we are glad that the Prime Minister has represented that spirit in the answer which he has given this afternoon.
Mr. Younger: While we all welcome President Eisenhower's speech and statement of United States' policy, may I ask the Prime Minister whether he is aware that some of us feel that the United Kingdom has a slightly different perspective on some of these problems, particularly those of the Far East, and whether

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he will, therefore, consider making a contribution at a very early date by making a statement of United Kingdom policy which, of course, we should not expect to be in conflict with President Eisenhower's statement but which would at any rate be supplementary to it, perhaps clarifying certain important points?
The Prime Minister: I understand that we shall probably have a debate on foreign affairs on the 29th of this month, but I would rather not endeavour to forecast precisely beforehand the lines which any remarks I might have to make should take.
Mr. Strachey: Would not the Prime Minister consider making a statement now that, if and when an armistice has been successfully concluded in Korea, Her Majesty's Government would favour the seating of the Chinese Government on the Security Council of the United Nations?
The Prime Minister: I think it might even hamper the movement of events in Korea towards an effective truce if I were to try to lay down conditions or make offers at the present time.
Mr. Irvine: Is it not a fact that the President's statement does not make entirely clear how far the liberation of the satellite countries and certain other matters are to be prerequisites of American mutual aid? Will the Prime Minister ask for clarification of that vital point, so that the whole matter may be usefully considered in the House?
The Prime Minister: I am sure it would not be in the interests which we all have at heart for me to attempt to go into details on these matters at the present time.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: I think we are having a debate in a short time. These matters ought to be considered and then discussed in the debate.

NEW MEMBER
Mrs. Patricia Ford, for North Down.
ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee [Progress, 16th April].
  [Sir CHARLES MACANDREW in the Chair]
  Question again proposed,

  AMENDMENT OF LAW
  That it is expedient to amend the law with respect to the National Debt and the public revenue, and to make further provision in connection with finance, so, however, that this resolution shall not extend to the making of amendments of the law relating to purchase tax except amendments, if any,—

  (a) making the same provision for or in respect of chargeable goods of whatever description; or

  (b) relating to the administration or enforcement of the enactments relating to the tax; or

  (c) reducing any of the rates of the tax generally for all goods to which that rate applies.

BUDGET PROPOSALS
3.50 p.m.
Mr. Hugh Dalton: I am much obliged to the Prime Minister for listening to some of what I have to say. We now return to our public duty of debunking this Budget. This work was well begun by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) last Wednesday—so well begun that he obviously got under the Prime Minister's skin, as a speech made by the Prime Minister in Glasgow on Friday shows. The Prime Minister used these words of my right hon. Friend:
"This old-school-tie careerist"—
The Prime Minister (Mr. Winston Churchill): It was not correctly reported. I said, "This old-school-tie left-wing careerist."
Mr. Dalton: That amendment will be helpful to emphasise a comment I shall make in a moment:
"This old-school-tie left-wing careerist may rightly claim to have been the worst Chancellor since Mr. Dalton."
I could not let these words slip past unnoticed today, and in them I think I detect a sub-conscious guilt complex in the Prime Minister. He has been a pretty hot careerist for a longer time than most of us have been in politics at all, and since

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before my right hon. Friend was born. I will quote, if I may, a few apt words from a most attractive book written by Miss Virginia Cowles and published recently, dealing with the Prime Minister, in which she—a common friend of the Prime Minister and myself and a most charming and talented lady—says:
"From the very first day Winston entered the House he was openly and unashamedly ambitious, and he made it plain to all who would listen that he regarded the rapid fulfilment of his aims as a matter of the gravest urgency. He decided that only one of two courses were open to him; either to win the leadership of the Tory Party, or to abandon the Tories and make his way with the Liberals. He toyed with the second idea as early as 1901, when he had been in Parliament less than a year."
That is a very interesting backward glance. The right hon. Gentleman is also an old-school-tie careerist, though I hasten to add that his old school is not much thought of either by my right hon. Friend's old school or by mine. For what it is worth, the right hon. Gentleman was at Harrow.
Now I pass to the comment on myself, of which I make no complaint. In these days we tend to be too polite in political exchanges and I welcome the robust and straightforward abuse from the Prime Minister, hoping he will not resent counter-attack. "The worst Chancellor since Mr. Dalton"—that may be a matter for argument.
The Prime Minister: May I assure the right hon. Gentleman that I did not attempt in any way to set myself up as a judge of the competition between himself and the right hon. Gentleman?
Mr. Dalton: May I shift the competition to another historic plane? I venture to assert that no later Chancellor, surveying all the Budgets of which this is only one in a long and unending series, has ever made more havoc, more Harrovian havoc, than did the right hon. Gentleman in 1925 when he brought us back to gold at the wrong parity and at the wrong time, and landed us in the general strike during which he ignored his duties at the Treasury in order to follow a journalistic sideline, and afterwards landed us in long years of mass unemployment in that terrible period.
Having said that, I add this: the right hon. Gentleman has big credits on the scroll of history, but not as a Chancellor
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of the Exchequer, not as a Budget maker. I felt it right that I should make these comments on his comments on my right hon. Friend and myself. I do not wish to detain the right hon. Gentleman any longer, but I thought it right to give him notice that I was going to make these few comments.
Now I turn to the Budget, the economic background of which has been well explored by a number of previous speakers. It is quite clear that this Government have had tremendous luck. Everything has gone wrong in their estimates and yet somehow they have scrambled through with a plausible grin on their faces. As compared with their estimates, the expenditure is nearly £200 million too much, the revenue is more than £200 million too little, and the surplus above the line, instead of being, as we were promised, £510 million, was only £88 million—only £420 million short! For loose, slipshod, inefficient, inaccurate, sloppy Budget forecasting, this one takes the prize.
I comment on one shortfall of revenue in particular, the Death Duties. The shortfall here is remarkable and very large in proportion to the total yield. The Death Duties yielded in 1951–52 £183 million. The estimated yield for 1952–53, just concluded, was £175 million, and the actual yield only £152 million. That is a shortfall of £23 million, or about one-eight of the total estimate. For this year, the estimate is only up to £160 million. Why is this? [HON. MEMBERS: "People live longer."] No, it is not that simple suggestion that I thought might be made. [Interruption.] My right hon. Friend the Member for Ebbw Vale (Mr. Bevan) puts the words into my mouth. In spite of all his efforts when Minister of Health to prolong the lives of the just and the unjust alike, the true explanation is not to be found in my right hon. Friend's activities but lies in those of the right hon. Gentleman, who has raised the rates of interest and thereby belittled the wealth of the rich, both living and dead.
The Chancellor of the Exchequer has promoted a depreciation of capital values, on which, of course, the Death Duties are assessed. [Interruption.] I did not catch the comment, but there can be no question that this decline in the Death Duties revenue has to be added to

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other elements which make up the total cost of the dear money policy being pursued by the present Government. I wish for a moment to speak about monetary policy as it is revealing itself in the Chancellor's successive statements.
There has been a great rise in the cost of the National Debt. Some of the figures have been set before us in these debates. I leave aside the Sinking Fund so as not to complicate the comparison. In 1951–52, the actual interest charge alone was £514 million. It was estimated for 1952–53 to be £540 million. Actually, it went up to £576 million, and it is going up a bit further next year according to the estimates. Therefore, on these figures there was an increase in the interest charge of no less than £62 million in 1952–53 as compared with 1951–52.
In fact, the cost of the right hon. Gentleman's dear money policy is higher than that, because the actual figures for 1951–52 include some five months when this Government were in office when the rates of interest were already going up. If this were taken into account, it would be found that the increased annual cost of the dear money policy is somewhere approaching £100 million a year, which is a very grave additional burden to be thrown upon the taxpayers.
What is it all for? Why do we need to have this continual increased tribute to persons who lend money? I shall in a moment ask the Chancellor to be so kind as to take note of a letter in "The Times" this morning. Perhaps, however, I may lead up to that by saying that in my view it is not reasonable to say, as the Chancellor has said, and as his Economic Secretary has said, seeking to belittle this increase, that one must think of the thing net and not gross and take account of the fact that we get some tax back on it. Of course, we get tax back on it, but that is true of every item of expenditure in the Budget.
Take the great figures for defence. [Interruption.] Some of those people are still paying the Excess Profits Levy, which we are so glad to see is coming off. The Government get a lot of this back on the contracts for defence. They get a lot of Income Tax, Surtax and Profits Tax back from the people who benefit from the defence programme. They get back P.A.Y.E. on salaries and
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wages of people who do work for the defence programme, and they even get some beer and tobacco money from persons who draw wages or salaries in connection with this expenditure. Therefore, it is quite wrong to try to get on the defensive about this increase of expenditure, on the ground that part of it comes back in revenue. That is true of every form of expenditure whatever and is not special to the National Debt charges.
This is a serious increase in the burden on the people. In my view it is quite unnecessary, so far as the charge on public funds is concerned. Even if there are restrictions in the private sector of industry with regard to credit and higher rates of interest there, in my view it would have been quite possible—this has been argued before—for the Treasury to have kept down the rate of interest which the Government themselves have to pay, particularly on the short-term debt, which is, of course, a very large element in this increase.
There is no reason at all why the short-term rate of interest should have been allowed to rise above the figure of one-half of one per cent., to which I reduced it in my first Budget in the summer of 1945 and at which it remained until the present Government came into office. That low figure could have been perfectly well held by arrangements between the Treasury and the City of London; or, if the City of London had refused to play on this and the Chancellor had reported that to the House, I am sure I could have pledged him the full support of this side in bringing the City of London into line, so that we should still continue to enjoy the benefit of a record low Treasury bill rate and large public economies resulting therefrom.
I also wish, in passing, to note the question raised by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) regarding rates of interest and bank facilities. It is very reprehensible, in my view, that the Government, although they have not made any serious effort to keep down the charges on the people through the National Debt interest, are none the less seeking to influence the bankers of this country to give facilities, I am not saying on the same level as for export, but to give favourable facilities for persons concerned with buying up denationalised public property. This is a

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most scandalous and blatant introduction of Tory Party politics into banking practice.
What have we been seeing? We have been seeing the continual creation of doubt and uncertainty as a result of the raising of these interest rates and as a result of the constant harping by spokesmen of the Government on the great importance and efficacy of their monetary policy; it is continually referred to by every speaker from the Government Ministerial group. This only means that more uncertainty must exist in the minds of industrialists, as to whether it may not be intended to push interest rates yet higher in the near future. The Government have created unemployment and uncertainty by this dear money policy, and it is high time that this was brought to an end.
That brings me to the letter which, I am sure, the Chancellor, who follows these things with close attention, will also have noticed, in "The Times" this morning, from Professor Richard Kahn, of Cambridge. I shall not touch upon more than one point in this very interesting letter. Professor Kahn raises the question why the policy of monetary restriction is to be continued at all at the present time. He quotes the Chancellor last year when, in winding up the Budget debate, he said:
"I am taking the steps I am taking, including the monetary steps, in order that we can push some of the products of engineering into exports …. No one wants to cut home investment if it can possibly be avoided. It would be much better to get more exports by increasing plant and machinery, but, having regard to the supplies of steel which are likely, we could not avoid the investment cuts …."—[OFFICIAL REPORT, 17th March. 1952: Vol. 497, c. 2051.]
Professor Kahn then goes on:
"The steel can now be made available. Why then does monetary restriction continue? … the Chancellor appears to be relying on it to discourage any undesirable increase in stocks. Does this mean that the economy is to be subjected for an indefinite future to the cramping influence of monetary restriction? There seem to be two other possible explanations of the Chancellor's policy."
I should like the Chancellor later to comment on this and to tell us whether Professor Kahn has rightly interpreted his mind.
One of these possible explanations, says Professor Kahn, is that
"… the cuts on investment, which were necessitated by shortage of steel but are not
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so necessitated any longer, are now being taken advantage of to enable consumption"—
rather than investment—
"to expand. The other possible explanation is that the object is to economise on imports of steel."
But, Professor Kahn asks, and I entirely agree with this question:
"Could anything be more shortsighted than to save foreign exchange on an imported raw material needed to make equipment for British industry?"
I hope that we shall get an answer to that, because I am quite sure that, whatever case there was a little while ago for this restrictive policy, it has now disappeared and the consequences should be drawn from this.
I turn for a moment to the repercussion of all this on local rates, which is very important. There have been great increases in local rates all over the country. One reason is that higher rates of interest have to be paid on all loans raised by local authorities, whether under the Public Works Loan Board or in the open market. They have generally to pay more, particularly on various commissions, if they go on the open market, than if they stay with the Board, but in any case they have now to pay very substantially more. This is a factor which will be increasingly important as time goes on and more loans are raised under the new conditions.
I have no regret at all for the time when local authorities were able to borrow at 2½ per cent. when I was Chancellor of the Exchequer. Nor have they. On those long-term loans they are secure as far as the rate of interest is concerned and they will go on paying 2½ per cent.—those who were lucky enough to get in during my time and did not have to wait for the right hon. Gentleman—for quite a long while yet, indeed until the dawn of the 21st Century, which some of us may not live to see. Those are the advantages, well understood by local authorities, of a cheap money policy.
The other main reason why local rates are rising throughout the country is the increase in wages and salaries of local authority employees of all kinds and also in the wages and salaries paid by firms who do work for local authorities. All that is a direct consequence of wage increases due to the cuts in food subsidies in last year's Budget. Therefore, it is

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very easy to see how the embarrassment of local authorities has arisen and is likely to continue to grow.
There are many suggestions which might be made for dealing with this problem. I shall throw out only one at this moment. Having abolished the development charge without too many tears being shed by anyone, it is regrettable that the Government have not made some suggestion for shifting part of the burden of local rates on to socially created land values and that we have not at least sought some partial easement of the problem, by the local rating of site values. I am sorry that there was no suggestion for that in the Budget speech, but it is not too late for the Chancellor to put something in the Finance Bill. Perhaps he will take that into consideration. I do not think the Finance Bill has been presented; so there is still time.
I turn to consider, briefly, some of the tax reductions in this Budget. I warn the Chancellor of the Exchequer, as I have had some disappointments about this myself, that gratitude for tax reductions evaporates very quickly. He will find in a few weeks that hardly anyone will be grateful for anything; they will be asking why we have to pay taxes at all. But in some cases the gratitude has not even begun, which I am sure must be very surprising to the right hon. Gentleman. Take taxicab proprietors, for example, and a number of drivers. It looked like a rather obvious pass at them in the Budget when we were told that the Purchase Tax would be taken off taxicabs and that they could make whatever hire purchase arrangements they liked. But they say it is no good at all, and none of them is going to switch over from Labour to Tory for this. So that has gone down the wind.
Then there are all the traders who sell Purchase Taxed articles. We have all read the Hutton Report—at any rate, I expect we have. I entirely agree with their main conclusion—it is what I always said when I was at the Treasury—and I thought it hardly necessary to appoint a Committee. I thought it quite clear that they would end by saying that there is no possible administrative means by which we could give a rebate to traders in respect of tax-paid stocks when the level of Purchase Tax on those stocks was reduced. There is no way of doing it
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and the Hutton Committee Report develops that argument. [Interruption.] The Government have accepted it, and we accept it, and we are all agreed, except the one hon. Member opposite who interrupted. I am convinced that the Committee are right.
The conclusion to be drawn is that we ought not to make these very large reductions in Purchase Tax, covering such a wide range of goods, selected without any discrimination at all, in any one Budget. If we do that we maximise the traders' losses. The President of the Board of Trade will, no doubt, have something to say about this later. The traders themselves say that they have been landed in a loss of £25 million. That was their estimate in respect of Purchase Tax paid on stocks, the tax having been suddenly reduced all along the line by 25 per cent. on all these goods. That may be an overestimate; we would not expect them to under-estimate their loss. But the "Economist" says that it is at least £15 million, and very likely a great deal more. So it is somewhere between £15 million and £25 million.
Is it really reasonable to impose that loss suddenly upon this large body of blameless citizens, most of whom probably vote Tory anyhow? Is it really good sense, is it good economics, or good finance, to do that? I would be very doubtful, and I will suggest how it could be avoided. It is no doubt true—I used to say this to them when they came to see me—that on a long view they would gain a lot more by the fact that, presumably, they would sell more cheaply and get a larger market when the tax had been reduced. But that is rather cold and distant comfort for them at the moment. The Chancellor is imposing these very big immediate losses on them.
The point is that for this and other reasons the Purchase Tax reductions are much too widespread and unselective and seem much too large while at the same time other articles might have been helped along the road a little. There is no reduction on clothing, as has been said already, and why that has been left out will be keenly pursued in future debates. It is all very well to say that the Chancellor did something in regard to clothing a little time ago, but that is never a good answer, because those concerned want to be kept in the running along with the

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others who are now getting something. I think the Chancellor has committed an act of great injustice to the textile industry. They have been hard hit by this Government. They are the most hard hit of any of the major industries and I think they should have shared some of the benefits of this Budget.
Broadly speaking, the biggest reductions are made on the most luxurious articles. That point has been made but it is a most important point. On expensive furs, jewellery and so forth, substantial reductions have been made. No object previously liable to Purchase Tax, except taxicabs and pianos, has been taken wholly out of the range—[HON. MEMBERS: "Batteries."]—and wireless batteries. That makes three. Are there any more? Would it not have been much better to make a much longer list not merely these three things but a long list of what one might call near-necessaries such as linoleum, carpets and all sorts of other things which hon. Members could add to the list, exempt from Purchase Tax altogether, sweep it right away and, meanwhile, leave the higher rates on the more luxurious articles? That would have been much fairer and would have immensely reduced the losses of traders.
The right hon. Gentleman mentioned umbrellas in his Budget. I have been puzzling about this because he gave them more than the average cut. I think this is a case for psycho-analysis. Why the umbrella? Has it anything to do with Munich? It does not touch me. I have no interest here and I have been completely above board. I said in public at the time of Munich that the umbrella had become a badge of national shame, and in a speech which was reported in the Press I swore that I would never own or carry an umbrella ever again. I have kept that vow up to now, even through the heaviest rains. I gain nothing from this relief. But why did the right hon. Gentleman do it? I think I have given the explanation.
There is another argument against reductions of this kind in Purchase Tax. The right hon. Gentleman wants to boost exports, as do all of us. But the Purchase Tax does not fall on exported goods. In effect, it is a subsidy for exports. Therefore, by making this wide range of reductions in Purchase Tax the Chan-
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cellor is channelling a lot of goods on to the home market which otherwise would have gone for export and would have earned us foreign exchange. If the Purchase Tax on goods for the home market is reduced, it reduces the incentive to export. That is so clear that I cannot imagine that it will be challenged, though it has not yet been mentioned.
I think we should—and here I respond to one point which the Chancellor made in his speech—view with great scepticism any exaggerated claims by manufacturers for a large home market if they are to do a good export trade. There is the case of motor cars, which is in the minds of all of us. The manufacturers did not make their case. It is a great mistake, if we are going to press forward with exports, to make this wide range of reductions in Purchase Tax. The greater part of these reductions will not benefit the great mass of the people of the country. We shall not find old age pensioners queueing up for cheaper television sets, nor in any other case shall we find any substantial alleviation in the cost of living for the great majority of our people.
I should like to say a word about the Entertainments Duty because I had a previous hand in some of the things that the Chancellor has been handling since. For my part, I welcome his proposal about cricket, but I wonder why he has not done something for football? I noticed on Thursday some scowling faces in the Gallery and I asked who they were. I was told that they were the Scottish team who were to play at Wembley on Saturday. They were very indignant, and rightly so. Why this discrimination between one outdoor sport and another? We on this side shall speak up for the footballers when we get the Finance Bill before us.
When I was Chancellor of the Exchequer I tried to help all these outdoor sports, but the Chancellor is not helping them all. I want to put one or two facts on the record. In my Budget in April, 1946, I said:
"There are now two scales of rates of Entertainments Duty. The lower scale now applies only to the theatres and to a few other live performances, the higher scale applies to all other entertainments. I have received many representations in favour of applying the lower scale to football, cricket and a number of other sports and I have decided that it is right to do so."—[OFFICIAL REPORT, 9th April, 1946; Vol. 421, c. 1825.]

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I did so. I cut them all down to the lower scale of Entertainments Duty and to that extent relieved the burden on them.
Last year the present Chancellor of the Exchequer put up the Entertainments Duty upon all these sports. He introduced what he calls an intermediate rate, which meant an increase in the Entertainments Duty on cricket, football and other outdoor sports. I regarded that as very reactionary. I do not know why he did it. Perhaps it was because of insufficient information from his Parliamentary Private Secretary the hon. Member for Chelmsford (Mr. Ashton) and others. I should like to see him going a good deal further than he has gone so far in taking out of Entertainments Duty altogether sports which give great pleasure to large numbers of people in the open air, not stuffed up in some indoor place. My emphasis is on the open air. I ask him, therefore, to approach with sympathy the Amendments that will no doubt be moved from this side of the Committee when the time comes.
With regard to the Purchase Tax on the equipment for open air sports, I did something which I should like to see him carry further. In my 1947 Budget, I said:
"I should like to do something more this year for the young and active members of the community, and those not yet too old to take vigorous exercise. I propose, therefore, to reduce the tax from 33⅓ per cent. to 16⅔ per cent. on sports requisites for football, cricket, hockey, boxing and rowing."—OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 72.]
Could we not now clean the slate of this Purchase Tax on this equipment which would do a lot more good than taking a quarter of the Purchase Tax off the indoor luxuries I have been speaking about.
There is one thing on which we are all agreed. We are delighted with the prospective death of the Excess Profits Levy. I ventured last year to describe it as a disincentive, demagogic device, and I cannot improve on that now. It was the most ill-contrived of all the taxes that have ever been put upon the excess of one thing over another the whole history of our fiscal life. It was most injurious to business efficiency. It picked out all the wrong people both to tax and
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not to tax, and I am very glad it is coming to an end.
What did the T.U.C. say about it? I understand that that is a question which is sometimes asked in this Cabinet. The Prime Minister has been known to say, "What does the T.U.C. think about this?" or "Have you consulted the chairman of the T.U.C?" The T.U.C. were very clear about this. They said, "Kill it. Stab it soon." But they said something else. They also said, "You must combine that with an increase in the tax on distributed profits." Why has that mellow, mature judgment of these leading figures in the trade union world been brushed aside and ignored? If E.P.L. is abolished without an increase in distributed profits tax it means that the increased profits will simply be shovelled out to the shareholders of the concerns making these great profits. In our view, a great defect of this Budget is that it does not combine the death of E.P.L. with an increase of the distributed profits tax.
Nor did the T.U.C. stop there. They recommended—and I think with great wisdom—that there should be some form of dividend limitation in addition to the increase in the tax on distributed profits, either on the simple and straightforward lines proposed by my right hon. Friend in 1951 or on some other more refined and complicated formula. What is wrong is that, as regards dividend distribution, at the moment legally the sky is the limit. There is no limit lower down and that is a state of affairs which is not acceptable to the workers of this country.
But the great injustice in this Budget comes out most startlingly in the Income Tax changes. It is only the standard rate, and the reduced rates which go with it, that have been reduced. If this is done and nothing else, then the Chancellor is bound, as was admitted by the Economic Secretary in a very talented speech, delivered with remarkably few notes, to give the largest reliefs to the richest. That follows from the simplest arithmetical consideration of the case. He is bound to give the largest relief to the richest; he is bound to give a larger relief to the person who does not work for his money than to the one who does and gets the same income. He is bound to give a larger relief to the person who

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has got no children than to the person who has many.
All this, as the Economic Secretary cogently observed, follows logically and necessarily from the Chancellor's present policy, provided he does nothing else— and this is our complaint. I once reduced the standard rate of Income Tax by 1s. The present Chancellor is reducing it only by 6d. But I did more than that; I also increased Surtax. That was much objected to by hon. Members opposite, who called it unjust, but the purpose of increasing Surtax at the same time was to limit the amount of income relief for the persons with the largest incomes.
At the same time, I also increased the exemption levels and I raised the personal allowances, and the result of that was to set the people free—millions of the poorest people—from paying Income Tax at all. In my Budget and in those that succeeded, large numbers of persons were exempted.
The Chancellor of the Exchequer (Mr. R. A. Butler): That was done last year.
Mr. Dalton: Why not do a bit more this year? The right hon. Gentleman soon gets weary of well doing. All his failures this year are excused on the ground that he did well last year. But in the national, if not in the party, interest we should like him to do well every year. He ought to have done more this year.
To the Economic Secretary, whose mathematical genius has been exhibited to us, I say, "You can get almost any result that you wish out of this most ingenious Income Tax scheme that we have devised, provided that you have properly combined the tax reliefs and adjusted the rates. You could easily get a plan by which you give bigger reliefs to the poor than to the rich and relieve large sections of the poor from Income Tax altogether." But that has not been done at all. That is why we are so disappointed with the right hon. Gentleman, who in some respects made a small virtuous beginning last year.
What did the Prime Minister say at Glasgow, when he got away from personalities and got to the broad issues of policy? He said:
"Sixpence off Income Tax is class favour to over 30 million people."
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There are about 50 million people in the United Kingdom, and so this Income Tax relief is class disfavour to nearly 20 million people. [Interruption.] Thirty from 50 equals 20. The Prime Minister worked all this out. He does not require coaching in these elementary points from the back benches opposite. The Prime Minister, of course, worked all this out before he made this carefully considered statement. He said that just over 30 million people were going to get this relief.
I assume that he is right in this one figure, but then I ask: What about the other 20 million people? I am not venturing to argue with him; I am assuming that he is right. What about these 20 million people who are left out—forgotten men and women? [HON. MEMBERS: "And children."] And children, certainly. As I have already said, the more children people have, the less Income Tax relief they get. Surely the Chancellor of the Exchequer must be very dissatisfied, when the Prime Minister has thus analysed the effect of what he has done. Nearly half the population—certainly a third—have been left out altogether from this distribution of Income Tax relief, and that is even worse than I thought it was. I knew it was pretty bad, but after the Prime Minister's pronouncement on it. we find it is even worse.
Should not the Chancellor of the Exchequer have thought about the other people who are entitled to something out of this share-out of largesse? There is the case of the old age pensioners. Their case is, and continually will be, stated by my hon. Friends. They are living at a lower standard and with less hope and happiness in their lives for the most part than any other section. Instead of dishing out all this money in the way that I have described, would it not have been reasonable to have given something to them?
Alternatively, looking a little further into the future, beyond the lives of old people nearly at the end of their journey, is there not a great deal to be said, in the interests of the children and of the mothers of large families, for giving a family allowance for the first child? That has been refused for a long time for reasons of economy. Now that things are so much easier, as the Chancellor has been explaining, and now that he has got

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so much to give away, would not a good way of spending part of it be to give a family allowance for the first child—even if you limit this concession to cases where there are already two or more children in the family, so that it would not be given for the first child if the first child were the only child?
The Tory Party do not like that kind of fiscal development. The Tory Party are against increases in public expenditure, except on defence and the National Debt. They are against that other investment programme which interests us. They are against investment in human capacity, health, talent, opportunity and happiness. They are threatening the National Health Service. They are threatening the national education service. They are against this other great investment programme in human capital and human values.
We for our part will keep this other investment programme always in the forefront of our aims. Partly for what it does and partly for what it does not do, this Budget will be held, as it is more and more clearly understood in the country, to be an unfair and an unjust Budget, and as such it will be judged.
4.37 p.m.
The President of the Board of Trade (Mr. Peter Thorneycroft): I was glad to find that the right hon. Member for Bishop Auckland (Mr. Dalton) has lost nothing of his old exuberance. He has just the same confidence in his economic judgment as he always had. He will, no doubt, forgive me for saying that it is not a confidence that we altogether share on this side. As the right hon. Gentleman's speech proceeded, he reminded me more and more of the old, bold and baleful Bourbon who had learned nothing and forgotten nothing of his past iniquities. I have in mind the part that he played in creating the inflation which was a large part of the cause of the trouble.
I should like to spend some part of my time in examining an aspect of the Budget upon which the right hon. Gentleman has not touched—the impact of this Budget upon the productive industry of this country. After all, all Budgets are more than mere profit and loss accounts. Incidentally, they are much more than mere
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devices for redistributing income. Together with monetary policy and credit policy, they form the major method whereby all Governments can influence the pattern of our economic life.
As President of the Board of Trade, perhaps I may be forgiven a certain prejudice in the matter, but it seems to me that the main test of this Budget is not whether it is a popular Budget or not, nor whether it benefits one section of the community or not. The prime and first test of this Budget in the final analysis seems to me to be whether it helps productive industry to face the immense tasks which many hon. Members on both sides have described in extremely vivid terms.
If it is clearly the duty and privilege of Governments to help the weak, it is also their duty to help the breadwinners, to put tools into their hands, to provide incentives with which to spur them on and to attract capital to industry. Let us not forget in our anxiety to preserve the Welfare State the welfare of productive industry for, if we forget that, many other things that we stand for will inevitably fail.
In the office that I hold I see a good deal of the problems of productive industry. It is my day to day business to watch the efforts of British industry trying to win and to hold markets. I may, therefore, be forgiven if I say something about those problems and something about what we are seeking to do to help these firms. The problems which confront British industry are many and complex. Many of them were described in a speech made with great objectivity and fairness by my predecessor in this office, the right hon. Member for Huyton (Mr. H. Wilson) on Thursday. Some of these problems are imperfectly within our own control.
There is one problem, which in my judgment seems to be more intractable than any other, and that is the level of direct and indirect taxation. The effects of taxation upon industry are various. They vary between one year and another, and I want to mention one or two of them. Some companies in these post-war years have lacked the cash with which to re-equip themselves and fit themselves to compete in this difficult post-war world. I concede that there has been in the last year an increased liquidity in company positions, but not all companies—and not always those companies which are in the

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most urgent need of re-equipment—have the cash.
Mr. James Callaghan: So the Government raised the Bank rate.
Mr. Thorneycroft: I shall come to that in a moment.
Another effect is that though some companies possess the cash they lack the willingness to re-equip. They feel, rightly or wrongly, that if they take the risk and win my right hon. Friend the Chancellor of the Exchequer will have a large share of the resultant benefits, and if they lose they themselves will stand the greater part of the loss. In some other cases demand has fallen, especially where there is Purchase Tax at the rate of 100 per cent. I hope that right hon. and hon. Gentlemen opposite will hesitate before they criticise the lowering of the Purchase Tax on some of the great craft industries. I wonder how many right hon. and hon. Gentlemen opposite who represent Birmingham or Sheffield are prepared to say that the tax on silverware and jewellery should stay at 100 per cent.
Mr. Frederick Mulley: With reference to silverware, does not the right hon. Gentleman know that the change from 100 per cent. to 75 per cent. is quite useless, and that if more selection had been made in Purchase Tax reductions it would have been much more helpful?
Mr. Thorneycroft: That is an argument which I fully appreciate, but it is not the argument advanced by the right hon. Gentleman the Member for Bishop Auckland. The right hon. Gentleman will find that his hon. Friends criticise the fact that the tax relief does not go far enough, not that relief was introduced.
Net personal savings have been virtually nil, yet personal savings have been the traditional method of financing the growing points of industry. In the main, reliance has had to be placed on institutional savings and on the expansion of existing companies. I can say without fear of contradiction that over the past eight years a new man would have found the very greatest difficulty in starting a new company and attracting risk capital from private savings, and yet that must be the essence of a successful capitalist system.
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I have no wish to over-state this case. Indeed, it is too good to be spoiled by over-elaboration. But let no one be under any illusion whatever as to what this country has been trying to do during the past eight years. We have been trying to run a capitalist system while depriving it to an increasing extent of capital. I do not think that that is a workable proposition. It is not one of the ways in which we can successfully run a country. I appreciate that right hon. Gentlemen opposite may disagree and that the other side can be stated, but this is my view about it.
One can run a capitalist system as in the United States of America where one attracts vast accumulations of capital and places ever greater quantities of mechanical power and ever newer techniques at the disposal of the workers. Today in America they use much more power per worker than we do in this country, and the gap is widening. They are investing more than twice as much as we are per man employed. They have large rewards and incentives to success. I am not arguing the merits or demerits: I am saying that it is one way in which one can run a country.
Mr. Hugh Gaitskell: Will the right hon. Gentleman give the relative rates of tax in America and in this country on companies? Is not it the case that taxation in America is just about the same as it is in this country?
Mr. Thorneycroft: Taxation is high in the United States of America, but investment is high too. There is no doubt whatever that in the United States of America it is far easier to get rewards for effort than ever it has been in this country during the past eight years.
Mr. Aneurin Bevan: The right hon. Gentleman was putting the case that high taxation is the enemy of investment. In this country taxation was high and investment was high. In America taxation is high and investment is high. Therefore, the one is not the enemy of the other.
Mr. Thorneycroft: The right hon. Gentleman will have an opportunity of addressing the Committee later. I understand that he will make a cool and dispassionate analysis of our economic position. I hope that during the course

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of it he will describe to the Committee his view of this situation and explain how one can maintain taxation over long periods at 9s. 6d. in the £ at the standard rate without discouraging investment in productive industry. If he wishes to do that, I am sure that hon. Members will be very ready to listen. We regard the right hon. Gentleman's economic judgment with some little suspicion. After all, his attitude towards private enterprise and investment is well known. He regards it as a miasma which is poisoning the whole nationalised sector of the community. If one holds that view perhaps it tends a little to prejudice one's judgment.
As I was about to say, there is another way of running the country, and that is the method whereby the Government themselves do virtually all the saving and pre-determine the direction of investment and exercise over-riding control on all foreign transactions. That is the way that it is done in the Soviet Union. The right hon. Gentleman the Member for Batter-sea, North (Mr. Jay) said that in some respects it was done with some success.
But what seems to be clear is than one cannot run a country in which one depends upon a thriving private sector of the community while denying it the savings, the capital and the incentive and all those things which are an essential feature of the running of any private sector. It is like running a motor car without petrol. It runs all right down hill but at the moment when one comes up against a slope—and I must say that we are coming up against a considerable hill at present—the whole thing breaks down.
This Budget is primarily an industrial Budget. Its purpose is to help industry, and it is none the worse for that. If we help industry in a Budget we help everybody, rich and poor alike. If we continue rates of taxes which injure industry we do not injure just a few rich or idle shareholders; we injure the whole national fabric and the means of production upon which everybody's standard of life depends.
I recognise that hon. Gentlemen opposite hold a different view, but I think that one of the reasons why they argue against a reduction in the standard rate of Income Tax is that they themselves would have found the greatest difficulty
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in offering to the country any tax reductions whatever. Let us look at what they are committed to on the side of expenditure. I was reading the other day in the "Daily Herald," a journal which I study closely, an article by the right hon. Gentleman the Member for Bradford, Central (Mr. Webb), who is the ex-Minister of Food. He says:
"I say frankly that we must declare beyond all doubt that we will restore the subsidies. And we must say we will not be restricted in their operation by any artificial, so-called 'ceiling'."
Is that the policy? If it is not the policy, I hope the right hon. Gentleman opposite will correct me, and I will willingly give way. If, in fact, it is the policy of the right hon. Gentleman opposite to restore all the food subsidies—in the exuberance of opposition, he asks that it should be without limit, but assuming that he might be persuaded by his right hon. Friend to have something in the nature of a ceiling—the cost would, of course, wipe away more than all the concessions that are made in this Budget So we must regard the suggestion which the right hon. Gentleman was making about tax relief as of a somewhat academic character, and not one which would readily fit into the general pattern of the policy outlined by his right hon. Friend.
Our case, at any rate, is that taxation has been too high too long, that it is time it was reduced, and that its reduction will be a great help to British industry. I should like to turn now to the performance of Her Majesty's Government in the new economic situation of the past year. I do not propose to rehearse again in detail the long list of events, which has been given many times, but I should like to deal with the arguments of the right hon. Gentleman the Member for Leeds, South, which have been repeated today by the right hon. Gentleman who preceded me, that all the benefits were fortuitous, that there was nothing which the British people had by their own efforts done during the year, and that there were no actions of the Government which led to these same ends. [Interruption.] If that was not the argument, let me read what the right hon. Gentleman said, taken from column 220 of his speech:
"One must therefore conclude … that there has been no effort and sacrifice as a

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whole in 1952 and that the improvement in the balance of payments position has come wholly from the favourable terms of trade and from the fall in investment."—[OFFICIAL REPORT, 15th April, 1953; Vol. 514, c. 220.]
It seems to me that that is a wholly inaccurate way of stating our affairs. Perhaps the fairest thing to say about the right hon. Gentleman's case is that it is part truth and part falsity, and I want to deal with both. What is true is that the change in the terms of trade was the largest external factor assisting us in closing the trade gap. That is an assertion which is beyond challenge, and, indeed, it has not been challenged. The prices of what we bought declined in relation to the prices of the goods we sold, and, after the adverse movements of 1950 and 1951, which added very much to the difficulties of the right hon. Gentleman at that time—which I readily concede—I think that, frankly, we as a nation did deserve to have that change in our fortunes.
If the source of that benefit is emphasised, let it not be forgotten that we paid a penalty as well. The very circumstances which were associated with the change in terms of trade in our favour at the same time also swung the market conditions very heavily against us, and if hon. Gentlemen opposite deny us credit for the one, they really must refrain from blaming us for the other. So much for the right hon. Gentleman's assertion that outside events affected our position. They did; they always have, and they always will. What I say is that we should have the whole truth, and not a part of it which happens to suit the arguments of the right hon. Gentleman opposite.
Now for the falsity. Though the terms of trade played a part, we should not be in the position we are in today if we had simply relied upon them. Hon. Gentlemen opposite seem to have too simple a faith in the play of blind economic forces. We were left in late 1951 upon the rocks. We could not just hope to drift away from them; we got a favourable slant of wind, it is true, but what we really can claim is that we took full advantage of it. The truth is that, within a few weeks, we were using both import cuts and monetary and credit policy in order to achieve both an external and internal balance, and we can claim without fear of contradiction that inflation was checked, the
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external account was balanced, and confidence was restored to sterling.
It is true that the criticism is made—and it is made with great clarity and force—that we have balanced at a lower figure than we would have wished, that, broadly speaking, we are paying for our imports with exports, but that both are smaller than we would like. These assertions are very proper, very fair and to the point, but I am bound to say that they come somewhat oddly from the benches opposite, and particularly from a right hon. Gentleman who has held the office of Chancellor of the Exchequer. Right hon. Gentlemen opposite are really comparing our present levels of trade with what they were spending, not with what they were earning. The actual earnings from our exports in 1952 were slightly more than in 1950 or 1951.
The right hon. Gentleman reminds me a little of a somewhat exuberant rake, happily now removed from control of his finances, comparing the earnings of the establishment with what he was spending in the heyday of his extravagance. The first essential, after all, is to balance—at a high level if we can, but, at any rate, to balance—and both right hon. Gentlemen will forgive me if I do rub into them the homely virtue of trying to make both ends meet. It does seem to me, after all, that it is the harsh preliminary to the more rewarding and enterprising policy initiated by this Budget.
May I therefore take one example to illustrate my case? I take it in the field of external trade—the liberalisation measures which I announced in the House, and which my right hon. Friend announced a few weeks ago in Paris. I believe that the initiative which the Government then took was of immense value to us and will be of immense value to European trade. We, more than any other country, benefit from liberal trade policies abroad, and it is our major interest to remove barriers, particularly quota barriers against our own exports.
But, as many hon. Gentlemen have pointed out, we cannot expect others to remove barriers against us unless we put ourselves in the position of removing the barriers against them. It seems to me that the conditions which make the removal of our own import quotas possible are not altogether generally understood. The essential preliminary to liberalising

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trade abroad is to get rid of inflation at home. To do the one without the other is to lead to the very balance of payments crises in which right hon. Gentlemen opposite continually found themselves.
That brings me to the speech delivered in Thursday's debate by the right hon. Gentleman the Member for Dundee, West (Mr. Strachey), who seemed to me to state with admirable clarity and precision exactly what I took to be the Socialist position on this aspect of the economy. He said:
"Last year the Government, partly in their Budget, but more importantly in their monetary policy, undertook a considerable programme of disinflation, deflation, or whatever you like to call it. In other words they reduced total demand, and by reducing total demand incidentally reduced the demand for imports as well. That seems to us the nub of the question, whether that is the right thing to do. Our criticism is essentially that that must be a most terribly indiscriminating way of reducing the demand for imports."
He went on to say:
"… they set their face against controls at what, to my mind, is the critical point, controls over foreign transactions … either we have to push the Chancellor's line far further than he has pushed it now, or we must take a far more drastic measure of control over imports and foreign payments—that is the key point."—[OFFICIAL REPORT, 16th April, 1953: Vol. 514, c. 431–9.]
I think it is, too; I think the right hon. Gentleman stated with absolute clarity the difference which exists between us and right hon. and hon. Members opposite, and I take this opportunity of saying how wrong I think his policy is, and how damaging it would be to our economy if pursued. As President of the Board of Trade, I have, of course, been the Minister principally responsible for the administration of the import cuts. For the past 18 months I have had a very good opportunity of studying in practice the working of that particular system. To my mind, any attempt to solve a balance of payments crisis by import control alone must inevitably fail, unless it also takes fiscal and monetary measures to get rid of inflation at home. It cannot be done by import control alone, and I hope I can persuade hon. and right hon. Gentlemen opposite of this.
What happens if one tries to do it by that method alone? When one puts down a prohibition over part of the field, the demand, though transferred, is still there.
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The goods still flow in—different goods perhaps—round the corner of the dam. What the right hon. Gentleman would then do would be to extend the dam, but, of course, the wider the import control, the greater the degree of retaliation would become, and therefore the fewer exports one would manage to sell. Meanwhile nothing whatever is done to remove the basic cause of the unbalance. Moreover, hon. Gentlemen who advocate these policies under-estimate the blunt-ness of the weapon of import control.
Mr. John Strachey: I am sure the right hon. Gentleman would not wish to misrepresent what I said. Is he saying that I suggested that import controls alone were a solution or ever could be to the balance of payments question? I am far from holding that view. I believe that controls over foreign transactions as a whole, which was the phrase I used, play a very great part in the problem, but it is the payments out which must be controlled as well as the imports which come in. It is the exchange control element to which I attach such great importance. Also, of course, the control of the internal economy is of great importance as well. No one denies that
Mr. Thorneycroft: The right hon. Gentleman attempts to blur the case which he put on Thursday when, with great force and pertinacity, he proceeded to launch an attack on my right hon. Friend for introducing deflationary measures over here. That was the purport of his argument, and he put it extremely well. I am saying that none of the other measures taken would have worked unless they had been accompanied at the same time with disinflationary or deflationary measures either in the fiscal or monetary field. That is my case
Import control is, in fact, an extremely blunt weapon, and there are really only two ways in which it can be used. Either one must base licences on the principle of what the trader has been doing before, in which case, of course, one tends to freeze the whole of the trading system on to some basic year, or, alternatively, one has to distribute the licences on the whim of someone in Whitehall which extends patronage on an indefensible basis.
Even supposing that the system which hon. and right hon. Members opposite are arguing for was administratively pos-

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sible—the use of these physical controls without some measure of disinflation— what would happen to the economy here? It would mean that the goods would be shut out, but that the demand would go on and that inflation would increase. The difficulty of solving the balance of payments problem would remain.
It seems to me that the measures argued for and urged by the right hon. Gentleman opposite and his hon. Friends are the best possible way of driving not only this country, but the whole of Europe into a steadily descending spiral of world trade. We believe it far wiser to take measures to put our internal economy in order and from the basis of those measures to take moderate steps towards liberalising trade outside.
I now turn to production and exports. I utterly reject the theory that this country is stagnating. To say that there is more room for production and greater investment is no doubt true, but to give the impression that nothing is happening is, of course, quite false. The truth is that after the war total production rose rapidly until 1950. For the last three years—not for the last 18 months—that curve has flattened out. There was a small rise in 1951, and a small fall in 1952. Two-thirds of the fall in 1952 was due to the textile recession which was part of a world-wide movement which affected many other people besides ourselves. Moreover, these global figures of production mask some very considerable achievements in certain fields.
In 1952, the production of pig iron, for example, rose by 8 per cent. and steel by 3 per cent. In January and February, 1953, steel was 10 per cent. up on the figures of two years ago, and 15 per cent. up on the figures of one year ago. The production of machine tools rose by 10 per cent., and was 30 per cent. more than in 1950. Production of generating plant rose by 15 per cent., and agriculture and coal production were up. Textiles, particularly wool, are recovering. It seems to me that to describe these achievements by our fellow citizens in both private and public sectors of industry as stagnating is a wholly false approach to the subject.
As hon. Members have said, I agree that in the field of exports we have faced very considerable difficulties. If our earnings were up, our export volume last
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year fell by 6 per cent. But let it be remembered that we were confronted by two factors for the first time in this postwar era. In the first place, we had to undertake an enormous switch from sterling to non-sterling markets. Exports to sterling countries fell by £60 million, while exports to non-sterling countries rose by £30 million. That vast operation, an essential factor of our balance of payments position, reflected immense credit on the flexibility and resilience of British industry.
Secondly, we were for the first time facing world wide competition on a buyer's market. We might have done much worse; we must do a great deal better. The most satisfactory factor in the export field was the fact that our exports to the United States reached a record figure of 400 million dollars, or over 6 per cent. above 1951. Clearly an important part of any solution to the dollar problem, which is an American as well as a British problem, must rest on an expansion of exports to the American market.
Mr. E. Fernyhough: Can the right hon. Gentleman say what proportion of the increase in our exports to America is represented by the sales of tanks and other armaments?
Mr. Thorneycroft: Our exports to the United States were mainly in the form of manufactured goods.
Mr. Bevan: What proportion was represented by armaments?
Mr. Thorneycroft: I shall reply to that point later. I do not know the proportion. In this matter, America still has some very big decisions to make. It is not enough for us to be competitive if the Americans are to use artificial means of shutting our goods out of their markets.
I have been asked about the tenders for the Chief Joseph Dam in the Pacific North-West. I want to give the facts about that matter. The facts are that when the bids for two contracts for power transformers and generators for this project were opened last December, the bids of the British firm were 1 million dollars lower than those of the six competing American firms. If we take import duty into account, the saving to the American taxpayer would have been about 1½ million dollars.

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Under the provisions of the "Buy American" Act, a decision on whether to award the contract to the only foreign firm involved was referred to the Secretary of the Army, and the reports show that the matter has been referred to the Secretary of Defence and has been discussed by the United States Cabinet. We took steps to make it clear to the Administration at the highest levels that a decision not to award the contract to the lowest bidder because the lowest bidder was a British and not an American firm would inevitably be regarded here, and indeed in all countries concerned with increasing their exports to the United States, as a bad omen for the future, as regards the foreign trade policy of the new Administration. We learned late last week that all bids have been rejected. I understand that no decision has yet been taken on the question whether to call for new bids or to negotiate with the lowest bidders; but if new bids were called for I understand there would be no change in the specifications.
We have been surprised and disappointed to hear this news. Whatever the reasons why all bids have been rejected, I feel bound to point out that the effect will be to give all or at least some of the American firms a second chance, as they failed at the first, to beat their British competitor on price. I find all this hard to reconcile with recent statements by the American Administration. Only the other day, the President's message to Congress about the renewal of the Reciprocal Trade Agreements Act stated:
"Our own trade policy as well as that of other countries should contribute to the highest possible level of trade on a basis that is profitable and equitable for all."
All I would say in conclusion on this topic is that there is more involved here than the award of a 6 million dollar contract. We must regard the treatment and the eventual outcome of this case as in some measure a pointer to the future commercial policy of the American Administration. I can answer the question put to me by the right hon. Member for Ebw Vale. Exports of arms to America were virtually nil.
So much for that matter. We must continue all our efforts to maintain and improve our competitive ability
Mr. Harold Wilson: While welcoming the statement which the right hon. Gentleman has just made and for the very firm tone in which he has expressed it, may I ask whether he would answer the question I put to him on another aspect of exports. I said that the volume of exports for last year was down by 6 per cent. Should I be right in supposing that the exports for last month, which appear on the face of it very disturbing in terms of volume, were down by 12 to 15 per cent.?
Mr. Thorneycroft: No, Sir. The answer is that the percentage is approximately the same as the average for the last quarter of last year, about 6 per cent. I will get the accurate figure, but it is not the sort of figure which the right hon. Gentleman is now mentioning.
There is one matter on which I should like to comment, a question which has been raised by many hon. Members about the use of the credit terms which our exporters are allowed to quote in foreign markets. We have recently reviewed exchange control policy in order to ensure, subject to balance of payments considerations, that there are no unnecessary obstacles to exports. As the result of this review, exporters can be assured that they will be given greater freedom of granting credit terms which they wish to offer to overseas buyers. In so doing, exporters will naturally have regard not only to the needs of the situation but to the financial facilities available to them. Exporters will, of course, continue to apply for the necessary permission, but they can rest assured that we intend to speed up the processes of control so as to give them decisions as rapidly as possible.
The greatest help to industry will be provided by this Budget. An industry which is overburdened with tax, which is starved of the sources of risk capital and which lacks incentive is a liability and not an asset. It is unable to compete abroad and clamours for protection here at home. That is not our conception of the role of industry. We wish to cast it for a tougher and more adventurous part.
If industry wishes to survive it can only be upon a basis of working harder, producing cheaper, providing goods of better quality, practising the sometimes forgotten art of salesmanship, and expanding old markets abroad while producing new goods for new markets. That

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language can be used only by a Government who are prepared to lift off the backs of industry at any rate some part of the burdens which up to now have been weighing it down.
Nobody is complacent in this matter. Everyone recognises the dangers which may lie in the future by possible changes in the terms of trade and the possibilities of some American recession. These things do not escape us, but it would be a timid Chancellor who framed his Budget on the basis of expecting the worst of all possible worlds. The Budget is an act of faith, and the opportunities which it extends must be matched by the responsibility with which they are seized. We believe that our faith is not misplaced; and that the Budget will command the support of a largely united, confident and happy people.
5.17 p.m.
Mr. H. Rhodes: The best part of the speech of the Tight hon. Gentleman was his declaration of policy about the American contracts. The other parts of the speech were a reflection of the Treasury monetary policy which has permeated through all Departments, of which the Treasury now have perfect control. I should like to answer one or two points that he made.
How does the right hon. Gentleman get an unwilling industrialist to invest if we do not tax the industrialist? There have been plenty of examples of unwillingness to invest. I would draw the attention of the right hon. Gentleman to the time when Sir Stafford Cripps tried to get the cotton industry to take up new machines, which they did not do although the capital was made available for nothing.
The right hon. Gentleman said that the exports to the American Continent in 1952 were not fortuitous, but there was much of that character in the terms of trade. We know that we were lucky about the terms of trade, but the Government said that it was their action which prompted the high prices that they got for exports, despite the fact that the volume was less. It was not because the Americans and the Canadians were unable to take up their contracts. There were very few cancellations. Manufacturers averaged up in 1951 and averaged down in 1952 on the prices they paid for
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their materials; and they were delivering in the middle of 1952 at considerably higher prices than would have been the case if the contracts had been booked at current prices. That is one of the explanations which seems to have been overlooked.
The President of the Board of Trade said that it was his business to watch British industry to see what it was doing and how it was faring. I will give him something to look at. He talked about the things which hindered and the things which helped production. Throughout British industry during the last 12 months there has been a very sinister movement. The business people of this country had the best of all times under a Labour Government.
Mr. Cyril Osborne: Not because of a Labour Government.
Mr. Rhodes: The hon. Member should wait a little. He has had his chance. These business people did well under the Labour Government. It only happens every now and again that an industrialist not only has the chance to do well when a Labour Government is in office but also has the chance afterwards to pay his taxes under a Tory Government and so do even better. I was hoping that somebody would question my statement about business doing well under a Labour Government because I have in my possession a record of what has been happening.
I hope that when we come to debate the Finance Bill we shall have a very bitter struggle on the point which I am about to make. It is one of the worst scandals that has blotted the face of British industry for many years, and I should like to hear any hon. Member getting up to defend it. It is the case of an industrialist who did well in 1952 and who did not do very well in 1953. In he makes a good profit and in his profits fall. I have received from a chartered accountant a number of examples of businesses in this category which I will not name but which have been mentioned in the Press.
I want to say at once that there is nothing wrong with the Act as it is whereby a business is assessed in the year of cessation or change of ownership on its actual profits from the preceding 5th of April to the date of cessation. There is nothing wrong with that, but the truth

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is that there is a racket by means of which no real cessation or real change of ownership takes place. That is at the root of the iniquity with which I want to deal.
One can take the case of a business that made a profit of £250,000 up to 31st March, 1952. I hope that somebody on the Front Bench is making a note of what I am saying, because I do not want it to be disregarded when the debate is wound up this evening. On the basis of a continuing business, the tax assessment would be on profits of £250,000. But if there is a change of ownership before 30th March, 1953, and during 1953 a profit of only £20,000 is made, it means that £20,000 is the figure on which profit is assessed. That is done by simply changing the business into a holding company. It can be done very formally. There is no change of ownership, of shareholders or of staff. There is no change at all, and I understand that the company can dither and dally even about the payment of Stamp Duty relating to the change for two years and get out of it in the end.
As I say, on this change being made, if the figure of profit for 1952–53 is £20,000 the company has only to pay on an assessment on £20,000. The result is that this company, on the basis of Income Tax at 9s. in the £, would be saving and putting into the hands of the shareholders £85,000 which really belong to Caesar. What are the Government going to do about it? Let them watch that point and get on with tackling that problem.
Mr. Osborne: How long has this been on the Statute Book? Why has it not been dealt with before?
Mr. Rhodes: The companies are only now beginning to suffer and the result is that they are taking advantage of what is on the Statute Book.
Mr. Bevan: Exactly.
Mr. Rhodes: I am not saying anything about that. I am merely relating the facts. The truth is that the Chancellor's concessions on Income Tax, in terms of 6d. in the £, would be found to be a flea-bite when everything is weighed up and there has been a proper investigation into the leakage of tax that has taken place in the last 12 months.
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The President talked about loss in production and he quoted a lot of figures, but anybody can quote figures. Does he think that a firm which decides in 1952–53 to change itself into a holding company is concerned about its production and its hidden unemployment? Of course it is not. The President talks about the reasons for loss of production. I tell him that this is one of them. It permeates all the way through in industries that do not happen to be connected with re-armament.
I have another "beauty" for the Chancellor. The Chancellor talked about lightening the burden on industry and used beautiful phrases such as:
"… If we want vision, enterprise and an expanding future, we must, if we can, throw off some of our burdens."—[OFFICIAL REPORT. 14th April, 1953; Vol. 514, c. 51.]
He said that industry must be as lightly burdened and as nearly competitive as we can make it. I can suggest one burden which the Chancellor can throw off today if he so desires.
I want to build an extension to business premises. I decided to do so before this Budget was introduced. The extension is not very big, but it is sufficiently important to be related to what is being done inside the building. I hold the view that unless there is a revolution in the ratio of building costs to what is produced on the machines inside the building there will never be any real encouragement to buy machines. I have therefore been interested in this question and have studied it in a number of countries. During the Easter Recess I spent a couple of days in Holland pursuing the matter. This is the situation which exists in this country. I will not give the name of individual firms, but I have them and will supply them on request privately.
After the war people were delighted if they could get hold of a licence to build. When a person obtained a building licence the architect would say to him, "Be sure and make your licence high enough so that it will cover all exigencies. You know what happens to people who exceed their building licence. If they are caught they go to prison." So everyone made their licences high enough, and there was always a margin, which had a direct effect upon the capital investment programme.

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Then the architect obtains a price-only one price—from a steel supplier. When that price is referred to the licence holder he thinks to himself, "We are living in an age when enterprise and competition is a kind of favourite theme" —as the Chancellor says. The licence holder says to the architect, "I am not satisfied with this price. Let us have another one." The architect is very reluctant to obtain a second price, but is forced to do so. The tender is sent to someone else, and when a quotation comes back the licence holder discovers that, in terms of cost per weight, if the weight is less the cost is more and if the weight is higher the cost is less. But the second price is always slightly higher than was the first price.
Incidentally, in the case of metal windows for houses the prices are all the same and a local authority who wishes to build cannot do anything about it.
The hypothetical licence holder about whom I am talking says to his architect, "I am not satisfied with this second price either." He sends for another one and the same thing happens. This price is a little higher than the others. Then the licence holder hears of a man who, because of German competition, is losing export markets in Australia, New Zealand and Canada. The licence holder thinks, "If I go to this man surely he will have steel in stock." The man who is losing his exports proves to have thousands and thousands of tons of steel in stock.
The licence holder asks what he was exporting. The exporter shows him. They are "reach-me-down factories," the sort of buildings which can be put up at the right time in the areas where they are most needed. They are lightweight factories such as are being erected in America. But we are dull in this country and too far behind the times to be doing the same—
Mr. Osborne: Good old capitalist America.
Mr. Rhodes: Wait a minute. The licence holder asks for what figures the factories were exported to Australia, and being knowledgeable about the weight of steel per square foot, he can assess the answer. He calculates that it would cost £50 a ton for prefabricated steel delivered into Australia. He decides that such a
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factory would suit him. When he goes to order it he finds the price is not £50 a ton. To him it is £68 a ton. But if he had it sent to a friend in Australia that friend could send it back at less money than the licence holder could buy it at home. If the President is watching what is going on in British industry, will he please look at that?
I have three or four more examples of a similar nature which I could quote to the Committee, but I have promised not to speak for too long and I intend to keep that promise. I hope, however, that the Chancellor will attempt to answer these points I have put. I hope there will be some effort made to deal with these matters—even if it is only by the President of the Board of Trade referring them to the Monopolies Commission forthwith—so that we who are trying to invest, and who have never been unwilling to do so, may receive some encouragement.
5.37 p.m.
Captain Charles Waterhouse: The right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) made great play about the difference between the monetary policy of the Chancellor today and that policy which he himself operated when he was Chancellor of the Exchequer some four or five years ago. Not very many months after the period when the right hon. Member for Bishop Auckland was Chancellor I remember speaking to a man of a certain age in my constituency. He showed me a piece of Government script and said that it represented 50 years of work and saving. He added, "I have been robbed of a quarter of my savings in as many months as it took me years to earn them."
Mr. Osborne: Quite true.
Mr. Ellis Smith: We have been robbed all our lives.
Captain Waterhouse: That was perhaps a hard saying. But the remarks of the right hon. Gentleman today about money creating dividends shows quite clearly to this Committee, and the country, what he thinks about those who earn dividends and to whom dividends should be paid. After all, the right hon. Gentleman spoke as an ex-President of the Board of Trade, an ex-Chancellor of the Exchequer and

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as a man who had urged the country to save. Yet he referred to profits paid out as having been "slopped away" to shareholders. It was a most peculiar attitude for the right hon. Gentleman to adopt. He and other hon. Members opposite have urged the necessity of saving, from the point of view both of the nation and of industry. But as soon as anybody does save he is regarded as a pariah, to be attacked, hunted and mocked, and any money paid to him as income on his investments is referred to as having been "slopped away."
I believe this to be a first-class Budget. I regard it not merely as the Budget introduced by the Chancellor a few days ago but as part of a general financial, industrial and commercial scheme which this Government are putting into effect. As a background, we have de-rationing and de-subsidising. In the last few months animal feedingstuffs, eggs and sweets have all been freed. Two pairs of Ministries—the Ministries of Civil Aviation and Transport, and the Ministries of Pensions and National Insurance —have been combined. Under this Budget sugar is to be freed in a very short time.
There will be a reduction in direct and indirect taxation; the Excess Profits Levy has been removed and—this is a small matter but an important one, because it is a piece of real political honesty, which the President of the Board of Trade has probably been urging on his right hon. Friend for some time—we are repaying, under the Business Chattels Scheme, the tens of millions of pounds which have been completely and wrongly withheld from those who have paid in premiums the whole amount due in respect of insurance claims during the war. I congratulate the Chancellor upon that small but important measure.
He has done excellently with the means at his disposal, and the strength of what he has done is clearly shown by the weakness of the attack upon his Budget. The right hon. Member for Leeds, South (Mr. Gaitskell) made one of his admirable speeches. He speaks with clarity and, as an economist, with knowledge. I not only listened to him with a great deal of pleasure but I read his speech with great care. On this occasion he drew our attention to the fact, as he says, that last year
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production was down, employment was down, there was more short time, there was less overtime, the intake of protein was down, the intake of edible fats was down, the intake of calories was down and the intake of fish, eggs and sugar was down. It is a terrible picture.
The curious thing is that the morale of the country is up. People in every walk of life were infinitely more cheerful during the last 12 months than they have been at any time since the war. It may be just our charm of manner, but there has been a feeling of bonhomie—a feeling of good cheer, hope and confidence such as we have not known for the last seven years.
Mr. H. Wilson: Is the right hon. and gallant Gentleman suggesting that the facts stated by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) were not true? I presume he accepts that they are facts. Does not that rather suggest that the people with whom the right hon. and gallant Gentleman frequently consorts are happier because they are getting a bigger share of the national income? The majority are still worse off.
Captain Waterhouse: I am not denying the accuracy of the figures. I am not denying that these things have happened, but I am utterly denying the truth of the conclusion which is drawn, that things are worse. Things are not worse; they are a good deal better, and we have every confidence that if only the present Government can remain in power long enough, things will be even better still.
It is true that there is a certain amount of unemployment and that there has been a setback in the textile trade. I have the honour to sit for part of a city which is a textile city. I know there has been unemployment, but I also know that during the worst of the slump last autumn employment was available for everybody who was unemployed. Last week I came down in the train from Leicester with the managing director of a large firm, who told me that at no time since the war had he been able to run more than 60 per cent. of his machinery, because he could not get operatives. He could not even get them last autumn.
Mr. R. J. Mellish: He could get them now.
Captain Waterhouse: He cannot get them now. He has spent a very large sum of money in building a factory in a town which is between 100 and 200 miles away from Leicester. It is most inconvenient, and he will have to train operatives; but he cannot get employees in Leicester. At no time since the war has this large factory been able to run more than 60 per cent. of its machinery.
Do not let us over-play this industrial depression. As far as I can see it, trade and business are still resilient. People are still confident. Conditions are not so easy as they were; they were far too easy; but it is absolute nonsense to say that a major slump is round the corner.
Mr. Mellish: Whilst accepting the implications of the right hon. and gallant Gentleman's argument so far as his own area is concerned, will he accept an assurance from me that in my area, where the docks are the main industry—and the docks are the barometer of the nation's industry—there is a great deal of unemployment and short time? Will he explain how this Budget is going to improve that situation?
Captain Waterhouse: I accept the hon. Gentleman's statement. In the best-run economy in the world it is impossible to avoid pockets of unemployment.
Mr. I. Mikardo: The docks are not a pocket.
Captain Waterhouse: The docks are a particular industry, and if from time to time circumstances arise which cause a recession in that industry it is too bad, but one does not cure it by Socialism, Communism or anything else. It is in the nature of things that recessions occur from time to time. But I completely deny that there is any sign of a major recession.
The right hon. Member for Leeds, South continued with another string of criticisms. This time he criticised my right hon. Friend the Chancellor of the Exchequer for being so terribly wrong in his estimates. He said that in production he was £350 million wrong; in Government expenditure, £175 million wrong; in terms of trade, £200 million wrong; in the invisible balance, £185 million wrong; in investment, £65 million wrong, and in stocks, £850 million wrong. That may or may not be so, but it is
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absolutely clear that it is not the Chancellor of the Exchequer who makes these estimates. Nobody thinks that for one moment. These estimates are made by his Department and in his Department— by the Statistical Department which, under the régime of the right hon. Gentleman opposite, has swollen out of all recognition. It is so large that it is almost as big as the whole of the old sections of the Treasury.
The fact that so many of those figures were wrong—if they were—is in no way a matter for which any blame can be attached to my right hon. Friend. It is an argument against the whole system. It is called planning, but it is really a matter of guessing the figures.
Mr. Michael Stewart: Is the right hon. and gallant Gentleman really saying that the Chancellor of the Exchequer is not responsible for the Budget estimates?
Captain Waterhouse: I am not talking about the Budget estimates. The part of the speech of the right hon. Gentleman to which I was referring—as the hon. Member would have appreciated if he had been listening—was dealing with the Economic Survey and the figures which were produced by the Treasury before the Budget. The point I am making is that if these experts, these planners, can be scores and hundreds of millions of pounds wrong in their estimates, then their estimates cease to be of much value. The suggestion I am putting to the Chancellor is that these learned and industrious men in the Treasury would be a great deal better employed in supervising expenditure, which, after all, was the old task of the Treasury, rather than in making these wild forecasts that are not confirmed in the event.
Hon. Members opposite have complained that taxes have been taken off for the benefit of the rich and have not been sufficiently reduced in the case of the not-too-rich. We have now reached in this country a state of taxation which is absolutely confiscatory. Taxes are cumulative. Take, for example, a £1,000 motor car. Hon. Members may say that none of us requires to have a £1,000 motor car, although those who represent Coventry will probably not hold that view. A £1,000 motor car, as it comes out of the factory, immediately attracts

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tax to the extent now of £500, and its price becomes £1,500.
If that car is bought by a Cabinet Minister, who used to get £5,000 a year, and paid tax at the rate of 10s. 2d., it would cost him rather more than £3,000 of income If such a car is bought by the bachelor friend of the right hon. Member for Leeds, South it costs him no less than £25,000 of untaxed income. Surely we are getting to a state of complete farce when taxes rise to that height.
It must be my object, in so far as I can achieve it, as it is the object of many of my friends whom I consult from time to time, to do what I can to urge the Chancellor to cut down administrative expenditure still further. How much my right hon. Friend can save by that it is difficult to say. [An HON. MEMBER: "Call in the experts."] I am trying to present a sensible argument. Suggestions have been made to my right hon. Friend, some of them practical, some of them impractical. An hon. Member has just interjected "Call in the experts." That is precisely what I am about to invite the Chancellor to do. I invite him, as I have done before, to go to his Treasury officials and instruct them to find ways and means by which he can, with the least possible delay, achieve a reduction of such sum as he specifies. That reduction should, in my view, be very substantial.
It is not only in the sphere of administrative economies that we need to watch our step. We are, in every way spending on a wrong scale; we have too big an idea of our financial potential. Foreign affairs cut very deep into financial expenditure. A little time ago we made a new arrangement with India. What is that costing us today? How has our position as a nation altered because of that change? If India is in danger we must certainly go to her protection; we cannot leave her to guard herself; but in the old days we should have had, as a quid pro quo for that responsibility, the benefit of Indian help, possibly in the Middle East. She would have borne part of the expense of the defence of the Middle East. Today all that falls on us. Was that thought of by hon. and right hon. Gentlemen when they embarked on this policy in relation to India?
Mr. Fernyhough: Would the right hon. and gallant Gentleman reverse that policy?
Captain Waterhouse: I am not speaking about the reversal of that policy; I am pointing out how desirable it is, in deciding on policy abroad, that we should have in mind the potential financial power of this country.
Mr. H. Wilson: Will the right hon. and gallant Gentleman give any estimate to the Committee of how many hundreds of millions of pounds it would have cost in troops, bloodshed, stores and materials to hold down an India opposed to the Government of this country?
Captain Waterhouse: That is not the question. The question is the general trend of policy; whether we watch, as matters are developing, with an eye to what we can afford. It is perfectly true that if a country develops into a hostile State and one has to go to war, it will cost a great deal more; I am not denying that. I am saying that a wiser policy earlier in India might have kept India in much closer accord with us and have given us the benefit of her support in our defence of the Middle East and elsewhere. I do not intend to spend more time on India.
I come next to Abadan, where in a matter of months we have been talked out of £300 million of British investment. Can we really afford that? Does £300 million not matter? After all, that amount represents about 1s. 6d. Income Tax in one financial year. Is that no matter for this Committee and the country to be concerned about? I suggest that the evacuation of Abadan has put on to us a burden which we cannot afford.
In the Sudan we have adopted a new policy. We have invested tens of millions of pounds in the Gezira scheme, which is of great importance to Lancashire. Does anyone really weigh the importance of Sudanese cotton to Lancashire when decisions such as these are being made? Is that consideration given sufficient weight?
The immediate problem now is the Suez Canal. There we have a base worth £500 million. We might be able to move the stores out if we had to but we could not move the base. Is that fully appreciated in this country and throughout the

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world? Is it fully appreciated by people who read day by day in the leading newspapers of the country words from which it would almost seem that we have already decided to give up that great base, that great strongpoint of security to the Middle East? This has a direct bearing on the finances of this nation.
I suggest that the time has come when we have to say that what we have we hold, and that where we are we stay. My right hon. Friend the President of the Board of Trade this afternoon has made an extremely clear and forthright statement on the American hydro-electric contract. That is the sort of statement that should come from the Front Bench, which occasionally does now come and which never came in the old days of Socialist rule. I hope that on other major issues of foreign policy no less than on the hydro-electric contract we may have equally clear statements.
I shall not detain the Committee any longer beyond saying that in my view the Chancellor has in his two Budgets first arrested decline and then given the nation material relief and real hope. If these were the only two Budgets which he were to produce, if they were the only two Budgets which this Administration were to produce, the country would be indebted to my right hon. Friend. I hope that that is not so. I hope that this is the first of a series of at least four Budgets. They would make a nice little quartet. If we have three more Budgets like this, Purchase Tax will have gone altogether, Income Tax will be down to 7s. 6d., and Britain will be on the high road to recovery.
6.0 p.m.
Mr. Gordon Walker: The right hon. and gallant Gentleman the Member for Leicester, South-East (Captain Waterhouse), quite as was to be unexpected, thought this was a wonderful Budget, to use his words. What made this all the more extraordinary was that he argued that the Chancellor was not responsible for his own figures. Not only was this Chancellor not responsible, but apparently all Chancellors and all other Ministers had and have no responsibility for taking the advice given to them by civil servants. I understood the right hon. and gallant Gentleman to say that the Chancellor was not responsible for his
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estimates. If the right hon. and gallant Gentleman thinks that, then how he can pass judgment on the Budget I do not understand. If he does not accept the figures how can he then think this is a wonderful Budget? I cannot understand that.
It seemed to me unfortunate from the point of view of his argument that he started by laying so much stress on savings, and the need to encourage them, because it is accepted, I think on all sides, that a reduction of the standard rate of Income Tax is not really adapted to encourage savings. It is generally accepted that a reduction of Income Tax on the whole will lead to increased expenditure on consumption. Even if hon. and right hon. Gentlemen opposite do not agree, I think that it is the general view of economists of the Right and the Left at the moment, including the "Economist," that, on the whole, a good deal of the concession given in Income Tax will be spent on consumption and not on an increase of investment.
Mr. Osborne: "The Times" editorial this morning takes rather the opposite view.
Mr. Gordon Walker: I have not read the City article. I do not think the editorials touch on the subject. Certainly the "Economist" week by week, before the Budget and since, has been saying what I do not think the Economic Secretary would deny, that a considerable part of any relief though a flat cut in Income Tax is bound to go on increased consumption.
All the speeches that I have heard from the other side of the Committee in this debate have been typical of what I regard as the two great defects in this Budget. One is that the Budget is based on the most extraordinary complacency, that it rests upon the most hazardous assumptions about the continuing development of our economy. The second is that this complacency itself is based upon economic theory, sheer theory, a sort of child, like faith in Tory economic dogma and doctrine. Only if that dogma and doctrine are true will the assumptions on which the Budget and the whole economic policy of the Government are based come true.
What is hoped, of course, is that certain consequences will flow from the actions

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being taken in the reduction of taxes, and so forth, by the Chancellor. So far not from the Chancellor nor from anybody else on that side of the Committee have we been given any logical reason to show why the hoped for consequences should follow from the actions taken. Whenever we got to that point in the argument the Chancellor resorted to metaphor and analogy—"lightening the ship," and all the rest of it. He was like an economic witch doctor invoking the right incantations to make the charm work.
The most hazardous of the assumptions on which the Budget is based, and the whole economic policy of the Government with it, is that the improvement in our position this year was the result of the deliberate and careful planning of the Chancellor. That is not so bad in itself; you cannot blame a Government for taking propaganda advantage of the good luck that comes their way. What is dangerous is that this line leads automatically to the further dangerous assumption that there will be continued improvement, that the improvement we have had is going to continue steadily in the future. If that is not the assumption made by this Budget, the Budget does not make sense at all.
It is a very dangerous assumption to make that this improvement is going to be steady and continuous. The reason I say that is that it is extremely probable that we are now in the good year of a two-year cycle of alternating good and bad years, such as we have had since the war. There are good reasons for such a cycle. It comes from our reserves being too low. When the reserves are too low certain special factors work with magnified effect. The terms of trade, the leads and lags that the Economic Secretary talked about, the stocks at sea, these things move with an extremely exaggerated effect, whereas, if we had big reserves, the effects would be covered and absorbed. Some of these factors will not move in our favour next year because they are once-for-all things.
We cannot go on running down stocks, and the leads and lags cannot go on working our way. We cannot go on running down stocks at sea. If some of these factors work at all again they will work against us. Certainly some, like the terms of trade, may quite well turn
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against us next year. It would be only prudent national housekeeping to assume that we are now in the good year of a two-year cycle. The Government, however, instead of preparing for a rainy day, have been acting on the assumption that the sun will go on shining for ever.
The Economic Secretary to the Treasury (Mr. R. Maudling): Does it follow from this that the right hon. Gentleman considers, unlike his right hon. Friend, that the Chancellor was wrong to reduce the amount of surplus for which he has budgeted this year?
Mr. Gordon Walker: I was going to say that the most grave consequences of this policy are upon our overseas economic policy. I think that, on the whole, the amount of tax remitted at home is about right, though, of course, it has not been done in the right way. Although, of course, to some extent in domestic matters, as in the use of reserves for the purchase of sugar, there are defects, I think that in the main these are showing themselves in our overseas economic policy and, above all, in the extraordinary doctrinal faith of the Government in early convertibility as the sovereign remedy for all our economic ills.
Convertibility is a good thing in itself, as the coping stone and the result of Government policy over a number of years, but to turn this hope, as the Government are now doing, of convertibility into a top priority is very nearly a lunatic course to pursue. The Chancellor told us that Ministers were giving their main time and attention to convertibility as a top priority. That leads to very dangerous consequences for us. It means we shall not develop and are not developing our resources in the sterling area and the Commonwealth as fast as we should. If we make convertibility a top priority it means we shall not engage in long-term agreements at sterling prices that are above ruling dollar prices today, because if we want convertibility as top priority we must keep parity as far as possible between dollar and sterling prices.
The only way in which we can develop our resources in the sterling area is by long-term agreements at sterling prices rather higher than the dollar prices— agreements like the Commonwealth

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sugar agreement, which hon. Members opposite support and praise. That is the very sort of thing the Government will no longer be able to do because if they give convertibility top priority it means they must not make those agreements where sterling prices are above ruling dollar prices. As long as the Government follow this line that will not be possible, and I cannot see, so long as they do, how we shall have agreements to develop Pakistan wheat and Southern Rhodesian tobacco, and things of that sort.
This optimistic complacency of the Government has led to a very shortsighted policy towards our gold and dollar reserves. It is essential to build up these reserves, in good times and bad; we must also remember they are not ours in the sense that we have earned them. It is the Colonies that have earned them. We should follow two principles in the use of the gold and dollar reserves. One is to use them for the benefit of all the sterling area, and the other is that this country should set an example to other Commonwealth countries. These two principles have been violated by the decision to buy dollar sugar.
Mr. Maudling: It is a fact that the United Kingdom is the only country in the entire sterling area and Commonwealth which still rations sugar.
Mr. Gordon Walker: I still say that, in these circumstances, where the surplus in the gold and dollar reserves is not earned by us, and where we must set a good example, we have violated the proper principles for running the gold and dollar reserves. The purchase of dollar sugar is very popular, but we must realise that what we are doing. We are using Malayan and West African dollars not for the good of all but for a domestic easement in this country, and that is a bad thing to do, in itself. We are setting a dangerously bad example to other Commonwealth countries. What happens when Australia, for example, says, "We want more dollars for American cars. You are spending a lot of dollars on sugar"? How do we resist that? There is always pressure for the running down of these reserves in the good year, and it is in the good year of the cycle that we ought to set a good example, yet here we have set a very bad example.
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Let me make just one point about the Budget at home. Here we find this same Tory super-complacency, this same trust in doctrine. We find underlying the whole economics of the Budget the assumption that in order to get a greater incentive there has to be greater social inequality. That is what this Budget really boils down to. There is no doubt that this Budget does create greater social inequality. As my hon. Friend the Member for Gloucestershire, South (Mr. Crosland) showed quite clearly, the bottom incomes remain the same as a result of the Budget while the top incomes are considerably bigger; the spread between the top and bottom incomes is substantially greater as a result of this Budget. There is greater social inequality. The Conservatives do not say, "We like this because we can put more money into our pockets." Oh, no. They say, "This is necessary for incentives. You cannot get an incentive unless you have this greater social inequality." I say that is a doctrinaire, out-dated and false conception of incentives in a modern society. That is why I think this Budget is radically a bad Budget.
This Budget is based on the assumption that incentive is only the affair of the leaders, of big business, of shareholders; whereas, of course, in a modern society, incentive is a matter of the whole community, particularly of the workers in the community—not only them, but particularly them. Social inequality acts as a disincentive because it undermines that spirit and will which alone leads to production, to good work and to increased output. Offending people's sense of social justice destroys the will and the spirit on which output depends.
When we were in office we showed that a policy of advancing social equality is not only just in itself but is efficient because it creates a spirit and a will in the people that leads year by year to greater productivity. If there is social inequality in a modern society, we believe—unlike the doctrine of the Tories, which is wrong in this—that it acts as a disincentive and not as an incentive. We cannot escape the simple proposition that, as a fact, the Budget increases social inequality. That is a great condemnation of the Budget because it is the very opposite of what the nation wants today,

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namely, more social equality as the true source of incentive.
6.13 p.m.
Mr. G. R. Howard: I am sure that the right hon. Member for Smethwick (Mr. Gordon Walker) will forgive me if I do not follow him.
While, like many of my constituents and most of my hon. and right hon. Friends, I welcome the Chancellor's Budget, there is, unfortunately, one part of it which some of my constituents resent very much. They resent, I am afraid, the rather lighthearted sentence in the Chancellor's speech which completely upset the economy of the Isles of Scilly. He referred to this "happy state." I think there is probably a misconception in this country about these islands. People imagine that they are rather like the Channel Islands, to which people go from this country to escape Income Tax; but that is not so.
The population of the Isles of Scilly is composed entirely of farmers, people who cater for the tourist industry, and a few fishermen—although, alas, not as many as there were. There is no justification for the idea that this is a sort of tax dodgers' paradise. People who go there for their summer holidays—and what a lovely holiday it is!—see the islands under the best conditions. I suggest that some of those people go there and try to earn their living on the Island of St. Agnes in the middle of the winter gales. They would find a very different situation.
I should like to ask who advised this move. Whoever it was he reminds us of the man from Whitehall who, after the passing of the 1947 Town and Country Planning Act, wrote with eager enthusiasm to ask the Isles of Scilly Council what their plans were for the development of the Bishop Rock; or the man in the War Office who wrote to my predecessor about a soldier and said that they could not do anything about him because he had gone overseas, when, in fact, the soldier had gone back to his home in the Isles of Scilly.
This matter cannot have been "overlooked." I know that this has been the source of discussion and thought in the past. As the islanders said to me last weekend, Sir Stafford Cripps used to take his holidays there and perhaps he saw something of the difficulties and did not enforce the tax. What we particularly
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resent on this occasion is that, whereas before, when those discussions took place, the people concerned were consulted, this time—after all, no Budget secret is involved—neither the Duchy of Cornwall, the local county council, nor, of course, myself, were consulted in any way until this bombshell exploded.
I want hon. Members to realise that in the islands at the moment there is a tax on living, as these figures will show. The accepted cost of building a local authority house is 40 to 45 per cent. higher than on the mainland. A loaf of bread on St. Mary's Island costs 7½d., and on the off islands the same loaf costs 11½d. A bag of groceries costing £1 on the mainland would cost 25s. on the islands. The delivery cost of one ton of coal in St. Marys, including steamer freight and charges, is, I believe, 43s. a ton, and in the off-islands costs 63s. per ton more than on the mainland.
I hope that hon. Members will not forget, too, that the man on the off-islands has no coal merchant to dump it in his cellar; he has to carry it by hand from the pier. The rent of a three-bedroomed house on the islands is 35s., whereas in Penzance the rent is 29s. 11d., inclusive of cooker and boiler. If a man is ordered to go to the mainland for any kind of specialist treatment, although he is a National Health patient he has to pay his expenses.
What will the future effects of this tax be? We cannot tell yet, but two things have happened already. On the morning after the Budget a teacher who was going to one of the islands to teach sent a telegram to say that she was not coming. A farmworker told a farmer friend of mine two days ago that if this meant he was going to be laid off in October could the farmer give him plenty of warning as he would pack up and go to the mainland. What effect will this have on our educational projects? The standard of education in the islands has been very good. Due to the Education Acts high expenditure has been forced on the islands' council. If they cannot bear the cost now I am sure that the county of Cornwall will not want to take it on.
The Isles of Scilly have been compared with the Western Isles, but apart from the fact that I believe I am right in saying that the population of the Western Isles has been decreasing, whereas that of the

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Isles of Scilly has been increasing, there is this difference. The Isles of Scilly have their own county council. How will they be affected? I am sure that hon. Members of the Committee will feel for me when I tell them that I faced a meeting on Friday night where expressions of opinion were certainly very forcibly made but, on the whole, were extremely helpful.
I examined the situation with the council and asked them to let me have the real facts and, if anything, to understate the case because we know that the Treasury are apt to bowl one out if one's facts are not right. As a result of this meeting they immediately elected a deputation to wait upon the Chancellor and they hoped that he would see them before the Finance Bill, so that they can explain the position to him.
If my right hon. Friend will consider the facts of this case with an open mind it would be possible for him to decide how this matter could be tackled in the best interests of the islanders, remembering, as I have said, that they are not tax dodgers but hard working people whose whole economy has been upset by one sentence in the Budget speech. They are deserving of special consideration, and inquiry will, I think, back up these protests and, if it does, at least I shall not have spoken in vain.
6.22 p.m.
Mr. Frederick Willey: I am sure that the Committee appreciates the difficulty of the hon. Member for St. Ives (Mr. G. R. Howard), and I am sure that the Chancellor will sympathetically consider all that he has said.
When. in November, I intervened in the economic debate, I said that the Chancellor of the Exchequer ought to have gone to the Bar where, I thought, he would have made a profitable living as a professional advocate. Now I agree with the hon. Member for Reading, South (Mr. Mikardo). The Chancellor is a man of many parts. He could have made an equally profitable living on the racecourse. Think of all the tips which he gave 12 months ago; many of those have been wildly inaccurate, and, indeed, some of the horses have not even stayed the course.
But last week, bold as brass, without a word of explanation or regret, he was at it again. With all the freshness of
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novelty, he described his Budget as an incentive Budget. Has he forgotten that that was exactly the description he gave on the previous year's Budget? Last year he said:
"It is by increased production and a new spirit of satisfaction in rewards well-earned that we shall pull through."—[OFFICIAL REPORT, 11th March, 1952; Vol. 497, c. 1302.]
That was the relevance of the Budget to the then economic situation.
The present Economic Secretary, then on the back benches, in one of his pleasantly delivered speeches perhaps more confident than he was last week— he has still a lot to learn from his Minister, but he will regain that confidence—said:
"If consumption remains steady"—
and the Chancellor's case is that consumption has remained steady—
"some are worse off and some better off."
The United Nations Economic bulletin for Europe confirmed this. It shows that half the people were worse off and one-sixth were not only better off—but substantially better off.
The Economic Secretary then argued that this might be not a very desirable consequence socially of the Budget, but that this was inevitable. He said:
"That is inevitable if we are to try to increase production, and it is upon increased production that the well-being of our nation depends."—[OFFICIAL REPORT, 17th March, 1952; Vol. 497, c. 1987.]
If that argument was valid then it is valid now, and the purpose of last year's Budget failed because it now cannot be denied that production fell by about 3 per cent.
So the Chancellor of the Exchequer and the Economic Secretary by their own arguments have proved that the efforts which the Chancellor made last year have failed. To meet this new situation the Chancellor, with all the aplomb of an indifferent conjurer, comes to us with the freshness of novelty, to say, "I am producing an incentive Budget."
In fact, it is not an incentive Budget. It is a Budget along exactly the same lines as last year's Budget. The President of the Board of Trade does not like the Budget being described as a device to redistribute income. That is the obvious purpose of this Budget, of last year's Budget and of any Budget. This is a

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political Budget. The Chancellor of the Exchequer, after all, is the pale pink hope of the Tory Party. When Mr. Flanagan and Mr. Allen were singing "Umbrella Man," the Chancellor of the Exchequer was one of the most plausible defenders of Munich and appeasement.
What the right hon. Gentleman did then was to confuse sectional interests with the national interest and, as I said in November what the Chancellor has done now has been to choose
"the present crisis to begin, and it is only a beginning, what he would term the redress of the redistribution of income achieved by the past Government. He is putting before national recovery the reversal of the policy of the late Government of fair shares for all."—[OFFICIAL REPORT, 11th November. 1952; Vol. 507, c. 822.]
Nowhere is this more plainly clear than with regard to the food policy of the present Government.
Let me say at once, that I disagree with my right hon. Friend. I welcome the agreement with Cuba to provide us with more sugar. After all, we imported a quarter of a million tons less sugar this year than in the previous year. I think that it is a very good thing to have bought sugar well below the world market price by the machinery of bulk purchase. We on this side support bulk purchase in appropriate circumstances. Personally, I am particularly delighted because I urged the Government in the summer to take advantage of cheap Cuban sugar and, as I understood it then, the offer was for sterling. I am still at a loss to understand why the offer was not accepted, but at any rate I am grateful to the Government for following the example of the late Government.
We bought 1½ million tons of sugar over three years and the present Government have bought one million tons over two years and I am pleased that the Conservative Party have eaten their words about the "Black Pact" they uttered at the time we signed the agreement with Cuba. This, I feel, is a ray of Socialist sunshine in a very bleak economic picture. All the official figures show that we have eaten less in 1952 than in 1951, in spite of the fact that we have been running down stocks. The cupboards which, a year ago, were bare, now, we are told, were indecently over-stocked.
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In spite of that the fact remains that we have eaten less. I do not want to exaggerate. I am not suggesting for a moment that we are starving or that anyone is suffering malnutrition except the particularly hard hit groups—the lower income groups with large families and possibly the old-age pensioners.
I do not want to exaggerate, but the fact remains that last year we ate less food than we have eaten for four years. We were eating less food than pre-war and less food than in 1944. The relevance of this is that it is in these circumstances that the Government have chosen to pursue this new policy about food. Price controls have not gone in the face of increasing supplies, but in the face of restricted supplies and supplies restricted by deliberate Government policy.
Take milk as an illustration. I have quoted it in aid before. Milk and bread were the key points of our nutritional policy during the war. By the price increases imposed by the Government the consumption of fresh milk has drastically fallen in the past 18 months. The last official figure is 4 per cent. down on that of 12 months ago which, in turn, was seriously down on the 1951 figure. This is at a time in which the production of milk, which is one of the few foodstuffs we produce wholly at home, has increased. That is why the Minister of Food has abandoned his controls on milk for manufacture. We may soon be in the position in which the Milk Marketing Board was before the war and the farmers will have difficulty in disposing of the milk even to manufacturers.
However, I am dealing with the general policy of the Government towards food, and that is only an illustration. Last year, we paid £347 million more for less food. As the Economic Survey admits, this was substantially due to the food subsidy policy of the Government. Over the past 12 months subsidised foods alone cost £177 million more than they did the previous year, and many of the increases, such as that on flour, had the effect of causing a host of consequential price increases.
What the Government did not do was to transfer this saving to the social services. The Tories said, "Instead of helping everyone, we will help those in

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greatest need." It sounded well, but it was untrue. Out of the saving, the social beneficiaries—the old-age pensioners, the war pensioners, those on National Assistance and those receiving increased family allowances—altogether received £49 million or, if we allow for the increased public pensions, £53 million. The major part of the saving—£80 million if we allow for the increase in procurement costs and social services—went in relief of Income Tax. We took from all absolutely equally and shared it out differentially to people according to their wealth.
Mr. Angus Maude: I am sure that the hon. Gentleman does not wish to mislead the Committee, but he is doing it most grossly. No one on this side ever suggested that if the food subsidies were cut last year the whole saving would go to one class of the community. We said that we would fully compensate people who lost in accordance with their loss. In the case of the welfare beneficiaries we more than did that.
Mr. Willey: I shall deal with the beneficiaries in a moment. I was dealing with the £80 million which was taken equally from everybody and distributed differentially. That is why I made it the net figure of £80 million after taking out the increased moneys paid in social benefits and allowing for the increased procurement costs.
The result is that the food subsidies last year cost £330 million, although the Parliamentary Secretary said that the Government did not quite succeed in reaching the £250 million level at the end of the financial year. The Chancellor is now continuing and even accelerating that process. What he said in his Budget speech was "a pretty fast one"; it was a "bumper" and, under the new ruling, I ought to warn him. He said:
"The provision for food subsidies in 1953–54 is, in round figures, £220 million, which compares with the rate of £250 million which I set in last year's Budget as the objective to be aimed at in a full year."—[OFFICIAL REPORT, 14th April, 1953; Vol. 514, c. 43.]
However, only recently the Parliamentary Secretary to the Ministry of Food said:
"… I am not going to pretend that it has been brought down to the actual level of £250 million."—[OFFICIAL REPORT, 18th March, 1953; Vol. 513, c. 75.]
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Why, then, did the Chancellor pretend that it did?
My objection to the Chancellor's statement is much more fundamental than that. The figures he gives are not comparable at all. There is no comparison between a level obtaining on a certain date and the expenditure over the year. The comparison is between the £330 million spent on food subsidies last year and the estimate of £220 million to be spent on food subsidies this year. In short, there is to be a reduction in the expenditure on food subsidies this year not of £30 million, as some of my hon. Friends and the newspapers imagine, but of £110 million, or, if we allow for sugar, £120 million. What are the social beneficiaries getting back this year? Not £49 million. Against the extra £120 million which has been taken from us all equally, they are getting this year, according to the Chancellor, £24 million.
How does the Chancellor obtain the £120 million that he is saving from the food subsidies? He obtains it by taking absolutely equally from all of us. Because the food subsidy is not subject to tax, the millionaire and the old-age pensioner make precisely the same contributions towards the £120 million. In fact, the man on the lowest wage rate with a large family makes several times the contribution made by the eligible bachelor to whom my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) referred. That is how the Chancellor obtains the £120 million which we can reduce to a net sum of about £100 million.
How does the Chancellor redistribute it? This time the Chancellor has gone much further than he went last time. There is no question of allowances this time. This subsidy saving largely finances the cut in the standard rate of Income Tax. See what happens. All of us—the widow, the old-age pensioner, even the smallest child—make exactly the same contribution. The rich practically scoop the pool, and, moreover, we get all the anomalies about which my right hon. Friend the Member for Battersea, North (Mr. Jay) spoke, such as families without children taking to the disadvantage of families with children, who, in fact, have contributed most. This is straightforward political fraud. The people who made the contributions and do not pay

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tax at all this year get absolutely no benefit in return.
There was another significant thing in the statement the Chancellor made in his Budget speech about food subsidies. Last year he told us the level at which the food subsidies would be at the end of the financial year. That is just the thing he will not tell us this year. What he tells us this year is that £220 million—£110 million less than last year—will be spent on the food subsidies. The Financial Secretary knows well enough that under this formula it is possible to abolish all the food subsidies this year, except possibly the welfare food subsidies and the agricultural food subsidies.
Think of some of the steps that have already been taken. After the Budget statement of last year, and outside that Budget statement, we had £22 million saved on eggs, £30 million on feeding-stuffs, £7 million on flour, and, to come, £10 million on sugar, and anything up to £40 million on bread. The extent to which the Chancellor goes this year in reducing the level of food subsidies will depend entirely on the timing of the price increases.
Some speculators are trying to decide whether or not the Budget points to an autumn General Election. It does not point to an autumn Election but it leaves an autumn Election open. Nothing could have been sillier than for the Chancellor, with that prospect open, to have announced in his Budget statement his price increases for this year. Now the Chancellor can decide as the occasion arises when to impose price increases and, in fact, if he is determined to eliminate food subsidies this year the longer he delays the date from his point of view the better. He will want a suitable pretext for each occasion.
On eggs, we had the black market. On bread, it will be white bread. If it be margarine, it will be branded margarine. The Chancellor knows that the Ministry of Food have been discussing for some time the decontrol of margarine. The difficulty is that the manufacturers have given notice that it will take them six months. The Chancellor would not be so foolish as to announce that he intended to take this step, but we all know that he is considering it. Why are meat traders so excited about a possible in-
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crease in the price of meat? Will the Chancellor say that the price of meat will not be increased this financial year because he did not announce it in his Budget speech? Of course not. What he is going to do is to await the opportunity.
In passing, I mentioned the confusion of the sectional and the national interest. This is what worries me. We have been talking about sugar, oils and fats. We know the steps we have been taking about cereals. In this country we have large strategic stocks. We do not know what they contain, but it does not take much guesswork to suggest that they include foodstuffs which can be easily stored. They may consist of cereals. They may consist of sugar or oils and fats. It is with the strategic stockpiles behind him, which are for another purpose, that the Chancellor is prepared to disregard the broad national interest and to use the pretext of decontrol to take off the food subsidies.
All this has nothing to do with increasing production. If it has any effect, it will decrease production. I am surprised that nothing was said in the Budget speech about food production. What did the President of the National Farmers' Union say after the Budget? This is what Sir James Turner said the other day:
"There is increasing anxiety at the absence of any formulation by the Government of a long-term policy for agriculture as a whole and at the inevitable effect which this is having in prejudicing the prospects of increased food production for which the Government have called."
We shall not get any long-term policy from this Government about anything except the persistent serving of sectional Tory interests. The Chancellor wound up by hoping, as he did before, for increased production from industry and the people of this country. I hope that we shall have increased production from industry, in spite of the Chancellor. I hope that the people will awaken to the Tory purposes of the present Government and, in their awakening, get rid of the Tories once and for all.
6.43 p.m.
Mr. Charles Fletcher-Cooke: The hon. Member for Sunderland, North (Mr. F. Willey) made the remarkable statement that this year's Budget was on exactly the same lines as last year's Budget—or something to that effect. If that is his judgment of the matter, all I

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can say is that he has missed a lot of good openings, because I should have thought it was quite clear to anybody that, whereas the purpose of the Budget last year was to stop inflation at any price, the purpose this year, when we have reached a position which some hon. Members have exaggerated but which is certainly a certain amount of slack water, is to stimulate demand. The two purposes are quite different and the two instruments to deal with those situations are equally different.
It was the "Economist" on Saturday which pointed out what is really a remarkable decision in these matters— that, in spite of the great obfuscation of figures which has been produced, and which I do not altogether understand, this is, in fact, very nearly deficit budgeting; this is a very bold bid of a Chancellor who, as far as I know for the first time in the history of this country, has taken the lesson which we were taught by the late Maynard Keynes to heart and, in a time of slack water, instead of drawing in his horns, has deliberately stimulated demand.
It was very interesting to read what the right hon. Member for Ebbw Vale (Mr. Bevan) said at Paddington over the weekend, when he took a very Gladstonian view of our affairs. He said this Budget is not prudent, when we are not yet out of the wood. That is following Adam Smith and Mr. Gladstone and all the other strict orthodox economists who said that when we were in slack water we must draw in our horns and must not stimulate demand—an old-fashioned view which I should have thought went out of favour with the publication in 1936 of Maynard Keynes' doctrine on employment, interest and money.
This old-fashioned view was expressed not only by the right hon. Member for Ebbw Vale over the week-end but has been expressed by quite a number of right hon. Gentlemen—the view that this is a sunshade Budget and that too rosy a view is feeing taken of the picture.
Mr. Bevan: If I sat here and allowed that to pass without contradicting it, it would be assumed that I agreed with it. In fact, I made no such statement. In certain circumstances I am in favour of deficit financing, but I cannot reconcile the application of Keynesian principles in this case of deficit financing with the retention of a high Bank rate.
Mr. Fletcher-Cooke: The right hon. Gentleman must not assume that the high Bank rate is necessarily to be retained for ever. I quoted from a reliable report of what he said, but if I am wrong I will withdraw. May I ask him this in return? Does he think it dangerous to stimulate demand at this moment?
Mr. Bevan: I will give my answer at once, although I hope later to have an opportunity of answering in a little more detail. What I consider we want is an increase in investment, but that increase in investment must be canalised in the right direction.
Mr. Fletcher-Cooke: I take that to mean that the right hon. Gentleman is not too keen on stimulating demand.
Mr. Bevan: I did not say that. I do not want to interrupt too much, but I hope the hon. Member is clear now: I believe in stimulating demand for the right sort of investment.
Mr. Fletcher-Cooke: The purpose of all these reliefs is twofold—to stimulate not only demand but also investment. I suggest that my right hon. Friend has struck a very good balance in that matter, because in the Purchase Tax reliefs he is undoubtedly stimulating demand. Speaking as an eligible bachelor who has to do his own shopping—a very undesirable state of affairs—I may say that over the weekend, in chemists' shops and places like that, I found a lot of people buying things in excess of their usual demand and at a much cheaper price, as one chemist told me. Even Purchase Tax concessions on small things like that are already beginning to have their effect.
Mr. Fernyhough: What about textiles?
Mr. Fletcher-Cooke: I come from a textile area and we are very sorry that nothing has been done this year for textiles, although something was done last year. Since that point has been raised, I am bound to remind the Committee that the hon. Member for Stalybridge and Hyde (Mr. Blackburn) made these remarks in the debate on Thursday:
"This year we are expecting that the improvement which has taken place in the textile industry will continue. …"—[OFFICIAL REPORT, 16th April, 1953; Vol. 514, c. 489.]
In those circumstances, when a Chancellor is being hard pressed for concessions, I can see that it is difficult for him to give

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concessions to textiles this year when he made some to textiles last year, when other indsutries are beginning to feel the slack water and when the textile industry is for the moment improving, at least on the evidence of the hon. Member for Stalybridge and Hyde.
In my submission, most of the speeches which we have heard from hon. Members opposite have been attacking the wrong Budget. They have been attacking the Budget which the Chancellor might have introduced and which he was under considerable pressure to introduce, but which he did not introduce—a Budget which would have cut Government expenditure a good deal more, which would have cut food subsidies a good deal more, which would have given greater remissions on Income Tax. It struck me that the disappointment of hon. Members opposite was in a way due to the fact that the Chancellor did not take that action and that all their speeches had been written before the Budget.
Let me take an example from the speech of the hon. Member for Northfield (Mr. Chapman), who said,
"Awaiting this Budget there are a number of wage claims which will now be pressed with the vigour which they deserve."—[OFFICIAL REPORT, 16th April, 1953; Vol. 514, c. 449.]
That would be a perfectly fair comment on a Budget which put up the cost of living by cutting food subsidies considerably and by cutting other things which benefit the workers, but it is a ridiculous encouragement after a Budget which lowers the cost of living—an encouragement which, unfortunately, has already been accepted.
Mr. C. R. Hobson: Does not the hon. Gentleman think that, on his own hypothesis, the abolition of E.P.L. and the failure to alter the Profits Tax, with the consequence of increased profits being made, is an incentive to the trade unions to go forward with wages claims?
Mr. Fletcher-Cooke: I understood that the reason for increased wages in the immediate past has been that more money was needed in the wage packet to pay for the cost of living. If, however, the cost of living is to be reduced, as clearly it will be by this Budget, it is wrong for the hon. Member for Northfield and others to encourage people to think that
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the reason still obtains. And nobody has denied that the cost of living will be reduced by this Budget.
I think the attack has largely been directed to the reduction of Purchase Tax on luxury articles such as jewellery, furs, pianos, and so on. The moral indignation expressed about these inanimate chattels has been so great that one almost feels that they themselves are largely to blame. I much prefer the attitude taken up by the president of the 80,000 amalgamated weavers in my area of Lancashire who has been pressing for a reduction in the tax payable on the highest quality of textiles. I think that is the right attitude to take.
It may be unfortunate, but the world is wicked and those are the things we can best sell abroad. These luxury goods, which are sometimes called luxury goods when one wants to attack them and quality goods when one wants to defend them, are the things for which there is a ready market abroad. It might be nicer if we could re-design the world ourselves and sell ordinary grey cloth or utility or under-the-D-line things abroad. Unfortunately that is not what the foreign trader looks to England for; he looks to England for quality goods of a high price. He is prepared to pay for those and not for the kind of articles which perhaps attract greater moral worth.
We have had a recent example of that over the question of some embroidery and decoration for the Coronation. These high-quality crafts have died to a certain extent, and in order to get the cloth embroidered properly, we have had to go abroad for work which was formerly the pride of this country. The same thing is happening with other crafts and will continue to happen unless the load of Purchase Tax can be taken off them, in which case we can hope to retain some of our export markets which pay us well for a relatively low effort but, of course, involve high and specialised skill. That is why we are all hoping that the horrible Purchase Tax, which crystallises in a purely fortuitous stream British industry as it is today, will go as quickly as it is apparently withering.
I want to make one serious observation about the White Paper on a point made fairly both by the right hon. Member for Leeds, South (Mr. Gaitskell) and the right hon. Member for Dundee, West

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(Mr. Strachey). In Table 30 on page 41 of the White Paper relating to the distribution of manpower we see in bold relief the fact that during this period of relatively slack water manpower has not moved as we hoped it would. Do not let us deny this point to the Opposition, because it is their best point in the entire debate, and it is a serious one. It is worrying that the engineering industries do not seem to have attracted the labour one might have expected during the last year. My right hon. and gallant Friend the Member for Leicester, South-East (Captain Waterhouse) made the point earlier today that he knew firms in his area whose machinery has been working at only 60 per cent. capacity because of the shortage of labour. If that happened last year, when there were relatively more people on the labour market than for some time, it is a serious matter.
I hope we shall all do a little more thinking on the subject, because my hon. Friend the Economic Secretary to the Treasury pointed out some of the difficulties. He said, for instance, that in order to get employment one cannot move from the South Coast up to the Midlands and change one's sex. We know all that, but what we want to know is what the Government, and particularly the Minister of Labour, will do to try to stop the freezing that is going on with regard to the mobility of labour. All pulls and tugs in the modern State are against mobility. The employers are against it— they like to keep as many people in their industry as possible even if it is contracting. The trade unions are the same. The local authorities are the same—they reserve houses for people who have been in their area over long periods. All these great, responsible authorities tend, no doubt with the best will in the world, to preserve and freeze the labour structure as it is. This must not be allowed to happen.
Although the right hon. Member for Dundee, West, mentioned this point, I do not think he had any solution to offer. He asked, does it not show that in all modern economies you cannot transfer manpower by financial policy? I do not think it does show that, because I do not think that the reserve has yet been exhausted. I should like to ask the right hon. Gentleman what he meant by that rather sinister question. Does he mean
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that the only way one can transfer manpower in a modern economy is by direction? Since he is not here, I shall have to take another opportunity of asking him that question, because it is perhaps at the root of our economic problem in this economy today, since it is upon the mobility and flexibility of labour, upon our opportunities of taking advantage of the various winds of demand that blow upon this country, that our survival may well depend.
Mr. William Shepherd: My hon. Friend has said with some concern that the engineering trade does not show a substantial increase in its labour force. Is he not aware that, although there has been no total change, there has been a substantial change from the light engineering products to the heavier side of the engineering industry, which was very desirable?
Mr. Fletcher-Cooke: I am glad to hear it and I am obliged to my hon. Friend. However I would have preferred to see, as would most hon. Members, a global increase in the labour employed in all the branches of the engineering industry over the last year. However, I do not want to detain the Committee long because many hon. Members want to speak and we are drawing to the close of this debate.
I ask myself and the Committee, through you, Mr. Hopkin Morris, will this deficit Budget, this bold bid, succeed? For that is what this is, stripped of all the figures. The predictions of gloom that we have had from the other side perhaps give the impression that nothing can succeed. The right hon. Member for Dundee, West, said:
"… sooner, rather than later, we are bound to run into heavier economic weather."—[OFFICIAL REPORT, Thursday, 16th April. 1953; Vol. 514, c. 437.]
All these predictions of gloom, culminating perhaps in that of the hon. Member for Gloucestershire, South (Mr. Crosland) who said that sooner or later we are bound to have a tax on coal, imply that we are somehow puppets, and that nothing we can do will make the slightest difference. Prediction of the future is to my mind the hall-mark of the charlatan. If anyone pretends that he knows what is going to happen, which the economists, perhaps because they are a young profession as professions go, are apt to do

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in order to make their position more important than it is, his forecasts are always falsified.
In the present circumstances, no other Budget would be as likely to succeed as this one. The economy is being given a great and valuable injection and there are incentives and motives for harder work, increased energy and greater skill. That is as much as we could hope for.
Mr. Frederick Peart: Would the hon. Member apply that also to the agricultural industry, which labour is leaving and which this year has 23,000 fewer workers? What is the incentive for workers to go back into agriculture?
Mr. Fletcher-Cooke: I was saying that as far as the distribution of labour is concerned, I am not at all satisfied with the present state of affairs, but that the other criticisms of the Budget are groundless. As far as the attraction of labour to the countryside is concerned, I am waiting to hear the answer and am hoping that the hon. Member for Workington (Mr. Peart) may catch the eye of the Chair so that he may let us know his answer. Perhaps when my right hon. Friend winds up the debate he may be able to give some assistance in that direction. Apart from that, this is as good a Budget to meet the present needs as could be found.
In the course of these debates, various names have been suggested for the Budget. We have had, "The Cricket Budget," "The Bankers' Budget," "The Bachelor's Budget" and "The Sunshade Budget." I have another suggestion to offer. I suggest that it should be called "The Butler Budget," because although we hope and believe that my right hon. Friend will hold his office for many years, it is too much to ask that he will ever again be able to achieve the right thing, at the right time and in the right way, to the same extent.
7.3 p.m.
Mr. E. Fernyhough: The hon. Member for Darwen (Mr. Fletcher-Cooke), like all Members on the other side of the Committee, has joined in the universal praise which has been forthcoming for the Chancellor on the Budget. I wonder, however, how sincere are their tributes. There did not appear
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to be any real enthusiasm on the benches opposite on Budget day, and looking back to the Tory Party Conference of last year, when against the wishes of the Chancellor a resolution was carried demanding a 2s. reduction in Income Tax, one can only think that Members of the party opposite must be very disappointed and that their praise of the Chancellor is hardly as genuine as he would like it to be.
The Chancellor said that his Budget last year was an incentive Budget, a Budget to create more enthusiasm, to give us more production, and in every way to assist in getting the country back on its feet. He planned for increased production, increased exports, increased revenue and less expenditure. On each of those four counts, upon which his Budget was based, the right hon. Gentleman was wrong. He had less production, fewer exports, less revenue and more expenditure.
Sir Edward Boyle: Let us be quite fair. My right hon. Friend in winding up the Budget debate last year ended his speech by saying that our prime duty was to save the £. In that respect, at any rate, he certainly proved extremely successful.
Mr. Fernyhough: Time will tell how positive have been the right hon. Gentleman's plans for saving the £.
What is so annoying about the predictions of the Chancellor is that the Prime Minister was equally wrong. He went to America last year and enjoyed the very great privilege of addressing Congress. This is what he told them:
"Our production is half as great again as it was before the war. Our exports are up by two-thirds. Recovery, while being retarded has been continuous, and we are determined that it shall go on."
The truth, of course, is that our recovery has not gone on. The ever upward trend in exports and in production stopped immediately we got a Conservative Government in power.
It is not difficult to understand why that upward trend stopped. The Chancellor appealed for increased effort and increased production, but what does the Prime Minister do with two of our basic industries? He denationalises steel and road transport. Does the Chancellor think that that kind of policy will evoke

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the response from the workers that is needed if we are to get production to the heights that we require? Of course not.
Not satisfied with denationalising steel and road transport, many hon. Members on the other side are now demanding that an attack should be made upon the miners. They want an inquiry into the Coal Board.
Mr. Fletcher-Cooke: Some of the miners want to do that themselves.
Mr. Fernyhough: But for different reasons. I do not want to weary the House with all the quotations of what hon. Members opposite have said about miners being pampered, appeased, and so on. There are many hon. Members opposite who want district agreements, the splitting up of the industry, and a general attack upon the miners' standards. Of course, they do not say so in so many words, because that would be too dangerous, but many of them are playing a clever game. The party opposite have written off the mining constituencies almost for ever. They know that not for another century at least will it be possible for a Tory to go into a mining constituency and to win the seat for Toryism.
What, therefore, is the attitude of Tory Members? They start to agitate in all the non-mining constituencies with a view creating against the miners as much prejudice as they can. They hope that this will pay good dividends—good Tory dividends—but it would be disastrous industrially for the nation if their purpose were to succeed. It is conduct to which they ought not to be a party.
The Chancellor has decided to reduce Income Tax by 6d. all round. Does he really believe that it is equitable to put an extra 2d. on the cost of school meals and to reduce Surtax by 6d. in the £? The Surtax payer will get the relief at the same time as the price of school meals has been increased and cuts have been made in education.
The recovery of the country depends entirely upon increased production. It does not matter how the financiers may juggle. Ultimately, the well being of our people depends upon the amount of coal, steel and food, to name only three items that we produce. These are the basic factors. Therefore, it is to the people in productive industry that the Chancellor has need to make his greatest appeal. He can appeal
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to all the financiers in the world, but they cannot assist him. The men who can help are those doing the hard, dirty and, to a large extent, dangerous work of our society.
But what response is there in this Budget for those people compared with the people at the top? What response is there for many people now outside the Income Tax level? The truth is that the Chancellor, as has already been said, introduced a class Budget, leaving those at the lowest end of the scale without any easement of their burden, and giving those right at the top, those with the biggest incomes and whose lives are easiest, the largest measure of favours he has been able to distribute.
I was glad to hear the President of the Board of Trade say what he did today in reference to the Americans refusing to allow the British electrical industry a contract which was rightly ours on the basis of the tender we submitted. I ask the Chancellor whether in view of that, and if the Americans remain adamant, he is prepared to tell us what is going to be done in the interests of this nation.
I believe we should go to the Americans and say, "If this is to be your policy in regard to trade, then we want to contract out of the Battle Act." We cannot permit the Americans to determine what we should export and to whom we should export if at a time when we are desperate for trade they place obstacles such as this in our way. It would be quite reasonable to say, "If you demand that our trade with Eastern Europe, with Russia and with China shall be in any way restricted we are entitled, as a quid pro quo, to be sure that you will not place undue obstacles and heavy burdens in the way of us doing trade with you."
The truth is that we are chasing a will-o'-the-wisp if we believe that it ever will be possible to make big inroads into the American market. If at a time when so much of the American economy is taken up with the rearmament programme they are prepared to keep us out, what is to happen to British motor cars and British engineering products if peace should break out? Will not General Motors lobby in Congress effectively against us to prevent imports going in and will not every American industry take the same line? The Chan-

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cellor, the Government, and the country have to look elsewhere if we are to maintain and build up our exports in order to maintain full employment in this country.
I wish to close on a note in regard to full employment. It is a terrible reflection that in our society at a time when there is a little glimmer on the horizon which we all hope will become a bright light for world peace that that glimmer should cause fear in the hearts of men and women in industry in this country. Many men and women in this country are already very concerned that if peace should break out it may mean mass unemployment once again.
Hon. Members opposite do not believe in planning, except for war; then of course they plan to the last detail. I ask the Chancellor and the Government whether now is not the time to begin to think about planning also for peace? Just as we plan in the event of war down to the last detail, and just as Tories believe in planning and controls for war purposes, I ask the Chancellor and the Government to plan for peace, because of the possibility, which everyone hopes will be realised, of an easing in the international situation and a peaceful settlement in Korea.
I ask the Chancellor and members of the Cabinet to do everything to produce a plan to give hope to people of this country that even under a Tory Government never again will they have mass unemployment. That would show that even the Tories have learned and are prepared to plan in order that men now employed, many doing work for war, will not be unemployed if peace breaks out.
7.16 p.m.
Mr. Angus Maude: I am going to start my speech by making one observation which may surprise hon. Members opposite, but I urge them to restrain expressions of approval until I have explained my reasons for it. It is a matter of considerable difficulty to make a speech saying why this Budget is a good Budget. The reason is that I have found when trying to talk about it outside the House that, with the single exception of hon. and right hon. Members opposite, such measures as the reduction in Purchase Tax and a cut of 6d. in the
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standard rate of Income Tax seem to people in the country so obviously good in themselves that they look at one with amazement if one tries to justify them. They do not consider that there is the slightest need to advocate a Budget of this kind.
When one is asked to speak about it all one can do is to turn to sort out the extraordinary discrepancies in the arguments against it made by hon. Members opposite. They have been placed in the very difficult position of trying to make political capital out of a Budget which is almost unassailable. Where they are mutually inconsistent to a considerable extent the arguments can be ignored. One need not spend too much time, for example, over the hon. Member for Sunderland, North (Mr. F. Willey) who welcomes the sugar agreement, and the right hon. Member for Smethwick (Mr. Gordon Walker), who thinks it a thoroughly bad thing. The right hon. Member for Smethwick thinks we ought to have been piling up our gold reserves to the exclusion of extra purchases of foodstuffs overseas, whereas the right hon. Member for Leeds, South (Mr. Gaitskell) thinks we ought to have been increasing stocks.
The same sort of discrepancies are visible all the way through the speeches of hon. Members opposite. They have attacked this Budget more or less in the following order: First, that the Chancellor of the Exchequer produced the wrong Budget last year; second, that the results of the Budget were quite different from what they ought to have been; third, even though many of them were saying last year that last year's Budget would turn out to be dangerously inflationary—the right hon. Member for Battersea, North (Mr. Jay), I believe, said that it was the most openly inflationary Budget since the war—now they are attacking my right hon. Friend for having carried through a policy of deflation during the year 1952– 53. Having said that last year's Budget was the wrong Budget and the results were not what my right hon. Friend intended, they now say that this Budget was a dangerous, gambling Budget—a rich man's Budget in which all the benefits have been taken from the poor and given to the rich.
The height of folly in this respect was reached by the hon. Member for Sunder-

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land, North whose disquisitions on the food subsidies have to be heard to be believed. He said that what happened to the food subsidies last year was entirely unjust because a certain amount of money was taken from every citizen in the country through the removal of food subsidies and only a small proportion of it was given back to the social service beneficiaries. That is as much as to say that if there had been only five social service beneficiaries in a particular class in the country, when food subsidies were cut for every individual in the country that particular class should have had a grossly disproportionate retain made to them in the form of welfare increases. Of course that is ridiculous. What matters is that adequate per capita compensation should be given and that is what we pledged ourselves to do and what in fact my right hon. Friend did.
When I hear the sort of talk that we have heard from the right hon. Gentlemen the Members for Leeds, South and Bishop Auckland (Mr. Dalton) about the need to give extra compensation in respect of old age pensioners, family allowances, etc., I must say that I think that an element of hypocrisy is present. When I listened to the right hon. Member for Bishop Auckland today discoursing on the hardships of old age pensioners my gorge nearly rose. Does the right hon. Member for Leeds, South really believe that the old age pensioner is worse off now, at the present cost of living, with 32s. 6d. per week than he was under the Labour Government with 26s. per week? Of course he does not. We all know perfectly well that he is better off.
As my right hon. Friend the Minister of National Insurance said the other day in answer to a Parliamentary Question, the increase in benefits has been, on a percentage basis, about twice as great as the increase in food costs, and has been slightly greater than the total increase in the cost of living. One would not think that to listen to the speeches of hon. and right hon. Gentlemen opposite. What they have tried to indicate is that nobody should get anything unless everybody gets something. I shall have a little more to say about that philosophical doctrine a little later. That has really been the idea behind almost every speech made from the benches opposite.
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I wish to deal, first, very briefly—I do not wish to detain the Committee for long —with one or two of the other observations of hon. and right hon. Gentlemen opposite. In his speech today the right hon. Member for Bishop Auckland made some remarks on Purchase Tax which call for some comment. He appeared to indicate that he was quite ignorant of the real reason for the reduction of Purchase Tax on luxury goods. He said that he could not understand what had been done about umbrellas and a few other things of that kind. Then he appeared faintly to recognise that there might be an argument that it was an encouragement towards making prices in export markets competitive if an increase in the home market were permitted through a reduction in Purchase Tax. He said that he did not believe that was true and that it was not necessary to encourage home demand in order to encourage the lowering of export prices.
That was precisely why the late Sir Stafford Cripps reduced the Purchase Tax on high quality motor cars in 1950; that is the answer to the right hon. Gentleman. So far as I know there were no objections at that time from right hon. Gentlemen opposite. What was right in the case of high quality motor cars then is surely equally right in the case of high quality goods now, in fact more so, because we have had several years of restricted demand at home and we are meeting greater difficulties and a more competitive situation in our export markets abroad.
I must also say that the hon. Member for one of the Birmingham Divisions who intervened on the question of Purchase Tax on jewellery and silverware seemed to me to be a little ungracious. Birmingham Members have, as we know, quite rightly been canvassing for a reduction of the luxury rates of Purchase Tax in order that their hard-pressed craft industry should get a little encouragement and stimulus. Yet hon. Members opposite now say that a reduction from 100 per cent. to 75 per cent. is derisory and will do no good.
I would ask them to bear in mind what we have heard from the retailers in the jewellery and silverware trade. If this tax had been cut back from 100 per cent. to 25 or even 50 per cent. the loss which retailers would have had to bear over-

723
night on stocks would have been terrific. I should have thought that if it was essential that this tax should be cut to 50 per cent. in order that this industry should be stimulated, it was probably right, since the Treasury believes that it is not possible to insulate retailers against this sort of loss, to take that step in two leaps instead of one.
Sir E. Boyle: As I initiated a debate on this subject a short time ago, I might say that I have had a number of letters from manufacturers of jewellery in Birmingham who say that this reduction will certainly be of assistance to them.
Mr. Maude: I am much obliged to my hon. Friend. It seems to me incredible that a reduction of 25 per cent. in tax should not be helpful. To suggest the contrary is merely another indication of the slightly ungracious attitude towards any sort of improvement in fiscal burdens which is generally met with from hon. Members opposite.
The right hon. Member for Bishop Auckland then proceeded to discuss old age pensioners and to say how he would have distributed the available surplus had he been budgeting now. He asked, for example, why family allowances should not have been given in respect of the first child. The reasons against that are very obvious and well known and have frequently been canvassed. He then went on to recommend a proposition which I can fairly claim to have invented, that is, that family allowances should be given in respect of the first child when there are already three children in the family. That of course means the doubling of the family allowance on the third child.
That is a proposition in respect of which I am glad to have the support even of the right hon. Member for Bishop Auckland—which I do not think will do it much good. Even with that handicap, however, I would still recommend it to the Chancellor when be comes to consider the question of family allowances. Incidentally, in view of all this talk and interest in family allowances, we are entitled to ask who raised the family allowances for the first time since 1945. The answer is that it was raised last year by my right hon. Friend, and that the compensation which that gave more than
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outweighed the increase in food costs which accompanied it.
So one can go through all these extraordinarily bald and mutually contradictory arguments which we have heard from hon. and right hon. Gentlemen opposite. There was the argument about stocks which we heard from the right hon. Member for Leeds, South, which if it was not meant to be deliberately misleading came at least pretty near to being so. He has been going about the country and writing in the newspapers for some time trying to insinuate that stocks of imported raw materials in this country are lower whereas, in fact, they are higher.
When these arguments are boiled down and examined dispassionately, one cannot escape the feeling that there is really one major question of principle which divides us on this side of the Committee from hon. Members opposite. It is that, having achieved a record level of taxation during their period of office, which was violently, and in our view dangerously, redistributed, they are prepared to fight almost to the death rather than see even the smallest burden taken off the shoulders of the higher and middle income groups in this country.
Nobody can pretend that this Budget puts any burdens on the poorer sections of the community. It does not; if anything it will reduce the cost of living. There are no new taxes; there is only the reduction in Purchase Tax. But when one listens to remarks such as that made by the right hon. Member for Smethwick today, when he said, "If you destroy people's sense of social justice you weaken their will to work and so lower their productivity," then one comes up against the basic principle which divides us. "It does not matter what I have not, so long as the other chap does not have it either. It does not matter whether you give me the extra incentive to work so long as you do not give the other chap anything which I have not got."
Is it really conceivable that the workpeople in British industry are actuated in their will to work by no higher motives than that of jealousy of their fellows? I do not believe it. I never have believed it, and I do not think that right hon. and hon. Gentlemen opposite will have much success if they try to spread this feeling throughout British industry. That

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is what they are trying to do. If not, the remark of the right hon. Gentleman has no meaning whatever. It is just a meaningless form of words which may sound well in public but cannot bear any other interpretation in fact.
I believe that this Budget marks a turning point in the economic history of this country. Last year my right hon. Friend the Chancellor was faced with great difficulties. The decisions he made then were courageous and in fact the out-turning has been pretty good. Memories are getting short, I think, when my right hon. Friend is taunted by the right hon. Gentlemen the Members for Bishop Auckland and Leeds, South with sloppy, slipshod, inaccurate estimating and with having all his forecasts falsified.
One of those right hon. Gentlemen was responsible for the most dangerous runaway inflation this country has ever seen. He went into convertibility in a debacle such as we have not seen certainly since the war. He saw his 1951 Budget falsified in every particular within six months and found himself, before the ink on his Estimates were dry, in the middle of another inflation and a balance of payments crisis which proved one of the most serious since the war. My right hon. Friend cleared up the debris which he found. He has halted, at least for the moment, the deplorable decline in our balance of payments position; and saved the £ sterling.
We have lived far too long under the control of a band of people who believed that monetary weapons would inevitably fail in their effect and who believe that controls, restrictions and exhortations would inevitably succeed. We have found that the tax, the fiscal weapon, is on the whole a bad weapon for producing the results we wish to achieve in the way of restrictions. We have found the monetary weapon is a much better one. If there is any surprise to be expressed, it is that my right hon. Friend found himself able this year to go as far as he did with his tax concessions. I did not believe a year ago that he would find it possible to go so far this year, and I think he will be proved right.
Were I to make any criticisms there would be just two. I hope that by next year my right hon. Friend will find it possible to make some reduction in the
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rate of duty on petrol and oil. I believe this to be a serious burden, both on industry and on the travelling public. I realise fully that he could not have done that this year and also reduce the standard rate of Income Tax.
My second criticism would be that the professional practitioners of this country are on the whole getting less out of this Budget than are businessmen. I am not at all sure that some form of tax reform is not necessary. We hope they may benefit as a result of the reports soon to be presented to the Chancellor. There is no doubt that the position of private professional partnerships is very serious, and some tax reliefs ought to be given.
Having listened to the greater part of this debate, I have heard no satisfactory argument advanced against the Budget, but merely hon. Gentlemen opposite whistling, or rather hissing, through their teeth to keep up their courage. I think the reaction of the country to their efforts will be very marked.
7.36 p.m.
Mr. C. R. Hobson: However welcome may be the reductions in the Income Tax and Purchase Tax, the fact remains that this Budget benefits the City rather than working people. The contemplated abolition of the Excess Profits Levy is not accompanied by any alteration in Profits Tax. Whatever may be said by the hon. Member for Darwen (Mr. Fletcher-Cooke), one consideration of workers looking for a wage increase is the amount of profit made by the firm. We may rightly say that there will be wage claims in those sections of industry where profits are high. What did hon. Gentlemen opposite say during the election campaign? They said they were in favour of an Excess Profits Tax. That was part of their electioneering propaganda, but they are taking no steps to implement it. It was just another of their pious promises.
We must regard this Budget in the light of the financial policy pursued during the past year. There have been considerable increases in the interest rate, with the result that an incubus has been placed not only on the private and public sectors of industry, but also upon local authorities in their borrowing. The actual increase in interest payments this year amount to £62 million, which is a considerable amount of money. Our

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invisible earnings have been lessened by the increased interest payment on sterling balances, and I wish to say a word about invisible exports.
The problem facing this country, whatever party may be in power, is that of survival as a great trading nation. Never since 1903 have exports paid for imports. From 1931 to 1939 there was an aggregate deficit of £129 million in the balance of payments, allowing for invisible exports, which was made good by the sale of gold and securities. The fact is, therefore, that even had there been no war our standard of living would have been reduced had there not been increased production. It seems, therefore, that our exports can never pay for imports without the help of invisible exports and that these invisable exports are something which we have to consider seriously. Last year's picture is rather sorrowful. They were down £85 million.
I wish to deal with shipping, and this is the main subject of my remarks. Shipping is our biggest invisible earner. In 1952 our earnings were £453 million, which is £6 million less than 1951. In 1914, we owned 50 per cent. of the worlds' tonnage. In 1939, we owned 25.9 per cent. and in 1952, 20.6 per cent. Those are the tonnage figures. The figures showing the number of vessels make it clear that the position is considerably worse, because we have some of the biggest vessels in the world. In terms of the percentage of vessels, we own about 18.6 per cent. This is with Japan and Germany just beginning to compete. We have 26 per cent. of the world's tonnage.
The position in the shipyards is satisfactory. The shipyards are working to full capacity, with the limitation on steel plate referred to by the Economic Secretary. We are constructing 35.1 per cent. of the world's tonnage, but 42 per cent. of that is for foreign owners. We are building fast modern cargo ships for our potential competitors. I do not see any reason why the shipping companies engaged in foreign trade should not have a 40 per cent. initial allowance to put them in the same category as companies conducting mining works. I am not asking for a subsidy, but in view of the importance of their activities I suggest that we could reasonably make the initial
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allowance 40 per cent. instead of the present 20 per cent.
There is no need to argue the strategic importance of an up-to-date merchant marine. It is obvious that such a fleet is a strategic necessity. We need a modernised merchant marine to ensure speed and quick turn-round. This is a highly competitive industry. I am confident that if the Chancellor of the Exchequer will consider this matter and be a little generous, the shipping companies will weather the storm. If there is one thing the British people can do it is to build ships and sail them, and may they ever do so. Shipping should be placed in a special category.
I also wish to refer to local government manpower. There has been a lot of foolish talk about the size of the Civil Service. It is often forgotten that over half of the Civil Service are employed in the Post Office, and I have never heard hon. Gentlemen opposite suggest that there should be a reduction in the number of postmen, counter clerks or telephone engineers. They usually plead for the reverse. Obviously, there have been economies in the Civil Service because of retrenchment in the Ministry of Food and the Ministry of Pensions. But there is never anything said from the other side of the Committee—and I have listened to the whole of the debate—about the size of local government.
I ask hon. Gentlemen to consider the figures. There are 1,448,291 people employed in local government. If we take away from that figure those employed in industrial capacities and those engaged in transport, who number 195,049, there remain 1,253,242. In 1937, excluding industrial employees, there were 846,000 employed in local government and in 1947 there were 1,028,000 employed. I say quite frankly that the country cannot afford a local government service of those dimensions. It is about time that on this question there was criticism from the Treasury bench and action.
During the terms of office of the Socialist Government, my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) showed that he was fully alive to the empire building which was taking place there. He went so far as to send out a special circular to local authorities drawing their attention sharply to this

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spawning that was taking place in local government. I put forward what I hope will be a useful suggestion. Where there is proven efficiency and economy in local government, that ought to be regarded as a weighting factor when block grants are considered. That is one way in which the central Government could consider the problem.
We certainly cannot afford a continuous growth in the number employed in municipal services. We must bear in mind that local government clerical officers work two hours a week less than civil servants. As we are placed today, with the country fighting for its life, it is the duty of the Government at least to draw sharply to the attention of local authorities the need for economy in manpower. That was done by my right hon. Friend the Member for Ebbw Vale. It is about time that the right hon. Gentleman the Minister of Housing and Local Government and the Minister of Health did likewise.
Dr. Barnett Stross: Does not my hon. Friend also agree that it would be useful if there were more freedom given to local authorities. For example, this is the point I want to put to him. Many people employed in local authority work are concerned with the preparation of plans which they have to submit to Whitehall. If there were much more freedom at the periphery, then we should get a saving in both directions. If we had the kind of freedom which I am sure my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) had also considered, there would be a saving in both directions and—
The Deputy-Chairman (Mr. Hopkin Morris): Order. Interventions should not develop into speeches.
Mr. Hobson: Those proposals are certainly worth consideration. All I am concerned about is to draw the attention of the Committee to the fact that, while we have a lot of talk about the size of the Civil Service, we hear few complaints about the size of the local government service.
I wish to mention a minor question which the Economic Secretary may like to draw to the attention of the Chancellor. Last year the Chancellor put a ban on all new building in the Post Office. The position in the Post Office is that one in every five telephone exchanges
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is full up. That means that many complete new buildings are required. This is not a question of the shortage of cables or equipment. The fact is that if we had the cables and the equipment we should not have the buildings in which to house the equipment. But we have 500,000 people waiting for telephones. I hope that the Chancellor, who had a lot to say on this matter last year, will reconsider his decision about building new exchanges.
I also wish to mention a matter which was referred to this afternoon by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), who spoke of the fact that the Government had removed development charges and put nothing in their place. I agree with my right hon. Friend. In place of development charges there should be taxation on site values. The value of these sites is created by public effort and enterprise and not by the individual. What happens today is that every improvement in the social order, every improvement in production, puts up the price of land. That creates an obstacle. We are deliberately creating a barrier to our own progress. Forcing up rents puts money in the pockets of the landlords who in many cases neither toil nor spin.
We should compel owners to pay a tax on land whether they use it or not. We should make it unprofitable to keep any land idle or to use land improperly. There is no reason why the taxation from site values should not be allocated in part to the local authority and in part to the national authority. It might interest the Economic Secretary to know that in Sydney and Johannesburg 90 per cent. of the rates are levied in this way. In view of the complaints about high rates common throughout the country, this is certainly a proposal worthy of examination. Why should not we recover by taxation for the benefit of the community land values which the people themselves have created?
I hope that this proposal, which has been made many times, will be considered by the Government. I have endeavoured to put several points before the Chancellor. I suggest that all are worthy of consideration. To sum up, I want a 40 per cent. initial allowance for shipping; I want something to be done about the empire building in local

731
government; I want more money for telephone exchanges, and a tax on site values.
7.50 p.m.
Mr. Douglas Marshall: I wish I had more time in which to go into detail on some of the matters about which the hon. Member for Keighley (Mr. Hobson) has spoken, but I could not let the opportunity pass without referring to one point he made concerning the shipping industry. I sincerely trust that the Chancellor will take due note of this particular point, because, as the hon. Gentleman opposite so rightly said, invisible exports are one of the most important factors in the whole of our economic life. It was with pleasure that I heard the hon. Gentleman say that, if there is one thing which the people of this country can always do, it is to build ships and also navigate them to all parts of the world, and I think that remark would find favour in every part of this Committee. I trust that the Chancellor will pay due attention to the point concerning shipping which the hon. Gentleman has drawn to our attention.
There are several special points that I wish to raise with regard to this Budget but the first thing that I should like to say—and, although it has been said already many times during the debate, I still feel that I must mention it again— is that, listening to the arguments that have been adduced by hon. Gentlemen opposite, I have gained the impression that their attitude is one in which not so much point has been made in regard to this Budget, but very striking comments have been made to suggest that the Budget of last year did not succeed. I find that completely and absolutely astounding.
If hon. Members opposite will reflect on the position of the country last year, and will remember exactly what was our situation in regard to the balance of payments, when we were in deficit to the tune of £398 million, and will recall that we have now corrected that deficit, and, at the same time, hon. Gentlemen opposite still suggest that last year's Budget in fact failed, I think they must have failed to appreciate what the Chancellor said at the conclusion of his speech last year to the effect that the whole design
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of that Budget was to rearrange our balance of payments position and get it straightened out.
In introducing his present Budget, the Chancellor mentioned the question of the importation of sugar, and, although it has nothing to do with the design of the Budget, I wish to make a brief reference to it. I gained the impression that the de-rationing of sugar could not come about, or at least no date could be stated when it might come into effect, because of technical reasons concerning the refining of sugar.
I should like to point out to my hon. Friend the Economic Secretary to the Treasury, who probably knows all about this question of the jam-making season, that there is no necessity to have refined sugar for that purpose. If sugar can be imported unrefined into this country, I cannot understand why it should not be issued in time for the jam-making season so that the general food position of the country can be assisted by this means. I can assure my hon. Friend that the jam made in that way will not suffer any ill effects.
The re-introduction of the initial allowances to industry will not only help agriculture, but will be of benefit to all interested in mining operations and the development of our mineral wealth in this country. In this connection, it would be extremely odd if I did not refer to the china clay industry. It appeared to me that the Chancellor's decision on the reduction of the Purchase Tax not only brought an immediate benefit, but was the beginning of a design to rid ourselves of this abominable way of collecting revenue.
When the Chancellor referred to the removal of Purchase Tax from dry batteries, those hon. Members who, in the last eight years, may remember the discussion on the Motion for the Adjournment which I initiated, as well as the many times on which I crossed swords with both the late Sir Stafford Cripps and the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), will realise with what pleasure I have received the Chancellor's decision to remove the Purchase Tax from dry batteries.
The point I want to emphasise concerns not only the reduction of direct taxation, but the Chancellor's approach

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to the problem in the reduction of 6d. in the standard rate of Income Tax. I feel that this approach indicated by the Chancellor is quite different to that which has been shown over the last few years, and I felt that there was much more importance to be attached to the Chancellor's statement that, in recent years, high taxation has been used as an instrument for warning off inflation, and his comment, "What a blunt instrument it is." That in itself was much more important than the Chancellor's action in reducing the tax by 6d., for here is an indication of a design to promote action, initiative, ingenuity, ability and adventure in this country. As the hon. Member for Keighley so rightly said, it is not just a question of a Budget surplus, but one of survival.
On this question of survival, I want to refer to the question of Empire development and fiscal policy in assisting that development. I have had the honour recently to spend two months in the West Indies with the United Kingdom Parliamentary Delegation, and I have had both the pleasure and the honour of seeing a good deal of the Caribbean. In the last 18 months, I have also seen a good deal of other Colonies, such as Uganda and Kenya, and it is my considered belief that this nation cannot possibly improve or even maintain our standard of life in this country unless we develop those parts of our Empire that lie undeveloped at the present time and which have the capacity for development.
It is my belief that this development cannot come about by great schemes promoted by the Government. I will not go into the whole story and picture to illustrate why I think that must be the case, but I think that that is the wrong instrument. I think that the best instrument must come from schemes originated by private enterprise, and I believe that it is from such private schemes expanded into more elaborate schemes that this development can best be accomplished.
It is true to say that, on the question of risk capital at the present time, the amount of such capital available outside the great institutions is not very great, and I would therefore put a suggestion to the Chancellor for his consideration. It is a suggestion which has come to my knowledge, and to which I have myself given great thought and consideration. I
734
fully realise that it may not be perfect, but I do suggest that it offers a basis on which the Chancellor may work in order to improve it.
My suggestion is simply that the fiscal policy of the Chancellor should be devised in such a way in regard to Empire development that any developing company in any part of the Empire where, in order to promote that development, the Colony concerned has made an allowance of tax, by let us say a tax free holiday, to help the company, the United Kingdom should also help by allowing a percentage allowance—say 20 per cent., or whatever may be thought the right figure —to go into a blocked account not subject to United Kingdom taxation. That blocked account would not be released unless the money were being utilised for the development of the Colony in which the company is located, and in order to stop anybody from attempting to release the money by liquidating the company, I suggest that a balancing charge should operate and that the whole of the money should then be subject to full United Kingdom Income Tax. I hope that my right hon. Friend the Chancellor will examine that suggestion and that it will find favour in his sight.
In conclusion—and this is my chief point—I believe this to be a good Budget and one which will lead to expansion. I also believe that if we do not properly consider the question of expansion within this country and the Empire we shall never, no matter what Government is in power, maintain the standard of life we desire or indeed improve that standard of life which is something which every hon. Member in this House desires and demands.
8.2 p.m.
Mr. Roy Jenkins: I understood the hon. Member for Bodmin (Mr. D. Marshall), in the earlier part of his speech, to say that he could not understand why we on this side did not regard the events of the last year as a great vindication of the Chancellor's Budget for that year. We regard those events in this way. Above all, it has been a year of contrast, a year, on the one hand, of very great improvement in the balance of payments position brought about—as was admitted by the President of the Board of Trade and other speakers—primarily by the fortuitous improve-

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ment in the terms of trade, but, on the other hand, a dismal story here at home.
Judged by almost every other test than the strength of sterling, it has been a year, not of triumph, but of failure. Production, exports, consumption, investment and stocks are down. I hope that even if hon. Members behind me forget them for purposes of their speeches, the Chancellor will not forget these other aspects of the situation, because it is important that he should bear them in mind in considering the difficulties that will face us in the future.
The Chancellor should also bear one other factor in mind, that in 1950 when we adopted a straightforward, honest method of showing our balance of payment results, they were in a still healthier position than in 1952. In 1950 none of the very disturbing features in the situation applied. Production, so far from being down, was up 8 or 9 per cent., exports were up 15 per cent., consumption was rising, as was employment, and it was in all respects a very much healthier situation.
When the Chancellor talks about his Budget being the new point of departure and about our recovery being on a firmer foundation, I just do not know what he means. I do not understand how a fall in production and exports as compared with 1950 can possibly constitute a firmer basis.
Another contrast about the past year is this. It is because the Chancellor, paradoxical though it may seem, failed in many of the objectives which he set himself last year that he has been able to be comparatively generous in his Budget this year. Had he succeeded in raising production and exports—the run-down in stocks was only that budgeted for and not the very much larger amount anticipated and which, in fact, took place—and had he had the economy of a fully buoyant State, then I doubt whether he could have afforded to give away £169 million this year, because his task would then have been to damp down instead of stoking up.
It is an odd thing that from the purely Budgetary point of view a Chancellor is in a more fortunate position when the economy fails. It follows that the Chancellor's ability next year to meet the demands of the right hon. Member for
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Blackburn. West (Mr. Assheton) will depend to a large extent on his being unsuccessful in his other projects this year. If exports and investments do not go up, he may have to take 1s. off Income Tax next year in order to stimulate other things. On the other hand, if he is successful in his objectives, then it will be more difficult to give the concessions demanded by his back benchers.
How likely is the right hon. Gentleman to be successful in achieving these results? He says he wants to use our resources a bit more to the full in the coming year, and proposes to do that if he can by stimulating investment. I do not think there can be any quarrel with that at all. We certainly want to use our resources as fully as possible and the slack should be taken up by investment. But what are the methods by which the right hon. Gentleman hopes to achieve these objectives? How likely are they to succeed? That seems to me a very much more doubtful question.
What was the factor which limited investment during the past year? One thing that is absolutely clear from the Economic Survey is that it was not a shortage of funds by companies in this country. They had £600 million over and above what they used for investment which they used to repay debt. The President of the Board of Trade said this afternoon that, although that may be so, some companies had been short of funds. But one cannot deal in a Budget with a situation in which every company is going to have plenty of funds. It is not a very satisfactory way of going about it to give funds to companies in the hope that those which do not need them will siphon them off to other companies that do. Companies are extremely unlikely to invest their surplus funds in risk and equity capital. That is not a common company practice.
It is quite clear that what limited investment last year was not any shortage of funds in the possession of companies. Never since the war has that been the limiting factor except, possibly, in the wholly exceptional circumstances of 1951. when we had a great rise in stock prices. I find it very difficult to think of any system of taxation that could deal with such a position.
Before 1951 it was the physical shortage which, above all, limited investment.

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Last year it was not lack of funds; it was primarily lack of confidence in the future on the part of the business community, which was the result of the Government's monetary policy. That being the case, we are not going to get investment merely by providing companies with more funds. There is no evidence that one single penny of the money accruing to companies from the ending of the Excess Profits Levy or the change in the standard rate of Income Tax will be invested over and above the amount invested last year.
It was made clear by the Chancellor in his Budget speech that he does not intend to make any change in his monetary policy. That was a matter dealt with in a letter published in "The Times" this morning from Professor Kahn, to which my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) referred. The Chancellor does not intend by his monetary policy to give any incentive to increase investment in industry. How, then, is the Chancellor looking to increase investment? There can be only one way, by stimulating it indirectly as a result of increased consumption, which he thinks may give better business and may encourage business men to make greater investment. Most of the concessions are directly and primarily for stimulating consumption. That was said quite clearly by the "Economist" this week.
Mr. Maudling: I have listened to the hon. Gentleman's speech with the greatest interest. I would refer him to the initial allowances, which I think have met with agreement from his right hon. Friends and which are designed to stimulate investment by improving business conditions.
Mr. Jenkins: I agree that the one point which is wholly desirable in the Budget is that of the initial allowances. I am sorry that this is the one aspect which the Chancellor himself regarded as ungenerous, because he was only going half as far back as the position which existed before 1951. That was the one concession to companies which tries to make them invest, because they can only get their money if they do invest. The effect of the other concessions is that they get the money whether they invest or not. Perhaps that is the reason the right hon. Member for Blackburn, West, no doubt speaking as he often does for the City,
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said that he did not like this concession very much. It is a concession with strings attached to it, and the right hon. Gentleman wants concessions without strings.
Apart from initial allowances, the only way in which increased investment seems likely to be brought about is indirectly, through an increase in consumption, in the hope that that will lead to a better business situation. Two comments can be made upon this method. The first is that it is a very indirect and clumsy way of going about it when a much less wasteful way of stimulating investment would be to do it directly. This is a roundabout way, stimulating a lot of consumption.
The second comment is that if the Chancellor is to get his increase in investment indirectly as the result of increased consumption and if the main purpose of the Budget is to stimulate investment, the taxation concessions have to stand on their own distributive feet. We stimulate consumption to the same, and perhaps to a greater, extent, when we give any taxation concession as when we give it in the form of 6d. off the Income Tax or in other forms particularly helpful to companies. From this point of view, it is as useful to stimulate consumption generally as to give to companies additional funds which they do not need.
I do not want to say much about the distributive effects of the Budget, but I cannot understand how hon. Gentlemen opposite can be surprised when we say that the Budget is a move away from equality in this country. One of the important things about the Budget, which hon. Gentlemen opposite may welcome, is that it marks an end of the 19s. 6d. in the £ rate of Income Tax and Surtax upon the biggest incomes. That rate was a symbol of the equality that we had built up here since the war and that had resulted in a far wider spread of incomes than before the war. The Financial Secretary to the Treasury, in his speech last Wednesday, stated that the only purpose of taxation was
"a necessary means of raising the national revenue."—[OFFICIAL REPORT, 15th April, 1953; Vol. 514, c. 254.]
On this side of the Committee we disputed that proposition, and I was surprised that it should have come from the Financial Secretary. I hope that the

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Chancellor may repudiate it when he speaks. Surely it is not the view of the Government or of the Chancellor that if it were not for the unfortunate evil that we have to raise a bit of money to pay for national expenditure there would be nothing at all wrong with the pre-tax distribution of income in this country.
I should have thought, quite apart from the injustice of such a distribution of income, that many economists somewhat to the right of the Chancellor would have taken the view that unless we had continuance of Government interference on a big scale with the distribution of income we should have stagnation so complete and continuous that some of Karl Marx's wild prophecies about the future of capitalism would be realised. I hope that the Chancellor does not accept that extraordinary principle which was enunciated by the Financial Secretary.
Turning to the external situation, I think it will be generally agreed that the balance of payments situation is extremely precarious. We have had the March figures, and they show what may be a development and a change in the wrong direction. At any rate, it is clear that a lot of things can go wrong which would very much upset the balance which we had obtained. It is extremely important to remember that the balance which we obtained and which we were holding has been achieved at the height of a boom in the United States. In the non-Soviet world the United States has at the present time an unusually high level of demand and of widening production, in a restrictionist and deflationary world.
Despite that situation, a great number of countries are still short of dollars, and therefore are applying a number of restrictions on their imports in an undiscriminatory way. Other countries are short of sterling and we are short of their currencies, although both of us have surplus export capacity. This is exactly the sort of situation in which discrimination, bilateral deals, and barter arrangements are made for the expansion of trade, and where non-discriminatory moves towards convertibility inevitably mean a contraction, yet this is all done on top of the United States boom.
If we have two developments of this sort in the coming year, we shall have
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a really difficult situation, becoming almost catastrophic. If a recession develops in the United States, and there are further moves in the non-dollar world towards convertibility and non-discrimination, countries will be still shorter of dollars. As soon as a United States recession began to develop, shortage of dollars would inevitably mean that countries would not merely cut down on dollar imports but on everybody else's imports as well. By pursuing a policy inclining towards convertibility, we are building up enormous difficulties for ourselves in the future.
The chief task of the Chancellor of the Exchequer at the present time ought to be to prepare the economy of the country for the difficulties which are bound to arise from the repercussions as soon as there is any slight falling off of activity in the United States. There is no evidence at all in his Budget statement and Budget proposals that the Chancellor is using this comparatively easy period for that purpose, so for that reason and many other reasons I say that this is a bad and unsatisfactory Budget.
8.20 p.m.
Mr. Norman Cole: In the very few minutes at my disposal, without disrespect to the hon. Member for Stechford (Mr. Roy Jenkins), I want to turn away from the close economic analysis that we have had during the last few days and speak of those who will immediately experience the effect of this Budget. A great deal has been said about the economic background of the Budget, but not enough has been said about the psychological effect on the people of this country at having something taken off the Income Tax at last.
This is the first time for 16 years that a Budget has not imposed any extra taxation. This is the first time since the war that anything has been taken off the standard rate of Income Tax. [HON. MEMBERS: "No."] A couple of years ago there was an increase in the standard rate of Income Tax under the previous Government, and that in a time of peace. Here we are eight years after the end of the war and we have to look to a Conservative Government for the first time to give some uplift to the people of this country.
Hon. Members: What people?
Mrs. Alice Cullen: Old age pensioners, for instance?
Mr. Cole: I think that this Budget could go down to history and be known as the "Springboard Budget." The purpose of a springboard, for the information of hon. Members opposite, is to enable those who use it to surmount obstacles which lie ahead. The purpose of this springboard Budget is to enable the people of this country to make use of it to leap over the obstacles which lie ahead of them.
I believe that people will regard this as a springboard Budget, not so much because of the monetary incentive which it provides, but because of the incentive to their spirit, provided not by the few pounds a year or a few shillings a week extra which they will receive, but by the fact that it is a step in the right direction.
Much has been said in this debate about production. It has become a sacred word which means more than any other to the future of this country. But production is not enough. By itself it is not a solution to any problem. What is important is production at the right price at the right time for the right market; and I suggest that the spirit underlying this Budget will enable production to go ahead to meet many of our future problems.
Despite what hon. Members opposite have said, the improvement in our economic position has been due to the efforts of the people of this country; and that effort had leadership from the Government. I believe that the spirit which lies behind this Budget will give an extra spur to that effort. This is where the contrast lies between the views of the two sides of the Committee. On the Government side this Budget is an act of faith; on the Opposition side we have had speeches from the prophets of gloom. I know which side the people will prefer.
There are two or three points which are not points of criticism of the Budget but to which I should like to refer because they are concerned with matters which affect the happiness of the people. The first is a technical matter and refers to the duty on light hydro-carbon oils. The whole purpose of the Budget is to lower the cost of production and increase exports. This duty on light hydro-carbon oils enters much into production costs. I
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ask the Chancellor to consider whether, in the course of the Finance Bill, he can make a full concession of the duty where the oils are used in industrial processes in the same way as the concession is now made in respect of heavy hydro-carbon oils.
The next point relates to war disability pensions. I know from personal contact that the Government are not complacent about this subject. I hope that, as the scene unfolds and as prosperity returns to this country, this ever-recurring need will be kept in the forefront of the minds of the Government and that they will give help at the earliest possible opportunity.
The third point refers to tax-paid stocks. It has been discussed in previous years. It is very unfortunate that, when perhaps the greatest concession has been made on Purchase Tax since the war, this should be the year when traders are heaviest hit by Purchase Tax on stocks already in their possession. I am sorry that the Chancellor has not seen fit to accept the recommendations of the Hutton Committee. One statement from that committee's report sums up the whole position. The committee state:
"Throughout our inquiry we have been impressed by the fact that whilst the long-term benefits of the tax reduction accrue to all sections of the trade concerned—manufacturers, wholesalers and retailers alike—the immediate losses to which it may give rise have to be met at the expense of one section alone."
That, of course, is the retail section.
The right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) referred to a £25 million computed loss by retailers through Purchase Tax on this Budget. I do not know whether it is within the compass of hon. Members to visualise such a sum, but I received from a constituent a simple letter which, whilst not criticising the Budget, points out that he sustains a loss of £450 because of the alteration in the Purchase Tax. I do not want to see the tax continue any longer than is absolutely necessary but the right hon. Gentleman the Member for Bishop Auckland seemed to suggest that it would be a good thing to keep it in existence for as long as possible so that nobody would lose. This is a policy of defeatism. I hope that some way will be found round the difficulty of reducing the Purchase Tax while at the same time avoiding losses to retailers who hold these stocks.

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it is not for nothing that it is said that Budget day is one of the most important days in the Parliamentary year. It is so because every man, woman and child is concerned to know what will be their individual financial position during the ensuing 12 months. This year has been no exception, but I believe that this Budget will remain in the minds of the people as something which has shown them a new way. I believe that they will thank the Chancellor for a Budget which will be a stimulus to them. They will thank him for the faith which he has expressed in bringing forward this Budget. I believe that the people will stand by him and support that faith. This Budget is one move forward towards a new era of happiness and prosperity.
8.30 p.m.
Mr. Aneurin Bevan: I should like to start what I have to say by expressing to the Chancellor of the Exchequer my appreciation for at least one thing that he did. He has provided a slight relief for authors, and lest I be accused of having a special interest in this matter, let me say at once that it has no benefit for me.
I have thought for a very long time that the position, not only of authors but of artists generally in Great Britain, ought to be seriously considered by the House. There is no doubt that the present system of taxation as it applies to the earnings of artists is the only capital levy in existence in Great Britain. For painters, sculptors, authors and composers to have to pay heavy rates of taxation on immediate earnings is, indeed, a form of capital tax.
It is not. I think, in the last analysis in the interests of the country that creative thinking should be so discouraged. There was slight relief given to authors earlier. I remember—although I have not his permission, he will not perhaps mind my using his name—that I got some information from Mr. Priestley some years ago as to the incidence of double taxation upon authors on their works abroad, and I was glad to find that my friend the late Sir Stafford Cripps was able to get that anomaly removed.
I think that the time has come for the Treasury to make a serious investigation to see whether it is not possible to relieve authors and artists generally
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from the anomalies under which they at present suffer. That was one feature of the Budget which aroused my gratitude, and I am afraid that is the last friendly thing I have to say about the Chancellor's Budget statement.
Having listened to many Budget statements over a number of years, I have come to the conclusion that, despite the opposite impression that is created, the position of the Chancellor of the Exchequer is one of the easiest posts in the Government. The reason is not far to seek. All await a new Budget from the Chancellor of the Exchequer with so much eagerness and anxiety as to what is going to happen to them that they have no curiosity left as to what is happening to them as a result of his previous exertions. So always he is practically blameless or, if he is not blameless, he very rarely has any blame, because everyone says, "What is going to happen now?"
I have come to the conclusion also that the Chancellor of the Exchequer has his Budget made up for him by a number of different teams of people working in the Treasury quite independently of each other. They then hand their results to him, and he presents them to the House of Commons. The more lucid he is, the more obvious the discrepancies become. I therefore listened to his speech with very great gratitude indeed, because everyone must admit that, for lucidity of expression, it was one of the best we have heard. The crevices were even more obvious than they normally are.
I say that obviously the Budget was put together by a number of people working independently of each other—because look at the outcome. What did the Chancellor of the Exchequer expect from the raising of the Bank rate? What was the purpose of it? Obviously the purpose of it—in fact he has said so, and the Economic Secretary has also said it even more specifically—was to depress trade and industry. It was to restrict employment, and the restriction of employment is bound to affect the absolute earnings of profits. That was its intention. Credit restrictions by the banks, announced by the Chancellor last year, and a raising of the Bank rate were directed to bringing about a certain degree of unemployment and, therefore, a certain degree of what this year has been called "slack" and a certain amount of depression in industry.

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If that be the case, if that was the intention of one part of the Chancellor's plan, how did he base his figures a year ago on the assumption that part of the plan would fail? We really have had no explanation yet of the fact that, whereas he intended by his credit policy to bring about a fall of earnings in industry, he based his expectations for the year just closed on the assumption that all the profits would increase. He ought really to have a conference at the Treasury and get them all together so that each would have an opportunity of knowing what the others intended to do.
How, for example, does the Chancellor explain that he expected to obtain from Profits Tax £76 million more than he got when his credit policy was designed to prevent profits from occurring? How does it come about that he expected people earning less in industry still to be able to pay him £68 million more in Income Tax than he got? How does he explain it? Did he assume that an increase in the Bank rate would increase profits? What was behind it?
I say nothing at all about the expenditure side because over that he had not the same amount of control; but here we have a situation in which a Chancellor of the Exchequer is £222 million out in his expectations of revenue and £200 million out in his expectations of expenditure, and in the year in which he does that he is applauded as a wonderful Chancellor of the Exchequer. That is why I say that it is one of the easiest jobs in the Government, that the Chancellor of the Exchequer is permitted a margin of error far in excess of what is permitted in any other Department. [Interruption.] I know what hon. Members have in their minds and I shall answer at once the implied rebuke.
A Minister, in presenting his Estimates to the Chancellor of the Exchequer, is not permitted to gamble. The Chancellor does not allow a Minister to speculate; the Chancellor is the only one who is allowed to do that. Every Minister is expected to base his Estimates of what he will require upon what he has already spent the year before. If a Minister wishes to speculate and feels that he will need more money, the Chancellor says, "No, if you find you need more money than is provided in your Estimates, then
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you must have a Supplementary Estimate." That is good practice.
But if one is bringing into operation a new scheme one is unable to base one's Estimates upon predictable behaviour until one has enough experience about how the people propose to behave. It is one of the most remarkable and one of the greatest of tributes to the sanity and restraint of the British nation that, after only one full year's experience of the National Health Service, I was able to put in an Estimate which was exactly right. Only one year! That is the answer to those people who have been trying to convince the country that the Minister of Health has no control whatever over the expenditure in his Department. The fact is that it is only a Minister of the Crown who is not permitted a development charge. Every other form of activity is allowed one.
Here we are, face to face with a situation which I think the Chancellor should explain. How does it come about that there is such a wide discrepancy with his Budget estimates of a year ago? If he cannot explain it, he must not expect us to have very much confidence in his expectations of the year to come.
In the course of his speech this afternoon, the President of the Board of Trade said that the Budget must be viewed not merely as a means of obtaining money from the population and distributing it by way of reliefs or by way of public expenditure, but that we must have regard to its effect on industry and production as a whole. With that I entirely agree, and it is from that angle that I want to examine the Budget.
When my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) was making his speech on Wednesday, the Prime Minister continued to interrupt him by saying, "Bankruptcy, Bankruptcy, Bankruptcy." I should like to ask how much truth there is in that. When the Labour Government took office in 1945, they inherited not only six and a half years of the consequences of war but, at the same time, the consequences of neglect in the between-the-war years. I should like to ask hon. Members opposite to make a comparison between seven years after the 1939–45 war and seven years after the 1913–18 war.
We are accused of having left the nation in a bankrupt condition. [HON. MEMBERS: "Quite right."] I am glad to

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get that interruption. In 1925 the output of Great Britain was 16 per cent. less than it was in 1913. After the exertions of the businessmen's Government, assisted by the now Prime Minister, production in Great Britain lagged seriously behind what it was in 1913. In 1951, when the electorate decided to change Governments, we handed over to our successors industry in Great Britain in a more flourishing condition than had been known since 1913. Even in the case of the output of coal, productivity was up and, for the first time since 1937–38, a much healthier situation existed in the coal mining industry and an increase in manpower was taking place.
In electricity, we had increased electrical consumption and production by 144 per cent. over and above 1939. The Chancellor of the Exchequer is now able to take the Purchase Tax off electrical goods because of the power stations built by us. Indeed, we have in the last few years heard less and less about power cuts. Why? For two reasons. One, because electrical production is up, and the other because electrical consumption is down—because unemployment is up, as we have seen, though the Tories have succeeded in producing the appearance of abundance in exactly the same way as before the war, and there are less bobs to put in the meters.
No one in any part of the House can deny that the power stations and the hydro-electric installations which were started and finished by direct Government action have meant an important and invaluable equipment for British industry. When the right hon. Gentleman talks about slack, the slack consists in the fact that Conservative policy has failed to keep in full production the plant we handed over to them in 1951.
These figures have an important bearing upon future policy. Steel production is up 50 per cent., largely as a consequence of new steel works built by the Labour Government in 1945. I will give an illustration. We had to curtail the production of steel in order to build new steel works—and hon. Members opposite do not seem to know that steel works are built out of steel. Therefore, throughout the years 1945, 1946, 1947, 1948, 1949 and 1950 we had to have steel allocation schemes in Great Britain in order
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to find enough steel to finish the steel works they now enjoy. That is how far we are bankrupt.
In the next place—these are the figures of a bankrupt nation—aluminium up 20 per cent. sulphuric acid up 61 per cent., refineries 10 times—[An HON. MEMBER: "Private enterprise."] Private enterprise? What is the hon. Gentleman talking about? In point of fact, in all those years we had to do something to which hon. and right hon. Gentlemen opposite really ought to pay serious attention, and that was to place investment in those places without which future consumption could not be enlarged.
I always thought it had become by students of the industrial nation of today a commonly accepted view, but I find it is not the case, that where it was necessary to invest large sums of money in heavy industry, it could not be expected to come from the private initiative of individual investors. This was the case before the war. The Chancellor of the Exchequer hopes—in fact, the whole of his Budget is a gamble on it—that the private investor in Great Britain, the individual entrepreneur, by having more cash put in his pocket, will bring about an increase in production. That is what the Chancellor expects.
Will the Chancellor of the Exchequer, when he replies, inform us on what account he expects the private investor in 1953 to behave differently than he behaved in 1935? In 1935 there was plenty of slack. There were two million people on the registers of the employment exchanges. Throughout the country there were idle blast furnaces, idle pits, idle factories and idle money. In fact, in the years before the war there was exactly the same situation as the Chancellor created in 1952 and which he proposes now to add to in 1953.
No hon. Member in the course of this debate has yet explained how we can expect the individual investor in Great Britain to behave differently in 1953 than he did before the war. The fact of the matter is—and this is a serious thing to which we must all direct our attention, because it is not only true here; it is true all over the Western capitalist world—that where there are industries like steel, where we have long-term investments and where large sums of money are

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involved, in other words, where we require equity investment on a very substantial scale, it has not been accomplished merely, first of all, by stimulating the consumption of end products. On the contrary, it has only been done by direct Government intervention.
That is as true of the United States as it is of Britain. Indeed, most of the heavy industrialists of the United States refused to expand their productive capacity at the request of the United States Government without having guarantees from the Government that if any capital equipment was not used by new markets, they would be compensated. It is also true that before the war in this country, the new plant that exists in my constituency would never have been completed if the Bank of England had not stepped in and taken the place of the private investor.
Mr. Osborne: It was a private institution in those days.
Mr. Bevan: It is also correct to say that not one single new steel works was built or reconditioned before the war without the bankers' Industrial Development Corporation, established by Philip Snowden. Hon. Members opposite ought to learn the elementary facts of industrial life.
What we have learned is this. It is perfectly true, first, that by a reduction of Purchase Tax the Government can stimulate the consumption of certain products and, therefore, can make the industries producing them more prosperous. It is also true that theoretically the time can arrive when that stimulus has passed by a series of chain reactions to the heavy industries, but long before it has effectively reached the heavy industries the stimulus dies down, and we get no expansion of the heavy industries.
That is why we on this side of the Committee—our philosophy is entirely different from that of the party opposite—believe in the case of these industries in direct State intervention, because only by that sort of State action can we get an expansion of the broad base of modern industry. Only by that means can we get an increase of production of heavy goods which enables an expansion of the light industries to take place.
That is why we think—this is our view —that if we leave the whole of the British
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economy to the initiative of the private investor alone, there is no hope whatsoever of adding to the industrial equipment of Great Britain where it is most required. That is why in those years between 1945 and 1950, under the leadership of Labour Chancellors of the Exchequer—and if I may be allowed to discriminate, particularly under the leadership of Sir Stafford Cripps, who was jeered in this House—a higher percentage of the British national income was ploughed back into new industrial equipment than at any other time in the recorded history of Great Britain.
Year after year more than 20 per cent. of the total national income was ploughed back into new investment. In fact, in those years, we had very high Income Tax, high employment, high profits, higher wages and better health—and I notice now that no one says "Marshall Aid." We do not now have the familiar jeer of "Marshall Aid." Why not? Because the Government have got Marshall Aid. When the British Labour Government had Marshall Aid, they used that Marshall Aid in order to repair the damage done by the Tories before the war. Now the Tories use their Marshall Aid gifts from the American people in order to reduce the standard rate of Income Tax.
If we take into account—and last week an answer was given on this from the Treasury Bench—what we were spending in those years overseas by way of direct gifts to other nations, by way of overseas military expenditure, by way of the releases of sterling credits, the British Labour Government spent £320-odd million more than they received. At the moment the Chancellor of the Exchequer reckons upon the receipt of assistance from the United States for the military equipment of Great Britain.
I say solemnly and sincerely, speaking for myself in this Committee, that I consider it is an humiliation for the British nation to continue its economic dependence upon the United States in this way. I believe that the people of this country want British economic independence, whereas the Tory Chancellor of the Exchequer reckons the assistance from America as part of his income.
Indeed the situation is even worse than it is made to appear. What happens? I was speaking the other day to an industrialist—[HON. MEMBERS: "Oh."]

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He happened to be a Member of this House, a Member of the party opposite. He was telling me that he had tried hard to win markets in Australia, that he had sought to displace dollar purchases by Australia for certain types of machinery, and that he had succeeded in doing so; at last, and under severely competitive conditions, he had won a considerable foothold in the Australian market. Just after he had succeeded in doing that, the Ministry of Supply approached him and said they wanted him to switch his factory to the production of parts of tanks. He replied, "No, I do not want to do that. I have just won this very valuable Australian market where we are no longer having to pay in dollars for this equipment."
The Ministry of Supply said, "But we need the tanks; the nation's security requires more tanks; and therefore we ask you to switch over." He did so. Then the Australians, no longer able to obtain the machinery in Great Britain, bought it from the U.S.A. As a result of that there was a greater expenditure of dollars. Now we are selling Centurion tanks to the U.S.A. in order to get the dollars back again. That is regarded by the party opposite as organising a healthy pattern of trade. We have put the Americans in possession of a peace-time permanent market, and in exchange for it we have merely the impermanent and highly precarious market of selling arms.
It seems to us that that is a dangerous state of affairs, and that, therefore, this situation ought to be re-examined as quickly as possible, because I believe it to be unwise for us to hope that we can ever get a sufficient lodgment in the American market as to make the foundations of British exchange secure. I believe that markets have to be found elsewhere, because the markets in Great Britain and America are not mutually complementary, whereas markets in other parts of the world are.
Accordingly, the difference between hon. Members opposite and ourselves is very clear. We believe that the only way in which we can get a safe expansion of industry in Great Britain is by returning to the measures and the policy that rescued Great Britain from 1945 to 1951. Furthermore, we also believe that the
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policy now being pursued by the Government holds some dangerous results for us in this country. As I said, we believe in qualitative investment, that is, in redirecting the flow of investment where it is most required.
The Chancellor of the Exchequer has made only one discriminatory relief in his Budget, that is the 40 per cent. relief for the first two years for mining exploration, which is a characteristic example, in my view, of how not to do it. The most effective way of doing exploration of that sort is for the nation itself, for the Government, to assemble geophysical teams and send them out to explore. [HON. MEMBERS: "Groundnuts!"] It is no use hon. Members talking about groundnuts. As my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) said the other day, the fact is that the Chancellor of the Exchequer has given more money away to the moneylenders than was lost on groundnuts.
Now I come to one aspect of the Budget to which I must refer. The Chancellor in his speech—[Interruption]—I warn hon. Members that I propose to make my speech. This is a repetition of what we had before. The Chancellor of the Exchequer desires to rise at about a quarter past nine. I wish to honour my arrangement with him. but I propose to finish what I have to say.
In his speech the Chancellor spoke of his plans to give certain reliefs. He relieved certain categories of consumers of certain goods and he relieved the taxpayer of his standard rate of Income Tax. At the same time he defended the decision of the Minister of Health to send the structure—[HON. MEMBERS: "Oh!"]—yes, to send the structure and the organisation of the National Health Service to a committee. I have no objection to that, not the slightest. In fact I would support an investigation into the organisation of the National Health Service—[HON. MEMBERS: "Hear, hear."] What is wrong with that? But why has not the right hon. Gentleman the Minister of Health been doing it? What is he paid for? After all, be has nothing else to do. He has plenty of machinery at his disposal; why has he not used it?
I invite the attention of hon. Members to these figures, because there is obviously on the other side of the Committee

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a deep antipathy towards the National Health Service—[HON. MEMBERS: "Nonsense."] They are seeking, by every means at their disposal, to try to undermine the structure of the National Health Service. They have created the impression that the finances of the National Health Service are out of hand. They are creating the impression that there is extravagance, that there is universal abuse, and that some means ought to be found for bringing it under control. That is the impression they are creating.
The fact is that if all the charges on the National Health Service were abolished, if the whole of the Danckwerts Award were set against the expenditure made on the Service, the expenditure in 1952–53 would still be a smaller proportion of the national income than it was in 1950. In other words, it is not true to say that the expenditure on the National Health Service is going up or is out of control. The fact of the matter is that there is a climate of opinion being created in order to facilitate another cut in the National Health Service.
If the Chancellor of the Exchequer had any reliefs to give, here was a field in which they ought first to have been given. From all over the country we are receiving letters of complaint from hospital management committees that they are very short of money and are having to threaten to close down wards. In the last few days I have had letters of complaint from old age pensioners all over the country who have been harassed by the charge for prescriptions.
It seems to us on this side of the Committee that the Chancellor of the Exchequer got his priorities all wrong, and that if he wanted to relieve any body of taxpayers at present the people to relieve were first of all the aged and the sick. Instead of that, it is noteworthy that in the first Budget where the Tories had what they thought was money to disperse, the money did not go in the first instance to the sick and the poor: it went first of all to the rich. And as these facts are becoming known the Budget is of course becoming more and more unpopular in the country.
Instead of directing their attack against the dollar ill-balance, they are using dollars to buy sugar. They are reducing the extraction rate of wheat in order to
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provide white bread—condemned by every nutritional expert in the country. I want to change my metaphor from last night. Last night I said that the Prime Minister had converted John Bull into a gigolo. He has now converted him into a sugar daddy, hoping to win favours that his own virility cannot command.
We on this side of the Committee think that the economics of the Budget are unsound. We believe that it is unjust. We believe that it does not make any effort to assist in the economic recovery of Great Britain. Furthermore, the Chancellor of the Exchequer makes no attempt at all to deal with one of the most flagrant weaknesses in the British system, and that is that whenever we have a balance of payments crisis there is £400 million or £500 million of funk money in the City which immediately takes flight abroad and increases the anxieties and difficulties of the country.
In fact what the Chancellor has done has been to put the moneylender in the heart of the British economic system. He has therefore failed, dismally failed, to live up to the opportunities that he had. He has not pursued realistically and courageously what his predecessors did. I can see in my mind's eye the sombre and reproachful figure of Stafford Cripps sitting by his side, because all of us here agree that all we have got from the Tory Party at present is a resumption of those policies and those values which brought this great nation to the edge of disaster in the years 1935 to 1939.
9.14 p.m.
The Chancellor of the Exchequer (Mr. R. A. Butler): All hon. Members will agree that we have had a most useful debate. I have listened to the greater part of it and I should like to pay my respects to hon. Members who have spoken from all parts of the Committee. While of course I cannot agree with every word said either by the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) or other hon. Gentlemen opposite, I can say that hon. Gentlemen have been inspired by a sincere desire that the course taken should be the right one in the national interest. In the intervals of dealing with the right hon. Gentleman and otherwise trying to counter some of his arguments, I shall, I hope, indicate by my own demeanour the intense seriousness with which I regard the

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national position, and the intense conviction that I hold that the course which I have proposed to the Committee on behalf of Her Majesty's Government is the right one in the national interest.
It would be invidious to single out individual contributions to the debate, but I am sure that, in the course of a long debate none of us would like to forget the maiden speech of the hon. Member for Small Heath (Mr. Wheeldon). I shall not have time to traverse all his arguments, but I should like to assure him that the problems of local government finance are very much in my mind, and, in so far as we have been able to help by the adjustment in the subsidies earlier last year, we did so; but I agree with him that the problems of local government finance remain in the mind of any serious person studying our country's difficulties at the present moment, and that the maximum degree of economy consistent with the progress which we all want to see should be maintained by those authorities.
Then, we have very valuable speeches from two right hon. Gentlemen on the other side of the Committee—the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) who made one of his —I do not wish to be patronising—best reviews of the economic situation to which he has treated us, and the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker), who, although I disagreed with him more than almost anybody else, sustained his arguments in a remarkable manner.
We had two very useful speeches from this side of the Committee— from the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton) and the right hon. and gallant Gentleman the Member for Leicester, South-East (Captain Water-house)—and, while I am dealing with textile areas, I should like to mention also the speech of the hon. Member for Ashton-under-Lyne (Mr. Rhodes), who was of considerable help to me in the course of the debate in Committee last year' on the textile depression. I should also like to remember the speech from Yorkshire by my hon. Friend the Member for Shipley (Mr. Hirst).
I shall not be able, in the course of my remarks today, to deal fully with the textile problem, and I should only like to
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say that, while I agree that this textile question is in the forefront of the minds of many hon. Members, we did attempt, in the last Finance Bill, to give a certain degree of help to the textile industry. When it is said that it has not been included in this year's Budget, I think it should be remembered that it is only now that the general rates of Purchase Tax have come down to the same level as those to which textile rates were reduced last time. That cost some £17 million of public money, and, in addition, some £20 million worth of orders were deliberately placed by the Government, thereby improving employment in the textile areas, despite all the criticisms of right hon. and hon. Gentlemen opposite, by well over 100,000 in the course of last year, so that the situation now is very much better than it was. However, we shall have plenty of time in which to discuss the problems of the textile industry in the course of our debates during the spring and summer.
I thank the right hon. Gentleman the Member for Ebbw Vale for his courteous reference to my giving help to authors. I am not an author, but I think the right hon. Gentleman is, to a limited extent, an author. My right hon. Friend the Prime Minister is an author. At any rate, this action was taken on a very limited scale, because it does not deal with a major problem of many others who wish to space their earnings over a longer period. They must wait for the Royal Commission on Taxation to deal with this problem. I am grateful to the right hon. Gentleman for one of the few kind things he has ever said to me in his life.
We should like to welcome back the right hon. Gentleman from the East. It was a source of great satisfaction to us to see the faces of the patient herd of barren back-biting heifers here, waiting for their champion Brahmin bull to come back from the East, to see him going round the Committee, to see him browsing here and browsing there, having a word with the hon. Member for Reading, South (Mr. Mikardo) here and a word with the hon. Member for Jarrow (Mr. Fernyhough) there, and with several words with his right hon. Friend the Member for Leeds, South (Mr. Gaitskell), with a bit of sugar cane here and a little melted butter there, and, finally, producing this magnificent oration on economics for us.

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I can assure hon. Members opposite that we study their facial expressions—not only my right hon. Friend the Prime Minister, but all of us—with the greatest pleasure, and the way they make place for the right hon. Gentleman and look to him to inspire their policy, which is not quite clear, is really most touching and gratifying to us all. No doubt the reason why the right hon. Gentleman's periodical, known as "Tribune," has paid so much attention to an election and called this an election Budget is that for the few seconds or perhaps the few weeks that the party opposite may present an appearance of unity they no doubt wish to go to the country themselves.
I assure the right hon. Gentleman that my motives in bringing forward this Budget—and I am sorry to be so dull to the Committee—were based entirely on economic considerations. The position would, I think, have been very much worse had we attempted to look at this Budget from the point of view of an election. I can only say that had right hon. and hon. Members opposite not shirked their duty, but faced up to it last autumn, then they might have been able to undertake, as the right hon. Member for Battersea, North (Mr. Jay) suggested, some of the import cuts which he said in the debate at the end of last week they had themselves got ready to use.
The truth is that we are thankful that we had the opportunity to take the energetic steps we did to put right the political and economic situation. The right hon. Gentleman said that the Labour Government had left industry in a more flourishing condition than it had ever been since 1913, and he went on to say that he and his hon. Friends had rescued Great Britain from the greatest crisis since 1945. Those were his proud claims.
What, in fact, was the position? It may be that there was an artificial booming of the economy internally, leading to the raging inflation with which we were faced. But we were also faced with the worst balance of payments crisis which this country has had for many years, a balance of payments crisis which meant the draining of our life blood and the ultimate collapse and devaluation of sterling. That is the situation with which we were faced and which we overcame.
I think it has been a very remarkable feature of the debate today that so few
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tributes from a genuinely patriotic angle have been paid by right hon. and hon. Members opposite to the state of sterling —I do not ask for tributes to Her Majesty's Government—because it is upon the state of the £ sterling that our economy and the employment of our people depend. I say to the right hon. Gentleman, in answer to all his proud boasts, that there is no doubt that had this balance of payments situation continued and the drain on our gold and dollar reserves proceeded in the way in which we found it when we came to power, we should have been landed with really severe unemployment and with a disastrous fall in our standard of living.
If the right hon. Gentleman pays tribute to Sir Stafford Cripps I should like to join with him, because he was not only a friend of mine but one of my finest predecessors. I hope the right hon. Gentleman will remember the warnings given by Sir Stafford Cripps and by the right hon. Gentleman my predecessor as to the danger which a balance of payments crisis would present to our employment and our standard of living.
When the right hon. Gentleman tries to make out that our economy was in a state of stagnation during the past year and that we are threatening, as the right hon. Member for Bishop Auckland (Mr. Dalton) suggested, the standard of living and the ideals in the social spheres of our people, I hope he will remember that it was his own Government who brought this country to the verge of ruin and then ran away.
Now I will come to the challenge which was put to me by the right hon. Gentleman. He, and his right hon. Friend the Member for Leeds, South—if I may so address him—both criticised the forecasts I made before the last Budget. The position as I put it in my speech on the Budget statement and do not think I really need repeat, was that there were definite reasons for the fall in Inland Revenue duties due to the deflationary policies I adopted, and which I quite openly stated were due to the terms of trade and their effects on our balance of payments, which actually upset many of the forecasts I made before the last Budget. That is precisely what happened. This is a perfectly straightforward argument which is understood by everybody.

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The very action we took to cut imports naturally resulted in a fall in the very import duties which make up the Customs and Excise part of our revenue.
Mr. Bevan: These were all facts within the control of the right hon. Gentleman. We cannot understand how he can pursue a credit policy which is bound to have the result of slight deflation in industry and at the same time expect industry to be sufficiently buoyant to give him increased revenue. How can he expect those two opposite things to operate together?
Mr. Butler: For one thing—remember that we had not had a credit policy for 12 years—I could not accurately foresee its effect. It is much better to acknowledge it openly. Secondly, I could not— and I do not think any Member of the Committee could—accurately foresee last year the extent to which the terms of trade would turn in our favour from the point of view of the balance of payments, but would have an adverse effect upon our internal economy. Those are frankly the reasons, coupled with the increase in expenditure, which I explained in Column 39 of my Budget statement and which were the reasons for the difference from the forecast.
I should like to tell the Committee about this. When I wound up the debate on the Budget last year I definitely took a line which proved to be absolutely correct, against a great many critics up and down the country. I said:
"There is evidence that unemployment is rising, and this had roots long before this Government even took office. Some of the consumption industries are undoubtedly facing a very difficult time. They must expect the further difficulties in their export markets to which I have referred … in my judgment we are settling these consumption industries quite a big enough task now, without depressing the home demand for their products still further."—[OFFICIAL REPORT, 17th March, 1952; Vol. 497, cc. 2050–51.]
That was precisely why I took the line in my last Budget which was criticised by the economic experts and which has since proved to be absolutely correct.
If I had not taken that line, which I confess was my own personal responsibility—heaven knows anyone in my position bears a heavy enough responsibi-
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lity—I do not mind telling hon. Gentlemen that we should have had a far greater degree of unemployment, rising even to the extent that hon. Gentlemen opposite have prophesied, namely, a million. As it is, we are far below that figure, and not above a figure which we all think is reasonable in the circumstances of the time through which we have passed.
Mr. Bevan: We are very grateful to the right hon. Gentleman for his frankness. He has said that he did not expect the measure of success which he actually received from the raising of the Bank rate and the restriction of credit. If that is the case, if he has found instruments so efficacious in the year just behind us, why does he not use the reduction of the Bank rate and the easement of credit to bring about greater buoyancy in industry?
Mr. Butler: I did not say that I did not expect such severity. I said that we had not been able to prejudge what the effect would be. Now that we have had a year's experience, I can dispose of the monetary question straight away. My view about the monetary weapon is that it is a flexible weapon. Without it—and I think that its cost has been well worthwhile for our economy—we should not have countered inflation or been able to release taxation this year. Being a flexible instrument, I undertake to the Committee that it shall be used with the utmost responsibility as a flexible instrument in the light of the experience we have had of it last year.
This was my judgment during the past year, and I am thankful for the sake of the British economy that that judgment was taken. Now it is a question of this year's judgment. I should like to make it clear to the Committee that this year's judgment is based on the national income calculations, the publications of the Economic Survey, the White Paper on the national income and the White Paper on the balance of payments. The deductions from that basis to the mind of any fair-minded economist are quite clear, namely that it is possible to release a certain amount in the course of this year. Many of the outside forecasts that have been given have corresponded almost exactly with the amount of taxation that I have decided to remit.

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I am glad to feel that the hon. Member for Gloucestershire, South (Mr. Crosland), in the course of his speech on Wednesday, said this when referring to myself:
"I am glad he was willing to take a risk on the side of demand as a whole. I think that that was an absolutely correct decision as against some of the advice which was tendered to him."—[OFFICIAL REPORT, 15th April, 1953; Vol. 154, c. 324.]
I accept that as being sense. The right hon. Gentleman the Member for Leeds, South, in his broadcast, also said:
"I am sure it is right to give a stimulus this year."
Therefore, I think that there is general agreement in the Committee as a whole that it was right this year to give a stimulus and to make the reliefs.
I propose, therefore, except for an interlude into the international scene, to devote the remaining parts of my remarks to the method of distribution, which I think is the sole subject of controversy in the Committee this evening. It is at least satisfactory to feel that there is general agreement that the general judgment is right.
I want to deal for a moment with the international scene. I listened with the greatest interest to the anxieties expressed by the right hon. Gentleman the Member for Huyton and other hon. Members. I think that the Committee would like to know whether Her Majesty's Government, and myself in particular, in making this decision, have had in mind the possible and likely trends in the international scene. It is not for me to make comments about the internal economy of the United States of America, but I can tell the Committee that during my visit with the Foreign Secretary I had a first-hand opportunity of studying the tendencies in that economy at the present time.
I am sure that we were all impressed by the speech of the President of the United States when he described—and I am not referring to international policy but to the economic policy—
"the hunger of our peoples for peace and fellowship and justice;"
and when he described the claims of the defence programme as
"… a theft from those who hunger and are not fed, those who are cold and are not clothed."
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He went further and spoke of the dedication that was necessary of the
"energies, the resources, and the imagination of all peaceful nations to a new kind of war. This would be declared, total war, not upon any human enemy, but upon the brute forces of poverty and need."
He went further and said:
"the purpose of this war would be to help other peoples to develop the undeveloped areas of the world, to stimulate profitable and fair world trade and to assist all the peoples who need the blessings of productive freedom."
I should like, in the economic sphere, on behalf of Her Majesty's Government, to endorse these objectives of the American President. In our Commonwealth Conference we had exactly the same objectives of developing the resources and helping the peoples of underdeveloped countries. No one can foresee what any possible rapid change from defence expenditure, here or in America, to social expenditure would, in itself, bring about. No doubt, if it were rapid, it would bring about an economic revolution of considerable size. It is unlikely that things will work out just like that. We must be firm; we must continue to be strong and we must not relax.
Nevertheless, this Budget has been framed against the background of any development, whether in the field of defence expenditure or whether there be signs of recession, great or small. I believe that the decision on demand which we have taken in this Budget will be adaptable to circumstances as they may arise in the world scene. President Eisenhower went on to say:
"The monuments to this new kind of war should be roads and schools, hospitals and homes, food and health."
This is precisely the aim of Her Majesty's Government. The hon. Member for Jarrow asked me whether I could state, in the course of this debate, that these were the aims of what he referred to rather, sniffily, as "even the Tory Government." I can tell him that the statement made by the right hon. Gentleman the Member for Bishop Auckland that the Tories were not interested in investment in human capacity, health and education is as false as many of the things that fall from the lips of the right hon. Gentleman.
Let us test some of these statements Let us look at the Estimates this year. The education Estimates themselves are

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up by £26.8 million. Homes, to which reference was made in this speech, are up by £8.9 million, quite apart from the increased bill for the local authorities borrowing for our housing programme of 300,000 houses, which the right hon. Gentleman must realise we are going to attain.
Assistance, under the Assistance Board, is up by £24.4 million, and family allowances, if hon. Members opposite will look at the tables, are up by £38.8 million. That is the answer to the right hon. Gentleman when he says that in their first Budget the Tories should have considered precisely these needs. That is precisely what we have done. As the result of our last Budget, taken in conjunction with this Budget, we have considered the needs of the people, and we propose to continue with our Tory policy of helping the people.
The case of old-age pensioners has been raised. What I want to ask hon. and right hon. Gentlemen opposite, who have raised frequently the case of the old-age pensioners, which is very near the heart of us all, is why, if they feel so strongly about this matter, did they leave it to this Government in the last Budget and afterwards to raise the pensions for old-age pensioners? From 1946 to 1951, under the Labour Government, the standard rates of old-age pensions were 26s. for a single person and 42s. for a married couple. These rates are now, thanks to our Government, a matter which has not been mentioned by any speaker on that side of the Committee, 32s. 6d. for a single person and 54s. for a married couple.
In answer to the taunts and jeers which have been made in the Committee and will be made in the country, and to which we shall have the answers I am giving, there is no need whatever for old folks to depend entirely on these pensions if they are in difficulty.
Three out of four old-age pensioners either have other resources or are doing part-time work. Those who are too old to work any more or whose resources are insufficient can, and do, come to the Assistance Board for extra help. Under our Government, for these old-age pensioners the Assistance scales were increased in June, 1952, to 35s. plus rent
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for a single person and 59s. plus rent for a married couple. Those were increases of 5s. a week for a single person and 9s. a week for a married couple, the largest increases the Assistance Board has ever made or recommended. Besides this, in thousands of cases the Board makes additional grants for special needs over and above these rates.
Mr. Herbert Morrison: Surely it was the case, was it not, that before these increases were made the right hon. Gentleman himself said that the reason for their being made was as a consequence of his cutting the food subsidies and thereby increasing the cost of living?
Mr. Butler: Strange to relate, I am about to deal with that matter. I think it wiser and better in life to tell the whole of the facts to the Committee, and so I shall proceed. The "Daily Herald" on 16th April referred to an elderly couple in Battersea as getting only an extra 4s. a week out of my last Budget. This matter has been investigated, and the couple referred to in the article should receive an increase of 9s. a week from the Budget.
Since October, 1951, Assistance scales have been increased by 16½ per cent. in the case of a single person and 18 per cent. in the case of a married couple. Since the same date the Index of Retail Prices has risen by only 7½ per cent., and for the last nine months since the Assistance scales were raised in June, 1952, the index has remained stable. I revert to a publication by the right hon. Gentleman "One way only," which states:
"We should have an economic policy so as to ensure that the cost of living index stays stable for at least six months."
We have done better than "One way only" by several months.
Of course it is true—this is in answer to the right hon. Gentleman—that the cost of food has risen rather more than the cost of living as a whole as a result of Government policy, which had its good effects in other ways, although it had difficult effects here. In fact, since October, 1951, it has risen by 15 per cent. However, this is not as great as the rise in Assistance scales, and it is still clear that those who depend on National Assistance are better off today than at the time when the Socialist Government were in power.

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I leave aside the Health Service with this one reference. The right hon. Gentleman in April, 1951, in his resignation speech, referred to the Health Service in these terms:
"… if it is pleaded against me that I agreed to the the modification of the Health Service, then what will be pleaded against my right hon. Friends …"
Those are right hon. Gentlemen opposite.
"…what answer will they have if the vandals opposite"—
that was us—
"come in? … The Health Service will be like Lavinia—all the limbs cut off and eventually her tongue cut out, too."—[OFFICIAL REPORT, 23rd April, 1951; Vol. 487, c. 42.]
Hon. Members will remember that Lavinia is the heroine of "Titus Andronicus," the least authentic and the most bloody of Shakespeare's reputed plays.
Mr. Bevan: Taking out of the House of Commons discussion on the National Health Service and handing it over to a committee is the modern form of taking out the tongue.
Mr. Butler: I was only going to say that I think it likely that the end of the right hon. Gentleman—I do not know about the end of the Health Service—will be much the same as the end of Titus Andronicus. Not only is Lavinia killed, but Titus is killed and everybody else too, this representing the right hon. Gentleman and his hon. Friends.
I should like to say a few words about the Health Service. The right hon. Gentleman is really barking up the wrong tree on this matter. This is a committee appointed to get value for money in the Health Service. I can tell hon. Members quite openly that the Committee appointed have been given no total of expenditure to which they have to work. They have been given quite an open remit to report on the Health Service. Members have been chosen with a particular regard to avoid politics. If that is removing a child which the right hon. Gentleman regards as his own from himself, then I can only say that the public in general will be delighted that this child is to be boarded out with a respectable Committee instead of being under his own care.
Mr. H. A. Marquand: The right hon. Gentleman says that the Committee have been given no total of expenditure to which to work. If that is so, why do the terms of reference of the Committee say that they must avoid a rising charge?
Mr. Butler: I have the terms of reference here. We wish to obtain from the Committee the most independent advice we can get for getting value for the money spent. The reason why I stated that no total had been imposed upon the Committee is that my right hon. Friend the Minister of Health and I have had queries on this subject, and that is the answer we have given recently to those who have asked, and that is the situation as it stands today.
Mr. Marquand Mr. Marquand rose—
Mr. Butler: I want now to turn to the question of United States aid, which was raised by the right hon. Member for Ebbw Vale in his speech. In a speech over the week-end, the right hon. Gentleman said that John Bull was a gigolo. He went even further today and said that the Prime Minister was a "sugar daddy," and he used other expressions.
Mr. Bevan: I did not say either of those things. I did not say John Bull was a "sugar daddy." I said the Prime Minister has tended to transform John Bull into a "sugar daddy."
Mr. Butler: I should like to ask the right hon. Gentleman what was the extent of American aid when he and his right hon. Friends were in charge of the government of the country. I can tell him that it was practically three times as much per annum as we are now getting and it was general aid in support of our economic system and not defence aid, which it has been recently.
I should further like to ask him this: why does he say that we have no right and that it is morally wrong—he used the words—to reduce the standard rate of Income Tax at a time when we are receiving American aid? If it is, why is it that the right hon. Member for Leeds, South, who sits beside him, took credit in his Budget speech of 10th April, 1951, for the fact that there were reductions in the Income Tax by the Labour Government of some £650 million during a period when they, too, had been receiving American aid?

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Why is it moral for the right hon. Gentleman and his friends to make remissions in taxation when they are getting American aid far larger than that which we have had—and we are getting a much smaller sum in aid of defence, arranged initially by the right hon. Member for Leeds, South and the Leader of the Opposition in support of our defence—if it is immoral for us to make a remission when the economic circumstances justify it?
Mr. Bevan: The right hon. Gentleman, I believe, asked a question. Does he want the answer? The answer is that in those years we were making payments overseas far in excess of what we received.
Mr. Butler: If the right hon. Gentleman talks about making payments overseas, I know of no period in British history when the overseas liabilities of the British people, especially in defence, were greater than they are today. I know of no period when any nation of our size was undertaking such large international liabilities and such a large defence programme as our country is at the present moment. I think hon. Members on all sides of the Committee should be proud of the effort we are making as a country at the present time.
Now I come to the more controversial topic of how the money was distributed. Here I must remind the Committee that the sole object of the remissions in taxation was to help productive industry and agriculture, upon which the future competitive power of this country depends. If hon. and right hon. Gentlemen are in doubt about that objective, perhaps they would listen to the speech of the Chairman of the T.U.C., the hon. Member for Nottingham, North-West (Mr. O'Brien), who has himself said that it is vital to achieve success in the capitalist task of competing with our competitors at the present time in the international field, and that any help that can be given to that is of vital importance to our own people in this country. It was to help that, that the remissions were given in Purchase Tax and in Income Tax.
The remissions in Purchase Tax have been played with a good deal in comment because I decided, in the interests of the tax and the revenue, that the 100 per cent. duty was untenable at the present time, and any hon. Member who has studied it
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knows that this is the case. I further thought that a man who works as a craftsman in the jewellery industry or in the fur trade is just as good a citizen as the man who works in any other trade. I further reflected on the effect that a reduction would have in stopping these trades collapsing and in helping us with our export trade. The right hon. Gentleman has made great fun of this outside the House of Commons, but I would like to ask him what his action was when Sir Stafford Cripps lowered the tax on Rolls-Royce cars. Did he resign from the Government? In writing in "Plan for Britain" in 1943, the right hon. Gentleman opposite wrote this:
"We can no longer allow a state of affairs in which bread and milk can go up in price and Rolls-Royce cars fall in price."
What actually happened under the Socialist Government while the right hon. Gentleman was a member of it? The price of the loaf rose from 8d. to 11d. and milk went up by a 1d. a quart, whilst the Purchase Tax was reduced by his then right hon. Friend, Sir Stafford Cripps, by a considerable degree and the whole of his philosophy was shown to be wrong. What did the right hon. Gentleman do? Did he resign? No, he did not resign in that year. He waited till the next year when his right hon. Friend the Member for Leeds, South raised the price of Rolls-Royces by putting back the Purchase Tax. This indicates the absolute hollowness and political buffoonery of the attitude which hon. and right hon. Gentlemen opposite are adopting today. This indicates why more than one popular newspaper, and one of the most popular of the lot with a 4 million circulation, asks the Labour Party to find a policy which will make sense in the eyes of the electorate.
If I turn to Income Tax, the right hon. Gentleman will not find that his case, or the case of his friends, is any stronger. There has been a great deal of talk about the distribution of largesse by the right hon. Gentleman the Member for Leeds, South. Is it largesse being distributed when we restore to the British taxpayer a small part of what has been taken away from him by the State? I do not like that word, and I do not think it is appropriate to the action we have taken. It is hardly a question of distributing largesse when we decide to take a little

769
less and to allow the taxpayer, contrary to the advice of the right hon. Member for Battersea, North, to spend a little of his money in his own way.
A good deal of play has been made with the effect of the Income Tax reductions. In the last few minutes at my disposal, I should like to get straight down to the most difficult case of all. There has been a great deal of play about the married men with two children earning £500 a year. I find that at the time of Sir Stafford Cripps, the man with two children in 1948–49 was paying tax of £27 10s. a year. This was reduced a certain amount by Sir Stafford Cripps and he got off £5. Since then, among other influences, he has come under my own benign influence, and I find that in the last Budget this family man's tax was reduced to £1 6s. 8d. a year—that is, 6d. a week. In this Budget, thanks to the reduced rates being reduced, his tax has come down to £1 2s. 2d. or almost exactly 5d. a week.
Therefore, what is the sense of right hon. and hon. Members opposite trying to argue the case of this man, who has 'been brought down practically to the level where he pays no tax at all, largely due to the efforts of this Government, and then saying that we have done nothing for a man earning £500 a year who has two children? It shows how hollow is the claim of hon. Members opposite.
It also shows, when they try to tell us these stories aibout those who have unearned income and those who have no children, that when they in fact get off more, it is for the very good reason that they have got off less by previous concessions. The position is not. as stated by right hon. and hon. Members opposite, that this remission of taxation has been designed to help a certain type or another type. The truth is that I decided to reduce 6d. on the Income Tax, first because I knew that this would give to industry some £45 million of relief for undistributed profits in the course of this year. I knew that the initial allowances could not operate to help them this year and that what I had done about the E.P.L. would take a year and more to be of any benefit to them.
I therefore decided, in the interests of industry and agriculture, to make this remission. I also decided that as it covers 30 million people, it is not a bad thing
770
to give a little encouragement to a very large section of our population. But when hon. Members opposite say that it does not affect everybody, I refer them to the words of Sir Stafford Cripps when in his 1948 Budget he said:
"As the Committee knows, in the course of the last two years we have, in fact, exempted very large classes of persons from payment of Income Tax, and they must now expect to see others get the benefits while they remain where they are—fully exempt from the tax."— [OFFICIAL REPORT, 13th April, 1948; Vol. 449. c. 917.]
It is, as Sir Stafford Cripps said, impossible to take the tax off people who do not bear it. That is one of the difficulties that people have in understanding a Budget of this sort in the country and in this Committee.
I conclude with these words. There has been a good deal of talk about morality and ideals. The worst thing that the party opposite can do for the country is to introduce a spirit of class war and division. The spirit of envy and malice which has inspired their efforts—
Mrs. E. M. Braddock: Brazen insolence.
Mr. Butler: —is not the one which we need. I should like to conclude by referring to the very deep feeling that I have heard from hon. Members on both sides of the Committee who support our drive for production and who will give us an opportunity of going ahead into an extremely difficult future in the spirit which we all share.
Mrs. Braddock: Come on, the hard-faced men on the other side. Shout your heads off.
Question put, and agreed to.
Resolved,
That it is expedient to amend the law with respect to the National Debt and the public revenue, and to make further provision in connection with finance, so, however, that this resolution shall not extend to the making of amendments of the law relating to purchase tax except amendments, if any,—

(a) making the same provision for or in respect of chargeable goods of whatever description; or

(b) relating to the administration or enforcement of the enactments relating to the tax; or

(c) reducing any of the rates of the tax generally for all goods to which that rate applies.

EXCESS PROFITS LEVY (PERIOD OF CHARGE)
Resolved,
That is is expedient to authorise all such charges to the excess profits tax as may arise from bringing the period of charge to the levy to an end not earlier than the end of the year nineteen hundred and fifty-three.— [Mr. Boyd-Carpenter.]
To report Resolutions, and ask leave to sit again.—[Mr. Kaberry.]
Report to be received Tomorrow.
Committed to sit again Tomorrow.

FINANCE [MONEY]
Resolution reported,
That it is expedient to authorise the issue out of the Consolidated Fund—

(a) of the sum of six hundred and fifteen million pounds (instead of the sum of three hundred and fifty-five million pounds) for the permanent annual charge for the National Debt for the current financial year; and

(b) of any sums required for the purpose of making payments of, or on account of, post-war refunds of excess profits tax by reason of provisions contained in any Act of the present Session relating to finance;

and the borrowing of money under the National Loans Act, 1939, for the purpose of providing any such sums as are mentioned in paragraph (b) of this Resolution.
Resolution agreed to.

CIVIL DEFENCE
Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Kaberry.]
10.2 p.m.
Mr. Ian Harvey: When I realised that this subject was to be debated at the conclusion of this important day, I felt that it might be an anticlimax, but after listening to the speech of the right hon. Member for Ebbw Vale (Mr. Bevan), I have taken a great deal of courage.
This is one of the first occasions during this Session when Civil Defence has been debated in this House, and it is perhaps not without significance that there was no reference during the course of the defence debate to Civil Defence and that in the White Paper on defence the subject merely appeared as a rather apologetic postcript. My right hon. and learned Friend the Home Secretary in his wisdom
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has appointed a Committee to consider publicity and recruiting for Civil Defence and he has increased that wisdom by appointing as a member of that Committee the hon. Member for Lincoln (Mr. de Freitas), who is here tonight and who has had considerable experience of this subject. I hope it might be possible for him to intervene during our discussion tonight.
One of the main recommendations of the Mabane Committee was that Civil Defence should be regarded as a fourth arm of defence. I believe there are many hon. Members who are in wholehearted agreement with that recommendation. The Mabane Committee have further indicated that they believe that if the incentive of fear of war is removed, some alternative incentive to recruitment is required. A crisis cannot go on for ever; either the crisis ends in the disaster which is anticipated occurring, or the crisis turns into a continuous state of stagnation which fails to have any impact upon the public. There is considerable danger that Civil Defence will suffer today from that situation, and we all applaud the decision of Her Majesty's Government to ensure that Civil Defence should not be regarded as a crisis force, and that the fear of war, which we all fervently hope is receding, should cease to be the main incentive for people to join the Civil Defence services.
It is imperative, therefore, that if that definite incentive or fear is removed, alternative incentives should be established. We believe that Her Majesty's Government have to establish those incentives. That can be done in two ways. The first is by convincing people that Civil Defence is a permanent service which has a permanent role in our society, whether or not there is an immediate threat of war in being. That can be done by paying attention to two very definite aspects of Civil Defence. The first is the question of organisation, because this idea that Civil Defence is the fourth arm of defence can only mean something if in its organisation and status it really holds that position.
We think that there should be an operational head of Civil Defence, to give purpose and direction to the whole Service, and above all—Members of this House will appreciate this point—to hold its own with the other Services of which it is supposed to be the fourth arm. Secondly, we think that Civil Defence should, as I have already mentioned,

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have a permanent place in our social structure, that the Civil Defence corps in particular should have a home with every local authority, and that it should be regarded as the police and the fire service are regarded today. That will mean some re-assessment of duties.
Recently we have had the tragic events of the Harrow disaster, close to my constituency, and the floods, close to the constituency of the hon. Member for Lincoln. The Civil Defence services played a very important part in both those events, but I do not believe that they were expected to do so as of right. That is a situation which requires attention.
There is some indication that Civil Defence in industry, which is a vitally important service, because the defence of industries by themselves must play a great part in any future hostilities which may unfortunately occur, is becoming too much of a private army, and many of us think that a greater co-ordination between the existing Civil Defence and the local authorities and Civil Defence in industry is to be desired.
The Home Secretary—and it is a very great honour for me to feel that my right hon. and learned Friend has come here at this late hour— has played a great part in the establishing of a prototype mobile column. We are all watching it with the greatest of interest. Some of us believe that the experience of the mobile column will show that it has vast implications for the future defence of this country, far greater than just a mobile column of Civil Defence. We think the right hon. and learned Gentleman may well find he will have to consider a permanent system with Civil Defence as a regular central corps. Some of us feel it may be necessary in the forthcoming National Service Bill to introduce some provision for men being called up and drafted into Civil Defence, the fourth arm, as into the other three arms.
The question of morale is equally important and it is vitally tied up with organisation. We believe the time has come for badges of rank to be granted for the Civil Defence Corps. We think there should be greater recognition of Civil Defence on public occasions. When the other three Services are present and operating, it ought to be a matter of course that Civil Defence is present as
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the fourth arm. It is no use paying lip-service to the idea of a fourth arm if, when on public occasions the other three arms are represented, as a possible last-minute concession Civil Defence is found tagging along behind. That is no way to build up a fourth arm.
We are glad it is the policy of Her Majesty's Government to discard the idea that the threat of war should be the main incentive to recruiting facilities. We are certain, however, that unless something is done to replace that incentive, to make Civil Defence a permanent part of our social structure, the whole organisation will be in serious danger of failing to attract the support we all desire.
The whole defence picture which, whether or not there is an immediate threat of war must always be before us, has been transformed by various scientific developments, many of which have been recently discussed in this House. New ideas on the whole subject of defence are forthcoming. We in London know very well that total defence involves Civil Defence. It is because I and my hon. Friends realise that change that we are most anxious that the excellent (recommendations before my right hon. and learned Friend should be put into effect and that Civil Defence shall be indeed and not merely in phrase the fourth arm of defence.
10.12 p.m.
Mr. Geoffrey de Freitas: I am grateful to the hon. Member for Harrow, East (Mr. Ian Harvey) for allowing me a few minutes of his time. I intervene to stress the fact that Civil Defence is regarded by hon. Members on this side of the House, as by hon. Members opposite, as a united national matter and not in any way as a question for the party division which has arisen in some other aspects of non-regular defence.
The hon. Member for Harrow, East referred to the mobile column. I hope that the experience gained will be reported to the House from time to time so that we may all be educated in this. We do not all know at present what it means, although I had the advantage of seeing the first beginnings of it. We do not know what it will lead to. Like the hon. Member, I look forward to the time when Civil Defence may be considered equally with the other three Services.

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No Government has even contemplated a system of Civil Defence which is other than civilian. It must be worked with the military, but it is a civilian organisation of neighbours coming together to defend one another. Although it works closely with the fire service, the police and other arms of defence, it is a civilian service controlled by the local civil authorities. We cannot envisage a system of peace-time control as rigid as one I read of in America where a policeman went into a house during an exercise and said, "There is a black-out on." Some people replied, "There is no danger," but the policeman said, "There is," and he drew his revolver and shot them to show there was. We cannot envisage anything like that because with us it is essentially a civilian service.
One of the problems is esteem. Of course, we cannot expect the Civil Defence services to be held in the same esteem as the Royal Navy, the Royal Air Farce or whatever regiment we may have in mind. I have in mind the Royal Lincolnshire Regiment. We cannot expect that, but the Home Secretary and the Home Office generally can go some way to help the Civil Defence services to be recognised on public occasions so that we may gradually build up an honourable status not only for the corps but for all those associated with it.
The hon. Gentleman referred to the work done during the floods. I know of the great work done by the Civil Defence corps in constituencies near my own. This work was done in peace time and it shows that, although on figures it sometimes seems that the corps is failing, there really is a structure which can be used in emergency. There is a great deal to be done and we must all thank the hon. Member for Harrow, East for raising the matter, and I thank him for allowing me the opportunity of identifying myself and my party with the Civil Defence corps and Civil Defence generally.
10.16 p.m.
The Joint Under-Secretary of State for the Home Department (Sir Hugh Lucas-Tooth): I am grateful to my hon. Friend the Member for Harrow, East (Mr. Ian Harvey) for raising this subject and to him and the hon. Member for Lincoln (Mr. de Freitas) for the manner in which
776
they have dealt with the matter, and for allowing me a good half of the available time in which to cover a very large field.
We all welcome every opportunity to increase interest in this subject. It is most important that the public and hon. Members should be conversant with the problem. The House may be interested if I start by saying that the latest figures for recruitment are more satisfactory than they have been. The total recruited in England and Wales to the end of March is 263,270. Recruits during March were 9,330 compared with the average for the previous six months of 8,260 and, for the corresponding six months one year before that, of something under 6,000. There has been a marked improvement. We should all be pleased about that, though there is still room for further improvement.
The purpose of Civil Defence is not aggressive. Indeed it is the very converse of aggression. Nor is it pacifist. For that reason, it rather tends to fall between two emotional appeals. I think that we all feel that there is, as my hon. Friend suggested, some temptation to try to import emotion on an alarmist basis by making an alarmist appeal. My right hon. and learned Friend the Home Secretary has always avoided doing that, as have all hon. Members in all parts of the House. I am sure that is the right attitude. I agree, however, that Civil Defence is an essential part of our defences. As such we cannot relax our determination to ensure that it is fully effective until the time comes, if it ever does, when we can relax all our defences generally.
The policy of Her Majesty's Government, as of the last Government, is to concentrate our available resources on those parts of our defences which are most effective deterrents to an enemy by reason of being able to take the offensive. Hon. Members in all parts of the House have agreed that that is right, but that does not mean for one moment that the position of Civil Defence is anything but an essential part of our defences as a whole. I can assure the two hon. Members that that is fully recognised, not only by Her Majesty's Government, but also by the Fighting Services, and that is important.
May I, quite briefly, give some evidence in support of that statement? In the first place, the Fighting Services have

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shown the greatest readiness to take part in Civil Defence exercises, land, conversely, they themselves have been very willing to organise exercises with a Civil Defence aspect. In the second place, the Military and Civil Defence Staff Colleges have been in the closest touch with one another. They have exchanged ideas, and, on occasion, even personnel. In the third place, the Army and the Royal Air Force have shown their practical help by being willing to loan men for the manning of the experimental mobile column.
May I say a word about the mobile columns which would be set up in time of emergency? It is intended that they should include all sections of Civil Defence and that their members should be whole-time. They would be an essential feature of the general Civil Defence organisation. The mobile column which has been constituted at Epsom is, of course, an experimental mobile column, as both my hon. Friends will appreciate. I should say, though, that it is experimental, not in the sense that we are trying it out to see whether mobile columns are worth while, because we are quite satisfied that mobile columns are essential, but it is experimental in the sense that we wish to find out how it should be constituted and how it should work. We want to study the organisation and the question of what is the best establishment, and also to study the tactical questions which must arise in the use of such an organisation.
I should tell the House that, as it will readily understand, it would be exceedingly unsatisfactory and wasteful to try to maintain a number of mobile columns —a mobile army—in peace time, for obvious reasons, and I do not think it is likely, therefore, that it will be possible or necessary to set it up in time of peace. But perhaps the House will be interested to know that the Home Secretary himself is visiting the mobile column at Epsom on the 27th of this month, and if any hon. Member is interested in this matter and wishes to go, he will there see the actual work of the column and how far the experiment has progressed.
May I now say a word on industrial Civil Defence? My hon. Friend suggested last week that there was a tendency for industrial Civil Defence to drift away
778
from the main body of Civil Defence. I go this far with him—that I agree that to seek to put the two branches of Civil Defence into watertight compartments would be entirely bad, and that, in the nature of things, there must have been some tendency for that to occur. On the other hand, that is appreciated, and the lesson has been learned, so that the tendency is now in the opposite direction. I can assure the House that there is a tendency for the two limbs of Civil Defence not to go further apart but to get closer together. The recommendation made in the Mabane Report in this connection has been accepted in principle by the Government.
In fact, there is to be a meeting this week with representatives of both sides of industry, and that will be followed as soon as may be, assuming it is successful—and I have no reason to believe it will be otherwise—by a meeting of representative organisations of local authorities, and I hope and I shall expect that it will be possible at no very distant date to issue detailed guidance to those concerned.
As regards the question of rank and badges of rank, I quite appreciate that there is a need for an early pronouncement. I believe everybody feels that, and, indeed, it is obvious that it is so. But there are some very difficult questions raised. I am sure that the hon. Member for Lincoln will appreciate these questions, having had some experience of them.
To give a brief example. Canterbury, on the one hand, and Liverpool, on the other, each have a chief warden. The functions and responsibilities of those two individuals must, in the nature of things, be different. I think the House will appreciate that there might be difficulties about insisting that they should hold different ranks, or that they should hold the same rank. How are we to have some easily denned scale suitable for the corps as a whole? I say that to indicate the kind of difficulties involved.
Consultations have been taking place with the local authorities, and I think I can say that they are almost on the point of completion. Again, I hope it may be possible to make a pronouncement on this subject in the near future. I appreciate what the hon. Member for

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Lincoln has said about the need for recognising the Civil Defence forces in a tangible form. It is not only a matter of paying them lip service on platforms and in this House, but of showing them in a practical way on ceremonial occasions that we regard them as important.
Since the Civil Defence Corps was formed at the end of 1949, a representative contingent has always taken part in the Remembrance Day parade at the Cenotaph. The House will remember that a contingent of the corps marched in the funeral procession of the late King George VI. It is intended that a contingent of the corps shall take part in the lining of the route for the Coronation, and, therefore, they will be fully represented on that ceremonial occasion.
I can say that on all such occasions it is the intention of the Government that
780
the corps should be seen to play their proper ceremonial part, thus indicating that the Government and the country genuinely regard them as my hon. Friend has said, as the fourth arm of defence.
I have necessarily had to deal somewhat perfunctorily with the many questions that have been raised, and I have tried to deal with them as best I can. In some cases, I think I have indicated that we are reaching a point where definite action can be taken, and I hope the House will appreciate that we will certainly do what we can to give effect to the desires of both hon. Gentlemen on either side of the House.
Question put, and agreed to.
Adjourned accordingly at Twenty-nine Minutes past Ten o'clock.

FUEL AND POWER
  Electricity Supplies (Rural Areas)
  Electricity Supplies (Rural Areas)
  Coal Production
  Coal Production
  Cotswold Area (Coal Ration)
  Cotswold Area (Coal Ration)
TRANSPORT
  Motor Cars (Wireless Sets)
  Motor Cars (Wireless Sets)
  Road Junction, Newcastle-under-Lyme
  Road Junction, Newcastle-under-Lyme
  Railway Pensions Schemes
  Railway Pensions Schemes
  New Highway Code
  New Highway Code
MINISTRY OF FOOD
  Batchers, Edinburgh (Fat Allowances)
  Batchers, Edinburgh (Fat Allowances)
  Sugar Supplies (Fruit Crop)
  Sugar Supplies (Fruit Crop)
  TEACHERS, DAGENHAM (ESTABLISHMENT)
  TEACHERS, DAGENHAM (ESTABLISHMENT)
  HEALTH VISITORS
  HEALTH VISITORS
Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers

  IRON AND STEEL BILL
  2.35 p.m.
  Order of the Day for the House to be put into Committee read.
  Moved, That the House do now resolve itself into Committee.—(The Marquess of Salisbury.)
  On Question, Motion agreed to.
  House in Committee accordingly:
  [The EARL OF DROGHEDA in the Chair]
  Clause 1 agreed to.
  Clause 2:
  The Iron and Steel Board
  (2) The Board shall consist of a chairman and not less than nine nor more than fourteen other members.
  LORD STRABOLGI LORD STRABOLGI moved to add to subsection (2):
  "of whom the Chairman and at least four other members shall be whole-time members."
  The noble Lord said: This Amendment is one to which my noble friends attach considerable importance, for reasons which I shall endeavour to explain to your Lordships. Under the Bill as drawn, undoubtedly it is envisaged that the Minister shall appoint a certain number of whole-time members to the Board. It does not say how many, and I believe that I am right in saying that it is not obligatory on the Minister to appoint any whole-time members, not even the Chairman. I do not want to enter into the old controversy about whether the Board of a great undertaking should consist simply of a panel of whole-time experts and technicians or whether it should consist of people with outside interests and, therefore, presumably a wider outlook. That matter has been debated over many, many years. On the Continent their system is different from our own: there,
  894
  they have both managerial and supervisory boards. Here, many of our successful companies have boards consisting entirely of whole-time fully paid experts, while others have mixed boards. I believe that up to now the general consensus of opinion has been in favour of the mixed board, with a certain number of whole-time experts and a certain number of people with outside interests serving part-time, who bring the benefit of their experience and knowledge to the board.
  As I say, I do not want to go into this old controversy. What we are asking for is a mixed Board, and to be sure that it is a mixed Board the Amendment asks that the Chairman and at least four others shall be full-time salaried members, entitled, after a certain number of years, to pensions. In another place, my right honourable and honourable friends moved for half of the Board to be whole-time salaried pensionable members—that is, half the Board of a minimum of nine and a maximum of fourteen members. We are more modest than that: we are asking only for a chairman and four others. I hope that our modesty will be rewarded and that the Government will be able to accept this Amendment. One reason why I think it is necessary to have some whole-time pensionable members is that it is laid down in the Bill that a certain number of members of the Board should represent organisations of the workers—in other words, trade unions—and it will not be easy to get good men to serve as part-time members. They have to give up other things to do so; they may not have private means—probably they will not—and we cannot expect men who have attained great positions in the trade union world to accept a seat on this Board unless it is a whole-time position, carrying with it an appropriate salary and pension rights. I am advised that unless we do that it will be most difficult for the kind of people we want to accept positions on the Board.
  There is another argument that I would put forward. It is common knowledge that when the late Government passed the Iron and Steel Act setting up the Corporation, there was a great pressure front the industry, which was opposed to the Act and its policy, to prevent professional iron and steel people from serving upon the Corporation. We were fortunate in getting Colonel Hardie, in

  895
  my opinion and in the opinion of many others as well. There was great difficulty in finding prominent and well-known members of the industry to serve, because of the professional pressure from their colleagues in Steel House against their serving. They were told that nationalisation was only a temporary arrangement and that they should not go into the scheme and should make it as difficult for the Government as they could. I am sorry to say that that argument carried some weight. That is another reason why we should have a certain number of posts that are whole-time, carrying an appropriate salary and pension—in order that the man prepared to burn his boats may feel able to join the Board. I do not know whether the same sort of pressure is going to be brought to bear on people in the industry not to serve on the Board—I hope not; but if there is, it is necessary to have a certain modicum of whole-time posts in which there is some security and which professional iron and steel people can fill.
  I do not know what the present Government, if they remain in office, are prepared to do in regard to the Board. We oppose this Bill, but as the Government are insistent and obstinate in passing it through, we are trying to make the best we can of it and improve it where improvement is possible. It may be that the Government really mean to make the Board an effective instrument for the supervision of the industry and the carrying out of a national policy with regard to iron and steel. I do not know. On the other hand, it is not impossible that if the Conservatives remain in office, they may allow this Board to wither away. Like Lenin, who insisted in his first pronouncement on the future of Socialism that the State must "wither away," the Government in this case may allow the Board to wither away. The Minister could, in effect, kill it. We hope that that will not be the case. We hope that the Government will take a wide view of the national interest and make the Board really effective. But we believe that if it is to be really effective there must be a certain number of whole-time people, including the Chairman, who will give their time to this important work in the national interest and not be occupied with outside activities.
  I would remind your Lordships that, as the Bill is drawn, it is not necessary to have any full-time members at all. I do not know whether the noble Marquess will say that nothing is further from the Government's thoughts than not to appoint whole-time members, but that they want flexibility. I dare say we shall be told that when the original Act went through under the Socialist Government, the then Minister of Supply, my right honourable friend Mr. Strauss, also pleaded for flexibility. I hope that argument is not going to be used, because the two cases are not analogous. We were setting up a Corporation of tremendous powers with a great future in front of it. This Bill sets up a Board which has not great powers—that is one of our complaints, and we hope to give it more powers before the Bill passes through your Lordships' House. The argument about flexibility and freedom to manœuvre does not apply to the same extent. There are many other arguments that could be put forward, but I think I have said enough to show that there are solid reasons for this Amendment, and I hope that the Government will accept it. I beg to move.
  Amendment moved—
  Page 2, line 30, at end, insert ("of whom the Chairman and at least four other members shall be whole-time members").—(Lord Strabolgi.)
  LORD WINSTER: In supporting this Amendment I must confess my surprise that the Bill is imprecise upon this important point. I say "imprecise," but that is a polite word to use; I must confess that I think it is rather sloppy. This Board will have most important duties of supervision confided to it, and a supervising body must be a strong body. This Board must not be a sham and a camouflage to make the public believe that a public control exists when, in fact, such control does not exist. In view of its duties, this Board really ought not to be, in the main, a part-time affair. Look at its duties. The Board is going to be charged with control of prices, of development, of the supply of raw materials; and it has to produce plans for the modernisation and expansion of the industry. It will be responsible for relations with the Iron and Steel Federation, and will exercise supervision over some 2,400 companies. The Board must

  897
  exercise a thoroughgoing supervision. But as regards the composition of the Board, the Bill, in its terms gives no assurance whatever that such composition will, in fact, be thoroughgoing. We do not want the Board to exercise day-to-day control of the industry; that would be absurd, and would not be at all helpful. But we do want a Board which will produce a development plan, will see that all concerned conform to that plan, and will not seek to pursue private interest, as I fear they may be inclined to do if supervision is not rigorous.
  Such duties as I have enumerated are not duties for part-timers. I believe there is force in the argument that the Minister, in appointing the Board, wants to enjoy a certain latitude and flexibility. But why not say in the Bill that the Board shall consist of a certain number of members, of whom a substantial number shall be full-time? Surely, it is reasonable to provide that a substantial number of the Board shall be full-time members. There is all the more reason for being precise in this matter because, if we look at Clause 20, line 17, we see that it says there that full-time members are contemplated. Therefore, if the Bill contemplates the appointment of certain full-time members, why be shy about it? Why not define, in some terms or other, what number of full-time members is contemplated? As the Bill is drafted at present, if the Minister were to appoint one full-time member, the terms of the Bill would be satisfied. Since it is perfectly clear from the duties imposed upon this Board that they are duties which are such as to demand the full-time attention of a certain number of the members, why not accept this Amendment, or some wording to the effect that a substantial number of the Board shall be full-time members?
  2.45 p.m.
  LORD ARCHIBALD: I feel that this is an extremely modest Amendment, and it is certainly one about which it can be said that there is nothing of Party politics involved in it. At this stage, it is unnecessary to argue that there should be full-time members of the Board, because that argument has been well put by my noble friends who have just spoken. In any case, the argument has already been accepted by the Government. The
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  Minister, speaking in the other place, said:
  "It is our intention that a proportion of the Board, including the chairman, should be full-time members."
  What we are really asking is that the Government's intention in the matter should be expressed in the Bill. The membership of this Board may be anything from ten to fifteen. All we are asking by this Amendment is that five of these members, including the Chairman, should be full-time members of the Board. My own view is that at least half of the members of the Board should be full-time; that is to say, if the Minister appoints the full number of fifteen, then seven or eight of them should be full-time members. The point at issue is simply whether the Bill is to express the intention which the Minister has indicated in another place. I can fully understand his reluctance to have his handstied too tightly; but less than five out of ten is unthinkable, if the Board is to function effectively; and even five out of ten would be a small proportion. In either case, the Minister is left with ample latitude for that flexibility he wants in the making of his appointments.
  I am bound to say that to refuse the proposal that there should be five full-time members would rather indicate that the Ministers intention was not a serious one. What is more important is that a refusal to accept that there should be five full-time members would strengthen the suspicion that the Board is not intended to play a serious part in the future of the industry; that it is, in fact, intended to be more or less a rubber stamp for Steel House. If that suspicion is unfounded, then there is an easy way to dispel it—namely, to accept that there shall be at least five full-time members of the Board, thereby indicating that the Board is intended to play a full, serious and worthwhile part in the future of this important industry.
  During the first year or two of which I had the honour to be a member of your Lordships' House I often heard the argument put from the other side, "If that is your intention, why not put it in the Bill?" I am bound to say that there were many occasions—though not on every occasion—even when that argument was resisted, when I felt it was well-founded. But I have never known a case where it was better founded than here.

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  The Minister has said that it is his intention to have full-time Members. We are only asking the Government to put that intention in the Bill. Why not have five out of ten, or five out of up to fifteen full-time members? Show that the Board is intended to be serious by accepting this Amendment; and, what is possibly more important, show that attitude of give-and-take, that attitude of both sides of the House contributing to make this a better Bill, by accepting this first Amendment.
  2.50 p.m.
  LORD MANCROFT: I do not think there is really a very great deal between us in this matter. Naturally, I have not agreed with everything which has been said by noble Lords opposite, but there are two points on which we can certainly all agree. The first is that there is room for argument concerning the precise desirable composition of this Board or, indeed, of any other board. I dare suppose that if the three noble Lords who have just spoken were to be taken aside separately and asked to give their honest opinion as to how the Board should eventually be constituted, their three opinions would all differ. I dare suppose that none of them—
  LORD ARCHIBALD: I am sorry to interrupt the noble Lord, but I think he would find that we were unanimous on the minimum number of full-time members.
  LORD MANCROFT: That may well be, but that is not actually what I said. I think there would be a fourth opinion if the noble Viscount, Lord Bruce of Melbourne, were in his place, because your Lordships will remember the very strong views on this subject which he expressed. I should like to remind your Lordships of the Government's intention concerning the composition of this Board—it has already been stated by the Minister in another place, and the noble Lord, Lord Archibald, has touched slightly upon it this afternoon. First of all, there should be a Chairman who, in the Government's view, should be independent and full-time—that is to say, not connected with the iron and steel industry, and if he comes from the industry then he severs his connections with it; then a nucleus of full-time members which should include, if possible, men
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  drawn from both sides of the industry, a consumer and possibly also an independent member. The third element should be part-time members, some drawn from within industry—when I say "within industry" I do not mean only the iron and steel industry, but industry, and, of course, from both sides of industry: consumer industry as well as the iron and steel industry.
  In addition we want some people not engaged in industry—that is to say, independent members with experience of administration, business, science and so forth. These qualifications are set out in the Bill. Steel producers on the Board should not number more than about three, and there should be equal representation of the trade union side in the iron and steel industry. These are the general ideas of the Government and they are well known, I am certain, to noble Lords opposite. I do not think noble Lords opposite would differ very much, and I do not think that I should differ very much, from what the noble Lord, Lord Strabolgi, has in mind as his final ideal Board. The next point, on which quite certainly we have no difference of opinion at all, is this. The noble Lord, Lord Strabolgi, expressed the opinion that the Government were desirous of seeing that this Board was both strong and effective, and, of course, he is completely right. We are desirous of seeing that it is both strong and effective, and I should have thought that was obvious throughout the whole length and breadth of the Bill.
  The only point upon which we differ is on this question of flexibility. The noble Lord, Lord Strabolgi, skated, I thought, a little uneasily over the observations of his colleague, Mr. Strauss, who was at the time of the 1948 Act the Minister in charge. I should like to remind your Lordships what it was Mr. Strauss said in another place on this very subject. Here I differ from the noble Lord, Lord Strabolgi, because I think that the arguments advanced there apply doubly today to the point we are discussing this afternoon. This is what Mr. Strauss, the Minister then in charge of that Bill, said:
  "It would be quite foolish for Parliament to lay down now the exact proportions of full-time or part-time membership, or even to say that there must be a certain number of part-time members. I think part-time members of a Corporation of this sort would be invaluable, but experience might show that ten full-time members are needed at a certain stage; I do

  901
  not know. I ask the Committee not to limit the Minister in his make-up of the Corporation, to leave it flexible, to avoid rigidity at all costs. Only in that way will the Minister be able to adapt the Corporation in numbers, proportion, and balance, according to the requirements of the situation. It may only be possible to see, after some experience of a year or two, what is the best proportion. It may be that after the Corporation has been working for some time the situation may be different and the proportion may have to be changed. I am sure it would be wrong to lay down here and now what the exact proportion should be, and I therefore hope the Committee will not ask the Government to do so."
  That Corporation had much more power on paper than this Board, but the arguments seem to me almost exactly applicable. I can find no sentiment in Mr. Strauss's remarks that would not apply equally strongly to this argument this afternoon.
  I quite agree, as I say again, that the final composition of the Board may be exactly what noble Lords opposite have in mind. But I do ask them to agree with the sentiments expressed by Mr. Strauss, that the Minister should be given a completely free hand, his intentions being well-known both to the House and to the country, so that he may choose, at the time and place he makes his choice, the best and the strongest Board possible. For that reason, whilst agreeing with many of the sentiments expressed opposite, appreciating what noble Lords have in mind and what they seek to do, I very much regret that the Government cannot see their way to accept this Amendment.
  LORD WILMOT OF SELMESTON: We have listened with great interest to what the noble Lord, Lord Mancroft, has said, because it seems to me that he has committed the Government to a number of steps which are certainly not in the Bill—or perhaps I have not searched it diligently enough. He said, first of all, that the Chairman is to be full-time. There is nothing about that in the Bill. If the intention of the Government is that the Chairman should be full-time, let it be put in the Bill; because what the noble Lord, Lord Mancroft, says is charged with great authority but it is not law unless it is in the Bill. If it really is true, as he says, that the Chairman is to be full-time, that, at any rate, can go in the Bill. The noble Lord went on to say that it is the intention of the Government
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  to appoint equal numbers of members from what he called both sides of the industry—no doubt meaning owners and workers. Is that the intention? The Minister of Supply in another place did not say so, and there is nothing in the Bill. If the noble Lord, Lord Mancroft, is committing the Government now to equal numbers, then let it be put in the Bill. Before we pass this Bill we have a right to know what in fact it is going to do.
  The remarks of Mr. Strauss in another place had regard to something quite different from this Board. They had regard to the Iron and Steel Corporation, whose functions were radically and altogether different from the functions of this Board. What he said certainly applied to the Iron and Steel Corporation who, of course, had the function of owning the entire industry. This is not an ownership body. This is described as a supervisory body and, as we shall discuss later on, we feel that its powers of supervision are very nebulous and its instruments very weak. But at any rate we have a right to know that some people are going to be serious about it. Now I am not one of those who believe that all public bodies should be composed exclusively of full-time members. I believe it is very desirable to have part-time members who still retain the contacts from which they really derive their value to the Board. But it is equally necessary that some of the members should be independent of outside interests and should be able to give the Board the whole of their time and attention and, no less important, should have no other interests. There is therefore, I submit, an unanswerable case for the Chairman and for some of the members to be full-time members. The Amendment which my noble friends have put down asks only for a minority of the members to be full-time; and I think it is an unhappy harbinger of the temperature in which we are going to pursue this matter if, on a business matter of this kind, the Government cannot state in the Bill what their intentions are. I hope that something further will be said on this subject before we leave it.
  LORD LLEWELLIN: I do not see that there is very much between the two sides of the House on this matter. The noble Lord who has just sat down said

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  that in the original Iron and Steel Act the functions of the Corporation were very different from those which the Board now being set up will have. He said that the Corporation owned the whole steel industry, and that this Board will have very nebulous powers. He came to the odd conclusion, after those two premises, that the Board should be more clearly defined when it had nebulous powers than when it was going to own and run the whole industry; and that therefore Mr. Strauss, speaking in another place, was right when he said that you could have a nebulous Board with exact powers, but that if you had nebulous powers—as the noble Lord calls the ones proposed under the present Bill—then you must have a clearly defined Board. That was what the argument of the noble Lord, Lord Wilmot of Selmeston, really amounted to, if I may put it as crudely as that.
  What does the Amendment seek to do? It seeks to provide that the Chairman and at least four other members should be whole-time members. But the position proposed by the Government as I understand it, is that the constitution of the Board shall be flexible. And although the intention certainly is that the Chairman shall be a full-time member—
  LORD WILMOT OF SELMESTON: It does not say so.
  LORD LLEWELLIN: I understood the noble Lord, Lord Mancroft, to say that the Chairman was going to be a full-time member, though I agree that the Bill does not say so. At the same time, I did not understand as clearly as the noble Lord, Lord Wilmot, appears to have done that the other members were to come equally from the two sides of the industry. The question arises whether we ought to define that position in the Bill, and whether we should say that the Chairman shall be full-time and that at least four of the other members shall be whole-time members. It may become apparent in practice that there should be only two whole-time members, or it may become apparent that there should be eight whole-time members. The difficulty about putting in any number such as four is that it may appear thereafter as though Parliament had meant it to be four, and four exactly.
  904
  For many years past, we have had minimum wages worked out for different industries in this country; and those of us who have studied the minimum wage problem always found that the minimum wage tended to become the maximum wage. I suggest, therefore, that if the Bill states that there shall be "at least" four full-time members, it will come to be considered later on as meaning "at most" four full-time members. I think it would be far better, after looking at this matter broadly, when the Government are in a position to appoint this Board under the Act, for them to say how many of these members shall be whole-time and how many part-time, and to leave it to Parliament afterwards to say to the Minister, if it thinks fit, that he has not selected the right proportion. I should have thought that in a matter of this kind, this Government, as was the case with the Socialist Government with regard to the original Iron and Steel Act, were quite right to ask for a free hand.
  EARL JOWITT: As the noble Lord, Lord Archibald, has reminded us, if there is one thing that rings in one's memory, and has done so since the six years' period when I was Lord Chancellor, it is the cry from the noble Viscount, Lord Swinton, "Put it in the Bill." If I learned anything, I learned that. To-day, we have the noble Lord, Lord Mancroft, in a speech of great charm—if I may say so, I never heard anybody turn down an Amendment with such sweet reasonableness—saying that the Chairman is going to be a whole-time person, a fact which does not appear in the Bill. I can only retort, therefore, "Put it in the Bill." I cannot see why you do not do so. If you want to meet us, put this in the Bill. Then an appeal was made to some words used by Mr. Strauss in another place. After all, if you are going throughout this Bill to regard the observations made by Mr. Strauss as having a kind of god-like quality of authority, that is "all right by me"; but if the Government are going to pay lip service to the observations of Mr. Strauss on this occasion only, and after that to regard the observations of Mr. Strauss as not being authoritative, I cannot see the point. The Government cannot have it both ways. Whether Mr. Strauss was right or wrong I do not know, and I do not care what he said on that

  905
  occasion—it seems to me that the circumstances are different. But I repeat that I should like to have something in the Bill.
  I was astounded to hear the observations of the noble Lord, Lord Llewellin. I have listened to him for many years, greatly to my advantage and interest, but I do not think I have ever heard him less happy than he was to-day. With the greatest respect to Lord Llewellin, it is not my experience that the minimum generally becomes the maximum. My experience is that the maximum generally becomes the minimum. That is the criticism that has always been levied. We are not asking that the number of full-time members shall be defined precisely; we are asking that it shall not be less than four, in addition to the Chairman. The position of the Chairman has already been conceded. If four is too many, then give us three; go some way to meet us, and put it in the Bill.
  If you are going to have representatives of the trade unions, it is exceedingly difficult, for reasons which we all understand, to see how that will work unless they are full-time members. I am glad to see the noble Viscount, Lord Swinton, is now present. I have just been praying in aid his—I will not call it raucous cry, but constant reiteration of the statement, "Put it in the Bill." I wish I had a gramophone record here of the noble Viscount saying it. I am sure I learned the lesson he taught me throughout the years, and I am now asking the Government to put in the Bill that which they say they intend to do. I think that that is a matter on which the Government could go some way to meet us. I repeat that if four is too many, let it be three. But put something in the Bill about it. This is not a matter on which I shall ask my noble friends to divide the House, but I would ask the Government to see, either now or between now and the Report stage, whether there is not something here which they can give us which accords with their own sense of what is right and desirable.
  3.10 p.m.
  LORD TEYNHAM: I wonder why, when the Opposition are not in office, they want one thing, and when they are not in office, they want another. I do not want to repeat the arguments put forward
  906
  by Mr. Strauss, which are all well known to us now; but surely it would be better to leave the matter flexible and to see how many full-time members are required after some experience of running the Board. I think there is some argument for the Chairman being a full-time member, but you might seek the services of a Chairman who was very experienced and most suitable for the job but who was unable for other reasons to give his full time. Personally, I should prefer to leave the clause as it has been drawn.
  LORD WINSTER: I have only two, remarks to make, arising out of the reply of the noble Lord, Lord Mancroft. As I understand the noble Lord, he concedes the point about a full-time Chairman, and I certainly understood him to speak of three interests at least which would require to be fully represented on the Board. So that would make, a Chairman and three other interests to be full-time members, and we are only asking for four. There is really, then, only one full-time member between us. I should have thought that the noble Lord might easily concede that point. As regards the remarks quoted from Strauss. I do not think that they were absolutely relevant to the point at issue up to the present moment. What they amounted to was that in respect of, as I think, another matter, Mr. Strauss asked that we give some time and learn by experience what to do. Surely time has elapsed, and we have gained experience. Surely we have gained sufficient experience by now to know whether a Chairman and four full-time members are the least which are requisite for the performance of the duties entrusted to this Board. As for the remarks made by the noble Lord, Lord Llewellin, I have never in my life listened to such an exhibition of hairsplitting, and I hope that I may never listen to such an exhibition again. When he suggests that the words "at least" inserted in the Bill will come to be regarded as "at most," I think that is the height of absurdity. I trust no attention whatever will be paid to that remark of the noble Lord.
  3.12 p.m.
  LORD OGMORE: I think it unfortunate that the Party which, when they were in Opposition, complained so violently and so often of delegated legislation,

  907
  should object now to giving Parliament control, to some extent, of the numbers on the Board. I think this is an important matter, and Parliament should consider the question of the structure of these Boards. As my noble friend has said, a lot of water has gone under the bridge since Mr. Strauss made his original statement which has been quoted to-day. When we were in office we learned a good deal the hard way about these various Boards, how they should be formed and how they should be carried on. There is one point that does not seem to me to be strongly stressed to-day, though it was touched on by my noble friend Lord Strabolgi—that is, that we as a House of Parliament ought to ensure that the rank-and-file of the industry have an opportunity of getting on to the Board, because, if there are only part-time members of a Board, who will not of course be pensionable and who will be paid only for part-time service, then the ordinary rank-and-file member, the man who comes up from the bottom, the steel worker, will have very little opportunity to become a member of the Board. We are told, "That will be all right. Of course, the Government will see to it." But why do not we see to it? That is what we are here for. I cannot see why we cannot put into this Bill something that I am sure all of us want—that is, that there should be an opportunity for the man at the bottom of the ladder in the steel industry to climb to the top.
  3.14 p.m.
  THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY): I think perhaps it would be useful if I said a few words at the end of this debate. I have listened with great interest, as I have no doubt your Lordships have, to the argument advanced on both side, They have been very good-humoured and in no sense unworthy of our general attitude to affairs. Personally, I agree with what was said by my noble friend Lord Mancroft, that there is not a great deal of difference between us on this particular point. We are all in agreement, for instance, so far as I understand it from what I have heard, that there are likely to be a number of whole-time members on the Board. I think that is almost certain to be so, though no doubt the number may vary from time to time.
  908
  As I understand it, the only question between us is: Is it desirable at this stage to tie the Minister's hand in this matter as to the correct course for him to follow in circumstances which may be unknown and which may, as I say, vary from time to time? On that particular point successive Ministers—the responsible Minister in the late Government and the responsible Minister in the present Government—have both taken the same view: quite unequivocally they have both said that it is undesirable to tie the Minister's hand. That is a view, as has been noticed this afternoon, which was expressed quite clearly and definitely by Mr. Strauss at the time of the Labour Government's Iron and Steel nationalisation Bill. I am not going to quote his words again; they have already been quoted by my noble friend, Lord Mancroft. But there can be no doubt as to what he meant. He could not have put it more clearly.
  LORD SILKIN: Does the noble Marquess happen to know in response to what Amendment that statement was made? Was it not made in response to an Amendment from the Opposition asking for the very thing for which we are now asking?
  THE MARQUESS OF SALISBURY: Perhaps the noble Lord will wait until I have finished my remarks, anyhow on this particular argument. Apparently, Mr. Strauss did not convince the noble Lord, Lord Archibald, from what he has said to us this afternoon. I must assume he stood loyally by his Party, because I do not remember his expressing his opposition in any violent form at the time.
  LORD ARCHIBALD: I was not in the House at the time.
  THE MARQUESS OF SALISBURY: In that case, the noble Lord is completely exonerated but, since he has come into the House, I understand he has altered his view. However, that is a matter we can discuss at another time.
  LORD ARCHIBALD: I think that is not quite fair.
  THE MARQUESS OF SALISBURY: I do not want to be at all unfair. Perhaps the noble Lord would like to say something now.
  LORD ARCHIBALD: I should. The point that I made is that during the early years of my membership of this House,

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  when a representative of the Ministry said, "It is our intention to do so and so," I often heard it said, "Well, if that is your intention, put it in the Bill." I am repeating that to-day. I said there were occasions when I thought that, even when that argument was resisted, it was well-founded, but never so well-founded as on this occasion.
  THE MARQUESS OF SALISBURY: I am sorry if I misrepresented the noble Lord. It is the last thing I intended to do. In any case, whomsoever Mr. Strauss did not convince, he convinced the present Minister of Supply; and the present Minister of Supply, as he has made equally clear, has come to the same conclusion as that to which Mr. Strauss came. We on this side of the House on this particular point agree, naturally, with our colleague the Minister of Supply, and I do not think that noble Lords opposite should complain of that. If we have been convinced by the arguments that Mr. Strauss used at an earlier time, that should be most agreeable to them.
  The noble and learned Earl, Lord Jowitt, in the remarks he has just delivered, used what I thought was one of the oddest arguments that I have ever heard. He said that the Government cannot say that Mr. Strauss was right at one time and then go on to say that he was wrong at all others; that that would be having it both ways. The noble and learned Earl is a great lawyer, and presumably a great logician, too, but is it not just conceivably possible that Mr. Strauss may have been right at one time and wrong at all the others? I only put that forward for the noble Earl's consideration. I would also agree with what the noble Lord, Lord Mancroft, has said, that the argument that you must not tie the hands of a Minister is presumably more effective with regard to this Board, which is merely a supervisory body, than it would be even with the much more powerful—at least on paper—executive board which was placed in the Act of the last Government.
  Moreover—and here I come to the main point which the noble and learned Earl made—there really is more substance in our difficulty in this matter than noble Lords opposite have perhaps realised. The noble Lord, Lord Wilmot, spoke of the position of the Chairman. He said that he understood, from what
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  Lord Mancroft said, that he was to be a "whole-timer." Of course, in the vast majority of cases I am sure that would be true. It would be the object of every Government who had to operate this Bill to find a "whole-timer" who would do this particular job. But it is not inconceivable that there might be an ideal person to act as Chairman of the Board who also had other duties. If that situation arose it would surely be entirely wrong that, by the unduly rigid drafting of an Act, that mar should be debarred from occupying the position. That is the answer I would make to the noble Lord who says, "Put it in the Bill." If it is to be the universal ruling, by all means put it in the Bill; but if it is a case where there might be exceptions (and if there were al exception it would be an important exception), then I think probably in the end it would be wiser not to do so. In fact I feel that this is a very fine opportunity for getting inter-Party agreement, and I hope the Opposition will grasp it, if my words have been at all effective.
  It is perfectly true, as Lord Jowitt very rightly said, that this is not a matter of very great moment—it is not one of the great clashes of principle which divide Parties. I think it has proved to be very little more than an agreeable debating point to start the Committee stage of this Bill. If we are to admit, as I think we must, that there is a modicum of common sense in all Parties and, in all Governments, I should have thought that noble Lords in all parts of the House would assume that where it was possible to get a "whole-timer," a "whole-timer" would be appointed—that there would be a varying proportion of "whole-timers" and "half-timers," and in the chair there would be a "whole-timer," if such a person could be found. That is what I think noble Lords opposite really mean, and it is certainly what we mean. I hope, therefore, that they will not find it necessary to press the matter further.
  LORD STRABOLGI: Although we attach considerable importance to this Amendment, I do not think it is worth a Division and I do not propose to press it. My noble friend Lord Jowitt, referring to the charming and gracious speech of Lord Mancroft in answering my points, reminded me of the description applied to a well-known pirate—

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  "as good a man as ever cut a throat or scuttled a ship." What Lord Mancroft said was all very nice, but he gave us nothing; neither did the noble Marquess. We do need flexibility. We ask only for four whole-time members. As for all this play with Mr. Strauss's remarks in another place, after all they were in answer to a Conservative Amendment pressing for the same principle for which we are pressing, although not in analogous circumstances. Mr. Strauss took a line, and now we have the Government sitting on those Benches and they take the other line; the cases are not analogous. I think there is something in what the noble Marquess said in regard to a whole-time Chairman. It is possible to conceive of a man as Chairman who would not wish to make it a whole-time job. In that case I presume there would be a Deputy Chairman. I wonder whether the noble Marquess would consider, at another stage of the Bill, whether or not we should allow for that particular case? I have not consulted my noble friends on this matter, but I think there might be a case for having either a Chairman or a Deputy Chairman as a whole-time member, so as to meet the rare but perhaps important case put forward by the noble Marquess, that of a man who, while suitable in every other way, did not wish to give up his other, outside interests but wished to be Chairman of the Board. We might find words to cover that situation, and perhaps we could have our four members as a quid pro quo.
  THE MARQUESS OF SALISBURY: I cannot give the noble Lord any great hope that we shall alter the view which I have expressed, and for the reasons which I have given, but I will certainly pass on his suggestion to my right honourable friend.
  LORD STRABOLGI: I do not wish to press this Amendment, I beg leave to withdraw it.
  Amendment, by leave, withdrawn.
  Clause 2 agreed to.
  Clause 3:
  Supervision of iron and steel industry by Board
  3.—(1) It shall be the duty of the Board to exercise a general supervision over the iron and steel industry, and to such extent as they may consider necessary the powers conferred
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  on them by this Act, with a view to promoting the efficient, economic and adequate supply under competitive conditions of iron and steel products, and in particular to keep under review—

  (a) the productive capacity of iron and steel producers;

  Provided that the duty of the Board with respect to the arrangements specified in paragraphs (d), (e) and (f) hereof, other than arrangements for the promotion of research, shall not apply in relation to any undertaking in whose case—

  (i) the Board are satisfied that the main activities of the undertaking are not part of the iron and steel industry, and that the only activities of the undertaking which form part of the iron and steel industry are activities included in paragraph 4 of the Third Schedule to this Act and are incidental to the main activities of the undertaking; and

  3.27 p.m.
  LORD WILMOT OF SELMESTON LORD WILMOT OF SELMESTON moved in subsection (1), after "supervision" to insert "and control." The noble Lord said: This Amendment inserts two words. As it stands, the clause says that the duty of the Board is to exercise general supervision over the Iron and Steel Industry, and this Amendment adds "and control." I think the attitude of the Government to this Amendment will be important as an indication of what really is their intention about this Board, its duties and its powers, which are fraught with such great importance for the iron and steel industry, for the trade and commerce of the country, and for our very security which depends upon this vital industry. In introducing the Bill to this House on Second Reading the noble Marquess compressed the purposes of the Bill, and the duties of the Board, in what I would describe as a masterly review of the whole rather complicated matter; and if I take only the words which he used, it is clear enough that the duties of this Board are wide, complex and very far-reaching.
  To begin with, the Board not only encompasses the limits of the industry as comprised by the Iron and Steel Corporation which now exists, but extends over the whole industry in the widest possible way. It has to look after the productive capacity of the industry; it has to make sure of the amplitude of the raw materials available; it has to see that those raw materials are equitably distributed, and it has to look after the supply of fuel for the industry. It has to fix

  913
  maximum prices for the enormous range of products of the industry; it has to have regard to the whole question of future developments and education within this vast industry; it has to require that nobody shall proceed with major capital developments without its consent, and in certain circumstances it has to arrange for the production, even in countries abroad, of raw materials for the industry. The noble Marquess went on to explain a whole number of other functions which this Board has laid upon it. I think it is a misuse of words merely to describe that vast range of functions as "supervision." If the Board is to be effective, then it is a controlling body and it must have power to make its will felt. To have a Board that is a mere office for asking questions, without any powers—and that is the situation as the Bill is drafted—of inspection or verification of what it is told, is really to make a mockery of the whole thing. If it is necessary to have this Board at all—and the Government say that they are in no doubt about that—then it is necessary for this Board to have power. And if it is to have power, we must face the fact that this is a board of ultimate control, as well as a board of initial supervision.
  I do not think there is very much more to say on the Amendment, and I hope the Government will indicate that they seriously intend that this industry, in view of its vast public aspects, shall be the servant of the public; owned, managed and run by efficient private enterprise managers and directors, yes, but ultimately responsible to the public interest, and subject to the control of this Board when it is called upon to exercise it. I trust that the Government will accept this Amendment, because it will make an enormous difference to the appreciation of what the real purposes of this Bill are. I beg to move.
  Amendment moved—
  Page 4, line 7, after ("supervision") insert ("and control").—(Lord Wilmot of Selmeston.)
  3.32 p.m.
  LORD TEYNHAM: The noble Lord, Lord Wilmot, has said that the Board should be a controlling body. I am afraid I entirely disagree, because I feel that the Government certainly do not envisage the Board as a kind of super-management imposed over the boards of directors of the individual firms. I think, therefore,
  914
  it would be wrong to give it any powers of control. The Board would, in fact, be an advisory, guiding body, and it would lead the industry rather than goad it. The members of the industry would look on the Board as a kind of club to which all the firms belonged, and it would provide machinery for co-operation in dealing with the common problems that exist. I hope that Her Majesty's Government will not accept this Amendment.
  LORD WILMOT OF SELMESTON: When the noble Lord describes the Board as an advisory body, does he mean that people will be free to take the Board's advice or to disregard it as they choose?
  LORD TEYNHAM: They are not bound to accept the advice of the Board; that is quite true.
  LORD OGMORE: I think that that has about made our case. This is a club, we are told, which members join and from which, presumably, they are expelled if they are not good boys. Some may pay their subscriptions and some may not, some way be on good terms with the secretary and some may not. I do not know that we need say much more. This is what we always feared was in the minds of the Government, but we never believed that it would be so bluntly expressed as it has been to-day. It bears out what the City paper, the Statist said on November 15. It was quoted in another place and I think it will bear quotation here. The Statist said:
  "The terms of the Bill make it difficult to believe that the Board would be in a position effectively to exercise the supervisory functions it has been authorised to perform. In the circumstances the Board would be likely to become either an ineffective nuisance or a rubber stamp for the trade associations."
  To-day, the noble Lord, Lord Teynham, has added to that description of the Board as an "ineffective nuisance or rubber stamp" that it will be a club, the members of which will be able to leave if they wish, and a club over which there will be little control by the Committee or anyone else.
  This is a very serious matter, and we attach great importance to this Amendment, because already the steel industry is concerned about the future of steel and

  915
  the future of those who work in the steel industry. I have here three reports which have appeared in the last month or two in the Western Mail, which circulates very widely indeed in the steel area in Wales. These reports all express concern, not by members of the Labour Party—at least I presume they are not—but by leaders of the steel industry. According to one report which was published on the sixteenth of the present month, Colonel J.M. Bevan, Chairman of the Briton Ferry Steel Company said:
  "I doubt whether we shall be able to get enough scrap to enable us to keep working, so there is as much danger of redundancy in the steel trade as in the tinplate trade."
  Your Lordships know that there have been thousands of men out of work in the tinplate industry.
  Recently I ventured during the Second Reading debate on this Bill to quote what was said by Mr. E. H. Lever, Chairman of the Steel Company of Wales speaking at Port Talbot. According to the report published in the Western Mail on March 20 he said that the scale of modern industrial organisation meant that money was wanted on a large scale. The great industries wanted to count on having the money as and when they needed it. He continued:
  "The money may not be there at the right time and the right price. Indeed it may not really be there at all."
  Mr. I for B. N. Evans has written an article which has been published in the Western Mail in which he gives ample evidence of the fact that steel is meeting a very serious challenge by reason of the new alloys and the new methods of producing iron, which were not even in existence a year or two ago, and that the steel industry has to meet a serious position which may affect not only the industry itself but the livelihoods of many thousands of men and the prosperity of great districts in this country. In those circumstances it would seem to call for ample control by the Board.
  If the Board has no control, if it is, as we have heard to-day, to be merely an advisory body, how can it take the necessary measures to forestall disaster and put the industry on the right road? This is, indeed, in my opinion, a difficult time, when we do not know what the call for steel is going to be and when we need
  916
  far more control even than we have had in the past. This is no time for a lessening of control. During the last few years, since the war and during the war, every scrap of steel that could be produced was urgently needed, but it may be that we shall not be in that position much longer. If, as we all hope, the Korean war is coming to a close, if there is a better climate of opinion in the world between the countries behind the Iron Curtain and those in the West, it may be that rearmament will be reduced in scale and that steel will be made available in much greater quantities for civilian production.
  At the same time it is possible, in the consequential adjustment which the industries will have to make from what is virtually war economy to peace economy that they will go through a temporary slump. In those circumstances we may find that, as is already the case with tinplate—tinplate, as your Lordships know is very largely steel; there is only 1 lb. of tin to 56 steel sheets, so that although we call it by another name it is in fact steel—we may find a very serious recession in the case of steel. In those circumstances that is the very time when control is needed. Up to now we have had control to a large extent of the purchasing of steel. We have said who may purchase steel. It may be that in the future we shall need to have some control of the production of steel—at all events for a short time in the period of adjustment. In the circumstances, I submit strongly that it is not only desirable but necessary to give power—full power of control, not merely advisory power of supervision—to ensure that the steel is produced where it should be produced in the national interest and in the interests of the community in which we live. For those reasons, I strongly support this Amendment.
  LORD SILKIN: I find myself in some difficulty in interpreting the functions of the Board. On reading the Bill I imagined that the Board had functions both of supervision and control and I thought the purpose of the Amendment was largely to make that clear. But there appears to be some misunderstanding on the subject. The noble Lord, Lord Teynham, for whom I have a great respect and for whose ability I have a high regard, must have read the Bill many

  917
  times over, yet his view is that the functions of the Board are purely advisory. I feel it is important that the position should be made abundantly clear. My reading of the Bill is that there are certain functions of control given to the Board. For example, it has control, and I should have thought absolute control, over the provision of additional production facilities. It can say "Yea" or "Nay," subject, of course, to appeal to the Minister. Under Clause 6, application is made to the Board, and it is in a position to give a decision. That is something more than advisory.
  Then, under Clause 8 it is entrusted with the duty of fixing maximum prices and these prices become binding upon all steel producers. That is something more than merely advisory. Moreover, later on in the Bill, it is given power to apply for an injunction in the courts in respect of any breach of Clauses 6 or 8. Therefore, I fail to understand how it can be contended that the only powers conferred upon the Board are advisory powers. Since there is this difficulty of interpretation, or doubt about interpretation, and since, as I contend—and I shall be glad to hear whether the noble Marquess agrees with me or not—that the Board has definite powers of control, I should have thought it right to have these words inserted in the Bill so that there may be no doubt whatever about what is the position of the Board.
  This Amendment was discussed fat some length in another place and some objection was taken to it, not on the ground put forward by the noble Lord, Lord Teynham, but on the ground that it is undesirable to say in terms that the Board should have power of control, because control is a bad thing and it is not desirable to interfere with the day-to-day functions of the various concerns. But the word "control," is not necessarily evil; it depends upon the extent of control. If the purpose of the control is merely to enable the particular functions that are conferred upon the Board by the Bill to be properly exercised—and I do not think anyone would claim that the Amendment means more than that—adding the words "and control" cannot mean more than control for the purposes of the Bill, and this is purely a clarifying Amendment. To show that the Amendment is not in any sense fanciful, I should like to quote from the Second Reading
  918
  speech of the Minister on November 25, 1952. He may have said this in an unguarded moment, but this is what he said (OFFICIAL REPORT, Commons, Vol. 508, col. 267):
  "I think it is common ground between us, on both sides of the House, that some measure of public supervision and control is necessary in the iron and steel industry. The main question is whether that necessary supervision and control can be obtained without State ownership."
  Obviously, the Minister himself contemplated a measure of control as well as supervision. Therefore, I suggest that the insertion of these words is merely carrying out what is a fact under the Bill and what seems to be the intention of the Minister.
  3.45 p.m.
  LORD GIFFORD: May I suggest that the noble Lords, Lord Wilmot of Selmeston and Lord Ogmore, made a mistake in reading the first two lines of this clause without going on to lines 3 and 4? The first two lines give directions about general supervision and the third and fourth lines go on to deal with powers. The noble Lord, Lord Silkin, mentioned that, but it seems to me that when noble Lords are arguing their case, the whole meaning of the first subsection should be taken and not only of the first two lines.
  LORD WILMOT OF SELMESTON: If the noble Lord agrees that the Board should have powers of control as well as supervision, then that should be put in the Bill.
  LORD WINSTER: I support this Amendment because I regard it as an acid test of the sincerity of the Government's intentions. Do the Government intend to use the Board for doing real business? The Amendment seeks to give the Board the necessary powers to make their supervision effective. The words "general supervision" crop up in this Bill, but general supervision necessitates powers which the Bill does not give to the Board. If it is intended that the Board shall control the industry, their powers ought to be correspondingly strong and effective, and also clearly defined. But the powers are not clearly defined in the Bill. The only power which is so defined is the power to maximum prices. There is another power which is defined—in order to add to the superfluity of

  919
  paper which is already clogging Whitehall: the Board may make reports. The Board cannot, for example, inspect works, but if on hearsay they think that a given works needs either enlarging or altering they can make a report on the matter. But they cannot do anything more. The Board enjoy no power of control whatsoever to have things which they think wrong put right. Refusal of the Amendment by the Government will certainly cause us to believe that the statement quoted by the Statist is completely right, and that the Government intend this to be a rubber stamp Board for the purpose of "eyewash" for the public.
  As I have said, although the word "supervision" is constantly cropping up, the Bill gives us no definition whatsoever of what it means. How can there be effective supervision without control? The thing is completely impossible. And without that control the public interest cannot be fully satisfied. The public interest may not be identical with that of the directors and of the shareholders, but the interests of the directors and shareholders may certainly prevail unless the Board have powers of control. It is within the memory of all of us that at Jarrow under private enterprise there was a case in which certainly the national interest did not prevail. As a matter of fact, the Minister has admitted this point by reserving to himself specifically in the Bill certain powers which are exercisable on strategic grounds. In other words, in the specific instance, the Minister recognises that he requires certain powers of control in order to safeguard the public interest, but he does so only on a very narrow issue.
  There is one other point to which I should particularly like to call attention. The Trades Union Congress have had this matter under consideration. The T.U.C. proposed a Board with the powers which they regarded as necessary for the public interest. Among these powers were the following: the power to compel private firms to undertake development; power for the Board to set up their own undertakings; power for the Board to maintain and improve wages, hours and conditions; power to give the workers a say in the politics of the industry and participation in management; power to provide for price stability and efficient
  920
  organisation. Noble Lords opposite may or may not agree that those powers are desirable, but the interesting point is that the present Prime Minister, when he was the Leader of the Opposition, said that he would—and I use his words:
  "accept the compromise solution which the Trades Union Congress have set before us."
  As Leader of the Opposition, the present Prime Minister accepted these proposals of the Trades Union Congress, but as Prime Minister he is responsible for bringing forward a Bill which mentions none of these things at all. I repeat, acceptance or rejection of this Amendment will provide an acid test of the sincerity of the Government's intentions in bringing forward this Bill, and will also be an interesting commentary on the undertaking of the Prime Minister, when Leader of the Opposition, to accept the proposals put forward by the Trades Union Congress, of which the present Bill makes no mention whatever.
  3.51 p.m.
  THE MARQUESS OF SALISBURY: The noble Lord, Lord Wilmot, made it quite clear when he introduced this Amendment that the Party of noble Lords opposite regard it as of the first importance. I am not surprised to hear that. After all, a similar Amendment was, I understand, introduced by his Party both during the Committee stage and on the Report stage of the Bill in another place, and on one of those occasions, at least, it was pressed to a Division. I shall not be greatly surprised, in view of what I have heard in this debate, if the Opposition take the same step here. Indeed, I think it is easy to understand why they attach so much importance to this Amendment. It would perhaps be unfair to them—and I do not want to be unfair—to describe this merely as a wrecking Amendment, because to describe it as that would be to indicate that it is purely negative in character, whereas, in fact, the motive is a very positive one. I have been told during recent years of terrifying operations in surgery—I believe they have even been tried, but at any rate they have been in contemplation—the purpose of which is not, of course, to kill the patient but entirely to alter his character. I suggest that this Amendment approximates closely to those operations. The whole purpose of it, as I understand it, is to insinuate into the measure which we have

  921
  before Parliament the full conception of centralised control which was inherent in their own Act.
  I do not blame noble Lords opposite for doing that; it is natural that they should, because that is the type of social and industrial structure in which they believe. But clearly they cannot expect the Government to accept it, because to do so would be to cut across the whole purpose of our Bill. If we were willing to put in Amendments of this kind, we might as well not have introduced the Bill at all. Our view, as noble Lords opposite know, is that, in order to stimulate the fullest enlistment of private enterprise and initiative in the national interest a wide measure of centralised control, even of general control, will not normally be necessary. I do not expect noble Lords opposite to agree with that, but that is our convinced view. As I said in my Second Reading speech, to which the noble Lord, Lord Wilmot, has already referred, under this scheme that we are introducing, the Board will have wide duties. It will have the duty of concerning itself with all aspects affecting efficient, economic and adequate production; that is to say, the scope of its supervision is a wide one. But we believe—and we intend to prove our case—that the work of the Board will best be done by persuasion, by influence and by cooperation, rather than by autocratic control and it is our view that, in the long run, the results achieved will be achieved by the Board and industry as partners, rather than by the more rigid relationship of controllers and controlled. The noble Lord, Lord Wilmot, and others who have spoken, evidently do not believe that, and they have used their great persuasive and forensic power in order to support their views. They think it is impossible to secure efficient co-operation of industry—at all events, of this industry with which we are concerned this afternoon—without the ultimate control being in the hands of the centralised body. They cannot believe anything else; it would be contrary to their faith to do so.
  I feel that it is only necessary for us to say in reply—and I would say it, in particular, to the noble Lord, Lord Ogmore, who spoke with great force on this subject—that, so far as I know, there is no evidence over the last twenty years that would support their thesis. On the contrary, I should have thought that all the
  922
  evidence went to show that not only had this industry been very efficient before ever nationalisation was introduced, but also that the industry was only too anxious to co-operate with the Government of the day, and to co-ordinate all its activities by a voluntary act. If that is so, surely a less onerous, a less rigid and less clamping method of supervision is more likely to achieve the objects which all of us have in view, rather than a heavy, clumsy, rigid and over-centralised machine. I am not saying anything very new in this speech, but that is the view which we take. It is also the answer I would make to the remarks of the noble Lord, Lord Winster, about "eyewash" and a "rubber stamp." We think this is the right way to do it; the noble Lord, Lord Winster, does not think so. I rather resented that he should charge us with insincerity. He said that whether we accepted the Amendment would be a test of our sincerity. I do not think that is fair. Here are two broad differences of principle, two schools of thought. I am not going to say that noble Lords opposite are not sincere in their views, and I do not think they should say that we are.
  I repeat, the whole basis of our broad industrial philosophy is voluntary co-operation, not centralised direction. I should have thought that it was the supreme merit of our scheme that the Government have not taken the attitude that there should be no modification whatever of those proposals. It has been suggested to-day that the duties of this Board will be merely supervisory. That is not so, and other noble Lords have pointed it out. We fully recognise that there are certain limited spheres where some measure of control is necessary, especially to deal with abnormal circumstances that may arise. These powers can be found in Clauses 6, 8 and 11; they affect prices, to which the noble Lord, Lord Silkin, referred, development, and also, as your Lordships know, powers to secure adequate arrangements for imports, both of raw materials and of finished steel, to meet a possible emergency. I do not say that that emergency is a probable one: I do not think it is. But we have taken steps to deal with the possibility. These powers which we have taken—because we hope we are realistic about these things—have been deliberately made

  923
  the minimum that is necessary for those purposes, and they are entirely different from the general control which is proposed in the Amendment. After all, that general control which the two little words would put into this Bill would in effect transfer all the ultimate responsibility from the firms themselves to the Board, and that is just what we do not want.
  There is also, of course, a general power to get information, but I think that may be regarded as the raw material—if I may use such an expression in this connection—to enable the Board to exercise its power of supervision. For the reasons which I have stated I think it is quite evident—it must be evident both to noble Lords on this side of the House and on the other side of the House—that the Government could not possibly accept this Amendment. I say that in all sincerity. It would strike at the very roots of our Bill, and, indeed, I am quite certain that it is intended to do that. In this matter I contend that we are not the reactionaries—we are the moderate evolutionary progressives. It is noble Lords opposite who are the reactionaries, as the country is beginning to find out. If they want to divide the House we cannot prevent them, but with a very clear conscience we shall go into the Lobby against them.
  4.2 p.m.
  LORD WILMOT OF SELMESTON: There can be no doubt now about the Government's purpose. The noble Marquess has stated it with his usual clarity and more than his usual vehemence. The purpose of the Bill is to set up an advisory body, and units within the industry will be free to accept or disregard the advice as they think fit. The supervision amounts to nothing at all except the power to ask for information which the Board has no power to verify, to give such advice as it may think fit and then go home. No wonder the Government were reluctant to comply with our request that we should know how many full-time members there were! You do not need full-time members just to give advice and leave it at that.
  It seems to me that the noble Marquess has overlooked one fundamental aspect of this matter. If the Government are serious—and I believe they are—in believing that they have a right to expect
  924
  units of private industry, controlled by directors who are elected by groups of shareholders and who are charged by their office and Articles of Association with the business of conducting that enterprise for the profit of the shareholders, to put their public duty before the interests of their shareholders, then he has the obligation of insisting that other people do the same. It is as though the tax collector were not armed with any powers of compulsion but relied upon the taxpayer as a patriotic citizen to pay his dues. The noble Marquess knows very well that unless the recalcitrant and the unpatriotic can be brought to task, the whole thing falls to pieces; and that is what will happen with these illusory powers of supervision.
  In view of the statement of the noble Marquess, the Bill could now be altered in another sense. This is not a supervisory Board, it is an advisory Board; to call it anything else is to use the wrong term and to mislead the public. At any rate, there is now no possibility of misunderstanding. The noble Marquess has gone back on the words of the present Minister of Supply. The Minister of Supply stated quite clearly in another place—my noble friend Lord Silkin has already quoted the speech—that it is agreed on both sides of the House that some measure of public supervision and control is necessary in the iron and steel industry. The question is whether it is necessary that that supervision and control should involve State ownership. Now this Bill does away with State ownership. We are not arguing that at this stage.
  THE MARQUESS OF SALISBURY: The noble Lords says that I am going back on the Minister of Supply. This is what I said: It has been suggested in certain quarters that the functions of the Board would be purely supervisory; that is not true. I went on to say that I fully recognized that there are certain limited spheres where a measure of control would be necessary. I then very briefly explained what those powers were, and I said that they are the minimum necessary for those purposes and were very different from the control envisaged in the Amendment. I never said that they were supervisory.
  LORD WILMOT OF SELMESTON: I am indebted to the noble Marquess. He

  925
  did, in fact, clearly define the limits of such control as is necessary, and he defined those limits as being the limits of an emergency only. Clause 11 in the Bill, the "Emergency clause," says, "Unless there is an emergency." According to the noble Marquess those are no powers of control—
  THY MARQUESS OF SALISBURY: But does the noble Lord wish for powers of control when there is no need? An emergency is when the powers are required.
  LORD WILMOT OF SELMESTON: The difference between the noble Marquess and myself and my noble friends is that whereas he sees the need for control only in the case of an emergency, we see the need for control before the emergency arises. Surely the experience of the non-preparation for Hitler's war convinces us that preparation in the iron and steel industry should have been made at a time when they were closing down works and throwing people out of employment. This is the very crux of the matter. It may be at the very time when the industry is unprofitable that the public interest demands that it should pursue certain unprofitable operations. By its very nature, the responsibility placed upon this industry is such that it cannot be guided solely by the measurement of individual private profit. That is not the job of the directors; it is not a matter of political philosophy or Party arguing. It is a matter of the intrinsic, basic character of the iron and steel industry, and it is because we know from experience that it is necessary to have regard to the public
  interest and the defence interest—not only in an emergency, but when things look quiet and when times are bad—that we think that control necessary. Therefore, as the noble Marquess has thought, we shall press this matter to a Division, because we believe that the whole purpose of the Bill and the future of the industry is at stake.
  LORD LAYTON: In that event, I and my colleagues shall vote with the Government. We shall do so because the Bill does three things. First, it speaks of general supervision; secondly, it gives specific powers in relation to prices and to production programmes in regard to which there is a very powerful sanction—namely, that the Government itself may do the job if the trade does not do it; and, thirdly, there are certain items which have to be kept under review. It happens that those are the things which I think are the right things to put into this Bill. I should not be afraid of the word "control." If we put in the words "supervision and control" I do not think it would add anything to the functions of the Board in regard to the Bill—at least, I have heard no argument to indicate that it would, except for the statements made on this side of the House, which seem to imply that it does add something. I do not know what it is, and, so far as I am concerned, I do not wish at this stage to put the words into the Bill.
  On Question, Whether the said Amendment shall be agreed to?
  Their Lordships divided: Contents, 24; Not-Contents, 47.

  CONTENTS

  Baldwin of Bewdley, E

  Douglas of Barloch, L.

  Ogmore, L.

  Jowitt, E.

  Haden-Guest, L.

  Pethick-Lawrence, L.

  Hare, L. (E. Listowel)

  Shepherd, L.

  Addison, V.

  Henderson, L,

  Silkin, L.

  Hall, V.

  Hungarton, L.

  Strabolgi, L.

  Lucas of Chilworth, L.

  Williams, L.

  Archibald, L.

  Macpherson of Drumochter, L.

  Wilmot of Selmeston, L.

  Bingham. L. (E. Lucan) [Teller]

  Milner of Leeds, L.

  Winster, L.

  Burden, L. [Teller]

  Morrison, L.

  NOT-CONTENTS

  Simonds, L. (L. Chancellor)

  Buckinghamshire, E.

  Bruce of Melbourne, V.

  De La Warr, E.

  Buckmaster, V.

  Salisbury, M. (L. President)

  Dudley, E.

  Davidson, V.

  Malmesbury, E.

  Elibank, V.

  Cholmondley, M.

  Onslow, E. [Teller]

  Goschen, V.

  Willingdon, M.

  Selkirk, E. [Teller]

  Long, V.

  Alexander of Tunis, E.

  Swinton, V.

  Birkenhead, E.

  Bridgeman, V.

  Templewood, V.

  Trenchard, V.

  Gage, L. (V. Gage)

  Mancroft, L.

  Gifford, L.

  O'Hagan, L.

  Aberdare, L.

  Howard of Glossop, L.

  Rea, L.

  Brassey of Apethorpe, L.

  Jeffreys, L.

  Remnant, L.

  Carrington, L.

  Jessel, L.

  Templemore, L.

  Cherwell, L.

  Layton, L.

  Teviot, L.

  Chesham, L.

  Leathers, L.

  Teynham, L.

  Fairlie, L. (E. Glasgow)

  Leconfield, L.

  Webb-Johnson, L

  Freyberg, L.

  Llewellin, L.

  Wolverton, L.

  Resolved in the negative, and Amendment disagreed to accordingly.

  THE MARQUESS OF SALISBURY: I beg to move that the House do now resume.
  Moved, That the House be now resumed.—(The Marquess of Salisbury.)
  On Question, Motion agreed to, and House resumed accordingly.

INTERNATIONAL AFFAIRS: PRESIDENT EISENHOWER'S DECLARATION
4.19 p.m.
THE MARQUESS OF SALISBURY: My Lords, I have asked that the House should resume in order that I may make to your Lordships a statement which is being made in another place by my right honourable friend the Prime Minister regarding the declaration on international affairs made by President Eisenhower on Thursday last. The statement is as follows:
"I have already welcomed this bold and inspiring initiative by the President of the United States of America. In his declaration he seeks to find means of establishing world peace on a genuine and enduring basis. Her Majesty's Government, and probably all the countries of the free world, will be glad to associate themselves with his sincere expression of those ideals and aims to which we all subscribe.
"I was glad to see that the right honourable gentleman the acting Leader of the Labour Party and the former Foreign Secretary, according to the report in the Daily Herald of April 17, seems to share these views. I cannot do better than read the words he is reported to have used. I am quoting from the Daily Herald:
'The British people, in common with enlightened people all over the world, will welcome this most important statement.'—
these are the words of Mr. Morrison—
'It is exactly the plan that was so enthusiastically endorsed by the Labour Party
928
Conference—the World Plan for Mutual Aid, which I introduced on behalf of the National Executive. What is needed now is a forthcoming response from all Governments so that the road will be opened to a new era of peace, progress and ultimate world prosperity.'
"I hope therefore that at this momentous juncture we shall not be hampered by Party controversy. It seems to me that patience is needed rather than haste. In my opinion no one can measure the extent or purpose of the change which has become apparent in the Soviet mood or even perhaps in their policy. I repeat what I said at Glasgow on Friday; no single hope however slender should be cast away. Time may well be needed to enable sure judgment to be made. I did not read President Eisenhower's speech as a challenge nor should I expect the Soviet Government to give an immediate categorical reply to the many grave and true points which his remarkable and inspiring declaration contained. It is of course as yet too soon to consider any relaxation of our efforts for collective defence.
"I trust that nothing will be said here or elsewhere which will check or chill any processes of good will which may be at work, and my hope is that they may presently lead to conversations on the highest level, even if informal and private, between some of the principal Powers concerned.
"There is, however, one sphere which claims priority because it is both practical and urgent. The establishment of a sincere and honourable truce in Korea, with due regard for other Asiatic countries affected, would not only be of the highest value in itself but it also might open the door to further priceless advances towards that general easement of the world situation from which a real and lasting peace might come. We should, therefore, all rejoice at the steps that are being taken to resume the parleys at Panmunjom. I do not wish to say more to-day except to assure the House that the whole

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subject holds the first place in the thought and attention of Her Majesty's Government."
That is the statement which was made by the Prime Minister. I thought that this House would wish to hear it.
4.22 p.m.
EARL JOWITT: My Lords, we are all grateful to the noble Marquess for letting us hear this statement. It is very satisfactory for us to learn that the leaders of both Parties have expressed themselves so emphatically about what undoubtedly were the most eloquent and wise words which the President used. Though we are to have a debate on Foreign Affairs on Thursday of this week, I feel certain that nothing that will be said then or now will in any way "check or chill" what the President so happily expressed as the "hunger for peace" which the whole world feels.
LORD STRABOLGI: My Lords, the noble Marquess quoted with apparent approval the statement of my right honourable friend Mr. Herbert Morrison, in which he said that he hoped there would be a "forthcoming response from all Governments." Does the noble Marquess really think that the statement that we have just heard is a forthcoming response? There is nothing at all in it. Furthermore, although we all, of course, agree with my noble and learned friend the Leader of the Opposition about the very important declaration made by President Eisenhower two or three days ago, if the noble Marquess reads the statement carefully he will see that China, which is the key to the whole situation in the East, is mentioned only once, right at the end, and there is no suggestion as to how to get out of the ridiculous position in which we find ourselves with regard to recognition of the Chinese Government.
THE MARQUESS OF SALISBURY: My Lords, I do not think it would be proper for me to-day to continue the debate on the question of China, but with regard to what the noble Lord alleges is the entirely negative character of the Prime Minister's statement, I think I must read again just one sentence.
LORD STRABOLGI: I did not say "negative."
THE MARQUESS OF SALISBURY: The statement says:
"I trust that nothing will be said here or elsewhere which will check or chill any process of good will which may be at work, and my hope is that they may presently lead to conversations on the highest level, even if informal and private, between some of the principal Powers concerned."
If that is not a "forthcoming" statement, I do not know what is, and if anyone has done anything to "check or chill," it is the noble Lord opposite.
LORD STRABOLGI: The noble Marquess must have misheard me because I am sure he would not misrepresent me purposely. I did not say "negative." The statement is platitudinous—that is perhaps the best word I can use—with nothing forthcoming, as asked for in the approved statement by Mr. Morrison.
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (VISCOUNT SWINTON): The noble Lord had better pay attention to his own Leader.
LORD STRABOLGI: It means nothing.

IRON AND STEEL BILL
4.27 p.m.
House again in Committee.
LORD SILKIN moved, in subsection (1), to leave out
"under competitive conditions".
The noble Lord said: I beg to move the Amendment standing in my name. We have just agreed that the Board shall have supervisory functions. This Amendment relates to what will be the purpose of these functions, and the clause is pretty clear the subject. It says
"…with a view to promoting the efficient, economic and adequate supply"—
and then come the words which we seek to omit—
"under competitive conditions,"
of iron and steel. I should like to ask the noble Marquess, if he is to reply, what does he think is added by these words "under competitive conditions"? The governing thing is what we all desire and about which there is no dispute at all—that is, that the industry shall be conducted with efficiency, with economy,

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and with a view to obtaining an adequate supply. I think it has always been the claim of noble Lords opposite that, so long as those things were secured, they were not wedded to any doctrine on the subject, whether it was by means of competition or whether it was by means of public ownership. The only test was: which system provided those things?
I should have thought it would be wiser and more in accordance with the principles which noble Lords opposite profess if they left out those words "under competitive conditions," so as to ensure that the things that were really needed were done in the way that was most appropriate. I wonder what noble Lords would have said if, in a similar Bill, we had put in the words "under Socialistic conditions"? Would they not have denounced it as being purely doctrinal and irrelevant, and nothing to do with the main purpose of securing "an efficient, economic and adequate supply"? I submit that in putting in those words here the Government are merely committing themselves to a doctrinal statement which, in certain circumstances, could even be in conflict with the purpose they have in mind. There may be cases where it will not be possible to secure competition at all. Indeed, there is a considerable tendency in this industry, in the interests of efficiency and economy, for larger and larger units to be created—I am not complaining of that—but under this tendency, in due course, competitive conditions will be impossible. I should like to ask Her Majesty's Government, in a case of that kind, what are they to do? The Board is required to secure these things by "competitive conditions." But suppose there is a conflict between "competitive conditions" and efficiency and economy, as there may well be—as indeed there is already in certain sections of the industry, and as will be the case to an increasing extent. What will happen then? My case, therefore, is that those words are at the best unnecessary and at the worst confusing to the Board, and because, in certain circumstances, they place the Board in a dilemma, compelling the Board to choose between "competitive conditions" and "efficient, economic and adequate supply."
Moreover, since the Board are charged with the duty of securing these things under competitive conditions, what is their duty when competitive conditions do not exist? Are they to go out deliberately to create them? The Committee have decided that the Board should have no powers of control. But are they to go out and use their powers of persuasion to bring about competitive conditions? Obviously not. If that is so, then what is the purpose of these words? My Amendment is designed to leave out those words which, in my submission, add nothing to the functions of the Board—indeed, in certain circumstances, they may be hampering and restrictive. It is probable that these words were inserted for purely doctrinal reasons, in order to assert the well-known belief of noble Lords opposite in the competitive principle. They are perfectly entitled to their views, but the words are quite inappropriate in this clause and in these circumstances. Noble Lords opposite may find ample opportunities for giving expression to their beliefs in competition, about which there is not a great deal of dispute. We also believe in competition where it is appropriate, but we do not believe in it as an absolute doctrine in all circumstances. If it is their intention to give expression somewhere to their belief in competitive conditions, I should have thought they could have found a more appropriate place, either in this Bill or outside it. I therefore beg to move the deletion of those words.
Amendment moved—
Page 4, line 10, leave out ("under competitive conditions").—(Lord Silkin.)
LORD MANCROFT: Here we have a change of tone from noble Lords opposite. They have been crisply commanding us in the last two Amendments to "put it in the Bill"; now they are equally crisply demanding that we should take it out of the Bill altogether. I think I can put Lord Sirloin's mind at rest on this matter. He is worried that the inclusion of the words "under competitive conditions" may lead to a clash of interests. I think I can make this point perfectly clear. All along in this matter the Government have taken the line that the whole purpose of this Bill is to substitute for a giant State monopoly an industry owned and controlled by a number of competitive units. That is perfectly

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clear. It has been claimed by the Opposition (the noble Lord did not emphasize this point particularly) that competition between firms continued under nationalisation, whilst the Government's view has always been that, in course of time, common ownership under a State monopoly would have dried up competition.
The whole object of this Bill is to restore competitive conditions. In particular, in Clause 9 on prices, the Government have, in respect of castings and forgings, proposed that the price control provisions shall be available when monopoly conditions prevail and prices cannot be kept at a reasonable level by voluntary means. In Clause 27, the industry is immediately brought back under the purview of the Monopolies Commission, from which, the Committee will remember, under nationalisation, it was protected by the proviso to Section 2 (1) of the Monopolies Act. The fact that the industry is what is technically called an organised industry is, of course, one of the reasons for public supervision. The Government have, however, made it perfectly clear that one of the duties of the Board will be to try to stimulate competition. By making the steel industry subject to the Monopolies Act, from which the national Corporation was exempt, they are putting this view into practice.
The noble Lord, Lord Silkin, raised what I thought was a perfectly fair point. He asked, "What are you going to do when no possibility of genuine competition arises? Are you going to create artificial competition?" The noble Lord foresees cases where it will not be possible for genuine competition to exist. I agree that those possibilities may exist. It may be true in many parts of the industry—for instance, in tinplate, about which the noble Lord, Lord Ogmore, knows a great deal. When the new integrated plant at Velindre is operating in a few years' time, tinplate output will be virtually confined to three large integrated works owned by two companies. Since the Board are responsible for promoting economic and efficient production, they will be bound to recognise this fact—and this, I think, is the answer to the noble Lord, Lord Silkin's point—and not make a god of competition.
I will conclude by saying that these words have not been put in for any
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doctrinal reason. Although efficient competition is something in which we on these Benches believe very strongly, we certainly do not believe in it if it is going to result in some state of affairs contrary to the industry's interest or contrary to the nation's interests. The words are inserted merely as an indication of the ideas behind the whole of this Bill—completely open ideas, of which I have tried to remind the Committee. The purpose of the Bill to substitute for a State monopoly an industry owned and controlled by a number of competitive units. There is no more evil intent in it than that, and I can assure noble Lords opposite that these words can stay in the Bill perfectly safely without in any way worrying them in the terms of the fear which the noble Lord, Lord Silkin, has in mind. I hope that with those assurances he will be content to allow the words to stay in the Bill.
LORD OGMORE: We have heard a gallant attempt to meet a very difficult situation, but the noble Lord, Lord Mancroft, has not answered the gist of my noble friend's complaint. My noble friend's complaint—indeed the complaint of all noble Lords on this side—is that the words are either unnecessary or confusing. We do not wish to see them in the Bill, nor do we think that any reasonable person would wish to see them in the Bill. We cannot understand why the other three adjectives in the Bill, "efficient, economic and adequate," are not sufficient. We do not think it is necessary to have this joker, as it were, put into the Bill. There are three good aces there already. Why bring in a joker? If in the future the steel industry is to be efficient, economic and have an adequate supply of iron and steel, I should have thought that that was all we in this House should require, so long as conditions of labour and so forth (with which this clause does not deal) are adequate. By putting into the Bill the words "under competitive conditions", the Government lay themselves open to the suggestion that this is a fob to those of their supporters who believe that the Government stand for the "little man," for free enterprise and for enterprise of a free nature, particularly in steel. In fact, for many years past there has been no free enterprise in steel. The noble Marquess has already paid tribute to that, when he said that the industry

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has been so successful ever since the war started.
The Economist of August 2 said this about the proposals of the Government:
"Whether it promises truly competitive private enterprise in the steel industry is distinctly doubtful."
Why did the paper say that?—because the Economist knows, as we all do, that in the world as it is to-day, in an industry like steel, there is no free enterprise. If, nowadays, any of your Lordships wished to open a tobacconist's shop in Streatham, presumably you could do so—I am not suggesting that you would want to; but there would be nothing to stop you if you did. But if any of us wanted to set up a steel works, of course we could not. The whole industry is, in fact, though not perhaps by name, one huge cartel—it was so before nationalisation and will soon become so again. That is so not only in this country but in pretty well every country in the world—particularly in the United States. The very nature of the industry enforces that situation. It is so vital to the national life of any country, either in war or in peace, that if you do not have a nationalised industry you have to have a cartelised industry to deal with steel. No private person can set up a steel works and carry on. Therefore to put in the words "under competitive conditions" is meaningless.
Under the present conditions—and the same applies with regard to conditions which are likely to arise in the future—there is no real competition, in the old sense, in the steel industry. A hundred years ago, of course, that was not so. I see that the noble Lord, Lord Aberdare is present. When his ancestors first came to South Wales, the industry was highly competitive; it waspossible—and it did in fact happen—for the various steel masters and iron masters and coal masters, the Bruces, the Crawshays, the Homfrays, and others, to compete; and they did. There is nothing like that to-day. The industry is all cartelised, wherever it may be. That was one of the reasons for nationalising the industry. We felt that if there was to be, as in fact there had to be, a monopoly, it should be a monopoly responsible to the public and under control of the State. What this Bill seeks to do is to retain the monopoly but without effective State control. The Bill seeks
936
to put the industry back under the control of those who are running the cartel.
The noble Marquess to-day threw overboard his noble friend Lord Teynham. If Lord Teynham had been an old-fashioned sailor he would have sunk, because I understand that in the old days of sailing ships sailors never learned to swim—a ship could not "back pedal" and so if a man went overboard he was left behind. But Lord Teynham is a modern sailor; no doubt he can swim, and he will eventually come to the surface. But the noble Marquess absolutely dissociated himself from what Lord Teynham said. That shows that this Bill is a very confused measure. The noble Marquess accuses us of not understanding it, but in fact his own Backbenchers do not understand it, although I understand that they have had opportunities on several occasions of hearing from the noble Marquess and others what it was all about. We have all a very great respect for the noble Marquess, and we recognise particularly the clarity with which he is able to express himself. I cannot believe that, had this Bill been capable of elucidation, he would have failed to elucidate it to the satisfaction of Lord Teynham and other noble Lords behind him.
The noble Marquess said that in an emergency the Board would take control, and he quoted Clause 11. I ask for guidance here, because this is a very important point affecting this Amendment. I cannot see in Clause 11 that the Board are given the powers which the noble Marquess suggests. The clause deals with the importation and distribution of raw materials and finished products, but it does not say anything about an emergency. It was a surprise to us (and this is a matter on which we should like some clarification) to hear the remark of the noble Marquess. We should like to know whether it is his view, and the view of the Government, that there is provision in the Bill for the Board, on the declaration of an emergency, or even if an emergency is not declared, to take control of the industry. Suppose for a moment that the noble Marquess is right. Where does the free competitive aspect of the industry go to, assuming it has operated under competitive conditions, if at any moment—asthe noble Marquess seems to say

937
when an emergency arises the whole industry may be controlled by the Government? That statement by the noble Marquess seems to me to be illusory. These words which we seek to omit mean nothing. They do not affect the operation of the Bill at all, and they would, of course, be jettisoned, both in form and substance, on the coming of an emergency. I would therefore suggest, in the interests of good English and clear thinking, that the Government should agree to accept this Amendment and strike these words out of the Bill.
LORD WINSTER: I feel I must correct the noble Lord who has just spoken upon a point of seamanship. It is quite true that the old sailing ship could not, as he put it, "back-pedal," but it could come up into the wind very rapidly indeed and lower a boat with extreme smartness, so the reasons that, according to the noble Lord, the old-time sailor gave for not learning to swim are, I am afraid, not justified.
LORD TEYNHAM: The old sailing ships used to do more than that. They used to "back their tops'ls" and stop.
LORD WINSTER: I think there is only a matter of a few seconds between the speed of the two manœuvres.
I am sorry that the noble Marquess took exception to my using the words "test of sincerity" in regard to a previous Amendment, but I really think that it was a little thin-skinned on his part to object. I live never impugned the personal sincerity of an opponent, but to impugn the sincerity of a Government is quite another matter. One would require one of the new calculating machines to add up how many times the Conservative Party have impugned the sincerity of their opponents' motives. But I should not like to say a word to impair the harmony of these proceedings to which the noble Marquess has referred, and I hope it shall do nothing to offend in that respect.
I must say that these words about "competitive conditions" in the Bill are really meaningless and superfluous, and they do lend themselves to a charge of being propaganda and camouflage. If the noble Lord, Lord Mancroft, objects to the use of such terms, I would ask him to do what he has not yet done and tell us exactly why these words which we are discussing have been inserted in the Bill,
938
and exactly what purpose the phrase serves. The industry is at present as competitive as it has ever been, and I do not know whether these words are necessary to convey the impression that the industry is being returned to competition. If that is the idea of these words I am afraid that the Economist is against them, because I note that last year the Economist said that the Bill promised truly competitive enterprise was extremely doubtful. Would the noble Lord tell us exactly how the present partly competitive structure of the industry will be changed when the Bill has been passed? The industry was not entirely competitive before it was nationalised. There were various price fixing arrangements, and, if I may, I would make another quotation in this connection. The Financial Times in 1944, referring to this industry, said:
"In prices as in other matters the trade acts in combination."
There are various international combines and cartels, and whatever else they may be, cartels are not competitive. I would say that nationalisation resulted in there being more competition in the industry than had previously existed.
Again, if we are to have these words in the Bill about competitive conditions, would the noble Lord, Lord Mancroft, tell us what is the yardstick by which the Board will decide whether a firm is running its business under competitive conditions or not? Let us suppose they arrive at such a yardstick and the Board decide that a certain firm is not carrying on production under competitive conditions: could the noble Lord tell us what powers the Board possess to do anything about it? What is there in the Bill to tell us what the Board can do if they find such a state of affairs in a firm after the Bill has become law? Another aspect of the question is this. I understand that the industry was, and for all I know will be again, dominated by some ten great firms. In time gone by I here were ninety-eight directors of those firms, twenty-one of whom sat on more than one board in the industry, so that there was an interlocking of control and responsibility. If that state of affairs is to be revived, how will these duplicate directors, if I may so term them, deal with competition between the several firms whose affairs they direct? I cannot understand how they will be able to do that.

939
The Bill lays down that the Board have to supervise (blessed word!) the industry so as to get efficiency, economy and adequate production under competitive conditions. I must respectfully congratulate the Conservative Party on their tardy conversion to the necessity for supervising private enterprise. But, as so often is the case, the conversion does not seem to be quite wholehearted, because in another place they rejected a proposal that supervision should be carried out in the public interest. What is the good of supervision unless it ensures the public interest? I do not know. What if, as may well be the case, the public interest were to demand in a given case either for security or for technical efficiency, or for any other reason, that there should not be competition? These completely superfluous words in the Bill nevertheless demand that there shall be competition. What do the Government really want? Do they want security and efficiency or competition for the sake of competition? I use the word "superfluous" for a definite reason. If business is to be carried on with efficiency and economy and for the ensuring of adequate supplies, as the Bill directs the Board, what is meant by throwing in competition? Surely efficiency and economy and ensuring adequate supplies of the commodity are covered by these other words. Why throw in the question of competition, which cannot add anything to the efficiency with which the industry is carried on? The whole contains the part, and the Government have introduced some completely superfluous words.
I read the whole of the Report of the proceedings in another place, and the only reason I have seen advanced by the Minister for the insertion of these words in the Bill is that they impose a duty on the Board to keep restrictive arrangements under review. Again, that is fully covered by the duty laid upon the Board to ensure efficiency. Efficiency cannot be ensured without restraining restrictive practices. Suppose the Board find that restrictive practices exist contrary to the efficiency of the industry, would the noble Lord, Lord Mancroft, tell us where it is said in the Bill that the Board are given powers to deal with such practices? There is nothing in the Bill about that.
940
There are really no arguments for these words, except, I fear, and I say it with regret, that they are introduced for propaganda and camouflage purposes, to make the public believe that the Government are going to restore to competition an industry in which nationalisation had destroyed competition.
4.55 p.m.
LORD SHEPHERD: May I ask a question and not make a speech? I understand that the noble Lord, Lord Mancroft, said that these words were included not for doctrinal reasons but for the purpose of ensuring that this great industry, which can be carried on profitably on an organised basis, shall be divided into parts so that the parts can compete one with the other. I can understand that reason, but the word "competition" suggests something else to me. The industry in Great Britain will not only be competitive within itself, but it will have to enter into competition with steel industries abroad, and in order to overcome competition from abroad it will have to make sure that the prices it charges for its materials come below the prices quoted abroad. Suppose that, in order to achieve that purpose, it is suggested by four firms making a product which I shall call a that the production of that article shall be carried on by one firm instead of four, in order to get a complete degree of organisation, to cut out unnecessary competitive costs and to ensure that the price is reasonably low. Will the words in the Bill prevent the Board from agreeing to such a proposal, either from the four firms concerned or from the Steel Federation itself—a proposal designed to enable the steel industry in this country to beat its foreign competitors? It is very important that we should know what these words mean and how far they will thwart the Board from doing the effective work they are supposed to do.
THE MARQUESS OF SALISBURY: The noble Lord, Lord Silkin, who spoke first said that he did not understand what the words meant. I shall try to explain them to him.
LORD SILKIN: I hope the noble Marquess does not think I said I did not understand what "competition" means. What I said was that I did not understand it in this context.
THE MARQUESS OF SALISBURY: What it implied—I think that would be a fairer word to use. The noble Lord seems to assume that this is just an ingenious idea of the Government, put in on their own initiative; that nobody had encouraged them to put in these words; that there was no reason for putting them in, and so on. They were put in originally for a definite reason. The reason was that with regard to this Bill, as your Lordships will remember, Her Majesty's Government adopted rather a novel procedure. Before the Bill was introduced, as far back as the summer of last year, they published a White Paper on the scheme they proposed to introduce, and said that they would welcome constructive criticism. This is one of the constructive criticisms they got from all parts of the House—I can give a quotation from the Party of noble Lords opposite in another place if it is desired. There were people who said that there was no reference to competitive conditions; that the Bill was not intended to create competitive conditions, and so on. Therefore, after careful thought, Her Majesty's Government decided, in order to make their attitude and their intentions absolutely clear, that they would include these words.
I forget which noble Lord it was who quoted from the Economist—I think it was the noble Lord, Lord Winster. It is true that the Economist used the words exactly as he quoted them, but I would remind the noble Lord that the words from the Economist date back to the time of the White Paper last summer, when there was no reference to competition. I believe I am right in saying that after the Bill was published, both the Economist on November 15, and The Times on November 7, expressed approval of the insertion of the words "under competitive conditions." Therefore I think the purpose which the Government had in mind, or one of the main purposes, was to indicate their underlying attitude to the problem of competition, and the effect was to produce the results they had intended. Suppose we had not put in these words but had left things exactly as they were. I have not the slightest doubt that, either in the other place or in this House, someone would have risen to his feet and said that the real truth was that the Government were aiming at a private monopoly; that all
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this talk about competition in the past, if I may use Lord Winter's words, appeared to be eyewash; that we had not even taken the trouble to mention the desirability of competition in this important Bill. I can almost hear these admirable speeches being made, and probably made quite effectively.
It certainly is not our object to create a private monopoly. Indeed, as your Lordships know, Her Majesty's Government have taken steps which may have the effect of making the industry subject to the Monopolies Act—which, I may say, noble Lords opposite never did with regard to their own Act, although the Monopolies Act was their own production. That, I would say to the noble Lord, Lord Winster, is the action which can be taken. The noble Lord asked what could be done to ensure competitive conditions. If there is a situation of monopoly, the matter can be brought to the Monopoly Commission under the Monopolies Act. This, at any rate, is some action which was not possible before.
I am not going to pretend to your Lordships that absolutely free competition is always possible in the modern world: we all know it is not, and it would be foolish for me to suggest any such thing. Therefore, the words—and this I would say in answer to the noble Lord, Lord Shepherd—do not mean that in every conceivable given condition the need for competition must override every other consideration. What they mean is that we hope to create in the industry a competitive atmosphere; an atmosphere where there is a great deal more competition than there was under the existing Act, when there was a complete State monopoly. It is the purpose to re-create, so far as possible in the modern world, competition. I believe it is valuable to have included in the Bill itself these words which clearly indicate the intention of the Government.
LORD SHEPHERD: The noble Marquess will forgive me for interrupting. If under the conditions I mentioned it became proper that four steel works, or parts of steel works, should be closed down in order to enable the industry to meet foreign competition, would not the words which appear in this clause prevent

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the Board from giving approval to the proposal, even though it were backed up by the Steel Federation itself?
THE MARQUESS OF SALISBURY: I do not think they would. In my view, the Board is always bound by the national interest as an overriding consideration. As I said, it is easy in a debate of this kind to produce any number of hypothetical situations which may not occur in a hundred or two hundred years. "Does the Bill cover this? Do these exact words cover that?" If you try to draw your legislation on that basis, you will never get anywhere. These words are a broad statement of intention; it is competitive conditions which we seek to create. I cannot define them clearer than that, and I should have thought that they were perfectly clear.
LORD WILMOT OF SELMESTON: The noble Marquess will appreciate that what we have in mind are not hypothetical situations, but the actual situation which formed the subject of one of the most valuable recommendations of the Report of the Anglo-American Productivity Committee on the Iron and Steel Industry. There is no virtue in competition merely as a label, nor is there in monopoly. The virtue lies in what happens. This most valuable Report of this authoritative Committee says:
"In all sections of the British iron and steel industry the greatest limitation upon productivity to-day is the size of the unit and plant."
I will not worry your Lordships with the rest of that paragraph, but the next paragraph goes on to say:
"Largely because of the relation between the size of the unit plant and the size of the works, the efficiency of the integrated steel works is limited again by its size."
Finally, it says:
"It will be necessary for development and re-equipment to be concentrated in the works most suitably sited for expansion."
This industry has in the course of the last few decades developed monopolistic tendencies. It has probably the most powerful trade association of any industry in the world, efficiently run and conducted with great skill; and, so far as it is possible for men charged with duties to their shareholders as paramount requirements, it is conducted in the public interest. But, as I have said before, the
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very nature of the industry forces it into monopolistic courses. Therefore I feel it would be wise—and there are no Party politics in this—if the Government took these directing words out of the Bill. After all, here is one of the signposts to the new Board. They are to supervise this industry in such a way that they have great regard for its competitive nature. What we want is the maximum of efficient production. It is because we believe that some form of monopoly is inevitable in this industry that we prefer to have a public monopoly to a private monopoly. But I am not arguing that. I do feel it would be wise, in these circumstances, to take these limiting and perhaps thwarting words out of the declaratory part of the Bill.
LORD SILKIN: I think we have threshed this matter out adequately; and, if I may say so with respect, one of the great advantages of a good humoured discussion such as we have had on this Bill so far is that generally speaking at the end of a discussion we know exactly what is in the mind of the other. I now understand from the explanation of the noble Marquess exactly why those words were put in. Even if it is desirable in some part of the Bill to give expression to the principle of competition, I am not convinced that this is the right place. It gives rise to certain difficulties and inconsistencies. I will not ask the noble Marquess for any undertakings. I am going to withdraw the Amendment, but I hope that he will look at the matter again and see whether it cannot be improved.
What I understand the noble Marquess to say is that he recognises that in some cases competitive conditions are really either impossible or undesirable, but that generally speaking competition is a good thing and that it is desired to give expression to that in this Bill. It may be that the right kind of words is "wherever practicable," or "wherever appropriate," or something of that sort. I am not trying to draft this Bill standing on my feet. I hope the noble Marquess will be prepared to look at it again and at the next stage see whether something better can be done. Without asking him for any definite undertaking, I would be willing to withdraw the Amendment.
THE MARQUESS OF SALISBURY: I do not know whether the noble Lord wants me to say anything, because he threw a

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beautifully decorated fly over me. I could not give the noble Lord any undertaking at all, because in our view this is perfectly clear. It represents, as I say, the broad conception which we have in mind. Of course, if the noble Lord asks me, I will refer the matter again to my right honourable friend, but I should not like him to think that his fly has caught a fish.
Amendment, by leave, withdrawn.
5.13 p.m.
LORD WILMOT OF SELMESTON LORD WILMOT OF SELMESTON moved, in subsection (1), after "conditions" to insert "and the equitable distribution." The noble Lord said: I must apologies to your Lordships for yet another Amendment to this clause. We have spent rather a long time on it, but it is a very important clause because it sets out the duties of the Board. Unless the duties are correctly and properly defined, the rest of the Bill is not much use. The purpose of this Amendment is to insert the words "and the equitable distribution" of the products, so that the duty of the Board will be not only to promote the efficient, economic and adequate supply of iron and steel products but also to promote their equitable distribution. I suggest to your Lordships that this is a necessary part of their duty. This supervision over the distribution of the products of this vital industry has, in fact, in the past formed a very major part of the duties of the various supervisory organs which have been associated with the iron and steel industry, under Governments of all colours, for a very long time.
There are several reasons why it is necessary. In times of shortage of steel products—and it should not be assumed that we are immediately emerging from a shortage of all forms of steel products—it has often been necessary for the board of control to give a direction as to the distribution of the products. Instances which occur to me are steel intended for the use in the development of the coal mines; steel needed for the proper development of railways and harbours, and for other works of vital national importance to defence or to commerce which require priority over other forms of user. Then there is the fact that in this industry there are a number of vertical combinations, so that you have a producer of primary products—and this is
946
true of most of the modern plants—while the metal is still hot proceeding to roll and fashion it into Various stages in its course towards the consumer. It is easy to envisage circumstances which have often arisen where integrated firms retain the whole of their product of a particular kind of iron and steel for use in their own finishing factories, and thus starve other competitive units, who do not produce the raw material but fabricate it, of the materials of their trade.
When this situation has occurred in the past—and sometimes it has occurred where the product is one which the national interest requires produced—the Iron and Steel Board have made a direction that there should be some alteration in the distribution of the product. Those of us who follow trade and industry have probably all come across examples of this kind. I have, and I suppose that I can say that I have an interest in the matter. But certainly those who use iron and steel products in any time of shortage sometimes require to ask for a direction that they should have a reasonable supply of the raw material. That duty was clearly placed upon the original Steel Board; later it rested on the present Iron and Steel Corporation. Now, for the first time, it is to go. We can see that the Iron and Steel Corporation faithfully discharged their function, because in their Report they set out what happened to the product and how much of it was sold down to consumers outside the nationalised sector. As I say, unless these words are inserted in the for the first time for very many years there will be no protection for the consumer who is not a primary producer, and having regard to the Government's declared intentions on this Amendment, I believe that we may expect them to agree. I beg to move.
Amendment moved—
Page 4, line 10, after ("conditions") insert ("and the equitable distribution").—(Lord Wilmot of Selmeston.)
5.19 p.m.
LORD MILNER OF LEEDS: I desire to support this Amendment, which appears to me to be a very important one. The clause seeks to provide for the efficient, economic and adequate supply of iron and steel products under competitive conditions, and there should be some assurance that those who require the products of the iron and steel industry will receive them. Your Lordships are

947
aware that in the Third Schedule those products are set out under the heading of "Iron and Steel Activities." They include
"the quarrying or mining of iron ore,"
which is obviously essential to every industry having to do with iron or steel. There is
"The casting of iron or steel by any process."
Your Lordships know that castings are required by all sorts and conditions of engineers. There is
"The production, with or without heat, of iron or steel forgings,"
again a requisite of almost every class of engineering. There is, too,
"The production of tinplate."
It seems to me that there should be some provision whereby the Board are under an obligation to ensure the equitable distribution of those and other products of which they have charge.
What is to happen if, for example, a small man in a small business desires supplies? One knows that for years during the war, and I believe for some years since, there have been shortages. I believe it is so even to-day, and that steel products are nothing like sufficient. Who is to see to it that every small man, or every large man for that matter, obtains a fair share—as they say in Yorkshire, "fair do's"—of whatever is being produced by the industry? This is not a theoretical question. I recollect an honourable Member in another place who ran a very successful engineering business not a hundred miles from Grantham during the War, and immediately thereafter prepared plans for—and, indeed, turned out—the first model or two of a small car, and also of a tractor. I have no personal knowledge of the facts, but I understand from him that he had to close down because he was unable to get from the manufacturers of his raw materials the raw material he required to enable him to provide that car and that tractor—and no doubt other products. That happened in the case of individual companies known certainly to the majority of us on this side of the House, and it may happen to many others. And this was not a small man, either.
What is going to happen to the small man? What rights and what remedies
948
has he? To whom does he complain if he does not get a fair allocation of the products of the industry? I do not know whether the co-operative organisations manufacture anything from steel products. If they do, supposing that they do not receive what they are entitled to, to whom do they complain? Take the National Coal Board—I know there has been some prejudice in that direction—or British Railways. British Railways are short of certain classes of steel, for railway lines and so on. What is their remedy if there is no assurance that the Board, who are responsible for the provision of this steel, are not under a duty to ensure equitable distribution? It is curious that the Board have power to review prices. If in that connection there are reserve powers given to the Government whereby, in effect, they can override the Board, perhaps the noble Lord can tell me whether there is any provision for the Government to intervene in a matter of this sort. Is there any overriding provision whereby the Government can allocate steel? Can a Member of Parliament, either in your Lordships' House or in another place, put a question—and if so who is the authority? Who has put upon him the duty of allocating steel?
So far as I can see, there are no such reserve powers. We heard from the noble Lord, Lord Layton, on Second Reading, that the High Authority in connection with the Schuman Plan had the power to make allocations. I know that we shall have the noble Lord with us on this occasion, because there does not appear to be any power in this Bill for the Board or the Government, or any high authority, to make allocations—I may be wrong, but that is my impression. Mr. Strauss put such a provision in the original Bill. It was thought then to be essential; and in my submission it is essential now. I hope the Government will think it right to accept this principle and ensure a fair distribution of the products of the industry.
LORD WOLVERTON: If there are semi-finished articles which are being distributed, surely, if there is a great scarcity, it should not be the duty of the Board to allocate; it should be the duty of the Government of the day. We now have a rationing scheme of semi-finished raw material. I should have thought

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that, if it was necessary to introduce a scheme, it should be the duty of the Government and not of the Board.
LORD MILNER OF LEEDS: Supposing that to be so, where is that duty laid upon the Government?
LORD WOLVERTON: They have a general power: they can do it under the Supplies and Services Act.
VISCOUNT SWINTON: In the same way as the steel allocation scheme was introduced under the late Socialist Government.
LORD MILNER OF LEEDS: There would have to be some special provision with regard to that. It was provided originally in the Iron and Steel Act.
VISCOUNT SWINTON: No: with great respect, it was not. That steel allocation was not done under the Iron and Steel Act—and deliberately. The late Government did not suggest for a moment that even the Minister of Supply should administer it. As a matter of fact, I had to administer it when I succeeded. The power to impose a scheme of that kind was under one of the Supplies and Services Act Orders. It was never part of the Iron and Steel Act.
LORD WILMOT OF SELMESTON: But the noble Viscount will remember how the thing worked, since he had a part in it. The duty was clearly laid on the Iron and Steel Board. The noble Lord is speaking about the licensing scheme. That licence is a duty or a permission to give an order, and a permission to someone to execute the order; but it does not guarantee the supply. Many times I have known people with a handful of licences unable to get the product to which the licences referred. They have had to go to the Iron and Steel Board and get a direction to the supplier to supply. That is how the thing works. And it is because under this Bill that machinery is now to go, for the first time, that it is important that these words should be put in. Otherwise, unless you are a manufacturer of your own raw material, you are in jeopardy as regards supply.
5.28 p.m.
LORD MANCROFT: This Amendment would give the Board the duty of promoting "equitable distribution" of iron and steel products in addition to
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their "efficient, economical and adequate supply." It is clear from Lord Wilmot's speech that he desires to be helpful in this matter, for which I thank him but while thanking him ought perhaps to warn him that I fear his help is a little misconceived. I think his fears are unjustified. When I first saw this Amendment on the Paper I was a little doubtful as to what was intended by the words "equitable distribution" in this context. I could not quite see how they applied to this Bill.
If I have understood aright the argument of noble Lords opposite, there are two different types of "equitable distribution" which the Opposition have in mind. The first is the fair distribution of semi-finished products within the industry, with the aim ensuring that the vertical concerns to which Lord Wilmot referred, producing from the raw material to the finished product, should not starve the finishing concerns not producing their own raw materials. The second was the fair distribution of the final products of the industry between the various consumers. I think the answer to the first point is that it is already provided for in Clause 3 (1) (b), which gives the Board the duty of keeping under review the arrangements for procuring and distributing raw materials for use in the steel industry.
LORD WILMOT OF SELMESTON: Ah!
LORD MANCROFT: Since "raw material" is defined in Clause 34 as including materials subjected already to any process or processes, it clearly includes pig iron or semi-finished steel used by an iron and steel producer to make an iron and steel product. The promotion of the appropriate distribution of semi-finished products within the industry is, therefore, already made, so far as I understand it, a part of the Board's duty.
LORD MILNER OF LEEDS: Which clause is that?
LORD MANCROFT: Clause 34.
LORD MILNER OF LEEDS: That refers to "Application to Northern Ireland."
LORD MANCROFT: I beg your Lordships' pardon. It is page 33, Clause 33. The important point I want to stress about it is this—and I come back to the

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exact meaning of the word "equitable"; and this is where I think the noble Lord and I differ, for good reasons. I do not think that the overriding consideration should be the word "equitable." The criterion is not whether distribution is equitable. That is a desirable factor—at times a very desirable factor—but surely the overriding criterion is the efficient, economic and adequate supply under competitive conditions. The Amendment which the noble Lord has moved in this regard is, at best, redundant, and might, indeed, indicate (the noble Lord, Lord Milner, has put this into my mind) that "fair shares" were more important than efficiency. I hope that I misconstrue the noble Lord's words when I say that.
LORD MILNER OF LEEDS: The two are complementary, surely.
LORD MANCROFT: They may well be complementary, but it must be efficiency which, in the last resort, is the overriding consideration. That may bring about some small degree of unfairness; I appreciate that.
On the second point, if I understood the noble Lord correctly, I am advised that the legal view is that the word "supply" includes "distribution." The Board's duty to promote efficient, economic and adequate supply under competitive conditions thus covers, as I understand it, efficient and competitive distribution, and the Board will be concerned with the general arrangements for marketing by producers—for example, arrangements with merchants and stockholders, so that the genuine needs of consumers, small and large alike, can most conveniently be met, and the consumer has the choice of buying what he wants. They will, in particular, use their influence to bring to an end undesirable restrictive agreements. That is a point we have already discussed on the previous Amendment, when we talked about monopolistic tendencies.
In normal times of rough balance between supply and demand, this supervision, I should have thought, would be adequate. In times of scarcity, like the years since the war, it may be necessary to have an allocation system; but it would be wrong, surely, to give the task of allocation to a Board set up to supervise one particular industry. This point has already been discussed by noble
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Lords who have practical experience of it, whereas my experience is purely theoretical. But it seems to me that an allocation in the national interest, which, incidentally, in practice is often extremely inequitable, is a job for the Government and not for any one particular industry or one particular Board. The Board cannot be expected to know the national need as regards allocation between different industries. Indeed, the Labour Government, as the noble Lord himself has suggested to us, I think, like the present Government, did not regard it as an appropriate function for a Departmental Minister, like the Minister of Supply, but rather as one for an inter-Departmental Committee, with a specially appointed chairman.
Moreover, any system of allocation involves automatically some form of discrimination, and equitable distribution, which is all that the Board could seek to secure, might at such times—this is where I differ from the noble Lord—run contrary to the national interest. Of course, the Board will seek to promote equity, whenever they can, by persuasion and by leadership. Naturally, that is important. What could be a more unhappy industry than an industry which thought that inequity prevailed? From top to bottom the industry would be discontented if it were thought that equitable distribution was not the watchword. I would ask the noble Lord, however, to agree with me in thinking that it should not be the overriding consideration, very important though it is, but that the national interest, which may at times clash with equitable distribution, is the overriding factor. I hope that, with that explanation and my thanks to the noble Lord, Lord Wilmot, for the careful and helpful way in which he put this important idea forward, he will agree to withdraw his Amendment.
5.35 p.m.
LORD WILMOT OF SELMESTON: One of the penalties of being on this side of the House is that one is bereft of the actual assistance of the Government draftsman. Therefore, I would never cling to a form of words when I have been shown, as in this case, by the noble Lord, Lord Mancroft, that the words themselves are not quite the right ones. Therefore, I hope that the Government will agree to try to find the right words to give effect

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to an idea which obviously has their sympathy. It is not mathematical equity which we seek: it is the national interest; and it is not in the national interest, in many circumstances, that producers of certain kinds of essential products should be starved of their raw material because the people who make that raw material have a fabrication plant which they will enlarge or use to absorb their whole output or, alternatively, tune their output of that kind of iron and steel product to the capacity of their own finishing works.
One has only to look at the ramifications of the United Steel Company, of the Lancashire Steel Corporation, of Guest Keen Baldwin and of Guest, Keen And Nettlefolds (to take some of the famous names in this industry) to realise that those circumstances may occur in the future as they have in the past. Wire is a case in point. There are very few big wire drawers. Most of them are users of that product, and there have been quite a number of occasions when the supply of wire has been not more than was necessary to feed their own plants. Special producers of other products, very necessary, might frequently have gone without but for the intervention of the Board. The same is true of sheets and plates, and other forms of semi-finished steel which are used by industries of every kind and who have a right to some court of appeal to which they can go if they feel that not only are their own pecuniary interests being affected but that the national supply of an essential product is being limited.
This is the dilemma. The primary producer feels that he is acting perfectly properly in doing the most profitable thing for his particular shareholders, using the whole of his output in his particular works. Maybe that particular form of product is less profitable than other forms, so that he does not want to make it for other people besides himself. I attach no blame in this matter, because t is part of the dilemma in which the Government put themselves by denationalisation, that they have to have regard to these commercial considerations
which govern the actions of boards of directors. May I make an appeal to the Minister to give an undertaking that the Government will alter the words to safeguard this situation which I have tried to describe? If they will do that, I will not press these words to a Division. But I regard this, as we all do on this side of the House, as a very important principle and, I may say, it is so regarded outside this House. This particular matter is of the greatest consequence to many industries, and unless the Government will try to put it right, I am afraid that we shall have to have a Division, in view of the importance of the principle involved.
LORD MANCROFT: I am sorry to hear the noble Lord say that. I thought I had convinced him.
LORD WILMOT OF SELMESTON: You did.
LORD MANCROFT: I am afraid that I cannot give him the undertaking he wants, for reasons which I think I have made perfectly clear. In regard to my assurance that the fears from which he was suffering are unjustified, I will, however, make certain that the points he was making are already covered in the Bill. I will make certain, if he likes, that I was speaking the truth, but I am pretty sure that I am well advised and that all the fears which lie has voiced this afternoon are met in the Bill. I can go no further than that. I am afraid that I cannot give him the undertaking for which he asks, and if- he must press his point more strongly, then press it he will.
LORD WILMOT OF SELMESTON: I am afraid that is what we shall have to do, because neither I nor anybody else can find any place in the Bill where this protection, which has existed hitherto for a very long time, is not being taken away. Therefore, I must press the matter to a Division.
On Question, Whether the Amendment shall be agreed to?
Their Lordships divided: Contents, 20; Not-Contents, 40.

CONTENTS

Baldwin of Bewdley, E.

Chorley, L

Ogmore, L.

Jowitt, E.

Haden-Guest, L.

Pethick-Lawrence, L.

Henderson, L.

Shepherd, L.

Hall, V.

Kenswood, L.

Silkin, L.

Lucas of Chilworth, L

Strabolgi, L.

Bingham, L. (E. Lucan) [Teller.]

Macpherson of Drumochter, L.

Wilmot of Selmeston, L.

Milner of Leeds, L.

Winster, L.

Burden, L. [Teller.]

Morrison, L.

NOT-CONTENTS

Simonds, L. (L. Chancellor.)

Bridgeman, V.

Gifford, L.

Buckmaster, V.

Howard of Glossop, L.

Salisbury, M. (L. President.)

Davidson, V.

Jeffreys, L.

Furness, V.

Jessel, L.

Cholmondeley, M.

Goschen, V.

Layton, L.

Willingdon, M.

Long, V.

Leathers, L.

Swinton, V.

Llewellin, L.

Alexander of Tunis, E.

Mancroft, L.

Birkenhead, E.

Aberdare, L.

Milverton, L.

Buckinghamshire, E.

Carrington, L.

Rea, L.

De La Warr, E.

Cherwell, L.

Remnant, L.

Dudley, E.

Chesham, L.

Templemore, L.

Onslow, E. [Teller.]

Fairlie, L. (E. Glasgow.)

Teynham, L.

Selkirk, E. [Teller.]

Freyberg, L.

Wolverton, L.

Shaftesbury, E.

Gage, L. (V. Gage.)

Resolved in the negative, and Amendment disagreed to accordingly.

5.48 p.m.
LORD JESSEL LORD JESSEL had given notice of two Amendments to the proviso to subsection (1), the first being at the beginning of paragraph (i) to insert "either." The noble Lord said: On the Second Reading of this Bill I raised the point covered by this Amendment, and the noble Viscount, Lord Swinton, in his winding up speech was good enough to say that the Government would give further consideration to the position of foundries under the Bill. The Amendment does not touch on raw materials, which we were told was the reason for including foundries within the scope of the Bill. My Amendment deals with such matters as training and education, safety, health and welfare, and arrangements for joint consultation. In these respects the Government have already excluded the tied foundries from the scope of the Board, and we contend that the independent foundries, which are equally part of the engineering industry, should be treated in a similar manner.
All we ask is that where the Government are satisfied that independent foundries already have their own machinery for dealing with matters concerning industrial relations, those foundries should be excluded from supervision by the Iron and Steel Board. We have been told that the Board has no powers, but advice from a Board of this kind can, on Occasions, be equally effective and disturbing to the recipient of that advice. We have the precedent of the Road Haulage Wages Act, 1938. This Act excluded from the supervision of a board firms which already had satisfactory conciliation machinery. It is on those lines that this Amendment is drawn, and I hope
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the Government will see their way to accept it. I beg to move.
Amendment moved—
Page 4, line 33, at beginning insert ("either").—(Lord Jessel.)
5.50 p.m.
THE MARQUESS OF SALISBURY: The noble Lord, Lord Jessel, has in the speech to which the Committee has just listened explained, I think with great clarity, the purpose of his two Amendments. If I understand him aright, his point is that the arrangements for training, welfare and labour relations in many of the foundry firms—whether tied to other works or not—are governed by agreements made for the engineering and allied industries between the engineering employers' federations and the engineering trade unions, and he and others are anxious that the setting up of the new Iron and Steel Board with the wide duties set out in paragraphs (1) (d), (e) and (f) of Clause 3 should not jeopardise these arrangements. There are, I gather, fears that intervention in these arrangements by the Board, however well-intentioned it might be, might prejudice them and put in peril the work of many years of patient negotiation. The noble Lord's Amendments, therefore, as I see it, seek to exempt from the Board's supervision of training, safety, health, welfare and joint consultation, foundry firms whose arrangements for joint consultation are part of wider general arrangements negotiated by the two sides of an industry not mainly concerned with iron and steel—notably, of course, the engineering industry.
I think it may help the noble Lord and other noble Lords if I explain in a very few words Her Majesty's Government's intentions in framing Clause 3 (1) (d), (e) and (f). The Government take the view

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that a Board responsible for promoting the efficient, economic and adequate production of an industry must have some regard for and supervision of such important matters—such increasingly important matters—for production as the training, safety, health and welfare of the workers and the arrangements in the works for joint consultation. As your Lordships will know, the iron and steel industry has art admirable history of labour relationships. It is, I believe, second to none, and it is our belief and hope that those relationships, which have been equally good under private and under public ownership, will so continue for a great many years to come. None the less, we have thought it right to charge the Board with the duty of keeping under review the collective arrangements in the industry for the promotion of research, training, safety, health and welfare—that is provided for in paragraphs (d) and (e)—and the arrangements for joint consultation in the factories in the industry—that is in paragraph (f).
I explained during the Second Reading debate, I believe, that it is the Government's view that the Board's best work will be done by its prestige and influence, and these are none of them matters in which—except for the spending of money on research and training—the Bill gives the Board any actual powers. Indeed, the Government are sure that the Board would not wish, even if it had the power to do so, to intervene in arrangements built up over the years and operating so smoothly on the basis of mutual confidence. The Government moved in another place the proviso which your Lordships will find at lines 32 to 48 on page 4 of the Bill, to make it clear that in these matters the Board's supervision would not extend—and this is Lord Jessel's point—to works where the foundry was only an incidental part of a larger works, and where the joint consultation machinery in the works embraced the foundry workers equally with the others. That was to avoid undesirable duplication.
The Amendment moved by the noble Lord, Lord Jessel, if I understand it, seeks to extend this proviso to what I may call independent foundries whose arrangements for the matters set out in paragraphs (d) to (f) are part of the joint arrangements for the engineering or
958
some other industry. I feel that this would be going too far. If we are agreed—as I am sure we all are—that these matters are of the highest importance to efficient economic and adequate production, and if we want the Board to be in a position to fulfil its important duty of promoting such production, then we must, as I see it, give the Board the duty of keeping these arrangements under review—that is, watching, promoting and helping but not, if I may use such words in your Lordships' House, unnecessarily butting-in. It would, I am certain, be wrong to exempt by statutory provisions any particular group of concerns just because at a particular point in time they had geared their arrangements to other industries. If my right honourable friend had felt that the fears which Lord Jessel has expressed were real, I know that he would have tried to meet him. I would, however, remind noble Lords that the Board has not been given powers to direct what form the arrangements on such matters should take, and the Government are confident that a responsible Board would not consider, for one moment, interfering or intervening between the two sides of industry in agreements affecting firms coming under its supervision. I am very grateful to the noble Lord for raising this matter. It has been very helpful in clarifying the position. I hope that after the explanations and assurances I have given him he will agree to withdraw his Amendments.
LORD SILKIN: I should like to say one word upon this Amendment. I do not think I can really add much to the very clear statement of the noble Marquess, a statement with which we on this side of the Chamber all agree. Is it not the case that if this Amendment were accepted it would mean that every single independent concern would have to be examined by the Board to ascertain whether it satisfied those conditions or not? You might get a portion of the industry coming within the Act and a portion not doing so. It would really be a very unsatisfactory state of affairs in regard to foundry firms to have some in and some excluded on a basis of whether certain arrangements had been made between employers and employees. For those reasons I believe that the Amendment really cannot stand up.
LORD JESSEL: In the first place, I apologise for speaking on two Amendments at the same time. Secondly, I should like to thank the noble Marquess for the extremely full answer he has given to my point. I realise that the Minister of Supply has taken a considerable amount of trouble over this matter: I know he has had a great many interviews with people concerned. I was just trying to put the point of view of the independent foundries, and the noble Marquess has explained why the Government cannot accept the Amendment. In the circumstances I beg leave to withdraw it.
Amendment, by leave, withdrawn.
6.0 p.m.
LORD BURDEN LORD BURDEN moved, after subsection (1) to insert:
"(2) The Board shall, in the performance of their duty under the preceding subsection, have regard to the need to secure full employment in Great Britain and to any other considerations relating to the national interest to which the Minister may have asked them to have regard."
The noble Lord said: In the absence of my noble friend Lord Lawson, I beg to move the Amendment standing in our names. As the noble Marquess the Leader of the House said a moment or two ago, this industry has a remarkable record of labour relations. Over some ninety years the workers in this industry have built up a strong and powerful organisation and they have produced some remarkable men—before the formation of the Confederation in 1917, men like John Hodge, and since the formation of the Confederation, Sir Arthur Pugh, happily still with us, and Sir Lincoln Evans. I do not think it is an exaggeration to say that in the proper carrying out of this highly skilled craft which has a high degree of risk the safety of this country both in peace and in war depends. I think I can also claim that in both world wars the industry made a wonderful contribution to the nation's safety. What it has done in post-war years everyone will agree is something of a record.
But in the labour and trade union world there are long memories, and those employed in the industry remember what happened after the First World War. With your Lordships' permission, I should like to quote from what is now a rare document, a pamphlet entitled, What is
960
Wrong with the British Iron and Steel Industry, issued by the Confederation in 1930 and dealing with the problem of unemployment. Incidentally, although it is not germane to the point I am making, in this document the Confederation ask for something very much like what was put on the Statute Book by the Labour Government. This is what the statement says, regarding the conditions after the First World War:
"After about twelve months of inflated trade, the industry in 1920–21 dropped into the inevitable slump. During the years that have elapsed, in which the industry has been struggling to find an outlet for its products, prices as regards a considerable percentage of those products have dropped to a level even below the cost of production. Wages have followed suit and abnormal conditions of employment and unemployment have occurred."
The statement goes on to set out figures comparing unemployment in the iron and steel industry with general unemployment. In 1924, the yearly average of unemployment in the pig iron industry was 14.3 and in steel smelting, iron puddling furnaces and rolling mills, it was 21.1, while the general level was 10.4. So it went on (I will not trouble your Lordships with all the figures) until 1930, when in the pig iron trade unemployment was 23.9 and in steel smelting, et cetera, 34.1, while the general level of unemployment was 16.6. Throughout the whole table unemployment in the iron and steel industry was approximately double the general rate of unemployment in the country. That condition prevailed almost up to the outbreak of the Second World War, notwithstanding the burst of employment which came from a measure of rearmament.
Strange as it may seem to noble Lords opposite, we on these Benches hold that those who have invested their labour power in this industry have an interest second to none in it. My first Amendment endeavours to place fairly and squarely on the shoulders of the Board the duty of endeavouring to secure and maintain full employment. The noble Lords in charge of the Bill say that they are going back to competition; they do not even say regulated competition or licensed competition, but back to the days of laissez faire. The noble Marquess who leads the House says that they are the evolutionary Party and we are the "stick-in-the-muds"—but they are going back to the very condition in which the

961
iron and steel industry was twenty years ago, described in this pamphlet issued by the Confederation. They are the backward-looking Party and we the forward-looking.
In order to avoid a second discussion, may I say a word or two in regard to the next Amendment? The first Amendment endeavours to place the responsibility for securing and maintaining full employment in the industry fairly and squarely on the Board. If that is not accepted, the second Amendment provides the alternative: that the Government should assume responsibility. That is in accordance with the White Paper in regard to full employment which was issued by the Government before the 1939–45 war came to an end. If we wish this industry to continue to make its great contribution to the export trade and to the national well-being, please do not even seem to indicate to those engaged in the industry on the labour side that they are going back to the terrible conditions which obtained in the inter-war years. Surely, it is not too much to ask that in a Bill of this kind the Government should declare their intention that, so far as it is humanly possible, they will endeavour to secure that the workers in the industry never go back again to those dark days. In that spirit, I plead with the other side to accept this Amendment.
Amendment moved—
Page 4, line 48, at end, insert the said subsection.—(Lord Burden.)
LORD MANCROFT: The noble Lord, Lord Burden, has given us an interesting and characteristic speech. I do not think that anybody could complain of the general sentiments to which he gave expression. He hoped to see an industry in which full employment is the order of the day; he deplored and was horrified at the prospect, or the possibility, of any return to conditions of unemployment within the industry. Nobody on any side of the House could possibly disagree with him for one moment. But what I do disagree with him about is his attempt to incorporate these sentiments at this juncture in this Bill. This Amendment would insert a new subsection requiring the Board in discharge of their general duty to have regard to
"the need to secure full employment…and to any other considerations relating to the national interest to which the Minister may have asked them to have regard."
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As I see it, the arguments against a provision of this kind are these. This is an attempt by the noble Lord to give the Board a responsibility for a matter of public interest far beyond the scope of the iron and steel industry. A Board set up to supervise a particular industry is not a suitable body to judge matters affecting full employment. The Board will agree, of course, with every sentiment expressed by the noble Lord, Lord Burden. The maintenance of an efficient and healthy steel industry, in itself, would make a most vital contribution to the maintenance of full employment. After all, cheap steel has undoubtedly helped the competitive position of the engineering industry in this country in its overseas markets, and thus helped to earn foreign currency to buy the materials to ensure the full employment to which the noble Lord, Lord Burden, and all of us, naturally attach so much importance. But this is already covered, I suggest, by the Board's general duty. In the last resort, only the Government can be responsible for the creation of the conditions which make full employment possible, by internal financial, economic and social policies and by agreements with foreign countries. In practice, of course, the Board could not fail to bear in mind considerations bearing on full employment. As I suggested to the noble Lord, Lord Wilmot, a few moments ago, how could the Board hope to do its duty and be concerned with a happy and efficient industry if conditions of full employment were not the aim of the Board, of the industry, and of all concerned?
I must on this particular aspect conclude by emphasising to the noble Lord as strongly as I can that, however desirable these sentiments may be (and they are), the responsibility must be the Government's. It must not be thought for a moment that by refusing—as I am afraid I am—to accept the noble Lord's Amendment on full employment, and his second Amendment, that the Board will be forbidden to have these considerations in mind. That would be the grossest distortion. I would, however, point out that the Government introduced an Amendment in another place which, in connection with the Board's general development functions, required them, without prejudice to their general duty, to have regard to any considerations relating to employment or to the national

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interest to which the Minister asked them to have regard. That is Clause 5 (2), at which I think the noble Lord is now looking. The present Amendment is similar to that subsection, but extends it to the whole of the Board's duty. There is also the important difference that "the need for full employment" is placed upon the Board as an absolute criterion. This would be quite unacceptable, for the reasons I have already given to your Lordships. It seems to me that full employment and the national interest will principally be served by efficient, economic and adequate production, which it is the Board's general duty to promote.
There are various particular fields in which they have functions: principally development, prices and raw materials; secondarily, research, training, welfare, joint consultation, and so on. In the field of development there may occasionally be scope for the Board to take account of considerations outside the strict confines of their general duty. It was for this reason that the Government inserted subsection (2) of Clause 5, to which I have just referred the noble Lord. In the field of prices there is already power (this is in Clause10) for the Minister to override the Board in the national interest, and this provides an adequate means for the Minister to bring full employment and other national considerations into the balance. In connection with raw materials, clearly the national interest and full employment can only be served by the Board taking steps in pursuit of their general duty to see that the necessary raw materials for efficient economic and adequate production are available. In regard to the secondary matters to which I referred, it is clear again that the national interest and full employment will best be served by the Board taking such action as will best further their general duty—and their general duty includes high up on the list the well-being and general happiness of the industry.
To sum up, the Amendment in the name of the noble Lord, Lord Burden, is, I would respectfully suggest, unnecessary, because the Bill already provides for wider considerations affecting the national interest to be taken account of in connection with development and prices, and in other matters such considerations are
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secondary to the prime consideration of efficient, economic and adequate production. It is further undesirable, in my submission, because it would look like a qualification upon the Board's general duty and would tend to blur, I should have thought, what, because of its paramount importance, should be clear-cut and well defined. That, I am afraid, is the firm opinion of Her Majesty's Government. I cannot offer the noble Lord any hope on that Amendment, any more than I can on the next Amendment which he has down and with which, since he spoke on the two together, he would perhaps like me to deal briefly at the same time.
Much of the argument I have directed towards his first Amendment applies to this one, too. This is slightly different, because it would allow the Minister to give the Board directions, whether general or specific, about the performance of their duty in the interests of full employment or for any other reason in the national interest. This Amendment is even wider and stronger than the previous one. The power which he envisages giving to the Minister would run completely counter to the Government's conception of the Board as a high-powered policy-making body, responsible in general, but not in detail, to the Minister, and through him to Parliament. Such a power would, in the opinion of the Government, seriously undermine the stature of the Board and would probably have the effect of discouraging really able men from accepting appointment to it. Therefore, I am afraid we cannot accept this Amendment either.
I would conclude by repeating what I said at first, because I think it is important that the Government should not lay themselves open to any accusation by those who may not perhaps have read this debate very carefully that they do not wholly agree with the noble Lord, Lord Burden, in the sentiments he expressed about full employment and the horrors of unemployment. Of course, we agree about that. But the Government feel that the best way of promoting the objects which the noble Lord has so rightly in mind—and which we, too, on this side of the House have in mind, as no doubt he will readily accept—is by a happy industry, and by a Board carrying out the duties with which it is charged. Those two—a happy industry and full

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employment—must march together. But to include in the Bill the specific provisions that the noble Lord specifies in his two Amendments would, we feel, be inappropriate and would run quite counter to our whole conception of the functions of the Board, the Minister and, indeed, of Her Majesty's Government. Therefore, I am afraid I cannot accept either of the two Amendments.
LORD SHEPHERD: I understand from the noble Lord, Lord Mancroft, that the principal objection to the Amendment that has been moved is the desire that improper powers shall not be given to the Board.
LORD MANCROFT: Irrelevant powers.
LORD SHEPHERD: That irrelevant powers shall not be given to the Board. The Government do not want the Board to intervene too meticulously in the management and running of the industry.
LORD MANCROFT: That is true, of course; but it is not quite the point I was making. What I was saying was that this is not the function of the Board at all. That is the point.
LORD SHEPHERD: I am glad to know that I have been talking upon the subject which the noble Lord said is within the compass of the intention of the Government. But I would remind him of his own intervention in the debate—that whilst the Government feel unable to give us the Amendment which we have proposed, the Government themselves in another place have given authority to the Minister to authorise the Board to intervene in the subject on which Lord Mancroft said they ought not to have authority at all. I would join issue with him there, because if a body like the Board is going to overlook an industry of this kind, it has not only to consider the position of raw materials and the like but has also to consider the provision of labour and the maintenance of that labour, in the work of producing the commodities which the industry turns out. I noticed that the noble Lord indicated that, without giving this Board a simple authority to deal with the question of employment, the effect of the Board's work will be success in the industry. If you get success in the industry, he repeats, there can be no better way of guaranteeing
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employment. If the noble Lord will look back, as my noble friend has indicated to him, at the record of this industry during the last fifty years, he will find that an industry divided against itself has been remarkable for the degree of unemployment that existed. Indeed, during the period when unemployment was rife in those industries some of the greatest fortunes in the land were made.
There is another important reason why we should like this proposal put into the clause. It may well be found necessary, as it was in the pre-war period under competitive conditions, to adopt a scheme for reorganisation for the purpose of reducing the costs of production. If that were to take place, it is on the cards that by that action there would be a turning off of a great deal of labour formerly employed. The making of an efficient industry may give rise to questions of employment and they might be as dangerous as they were then. Indeed, noble Lords opposite will remember that the National Government which existed from 1931 onwards joined with the Steel Federation of Great Britain in the reorganisation of that industry, which brought about the closing down of mills and furnaces; and the concentration of work in a fewer number of places led to the discharge of a great number of men. It is conceivable that under the new conditions some sort of reorganisation will take place. If that is the case, we suggest that it is of the highest importance that there should be some degree of authority to the Board, to have regard not only to cutting down costs but also to the provision and maintenance of full employment.
I agree with the noble Lord, Lord Mancroft., that full employment is a responsibilily of the Government as a whole on behalf of the people of the United Kingdom. If an industry is organised under Government auspices, the Government naturally have the matter under complete control. But if we are to divide up industry in the way proposed in this Bill, the Government, if a way is to be found to produce full employment, will have to do so through fie agency of those continuing the industry. It will be impossible for the Government to guarantee full employment to the people employed in a competitive industry unless the Board which this Bill proposes is given authority to have regard—and this is all our

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Amendment says—to the provision of full employment as being one of the important principles at stake. If we have a nationalised industry it is for the Government to say what it requires in that industry. But if industry is under private enterprise, and it is still the responsibility of the Government that full employment should be maintained, then only through the agencies attached to that industry can the Government's wish and purpose be carried out.
6.26 p.m.
VISCOUNT BRIDGEMAN: I think we may be in danger of misconceiving the attitude of the House on the question which is the subject of this Amendment. As my noble friend in front of me has said, there can be no question but that everybody in this House, irrespective of Party, wishes to do everything possible to avoid conditions of unemployment and hardship to the workers, in this industry or any other. But although one can say that with all one's heart, it does not therefore follow that that is a reason for putting words to that effect into this or that Bill.
The other thing which strikes me, not only about this Amendment but, if I may refer to them, about some Amendments which have gone before, is that a number of the Amendments proposed by noble Lords opposite seem to us to have the effect of placing upon the Board responsibilities far outside the scope of the steel industry itself, and extending into the realms of the economic conditions of this country. That, I am quite sure, is wrong. After all, so long as the economic conditions of this country are good, the steel industry, like any other industry, will be fully employed; and there is the incentive there, not only to the workers to do their best but to the employers to employ as many of them as possible. In any industry like the steel industry, where labour conditions have traditionally been extremely good, as they are now, that will work. When you get to a state of affairs such as existed in the early 'thirties, which noble Lords opposite have in their minds, you have a condition where the maintenance of full employment, in this industry or any other, is a problem reaching far beyond the bounds of the industry itself. The only way in which the steel industry can maintain
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full employment if orders are not there is for the Government to take such action as will keep the steel mills working, by providing orders which might not otherwise have been provided. There is no other way to do it. That I am quite certain is something far beyond the capacity of the steel industry itself and, therefore, far beyond what ought to be the purview of the Steel Board, because the Steel Board is a body which has been set up to deal with the steel industry and not to deal with the political considerations outside it.
Therefore, do we not come back to this? If a situation like that arises—a situation which we all want to avoid—is that not a matter for the Government of the day, and have not the Government of the day proper powers in the Bill itself? In Clause 5 (2)—a clause which I think was slightly misquoted by the noble Lord, Lord Shepherd—the important feature is that the Minister may ask the Board to take into account any circumstances which he, the Minister, should take into account. In those circumstances, surely we include any such circumstances as might arise from the sort of national crisis which noble Lords opposite have in mind.
LORD SHEPHERD: May I intervene? I was not misquoting, as the noble Viscount suggests. I was merely indicating that the noble Lord, Lord Mancroft, had said that the Board was the wrong institution to be given such powers, whereas in the subsection now being quoted by the noble Viscount, the Minister has the right to give them such powers, and I could not see how it was possible to square the two.
VISCOUNT BRIDGEMAN: I think they square perfectly well. The Board should not have power themselves to deal with economic difficulties outside the industry. The Minister should certainly have powers to ask the Board to take into consideration any matters to which he thinks they should have regard. Surely that would apply to the matter of full employment, or, if the worst came to the worst, to unemployment. I feel that this problem of unemployment is one which is well taken care of in the Bill, and I think we should be wise not to try to impose on the Board powers which go far outside their real business, which concerns the steel industry itself.
LORD LAWSON: I apologise for the fact that I was not here to move this Amendment, as was originally arranged. The noble Viscount, Lord Bridgeman, has just said that this is a matter to which the Government, and not the Board, should have regard. One of the outstanding problems in the last war was that in most of the heavy industries (I am fairly familiar with the heavy industrial areas) no notice whatever was taken by the privately run industry of the need for conserving a strong esprit de corps among the skilled workmen particularly, to say nothing of the unskilled workers in the great industries.
VISCOUNT BRIDGEMAN: I am sorry to interrupt. Surely, the words that the noble Lord has just used, to the effect that no steps were taken by heavy industry to preserve an esprit de corps, were rather strong and very sweeping. I do not want to take up the time of the House, but I should like to give the noble Lord afterwards several instances of cases in which that was done. We must not allow it to go out of this House unchallenged that no steps were taken.
LORD MANCROFT: Exactly what period has the noble Lord in mind at the moment?
LORD LAWSON: I had in mind 1939. As a matter of fact, in the shipyards the most outstanding factor was that if it had not been for the "phony war" we should have been in a very bad situation indeed, because not only skilled but the great corps of unskilled men—known as "black gangs"—had to leave the shipyards. It was a well-known fact that they were dissipated in the most alarming way, so that they could not be found when they were wanted. We did manage to pick up some of the older men and get a kind of "scratch" gang together to deal with the situation. But as I say, had it not been for the "phoney war" at that time, we should have been in a very difficult position indeed. I know this for myself: I speak with knowledge of the matter.
It is also a well-known fact that these men, who were dissipated and dispersed all over the place, were doing jobs that were little better than making dolls' eyes—at the very time that the Government were crying out for them. I should have thought that that industry, upon
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which the country is so dependent, is an outstanding instance and a living proof of the fact that there mast be some relation between these Boards and the Government of the day, so that the men can be sure that they are not being let down. I will not detain the House, but I could speak at considerable length on this matter, because I was deeply involved in the special areas in the North. I remember how heartbreaking it was to see highly qualified men from the shipyards and heavy industries practically driven away. It fact, I myself had to get them away to get them jobs, to industries that were certainly not worthy of this country, considering the high degree of skill of these men. There should be some close contact between the Boards of nationalised industries or semi-nationalised industries—call them what you will—and the Government; and it is essential that the Government should know what is the state of things in the industry, and that the industry should know exactly what is the policy of the Government of the day.
LORD SILKIN: I think it is a great pity that the Government have decided not to accept either of these Amendments or anything which resembles them. It seems to me that the reasons given by both the noble Lord, Lord Mancroft, and the noble Viscount, Lord Bridgeman, take little account of the actual wording of these Amendments. As I understand it, the reason given is that it is not the job of the Board to concern itself with full employment, but that that is a matter for the Government. I accept fully the fact that this Government, as indeed any Government in modern times, have to concern themselves with the problem of full employment. No Government could live long in these times unless that was one of their dominating concerns. Therefore, I am not making the slightest imputation against the Government, or suggesting that they are indifferent to the question of employment. But it seems that the reasons given are involved in the doctrine of good government—that this is a matter with which the Government must concern itself and not one on which the Board either has the information on which it could act or could properly act, even if it had the information.

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Now let us look at the Amendments and see what they say. The first says that the Board shall have regard to these matters and:
"…to any other considerations relating to the national interest to which the Minister may have asked them to have regard."
In other words, they are not asked to take the initiative themselves. According to the Amendments—orat any rate according to the intention of the Amendments—they would concern themselves with the question of employment only when they are asked by the Minister to do so. But the second of the two Amendments is even stronger, because it gives the Minister power at any time to give to the Board—he may: he is not obliged—
"directions as to the performance of their duty to secure full employment.…"
LORD MANCROFT: The noble Lord keeps on saying "full employment." He would be more revealing if he were to read the remainder of the words
"in Great Britain."
The Amendment does not say "here and there" or "in this industry or that": it says "full employment in Great Britain."
LORD SILKIN: I prefaced my remarks, as I would on any Amendment, that it may well be that the wording of the Amendment is capable of improvement.
LORD MANCROFT: Hear, hear!
LORD SILKIN: Well, it was so even in the days when the noble Lord and his friends were in Opposition. We have not a skilled draftsman at our disposal, and it is conceivable that frequently we could be tripped up on words. But nobody is out to trip us up, I am sure, on the literal wording of our Amendments—though we are entitled to do it to the Government, because they have got draftsmen. If the noble Lord or the noble Viscount understands this Amendment to mean that a Board concerned with operations in iron and steel should deal with full employment throughout the country and in every industry, of course, I would agree with what they have said in their criticisms. But obviously that is not the intention—and none of the speeches in support of the Amendments lends colour to that interpretation. My noble friend Lord Lawson, for instance, dealt specifically
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with unemployment in the iron and steel industry; and so did my noble friend Lord Burden. And that industry is, of course, what we are talking about. So I say that, if that is to be regarded as the intention of the Amendment, the second Amendment makes it quite clear that what we are asking is that the Minister shall be in a position, if he so desires, to give directions to the Board to have regard to these questions. Why not? Questions will arise as to whether or not a particular concern should be closed down. As the Bill stands at present, the Board will have regard to questions of efficiency, questions of price and so on—the various considerations are set out in the Bill. Why should not the Minister have the right to give a direction asking the Board, in addition to the considerations that are already set out, also to have regard to the question of the employment of the industry? After all, it can be a very serious matter.
Let us take, as an example, the question of the new town of Corby, where vast sums of public money are involved in the building of a new town, and where people have been recruited from all over the country for the purpose of employment by Stewart and Lloyds in this industry. Supposing that there were some suggestion—it may be fanciful—that something should be done in connection with Stewart and Lloyds, that they should be slowed down or that the industry in that area should cease altogether, this would have repercussions upon tens of thousands of people. Eventually, the new town will be a town of something like 80,000 people, nearly all of them directly concerned with this industry. Is it to be suggested that the Minister or the Board should have no concern at all with this; that they should make their decision on the question of what should happen at Corby merely on the ground of "the efficient, economic and adequate supply of iron and steel products," without regard at all to the social capital that is involved in the creation of the town of Corby and without regard to the welfare of the individuals who are employed in the industry? All that this Amendment seeks to do is to give the Minister power in a proper case, within his own discretion to give a direction to the Board—does the noble Viscount, Lord Davidson, wish to say something?
VISCOUNT DAVIDSON: Only that under Clause 5, subsection (2), that is fully provided. May I read it?
"Without prejudice to the promotion of the efficient, economic and adequate supply of iron and steel products, the Board shall, in their consultations under the preceding subsection, have regard to any considerations relating to employment in Great Britain or otherwise relating to the national interest to which the Minister may have asked them to have regard."
Surely that is it?
LORD SILKIN: I admit that that goes part of the way, but the second Amendment, at any rate, goes much further, because it enables the Minister to give a direction to the Board on this subject. It is a much stronger Amendment; it is a much stronger provision, and it is of a much more general character. Of the two Amendments, if I had to choose between them, I think I should prefer the second. Just as noble Lords opposite were anxious to keep in the Bill the words "under competitive conditions," as a demonstration that it was important to have competition in this industry, so I think it is desirable to have the strongest possible words in this Bill to indicate that employment in the industry is something with which we are deeply concerned, and that it is to be one of the important factors in the functions of the Board when asked by the Minister to have regard to it. For those reasons, while I would not at all pledge myself to the exact wording of either of these Amendments, I hope that the Government will see their way to reconsider the matter between now and the next stage, with a view to giving us something which will be a declaration of their intentions as regards employment.
LORD LAYTON: May I ask the noble Lord who has just sat down whether he does not regard Clause 5, subsection (2), as mandatory on the Board? Because the Bill says earlier on that the Board shall have regard to considerations to which the Minister may have asked them to have regard. Is that any weaker in direction? It seems to me, if I may say so, that that subsection has identically the same mandatory effect as the second of these Amendments, and that as between the two the only difference is that the Amendment now being moved covers all the functions of the Board, as distinct from production facilities and raw materials. As the Government have
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accepted the principle in subsection (2) I do not see any clear reason why they should not do so for the whole of the functions of the Board.
LORD STRABOLGI: Surely the difference is that what we are trying to consider and do in our Amendment places the onus on the Minister. It is permissive for the Minister; it gives him the right; he may act at any time if he thinks the Board is not paying enough attention to these questions. I think the noble Lord, Lord Silkin, supports me there and will probably be grateful to me for answering the noble Lord, Lord Layton.
I have taken the opportunity to do so because I want also to say a word on the general principle. In these debates, noble Lord after noble Lord arises from the other side of the House, figuratively lays his hand on his heart and says, "Whatever happens, we are going to fight and struggle to keep full employment for the workers of Great Britain. Any other suggestion is unfair to us, unjust, libellous and all the rest of it." That is what they are saying, and I am sure they are meaning it. That is within the precincts of this Chamber. But what happens outside? Their supporters, or a very large proportion of their supporters, are business tycoons who provide the great sinews of war for the Conservative Party, who are the driving force of big business in this country and who believe that full employment is not in the best interest of their particular system.
SEVERAL NOBLE LORDS: Shame!
LORD STRABOLGI: What is the use of noble Lords saying "Shame"? It is perfectly well known.
LORD MANCROFT: By whom?
THE EARL OF ONSLOW: By whom?
LORD STRABOLGI: As I said, by many of the great leaders of industry, or the leaders of the great industries in this country, who believe that full employment means slackness on the part of the workers, too strong trade unions, and that it would be to the advantage of the country—and they are quite cynical about this—from time to time to have a good dose of unemployment.
LORD MANCROFT: That is a monstrous thing to say.
LORD STRABOLGI: It is not monstrous. Does not the noble Lord know what is being said outside this House? I do not know what he does with himself in his spare time.
LORD MANCROFT: The noble Lord is speaking rubbish.
LORD STRABOLGI: These things are being said and are being written in papers like the Economist.
Now let me come to the actual proof of what happened in the past. We can read from history. I see the noble Viscount, Lord Davidson, who is one of those who protest that of course the last thing the Conservative Party want to see is anything but full employment. He occupied a very important position in the Governments which followed upon the First World War, when we had a deliberate and considered policy of deflation and the throwing out of work of large bodies of men for deflationary purposes, followed by tremendous industrial troubles, strikes and lock-outs which caused great injury to this country.
Now we have had the second Budget of the present Chancellor of the Exchequer. I do not want to go into the details of that because I presume that in due course it will come before us in the ordinary way, as a Finance Bill. The second Budget of the present Government is a gamble. It is hoped that it will keep things on an even keel. It is hoped that it will give a certain incentive towards increased business efficiency, and so on. But it may easily fail. Half a dozen factors may upset it. What is the alternative then? The alternative then is a good dose of deflation, the throwing out of work of great numbers of men as a consequence, the lowering of wages and the standard of living in that way, and an attempt to bring about a balance in our economy exactly as was done after the 1918 War. I do not say that the noble Viscount, Lord Davidson, had anything to do with it at the time, but he was a prominent member of the Government which was ultimately responsible and which listened to the promptings and advice of the then leaders of the City of London and the great industrial leaders of the country.
What happened has been explained by my noble friend Lord Lawson, speaking from his great experience as a trade union leader. He saw it happening in the North of England. I, as a member of
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Parliament, saw it happen. He saw it as a great trade union leader. It is that sort of thing which we are hoping to prevent, by any means we can, because in the long run it is bad for the country, bad for the nation and particularly bad for the working people. Whatever our shortcomings on these Benches, we try to speak in what we think are the interests of the great mass of the workers of the country. We think that words of this sort are necessary and desirable, and we all regret very much that the Government cannot accept them, or at any rate propose some alternative form of words which will fulfil the same purpose.
LORD WINSTER: This House will certainly be a vastly entertaining place if we occupy our speeches with saying how we spend our spare time, but it might not in every case conduce to our reputation with the outside public. I hope the suggestion will not be generally adopted.
LORD STRABOLGI: I made no reflection on noble Lords opposite.
LORD WINSTER: I do not look around always making reflections or to see that reflections are implied; I leave that to others to do. But I should like in one or two words to support what was said by the noble Lord, Lord Lawson, about the effect in the shipbuilding yards of the dreadful unemployment which took place in the steel industry. That was a really dreadful period in the industry. But it is over, and it is no good going over it except to draw one or two useful conclusions from it. Certainly, at the Admiralty in the early stages of the war I had the opportunity of knowing how unfortunate were the effects in our shipyards of the withdrawal of labour from the shipyards which followed upon unemployment in the steel industry. Undoubtedly, we were put to very great straits on that account, and suffered severely in more than one respect.
On the subject of the Amendment I should like to say this. The Explanatory Memorandum to the Bill says that it provides for the return to private ownership of the undertakings in question. Well, I should have liked to see the Bill accept the fact that private ownership must have close regard indeed to employment. I think it would be unfortunate, by way of contrast, to say that

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a nationalised industry pays close attention to employment or full employment, but that when the industry is returned to private ownership that consideration is, to some extent, lost sight of. I should have thought that the Government would be very anxious indeed to connect that statement in the Explanatory Memorandum, that the Bill provides for the return to private ownership, with something in the Bill to show that private ownership will have this close regard to employment or full employment. I should have thought it would be a very good advertisement for the Government in regard to what they are doing, and I am very surprised that they have not taken that opportunity. I hope I do not misunderstand the noble Lord, Lord Mancroft, but I thought that at one time he took exception to the words "Great Britain" in the Amendment. I do not want to misquote him in any way at all—
LORD MANCROFT: I did not take exception at all. I merely asked the noble Lord, Lord Silkin, when he was referring to the Amendment, to read it out with the words "Great Britain"—not that I take exception to them, but merely to get the constant reiteration of the words "full employment in Great Britain." I was only making the debating point that full employment in Great Britain was outside the scope of the Bill; but if it was a question of full employment in the industry, then I was arguing that the best way of obtaining full employment in the industry was by the Board carrying out its functions in order to obtain a happy industry.
LORD WINSTER: I quite understand. I am sure my noble friend will agree that to some extent the wording is irrelevant, provided the Amendment takes into account this question of having regard to full employment. In that regard I think we should be quite amenable, as far as the meaning is concerned.
Two other points have occurred to me. If we look at Clause 2 (3), we find there a reference to the Board having regard to organisation and administration, and then, again, in Clause 3, we find that the Board has to have regard to training and education and to welfare. The Board is charged with those responsibilities for looking after organisations and administration, which I should think concerned very closely indeed the matter of employment,
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and also training, education and welfare. But what is the need for training and educating your workers and having regard to their welfare if it does not extend to having very close regard indeed to their employment? I should have thought that it was implicit in those directions to the Board, and that therefore the Government could have no possible objection whatsoever to mentioning the question of employment in connection with the duties of the Board. Finally, I would say that in many places throughout the Bill and throughout the directions to the Board reference is made to the Board's doing things in the national interest. I must confess that I have difficulty in understanding what could be more in the national interest than establishing a happy and contented labour force in this great industry, through having due regard to the full employment of the labour force.
VISCOUNT DAVIDSON: I should not have intervened except for a very few moments, had it not been that Lord Lawson has arrived in the Chamber. I know what a passionate interest he took in the employment of his people in the North before the war. He knows that when I was in another place I also had occasion to take a very keen interest in unemployment, or rather in the cure of unemployment, if that were possible. But in relation to this Amendment, as it seems to me, the point is a very simple one. It is that the Board, as an industrial body, will be staffed by people who are experts in their particular walk of life: management and labour, and the consumer of steel goods and other independent persons. It is inconceivable that they should not be interested in employment in the industry which they supervise. Therefore, I think the only result of accepting this Amendment would be to take out of the hands of the Government their responsibility for full employment. It could not possibly be a function of a Board restricted in their supervision to one industry. That is why I hope the noble Lords across the floor will withdraw their Amendments.
7.0 p.m.
THE MARQUESS OF SALISBURY: Perhaps I may say a word in conclusion. We have had, I think, an interesting and valuable debate on these Amendments. I regretted the intervention of the noble Lord, Lord Strabolgi, who did not seem

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to me to heighten the general standard. I have long known him to be an adept at what I may call slinging mud in the hope that some of it may stick. I should have thought he was old enough to realise that in the long run that hurts nobody but himself. It is not going to have the slightest effect on the Conservative Party. Everybody knows that what he said is not true. It has a bad effect on himself. Certainly the making of reckless statements of that kind, for which he did not produce any evidence at all, has an effect on his reputation in the country and in the House. His reputation as an accurate speaker in this House is his affair, and I do not propose to take it any further, but I should like to repeat that it seems to me to be absolute insanity to say that either the Conservative Party or any other Party should want unemployment for its own sake. There was a long slump, which was world wide and not confined to this country, and unemployment was at least as high at the time when the Labour Party were in office as when we were in office. I do not think the Labour Party were entirely responsible for that. I would be the last person to suggest such a thing. It was something much bigger than any purely British Government could tackle at that time. To suggest that we were responsible is equally wrong.
After all, there is every reason why any Government should want the working people to be employed. First, there is the obvious reason, which I think is common to us all and which was mentioned by the noble Lord, Lord Lawson, that unemployment is in itself a dreadful and a degrading thing to people who are unemployed for a long time. I should not have thought that any responsible person in any Party would desire such a situation as that for his fellow countrymen. Even if we were not humanitarian and were purely hard-boiled businessmen or economists, or whatever it may be, we should have thought it deplorable from a purely economic point of view. A man who is unemployed is unproductive; he is not playing his full part in increasing the general wealth and prosperity of the country. From that point of view, equally, it is undesirable that men and women should be unemployed. Therefore I think we can take it that it is generally accepted in all parts of the
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House that everybody of a responsible character, in whatever Party he is, wishes to see the working people of this country fully employed. I think that is common ground, and I do not believe that anyone, except the noble Lord, Lord Strabolgi, would disagree with it.
Now I come to the Amendments themselves, which I am sure are sincerely designed to bring about that result, or anyway to help towards that result. My case has already been put by my noble friend Lord Mancroft and others. However well-intentioned the Amendments are, they still seem to me, after I have listened to the whole of the debate, to be an attempt to give the Board a responsibility for matters which are really outside the scope of the iron and steel industry alone. Clause 3, which we have been discussing, deals with the supervision of the iron and steel industry. It is concerned with increasing the productive capacity of the industry and with no other purpose whatever. As my noble friend, Lord Davidson, has just pointed out, unfortunately one cannot confine unemployment to the iron and steel industry or even consider unemployment in the iron and steel industry by itself. It is a much larger question, which can be tackled as a whole only by the Government.
I do not think a reference to unemployment would be appropriate in Clause 3, and here I come to the point very properly raised by the noble Lord, Lord Layton. If we turn to Clause 5 (2) we see that almost exactly the same words as those in the noble Lord's Amendments are already in the Bill. The subsection reads:
"Without prejudice to the promotion of the efficient, economic and adequate supply of iron and steel products, the Board shall, in their consultations under the preceding subsection, have regard to any considerations relating to employment in Great Britain or otherwise relating to the national interest to which the Minister may have asked them to have regard."
That seems to me exactly what noble Lords opposite want, and I think the words are properly placed where they are. I do not think this Amendment would be in its proper place in Clause 3, and I could not give the noble Lord any assurance that we would put it in Clause 3. It is there in the Bill and that is what the noble Lords want. I should have thought they would be satisfied with that.
LORD WILMOT OF SELMESTON: I rise at this point only to say that I think the noble Marquess was unwittingly unduly severe in his strictures upon my noble friend Lord Strabolgi. Let me say why I think so. If I heard my noble friend aright, he had no intention of imputing to noble Lords opposite any such foolish thought as that they would welcome unemployment. I cannot believe that any Member of this House would have such stupid thoughts at any time. What my noble friend said was that some commercial people do say that they think perhaps it would be an advantage if there were a modicum of unemployment. We are men of the world; we mix with commercial characters, and which of us can say that we have never heard anybody say that? Of course, it is exceedingly foolish. It is a doctrine which was exploded long ago, and all of us now realise the truth of what we were told by Maynard Keynes, among others: that what we can do we can afford to do—one of the greatest truths that was ever said; and I am sure everybody realises that. But there are ignorant people who have not learned that lesson, who think that costs would come down and wages would come down, and that the trade unions would be less belligerent if there were a little queue outside the Labour Exchange—not a long queue, that would affect the market very much, but one long enough to affect the temper of the belligerent unionists. We know that such talk is stupid, and I am sure that neither my noble friend nor anybody else on this side of the House would be so foolish as to think that any Member of the House versed in the conduct of public affairs would be likely to join with such foolish people in holding these views.
THE MARQUESS OF SALISBURY: When I was at Geneva, in the days before the war, there was a process known to the League of Nations as "the reinterpretation of affairs." I think the noble Lord, Lord Wilmot, has given an. extremely agreeable and absolutely brilliant reinterpretation of the speech already made by the noble Lord, Lord Strabolgi, but I beg him to read the two speeches to-morrow morning and see whether they look exactly the same.
LORD STRABOLGI: As the noble Lords who have wound up the debate have referred to my speech, I shall take advantage of that fact to make one further comment. The noble Marquess, Lord Salisbury, the noble Viscount, Lord Swinton, and others were prominent in the Government of this country between the wars. They will remember the extremely injurious policy pursued by the then Conservative Government, in which the present Prime Minister was Chancellor of the Exchequer, when, in order to make the pound able to look the dollar in the face, we had a deliberate policy of deflation, a deliberate raising of the value of gold. We then, prematurely, went back on to the gold standard, and the result was the dislocation of our labour markets and tremendous a unmployment. In effect, the Government did not care about unemployment, which went up and up. So long as we could go back on to the gold standard, in the most foolish way, for a ridiculous question of prestige, then the consequences could follow. That happened between the wars. We do not want to see anything like that happen again. The present Government, with their narrow majority, are not trying to do that; but there may be other circumstances and conditions; and "when the devil is well" the devil again will be a devil.
LORD LAWSON: I am sorry, but I cannot withdraw this Amendment. I feel that the only way of handling this matter is to lay the full responsibility squarely on the Board.
On Question, Amendment negatived.
THE MARQUESS OF SALISBURY: Before we go on to the next Amendment, perhaps I may say a word about the business of the House. I had hoped that we should have got a little further forward than we have to-day. However, we do not complain; we have had valuable discussions which have served to clear our own minds and the minds of others. We did agree that we should stop at seven o'clock, and it is now quarter-pasts even. In the circumstances, I do not think it would be worth while to start another rather controversial Amendment. Therefore, I suggest, it is agreeable to your Lordships, that we should now adjourn the Committee stage. I only hope that it may be possible for us to make

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rather more rapid progress to-morrow. If we do not, I suggest that noble Lords should so make their arrangements that we might sit a little later, if necessary. Having said that, I now move that the House do resume.
Moved, That the House do now resume.—(The Marquess of Salisbury.)
On Question, Motion agreed to, and House resumed accordingly.
House adjourned at a quarter past seven o'clock