Sitting of 21 July 1953

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  TRADE AND COMMERCE

    Economic Survey of Japan
    Mr. Ellis Smithasked the President of the Board of Trade (1) what action he proposes to take on the report prepared by Her Majesty's Commercial Minister at Tokyo;
    (2) if he has considered the comments made in the survey prepared by the Commercial Minister at Tokyo, with reference to the shipbuilding and machinery industries; and what particular action he proposes to take in this connection;
    (3) if he has considered the references made to the pottery, cotton textile and rayon industries in the report prepared by the Commercial Minister in Tokyo, particularly with regard to the unfair practices, registering of designs, patents, etc.; and what action it is proposed to take.
    The President of the Board of Trade (Mr. Peter Thorneycroft): The Overseas Economic Survey of Japan is one of a series prepared by British officials in countries overseas to provide factual information on economic and commercial conditions in these countries. I am sure that those concerned in this country will study the sections mentioned by the hon. Member, as I have done, and consider how best to meet this competition. As regards unfair practices and copying of designs and patents, we are always ready to assist any firm or industry affected to take up any such cases with the Japanese authorities.
    Mr. Ellis Smith: Will the President thank and congratulate our Minister in Tokyo for such a fine, informative report Does the right hon. Gentleman agree that
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    it completely justifies the anxiety which we have expressed in the House over a long period; and does he not think that he should take the initiative on this report rather than leave it to us?
    Mr. Thorneycroft: I certainly agree that this is a valuable contribution to a difficult problem.
    Mr. Bottomley: Has this report been made available to Commonwealth Governments particularly those in Asia?
    Mr. Thorneycroft: I think so.

    Launderers' Association (Textile Labelling)
    Miss Burtonasked the President of the Board of Trade whether he is aware that at the meeting of the Council of the International Launderers' Association held in Stockholm last month the need for an international code of informative textile labelling was unanimously agreed; that all members were authorised to take steps, in the name of the Council, with their respective Governments and manufacturers to press for the introduction of such a system as urgently as possible; and if, therefore, he is now in a position to make a statement on the discussions which have been taking place between the British Standards Institution and the Institution of British Launderers on this matter.
    Mr. P. Thorneycroft: I am aware of the resolution to which the hon. Member refers. No approach on the matter has been made to me by the Institution of British Launderers. The last part of the Question does not therefore arise.
    Miss Burton: Am I wrong in assuming—because I was given the information—that shortly after the end of the war the British Launderers' Association had been having discussions with the British Standards Institution on this matter?
    Mr. Thorneycroft: I should perhaps say that the British Standards Institution is, as the hon. Lady knows, an independent body incorporated by Royal Charter. It would not be right for me to try to interfere in its day-to-day work, nor have I any responsibility for answering questions about that work. Perhaps the hon. Lady would consult the Institution.

    Wool Cloths (Standards)
    Miss Burtonasked the President of the Board of Trade whether he is aware that trade and industry are concerned at the delay in making public the standards agreed by the British Standards Institution on the description of fibre content of wool cloths; that the effective working of the Merchandise Marks Act is hampered by such delay; and if he will therefore make a statement on the position before the House rises for the summer Recess.
    Mr. P. Thorneycroft: I understand from the British Standards Institution that there has been no avoidable delay in arranging publication of these standards, which have only recently been agreed.
    Miss Burton: That really is no answer. Is the President aware that this information is shortly to be made public, and would he not agree that it would be advisable that it should be made public through the House? Can the right hon. Gentleman answer the last part of my Question?
    Mr. Thorneycroft: I should perhaps make it plain that I cannot accept the responsibility of answering for the day-to-day conduct of affairs by this Institution.

    Hotels (Colour Bar)
    Mr. Morleyasked the President of the Board of Trade what action he will take, in conjunction with the British Travel and Holidays Association, to prevent the recurrence of the incident of discrimination against a coloured American music hall performer at the hotel of which particulars have been sent to him.
    Mr. P. Thorneycroft: Without expressing any opinion on the matters alleged in this particular incident, I would say that I very much deplore discrimination on grounds of colour. I fully support the British Travel and Holidays Association in the importance it attaches to hotels and catering establishments extending a courteous welcome to all visitors.
    Mr. Morley: While thanking the President of the Board of Trade for his reply, might I ask whether no further pressure can be brought on those hotels which refuse accommodation to distinguished
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    coloured visitors from abroad who are well able to pay for the accommodation?
    Mr. Thorneycroft: I have, of course, no statutory powers in this matter, and I believe that this subject is probably best dealt with by the impact of public opinion.

    Fruit and Vegetables (Prices)
    Mr. Peter Freemanasked the President of the Board of Trade whether, with a view to reducing the cost of all fruit and vegetables, he will allow the free importation of all varieties and at all times, and cancel the closed periods now in operation, instead of increasing such periods and reducing the tonnage each year as the present policy has been of recent years, thus causing artificially inflated prices by a deliberately contrived shortage.
    Mr. P. Thorneycroft: No, Sir.
    Mr. Freeman: Is not the policy of the Government to set the people free? Does the right hon. Gentleman not think that it would be an extremely good thing to relax controls which increase the cost of living, which affects every member of the community?
    Mr. Thorneycroft: The hon. Gentleman's suggestion would, of course, mean that protection would be removed altogether from the horticultural industry, which I do not think in the long run would serve anybody's interest, least of all the British housewifes'.
    Mr. G. Wilson: Will my right hon. Friend do everything he can to continue the protection of the British horticultural industry which has been seriously handicapped by foreign dumping on many occasions?
    Mr. Thorneycroft: I shall pursue the policy I am pursuing at the present time.

    Tomatoes
    Mrs. Castleasked the President of the Board of Trade under what powers he suspended, without notice, the importation of tomatoes at midnight on 7th July last; whether he is aware that consignments purchased by the importers before they had received postal notification of this suspension on 8th July were seized by Her Majesty's Customs; and what restitution he proposes to make to those importers who incurred financial losses as a result of his action.
    Mr. P. Thorneycroft: All import licences are issued subject to the condition that they may be revoked under Article 4 of the Import of Goods (Control) Order, 1940; and importers of tomatoes are specifically warned of this. The procedure followed on 7th July, as on previous occasions, is well understood by the trade both in this country and the Netherlands. I cannot take account of the time at which orders are placed, but normally goods which are actually despatched to the United Kingdom before the revocation of import licences are admitted. I understand, however, that the two boats carrying the 130 tons of tomatoes seized by Her Majesty's Customs did not leave Holland until the evening of 8th July. I cannot undertake to compensate importers for losses incurred by the arrival of goods which are not admissible.
    Mrs. Castle: Is the right hon. Gentleman aware that it is usual to give 24 hours' notice to the trade in view of the fact that goods like tomatoes are ordered forward so that the orders may be placed in the auctions in good time, and is he aware that this ban came into operation half an hour before he released his Press notice and nine hours before the trade were aware of the ban, with the result that the 130 tons to which he referred were shipped in good faith and in ignorance of the ban, but were confiscated by the Customs with loss to the importers? Does the right hon. Gentleman think this is a reputable way to conduct international trade?
    Mr. Thorneycroft: Precisely the same procedure was followed on this as on all other occasions, a procedure which is thoroughly well understood both by the importers in this country and the exporters in Holland. I would only add this, that if I were to start giving longer notice of these bans there would be considerable difficulty because of their being forestalled.
    Mrs. Castle: Is the right hon. Gentleman aware that this is the first time that the ban has been brought into operation half an hour after the Press notice was released, and that that meant that the loss was inevitable, and that this is another example of the complete inefficiency of his Department in the conduct of trade?
    Mr. Thorneycroft: The hon. Lady is misinformed of the facts.
    Mr. D. Jones: What are the facts?
    Mrs. Mannasked the President of the Board of Trade if he is aware that Scottish housewives have been paying 3s. 4d. to 4s. 3d. for Scotch tomatoes since early spring and are now deprived of the cheaper prices of the flush season, due to import restrictions; and if he will protect housewives by fixing a controlled maximum price and relaxing the ban on imports.
    Mrs. Castleasked the President of the Board of Trade whether he is aware that since the ban on the import of tomatoes the price of tomatoes in the shops has risen to 2s. per lb.; and whether he will consider lifting the import ban.
    Mr. P. Thorneycroft: The suspension of imports of tomatoes was lifted at midnight on 17th July. My information does not confirm the retail prices quoted.
    Mrs. Mann: Will the right hon. Gentleman believe me when I tell him that the prices rose from Is. 4d. to 2s. in Glasgow and that in London I saw them at Is. 6d.? We are very pleased that the import ban has been lifted and very sorry it ever was imposed.
    Mr. Thorneycroft: My information is that prices in Scotland varied between Is. 3d. and Is. 9d., but I would not deny that the hon. Lady never found one lot at
    Captain Duncan: Is my right hon. Friend aware that according to an official of the East of Scotland College of Agriculture the working costs of production are 14s. 3d. per 12 lb. basket, or about Is. 3d. per lb., excluding capital expenses, and that, therefore, having regard to a reasonable profit and the payment of decent wages to the workers, the price of 2s. is not unreasonable?
    Mr. Thorneycroft: What we did in this case was to impose a ban on imports when the prices were falling and when they started to rise again we let the imports in, which was, I think, the right way to use this measure.
    Mrs. Castle: While thanking the right hon. Gentleman for lifting the import ban

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    as a result of the Questions tabled by my hon. Friend and me, may I ask him whether he is aware that his reply proves how intolerable it was that he should have refused to admit the 130 tons sent on 7th July, which were confiscated to the great loss of the importers? The right hon. Gentleman was wrong in his acceptance of the ban.
    Sir H. Williams: Is it in order to ask the same question twice?
    Mr. Speaker: I was waiting to detect some difference.
    Mr. Stokes: On a point of elucidation. Should not Question No. 13 read "Scottish housewives" and "Scottish tomatoes"?
    Brigadier Medlicott: Is my right hon. Friend aware that in spite of the occasional mishaps there will be widespread approval in agricultural areas at the general measures he is taking to protect the horticultural industry from unfair competition and to enable it to maintain the standard of living of its workers?

    Anglo-Brazilian Trade Negotiations
    Mr. K. Thompsonasked the President of the Board of Trade if he will make a statement on the progress of the Anglo-Brazilian talks before the House rises for the Summer Recess.
    Mr. P. Thorneycroft: I am now awaiting the full text of the reply which the Brazilian Government have just made to the proposals which Her Majesty's Government made to them. I shall report to the House in the course of the next week on the stage now reached in our negotiations with Brazil.

    Export Credits (Premiums)
    Mr. K. Thompsonasked the President of the Board of Trade why increased premiums are charged by the Export Credits Guarantee Department when extended credit facilities are offered by the British exporter; to what extent this is the practice; and if he will issue revised instructions to his Department, in view of the need for offering such extended credit facilities in face of competition of this kind from other exporting countries.
    Mr. P. Thorneycroft: In conformity with general insurance and financial practice the Export Credits Guarantee Depart-
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    ment equates rates of premium to the nature and period of the risks undertaken. The Department charges increased premium when extended credit facilities are offered by exporters, the risk naturally being greater when longer credit is accorded. Since E.C.G.D. rightly tries to conduct its operations on commercial lines, I do not propose to instruct the Department to change its practice.
    Mr. Thompson: Is my right hon. Friend aware that this is a very formidable argument for separating the ordinary commercial from the political section of the risk which the E.C.G.D. covers, and is he aware that the extension of credit facilities over long terms is now an important weapon in the armoury of those who export from this country?
    Mr. Thorneycroft: So far as I know the facilities offered by the E.C.G.D. are at least as good as those offered by any other exporting country.

    Scotland (Minister's Visit)
    Mr. Hamiltonasked the President of the Board of Trade whether he will have any formal meetings with local representatives in Fife when he visits that county on 11th August; and what discussions he will have with members of the Glenrothes Development Corporation on the need for more industry in the new town.
    Mr. P. Thorneycroft: My programme does not include any formal meetings with local representatives in Fife, but I shall be meeting representatives of the Glenrothes Development Corporation and will discuss with them any points they wish to raise.
    Mr. Hamilton: While thanking the right hon. Gentleman for that reply so far as it goes, may I ask him if he is not aware that Fife is one of the most important developing mining areas in the whole of the United Kingdom, and does he think that half a day out of a 10-day visit spent in Scotland is adequate for such an area?
    Mr. Thorneycroft: I am quite satisfied about the full importance of Fife, but I would hope that hon. Members representing Scottish constituencies would not press me from all quarters of the House to extend my visit, for I should not get South of the Tweed at all.

    Patents
    Sir D. Campbellasked the President of the Board of Trade the average time which now elapses between the receipt of a complete specification by the Patent Office and the sealing of the patent; and how this compares with the time taken in 1938.
    Mr. P. Thorneycroft: The average time is now about two years and eight months as compared with one year and two months in 1938. Three months of the increased time taken are the result of the revised requirements of the Patents Act, 1949.

    Irish Whiskey
    Mr. Stokesasked the President of the Board of Trade how much Irish whiskey was exported from Great Britain in 1952; and at what price per bottle.
    Mr. P. Thorneycroft: I regret that this information is not available, since exports of Irish whiskey are not separately recorded.
    Mr. Stokes: Is the President aware that last week I was told by his Department that there were no exports of Irish whiskey to the United States from Northern Ireland, and yet a notice appeared in the Press confirmed by one of the chief distillers, that a considerable quantity was exported from Northern Ireland? Is it not chicanery to tell the House none was exported when what in fact happened was that the whiskey was sent from Belfast to Scotland and Northern England and thence shipped to the United States?
    Mr. Thorneycroft: I think the right hon. Gentleman has got the picture quite correct. They were in fact exported from Glasgow.
    Mr. Stokes: Why was I not told so last week?
    Mr. Thorneycroft: I do not think the right hon. Gentleman asked that question.
    Mr. Stokes: When a Member is genuinely seeking information as I was—[HON. MEMBERS: "Oh."] I was. I had not the slightest idea of what the answer was. When a Member asks a question of that kind surely it is the responsibility of the Department to say, "No, but, of course, this whiskey was shipped from
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    Scotland or Northern England," and not to say none was, because that is not true.
    Sir T. Moore: To elucidate this matter, does not the right hon. Gentleman's Question refer to Great Britain, and the answer and supplementary to Northern Ireland? He must really find out what he wants to know.
    Mr. Stokes: If I can teach my grandmother to suck eggs, may I ask the President if he is aware that his hon. and gallant Friend has not the slightest idea what he is talking about?
    Colonel Gomme-Duncan: Is it a fact that when this inferior brand of whiskey gets to Scotland it is being virtually exported as Scotch whisky?
    Mr. Thorneycroft: I think that Irish whiskey sells upon its merits.

  NATIONAL FINANCE

    Food Subsidies
    Mr. Gowerasked the Chancellor of the Exchequer at what annual figure the food subsidies are now maintained; and what proportions are in respect of home-produced foods and imported foods, respectively.
    The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): As my right hon. Friend said in his Budget speech, the provision for food subsidies in 1953–54 is, in round figures, £220 million. Of this total, rather over 85 per cent. is for home-produced foods and rather under 15 per cent. for imported foods.

    Small Savings (Progress)
    Mr. Nabarroasked the Chancellor of the Exchequer whether he will make a statement upon the progress of National Savings, including new investments and withdrawals in the Post Office and Trustee Savings Banks, for the current National Savings year to date; how these figures compare with a similar period in the previous year; and to what causes he attributes the accelerated rate of withdrawals from the Post Office and Trustee Savings Banks.
    Mr. Boyd-Carpenter: I would refer the hon. Member to the detailed figures published weekly by the National Savings Committee. The pattern of saving is extremely complex and I would prefer not

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    to speculate on the factors which may be influencing people in their choice of investments. If, however, the hon. Member will study the published figures he will see that Savings Certificates have been extremely buoyant this year and that the net rate of withdrawal of National Savings as a whole is lower than it was a year ago.

    Small Savings (Taxation)
    Mr. Nabarroasked the Chancellor of the Exchequer the policy of his Department in regard to assessment for Income Tax and Surtax of the interest earned or accrued on small savings in the Post Office and Trustee Savings Banks; what is the minimum deposit or the minimum sum of annual interest earned or accrued which attracts an assessment to Income Tax and Surtax by the Inland Revenue authorities; and whether he will make a statement.
    Mr. Boyd-Carpenter: All such interest of whatever amount, is chargeable where the recipient is liable, to tax and must be included in the taxpayers' return. In practice no assessment is made where the total amount of savings bank interest plus any other interest not taxed at source is less than £1.
    Mr. Nabarroasked the Chancellor of the Exchequer how many accounts for small savings are currently conducted by the Post Office and Trustee Savings Banks; in the instance of how many of these accounts the interest earned or accrued was assessed to Income Tax and Surtax in a period of 12 months, ending on the latest date on which a calculation can conveniently be based; and what was the estimated number of accounts in the said period to which no assessment was made.
    Mr. Boyd-Carpenter: The number of active accounts conducted by the Post Office and Trustee Savings Banks is about 23 million and 6½ million, respectively. I regret that the information asked for in the last two parts of the Question is not available.
    Mr. Nabarro: Can my hon. Friend say whether the effort being made by the Inland Revenue to assess the tax on no fewer than 29½ million accounts is in fact proving a deterrent to the investment of small savings in the Post Office Savings
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    Bank and the Trustee Savings Bank, and, if so, does he contemplate any change in the present arrangements?
    Mr. Boyd-Carpenter: While not accepting my hon. Friend's figures, in view of the fact that direct taxation is paid by some 16½ million people in all in this country, the figures do not suggest, if one takes the savings investments which are liable to tax as a whole, that any such effect as my hon. Friend fears has actually operated.
    Lieut.-Colonel Lipton: Is the hon. Gentleman not aware that the rate of withdrawal from Savings Banks, to which the hon. Member rightly draws attention, is due not so much to the potential liability to tax, as to either a shortage of cash on the part of the depositors or lack of confidence in the present Administration?
    Mr. Boyd-Carpenter: The difficulty in accepting the hon. and gallant Gentleman's suggestion is that the overall position is very much better than it was.
    Mr. Nabarro: Would my hon. Friend agree that whereas there are now 16½ million Income Tax payers in this country and there is a total of 29½ million of these small accounts in the Post Office Savings Bank and the Trustee Savings Bank, it is still necessary for the Inland Revenue to assess on the whole of those 29½ million accounts in order to ascertain whether the depositors have in fact any liability to pay tax?
    Mr. Boyd-Carpenter: I do not follow my hon. Friend so far as that, nor, I assure him, have the Inland Revenue any such a craving for unnecessary work.
    Mr. Gaitskell: Is there any reason why, if small earnings under P.A.Y.E. are all subject to tax unearned income should also be subject to tax?
    Mr. Boyd-Carpenter: As the right hon. Gentleman knows, with the exception of special provisions in respect of National Savings Certificates, savings of this or any other character have been treated as other incomes have been treated.

    Defence Expenditure
    Mr. Shepherdasked the Chancellor of the Exchequer the percentages of the national income and the revenue

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    taken by defence needs in the years 1938 and 1952, respectively.
    Mr. Boyd-Carpenter: Defence expenditure was about 7½ per cent. of the gross national product in 1938–39 and 12 per cent. in 1952–53. It was about 41 per cent. of total ordinary revenue in 1938–39 and 38 per cent. in 1952–53. These proportions are based on the definition of defence expenditure used internationally by the North Atlantic Treaty Organisation.

    Coronation Television Programme (Cinema Projection)
    Mr. H. Johnsonasked the Chancellor of the Exchequer whether, in order to give equal treatment to cinemas, hotels and restaurants, he will refund to cinemas the amount of entertainment tax paid in respect of admissions to cinemas to view the television projection of the Coronation ceremony.
    Mr. Boyd-Carpenter: No, Sir. Where it was provided by a cinema proprietor in the normal course of his business this exhibition was in law clearly a dutiable entertainment and I see no reason in equity why the duty paid by the public should be repaid to the cinema proprietors in question.
    Mr. Johnson: Is my hon. Friend aware that this is most unfair discrimination against the hard-pressed and over-taxed cinema industry? If a hotel opens its doors to allow patrons to view the Coronation ceremony on television and they do not pay, and quite rightly do not pay, any Entertainments Duty, why should the cinema industry be burdened with Entertainments Duty on exactly the same screen as the Coronation television programme?
    Mr. Boyd-Carpenter: This was a showing in the ordinary course of a cinema proprietor's business and in respect of which he made a charge which was clearly dutiable, and so far as my hon. Friend's general observations are concerned it is perhaps noteworthy that this is the only complaint we have received on this subject.
    Mr. Gaitskell: Is there any reason why the cinema companies which produced this film and have already made very substantial profits out of it, thanks to the
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    kind of agreement negotiated by the Government, should have their profits still further increased by tax remission?
    Mr. Boyd-Carpenter: The present Question relates to the showing and not to the making of this sort of film.

    Bank Bills (Discount Rate)
    Mr. F. M. Bennettasked the Chancellor of the Exchequer whether he will consider amending the restrictions on bank bills now limiting their tenor to three months, since finance of longer duration is required for some international trade and is being widely obtained in London by other methods.
    The Economic Secretary to the Treasury (Mr. R. Maudling): I am advised that a maximum usance of 90 days is adequate for most cases; longer periods are exceptionally allowed if the circumstances justify.
    Mr. Bennett: In view of that reply, will my hon. Friend agree to consider some specific cases of which I know, where 90 days have in fact not proved long enough because of, among other causes, local transport conditions, for example, in West Africa and Tanganyika, and does he appreciate that in such cases, since the necessary finance has to be found, it is borrowed on overdraft, even from local banks, some of which are not British, with a consequent loss of invisible earnings to this country?
    Mr. Maudling: My impression is that the general arrangements are satisfactory, but I shall be glad to consider anything which the hon. Member has to say.

    Housing Loans
    Mr. Sparksasked the Chancellor of the Exchequer if he will take steps to arrange for housing loans to local authorities from the Public Works Loan Board to be advanced for shorter periods than 60 years, or alternatively to permit break clauses in the terms upon which the Board advances money to local authorities.
    Mr. Boyd-Carpenter: This matter is under consideration.
    Mr. Sparks: Does the hon. Gentleman mean that the House will be informed as soon as possible of the results of that consideration?
    Mr. Boyd-Carpenter: It means that discussions are taking place, and if changes of substance are decided upon, of course the House will be informed.
    Mr. Emrys Hughes: Is the hon. Gentleman aware that the Ayrshire County Council are considering floating a loan but have been told that the expense of that loan means £60,000 extra to the money lenders, and will he hurry up his decision to enable them to save that money?
    Mr. Boyd-Carpenter: I am not aware of the facts to which the hon. Gentleman refers, but I am glad to learn from him that the Ayrshire County Council are considering taking advantage of its new freedom.
    Sir T. Moore: Is that not considerably less than what the Ayrshire County Council lost in investing in Dalton loans?

    Civil Servants (Gratuities)
    Mr. Marloweasked the Chancellor of the Exchequer which civil servants are paid a gratuity on retirement in addition to pension; at what rate such gratuities are paid; for how long the system of paying gratuities has been in existence; what is the approximate average cost of paying these gratuities; and to what extent payment of these gratuities has been taken into account in considering the repercussive effect of increasing the pensions of those officers of the Armed Forces who retired prior to 1st September, 1950.
    Mr. Boyd-Carpenter: Established civil servants receive on retirement a lump sum calculated in most cases at the rate of 3/80ths of their average annual emoluments in the last three years before retirement. When these allowances were introduced under the Superannuation Acts of 1909 for men and 1935 for women, civil servants then established were given the option of retaining the earlier higher rates of pension which were reduced by an actuarially equivalent amount for those not taking this option. Approximate cost in 1953–54 is £550 per head, after deducting contributions in respect of widows' and children's pensions schemes. These allowances have of course been taken into account in connection with the matter referred to in the last part of the Question.
    Mr. Marlowe: My hon. Friend is, of course, aware that until September, 1950,
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    the retired officers were not given terminal grants, and is it not the case that between 1920 and 1950 their pensions were assessed on quite a different basis, and therefore, when I press for an increase in officers' pensions there is no validity in the answer that Civil Service pensions have to be dealt with on the same footing? Is it not the case that they have always been dealt with on quite a different footing?
    Mr. Boyd-Carpenter: The fact that pensions are not precisely on the same basis is no particular reason for assuming that changes in one do not affect changes in another.
    Mr. Marlowe: Is not the only way to do justice in this matter to increase retrospectively officers' pensions between 1920 and 1950 to bring them into line with what civil servants were getting at that time?
    Mr. Boyd-Carpenter: If my hon. and learned Friend had followed my answer he would have seen that where this lump sum had been given to civil servants the actuarial equivalent reductions were made in the rates of pension, and therefore, the latter part of his Question does not arise.

    Boxing (Entertainments Duty)
    Mrs. Braddockasked the Chancellor of the Exchequer if his attention has been drawn to the further serious effect of the Entertainments Duty on boxing promotions; and, in view of the fact that regular provincial promotions are now reduced to two, Mile End Arena and Liverpool Stadium, if he will be prepared to meet representatives of the British Boxing Board of Control at an early date to see if any arrangement can be reached to prevent boxing becoming extinct.
    Mr. Boyd-Carpenter: My right hon. Friend has received various representations about the effect of the Entertainments Duty on boxing promotions, but I do not think that the suggested meeting would at present serve any useful purpose.
    Mrs. Braddock: As the British Boxing Board of Control have sent monthly returns to the Treasury and as the figures sent a few days ago show that the number of boxing promotions has fallen from

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    46 to 28 since the beginning of the year, can the hon. Gentleman tell me when the number of promotions will be low enough for him to consider the whole question of Entertainments Duty on boxing?
    Mr. Boyd-Carpenter: I do not think the hon. Lady is quite right in assuming that the difficulties with which the sport is confronted are necessarily a direct cause of, or could be relieved by, changes in the Entertainments Duty. In any event, the matter was discussed, as she will recall, at some length in the House a very short time ago.
    Mr. Noel-Baker: Will the hon. Gentleman consider whether the Treasury are not losing money over this affair?
    Mr. Boyd-Carpenter: I am always prepared to pay attention to that consideration.

    Small Income Groups
    Miss Wardasked the Chancellor of the Exchequer whether he will move to set up a Select Committee to consider the financial hardships of the small income groups, and report.
    Mr. Boyd-Carpenter: No, Sir. My right hon. Friend does not think a Committee such as my hon. Friend suggests is necessary.
    Miss Ward: Is my hon. Friend aware that, in my view, this is a most unjust decision and that it is quite unfair that these people should be deprived of Parliamentary protection which Parliament has decided upon for itself? It is not cricket, it is most unfair, and I am thoroughly ashamed of my hon. Friend's answer.
    Mr. Boyd-Carpenter: I think my hon. Friend is, perhaps, somewhat exaggerating the value of the appointment of Select Committees. Of course, my right hon. Friend gives personal attention to this matter.
    Mr. Hamilton: Is the hon. Gentleman aware that on 20th April the Chancellor of the Exchequer said that between October, 1951, and that date the cost of food had risen by 15 per cent., and, bearing in mind the reasonable assumption that the lower income groups, particularly old age pensioners, spend about
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    50 per cent. of their income on food, does not the 15 per cent. increase more than offset the 2s. 6d. increase in old age pensions? What is the hon. Gentleman going to do about it?
    Mr. Boyd-Carpenter: The hon. Gentleman is overlooking both the very large number of adjustments in taxation which have been made for the benefit of these people and the stability, which I am sure he welcomes, in food prices recently.
    Miss Ward: In view of my hon. Friend's comments about taxation, will he do a little more by further reducing taxes on small incomes, because that is one of the things that I am asking for?
    Mr. Boyd-Carpenter: My hon. Friend must not expect me to anticipate next year's Budget statement.
    Mr. Lewis: Can the hon. Gentleman say what tax remissions the old age pensioner and his wife who are on basic pension got from the last Budget?
    Mr. Boyd-Carpenter: Perhaps the hon. Member will put that question on the Order Paper.

    Equal Pay
    Miss Wardasked the Chancellor of the Exchequer whether he will move to set up a Select Committee to examine the financial difficulties of women teachers, women civil servants and women local government officers who, owing to lower rates of pay than men for equal responsibility, are finding increasing difficulty in carrying out their responsibilities.
    Mr. Boyd-Carpenter: No, Sir. My right hon. Friend does not think a Committee such as my hon. Friend suggests is necessary.
    Miss Ward: Is my hon. Friend aware that I consider it bad leadership for Parliament to protect its own interest by the appointment of a Select Committee to consider Member's expenses and deprive its own employees of the same protection? I believe that employees come first and employers afterwards. I should be glad to know whether my hon. Friend accepts that as a proper definition of good employers.
    Mr. Boyd-Carpenter: My hon. Friend is perfectly well aware that the attitude

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    of Her Majesty's Government on this question has been very clearly stated in the House.
    Miss Ward: But nothing has happened.

    Japanese Companies (British Capital)
    Mr. D. Jonesasked the Chancellor of the Exchequer the total amount of British capital invested in Japanese industry, giving separately as far as possible each class of industry.
    Mr. Maudling: No information is available as to the total amount of British capital invested in Japanese industry. The nominal value of United Kingdom holdings at the end of 1951 of share and loan capital in companies registered in Japan is estimated at £5·3 million, of which £4·2 million related to electric light and power companies. This estimate is the latest figure available; it is confined to securities quoted on, or known to, the London stock exchange; and it continues a series of estimates for the years 1938 to 1950 previously published by the Bank of England.
    Mr. Jones: Will the hon. Gentleman confirm or deny a statement which appeared in a periodical recently that 60 per cent. of the capital of Teiko Cotton Yarn of Japan is owned by J. & P. Coats of this country?
    Mr. Maudling: I certainly could not confirm or deny a statement of that kind relating to a particular company, but the hon. Member will be interested to know that, compared with the figure of £5,300,000, the amount invested in Japan at the end of 1946 was £5,100,000, so that there has been very little change.

    Northern Ireland and U.K. (Financial Relations)
    Mr. Loganasked the Chancellor of the Exchequer the total amount of the grants and subsidies paid to Northern Ireland for the year ended 31st March, 1953, under the headings of calf-rearing, grassland fertiliser, hill-farm improvement, hill cattle and sheep subsidy, ploughed-up grassland, phosphatic fertilisers and lime subsidies, respectively.
    Mr. Boyd-Carpenter: As the answer involves giving a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Logan: Are we getting value for our money? Is an inquiry needed into the financial position between the two countries?
    Mr. Boyd-Carpenter: That supplementary question arises more generally on the next Question in the hon. Member's name.
    Mr. J. Hudson: Do the figures include sums of considerable millions?
    Mr. Harden: Is my hon. Friend aware that exports of agricultural produce from Northern Ireland to Great Britain in the year ending December, 1952, totalled £43¼ million?
    Following is the answer:
    The accounts for the year ended 31st March, 1953, are not yet complete; but the following are the amounts so far recorded as paid in that year to farmers in Northern Ireland:

    £

    Calf-rearing

    …

    534,577

    Crassland Fertilisers

    …

    10,430

    Hill-farm Improvements

    …

    13,414

    Hill Cattle

    …

    134,452

    Hill Sheep

    …

    20,999

    Ploughed-up Grassland

    …

    637,511

    General Fertilisers

    …

    662,441

    Lime

    …

    235,409

    Mr. Loganasked the Chancellor of the Exchequer the payments received in 1952–53 period by the Northern Ireland Government under the Social Services Agreement Act, 1949, as well as the parity adjustments in favour of the National Insurance Fund for 1952–53 under the National Insurance Act, 1946.
    Mr. Boyd-Carpenter: Payment on account to the Northern Ireland Exchequer during 1952–53 under the Social Services (Agreement) Act, 1949, amounted to £4,300,000. The amount due for 1952–53 under Section 63 (2) (A) of the National Insurance Act, 1946, has yet to be determined but payments are made on account.
    Mr. Logan: Am I to understand that about £10 million is being paid in subsidy? As there has been no statement to the House about what we furnish to Northern Ireland, and in justice to our taxpayers on whom there is a heavy demand, is it not time that we ascertained the financial position of Northern Ireland and its obligations to this country?
    Mr. Boyd-Carpenter: The amount in respect of subsidies is nothing like the

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    figure which the hon. Gentleman mentioned. Social service payments are automatically assessed on certain formulae embodied in legislation which, as it so happens, was enacted by the party oppposite.
    Mr. Healy: Do not the total subsidies paid to Northern Ireland amount to more than twice as much as their Imperial contribution? Is this not, in effect, a repeal of the Government of Ireland Act, 1920, and is it not subsidising the partition of Ireland?
    Mr. Boyd-Carpenter: I do not accept any of the assumptions made by the hon. Gentleman. All these payments are made under agreements which were carefully considered at the time and are part and parcel of the general, and generally satisfactory, arrangements between these two parts of the United Kingdom.
    Sir D. Campbell: Does not my hon. Friend agree that all citizens in the United Kingdom should enjoy the same standard of social services and that the agreements in question merely ensure the implementation of that principle?
    Mr. Boyd-Carpenter: As I understand it, that was the purpose of the two Acts of Parliament to which I referred in my original answer.

    Whisky (Exports to America)
    Mr. Stokesasked the Chancellor of the Exchequer what Excise revenue was lost in 1952 by the shipment of 6,300,000 gallons, proof, of whisky to the United States of America at a net price of 6s. 8d. a bottle.
    Sir T. Moore: On a point of order. Would it be in order to ask you, Mr. Speaker, to ascertain from the right hon. Gentleman whether the information contained in the Question is any better than that in Question No. 19?
    Mr. Stokes: I shall be glad to answer that question.
    Mr. Speaker: That would be completely out of order.
    Mr. Boyd-Carpenter: The reply to the Question is that any estimate of the loss of revenue would be conjectural depending on the extent to which an increase in consumption of whisky in the home market in 1952 would have been offset by a reduction for other spirits; but I have no
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    doubt that the amount was small in comparison with the receipts in dollars that we obtained from these exports.
    Mr. Stokes: The Minister will understand that what I meant was assuming that this was all sold at home, but may I ask two supplementary questions? Presumably he will have noticed the statement by the distillers that Scotch whisky sales in America have greatly increased this year? Has he seriously examined the method of sale of Scotch whisky in the United States, which is practically entirely in the hands of competitors, and is it not true that were the export price doubled in dollars, and the sales did not fall by more than half, the dollar balance would not suffer and the Exchequer would benefit greatly?
    Mr. Boyd-Carpenter: The right hon. Gentleman knows perfectly well that these questions are ones I have heard before and are not questions which arise out of this one, which asks specifically for information as to the loss of Excise revenue. That is the only matter about which the right hon. Gentleman has asked. So far as that is concerned, it must depend on the extent to which people, when they cannot drink whisky, drink gin.
    Mr. Stokes: But may I ask the Financial Secretary whether he is aware that the art of putting down Questions is to put down a Question you do not want answered in order to ask a supplementary question to which you do want an answer? Is he also aware that neither his Department, the Ministry of Food nor the Board of Trade have yet succeeded in answering any question of mine on this subject intelligently—or truthfully?
    Mr. Boyd-Carpenter: For years I have been a humble student of the interrogatory methods of the right hon. Gentleman, but I can assure him that when he puts down any Question to this Department he will get an answer relating to that Question and not relating to all sorts of other matters all over the shop.
    Mr. Woodburn: Is the hon. Gentleman aware that the export of Scotch whisky is the biggest single dollar earner of any of our exports?
    Mr. Boyd-Carpenter: It is a very valuable export.
    Mr. Stokes: In continuation of the argument of my right hon. Friend, does not the Chancellor think it is quite time that the export price of whisky in dollars was put up to a value commensurate to what it can genuinely get in the United States under proper selling conditions?
    Mr. Boyd-Carpenter: I really must decline to have to settle disputes between right hon. Gentleman on the Front Bench opposite—it would be a full-time job.
    Sir T. Moore: Again on a point of order, Mr. Speaker. Have you considered the implication in the statement by the right hon. Gentleman that no Question is put down on this Order Paper to gain information but is merely a cloak for asking another question later? Surely that is contrary to all our traditions?
    Mr. Stokes: In protection of yourself, Mr. Speaker, I never said anything of the sort. [HON. MEMBERS: "Oh."] I did not. I said "the art"; I did not say "the fact."
    Mr. Speaker: Order, order. If, in fact, a supplementary question does not arise out of the answer to the Question on the Order Paper, the Minister is quite entitled to refuse to answer it.

    Export Credits
    Sir H. Sutcliffeasked the Chancellor of the Exchequer in what respects facilities for credit for goods exported from this country are restricted by his foreign exchange control regulations; and if he will give an assurance that valuable trade is not being lost as a result of these restrictions.
    Mr. Maudling: Permission is needed if more than six months' credit is given for goods sent outside the sterling area. Longer terms are, of course, allowed for capital goods, and in this field the exporter's judgment is respected as far as reasonably possible. We are very careful to minimise the risk of losing valuable trade.
    Sir H. Sutcliffe: Is my hon. Friend aware that orders have been lost through too strict an adherence to this maximum period of six months' credit, although in one such case a suitable alternative was offered—half the payment immediately and the other half in 12 months'
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    time—and would he look into this problem?
    Mr. Maudling: My impression is that it is very rare indeed for orders to be lost on those grounds, but if my hon. Friend has any particular cases in mind, I shall be glad to look at them.

    Company Reconstructions (Taxation)
    Mr. E. Fletcherasked the Chancellor of the Exchequer if he will direct Departments to refuse their consent to transfer of current Government contracts to a reorganised or reconstructed company until the Treasury is satisfied that such reorganisation or reconstruction has not been carried out for the purpose of evading tax.
    Mr. Boyd-Carpenter: While my right hon. Friend deprecates the use of the device of company reconstruction to avoid taxation, he does not consider that the issue of a direction such as that suggested would be a satisfactory way of dealing with the matter.
    Mr. Fletcher: Is the hon. Gentleman aware that recently the Admiralty gave their consent to all current Admiralty contracts being transferred from John Brown and Company Limited to a reorganised company with the same name, and also is he aware of any reason for that reorganisation other than as a measure of tax avoidance which he has deprecated so severely, and is he going to allow Government Departments to continue to encourage this tax avoidance when he could stop it?
    Mr. Boyd-Carpenter: The hon. Gentleman asked a Question on that precise point of my hon. Friend the Civil Lord of the Admiralty on 15th July, from whom he received a full reply.
    Mr. Fletcher: But I still have to know whether the Chancellor was consulted about that transfer or not. I was told by the Civil Lord of the Admiralty that he could not reply; that all he was concerned with was that a reorganised company could carry out the contract. Of course they could, because they were the same company. Was the Treasury consulted, or will it be consulted in future, about similar reorganisations?
    Mr. Boyd-Carpenter: That is a different question from the one which the hon. Gentleman put down on the Order Paper.
    Mr. Jay: Is it not the responsibility of one Department or another to ascertain whether this action was taken for the purpose of tax evasion?
    Mr. Boyd-Carpenter: On that I can only remind the right hon. Gentleman of the characteristically clear comments of my hon. Friend the Economic Secretary during the Report stage of the Finance Bill.

  AIR POLLUTION (COMMITTEE OF INQUIRY)
  Mr. Doddsasked the Minister of Housing and Local Government what progress has been made in setting up the committee to inquire into the problem of air pollution.
  Brigadier Medlicottasked the Minister of Housing and Local Government how soon he anticipates being able to announce the composition and terms of reference of the committee proposed to be set up to examine the problem of air pollution.
  Mr. Hastingsasked the Minister of Housing and Local Government the terms of reference of the committee that he has appointed to inquire into the causation and prevention of fogs; who are the members of this committee; and when it is anticipated that it will report.
  The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Ernest Marples): The terms of reference of the Committee, which is being appointed jointly by my right hon. Friend, by the Secretary of State for Scotland and by the Minister of Fuel and Power are:
  "To examine the nature, causes and effects of air pollution, and the efficacy of present preventive measures; to consider what further preventive measures are practicable; and to make recommendations."
  We have been fortunate in securing the services of Sir Hugh Beaver, M.Inst.C.E., M.I.Chem.E., as Chairman. The members are listed in the statement I am circulating in the OFFICIAL REPORT. The committee will be assisted in its work by assessors from the Ministry of
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  Housing and Local Government, Ministry of Fuel and Power, Ministry of Health, Department of Scientific and Industrial Research, Department of Health for Scotland, and Welsh Board of Health. The committee will begin work forthwith, but I cannot predict when it will report.
  Mr. Dodds: Whilst thanking the hon. Gentleman for that information, may I ask if he is aware that there is a good deal of concern that it took five months following the December massacre to decide to set up the committee at all? Will he press ahead with this in view of the fact that there might be a worse case in the months ahead because winter is just round the corner?
  Mr. Marples: The speed of the report depends on the committee, but I can assure the hon. Gentleman that its terms of reference cover a wide range of interests, particularly the scientific aspect which has not been neglected.
  Mr. Hastings: Will the hon. Gentleman make sure that the terms of reference include air pollution from the burning of smokeless fuels and oil, which contain just as much, or more, sulphur oxide, which is the real source of danger in fogs and similar conditions?
  Mr. Marples: That is included in the terms of reference.
  Mr. Blenkinsop: Will the Minister also take account of the urgent need to encourage local authorities to develop smokeless zones as one way of tackling this problem?
  Mr. Marples: Yes, Sir, and I think there is another Question on the Order Paper later on this subject.
  Following are the Members:
  COMMITTEE ON AIR POLLUTION
  Sir Hugh Beaver, M.Inst.C.E., M.I.Chem.E. (Chairman).
  Miss A. D. Boyd, B.A., F.S.W.H.M., Housing Manager, Rotherham County Borough Council.
  Dr. J. L. Burn, D.Hy., D.P.H., Medical Officer of Health, Salford County Borough Council.
  S. R. Dennison, Esq., C.B.E., M.A., Fellow of Gonville and Caius College, Cambridge.
  Sir Roger Duncalfe, Chairman, British Glues and Chemicals, Ltd.; Chairman of the Federation of British Industries Technical Legislation Committee and Vice-President of the Federation of British Industries.
  Professor T. Ferguson, M.D., D.Sc., Chair of Public Health and Social Medicine, Glasgow University.
  Dr. G. E. Foxwell. D.Sc., F.Inst.F., M.Inst.Gas.E., M.I.Chem.E., President, Institute of Fuel.
  Dr. R. Lessing, Ph.D., F.R.I.C., F.Iast.F., M.I.Chem.E., F.Inst.Pet.
  G. Nonhebel, Esq., B.Sc., F.R.I.C., F.Inst.F., Imperial Chemical Industries, Limited.
  C. J. Regan, Esq., B.Sc., F.R.I.C., Chemist in Chief, London County Council.
  Professor O. G. Sutton, C.B.E., D.Sc., F.R.S., Chairman, Atmospheric Pollution Research Committee.

  HOUSING

    Requisitioned Properties, Blackburn
    Mrs. Castleasked the Minister of Housing and Local Government why he is compelling the Blackburn local authority to derequisition, by December, 1953, all houses held by them on requisition, in view of the fact that there are still 3,600 persons on the waiting list for houses.
    Mr. Marples: My right hon. Friend has asked all local authorities to implement the recommendations of the working party, a copy of whose report I am sending to the hon. Member.
    Mrs. Castle: Is the hon. Gentleman aware that I have read the working party report, and it is quite clear that house-letting sub-committees to local authorities ought to be allowed discretion in this matter to derequisition properties where this can be done without lengthening the waiting list for council houses, but that in the case of Blackburn the local house-letting sub-committee has been arbitrarily overridden by the Principal Regional Officer of the Ministry and told that they must derequisition despite this long waiting list and despite its strong protest?
    Mr. Marples: The working party included representatives of the local authorities and the report was unanimous. Whilst the local authorities have a duty to rehouse the people on the waiting list since the end of the war, it is time that they paid some consideration to people who have possibly invested their life savings in houses.
    Mrs. Braddock: In view of the fact that the Ministry themselves need to give authority before a house can be derequisitioned, will the Minister see that in
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    all these cases they are perfectly satisfied that those who have occupied the houses have been offered, and accepted, suitable alternative accommodation before agreement is given to derequisition?
    Mr. Marples: My right hon. Friend hopes that with the increased tempo of council building local authorities will be able to rehouse quite easily those people in requisitioned houses.
    Mr. Chetwynd: What legal authority has the hon. Gentleman's Department for this action? If a local authority cannot rehouse its people, can the Minister compel them in any other way to do so?
    Mr. Marples: The duty of rehousing the people is laid on the local authority by, I think, the 1936 Act.
    Mr. Anthony Greenwood: Do we gather from the Minister's reply that his Ministry wants local authorities to derequisition houses only when the owner of the house can put forward a good case on grounds of hardship?
    Mr. Marples: No. My right hon. Friend wants to derequisition houses in accordance with the unanimous report of the working party.

    Wales and Glamorgan
    Mr. Gowerasked the Minister of Housing and Local Government how many houses were completed in Wales and in Glamorgan, respectively, during 1950 and 1952; and what number he expects will be completed during 1953.
    Mr. Marples: Information for 1950 and 1952 is given in Appendix B to the Housing Return. I prefer not to make any definite estimate of the 1953 completions.

    Programme
    Mr. Fernyhoughasked the Minister of Housing and Local Government if, in view of the still unsatisfied need and the numbers still remaining on council housing lists, he will reconsider his decisions to curtail the housing programmes of local authorities in the north-east.
    Mr. G. Jegerasked the Minister of Housing and Local Government (1) why he has withheld approval of

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    the erection of 72 houses in a council estate in Knottingley;
    (2) what limitation he has placed on the number of houses to be built by private builders in Knottingley.
    Mr. Higgsasked the Minister of Housing and Local Government what measures he is adopting to keep the housing programme in step with the availability of materials.
    Mr. John Hallasked the Minister of Housing and Local Government whether he will make sure that the housing programme is maintained at its present high rate.
    Mr. Marples: I would refer hon. Members to the reply which I gave on this subject on 14th July to the hon. Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) and others.
    Mr. Fernyhough: Is the Parliamentary Secretary aware that every authority on Tyneside believes that he has set out to reduce their housing programmes? Is he further aware that many of these local authorities have their own public works department and are very much afraid that unless they can get permission to carry on with their building programmes, they will have to disperse the forces they have built up and that it will be a very difficult task to reassemble the team as and when they once more get the signal from the Minister to go ahead as fast as they can?
    Mr. Marples: There is some misapprehension. There has been no cut whatever in the housing programme, which is now running at the rate of 300,000 houses a year. The bricks and cement which are being produced will not support a figure higher than that. It would be absolute folly to start more houses than there are materials to finish
    Mr. Higgs: Is my hon. Friend satisfied that the best use is being made of the supplies of bricks that are available? In particular, can he assure the House that full consideration is given to the difficulties of individual private builders when small orders for bricks are often difficult to obtain in view of large orders placed by other concerns?
    Mr. Marples: In reply to the first part, I am quite satisfied that the bricks are
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    being used in an economical way. A circular has been issued to local authorities, which they are following, whereby substitute materials for the inner skin of houses, instead of bricks, can be used. In reply to the second part, if my hon. Friend has any case in mind and writes to me, I will do my best to meet the point.
    Mr. Fernyhough: Will the Minister give an assurance that no local authority will be prevented this year from building as many houses as it built in the last 12 months?
    Mr. Marples: The rate at which we are now building in 1953 is 300,000 houses a year. The rate for 1954 is not less than that figure. In all the circumstances, it is a remarkable increase on what we were building in 1950.
    Mr. Fernyhough: Answer the question.
    Mr. Jeger: Is the Minister aware that some local authorities which have embarked upon plans for completing or extending housing estates and have invested large sums in building the roads and laying the sewers, are now being prevented from building the houses and, therefore, capital investment is lying idle and going to waste?
    Mr. Marples: The hon. Member has a Question on the Paper about Knottingley. He will find that in 1953 it is estimated that Knottingley will have a 100 per cent. increase in the number of completed houses compared with 1951 and they now have under construction one and a half times what they will complete in 1953. All things considered, it is a remarkable increase, even in that constituency.
    Miss Ward: Is my hon. Friend aware that all the local authorities in the North-East region do not agree with the hon. Member for Jarrow (Mr. Fernyhough), and that Jarrow is politically minded and is out to "have a go" at the Minister?
    Mr. Moody: Will the Minister introduce elasticity in the administration of this new order, which restricts the allocation, and will he give special consideration to cases like that of Gateshead, whose applications for 150 houses on the Wardlow Estate have been held up by his Department for nearly 12 months?
    Mr. Marples: We pay attention to all the circumstances of any local authority. All the circumstances—whether they have a direct labour force, whether they have a large number of non-traditional houses which do not use bricks—will be taken into account. It is difficult by question and answer to give the hon. Member details about a specific local authority.
    Mr. K. Thompson: In view of the fact that the availability of supplies is the limiting factor, what steps are being taken to obtain more bricks and cement?
    Mr. Marples: Since this Government came into office, there has been a 20 per cent. increase in brick production and an increase also in the cement production. This increase of building materials, which is the result of great work by my right hon. Friend the Minister of Works, has been utilised by the same number of building trade operatives.
    Mr. Fernyhough: In view of the unsatisfactory nature of the answers, I give notice that I shall raise this matter at the earliest possible opportunity on the Adjournment.

    Henley-on-Thames
    Mr. Hayasked the Minister of Housing and Local Government when approval of the erection of 65 dwellings at Abraham's Field, Henley-on-Thames, will be notified to the Henley Borough Council.
    Mr. Marples: I am now satisfied that the allotment land at Abraham's Estate can properly be appropriated to housing and I shall be approving the site works tender before the end of the week.

  LOCAL GOVERNMENT

    Block Grants, Abergavenny
    Mr. Donnellyasked the Minister of Housing and Local Government what recent changes have taken place in the block grants to the Abergavenny Borough Council.
    Mr. Marples: Block grants ceased in 1948. Instead, county district councils receive sums from the County Council calculated by reference to the size of the population.
    Mr. Donnelly: Has the Minister's attention been drawn to a statement by the town clerk of this local authority in which he announces the council's refusal to let the town theatre for the showing of a play by Mr. Du Garde Peach because it poked fun at some councillors and, worse still, at the town clerk? Will the hon. Gentleman give a firm assurance that he will reconsider any grants to local authorities who seek to suppress Shakespeare because he pokes fun at the Beadle?
    Mr. Marples: Fortunately, the supervising of the censoring of entertainment by local authorities does not come within the jurisdiction of my right hon. Friend.

    Derating
    Mr. Morleyasked the Minister of Housing and Local Government if he has considered the resolution adopted by the Association of Municipal Corporations, a copy of which has been sent to him, that he should set up a committee of inquiry to consider and report upon the full implications of Sections 67 and 68 of the 1929 Act; and if he will make a statement.
    Mr. Marples: My right hon. Friend has considered the resolution but cannot add to the statement he made in the course of the Debate on the Second Reading of the Valuation for Rating Bill.
    Mr. Morley: Is the Minister aware that the loss in rateable value through derating to Southampton is £140,000, which is the equivalent of a rate poundage of 1s. 8½d.? Would he agree that the reasons for which derating was allowed in 1929 are no longer valid and that with the constantly increasing rates it is time that this matter was looked into again?
    Mr. Marples: Derating at this time would put stresses and strains on the economic situation. If derating was to be undertaken, I think the hon. Member would agree that it could better have been carried out five or six years ago.
    Mr. McAdden: Will my hon. Friend be very careful in dealing with this matter to bear in mind that the chairman of the Productivity Council of the T.U.C. stated most emphatically that to do away with derating now would be a disastrous step?

    Piped Water Supplies, Wales
    Mr. Gowerasked the Minister of Housing and Local Government what steps he will take to accelerate the provision of piped water supplies to the rural areas of Wales and Monmouthshire.
    Mr. Marples: Every effort is being made to provide piped water supplies in these areas as rapidly as resources permit. The value of schemes authorised in the year ended 31st March, 1953, was £1,272,000 compared with £564,000 in the preceding year.
    Mr. Gower: While thanking my hon. Friend for that reply, may I ask him to bear in mind that this is one of the amenities which are needed to prevent the progressive de-population of those areas?

    Coast Defences, Lowestoft
    Mr. Edward Evansasked the Minister of Housing and Local Government (1) whether he is aware that, in relation to the repair of flood damage to the North Sea wall at Lowestoft, his officers are proposing that the work of restoring the flood checking and earth bank at the rear of the wall should be excluded from the reimbursement provisions of Circular 33/53 notwithstanding that such works form an integral part of the coast defences; and whether this proposal was made with his approval.
    (2) whether he will give an assurance that the whole cost of restoring the North Sea wall at Lowestoft to its condition prior to 31st January, 1953, will be reimbursed to the Lowestoft Corporation in accordance with the repeated assurances of Her Majesty's Government that such charges will rank for 100 per cent. grant.
    Mr. Marples: My right hon. Friend has undertaken to reimburse the cost of restoring coast protection works to their condition before 31st January, 1953. He is considering whether the reinstatement
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    of the promenade behind the sea wall at Lowestoft falls within this category.
    Mr. Evans: Is the Minister aware that what he calls the promenade is a flood decking installation, which ranked for grant under the Coast Protection Act, under which the local authority was paid when the wall was originally built? Is he further aware that in the view of the council's surveyors who have considerable experience of protection work along the east coast, the flood decking is an essential part of the coast protection work in that area? Will the Minister see that there is no equivocation whatever that this flood decking ranks for 100 per cent. grant?
    Mr. Marples: At present we are awaiting the engineer's report, and I will study in tomorrow's HANSARD what the hon. Member has said. But (he promenade is structurally independent of the sea wall and not part of it. The sea wall remains intact and the promenade was damaged. I will, however, look into the question sympathetically.

  RIVER AVON (OVER-HEATING)
  Mr. Anthony Greenwoodasked the Minister of Housing and Local Government what steps are being taken to prevent the over-heating of the River Avon near Bristol.
  Mr. Marples: I am advised that the over-heating was due to natural causes beyond anyone's control.

  QUESTIONS TO MINISTERS
  Lieut.-Colonel Lipton: On a point of order, Mr. Speaker. May I ask if your permission has been sought by the Secretary of State for War to answer Question No. 106 and other Questions relating to the death of Private Donald Harrison at the end of Questions?
  Mr. Speaker: No, I have not received such a request from the Minister.

FOREIGN AFFAIRS
Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Buchan-Hepburn.]
3.31 p.m.
The Chancellor of the Exchequer (Mr. R. A. Butler): The House will, I think, expect from me an account of the way in which the foreign policy of Her Majesty's Government has developed since my right hon. Friend the Prime Minister made his great speech on 11th May, when we last debated foreign affairs. I think it would be inappropriate for me to make a comprehensive review, or what is sometimes called a tour d'horizon, of every aspect of the international scene, but I know I can count on the consideration of hon. Members in describing to the House, as is my duty, the outcome of the Washington Conference, after hearing the reports of my noble Friend the acting Secretary of State for Foreign Affairs.
First, I should say a brief word about certain distinguished visitors we have had in London since our last debate, and whom we have been very happy to welcome here. The first was the German Federal Chancellor, whose character and influence cannot but impress all who meet him. The visit of the Turkish Prime Minister and Foreign Minister, which was a long-awaited and very valuable visit, made an equal impression upon us at the time of the Coronation, and shortly afterwards the Foreign Minister of the Netherlands, Dr. Beyen, was our guest, to be followed by another outstanding European statesman, the Italian Prime Minister, Signor De Gasperi. We have also been pleased to see the Greek Minister of Co-ordination, M. Markezinis.
The Prime Minister himself had most useful and valuable conversations with the first four of these visitors and, as a result of these visits, my noble Friend was able to go to Washington knowing the views and the position of such valued North Atlantic Treaty partners as Turkey, the Netherlands and Italy and also of the German Federal Government as well. Unfortunately, the Prime Minister's illness prevented him from seeing M. Markezinis, with whom, however, I had a most useful conversation and I am sure that his visit will benefit the close and indeed historic, relations between this country and Greece.
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I will deal next with the prospects for the conclusion of an early and honourable armistice at Panmunjon. In Washington the three Foreign Ministers reaffirmed their strong support for the efforts of the United Nations Command to achieve this and expressed the determination of their Governments to continue to work towards this end.
A month ago some new difficulties arose in South Korea at a time when all of us had high hopes that an armistice was about to be signed. President Syngman Rhee has since given assurances—which I have mentioned at Question time—that he will not impede the carrying out of the terms of the armistice agreement. Mr. Robertson has stated that we can proceed in good faith to sign an armistice when the Communists are ready to do so. After the United Nations Command negotiators had made all this abundantly clear, the Communists stated, at the meeting on 19th July, that, in view of the assurances given by the United Nations Command, they were ready to discuss detailed preparations for the signature of an armistice agreement. We have therefore every reason to hope that the agreement can be signed without further delay.
The three Foreign Ministers stated their resolve that if, unhappily, the other side should renew their aggression in Korea after an armistice and thus threaten the principles defended by the United Nations, their Governments would, as members of the United Nations, again support the restoration of peace and security. The House will probably recall the words used by the Prime Minister early in 1952:
"If the truce we seek is reached only to be broken our response will be prompt, resolute and effective."
This still remains the attitude of Her Majesty's Government.
The Foreign Ministers also considered it prudent to emphasise that an armistice must not result in jeopardising the restoration or the safeguarding of peace in any other part of Asia. The hostilities in Korea have for three years acted as an absolute bar to any improvement in the general situation in the Far East. An armistice in Korea will not only be of the highest value of itself but, as the Foreign Ministers recognised, a step forward in the cause of peace everywhere. It will, in particular, give us an opportunity to settle

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the Korean question by peaceful means at the proposed political conference and thus open the way thereafter for a settlement of other outstanding problems in the Far East.
Some hon. Members may urge us that, as soon as the armistice is signed, we should try to solve at once such difficult problems as Chinese representation in the United Nations and the United Nations strategic embargo. As the House is well aware, we stand by the United Nations Resolution of May, 1951, in respect of the export of strategic goods to China. What is more, we are carrying this out rigorously, and intend to continue to do so. At the same time, it is the policy of Her Majesty's Government to develop trade in goods which are not the subject of security controls. We believe this trade in non-strategic goods is to the advantage of the free world.
Her Majesty's Government have already made clear that our policies on such subjects as Chinese representation and the strategic embargo will have to be reconsidered in concert with the other members of the United Nations at the appropriate time after an armistice, depending on how events develop in the Far East. Meanwhile, as the Foreign Ministers stated, our present policies should be maintained. We should resolve to move forward step by step. First after an armistice must come a political settlement in Korea, and then the best hope for the future will be a firm consolidation at each stage of advance.
There is one other passage in the communiqué published in the White Paper on the subject of Indo-China. The House will have taken note of the declaration made on 3rd July to the Associate States of Indo-China by the French Government. In that the latter express their willingness to promote, by negotiations, the independence and sovereignty of the Associate States within the French Union. This declaration was warmly welcomed at Washington by my noble Friend and Mr. Dulles, and I feel sure the House would want to welcome it today. The way now seems open for the French to do everything possible to satisfy the aspirations of the Associate States so that whatever doubts remain there and elsewhere in Asia as to the genuine nature of their independence may be resolved.
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This is of particular importance at the present crucial stage of the struggle against the Communist Viet-Minh rebels, who continue to be encouraged and supplied by Communist China.
I welcome, therefore, this opportunity to endorse the tribute paid at Washington to the heroic efforts which continue to be made in Indo-China by the forces of the French Union, including the rapidly expanding armies of Viet-Nam, Laos and Cambodia, but great efforts are still called for if victory is to be won, and the House will, I am sure, be glad to note the encouraging and inspiring speech made on 16th July by the new Commander-in-Chief of the French Forces in Indo-China and also the news of the bold parachute operation by the French Union forces as a result of which a considerable quantity of Viet-Minh supplies have been destroyed. Her Majesty's Government, for their part, have given and will continue to give all such material aid as lies within our resources to the French Union forces in their struggle. A successful outcome of this struggle is a matter of the utmost concern to South-East Asia and to the free world.
I want to say a word about Egypt. My noble Friend the acting Foreign Secretary also discussed with Mr. Dulles the situation in Egypt. These talks confirmed the wide measure of agreement between us and our American friends on this subject. In particular, they showed that we both consider that the maintenance of an effective base in the Suez Canal area is essential in the interests of world peace. My noble Friend discussed in detail with Mr. Dulles the best means of ensuring this with Egyptian co-operation. In their discussions they were assisted by General Sir Brian Robertson who conducted the negotiations with Egypt on our behalf, in association with Her Majesty's Ambassador. There are as yet no developments which alter the situation as described by the Prime Minister on 11th May. His statement is there for hon. Members to study. We are willing to resume negotiations whenever the Egyptian Government are ready to do so, and General Robertson is available in Cairo. Meanwhile, we remain resolute and patient.
From now on I should like to deal with the main and central theme of the Conference, namely, the proposal for

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four-Power talks in September on the subject of Germany and Austria. When we look on the results of the Washington Conference, I think we must agree that it has not only successfully established and consolidated the absolute unity of aim and purpose of the great Powers involved but has also marked a notable step forward towards the relaxation of tension. It is further evident—and I hope the House will notice this—that the line decided upon has the support of our North Atlantic Treaty partners and of the German Federal Government.
The Conference has also confirmed the wisdom of the main themes put forward by my right hon. Friend the Prime Minister in his speech on 11th May. The first of these themes, which naturally fired popular imagination both here and in many other countries, was that no opportunity should be missed—indeed, one should be sought and found—to explore by direct contact any new mood in Moscow after the death of Stalin. My right hon. Friend's wish was to encourage whatever tendencies the new leaders of the Soviet Union might show for a genuine relaxation in tension and for the composing, or at least easing, of sources of international friction.
Another theme of the Prime Minister's, which has perhaps been overlooked in some quarters, was that the Western World must maintain its unity and strength and develop the institutions upon which our safety and continued prosperity depend. I have particularly in mind the North Atlantic Treaty Organisation and the existing or projected European organisations, the Coal and Steel Community, the European Defence Community and the European Political Community. These institutions are not, as some have thought, simply a buttress against the Soviet menace as it has developed since 1945. They are also—and this is even more important—a response to the requirements of the modern world for a closer working together of nations, great and small, in the interest of peace, security and welfare.
If hon. Members will turn to page 4 of the communiqué and read subsection (b) on that page, they will see that this is borne out in the terms of the communiqué from Washington. Even if, happily, some composition with the Soviet
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Union could be obtained, these institutions would therefore be just as necessary as they are now. In any case, in the situation facing us they are vital to our security. It is the sacrifices and the efficient and loyal work responsible for their creation and development which are redressing, although we should remember that they have not yet redressed the balance of power between the Soviet Union and the West. It is only because the West has shown this unity and built up its defensive strength that there is now, as we all hope, a possibility of discussion with the Soviet leaders.
I would also remind the House of the importance which my right hon. Friend attached on 11th May to the German problems, which he described as, "of course, the dominating problem in Europe." He also said:
"Strong as is our desire to see a friendly settlement with Soviet Russia, or even an improved modus vivendi, we are resolved not in any way to fail in the obligations to which we have committed ourselves about Western Germany … which will in no way be sacrificed or … cease to be master of its own fortunes within the agreements we and other N.A.T.O. countries have made with them."—[OFFICIAL REPORT, 11th May, 1953; Vol. 515. c. 894.]
The Prime Minister also made it clear that he did not think it impossible to reconcile these problems concerning the freedom and safety of Western Europe with the security of Russia. All of us who look ahead for wide, constructive possibilities to arise out of the Washington talks, will hope that the immense problem still of reconciling the general security of Russia with the freedom and safety of all the nations involved is by no means an insoluble problem.
It is only, I think, by recalling in this way the major objectives that were set out by my right hon. Friend on 11th May that we can properly judge what has been achieved at the recent meeting. Only thus can we assess what are the present prospects for maintaining the momentum and carrying forward his initiative for composing our great and very real differences with the Soviet Union without endangering the strength, prosperity and unity of our great Western alliance.
It was always intended, as hon. Members will remember, that before any fruitful discussions could be held with

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Russia there must be some intermediate consultations between the three Western Governments—those Governments who share such great responsibilities in Germany and elsewhere. The House may remember that this was the objective of the Bermuda meeting. I might go back a little earlier than that and tell the House that early in June we received a proposal from the United States Government that there should be a three-Power meeting. The Prime Minister welcomed this idea and suggested Bermuda as a meeting place. The President at that time readily agreed. Unhappily, next day the French Government was defeated and a five-week interlude occurred before the date of a further meeting could be arranged. In the meantime, my right hon. Friend the Prime Minister fell ill, and a different set of intermediate conversations was arranged on the Secretary-of-State level.
In matters of such vital importance it has rightly been found proper to consult other nations closely associated with us, more particularly our N.A.T.O. partners, and also the German Federal Government. In the fluid and baffling situation facing us there were many voices raised in many countries to suggest that, with the international scene shifting so rapidly, the prudent course would have been to modify our original design. We might have waited upon the further unfolding of the scene; we might have waited until the Prime Minister was completely restored to health; we might have waited to see whether a truce actually materialised in Korea; we might have waited for the result of the German elections; we might have waited for further and perhaps even more sensational events behind the Iron Curtain. Above all, we might have waited to see who are likely to remain the real repositories of power in Moscow, as they are the persons with whom it might be profitable to negotiate.
This was not the view taken by Her Majesty's Government. We felt that, above all, the momentum must be maintained; that we must work towards a possible improvement in the international scene; that the initiative must not be allowed to fail, and that whoever the real repositories of power might be, they should have no excuse for thinking that our desire for more normal relations or
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our determination to base them on Western unity and strength had in any way flagged. That is why we went ahead as we did, and I am sure we were right to do so.
The Washington talks have revealed agreement among the three Western Allies about the desirability of high level talks with the Soviet Government at a date not too far distant. They have enabled the three Western Allies to agree on the best way to handle the new situation created by the stirring of the spirit of freedom in Eastern Europe. They have re-affirmed the necessity for maintaining, and even strengthening, the development of European unity, and the military defences of the West, and they have confirmed the soundness of the existing tripartite policies towards Germany, which have also enjoyed the support of the German Federal Government
I should like for a moment or two to examine these policies towards Germany. They can be briefly summed up under two heads. First, the entry into force as soon as possible of the Bonn and the European Defence Community Treaties. Secondly, the re-unification of Germany on the only possible basis consistent with German freedom, as set out in the Allied Notes of last year, culminating in our Note of 23rd September. This was most recently and clearly restated in the message sent to the German Federal Chancellor by the Prime Minister last month immediately after the strikes and other events in Berlin and East Germany.
The Washington communiqué, with the latest Note to the Soviet Government, has been made available to hon. Members as a White Paper. In it they will read the main themes in the Prime Minister's speech of 11th May and of the policy objectives I have just outlined. As I shall now show, the conclusions are in fact in keeping with the policies pursued by successive Governments. The fact that such agreement could be so quickly reached must be attributed to the wide experience and understanding of my noble Friend and of his distinguished colleagues Mr. Foster Dulles and M. Bidault.
Of course, there have been, and no doubt still are in some quarters, certain differences of opinion about the timing of such talks, about their nature and the topics which they should cover. There

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appear even to be differences of opinion as to whether the protagonists are pygmies or giants. But I would remind the House that the resumption of contact between the Soviet Union and the Western Powers is not an end in itself but the means to an end, namely, the relaxation of international tension. And so the three Foreign Ministers have issued their invitation for a meeting on Germany and Austria to be held about the end of September, and we now await the answer of the Soviet Government.
I do not doubt that I am expressing the sincere hope of Her Majesty's Government, and of the House—and that this is shared by our United States and French allies, and by the peoples of all the countries concerned—that the Soviet Government will accept our invitation. I trust that these talks may be so conducted that they may lead the way to other talks of even wider import, such as the Prime Minister suggested in his original proposal for an unrestricted high level contact. These talks in September are intended not as a substitute for, but as a prelude to, such further discussions, if, as we and our allies hope, real progress can be made.
My noble Friend the Lord President of the Council stated publicly in America—and he has confirmed this to me on arrival in England—that the present proposal in no way excludes or excluded a widening of the present talks in terms either of personalities or of topics. Our aim is to build bridges and not to erect barriers. Equally the House must remember that to proceed as if no barriers exist might well only produce a cruel and mounting sense of disappointment and disillusionment. The House will recall that in his speech of 11th May the Prime Minister said that it would be a mistake to
"expect that the grave, fundamental issues which divide the Communist and non-Communist parts of the world could be settled at a stroke by a single comprehensive agreement. Piecemeal solutions of individual problems should not be disdained or improvidently put aside."—[OFFICIAL REPORT, 11th May, 1953; Vol. 515, c. 899.]
Of course, it cannot be said that the problems now suggested for such piecemeal solutions are minor problems. It has become increasingly obvious in recent weeks that the key problem in Europe
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and in Western relations with the Soviet Union is the problem of Germany. The events in Berlin and in East Germany last month and the Federal elections to take place in a few weeks have made this clear beyond all manner of doubt.
The age-long problem of French security, the renaissance of the Concert of Europe and the degree of continued collaboration of the United States with Europe may well alike depend on the nature of the German settlement. Any meeting with the Soviet leaders at any level must involve a discussion of the German problem. Nor in our view can Germany be treated in 1953 simply as an object for four-Power decisions, as the Russians still seem to think, if we are to judge from the last evidence we have, that is, the Notes exchanged last year.
The Western allies have long made it their practice to consult fully with the Federal Government on all matters concerning Germany and this was, of course, done in regard to the latest Note sent as a result of the Washington decisions. But before the German problem can be settled or a peace treaty negotiated, or even discussed, with the Soviet Government, there must be a free, all-German Government, able to negotiate such a treaty and free to decide its own international relations. Therefore, as the latest allied Note rightly emphasises, the first and essential problem to be discussed with the Russians is that of free elections throughout Germany and the formation of a free all-German Government. Once this has been done real progress can be made in negotiating a German peace treaty, in resolving the central problem of Europe and thus reducing tension in Europe.
These are not new and hurried decisions made in response to recent developments in Russia. Nor are they made in reference to the forthcoming German elections. We are following a consistent policy begun by Mr. Ernest Bevin, carried on by the right hon. Member for Lewisham, South (Mr. H. Morrison) and pursued by my right hon. Friend the Foreign Secretary, who, I am sure the House will be glad to know, is now on the high road to recovery.
I would remind hon. Members of certain passages in the speech of my right hon. Friend the Foreign Secretary when we debated the German question in this

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House nearly a year ago—on 31st July last year, to be exact. He then said that, if we did not complete our present policies—
"All chance of securing Germany as a partner in European unity and reconstruction would be lost. What is more, we might well be forfeiting the only opportunity of a peaceful re-union of Germany herself in the future."—[OFFICIAL REPORT, 31st July, 1952; Vol. 504, c. 1707.]
My right hon. Friend added a reference to the Notes we were then exchanging with the Soviet Government, and said that, while we were ready to go into four-Power talks, we should not, because of that, relax the efforts in which we were then engaged. Those words remain as true today as when they were then spoken. He reminded us then, and that reminder is very necessary today, that, on the basis of the only proposals we had, or indeed have yet had, from the Soviet side, Germany would be precluded in advance from entering into regional associations with other Powers, and this would mean a Germany left in dangerous and irresponsible isolation at the heart of Europe. This is a fact which I know is in the minds of many hon. Members.
I can add to this that, in the view of Her Majesty's Government, the best security for all nations concerned against any such danger lies in the closest possible association of Germany, whether the Federal Republic or a re-united Germany, with such a purely defensive organisation as the European Defence Community, which is in itself part of another defensive organisation, the North Atlantic Treaty Organisation. My right hon. Friend the Foreign Secretary would, I know, agree if he were here with what has been done in Washington.
I would further remind the House that what we are now proposing—and this necessarily follows from the proposals made in our Note of 23rd September last year—has had the approval of the German Bundestag in a resolution adopted as recently as 10th June by all the democratic parties, including the S.P.D., the Communists alone having voted against it. I think it would be worth while reminding the House of the five points which were themselves so widely supported in the Bundestag at such a recent date. The five points of the resolution were as follows:
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First, the holding of free elections in the whole of Germany; second, the establishment of a free Government for the whole of Germany; third, the conclusion of a freely agreed peace treaty with this Government; fourth, the regulation in the Peace Treaty of all territorial questions still remaining open; and fifth, the safeguarding of freedom of action for an all-German Government within the framework of the basic principles and aims of the United Nations.
Such were the five points of the Bundestag resolution, and these points conform to the proposals made in our Notes last year, and to the proposals now put forward as a result of the Washington Conference.
We realise that this German negotiation will not be an easy task, but, as my right hon. Friend the Prime Minister said in his message to the German Federal Chancellor on 24th June, our proposals—
"provide the only basis for achieving our common aim of a Germany re-united in freedom."
It is our hope that the Soviet Government may see their way to negotiate with the Western Powers on this basis.
Here I will leave the German problem and come to the question of Austria, which is also on the agenda. We have suggested in our Note that final agreement should also be reached at the proposed four-Power meeting of Foreign Ministers on the Austrian Treaty. This is, of course, a completely different question, and should be much easier to solve than that of Germany. Here again, we are still awaiting the answer from the Soviet to our Note, although admittedly a more recent Note, namely, that of 11th June last, asking the Soviet Government to say what Treaty they would be prepared to sign.
Does anybody suggest that Austria is a menace? Can it be said that it is a vital strategic centre capable of changing the whole balance of power? Of course, the answer must be "No." No such suggestion was made in 1943, when the Soviet Government agreed with the United States Government and with Her Majesty's Government that one of our post-war aims was the early restoration of Austrian independence, but, although more than 250 meetings have been held in which the Western Powers have made innumerable concessions, the Russians have hitherto refused to loosen their grip on Austria.

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If it is suggested that the proposed German negotiations will be difficult and complicated, no such suggestion can possibly be made about the Austrian Treaty, which has stood virtually ready for signature for many months and indeed years. All friends of Austria will agree that here is a vital and essential step in restoring confidence in Europe. The proposed agenda, therefore, can in no sense be rejected as unduly limited or restricted or as covering only details, in which experts may get bogged down. It covers at once the central question for the future of Europe, and also the one question between ourselves and the Soviet Union which is already almost settled and which could now be settled at one meeting, given the will to do so.
If, as we hope, our invitation is accepted, we shall not enter these talks in any unduly rigid spirit. The Western Powers, like the German people themselves, want a peace treaty and want it as soon as possible, but there are certain essential principles on which there can be no compromise and without which no general agreement with the Soviet Union, however attractive and however much we all desire it, would be worth the paper on which it is written.
These principles can be summed up in the words—internal freedom of choice and security against external aggression for all the peoples and countries concerned, including the populations of East Germany and East Berlin.
Mr. R. H. S. Crossman: May I ask the right hon. Gentleman one question on Germany and Austria? He dealt in detail with the one new proposal which the Prime Minister made in regard to Germany when he talked about the Locarno spirit. Do I gather that the Prime Minister's one original suggestion has been smothered, and that we have gone back to where we were before 11th May?
Mr. Butler: No, Sir. If the hon. Gentleman had listened to my speech, he would have seen that I referred deliberately to the Prime Minister's view that he hoped that the security of the Western world could be combined with the possibility of assuring the security of Russia, and he made special reference to that at no inconsiderable length. In my very last
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words just now, I was referring to the need for assuring internal freedom of choice and external freedom from aggression, and I would not for a moment deny that the contribution of the Prime Minister was an extremely important one, to which I deliberately made reference. To sum up what I said, those who look further than the Washington Conference for constructive and big possibilities should bear this in mind.
I turn now to the second main achievement of the Washington Conference. I would refer first to the fact that the three Foreign Ministers were agreed that it was inseparable from the achievement of our aim of negotiation with the Soviet Government and of finding an early solution for the German and Austrian problems. This was and is a re-affirmation in the communiqué that our fundamental aims—peace and security and the welfare of our peoples—can be gained only by maintaining and developing the unity and solidarity of the West. It was therefore agreed that we should all keep firmly, although unprovocatively, to the paths we have chosen, which are serving us well—the North Atlantic Treaty Organisation, and the closer bringing together of Europe through the Coal and Steel Community and the European Defence Community. I would recall at this stage the passage from the Washington Declaration of 14th September, 1951, signed by the right hon. Gentleman the Member for Lewisham, South, which reads as follows:
"The three Foreign Ministers declare that their Governments aim at the inclusion of a democratic Germany on a basis of equality in a continental European Community which itself will form a part of a constantly developing Atlantic Community."
We are now continuing and carrying out that policy.
If the international outlook is brighter, as we all hope, this is due in large measure to the success achieved by the North Atlantic Treaty Powers and by the united efforts of its members in building up their defensive strength. As one who attended the last meeting of N.A.T.O. on behalf of the United Kingdom, I can say to hon. Members that one of the most inspiring experiences I have had was to see the absolute unity of purpose of the countries involved and the sacrifices that they and their peoples

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are prepared to bear in order to keep up this defence effort.
It should be remembered in this connection that the Commonwealth countries have also played a noble part. I have often thought, and indeed stated, that we must match these efforts in collective defence by a more imaginative cooperation in the field of economics and finance, because these defensive structures must be built on a solid foundation if they are to endure, and we must at least get as close together in these fields of economics and finance as we have in the fields of foreign policy and defence.
It must now be clear to the British people that the mood of aid is passing away, and we must therefore prepare ourselves as a country to carry our immense defence burden under the proud flag of our own economic independence. We shall always welcome purchases of our equipment, and we have in the meantime some orders and some help on which we can rely. But the more we stand on our own economic and financial legs, the greater will be our influence and the better our voice in the counsels of the nations.
I shall be making an appeal tomorrow at the meeting of the National Joint Advisory Council for industry, describing the efforts we have still to make as a united country if we are to be strong and not dependent. Then, we must continue to support the cause of European unity—in the O.E.E.C., of which the Foreign Secretary is the Chairman, in the Council of Europe, in the Coal and Steel Community and in the European Defence Community, and this line is a vital element in the process of uniting Europe and of ending old quarrels, more especially the Franco-German feud.
It is sometimes forgotten how much we have already done in this direction, and even in this House there is sometimes a tendency—whether deliberate or otherwise—to appear to forget. It may therefore be useful, both here and outside this House, if I briefly sum up what we have done.
At the headquarters of the Coal and Steel Community in Luxembourg—the only body of this kind already in existence—there is a British delegation. We have made proposals, known as the Eden
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Proposals, for close links with other European bodies through our joint membership of the Council of Europe. British observers have been participating in the meetings of the E.D.C. Interim Commission in Paris, which is preparing all the necessary plans to be put into effect immediately the Treaty is ratified. We have given far-reaching guarantees to the European Defence Community in our treaty with them, in the tripartite declaration on the European Defence Community and in the protocol to the North Atlantic Treaty.
Members of both Houses of Parliament took an active part last winter in drafting the Statute for the European Political Community—the basis for a European constitution. We took the initiative in putting forward practical proposals for close association between our forces, stationed as they are in such strength on the Continent, and those of the European Defence Community Powers, including joint training, joint manœuvres, the exchange of officers and observers and plans for the standardisation of tactics, logistics and weapons.
Finally, we have made proposals to the six Governments for a closer political association between the United Kingdom and the European Defence Community. These are still under discussion and cannot, therefore, be revealed in detail. I can say, however, that they have been generally welcomed by the Governments concerned and that negotiations on them are proceeding very satisfactorily. So I can say to the House that we are honestly doing our best all round.
I can give hon. Members this assurance, but I cannot foretell the future. Whatever it may hold, our increasing strength and unity will give us hope, but we have still to struggle for security. Our part is clear, but it is not easy. We cannot yet judge the full significance of developments within the Soviet Union itself. Above all, we cannot assess the importance of the disgrace of the second figure in the triumvirate which took over from Stalin. We notice any straws in the wind which indicate a new mood. We shall grasp at realities. We welcome every sign of a lightening in the heavy burdens which have pressed upon the populations of the satellite countries. Whilst we must continue to counsel patience and restraint, we also pay a tribute to the populations of

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those countries. In the words of the Washington communiqué, we wish
"to see true liberty restored in the countries of Eastern Europe."
I think, in summing up, that our main satisfaction, as it was that of the three Foreign Ministers in Washington, is that our aims and purposes are united, that we are acting in concert with our N.A.T.O. allies and with the Federal German Government, that we are determined to preserve and develop our strength, that we face and shall exert ourselves to resolve grave issues. Surely we shall now inspire this unity and strength with imagination so that we may emerge from the cold threat of conflict and devote our lives to the warmer purposes of well-being and honourable peace.
4.19 p.m.
Mr. C. R. Attlee: We all recognise the difficult position in which the Chancellor has found himself with the Prime Minister and the Foreign Secretary away ill. We are all glad to hear that the health of the Prime Minister is improving and that the Foreign Secretary is soon to return to this country, and that he is also on the way to recovery. It would be useful if the right hon. Gentleman could tell us what prospects he sees of the Prime Minister and the Foreign Secretary again assuming full control of their offices, because the subject which we are discussing today really arose out of the speech of the Prime Minister which suggested high level talks.
It was a great regret to all of us that, immediately following that statement, the right hon. Gentleman fell ill, and it is important for us to know whether there is still a prospect of these high level talks or whether the proposed talks by the Foreign Secretaries are a substitute. It is also important for us to know whether at those September talks the Foreign Secretary is going to be able to represent this country. I do not know whether the right hon. Gentleman can make any reply at all on that, because it is very difficult to discuss this matter, which is essentially one of discussions between statesmen, without knowing what statesmen will be available.
Mr. Butler: I made my speech. Perhaps the right hon. Gentleman had better make his. [HON. MEMBERS: "Oh."] I have already indicated the improvements
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in the health both of the Prime Minister and of the Foreign Secretary, and I am sure that it would be the wish of the House that they should so improve in health that they can shortly take on the duties to which the right hon. Gentleman referred.
Mr. Attlee: I echo that, but one would like some indication of when they will resume. I have not asked this question in any attempt to be offensive to the Government at all. It is a fact that we have been without a Foreign Secretary for a great many weeks and we have been without a Prime Minister also for a good many weeks. We have been extremely patient. In fact, we compare very favourably with the party opposite when Mr. Ernest Bevin was absent. The House and the country are entitled to more information than we have had on this subject.
The Prime Minister's speech raised great hopes. It was imaginative. It envisaged a meeting on the widest basis in an effort to take advantage of what seemed to him, and to all of us, some possibility of the loosening of the tension between East and West. Since then 10 weeks have elapsed and there have been various happenings. There have been the happenings behind the Iron Curtain. I do not know their significance. I do not think anyone knows, but the fact is that, broadly speaking, the trend towards a certain loosening of tension has continued. The position that we took up, and I think everyone took up, when we debated the matter on 11th May was that we should take the greatest possible steps forward to take advantage of what seemed—it might or might not be—a loosening.
We are all agreed that the tripartite conference at Washington was inevitably a poor substitute for those high level talks. We could not expect very much from it, but I must say that I think this White Paper is disappointing. It does not seem to be forward-looking enough or to be really in tune with the Prime Minister's speech. There seems to be too much emphasis on positions already taken up.
I find that same fault in the communication that was sent to the Soviet Ambassador in London. There we set out our position and seemed to expect that that would be accepted by the U.S.S.R. I find rather the same line on the Far East matter, and I shall deal with that later.

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There again our position is set out and the other side are asked to accept it. That line is not likely to be very fruitful. It is quite idle to expect that those other Governments will necessarily accept just what we want. We would all like it if they would, but that is not the way things work.
I am not at all happy about the proposed meeting in September of the Foreign Secretaries. I quite agree—in fact I said so in my speech on the last occasion that we had a debate—that if there is some specific point on which we can get agreement, it will be all to the good, but I cannot regard the future of Germany as one of those points. The right hon. Gentleman himself said that it was a major point, and it is the major point. To suggest that talk at high level on that particular crucial question is likely to be fruitful by itself seems an entire illusion. We want free elections and we want a free German Government, but we have to think how these will fit into Europe.
On those points we may have a great many opinions and there are a great many fears. Undoubtedly there is still in Russia, and particularly in the satellite States, a fear of Germany. There is an apprehension in Western Europe and to some extent in this country of a Germany rising again as an armed menace to the world. Suggestions are put forward for neutrality, but they do not get a great deal of acceptance. Suggestions are put forward for some kind of control of German armaments. Well, we had some experience of trying to do that after the 1914–18 war.
It is an extremely complicated and difficult question, which I suggest is not solved merely by saying that we want to integrate a free Germany with the West. We do, certainly, but are we likely to get agreement from the U.S.S.R. on that proposal by itself? Therefore, it may be unfortunate to have a discussion on this German problem instead of the wide talk that was suggested by the Prime Minister.
Could not the conference take place in a rather different atmosphere, not in just dealing with the two specific points of Germany and Austria? We all want the Austrian Treaty, but I thought it was put rather abruptly in the communication to the U.S.S.R., in these words:
"Her Majesty's Government also consider that at this first meeting agreement should finally be reached on the Austrian treaty,"
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It is an excellent idea, but I doubt whether we shall get it except in the context of some larger settlement.
The crucial matter that concerns all of us is the position of that great country, Germany, in the middle of Europe. She may again be a menace or she may not. She has to be given freedom. Is she to have complete freedom to be an armed Germany again? That is one question. Some people suggest that we should have a Germany disarmed in the middle of Europe, but there may indeed be a menace from a Germany that has no responsibility for defence at all. I suggest that the only possible way of discussing this matter is in the larger context of the future of a peaceful Europe. What we need is a Europe where armaments are reduced. I do not think it is any good proposing that we should have by itself a Germany kept down to a low level of armaments. We tried that before, but it did not work. It is only possible if we are to get some agreement for a reduction of armaments all round.
Is that impossible? I think the Prime Minister's speech indicated that he thought it was quite possible that in Russia they were getting tired of the burden of armaments and wanted to raise the standard of life of their people. I am quite sure that on the Continent of Europe and in this country we are tired of this burden of armaments. I am sure that they are in the United States of America. Everybody knows the difficulties of disarmament or of approaching disarmament, but I do not think that they are more difficult than what is set out in this White Paper, this attempt to reach this agreement on Germany by itself.
There is further the broader question. It is not only Germany. There is the future of the other States of Eastern Europe, of Poland, of Rumania, Czechoslovakia and the rest. There are indications that these are all very restive. It may be—one can only speculate—that the rulers of Russia themselves feel that it would pay them better to work for the development of their resources inside Russia and relax their hold on the satellite States. It may be so; I think it is worth trying out.
There is, I think, a great danger in always looking backwards in these matters. There is a great danger with the Germans in that. I think that there

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are dangerous irredentist forces in Germany. Any number of re-allocations of territory can be made. I notice that point in the five points of the Bundesteg with regard to territorial settlements. But for 700 years the Slav and the Teuton have quarrelled about the division of those areas. I should have thought it about time that they stopped that and about time that they tried to settle down to make the best of what they have got.
I do not think it is any good trying to revise these things on some historical basis. Every country always has some historical reasons why it should have this or that. I was struck by this idea in the Prime Minister's speech of the labouring peoples of the world wanting to get away from this. Therefore, I rather deprecate this attempt to get a settlement on these two points. I fear it may spoil the subsequent conference.
I do not know—I cannot find out—when the Prime Minister will be able to take over or when the Foreign Secretary will be able to do so. I think at this juncture meetings of this kind are likely merely to bring out points of friction and not to contribute to the broad conception that was thrown out in our last debate. I believe that everywhere the world is waiting for a new start. I believe we thought we had got it. The Prime Minister's sudden illness was a thing which one could not foretell, but I really do not think that this White Paper is a continuance of that attempt to get a new spirit in the world.
Further, one could look at Europe by itself, but that again has to be looked at in the larger context. One needs to look at what is happening in the world as a whole and particularly in Asia. That brings me to the points that have been made with regard to the Korean trouble. We are all hoping that the Panmunjom negotiations may now come to a settlement. Personally, I think that there has been great patience shown for a very long time by the United States, and I think that General Mark Clark has played a very good part in the last few days. We all hope that they may come off—but what then? That is where I find again in this White Paper a tendency merely to stand pat.
I am not encouraged when I read a report in the paper today of what Senator
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Knowland was saying with regard to the Far East. Almost inevitably, in a struggle in which the Americans have borne the heaviest burden, which we all gladly recognise, this must appear to many of them to be their fight; but remember, it is a United Nations' fight. A settlement of the armistice was, of course, a matter for the United Nations Command, but the political settlement afterwards is not a matter for one or two States, it is a matter for the United Nations.
Therefore, we would press that, right away, the Assembly of the United Nations should be called; first, because it is not certain yet whether this will go through; then, because I think there is need of the public opinion of the world to help in the control of Mr. Syngman Rhee, who very nearly upset the whole of this armistice and may yet do so again.
Thirdly, there is the kind of settlement which ought to emerge after Korea. I very much doubt whether, if we take this question merely on the matter of Korea by itself, we are likely to get a settlement. It is rather the same as the proposal in the West. We suggest to the Chinese that there should be a united Korea. They rightly or wrongly, are backing the North Koreans. They are asked to accept what we want. I do not think that we shall get that without something on the other side. They have in their minds, rightly or wrongly, Formosa. Chiang Kai-shek; and all these matters come together and should be fully discussed at the United Nations.
I welcome very much the statement made by the French Government regarding Indo-China: I only wish it had come earlier. But if we want to get that settlement I think that it has to be done in some wider setting. That is where one can bring both the West and the East together because it is widely recognised now that we shall not get a peaceful world unles we can raise standards in the less developed parts. There is a great opportunity there. If we could get a cessation and a reduction of armaments, it would set loose an immense amount of productive power that might be used for laying the foundations of peace and not the foundations of war.
Therefore, my view on this White Paper is that it is not a fulfilment of the expectations that we had from the last

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debate, that it tends to be too narrow, tends to stand too much on positions already taken up. I am not for a moment suggesting that at this time we can throw away the Atlantic Pact—far from it. Obviously we have to continue to deal through strength, but I think that we have built up our strength and that these changes are due to some extent to the fact that we have built up this strength of the Atlantic Community. But I do not think that any of us wants to go on building, and building, and building it up. We would much rather get an agreement if we could get it at a reasonable level.
I would hope, therefore, that we would keep in mind all the time, first, the possibility of wide talks which will not necessarily bring great results at the moment, but wide talks in trying to get some conception of a peaceful Europe and a peaceful world. I am quite sure also that now is the time, as soon as the armistice has been signed, when the United Nations should take over this matter of a settlement in the Far East. I entirely agree that, as has so often been said, the Americans have shed their blood. So have we. We have played our part in Asia and we have great interests there.
I want to see flowing East and West trade in Europe. I want to see trade with China. Above all, I want to see intercourse between the peoples. I believe that there has been some relaxation. If the talks could only get towards our understanding each other and provide a meeting between peoples, then the position might be more hopeful. But frankly I do not think that the Washington talks have taken us much further on the road of peace.
4.41 p.m.
Mr. W. R. Rees-Davies: In rising to address the House for the first time, I ask the House to afford to me the indulgence extended to hon. Members on such occasions. I have but one advantage, if it be an advantage, in that I am the third generation to have the honour to sit in this House. My forebears, my father and my grandfather, however, sat as members of the Liberal Party. I am therefore satisfied that I have suitable ghosts who will prevent me from being too partisan either on this or. I trust, on other occasions.
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Following as I do on the two statesmanlike speeches that we have heard this afternoon, it is with great diffidence that I invite the House to allow me to consider for a short while the two great issues of today upon which the peace of Europe and of the Middle East, if not of the world, depends. On 11th May the Prime Minister urged that unity, vigilance and fidelity are the only foundations upon which hope can live. I am sure that the House will agree that it is the careful pursuit of these virtues in practice which will ensure our success in maintaining the peace of the world.
The dominant issue in Europe is whether one can attain a united Germany upon terms which will maintain world peace. The dominant issue in the Middle East is still the problem of our base on the Suez Canal. This afternoon we have heard from the Chancellor of the Exchequer glad tidings indeed of agreement with the United States that the maintenance of a base in the Canal Zone is a necessary instrument for the preservation of world peace.
In the absence of agreement we face the unpleasant necessity in this area of providing 80,000 troops, including some of our finest fighting units, at a cost of £50 million per annum for the protection of £500 million worth of stores and installations. But until agreement, international or otherwise, is achieved, as I trust it will be, it is plain that we must stay, not merely because of the considerations of military strategy which are involved in this pivot of Middle East defence but also because of the psychological values involved in that area.
If we leave, the present dictator or his successor—the "dancing major" or whoever it may be—will seek to wipe out our efforts at justice in the Sudan, or to overthrow Israel, or to stir up dissension in a third direction in Africa. These are psychological factors of the very greatest importance. I feel sure that the majority of the House will agree that loss of our prestige there would be loss of our prestige in the world. Prestige in the Middle East depends upon strength and the length of one's purse. The considerations involved are different from those involved in other areas. These are the weighty factors.

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Nevertheless, the information which I have been fortunate enough to obtain from many friends of mine who are serving in the Forces leads one to believe that some reduction in our Forces in the Canal Zone might gradually take place and indeed begin now. The conditions experienced by our troops there are very difficult indeed, but one cannot pass this subject without saying that they are very grateful to the Government for the facilities which are being provided at the present time. The postal facilities, for example, are excellent with a service taking only 48 hours and a cheap rate of 2½d. Thanks to the efforts of General Festing, sports facilities are now satisfactory and canteen and other social facilities have been rapidly improved.
But is it really necessary that the Para-troop Brigade, our only brigade of that kind, should be maintained for a period of nearly two years in the Middle East? Is it not possible that they might be relieved and brought back so that they may carry on their effective training? At present these fighting troops are engaged in the Canal Zone purely on guard duties. I feel that is a serious waste of the fighting personnel of the country.
If international agreement may perhaps now be obtained in order to reduce our Forces to merely technical personnel of some 6,000 or 7,000 as before the war, why should we not insist that part of the burden of their maintenance, until such agreement be forthcoming, should be borne by the United Nations? Why should the British nation, in defence of world interests, be compelled to meet the whole burden of defence in that area?
Passing from consideration of Egypt to the really dominant issue of Germany, we appear to be agreed in this country, as indeed is Russia, that Germany should be united once again. The natural desire of the Germans in this respect, which has been expressed quite clearly in statements by Dr. Adenauer, must become a reality sooner or later. One trusts that it may be soon. But surely our deep concern must be about the practical safeguards which must obtain before ensuring a reunited Germany. The Prime Minister declared on 11th May:
"We shall continue to play a full and active part in plans for the political, military and
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economic association of Western Europe with the North Atlantic Alliance."—[OFFICIAL REPORT, 11th May, 1953; Vol. 515, c. 897.]
This presupposes the inclusion of Germany. Indeed, we have heard this afternoon, and one could not fail to be most deeply impressed by the Chancellor's statements of further plans which apparently are being and will be pursued in this respect.
I feel, nevertheless, that it is only right that one should spotlight for a moment from these back benches the difficulties which are involved so that the country may appreciate them. Past history, and particularly a study of Bismarck, shows that the natural military alliance of Germany, if free, is in the direction of the Soviet Republic. The natural boundaries of Germany and the plains of Germany flow and stretch to the East and not to the West. The natural resumption of trade is with the East and not with the West. That is the background of German history. Post-war knowledge and present-day contacts with Germans and those closely associated with Germany support this view, for several reasons.
There is a very real fear in Germany of another war with Russia. There is obviously a very real fear in Russia that they may have another Stalingrad in a war with Germany. In terms of trade at present—I stress those words—they face more difficulties and more difficult competition in the markets of the West than in the markets of the East. It seems, therefore, that one must make of European unity a real truth, that one must open up the colonial empires of the other countries and encourage the markets of the Commonwealth, of our Empire, as well provide the persuasion that is needed to ensure that Germany faces to the West rather than to the East.
The vital question is that of the balance of power between Eastern and Western Germany. I pose this question: what would happen if Russia and the Western Powers were now to withdraw their troops altogether? Would there not be a situation such as was envisaged by my right hon. Friend the Leader of the Opposition on 11th May? Is that not the danger—a situation with East Germany, with its troops, perhaps 300,000, and containing the doughty warriors of the Wehrmacht, on the one side facing

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Dr. Adenauer and his scholastic professors, on the other—a Lutheran East and a Catholic West of opposing factions.
Surely, little imagination is needed to appreciate the danger of a possible military dictatorship, the rise of an imperial Power arm in arm with an East German Socialist spinster, with the mother of the Soviet Republics, in the background—a mother-in-law able to provide a dowry of no inconsiderable amount, namely, the consumer markets of the East—a very real danger and, indeed, if it came about, an unholy wedlock. Therefore, one must face the possibility of a Soviet-German bloc along those lines within the next 10 years, and, if that position arose, the possible danger of yet a further world war thereafter.
Our aims, then, should be these. One should proceed, as has been said, step by step with patience to ensure German unity; to support the West German Government pledged to military, political and economic associations with the E.D.C. and the E.P.C.; in particular to strive to ratify the E.D.C.; and to ensure in the rearmament of Germany a true balance of power between East and West, before the unification of Germany is complete; then the Bundestag proposals to follow, with the free elections and a peace treaty after the integration of Germany with the West has been ensured.
I ask my right hon. Friend this question in conclusion. What further active steps can be taken to press for the integration of Germany, whether it be divided or united, into the E.D.C., and the closer economic association to which the Chancellor has referred? If we are united, vigilant and faithful to these ideals, I believe our hopes can be realised and that peace in our time can prevail. But if we fail in that project and if, therefore, a Soviet-German military alliance were ultimately to prevail, then the future of this country would be in danger; this Government presumably would take the blame, and the youth of our country in the future might have to face the further horrors of war.
4.55 p.m.
Mr. Clement Davies: As one who has had a long experience in the House, may I assure the hon. Member for the Isle of Thanet (Mr. Rees-Davies) that I am speaking on behalf of the
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whole House in tendering to him our very sincere and warm congratulations not only upon the subject matter of his speech, but upon the ease and conviction with which it was uttered. We look forward to hearing more contributions from him in the future. We are glad that he has followed in the footsteps of his grandfather and father, although some of us regret that he has departed in some way from the tradition they set.
We are glad to hear of the possibility of a truce being signed quickly in Korea and of the reopening of trade with China, so that China will be able to take her place among the nations of the world. We are also glad to know that there is a complete understanding between the United States and ourselves on the maintenance of that international channel, the Suez Canal. But, important as all those matters are, they are small compared with the much bigger question of the prospect of general peace in the world.
The question that I am asking, and which I am sure everyone would like to have answered, is: is the international outlook brighter today; is the tension relieved as a result of this meeting in Washington? I only wish that I could answer that question in the affirmative, but I cannot. I honestly cannot. When I compare what has been done and what the Prime Minister said in that remarkable speech of his on 11th May, I cannot but express my disappointment. That was an outstanding speech, broad in its outlook and its conception, tolerant in its views and perfectly prepared to understand the fears even of Russia and to come forward with a suggestion that nobody else has ever made. We were all proud that the initiative should have come from this country, and particularly from our Prime Minister.
Then we knew that there would have to be a meeting between the free nations before there could be a meeting between the four great Powers so that they might put their views forward, and that was the idea of Bermuda. Unfortunately, owing to the illness of the Prime Minister, that had to be cancelled, and this new meeting in Washington was substituted for it. I am sure that it was not in the minds of anyone that after the meeting at Bermuda a definite statement should be issued to the world making it perfectly

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plain that whatever might happen with regard to Russia, those were the terms upon which we were going to a round table conference.
May I remind the House of the great words of the Prime Minister and point out that it seems to me that what has happened at Washington has been a retrogressive step from the position taken up originally. The right hon. Gentleman said:
"I must make it plain that, in spite of all the uncertainties and confusion in which world affairs are plunged, I believe that a conference on the highest level should take place between the leading Powers without long delay."
The right hon. Gentleman emphasised that. It is quite obvious that that was the first matter in his mind—to clear the way, by a broader agreement and a broader understanding, to the technical matters that might have to be settled at a subsequent conference.
The right hon. Gentleman continued:
"This conference should not be overhung by a ponderous or rigid agenda. …"
If we refer to the White Paper and the statements which have been issued from Washington, what do they represent but a rigid and even ponderous agenda? A great many words have been used which add nothing to our knowledge. They are a reiteration of a whole number of cliches, which make them very ponderous indeed.
What they say is, "First, let us have a clear understanding. We are not going to talk to you about Germany unless you agree, straight away, to full and free elections throughout the whole of Germany, including your Eastern Germany, which you dominate at the present moment. You must give us that undertaking before we begin to talk." They then go on to say, "That will mean a free German Government. Then, and then only, will it be possible to talk about the terms of the treaty with Germany." That is laid down as part of the agenda, and the same thing applies in the case of Austria.
What is the difference between what has now been issued from Washington and what has been said, time and time again from the Despatch Box, by Foreign Secretaries? What is the difference between this Note, issued from
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Washington, and the prior Note, about which the complaint is made that although it has been received by Russia no reply has yet been sent?
The Prime Minister carried the matter very much further than that. He said that we should not be
"led into mazes and jungles of technical details, zealously contested by hordes of experts and officials drawn up in vast, cumbrous array. The conference should be confined to the smallest number of Powers and persons possible. It should meet with a measure of informality and a still greater measure of privacy and seclusion."
Then comes what I regard as the whole gist of what was in the Prime Minister's mind. He said:
"It might well be that no hard-faced agreements would be reached, but there might be a general feeling among those gathered together that they might do something better than tear the human race, including themselves, into bits."—[OFFICIAL REPORT, 11th May, 1953; Vol. 515, c. 901.]
That was a broad invitation to the powers in Russia, whoever they are. He said, in effect, "Come out. Let us discuss the general world position today. Everything will be open. We are not having an agenda of any kind or description. We, of the free nations, have already met, and have arrived at certain agreements as to how we should present the matter to you. They are already well known; there is no need to emphasise them, but we ask you to come along, and we will discuss the matter completely freely."
I should have thought that that was the one and only way in which we could bring any of the powers in Russia into open discussion. This Note has now been sent to Russia. It has already been delivered. It says, "We want a conference, not on the highest level, but between Ministers. They are to discuss these matters, and in this order." What is likely to happen? If a reply does come from Russia it will be, "We do not agree that those are the prior matters. Instead of discussing Austria or Germany we should like to discuss China, or the position of Formosa." Then there will have to be another meeting, and another Note will have to be sent.
Does that bring us any nearer agreement? The whole world is waiting for a relief of this tension. The right hon. Member the Leader of the Opposition very rightly said that he believed that not only people in this country, but people

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in the United States and in Europe were tired of a war tension. He could have gone further and said that every ordinary man and woman throughout the world is anxious for peace today, anxious for a relief of this tension.
If I could feel for a moment that our present approach was the right one I should welcome it, but I have seen this kind of approach tried time and time again, only to lead to failure. That is really what failed us as long ago as November, 1947, when the last meeting between the Foreign Ministers took place. There they were, surrounded, as the Prime Minister has pointed out, by an array of technicians, raising all kinds of legalistic points, about what was agreed at one place by one party and what was agreed at another place by another party. That is almost like trying to get an agreement in a dispute between two commercial firms, who leave the matter in the hands of solicitors, to carry on by correspondence. That method will never end in success.
The Prime Minister said that we should take it out of that atmosphere, and put it on the highest level. Let us have a general discussion. Let us begin afresh and say, "Look, the world is really suffering, and it is time we tried to relieve it of its suffering." I do not think that the world has ever been in such a state of flux and movement as it is at present. It is quite obvious that there are signs of disturbance in every country. We can see them in Russia, East Germany, and the satellite countries of Poland, Czechoslovakia and Bulgaria. Throughout the whole world there is this movement. Surely, now is the time for great statesmanship to take people along the road towards peace and not to stick to technical and narrow points which may prevent people from discussing them around a table.
If this conference has to take place in Washington—and I dare say that it has to take place there—it would have been better if no statement had been made. It would certainly have been better if no document had been sent to Russia saying, "These are the terms upon which we meet." It would have been very much better to do what the Prime Minister desired. We might then have had success.
5.7 p.m.
Captain Charles Waterhouse: First, I should like to associate myself with what was said by the right hon. and learned Member for Montgomery (Mr. C. Davies) in such appropriate terms about my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies), who made an admirable maiden speech. I have seen my hon. Friend in battle on the hustings, and I can assure hon. Members that he is a doughty contestant there. Having heard him this afternoon, I know we all agree that no maiden speech was delivered with greater confidence, covered a wider field, or dealt with the subject more reasonably and eloquently.
He began with the question of Egypt, and I should like to make that the first of the three short points which I want to put to the House this afternoon. I welcome the clear and categoric statement of my right hon. Friend that our base in Egypt is essential for world peace, and his final remark on this subject, that we shall be patient and resolute. I was glad to hear him reiterate and reaffirm the statement made by the Prime Minister on 11th May. That statement gave us real confidence. The various points he made were made firmly and clearly, and he made it absolutely apparent, by the general background of what he said, that the last thing he intended to do was to evacuate the Canal Zone.
Yet we can hardly open a paper for many days consecutively without finding that a correspondent is informed from some reliable source that something is being done about evacuation. In the "Sunday Times," yesterday, I read that "Mr. Dulles and the Marquess of Salisbury, last week, discussed in great detail British conditions in relation to evacuation." I submit that this reiteration of the idea of evacuation is doing real harm to our cause.
The Prime Minister has said that we are not going to evacuate. We know that we have far too many troops there; more troops than we want to have there, and possibly more than we can afford to have there, but between a reduction of troops, to the number of 5,000 or 10,000—as suggested by my hon. Friend the Member for the Isle of Thanet—and evacuation, there is the whole difference between security and scuttle.

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I hope and believe that the Government will never agree to evacuate the Canal Zone in that way. After all, we are apt to forget that we stand on definite Treaty rights and that they do not end in three years. We have a responsibility to the whole world for the maintenance of this base. I do not think we need fear that the Government will relinquish their great responsibility in that respect.
I must, however, express a fear. I do not think that we shall get any great help from our friends in the United States of America on this matter. They have made their position clear. They stand foursquare against all forms of imperialism, and they are to be the judges of what imperialism is. They advised us to get out of Hong Kong. They advised us to get out of Burma. They advised the Dutch to get out of Indonesia and the French to get out of Indo-China.
That is all very well. I do not grudge them the power of giving advice. They are the judges of their own affairs. They are content merely to dominate a couple of continents and to have strategic bases throughout the world and to exploit oil wherever it is to be found. I do not blame them for that. That is their point of view, and I hope that they will allow us to have our point of view.
That brings me to my second point. It is that President Roosevelt made these views of his perfectly clear first at Teheran and then at Yalta. He made it abundantly clear. According to General Eisenhower's "Crusade" he said to Stalin that "Russia and the U.S. were both free from the stigma of Colonial Empire building." That is a very fine sentiment; but I think that there have been few greater disasters in modern history than those conferences at Teheran and at Yalta. I do not want to use too hard a word but in my view President Roosevelt was completely hoodwinked by Stalin. He took the view that Britain was likely to be the trouble maker and the aggressor in the post-war world.
My right hon. Friend the Prime Minister must have had a shock when he discovered how the counterpoise in this committee of three was shifting. I hope that there is no fear of us, on our part, falling into a similar error today and taking the side of Russia against the United States. My right hon. Friend the
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Chancellor of the Exchequer has given me no cause to believe that there is, but obviously there is considerable pressure in that direction. The right hon. Gentleman the Leader of the Opposition spoke of the possibility of loosening tension by general talks. He was against stating a view. He believed in wide talks.
The right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) has just been asking what the difference is between our attitude now and our attitude of a few months ago. He asked for everything to be open. He was against any form of interchange of Notes leading to another meeting and other Notes.
Really, where does all that take us? Are not the interchange of Notes and official meetings always the necessary basis of any lasting agreement? Do either of the right hon. Gentlemen really believe that three men, however great, can meet round a table, with differences as great as those which divide Russia from Britain and the United States, and come to some agreement because of their charm of manner or their change of heart or something of that sort?
Mr. C. Davies: I agree with what the Prime Minister said. The Prime Minister said, "Let us meet without anything of this kind—without Notes." He said that it was not to be expected that they would arrive at a full technical agreement but, at any rate, the feeling would be all the better and they could start the technical discussion afterwards.
Captain Waterhouse: I did not read into what the Prime Minister said a declaration that we had changed our ground. Unless I made a wrong note of the right hon. and learned Gentleman's words, he asked, "What is the difference between what we say now and what we said before?" If one is always expected to change ground, to be advancing towards one's opponent in a discussion before one has started the discussion, surely one cannot hold any position at all. It is here that I join issue with the right hon. and learned Gentleman.
Mr. Davies: That was not the point. What we said a few weeks ago is exactly what we are saying now—that there would be no point of putting into this Note to Russia the statement that we want a meeting with them on exactly the

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matters on which Russia has already said she will not hold a meeting. Therefore, the Prime Minister said that we should put the matter on a broader basis.
Captain Waterhouse: There has been reference to a business meeting. If we are to have a business meeting we must know the business which is to come before the meeting before we attend it.
Mr. Ian Mikardo: One often has lunch before a business meeting.
Captain Waterhouse: If the Prime Minister wants to go to a social function for lunch, that is a different matter. Here we are talking about a serious question of trying to get two opposing views together, trying to find a way of agreeing between opposing ways of life. That will not be done by any conference without preparation unless there is a real change on one side or the other.
We think—and I believe that the right hon. and learned Gentleman agrees with me here—that we were right in what we said some time ago. The right hon. and learned Gentleman believes, as I do, that the Russians were wrong. The whole basis of the Prime Minister's remarks was that he thought that there had been a change of heart in Russia. Do not let us be afraid of reiterating what we believe to be right. Let us have confidence that the Russians have changed their view, as the Prime Minister thought, and are coming towards our way of thinking.
Everybody in the House hopes that much will come out of the Washington discussion. There is no great evidence of anything yet. I share the regret that the Prime Minister's illness deprived us of the benefit of his presence in this House. I do not know that I really regret that he has not been able to go to these talks. I am not at all sure that the time is yet right for that, but I am absolutely sure—and this brings me to my final point—that the strain on Ministers of the Crown is becoming more than any man can possibly bear.
During the last Administration three highly respected Ministers had to leave office and go to their deathbed within a few weeks or months. In this Administration in the last two years there has been far too much sickness among Cabinet Ministers. Can one wonder when one
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thinks what they are expected to do? The whole system is approaching a point where a change must be made or our practice of government will become virtually impossible. Of course, the biggest strain of all is on the Foreign Secretary. The late Ernest Bevin, the present Secretary of State, and now the Prime Minister, one after another, have paid a high price for their devotion to their duties.
We in this country pride ourselves on having the finest Civil Service in the world. We pride ourselves on having the finest representatives that any nation could look for. Our greatness in the past has not been built only on Ministers of the Crown: it has been built on the Stratford-Cannings, the Cromers, the Milners, who have had real authority in their posts. I am told—my hon. Friend will tell me whether I am right or not—that the Foreign Office is inundated today with despatches, telegrams, telephone calls. Last year the Minister of State spent about six months in the United States. It would be interesting if the Chancellor of the Exchequer would ask someone in the Foreign Office to give him a list of the number of times the Secretary of State and any junior Minister at the Foreign Office has been absent from this country within the last seven years. It would, perhaps, be rather disappointing if, after each absence, a note were made of exactly how much was achieved.
I suggest that a change has to be made here, and that it has to be made quickly. I believe that the proper place of a Foreign Secretary is behind his desk in the Foreign Office, where people will go to see him, and that only after all the preparations to which the right hon. and learned Member for Montgomery has rather disparagingly referred must the Foreign Secretary be lured away from this country to go to a foreign country to a conference, and there to set the seal on something that has already been decided after the weeks and months of work.
I believe that the proper place for the Prime Minister is behind the largest and best cigar he can get in Downing Street or Chequers. I believe that the place of Ministers of the Crown is the position in which they can advise the Crown, and they cannot advise the Crown from foreign lands. I do urge my right hon. Friend, the Chancellor of the Exchequer, who is as tough a guy as any in this

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House and shows no signs of breaking up himself, to bear what I have said in mind and, if he thinks well, to consider, with his ingenuity and in consultation with his colleagues, whether some way can be found of relieving the all too heavy strain which now falls upon the holder of the office which he is representing today.
5.23 p.m.
Mr. Gordon Walker: The right hon. and gallant Gentleman the Member for Leicester, South-East (Captain Waterhouse) said that the proper place of the Foreign Secretary was behind his desk in the Foreign Office. I do not think I really agree with that, for I think that the Foreign Secretary and other Ministers must move about the world and learn about it. I am sure that the right hon. and gallant Gentleman will agree, however, that, at any rate, the place of the Foreign Secretary is in this House and not in another place, and I hope there is no prospect of the appointment of a Foreign Secretary who does not sit here and who is not answerable to this House.
While I was listening to the right hon. and gallant Gentleman I recognised how very difficult it must be sometimes for the present Government to have a flexible and realistic policy about Egypt, when people who speak with as much authority as the right hon. and gallant Gentleman does, with as much support, take up so adamant a line as he does, with no recognition at all of the real problems involved, such as the problem of how to maintain a base amid a hostile population, how to change this country's base into an international one.
Captain Waterhouse: I would remind the right hon. Gentleman that we have shifted our position enormously in the last seven years. We have evacuated Cairo and Alexandria, and made every sort of concession to the Egyptians. They have not moved at all.
Mr. Gordon Walker: I do not really want to pursue that point. I think it is a very difficult one to discuss in public in the middle of negotiations, and I was just coming to a point where I was in agreement with the right hon. and gallant Gentleman, for he said he did not want the United States to tell anybody what they thought imperialism was. I
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do not want myself to be in a position always to be told by the right hon. and gallant Gentleman what imperialism is either.
The Chancellor of the Exchequer seemed to me to be showing in his new venture into foreign policy the same sort of optimistic complacency we have got used to from him in the field of finance and economics. He used again today a debating trick he has often used before in this House of assuming away the real, essential problem, assuming it out of existence, as if it were not there at all. Then he does not even have to answer it but can go on talking all round the edge of the problem. The truth is, I think, that we are in a much more critical and testing time for the West than the Chancellor of the Exchequer seems to recognise or admit.
The right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) very rightly said that everything is in a state of flux and movement at the moment. The whole situation is extremely fluid, and amongst the things in flux is the very basis of our Atlantic alliance. The whole basis of our Atlantic alliance has suddenly and unexpectedly come into question, and the main reason for that is that suddenly there has been a shift in our favour in world affairs. Suddenly we have moved from the defensive to being on the initiative, and, as is the case in all alliances, success often brings many more problems with it than adversity. Sudden success is very embarrassing to alliances because it suddenly brings into the foreground objectives about which it was very easy to agree between the partners so long as those objectives were in the remote future. They become very embarrassing when they suddenly come right up to the immediate present.
I do not want to go into why the shift has occurred, but I think the fundamental reason has certainly been the strength of the West. That has been the basic, underlying reason. There may have been internal changes in Russia which nobody understands. There has certainly been one factor that I regard as of immense importance, namely, the rising of the workers in Eastern Europe and in Germany. That is a matter of great importance to the general balance of forces in

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the world because this rising, this spontaneous, genuine mass rising of the workers, has indelibly stamped the Russian role in the West—it is a different problem in Asia—as being imperialist, reactionary and oppressive. It has, I think, brought with it a permanent weakening of the Russian position in the West and a permanent corresponding strengthening of the forces of democracy in the West, and I think it has played a very great and important part, and is probably the main factor, in the shift suddenly in our favour.
But, whatever the reason is, there is no doubt that we have moved from the defensive to the initiative, and we are finding it extremely embarrassing because the main objective of the Atlantic alliance has thereby been transferred from the remote future to the immediate present. That objective has been to get ourselves into a position in which we can negotiate from strength. Now we are so much nearer to that position, so much nearer to being able to negotiate from strength that we are faced by the real problem instead of talking of it as something in the distant future.
It is a problem not before faced by N.A.T.O., and it is the problem of how to convince the world that we are genuine in our desire to negotiate. Nobody can tell if Russia is really willing to negotiate or not, but that is really irrelevant to this problem, because either way we still have to convince the world that we are genuinely desirous of negotiating. If we succeed in the talks then there will be a relaxation and disarmament, and so forth. If we fail and the talks break down, and the world finds that we are to blame, the whole moral basis of the Atlantic alliance will be in very great jeopardy. The doubt in the public mind not only in this country—perhaps, less here than in many countries—is about our sincerity when we talk about negotiating from strength. That is why the root, the basis of the Atlantic alliance is in question.
The only way to convince the world that we are genuinely desirous to negotiate is to be genuinely desirous to negotiate. There is no other way of doing it. It is no good accepting negotiations in principle and then raising a whole lot of unacceptable conditions which will make negotiations difficult if not impossible. Of course, we have to take
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the realities of each particular situation into account. We do not live in a Utopia. We have to go to the utmost limit that the realities of every particular problem permit and adapt our policy to facilitate negotiations and not to make them more difficult.
It is by this test that we should judge the work of the Foreign Ministers as to whether they are, to the limit permitted by the realities of the situation, adapting their policies to facilitate negotiation. One can apply this over the whole field of foreign policy, to the Far East and so forth. I should like to apply it to one aspect which I think is the most difficult and important, namely, the question of Germany.
We are all agreed, I think, on both sides of the House that we must go for German unity, the reunification of Germany, because that is the one point upon which it looks possible that we may agree with Russia. The test which world opinion is going to apply is whether we are sincere in wanting this. The world and even Germany is full of people who say that they want German reunification, but who have a hidden fear of it and a hidden desire to keep a division in Germany and rivalry. There are a lot of people who want that.
Any policy which we adopt about German reunification is going to be very widely open to suspicion. I think that the Foreign Ministers in their communiqué have laid themselves open to very justifiable suspicions of this sort. They have put German reunification in the forefront of their proposals for talks with Russia, and they have taken, as a first step, free elections, which is obviously a right and sensible thing to do, but they have done this in a way which really does arouse very great doubts as to whether they really intend this to be a genuine first step towards a settlement with Russia.
I am particularly disturbed—and I hope that the right hon. Gentleman who replies will try to justify this—with the extraordinary emphasis which the communiqué places upon the European Defence Community. The right hon. Gentleman the Chancellor of the Exchequer did the same thing in his speech. The Foreign Ministers put it in the first two effective paragraphs in the communiqué and give it immense

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emphasis by putting it before anything else, and they deal with it at greater length than they deal with other very much important problems in the world.
They raise it to an absolute policy detached from everything else, and so did the Chancellor today. The communiqué makes the extraordinary assertion that E.D.C. is not linked with existing international tensions. I have never seen so extraordinary a statement in so important an international document. It is so far removed from reality that it must be supremely innocent or supremely sinister. I cannot see any other reason. It just is not true. I leave the choice to people to make for themselves. It seems to me that one essential condition if we really want German reunification is to suspend the whole E.D.C. policy while we are entering into these talks with Russia. If we do not suspend the E.D.C. policy, we are not really genuinely wanting talks with Russia.
I think that there is a simple and logical position here. The policy of E.D.C. and the policy of German reunification are really alternative policies at the present moment, incompatible policies. We cannot press for incorporating half of Germany into the West and at the same time press for absorbing the two halves of Germany altogether. It is like trying to use one and the same piece on the international chessboard in two incompatible combinations. This, as "The Times" pointed out this morning, is what the Foreign Ministers communiqué does.
Everybody knows that E.D.C. is bound to come up in talks with Russia, if there are talks with Russia. To exclude the E.D.C. policy as the Foreign Ministers do beforehand, and as the Chancellor did this afternoon, is really to ensure the failure of the talks with Russia and to make it look as if we wanted to ensure the failure of the talks. The Chancellor of the Exchequer argued—and I can see the point—that this policy of E.D.C.—and no doubt the right hon. Gentleman will use this argument when he comes to reply—is part of the policy of keeping up the strength of the West. I am all for keeping up the strength of the West. But this does not depend on E.D.C., it depends on N.A.T.O. E.D.C. is not even there yet. It is significant that there is
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no mention in the communiqué of ratification by France. That omission makes the communiqué very suspect. Without the assurance of French ratification—and this is something which the Ministers must have talked about—all this emphasis on E.D.C. in the communiqué is meaningless.
There are only two explanations of what was done by the Foreign Ministers. One is the desire to help Dr. Adenauer in the German elections, and the other is the desire to destroy the whole of the hope of future successful talks; or possibly both. I do not know, but there may be another explanation. I have tried hard to find one. I cannot find any other explanation than that, and if that is the explanation, or if it seems to the world to be the explanation, then they really will be condemned at the bar of public opinion.
There is one other condition if we are really serious about trying to get German reunification and making it clear that if there is a failure it is not our fault but the fault of the Russians, and that is to leave the maximum scope for manœvre in negotiations on the actual point of German unification when we meet the Russians, and not to lay down too many hard and fast conditions before we even get to the table.
I think that there are limits as to how far we can go in manœvre. I agree with the Chancellor of the Exchequer that we cannot regard Germany as an object of barter or of four-Power decision. The limits to which we can go in negotiations must be determined amongst other things, by the desires of the German people. We cannot just treat them as if they were permanently conquered. We cannot at one and the same time give the lion life and liberty and divide up its skin.
We have to be logical about this. If we want the national unity of Germany, that carries with it, in due course, inevitably, a free foreign policy and armaments. We cannot reunite the German nation without giving it all the attributes that go with nationhood. I agree with the Leader of the Opposition that any idea of neutralisation, however attractive it may seem, is impracticable. It is not enforceable and it would defeat the purpose of settlement with Russia, because if we did neutralise Germany it would be

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a constant source of suspicion and temptation to East and West. It would defeat the purpose of settlement which is to get some sort of agreement between East and West.
I would say that if the neutralisation of Germany is the price that Russia wants for a settlement, then there can be no agreement. Then it would not be we who are to blame. It would be clearly the Russians who were trying to put forward an impossible and self-defeating policy. There is none the less some room for manoeuvre left. I cannot see why there should not be an interval of time between the acceptance of German reunification and the consequences of it, namely a free foreign policy and rearmament. The two are logically connected but they are not simultaneous.
I do not think, however, that there can be a long interval of time, because that would mean getting into all this contradiction of a policy of neutralisation. But if there were a short interval of this sort it would help, I think, very greatly to get a settlement of our problems with Russia on this German matter. It looks as if it might be accepted by Russia—one cannot be sure—but I am certain it would be accepted by Germany. It would be a price that Germany would be prepared to pay for reunion, for they want reunion very much, more than anything else and would be prepared to pay a price for it. Moreover, as every German knows, the problems that will ensue after reunion will be immensely difficult, such as getting the two marks balanced and in rearranging the flow of population. These immense difficulties will tax the German Government for a considerable time.
There is the final advantage that if there were an interval of this sort before Germany re-armed and had a completely free foreign policy, it would give a powerful motive to the rest of the world to use that interval to come to a full settlement, with the disarmament which would follow. The level to which Germany would arm, if rearmament should begin, would be determined by the level of armaments all round. That would necessarily be the case in the end because we should have no control.
Mr. Ellis Smith: Not necessarily, if an aggressive policy was adopted.
Mr. Gordon Walker: Only the Germans could determine their own level of rearmament, but they would be very much influenced in fixing their own level of armaments by the level of armaments all round them. Therefore, the lower the level of armaments all round them, the more likely it is that the level of German rearmament would be within the limits of an international agreement about rearmament. There is no hint of any of this sort of flexibility or freedom to manoeuvre in the communiqué. As I read it—it is a little obscure—"free Germany" and "free German government" seem to preclude any manoeuvre of this sort.
Therefore, the test I apply to Western Germany fills me with great doubts about the communiqué of the Foreign Ministers. I agree with the Leader of the Opposition that they have been standing pat too much and looking too much into the past. When we read the communiqué, the Foreign Ministers seem to be lost and uncomfortable in the new scenery of the international situation; they seem as if they are hankering after the relative simplicities of the old unbudging cold war. They have become accustomed to the gestures and the policies suited to it. It looks as if they are emerging into a new world where the whole landscape is different and they have not adapted themselves to it at all.
If that is so, or if it appears to world conscience and public opinion to be so, it will destroy—this is why I am disturbed about it; it is not just a question of political, diplomatic manoeuvre—the whole moral basis of our Atlantic alliance. Whether there are talks or not, and whether the talks succeed or not, if world opinion once begins to think that we are not genuine in wanting a settlement, once it is doubted that all our strength and all our armaments have been designed to get a settlement, then the whole basis of our Western alliance will be in question and the moral support for it in the world will be lost. This is the greatest disservice that one could do to the cause of democracy.
5.45 p.m.
Mr. F. M. Bennett: I have been following as carefully as possible the speech of the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker), but I must confess that I did not hear a great deal which could not be reconciled within the framework of the Government's proposals.

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There were, however, one or two contradictions in the right hon. Gentleman's speech. He advanced the quite reasonable theory that E.D.C., or its progress, would have to be suspended until the talks took place and proved successful or otherwise. A few minutes later he said that the one remaining obstacle to the coming into effect of the E.D.C. was French ratification and that there was no chance at all—I agree with him—of French ratification until the talks take place. So his aim has been accomplished in advance.
Mr. Gordon Walker: My doubts arose from the fact that so much emphasis was given to it in the communiqué. The Foreign Ministers themselves must have realised that it was unreasonable. There must be some explanation why they gave it so much emphasis.
Mr. Bennett: Naturally, the Western Ministers have never concealed their aim to realise E.D.C. as soon as possible. But we are talking about what it is in the Note which has gone to Russia and the practical state of affairs. The right hon. Gentleman agrees with me that there is no immediate prospect of the French ratifying the E.D.C. while the talks are outstanding.
Earlier in his speech, the right hon. Gentleman also asked if we were quite sure that we really wanted German reunion and said too that many people in Germany did not want it although they paid lip service to it. A little later he said that the German people want reunion more than anything else. Incidentally I recently paid a visit to Germany and I incline to the latter view. The two are not easily correlated.
Mr. Gordon Walker: I should have said in the first case that I was talking about a certain number of political leaders. I agree that the German people want reunion.
Mr. Bennett: I thought, too, the Leader of the Opposition was a little ungenerous when he claimed that the Opposition had been extremely patient about the absence over many weeks of the Foreign Secretary. I had not the good fortune to be a Member of the House at the time, but I remember when the whole country had to be patient for a much longer period during the absence from
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any effective control of the Foreign Office of the late Mr. Ernest Bevin. We do not stand alone in that respect, and it seemed a little ungenerous to make that point.
As a young man entering politics, one is taught that all things are possible in politics. However, when, during the last General Election, I and many others had to fight under the slur of being led by "Winston the Warmonger," I did not appreciate that within such a very short time I and my hon. Friends would be challenged as the betrayers of "Winston the Archdisciple of Peace." A marked change has certainly taken place in the intervening period in the Labour Party's views upon the Prime Minister.
I do not think that anyone or any case has been betrayed. When the Prime Minister made his announcement in the House on 11th May, all he said was that he wished to have three-Power talks with a view to all parties later agreeing to four-Power talks taking place at the highest level. It was always in his mind, as it would have to be, that if there were to be four-Power talks the agreement of everybody would have to be obtained, and, therefore, he could not give in advance a pledge that each and every Power would agree to such a course when it was put forward. However, in his absence the preliminary three-Power talks have taken place, although, owing to the illness of the Prime Minister, at the Foreign Secretary level. They have not precluded four-Power talks at the highest level in the future; they have merely set as an essential pre-condition that there should be another preliminary talk, four-Power this time, at the Foreign Secretary level to test whether there was real sincerity behind the recent apparent change of heart or mind by Russia.
I cannot see any harm in that, because one does not need to be either pro-Soviet or anti-Soviet to know that there are two possible alternatives before us. It may be that Russia has had a genuine change of heart and now wishes to settle down with the Western world. On the other hand, it is no good our blinking our eyes to the fact that it may be that the overtures which have been made are part of the Communist Russian design, at the highest level there, to prevent the growing unity and strength of the Western world and to separate us from our allies That may not be the right prospect but

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it is something that we have to take into account. Why should we not, before proceeding with four-Power talks, attempt to find out whether or not the Russians are sincere in their offers?
What are the best tests that we can apply without being unreasonable in our demands? There is, above all, Austria. As the Chancellor of the Exchequer reminded us, during the war the Russians themselves fully agreed to the proposition that one of the first post-war aims of the Allies should be to restore a free and independent Austria in a peace treaty. All these years have gone by and it has not taken place. Is it unreasonable for us to say, in effect, to the Russians, "If you are sincere and you have had a change of heart, we want to find out first whether you will do what you promised to do 10 years ago."
If they do not want to do it, what are the reasons? I can imagine two. First, that they might want to keep their troops in central Europe with a view to using them strategically for a hypothetical future war of aggression, because militarily it is convenient for them to have a forward base in Central Europe. Second, and it may be both, not an alternative, because they want to maintain lines of communication with their satellite States so that they can move troops freely into Czechoslovakia, Poland or Eastern Germany should that become necessary. If, however, they have had a change of heart, why should they want to do that? So whichever way we look at it, there is no reason why the Russians should not give up all claims to remain in Austria and be willing to conclude the peace treaty that they promised in 1943.
Turning to Germany, for years past the Russians have been claiming that they want to back the re-union of Western and Eastern Germany and that they want elections throughout the free zone so that a free German Government can be elected which will be in a position to decide its own future. What are we asking them to do? Nothing more than they were saying was their desire during the period when first the late Ernest Bevin was Foreign Secretary and afterwards the right hon. Member for Lewisham, South (Mr. H. Morrison); that is to say, that we should not proceed with the integration of Western Germany alone into our defence system but should give the whole
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of Germany freedom to decide its future by having free elections.
Again that is all we are asking them to do as a proof of their sincerity. If all they have been saying over these past years is a true statement of policy, they should not regard either an Austrian or German settlement as a pre-condition of other points being raised, but should welcome both because both are what they have said in the past is their policy. We have therefore not laid down any horrible conditions which the Russians are not in a position to accept. As far as I can see, we have simply said that we want some proof of their sincerity in the widest field before we go on to the other matters outstanding between us. If they are prepared to give us that proof of sincerity, the communiqué and the Note make it perfectly clear that there are no inhibitions on our proceeding to discuss any other outstanding matters.
Meanwhile it is clear that disarmament is not for a moment capable of any practicable or favourable or even positive discussion as long as the outstanding matters of Austria and Germany are not settled, because as long as Russian troops are where they are in Germany, as long as they control the satellite States in the way they do now, and as long as the) keep a military grip on Vienna, to suggest that we can leave those things on one side as technicalities, as the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) was claiming we could do, and proceed to talk of disarmament, that is completely unreal.
In his opening speech the right hon. Gentleman the Leader of the Opposition seemed to think that we could not claim any of these things unless we were prepared to offer some quid pro quo. If it is impossible to go ahead with disarmament in the present state of tension, what quid pro quo have we left in Europe? If we are not to suffer an appalling moral reverse, we cannot reach any settlement by which we accept as permanent the boundaries of the present cold war and keep the satellite peoples permanently under Russian domination. In that respect, during the last foreign affairs debate I welcomed particularly the speech of the hon. Member for East Ham, North (Mr. Daines) who made much the same point as I am making, though much more eloquently. He said, in effect, that we

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should not bargain for security in this country at the expense of the Eastern satellites by appearing to accept a status quo which would be immoral. Moreover, even if we were prepared to be immoral and to accept that, it would be impracticable, because, whatever we might accept as the status quo, recent riots in Eastern Germany and elsewhere have made it clear that the people there are not prepared to do so. Therefore, any such pact would only be illusory because the people themselves would do their best to destroy it.
What therefore the Government have done is to follow the same lines of policy as the present Opposition were seeking to do after the war, that is, to come to a settlement with Soviet Russia but to have some prior reason for believing in the sincerity of their offers before proceeding to further interminable conferences which all too often in the past have been used simply for a exchange of abuse.
Now, finally, I should like to foresee what I feel the Government ought to do if these talks fail. I am as hopeful as anyone that this is a genuine change of heart on the part of the Russians, and that therefore they will not object to coming into these talks and clearing up the outstanding matters of Austria and Germany before proceeding with others. However we have to face the possibility of the failure of the talks, and in that case I urge the Government not to delay the integration of Western security any longer by permitting France to hold up all our plans by delaying E.D.C.
E.D.C. is, after all, nothing more or less than the Pleven Plan, a French plan, under another guise. It is surely unreasonable of the French to have conceived and developed the plan under one name and then to be almost the only power which prevents its ratification under another having persuaded the others originally to back it. Therefore, if these talks fail, I ask the Government to say firmly to the French that if they do not like their own Pleven Plan in the form of E.D.C. we cannot tolerate any longer the delay of the integration of Western security, and we should put forward some other suggestion.
That suggestion to my mind should be to say that we wish to bring as much of
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Germany as wishes to join us within the N.A.T.O. organisation. When I was in France a few weeks ago I put this point of view to a number of Frenchmen. I thought I would get violently attacked immediately but, instead. I found an interesting point of view. To my surprise they rather welcomed the suggestion and said that, after reflection, they preferred the idea of Western Germany going into N.A.T.O. than into E.D.C. They feared that if they were closely integrated in E.D.C. Germany, being the stronger Power, sooner or later and by one manoeuvre or another, would drag France into a drive eastwards to recover the lost provinces of Germany. Within N.A.T.O., being a looser organisation, the same danger would not arise since it would be much more difficult for Germany to drag her partners into a war to recover her Eastern provinces.
I do not know whether that was an isolated French view. Whether it was or not, we have a right in this country, and the Americans have a right, to demand that no longer shall our common security be held up by the objections of one country to the ratification of a plan that they themselves conceived and suggested. Therefore, I ask the Government to take action along the lines I have suggested if the worst comes to the worst and the proposed four-Power talks fail.
6.5 p.m.
Mr. Harold Davies: I should like to point out certain unrealities in the speech of the hon. Member for Reading. North (Mt. F. M. BENNETT). When he asks France to face realities, I ask him to refer to the communiqué, on page 4 of which there is this kind of verbiage:
"Convinced that no effort should be spared to strengthen European unity within the Atlantic Community, the three Ministers have noted that the Coal and Steel Community, the result of a French initiative, is now operating successfully."
Does the hon. Member accept the implication of the European Coal and Steel Community? We are a country which is having to import coal, and the French, with what the hon. Member called their flim-flam plan, and with what is to be a Green Belt plan for agriculture, have their plan for coal. If the hon. Member wants the French to do something for European defence, how far are the Government and hon. and right hon. Gentlemen opposite prepared to throw in their

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weight with the European Coal and Steel Community for a start?
Mr. F. M. Bennett: I had not intended to interrupt but the hon. Member has asked me a question. I cannot develop that whole argument now but would be quite prepared to do so at another time. It appears to be quite unrelated to the main theme of my speech. Although I was not in the House at the time, I was in the Gallery, and I do not remember any marked enthusiasm among hon. Members on the opposite side for joining in the Schuman Plan when it was a practical proposition.
Mr. Davies: I agree; we are not enthusiastic.
This country, and the Government and Members opposite, are suffering under certain illusions. We are no longer in the Victorian era, when our forces were all over the world and we were certainly a world power. First and foremost, we are talking of virile foreign policies at a time when we have to import coal, and at a time when the Government have taken £539 million worth of goods which were, so to speak, on the shelves of the British economic pantry. The present Government imported £539 million fewer goods by using stocks that the Labour Government had piled up and put on the pantry shelf of Britain's stockpile. We are—I include hon. Members opposite—at the same time talking about keeping up our armaments so that we reach the highest point of firing power when we have the lowest stock of raw materials and food to maintain that firing power.
I want the country to face the realities of Britain's position before we talk so vigorously about telling the French to do something about their position. We are getting less production per year than when the Labour Government were in power. That is nothing to smile about. It is one of the tragedies of Britain's present system. I happened to be the only Member of Parliament who suggested some years ago to my own party when in Government that we would have to import coal.
We had a terrific hue and cry from the party opposite when we had to import coal because of the taking over of the coal mines and because of the antiquated type of mining that had gone on under private enterprise and had allowed the
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mines to deteriorate. Now, the Government have to face this reality. If they are not prepared to accept Russia's approach, they are leading themselves into a position that will seriously undermine the only type of leadership, the moral and spiritual leadership, that Britain can give to the world.
We were told that we must strengthen our resources until we were level with the strength of the U.S.S.R. Apparently we have reached that pitch. Now, we are told that we can wait, because disintegration is beginning to take place in the Russian Empire and among its satellites. I warn the House and I warn anybody who believes that disintegration is taking place that that might be one of the biggest mistakes of people's lives, If anyone feels that the wise thing now is to undertake psychological propaganda and a war of words to get revolts within the U.S.S.R. and within, say, China or South-East Europe, it may be that we are wasting our words on the desert air and the propaganda will work backwards.
That happened in the First World War. The Germans went in with their huge cartoons with British Tommies caricatured as vile looking men holding a poor little Persian to the mouth of a gun. The second picture was the vile Tommies whipping the poor little Persian, and the third picture showed them blowing him to death. Under the first picture the Germans said, "This is what the British will do if they come into Persia." A couple of Persians, looking at it, said, "If this is what the British will do, we had better not annoy them." In other words, the propaganda worked backwards. Britain should be trying to give leadership to the world, and if at this juncture we do not, in the words of one of my hon. Friends, show that those who genuinely want peace are seeking to restore liberty, hope and human dignity, we lose the moral leadership of the world.
I have two other points to mention, one of which is the four-Power Conference. It is ridiculous to talk in terms simply of a four-Power Conference. Asia is a reality; it is there. A four-Power Conference discussing Asia, with the presence merely of Russia, America, France and Britain, would be useless without drawing into the conference the one country in Asia which has the dignity and the position to give a certain amount of leadership—namely, India.

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India should have been invited to help at the conference and to guide us in the problem of solving the terrific national upsurges that are taking place all over Asia and South-East Asia. I am not one of those who went up and down the country hurling personal epithets at the present Prime Minister. [An HON. MEMBER "Who did?"] Ninety-nine per cent. of it was propaganda that worked backwards, like the Persian propaganda. It was thought that it would be a point against the Labour Party made by the national Press, but to their horror the propaganda worked a little bit backwards—it backfired. It is of paramount importance to bring into these top level conferences the experience and judgment of India.
I do not subscribe to the theory that in the first analysis the revolutions in Asia and South-East Asia have anything to do with Communism. I am convinced that what happened in Malaya had, in the beginning, nothing to do with Communism, because I was there when it happened. [Laughter.]
Mr. Mikardo: We know now.
Mr. Davies: Neither has the position in French Indo-China anything to do with Communism. Anybody who looks at the story of the national struggle of French Indo-China is misnaming that struggle by calling it a Communist revolution. It is time that the white races realised that Asia and South-East Asia refuse any longer to stand on the sidelines of European imperialism. Consequently, I regret that the Chancellor of the Exchequer has not informed the House more deeply what he means by extending material aid to French Indo-China.
Do the Government mean that if we get a Korean truce there will now be an opportunity of extending aid to France and intensifying the war in French Indo-China? We should know that, because my experience with most French people—although I admit it is dangerous to generalise—is that the majority of them are sick and tired of the war in French Indo-China, which is sucking away the lifeblood of that great civilised nation. By using the phrase, which was previously used by the Prime Minister, that we are prepared to be prompt and resolute in action and saying that we would extend material aid, does the British
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Chancellor of the Exchequer mean that, without any further discussions, once the Korean war is finished, there will be an extension and intensification of the war in French Indo-China?
I think the House should have a categorical answer to that question. I have not forgotten that one N.A.T.O. conference stated that it was interested in the subject. Are we to creep slowly into the position, because of responsibility to N.A.T.O., in which British troops will be put into French Indo-China? The mass of the people here, however they may vote in the polling booths, are also sick and tired of their boys being sent all over the world to fight battles which they know in their hearts have nothing to do with the maintenance of liberty.
What is the good of pretending that we are defending liberty all over the world and that all these people are Communists? While we are sitting comfortably in this British House of Commons, Korean men and women, on both sides, are being turned into charcoal by the napalm bomb. We have become indifferent to the facts of war, but at one time in this House, John Bright was courageous enough to resign from office over the Egyptian situation. Today we seem to accept as inevitable the mass intensification of war and to believe this dream that we are protecting liberty.
All the time we maintain these wars we are searching people's houses and calling people Communists if they happen to have a slightly different point of view. The result is that this sort of thing is creeping more and more into British national life and creative thought and the decent element of mankind is thereby eliminated. It is no good pretending as someone did with a little chop logic in the last foreign affairs debate—ostentatiously reading from the 1936 Treaty with Egypt running through the phraseology which was dead and dry as dust—and dealing with words when the hon. Member should have been dealing with human beings and then saying that we are entitled to keep 10,000 men in Egypt. I believe it is possible to keep our technicians there. The Egyptians would agree, provided that the orders went through an Egyptian to our technicians. We seem to be giving very little away.

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We all hope to see the Foreign Secretary back in the House very soon. I once asked him if he would give encouragement to an oil conference in the Middle East; Syria, for instance, does not want American aid. I believe that Britain should give a lead to the Arab world. Kuwait has more income per population than any country in the world because of the natural luck of having oil on that island. I believe the Arab world could form its own Arab aid or a kind of Schuman Plan for the Arab world from the royalties from Kuwait. In addition to the progress of the Israeli world, the Arabs, working together, might find the formula of mutual aid in the Middle East.
It is no laughing matter when we think that after about 50 years Persia is still a beggar sitting on an empty petrol tin. Apart from about 70,000 people in Abadan and its environs, who have a slightly higher standard of life, the mass of Persian people have received very little benefit from the rich oil deposits there. The truth of the oil situation is clear. An American oil well can produce 12 barrels a day, whereas a world oil well can, on the average, produce 20 barrels a day; but a Middle East oil well can produce 5,000 barrels a day. That is why we are in Egypt and the Suez Canal and why America is interested.
Could not the House of Commons take some initiative today instead of speaking like bureaucrats? Most of the speeches of hon. Member's opposite have been dished out of the bag of some Foreign Office official who looks on the Middle East as they did in the days of dear old Queen Victoria. Humanity is on the move and it is time the Government were able to distinguish between facts they are able to change and facts they cannot change. They should have the courage to change the facts they are able to change. One fact they could change is the entire atmosphere in the Suez Canal area. They would do so if they were prepared to make concessions. What concession is there in the Washington communiqué? The Russians are being asked to negotiate, but we say we are not going to move an inch from A, B, C and D. That is not the spirit of negotiation; it is an ultimatum.
We came to the House today expecting the Chancellor of the Exchequer, who is
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the bright boy of the Tory Party, to give a dynamic lead to the country. Instead, we got a dusty Foreign Office brief and he seemed afraid that he would upset the Prime Minister. He is afraid to upset the non-Butlerites. Here we see a party split from top to bottom, some supporting the Prime Minister, some supporting the new bright Butlerite Socialist approach and some not prepared to give a lead in world affairs. In other words, we see a party afraid to go into a General Election. [HON. MEMBERS: "Oh."] Here we see a party afraid to go into a General Election, but leading the country gradually into a crisis of international affairs and the greatest crisis in economic affairs we have ever known. They talk politics and foreign policy as if they were living in the 19th century.
This Government which has consumed raw materials instead of exporting them, a Government which has had to import coal and a Government which, when productivity is going down continuously, still talks of armaments and keeping divisions all over the world, should not only be out of office, but should be impeached.
6.20 p.m.
Mr. Derek Walker-Smith: The hon. Member for Leek (Mr. Harold Davies) always interests the House, sometimes instructs it and not infrequently diverts it, and the speech to which we have listened has succeeded in all those three respects. I must say, however, that there is no split in the party on this side of the House. Unfortunately, from his point of view, it is the other way round, although I am not so sure in the matter of foreign policy which is the more dangerous, the split on the other side of the House or the efforts being made by the more responsible Members to-paper over the cracks.
There are one or two points made by the hon. Member to which I will refer in the course of my argument, but I want to confine what I have to say to what the Chancellor called the main theme. I start by saying that I welcome the Washington communiqué and that I welcome the proposal to have a conference with a specific agenda. I welcome, too, the definition of the dominant purpose of the three Governments which is contained

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on page 3 of the communiqué, where it is defined as
"to seek solutions fulfilling the common hope of their governments and peoples for peace, freedom and justice."
There are to some extent general and abstract terms; but I am convinced that only a peace based on justice and freedom is either morally worth while or strategically sensible. I believe, too, that only such a peace has the stuff of permanence in this world where, though the lamps of liberty may sometimes burn low, fortunately they are never wholly extinguished.
The proposal for a Foreign Ministers' conference has been denounced by right hon. and hon. Gentlemen opposite as a false step. I do not think that that is in any sense an accurate description, for I believe that this is a step in the right direction—not the only step and not necessarily a final step, but, nevertheless, a step in the right direction; and there is certainly nothing in this conference to prevent the later holding of a high level conference.
Mr. Mikardo: Not to prevent, but to impede.
Mr. Walker-Smith: Neither to prevent nor impede. To delay, possibly, but of course the delay in holding such a conference would not necessarily be a disadvantage if by the time it comes to be held it is held with a better prospect of success. I do not know whether the hon. Member adds a knowledge of history to his other versatility, but he will remember that the history of high level conferences insufficiently prepared has not always been a happy one. He will recall the meeting on the Field of the Cloth of Gold and the Treaty of Tilsit, and, more recently, the Ribbentrop-Molotov Pact, all of which were high level conferences which failed to achieve in the long run what was expected of them.
It is the timing of high level conferences, even more than of other international conferences, which is of vital importance. It seems to me that right hon. and hon. Members opposite have rather carefully skirted round one intervening circumstance which has affected the timing of a high level conference since the Prime Minister made his speech on 11th May. That, of course, is the
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eclipse of Beria from the Soviet hierarchy, which has revealed the deep and fissiparous tendencies within that hierarchy.
Mr. A. J. Irvine: Is the hon. Member carrying his argument to the length of saying that he is glad it has been found impossible to hold the conference in Bermuda?
Mr. Walker-Smith: No, Sir. Only the hon. Member could possibly have drawn such an inference from what I said. What I said, quite specifically, was that there was in this conference no impediment to a further conference and that it might be that the final conference would turn out to be better for having had this one. I then proceeded to discuss the intervening circumstance which may have some effect upon the timing of the conference—that is to say, the dismissal of Beria.
I notice that in the Motion of certain right hon. and hon. Gentlemen normally associated with the right hon. Member for Ebbw Vale (Mr. Bevan), put down just over a fortnight ago, they press for an early conference with the Soviet leaders—in the plural. There is an overwhelming presumption that, at the time, what they were pressing for was a conference with Malenkov and Beria, but at the time they put the Motion down the position was that Malenkov had already denounced Beria as a public enemy of Russia.
Mr. Mikardo: As one who signed that Motion perhaps I may be allowed to say that the inference behind it was a very simple one. It is not for us to decide who are the leaders of Russia any more than it is for them to decide who are the leaders here. If we call for a conference between the leaders of countries we mean whoever are the leaders at the time the conference takes place. Neither here nor in Russia are political leaders permanent.
Mr. Walker-Smith: Again, it is a question of timing. It is obvious that the hon. Member and his colleagues put down this Motion in misunderstanding of what the position really was, which is another illustration of the ignorance of the extreme left of conditions and views in Russia which they purport to interpret with such exceptional authority.
Mr. Mikardo: Did the hon. Member know?
Mr. Walker-Smith: I certainly did not know, but then I did not put down a Motion in these terms and I do not pose as interpreting with particular authority what happens in Russia. I want to put this question, because it has not been answered satisfactorily as yet: apart from exploration, what do the Opposition expect would come by way of settlement from an immediate high level conference?
Mr. Mikardo: Ask the Prime Minister. It was his idea.
Mr. Walker-Smith: I am asking what the Opposition expect and I have taken the precaution, the hon. Member will be glad to know, of consulting this week's "Tribune" to see what help I could get from that. It was not of very great assistance because all the "Tribune" says is that it will give a chance to end the division of Germany and a chance to seek a new settlement of Europe. As far as the first point is concerned, that, of course, is exactly the subject matter of the proposed Foreign Ministers' conference in the autumn.
As far as the second point is concerned, I am still awaiting a more precise definition from the Opposition as to exactly what conditions they would consider desirable as the terms of a general settlement. Would they, for example, consider the recognition of the status quo as the suitable basis for a settlement? Would they regard the permanence of the Iron Curtain frontiers as a suitable basis for a settlement? If not, what is the suitable basis which they suggest? I hope they do not take the view that the Iron Curtain frontiers form a suitable basis, because they could hardly regard that as a suitable outcome of six years of struggle for liberty or as a suitable signpost for the future of mankind.
The House is entitled to know what sort of settlement they have in mind. We knew what it was between 1945 and 1950. For example, Mr. Bevin could at any time have had a settlement on the basis of capitulation, but to his eternal honour that is exactly what he was not prepared to accept, although that was not for lack of urging from the extreme Left of his own party.
Mr. G. R. Mitchison: I wonder whether the hon. Gentleman has completely given up the Prime Minister's
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idea of 11th May, when the Prime Minister said:
"It might well be that no hard-faced agreements would be reached. … At the worst the participants in the meeting would have established more intimate contacts. At the best we might have a generation of peace."—[OFFICIAL REPORT, 11th May, 1953; Vol. 515, c. 901–2.]
For that reason the Prime Minister argued for no such rigid agenda as appears in this White Paper. What has happened to all that?
Mr. Walker-Smith: It has been made quite clear that the Prime Minister still took the view of the ultimate settlement which he took before. What I am seeking to inquire, and the House is entitled to know, is what is the basis of settlement proposed by the Opposition? The time will come when the Leader of the Opposition may have to decide whether Bevinism can continue after Mr. Bevin has gone, or whether the foreign policy of the Opposition is now as prescribed by the "Keep Left" group.
I would suppose that the requirements of a general and ultimate settlement are these. First, a thawing of the cold war. Secondly, the relaxation of the Soviet grip on the satellites. Thirdly, a general reciprocal limitation of armaments. The third of those matters was referred to by the Leader of the Opposition in his speech. There is this apparent difficulty about having an early general settlement, including a settlement of the question of the limitation of armaments with the Soviet, that in this atomic age, limitation of armaments obviously requires international inspection and supervision. How can we hope to get that from a country which has so very rigid a control of movement within its own frontiers? That ultimate settlement, I would think, can only follow on some relaxation of the Iron Curtain.
The expectation of a speedy general settlement going beyond the specific matters proposed to be dealt with rests on the basic assumption that there has been a fundamental change of policy on the part of the Soviet Union. Some hon. Members appear to be able to accept that assumption more easily than I think it right to do. As we know, there is some evidence in this matter. There is evidence of some domestic easement on the

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part of the Soviet Union. They cut consumer prices; but then, of course, consumer prices were high. They mitigated the severity of the penal code, but the penal code was harsh. They introduced some easement into the position of satellite countries, but the good effect of that was quickly mitigated by the harshness with which the rising in Berlin was suppressed—a course of action which very properly evoked a motion of protest from some hon. Members opposite, to which I was proud to add my name.
So we have this vital question of whether it is a change of policy or merely a change of tactics on the part of the Soviet Union. In considering the answer to that question, we have to look not only at the evidence of these matters to which I have referred, but also to the official Communist doctrine—or at any rate Stalinist doctrine—that the strategic objective must remain unaffected, whereas tactical adjustments, and even temporary withdrawals, are necessary and permissible in pursuit of it. Further, the "Pravda" editorial dealing with the dismissal of Beria did identify him as a capitalist agent when denouncing him after his dismissal.
I think that on all the evidence it is wrong to make any quick assumption as to what is the answer to this vital question. That does not in any way mean that the project of a high-level conference is wrong or unwise, because it would serve a useful purpose as a medium of exploration and as a forum where the general basic requirements of an ultimate general settlement could be prescribed and discussed. But to take the vital step from exploration to settlement it is necessary that there is a bona fide change of policy on the part of the Soviet Union.
Right hon. and hon. Gentlemen opposite seek to say that the gulf is a gulf between a high-level conference and a Foreign Minister's conference. I do not agree. I think the gulf is rather between essay and achievement, or more precisely, between exploration and settlement; and that if a gulf which can be bridged only by the action of the Soviet Government. I think it is clear that the Foreign Ministers' Conference will provide early evidence of how far that gulf is likely to be bridged, more particularly because the
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two subjects on the agenda are those which a high-level conference must instantly have come to as soon as they sought to progress from exploration to settlement.
The first of these subjects, the Austrian Treaty, is a problem which, as my hon. Friend the Member for Reading, North (Mr. F. M. Bennett) rightly said, puts to the test the bona fides of the Russian change of intention, if change of intention there be. The only justification for delaying that Treaty is the fact that the presence of Russian troops, permissible in present circumstances until the signing of the Treaty, enables pressure to be maintained on Hungary and Roumania. Therefore, it is a splendid chance to demonstrate that the old doctrine of power politics—the Stalinist doctrine—does not apply, by making haste to sign the Austrian Treaty.
The German question is, of course, a good deal more difficult. The solution of free elections and an all-German Government, with a choice of international association, is not ideal, because of the risk involved. But it is the only apparent solution that I, at any rate, can see. The Potsdam idea of a divided Germany is dead. The right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) was clear and eloquent on that subject. The idea of a united but neutralised Germany is only a degree less practicable, and is dangerous alike to Germany and the Western Powers. We do not know whether Russia will still want that since the death of Stalin. We know that they did before. The Foreign Secretary, in a debate in the House in November, 1951, said:
"The Russians would want it.…There is nothing in the world they would like better than a disarmed vacuum in the centre of Europe. That is just one part that a country like Germany can never play."—[OFFICIAI REPORT, 20th November, 1951; Vol. 494, c. 347.]
I think, therefore, that the solution proposed is the only practicable solution although it involves the terrible risk of Germany moving into the Soviet bloc.
In spite of all the historic and economic considerations put forward by my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) in an excellent maiden speech, I still hope and believe that the risk is very small—or at any rate, is small.

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On the other side we have the splendid progress made by the Federal German Republic under the Government of Dr. Adenauer. We have the contrast there between East and West Germany, and the chilling experience of Communist administration in practice in East Germany. Even were there an absorption of Germany into the Soviet bloc it would be only temporary. I think that the experience of 1939 would be repeated; there would first be competitive armament between the two countries and then quite possibly a conflict, which would be to the great detriment not only of the peoples of those countries, but the world as a whole.
I feel that in the long term it is better not only for the peoples of Germany and the Western World but for the people of Russia that Germany should be attracted rather to the Western Powers, because they would act as a brake on aggressive intentions. Surely, not even the most fevered Communist imagination could regard Great Britain or France at the present day as a potentially aggressive Power? I therefore believe that this is the outcome which will be best, and that our Government is charged with the duty of doing all that it properly may do to see that it comes about. They must take steps, also, to guard against the odious possibility that the Soviet Union may seek to attract a reunited Germany by the bribe of non-German territory.
I want to come now to the question of what Russia would get from these talks. The Leader of the Opposition rather seemed to go on the basis that, in such a settlement or in such talks, there must be a quid pro quo for each concession. I do not believe that a settlement can be arrived at on that basis of arithmetical computation. Not only is it incompatible with the requirements for a general settlement, but it is, in fact, illogical in view of events since 1945. After all, after 1945, Soviet Russia pushed her dominion eastwards and ended with vastly inflated territories.
Mr. Emrys Hughes: We know that.
Mr. Walker-Smith: Be that as it may, clearly Russia cannot be given a quid pro quo for every retreat from a position which she should not have assumed. To accept that principle would involve accepting the propriety of her post-war
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conduct, which, with great respect to the hon. Gentleman, we did not approve. It is obviously quite contrary to the suggestion which we are asked to believe that there has been a change of heart and policy on the part of Russia which calls for a new approach—to say, at the same time, that there must be a precise quid pro quo for every concession which they make in retreating from the Stalinist position which they say now should not obtain.
In any event, future concessions must have some regard to past actions, and, because of that, it is quite true that the appearance of concessions will be greater on the Russian side if there is to be any satisfactory settlement. There is nothing to wonder about in that, because it merely parallels the extent of the advance made by them in the post-war years. That is not to say that there will not be a very real gain for Russia if this thing goes through, because they can gain by agreement what they cannot get by individual action, and that is security.
Here, I think, is the crux of the whole matter. Security of what? The Western Powers are not in a position to underwrite Russian security based upon the Iron Curtain frontiers as they are today, and this is made quite clear in the communiqué, which says of the three Governments:
"The same spirit inspires their desire to see true liberty restored in the countries of Eastern Europe."
The policy of the Western Powers is ultimately aimed at self-determination for these peoples. If, on the other hand, the Soviet Union means security within their 1939 frontiers, they can have something which should be of inestimable value to them.
The Leader of the Opposition posed the question whether Russia had now arrived at the point of realising that she would do better to cultivate her own resources and relax her grip on the satellites. I think there is no doubt that, even from their own point of view, in the long term they would be much better advised so to do. I think that, in the long term, a fair deal for the satellites now would benefit future Russian security just as would acceptance of a right solution of the German problem.
Therefore, in summary, the position as I see it is that we are in a position now

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to make immediate progress with the Austrian Treaty and the German problem in the Foreign Ministers' conference in the autumn. Thereafter, we should seek such wider progress on the subject of the satellite countries as seems possible from the Russian reaction in the Foreign Ministers' conference. Beyond that, again, lies the wider question of the reciprocal limitation of armaments, which seems to me to involve a greater liberalisation of the domestic situation in Russia than we have arrived at. It is, therefore, to some extent speculative to discuss that in any detail now.
I ended a speech on the international situation in December, 1950, by saying that, in my view, two things were necessary for an improvement in the situation. The first was more liberal statesmanship behind the Iron Curtain, and the second was more effective statesmanship by the Western Powers. So far as the more liberal statesmanship behind the Iron Curtain is concerned, we have had some evidence, with which I have dealt; but we still await much more positive signs before we can move on to the question of the limitation of armaments, which is the basis of any general and ultimate agreement. So far as the statesmanship of the Western Powers is concerned, I think that my right hon. Friends have earned the confidence and the congratulations of the House and the country by what they are trying to do in that respect.
6.47 p.m.
Mr. W. T. Proctor: The world situation changes very rapidly, but not as rapidly as the policy of the Tory Party. We have just listened to a speech which is a complete repudiation of the policy put forward by the Prime Minister. The hon. Member for Hertford (Mr. Walker-Smith) has not been content to put forward illustrations from the present time, but has had to take illustrations from history to show that top level conferences never succeeded; and he instanced the Ribbentrop-Molotov conference as one that did not succeed. For my part, when it took place, and since then, I thought it was one of the most ghastly successes in the history of the world.
Mr. Walker-Smith: The hon. Gentleman must try to get this right. I threw out, in answer to the hon. Member for
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Reading, South (Mr. Mikardo), certain historical illustrations of high level conferences that had not succeeded, and which had not, perhaps, been very well prepared for. I did not suggest at any time that high level conferences never succeed. I certainly made it quite clear, in answer to the hon. Member for Edge Hill (Mr. Irvine), that I did not at all deviate from the suggestion of the Prime Minister. I said that the suggestion was a good thing, but that the timing of it was obviously affected since then by the question of the dismissal of Beria, apart from anything else.
Mr. Proctor: The hon. Gentleman expresses with very great clarity the thoughts that arise in the Tory mind, and, when he takes such a long time to answer an interjection, it shows that he is in great difficulties. His very answer clearly showed that the suggestion, which went right through his speech, was that top level conferences did not succeed, and the only suggestion he made about the proposed conference was that we, the Opposition, should say what we hoped to get out of it. What was clearly in his mind was his idea that high level conferences could not be a success, thus abandoning the proposal of his own Prime Minister.
I shall take a risk and say what I hope to get out of the high level conference, and the first thing I would hope for would be freedom for the people of Eastern Europe. I say that, in a high level conference that is to accomplish something of historical importance, that freedom for the people of Eastern Europe must be one of the things that we must have uppermost in our minds. Then there must be security for Russia, security for Europe, and possibly, I hope, the lifting of the burden of armaments throughout the world. Following on that, there must be a programme of economic reform throughout the world on the lines of the proposals put forward by the Labour Government, on the lines of the proposals put forward in America by Walter Reuther and on the lines of the great speech made by President Eisenhower not so many weeks ago. That is what I hope might come out of a high level conference.
Although we supported the Prime Minister in this proposal, I am not too happy as far as the Prime Minister is concerned. When he goes to a conference, I reserve the right to see what comes

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out of it, because I am not quite certain that the kind of world which he intends to build is the kind of world which I want. Though the Prime Minister is the elected representative of the British people, I reserve the right to judge what comes out of such a conference.
I know that what the Labour Party desire to see come out of it are the things I have indicated. The world situation has very much changed, and I hope that the position so far as Russia is concerned has changed for the better. There is a new Government in Russia. No one can say what the policy of that Government is, but we hope that the aggression, almost direct and the indirect, which has been followed by the Russians for the last seven years has ceased. If it has, then we can hope for a very great change in world affairs.
I think that the Soviet Union lost the battle when she laid down the gauntlet, and that the free nations, by rearming and by making such tremendous efforts to stabilise the world, have brought about the present situation. I hope that the Russian leaders will recognise that tact. We, too, must recognise what is the present position. What we want is the kind of spirit which we thought existed in 1945. We should be prepared to play our part in an endeavour to bring about once again a situation in which we can sit down with the leaders of Russia and of the European and world nations and re-plan the world.
What can we offer Russia at the present time? Someone asked what Russia was to get out of it on an arithmetical calculation. Any nation that can get peace out of a conference today is more than amply rewarded. That is what we want to get out of it. I believe that there is a good chance at this four-Power conference of coming to an agreement on the question of armaments in Europe, because I do not believe that the European countries are anxious to rearm. I see no evidence of any anxiety on the part of the Germans, the French, or any other European country to rearm.
This may be a golden opportunity of getting peace for generations by deciding what is to be the level of armaments. It would be a great thing for the Russian leaders at the present time to be able to sit down at a conference with representatives of Great Britain, Europe and
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America to decide not on how many armaments, but on how few armaments are necessary throughout the world. I said earlier that many great changes have taken place in the world, but I think that the greatest change of all is that which has taken place with regard to Germany.
Many of us were concerned about the fate of Eastern Germany, and were wondering what was happening there. We have heard a lot about the extent of the rearmament of Eastern Germany and about Soviet propaganda in Eastern Germany, but one thing that we are sure about now is that the particular kind of Communist colonialism practised in Eastern Europe has made it certain that Communism such as is practised in Russia is out, as far as Germany is concerned. That is a great factor in the history of Europe. Russia would do well to recognise it, and Europe would do well to welcome it.
We can only deal successfully with Germany on a basis of equality. When we decide what is to be the future rearmament of Germany we shall be making one of the great decisions of history. I am anxious to make certain that we shall never again have German aggression on a nationalistic line. Therefore, I say that any rearmament of Germany must be done within the framework of some international organisation. I am ready to make the supreme sacrifice on this basis and to say that what we apply to Germany I am prepared to apply to ourselves. If we do that, then I think there will be a possibility of rebuilding Europe on a basis of peace and friendship.
I now turn to the very great change which has taken place in America. There have been many disputes and many differences of opinion in this country on the question of America. I have taken every opportunity to pay tribute to the great American nation for what it has done since the war. I do not say that the Americans have done more than they should have done, but I am so used to people not doing as much as they ought to do that I am thankful when they come anywhere near it.
By making a contribution of 36,000 million dollars for economic aid to the rest of the world America has done a very wonderful thing. But that was the America of Roosevelt, the America of

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Truman and Acheson, and in mentioning another name in that connection I run a risk with my own party, but I must mention Vandenberg because he gave that stability which made these things possible and brought the support of the better part of the Republican Party to the aid of the Administration.
It is a very different America with which we are dealing at the present time, an America which has abandoned economic aid. The vast riches placed at the feet of America and the vast power which she exercises in the world have not been naturally developed. They have come as a result of two great world wars. The American people would do well to realise that that position has not come about through a natural process of economic change and to consider the great responsibilities that go with the great wealth and power which they enjoy.
On numerous occasions the Government have indicated that they are in favour of trade, not aid. I believe that the reason for that is because they have been clearly told that there is no aid for them. In my opinion the Americans have made a mistake in taking up that attitude. It is a fateful decision that affects the free world. If they refuse the aid and decline the trade the position of the world in the future will be chaotic. It is the duty of statesmen in Europe to tell the American people, if necessary over the heads of the American statesmen, that that is the position.
Now I would say a word about President Eisenhower. He won the American Election by putting forward a progressive policy. I do not believe that he would have won it unless he had done so. Therefore, he stands in a position of immense responsibility, and it would be a disaster for the world if, as a result of Eisenhower's personally progressive policy, the forces of reaction were allowed to triumph. I believe that on the action of America depends the future of the free world.
It is useless for us to pretend otherwise. There have been many disputes about what we did on rearmament. I studied that question very carefully when the matter was going through. My right
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hon. Friend the Leader of the Opposition clearly indicated during the whole of that period that this was a collective effort, and that it was necessary for us to receive guarantees with regard to aid and trade and for us to protect ourselves economically. The present Government may think that they can maintain, as the Chancellor of the Exchequer said, the immense burden that we have undertaken without American aid, and without a world planned along sensible lines, but I do not believe that it can be done. It is far better to tell America that now, and to ask that these policies shall be reviewed very carefully.
There is a great opportunity for peace at the present time, but it is not possible for the Oppositions of the democratic world to leave everything to their Governments. Oppositions as well as Governments have responsibilities, and I should like to see the Oppositions in Europe getting together. I want to see the Social Democratic party of Germany in much closer contact with our Labour Party than it is at present. I want to see the Socialists of Western Europe all together, hammering out a policy. If Her Majesty's Government are totally unable to approach the Russians on a high level basis for a conference, the Social Democrats of Europe should get together to make the new policy for Europe which I have outlined, and which will bring us peace and economic rehabilitation.
It is the duty of my right hon. Friends on the Front Bench and of the leaders of the Labour Party to make these contacts in Europe and to see whether we can devise a policy, because I am sure that before long the Oppositions in Europe will be the Governments of Europe. That is the great hope of humanity. This Government is a strange contradiction in the modern world: it is impossible to run a modern civilised society without national and international planning, but we have the ridiculous position today of a Government being in power that do not believe in planning anything. The ineptitude with which they are dealing with this situation indicates that they are bungling the affairs of this country. The sooner a Labour Government is substituted for the Tory Government the better for the world.
7.4 p.m.
Mr. Gilbert Longden: Except for his peroration, his misinterpretation of some words that fell from my hon. Friend the Member for Hertford (Mr. Walker-Smith) and his mistrust of the present American Administration, I agree with very much of what the hon. Member for Eccles (Mr. Proctor) said.
Mr. Proctor: We cannot be allies on that.
Mr. Longden: As far as Europe is concerned, I listened with great disappointment to what fell from the Leaders of the two Oppositions. Their speeches were riddled with defeatism. The Leader of the official Opposition rightly said that nobody outside the Kremlin could say what was in the minds of the people inside the Kremlin, yet most of his speech was devoted to explaining what he thought was in their minds. Nothing, so far as I know, that has happened since the Prime Minister's speech on 11th May has derogated in any way from the aims and intentions which my right hon. Friend then uttered. Neither of the right hon. Gentlemen gave any credit at all to my noble Friend the acting Foreign Secretary for having persuaded the American Administration to come into four-Power talks at any level.
Mr. Mikardo: He did not persuade them. Adenauer did.
Mr. Longden: The hon. Gentleman may have more information about what went on than I have, but that was my impression.
I welcome the communiqué which was issued after Washington, firstly because it reaffirmed the faith of the free world in the North Atlantic Treaty Organisation. It is my firm belief that in that Organisation lies the best hope for peace and prosperity for the free world. I believe, as has been admitted on the other side of the House, that this is the instrument which is responsible for the change of voice from the Kremlin. None of us knows whether it is a change also of policy, but this is the instrument which will keep the peace.
N.A.T.O. includes free Europe, or at any rate 13 European States. It is to that component, that circle, that I confine my remarks this evening. Otherwise I shall be abusing the privilege of having caught
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your eye, Sir. Furthermore, I am a United Kingdom delegate to the Council of Europe and I welcome this all too rare opportunity of saying something about what happens there.
I want to cast my mind back to April, 1945, when the present Prime Minister sent that famous telegram to Stalin. I will not read that telegram now, because my right hon. Friend himself read it on 11th May and it will be fresh in all our minds. We must all admit that it was a remarkable forecast of what might happen after the war and that it was a frank and friendly effort to avoid its happening. The hon. Member for Leek (Mr. Harold Davies), who is no longer in his place, will be pleased to know that in that telegram the Victorian era had passed. He may remember the passage from one of Queen Victoria's letters to one of her Ministers in which she said "The Emperor of Russia will be very much annoyed, but that is neither here nor there." There was none of that spirit in my right hon. Friend's telegram. Alas, his efforts failed. All the good will which was bubbling up throughout the war towards our ally Russia, or towards the Union of Socialist Soviet Republics, soon evaporated.
We thought that Russia wanted peace and prosperity just as we did, but they did not desire that. They did not honour their Yalta commitments, they added 23 million free European peoples to their Empire, they have retained German prisoners of war to this day, they have not got out of Austria, there is the childish vituperation to which we have all listened from "Pravda" and Moscow radio, and there is the fifth column of men and women who have renounced their natural allegiance to God, their countries and even to their families in order to continue their treacherous work in all the countries of the free world. So we had the cold war. I would like to read to the House an extract from something said by Edmund Burke because it is very topical:
"We are in a War of a peculiar nature. It is not with an ordinary community. We are at War with a system which by its essence is inimical to all other Governments; which makes Peace or War as Peace and War may best contribute to their subversion. It is with an armed doctrine that we are at War."
Dr. H. Morgan: To whom was that addressed?
Mr. Longden: I am sorry but that quotation swam into my ken unaccompanied by its context. I will endeavour to find out and let the hon. Gentleman know. I have no reason to doubt its authenticity.
So we had to try other and more expensive methods. First, the United States of America with its Marshall Aid offered freely to Russia and the satellite States, and the O.E.E.C. and the E.P.U. which sprang from it. Next, the United Kingdom's initiative in the Treaties of Dunkirk and Brussels. There was the speech of my right hon. Friend the Prime Minister at Zurich when he asked France to lead Germany back into the family of Europe. This led up to The Hague Conference. I am sorry that that Hague Conference was boycotted by the Labour Party—the Government of the day. I fear that it was because they were pursuing the will-o'-the-wisp of a Socialist Europe. What a futile and arrogant line to take, as if the opinions and feelings of anyone who is not a Socialist could not be tolerated. I hope very much that that no longer applies in any part of the House.
There is the Council of Europe, the 15 European States which meet at Strasbourg to exchange views and to get to know each other. It is no good blaming the Council of Europe for not taking effective action, because it is not an executive body. I am certain that it fulfils a very useful function indeed in the modern world. I, therefore, welcomed my right hon. Friend's statement on 11th May:
"We have Strasbourg and all that it stands for, and it is our duty to fortify its vitality and authority tirelessly as the years roll on."—[OFFICIAL REPORT, 11th May, 1953; Vol. 515, c. 894.]
Mr. Geoffrey de Freitas: The hon. Gentleman has been a representative at Strasbourg for the same time as I have. Can he tell me of any occasion on which the Government which he supports have done so?
Mr. Longden: I am not aware of any occasion whatever when the Government which I support have done anything to prevent the Council of Europe uniting and getting together. If the hon. Gentleman has the good fortune to catch your eye, Mr. Deputy-Speaker, perhaps he will enlarge on that point, because frankly I do not know what he is getting at.
Mr. de Freitas: It is the hon. Gentleman's point.
Dr. Morgan: My hon. Friend wants the hon. Member to elaborate.
Mr. Longden: The hon. Gentleman is accusing the Government of not having taken any steps to enforce the vitality of the Council of Europe. I do not agree with him.
Mr. Mikardo: Tell us one thing they have done.
Mr. Longden: Meanwhile, France, the third of the three Powers, took the initiative in suggesting the Schuman Plan which has produced the European Coal and Steel Community. All three of those Powers signed the Treaty of Washington on 4th April, 1949. In this North Atlantic Treaty Organisation free Europe is the weakest link. Why is that? It is partly because some of the Governments of the larger States are unstable, but mainly because of the Franco-German problem.
One solution would have been to keep Germany unarmed, occupied, and neutral. I think we are agreed on all sides of the House that that is utterly impractical politics. The second solution would have been to invite Western Germany to become a full independent member of the North Atlantic Treaty Organisation; but France refused that solution and herself proposed a third—the European Defence Community within N.A.T.O. That Treaty was signed in May, 1952, but has not yet been ratified even by France.
We cannot blame the French nation for mistrusting Germany. Western Germany today is under able, honourable and efficient leadership, but who can vouch for tomorrow? We can blame France—or at any rate we can deplore the fact that France has been paralytic-ally inactive over the past year, for time is not on our side. The E.D.C. Treaty provided for a European Political Community to control the army. It is indeed essential, as I am sure all will agree, that such an army should be civilly and democratically controlled.
Last September the Council of Europe invited the European Coal and Steel Community to constitute an Ad Hoc Assembly to draft a treaty to embody the Statute of a European Community. It

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gave it six months. On 10th March last, exactly six months after they had been commissioned, the Ad Hoc Assembly presented the result of their work to the Foreign Ministers of the six States. I shall not weary the House with an explanation of the constitution. We are not wedded to every comma in it but, if it were ratified, it would provide that within two years the European political community should take over control of the European army and the Coal and Steel Community. Of course, other functions could be added as time went on and, above all, other nations could join.
It would be a first step towards European federation. Whatever its ultimate fate I think that the utmost praise is due to the lay parliamentarians of those six States for having produced an historic document. I know that some hon. Gentlemen on both sides of the House do not agree with either the European Defence Community or the European Political Community. I do not know whether they think that we are wasting our time and that the work can never come to anything—in which case I respectfully accuse them of defeatism—or whether it is that they fundamentally disagree on the whole problem. But I have always believed in it and I have always lent my feeble weight at Strasbourg to the project.
I believe that it would guarantee peace in Europe by the voluntary confinement of France and Western Germany within an inner circle of the European community. Secondly, I believe that it would make for the increased prosperity of our continental Allies. Increased productivity and co-ordinated defence will lead to reduced taxation and high taxation, whatever hon. Gentlemen opposite may think, is a brake on human activity.
Above all, E.D.C. would strengthen N.A.T.O. which would form the outer circle which would contain the two age-long belligerents, the Teuton and the Gaul. If I may digress, I would say that I am sorry that some States will not measure up to their responsibilities and that they remain content to let others bear the burden for them. I am also sorry that other States are not considered "good" enough to join us as full partners in peace though, should war break out, we should be glad enough of their help. So it was with pleasure that I for one
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read what I consider to have been a remarkable communiqué after the Washington Conference. I consider that it was remarkable because it was clear and forthright and instilled with unity and determination.
I want to remind the House of one or two of its paragraphs:
"The three Foreign Ministers have reaffirmed their resolve to pursue vigorously the policies upon which their Governments have agreed within the framework of the Atlantic Treaty. These policies include the work for European unity of the six European countries…"
Next,
"The Ministers reaffirmed that the North Atlantic Alliance is fundamental to the foreign and defence policies of the three Governments."
So it is.
"The establishment of the European Defence Community constitutes a necessary step to the same goal; meanwhile the work of creating a European Political Community is being pursued by the six Governments."
These are the things which they say it will do:

"(a) the above institutions of a European Community will strengthen the Atlantic Community and will in turn be strengthened by association with it;

(b) those constructive efforts to build a stable, secure European Community are a major contribution toward world peace…

(c) such a Community, peaceful by its very nature, is not directed against anyone… Indeed, the provisions laid down in the European Defence Community Treaty are a guarantee that its forces would never be used in the service of aggression;

(d) designed to put an end to the conflicts of the past, the European Community does not exclude any State;… "

On 7th August the six Foreign Ministers are to meet to discuss this draft. It is not a good time with unstable Governments in Italy and in France and with general elections just coming on, but I would say, "Drop finally and for good any idea that the United Kingdom should, or ever will, join a European Federation." We cannot do so. It has been explained to the European countries times out of number why we cannot do so. We have never pretended that we would do so. There is no need for us to do so.
We all know what this country has done to help in other ways. The various steps that we have taken were detailed by the Prime Minister on 11th May. Secondly I would say, "Do not regard

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the action of the American Senate in giving President Eisenhower discretion to withhold one million dollars of American aid as a threat."
Mr. Mikardo: What does the hon. Member think it is—a promise?
Mr. Longden: I do not think that it is a threat. The Americans are realistic people. They naturally weigh the amount that they spend. It may be that they will come to the conclusion that Europe is not worth spending more money on. They believe, rightly or wrongly, that unless these European nations are what they call integrated it will be no use spending any more money. That is all. If Europe will not help itself the United States may come to rely upon herself alone. That would be a pity, because the abandonment of isolationism by the American nation is one of the miracles of modern times.
To France I would say, "Now is the time to rope Germany in, even though she is not yet re-united." Over and above our guarantee to France she can rely on the United States. I believe that a Germany in N.A.T.O. is a guarantee to the U.S.S.R. as well.
Mr. Arthur Moyle: When the hon. Member speaks about Germany being included in N.A.T.O., is he prepared to allow Germany to go into the N.A.T.O. arrangement without any guarantee that she will make no territorial claims?
Mr. Longden: I think that at the moment the proposals are that Germany should come into an E.D.C., which in turn will be controlled by the European Political Community, which in turn will be part of N.A.T.O.
Mr. Mikardo: No.
Mr. Longden: Yes.
Mr. Michael Stewart: Whose proposals?
Mr. Longden: The proposals of Her Majesty's Government.
Mr. Mikardo: No.
Mr. Longden: These are the proposals of Her Majesty's Government as I see them.
Mr. Mikardo: That is vastly different.
Mr. Longden: I hope that I am right, and if I am right I ask the Government to carry on the good work. In any event I hope that the free world will not allow itself to be deviated from the path which we have laid down, which leads to the goal of N.A.T.O. Nobody is threatened, and N.A.T.O. is the one guarantee of peace and prosperity.
I would respectfully put my last words to Her Majesty's Government. They are, "Use all the means at your disposal for forming public opinion and for helping public opinion to know what our aims are and to appreciate the points of view of our Allies." In the free world, at any rate, foreign policy in the long run must depend for its success upon the support of public opinion. That is why I think that our foreign policy in this country has been so successful ever since the war. It is because it has had the support of both sides of the House and of opinion in the country. But there is a danger that on both sides of the Atlantic opinion is being passively allowed to form itself or is being actively led astray.
7.25 p.m.
Mr. Frank Tomney: The hon. Member for Hertfordshire, South-West (Mr. Longden) began by referring to the speech of the Prime Minister on 11th May, to which he paid a great compliment. I want to pay an equal compliment to another speech, made by my right hon. Friend the Leader of the Opposition, which was equal to the Prime Minister's speech in temper, authority and purpose. There are times when this House has a really electric atmosphere and 11th May was one of those occasions. One realised that the House of Commons, which often talks to the world, was talking to the world on that occasion.
It was one of those days when, after a long period of diplomatic inaction and morass, hopes began to spring in the world because the Soviet Union stated that there was no issue that could not be settled by process of negotiation. The speeches on that occasion matched the issues which were involved. Today's speeches, so far, have tended to run on the lines of a serial. Sometimes, in listening to a debate on foreign affairs, one has an impression which drives one to utter the conclusion, "This is where we came in." The debate seems to go on and on and the

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same points are elaborated, built up, spread out and protracted until one is lost in the verbiage and the kernel of the few essential factors cannot be found.
I should like to deal with some of those factors for a few minutes, because it is always sensible to look at the issues involved in world policy through the eyes of the people with whom we are trying to deal. I believe that at present it can be said that the diplomatic corps of this country have more elbow room than they have had for some time. It is elbow room of which we ought to take advantage. That is why when the Prime Minister suggested that a meeting of heads of State should take place without a strict agenda his suggestions were received with general acclamation. Had it taken place the leaders would have been called together to discuss mutual difficulties at the top level.
I must be cautious in my speech. The past seven years have taught me to be cautious in the field of foreign affairs. We must remember a man of great stature, a great trade union leader who, unfortunately, died too soon, not only broken in health but also broken in heart. He died of a broken heart largely because of the terrific endeavours that he made in foreign affairs, which never reached fulfilment. There was a man used to difficult negotiations in his own difficult field, yet it is true to say that he never met anything so consistent as the dark theme of Soviet policy during those difficult years. There was never one slight deviation on the theme of Soviet policy all these years.
When one looks back on the policies of Yalta, Potsdam, Casablanca and Teheran, one can see one central theme running right through them. It is when one reads the history of those days and sees the misjudgments of great statesmen like President Roosevelt in regard to the Soviet, that one becomes extremely cautious of how we should proceed. If one looks back at the Palais Rose conference, when the deputies of the foreign nations were given the task of forming an agenda, one recalls that they met week after week and did not succeed in their task.
The first question we have to decide is whether the policy of the Soviet Government, following the death of Stalin, reflects a change in tactics or in strategy.
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It is always as well to view these issues through the eyes of the Kremlin, and that is very difficult because one is never sure whose eyes one should be looking through. I should imagine that the top 12 in charge are looking over their shoulders to see who is next to "get it in the neck."
No one would have thought that in a little over 12 weeks a person with the power of Beria, controlling the secret police of all Russia and the satellites, with an armed police force equipped with tanks and field guns, would have been labelled before the free world as a traitor to the cause which he was supposed to be serving. That is a remarkable thing, and one begins to wonder what will happen next, and whom we shall have to deal with.
In my opinion, there can never be a democracy with three people occupying the top position of the Soviet Union. One has got to emerge. Who it is to be, no one knows. When this triumvirate was formed, I said to myself, "It will be Beria first and Molotov second." I was wrong. But I think that in the end Molotov will emerge as the top one of the three. The man in charge of negotiations is never put in the forefront. Even in Britain it is not Harry Pollitt; it is Palme Dutt. That is the case in every nation. When we are dealing with a man who is conducting negotiations involving issues which affect the rest of the world, it is best to be cautious.
What we can be sure of is this. The world has now reached a military stalemate. There can be no victory in Korea unless the United Nations intend to pursue an all-out war. Nothing that President Rhee must be allowed to do should delay for one moment the signing of an armistice. The Far East, and especially Korea, want a breathing space as soon as they can get it. There has been talk in this House and in the newspapers about extending the war to China, but it has never happened. I have never believed that the Chinese people themselves would ever become Communist. The matriarchal and patriarchal system in Japan and China are so ingrained that they do not lend themselves to Communism as such.
Here we have a vast impoverished continent which has been war-ridden,

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perhaps for 400 or 500 years, and which has never been allowed to develop. Out of this new system of government may come an agreement whereby the peoples of China can enjoy a fuller and happier life. That is why I am thankful that wiser counsels prevailed when we advanced to the Yalu border in 1951, and China was not invaded. There are issues in China which will resolve themselves.
The elbow room which we can exercise diplomatically in China is vital to us. Let us look at Manchuria. Russia got a strangle-hold on the raw materials of Manchuria, and the Chinese will not tolerate this for ever. China will begin to want to lead her own life, and that is when British diplomacy will exercise its great force. We talk of genuine fears. Russia and America have genuine fears. So have we. But let us remember that in this global strategy, if we can resolve the difficulties which confront the peoples of the various continents on the basis of parity of responsibility and mutual aid, we shall have got somewhere.
We talk of the American attitude to Formosa and our attitude to Chiang Kaishek. But let us consider the Philippines, Hawaii and Pearl Harbour, and bear in mind that the bomber stations on those islands constitute a defence of the whole of the waterways of the United States. Tribute has been paid to the United States and to the aid which she has given to the world. I fully endorse that, but let us remember that we in this country have very little time, for reasons which we all know. If a period of comparative peace comes to the world, a period in which industry has to live on its own initiative and exports, then Great Britain will be in a very poor position. These vast markets in the East are as vital to us as to anybody. The quicker we can have them opened to us, the better.
It will not always be possible to sustain the life of the people in these islands on the standards which we have achieved unless we get an expansion of trade. It may so happen that once the American aid on which Japan is at present largely subsisting comes to an end, Japan will become an active competitor at lower prices in the Far Eastern markets. We have the same problem in Germany and France. Indeed, there is the same problem all over the world, of countries build-
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ing their manufacturing secondary exports, which will compete with the goods that we sell. Unless we can produce our capital goods at prices which can compete with those of other countries, especially Germany, we are in for a very rough time.
I remember my right hon. Friend the Leader of the Opposition saying, in a previous speech, that when the river is jammed with logs it is best to try to extract one log to get the rest moving. Which log do we take out? Is it to be Korea, Germany, Austria, Czechoslovakia or Poland? Which log should we take out to get them all moving? We have to make up our minds to take one log out. I fail to see why we do not regard Germany as the major problem. If we can get a settlement over Germany, all the other problems will fall into their right perspectives.
We must remember that when we talk about freedom we are talking here, in the British House of Commons, with the right to walk outside without being arrested, so long as we remain within the limits of the law. But things do not happen like that in some other countries. No one can deny that Czechoslovakia was not a great democracy in the days of Masaryk and Benes, but she went the way that Poland went. The whole world on the other side of the Iron Curtain is seething with discontent.
Russia, although she did not know it, lost the battle for Europe at the time of the Berlin airlift. If we had failed then, the position would have become extremely difficult for Western Europe. This effort, in some ways comparable to our effort in the Battle of Britain, owed its success largely to the drive and initiative of General Clay, of the United States. The effort was made; it cost British and American lives, but if we had failed then the signal would have been given for Russia to go ahead.
We have N.A.T.O., and we have the E.D.C. It is asking a lot to include Germany in such organisations. She was responsible for two world wars and enormous bloodshed, destitution and poverty in Europe, but if her inclusion is the only guarantee that France will accept, what are we to do? Whatever happens, we must not allow the United States to withdraw from N.A.T.O. That

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would leave Germany the dominant power in Europe.
The hon. Member for Hertfordshire, South-West (Mr. G. Longden) expressed the fear that America might return to a policy of isolation. She can never do that; she is too heavily committed the world over, but we must make sure that she never leaves N.A.T.O. The question whether or not to include Germany is a matter for high politics. The question whether it will bring about a period of guaranteed peace, with effective guarantees with regard to armaments and a general drive, afterwards, for disarmament in Europe and, it may be, in the world, needs careful consideration.
The comparable decision at the other end of the scale is whether China should be a member of U.N.O. We recognised the Communist Government of China—and I do not think that either side of the House regrets it—although China did not recognise us at the time. If there has to be some straight and hard talking between us and the United States on these points, let us have it.
Great hopes sprang up in the world after the two great speeches in this House on 11th May. During the last seven years the world has had only the golden threads of hope to hang on to. If those hopes are to be realised, and we can clearly see the way ahead, let us by all means have the meeting between the heads of States, which the Prime Minister suggested, as quickly as possible. Let us go forward and realise that, perhaps for the first time for two or three decades, the world may again live in peace.
7.45 p.m.
Mr. Hamilton Kerr: I am glad that hon. Members on both sides of the House have paid their tributes to the United States of America. I know that some of the things which the Americans say about us simply madden us, and some of the things we say about them madden them, but I recall the old proverb:
"Little pebbles hurt more than large stones."
However, these are differences between friends. The future of the world depends on the alliance of the free peoples of Europe, the British Empire and Commonwealth, and United States of America.
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Today, hon. Members have been discussing the possibility of four-Power talks. The objective of those talks is peace. We all realise that this country must have peace if it is to recover in the second half of the 20th century. I expect that hon. Members listened, as I did, on that morning of 6th June, 1944, when heavy, droning bombers overhead foretold the invasion of Normandy, and we all prayed that that invasion would not prove to be a second Passchendale or a second Dardanelles.
To bring peace to the world we shall have to solve two great problems. First, there is the overwhelming problem of the growth of population and, secondly, there is the even more pressing one—the fact that world production is not keeping pace with that growth of population. We have to find the answer, whether we are Communists or Democrats and whether we live in Asia, Europe or the Americas. If good intentions on our part had been able to produce peace we should have had it long ago.
I well remember the gestures of good will which we made towards the Russian people during the war. I remember Lady Churchill's Red Cross Fund; the presentation of the Sword of Stalingrad, and the Red Army Week. When the late Mr. Bevin—whose death we all lament, and who was so greatly respected—made that 50 years' treaty with the Soviet people, I hoped that we should have a certain guarantee against a resurgence of German aggression. But, alas, we were deceived.
Mr. Emrys Hughes: What about the Fulton speech?
Mr. Kerr: That came as a result of Russian action. I had not fully read my Karl Marx at the time. I hoped there would be no cause for conflict, politically or economically, between the peoples of the West and the Soviet Union. I confess that I was wrong. We realised, from the time of the Berlin airlift onwards, that the relentless strategy of the Soviet ruling class was the fostering of world revolution.
I now submit that the policy of peace through strength has alone been responsible for the improved situation in the world today. The hard fact, from which we cannot escape, is that the alteration

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in the balance of power has caused the Russian leaders to think we hope in terms of conciliation. The fact that the United States have great industrial resources, that its strategic air force can deal formidable blows, has deterred the Russian general staff rulers from possible recourse to further aggression.
We must face the fact that we may now be seeing a Russian retreat from Europe. It may be true that the Russian leaders have realised that the workers of Europe are not at heart, or by instinct, collectivists. They are individualists, by tradition and education. They think in terms of a home of their own, a job, a living wage, and a chance for their children. The Russian nature is different. When I was in Moscow in 1937 I was very impressed, when I went to some of the great collective tenements, by the fact that all the inmates would collect in one room, on certain nights, to discuss a great topical question. They have a collectivist instinct, which does not exist in Europe.
Therefore, when we go to these conversations we must realise that a Russian retreat in Germany may likewise mean a Russian advance in Asia. For amongst the people of Asia and Africa there exists a situation, exploitable by Communist propaganda, a new nationalism, the raucous voices of the colour conflict. I would say that there would be one test of Russia's good intention on these forthcoming conversations. I give this in the words of Mr. Vyshinsky, "Peace is indivisible." If Russia aims to alter her policy she must end the cold war first and foremost. A major strategic objective of our policy must be to prevent the peoples of Asia ever uniting in a mass against us. We must offer a better way of life than can the Communists.
Secondly, the question of Germany was mentioned in the course of the debate. There are many important facts arising from the situation in Germany. First, no German will rest so long as Germany is divided. Germany is determined to build up a united country. Further, we cannot hope to defend Europe without the help of German contingents. Lastly, we must face the prospect of a powerful Germany, in alliance with the free
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peoples, and, at the same time, able to dominate them in a way which she has never been able to do before—even by force.
I therefore support the theme put forward by the hon. Member for Leeds, South-East (Mr. Healey) when he spoke at Strasbourg, that the one solution in the long run is to bring Germany into N.A.T.O. Our French friends will fear this prospect. But the decisive factor is surely this: for the first time in history the great power, wealth and resources of the United States, allied to the British Empire and Commonwealth, is invested in support of the people of Europe. It is within the wider framework of N.A.T.O. that the enormous potential resources of Germany must be harnessed to the resources of all the free people. And it provides us with the only sure guarantee that a united Germany will not, at some future date, pick a quarrel with the East and drag us unexpectedly into war.
If we place some hopes in these conversations we know, at the same time, that the balance of power is the decisive factor. But we also know, that the balance of power may preserve peace but it cannot win peace in the long run. I do not think that war ever really solves our difficulties. We beat the Japanese, but the Japanese problem remains. We beat the Germans, but the German problem remains. I believe that we can only unite people if we unite them in joint service to joint ideals.
A short time ago we all went to the great Coronation service in the Abbey. I recall a leading article in "The Times," which said that the great Gothic Abbey, which superseded the Abbey of Edward the Confessor, was designed as a symbol of reconciliation between the Norman and the English people. It was designed in the wonderful style of the Gothic art which, in the words of Henry Adams, the American historian, was the only "Art that flung its passion against the sky." It was a symbol of service to a joint ideal. Only that will win peace in the long run. We have to ask ourselves what our policy should be, not which is right, but what is right. When we have decided, let us do it.
7.55 p.m.
Mr. Ian Mikardo: If I do not begin by commenting on the speech which we have just heard from the hon. Member for Cambridge (Mr. Hamilton Kerr) that is not out of any lack of courtesy to the hon. Gentleman but because he confined his remarks for the most part to general propositions and general principles which I am sure would command support and respect from all sides of the House.
I feel almost that I ought to preface my remarks by the conventional plea for the indulgence of the House, because although I have been a Member for eight years this is the first time that I have spoken in a foreign affairs debate. In recent times these debates have largely been conducted by a handful of hon. Members on both sides of the House who have come to acquire a reputation, and in a few cases even to earn a reputation, as experts in this field. Perhaps it would be a refreshing change for the House to hear the views of one who is the veriest amateur in this subject, one who can bring to bear on it nothing more than a plain man's honest curiosity and simple judgment, one, in fact, who may almost claim the honour of speaking not for the wise, the learned and the experienced, but for the man in the street.
My hon. Friend the Member for Hammersmith, North (Mr. Tomney) reminded us that two months ago the ordinary folk of this country, and of many other countries, experienced a surge of excitement as a result of the speeches of the Prime Minister and the Leader of the Opposition in our last foreign affairs debate. For years they have been weighed down by the perplexity and the threats and fears of the cold war. They could not see how it was ever going to end, but they had a feeling that there was just a chance of bringing it to an end if only the leaders of the four great Powers would get together and really have a genuine shot at it.
The ordinary people just could not understand why this idea of a high level conference, an uninhibited and straight-from-a-blank-sheet-of-paper conference, which seemed an obvious and simple one to the man in the "pub," got no public support except from a very few of my hon. Friends on the back benches on this side of the House. Then, on 11th May, the Prime Minister became the most notable
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and the most important convert to this idea. His plea for a top level conference, and especially for a conference unhibited by officials or detailed agendas or a lot of punctilio, sounded a reverberating note right round the world and brought a new hope to millions of people who had almost given up daring to hope.
Then, last week, in Washington, Lord Salisbury muted down the reverberating chord which the Prime Minister had struck to the plaintive peep-peep of a penny tin whistle. Today, the Chancellor did very much the same. He dealt a death-blow to the policy which the Prime Minister announced on 11th May. The whole burden of the Chancellor's speech today was, "I come to bury Churchill, not to praise him." That was a piece of Anthony's speech, delivered not by Anthony but by Brutus.
It was obvious on 11th May, while the Prime Minister was speaking, that many of his right hon. and hon. Friends, on both the back benches and the Front Bench, were by no means enthusiastic about the fresh initiative that the Prime Minister was taking, and, indeed, some of them have not been at all enthusiastic about it today. I suppose they felt it was much too unorthodox and much too unconventional and much too independent for the strait-laced conventions of the Conservative party.
Then the Prime Minister went sick, and the lesser men all around him got to work to tear down what he had been trying to build up. It was the mediocrities of the Conservative Party, the same people who had kept the Prime Minister out of office for all those years before the war, who seized on the opportunity presented by his illness to betray his hopes. It was the mediocrities of the Conservative Party who rather meanly seized the opportunity presented by his illness to betray the hopes which he himself had built up. While the cat was away, the mice started to eat away the foundations of his house.
If any hon. Member opposite thinks I am putting that a bit strongly, he has only to compare the rousing words of the Prime Minister on 11th May with the mock-Machiavellian, second-rate, dishonest verbiage of the Washington communiqué. I shall not quote in detail what the Prime Minister said about his hopes of a high level conference because the right hon. and learned Gentleman the

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Member for Montgomery (Mr. C. Davies) gave it in full, but I shall pick out two phrases. The Prime Minister talked about a conference which
"…should not be overhung by a ponderous or rigid agenda…."
What does that look like in the light of the Washington communiqué? The Prime Minister also talked about a conference which should not be
"…led into mazes and jungles of technical details, zealously contested by hordes of experts and officials.—[OFFICIAL REPORT, 1lth May. 1953; Vol. 515, c. 901.]
What is left of that in the light of the Washington communiqué?
It is obvious what the Prime Minister had in mind when he said that. He was hoping that personal and not too formal contacts between the great men of the great Powers would break down the East-West deadlock. He was hoping by this means to create a climate of relationships in which a more formal and detailed conference, later, would have some chance of success. Above all, he was hoping, as he frankly said, to take advantage of the new situation in Russia and give encouragement and help to the liberalising elements in the Kremlin in their struggle against the obstinately hostile sector of Russian opinion. His actual words were:
"I am anxious that nothing in the presentation of foreign policy by the N.A.T.O. Powers should … supersede or take the emphasis out of what may be a profound movement of Russian feeling."—[OFFICIAL REPORT, 11th May, 1953; Vol. 515, c. 900.]
That was a new and really independent British initiative. It was the first time that Her Majesty's present Government had done anything more than allow itself to be dragged along at the cart-tail of the United States of America. But the communiqué which the acting Foreign Secretary signed last week was a complete and abject surrender. Mr. Dulles must have been very pleased to discover that the acting Foreign Secretary has considerably less guts and considerably less independence than Syngman Rhee.
In the light of all this, it is no wonder that the Washington communiqué has affronted almost every section of British public opinion. I do not suppose that one could spread the gamut of the British Press any wider than the space between the "Daily Mirror" and the "Observer."
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It was the "Daily Mirror" which described the communiqué as
"a distressingly platitudinous document which seems to have been drafted by the dead right foot of Mr. Dulles."
Going to the other end of the gamut, there is Mr. Sebastian Haffner, who wrote of the two Washington communiqués in last Sunday's "Observer," in equally powerful, though slightly less colourful, language:
"The two overlong communiqués read in parts more like extracts from a Republican election speech than like the businesslike statements of responsible statesmen; some passages … bear little relation to the realities of the situation and others are frankly sheer gibberish."
I am bound to say that I agree with him. What does the House make of this passage from the communiqué:
"Since the European community corresponds to the lasting needs of its members and their people for peace, security and welfare, it is to be looked upon as necessary in itself and not linked up with existing international tensions."
One could not find anything more polysyllabicly platitudinous even in a Cominform communiqué. In fact, this is almost identical with, and highly reminiscent of the language of the Cominform communiqués.
I am sorry to have to say it, but I cannot escape the conclusion that the invitation extended to the Russians in the Washington communiqué has been deliberately designed to ensure that there will not be an agreement with them. The Western Foreign Ministers have gone out of their way—my right hon. Friend the Member for Smethwick (Mr. Gordon Walker) pointed this out most clearly and cogently—to present the Kremlin with a set of conditions in advance which they know perfectly well that the Kremlin cannot and will not accept.
On this, I quote Mr. Haffner again. He wrote:
"The Russians are invited to sit down to discuss a very narrowly circumscribed, and somewhat one-sidedly selected, agenda: the organisation of free elections in Germany, the establishment of a German Government … and the Austrian Treaty. It strikes the eye at once that on all these three items the Russians, to assure the success of the conference, would have to make considerable concessions and the Western Powers would have to make none."
Mr. Haffner goes on:
"It is certain that … the attempt to impose one-sided, piecemeal concessions on

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the other side while reserving and maintaining all one's own cold war positions … is doomed to failure from the start. There is no earthly reason why the Russians should agree to free German elections only in order to see the whole of Germany, instead of one-half of it, added to the opposite camp in a continuing cold war."
What then has become of the Prime Minister's anxiety that our presentation of foreign policy should take advantage of what, as he said, may be a profound movement of Russian feeling? Out of the mystery that surrounds what has been happening in the Kremlin during the last two or three weeks—I agree with those who have already spoken that no one knows precisely what it means—one thing seems reasonably clear, that there are some people in the Kremlin who are less hostile and some who are more hostile to the Western world.
That is as far as one dare go. What the acting Foreign Secretary and his colleagues did in Washington is the very opposite of what the Prime Minister wanted to do. They have encouraged our intransigent enemies and discouraged those Russians who seem to want to find some way in which they can live at peace with the world.
Not only does the Washington communiqué appear to aim at the continuation of the cold war in Europe; it also appears to aim at the continuation of the troubles in Asia. The acting Foreign Secretary seems to have run away completely from the Government's past position about the recognition of Communist China after a Korean truce has been signed. Moreover, the Foreign Ministers very foolishly committed themselves to what can only be an indefinite extension of the war in Indo-China.
One of the things that make European problems so difficult at present is the seemingly chronic weakness of our friends in France. That weakness, as my hon. Friend the Member for Leek (Mr. Harold Davies) reminded us, is due primarily to the long, arduous and expensive campaign which they have carried on for so long in Indo-China. Does anybody really expect that, when a truce is signed in Korea, French public opinion, which is already not very enthusiastic about the Indo-China campaign, will be willing to accept a situation in which France will be the only Western country carrying on an active war in
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Asia? I do not believe that that will be so.
It would not be so bad if the French were winning it or if they had any expectation or any reasonable hope of winning it. The Chancellor reminded us today that the new French commander in chief, General Navarre, spoke glowingly about the prospects of victory. We all know that generals and parliamentary candidates always speak glowingly about the prospects of victory whatever they feel the situation really to be, but it is clear that, in fact, General Navarre is not all that optimistic.
This is what an authoritative report says about his recent inspection of the campaign and of the situation in Indo-China:
"Despite his optimistic public assertions on victory prospects, it is understood from members of his own staff that the General was seriously alarmed by his first visit of inspection and came back convinced that there is at the present time a quicker build-up of weapons, and more particularly of manpower, on the Communist than on the French side."
All round, then, it looks as though the Western Foreign Ministers, in respect of both Europe and Asia, are trying to encourage or frighten the Eastern Powers into continuing their intransigence. And this situation makes nonsense of the past attitude of Her Majesty's Government and of the American Government that we must build up our armed forces in order to be able to negotiate from strength.
For the last year or two the State Department has been telling us that the time was not opportune to negotiate with the Russians because we were comparatively weak and they were camparatively strong. Now the Americans say that the riots in Berlin and the upheavals inside Russia prove that the Russians are weak and we are comparatively strong, so there is no need to negotiate with them. That is their line, that when you are weak and the other fellow is strong, it is the wrong time to negotiate; and when you are strong and the other fellow is weak, you then have him on the run and there is no need to negotiate. So, in either case, you never negotiate.
It may be asked why, if that is the view of the American authorities, the State Department agreed to even an inadequate four-Power conference, a doomed-to-failure four-Power conference, of the type

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described in the Washington communiqué. The hon. Member for Hertfordshire, South-West (Mr. G. Longden) said that Mr. Dulles agreed to it because Lord Salisbury persuaded him to do so. The hon. Gentleman must be even more naïve than he looks, and that is something which it is difficult to believe.
The real answer to the question, why did Mr. Dulles agree to this, is the answer given by my right hon. Friend the Member for Smethwick. It is simply that Mr. Dulles' rôle as Secretary of State is at present only his secondary rôle; his primary rôle is to act as election agent for Dr. Adenauer in the forthcoming German elections. Dr. Adenauer is the darling of the State Department.
I was in the United States when the Foreign Secretary and the Chancellor of the Exchequer were there. They left and then, a little while afterwards, Dr. Adenauer came over. It was noticeable to see the difference in the treatment of the two right hon. Gentlemen on the one hand and Dr. Adenauer on the other. The two representatives of Her Majesty's Government were treated like poor relations who had dropped in to borrow half-a-crown. They were seated well below the salt, and Dr. Adenauer was seated well at the head of the table and given all the choicest pickings off the fatted calf.
It is Dr. Adenauer, after all, who for a long time has been the most notable and most persistent opponent of four-Power talks on German unification. Then, on 17th June, there were those riots in East Berlin and (hey led to such an upsurge of feeling in Germany in favour of unification that Dr. Adenauer realised that he could not maintain his opposition to four-Power talks without seriously damaging his electoral chances. Therefore, he told the State Department that he agreed and the Washington communiqué explicitly mentions his agreement. He told the State Department he agreed that there should be four-Power talks, but he has only done it to tide himself over until after polling day on 6th September. I promise the House—and I am quite happy to be challenged on it after the event—that we shall see the attitude of Dr. Adenauer to the four-Power conference hardening all over again the minute the election results have
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been declared, indeed, the minute the last vote is cast.
The real objective of the Ministers' meeting in Washington was not to reset the world stage; it was the much lower objective of carrying out an electoral manoeuvre on behalf of one of the parties which is to contest the West German elections. We are almost back in the days of the Palais Rose in 1951, of which my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) has such bitter memories. We are in a worse position than we were then because, that conference started, although it did not take long before it went wrong, as a genuine attempt to reach agreement.
Now I do not believe that genuineness is there. As "The Times" said last Friday—and "The Times" is not normally critical of the Foreign Office:
"The decision to invite the Russians to talks on German unification … was agreed to by Mr. Dulles with marked reluctance."
So we are starting in an even worse position than we started that awful 19 weeks in the Palais Rose, and that is not an augury for the success of this conference. One cannot escape the conclusion that the Government, with the hand of the Prime Minister off the helm, has blundered badly in this matter and has suffered a resounding defeat on the diplomatic front.
Finally, I want to comment briefly on one other subject which again deals with a diplomatic defeat of Her Majesty's Government. That subject has already been mentioned once or twice today. It is Egypt. Seeing the mess that the Government have got themselves into in their negotiations with the Egyptians, one cannot help recalling the fine words which they all uttered during the General Election campaign in 1951. In those clays their spokesmen went around the country making light of the Egyptian problem. They said it was easy, that it was only the Labour Government that was bungling. All that had to be done was to change the Government and have a Conservative Foreign Secretary and the thing could be settled almost by the waving of a magic wand. The Prime Minister himself said on 17th October, 1951:
"The sooner the present tottering Ministers are replaced by a stable British Government with a strong majority and a long period

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of calm and steady rule before it, the sooner will the dangers of violence and loss of life in the Middle East be diminished."
I ask any hon. Gentleman opposite, I ask the right hon. and learned Gentleman the Minister of State, whether he can say, after the events of the last few months, that the dangers of violence and loss of life in the Middle East have been diminished since the party opposite took power. Of course they have not. There we see all their team—the Prime Minister, the Foreign Secretary, the acting Foreign Secretary, the Minister of State, the Joint Under-Secretary of State—all of them outwitted, outfought, outgunned, by an Egyptian major with little experience in diplomacy but with a considerable talent for dancing in his underwear.
The right hon. Gentlemen opposite, who on the subject of Egypt roared like lions in the General Election campaign of 1951, are now revealed for what they are—poor little lambs who have lost their way, baa, baa, baa. In almost all these fields, wherever one looks, one sees that in foreign affairs Her Majesty's Ministers present at this time, more than at any previous time, a sad picture of men weak and uncertain and blundering.
8.20 p.m.
Mr. Fitzroy Maclean: The hon. Member for Reading, South (Mr. Mikardo) told us that this was his maiden speech in a foreign affairs debate. I hope that he will make many more of these speeches, because foreign affairs debates are apt to be rather dull performances and he certainly contributed something very much livelier than we are generally forced to listen to. I enjoyed every moment of it. I was also particularly grateful to the hon. Member for summing up so concisely, for crystallising, so to speak, the arguments which have been advanced by speakers on the other side of the House, starting with the Leader of the Opposition and runing the whole way through.
I have never seen such a display of disingenuousness and shadow boxing in all my life. Hon. Members opposite start by assuming that the whole idea of high level talks with Russia has been dropped, that that policy has been thrown overboard and has been sabotaged by the present proposals, and so on. That shows a complete disregard for the facts. The party opposite do themselves less than
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justice in taking that line. Not only that, but they also expose themselves very badly indeed. When one considers their record in the matter of relations with Russia, they do not have very much to be proud of.
What did we inherit from the party opposite? When the present Government took office, we inherited from them a complete deadlock as far as our relations with the Soviet Union were concerned. There had not been any conversations to speak of for a very long time, and the last ones had ended in complete failure. What is more, at the General Election which resulted in their being, quite rightly, removed from power, they did everything in the course of their Election campaign to queer the pitch for their successors.
Most things are fair at a General Election, but when a country has been trying to have a bi-partisan foreign policy and has up to a point succeeded—[HON. MEMBERS: "Oh."] When hon. and right hon. Members opposite were in power, we supported them in the main on all the big issues of foreign affairs. The Leader of the Opposition must know that on a great many occasions we supported him when a great many hon. Members behind him did nothing of the kind, and it was only thanks to the support of this party that he managed to carry that policy through.
Mr. Attlee indicated dissent—
Mr. E. L. Mallalieu: The hon. Member has said that with regard to Russia his party inherited deadlock. Now he claims that there was a bi-partisan policy. Would he not also claim responsibility for that deadlock?
Mr. Maclean: We supported the measures of which we approved. We did not support the deadlock. We were not responsible for the detailed carrying out of the then Government's policy. We certainly supported the general lines of the late Mr. Ernest Bevin's policy. We do not accept responsibility for the fact that there was a good deal of bungling on various levels.
The fact remains that there was what was generally agreed to be a bi-partisan foreign policy—or perhaps it would be more correct to say that the previous Government enjoyed a substantial measure of support from this side of the House in matters of foreign affairs and

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of defence. In spite of that, in the course of their Election campaign hon. Members opposite did everything they could to queer the pitch for their successors. The right hon. Member for Bishop Auckland (Mr. Dalton) went so far as to say that if a Conservative Government were returned the country would be involved in war with Russia within 12 months. That was spread all round the country in every constituency. It was one of the biggest smear campaigns in our history.
Lieut.-Colonel Marcus Lipton: Including the Red Letter?
Mr. Maclean: Having done that, and having done everything they could in that Election campaign to queer our relations with Russia, and having laughed at and dismissed as a mere Election stunt my right hon. Friend the Prime Minister's appeal at the Election before in his Edinburgh speech for high level talks with the Russians, hon. Members opposite now have the audacity to set themselves up to criticise the very satisfactory result which has been achieved at the Washington Conference.
The fact is that, if the Russians want agreement with the West—and to my mind that is at the moment an open question—they will not be put off by a few drafting points or by the fact that the preliminary conference is held between Foreign Ministers rather than Prime Ministers. Why on earth should they?
Reference was made earlier in the debate to the Soviet-German Pact. How was that negotiated? The Soviet-German Pact was negotiated through the ordinary diplomatic channels. The negotiations were conducted secretly and against a background of mutual hostility and abuse by permanent officials. It was quoted just now as an example of a high level conference, but as far as I remember it was only brought on to a high level on 23rd August, 1939, when Ribbentrop flew to Moscow and that evening he and Stalin signed the agreement. But all the preparations were made, not on a political level at all; they were made through the ordinary permament officials. That is a very good example of the fact that if two countries want an agreement they will get an agreement.
Mr. Attlee: On that point, I understood that the hon. Member blamed us because we had not obtained talks between our Foreign Secretary and Molotov. At that time there was always clamour for a higher level meeting. Now it is the other way.
Mr. Maclean: Why does the right hon. Member assume it is quite the other way, that there is not going to be a meeting between Prime Ministers, and all that has been dropped? What reason has he for saying that? These preliminary discussions may not be on the very highest level—they are on the Foreign Ministers' level—but that is not a reason why they should not succeed. I am pointing to the Soviet-German Pact which someone called a "disastrous success," as an example of how top level preliminary conversations are not an essential condition to an international agreement. There is no reason why talks on a broader basis should not follow later.
I cannot understand why hon. Members opposite dislike so much the idea of stating our attitude over the key problems of Germany and Austria at the beginning. The Russians never fail to state their attitude over these problems. Why should we not mention in advance one or two things we want to discuss? That does not preclude us from discussing other questions, nor does it preclude the Russians from stating their attitude. Why should hon. Members assume that because we have taken a perfectly reasonable attitude on these questions it means these negotiations are going to break down and the whole idea of high level discussions is to be dropped? I see no reason for that at all.
On the question of the discussions and how they are likely to proceed, I must say I am all in favour of talking to the Russians. I think that to say one is not going to talk to the Russians, or that it is dangerous to talk to them, is pure defeatism. There is no reason whatever to make a bogy of the Russians. What is absolutely essential is that before we go into such conversations we should know what our own aims are, and that we should bear in mind certain very important considerations.
As we all know, there have of late been a number of very important changes in the Soviet Union. It is very difficult for anybody outside the narrow circle of

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the Kremlin to know exactly what those changes in personnel and changes of policy really mean. In fact, I would say it was impossible. But I do think we want to be very careful—as one hon. Member opposite said in a very remarkable speech—not to make the assumption that these changes mean a fundamental change of attitude. We do not want to make the assumption that they are necessarily strategical changes. They are much more likely to be purely tactical changes.
If we look back over the last 30 odd years we shall find that there have been a great many shifts and changes in the course of Soviet policy. But so far, though this may not necessarily apply in the future, the basic aim of Communist policy has always remained the same, namely, the destruction of the non-Communist world and the substitution of a Soviet or Communist regime in as large a part of the world as possible. Sometimes they approach that object gently, sometimes they approach it more violently, but up to the present that has remained the constant aim of their efforts. That is why it is so dangerous to start talking, as some hon. Members opposite have done, about the special qualifications of a Socialist Government for talking to the Soviet Government. It shows a complete misapprehension of what it is all about.
"Left will talk to Left in comradeship and confidence,"
said Mr. Bevin in June, 1945, and, as somebody said just now, he lived to realise how wrong he had been. This is shown best by something Lenin said when he was asked whether the Communists should support the Social Democrats. He said:
"We will support them as the rope supports the hanged man."
That is something which I think hon. Members opposite would do very well to bear in mind when they are talking about ideological differences.
To sum up, let us by all means have talks—preliminary talks on a lower level and subsequent talks on a higher level, but, above all, let us avoid wishful thinking. In particular, there has been wild speculation about the significance of the removal of Mr. Beria. A great many varying interpretations have been put upon his liquidation. Again, it is bound to be a matter of
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guesswork, but I should say that it is most probably an internal affair, a question of personalities, a phase in the internal struggle for power, which need not necessarily have any international significance at all.
I was in Moscow when Mr. Beria was first appointed to the job of Commissar for Internal Affairs 15 years ago. He has had a very good run for his money because in the two or three years before that they had run through two or three Commissars for Internal Affairs. I remember seeing them go, one after the other. The usual procedure was that they were first appointed either Postmaster-General or Commissar for Water Transport. That was always a very bad sign; it meant that liquidation was about to follow. I remember seeing Yagoda, who was one of the most notorious chiefs of the O.G.P.U. in the whole history of the Soviet Union, in court after his own trainees, after the police officials he himself had trained, had done with him. It was not a very pretty sight indeed to see this man reduced to a state of abject submission by the people he himself had trained.
That followed a real or imaginary plot, but the important thing was that Stalin managed to strike first. Now Stalin's successors are, in my opinion, behaving in very much the same way. I am sure that the important thing in the Soviet Union, and perhaps in other circles, is to have complete control of the party. We all have party conferences approaching so perhaps that point is worth bearing in mind for us, too. It certainly applies in the Soviet Union.
Even though he has been in power for 15 years and even though he had behind him a force of tanks and field artillery, I think it would be a great mistake to assume, on the strength of Beria's liquidation, that the whole machine is breaking up, or, alternatively, that there is likely to be any radical change in Soviet policy. His liquidation may well have no effect on Soviet policy whatever. Certainly we should be very mistaken on the strength of it to relax our efforts in any way or to be any less watchful than we have been in the past. I think the leading article in "The Times" this morning put it very well when it said
"there has been no basic change in the facts of power."

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I am sure that is the assumption we should work on.
One thing is certain. The situation in the world and in Russia at the moment is in a state of flux. It is as uncertain as it can be, and to my mind that makes it all the more necessary for us to be strong and to have a firm policy and to act in concert with our allies. I welcome the Washington communiqué because it shows we are doing just that. Any settlement we conclude with Russia must be negotiated from strength. That does not mean that I oppose disarmament. But our position in relation to the Soviet Union must not be one of weakness but one of strength.
Any settlement must be negotiated jointly with our allies. There can be no question of a separate deal, a separate peace. It must on no account betray the principles for which we stand. It must not prejudice the national rights of Eastern European countries which at the moment find themselves under Soviet domination. On no account can we leave those countries to their fate. Once again I was glad to see that explicit reference to the countries in Eastern Europe made in the Washington communiqué. We have very definite obligations and commitments towards them. At the present time there are signs that the Soviet grip upon them is loosening—after all no one ever retreats unless they have to. And for that reason we must take the riots and unrest and disturbances behind the Iron Curtain seriously. With all that going on, we should do nothing which might possibly give the impression that we are leaving the people of Eastern Europe to their fate.
The cold war is still on. We do not want to continue it any longer than need be, but so long as it does continue we must take advantage of any passing weakness on the other side. We may be sure that they will take advantage of any weakness we may show. If we are proposing to drive a bargain it should be the best and the hardest bargain we can obtain. I do not believe that a settlement with Russia is impossible even though there is a fundamental conflict between our two ideologies. At one time it seemed as if it was impossible for the Moslems and the Christian world to live side by side in peace. But that has been achieved and I see no reason why a
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similar result may not in time be achieved between the Communist and the non-Communist world.
Before the war we went through a period of relative quiescence so far as the Soviet Union was concerned. It was, so to speak, contained and gave relatively little trouble to anyone. If a balance of power can be established which keeps Russia quiet, I do not see why that should not happen again. But any such settlement must, I repeat, be based on Western strength, on Western unity and, above all, on Western loyalty to Western principles. If we betray those principles or show weakness, if we allow a wedge to be driven between ourselves and our allies, nothing will prevent this country and the world from becoming involved in another war.
8.44 p.m.
Mr. Denis Healey: I fully agree with the interpretation of the hon. Member for Lancaster (Mr. Maclean) of the meaning of Beria's dismissal. I believe that it is not likely to prove very significant in foreign affairs. It is mainly a reflection of an internal struggle for power in the Soviet régime.
I should like to start by paying the Government some courtesies, none the less sincere for being conventional. First of all, I want to say how much I hope the Foreign Secretary will soon be back in control of British foreign policy, and, secondly, that I hope the Prime Minister will soon be back in his normal duties as the leader of the Government. Thirdly, I wish to congratulate the Chancellor of the Exchequer for the agility with which he tried to reinterpret the Prime Minister's speech of 11th May as compatible with the results of the recent Washington talks.
I find myself in a very small minority on both sides of the House in not sharing the general enthusiasm for the Prime Minister's recent foray into the field of diplomatic affairs. In my opinion, his speech of 11th May did much more harm than good. It is quite true that it fired the popular imagination throughout Europe, and some of my hon. Friends were so impressed that I almost thought they would change their personal allegiance. In my opinion, the concrete results of the Prime Minister's speech of 11th May were much more bad than good. One incidental minor result was

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that it destroyed the stability of democracy on the Italian Peninsula, a point on which I shall have more to say later. It certainly delighted the Russians, who made that quite clear in "Pravda" articles, but it was not, in spite of all that, a very great contribution to peacemaking, because it annoyed all the allies without whose co-operation we cannot reach a settlement of any outstanding issues with Russia.
In the one sphere of foreign politics—the Middle East—in which it is in the Prime Minister's own hands to implement his policy, the Prime Minister seems to have put himself at the head of the "Keep Right" revolt against his own Foreign Secretary's attempts to make friends in the Arab world, with the results that we have seen in the last week in Ismailia. Personally, I shall not regret it at all if there are no more similar outbreaks of the old Adam in the Garden of Eden.
I do not myself, therefore, regret the temporary disappearance of the Prime Minister's original proposal for a conference of the Big Three Prime Ministers. It was quite clear in his speech that he did not intend to include the French Prime Minister. It has been said by earlier speakers that, if the Russians really want to reach a settlement, we are likely to find that both sides can use the usual normal diplomatic channels. We have found that to be the case on the question of the Berlin blockade, and of the Korean truce, and also, significantly, during the last week, in the resumption of diplomatic relations between Israel and the Soviet Union, because the first sign that the Russians wanted it came from the diplomatic approach of their diplomatic representatives in Sofia to the diplomatic representative of the Israeli State. I see no reason to believe that, if the Russians genuinely want a discussion of any outstanding issues, they will not make that attempt in the normal way through diplomatic channels.
I could not help avoiding the feeling when I read the Prime Minister's speech—I was in Strasbourg at the time—that he was hankering after the great days of Yalta and Teheran, when a few men, of whom he was one, sliced up the world into spheres of influence in an orgy of power politics. That proceeding was both
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possible and necessary at the time, when we were allied with the Russians in a war against a fearful enemy who was by no means yet defeated. In the present situation, it is neither possible nor necessary, nor right, because the Big Three Powers cannot any longer, nor should they attempt to, decide the fate of all the other nations in the world against their opinion and without consulting them.
In fact, we are witnessing this year a most important change in the whole of world politics—a change that has been referred to variously by earlier speakers as a great flux. What is happening is that the post-war period of world politics is coming to an end, and world politics is no longer dominated exclusively by the three surviving victorious Powers. There are now other countries which can think and act for themselves in Europe, in the Middle East and in Asia.
It has become very apparent during the last few months that Britain and America, who since the war have largely set the whole tone of the policy of the Western World, can no longer count on the automatic support of their European allies. This was inevitable in any case as the continent of Europe recovered from the damage of the war, but it has been hastened by two other events.
First of all, the Americans, for some reason best known to themselves, have thought fit to announce two years in advance that there will be no more foreign aid after 1955. It is rather surprising to watch them, after having made this announcement, trying to exercise increasing pressure on their European allies when there is less force behind the arm which is trying to apply the pressure.
The second factor which has hastened this process is the apparent reduction in the Soviet threat to the Western World. In my opinion, the main purpose of the shift in Soviet policy—it is a genuine shift in policy, although it also has tactical aims—is to speed up the disintegration of unity in the Western World which has been built up since 1945, primarily under the aegis of Britain and the United States.
The fact is that the unity which has been built up in the West since 1945 is now more vital than ever, whether or not Russian policy continues to be a threat, because, with all the other countries in

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Europe, in the Middle East and in the Far East coming on to the international stage in their own right, the world will soon relapse into the traditional anarchy of power politics, of which the inevitable end is war, unless something is done to reverse the process. In fact, this is precisely the prediction made by Mr. Stalin 18 months ago when he initiated the shift in Soviet policy in his famous pamphlet "The Economic Problems of Socialism in the U.S.S.R."
How are we to react to this extremely dangerous situation which is developing? We must somehow try to get back the impetus behind the movement towards unity which has been built up since 1945, but we must recognise that any unity which we hope to build up must be based on the consent of all concerned, springing from genuine intellectual conviction. We can no longer rely to the same extent as previously on bribes or bullying.
We have seen on two occasions recently how the direct exercise of pressure by the United States Government on an Allied Government has had precisely the opposite results from what was intended. One case was the Italian elections, where the open intervention of the American Ambassador in Rome had a disastrous effect on the prospects of the Government. Another striking case was a series of threats made by the American Government to cut off economic aid to Europe if the Continental countries did not ratify E.D.C. There is every evidence that these threats have had the opposite result to what was intended.
The plain fact is, as many thoughtful writers on foreign affairs, such as Walter Lippman, have recently pointed out, that policies which have so far been dependent on American pressure are beginning to break down. The most important of these policies is the attempt to build a Continental Federation or European Community in Europe.
Several previous speakers have complained about the inordinate attention paid in Washington communiqués to European Defence Communities and to allied organisations. I think there is a very good rule in such cases, the motto to say nothing but good of the dead, or, as the Prime Minister would say, de mortuis nil nisi bonum. The fact is that the craft of European Community is
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patently foundering in front of our eyes, and I think we can well leave it to spokesmen of the Government party in Strasbourg to fire expensive torpedoes at the sinking ship.
The main task which we now face is to get ahead with solving the problem of Germany, which is now already as the Federal Republic, a great Power in its own right. The problem can only be solved if we bring Germany into the only framework where she can have equality without predominance, and the only such framework is that of the Atlantic Community which was built up after 1945 in the first instance as a response to the Soviet threat.
The first big obstacle to that, of course, has been the sidetracking of this whole activity into the fruitless channels of the European Defence Community. I think we can neglect that, because it is certainly dead. The other great obstacle to including Germany into the Atlantic framework has been the argument, on which there was a great deal to be said on both sides, as to whether Western Germany should first be integrated into the Atlantic framework or first united with Eastern Germany.
But that argument has now been settled by the facts. The fact is that the German people will not want to be integrated into the Atlantic Community and the French people will not allow them to be so integrated until both have proved to their own satisfaction whether a settlement of the German problem is now possible by negotiations with Russia. That, and not the eloquence of the acting Foreign Secretary, is the reason why the conference at Washington proposed these four-Power talks.
There has been a natural reluctance to negotiate a settlement with Russia during the last few months because the Western Powers feared that they might find themselves divided once the possibility of negotiation really arose. The remarkable fact is that on Germany, which is the key to any settlement in Europe, there is remarkable unity both of aim and method among all the persons concerned on the Western side; both the Government and the opposition parties in Western Germany and in all the three Western Allied Powers, are agreed that German unity is

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only acceptable on condition that there are free elections in the Soviet zone, and secondly, that a united Germany has freedom of foreign policy, freedom to choose her friends.
Let us be clear what freedom of foreign policy means. It means in practice at the present time freedom of Germany to join the West. There is no question whatever that a united Germany which came about this year would choose the West. It would be quite incapable of defending itself without Western protection for a long period, and the addition of the ruined Soviet zone to the Federal Republic would set back West German recovery by years, unless the united Germany were helped by the West pumping in supplies over a period. There is no question at the moment that a united Germany would join the West. If we got a united Germany, freedom to choose her friends would mean freedom to join the West.
The remarkable extent of agreement on this has been shown by the action of the main opposition party in Germany, the S.P.D., in voting for the Bundestag Resolution and also by the French Socialist Party, the largest single democratic party, and the most important opposition party, in France voting strongly against neutralisation of Germany at their party congress a fortnight ago. There can be no doubt in any of our minds that if we enter negotiation with the Russians on Germany unity, those conditions are what we must aim at. There is a case for arguing that it was very unwise of the Western Governments to embody these conditions in their Note to the Soviet Union as an agenda for the conference. I think it was very unwise indeed, and that the criticism made of that action is fully justified.
On the other hand, if the Russians really want a settlement of the German problem on any terms which are acceptable to the West they will certainly not be put off from entering negotiations by any awkwardnesses in the framing of the Western Note. If the Russians want a settlement they will approach us and take an opportunity of having a settlement, and they will not be put off by any stupidities in the form in which they have been approached.
The Joint Under-Secretary of State for Foreign Affairs (Mr. Anthony Nutting): The hon. Member said that it was unwise to insert certain conditions in the invitation issued to the Soviet Government. Perhaps he would not mind specifying what he thinks were the things which were unwisely inserted.
Mr. Healey: The Note which was sent to the Soviet Government, which is published today in a White Paper, concludes:
"The subjects for discussion should be the following:

(1) The organisation of free elections in the Federal Republic, the Eastern Zone of Germany and in Berlin….

(2) Conditions for the establishment of a free all-German Government with freedom of action in internal and external affairs."

The Russians might well object when they get this Note that they cannot agree to the achievement of Western aims being made the agenda in the discussion, and that is how the agenda is drafted at the moment. On the other hand, if they want a settlement I think that they will not argue debating points like that, and far too much attention has been paid to debating points in this discussion up to now.
If we get these talks with Russia, and I sincerely hope that we shall, let us be quite clear that if we can get the unity of Germany under any acceptable conditions that will be by far the best result of the discussions, even from the point of view of selfish Western interests; because the sooner we get German unity the better for us, the less price we shall have to pay the Germans or the Russians for it and the less dislocation it will cause to Western policy for including a united Germany in the Western alliance.
But it is possible, of course, that the Russians will not meet all the conditions which we would consider the basic essentials. If that is the case it is absolutely vital that it should become clear from the negotiations that the break-down is the fault of the Soviet Government. If that does not become clear to both the German and the French people the present stagnation in Western policy is certain to continue, because Germany would not want to commit herself to the West and France would not want to see her integrated with the West.

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That means that if in any negotiations Russia offers a large part of what we are asking we must be prepared to offer some concession on our part. I agree that we cannot weigh concession against concession, as somebody said, by a mathematical computation, but we must be prepared to show the Germans and the French, as well as the Russians, that we are prepared to give up something ourselves. Both positions on Germany are very rigid indeed, but I believe that there is one point on which flexibility is possible. There is no possibility whatever, of course, of a concession on a free election. That is an absolute sine qua non of any agreement whatever on German unity. Also I do not think that we can get a concession in principle on the question of freedom of foreign policy.
The neutralisation of a united Germany would be profoundly dangerous to the West and to Germany. It is the most important single factor here. The neutralisation of Germany would mean the withdrawal of all N.A.T.O. troops from Germany west of the Rhine. If that happened we would be giving up the possibility of defending N.A.T.O.'s northern flank, including the whole of Scandinavia and Holland, and would be making it almost certain that we could not defend France either, because there is not sufficient depth behind the Rhine for defending France.
The result is that the neutralisation of Germany would mean the breakdown of N.A.T.O., and the disintegration of the whole of the Atlantic Community. The second point of equal importance is that the neutralisation of Germany would only work as long as the Western Powers and Russia distrusted one another less than either of them distrusted Germany That certainly is not the case at the moment.
Of course, it would be very dangerous to accept neutralisation on a temporary basis, as was suggested earlier in the debate, because this moment is the one moment when we can be sure of a united Germany joining the West. If we have a united Germany neutralised and then give it time to lose all its dependence on Western support, by the time we give up neutralisation Germany is bound to join the East, so that we get the worst of both worlds.
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On the question of neutrality we cannot budge an inch but we can budge an inch on the question of German rearmament. We can budge a great deal, because it is possible to integrate a united Germany politically and economically into the Atlantic community, provided the Atlantic Community is strengthened in the economic field, as the Chancellor suggested, without a united Germany at least in the early stages being militarily integrated with the Atlantic community.
The idea that a united Germany should be allowed to join E.D.C. is preposterous. The reason that the French will not ratify E.D.C. now is that they do not want to be locked up in a cellar with 50 million Germans. If it is a question of being locked up in a cellar with 70 million Germans, there is no question of the other countries in E.D.C. going through with it at all. Therefore, if Russia does offer free elections and, in principle, the freedom of foreign policy, the Western Powers should be prepared to concede German rearmament at least for the time being. That would mean that N.A.T.O. troops and Russian troops stayed in Germany as they do at present, but that we have a united German Government elected by free elections, free to integrate itself politically and economically with the West.
That is exactly the present situation of Austria. It is not a very nice situation but it is better than the present situation of a divided Germany with all its future potentialities for war. I believe that the Australian solution of the German problem, if rumour is correct, was at one time favoured by the Foreign Secretary himself. I am certain that the overwhelming majority of Germans would be prepared to accept unity at the price of continued disarmament under these conditions, and I know that the whole of the French nation would be only too glad. But it is conceivable that Dr. Adenauer himself might not be so prepared.
Here I must refer to the blatent and flagrant intervention of the Western Powers in the forthcoming West German elections. It is quite inexcusable, and it comes very ill from members of a party who have so often sneered at the Labour Party for wishing to pursue a Socialist Foreign policy. A foreign policy which depends entirely for its success on the permanent survival of an old German

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statesman in power in Germany, although his party is dwindling in importance every day, is not even sensible.
I can understand if the Prime Minister has a guilty conscience after the catastrophic consequences of his last speech on the elections in Italy. But I would ask him to bear in mind that the intervention on the Government side of the American Ambassador in Rome was equally catastrophic to the then Italian Government, and it may turn out that the Western attempt to bolster Adenauer in this flagrant way—and we have seen other examples of it this week—will have the opposite result. Some of the damage which has been done could be repaired if the Allied Powers would consider associating the future German Government, whatever its political complexion, with the four-Power talks in some way or other. I leave that as a thought for consideration by the Government.
I feel that the Washington Conference has made a most valuable step forward and that, on the whole, it has pulled back Western policy on to more sensible lines, and although there are certain absurdities and stupidities in the actual framing of the documents which emerged, there has been created a basis for genuine negotiations with the Soviet Union on what is by far the most important of all the problems at present dividing us.
9.10 p.m.
Mr. C. J. M. Alport: I am sure I am not alone in this House in saying that I always listen with the very greatest interest to the contributions of the hon. Member for Leeds, South-East (Mr. D. Healey). Hon. Members on this side of the House do so, particularly, because we are always intrigued to find how far his presentation of the problems of foreign affairs differ from those not only of one or other group in his party, but, so far as I can make out, from everybody else in his party as well. It may be that our observation is inaccurate, but, for somebody whom we recognise as an expert, it seems peculiar that we should hear his lone voice condemning the Prime Minister for taking an initiative which the rest of his party, and public opinion generally throughout the Western World, has complimented and supported him in taking.
There is no reason why the hon. Member should not take an individual point
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of view in this matter, but what rather worries hon. Members on this side of the House is the almost joyous way in which hon. Members opposite—particularly the hon. Member for Leeds, South-East—proclaims the death and the complete abandonment of E.D.C. The politics of this country at the present moment are littered with the abandoned brain-children of the late Socialist Administration, and E.D.C. is surely one of those.
Mr. Healey: Would the hon. Member agree that the proposal to form a European army was first made by the present Prime Minister at the Council of Europe in August, 1950, and that he then supported a resolution for the creation of an army with a federal superstructure, and did not deny the suggestion that he might be its Minister of Defence?
Mr. Alport: Whether or not he denied that suggestion, the proposal, emanating from the Pleven Plan, was taken up with very great alacrity by the late Administration, and was given, as we understood, it very great support. Now we find that it has been suddenly and completely abandoned, and instead, so we are instructed by the hon. Member for Leeds, South-East, we have to look upon the Atlantic Community as providing a prospect for that renewed unity which, I quite agree, is so essential at the present time.
It is surely not very encouraging to those whom we are asking to join us in unity in the Atlantic Community to find us simultaneously abandoning, apparently without a care in the world, the previous structure of unity upon which we placed so much reliance. I should have thought that a perfectly satisfactory and proper explanation of the attention paid to the E.D.C. in the communiqué was the feeling of the three Foreign Secretaries that it was quite vital that, at the present time, we should try to make up the ground which has undoubtedly been lost, mainly as a result of the fears of the French, and to try to carry through that experiment in European co-operation at a time when, as the hon. Member for Leeds, South-East quite rightly says, there are signs of the breaking up of that close unity of Western countries—particularly in Western Europe—which has existed in the last few years.

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One of the things we must certainly do, at a moment when we no longer fear the Russian menace in the way we did two years ago, is to make sure that we do not surrender the unity and strength which made that freedom from fear possible. I agree that there is much to be said for a development of the Atlantic Community. It is most important that hon. Members on both sides of the House should pay full attention to the development of the idea of European unity, without which, in my view, many of the advances we have made during the last few years will be lost.
I am conscious this evening, and other hon. Members must surely have been conscious too, that in speaking on Foreign Affairs at the present time one runs a greater chance of being wrong than almost at any other time during the last seven years. I think that it is incumbent upon those of us who have the temerity to try to contribute to this debate to attempt to give the assumptions on which our remarks and conclusions are based. I think that the very remarkable speech of the hon. Member for Hammersmith. North (Mr. Tomney) was a particularly good example of the way in which we should apply ourselves to our problems at the present time.
My argument, for what it is worth, is based on three propositions. The first proposition is that the riots and strikes which have occurred in Berlin and Eastern Germany and in other satellite countries are of major significance to the future of Europe. They have turned, in my view, the satellites from being an asset of strength to the Soviet Union into being a potential liability, not only in peacetime but more especially in war.
I do not believe that the men equipped with the responsibilities of power in Moscow can ignore the portents of these strikes and unrest and the meaning this must have to Russian security in the West. I would have thought, therefore, that it would have been in the interests of Russia to be relieved so far as possible of direct responsibility for the administration and subjugation of these territories. I would have thought that now, as at no other time since 1945, there is a reasonable chance of Russia trying to withdraw—obviously from her point of view without loss of face or prestige—from the morass
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of hatred and opposition which exists so far as the Soviet Union is concerned, and which has been the result of six, seven or eight years of Soviet domination of these countries. Therefore, if that is in the interests of the Soviet Union, I should have thought that if we were going to deal, as I hope we will, with the problem of Europe in negotiations with Russia we must deal with it, not as a German problem alone, but as a problem of Germany and the satellite countries as a whole, because I do not believe that these two problems can be disentangled.
The second significant thing which has happened during the last few weeks is the appearance of Germany as being the main political problem in foreign affairs. We have since 1946 been grappling with the problem of Russia. Now, as one hon. Member said, it seems to be almost a case of "this is where we came in." It is Germany once again that is our problem. It is my view—and I do not claim that I am any more right than anyone else—that the problem of the future development of the forces within Germany is not a problem of expansion towards the West but is now the problem of expansion towards the East. I believe that there are still forces within Germany that might, unless controlled, at some future date, not in the next five years or 10 years or perhaps even 20 years, lead Germany once again to try to repeat the experiment of 1914 and 1939, and that third time be successful.
I do not believe that these are the dominant forces in Germany at the present moment, but I think they can become the dominant forces unless we are thinking, in framing our policy, in terms not of this year or next year but of the next 20 years or more. It would be the gravest mistake if, in order to solve the immediate problem and to relieve ourselves of the immediate tensions, we were to create a new and even greater problem and greater tensions in the future derived not from the conflict between East and West, between Communism and the West, between Russian expansion and the West, but from the danger of a future development of German expansion once again.
As I have said, I believe that that expansion would not be directed against the West in the future. I believe that, if there is any lesson which any future

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German statesman must learn from the experience of the last 50 years, it is that in trying any attempt to expand westwards the Germans bring themselves up against counter forces which will always defeat them. Therefore, it is towards the East that the danger lies. Even if I am wrong in all this supposition, I think these are the views and this is the appreciation which would be in the minds of Russia, and not only in the minds of Russia but also particularly in the minds of the satellite countries. If we are to bring liberation to the satellite countries—I believe that to be right—then we must not liberate them from Russia whilst at the same time placing them in jeopardy—they might suppose it to be in jeopardy—of German expansion in the future.
I believe there is a way of synthesising these two problems. If we can ensure some relaxation of the hold which Russia has upon the satellites, the quid pro quo—the Latin tag so often used in this debate—must be to ensure both for Russia and for the so-called satellites that their integrity and security in the future will be protected against the dangers of territorial expansion from Germany eastwards.
I realise that this is a very difficult subject indeed, but it is absolutely the key problem which we have to face at the present time. I have asked many German friends what is the meaning of German unity. Those words have been used often enough in this debate. What is German unity? What does it mean in terms of geographical expression, and if it means something today, can we be certain that it will mean the same thing in 10 or 20 years' time?
These are perfectly legitimate fears for us in this country, and for the French, and, indeed, for any of those countries which were involved at one time or another in two great world wars. It would be not only wrong with regard to the interests of our own people and those of the Western World but also a wrong to the Germans themselves if we did not get the Germans to face up to that problem at the present time. I believe that the future of Germany can rest in the hands of men who are willing and able to ensure that Germany makes her real, proper contribution—her historic contribution—to the free Western World, but
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it is in Germany's interests, just as it is in our interests, that we do not leave a loophole to someone who wishes to follow in footsteps of the past to create or exploit an issue of German expansion in the future on a basis of nationalism which will lead to a return to a dictatorship of expansion which we have twice seen in our lifetime.
That is a problem which must be tackled. If we are prepared and able to tackle it now, I believe that, whatever might be the immediate reaction in Germany, it will be far easier to tackle it in 1953 than it would be to tackle it in 1963 or 1973 if the problem arose then. By tackling it and by ensuring that there is an understood and guaranteed definition of the meaning of German unity before we start talking about it too glibly, we shall make the best contribution to a return of confidence between East and West, involving at the same time the liberation of those satellite territories in the East which would be in the best interests of the Soviet because they would provide the essential buffer between the Soviet and Germany.
My third proposition is this. I am no expert in European affairs, or in the Council of Europe, but I feel the time may have come when the rhythm and pattern of our foreign policy and foreign relations over the last 400 years should be changed. Hon. Members will remember from their school days that Mary I, after the loss of Calais, went to her grave believing that the word "Calais" would be written on her heart. What was the significance of that? It was not a question of economics, of the value of Calais from a strategic or economic or material point of view. It represented the loss of the great mediaeval interests which Britain had on the Continent of Europe. During those years all our energies and inspiration, and our great cultural contacts, were directed to the Continent. It was only when that failed, and our interests and energies were forced out to the West, that we realised that the Continent was not as essential to us as mediaeval man had supposed.
I believe that times have changed and that the continent of Europe is just as essential to us today as it was in those days when we seemed so close to it and the New World was unknown. I was delighted to hear my right hon. Friend the Chancellor of the Exchequer catalogue

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the commitments which Britain has undertaken on the continent. I was also glad to hear him say that we were going further than that, and that at the present moment discussions are taking place for a basis of political association.
I know it is an idea which causes a great deal of heart-searching on both sides of the House and, indeed, throughout the country. We are frightened of the idea of being federated, of having our liberty of action fettered by being too closely associated with the Continent. I understand that clearly, but I am not sure that this attitude is not a relic of 400 years of freedom and exploitation and expansion not on the Continent of Europe but away to the West and to the South.
I am sorry to put this against an historic background because it may seem so remote, but it may mean something to the House when I say that the connections we had in mediaeval days have some application to our present problems. We should accept the disadvantages, accept the commitments, accept all the hazards which a closer connection with Europe involve. I do not believe that this would mean a conflict with our Commonwealth or Empire interests. I do believe that unless we are able, with our leadership and through our contribution, to maintain the stability and integrity of Europe, it will not be possible on the next occasion to rely simply upon our connections with the Commonwealth and the outside world to rescue us and Europe together from the conflagration which may take place.
Therefore, what we really require is not only to make our contribution and to accept our commitments, but to undertake the leadership in Europe which that will entitle us to claim. The reason why the design of E.D.C., the design of the Schuman Plan and the design of these various institutions upon which Western European unity is based is not congenial to us is primarily because we have no part in deciding what their design should be. Now, I believe, we have perhaps learnt from our mistakes and we are accepting, through the policy of the Government, the new atmosphere which exists in the world and with that a new role for Britain, a role which will not be any
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less significant and satisfactory for its people than the role which we have had historically during the last 400 years.
9.31 p.m.
Mr. Geoffrey de Freitas: As the hon. Member for Colchester (Mr. Alport) was speaking, I was trying to complete the lines
"An oyster is a gentle thing
and will not come unless you sing"
but his reference to school days drove that right out of my head, because I can remember him as a captain of boxing who landed a straight left and right hook on many occasions. We were in the same weight at that time.
The hon. Member made a moving speech. I was particularly impressed with how, at the beginning, he attacked my hon. Friend the Member for Leeds, South-East (Mr. Healey) for saying that the E.D.C. was dying and not doing anything to revive it. I say tonight that the Council of Europe is dying, and I want to know what the Government are going to do about it. The hon. Member looked back 400 years. I want to look forward only 50 years. The hon. Member referred to our role, and I should like to know whether this is not the guide for us: why should we accept a role as a constantly grumbling appendix of Europe when our real destiny is to be the heart of an Atlantic community?
In my submission, the Council of Europe is dying. The Consultative Assembly has certainly never recovered from its betrayal—that is the only word for it—by the Prime Minister. Are the Government going to let it die, or will they, as I suggest they should, transform it and its Committee of Ministers and Consultative Assembly into an Atlantic Council, with a Committee of Ministers and a Consultative Assembly? Such a Consultative Assembly could have a real purpose, unlike the Strasbourg Assembly with its parochial European outlook, which is of little significance in an age in which Europe has ceased to dominate the world.
An Atlantic assembly of Western Europe and the United States and Canada being the meeting place of parliamentarians and not of Governments, there could be freer discussion than is possible between representatives of Governments because at that level every word matters.

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It would lead to a genuine exchange of views between parliamentarians, who would thus learn a great deal of the way in which other parliamentarians are thinking.
To some Governments, especially a British Government, these meetings of parliamentarians are suspect. Our Governments, and particularly the Foreign Office, view with horror international meetings of men and women without responsibility. I understand that this tradition blinds us to the fact that in many other countries like the United States and France the views of parliamentarians are exceptionally important—in many cases more important than the views of Governments. We have begun to understand why so many United States senators conceive it to be their duty to attack their Government, even if it is the Government of their own party. The separation of power appears to them like a divine command.
But we have not yet begun to realise that in a country as near as France even a former Prime Minister, who has had the difficulties with which French Prime Ministers are faced, feels and thinks in his attitude towards a Government primarily as a parliamentarian and only secondly as a Minister. I have heard former Prime Ministers discussing the instability of French Governments and in each case they spoke as parliamentarians who conceived it their first duty to tear the Government down and not, as Ministers, to keep a Government in being.
I believe that one of the first things we should recognise is the very much greater importance that should be attached in foreign affairs to the views of what we would call back benchers in countries other than our own. We must not think of other countries organising their parliamentary and political life in the way we do.
During the time that I have been a United Kingdom representative at Strasbourg—the last 18 months—like other hon. Members I have had many lessons given me of the different trends and different points of views of continental politicians. I certainly never remember a debate at Strasbourg which made the faintest impression on the current of affairs in Europe. I see its significance only as a means of educating parliamen-
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tarians from the 14 different European countries in the different points of view, the different trends, of other parliamentarians.
How much more important is it for parliamentarians of the countries of Western Europe and North America to learn from each other why they are thinking the way they are and what they are thinking. At Strasbourg we sit in alphabetical order. If there were an Atlantic assembly then, assuming that we had the same arrangement of seating, we would have everything to gain by having Senator Taft sitting next to M. Teitgen, Chairman of the M.R.P. in France and Senator McCarthy sitting next to M. Macass, a very distinguished Greek representative.
In this House we spend many hours and days in the course of a year discussing the affairs of Asia and Africa. We meet men and women from the parliaments of the new Asia and Africa who come in our Commonwealth Parliamentary Associations and other bodies. In an Atlantic assembly, without realising it, we would act as interpreters of the new Asia and the new Africa to American Congressmen, who have no such contacts and no such experience as we are fortunate enough to have.
Even at Strasbourg, like other hon. Members, I have found that some of our fellow Europeans, for example, the Scandinavians, who have little contact outside Europe except in shipping, often appear to us to be surprisingly ignorant of events in Asia and Africa which we all accept as a matter of course. That is no reflection on them, but arises from the fact that they do not discuss and debate these matters at home. They have no reason to do so. How much greater, then, is the gap between United States Congressmen and the new Asia and the new Africa?
My hon. Friend the Member for Hammersmith, North (Mr. Tomney), who referred to the problem of the difference of opinion between the United States and this country about China, understated the problem. It is almost a question of there being one European point of view and one American point of view. Almost without exception, United States Congressmen take one point of view on China and almost without exception European parliamentarians take another point of

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view; we all recognise the great difficulties which may confront us in the months to come because this wide divergence has grown up.
I believe that the existence of such an assembly as I have outlined would have gone a long way towards preventing that taking place. In what I do not regard as a very original choice of words, the Chancellor of the Exchequer said that Her Majesty's Government were "ready to grasp at realities." I ask him to consider an Atlantic council as a political reality. It would start with many advantages.
First, there is no likelihood of it wasting time with long arguments about federation and with the frustration which occurred at Strasbourg because so many Europeans were led to pursue this policy by irresponsible statements by Conservatives who ought to have known better, as well as by one member of the Labour Party. There would be no likelihood of federation being discussed at such an Atlantic council because the 150 million citizens of the United States would not contemplate federation with the 300,000 citizens of Luxembourg, even if they were to contemplate federation with the 200 million of the four most populous Western countries.
Even the voting in such an assembly would take into account the size of the United States if it followed the Strasbourg pattern, as I suggest it should. At the United Nations, where Governments are represented, the United States and the United Kingdom each have only one vote, just as the Yemen has, but it is recognised at Strasbourg, and would be recognised at this Atlantic assembly, that voting should bear some relation to the size of the country. For example, Luxembourg has three representatives at Strasbourg whereas we have 18. On a populalation basis the United States would have over 50, although since they have only 530 members of their two Houses, they would be unlikely to take up their full membership in such an assembly. The point is that there would be sufficient of them to see that all the geographical and sectional interests of their hugh continent were represented.
The second advantage which I believe this assembly would have is that it could learn from the mistakes of Strasbourg.
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I refer to such mistakes as we have had inflicted upon us this year with the requirement that Members of Parliament go three or four times a year, or even five times a year, to the Assembly at Strasbourg. This ignores the fact that for any Member of Parliament to mean anything in an international assembly, he has to be firmly based in his own national parliament—and there is no more certain way of weakening his position in his national parliament and in his country than for him to become merely an itinerant internationalist. But they could learn by those mistakes and have no more than two meetings a year.
The third advantage is that they could learn from the successes of Strasbourg. I submit that one of those successes is the choice of the city which is the meeting place of the cultures of two of the most important European countries, Germany and France. It is rumoured that it was chosen only because Sir Gladwyn Jebb went to Strasbourg University. I am not interested in the reason, but it was a happy choice. Were we dealing with an Atlantic community we would have to consider whether a city like Quebec would not be a suitable meeting place. There, 200 years ago, was the battle which decided the future of North America. It may well be described as the meeting place of English and American Protestant culture and the Catholic culture of old France.
The fourth advantage I see from this Atlantic assembly is in the timing. Four or five years ago it would have been impossible to contemplate such an assembly. Today, most Western European countries have had the experience of dealing with Canada and the United States, and working with their Governments in the North Atlantic Treaty Organisation. It is, therefore, not beyond the bounds of practical politics for us to develop an organisation which recognises the importance of parliamentarians as opposed to Governments. As I said, recent events have shown us that in the United States and in France parliamentarians can be even more important that Governments.
I do not wish it to be thought that my suggestion is that the N.A.T.O. Organisation should develop a consultative assembly. That would raise complications which are unnecessary and should

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be avoided. There are obvious difficulties, such as the fact that Portugal, a member of N.A.T.O., could never be a member of a consultative assembly because it has no democratically elected Parliament. That is why Portugal is not in the Council of Europe today. On the other side of the coin, we find the bigger complication in the fact that Germany and Sweden are not members of N.A.T.O. I am not offering this Atlantic assembly as a development of N.A.T.O. but as a consultative assembly modelled on the dying Consultative Assembly of Europe so that continental and North American parliamentarians as well as British parliamentarians may learn from each other.
The Chancellor of the Exchequer referred to the constantly developing Atlantic community. We pride ourselves on being realistic in politics and I wish the Government to show evidence of that. We should no longer accept as inevitable our role as the constant grumbling appendix of Europe. Instead, we should become the heart of an Atlantic community.
9.49 p.m.
Major H. Legge-Bourke: I had intended to raise a matter which is allied more closely to the beginning of this debate than to the end. But first I would say a few words concerning my feelings about Germany. During this debate I have been remembering a reference in Lord Rosebery's book about Pitt, in which he said something to the effect that every so often the Russian Empire feels the desire for expansion. This is usually gratified at the expense of the Turks—I suppose today we should substitute Yugoslavia for the Turks—with the result that the Western Powers do their best to prevent this process, with much the same effect as pruning would have on a healthy young tree.
I cannot help feeling that, at the end of the war, we might have realised that the damage had been done before the war had ended, and that everything we did from then onwards to push Russia back, or to get her to recede behind her frontiers, was likely to be done in her time and not in ours, and that much waste energy could have been avoided. That is a rather sorrowful reflection, but I am inclined to think that it is probably
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nearer the truth than many others we have heard on this subject. I believe that the damage was done at Teheran and Yalta, and that once we allowed Russia to get as far West as she did, it was entirely up to Russia when she withdrew from that line, and that nothing that we could do, short of starting a world conflagration, was likely to push her back.
I am quite horrified to hear in this debate today from a number of speakers the idea that one of our duties when the talks take place must be to offer something to Russia. In the name of conscience, has not Russia taken enough from the free world since the war? Have we now got to give her still more? I should have thought that if we could have seen Russia giving freedom to Estonia, Latvia and Lithuania, we might have said that Russia had done something for which we should give some return, but, until something like that occurs, I do not see why we should give one single thing to Russia.
That is all I propose to say on that subject, beyond this—that I believe that one thing which we have to consider so often in politics is which is the worse of two worlds, and to try to avoid having the worse of the two. I say that the worst of the two worlds as far as Germany is concerned would be a Germany re-united and tied up with the East. I would say no more on that subject, because I am not sufficiently expert in German affairs to know the details of the matter, except that the paramount issue in my mind would be to avoid a re-united Germany going towards the East and going in with the Soviet Union. Do not let us imagine that there must be a majority for the Communist Party in Germany for that to happen, because there was no majority for the Communist Party when Ribbentrop signed the pact with Stalin before the war.
The other subject which I wish to raise is one which I think I can claim to know a little more about, and that is the question of Egypt and the Middle East. There is one large problem there which we tend to overlook in all these difficult negotiations about the Canal Zone, and it is that, in addition to the rather natural desire of the Egyptians to try to remove us from the Canal Zone,

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I believe that they have had another reason for wanting us to go which we have ignored rather too much. I believe that that reason is that they want us to go so that they can, one day and in their own good time, try to redeem the shocking defeat which they had at the hands of the Israeli troops when we were setting up the State of Israel. The hon. Member for Leicester, North-West (Mr. Janner), who is sitting opposite, may find what I am about to say strange, coming from me, but I hope we shall be more or less in agreement.
I am of the opinion that there is one very dangerous dilemma in which this country may find herself in the Middle East unless fairly prompt action is taken. It is this. Let us suppose that we were so to denude our garrison in the Canal Zone to the level of maintenance troops, and that we had adequate safeguards—or safeguards which might be considered adequate—so far as our return is concerned. Suppose that the Egyptian Government decided to send their army into Israel. It is absolutely certain that the Kingdom of Jordan would have to come in with Egypt, if only to support her own interests. We should then be in a very unpleasant dilemma because, on the one hand, we are guaranteeing the frontiers of Israel jointly with other Powers, and, on the other, we have a treaty of alliance with Jordan.
Therefore, if that situation should arise, we might find ourselves in the unfortunate position of either having to abandon Israel or break our treaty with Jordan, or sit on the fence. If we sit on the fence, then one thing is certain—we shall have a conflagration in the Middle East which will get out of control and which will result in a terrible loss of life. I doubt whether we should ever be able to control it by ourselves. Therefore, it seems that what we must avoid is any likelihood of the Egyptian Army ever again invading Israel.
One of the things which have been troubling a great many of us for a considerable time, especially those of us who have been regular Service men, has been the appalling effect upon morale of boxing up our troops in the Canal Zone for such a long time under the conditions in which they are now living. A fairly close
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relation of mine recently went out there, and he described the conditions as being little short of living the life of a prisoner of war. That is probably the nearest and most apt description which I could give of it.
Something has got to be done about that. We cannot leave a number of men, particularly of our Regular Army, living in such conditions for ever. I believe that one way of overcoming this difficulty, without at the same time losing face or endangering our interest, would be for us to move the fighting section of the troops in the base at the moment, or a sufficient quantity of them, to maintain law and order—and that is the important thing—somewhere else in the Middle East.
There is one thing about which I have always disagreed with the Prime Minister, and that is the statement which he made at the beginning of the 1945–50 Parliament in which he said that he saw no strategic importance in our staying in Palestine. I always disagreed with that view, and always agreed that Palestine, or Israel as it now is, must inevitably be of immense strategic importance to us.
I do not think that we want to stay in the Canal Zone for the sake of the Canal, but we must be somewhere near that region because it is the junction between two great continents. History shows that long before the Canal was built, that area was vital, and it will remain vital whatever Lord Montgomery or anyone else may say.
I believe we might thus be able to do something that Israel very badly wants us to do, and not do something which would make our relations with the Arab States even worse than they are at the moment. It would maintain our strength in the Middle East and would keep a bastion in the area against possible aggression from the Soviet Union. It would mean, perhaps at the price of considerable economic aid, giving Israel financial assistance, on the understanding that our troops could go perhaps to Sarafand or North of Acre, where considerable activity took place during the war. Let our fighting troops be in that area and the Suez Canal base remain where it is, with a maintenance squad.

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We should then achieve many objects that we ought to achieve. We should overcome the problem of the morale of the British Army, Egypt would be deterred, after our pulling out, from attacking Israel through the Sinai Peninsula, the political solution of the Israel-Arab problem would be very greatly facilitated, the refugee problem would be eased, and peace, I believe, would be guaranteed between the Arab States and Israel. We should still maintain a bulwark against the possibility of a Russian coup in that area, and maintain our traditional role of keeping the peace in the East. All these things are important to do. We shall never solve the social problems of the East until we solve the political problem, and that is what we must do.
It being Ten o'Clock, the Motion for the Adjournment of the House lapsed, without Question put.

EMPLOYMENT (OLDER PERSONS)
Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Kaberry.]
10.1 p.m.
Mr. Charles Fletcher-Cooke: My subject tonight is the employment of persons over 40. I am still able to speak about this subject without declaring an interest, although I believe that the Parliamentary Secretary who is to reply is not in such a happy position. Three years ago, almost to the day, this painful, unglamorous subject was raised by one of my hon. Friends. I am sure it is a subject which has been in the minds of the Ministry of Labour ever since then.
My impression is that during those three years the matter has become worse rather than better, and it is a painful reminder of that fact that only recently a very gallant officer, formerly in the R.A.F. and who has been unemployed for many years, felt it necessary to make a demonstration of the suffering and misery of these men by flying under the bridges of the Thames in an aeroplane in order to call attention to his plight and the plight of his co-sufferers. I am glad to say that as a result of his daring and no doubt foolhardy action he himself has at last got a job, but it will be a sorry state of affairs if it is necessary to fly under the Thames bridges and imperil
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both oneself and the bridges in order to get a job when one is advanced in years.
There are two problems. There is the problem of persons over 40, and the problem of persons over 60. The first problem is not too difficult to solve. The difficulty that people of that age find, particularly in the clerical and executive grades, when they have left their jobs, no doubt for good reasons, and try to get another, is that owing to the increasing incidence of superannuation and pension schemes in this country nowadays, they do not fit into the schemes of the insurance companies that run these beneficial schemes. The result is that employers, even if they are otherwise disposed, are virtually forbidden to employ persons over 40 because the schemes of superannuation and pension devised by the insurance companies forbid it. The insurance companies, for actuarial reasons, insist on a comprehensive cover for employees altogether in any concern, because that spreads their risk. As a result, they also insist that to bring people over 40 into these schemes would be unduly to favour such persons. As a result of that, and not of ill will on the part of employers, persons over 40 are virtually debarred from employment.
It is a rather curious development of what is otherwise a magnificent social experiment. The only possible cure is for the Ministry of Labour to make it clear to a conference representing employers, the F.B.I. the trade unions and above all the insurance companies, that any such provision in pension schemes run by insurance companies is contrary to public policy, whatever its actuarial merits may be.
I am quite sure that business in this country has sufficient sense of social responsibility to accept that, provided that they all accept it, provided that all the companies agree that they will not make this a condition for running a superannuation or pension scheme. It is one of the glories of our way of life that these things can be done without compulsion. If that can be put to them I think that that very serious problem might be solved. At the very least, the insurance companies should allow the over 40's to contract out, that is to say they should not insist that all employees of whatever age of any concern should join the scheme.

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I have had a good deal of information from people since I said that I was going to raise this subject. My information is that people of that age are so desperate to use their faculties in employment that they are prepared to be excluded from a superannuation scheme altogether and not to take the benefits that otherwise would accrue to them. But under most schemes at present even that is not permitted, because for actuarial reasons insurance companies insist that all employees, of whatever age, should be members of such a scheme.
I know that the Parliamentary Secretary to the Ministry of Labour has an Advisory Council that advises him on these matters. I also know that the Chancellor of the Exchequer has set up a Commission to advise him on the whole problem of working age because of the fact that, as we all know, owing to the advances of medicine and one thing and another, people who used to be too old at 60 are now often only too spry at 76 or 79. But in the case of this problem of the employment of perfectly robust, fit and capable men of over 40 we cannot wait for the reports of the Chancellor's Commission, because every day one gets more and more examples of the most terrifying waste of talent and of the feeling of despair that attacks people who are still in the prime of life when they feel that they are not wanted.
The problem in the form of human despair and misery is almost as acute as it was in the bad old days of mass unemployment. It is not as glamorous and does not hit the headlines as often as that did, but I believe that in the sum total of waste, despair and misery the problem is almost as acute. After all, in the days of mass unemployment there were many who were young and in whom hope was not yet dead, but once the great divide is passed it is very difficult to retain hope. This problem, though not as glamorous as that of mass unemployment, is just as urgent and in the matter of human misery is just as important. Yet in the case of the middle-aged it does not require very much to put it right.
The second and rather more important point is the problem of the over-60s. There are insurance and actuarial complications which though great are not the overwhelming obstacle. The over-
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whelming obstacle today is the retention by employers, by the Government and by everybody else of the myth, and it is a myth, that people over 60 in the 1950's are the same physical specimens as people over 60 a hundred years ago. They are quite different physically, mentally, spiritually, and in every way. But there is a sort of carry-over from a century ago of the idea that anyone over 60 is an old man with a beard, fit for nothing but to be put out to grass. I am sure the House agrees with me that that is quite incompatible with present-day medical and sociological conditions.
It is ridiculous, for example, that our great trade union leaders, who have done so well by this country recently, should in the next few years, and in some cases in the next few months, be forcibly retired because the age limit is laid down rigidly in black and white and, therefore, they have to go. In the same way, in the Civil Service the age limit is quite out of touch with modern conditions. Of course, it spreads all the way through industry and in every activity. One sees men perfectly capable of doing a good day's work mooching about public libraries, sitting on the public benches, being got rid of by their wives because they become a nuisance if they stay in the house, with nothing to do, eating their hearts out, longing to be of use in a humble capacity.
A great many people—I think the population here is ahead of the leaders—realise that a working life should not be a sort of crescendo up to the position of a great executive in a high position at the age of 60 or 65, and then a complete drop down to retirement, but should be a curve—a life up to a position of maximum responsibility and a maximum income, say, at 55 or thereabouts, and then a tailing-off and an acceptance of lesser responsibility with a smaller income, because in the sixties a man's responsibilities are much less. His children have grown up and gone away, and he has not got that financial responsibility. His needs are less and his way of life is more settled. He knows exactly how to deal with such money as he has. His days of restlessness are over. He is much less of an absentee.
I think that now, after the fearful experiences that older people have had in

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recent years of the difficulties of employment, they themselves would be quite prepared to accept jobs much humbler and lower paid than they were accustomed to when they were 10 years younger. I believe they would do such jobs very well.
I suggest to the Parliamentary Secretary that it should become an honourable obligation among all employers, whether they be Government or private employers or whatever they may be, to accept a proportion—I think the problem will be solved by quite a small proportion—of people over 60 or even over 65 as new employees. Of course, they would keep their old employees, by and large. If this idea is put across in the right way, there is no reason why it should not be put into effect.
Employers should be proud of doing this, in the same way as the employment of the disabled or ex-Service men who have lost some faculty has become an honourable obligation generally in industry. That, of course, is a much more glamorous affair. There was the old King's Roll on which employers who were prepared to employ a proportion of disabled persons were proud to have their names. We should try to stimulate the same sort of attitude towards the employment of what are known as the old, but who are no longer the old owing to the triumphs of medicine. The same sort of credit should be given for employing a proportion of the old as is given so readily for the employment of the disabled, and it should be the same sort of honourable undertaking.
If it is not presumptious to suggest it—it is not my idea—if in some way the favour of Royal patronage could be given to such a suggestion, as was given so successfully to the employment of the disabled, then I think we should create a climate of opinion which would encourage the employers, both State and private, to achieve that position.
None of these points is new, and none is my own. I raise them again because, in spite of the fact the Parliamentary Secretary has his Advisory Committee, and has this matter very much before him and takes it very much to heart, I do not think it has been treated sufficiently urgently. I have had a great deal of correspondence in this matter; more than I expected, and much more than I thought the problem really deserved. I was
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wrong about that; it deserves an enormous amount. It was suggested to me today that the secretaries of Chambers of Commerce might be of help. They are in touch with employers and are, generally speaking, accepted persons throughout the country. It may be that they are the right agency; I do not know.
All I can say is that we cannot wait for the Chancellor of the Exchequer's Committee to report on the whole problem of the employment of old people. I suggest that we cannot wait even on the Parliamentary Secretary's Advisory Committee, valuable though that body is. It is time to get the insurance people and employers really weaving on this matter, and that can be done only by a propaganda campaign of great imagination. We must make it not only an honourable obligation but an economic obligation to employ these old people. The old people themselves must be prepared to accept tasks and remuneration less than they have been accustomed to in their younger days, and I think they would do so.
This matter is going to get more and more important, because we are all going to live much longer than we expected and, perhaps, longer than we hoped. We are all going to do that because the National Health Service, under the beneficent leadership of my right hon. Friend the Minister of Health, is so very successful. Sooner or later this matter is going to get on top of us, unless we get on top of it. I hope that I have said enough to keep this burning question revived in public attention. I have not done as much as Major Draper, who flew under bridges, but at least there will be a reply from the Parliamentary Secretary, and I am sure it will be a favourable one.
10.18 p.m.
The Parliamentary Secretary to the Ministry of Labour (Mr. Harold Watkinson): I congratulate my hon. Friend upon raising this matter. As he said, it has not been raised in this House for some time. It is a very important matter and it is time that it was ventilated again. Certainly my right hon. and learned Friend and myself, and the Ministry of Labour, very much welcome the opportunity to say what we are doing.
I should start by saying that we realise that this is a very real problem, and one which must inevitably become more pressing as people tend to live longer and the

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whole age balance of the population changes, as it will do. Most of us know that statistics show that by 1977 there will be literally millions more older people in the population. The Government appreciated that point, and, as a result, the National Advisory Committee on the Employment of Older Men and Women was set up by my right hon. and learned Friend.
I should defend myself from any charge, by my hon. Friend or anybody else, that we have not brought a spirit of urgency into this matter by saying that the Committee, which meets under my chairmanship, has worked extremely well and extremely hard, and either the Committee or its sub-committees have been meeting every month since its inception—and more often than once a month in some cases. I should like to take this opportunity of paying a tribute to the members of this Committee, who have worked very hard and who represent all the interests which are concerned with this great problem.
They represent the British Employers' Confederation, the Trades Union Congress, research institutes, Government Departments, the medical profession, women's organisations and many other interests. We are certainly not waiting for this problem to get on top of us. The Committee hopes to issue an interim report early in the autumn, the purpose of which will be to draw attention to the hard fact that, as my hon. Friend has very rightly said, this is a problem from which the nation cannot escape.
Perhaps I may give an analysis of the present figures of unemployment for June to prove that point. The total unemployment in that month was 1·4 per cent. of the working population, but for men aged 20 to 40 it was only 1·1 per cent., while for those aged over 40 it was 1·6 per cent. and, in addition, the over-40s have been unemployed for much longer periods. I have analysed the 30,000 persons continuously unemployed during the last year and 60 per cent. of them were over 50. So we certainly must not, and we do not, under-estimate the seriousness of the problem, nor do we close our eyes to the fact that, because people are tending to live longer, this will inevitably alter in time the balance of the population.
We have, therefore, to forget all our previously conceived notions about
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people being too old at any age. The point which I want to put to the House, and which I hope will be noted by employers, is that the criterion for the future must not be age at all; it must be capacity and ability. Certainly, in my task as chairman of this Committee, I have had many examples brought to my notice of people far beyond what we consider normal retirement age doing expert and sometimes very hard physical work. Sometimes they are leaders of their professions and others are skilled craftsmen on whose teaching skill we rely for training the younger operatives. We cannot do without their skill and assistance and the nation has to come to realise this fact.
I had brought to my notice today the case of a man who is working in a brickworks organisation, which is not easy work. He has been working there for 61 years. He started when he was 11 and he is now 72, and what is more, because it was his customary time to start work at 6.30 a.m. he still does so, although most of the other workers do not start until 8 o'clock. There are plenty of examples like that throughout the whole range of industry of people whom we have in the past called too old doing expert work which the nation cannot do without.
I say again, do let us try and determine—and it is, as my hon. Friend said, dependent very much on the good will of employers, whether the employers be in the private sector of industry or the Government or nationalised industry—that no man or woman suitable for a job shall be denied it because of his or her date of birth. If we can establish that principle we shall have gone a long way towards solving this problem.
Mr. H. Boardman: I know that the hon. Gentleman and his right hon. and learned Friend are very interested in this problem. He says that it is dependent on the good will of the employers. Is it not a fact that his right hon. and learned Friend has himself put this problem both to the T.U.C. and to the Employers' Confederation, that his predecessors did likewise, and in the meantime we have made no progress whatsoever?
Mr. Watkinson: Perhaps the hon. Gentleman will let me finish what I have

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to say, and I think that he will then find that I have tried to meet his point.
I was going on to say that there is another reason why we can look at this matter from another point of view; it is that all modern medical evidence tends to show that older people are healthier and happier members of the community if they continue in their job.
For all these reasons, therefore, the Government attach the greatest importance to this work and to the work of the Committee over which I have the honour to preside. It was our duty only to try to set forth the general scope of the problem and how it might best be met. We were not given in our terms of reference the financal and economic implications, and that is the reason the Chancellor of the Exchequer has set up a separate Committee which will deal with the economic implications, because we realise that the time for purely pious exhortation has gone by and we have to state this as a serious problem. Therefore, we must study the economic and financial implications as well as the general scope of the problem. So these two Committees will work very closely together. My own Committee will produce its first interim report to the Minister before the House resumes after the Summer Recess. I believe its contents will shock the country into some realisation of the scope and the urgency of the problem. At least, that is our hope.
As to what the Government themselves have done to try to set an example, we have tried to adjust our own practice to meet the needs of older people. For example, age limits of engagement are now as high as 60 in some occupations in Government service, such as typists, postmen and telephonists. There is no upper age limit for temporary posts, and the periodical arrangements whereby civil servants become established have upper age limits of 60 and 65 in some cases. But we realise that we can make little progress unless we have good will and that we have this time really to try to establish it and not just take it for granted.
My hon. Friend spoke about insurance schemes. It will be one of the main purposes of the Advisory Committee to draw attention to any method or principle which we think is a bar to the employment of older men and women. I do
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not qualify that by age at all. As to the insurance schemes, my hon. Friend will be glad to know that, as chairman of the Committee, I have already approached all the insurance companies concerned in any form of pension scheme and they have promised me their co-operation and good will. My advice to any employer who feels that his present retirement pension or insurance scheme is a bar to the recruitment of older people is that he should now get in touch with his insurance company, who, I am sure, will now be willing to try to recast the scheme to stop that requirement being a bar to the employment of older people. It is not the easiest thing to do, but we believe that there is a solution. Whether it be contracting out of the scheme or whether it be benefits proportionate to the payments, I am sure the companies will try to meet the point.
I feel that my hon. Friend tried a little to put the over-60s too much into a category. I refer to the idea of a Queen's Roll, or something of that kind. In our view and in the view of the Committee, the one thing we do not want to do is to say that anybody is old at a certain age. We recognise my hon. Friend's point that it may be necessary for older people to do a job switch in later middle age to something not quite so strenuous or more suited to their length of experience, perhaps teaching other people in industry.
We recognise all these things. They have all been studied at great length in our report and they are all set forth in a way which I hope people will recognise and study, and we hope that it will bring home to the people of this country that they really have got to do something about the problem. If they do not feel that way inclined, there is the Chancellor's Committee studying the economic problems, and my own Committee which will stay as an Advisory Committee and will have to continue to take action if we feel that the problem is not being met.
At least we have made some attempt to face up to the problem. We have made great attempts to find a solution to it. This will be set forth within three months in our report. The Chancellor has now got to work studying the very grave financial implications of the generally older age levels of the population, and between these two Committees we hope we can tell

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people at the older age levels that they have a better chance in the months and years ahead of becoming useful and gainfully-occupied members of the population than they have had in the past.
Before I sit down, I must point out that I do not wish to imply that all this sort of thing can be solved by a committee or by somebody making a speech in the House of Commons. As I have said, it can be solved only by the co-operation
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of all the interests involved and by the realisation that it is a problem that we cannot escape and that we must face as a nation, and, if we are prepared to adopt that approach to it, we can offer much more hope to the older men and women in the population.
Question put, and agreed to.
Adjourned accordingly at Twenty-nine Minutes past Ten o'Clock.

TRADE AND COMMERCE
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  Exports to South America (Credits)
  Horticultural Tariffs
  Horticultural Tariffs
  Maltese Pipes (Imports)
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  Ladies' Mantle and Costume Industry
NATIONAL FINANCE
  Industries, Underdeveloped Areas (Tax Remission)
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  Official-Paid Envelopes (Members)
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HOUSING
  Basildon (Fuel and Power Services)
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LOCAL GOVERNMENT
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MINISTRY OF WORKS
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  Office Extension, London (Granite)
  Festival Pleasure Gardens (Future)
  Festival Pleasure Gardens (Future)
  "The Burghers of Calais"
  "The Burghers of Calais"
  Bricks (Production)
  Bricks (Production)
PALACE OF WESTMINSTER
  Picture, Central Lobby (Condition)
  Picture, Central Lobby (Condition)
  New Palace Yard (Condition)
  New Palace Yard (Condition)
EMPLOYMENT
  Factory Inspectors
  Factory Inspectors
  Cotton Spinners (Cancer)
  Cotton Spinners (Cancer)
NATIONAL SERVICE
  Liverpool Man (Call-up)
  Liverpool Man (Call-up)
  Special Housing Association (Programme)
  Special Housing Association (Programme)
  Medical Board Chairmen (Age)
  Medical Board Chairmen (Age)
SCOTLAND
  Education (Capital Investment)
  Education (Capital Investment)
  National Parks
  National Parks
  Electricity Supply
  Electricity Supply
  New School, Minishant
  New School, Minishant
  New Roads
  New Roads
  Criminal Cases (Defence Costs)
  Criminal Cases (Defence Costs)
BRITISH ARMY
  Personal Cases
  Personal Cases
  National Service Men
  National Service Men
  Gurkhas (Recruitment)
  Gurkhas (Recruitment)
  Troops, Singapore and Malaya (Mail)
  Troops, Singapore and Malaya (Mail)
  Soldier's Death, Moston Hall Hospital
  Soldier's Death, Moston Hall Hospital
  Psychiatric Reports (Disclosure)
  Psychiatric Reports (Disclosure)
  Equipment (Japanese Manufacture)
  Equipment (Japanese Manufacture)
  DEFENCE (UNITED KINGDOM AND ISLE OF MAN CONTRIBUTIONS)
  DEFENCE (UNITED KINGDOM AND ISLE OF MAN CONTRIBUTIONS)
  NATIONAL ASSISTANCE, CHESTER-LE-STREET AREA
  NATIONAL ASSISTANCE, CHESTER-LE-STREET AREA
ROADS
  Forestry Commission Construction, Scotland
  Forestry Commission Construction, Scotland
  Parking, West End
  Parking, West End
  OIL POLLUTION (COMMITTEE'S REPORT)
  OIL POLLUTION (COMMITTEE'S REPORT)
  IMPORTED WOOLS (PITCH)
  IMPORTED WOOLS (PITCH)
COLONIAL TERRITORIES
  Yaws (Incidence and Treatment)
  Yaws (Incidence and Treatment)
  European Highlands, Kenya (Development)
  European Highlands, Kenya (Development)
  Malaria (Prevention)
  Malaria (Prevention)
MINISTRY OF FOOD
  Orange Juice (Preservative)
  Orange Juice (Preservative)
  Meat Ration (Value)
  Meat Ration (Value)
  Imports
  Imports
FUEL AND POWER
  Coal Distribution Costs
  Coal Distribution Costs
  Pipe Lines from Middle East
  Pipe Lines from Middle East
  Winter Stocks, Edinburgh
  Winter Stocks, Edinburgh
  MINISTRY OF PENSIONS (PERSONAL CASE)
  MINISTRY OF PENSIONS (PERSONAL CASE)
ATTORNEY-GENERAL
  Northern Ireland (Inquests)
  Northern Ireland (Inquests)
NATIONAL FINANCE
  Building Societies
  Building Societies
  Bank of England (Commercial Bills)
  Bank of England (Commercial Bills)
  Halfpenny Coin
  Halfpenny Coin
  Charitable Donations
  Charitable Donations
  "The Scottish Epidemic"
  "The Scottish Epidemic"
  Albania (Gold)
  Albania (Gold)
  European Community (Budget Contribution)
  European Community (Budget Contribution)
  Long-dated Gilts
  Long-dated Gilts
HOUSE OF COMMONS
  Ministers (Pay)
  Ministers (Pay)
  Switchboard Service
  Switchboard Service
SCOTLAND
  Divorce
  Divorce
  Council Houses
  Council Houses
  Wrongful Conviction (Compensation)
  Wrongful Conviction (Compensation)
  Dundee
  Dundee
  Local Government Expenditure
  Local Government Expenditure
  Social Work (Scotland) Act 1968
  Social Work (Scotland) Act 1968
  Freshwater and Salmon Fisheries (Scotland) Act 1976 (Protection Orders)
  Freshwater and Salmon Fisheries (Scotland) Act 1976 (Protection Orders)
HOME DEPARTMENT
  Prison Sentences
  Prison Sentences
  Ryedale Parliamentary Constituency
  Ryedale Parliamentary Constituency
  Probation Officers
  Probation Officers
  Deportation Statistics
  Deportation Statistics
  Police National Computer
  Police National Computer
  Shops
  Shops
  Special Constabulary
  Special Constabulary
  Local Radio (VHF Band 2)
  Local Radio (VHF Band 2)
  Television Licences
  Television Licences
  Polling Stations (Disabled Persons)
  Polling Stations (Disabled Persons)
  Crime Statistics
  Crime Statistics
  Police (Race Relations Training)
  Police (Race Relations Training)
  Drug Addicts
  Drug Addicts
  Walton Prison (Incident)
  Walton Prison (Incident)
  Homicides
  Homicides
  Wind Surfing
  Wind Surfing
  Detained Persons
  Detained Persons
FOREIGN AND COMMONWEALTH AFFAIRS
  Fiancés and Husbands (Immigration)
  Fiancés and Husbands (Immigration)
  Zimbabwe
  Zimbabwe
  Sri Lankan Police (Training Courses)
  Sri Lankan Police (Training Courses)
  Mr. Dave Kitson
  Mr. Dave Kitson
  European Court of Human Rights
  European Court of Human Rights
  European Commission of Human Rights
  European Commission of Human Rights
  European Convention on Human Rights
  European Convention on Human Rights
WALES
  Penley Hospital (Polish Citizens)
  Penley Hospital (Polish Citizens)
  Multiple-occupation Houses
  Multiple-occupation Houses
  Clwyd County Council
  Clwyd County Council
  Flood Relief Schemes
  Flood Relief Schemes
  Houses (Demolition)
  Houses (Demolition)
  Nursery Education
  Nursery Education
TRADE AND INDUSTRY
  Manufacturing
  Manufacturing
  Telephone Apparatus (Blind Persons)
  Telephone Apparatus (Blind Persons)
  Airbus A310 (Launch Aid)
  Airbus A310 (Launch Aid)
  Mr. Ian MacGregor
  Mr. Ian MacGregor
  British Goods
  British Goods
  European Community (Grants)
  European Community (Grants)
  Industrial Research
  Industrial Research
  British Steel Corporation (Resources)
  British Steel Corporation (Resources)
  Academic-Industrial Projects (Support)
  Academic-Industrial Projects (Support)
  Weighing Machines
  Weighing Machines
  Horse Riders (Headgear)
  Horse Riders (Headgear)
  Hallmarking (Exemption Level)
  Hallmarking (Exemption Level)
OVERSEAS DEVELOPMENT
  Budget
  Budget
  United Nations Development Programme
  United Nations Development Programme
  Refugees (Education)
  Refugees (Education)
DEFENCE
  Radioactive Materials (Transport)
  Radioactive Materials (Transport)
  Brazil (Training Aircraft)
  Brazil (Training Aircraft)
NORTHERN IRELAND
  Housing Executive
  Housing Executive
  Coal-based Gas Plant
  Coal-based Gas Plant
  Elections (Prevention of Personation)
  Elections (Prevention of Personation)
  Women Prisoners
  Women Prisoners
  Northern Ireland Assembly
  Northern Ireland Assembly
  Pig and Poultry Industries
  Pig and Poultry Industries
  Security
  Security
  Construction Industry
  Construction Industry
  Devolution
  Devolution
  Northern Ireland (Emergency Provisions) Act
  Northern Ireland (Emergency Provisions) Act
  Plastic Baton Rounds
  Plastic Baton Rounds
SOCIAL SERVICES
  Bread
  Bread
  Pharmaceutical Companies (Profits)
  Pharmaceutical Companies (Profits)
  Hospital Waiting Lists
  Hospital Waiting Lists
  Treatment (Waiting Times)
  Treatment (Waiting Times)
  Nurses Home, Carlisle (Closure)
  Nurses Home, Carlisle (Closure)
  Benefits
  Benefits
  Emergency Benefit Cases, Birmingham
  Emergency Benefit Cases, Birmingham
  Claims Statistics, Birmingham
  Claims Statistics, Birmingham
  Local Office, Erdington (Industrial Action)
  Local Office, Erdington (Industrial Action)
  Complementing System (Review)
  Complementing System (Review)
  Form MED 3
  Form MED 3
  Claimants
  Claimants
  Health and Social Development Programme, Liverpool
  Health and Social Development Programme, Liverpool
  Camberwell Resettlement Unit
  Camberwell Resettlement Unit
  Health Authorities (External Audit)
  Health Authorities (External Audit)
  Voluntary Unemployment Deductions
  Voluntary Unemployment Deductions
EMPLOYMENT
  Construction Industry
  Construction Industry
  Truck Acts
  Truck Acts
  Factory Inspectorate
  Factory Inspectorate
  Youth Training
  Youth Training
  Factories Acts
  Factories Acts
  Community Programme
  Community Programme
  Youth Opportunities Programme (Injuries)
  Youth Opportunities Programme (Injuries)
  Unemployment (Liverpool)
  Unemployment (Liverpool)
AGRICULTURE, FISHERIES AND FOOD
  Export Refunds
  Export Refunds
  White Bread
  White Bread
  Seed (Certification and Testing)
  Seed (Certification and Testing)
  Apples and Cauliflowers
  Apples and Cauliflowers
  New Zealand Butter
  New Zealand Butter
  Newcastle Disease
  Newcastle Disease
  Wool Production
  Wool Production
  Scrapie
  Scrapie
  Bread Wheat
  Bread Wheat
  Cereals
  Cereals
  Salmon Sales
  Salmon Sales
EDUCATION AND SCIENCE
  Teacher Training Institutions
  Teacher Training Institutions
PRIME MINISTER
  Engagements
  Engagements
  General Belgrano
  General Belgrano
  Nationalised Industries
  Nationalised Industries
  Fraserburgh
  Fraserburgh
  Nantymoel
  Nantymoel
  Gleneagles Agreement
  Gleneagles Agreement
  Exports to South Africa (Job Dependence)
  Exports to South Africa (Job Dependence)
  Top Salaries Review Body
  Top Salaries Review Body
TRANSPORT
  Rail Electrification
  Rail Electrification
  Channel Tunnel
  Channel Tunnel
  Heavy Goods Vehicles
  Heavy Goods Vehicles
  Tourist Road Schemes
  Tourist Road Schemes
  British Airways (Aircraft Acquisition)
  British Airways (Aircraft Acquisition)
  Aircraft Noise
  Aircraft Noise
  Ilminster Bypass
  Ilminster Bypass
  Reject Tyres (Imports)
  Reject Tyres (Imports)
ENERGY
  Central Electricity Generating Board
  Central Electricity Generating Board
  Coal
  Coal
ENVIRONMENT
  Alcester Bypass
  Alcester Bypass
  Planning Appeals
  Planning Appeals
  Association of London Authorities
  Association of London Authorities
  Maltby Far Common (Inquiry)
  Maltby Far Common (Inquiry)
  Empty Houses
  Empty Houses
  Housing Investment
  Housing Investment
  Enterprise Zones
  Enterprise Zones
  Council Houses (Non-traditional Construction)
  Council Houses (Non-traditional Construction)
  Westhoughton Parish Council
  Westhoughton Parish Council
  Structure Plan (Greater Manchester)
  Structure Plan (Greater Manchester)
  Abandoned Limestone Mines
  Abandoned Limestone Mines
  Homeless Persons (Code of Guidance)
  Homeless Persons (Code of Guidance)
  Urban Development Grant
  Urban Development Grant
  Local Authorities (Expenditure)
  Local Authorities (Expenditure)
Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
The Lord Ebbisham—Sat first in Parliament after the death of his father.
COVENTRY CATHEDRAL BILL
Read 2ª.
WEST BRIDGFORD URBAN DISTRICT COUNCIL BILL
Read 3ª, with the Amendments, and passed, and returned to the Commons.

CONFERENCE OF FOREIGN MINISTERS
2.36 p.m.
EARL JOWITT: My Lords, I should like to ask Her Majesty's Government a Question of which I have given them Private Notice. Before asking the Question, may I say—and here, I am sure, I speak for the whole House—how glad we are to have the noble Marquess who leads the House back with us again, safe and sound from his journey. I hope that the temporary indisposition from which he suffered has been cured by that best of all doctors, a sea voyage. My Question is: Whether the noble Marquess will take the opportunity at some time of making a statement in your Lordships' House relating to the tasks which he undertook in the United States.
THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY): My Lords, I should like to thank the noble and learned Earl for the kind things he has said. I had an agreeable and interesting visit and, I hope, a fruitful one; but I am glad to be back. With regard to the statement, as your Lordships know, there is to be a debate on foreign affairs on the 29th of this month, and I should rather keep the main body of what I have to say until then. But I thought it might be for the convenience of the House if I made a brief
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statement to-day, and I propose to do so at half-past three.
EARL JOWITT: I am obliged to the noble Marquess. I do not know whether he can indicate at this stage if he will speak fairly early in the debate on foreign affairs, so that we may have an opportunity of dealing with his statement.
THE MARQUESS OF SALISBURY: My Lords, I think it will probably be for the convenience of the House if I speak first or second; and no doubt that can be arranged with the noble and learned Earl. In any event, I shall speak in the early stages of the debate.
EARL JOWITT: I am obliged.

NUCLEAR ENERGY POWER STATION
2.39 p.m.
VISCOUNT FALMOUTH: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government the proposed size of the new nuclear energy power station about to be built at Sellafield for commercial purposes; the estimated cost per kilowatt installed including the reactors, the estimated overall thermal efficiency, and the estimated cost per unit sent out on a 60 per cent. load factor.]
THE PAYMASTER GENERAL (LORD CHERWELL): My Lords, it is incorrect to describe the purpose of the plant to be built at Sellafield as commercial. It is an experimental power station, and Her Majesty's Government are at present unable to commit themselves to estimates of the kind asked for by the noble Viscount.
VISCOUNT FALMOUTH: My Lords, arising out of that Answer, I am sorry to hear that the noble Lord cannot give the reply which I had hoped for, and which has been more or less given in publications of learned societies, In view of the great interest that has been created in nuclear energy in technical circles, I should like to ask the noble Lord whether it is not possible for those interested, especially consulting engineers, who are now getting inquiries from different parts of the world as to whether they should establish stations developing nuclear energy or ordinary coal stations, and are

659
unable to give any reply, to be brought into contact with the Government developments. This might be done either through a council or lectures, or something of that sort, or by persons who have these matters directly under their charge. Consulting engineers would then know what reply to give to their clients who are asking them to deal with these important matters. I know that the noble Lord cannot give a definite reply to this question, but I hope that he will be able to discuss it with his advisers, to see whether some means can be arrived at to enable technical people closely interested in the matter to be kept in close touch with developments.
LORD CHERWELL: My Lords, we will certainly consider that point sympathetically and see how soon and in what way we can carry out the desires of the noble Viscount.
LORD REA: My Lords, I should like to ask whether the noble Lord is aware that the factory at Sellafield is on the fringe of the last of the most beautiful unspoilt parts of the country. Would he ensure that this enormous sum of, I believe, £10 million which is to be spent on the extension of it is in respect of a factory which will not become obsolete in the foreseeable future?
LORD CHERWELL: My Lords, it is difficult in these matters to say what the foreseeable future is, and whether a thing will become obsolete in that period. When the first steam engines were built it was impossible to say whether they were in their final form, or whether they would have to be changed and become obsolete fairly soon. Naturally, everything possible will be done to satisfy the noble Lord's wishes.

BRITISH SHIPS AND CHINA TRADE
2.42 p.m.
LORD WINSTER: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they have any information to the effect that British ships which are, or have been recently, engaged in the China trade will be refused bunkers in United States ports.]
THE SECRETARY OF STATE FOR THE CO-ORDINATION OF TRANSPORT, FUEL AND POWER (LORD LEATHEAS): My Lords, I have no doubt that the noble Lord's question is concerned with the introduction by the United States Government on July 6, of new regulations governing the supply of petroleum products to ships in United States ports. These products, which include marine bunker oils and lubricating oil and grease, were previously dealt with under a general export licence and could therefore be freely obtained by ships calling at American ports. The effect of the new regulations is that an individual export licence is now required for the supply of these products to any ship which falls into certain categories, namely: ships which have called at Macao or a Far East Communist port since January 1, 1953, and ships which are bound for any such port within 120 days; ships which are to carry within 120 days any cargo which is known to be destined for any such port and is not covered by a United States export licence; and ships which are registered in or on charter to a Soviet Bloc country, or on charter to a national of such a country.
The first point which I should like to emphasise is that these restrictions are in no sense aimed only at British ships. They apply to all foreign ships that may enter ports under United States jurisdiction, whatever their flag may be. There is no question of discrimination in favour of United States ships, because they are already prohibited from trading with Chiness ports. Secondly, the regulations do not of themselves prohibit the supply of bunkers; they provide only that an individual export licence must be obtained for the supplies for each ship. While it is true that the regulations came into force only a fortnight ago, Her Majesty's Government have so far had no report of an export licence having been refused in respect of a British ship. In at least two cases which have fallen under the new regulations a licence has been granted and bunkers have been obtained without any significant delay to the operations of the ships concerned. Her Majesty's Embassy in Washington are in close touch with the United States Department of Commerce on the administration of this control as it affects

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British ships, and will investigate immediately any case in which difficulties may arise.
LORD WINSTER: My Lords, I thank the noble Lord for that full and helpful Answer, but may I express the hope that he will follow this matter carefully, because it is one which will affect not merely ships engaged in the China trade but ships engaged in the Eastern trade generally? I appreciate what the noble Lord said about there being no discrimination against our ships in particular, or any discrimination in favour of American ships. But it is the fact that British shipowners engaging in trade with China have to get a licence from the Ministry of Transport, and the British ships which are trading with China are trading only in non-strategic materials and are complying with the resolution on the subject passed by the United Nations. In all those circumstances, it seems unfair and unkind that our ships should in any case be refused bunkers, and I hope that that matter will be followed up, in case any refusal of bunkers occurs. I am sure that the noble Lord will appreciate, too, that American bunkers are much cheaper than British bunkers.
LORD LEATHERS: My Lords, I can assure the noble Lord that all the points he has raised will be carefully watched. It is not easy to make any statement, in that the objective of the United States goes beyond what we have laid down in our own regulations. All this will require careful consideration, and the noble Lord may be sure that everything will be watched continuously.
VISCOUNT ELIBANK: My Lords, closely related to this subject, may I ask the noble Lord whether he is aware that, whilst legitimate British trade with China is under criticism, the United States last year bought from China goods valued at nearly 28 million dollars?
VISCOUNT STANSGATE: My Lords, may I ask whether the Government intend, in the interests of our own traders, to issue some reply to the very damaging report by the McCarthy committee?
THE MARQUESS OF SALISBURY: My Lords, perhaps that is a matter which I can answer. I have not yet seen the
662
report itself; all I have seen have been reports in the Press. I will, however, take an early opportunity of looking at it, and at other documents at the same time, and perhaps it may be possible for me to say something on them in the debate next week.
VISCOUNT STANSGATE: I am obliged to the noble Marquess.
LORD BARNBY: My Lords, reverting to the original reply and arising out of it, may I ask the noble Lord a further question? In view of the acuteness of feeling in the United States on the matter of trade between the United Kingdom and China, as is brought home to those of us who are in constant commercial relationship with the United States, and the widespread misconception existing in the United States, would he feel it worthwhile to make representations in the proper quarter that the appropriate media in the United States—the British Embassy or British Information Services—should be used to bring about a greater understanding in the United States of the difference between, strategic and non-strategic rated materials, in so far as they fall within the categories of trade between the United Kingdom and China?
LORD LEATHERS: My Lords, that rather presupposes that nothing of that sort had been done already. I assure the noble Lord that it has been constantly represented and will continue to be the subject of discussion.
LORD MATHERS: My Lords, for the purposes of clarification, will the noble Lord say whether the reference to "one twenty days" in his original reply meant one hundred and twenty days?
LORD LEATHERS: I am sorry if I have misunderstood the noble Lord's question. Am I asked whether the words "one twenty days" really mean a hundred and twenty days?
LORD MATHERS: It is the expression used by the noble Lord. I am asking him whether, when he referred to "one twenty days"—it might mean one period of twenty days—he meant one hundred and twenty days.
LORD LEATHERS: It means a continuing period of up to 120 days.

NEW WEST END HOTEL
2.50 p.m.
LORD BLACKFORD: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, since the junction of Conduit Street with Bond Street is one of the most congested spots in London, the plans for the new building in course of erection at this corner allow for the frontages to both streets to be set back at least 10 feet; whether the new building is to be a large hotel; and, if so, whether the entrances will be arcaded to decrease interference with traffic.]
LORD MANCROFT: My Lords, I am informed that the local planning authority—in this case the London County Council—gave permission on April 13, 1953, for the erection of a hotel on this site in Bond Street. As regards the size of the hotel, I understand that it is to have something in the region of 240 rooms. To give a measure of comparison, that is about the size of Claridge's and the Dorchester, or half the size of the Savoy and Grosvenor House. The main building, according to the plans approved by the London County Council, will conform to the existing building lines on Bond Street and Conduit Street, just as those of the new Time and Life building do on the opposite corner, but an arcaded footpath, affording a clear width of 10 feet, will be provided within the building along the whole length of the Bond Street frontage. This will enable the road in Bond Street to be widened, and it is a condition of the planning consent that the developer shall consult the London County Council's chief engineer in regard to the line of widening. The main entrance to the hotel will be from Conduit Street, and the approved plans make provision for cars to drive in and out within the curtilage of the building. I have taken the liberty of putting a set of plans and elevations of this hotel, which I hope may be of some interest to your Lordships, in the Royal Gallery.
LORD BLACKFORD: My Lords, I beg to thank the noble Lord for his very courteous reply and also for the trouble he has taken in placing a set of plans in the Royal Gallery for us to study. I
664
am gratified to see that two of the objects mentioned in my Question—namely, the widening of Bond Street by 10 feet and the arcading of the entrance to the hotel—are being fulfilled. But will not the noble Lord make representations to enable the Conduit Street frontage also to be arcaded, so that that street, too, may be widened by 10 feet, because there is no doubt that there will be very great congestion in Conduit Street when this hotel is built? Also, will the Government realise that this site is about the least suitable in the whole Metropolitan area in which to construct an hotel? Have they comprehended that the existence of the Cumberland Hotel, on a less congested site, is still a very great interference with traffic? Is it generally understood that, if we are to cope with the greatly increased motor traffic, which is inevitable as time goes by, we have to think years and years ahead, and make plans accordingly? What apparatus is there for ordinary citizens like myself to have prior knowledge of these stupid plans, so that we may start agitating early enough?
LORD BARNBY: My Lords, before Lord Mancroft replies, may I associate myself with the thanks expressed by my noble friend Lord Blackford to the noble Lord for having taken the trouble to put these plans in the Royal Gallery for us to see? I would also associate myself in general with the remarks of Lord Blackford, and perhaps I may be allowed to go a little further, in view of the strong feeling in this matter, and in view of the great national loss caused through the delay to traffic in that area, and particularly in Bruton and Conduit Street. Is it too late that there may even yet be a complete abandonment of the idea of building an hotel in that region?
LORD MANCROFT: My Lords, these are two very important questions, and they go a little further than the actual scope of the original Question. With regard to traffic in Conduit Street, that, clearly, is a problem, and I can assure the noble Lord, Lord Blackford, that my right honourable friend the Minister of Transport and the Commissioner of Police are considering it very carefully. If I may say a word in regard to the whole of the wider question of planning, this thought occurs to me: we have delegated legislation in this case to the planning authority, who are the London

665
County Council. Many of us have in the past questioned the wisdom of delegating too much, but it does seem to me a little difficult, having once delegated that legislation, to be constantly jogging the elbow of the authority to whom we have given the power. The London County Council and not the Minister of Housing and Local Government are the planning authority here. The noble Lord, Lord Blackford, asked what he personally can do. Well, my Lords, the London County Council is a democratically elected body, elected by the ratepayers of London, and the Council's proceedings are held in public. There, I should have thought, lies the solution to the noble Lord's grievance, rather than asking that the powers of the Council should now be curtailed.
LORD GIFFORD: My Lords, does not the noble Lord think that the importance of having a really first-class modern hotel in the centre of the West End of London may be worth even some slight additional traffic congestion in that area?
LORD MANCROFT: My Lords, my opinion in this matter is clearly not worth while, but the London County Council are obviously in agreement with Lord Gifford.

ISLE OF MAN (CUSTOMS) BILL
Brought from the Commons, endorsed with a certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act, 1911; read 1ª, and to be printed.
MONOPOLIES AND RESTRICTIVE PRACTICES COMMISSION BILL
Brought from the Commons; read 1ª, and to be printed.
REGISTRATION SERVICE BILL [H.L.]
Returned from the Commons, agreed to.
POST OFFICE BILL [H.L.]
Returned from the Commons, agreed to.
FOUNDLING HOSPITAL BILL [H.L.]
Returned from the Commons, agreed to with Amendments: the said Amendments considered and agreed to.

FINANCE BILL
2.56 p.m.
Order of the Day for the Second Reading read.
LORD CHERWELL: My Lords, it might be thought, since the country in its wisdom has decided that this House should have no say in money matters, that our consideration of the Finance Bill would be a pure formality. But I think it is really much more than this, for so many Members of this House have such wide experience and such deep knowledge of economic matters that their views must carry great weight. Even if our discussion cannot alter this year's Finance Bill one way or the other, noble Lords may hope that the words of wisdom which fall from their lips in to-day's debate may find a reflection, even if perhaps only a pale reflection, in the proposals that the Chancellor of the Exchequer brings forward next year. It may seem a long time to wait, but we must hope that the harvest will be worthy of the seeds planted to-day.
I do not think there has been a less controversial Finance Bill for many years. It is the first time since 1946 that the Budget Resolutions have been passed in another place without a Division. Even the Committee stage of the Bill went through that House without any all-night Sittings. Whether this should be regarded as a tribute to the Chancellor or as a symptom of fatigue on the part of the Opposition it is not for me to say, but I am inclined to think that it is because the country an a whole feels that the Budget is on the right lines and the Opposition know it.
Deciding on the broad outlines of the Finance Bill has become infinitely more difficult than it used to be. In the old days, all the Chancellor had to do was to consider what changes were foreshadowed in essential Government expenditure and to decide what changes in taxation were required in order to find the necessary money. In those days Government expenditure amounted to

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less than 10 per cent. or so of the national income, and changes from year to year in peace time seldom amounted to as much as 1 per cent. of the national product. Such small changes scarcely affected to a perceptible extent the economy of the country as a whole. Nor was it held to be the Chancellor's job to affect it. Indeed, any Chancellor who had been suspected of wishing to intervene in the country's economy would have been condemned out of hand. Today, the situation is quite different. More than a third of our total national income is spent by the Government, and in one form or another, therefore, has to be abstracted from the pockets of the people. Indeed, if local rates and National Insurance contributions are included—as was brought out in a most useful study published in The Times last week—the proportion is nearer two-fifths. Inevitably, the Budget must have important repercussions on business and trade throughout the country.
Whether we like it or not, therefore, the Chancellor of the Exchequer has to consider not merely how the Government are to pay their way, but what the effect of his Budget will be on business activity, employment, prices, and so on. Moreover, in making his decisions, his hands are tied by the fundamental, inescapable need to achieve a balance between imports and exports. And, in dealing with this aspect, he has to have regard to the balance of payments, not only of the United Kingdom but of the sterling area as a whole. In the old days this harsh problem scarcely existed. Before 1914, the value of our exports of goods and services exceeded the cost of our imports so much that we were sometimes able to invest abroad as much as 10 per cent. of the national income. A prosperous concern, such as the Empire then was, had no need to worry about balance of payments difficulties.
The First World War weakened our international position, but by the latter part of the 'thirties we could once again face the ups and downs of trade with comparative calm, thanks to our relatively large gold reserves. In 1937, for instance—admittedly a very good year—they were equivalent to something like nine months' imports. With reserves of such an order of magnitude available, a fall
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in the demand for our goods abroad, or a rise in the price of our imports, could be faced without alarm. The situation is very different to-day, when our gold and dollar reserves would barely pay for the goods we import every three months. And the situation is much more serious, since we now have overhanging us sterling liabilities to the Commonwealth and Empire, and to foreign countries, amounting to some £3,500 million—four times our gold and dollar reserves. In 1937, these liabilities were only £800 million and were fully covered by our gold reserves.
As I have said, once it is admitted that the Chancellor, in his Budget, is bound to intervene in the general economy of the country, his task becomes exceedingly difficult. It is easy enough to enumerate what should be the objectives of economic policy. We must have full employment; we all agree that anybody prepared to work should be able to find a job. We should aim at maximum output. Clearly, the greater the country's total production, the more there will be to share out. We should stabilise prices. It is surely unfair that the real value of people's savings and covenanted benefits should be whittled away by constant falls in the purchasing power of money. We should free the people from controls. Everybody wants to get rid of all these restrictions and interventions, which hamper our activities and reduce our productivity. All these are highly desirable objectives and everyone, I believe, would wish to achieve them. But, constricted as we are within the straitjacket of the absolute need to balance our trade with the outside world—in other words, to pay our way—it is not easy to devise an economic policy that will satisfy all the objectives.
Anyone who thinks at all deeply on these matters must realise that they tend, unfortunately, to some extent to conflict, and we must therefore inevitably be content with less than the ideal solution. Exactly how and where to balance them is bound to be one of the most anxious tasks facing any government. On the whole, I think the Government have been fairly successful in dealing with the very difficult situation which they inherited. The appalling drop of 10 per cent. per month in our gold and dollar reserves has been checked; and although unhappily this required cuts in our imports,

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I do not think that these have created any serious hardship. In spite of the reduction in the food subsidies, about which the Opposition complained so vociferously last year, food consumption in the first quarter of this year was higher than in the first quarter of any year since the war. Tea, eggs and sweets are no longer rationed. Sugar we expect will be off the ration within a few months. The rations of meat and bacon have been improved, and, as I have said, consumption has risen. And a number of other controls have been relaxed or completely removed. And yet, with all this, retail prices during the last year have risen by only 2½ per cent.
Last spring, owing to the general fall in the demand for textiles, we were all very anxious about the unemployment in this industry. Indeed, the Government had to take exceptional, almost emergency, steps to deal with it. I am sure we are all glad that in June of this year un-employment in the textile and clothing industries was only 21,000, as against 158,000 the year before; a reduction to less than one-seventh. In general, too, employment is not unsatisfactory—98½ per cent. of the working population; that is, about one person in seventy unemployed. When we remember that at the time of the Beveridge Report it was thought prudent to assume that normal unemployment would be of the order of 8 per cent., it would be hard to complain about a figure one-fifth of that amount.
LORD PAKENHAM: May I just interrupt the noble Lord? I do not think that he and I would differ about this. That was certainly never the assumption made by Sir William Beveridge (as he then was) of what was likely to happen.
LORD CHERWELL: I think that if the noble Lord looks at paragraph 441, and Appendix A, paragraph 14, he will see that I am not misquoting.
LORD PAKENHAM: I gather that the noble Lord will not be here when I reply, but I will reply, nevertheless.
LORD CHERWELL: I shall look forward to reading the noble Lord's reply in Hansard. It will, I am sure, be as adequate as usual.
Last year, also, considerable misgivings were, very naturally, expressed about the fall in industrial production. This, of
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course, is a very grave matter to which we have given anxious attention. In the engineering industry it was due in considerable part to the shortage of steel which developed in the second half of 1951. I do not myself believe that this would have been allowed to arise if the leaders of the steel industry had not been distracted by the imminence of nationalisation. But I had better not say any more about this. It would be nice for once to be complimented on a statesman-like speech, and I know that that happens only if one refrains from criticising anything the Opposition may have done, or, better still, if one can manage to throw a few bouquets across the Floor with a straight face.
Another important reason for the drop in the Index of Production was, as I have said, the fall in demand for textiles. To some extent this was no doubt due to world conditions, but, as I have said before, I do not think we can altogether acquit Dr. Dalton of blame for it—his notorious speech advising buyers to strike against the high prices of clothing will be within the memory of many Members of the House. It is unfortunate that the mischievous utterances by politicians are so apt to be more effective than their more serious—and statestnanlike—exhortations. Since then, there has, fortunately, been a notable improvement in the Production Index. I am sure the whole House will be glad to know that it has risen considerably since last summer. Indeed, allowing for normal seasonal variations, it has gone up by something like one-tenth. I do not want to make too much of this, as we had some leeway to make up, but I am sure the House will be glad to know that production is now higher than it was in 1952 or in 1951.
It is a truism to say that, in the long run, a country can consume only what it produces; unless we can produce more, our standard of life cannot rise. Conversely, the more we can produce the better off we shall be. Short of working harder, or working longer hours, therefore, the only hope of improving our living standard is to get more output for the same effort. We can do this only if we seize, all our opportunities to combine and develop our capital resources, our technical skill, our technological knowledge and our managerial ability in a major productive effort. The closer harnessing of technical progress to industrial

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and agricultural production is of prime importance.
As I have frequently said, and as is emphasised in the recently published Report of the Advisory Council on Scientific Policy, this country would have much to gain by employing in industry more men with scientific and technological training. Abroad, with their great technological institutes, scores of thousands of highly trained men are available to direct and manage industrial concerns in which novel processes are being developed or new methods of manufacture initiated. I believe that the British people have a natural bent for this sort of thing; and, indeed, it is wonderful how much we have been able to accomplish, lacking, as we do, technological universities such as exist in almost every other industrialised country.
Unfortunately there seems to be a snobbish idea that only a man who is adept at the arts, who can discuss the metres used by Latin poets or the aberrations of mediæval kings, can be called an "educated" man, even though he may not know how his wireless set works, or indeed how electricity is produced. But, stimulating as some people may find the verses of Catullus, reading them scarcely increases productivity. New inventions and discoveries likely to assist the country in its hour of need are far more apt to come from people who have studied the rude materialistic aspects of applied science. It is because we realise this that the Government are determined to assist technological education and, in spite of the obstacles interposed by some of our well-meaning, but misguided, highbrow friends, I trust that we shall, in the not too distant future, be able to give our young men opportunities equal to those enjoyed abroad to equip themselves for the professions which lie at the root of all our industrial processes.
Despite these handicaps we have succeeded since the war in starting or developing industries in this country which in our more prosperous days we tended to overlook. Petroleum refining has been put into operation on a large scale, which should save us scores of millions of pounds which formerly we had to pay across the exchanges every year. Our aircraft industry leads the world in quality, if not quantity. Perhaps I may
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remind noble Lords that there has been for a number of years now a specialised technological institution at Cranfield for the study of aircraft problems. Our chemical industry also holds its own. Indeed, many knowledgeable people think that one of our new synthetic textile fibres may replace nylon in many important applications.
But, of course, management and technology alone cannot do the trick. At the root of the matter is the willingness of all to work harder and more effectively. The vicious fear that a man might work himself out of a job must be dispelled. The real danger to employment is not that production may be so big that the product will not be wanted. It is that we may fail to put our backs into our work, that we may let our costs rise until the price of our manufactures is so high that they become unsaleable abroad. That is the real road to unemployment. For if we fail to export we shall not be able to import and we shall go short of the raw materials essential for our manufacturing industries.
The great trade unions have an important rôle to play in making these elementary truths clear to their followers. And, I am glad to say, the leaders of many of them are doing their best to drive home these simple facts of life. It would, of course, be much easier and perhaps more popular for them to decry any call for more exports or for higher production, as Mr. Bevan did when he described exports as "the will-o'-the-wisp of private enterprise" or as Mr. Strachey did when he said: "You remember the old 'Produce more' cry? I suppose we shall get it again after this war too." But to reach the top in a great trade union a man needs more than glibness and spellbinding phrases. He requires brains and vision and courage. And I am glad to see that the leaders of the T.U.C. are not afraid to exhort their followers to increase output—even if I may not always see eye to eye with them as to how much industry ought to spend on wages and how much ought to be set aside for re-equipment, expansion and so on.
Unlike academic Socialist politicians, Conservatives realise the impotence of Government exhortations alone. They believe that you must offer an incentive to people if you want them to risk their money and their effort in order to produce

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saleable goods. There are few indeed who will work without financial reward, though perhaps the member of the Opposition Front Bench who said yesterday, in another place, that such people were only to be found in monasteries or nunneries had temporarily forgotten the existence of your Lordships' Chamber, and the valuable unpaid work done here by noble Lords.
There must—and Mr. Stokes was not the only Labour speaker to recognise it—be some recompense for a man who refrains from consuming all he earns and is prepared to invest his savings in some risky project no less than for the roan employed in the factory that results from this investment. If we are to invest more in productive industry we must find people willing and able to finance it. Taxation has made it so hare to put money aside for investment, and so reduced the reward for success, that it is very difficulty to finance risky enterprises—and all novel enterprises are bound to be risky.
Firms are hard put to it to-day even to maintain their equipment at modern prices. They have to set aside sums enormous in comparison with pre-war figures, just to replace worn-out tools so as to keep the business running. Even more has to be set aside if the firm is to expand its activities. When we remember that all money set aside for such purposes is labelled with the pejorative word "profits," and that firms have to pay perhaps three times as much as they used to for new machinery, it is not surprising that it is difficult to find sufficient fresh capital to expand or to start new enterprises. And if a firm does so, and really puts by enough money to increase output and provide goods for the public, or for export, not to mention work for its employees, it is abused and the shareholders are described as "profiteers." It is a mystery to me why people who have contributed something to the country's wealth should be exposed to such attacks if they make a fortune, whereas people who win prizes in football pools, or people who are paid scores of thousands of pounds for an hour's boxing, or for clowning on the stage, or for posturing on the silver screen, are admired and even idolised by the same public.
My Lords, the main aim of the Bill before us is to encourage production so
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that we may be able to export enough to pay our way without lowering the standard of life of the people. First and foremost it is intended to be an incentive Budget. We hope it will help to stimulate trade and industry and give it greater opportunity and incentive both to produce more for our home needs and to develop our export trade. The measure most immediately directed to this end is the increase in initial allowances for new plant and buildings. Clearly, the more up-to-date the tools the greater the productivity—unless of course, some short-sighted users object. Any fiscal measure which encourages the use of labour-saving machines will, I am sure, be approved by this House. I may add that I sincerely hope that greater attention will be devoted to working this new machinery (and for that matter old) on double or treble shifts.
A further measure to stimulate the expansion of industry, particularly new processes, is the abolition of the excess profits levy. I think it is generally agreed on all sides of the House that this is a tax that will not be missed. Finally, in the Finance Bill 6d. is taken off the income tax. As I have said it is imperative to give people, and for that matter companies, an incentive to produce as much as possible. We cannot change human nature. And unless extra effort promises some extra reward, you may expect, but you will certainly not get, the extra effort. We hope that this reduction in the standard rate of tax may have a stimulating effect. As we anticipated, the fact that 6d. off the income tax helps a man who pays a great deal of income tax more than a man who pays little has caused a good deal of outcry from the Opposition, especially during by-elections, though their protests do not seem to have attracted very many votes. The reason, no doubt, for their lack of success is that the ordinary elector is quite clever enough to see—however glibly and sometimes even dishonestly the issue may be presented—that you cannot relieve a man of income tax if he does not pay any.
Despite these alleviations, however, taxation is still far too heavy to be healthy. Unless one subscribes to the view—which we certainly do not—that "the gentleman in Whitehall knows best," one cannot really be content that more than one-third of the national income should be taken out of people's pockets and spent by the Government. Even in

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Biblical times a tithe was considered plenty. Unfortunately, as things have developed it is not easy to see how to make a significant reduction. Broadly speaking, of the total Government revenue, defence and the service of the National Debt take about half and the social services nearly three-quarters of the remainder. Only about one-eighth is applied to the ordinary, old-fashioned processes of running the country—police, law courts, administration and so on.
Great economies would clearly involve policy considerations. But worth-while savings can be made and are being made by good housekeeping. The Civil Service has been cut by 22,000. Various Ministries have been amalgamated and overheads will be correspondingdly reduced. A number of controls have been abolished, with resultant economies. And, on the whole, ordinary Government expenditure, apart from defence expenditure, has fallen since the Chancellor took over, despite rising prices. It is remarkable, all things considered, that we have not suffered greater hardships. We have had to find this year something like £800 million more for defence than was required on the average in the last five years of the Socialist Government. Furthermore, we have received in aid only £150 million per annum, whereas the previous Government received on the average something like £340 million a year, or more in real terms, with which to close the dollar gap. On top of this we have over the last two years been obliged to pay back something like £60 million a year in dollars as repayment of capital and as interest on the loans made to our predecessors.
But, my Lords, even though, as I have indicated, our situation at the moment is not unsatisfactory, we are by no means secure. All of us are determined to maintain employment; all of us want to keep prices from rising; all of us realise the need to raise output; and all of us would like to reduce controls. But, as I have said, these objectives, not easily reconcilable amongst themselves, are dominated by the paramount need to balance the sterling area's trade with the non-sterling, world. To do this against German and Japanese competition will tax all our efforts.
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The sterling area's current transactions with the rest of the world approach something like £10,000 million a year. A worsening of our position by only, say, 3 per cent., which might very easily result from a fall in earnings or an increase in expenditure such as we have often experienced in the past, would cost us some £300 million. It is clear that in order to prevent the complete exhaustion of our reserves, which to-day stand at £850 million, we might in such circumstances be forced to restrict imports drastically, with consequent food shortages and unemployment. It is for this reason that we must all try to maintain our exports by increasing output without raising prices, and make sure that we earn enough to pay for our daily bread. I am sure the official Opposition realise this as clearly as the Government. And I am confident that we shall all work together and try and rebuild the country's position until once more we can face with confidence whatever storms may come. My Lords, I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2ª—(Lord Cherwell.)
3.27 p.m.
LORD PETHICK-LAWRENCE: My Lords, some three months ago, when we had our last debate on finance and economics in this House, we had only recently learned the facts of the Chancellor of the Exchequer's Budget, and on that occasion we dealt with the main features of that Budget in our debate. To-day, the noble Lord, Lord Cherwell, has opened this Second Reading debate, and has made some references to the Budget and the terms of the Finance Bill, for which we are grateful. And we are grateful to him, also, for the moderate tones in which he disapproved of some of the views of the Opposition. If he did not live up entirely to his own proposal to throw bouquets at the Opposition, I am bound to admit that the number of brickbats he threw across the table were, at any rate, considerably fewer than I have known him to throw in times gone by. Lastly, with regard to his speech, I would say this. The fact that no vigorous attitude has been taken up by the Opposition towards the terms of the Finance Bill and the Budget must not be taken to mean that the Opposition entirely concur in the provisions of the Bill. In fact,

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though the noble Lord was speaking on behalf of the Government—and therefore was commending the financial set-up of to-day—it seemed to me that in one or two matters, at any rate, he very strongly disapproved of the financial set-up. The fact that he took that line excused him from a very vigorous defence of the Chancellor's proposals.
I have no intention of taking up the time of this House by repeating some of the arguments and re-presenting some of the layout which I ventured to lay before your Lordships on the last occasion upon which we had a financial debate. Still less have I any desire to rake over the embers which blazed up, or, shall I say, flickered up, in another place during the various stages when the Budget and the Finance Bill were discussed. It seems to me that that would be a waste of your Lordships' time, particularly as I consider that the tendencies to which I drew attention on the last occasion finance was before this House have become a little more marked—not a great deal more marked but a little more—than they had when I was speaking here at the end of April. The precarious balance of trade is a little more in evidence—a little less precarious perhaps. The slight improvement in production to which the noble Lord referred—and I think he referred to it with moderation—has become somewhat more marked; and production has nearly climbed back to the level of two or three years ago. We are again wistfully hoping for peace, or at least a ceasefire, to break out in Korea. There seems to me, therefore, to be little purpose in taking up the same line again, and I would venture to follow the noble Lord along the general line of his speech in discussing the outlook for the future rather further in advance than is covered by the financial statements for the year, looking forward a decade or even more, and to where the finances of the country are drifting in the years to come.
I am sure that I shall have widespread support in the House when I say that no
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one can look forward to the prospects for the future with any complacency. In common with the noble Lord, Lord Cherwell, I have no doubt that most of your Lordships who are listening to our speeches here to-day have read the interesting articles that appeared in The Times newspaper at the end of last week, and I think there will be substantial agreement with the well-informed diagnosis of the situation which was given in those articles. Perhaps I may be allowed briefly to summarise their main conclusions as they appear to me. In the first place, there is no likelihood whatever that the running costs of our domestic services will decline. On the contrary, it is almost certain that in every one of them there is likely to be an increase.
In the second place, with regard to military costs, the costs of defence, I am afraid that it is unlikely that we shall see any substantial reduction; they even may tend to go up rather than down. Further than that, we urgently need capital for the development of our railways, our roads, our docks and for productive industry generally. Above all these, there is likely to be some £80 million additional expenditure when the cost of the British Army in Germany is transferred from German to British expenditure; and beyond that we have to allow for at least £100 million, possibly considerably more, owing to the fact that the American people, as represented by their Congress, are intending to reduce the amount of military aid, and possibly civil aid, which they have sent to this country in recent years. And to this, I myself would add an additional item for the large amount of money which we may have to spend on Colonial development in a special direction, to which I shall refer later. I understand that the noble Marquess, Lord Salisbury, now desires to make a statement on an entirely different matter; I will give way and perhaps I shall be allowed to resume after the noble Marquess has spoken.

CONFERENCE OF FOREIGN MINISTERS
3.35 p.m.
THE MARQUESS OF SALISBURY: I am most grateful to the noble Lord, Lord Pethick-Lawrence, for allowing me to intervene to make what I can assure your Lordships will be a brief statement on my visit to Washington. I do not propose to-day to anticipate the foreign affairs debate which, at the request of the noble Lords opposite, has been arranged for July 29 and which will give an opportunity for a full discussion of the recent Washington talks. Meanwhile, however, I feel that the House may expect me to give a very brief account of what was achieved at Washington. The aim of Her Majesty's Government, as you know, was to maintain the momentum of the policy laid down in the Prime Minister's speech of May 11.
Her Majesty's Government have had two main objectives since that date. The first is to bring about a meeting between the three Western Powers and the Soviet Union, with a view to composing, or at least easing, the differences between them. The second aim is to maintain and strengthen Western unity by further developing the institutions upon which the safety and prosperity of the Western world depend, such as N.A.T.O. and the various European organisations—the Coal and Steel Community, the Defence Community and the European Political Community. The original plan had been a meeting at the highest level, preceded by an equally high-level meeting between the heads of Governments of the United States of America, France and this country. For a number of reasons, including the illness of the Prime Minister, this particular plan could not be achieved, as your Lordships know. In order to retain the initiative, an intermediate meeting of Foreign Ministers was arranged, therefore, in Washington.
Our discussions there were mainly concerned with policy towards the Soviet Union and the satellite countries, with the German problem and with the connected problem of European unity within the Atlantic Community. We also discussed the position in Korea and in Indo-China, and I had some valuable conversations with the United States Secretary of State
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about Egypt. The Washington communiqué and the Note sent by the three Western Allies to the Soviet Government, which have been circulated in a White Paper, show clearly what has been achieved. If I may, I would briefly summarise the results as follows:—

(1) We agreed upon an immediate invitation to the Soviet Government to early four-Power talks.

(2) These talks will deal with, first, the key problem in our relations with the Soviet Union—namely, Germany—some solution of which is essential for any genuine relaxation in European tension, and, second, with Austria, which ought to be the easiest problem to solve between us and the Russians.

(3) It was agreed that further four-Power meetings at the highest level and with an even wider agenda were not excluded, if the situation seemed to require them.

(4) It was agreed that N.A.T.O. and the European institutions I have mentioned above, and more especially the European Defence Community, were fundamental to Western security and to the maintenance of international peace and must be further strengthened and developed.

(5) It was also agreed that these institutions corresponded to the lasting needs of their members, were necessary in themselves and therefore were not to be regarded as linked up with existing international tensions. This I would regard as of especial importance.

(6) Our note to the Soviet Government shows clearly that the three Western Allies, in agreement with the German Federal Government, wish to do everything in their power to reunite Germany in conditions of genuine freedom, and so contribute to the security of all countries.

It is the sincere hope of the three Powers that the Soviet Government will respond to this invitation and so enable us to work out together the means for a relaxation in international tension in Europe, just as we hope that an armistice in Korea will lead the way to a similar relexation of tension in the Far East, including South East Asia.
As regards Egypt, the House will have noted that General Sir Brian Robertson

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has returned to Cairo. I will say no more now than that our talks in Washington confirmed the wide measure of agreement between us and the United States Administration on the Egyptian problem and more especially our common view that the maintenance of an effective base in the Suez Canal is an essential strategic interest of the free world. Our position remains that we are willing to resume negotiations as soon as the Egyptian Government is ready to do so. In conclusion I should like to pay tribute to my two colleagues, Mr. Foster Dulles and M. Bidault, for the friendly and cooperative spirit in which they tackled our joint problems.
EARL JOWITT: My Lords, there is a good deal to ask and say about this statement, but, following the example of the noble Marquess, I think it would be much more convenient if I postponed questions and comments until we nave our foreign affairs debate next week. Therefore, I propose to-day merely to thank the noble Marquess for making his statement.
VISCOUNT STANSGATE: My Lords, as the noble Marquess is the only firsthand authority in this matter, will he permit me to ask one question? Is it the Government's policy to re-unite Germany, and that the re-united Germany should be a member of the European Defence Community?
THE MARQUESS OF SALISBURY: My Lords, if the noble Viscount will allow me, I would prefer to follow the example of the noble and learned Earl, Lord Jowitt, and suggest that all these matters should be left to the debate next week. I can give the noble Viscount an assurance that I shall be very ready to answer on that occasion. I do not think I should do much good by answering supplementary questions to-day.
VISCOUNT SAMUEL: My Lords, on behalf of noble Lords who sit on these Benches, I should like to thank the noble Marquess for having, in spite of the fact that we are to discuss foreign policy next week, made an interim statement on the important conversations that have taken place in Washington. We are all glad that he was able to report so large a measure of common agreement. Undoubtedly, the most important outcome of those conversations has been the
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despatch of an invitation to Soviet Russia to join in four-Power conferences on the same level. Whether the change in Soviet policy extends to the basic objects of their State, we do not know; but undoubtedly there has been a great and significant change in the tone and temper with which they are conducting their affairs. Without entering further into these matters, for the reason given by the noble and learned Earl who leads the Opposition, I think I may say that all of us in this county, of all Parties and schools of thought, most earnestly hope that that invitation will be accepted by the Soviet Government. We trust, too—and we have no doubt—that this change in the temper of their policy will not be met on the side of the Western countries by a spirit of sceptical suspicion, but rather in a spirit of full reciprocity. For the rest, we would only thank the noble Marquess for having rendered, by his visit to Washington, yet one more to his many services to the country.

FINANCE BILL
3.45 p.m.
Debate on Second Reading resumed.
LORD PETHICK-LAWRENCE: My Lords, if I may now resume my remarks on the Second Reading of the Finance Bill, which has been interrupted by the interesting and important intervention of the noble Marquess, I would begin by recapitulating in a few words the last sentence or two of what I was saying before the interruption took place. I was recalling the points of view put forward in the articles in The Times. I was saying that they suggested that while the running costs of the Services, and the costs of defence, were not likely to fall, but, on the contrary, were likely to increase, and certainly increases are to be expected in the cost of the domestic services, there would also be large additions to the bill for capital development to be looked for in the future. I therefore pose this question: Is this formidable bill one that can be met? The answer which will develop from what I have to say hereafter will be, Yes, on certain conditions.
It is of prime importance that we should all be realists in these matters, whether we be Socialists, Conservatives or Liberals—and I venture to suggest

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that in some respects we are all, in different proportions, all those things—and we must be prepared to accept the logic of events. We cannot, even if we would, go back to the old world of the nineteenth century, with its undisputed British predominance in manufactures and commerce; with British policing of the high seas and control of the far and near East; with its class prejudices, its sex exclusions, its internecine fights between capital and labour, its restrictive practices, its treatment of the sick and the aged. In the first part of the twentieth century, partly as a result of the great wars, two leviathans have arisen, and we have to live in the same world, with them in the future.
So far as this country is concerned, the situation is rather like that of a human being going into a bathing pool and trying to swim in that pool in which there is at the same time an elephant and a rhinoceros: it can be done, but it is not easy. If we are to trade with these leviathans, we must do so, to some extent, on their terms; and if they will not take our imports in exchange for their exports to us, we may have to discriminate against them and seek food and raw materials elsewhere. That is easier said than done, because to a large extent it will require prior capital development of the countries which are the sources of this food and raw materials. Noble Lords may remember that, before the break in our discussion, I said that I would refer later to an additional item, which I do not think was mentioned in those articles in The Times—I refer to the great increase in expenditure which may have to come from this country for development in our Colonial Empire, and possibly in some of the countries which are in close association with us, for the express purpose of developing markets to us of the food and raw materials which we require.
Then we must recognise that, with regard to Asia, we have to accept, and not merely grudgingly acquiesce in, the new relationships between Europeans and Asians. I say that all those countries are fortunate which entered into this new partnership in a spirit of good will, and did not wait for the new position to be forced upon them. I do not propose to dwell on that: still less do I propose to dwell on the situation in Africa. North,
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South, East, West or Central, all of which fill me with considerable alarm. I do not do that because I should be wandering far away from the subject of to-day's debate. But I would say that untoward developments in Africa may well have repercussions in the world of finance, considerable in any case, and shattering if the worst were to happen. Therefore, the first condition of the survival and prosperity of this country is that we should face the world not as a single country but as one of the Commonwealth—primus inter pares very likely, but not a controlling Imperial Power—and that within the Colonial Empire we also recognise partnership and not dominance. I would go a little further than that, because outside our Commonwealth and Empire there are countries belonging to the sterling area, and there are countries in Europe, who look to Britain to give them a lead, both in finance and trade and in their attitude to world problems.
Turning from these overseas questions, I come to the domestic side. I begin with what I described a little earlier in my speech as class prejudice. I believe that we have learned in this first half of the twentieth century that people have different functions to perform. We have gone a long way from the exaggerated and insulting, class distinctions. We know now, and realise, that all these functions are necessary to civilization, and that the performers of every one of them are entitled to our respect. If there are to be differences of remuneration they must not be too great. There must no longer be vaunted luxury in juxtaposition to grinding poverty. We have come a long way. I am not quite sure that we have finished the road, and we probably have further to go; but the changes from the nineteenth century conceptions are tremendous. If you turn to the question of sex, sex dominance and sex exploitation have largely gone. The wasteful shutting out of women from certain occupations has very largely disappeared. Nearly every avenue is open to men and women, irrespective of sex. There are still a few relics—exclusion from your Lordships' House for example, and unequal pay for equal work. We must tidy up these remains. We must do away with these things, not merely as a matter of justice between one sex and another, but because every such exclusion and hindrance is

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a waste to the body politic which needs the best person for a job, and needs that those persons shall be satisfied with the wage they get for their work.
Then I come to the internecine strife between capital and labour. I remember the days when there was a dog fight between the two factors in industry. It is much less than it was, but it has still further to be reduced. With this we must get rid of the restrictions upon output to which the noble Lord himself referred, which arose in the first instance largely because of the attempts by employers to impose humiliating and exploiting conditions on their workpeople. We must remember that restrictive practices are not confined to one side in industry. There are restrictive practices by employers and manufacturers who hope by their restrictions to exploit the community and the consumer in their own interest. Both of those restrictive practices have to go. Of course, in every class of society—this is my experience through my life, and I think other noble Lords will agree with me—there is a certain proportion of slackers who want to get paid, rewarded or honoured for doing as little as possible for the benefit of the community. The danger is that the pace of the worst, the least efficient, tends to become the pace of the whole; and that is one of the great dangers which we have to meet and overcome in seeking to increase the output of the country. All sections of the community must set their face against the slackers in their own section of society.
Now a word about old age. One of the stupidest forms of waste is the rigid insistence on a fixed and identical retiring age for all workers in all kinds of employment. What is right for heavy manual labour may be all wrong for mental, or other labour. I notice that in politics, which are very strenuous in some respects, we have, not only in your Lordships' House but in the House at the other end of the passage, eminent examples of men who have passed well beyond the forties, fifties and sixties, and have got well into the seventies, and possibly even into the eighties—far beyond the Psalmist's allotted span of three score years and ten. On the other hand, there are some men who are born old, in the sense of being work shy; others who are old at forty or fifty, and some who are still in their
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prime in their sixties and seventies. When I say "men," of course I include both sexes, just as a master who for the first time was addressing a co-educational class in his school, who kept on referring to them as "boys," at last recollecting himself said, "Of course, boys always embrace girls." Therefore, my second condition for survival and prosperity is that we have to use our individual common sense and be prepared to be flexible, and, above all, to realise that the people of this country must play as a team in a game which can he played only by a common effort, and not play as individuals, each for his own hand and each for his own selfish ends. Unless we do that, then in very truth we shall lot be able to have prosperity, even if we are able to survive. During the war, we pooled all our resources, and, to the amazement of the world, we once again, in the words of Pitt:
"Saved ourselves by our exertions and Europe by our example."
In this economic battle we have in some ways an even harder task; but having lived, as I have, a long life as a member of the British race, I have a supreme faith in our people, in their sense of reality, in their toughness in the face of difficulty and trial; and I am confident that if they are led by leaders who have both wisdom and vision, we shall come through.
4.1 p.m.
VISCOUNT WAVERLEY: My Lords, when I addressed you three months ago in the last debate, to which the noble Lord, Lord Pethick-Lawrence referred just now, I said that I thought the Chancellor of the Exchequer had been right to risk deliberately a Budget deficit by granting tax concessions designed to encourage productive enterprise. The time has not come for a final judgment, but I certainly do not think that any ground has appeared in the intervening months for changing that view. The situation which confronts us to-day presents a number of encouraging features. After a period of anxiety, to which the noble Lord, Lord Cherwell, referred, there has been a notable recovery in certain sections of industry, in particular in the textile industry; and in the woollen section of that industry, to which my noble friend referred, there has been recovery. The motor car industry has done particularly well in the matter of exports; and in

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various sections of the chemical industry there is steady improvement to be recorded.
In addition to the main features of the Finance Bill, there are a number of miscellaneous provisions, unconnected, none very important or costly, all tending to enhance the atmosphere of uplift, which is the dominant characteristic of the Bill. The central provisions are, of course, the abolition of the excess profits levy, the restoration of initial allowances, and the reduction of the basic rate of income tax. The Bill is much lighter than usual. In the final speeches in another place—which I have been at pains to read—very little criticism was made, except on quite minor points of detail, such as the exemption of cricket from entertainment tax and the reduction of purchase tax on luxury articles. As Lord Cherwell commented, there was at no time any Division on the Budget Resolutions. So far in this debate, however, we have heard very little on the substance of the Bill. I do not know whether that is customary in this House, in dealing with a Bill of this kind.
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (VISCOUNT SWINTON): It is not out of order to refer to it.
VISCOUNT WAVERLEY: It is not what I was accustomed to in another place. I must confess that I came here with a lively expectation of having from my noble friend a detailed and pellucid exposition of certain provisions of Part III of the Bill. I did not have it, and I am not going to rush in where my noble friend thought it better not to tread. I suppose that those provisions are, in effect, the first concern of the inquiry of the Royal Commission on Income Tax and of the Millard Tucker Committee. I venture to think that when we receive the next Finance Bill, we shall find in it an adequate reflection of the recommendations of the Royal Commission made as the result of these vitally important investigations.
I have said once before that the machinery which we have in this country for the assessment and collection of direct taxes is the most perfect thing of its kind in the world. It might well prove to be our undoing. Lord Cherwell referred to what he called the pejorative word
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"profits." I wonder whether all of your Lordships fully grasped the implications of that reference. May I venture to expand for a moment? I certainly think it is a great pity that we have not been able to find a new term for the surplus which emerges in every thriving industry—not a disposable profit at all, but something which must be retained to preserve the very life of the industry. Now, my Lords, taxation deals with that surplus as if it were ordinary profit. We need more and more of such surpluses. The paramount need everywhere to-day is increased productivity, particularly in the exporting industries. Everyone knows—it has been said again and again—what are the necessary ingredients for the solution of that problem: better and speedier and more effective application in industry of the results of scientific research; the employment of more and more scientists and highly trained technologists in industry. I do not think the situation is quite so bad in that respect as is often represented, but we in this country, by comparison with other countries in competition with us, still have a long way to go.
Nevertheless, I should say that substantial and almost spectacular progress is, in fact, being made. We want better training of foremen and managers, and we want better human relations. All these things are essential. There are encouraging signs. But we have to meet to-day much keener competition from Germany and Japan. As Lord Pethick-Lawrence pointed out, we have to face, in certain directions at any rate, a tendency to increased costs in our own industries. We shall be faced with a problem when we take over the full cost of the Army of Occupation in Germany; and the generous contribution that America has been making, which has so assisted our finances and our balance of payments, cannot continue indefinitely. Those are undoubtedly grave aspects of the matter. At one point in his speech the noble Lord, Lord Pethick-Lawrence, painted an attractive picture of somebody, presumably representing this country, wallowing in a pond with an elephant and a rhinoceros. It would have been more serious if he had said a hippopotamus, because, after all, that is an aquatic animal. But whatever Lord Pethick-Lawrence had in his mind, that suggests

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to me an awkward and perhaps embarrassing situation; and it may be that we shall have to get out of that particular pond and cultivate suitable water sports with other associates, those who are nearer to us and perhaps, in some respects, more congenial to us. I welcome very much what the noble Lord had to say about all that.
Africa presents us with a very great problem, and truly what happens in Africa may have a profound effect upon our economy. But I do not know whether the noble Lord, Lord Pethick-Lawrence, has been following closely a tendency which has become very marked in recent months—at least I think so—towards a freer use of British capital in development overseas. There have been a number of indications of this, and those who are responsible deserve great credit for the imagination and foresight which they have exercised in promoting and supporting these movements. We may come to rely very largely on the results of such development.
I warmly welcome, also, the stress that is now being laid by responsible trade union leaders and by many former Socialist Ministers on the vital necessity for increased productivity and increased investment. In some respects, we see there a very welcome change, and I particularly welcome the tone of the noble Lord's speech and its constructive character. While, as I have said, there are encouraging features, we still have a very long way to go. There is no reason at all for complacency, either on the part of the Government or of any section of the community, employers or workers, or whoever they may be. As the noble Lord said, we have all of us got to be realists, stern realists, and it cannot be made too clear that on the reaction of the community to the present concessions will depend all hope of future relief and, perhaps, our ultimate standard of life.
4.12 p.m.
LORD BRAND: My Lords, from what some of your Lordships have said, I believe I shall be in order in taking a rather wide view of what one is able to say in this debate, because I want to make some reflections on our economic and financial position and some comparison of policy as regards the Conservative side, on the one hand, and the Labour
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side, on the other. I take the Conservative policy as that exemplified in the Chancellor of the Exchequer's speeches and actions, and I think I am right in taking the Labour policy as that set out, for the moment at any rate, in the document called Challenge to Britain which is to be submitted to the Annual Conference of the Labour Party and which sets out a very detailed policy indeed.
First, I should like to make a few remarks on the results of the Chancellor of the Exchequer's policy. As others of your Lordships have said, the crisis is overcome for the time. We are now making, I think, a surplus, even before taking credit for American aid. In 1953, up to the end of June, our gold and dollar reserves have increased by some 520 million dollars, of which only 167 million dollars were aid. This has, I think, been accomplished in the main, first by the very favourable change in the terms of trade; secondly, by a big reduction, in volume as well as value, of imports in 1952, though this volume appears to be climbing again now; and, thirdly, by the maintenance, more or less, of the value of our exports, our dollar exports being somewhat higher. Moreover, I think the Commonwealth Conference was exceptionally successful in inducing other sterling area countries to reduce their imports—not only dollar imports but also imports from Europe which were costing us gold through being settled via the E.P.U. We should remember that terms of trade which are favourable to us are uafavourable to many sterling area countries, particularly the Colonies, because the prices of their products have fallen. By these means we have staved off an alarming crisis.
The other side of the Chancellor's policy was the process of reducing taxation, which we should like to see go much further, but how far it can go seems to me doubtful, as it looks—I think your Lordships have heard observations this afternoon to that effect—almost certain that our expenditure must automatically go on rising. Meanwhile, production is up. I have not been able to ascertain where the increased production is going to, whether it is going to stocks or to consumer goods. Certainly, there has been a good deal of spending. I am told that, probably due to the Coronation.

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400,000 television sets, worth, including purchase tax, about £25 million, were sold in less than four months. The underlying trend so far as consumption goes seems to be upward.
Of course, higher production is not all "jam," because it means higher imports. There are signs of this; and the question, therefore, has to be asked, are we consuming more than we can afford? Is the home demand too high? While this is uncertain and while our reserves are so low, our balance of payments so precarious, our Government expenditure and taxation so vast, our risk savings so limited, it seems to me that any equilibrium we have now reached has perhaps a rather temporary look. Any recession from abroad in our present state of weakness would be bound to be serious, and, to my mind, the possibility of real convertibility which we could maintain by our own efforts through thick and thin seems still a good way off. Great help might no doubt be given to us by the pursuing of a freer policy by the United States, or by their being able to discover some means of greater foreign lending, but the difficulties of doing this on a large scale are formidable.
In the main, each country must solve its own problem. What is our answer? In what direction shall we seek a solution? This question perplexes everyone, of every Party. I want to ask what answer the two main Parties give. The Conservative answer, as I understand it, is that the Government's aim should be not themselves to take over the task of commerce and industry, but to create a framework of stable, convertible currency and stable prices, within which the native energies, brains and vigour of the community could have free play; that taxation should be reduced, if possible, and that in any event inflation must be eliminated. This involves restraint, through fiscal and monetary measures, of domestic consumption, to allow the use of more resources for increased exports as well as an increase of savings. How can such a policy succeed in the face of constant increases in wages and prices?
I agree that the progress towards convertibility of United Kingdom sterling is highly desirable, for several reasons. First, it is unthinkable that the sterling area should hold together in the long run
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without convertible sterling. We are the bankers of the sterling area. Depositors and clients want a banker to pay them back in the same coin as they have paid into the bank. We cannot possibly suppose that the sterling area will always regard a currency as good if the policy pursued by a country may at any time lead to a further depreciation. Therefore, from that point of view convertibility is highly desirable. Then again, the general convertibility of the main currencies of the world is necessary if the greatest possible increase in world trade is to take place. Such an increase would be the greatest help of all to us in the solution of our problems. Convertibility is also necessary to encourage the maximum free flow of capital internationally. This is almost equally as important as increased trade.
It is only when the lenders, the creditor countries, feel that they are lending to countries which will be able to repay them, and if the currencies are strong and convertible, that free lending will take place in the world. At present, as you can see if you look at South American countries, an enormous obstacle to investment in such countries is the complete instability of thecurrency—I refer particularly to Brazil. Generally, as Mr. Rooth, the President of the International Monetary Fund recently said:
"Steps to convertibility and monetary reconstruction are the most important of all means in helping expansion and a balanced growth of world trade, which in turn is the most important element in maintaining a high level of employment and real income and in developing productive resources."
As your Lordships no doubt know, in the last two years there has been a general movement, particularly in Europe, away from the use of direct controls and in favour of monetary and fiscal measures to create stabilisation, and generally this policy has had striking results. I should like to refer your Lordships to a very comprehensive document which is published each year—namely, the Report of the Bank for International Settlements, which I remember Lord Keynes told me in Washington was, he thought, the best that was published, and that if you were to read it you would get from it all the figures you wanted about all the main countries of the world. I thoroughly

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recommend it to your Lordships. Nevertheless, I recognise that convertibility imposes certain restraints which we must live up to—about reducing or containing our consumption, and about living within our means. The question is, shall we do so? In addition, it is true that the sterling area system plus an inconvertible sterling acts like a sort of protective shield for British industry, and to that extent is useful. If we had convertibility, our industry and trade would require to be fully competitive with the conditions of other countries. I should like to emphasise that the Conservative policy—
LORD PAKENHAM: May I interrupt the noble Lord, who is always very generous about giving way? Before he leaves the Conservative policy, would he tell us whether the Conservative policy is the same as the policy he himself recommends, or is there any difference between them?
LORD BRAND: I was coming to what I myself believe is the right thing at the end. I do not think I shall be highly constructive, but perhaps the noble Lord will wait to the end.
LORD PAKENHAM: Certainly.
LORD BRAND: I now want to contrast that which I understand to be the Conservative policy (I have no right to say that I fully understand it) with the Labour Party policy as represented in Challenge to Britain. To begin with, may I say, without offence, that it would surprise me very much to learn that the best brains in the Labour Party had taken a serious part in hatching this programme, because, to use some exaggerated words, I think it is an enormous hotch-potch of everything; but there I may he perfectly wrong. It appears to be a catalogue of all the things that might be worth doing, first, if Governments and officials always knew better than other people; secondly, if great inflation were thought to be not undesirable—although it refers to uncontrolled inflation as being a bad thing; thirdly, if the fact that some of the things in the catalogue are entirely incompatible with others is thought to be no disadvantage. For instance, the plan indicates a large number of schemes involving, in my opinion, vast additional expenditure and large-scale inflation, with, at the same time, an imperative injunction to industry
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to cut down production costs. Again, while it promises
"sufficient encouragement to venture capital on risky projects,"
it couples with that promise the threat of legislation to prevent much in the way of distribution of dividends. I do not think that is a sign of very great encouragement.
Labour, with a capital "L," appears throughout as a sort of beneficent and omniscient goddess, clothed with quite miraculous powers. For instance, it is said that if savings are insufficient, Labour
"will see that enough saving is made"—
presumably by additional taxation. Well, if we have that on top of the present taxation, it will undoubtedly be inflationary. Then, Labour will see that
"there is an adequate supply of risk savings at cheap rates"—
presumably also out of taxation I do not know where else it will come from. The Labour Front Bench have not the savings in their own pockets, and therefore it must come from the taxpayer. Who is going to see how this risk capital is spent? Is there to be a great new institution, and how much will it know about how these risk savings should be spent? Anyhow, such a course is directly inflationary. No mention is made of any aim towards convertibility. Perhaps that is natural in view of the fact that the programme would certainly lead to inflation. The only reference to currency is:
"We must tighten up currency controls."
Perhaps the most remarkable promise is that
"Labour will introduce legislation to place the necessary powers for ensuring full employment on a permanent basis, subject to appropriate Parliamentary safeguards."
Well, I have never heard before that legislation can ensure full employment. It seems to me to be King Canute, with a vengeance!
LORD PAKENHAM: May I interrupt the noble Lord again, as I am sure his words will be widely followed in certain quarters? I feel he ought at least to read a little more of that quotation. It says:
"Labour will use direct controls to ensure that resources are not wasted through inflation."

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I understood the noble Lord to say (but I was not hearing perfectly at the moment) that this document regarded considerable inflation as not undesirable.
LORD BRAND: In answer to the noble Lord, I would say that it is difficult to know what it desires, because while that sentence is in—that Labour says that uncontrolled inflation is undesirable—the whole document would lead to great inflation. Perhaps the Labour Party have not adjusted the two sides; but there is no doubt what the result will be unless you scrap all the part that leads to inflation. I daresay that in compromising one perhaps put in things that are inconsistent; and that seems to me a strong characteristic of this document.
There is one sentence that has a certain amount of pathos about it. It says:
"It is no good Whitehall working on blueprints for increasing and expanding engineering exports unless the Government have power to ensure that the blueprints are put into effect."
But does anyone suppose that Whitehall is the best instrument for drawing up blueprints for the engineering industry? Surely the engineering industry knows more even than civil servants in Whitehall, able as they are. It seems to me that one would think that British industry and the British people were merely sitting by, waiting for orders from Whitehall. The guiding idea of the programme appears in the statement in the very first sentences:
"British capitalism long ago entered on its decline."
If the view that British industry is moribund is really held, then the suggestion of nationalisation is understandable. But why should it be moribund? What about private industry in the U.S.A., Canada, Germany, Holland, Sweden and Switzerland. Are we in this country so much more inefficient and stupid that we cannot run industry as well as they can? I do not think so. Unfortunately, while the proposal to nationalise arises, I understand, because private industry is decadent, it is remarkable that the only industries which it is proposed to nationalise at the moment are the very successful ones—engineering, aircraft and chemicals. On what ground that is suggested, is uncertain. I do not suppose that it would be so that they might join
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the moribund troop. The argument seems to be that such industries must export much more, that much more capital is wanted, that there are no private savings; and therefore, the Government must provide the capital.
The document proceeds to say that
"What a free enterprise system cannot do is to direct the flow of capital into specific industries,"
and that therefore the Government must. What a strange statement to make! What is the great capital market in the City of London doing? Its whole object is to direct capital into those channels which are shown by prospectuses to be flourishing, able to supply goods, able to sell them, abroad or at home, and, generally speaking, to match capital and the demand for capital. Naturally, that flow is directed by market forces, by the possibility of a company making a profit. You have only to look at last week's papers to see that millions of pounds were provided for industry, and particularly for the engineering industry. When I read about directing the flow of capital into specific industries, I sense a faint but distinct aroma of groundnuts, of capital being directed by people who do not know about industry into a direction which they think will be highly satisfactory and profitable but which does not turn out quite like that.
Apart from nationalisation. Challenge to Britain has one broad proposition for curing the dollar gap. That solution, as I understand it, is the tight organisation of the United Kingdom, the rest of the sterling area, and the O.E.E.C. countries in a joint planning co-operative group. All these countries are to discriminate against dollar imports and have tighter exchange controls. In return for agreeing to these methods, the United Kingdom will supply loans on a large scale, without expecting any payment until later on, for the development of food and raw material exports. Each country, it is said, must know its exact part in the plan over several years. I myself believe that whatever merits such a scheme has, it is impracticable. I think the other sterling area countries will not join us in a cold war against the United States—a step which looks like, though I do not think it is intended to be, a method of baling us out in our difficulties. Moreover, is it likely that we shall have these gigantic

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resources to lend abroad if all the other inflationary projects of this programme are also to be carried out? The programme does not mention the question where the resources are to come from.
Now a few words about my own conclusions, about which the noble Lord wanted to know. I consider that the Labour policy, as set out in this programme, of combined nationalisation, plus inflation, plus a proposal to form a protective bloc, is impracticable and against the country's interests. I believe that the Chancellor's policy is on the right lines, and, as I have said to your Lordships, the same policy has met with very considerable success in a good many other countries. Here we labour under great obstacles, more almost than in other countries, because we bear greater burdens. For example, we are banker to the sterling area; we have to pay huge debts; we have to build up reserves—all of these require a surplus; we have to lend to undeveloped countries; we have to export much more; we ought to invest much more in industry. Our taxation is huge, and no one sees any means of reducing it. In the face of all this, we have to maintain our current consumption as best we can, and as wages and prices go up, as they appear to be going up, we have to provide reserves for increased current consumption or, somehow, to keep current consumption down. If all these burdens are too great, we risk inflation again. Then our competitive power fails and our only recourse is to devalue again. Yet all economies, in production, in subsidies, in social services or in defence are politically difficult.
One always comes back, therefore, to what other noble Lords have already mentioned—the necessity of increasing our efficiency and our productive power. But there are difficulties here, as we all know. I think the obstacles are less in the new industries than they are in the old, and no doubt difficulties come both from the management side and from the side of the men. I should like to draw your Lordships' attention particularly to a sentence which appeared in a report in The Times on July 16 of a meeting of the Transport and General Workers' Union. The Times report said:
"Many workers suspected higher productivity merely meant higher profits for the employer."
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In this connection, I was very glad to hear what the noble Lord, Lord Pethick-Lawrence, and the noble Viscount, Lord Waverley, said. I think that both of them wished the idea somehow to get through into the country that we are all partners in industry—management, labour and shareholders alike. But here, as reported in this paragraph to which I have referred, are men who apparently feel that higher productivity will not benefit them or the country. They think it means only higher profits for the employer—that was the effect of what was said.
Of course, to-day there is hardly any such class as "the employers." There are thousands, tens of thousands, and hundreds of thousands, of shareholders, and shareholders who have great difficulty in making any savings at the present time. Their savings are essential to us, and what do they get as a return on their savings, if dividends are paid? If they are in the sur-tax class, three-quarters of what their holdings yield goes to the Government anyhow, and is used to pay for the social services and so on. Is it not tragic that the wage earner should consider it criminal and destructive of both his interest and the country's interest that shareholders should get some dividends? That is an idea which I believe it is absolutely necessary to alter. Even if we get greater production, my belief is that we shall never be likely, from the existing amount of international trade, to get a sufficient surplus for all our needs. Our imperative need, therefore, is greater international trade, and the best approach to that is that all great trading countries should recover their equilibrium and make their currencies ultimately convertible one with another. For this reason, I believe that the Conservative policy is fundamentally right, and if the Labour policy is not to support convertibility, then I believe that policy is fundamentally wrong. But, of course, convertibility, as I say, is quite a long way off; it has many obstacles to overcome.
I should like to make one or two final comments. I have criticised Challenge to Britain, but on more than one point I support it. I believe that it is right in recommending a closer organisation of the sterling area. We are the bankers of the sterling area countries, and their

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monetary and fiscal policies are of vital importance to us. If they are wrong, we pay the penalty, because they can come back on our reserves. I do not believe that mere central bank co-operation, or even Government co-operation, from a distance, is sufficient. I believe that it is absolutely vital to us to follow closely the policies of those other countries and to have some definite machinery for doing so. My view is that something similar to the organisation of the O.E.E.C. is desirable for the sterling area. The second matter on which I agree with Challenge to Britain is in its call for sacrifice and its statement of the critical problems before the country. I agree with it in its call for
"sacrifice not only of material benefits but of many cherished habits and traditions."
It does not go into any detail to show what these words mean, but the sentiments are admirable.
My Lords, I have referred hardly at all to the very important matter of United States' policy. The United States suffers as we do from ingrained prejudices—one of them is tariffs. If nothing can be done about tariffs, and lending to the outside world by the United States citizens or industries is not possible on a large scale, and if United States Aid more or less disappears, then the non-dollar countries must, I think, maintain quantitative restrictions against dollar imports, when they have no means of paying for them available, or put themselves in a position to compete with the United States by lowering their rates of exchange. But the great obstacle to any such devaluation, is that you do not simply do it once and, so to speak, take your medicine, and determine that you will so act that it shall not be necessary to devalue again. Immediately you devalue, if prices rise, then wages rise, and you face the same old problems all over again. This last tendency towards the vicious circle, which is now almost a tradition and a habit with us, is perhaps the greatest handicap of all, and one of which we must rid ourselves.

BUSINESS OF THE HOUSE
4.48 p.m.
EARL FORTESCUE: My Lords, may I interrupt the business for a short time in order to make an announcement. As there are nineteen speakers on the Motion to be moved by the noble Viscount, Lord Samuel to-morrow, it has been agreed, through the usual channels, that we shall sit right on until we finish: there will be no adjournment for dinner.

FINANCE BILL
Debate on Second Reading again resumed.
4.49 p.m.
LORD SHEPHERD: My Lords, a year ago the Second Reading of the Finance Bill was moved by the noble Lord, Lord Lloyd, and it fell to me, as a junior Parliamentarian on this side of the House, to reply to him at once. I am very glad that on this occasion more experienced members of our two Parties have been engaged. The debate has been graced by a Motion from a member of the Cabinet itself, and we have had a reply from my noble friend Lord Pethick-Lawrence, than whom there is no more clear-sighted economist in this country. I hesitated at first as to whether I, with no pretence to economic knowledge, should intervene in the debate at all, but I came to the conclusion that, after all, this House consists not merely of economists or of lawyers, or of any other groups of skilled persons: it comprises ordinary men as well. And I felt that it might be desirable that an ordinary man, with no very extensive or special knowledge, should say a few words about the Bill and about matters that arise out of the Bill.
There seems to be a tendency to presume that the financial condition of the country, as seen through the eyes of the Chancellor of the Exchequer, is not too bad. There seems to be a feeling that we ought to be very thankful now that things are so good in that respect. I look to the speeches of the Chancellor of the Exchequer to find out what he himself has to say. The first thing he has to tell me is that the Budget Estimates of a year ago failed very badly. He budgeted for a surplus above the line of £510 million: the actual surplus above the line was no more than £88 million.

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Under the line, he budgeted for a deficit of £506 million, whereas the actual deficit was £524 million. He prophesied that there would be an overall surplus of some few million pounds. The actual result was a deficit of £436 million. I am not going to say severe things about that result. I am, however, going to ask noble Lords opposite to consider what they would have said about a similar condition of affairs if the Chancellor of the Exchequer had been a Labour Chancellor. I would add to that question another—namely, if the Chancellor was so far wrong last year in his Estimates, what guarantee have we that he will be any nearer this year? Can we assume, remembering these facts, that this year's Budget, which has been belauded so much, is going to lead to better things?
The Chancellor of the Exchequer gave two main reasons why there was a deficit last year. First of all, there was an increase in defence expenditure of £365 million—that is to say, £1 million a day extra. About that I would say that if the Government found it necessary to expend that money, and if they desired to proceed to more intensive rearmament, then we have no complaints to make. It is a part of a deficit created by an anxiety to protect the people of this country from difficulties abroad, and noble Lords on this side are more than sure that they are right in giving support to it. The second point mentioned by the Chancellor was that during the last financial year there had been an increase in the cost of the National Debt of £42 million, owing to the higher bank rate. If we look in the Financial Survey, we find that it states that in the last calendar year, for the same reason, there had been an increase in the charge of the National Debt of £60 million. We agree with the noble Lord who spoke last that taxation is still very high. We do not believe in high taxation for the sake of high taxation, but we say that if we are to reduce taxation in some directions, then we ought not to miss a direction of this kind. I suggest that we take serious thought about reducing the bank rate once more, in order that Government borrowing may be done at a much lower rate than it now is, and in order to prevent the necessity for the Chancellor to raise taxation again to make good the increased charges from this cause.
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I should like to make one other point about the increased bank rate and the result it is likely to have elsewhere. It was mentioned in the debate in another place that recently the Birmingham City Council have been to the City of London to raise a loan of £10 million, instead of obtaining it from Government sources. They found themselves under the necessity of paying not 3 per cent.. the sum to which they had become accustomed, but 4¼ per cent. On that £10 million the people of Birmingham have to pay an increased interest charge of £125,000 a year. The speaker in another place, a man of authority in Birmingham, said that it was quite usual for the City of Birmingham to find itself in the position of borrowing £10 million a year. Therefore, if this loan were to go its full course of seventeen years, and Birmingham has to borrow £10 million every year to the end of that seventeen years, the extra charge to the people of Birmingham would ultimately be at the rate of £ 2,125,000 a year. In other words, to meet the extra interest, due to the higher bank rate putting up the interest rate, the people of Birmingham would have to pay an additional rate of 5s. 8d. in the £—and therefore in many directions are likely to be less prosperous because of that.
I should like to refer to the statements made in the course of the debate by the noble Lord, Lord Cherwell, and the noble Viscount, Lord Waverley, concerning production. We all recognise that there must be increased production, not only in order to provide our people with the standard of living we think they are entitled to but also in order to export abroad to buy the foodstuffs and raw materials required in this country. The question is, how is that to be accomplished? Frequently the same people who talk about the necessity for more production also argue that the standard of living is much higher than it ought to be, and eight to come down. They say that we ought to consume less, so that our manufacturers will have more goods to export to places abroad. On Saturday The Times pit this case very clearly in a leading article. I hope your Lordships will allow me to quote briefly from it, in order that I may get hold of the point to which I want to draw your Lordships' attention. The article says:
"…there is no real scope for acceleration in the increase of production by the rate of

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capital investment unless saving is greatly increased and the standards of consumption are correspondingly lowered."
Therefore, we have to assume, from the leading article in The Times, that consumption in this country has to be greatly reduced. What I again want to know is how this is going to be accomplished.
The Times leading article went on to tell us some of the things thought to be necessary for the occasion. It said that the old must be prepared to work later in life; the young should work harder and for longer hours; there should be flexibility of labour; there should be keener management; and there should be an ambition to acquire and exercise skill in all its ramifications. I still want to know how it is going to be done. Let us take the question of reduced consumption. Does "reduced consumption" mean that less food must be eaten by our people? The Times does not tell us whether that is so, or not; but does it really mean that we have to consume less food? If we do consume less food, what effect is that going to have upon the trade of this country with New Zealand, Australia and Canada? From where will the people of those countries get their money with which to buy our manufactures if we reduce our purchases of food from those countries? What will happen to the shipping interests in Britain, which have done so well in recent years in the carriage of food to these shores, if they have a smaller quantity to bring over? Surely, those are not difficult points to answer. Does "reduced consumption" mean that we have got to wear fewer boots and shoes, or buy fewer boots and shoes? If that be the case, what will be the effect of that reduced consumption on the boot and shoe factories in our land? Will it be necessary in those factories, due to the reduced consumption of boots and shoes, for men to work harder and to work longer hours; or will the inevitable result be an increase in unemployment? I think it is a serious matter when a request for increased production and a demand that consumption should be greatly lowered are linked together.
Take the question of clothes, both for men and women. If we are to wear fewer of these things, and not buy as many as we have been doing, what will be the effect upon the shopkeepers of London, and of
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all towns, large and small? Will they do as much trade as they have been doing hitherto? Surely the answer is, No. And if the shopkeeper does not do the trade, does that not mean that he will be sending fewer orders to the mills and factories? Surely the answer is, Yes. Surely it means that the textile areas—in particular, Lancashire, Cheshire and Yorkshire—will suffer once more from a reduced consuming power of the people. Then there is the subject of beer. Have the people of our country, because of their low consuming power, got to drink less beer? And if they drink less beer, how will that effect the brewing interests? Will they be particularly glad of the event? I am a teetotaller myself, but I am not bigoted, and I do not suggest that a person should refuse to drink beer merely because I do. But I would say this. It would be a serious matter for us, in a financial sense, if the people, by drinking less beer, forced the brewers to pay less in the way of taxation, which in turn might cause the Chancellor of the Exchequer to increase income tax, in order to make up the shortage. When we come to consider all these questions, I feel sure we shall realise that we shall not increase the productive power of our country, or our power to export commodities, by an impoverishment of the people. We shall improve our productive power only when our people are in a state of prosperity. There must be other ways of achieving greater productivity than a serious reduction in consumption.
It has been suggested by one or two noble Lords to-day that one of the faults of present conditions is that the State is taking too much of the national production. I have certain figures here which I should like to put before your Lordships. In 1951 the gross national product was £12,254 million. Of that, the Government took £4,644 million. That withdrawal left in the private sector £7,600 million. I was curious enough to look up the figures for the year 1938, and they are these. The gross national product was £5,132 million. The Government revenue taken from that was £1,017 million, leaving in the private sector in that year the sum of £4,115 million. Then, as a plain man, I again began to ask myself some questions. It is said that this revenue is spent by the Government and abstracted from the taxpayer—I think the noble Lord,

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Lord Cherwell, used those phrases. But how much of the revenue of the Government is sent hack to the private sector, either before it is received by the Government, or immediately thereafter? All this money which is brought into the hands of the Government is not spent by the Government, in the ordinary sense of that word.
There is the debt interest, for instance, of £600 million, which is immediately paid over to the private sector. It ceases to be part of the national sector; it goes back into private hands, and is spent by private persons in whatever way they choose. Subsidies amount to £397 million. There again, there is a transfer of money from the public sector to the private sector. Insurance, amounting to £468 million, is a payment back from the public sector to the private sector. Grants to persons represent £394 million; and grants to local authorities in relief of rates are no less than £376 million. In other words, last year, out of a total of £4,644 million taken by the Government in taxation, £2,237 million was returned to the private sector by the methods I have recited. There are one or two other cases which could be added. What the Government actually spend themselves could be stated on these lines: on defence, £1,415 million; on national health, £418million; and on civil expenditure, £427 million. Those three items balance the other items I have mentioned concerning the return of moneys to the private sector. Apart from the above, the Government invested (they did not spend) £600 million, making very nearly the complete sum taken over by the Government. That seems to me a most important matter, and it ought to steady the nerves of anxious people.
There are two ways, as I have said before, of spending money. Money can be spent by people in this country individually. In certain cases it is better that the money should be spent by individuals; but in other cases the people can spend money to greater advantage if they spend it together. But when we are talking about expenditure of Parliament or of the Government, or of local authorities, we should always remember to ask ourselves: How far is this a joint expenditure, out of which we jointly get a benefit, or an expenditure that means nothing to us at all? If we do that, we
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shall not be so seriously alarmed by the growth of expenditure either in the public or in the private sectors as we now appear to be. One other point about this refers to the social and health services. We think in terms of hundreds of millions of pounds when referring to the social services, and we sometimes assume that there has been a very great increase in the past few years in the expenditure on these services. Yet it noble Lords will look up the facts they will find that proportionately that is not so.
The cost of the social services in 1938–39, represented 9·2 per cent. of the national income of that time. In 1950–51 the cost was 11·7 per cent—an increase of only 2 per cent—and in 1951–52 it became 11·5 per cent. But, say the Committee who have been examining this subject, if the conditions of the population in 1938 had been the same as in 1951, then from £50 to £80 million of extra expenditure would have had to he added to the cost of the social services in 1938, bringing the proportion of expenditure from the national income for 1938 to the level of last year. I am not saying for a moment that we should look upon the rise in expenditure on the social services with closed eyes. I believe that in this field, as in every field of human activity, there will be opportunities of retrenchment and reform. It is our duty to watch those services and make sure that we are not spending money wastefully. But I do suggest to noble Lords, as I have done before, that perhaps the wisest expenditure of a country or of individuals is to spend on health, building up the stamina and intelligence of the nation, so that its people can compete in the work of enriching the world and themselves.
I do not wish to say anything more than that, but I should like to refer once more to the speech of the noble Lord who spoke immediately before me. If he had been an ordinary politician and not a banker, I should have assumed that his reference to the policy of the Labour Party was meant to detract attention on this side of the House from the condition in which the finances of the nation are at the present time. But I will not impute that to the noble Lord, because I know of his reputation and the way in which he deals with these matters. But I would remind him of something he omitted to

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say, which is that what he was reporting from was not the actual policy of the Labour Party but a series of proposals which are to come before the National Conference.
LORD BRAND: I was reporting from the programme to be put before the Annual Conference of the Labour Party by the National Executive of the Labour Party.
LORD SHEPHERD: If it is quite clear that the noble Lord understands that, and noble Lords understand that, they will realise that until these proposals have been before the annual Party Conference, they must not be accepted.
LORD BRAND: I fully understand that.
LORD SHEPHERD: All well and good, but I am not going to be led astray in dealing with the pamphlet, although I understand that my noble friend will be making reference to one or two of the points which have been raised. This discussion has had value. It has been made clear from this side of the Table that we are as much interested in the welfare of this country as are noble Lords who sit on the other side. We are anxious, even when critical, only to co-operate with the Government, and with noble Lords on the other side, in doing, things which are necessary. But we hope that we shall be candid with one another, and that we shall not have brought into this House a Budget statement which appears on the surface to be good and prosperous when in fact it is the reverse.
5.15 p.m.
LORD RENNELL: My Lords, I had intended to raise one or two points arising out of the remarks of the noble Lord, Lord Brand, but before doing so there are two or three points in Lord Shepherd's remarks which I find it difficult to leave unchallenged. The noble Lord, Lord Shepherd, referred in the early part of his remarks, and on previous occasions, to the standards to which we are "entitled"—in inverted commas—and then went on to wonder whether a restriction in domestic consumption must involve (or at the time he suggested it might involve) a reduction in the consumption of food and clothing, the only two categories to which the noble Lord
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referred. So far as I am aware, neither in The Times nor in your Lordships' House has there been any suggestion that a reduction in domestic consumption should involve a reduction in the amount of food or clothing consumed.
LORD SHEPHERD: What I indicated was that guidance was not given as to which subjects were to be reduced. What I have been trying to point out, however, is that we are spending more money, say, on the bank rate and other things which might deprive us of our ability to purchase. What I wanted to know was whether, as a result, we were to go short of those commodities.
LORD RENNELL: It seems a pity that the noble Lord chose to single out food and clothing as the examples on which possibly a reduction might take place. I am coming to this question of bank rate in due course. May I continue by saying—and I believe practically every one of your Lordships will agree—that no man or woman in this or in any other country is "entitled"—in inverted commas—to anything unless they work for it. That is the principle which has been recognised in no less a place than in Challenge to Britain, where on the first page the noble Lord will no doubt have read that the plan there outlined and, indeed, any other plan, financial or economic, put into force by any Government in this country to-day involves:
"Sacrifices not only of material benefits but of many cherished habits and traditions."
That statement occurs in this particular document, and that is at least one statement with which I think we on this side of the House can wholeheartedly agree. So far as reduction in domestic consumption is concerned, without going into any argument about a reduction in the two categories to which the noble Lord referred, I might point out, as merely one example, a possible reduction in the number of television sets purchased, which might allow a surplus available for export. However, I want to come back to what the noble Lord, Lord Shepherd, has said about the bank rate later.
To take the main theme of the discussion this afternoon, I feel that there has been a little too much assumption by the noble Lord, Lord Shepherd, and possibly even the noble Lord, Lord Pethick-Lawrence. that we on this side of

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the House feel that, as a result of the Budget this year, the position is vastly improved. I think it has been improved. I think that the general feeling in the country, and the general acceptance of the policy involved in the Budget, has had a definitely good effect. But that is far from saying that either the financial or, above all, the economic position of this country is favourable. I am inclined to take perhaps a less optimistic view even than that which the noble Lord, Lord Brand, takes, because it does not seem to me that the surplus on our balance of payments is accumulating either as much or as quickly as it ought to. There are now several indications that the accumulation of the surplus is tending to slow down. We have had the great advantage of having a more favourable export trade by reason of the fall in prices of certain imports. On the other hand, the reflection of that fall in the cost of imports—
LORD PAKENHAM: I think the noble Lord is saying something he did not mean. He said we had a more favourable export trade.
LORD RENNELL: I do not think I said that. I believe I said that I thought the surplus which was accumulating as a result of our export trade was not as favourable as it should be, and that the surplus was slowing down.
LORD PAKENHAM: I was only trying to be helpful to the noble Lord.
LORD RENNELL: May I continue? The value of imports which go into our exports has been more favourable for the last twelve months, but that, unfortunately, has not reflected itself in the costs of production. And there is one figure which comes out very clearly in the Summaries of Statistics in this country and in other statistics that are published about this country and Europe generally, which I find very disquieting. Lord Pakenham will no doubt take up this point. If he will look at the trend of wholesale prices in the Summary of Statistics—I am taking the summarised figures at the beginning of the book—he will see that there has been a continuous fall since the spring of 1951 right up to date—and a fall of very considerable dimensions. That has not reflected itself in any way in retail prices or in the cost of living. In point of fact, as wholesale prices have fallen, so retail prices and the cost of living have risen steadily.
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If you will relate that to wages, you will find that the increase in wages in this country has been of approximately the same dimensions as the rise in the cost of living. In other words, real wages are approximately at the same level. I am not commenting adversely on that in any way: it is probably necessary that it should be so. What I am commenting on adversely is the fact that both should have taken place: that there should have been a rise in wages coupled with a rise in the cost of living. I find it disquieting that, with a fall in most import items and with a fall of wholesale prices in this country and in the world generally, there should have been no slowing down in the rise of the cost of living.
That means, in other terms, that in spite of the fall of wholesale prices and import prices in this country we have not the benefit in our export trade that we might have and would have had: and if the trend in wholesale prices continues level or rises upwards, the reflection of that on our balance of trade will be extremely serious. I do not know whether the apparent slowing up of the surplus on our foreign trade at the moment is due to a less competitive position in this country as a result of those tendencies or whether it is due to other causes; but I think that that is one of the black points in our present economic situation—and it has, of course, a direct relation to the policy which has been pursued hitherto and notably to one of the points to which Lord Shepherd referred.
The fact of the milder is that in spite of the present Government—and, indeed, many economists and experts in other walks of life—having made efforts to halt the trend towards inflation which was only too apparent up to 1951, those efforts have not been singularly successful. This includes the financial measures which were taken and which I believe were necessary. All the figures which bear on the latent and underlying causes of inflation seem to me to be rather disquieting. Bank advances have come down to a great extent. Bank deposits have risen steadily. The velocity of circulation appears to be not slowing down but rising. Money in circulation is rising and turning over rapidly. So that, in spite of the higher bank rate and the higher cost of money—and I will come back

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presently to Lord Shepherd's point—it does not seem to me that the efforts which have been made to restrict inflation have been wholly effective. Therefore, so far from following Lord Shepherd in the direction of hoping that there will be a reduction in the bank rate, I can see no prospect of that until a reversal has taken place in the upward trend of the cost of living, retail prices, and wages. I believe that a reversal of those two trends is the one essential thing to create the more favourable balance of trade, without which I do not see how we can get within even talking distance of convertibility.
There is a cure for the financial and economic position of this country; and, of course, it lies in the sacrifices to which this document Challenge to Britain makes reference on the first page. Here the flatter is made abundantly clear. The cure is to submit to those sacrifices of material benefits which have been cherished habits and traditions. That does not necessarily mean a reduction in domestic consumption, but it does mean that large increase in domestic production to which Lord Brand and others have referred. Our main difficulty is that, with a static labour force, which is what we have, we cannot increase our production without a larger man-hour output or (or probably both) an increase in our technical equipment. The latter involves, inevitably, capital investment. For the last five years, during which mainly the same speakers as have addressed your Lordships to-day have spoken, this question of the lack of available capital has been the main theme running through the debates in your Lordships' House. The problem is still with us: and we are no nearer a solution than we were when we first started talking about the matter at the end of the war.
The fact is that we are not producing enough to create the capital to re-equip ourselves and to make that overseas investment which is essential to our continued existence. The alternative is to obtain capital for investment from overseas. That appears to be unlikely for as far ahead as we can see. The only solution, therefore, which remains in our hands, is to produce the additional capital ourselves, and that additional capital can come from a static labour force—a
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labour force, that is to say, static in numbers—only by an increased output from all those 22 million-odd men who are employed in production in this country. Without that capital re-equipment and new capital investment, as a result of invested capital falling into obsolescence and breaking down, as all capital investment eventually does if it cannot be renewed, and renewed at the greatly enhanced costs of to-day, not only shall we remain in the static position in which we are, a rather precarious static position, but that position is bound to grow worse.
The main difficulty with which we are faced, and with which we in this House ought to be concerned, is much less the Budget figures of from one year to another—and a good deal can be said about that too—as that we cannot at our present rate of production and saving continue to finance our own capital requirements. So far as Budget figures themselves are concerned, I do not follow, and I do not wish to take your Lordships into, the devious paths of above and below the line accounting in a Budget. I should like to say only that I hope the revised form which is now published in parallel with the old traditional form will become the accepted form; and if the noble Lord, Lord Shepherd, will consider the figures in the revised alternative form, the rather unjustifiable assumptions that he made about deficit will not, in fact, be borne out. I think that, for everybody's sake, the time has come when the form in which Budget figures are drawn up should be revised.
There is at long last one perfectly simple problem, and it is one to which I hope and think all Parties and all people, both in this, your Lordships' House, and in the country, will devote themselves. It is, how to produce more out of a given labour force that is willing to work and that can continue to maintain its present standard of life. I have no word of criticism against wages rising consistently with the rise in the cost of living, but I have the greatest possible criticism of a policy which allows the cost of living to rise and therefore forces wages up. I do not believe that the cost of the existing bank rate on Government finance has the slightest effect on greater or less production but I believe it has a tremendous effect in preventing people from wasting

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money. The old adage of "Easy come easy go" is truer of easy money than in any other walk of human life. When I read in the Challenge to Britain:
"We will see that there is adequate supply of risk capital at cheap rates,"
I can only conclude by saying that I hope a merciful Providence will protect us from the provision of cheap risk capital for investment in enterprises like the Colonial Development Corporation, the Overseas Food Corporation and oversized aeroplanes. I should like to add that, so far as local borrowing is concerned, many of the remarks which the noble Lord, Lord Shepherd, made about money returning, money that has been taken through the Budget and is returned to the public, applies with equal force, of course, to the cost of the City of Birmingham Loan; but a higher rate on the City of Birmingham Loan will make the City Fathers a little more chary of spending money, and will leave a little of the surplus capital available for investment in productive industry.
5.36 p.m.
LORD HAWKE: My Lords, I have on these occasions often spoken on the subject of savings, but this afternoon I am not going to tread that well-worn path. I should like to follow up my noble friend Lord Rennell in one particular, and make one humble suggestion to him. Arising out of his disquiet that the index of raw material prices is falling while the index of wages and cost of living is still continuing slightly to rise, I suggest to him that that is the double march towards equilibrium—that had raw material prices not been falling and the other index slightly rising, there would not have been the slightest chance for industry to operate at full capacity and to dispose of its resulting products.
As regards the formation of capital, up to quite recently undoubtedly the question of steel was the great handicap. Now that steel is available, I believe that there is a certain degree of money capital which can assist to a rather greater extent than is generally believed, though I also believe that in the majority of cases those resources are not such as are available for taking the more extreme risks. The noble Lord, Lord Shepherd, in his approach to these matters, showed a delightful mixture of the modern scientific and the ad hoc; and, when he
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talked about the Budget, I thought he rather mixed up the two. His Party were, I think, the creators of the Budget as an economic instrument, and he denounced the last Budget as a great failure, not because it was wrong as an economic instrument but because its figures and estimates of income and expenditure in the outcome turned out to be considerably wrong.
I should like once again to take up with him the question of the bank rate and the national debt. I assure him that it is an absolute and complete delusion to think that this £40 million, or whatever is the extra cost, is wasted. The spending of that £40 million is part of a system of controls, one might say, which has probably saved the Government £400 million and the entire citizens of this country possibly as much as £1,000 million; because, undoubtedly, without the check to inflation of the higher money rate as one of the most important instruments in that check, inflation would have gone on at a very considerable rate throughout last year, inflating the Budget figures and the cost of living figures.
LORD SHEPHERD: Is it not within the noble Lord's recollection that the effect of the bank rate has been slight and mainly psychological, and that the adverse balance had to be fought by positive weapons, like the keeping out of imports? I think the noble Lord is trying to put over too much. The balance of payments has not been brought to its present condition merely by the operation of the bank rate.
LORD HAWKE: Certainly not. I said it was one of the—I called them "controls" for lack of a better word. Cuts in imports were another.
As regards the attack on articles in The Times, I suggest that they should be addressed to the Editor of The Times rather than to my noble friend on the Front Bench, because am quite unaware that the Conservative Party have adopted in toto the leading articles in The Times, as the noble Lord rather led me to believe they must have done. I believe that this particular Finance Bill, giving effect to the Budget, has got to be looked at merely as an episode in what I hope will be a long innings by my right honourable friend the Chancellor of the Exchequer.

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One has to go back to that disastrous day in September, 1949, when we devalued the pound. At that time the importers of this country—and the Government were the biggest importer—greatly overestimated the impact of British economy on world trade. They thought that in time Britain would tend to pull world prices down, and offset some of the loss from inflation. As a result, they ordered goods short, to arrive in 1950. Whereupon, by the luck of the game, one may say, we were overtaken by events in Korea. We know what happened. Consumers all over the world leapt into buy before things became impossible to obtain. They scented world war. The stocks of raw materials in the world were inadequate, so prices rocketed up; and, as they leapt, consumers and merchants all over the world picked up as bargains anything below replacement cost; industry found its stock of cheap raw materials running out, and had to replace it at ever higher prices; and that, of course, led to the great outcry in regard to the shortage of capital for industry. They needed enormous liquid capital to finance these very highly-priced stocks; and in turn, of course, the prices of their manufactures went up, too.
Our exports flourished but, on the whole, exporting industries, ever chary of charging too much, did not succeed in charging the outside world high enough prices for our products. As a result, we generated an extremely large trade gap, resulting from a great deterioration in the terms of trade. Confidence in the pound became seriously shaken, both on account of the gap and the distrust by foreigners of the ability of the Government of the day to take the right steps to put the situation right. At that stage noble Lords opposite declared their innings closed, and my right honourable friend the Chancellor of the Exchequer went in to bat on one of the stickiest wickets which any man could hope to see. Every stroke he made had to be with a dead bat—there were import cuts, a restriction in credit, an increase in the bank rate and a very austere Budget.
Now throughout 1952 these steps were very successful. Helped by steps taken in the sterling area, the very high prices of our imports fell, and towards the end of the year it began to be clear that some-
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thing slightly more free in scoring strokes might be attempted. Each of the steps that I have outlined played its part in this improvement in the state of affairs. The consumer economy in this country was never expanded sufficiently for it to be able to swallow the increase in prices of raw materials, so that in itself tended to generate a fall. There was, in fact, a slight check to our manufacturing activity, and that might easily have gone too far if Mr. Butler had listened to some of the advice he received in framing his recent Budget. Fortunately, he and his advisers reckoned that much of this advice, which pointed out that the economy was in danger of inflation, was probably slightly out of date and in the Budget which we are talking about he has been able to offer some relaxation—a relaxation which in itself might not have been enough, were it not for the fact that it was obvious that in Coronation Year the British people were going to spend a lot of money. In the result, industry has been kept on a more or less even keel. We have not had the inflationary boom that we had in 1951–52; nor have we had the equally disastrous slump which might very easily have occurred.
I do not want to go far into the future like Lord Pethick-Lawrence, but I do believe that we are always bound to live in a precarious state. After all, we are a debtor nation. Moreover, we are a debtor who tends to borrow short and lend long, which is always a dangerous situation. Equally, the services we receive from the world are more important to us than those which we render to the rest of the world are to them. Nowadays, they make their necessities locally. It is only the top slice of private and Government income abroad which tends to be spent on British goods. That is why we are so vulnerable to any considerable fall in commodity prices. For that reason we need very large reserves, and I, for one, can see no chance of accumulating those reserves at the present price of gold. In such circumstances, I submit that we should always examine with sympathy and care any schemes produced for the production of floor or basic prices within the Empire, or even within the world, for any of the more basic commodities.
My Lords, one could say much more if one did not have mercy on one's

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hearers. But I submit that Mr. Butler has done remarkably well. He has steered the economy between a boom and a slump; he has used skilfully all the weapons at his command, whether it be the bludgeon of the Budget or the rapier of credit control. I do not believe that any man could have done more, and I think we owe a lot to Mr. Butler and his advisers.
5.49 p.m.
LORD PAKENHAM: My Lords, I am sure that we all sympathise with the piety of the noble Lord opposite who has raid his economic leader a handsome and, I am sure, absolutely sincere tribute. We are always interested to listen to the noble Lord, because he says what many other noble Lords are thinking, even though from this side we do not feel they are necessarily thinking very clearly. But although the noble Lord is a most candid orator, he will forgive me if I take exception to one phrase that fell from him in the course of his cricketing analogy. I do not think he intended it this way but most likely it will be read like this. He said that in 1951 the Labour Government declared their innings closed. That will be taken to mean that they ran away. I hope that he had no such intention in mind.
LORD HAWKE: After four years in office they went to the ballot. If they had wished to stay in, they could have done so.
LORD PAKENHAM: The view was held throughout the country that important steps had to be taken to rectify the national position, and if the noble Lord is saying that the Labour leaders ran away, in view of the strenuous efforts they made during that Election he is saying something that is quite unworthy of him. I have my own leaders and must speak plainly, but I do not want to whip up this nice, quiet debate—almost "demure," to use Sir Winston Churchill's word—into a partisan controversy. The noble Lord, Lord Brand, did the Labour Party something of a service by publicising the new programme, which he had clearly read with considerable care. If I may drop back into the language of my own profession, I would give him an alpha-beta for knowledge. He seems to ignore that it sets out to fight inflation, even though he does not agree with the way it does so.
LORD BRAND: If the Labour Party are fighting inflation, they must abandon most of the document, because most of it is inflationary.
LORD PAKENHAM: That is a matter of opinion. The noble Lord thinks that any Labour programme is inflationary. We have crossed swords fairly often in the House, and we know one another's point of view. He has said over and over again that any Socialist policy is inflationary. It is therefore not surprising that the Socialist policy for the Election is inflationary in the mind of the noble Lord but not inflationary in the minds of those who sit on this side of the House.
LORD BRAND: May I direct the noble Lord to the comments of the New Statesman on this pamphlet? Perhaps he would read an article in that paper, which I do not often read; but I did happen to read this one which pointed out the same thing: the endless expenditure involved in the projects of this programme, without any sense of priority or of resources being available.
LORD PAKENHAM: I am in no way disloyal to the New Statesman, even though I say that I have not read it very much lately. As noble Lords opposite have disclaimed responsibility for Time Times I may at least be allowed to do the same for the New Statesman, which is not an official Labour Party publication, though full of stimulating thoughts.
The noble Lord, Lord. Brand, asked, what is the City doing. What do we think the City is doing? Through the noble Lords, Lord Brand and Lord Hawke, it has, I think, done a very good job of public relations in your Lordships' House to-day. We have heard the City point of view expressed. The noble Lord, Lord Brand, has stated the orthodox City point of view. I am not going to try to contradict or refute that in a few sentences, but I would say that the fundamental point of difference between the noble Lord and this side of the House is simply this: He seems to conclude that public interest and private interest coincide where the activities of, at any rate, the reputable firms in the City are concerned. There might he a few black sheep, but we are not concerned with them. We are concerned with the great firms, and I believe he considers that large-scale activity on their part must

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necessarily conduce to the national interest. I understand him to mean that the City, the great, reputable City of London, leaving out the little regrettable people, directs money where most profit is to be found, and that in the long run that is about the best test which, in this vale of tears, we can apply.
LORD BRAND: I would put it like this. If a banking concern wishes to offer an investment to the public, the first thing it wants to know is that the people who sponsor the investment are thoroughly reputable, thoroughly honest and thoroughly experienced in their trade—particularly thoroughly experienced; that they know the whole thing backwards; that they have been working in their great company for years and years; and that they have built up a great trade, export and home. That they should have done so is obviously in the interests of this country and the world at large to whom they sell goods. The issuing house wants to know—your Lordships know how very good a prospectus has to be; it is enormously important never to deceive anybody—that the goods it is offering are good, that the figures are absolutely correct, and that people will, on the whole, get a good investment. But the vital thing is that the people making the issue know their business backwards, like a great lawyer knows his profession.
EARL JOWITT: Or ought to.
LORD BRAND: But when you come to the Government entering the difficult field of risk investment, why should Whitehall know anything about that? Who can trust them, even if they work through a great Government corporation? Who can trust them to know something which they have not followed all their life, which is not in their bloodstream at all? They have to do the best they can and hope that, for example, groundnuts, or something else—say, the Colonial Development Corporation business—will come out all right. But Government would not know these businesses backwards, and that is, in my opinion, the foundation.
The noble Lord asked: What does the City do? It trusts the people of this country, the great concerns that have built up their businesses and made a
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great success of them. These great concerns want more capital and can give figures to show that their business is very satisfactory. They are able to say they know the countries, wherever they are, in which they are operating. They know their business backwards and how to sell their goods; but the Government do not know anything of that kind.
LORD PAKENHAM: I am grateful to the noble Lord for proclaiming the faith in him. I am not reflecting on individual patriotism in the City any more than he is reflecting on civil servants. I know that he has been employed in both ways and he is impartial between them, so far as humanity is concerned. The noble Lord assumed that where the great reputable houses of the City are concerned, their private interest will coincide with the public interest. That is how I see it, after his exposition.
LORD BRAND: If by their private interest the noble Lord means the prosperity of great concerns which are working in the interests of the community, I certainly say so. I say that it is in the interest of the community that they should make a profit. It is not in the interest of the community that they should make no profits but losses, and gradually disintegrate and bring disrepute on this country, and knockout our export trade and so on. You want a prosperous trade.
LORD PAKENHAM: In other words the "invisible hand" of Adam Smith, as proclaimed in The Wealth of Nations in 1776. I can only say that we on these Benches do not share that philosophy. I am only asking what criterion they should apply. The noble Lord says that they must apply the criterion of private profit, and he maintains that if they do that they will be applying the best criterion from the national point of view.
LORD BRAND: My Lords, I am sorry to have to interrupt again. I should like to ask whether the noble Lord's criterion is losses. If so, how long does he propose that the Government should continue in business?
LORD PAKENHAM: I do not think I will reply to that joke. It is not, if I may say so, a very new one to me. The noble Lord, Lord Brand, has apparently

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taken private profit as the test. I would say that private profit throws seine light on the question of whether a particular line should be pushed. There is also the question of the national interest. Should export and investment industries, for example, be developed, rather than consumption industries? There are obvious choices of that kind where the national interest might come into conflict with the private interest of these reputable undertakings. I hope that I have sufficiently indicated my point, and have explained why we do not accept the noble Lord, for all his very sincere studies of these matters, as a very impartial umpire between the Labour Party programme and the Conservative Party programme.
The noble Lord, I am sure, approached this problem with naïvety. I am often told that I am naïve, and I try not to take offence. So I hope that the noble Lord will not mind when. I say that he comes with complete naïvety to these two programmes. He says, in effect: "Let us see what the Conservatives say? Ah! yes, that seems to be pretty good sense. And what do the Labour Party say? Oh!that is dreadful rot. "That, putting it bluntly, seems to be the conclusion to which the noble Lord has come. Now the noble Lord whether consciously or unconsciously, is a distinguished Tory. I am not saying that he has any official connection with the Tory Party, but he definitely takes the old-fashioned Tory point of view. And we salute him for it. But, if he will allow me to say so, to ask us to accept him as umpire would be like asking the Australians to accept Bedser as an umpire in the next Test Match.
LORD HAWKE: I think they would love it.
LORD PAKENHAM: I believe the noble Lord who has just spoken thinks that Bedser is an Australian, which really would make his ancestor who gave so much fame to cricket turn in his grave.
LORD HAWKE: I can assure the noble Lord that he is also the Australians' nightmare as a bowler.
LORD PAKENHAM: I will not make the same joke twice, for I am sure other noble Lords' powers of apprehension are not less speedy than those of the noble Lord who has sought to trip me up. I
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will now, if I may, come to the general theme of the debate—I hear a noble Lord say: "Hear, hoar!" I think that the noble Lord, Lord Brand, will agree, however, that probably no one ever gave way for quite such a long period of time at the opening of a winding-up speech as I have had the honour of doing this afternoon. Let me say at once that I do not regret it. But at the same time, I would take credit for it.
All Governments have their weaknesses. It will fall to the noble Earl who is to reply to mention the weaknesses of the Labour Government. The noble Lord, Lord Hawke, has already touched on the subject. There is no doubt at all in my mind as to a prevailing weakness of the present Government, and it is a characteristic which is very unattractive to all outside the administrative hierarchy now running our affairs. I would say that a particular quality of the present Government is that of complacency. I hope that the noble Earl will not feel it necessary to say, "We have no intention of being complacent," for we feel bound to fasten that label on the Government. They were not complacent at the beginning of their term of office, but as time goes on they seem to be getting more and more pleased with themselves. They are getting a certain amount of praise from various quarters—some impartial and. some not—but no praise that they are receiving is anything like the praise they are giving themselves. Let us now glance at one or two facts which have been touched on already. There has been a remarkable recovery of our reserves in the last year. Let us give all credit to the Government for that. I am not a bit inclined to say that everything the Government have done is bad. Not at all. There has been this recovery of our reserves. It is true that the reserves are still about two-thirds, very roughly, of what they were when the present Government took office. I think these are the latest figures. Therefore, we all agree that the reserves are far less than they should be. But there has been a steady improvement in recent months, and we give the Government credit for it. And they are entitled to take any credit they can secure.
And now I call in aid the noble Lord, Lord Brand—I do so with great pleasure after my, possibly, rather personal remarks to him just now. I call him in

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aid because I am grateful to him for his frank recognition of the fact that the biggest single factor in the improvement has been the better terms of trade.
LORD BRAND: I gave a list and I put it first. I will leave the rest to the noble Lord.
LORD PAKENHAM: At any rate, the noble Lord gave it a very prominent position. I do not know whether the House requires that point to be laboured. In Table 150 of the Statistical Digest, we observe that the terms of trade from our point of view got steadily worse for some time until 1951. If you take 1950 as 100, you find that in 1951, the terms of trade had deteriorated to 113. Since then there has been a steady improvement. When this particular figure falls, that is all to the good from our standpoint. In 1952, the figure was 105, and in May, 1953,the figure for the terms of trade had come down to 91. I am told by experts—I have not checked the figure myself—that in the last two years, this improvement in the terms of trade, for which I do not think the Government can take very much credit (the noble Lord, Lord Hawke, would attribute some credit to the present Government but this improvement in the terms of trade has been primarily outside the control of the present Government) has been worth to us as much as £600 million a year. That is to say, our trade balance would be about £600 million a year worse if the terms of trade were what they were two years ago. So, as the result of factors which are mainly outside our control—some would say, wholly outside, though Lord Rennell argued rather the other way—there has been an improvement of trade balance by £600 million a year.
LORD RENNELL: The noble Lord would agree—would he not?—that the release from control of a number of primary raw materials has contributed to a fall in price of those raw materials and, therefore, to improvement in the terms of trade.
LORD PAKENHAM: I will not stop to argue that now. I should have thought that that was not a substantial factor. I am only putting to the House that the change has come about through something which is primarily outside our control. In a leading article in the London
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and Cambridge Economic Bulletin for June, 1953, we find three other factors singled out. They are: a substantial return of short-term capital from abroad, restrictions of imports, both here and in other sterling countries, which are now being relaxed, and the reduction of the imports of raw materials. This last followed a setback in certain industries. None of these factors is likely to recur in the form we have known them—of course, we do not want the last one to recur at all. We must assume that, coupled with the great improvement in the terms of trade, this improvement has been brought about through movements or acts which, so far as we can see, cannot be expected to bring about any similar improvement in the future. That is why I say that those who take pleasure in the existing position are living in a glass house. The Economic Bulletin is fairly authoritative: it is included nowadays in The Times review of industry. The Bulletin says:
"The dominating feature of our economic position is the precariousness of our external position both for the relatively short run and for years to come."
I do not think the noble Lord, Lord Hawke, from what be himself said, will disagree with that wording. Certainly the Government cannot be allowed to give the impression that the position is anything but extremely precarious.
How are things moving? On past occasions, noble Lords have credited us with a genuine desire to see things getting better. I think the noble Earl will credit us with at least that much of patriotism and good will. Of course, it is our duty to bring out the dangers, as noble Lords opposite did for a number of years. But I am sure the noble Earl will assume that we should be happier if things went well than if they went badly. Let us take production; and we are all agreed about the importance of production. Here the noble Lord, Lord Cherwell, rather startled me. The nobleLord was good enough to say that he had to leave the Chamber, and we understand the engagements which have withdrawn him. I understood him to say that production has increased about 10 per cent. in the last year. If that is what he did say, it was a very surprising thing to say.
LORD RENNELL: I thought the noble Lord said 2 per cent.
LORD HAWKE: I thought he said 2½ per cent.
LORD PAKENHAM: I withdraw and apologise. Clearly my hearing is deteriorating, but some of us on these Benches understood him to say 10 per cent. Perhaps, when he comes to reply, the noble Earl will tell us which it was. If it was 10 per cent., that was a very surprising statement. I was going to refer the House to the statement made by Mr. Butler, the Chancellor of the Exchequer, in another place on July 13. He said that the figure for May was about 3 per cent, above the May, 1951, level. I think that may well be about 2 or 2½ per cent, above the 1952 level. So that would fit in perfectly well with what the noble Lord said about production increasing about 2½ per cent. on last year. But certainly on these Benches we understood him to say 10 per cent., and we should like that to be cleared up.
Before the speech of the noble Lord, Lord Cherwell, we regarded the production record since this Government came into power as disappointing. Of course, I know that noble Lords opposite are just as keen on production as we are, but if we turn to the Monthly Digest of Statistics, Table 31, and run through the years from 1946 to 1952, we find 87, 92, 100, 106, 114 (that was 1950), 117, and then, in the first year of the present administration, 114. There is this downward trend. I do not know the figure for May; we have only the indication thrown out by Mr. Butler. It is not in the Digest. The present position appears to be that the production figure has crept a little way past that of 1951. Perhaps it is not unfair to say that we are just about back to where we were in 1951 after two bad years. After two unsuccessful and unhappy years, during which the present Administration have been in power, we have worked our way back to the happier era of the Labour Administration.
LORD HAWKE: That was the top of the Korean boom.
LORD PAKENHAM: Two years ago—that is the comparison Mr. Butler has taken. I do not know what is called the "top of the boom." It was certainly after the Korean war had started: it had been going on about ten months. But the point I am trying to make, for the benefit of the noble Lord, is that there
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was a steady increase in production year after year until the present Government came in; then, possibly as a result of their measures, possibly, if you like, as a result of necessary measures which they took (I am not going to argue that), there has been this decline in production. Production has been struggling back to where it was. That is an unsuccessful record, and a very disappointing story, There is no sign of any new magic in the Budget policy of last year, and up to, the present, although is early to judge, there is no sign of any great magic in the present Budget.
I should like to stress another point for the benefit of the noble Lord. I think we are all agreed that what matters tremendously is not just the total volume of production, but the production of metals, engineering goods and vehicles. This point was made by Mr. Gaitskell elsewhere. I take the figures in Column 7 of Table 31 of the Digest, which come up only to the end of March. The figure for March this year is only 127, and for March, 1952, 134, so that, according to the latest figure, the production of these vital articles was actually clown this year, and these are the things on which we shall depend when it comes to expanding export trade.
LORD HAWKE: The noble Lord has been arguing a lot and, quite innocently, I think, wrongly. A great deal of this production did not go into consumption at all. If the noble Lord asks anybody connected with trade, he will find that inventories were very heavy, and any slackening off in production has been where those inventories were being cleared off. It is not fair to take production only: it is production plus consumption that matters.
LORD PAKENHAM: I do not think it is unfair to take the figures of production from the Monthly Digest. We have been taking them from this publication for the last seven or eight years. That gives the latest figures open to a member of the public, and it is open to the spokesmen of the Government to interpret them or explain them in any way they can.
LORD RENNELL: Is the noble Lord referring to Column 7? If so, the figures are up, not down.
LORD PAKENHAM: I do not know what figures the noble Lord is talking about. My lot are down.
LORD RENNELL: The production figure of the total of metals, engineering goods and vehicles for the first three months of this year are 124, 127 and 127, which is about the same as for the same period last year, the same as for the same period the year before, and larger than any total of the years quoted.
LORD PAKENHAM: I am giving the figure for March, 1951, and not the figure for the first three months of the year. We cannot carry this very far. I make the figure for the first three months of 1952, 387, and for this year, 378.
LORD RENNELL: And for 1951?
LORD PAKENHAM: I was taking 1952. The figure for this year is slightly up on 1951, if the noble Lord wants it—and down on 1952. That is not very satisfactory. I would ask the noble Earl to give us the latest figures: we have only figures up to the end of March. I feel that I have, at least, made out a case for being far from happy about the production of these essential goods. So much for production.
As regards exports, there again I cannot feel, under the present dispensation, although the Government are just as keen as we are on raising exports, that the story is particularly satisfactory. We look at the figures for export volume and we find for 1947, the index of 62; for 1948, 79; 1949, 87; 1950, 100; 1951, 101·2; and 1952 down to 95. There again, for the first time, when this Government come into power, there is a drop. Perhaps the noble Earl could spare me a moment. I realise that I am putting up some points which are rather new to him, but at the same time, so to speak, one point is overtaking another.
THE EARL OF SELKIRK: I apologise to the noble Lord. I was looking up a point.
LORD PAKENHAM: I do value the kind of reply which the noble Earl will give to this particular point. I know that it is particularly difficult, and will tax his great powers to the utmost. I hope the noble Earl will attend to what I have just sail which is that, for the first time, when this Government come into power,
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we find the annual figure for exports dropping. It is not entirely the fault of the present Government, of course—there have been world factors and so on. I say only that you must take the rough with the smooth, and not feel—as winning a by-election or two is apt to make you feel, and as the noble Lord, Lord Hawke, certainly feels—that the Government have done particularly well. What I have said should surely tend to show that the story in regard to exports and production is disappointing: they have both gone down, when we should all hope that they would go up. So far as this year is concerned, my arithmetic may not prove equal to the strain, but, so far as I can see from the figures for the first five months given in the Digest, the export volume is down as compared with last year. If the noble Earl has some later figures, or can put some gloss on those, we shall be pleased if it is favourable. There is the story in regard to production and exports.
We are at one with noble Lords opposite in wondering how we can bring about a great improvement. I am going to quote the London and Cambridge Economic Service for the last time, and I repeat that it has no connection with politicians, so far as I am aware. According, to that publication, the Chancellor's speech at the time of the Budget showed no real connection between the Budget proposals and the need for increased exports. That was the view of the London and Cambridge Economic Service at the time of the Chancellor's speech. While I am not going to argue that these people are absolutely right, and follow out all their conclusions to the end, because I might not agree with them all, I think we are bound to take note of that as a strong and impartial opinion. What is the Chancellor of the Exchequer doing to encourage exports? I have given the noble Earl notice of this question. I was perhaps a little facetious in speaking to him just now, but I do seriously ask him, when he comes to reply, to give a full answer to the question: What is the Chancellor doing to improve exports, on which we all set such store?
I do not know whether Members of our Lordships' House have had time to read the debate which took place in another place yesterday. I have not read it carefully, but I noticed that yesterday

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it was stated by a Minister, on behalf of the Government, that the United States were investing about three times as much per worker as we are. It was also stated that in 1900 output per man-hour in the United States and Western Europe was about the same, but that now American output was two-and-a-half times as great per man as the output per man in Western Europe. Without having had time to study that debate carefully—I rely mainly on what I read in The Times—I observe that the same Minister stated that, through one agency or another, the American Government are paying more than half of the total expenditure on research on steel as compared with 15 per cent. in this country. The noble Earl can check that in Hansard, but that is how I found it reported in The Times. That does show, in some respects, a more positive attitude to research and improving equipment in the United States than in this country. Arid that appears to be Government initiative. Perhaps the noble Lord, Lord Brand, who is not particularly keen on Government action, though he is a distinguished servant himself, will agree that that is a good way in which the Government might use their energies.
LORD BRAND: I may say that I believe Government research to be most useful.
LORD PAKENHAM: I was only making this comparison between the United States and this country, and suggesting that until we increase investment in this country—and I am sure all noble Lords will agree with this—we shall lag a long way behind the Americans in productive efficiency. What is really happening there? In another place Mr. Gaitskell gave some figures which were not dealt with. They were produced at the end of a strenuous debate, and the Chancellor of the Exchequer probably did not have time to reply adequately to the point Mr. Gaitskell raised. If we are taking the test of investment, here again, I submit, the output of the heavy industries is a crucial index. Mr. Gaitskell pointed out that in the eighteen months from the middle of 1950 to the end of 1951—that is, broadly, the last eighteen months of the Labour Government—there was an increase in manpower in engineering, chemicals, vehicles and metals, amounting to 250,000 people. Since the present Government came in,
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there has been a sad drop of 50,000 in these crucial industries. That drop is most serious, whomsoever one blames, or whatever use one males of it on platforms. It is a disquieting fact. I suggest to noble Lords that, while all of us, wherever we may sit, and however unimportant we may be, have a responsibility for making suggestions as to how to improve this position, the main responsibility falls on the Government of the day. I ask the noble Earl specifically again: What are the Government doing to deal with this serious manpower position, this drift away from the crucial industries into other industries less important to the long-term future of this country?
I shall finish in a moment. I do not want to treat the argument about the City as if it were some old-fashioned dispute about the bankers' ramp, let alone a personal reflection on individuals concerned. But there is here an important difference of social philosophy, and in a debate of this kind it seems to me that we should follow it up. Noble Lords opposite, of great distinction, who have spoken in this debate—I have not been able to refer to them all: for instance the noble Viscount, Lard Waverley, who has now left us—have argued, as I see it, that we want economic laissez faire—well, a wise monetary policy: that the positive thing the Government can do is to take responsibility for seeing that the money flows along sound lines; but that in other ways there should be the greatest possible economic freedom, and as much enthusiasm as we can generate, among both managements and men, for greater production. That seems to me to be their social philosophy. We on this side of the House do not feel that a philosophy of that kind is enough. Of course, we want to see a sound monetary policy; and we join with noble Lords opposite—.I say this so that there shall be no mis-undertanding about it—in calling for harder work, more sensible and enterprising work, and work in places which may he more inconvenient, but work which, at the same time, is of more patriotic value. But we believe that more positive steps must be taken by the Government if the right amount of investment is to be secured and directed into the right channels.
I will not say more than a sentence or two beyond that this afternoon. The

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noble Lord, Lord Pethick-Lawrence, in a speech which I think was applauded everywhere, and the noble Lord, Lord Shepherd, in a speech which I, at any rate, would echo, and which I am sure interested the House, have stated the point of view of noble Lords on these Benches more thoroughly than I have done, or, perhaps, could hope to do. But I would just say that we agree with what was said yesterday by speakers from more than one side in another place: that, in the last resort, the final emphasis should be laid on co-operation and partnership in industry. We agree with that. But the noble Earl will not think me ungenerous—because we recognise that much good has been done my the present Government—if we say that, while this present Budget does not go very far in the direction of injustice, in our opinion it attempts to provide more incentives by some increase of inequality; and there we believe the Government are on a false track. I must ask the noble Earl, if not to-night, then on some other occasion, to see whether the Government cannot find some way, consistent with their own philosophy, of making sure that the social justice which is so very highly valued by everyone in the country is preserved and, indeed, is enhanced, because in the last resort all of us in this House agree that this country has to work better, harder and still more unitedly if we are to come through this difficult time.
6.32 p.m.
THE EARL OF SELKIRK: My Lords, I do not think that even the sternest critic of this House could possibly say that in dealing with a Finance Bill we narrow and bigoted in the views which we collectively express. This debate has wandered over a very wide field, and I hope your Lordships will excuse me if I do not attempt to chase it on all the paths that it has followed. As the noble Lord, Lord Pethick-Lawrence, emphasised in his remarkable speech, if the criticisms of the Finance Bill were no more than embers flickering in another place, they hardly flickered here. It would be untrue to say that noble Lords were an extinct volcano, but there were certainly no more than rumblings on the subject of the Finance
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Bill in the course of our discussions to-day.
I should like to make one point to the noble Lord, Lord Shepherd, who has left the House. He reverted to the question of the bank rate. It seems to me that in all discussions he under-estimates the importance of taking inflationary pressure out of the country. That was the basis of the discussion between the noble Lord, Lord Pakenham, and the noble Lord, Lord Brand. As I see it, the whole basis of the philosophy, which the noble Lord, Lord Shepherd, has expounded, under-estimates the evil influence of inflation. The noble Lord was talking about social justice. I know he feels keenly about it, and so do we. But if we want to twist the noble Lord's tail, what do we say? We tell him that he cut widows' pensions by 25 per cent.—that is what he did by lowering the cost and the value of money. That is the hardship which is brought, and will always be brought, by inflationary pressure. It is the major achievement of this Government, in spite of what my noble friend, Lord Rennell, has said, to have lamely shaken out the inflationary measures which were there when we took office.
As the noble Lord, Lord Pakenham, has invited me, I will turn to speak of the next step. To get rid of inflation was the first task and the essential task which the Government had to undertake. The noble Lord asked me about production. Production has increased. The figures I have are these. Production in the second quarter this year was 121, as compared with 119 in 1951. I am making that comparison for this reason: 1952 was admittedly a bad year of production, and we admit that production fell, whereas in May of this year production was 120, in spite of holidays, compared with 116 in 1951. That means, in effect, that at present production is running at a higher rate than it has ever run before. The question with which I will deal in a moment is whether in fact the rate of increased production is adequate. Does the noble Lord wish to question that?
LORD PAKENHAM: I would not dream of questioning a statement of fact by the noble Earl. That goes without saying. Just for the record, I wonder whether I could ask him what his state-

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ment was a moment or two ago. Did he say that for the first half of the year—
THE EARL OF SELKIRK: No, for the second quarter.
LORD PAKENHAM: I wondered whether the noble Earl has the figures for June.
THE EARL OF SELKIRK: I have not the figures for June.
LORD PAKENHAM: I assumed that that referred to the whole of the second quarter. I do not wish to be tiresome; I am simply trying to be helpful.
THE EARL OF SELKIRK: If the noble Lord will be good enough to leave that for a moment, I will see whether the figures can be supplied to me. May I take up one point which the noble Lord made? He is entitled to suggest—though, I say, without the slightest ground for believing it—that there is an appearance of complacency in the Government. I am sorry if anybody on this side of the House looks complacent. I say emphatically that there is no complacency in any uttered statement by Mr. Butler, the Chancellor of the Exchequer. For the sake of the record, may I read the last statement which he has made on this point, which is far from showing the slightest measure of complacency? In respect of exports he says (OFFICIAL REPORT, Commons, Vol. 517, col. 1793):
"…while hose are most comforting improvements, the general trade position is as yet not satisfactory if we are to maintain the impetus which we so much need."
He goes on, on the following page, to say (col. 1795):
"…it all depends on increasing the national income and on greater production."
Those are not words which could even remotely be called complacent.
The noble Lord, Lord Rennell, has raised the question of why prices have not fallen, or rather, why it is that with wholesale prices falling, retail prices have not shown a corresponding fall. In spite of the fact that they have levelled off, the noble Lord suggests that there still remains a measure of inflation in the economy. I should like to deal with two of the illustrations he gave. One is bank deposits and the other the currency in circulation. In both these there has been an increase over the last year. But, taking into consideration the increased production since last year and also the
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slight rise in prices, it is the view which I am representing that that is not an excessive rise in the circumstances, and should not be taken as constituting an inflationary pressure. In fact, at the present time, we do not have any clear picture that our competitive position is deteriorating owing to internal inflationary pressure. I do not want to say more than that. The future export position is, of course, very difficult indeed.
The noble Lord, Lord Pakenham, has raised two questions. He has asked me—and very rightly asked me, if I may say so—how the policies contained in the Budget affect the questions of investment and of the export trade. I think I can answer the question on investment fairly simply. There is a direct and definite connection between the Budget proposals and the investment which we hope will arise from them. In the first place, a reduction of the standard rate of income tax gives immediate financial resources to industry. That means lower taxes over the whole level. If the noble Lord likes, I can go into the figures. There is practically no tax which will give immediate relief in the same way as a reduction in the standard rate of income tax. Initial allowances really only arise next year, but the relief of the standard rate is immediate. That is why we say that it should have an immediate effect and enable industry to increase its investments. Next year industry will receive the initial allowances. That is the encouragement now, but there will be a positive result next year.
We therefore suggest that we are providing not only an incentive but also resources which will enable investment to be made. I suggest, too, that the greater freedom for building enables people to start their works when they want to. Anybody who is familiar with the delays which have arisen in this connection will know that it is discouraging to people to have to wait, and that this freedom for building is something of considerable value. There is now greater availability of material and steel, which is a very important point, and recovery of demand. Most encouraging of all is that there is confidence, for without confidence you cannot expect to get investment of any great importance.
The second point of Lord Pakenham's I with which I wish to deal was in regard

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to export. Quite frankly, I think it is more difficult to show a direct, immediate, logical connection between the proposals of the Budget and increased exports. The reason is that no Government or private individual can ever compel anyone outside this country to buy anything. Only by mutual agreement is the purchase taken up. Does the noble Lord think that there should be an export bonus—a special bonus provided for exporters? It has never been put forward as a concrete proposal during the last seven years and it offers many practical difficulties. But we have extended the system of export guarantees and quite recently we have extended the exchange control facilities for long-term credit to export capital.
One important issue of the Budget is the moral one. Both at home and abroad there is a considerable moral effect in the reduction in taxation. We have behind it, moreover, the stable price level at home. These two together are an important basis on which to proceed, because no export market will flourish long unless it is based on a sound market at home—and we hope that it is from this sound market that the export market will proceed. Let me take the example of the motor industry, which has done extraordinarily well for a time but which had a recession in the export market last year. As a result of the Budget proposals, particularly as regards purchase tax, there has been a considerable increase of purchases in this country, enabling the production lines of the industry to proceed, and the motor-car export industry is now going ahead again. That is only a simple example of the way in which the home market has been able to support the export market when the export market has become weaker.
Finally, there is the encouragement to investment, which creates efficient industries by making better equipment possible. I was going to deal with some of the points of the Finance Act but I feel it would be somewhat irrelevant to do so.
LORD PETHICK-LAWRENCE: It is a Bill at present.
THE EARL OF SELKIRK: I beg pardon.
LORD PAKENHAM: Will the noble Earl be able to say anything about the rather serious move of labour away from the heavy industries?
THE EARL OF SELKIRK: I can only say that on the figures given, the difference in the comparative numbers employed is not very great. At the present time the Government have no evidence that labour is moving away or causing difficulty to the export industry. I regret that I cannot at the moment give any answer beyond that.
LORD PAKENHAM: I thank the noble Earl very much.
THE EARL OF SELKIRK: I would say one thing with regard to a point which the noble Lord, Lord Pethick-Lawrence, mentioned. Perhaps I may be allowed to say that I enjoyed his remarks very much. I found myself in complete agreement with him on many subjects. He emphasised that there are restrictive practices and urged that they should be removed, whether they exist among employers or among employees. But surely they should also be removed from the Government. The Government frequently exercises restrictive practices, and I hope the noble Lord agrees with me that they also should be removed.
The noble Lord emphasised further that the least efficient should not make the pace for the whole. I quite agree. But surely you get just such a situation in conditions of competition and good reward. If these things are not present you inevitably fall back on to the weakest link. I should like to mention a point which was raised by Lord Pakenham in answer to the noble Lord, Lord Brand. He distinguished between private interest and public interest. I agree that there are occasions when private interest differs from the public interest; but what I think the noble Lord forgets is that the Government interest also differs sometimes from the public interest. That is particularly the case in dictatorship countries, of course; but even in countries such as our own I can easily imagine a situation where the Government interest is not strictly the public interest. That, very often, is where a Socialist philosophy finds itself, in a measure, at a disadvantage.
One point which every speaker has returned to is the question of production

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and exports. Over the last fifteen years the United States—and I think it is good to look at these things over a fair period—have increased their production to 245 per cent. since before the war—that is to say, 2½ times. Canada has increased hers by about 2¼times. In the United Kingdom we have increased ours by about one-third. As compared with her pre-war production, Germany is increasing her production very rapidly. She is about one-quarter up. It is true that in the intermediate years we have had particular difficulties to deal with. We have made a large number of experiments of one sort or another—
LORD PETRICK-LAWRENCE: We are a little confused when the noble Earl says that United Kingdom production has gone up by about one-third. Does he mean one-third of 1 per cent. per year? If not, what does he mean?
THE EARL OF SELKIRK: I was referring to the last fifteen years, and I look the figures for the United States and Canada. I will repeat them. The United States has increased her production two-and-a-half times. Canada has increased hers two-and-a-quarter times—223 per cent. In this country production has risen to 130 per cent. We have, as I say, had difficult periods to cope with but in the given period there is rather a sharp distinction.
LORD PAKENHAM: If I may interrupt the noble Lord, I would point out that that figure is a much lower one than the figure frequently given by Government spokesmen. Are we to take this figure of one-third as an authentic one?
THE EARL OF SELKIRK: So far as I know, the figure I have given is correct. If not, I will certainly inform the noble Lord. The figure I have given is the figure for the last fifteen years. Whilst we are more dependent than the United States on exports, they exported in 1952 twice as much merchandise as the United Kingdom. We have to remember that their rates of wages are of the order of three-and-a-half times the size of ours. We have to ask ourselves why this situation exists. When we send our productivity committees abroad they do not find anything new. The Heavy Chemicals Committee, among other productivity committees, did not find anything new in the United States. They said in one comment:
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"In general we saw nothing that is new—just more of it."
There is no doubt that more machinery plays a considerable part in obtaining higher output.
The noble Lord, Lord Cherwell, has mentioned training. No doubt that plays a great part, but I am going to ask this question. Is there not also something in the point made by the Economist in its article" The Riddle of Prosperity"? That article said:
"Have we lost our faith in the merits and even morality of economic achievement?"
Has the approach of our economists to this problem been too mechanistic and not sufficiently human? Are we attaching enough importance to what has frequently been described by productivity committees as the "atmosphere in industry" which exists in the United States?
I do not know whether the same applied to an article in The Times. The Times said:
"The main reason why Britain has not yet prospered sufficiently to lift herself above the safety line is that the British people as a whole have not yet had the will to prosper."
I would seriously suggest this. I wonder sometimes whether we reflect enough on the essential rightness of a good industrial enterprise, well managed, with a happy staff and a large export trade. Few things are more difficult or more exacting than to take part in an organisation of this kind, and few things are of greater benefit to the public at the present time. We are fortunate in having many such in this country, and we are indebted to all those who, whether in management, as members of the staff, or as officers of trades unions, have permitted the situation to arise. But, we very much want more and better ones.
I would add just this: we have here put forward, we hope, art incentive Budget, a Budget which will provide at once an incentive and an encouragement, which will give an opportunity to those who are able to make use of it, particularly to-day, when economic aid is tailing off, when overseas competition is keener and when the burdens of taxation are heavy. We have to-day confidence in sterling, stable prices, available materials, and, we suggest, now from the Budget, increased incentives. I suggest that this Finance Bill and the effects which it will have are a gesture of confidence and a challenge to the people of

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this country which we very much hope will be taken up.
On Question, Bill read 2ª; Committee negatived.

VALUATION FOR RATING BILL
6.53 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.—(Lord Mancroft.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF DROGHEDA in the Chair]
Clauses 1 and 2 agreed to.
Clause 3:
Definitions of "dwelling-house," "private garage" and" private storage premises"
3.—(l) Subject to the provisions of this section, in this Act—
the expression "dwelling-house" means a hereditament used wholly for the purposes of a private dwelling or private dwellings;
the expression "private garage" means a hereditament having a floor space not exceeding two hundred and forty square feet and used as a lock-up garage, other than a hereditament which—
(a) forms part of the premises in which a business of providing services for motor vehicles is carried on, or
VISCOUNT LONG VISCOUNT LONG moved in the definition of "private garage," after the words "lock-up garage" to insert:
"other than a garage attached to a dwelling house or within the curtilage of a dwelling house and used wholly by the occupier thereof or by persons residing with him for the accommodation of motor cars belonging to them and"
The noble Viscount said: I do not intend to keep your Lordships for more than just a few moments. There are two questions, and two only, that I should like to ask my noble friend Lord Mancroft. The first one refers to the owner of a garage that is more than 240 square feet. Is he to be charged or rated at the old rate or at the new rate? It is not quite clear. The second question I should like to ask the noble Lord, in moving this Amendment, is: Is a man who builds a new garage within his own purview, within his own
740
curtilage, to be rated at the old rate or at a higher rate? In conclusion, I would ask the noble Lord whether, between now and Report stage, he will make quite certain that in the Bill those two questions, which at the present moment are causing some anxiety, are answered satisfactorily. I beg to move.
Amendment moved—
Page 3, line 24, after ("garage") insert the said words.—(Viscount Long.)
LORD WOLVERTON: I should like to support this Amendment. The position does not seem to be quite clear in the Bill. The noble Lord, Lord Mancroft, I think made the position quite clear in the House on Second Reading. His words are set out in the OFFICIAL REPORT, Volume 183 (No. 90), Column 606. Reading Clause 3, I think you can take it either way. What we are worried about is a garage which is part of a hereditament, a house, added on as an annex to the house. Then, I think, it would be within the curtilage to be rated as one. But if the garage were built, say, fifty yards away, though still within the curtilage, it might he rated quite separately if it was over 240 square feet. Some noble Lords and myself in reading the Bill think it can be construed either way. I thought it was the intention of Her Majesty's Government, as they said on Second Reading, that, if the garage was within the cartilage, it should be part of the hereditament. I should like that point cleared up. I cannot clear it up for myself by reading the Bill. Perhaps it can be cleared up at the next stage of the Bill by the insertion of suitable words.
LORD MANCROFT: I am grateful to my two noble friends, Lord Long and Lord Wolverton, for raising this matter, because, if it is causing them any uneasiness, and if they feel there is ambiguity, it is right that the matter should be cleared up. As I understand it, the point of the noble Viscount's Amendment is to exempt from the restrictions involved in the definition of "private garage" garages which are occupied together with a house. This, I think, is already achieved by the Bill as it stands, for the definition of "private garage" applies only to a hereditament—that is, a separately rateable property. Garages form separately rateable properties only if they are not within the curtilage of a house, or if

741
they are let out so as not to be in the same occupation as the house. Garages occupied together with a house are not separately rateable and are assessed together with it, so that they are only part of the hereditament. Hence, such garages, whatever their size, would be assessed, together with the house, on 1939 values, assuming that the 1939 values are lower than the current values. That is the position, as I understand it, and as I hoped I had made it clear on Second Reading. Perhaps the noble Viscount, Lord Long, would like to consider that explanation once again, and if he is still not satisfied that I have resolved his ambiguity, I shall be only too pleased to try to help him furrier at a later stage in the Bill.
VISCOUNT LONG: In view of the noble Lord's statement, I, of course, withdraw my Amendment. But I hope that, if it is possible, he will ensure, between now and Report stage, that what lie has said to-day is in the Bill in the language in which he has expressed it this afternoon. I thank him for his explanation. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Remaining clauses agreed to: Bill reported, without amendment.

NEW TOWNS BILL
7.0 p.m.
Read 3ª (according to Order), and passed.

MARSHALL AID COMMEMORATION BILL
House in Committee (according to Order): Bill reported without amendment.
NATIONAL INSURANCE (INDUS TRIAL INJURIES) (No. 2) BILL
House in Committee (according to Order): Bill reported without amendment.
AUXILIARY FORCES BILL [H.L.]
Read 3ª (according to Order), and passed, and sent to the Commons.
LICENSING BILL [H.L.]
Read 3ª (according to Order), and passed, and sent to the Commons.
  VETERINARY SURGEONS' NATIONAL SERVICE
  VETERINARY SURGEONS' NATIONAL SERVICE