Sitting of 20 April 1955

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS

  FOREIGN SERVICE (SENIOR BRANCH RECRUITMENT)
  Mr. Malcolm MacPhersonasked the Secretary of State for Foreign Affairs, in view of the small numbers of recruits now drawn from any source except Oxford and Cambridge, what steps he intends to take to widen the sources of recruitment for the senior branch of the Foreign Service.
  The Joint Under-Secretary of State for Foreign Affairs (Mr. R. H. Turton): The normal competition for the senior branch of the Foreign Service is open to anyone within certain age-limits who obtains a first or second-class honours degree at any recognised university or reaches an equivalent standard in a written examination. There is therefore no need to widen the sources of recruitment. Special competitions are also held for candidates over the normal age, for which a university education is not an indispensable qualification.
  Mr. MacPherson: Is not the hon. Gentleman aware that out of a total of 426 appointments made to this branch since the end of the war 341, or rather more than three-quarters, have gone to graduates of Oxford and Cambridge, whereas 46, or rather less than one-eighth, have gone to graduates of London, the English provincial universities, the Scottish universities and two universities in Ireland together? None at all were graduates of the University of Wales or of such a provincial university as Manchester. Does he not realise that the Foreign Service is losing a great deal in not widening the scope of the recruitment to this branch?
  Mr. Turton: The figures the hon. Member has given are quite accurate but unfortunately reflect the proportion of candidates for examination. Anything the hon. Member can do to encourage members of the Scottish or other universities to enter for the Foreign Service competition will be very welcome to my right hon. Friend.
  Mr. Mott-Radclyffe: Would my hon. Friend say how many candidates from the universities other than Oxford and Cambridge sat for the examination? That is surely the crux of the matter.
  Mr. Turton: The best way to deal with that is to give the number of candidates in the normal open competition in 1954. There were 138 from Oxford, 83 from Cambridge, 29 from London, 17 from other English universities and 20 from the Scottish universities.
  Mr. Ernest Davies: Would it not be possible to make better known at the lesser universities the qualifications required and details of the examination, of which undergraduates at Oxford and Cambridge are made aware?
  Mr. Turton: I do not quite understand what the hon. Member means by the "lesser universities," but I can assure him that the Civil Service Commissioners maintain close relations with all the universities and that each university appointments board is regularly informed by them of all Foreign Service competitions. I suggest that hon. Members interested in this matter should get in touch with the universities in or near their constituencies and point out to the authorities the very desirable careers that exist in the Foreign Service.
  Mr. Godfrey Nicholson: Is it not the fact that not the least attention is paid to where the candidates are educated and that they are appointed purely on their merits? Does not the present very high reputation throughout the world of the Foreign Service, both here and in foreign countries, point to the success of the present methods?
  Mr. Turton: I quite agree. We have a very high standard in the Foreign Service. We are quite sure that we get the best candidates, but let us have all the competition we can get.

  ANNIVERSARY OF AUSTRIAN REPUBLIC (CONGRATULATORY MESSAGE)
  Mr. G. Longdenasked the Secretary of State for Foreign Affairs whether he will send a message of congratulation to the Austrian National and Federal Councils on 27th April, which is the tenth anniversary of the re-establishment of the Austrian Republic.
  Mr. Turton: I am grateful to my hon. Friend for this Question. I agree that it would be an appropriate gesture to send a message of congratulations to the Austrian Parliament on this auspicious occasion; and I suggest that you, Mr. Speaker, should be asked to send a message to the President of the Austrian National Council on behalf of this House.
  Mr. Speaker: If that is the desire of the House, I will undertake to do so with pleasure.
  Hon. Members: Hear, hear.

  ISRAEL-EGYPT BORDER (INCIDENTS)
  Mr. Crouchasked the Secretary of State for Foreign Affairs if he will make a statement on the recent border incidents between Israel and Egypt.
  Mr. Turton: There have been numerous border incidents of a minor nature since the attack at Gaza on 28th February. Armed forces of the two sides were actively engaged on two occasions, at Nahal Oz on 3rd April and at Nirim on 9th April. The Mixed Armistice Commission has examined complaints about these incidents from both sides and has passed resolutions condemning actions by both parties.
  Meanwhile the Chief of Staff of the United Nations Truce Supervision Organisation has made certain concrete proposals for reducing tension in the Gaza area. In a resolution of 30th March the Security Council requested him to continue these efforts and called upon the Governments of Egypt and Israel to co-operate with him. General Burns is now actively engaged upon this task, in which he has the full support of Her Majesty's Government.
  Mr. Crouch: Is there not a danger of these incidents developing into something much more serious, and has not the time arrived when the United Kingdom and the United States should be more firm with both the Jews and Arabs with the idea of getting them together to sign a peace treaty? How much longer does my hon. Friend think these 900,000 refugees can live in mud huts and camps with very little to do all day except bask in the sun? Can something be done about that?
  Mr. Turton: Her Majesty's Government appreciate the danger that the continuance of this tension may lead to something even more disastrous. That is why we are giving all our support to the work that is being done in the Security Council and by General Burns, who is performing magnificent work in trying to reduce tension. While these talks are proceeding, we should refrain from comment in this House. As regards refugees, that is another question, but if a suitable opportunity occurs, perhaps in another Parliament, for the hon. Gentleman to put down a Question, I will try to answer it.
  Mr. Janner: Does the hon. Gentleman not realise that the Tripartite Declaration is not in itself a deterrent to marauders who are crossing the borders of Israel and looting and murdering and that it is no use blaming those who retaliate if there is no security for their protection? Will the hon. Gentleman reconsider the question and deal with Israel in a similar manner to the way in which we are dealing with the Arab States, so that there may be an agreement between this country or between America and this country and Israel which will make the others feel that we are really determined to prevent them from crossing the Israeli border?
  Mr. Turton: I hope the hon. Gentleman will study the reply I have given. The proposals of General Burns are directed to preventing marauding on the border. If, with his great influence, the hon. Gentleman can persuade the Israeli Government to do what they can to carry out the four proposals of General Burns, just as I hope all friends on the Egyptian side will do, it will help considerably to ease tension.
  Mr. Shinwell: Yes, but is the hon. Gentleman aware that Her Majesty's Government have a Treaty with Iraq, with Egypt and with Jordan, and that there is no treaty with Israel, and is not most of the trouble attributable to the fact that Egypt continues to proclaim a state of war against Israel?
  Mr. Turton: No, I think the trouble here is the difficulty of a frontier where raiding parties are crossing it and where all the incidents are of the nature that I have described in my reply. It would be a great help if we could get a system of agreement on the joint patrols and negotiation of a local commanders' agreement, and put a barbed wire fence along exposed parts of the demarcation lines. I hope all parties will do their best to bring that about.
  Captain Waterhouse: Is it not a fact that as long as Egypt refuses to the Israeli Government and nationals free access through the Canal, they must expect to have retaliation in some form or another?
  Mr. Turton: No, I hope that my right hon. and gallant Friend will not make that suggestion. We are doing all we can to reduce tension, and it will help to avoid these frontier incidents if both sides will accept the proposals of General Burns.
  Mr. Beswick: Does not the Minister think that this is precisely the kind of occasion when an international police force could be usefully employed, and although there is a reluctance on the part of some member States of the United Nations to accept this idea, could not Her Majety's Government do more to persuade them of the usefulness of such an institution?
  Mr. Turton: This matter is at the moment before the Security Council, and it would be unwise to try another solution while the Security Council is using its best endeavours to see that the proposals of General Burns are accepted.

  O.E.E.C. ANNUAL REPORT
  Mr. Jayasked the Secretary of State for Foreign Affairs to what extent the findings of the Sixth Annual Report of the Organisation for European Economic Co-operation reflect the agreed views of the member Governments.
  Mr. Turton: The Report as a whole has been unanimously approved by the Council of the Organisation for European Economic Co-operation.
  Mr. Jay: Is the Minister aware that, according to the official summary of this Report sent to hon. Members by the Treasury, the conclusions of the Report are vehemently against what it calls the maintenance of rent control and other restrictive practices, and is he also aware of the Treasury summary that these conclusions are important because they represent the agreed views of the member Governments? Do we assume, therefore, that it is now the policy of the present Government to abolish rent control?
  Mr. Turton: No. I have not got the passage to which the right hon. Gentleman refers, but the conclusions of this Report are summarised on page 176, where it states:
  "The influence of Government policy on the improvement of the economic position of the United Kingdom must be stressed."
  It goes on in the next paragraph:
  "But it is important to recognise that the expansion of activity over the past two years has been partly a recovery from a recession."
  Mr. Jay: But is not that a very unsatisfactory answer? As I put this Question down to the Chancellor and it was transferred to the Foreign Office, should not the representative of the Foreign Office be able to answer it?
  Mr. Turton: If the right hon. Gentleman had put a question on the Order Paper directed to rent control, I would have attempted to answer it. The right hon. Gentleman, however, asked me a general question on the Report, and I came provided with two copies of it. I have tried to help him by pointing out that this Report shows how the general improvement of the economic position of the United Kingdom is due to the policy of Her Majesty's Government.
  Mr. Shinwell: Is it not strange that the hon. Gentleman cannot find a satisfactory reply in two copies of the Report?
  Mr. Turton: Two volumes, not two copies.
  Mr. Smithers: Is it not a fact that the policy reflected in the Report of the O.E.E.C. is one of the progressive removal of controls? Is it not also the fact that this policy has always made

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  allowance for the domestic policies and the particular local difficulties of individual member States?
  Mr. Turton: That is a very accurate statement.
  Mr. Jay: Are we to infer from the totally unsatisfactory answer of the Minister that it is the intention of the Government to remove rent control but that they have not yet had the courage to inform the House of Commons or the country?
  Mr. Turton: It would be very unwise of the right hon. Gentleman to draw that conclusion.

  COUNCIL OF EUROPE (UNITED STATES AND CANADIAN ASSOCIATION)
  Mr. Hector Hughesasked the Secretary of State for Foreign Affairs if he will instruct the permanent representative of Her Majesty's Government at the Council of Europe to support the proposals tabled there by the hon. Member for Lincoln which call for an assembly at which United States and Canadian parliamentarians could meet with European parliamentarians to debate common problems.
  Mr. Turton: The hon. Member for Lincoln did no more than sketch out alternative methods of achieving closer contact between the Consultative Assembly of the Council of Europe and members of the Canadian Parliament and United States Congress. This report will be discussed by the Consultative Assembly. We shall of course consider most carefully any recommendations which the Assembly may eventually make to the member Governments.
  Mr. Hughes: But will the Government support the proposals, and does not the Minister realise that they are limited to problems which are common to the democracies? Is it not a negation of democracy to deny an opportunity of discussing them in this way?
  Mr. Turton: What the hon. Member for Lincoln has done is to sketch out certain alternative possibilities. These will be discussed by the Consultative Assembly. When the Assembly has
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  reached a decision upon them, Her Majesty's Government will carefully consider its recommendations.

  MALTA (CENSORSHIP REGULATIONS)
  Mr. Russellasked the Secretary of State for the Colonies if he is satisfied with the operation of the censorship on newspapers, periodicals and films imported into Malta; and if he will make a statement.
  The Secretary of State for the Colonies (Mr. Alan Lennox-Boyd): This is a matter which is within the sphere of responsibility of Maltese Ministers. I understand, however, that they have the application of these regulations under review.
  Mr. Russell: Is my right hon. Friend aware that British newspapers, periodicals and films seem to take much longer to get admitted into Malta than do Italian ones? Does he know whether Maltese Ministers are looking into that complaint?
  Mr. Lennox-Boyd: In the days when we used to have newspapers, I remember reading an inaccurate statement to the effect that censorship in Malta was directed by the Colonial Office. That is quite untrue. It is a matter solely within the discretion of Maltese Ministers to regulate the import of matter which they locally consider to be indecent. obscene, or impious. I understand that political and other considerations do not generally enter into this point of view.

  NYASALAND

    Land Acquisition
    Mrs. Whiteasked the Secretary of State for the Colonies if he will make a statement on land acquisition in Nyasa-land.
    Mr. Lennox-Boyd: I regret that I am not yet in a position to make a general statement on this question. Particulars of land already acquired were given in a reply on 6th April to my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow). It would be contrary to the public interest to give details of negotiations still in progress.
    Mrs. White: Is the right hon. Gentleman aware that the figures given on 6th April showed that there were still some 200,000 acres of land, out of a total of 500,000 acres which are to be purchased, which remain to be negotiated? Can he give an assurance that this matter will be speeded up? It is now some seven years since it was decided to acquire the land.
    Mr. Lennox-Boyd: I understand and share the anxiety of the hon. Lady that a settlement should be reached on this most important matter. A good deal of land has already been purchased. There are certain outstanding problems in regard to land and other issues in Nyasaland which I intend to discuss with the Governor who will be visiting London next week for talks with me.

    African Franchise
    Mr. J. Johnsonasked the Secretary of State for the Colonies when he intends to institute some form of franchise for Africans in Nyasaland.
    Mr. Lennox-Boyd: The Governor is coming to London to discuss with me next week the constitutional questions which he has already considered with representatives of the three communities at Zomba. I would, therefore, prefer not to make a statement about any constitutional matters affecting Nyasaland for the time being.
    Mr. Johnson: When the Governor comes to this country, will the right hon. Gentleman impress on him that if elections are good enough for Europeans and Asians, they are perhaps equally good enough for Africans?
    Mr. Lennox-Boyd: I will bear that in mind.

    Shire Valley Scheme
    Mr. J. Johnsonasked the Secretary of State for the Colonies what discussions he has had with the Portuguese Government regarding the Shire Valley dam and irigation scheme in Nyasaland.
    Mr. Lennox-Boyd: Discussions held with the Portuguese Government when the Shire Valley scheme was the responsibility of the Nyasaland Government are summarised in an exchange of notes between Her Majesty's Government and
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    the Portuguese Government, published as Cmd. 8855 in January, 1953. The Shire Valley scheme has been the responsibility of the Government of the Federation of Rhodesia and Nyasaland since July, 1954.
    Mr. Johnson: Will the right hon. Gentleman do his best to see that this does not get too far down the queue now that the Shire Valley scheme seems to be about to begin, because this is of vital importance for the future of the Colony?
    Mr. Lennox-Boyd: I can assure the hon. Member that that is so, and I cannot sufficiently anticipate the pleasure with which I will tackle this particular problem after a renewed mandate.

    TANGANYIKA (EXTRA-MURAL STUDIES)
    Mr. Rankinasked the Secretary of State for the Colonies what institutions in Tanganyika are carrying out activities similar to the work of the extra-mural department of the University College of East Africa; and whether he will place such work under the supervision of the university to ensure academic standards.
    Mr. Lennox-Boyd: The activities to which the hon. Member refers are carried on by the British Council and the Social Welfare Department of the Tanganyika Government. Whether the University College of East Africa should also undertake work of this nature is a question for the council of the college which, as the hon. Member already knows, is an autonomous body. The possibility of arrangements being made between the Government of Tanganyika and the university college for extra-mural work to be done in the territory will be considered by the Government of Tanganyika and the college authorities in the light of information gained from the working of a pilot scheme in Uganda.
    Mr. Rankin: While recognising those factors and thanking the Minister for that helpful answer, might I ask him to put his considerable influence behind this attempt to raise the status of these institutions nearer to university level? Is he aware that the Tanganyika African National Union is very strongly of this opinion, and will he note its attitude in the matter?
    Mr. Lennox-Boyd: I am always in favour of the bodies with the highest possible influence continuing to exercise authority both in Britain and Africa.
    Mr. J. T. Price: On a point of order. In view of the fact that the Minister, in reply to Questions Nos. 10 and 12, has indicated that he has no authority over either of the matters raised, may I ask how the Questions came to be placed on the Order Paper in view of the fact that Members often have difficulty in getting such Questions on the Order Paper?
    Mr. Speaker: I assume that the Secretary of State has some residual responsibility for the Colonies. Though in varying degrees in different territories there has been a delegation of authority, I see nothing prima facie out of order in the Questions.
    Mr. Rankin: Is it not a fact that while devolution is continuing within the Colonies that does not rob the Minister of his influence in pressing his point of view upon them?
    Mr. Speaker: That may well be so.
    Mr. Lennox-Boyd: Further to that point. While the university college at Makerere is an autonomous body, as Members on both sides of the House know, I naturally have responsibility in regard to the Government of Tanganyika who are watching with interest the experiment now being conducted in extramural work in Uganda to see whether it is applicable to Tanganyika. The experience in one territory is frequently of much value in another.

  KENYA

    Detained Persons (Releases)
    Mr. Fenner Brockwayasked the Secretary of State for the Colonies how many persons have been released from detention in Kenya since April, 1954, and in what categories.
    Mr. Lennox-Boyd: Since 23rd April, 1954, 6,759 detained persons have been released in Kenya. Of these 3,244 were released after initial screening from the Anvil camps at Langata, MacKinnon Road and Manyani. Two thousand four hundred and fifty-five were released after more detailed screening from camps in the Central Province. The remaining
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    1,060 persons were released from detention under Detention Orders, including 32 who successfully appealed against detention.
    Mr. Brockway: In view of the fact that nine months ago General Erskine estimated that 20 per cent. of those who were detained were innocent. can the Secretary of State state the proportion of those who have been released?
    Mr. Lennox-Boyd: I wish that the hon. Gentleman, whose passionate interest for things African we all recognise, would read all the Parliamentary discussions, because quite recently, on behalf of General Erskine, I denied the statement that had been falsely attributed to him. However, the General, like a great many of us, if he found it obligatory to deny every inaccurate statement attributed to him, would find little time for creative work. He decided to ignore that particular misstatement.
    Mr. J. Griffiths: Since it is the testimony of everyone who has been in Kenya in recent years that there is a general feeling that the screening is very slow and ought to be expedited, can the Colonial Secretary tell us now whether the screening process is being expedited so that those innocent may be released as soon as possible?
    Mr. Lennox-Boyd: In reply to the right hon. Gentleman, whose interest I also fully recognise, I have recently made a statement in regard to the inquiry into screening in Kenya, when it was held that the procedure now was such that there need be no anxiety among reasonable people as to the speed with which it is being conducted. However, I would at this stage in Parliament, as before, put out the plea that we should from time to time look at this thing in the atmosphere of those engaged in a desperate struggle in Kenya and not always with the calm with which we are able to look at the matter from the United Kingdom.
    Mr. Bottomley: Is the Secretary of State aware that many responsible people subscribe to the statement alleged to have been made by General Erskine? Is he satisfied that the rate of release is sufficient to justify reasonable action?
    Mr. Lennox-Boyd: As the statement attributed to General Erskine was inaccurate, I see no reason why, attributed

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    to people of lesser experience, it should suddenly become accurate. I can assure the House that I am constantly in touch with the Government of Kenya to see that the speed of release is carried out to the fullest possible extent commensurate with the needs of public safety.

    Tribal Associations
    Mrs. Whiteasked the Secretary of State for the Colonies what instructions have been given by the Government of Kenya concerning the establishment of tribal associations in Nairobi.
    Mr. Lennox-Boyd: None, Sir. Tribal associations have been in existence for many years and the Kenya Government have agreed to the recognition as they have applied for registration from time to time.
    Mrs. White: Is the right hon. Gentleman aware that trade union organisers in Nairobi have informed us that pressure was put by the Administration on Africans to join their tribal associations, and to avoid all other associations, including trade unions? Would he please look into the matter?
    Mr. Lennox-Boyd: I have looked into it, and I wrote to the Governor about it when it was conveyed to me in a suggestion made by the right hon. Gentleman the Member for Wakefield (Mr. Creech Jones). I feel quite certain that the Kenya Government are not fostering the tribal associations to the detriment of the development of normal, healthy trade union activity. I will write to the right hon. Gentleman and the hon. Lady as soon as I have further information from the Governor.
    Mr. Braine: In view of the importance of the new associations starting off on the right foot, can my right hon. Friend say whether it is obligatory on these societies to register under the Societies Ordinance of the Colony?
    Mr. Lennox-Boyd: Yes, Sir, that is so.

    NORTHERN RHODESIA (ORDER IN COUNCIL)
    Mr. Fenner Brockwayasked the Secretary of State for the Colonies to what extent under the provisions of the Northern Rhodesia (No. 2) Order in
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    Council, 1954, the right to alienate African lands will be delegated by the Governor to a member of the Executive Council.
    Mr. Lennox-Boyd: No delegation of power to alienate African lands has been made, or is intended to be made.
    Mr. Brockway: Will the right hon. Gentleman look at the Amendment contained in the Northern Rhodesia (No. 2) Order in Council, 1954, to the Northern Rhodesia Order in Council, 1924, and give us an assurance that in that Amendment there is no change?
    Mr. Lennox-Boyd: Indeed, I can. I hope that those who read the Questions of the hon. Gentleman will also read the Answers, for a great deal of misunderstanding in Colonial Territories is often created by people who read only the Question and who do not wait for the Answer. Under recent regulations the Governor of Northern Rhodesia has delegated power to the Director of Services and Land to make grants of Crown Lands on his behalf, subject only to the special or general directions of the member of the Executive Council responsible for land. Under the relevant Statutes and Orders the definition of Crown Land expressly excludes all native reserves, native trust land and land or mineral rights to which the Paramount Chief and people of the Barotse are entitled. I hope that the hon. Gentleman will use his considerable influence with the people who read his Questions to draw attention to the Answers given to his Questions.
    Mr. Brockway: With reference to that admonition, may I ask the right hon. Gentleman whether it is not a fact that the Kenya Government have suppressed nearly all the African newspapers? If the European newspapers which remain fail to report his replies, the responsibility cannot be mine.
    Mr. Lennox-Boyd: I am grateful to the hon. Gentleman for the generous way in which he took my admonition. We shall all be giving each other a good deal of advice in the course of the next few weeks, and in regard to the availability of newsprint perhaps the United Kingdom is not in the best position to lecture other countries at this time.
    Mr. Baldwin: Do not the Questions that are asked in this House on these

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    occasions do a great deal of harm overseas and create strife between the various races?
    Mr. Hobson: Can the right hon. Gentleman state the number of African newspapers printed in Nairobi at the present moment?
    Mr. Lennox-Boyd: If the hon. Gentleman will put a Question on the Order Paper for that information, I will gladly answer it. To my hon. Friend the Member for Leominster (Mr. Baldwin), who asked about the mischief that might be done by Parliamentary Questions, I would quote a Nigerian proverb, which is the slogan of a newspaper in Nigeria, that the truth is worth more than a penny. The truth can often be conveyed by Parliamentary Answers as well as by Parliamentary Questions.

  HONG KONG

    Health and Malaria Control (Expenditure)
    Mr. Rankinasked the Secretary of State for the Colonies what reduction there was this year in the estimates for the medical and health department of Hong Kong; what was the reduction in the Vote for malaria control; and what was the reason for such reductions.
    Mr. Lennox-Boyd: There have been no such reductions. The total medical department estimates for the year 1955–56 show an increase of 2 million dollars as compared with 1954–55, while the malaria control sub-head shows an increase of 12,000 dollars as compared with 1954–55.
    Mr. Rankin: While expressing my pleasure that there is no reduction, may I ask the Minister to give very careful thought to malaria control? Is he aware that, owing to the influx of people from the mainland, the fact that trade has been cut by the embargo and the fact that there is no Welfare State there, malaria control is of great importance to Hong Kong?
    Mr. Lennox-Boyd: Of course I am aware of the fact that the problems of the Governor and Government of Hong Kong have been enormously increased by the refugee population. If the hon. Gentleman suggests that the restrictions on trade are due to American action alone, that is wrong, because it is the
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    united decision of many nations of the free world to cut down the sale of strategic materials to China. I am fully conscious of the need to ensure that the malaria control Vote in Hong Kong is not diminished. Not only is more money being spent, but the revised estimate for the forthcoming year is actually more than the original estimate.
    Mr. Braine: In order to get the Question into proper perspective, is it not a fact that not only in Hong Kong but in other Colonial Territories the campaign against malaria is one of the brightest achievements in the Colonial Empire and that in some places malaria has been completely eradicated in recent years?
    Mr. Lennox-Boyd: That is true.

    Court Sentence (Foster Mother)
    Mr. Sorensenasked the Secretary of State for the Colonies whether he will make a statement on the case, particulars of which have been sent to him, of the ill-treated child whose foster mother was sentenced in a Hong Kong court on or about 12th January; and what is the present estimated number of Mui-tsai children in Hong Kong and the New Territories.
    Mr. Lennox-Boyd: My only information about this case is derived from a local newspaper, the accuracy of which however I have no reason to doubt. From the account there given I am bound to say that the sentence seems to have been well deserved. The case was not one of Mui-tsai which is illegal and of which no cases have come to light for a number of years.
    Mr. Sorensen: Does this not seem at least somewhat indicative of the fact that, even though it is illegal, Mui-tsai is still practised behind the scenes? Will the right hon. Gentleman have special investigations made to determine whether an underhand Mui-tsai arrangement still exists?
    Mr. Lennox-Boyd: From all that I know of the Governor of Hong Kong, it is quite unnecessary to stimulate him to the proper discharge of the duties imposed upon him by statute.
    Mr. I. O. Thomas: For the benefit of hon. Members who are not experienced in the matter, will the right hon. Gentleman say what Mui-tsai is?
    Mr. Lennox-Boyd: Definitions vary according to the part of the world in which one happens to live. "Mui-tsai" describes a young female domestic servant who, by Chinese custom, is purchased from her parents or guardians for service in the household of her master.

    COLONIAL TERRITORIES (PRISON RULES)
    Mr. Brockwayasked the Secretary of State for the Colonies if he will discuss with the Governments of the Colonies, Protectorates and Trusteeship Territories the preparation of minimum standard rules for prisons and detentive institutions in these territories.
    Mr. Lennox-Boyd: Colonial Governments already possess copies of the United Kingdom Prison Rules, 1949, and a set of draft standard minimum rules, largely in agreement with United Kingdom principles, is being considered by the United Nations. My advisers scrutinise colonial prison reports and legislation and matters of importance are referred to my Advisory Committee on the Treatment of Offenders. In the circumstances, I do not consider that discussion of yet another set of standard rules, on the lines proposed, would serve any useful purpose.
    Mr. Brockway: Does the right hon. Gentleman really think that is enough? Has he read the Report of the Advisory Committee to the Colonial Office on conditions in colonial prisons? Is he aware that we have undertaken to the United Nations to carry out standard minimum regulations in the Colonial Territories? In view of all those facts, will he look at the matter again?
    Mr. Lennox-Boyd: It is my custom, which I am sure is not an unusual one, to read the advice and the reports that advisory committees present to me. I should be very ready to circulate to any hon. Members interested the Report of the Advisory Committee on the Treatment of Offenders which was presented to my predecessor one month before I took office, and I would gladly lay copies in the House. I am sure that the result of any scrutiny of the Report would not only give some indications of the lines of future progress but would also show what valuable work has been done in penal reform over the last few years.

    BRUNEI, SARAWAK AND NORTH BORNEO (COLLABORATION)
    Mr. Sorensenasked the Secretary of State for the Colonies if he will confer with His Highness the Sultan of Brunei with a view to securing voluntary collaboration in the provision of facilities in Brunei for the training of teachers and of nurses and medical assistants for service in Brunei and in Sarawak and British North Borneo.
    Mr. Lennox-Boyd: Collaboration in all matters of common concern is already the function of the inter-territorial conference of the three Borneo Governments, and I do not think that special arrangements are necessary in these particular fields.
    Mr. Sorensen: In view of the high promise of the Brunei five-year development plan, is there any likelihood of its being used under the direction of the Sultan's Council for the benefit of Brunei's poorer neighbours?
    Mr. Lennox-Boyd: Brunei has already shown her readiness to help neighbouring territories, but I think it would be very wrong if we gave any impression that we intended to use the richness of Brunei, without her wish, to help neighbouring territories. The teacher training colleges now established in Sarawak and North Borneo are open to Brunei candidates, and I am advised that better facilities exist there than could be created quickly in Brunei itself. In regard to the training of medical assistants, all my advice is in favour of the territories doing their own training in their own territories.
    However, I should like to thank His Highness the Sultan and the people of Brunei for the help which they have given in many ways to less fortunate territories, and not least for the very large loan which they have recently made available for the Federation of Malaya to combat the spread of Communism.
    Mr. Sorensen: Is the right hon. Gentleman aware that I made no suggestion that pressure should be exerted by this country on Brunei and that I entirely share his appreciation of what Brunei has done?
    Mr. Lennox-Boyd: I think that, as in so many other things, this is a case where there is very little in dispute between the hon. Gentleman and myself.

    MALAYA AND SINGAPORE (EMERGENCY COSTS)
    Mr. Sorensenasked the Secretary of State for the Colonies the approximate annual cost of the emergency in the Federation of Malaya and Singapore; what are the total grants made by Her Majesty's Government towards this expenditure; who will bear the cost of the Australian forces which are to be directed to this area; and, in view of the restriction on educational and social services caused by expenditure on the emergency, if he will consider a substantial increase in financial aid to the Federation and to Singapore further to ease the burden caused by the emergency.
    Mr. Lennox-Boyd: The cost of the emergency to the two Governments in Malaya in 1954 was approximately £20 million, towards which Her Majesty's Government made a grant of £6 million. In addition, of course, Her Majesty's Government met the cost of the external forces in Malaya. It is customary for Commonwealth Governments to bear the cost of maintaining their own forces when these are deployed to meet Commonwealth strategic requirements.
    In reply to the fourth part of the Question, I have nothing to add, in regard to the Federation Government, to the statement which I made on 15th December in reply to the hon. Member for Bristol, Central (Mr. Awbery). There is no question of any need to help the Government of Singapore in this way.
    Mr. Sorensen: Does the right hon. Gentleman not appreciate that this emergency affects not only Malaya and Singapore but this country as well—we are involved in it just as much as the people of those two territories? Under those circumstances, is it not fairly evident that the expenditure they are making on the emergency must limit their power to spend similar money on the social services, and will he not reconsider the possibility of augmenting the assistance that we give to these territories?
    Mr. Lennox-Boyd: No, Sir, there is no indication that the needful social development of Malaya is held up by anything other than the physical limitations enforced by the emergency, and Her Majesty's Government, having spent £65 million on the cost of the external forces
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    of Malaya, cannot be accused of not realising that this is an all-out Commonwealth effort.
    Mr. Awbery: If the full financial responsibility of the emergency is not carried by this Government or very substantial further aid sent to Singapore and Malaya, then is there not a possibility of the Social services in both the Colony and in the Federation breaking down?
    Mr. Lennox-Boyd: No, Sir, that is not the case at all. If my Answer and previous Answers are fully studied, it will be realised that what the hon. Member says is a completely inaccurate picture of the situation in the two territories. I am glad to say that in Singapore the surplus balance exceeds £35 million.

    MAURITIUS (CONSTITUTION)
    Mr. J. Johnsonasked the Secretary of State for the Colonies whether he will now make a statement upon the proposals for constitutional advance in Mauritius.
    Mr. Lennox-Boyd: I have given very careful consideration to the proposals which have been submitted by the Governor for changes in the Constitution of Mauritius. I think it would be desirable for the Governor and the leading representatives of the principal schools of thought in the Colony to come to London for discussions on these proposals before any final decision is taken, but in present circumstances it is not yet possible to arrange a firm date for this visit.
    Mr. Johnson: While hoping that the Minister will follow his excellent example in Nyasaland and invite the Governor of Mauritius here, might I ask him whether he will get a move on, as it is 12 months since Lord Munster went to the island; and if the right hon. Gentleman does not get on with the matter soon, perhaps we on this side of the House will be able to finish it for him?
    Mr. Lennox-Boyd: I am aware of the advisability of getting a move on, but I am also aware of the constitutional propriety which ought to be followed by a Minister receiving a Governor from a Colony, when there is a great deal of controversy about its future, on the eve of a General Election.

    WIRELESS RECEPTION, ARBROATH (INTERFERENCE)
    Captain Duncanasked the Postmaster-General whether the Spanish authorities have yet taken steps to abolish the interference from their station at Barcelona with the Home Service reception in the Arbroath area, in view of the fact that they are now signatories of the Copenhagen Convention.
    The Postmaster-General (Or. Charles Hill): This interference has unfortunately not yet stopped, although the Spanish Administration have made periodic changes in Barcelona's frequency, apparently with the object of improving the position. We have recently written to them again about the trouble. Although Spain is now a member of the International Telecommunication Union, she has not yet accepted the Copenhagen Plan.
    Captain Duncan: May I welcome the light hon. Gentleman to his new Department and ask him to do his best, as Spain is now a member of the I.T.U., to see that they are urged to accept the Copenhagen Plan so that this interference can be reduced?
    Dr. Hill: The Spanish authorities say that they are studying the Plan. A further communication went to them on 28th March and we are hopeful of an improvement.

    SHIPBUILDING (NORWEGIAN ORDERS)
    Mr. Hector Hughesasked the First Lord of the Admiralty if he is aware that, between 12th October, 1954, and 31st March, 1955, Norwegian shipowners placed 73 shipbuilding contracts in Norway, Sweden, France, and Western Germany, but none in Britain; that, in Britain, there is now a dearth of shipbuilding contracts for future execution; that this state of affairs threatens unemployment in British shipbuilding yards; and if he will make a comprehensive statement on the subject indicating, in particular, his plans for resolving the relevant problems.
    The First Lord of the Admiralty (Mr. J. P. L. Thomas): I am aware that a large number of Norwegian orders have
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    recently been placed on the Continent. The United Kingdom order books at present represent about two years' work at the current rate of output and there is a marked revival of orders. I cannot therefore agree that there is a dearth of contracts for future execution, or that in consequence there is a threat of unemployment. It seems to me likely that the Norwegian shipowners were influenced by the firm prices and relatively early delivery promised by many yards abroad.
    Mr. Hughes: Has the Minister observed the speeches of the chairman of the Peninsular and Oriental Steam Navigation Company and the managing director of the Norwegian-American line on this subject, and does he realise the great anxiety that exists in shipbuilding and shipping circles on the part of both masters and men lest the future may bring unemployment to these spheres? Will he do something about it?
    Mr. Thomas: These two speeches have been brought to my notice. In the last two years German and Japanese yards have been in a position to compete successfully with our shipbuilders both in price and in delivery, but that competition, I am glad to say, is now slackening and things are evening out. I understand that during the last few weeks three orders have been placed in British shipyards by Norwegian shipowners.
    Mr. Shinwell: Can the right hon. Gentleman say whether, if firm prices and early deliveries are important factors in obtaining further shipbuilding contracts, he has as yet instituted any inquiry into the matter in order to promote a solution or a partial solution?
    Mr. Thomas: I think the problem is solving itself now. Continental and Japanese yards have had the advantage of short order books, adequate steel supplies, and a plentiful supply of labour, but they are now running into difficulties, competition is slackening, and things are adjusting themselves.
    Mr. P. Williams: Is my right hon. Friend aware that most people in the country are getting sick and tired of the prophets of doom in relation to shipbuilding; secondly, is my right hon. Friend aware that until the order books

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    are, in fact, reduced there will be difficulty in getting new orders; and, thirdly, would my right hon. Friend agree that the information contained in this Question was given by Mr. Henriksen at a lunch in Sunderland when he said, "I think the British"—
    Mr. Speaker: I think the supplementary is a little long.
    Mr. Willey: Is the right hon. Gentleman aware that there has been a very close association between the shipbuilding yards of Sunderland and Norway for a considerable time, that Sunderland depends upon this association, that it is a matter of great disturbance to Sunderland that we have had no orders for several years, and will he use his best offices to see that orders reach us?
    Mr. Thomas: I certainly will, but, as I have said, I think the position is improving as far as Norway is concerned. I will bear in mind the points made by the hon. Member for Sunderland, North (Mr. Willey) and my hon. Friend the Member for Sunderland, South (Mr. P. Williams).
    Mr. P. Williams: Is my right hon. Friend aware that the Norwegian shipowners are of opinion that there is a bright shipbuilding future for this nation?

    ROYAL AIR FORCE (UNIVERSITY GRADUATES)
    Mr. Malcolm MacPhersonasked the Under-Secretary of State for Air to what extent the educational services in the Royal Air Force depend on university graduates in mathematics and science, serving either as National Service men or on short-term commissions.
    The Under-Secretary of State for Air (Mr. George Ward): Of the 492 graduates in these subjects in the Royal Air Force education branch, 87 are serving on National Service commissions and 239 on short service commissions.
    Mr. MacPherson: Is the Under-Secretary aware that proposals have been made in recent years to exempt from National Service such of these graduates who intend to enter the teaching profession, and does he realise that it would help if he and his Service colleagues gave rather more information than has so far
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    been available about the use made of these graduates in the Services?
    Mr. Ward: The question of whether or not graduates are called up for National Service is not for me; it is a matter for my right hon. and learned Friend the Minister of Labour. Certainly we welcome as many of these graduates as we can get for the education branch of the Royal Air Force.

    PUBLIC TRANSPORT SERVICES, KENT
    Mr. P. Wellsasked the Minister of Transport and Civil Aviation how many licensees for public transport services in rural Kent have notified the licensing authority of their intention to curtail or suspend services during the two years ending 31st December, 1954; and how many services were involved.
    The Minister of Transport and Civil Aviation (Mr. John Boyd-Carpenter): During this period the licensing authority granted applications from four companies to curtail services. I am informed that 52 services were affected in greater or lesser degree, but that no service was completely suspended. At the same time I understand that some 74 services were improved in one way or another.
    Mr. Wells: Is the right hon. Gentleman aware that the curtailment of public transport in rural areas is having a most disastrous effect on agriculture, and will he call the attention of the licensing authorities to the fact that the drift from the land is to a great extent a consequence of this curtailment which is continually taking place?
    Mr. Boyd-Carpenter: This is an important problem but, as I said in reply to an earlier Question, licensing authorities are making great efforts to maintain these services. If the hon. Gentleman will study my answer, I think that he will appreciate that in the area to which he referred they are doing so with a considerable degree of success.
    Mr. Bottomley: Is the right hon. Gentleman aware that one of the reasons for the curtailment of these services is the high cost of petrol, and can he say whether he made representations to his right hon. Friend the Chancellor of the Exchequer to reduce the petrol tax?
    Mr. Boyd-Carpenter: The right hon. Gentleman's own official experience will enable him adequately to answer that question himself.
    Mr. J. T. Price: Is the House to take it that it is the view of the Minister of Transport that many of these rural services are to be regarded purely as commercial undertakings and not as public service undertakings with a fundamental duty to the public as a final deciding point regardless of economic questions? Is the right hon. Gentleman aware that the recent judgment given in this matter is thought by many to determine the position of the Ministry? Can the Minister confirm or deny that he in fact regards these companies as commercial undertakings?
    Mr. Boyd-Carpenter: I should like to pay very high tribute to the sense of public spirit involved in the operation of unremunerative services in rural districts by many of these operators, for which I think that we should be very grateful.

    ANTI-AIRCRAFT COMMAND (CIVILIAN TECHNICAL STAFF)
    Lieut-Colonel Liptonasked the Secretary of State for War how many of the civilian technical staff employed in Anti-Aircraft Command have been retained; and by which Service Department they will be employed.
    The Under-Secretary of State for War (Mr. Fitzroy Maclean): All have been retained so far but about two-thirds will become redundant during the next nine months. As I explained yesterday in answer to a similar Question by my hon. Friend the Member for Gillingham (Mr. Burden), as many as possible of these will be transferred to other War Department establishments or to suitable
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    vacancies offered by other Government Departments. It is, however, too early to say how many of the temporary staff will be retained in Government employment and how many discharged.
    Lieut-Colonel Lipton: Is the Minister aware that there is a considerable risk of losing the services of many of these highly skilled technicians who know all about radar and electronics, and that if the Government lose their services to industry we shall never be able to get them back if and when an emergency arises? Is the hon. Gentleman aware that I wrote to the Secretary of State about this five weeks ago and I have not yet had an answer?
    Mr. Maclean: My right hon. Friend is naturally perfectly well aware of the need for retaining the services of men whose services are needed. On the question of the hon. and gallant Member's letter, this is a complicated subject which requires the concurrence of several Government Departments, and I am not in a position to make a statement about it now.
    Lieut.-Colonel Lipton: May I ask the hon. Gentleman to do his best to see that I get an answer before 26th May?

BUSINESS OF THE HOUSE
The Lord Privy Seal (Mr. Harry Crookshank): After discussion, it is proposed at the request of the Opposition to report Progress on the general debate of the Budget Resolutions at about 8 o'clock this evening and then take the Motion relating to Business of the House.
Proceedings on the Motion relating to Business of the House exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[The Prime Minister.]

ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee. [Progress, 19th April.]
  [Sir CHARLES MACANDREW in the Chair]

  INCOME TAX (SURTAX RATES FOR 1954–55)
  Question again proposed,
  That income tax for the year 1954–55 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1953–54;
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act. 1913.

BUDGET PROPOSALS AND ECONOMIC SITUATION
3.29 p.m.
Mr. Hugh Gaitskell: In the course of his speech yesterday the Chancellor of the Exchequer did not confine himself to the immediate past and the present financial year. He made several excursions into the record for his whole period of office and he introduced certain comparisons. As this is the last Budget he will present in this Parliament, and probably for a long time ahead, it was very natural that he should go into these wider issues. I propose to do so, too, and to make some comparisons. I will begin immediately with some remarks about production. I do so partly in order to correct something which I said in the debate on the Queen's Speech last December.
I then gave these figures. I pointed out that in the last three years, 1951–54, the increase in industrial production was just 10 per cent., that is, an average of just over 3 per cent. a year. I said then that between 1946 and 1951, under a Labour Government, the increase had been 30 per cent., or an average annual increase of 6 per cent. But I made a mistake. Between 1946 and 1951 the increase was not 30 per cent., but 35 per cent., and the average annual increase was 7 per cent. and not 6 per cent. That is to say, production rose more than twice as fast under the Labour Government as it has done under the Tory Government.
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I am aware, of course, that the Chancellor will point with pride—indeed, he has already done so—to the increase of 6½ per cent. in 1954. Well, that is his best, and it is below the Labour average. But the Economic Survey foresees an appreciable increase for 1955, and yesterday the Chancellor himself, rather to my surprise, went further and spoke of the scope for increased production being as great as, if not greater than, in 1954. So far, this does not seem to be happening.
Two days ago the Treasury published the latest seasonally corrected figures of production and I wish, if I may, to read them to the Committee, because they are rather serious. Taking 1948 as 100, in the first quarter of 1954 the figure is 125; in the second quarter, it is 127; in the third quarter, 130; in the fourth quarter 131; and in January and February, 1955, the figure is still 131.
What does that mean? It means, in fact, that according to the Treasury's own index, and allowing for seasonal variations, there has been virtually no increase in production for the past five months. I am a little surprised that the Chancellor made no comment about this. Perhaps one of his assistants will tell us later what the Treasury feel about this; whether they are disturbed about it. These are the Treasury's own figures, and in view of the fact that the Chancellor's whole Budget rests on the assumption of expanding production, I think that we are entitled to hear an opinion about it.
There is one other comment I would make. I do not think it will be denied—certainly not by the Chancellor—that at present there is little slack in the economy and if, therefore, production has not been rising in these past five months, there is, I think, only one conclusion to be drawn; that is that productivity has not continued to increase.
I turn now to investment and I will make some comparisons here, also. Of course, the Economic Survey shows once again that in this field the great advance has been made by the nationalised industries. If hon. Members will turn to page 23 of the Economic Survey, they will see that clearly enough. In the case of mining, the increase in investment last year was £19 million. In the case of electricity, gas and water, it was £29 million. In the case of transport and communications the figure is £25 million,

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and in the case of the whole of manufacturing, which is, broadly speaking, the private sector, the increase was £12 million.
I do not think that one can leave it there. I am not certain of this, but I presume that the manufacturing figure includes the steel industry and certainly, any investment—any increased investment—which took place in the steel industry in 1954 was planned when the industry was still nationalised. If we deduct what I suspect that increase was, it is fairly evident that there was virtually no increase in investment in the private sector last year at all.
I noticed that the Chancellor seemed to take quite a lot of pride in the achievements of the nationalised industries.
The Chancellor of the Exchequer (Mr. R. A. Butler)The Chancellor of the Exchequer (Mr. R. A. Butler) indicated assent.
Mr. Gaitskell: I am delighted to see the right hon. Gentleman nodding his agreement. I hope he will stand up for nationalisation in the future as the most successful child in his industrial family. Perhaps he will even come over and encourage further measures of nationalisation.
Mr. Butler: May I say to the right hon. Gentleman that if we produced more coal then we could be even more satisfied with this investment?
Mr. Gaitskell: It is certainly a regrettable fact that in the last year or two, under a Tory Government, the miners do not seem to be inspired with the same will to produce as they were under a Labour Government.
However, since the Chancellor has made comparisons in progress under a Tory Government and a Labour Government, I will mention one other set of figures. It is always difficult to get figures of net investment, although, of course, that is what really matters—the net addition to capital. There was an article by Mr. Redfern published recently in the Statistical Society's Journal, which throws some very interesting light on this subject. In fact, it shows just this: in manufacturing and distribution there was a steady rise in real terms in the rate of investment from 186 in 1948 to 267 in 1950 and a fall back since 1950–51 to
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191 in 1953, actually a substantial fall in net investment.
The same kind of development is shown in Mr. Redfern's figures for plant and machinery; a rise from 190 net investment in 1948 to 261 in 1951, and a decline to 214 in 1953. Again, I think that the Government might give us a little more information on this subject. If they really believe that there has been any progress in the private sector in the rate of net investment since they came to power, let them prove it. Let them show Mr. Redfern's figures to be wrong.
I pass now to a subject which, I think, must concern all of us particularly at the present time: that is, the balance of payments of the United Kingdom. There is no need for me to stress its importance and there is no need for me to stress what has to be done in this field. The Chancellor told us and the country nearly two years ago, when he spoke to the National Joint Advisory Council in July, 1953, that what we needed was an average annual export surplus of £300 million to £350 million.
I have asked the right hon. Gentleman once dr twice whether he still stands by that figure, and I believe I am right in saying that he has not withdrawn from it. Certainly, for my part, I would say—in fact, I have said—that a surplus of that order is needed. It is needed if we are to play our part in investing in the backward areas of the world, particularly in the Commonwealth. It is needed if we are to pay our debts. It is needed if we are to accumulate gold reserves.
What, in fact, has been the surplus in these last three years? In 1952, which one might suppose to be the most difficult year, the surplus was £138 million. In 1953, it was £115 million, and in 1954 it was £110 million. Whatever we may feel about that, it is a very long way behind the target which the Chancellor has set himself. One must ask, of course, whether there are any reasonable explanations, because we would all agree that a Government is not completely in control of all the circumstances, and that external economic factors can make things more difficult or more easy.
I think we all recognise the importance of the terms of trade, but nobody could possibly say that they have not been extremely favourable in these last three years. Even in 1954, we were still able

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to buy the same as in 1951 for £500 million less, and we know, of course, that this fall in the price of imports is the sole explanation of the improvement in the balance of payments since 1951. It is not the volume of imports or exports, or the prices of exports, which have materially changed; the whole change has been in the cheaper prices at which we have been able to buy our imports in the world markets.
I have not included in these figures defence aid. I have never taken the view that aid of any kind should be included in showing a true balance of payments figure. But what is included, and must be included, in these figures is something which, at any rate, closely approximates to aid. It is the United States offshore purchases and United States and Canadian expenditure in dollars in this country.
I do not know whether the Committee realises that the amount of offshore expenditure and other expenditure here by Americans and Canadians rose last year to the high level of £100 million. The significance there, of course, is that it is something on which we cannot and should not continue to rely. The real trouble in this field is undoubtedly the failure of our export trade to expand. In the last three years we have had an increase in volume of 3 per cent., an average rise of 1 per cent. a year.
The Chancellor may claim that things have been difficult, but it is hard to understand how that can be so when one looks at the record of other European countries in this field. I quote here these very remarkable figures from the "Survey of Europe," published by the Economic Commission for Europe. Between 1950 and 1954, exports from Italy rose by 16 per cent., from France by 20 per cent., from Belgium by 45 per cent., from Holland by 56 per cent. and from West Germany by 109 per cent. as against a rise in British exports of 4 per cent.
I cannot feel that any of us could possibly be satisfied with that comparison. The fact is that in the last three years virtually no part of our expanding production has gone to exports whereas, under the Labour Government, the large part of our much more expanding production did go to exports. Whatever hon. Members or others outside this Committee may say about the Labour Govern-
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ment, there is one thing which they cannot deny, and that is that under that Government there was a spectacular increase in British exports.
I will not make any claims about the immediate post-war years when, of course, one would expect a rapid expansion, but, if we take the years 1948 to 1951, we find that the rise was 30 per cent., 10 per cent. a year and ten times as fast as it has been in these last three years. I must say that the expansion of exports under the Labour Government was part of our deliberate policy, and I say that very deliberately now because of the claims which the Chancellor has made for rising consumption under his Administration.
Of course, we can see that consumption has risen faster in the last three years. But why was that? It was because the under the Labour Government we had to pursue a policy of austerity in order to build up our export trade. We had to pursue a policy of austerity and restraint so that we could devote enough of our resources to repairing the ravages of war. [Interruption.] I wonder whether the noble Lord and other hon. Friends of his have thought where this country would be today and what sort of prospects we should have of a rising standard of living if the Labour Government had not pursued a policy that was unpopular—and which was bitterly attacked by hon. Members opposite—for the sake of the future.
The second question that arises in connection with the rise in consumption is who has got the rise, and that is something to which I shall return a little later. This unsatisfactory record leads us into the far more serious situation which has developed during the past nine months and on which, I thought, the Chancellor spent surprisingly little time. He mentioned, of course, the fact that there was a deficit of £38 million in our balance of payments in the second half of 1954, but the first quarter of this year shows a very much worse situation.
The trade gap in those three months—we have not, of course, got the total payments figures—has averaged £77 million, the shortfall of exports from imports, compared with £55 million in the previous six months when there was already an overall deficit. In March, we had a huge gap of £92 million. Can it be denied that on the basis of these figures, and assuming

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that they continue at anything like this rate, we are heading in 1955 for a deficit in our balance of payments of at least £100 million or £150 million?
Why has this happened? The Chancellor, quite rightly and fairly, pointed to the change in the terms of trade. I am not going to blame the Government for that, because I always have said that there are a lot of things which we cannot control. We may, perhaps, criticise the Government for abandoning what we believe to be the advantages of bulk purchase, but let that rest on one side.
What really is shown by this change is how extraordinarily misleading the Government's whole propaganda has been. It shows that this quite small change in the terms of trade against us—only about one-third of the way back to the difficult position which we faced in 1951—has produced a critical situation. The second reason for the change is the rise in the volume of imports, not so much in 1954, when, in fact, the volume of materials and food imported was actually lower, but in the last three months where there have been substantial increases, particularly from the dollar area.
In the five months, October to February, there was, I think, a rise of about 30 per cent. in the rate of our dollar imports. Why was this? I suggest that there are two reasons for it. First of all, an expanding production undoubtedly requires a higher volume of imports. That is why it is impossible to conceive of our being in a satisfactory position for long if we are importing less raw materials than before.
But there is another reason. I do not think that it can be denied that there are more dollar imports coming in because the Government have lifted a lot of controls as a result of which people are free to bring in things which they were not free to bring in before. The result has been exactly what one would expect, that we are running into a balance of trade deficit. I have details of the kind of increases that have taken place, but I will not weary the Committee with them. They are, of course, available in the official returns.
There is a third reason for the worsening situation, and that is the decline in our invisible exports for 1954. The most significant figure here is the increase in
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the payments by this country of interest, profits and dividends. The following figures are quoted from the Economic Survey. In 1951, we had to spend in this way £178 million. In 1952, the figure had risen to £208 million, in 1953 to £226 million, and in 1954, to £258 million. These figures show that in two years an additional burden of £50 million was imposed upon us.
Why has the burden been imposed upon us? There are obviously two reasons. First, there is the rise in interest rates, which affects the Treasury and also affects the balance of payments position, because we must remember that we are not in the situation in which we were before 1914, when we had substantial short-term net assets; we have a substantial short-term net liability, in the form of sterling balances, to the tune of £4,000 million, and when the interest rate goes up we have to pay out more on that account. Secondly, there is the rate of dividends paid last year.
The sterling area position, to which the Chancellor also referred, is, in my opinion, even worse than that of the United Kingdom. Over the year 1944 we were barely in balance; there was a small surplus of £7 million. There was a deficit of £164 million in the second half of the year, compared with a surplus of £171 million in the first half. It is true that over the year as a whole the gold reserves rose by £87 million, but they fell by £92 million in the second half of the year, and have fallen subsequently by a further £33 million.
The Chancellor made play, yesterday, with the fact that we had repaid the E.P.U. and the I.M.F., between them, £75 million. That is perfectly true, but what the Chancellor did not mention was that during that year we borrowed, on dollar account, £115 million. Those are the figures given in the Economic Survey. Nor, when describing the sterling area position, did the Chancellor mention that we achieved that increase in the gold reserve partly by borrowing, partly through defence aid—amounting to £50 million—and partly with the help of offshore purchases of £100 million, to which I have already referred.
That would not matter very much if our gold reserve were really substantial These are not enormous figures; I do not claim that for a moment. A decline of

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£130 million is not enormous in itself, but, unfortunately, the reserves are far from large. They stand today at 2,667 million dollars—just 300 million dollars more than in December, 1951, 600 million dollars less than in October, 1951—when the Government came into office—and 1,200 million dollars less than the peak figure reached, in June, 1951. I am not seeking to score a point; I want the Committee to realise just how serious is the gold and dollar situation.
One might say, "Has it not been very difficult, in these last three years, to accumulate gold and dollars?" The rest of Europe has not found it so. During those three years, since December, 1951, while we have increased our reserves by 330 million dollars, the rest of Europe has increased its reserves by 4 billion dollars. It has not been a question of America mopping up the gold of the rest of the world; she has been losing gold all this time—but it has not been coming here.
What was the Chancellor doing during this period of deepening deterioration in the second half of 1954? What were his colleagues doing? We know what one of them, at any rate, was doing. The noble Lord the Chancellor of the Duchy of Lancaster was busy planning his posters. He was thinking out some nice slogans that would suit the country. We all know them, and I need not repeat them. I do not know whether the right hon. Gentleman will have them changed before the General Election. If so, he had better hurry up.
The Chancellor himself was not really doing very well just at that time. He was removing restrictions upon hire purchase in August to make it easier for people to have a good time in view of the coming General Election, and he was conniving at the biggest inflation of Stock Exchange prices that has occurred in the last quarter of a century. It is even more extraordinary that at this very moment, when things were turning against us, the Bank of England was making substantial advances towards convertibility.
Because of the time available I do not propose to go into that question. I simply record my view that in the action taken by the Treasury and the Bank of England in this matter, in the last year—in the reckless decontrol of foreign exchange which has occurred—we have been weakening our defences at the very
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moment when a storm was blowing up, and weakening those defences in such a way as to handicap our own exporters and threaten the stability of the present sterling area.
The Chancellor was also saying things. For instance, he was speaking in Blackpool in October, at a Conservative Party conference—and we are told that he had a great personal success there. He was speaking, as we recall, about investing in success and doubling our standard of living in 25 years. Before this, he had said one other thing:
"Our future policy will emerge like a cat from the bag, in due course, when the time has come for it."
The period of gestation, if that is the right word—ended last February, and the cat came out of the bag. But it was not a gentle pussy at all. It was a nasty, fierce, mangy, hungry cat, called "Bank Rate at 4½ per cent."
Let us look briefly at the prospect ahead. I do not think the Chancellor will deny that, taking the first three months' figures, it is a rather gloomy one. He may hope that the terms of trade will move in our favour—and I make no prophecies about that. It is possible. Indeed, basic raw material prices have fallen slightly in the last few weeks. On the other hand, if the American recovery proceeds we should expect the upward movement to continue.
Then there is the question of invisibles. There is one extra cost which we have to meet. I am not contesting the necessity of it, but we know that from the beginning of 1956 we have to meet what has been estimated to be at least £70 or £80 million a year for the cost of our troops in Germany. The crux of the matter is exports—and the Chancellor, yesterday, gave us very little ground for optimism about those. He made no reference to the question of Australian import cuts.
Mr. R. A. Butler Mr. R. A. Butler indicated dissent.
Mr. Gaitskell: I am sorry. I beg the right hon. Gentleman's pardon. They have to be brought into the picture, and they are not exactly encouraging. I concede to the Chancellor his dilemma. As production expands we need to import more raw materials, and the whole question is whether, in the free economy in which he believes, we are going to be able

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to increase our exports sufficiently to pay for those additional imports. It may be that we can, but there is certainly no certainty about it. I would go so far as to say that in the free economy in which the right hon. Gentleman believes there is a very natural tendency for consumption to increase at the cost of investment and exports, as production rises.
Let us suppose that the Chancellor does not get his increase in exports, or does not get any of the advantages of further favourable terms of trade. What will his policy be then? We know what his policy is. It is under no circumstances to reimpose import controls, but to rely entirely upon what he calls a flexible monetary policy, and what other people call a fierce tug on the reins from time to time. But what does this mean? When one thinks it out, it means that if we get into the position where production is expanding, and we are not exporting enough, the Chancellor, by his Bank Rate policy, deliberately slows down that expansion.
The whole purpose of raising the interest rates is to discourage borrowing—but to discourage borrowing is to discourage firms from placing orders, and the effect of their not placing orders is to damp down production. The sole object of this policy is, ultimately, to reduce imports and perhaps make room for exports. That is a very serious situation. If it develops—as I, personally, think it will quite soon—we shall be faced not only with the danger of a fall in production, but with the danger of unemployment.
There is something else. Suppose that, in these circumstances, productivity continues to increase, as we want it to because our future depends upon it. Suppose that the Chancellor, because of the balance of payments situation, cannot allow any increase in the imports of raw materials. What is the conclusion one must draw? It is that we shall get technological unemployment. That is a very grave danger, because if it developed it would wholly undermine the work of the Productivity Council—excellent work—and the faith that is being built up that people need not worry about unemployment resulting from higher productivity. That is, I am afraid, the logic of the Bank Rate policy.
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There are other disadvantages. There is the increase in the interest charge on the Budget, which goes up by £30 million next year. I note, in passing, that whereas the interest charge on the National Debt was £515 million in 1951–52 when we left office, next year it will be £600 million, an increase of £85 million. I will not hesitate to mention what we all know is the very unsatisfactory consequence for local authorities, and I have already mentioned another very awkward circumstance, the increased burden on our own balance of payments, because we have to pay higher interest abroad.
All this places the Chancellor in a very difficult position. He may hope that good fortune will once again come to his assistance. He may hope that the terms of trade will move in our favour. He may believe that by a slight and temporary reduction in stocks he can scrape through. But it is a hope. The situation is dangerous. The Bank Rate may be sufficiently high at the moment to attract funds from overseas and hold the exchange position. I do not doubt that it is doing that, but it will not continue to do that if those who own this money and these funds believe that there are risks about the fundamental situation, and if they are pessimistic about our balance of payments. If that happens, then the new moves to convertibility will make for a far greater rush on the £ than we have ever had before.
The Chancellor is in a dilemma. If he turns the credit screw hard enough to slow down the demand for imports, he damps down production and creates unemployment. If he keeps full employment he risks a balance of payments crisis. If he imposes direct control on the less essential imports he eats a whole mouthful of words. So, in this situation, he asks his right hon. Friend the Prime Minister to have an early General Election.
What else does he do? He comes to the Committee and tells us that he has decided to give away £140 million in tax reliefs. It is very difficult for outsiders who have no access to the detailed estimates of the Treasury to pass a fair judgment on whether or not this or that surplus or deficit is exactly right in any one year. The Chancellor has given us very little help in arriving at any judgment ourselves. He seems every year to give us less and less information in his Budget statement.

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He spoke yesterday of the economists' argument being clear, but it seems to me that it was only clear to him because no figures were involved. It is impossible from what he told us to know why he settled on this particular amount or on any give-away at this stage. He did not explain why he had assumed that demand would be slacker and production greater, and there is precious little evidence that these statements are right. He has not told us what kind of export surplus he has in mind.
Is the right hon Gentleman really saying that the state of the country is less inflationary today than it was a year ago when he decided on a "No change" Budget? Above all, how exactly does he reconcile his decision to give away £140 million with his statement in February which preceded the announcement of the rise in the Bank Rate? I can only say that I have my doubts, and I hope that the right hon. Gentleman will forgive my saying that the suspicion crossed my mind that he had lemembered that there would shortly be a General Election. If he wishes to dispel that impression he will be able to do so when he speaks later in the debate.
Suppose that the Chancellor is right. The further question arises how exactly money of this kind and degree, £140 million, is to be used. How should the benefits be distributed? Perhaps, for the moment, we can all agree that the aims must be higher production and fair distribution. We can certainly all agree about the first, but I am not so sure about the second. I propose to examine in the light of those two tests the measures which the Chancellor announced. First, therefore, a word or two about the reduction of Purchase Tax.
I make only one comment. After all the pressure from the cotton industry—natural pressure, because the industry is very anxious about the situation in Lancashire—this concession seems miserably inadequate to meet the situation. I understand that the President of the Board of Trade will be speaking tomorrow and will announce the Government's policy for the cotton industry, and that my right hon. Friend the Member for Huyton (Mr. H. Wilson) will develop our views on this matter further, after the President of the Board of Trade has spoken.
The rest of the concessions are all in the field of Income Tax. We have no
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objection to, indeed we welcome strongly, the increases in the allowances for single persons, married persons and children, and the otner minor changes which the Chancellor has made. I only wish he had been able to adopt some of the more modest and not expensive proposals which the Royal Commission suggested in its second Report. If we are in order, we shall certainly seek to obtain further concessions in that direction during the passage of the Finance Bill.
There are less favourable things to be said about the change in the standard rate of Income Tax. I thought it rather a mean gesture to confine the reduction in the lower rate of tax to 3d. instead of 6d. The concessions are, of course, set out in the tables in the Financial Statement, and they are clear, but I must make three points about them. There is not the slightest doubt that companies are once again the favourite children of the Chancellor. On his own admission, they receive £40 million—I am told that the actual figure is £45 million—out of the £100 million which these changes in the standard rate and the other rates will cost, if we exclude the allowances.
I believe that this sum of between £40 million and £45 million will go to just over 200,000 companies, of which £21 million, or about half of it, goes to only 300 companies, each of them making £1 million a year profit or more. I am indebted for this information to my hon. Friend the Member for Sowerby (Mr. Houghton). Perhaps the Financial Secretary will correct me if I am wrong, but I understand that this figure of £40 million or £45 million does not include the tax concessions on distributed profits, on dividends, and on interest. Indeed, according to my calculations, that will involve another £20 million, so that between £60 million and £65 million—nearly two-thirds of the total—will go to companies and property owners.
The right hon. Gentleman may claim that all this will help investment. He claimed that in 1953. There never has been any evidence whatever that it did anything of the kind. I have already mentioned the very poor showing of the private sector in investment. We were prepared to endorse and support what the Chancellor did last year in investment allowances to the companies—that was specifically directed to stimulating invest-

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ment—but merely giving away money to companies in this way brings no security whatever that it will be invested.
The second comment that I would make on these proposals is, of course, that if one looks at the tables it will be seen at a glance that the man who gets his income from investment does better than the man who gets his income from the sweat of his brow. That is true all the way along the line, whether one takes the very low incomes or the very high incomes. Take, for instance, a married man with two children and an income of £600 a year. If his income is all earned he gains £7 16s. 8d. in the year. If his income is all from investment his gain is £12 a year. It is the same throughout, and I shall not weary the Committee with the figures; hon. Members can read them for themselves.
The third comment I have to make is that the larger the income the greater—far greater—the benefits obtained. Once again, the tables show this perfectly clearly. The married man with two children earning £600 a year—and I take only earned income now—benefits by £7 16s. 8d. a year, roughly 3s. a week. The man with £1,000 a year benefits by just over £16—an increase of about 6s. a week. The man with £1,500 a year benefits by £28 a year—10s. a week or just over. If one takes a man with £5,000 a year the benefit is £112 a year. That is well over £2 a week. A man with £10,000 a year receives a benefit of £237—a clear gain of nearly £5 a week.
I know that hon. Gentleman opposite think that that is perfectly natural. They say, "After all, you are reducing taxation. The rich pay more in taxes; they should get greater benefits." This is the difference between them and us. The whole assumption on which a Budget of this kind is produced is to get back to the palmy days when the rich were taxed much less heavily, whereas we in that situation would ask ourselves, "If we have money to give away where can we best relieve hardship?"
This matter cannot be judged, however, without taking into account the background of the last few years. It must be looked at in the light of the changes in the way in which wealth and income have been shared out over the last three years. We have heard a good
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deal about higher consumption. Where has it gone? We know where the big increases have gone so far as commodities are concerned. The figures are in the Economic Survey. By far the largest increase this year has again been in motor cars; an increase of 19 per cent. It was 27 per cent. last year. The second big increase is in household goods; 10 per cent. as compared with the average of 4 per cent.
But, if I may say so, last year's figures of the incomes of different sections of the community tell the story even more clearly. It was a period of rising prices. I think I am right in saying that there was a rise in the cost of living of 4 or 5 per cent. during the year.
Mr. Charles Ian Orr-Ewing: No. Less than 3 per cent.
Mr. Gaitskell: If the hon. Member wishes me to be quite correct—4½ per cent., and, if he wants it, an increase of 8 per cent. in food prices.
Those who depend on social service benefits, about which the Chancellor spoke yesterday, in 1954 received no improvement, except for a few people on National Assistance. They were worse off during this year. Wage rates went up 4 per cent., and the Survey says that earnings went up 7½ per cent. But dividends went up 20 per cent. If the Chancellor of the Exchequer is inclined to deny that—and yesterday he gave a very queer figure of 4 per cent. increase in dividends—I would draw his attention to the Stock Exchange's own booklet on this subject. The Stock Exchange is not likely to make a mistake this way, at any rate. Its figures show an increase of just over 20 per cent in dividends in 1954.
Incidentally, so do some other figures in the Survey. The Chancellor referred to one table and I will draw his attention to another. If he will turn to page 33 of the Survey, he will see that the increase in dividend payments, which is defined in a footnote as:
"Ordinary and preference dividends before deduction of tax."
was not £60 million, but £80 million. He says, of course, "Oh, but it is so little compared with the increase in wages." It is extraordinary to me that the Chancellor of the Exchequer can come here and make such a statement

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without regard to the numbers of persons who enjoy those increases.
I turn to another matter, which was of some importance last year and still is, and that is the rise in share prices. I know that there has been a slight decline since the February Bank Rate increase, but the level of shares today still stands above the level it had reached by the end of last year. The index is 188, compared with 131 at the beginning of January, 1954. It is still true that anyone who had £10,000 invested in a miscellaneous collection of shares at the beginning of 1954 would be able to realise them for £14,000 today. That is a clear profit of £4,000—untaxed—with which he could do as he liked, with which he could raise his standard of living—and he does raise his standard of living to quite a large extent.
We all know why this has happened. We give the Chancellor the full credit for the Stock Exchange boom. We invite him to receive the plaudits of his friends in the City. First, there are the dividend increases, and against them only that small, timid voice saying from time to time, "Of course, we do not quite like this"—and that is as far as it goes. Then there is credit creation—loans from the banks to stockbrokers. They rose last year by nearly 50 per cent. I do not know whether the Chancellor has any control over the banks these days. One would have thought that, had he wished, he could have stopped that.
Finally, and most important of all, it is his own fiscal policy that is responsible. Look at what he has done for the companies in the past two years, from 1952 to 1954. I quote from the same table in the Economic Survey. Gross trading profits rose from £2,252 million in 1952 to £2,633 million in 1954—an increase of £381 million. And in those same two years the tax paid by companies, both Profits Tax and Income Tax, declined from £895 million to £759 million, a decline of £136 million.
No wonder that even after a rise of 28 per cent. in dividends in two years, the undistributed profits are up by £400 million. No wonder that every week that passes sees a new bonus issue. I know very well that this is really lifting the nominal value of the shares to their real value and that it makes no real difference, but—it is a curious thing—I have never
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met anyone who did not feel very pleased if he happened to be a participant in a bonus issue. The real fact is that such issues almost always do yield a further increase in the actual amount of dividends paid. And now the Chancellor has handed another present to the same people who have already been doing better than anyone else in the past year.
I do not know whether the Chancellor of the Exchequer has seen the comment of the "Manchester Guardian" today on his Budget. This is what the city editor says:
"The Chancellor's optimism took the City by surprise."—
They do not know him as a politician—
"The general reaction was that it should help to support Stock Exchange prices … because the reduction in the standard rate of income tax may lead to bigger dividends … The proportion of profit paid in tax by industrial concerns should fall, so that more should be available for shareholders and other purposes."
That is fair comment. I think that they are right. I have no doubt that the Stock Exchange boom will continue now. Whether that is a wise thing is another matter. I have no doubt myself that it is not a just thing.
We have to consider this in the light of other claims. All of them have been rejected. The Chancellor referred to the deputations that came to him. He has ignored them. There is nothing off tobacco, nothing off beer, nothing but this trivial change in Purchase Tax, nothing off the petrol tax—nothing to relieve the people who travel by bus and who have to pay higher fares because of the tax on diesel oil. It would have been very easy to make a concession of that kind. We would not have opposed it.
Mr. R. A. Butler: May I ask the right hon. Gentleman whether he would have regarded such concessions as pre-Election bribes?
Mr. Gaitskell: The bribe consists of the Chancellor's decision to give away £140 million. He has decided to give that away; while what we are doing is to make a few suggestions that it might have been better distributed.
The Chancellor has done nothing whatever for the low paid wage earner who has to pay these indirect taxes. He has done nothing whatever to relieve those

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who suffer hardship from high food prices. He has done nothing whatever to relieve the suffering caused by the rising cost of living. He has done nothing whatever to assist those—the poorest of all—who rely on National Assistance.
When, last December, the Government were asked to increase the paltry 2s. 6d. and 4s. which they conceded to National Assistance people, they refused. That does not prevent them from coming along now and giving £40 million or £50 million away to the companies. But there is something even worse than this. The Chancellor boasted about the rise in pensions and other benefits, but he said nothing yesterday about where the money to pay for this was coming from. I will remind him where it is coming from.
In June, every wage earner, every worker in this country, will have to pay out of his wage packet another 1s. a week. He suffers a wage cut of 1s. a week. Every employer will have to pay another 1s. a week on his employees, and that 1s. a week will be passed on in higher prices. The community as a whole will have to meet that. When we are considering what should be done with £140 million, is it not right and proper that we should take into account the additional burdens which are being imposed on the rest of the population?
This decision, which was opposed by us last December, alone made possible the Chancellor's gift to his favourite children. Indeed, I said at the time that the Government were doing this in glaring contrast to the normal proportion of the Treasury contribution. I said that the Chancellor was doing this in order to prepare his way for an electioneering budget. The only thing that he forgot was that we might remind people of the 1s. a week increase—and we shall. There could not be a more glaring example of the Tory redistribution of wealth. The £10 a week family man gets nothing out of this, and he pays 1s. a week more. The £10,000 a year man gets £5 a week more. That is the contrast.
There is no doubt that this will be the last major debate on economic affairs in this Parliament, and it is time to pronounce judgment upon the Government's record. In doing so, we must take into account what sort of external conditions
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they enjoyed—for no Government is responsible itself for these—and we must make allowances if necessary.
But the conditions which this Government have enjoyed in the last three years have been exceptionally favourable—the easy terms of trade, the mildness of the American recession, the stream of extraordinary dollar expenditure poured out by the United States Government have all been a great help. When the Government came into power, the worst strain of the post-war period was over. The heroic effort and austerity which all the country had to endure, the build-up of exports, the rebuilding of industrial equipment, was all finished. The natural forces of recovery which follow after any war were already fully in action. Now was the opportunity to construct on a sound basis an even more flourishing export trade, an adequate surplus for investment abroad, reasonable gold reserves, and, above all, a high level of home investment. It cannot be denied that this opportunity has been missed.
Judged by the hard facts and figures, the Government have failed. Fundamentally, they have failed because they have not tried—because they have pushed too far their preference for economic anarchy, their dislike of positive action by the community, their belief that, somehow or other, everything will come right in the end. They have failed, in fact, because of their Tory philosophy.
They have failed in another and deeper sense as well. The war brought to all of us a greater sense of social unity and cohesion, a determination to do away with out-of-date injustices and inequalities. The Labour Government reflected that feeling in their legislation. Bold strides forward were made towards a classless society. In these last three years the whole process has been reversed. It is unquestionably the well-to-do who have done best and the poor people who have done worst under this Government. If there were any remaining doubts about this, they have certainly been dispelled by yesterday's Budget.
We accept the challenge of the forthcoming Election—eagerly, gladly. We accept it because it gives us a chance to turn out a reactionary Government and to enable us to proceed with the great task of realising for our country the ideals in which we believe.
4.39 p.m.
The Financial Secretary to the Treasury (Mr. Henry Brooke): I feel some diffidence in following so able a debater as the right hon. Member for Leeds, South (Mr. Gaitskell), who has himself held the distinguished office of Chancellor of the Exchequer, and the clarity of whose own Budget speech four years ago I remember with gratitude.
The right hon. Gentleman has the further distinction of living in my constituency. We are all picking up our electioneering handbooks, and we are reminded that it is unwise to pick quarrels with our constituents, especially in the weeks preceding a General Election. I am inclined, however, to think that the right hon. Gentleman must be written off as a dead loss. I have no desire to pick any personal quarrel with him, and I know that my right hon. Friend the Chancellor of the Exchequer will himself wish to answer a number of the questions which the right hon. Gentleman raised in the debate.
If the right hon. Gentleman can quote the "Manchester Guardian," however, so can I, and I invite the attention of the Committee to today's leading article. This is what the "Manchester Guardian" says:
"Mr. Gaitskell will have to do his best to pick holes in the Chancellor's reasoning, but it is really no use just juggling with figures. People are not going to be much impressed by mere words. They will want to know what Labour would do to make things even better. Mr. Butler has set the tone and it will be hard to match."
I now want to apply another test, the historical one, because the right hon. Gentleman has exercised his judgment; he has sought to peer into the future, and we must test his words today by the judgment of history upon his words of a year and two years ago. Two years ago, in this corresponding debate, he said that my right hon. Friend was having to struggle with
"a stagnant economy with production flagging which had to be given a shot in the arm."—[OFFICIAL REPORT, 15th April, 1953; Vol. 514, c. 225.]
Some shot, because in these past two years—in fact, practically continuously since the time when this Government were able to check the disastrous fall in the reserves—there has been a continuing rise in this country towards, at the present time, the highest prosperity which it has ever known.
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I want to be perfectly fair to the right hon. Gentleman. His argument is that the success of these last few years is due to luck, to external conditions being exceptionally favourable. I am bound to say in passing that if I were choosing a test team I would be inclined to go for the man who did not constantly complain of the good luck of others. The test which we can apply here is that as between these two right hon. Gentlemen, the Chancellor of the Exchequer and the former Chancellor of the Exchequer, my right hon. Friend has an outstanding reputation throughout the world for his conduct of this country's economy.
Hon. Members opposite have recently been quarrelling among themselves. They are not only out of step with one another, but on this issue they are out of step with the whole of the rest of the world, because if they examine any impartial international document they will find that the growing prosperity of the United Kingdom is ascribed in those columns not to luck but to the wisdom of my right hon. Friend the Chancellor of the Exchequer. If I may strike a personal note, I have in these last few months had the privilege of watching his exercise of the tireless care and the cool judgment with which this world-wide reputation has been gained.
The right hon. Member for Leeds, South referred to the Economic Survey, and he thought that that demolished the Chancellor's Budget. He spoke of investment. I too invite him to examine pages 23 and 24 of the Economic Survey. He will see there that whereas in 1953 most of the increase in new building was in housing, in 1954 it was mainly in industrial and commercial building.
What about the right hon. Gentleman's complaint that private investment is not going forward as it should? He made some play with statistics, but evidently he had committed the economist's error of looking only at the figures and not reading the letterpress which followed. If he will examine the latter half of paragraph 40 he will see that after allowing for the decline in Government financed investment in private industry and the fall in investment in the petroleum industry,
"investment in the iron and steel industry was slightly higher than in 1953. In other manufacturing industries expenditure on new factory building rose by about £25 million.… At

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the same time new orders placed for machine tools, and for some other types of manufacturing plant, were higher than in the previous year, while the area of factory space for which Industrial Development Certificates were issued during 1954 was considerably greater than in 1953. There is thus a good deal of evidence to suggest that the demand for investment by private manufacturing industry took a fresh upward turn during the year."
I wonder why the right hon. Gentleman did not quote those words.
Mr. Austen Albu: Has not the hon. Gentleman missed out one sentence? There is a subsidiary sentence after the words referring to new factory building:
"… and there was probably also some increase in deliveries of plant and machinery to those industries during 1954."
That does not seem like much of an increase.
Mr. Brooke: That helps to prove the point that I was making.
Mr. William Hamilton: Is that why the hon. Gentleman missed it out?
Mr. Brooke: I want to make further reference to the speech made by the right hon. Member for Leeds, South a year ago. He spoke last year about the figures of food consumption. He thought things were not going satisfactorily. He said:
"I should like to have the Government's observations on it."—[OFFICIAL REPORT, 7th April, 1954; Vol. 526, c. 375.]
I will give him the Government's observations.
If the right hon. Gentleman will examine the Economic Survey he will see that in 1954, compared with 1951, the consumption of tea per head was up, as was the consumption of fruit, eggs, sugar, fats and meat per head. That sounds like a prosperous economy. That sounds as though the whole of the country was doing better. I would particularly invite the attention of the Committee to the fact that in those three years the consumption of meat rose from 76 lb. per head per annum to 103 lb. per head per annum. It is quite true that the consumption of two foodstuffs was substantially down over that period.
Mr. George Lawson Mr. George Lawson (Motherwell) rose—
Mr. Brooke: Those were potatoes and bread.
Mr. Lawson: What about butter and cheese?
Mr. Brooke: Potatoes and bread are the foods that people eat when they are hungry. Those are the foods with which people had to fill themselves up in the days of Labour Government.
Mr. Lawson: What about butter and cheese?
The Temporary Chairman (Colonel Sir Leonard Ropner): I must ask hon. Members to keep quiet during the Financial Secretary's speech.
Mr. Brooke: Looking at the figures, it does not seem to me that the Government have anything to fear from an early Election. The right hon. Gentleman made the allegation that the Chancellor had asked the Prime Minister to seek a dissolution of Parliament because he apprehended an economic slump. I can see one very sound economic reason for an early Election, and it is that there would be insufficient confidence abroad as long as apprehension persisted that the right hon. Member for Leeds, South might resume control of this country's economic affairs.
I listened to most of the debate yesterday evening in a thin House, and it was only too clear that the Labour Party could not make up its mind whether this was an electioneering Budget or a Budget which benefits only the few.
Mr. Sydney Silverman: Which is it?
Hon. Members: Both.
Mr. Brooke: If hon. Members still say it is both, that proves the utter confusion in which their minds must be.
Mr. Silverman: I appreciate what the hon. Gentleman says—that the Opposition are confused in their minds by being unable to decide whether this is a Budget intended to benefit the supporters of the Government or an electioneering Budget intended to win votes, and that we seem to be still more confused when we appear to say that it is intended to do both. Would the hon. Gentleman mind clearing up the confusion in our minds by telling us which it is—an electioneering Budget or one intended to benefit the Government's friends?
Mr. Brooke: I do not think I could possibly clear up the confusion in the minds of hon. Members opposite, but what I see clearly is that a true electioneering Budget, such as one which the Labour Party might have introduced in similar circumstances, would have given away not half the surplus but all the surplus, hon. Members opposite being well aware that they might not have a chance to introduce another Budget. It would have sought, in particular, to curry popularity by decreasing some of the indirect taxes—the taxes on sports, the taxes on tobacco and the taxes on beer—none of which my right hon. Friend has touched. If it is alleged that this is a Budget which benefits only the few, then I invite hon. Members opposite to explain how they manage to reconcile that allegation with the fact that it frees nearly 2½ million people from paying Income Tax.
I do not want to recapitulate last night's debate, but last night the hon. Member for Acton (Mr. Sparks), who is unable to be here today, made play with the argument that the Government were not sufficiently rapidly increasing their expenditure in various directions. This is, of course, a debate which covers the whole field of expenditure as well as that of revenue. He quoted from Table VII (a) in the Financial Statement, picking out, with I thought superb electioneering skill, the few items which had gone down and failing to mention that the increase shown at the bottom of the table was £30 million. He concealed from the Committee what my right hon. Friend had stressed in his Budget speech—that for war pensions he is finding £8 million more, that for education he is finding £25 million more, and that for the health services he is finding £32 million more; and everybody on these benches is highly proud of those figures.
I want to dwell for a few minutes on the subject of Purchase Tax, and I think it may be a help to both sides of the Committee if I go into my right hon. Friend's proposals in a little detail. I want to declare that I have no doubt at all that the Purchase Tax can have a bearing on the export trade of an industry. That happens because a heavy Purchase Tax may reduce home sales of some products and not provide the industry with a sufficiently secure home market from which it can branch out and capture export 210
markets, and I do not deny for one moment that a 50 per cent. rate of Purchase Tax may have certain effects of that kind.
I also want to explain how my right hon. Friend has reached his decision, which he announced yesterday, about the concession which he is making in favour of Lancashire cotton goods and Northern Ireland linen. In passing, I invite the Committee's attention to a reply which I gave yesterday to a Question by the right hon. Member for Huyton (Mr. H. Wilson), in the course of which I pointed out that this Government had already, before the Budget, reduced the burden of Purchase Tax on textiles by almost half.
It is quite true that there still remains a sum of approximately £42 million which is gathered in from textiles. Of that, some £7 million comes from the cloth, the material, sold as such, whether woollen or non-woollen, and the remainder, about £35 million, comes from clothing. I think that the case which has been urged from some quarters outside the House has been that the whole of the Purchase Tax should be removed from the whole textile field. That would involve a loss of revenue of £42 million, and my right hon. Friend reached the conclusion that that was more than he could afford to give away, in addition, in this Budget.
Moreover, there is a further reason. It is not only by the textile trade that the Purchase Tax is felt, and it would be wholly unfair to relieve all textile goods and clothing from all Purchase Tax while making no change whatever to meet the comparable requests which are heard from other industries. As the right hon. Member for Leeds, South, well knows, it is necessary, in shaping the Purchase Tax, to be sure of avoiding unfairnesses such as that.
That is the difficulty, and I am inviting the Committee to face these problems with me because I am sure that my right hon. Friend's desire is that the action which he has taken may be understood, and I am equally sure that if hon. Members on either side of the Committee have better suggestions to make whereby he could help the textile trade without impossible loss of revenue, he will be glad to consider them.
Mr. J. T. Price: Naturally, as a Lancashire Member, I am following everything which the hon. Member is saying on this subject with great interest. I now invite him to say—if he is at liberty to do so—how he expects the small, infinitesimal concession granted to Lancashire in the Budget to have the effect which it is intended to have when nothing is done about the D line which fixes the point at which the tax becomes operative? How can Lancashire hope to maintain its present position when, from what the hon. Gentleman has said, he apparently thinks that the cotton industry can be considered only on an equal footing with other industries which are prosperous, whereas the Lancashire industry faces a situation causing great distress to the whole economy of the country?
Mr. Brooke: I hope that the hon. Member for Westhoughton (Mr. J. T. Price) will allow me to develop this argument, because I was intending to refer to the D level in due course, and I was not seeking to run away from any of the important points that arise here.
The next step in my argument is this. If it is not possible to remove the tax entirely, for the reasons I have given, could the Chancellor remove the tax wholly from the materials—the piece goods—while leaving it on the clothing? Obviously, that would have cost double the £3 million which my right hon. Friend has given away. It is £3 million a year—£2½ million in the current year and £3 million in a full year. The tax gathered in from the cloth is £6 million a year on the non-woollen cloths and £1 million on woollen cloth, adding up to the £7 million that I mentioned earlier.
I think that, here again, the right hon. Member for Leeds, South will realise the difficulties into which we might be led if we were to exempt the cloth entirely from tax, while retaining the present rate of 25 per cent. tax on clothing. Clearly, it would be liable to lead to a warping of the ordinary channels of trade if people could buy the cloth free of tax, arrange for it to be made up, and thereby get a finished article which had not paid any tax at all, and then seek to sell it in competition with articles made up under the present industrial and commercial arrangements, which would have borne a 25 per cent. tax.
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Frankly, the more one examines such a suggestion, the more unsound does it appear to be to relieve material entirely from the tax and let it be sold in that tax-free state, while still seeking to collect 25 per cent. from the manufacturers and others who are making it up under present arrangements. I must warn the Committee that if we did that there would be an outcry about the anomalies that would be created.
I come now to the D level which the hon. Member for Westhoughton mentioned. I have taken into consideration, and so has the Chancellor, the argument which one hears from Lancashire that the D scheme, though it was liked, and indeed was pressed upon the Government originally three years ago, is now a failure on the ground that no one will buy goods which have borne tax.
Everybody, so the argument runs, will look out for the cheaper goods which are below the D level and escape the tax; and the manufacturer, therefore, so the argument runs, cannot find a market for the better quality goods. I entirely appreciate that it is the better quality goods with which we are more likely to be able to expand our export trade, and what we have to examine, if we are realists, is whether this argument holds water.
If one goes round the shops, I promise hon. Members opposite that they will discover—and they may have an easier way of learning it simply by consulting their wives—that the buying public on the whole is quite oblivious of the D level. If there is this rigid buying resistance to any goods which bear tax as being above the D level, how is it possible to account for the very large proportion of many kinds of goods in the shops which have clearly borne tax? I know that the D levels are complicated. They are not easy to understand, and it is certainly not easy to carry the figures in one's head, but I will offer to hon. Members the kind of experiment that any hon. Member could try.
He can go round the shops and see whether he finds on offer women's stockings costing more than 4s. 11d. per pair, because if he does these stocking are likely to be bearing Purchase Tax. He can, if he is a brave man, seek to buy a lady's petticoat; I believe they are called slips nowadays. He will find that these are on sale at varied prices, certainly, in many cases, above 12s., and

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any lady's petticoat or slip which is selling retail at above about 12s. is likely to bear Purchase Tax. He can, if he is an even braver man, go into a shop to buy ladies' slumberwear.
The Prime Minister (Sir Anthony Eden): Slumberwear?
Mr. Brooke: I gather that my right hon. Friend the Prime Minister repeated that word questioningly. Slumberwear is the modern equivalent of nightdress. A lady's nightdress—which I understand the Prime Minister thinks is a much better word—which sells in the shops at a guinea or more is likely to have borne Purchase Tax.
I could continue the list—[HON. MEMBERS: "Go on."] I thought I might come here to the successful part of my speech. If hon. Members will try this experiment in the shops, they will find for themselves that it is just untrue to say that there is no sale for those goods which are above the D level and, therefore, bear tax. That is the answer to a great many of the fears of Lancashire that the D scheme kills trade above the D level.
Mr. J. T. Price: I am extremely grateful to the hon. Gentleman but, as he has mentioned the question of slips, I hope he will permit me to point out that his own slip is showing. He has made a very serious slip in the way in which he has put the argument. The slip here is that he has missed the whole point of the argument about the D levels. We in Lancashire say—and the whole trade knows it, because it is one of the elementary axioms of the trade—that the existence of the D level in its present form, with high tax above the D level and no tax below, is encouraging and causing manufacturers to depreciate the quality of goods in order to get those goods below the taxation limit, and that is having a very serious effect on the export trade and our ability to compete in export markets.
Mr. Brooke: I know that that is what is being said by many people in Lancashire.
Mr. Price: They know better than the hon. Gentleman.
Mr. Brooke: I was just asking the Committee to consider how true it could be, bearing in mind the fact that the shops are full of goods that are unquestionably above the D level.
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These matters will undoubtedly be further debated on the Purchase Tax Order, if the Opposition decides to pray against it, but I thought I might be able to give some help to both sides of the Committee by showing how my right hon. Friend had reached this decision, and by putting before the Committee some of the difficulties which would arise if any other course were taken. I say in all seriousness that if the hon. Member for West-houghton, or any other hon. Member, can devise a better way of remoulding Purchase Tax on textiles so that the Chancellor will not have to give away about £40 million of revenue and yet be able to give Lancashire and Ulster greater help than by this proposal, I am sure that my right hon. Friend will be glad to consider it.
I turn to direct taxation. In the special circumstances of this year the Chancellor has not been able to deal as fully as I know he would have desired with several of the important Reports which have been presented to Parliament in recent months. I am not sure whether the name Millard Tucker has yet been mentioned in these debates. If not, I want to mention it now and to assure the Committee that my right hon. Friend has not forgotten, but has carefully studied, the last Millard Tucker Report. The fact that he does not feel able, in the short time between now and the Dissolution, to invite the House to take any action on that Report, by no means indicates that he has closed his mind permanently to the following up of some of the suggestions there made.My right hon. Friend also paid his tribute yesterday to the Royal Commission on the Taxation of Profits and Income, and particularly to its Chairman, Lord Radcliffe, who, incidentally, is a constituent of mine, as I believe is the right hon. Member for Battersea, North (Mr. Jay). The Hampstead team on Income Tax might be able to take on almost the whole country.
Mr. S. Silverman: Did Mr. S. Silverman: Did the hon. Gentleman say, "Take in the whole country"?
Mr. Brooke: I never take in anybody.
The Royal Commission made a number of most valuable observations and suggestions. The Second Reading of the Finance Bill may be a more appropriate

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moment to go into them in detail. The three main conclusions of the Royal Commission were: first, that the starting point of liability to Income Tax is too low; second, that the present structure and graduation of the tax is hard on the family man—the parent of children—particularly in the middle and upper ranges of income; third, that there is too big a jump in the graduation of the tax at or about the £2,000 a year figure, when Surtax begins and almost at the same point earned income reliefs end.
It is quite true that my right hon. Friend has not followed precisely the recommendations of the Royal Commission for dealing with those three defects, but he has had to study the complications of P.A.Y.E. and to seek to frame proposals which would not cause the immense additional complications that some of the recommendations of the Royal Commission would cause. The scheme which he has outlined to the Committee will in large measure meet the first two criticisms of the Royal Commission.
I should like to give a few figures to illustrate what the Chancellor has achieved in these directions in the four Budgets he has introduced, which—despite the forecasts of the right hon. Member for Leeds, South—I believe will be the first four of a much longer series. In 1951–52, the last year in which the Labour Government were responsible for the Budget, a single person earning £300 a year paid £29 10s. in tax. By the four Conservative Budgets that amount is now halved—reduced to £14 13s. 4d. A childless married couple earning £400 a year, paid £29 10s. Income Tax a year under the arrangements of the Labour Government. Under the action of the Conservative Government that tax is now reduced to £9 7s. 6d. If we take the case of a married couple with two children, bearing in mind that it was the families with children which the Royal Commission said deserve particular attention, we find that such a family with £575 income a year in 1951–52 paid £29 10s. tax. Under the proposals of my right hon. Friend, that family will be exempted from tax altogether.
If we take the case of an elderly married couple living on an investment income of £600 a year, we find that under
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the régime of the Labour Government that couple paid £114 a year tax—a great deal for an elderly couple. Under the proposals of my right hon. Friend, and as a result of four years of Conservatism, that amount is reduced to £48 per annum, a relief of £66 a year, or 25s. a week. That is the sort of household where relief will be particularly valued.
Mr. Arthur Lewis: What about the £10,000 a year man?
Mr. Brooke: I want now to show what the Conservative Government have done in the way of relieving people of tax altogether. We all bear in mind the claims of the Labour Party that it is the only party which cares for the people who have to make do on small incomes. In 1951–52, a single person started paying tax on an income of £137 10s. I am speaking in terms of earned income all the time. As a result of the four Budgets introduced by my right hon. Friend, that figure has gone up to £180. In the case of the married couple without children, the figure at which no tax is paid has gone up from £238 under Labour to £309 under the Conservatives. In the case of the married couple with two children, the tax-free figure has gone up from £413 to £566. I beg the pardon of the Committee, but a moment or two ago I said that a couple with £575 a year would now pay no tax at all. It is true that they will pay a microscopic amount of tax.
Finally, the married couple with four children—this is where family and household responsibilities fall most heavily, as I know, because I have four children—under the Labour Government would start paying tax at £588. Under the proposals of my right hon. Friend they will pay no tax until their income reaches £823.
Mr. Douglas Jay: Will the hon. Gentleman tell us how much relief has been given over these four years to the single man with an income of £10,000 a year?
Mr. Brooke: I cannot answer that question on the spur of the moment but it is true that reliefs have, on the whole, been given in proportion to the tax that is paid, with a considerable bias in favour of those who have the smallest incomes, as I am about to show.

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I want now to give some figures which apply a different test. I have been trying to see how I can best present to the Committee the full effect of these changes over the four years. The allegation is made—I could see it peeping out from the apparently harmless question which the right hon. Gentleman has just asked me—that my right hon. Friend has introduced a series of class Budgets. Let me say at once that this allegation is not believed by anybody outside this House. I have analysed the figures in the following way: I want to ask the Committee to consider what certain classes of people would now be paying in additional taxation if the rates in force in the last Budget of the Labour Government were still operating. These figures are interesting.
First, we will take the Surtax payers, those people whose incomes exceed £2,000 a year. The entire class of those people would, if the rates of the Labour Government were still in force, be paying 12½ per cent. more in Income Tax and Surtax. We will take another band, those whose incomes are between £1,000 and £2,000. Those people, if the rates of the Labour Government were still in force, would be paying 37 per cent. more.
Now let us take the largest band, where we find most of the taxpayers, those with incomes between £500 and £1,000 a year. Those people, at the rates of the Labour Government, would be paying 75 per cent. more tax than they are now. And now we will examine the other great band in which there are many taxpayers, those with between £250 and £500 a year—
Mr. Lewis: Compare it with 1914.
Mr. Brooke: At the rates of the Labour Government they would be paying almost 100 per cent. more tax than they are today. Finally we will take those whose needs are greatest, those whose incomes are below £250 a year, those to whom one would think the Labour Party, according to the claims it makes, would be more careful to temper the wind. Those people, at the rates imposed by the last Labour Budget, would be paying 400 per cent. more tax than they are today.
Mr. Jay: Would the hon. Gentleman give us those figures in actual numbers and not in percentages?
Mr. Brooke: If I may say so, these are matters which we might profitably pursue
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further on the Second Reading of the Finance Bill, when there will be ample opportunity for hon. and right hon. Gentlemen opposite to refute my argument, if they can. It would be much better if they took a little time to think it over and to see what they can evolve.
My hon. Friend the Member for Tyne-mouth (Miss Ward), who has constantly urged successive Governments to pay greater attention to those who are experiencing the hardest time because there is so little money coming in, will be particularly happy to note that people with incomes of under £500 have been relieved, on the average, of half their tax, and people with incomes of under £250 will have been relieved of four-fifths of it. I am sorry that my hon. Friend is not here today.
The right hon. Gentleman, and other hon. Members opposite who spoke yesterday, sought to pretend that this was an unfair Budget, a class Budget, which gave only to the privileged—[HON. MEMBERS: "Hear, hear."] Even now I hear "Hear, hear" from the other side of the Committee. Yet I would invite the attention of the Committee to some perfectly true words which were used yesterday early in the debate by the hon. Member for Nottingham, South (Mr. Norman Smith) when he said:
"… we got a Budget concession which puts additional spending power into the hands of very nearly everybody."—[OFFICIAL REPORT. 19th April, 1955; Vol. 540, c. 72.]
That does not sound like a class Budget; that sounds like a good Conservative Budget, and that is precisely what this is.
I heard yesterday, and again today, the argument that this Budget does nothing for the people who pay no Income Tax. That, of course, is true so far as the Income Tax concessions are concerned. People who pay no Income Tax
"must now expect to see others get the benefits while they remain where they are—fully exempt from the tax."—[OFFICIAL REPORT, 13th April, 1948; Vol. 449, c. 917.]
I am quoting words used by the late Sir Stafford Cripps on this very subject.
Much more could be said to refute the arguments which hon. and right hon. Gentlemen opposite are seeking to trump up against a Budget which I have no doubt will be exceedingly popular throughout the country. When, however, I hear arguments about class bias in these concessions and about doing nothing for

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those who pay no tax, it is worth while for all of us to examine the programme of the Labour Party—which I realise may be withdrawn by next week. The programme of the Labour Party means more taxation not only from the rich but from every taxpayer, and I should say unquestionably from those who are not direct taxpayers at the present moment. It is sheer boloney for the right hon. Gentleman—
Mr. A. C. Manuel: A new low level.
Mr. Scholefield Allen: On a point of order, Sir Leonard, is "boloney" a Parliamentary expression?
The Temporary Chairman: I heard the Minister say nothing unparliamentary.
Mr. Brooke: I thank you, Sir Leonard, for your Ruling on the delicate line between what is Parliamentary and unparliamentary.
I sought to say that it was sheer baloney, on the part of the right hon. Gentleman, to seek to convey to the Committee that if a Labour Government were in charge they would be able to meet all the expenditure which their profligate programme would involve by further soaking of the rich. Though some of his hon. Friends may not agree with him, the right hon. Gentleman, the Member for Leeds, South, having held the post of Chancellor of the Exchequer, knows perfectly well that the programme which his party has so far put before the country would involve colossal additional taxation on everybody, and it is between that and the wisdom of the Budgets of my right hon. Friend that the country will have to choose.
5.20 p.m.
Mr. J. Idwal Jones: It is with some trepidation that I rise to speak for the first time here after my election for the Wrexham constituency, but I have been informed, and have seen evidence of it, that the House and this Committee are always prepared to give all encouragement to a new Member. I shall endeavour to be brief, and I shall endeavour to be as non-controversial as possible. The Committee will appreciate that I am succeeding the late Professor Robert Richards, who was a highly revered
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Member of the Committee, and who was highly esteemed in the Wrexham division. I consider it to be a great privilege to follow him.
As my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) has so ably shown today, it appears to me quite clear that we are heading for very difficult weather in our economic affairs. We have heard a good deal in the last three or four years about the progress the nation has been making since 1951, and yet the fact remains that now, at the end of the present Parliament, the gold and dollar reserves are lower than they were at the time of the General Election of 1951 and very substantially below the level at which they were in June of that year. That is one reason why I find this Budget a baffling one.
Our reserves and resources in October, 1951, were considered by the Conservative Government to be in so very unsatisfactory a state that they slashed our social services, our National Health Service, and the amount spent on education, and yet at the present time, when our reserves are not much better, we find attempts being made to improve the lot of those people who are better off, while relief is not given to the general public. We do not see in the Budget very much hope of any real advance in our social progress.
At the same time the trade gap is widening. It was wider last March than it had been for a considerable period. As my right hon. Friend has pointed out, the Chancellor has safely ensured the process of widening it still further. Furthermore, the £ stands at its lowest value in its long and chequered history. These are very serious considerations, and despite them the Government have decided upon the policy contained in this Budget.
The Financial Secretary had a good deal to say about the Purchase Tax. Here is a form of indirect taxation which can never be justified in principle, which can be tolerated only in circumstances of grave necessity, and which we are looking forward to abolishing altogether. While there is some relief of the Purchase Tax on textiles, it is very insignificant, and there is no change in the Purchase Tax to lighten the weight of it on the people as a whole.

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My right hon. Friend mentioned petrol. We know very well that if the tax on petrol were reduced, that would have an influence in reducing the cost of living for the entire community. Nothing, however, has been done in this respect. We are fully aware of the reason offered for that—that we do not want an inflationary pressure at the present juncture. That is the reason offered, and were it justified we, of course, could support it; but let us be perfectly clear on the point.
We know prices are rising, but it does not follow, because prices are rising, that we have an inflationary position. Prices rise at the same time as wages. As was stated in this Chamber two months ago, retail prices went up 4 per cent. and wages went up 4 per cent., and the relative position of retail prices and wages seemed to be fairly stable. So it does not appear that there is danger of inflationary pressure from that sector of our economy.
When, however, we look at another sector of our economy the situation is rather different. In the same year that retail prices rose 4 per cent. and wages 4 per cent., retaining relative stability between the two, company profits were going up 11 per cent., dividends 18 per cent. and share prices 34 per cent. If the correct definition of inflation is that there is too much money chasing too few goods, then I think that there we have an inflationary situation. There is too much money chasing too few shares, because shares are, in that sector, the goods in question. That explains, of course, the so-called boom and the so-called prosperity.
There is an inflationary pressure and that is why, personally, I cannot see that this Budget really makes sense. It increases the inflationary pressure at the very point in our economic structure where we can least afford it. As has been pointed out today already, there is a relief to industry, but it will, of course, find its way into this sector of our economy.
At the same time the Bank Rate is up to a higher level than it has been since 1932. This out-of-date monetary procedure is uncertain in its effects in some respects, certain in its effects in other respects. It will certainly add to the cost of living of the community; it will certainly add to the burden of our local government. It is uncertain in other
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respects. As someone wrote recently in a periodical, the Chancellor, at the present moment, rather than tugging the horse, is being tugged by the horse, because the increase in the Bank Rate is not achieving the result it was meant to achieve.
Thus, I cannot see much really scientific basis for the proposals in this Budget. As the newest Member to enter this Committee, I say in all humility that the Budget is a very baffling one indeed, and to me is explainable only in the light of the impending General Election.
5.28 p.m.
Mr. Geoffrey Stevens: In the last few minutes my mind has been carried back very vividly to an occasion about five years ago, when we met in another place, when I made my maiden speech, as the hon. Member for Wrexham (Mr. Idwal Jones) has just made his maiden speech, and I remember how I learned from experience how kind, as he himself said, the House and this Committee are to new Members, and the encouragement they give to them.
I congratulate the hon. Member on the cogent way he has put his own views on the Budget, although I do not agree with them all. I am sure I should go on in traditional fashion to say that I hope that we shall frequently hear him address us in the future, but I must put in a slight proviso and add, in the unlikely event of his success on 26th May.
Mr. T. W. Jones: Unlikely, with his majority?
Mr. Stevens: I know what his majority is, but I was thinking of the landslide of 26th May.
I hope that the hon. Member will forgive me if I do not follow up his remarks, but go on to some rather different matters. I am sorry that the right hon. Member for Leeds, South (Mr. Gaitskell) has left, because I shall refer to one or two things he said. He referred in very scathing terms to the Budget proposals and financial policies of my right hon. Friend and said that we in the Conservative Party had frequently painted, and at present were painting, too rosy a picture. He said that much of our propaganda is misleading.
I am sorry that the right hon. Gentleman has not had the time to study the

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"Preliminary Estimates of National Income and Expenditure, 1948 to 1954." If he studies that document he will find that it is not misleading propaganda but a matter of fact that in 1954, after three years of Conservative Government and Conservative financial policies, we as a nation earned more, spent more and saved more than at any time in the history of the country. That cannot be called misleading propaganda. It is a question of fact. It cannot be suggested that that is painting the picture too rosily, because I am quite sure that a Command Paper of this kind would never paint a rosy picture but only a factual one.
The right hon. Gentleman also had something to say about the high Bank Rate. He said that it discourages borrowing and development. It is perfectly true. That was the object of the exercise. It does indeed discourage borrowing and development with other people's money. What it also does is to act as an incentive to saving and development with one's own money, which, I should have thought, should be very much encouraged.
The right hon. Gentleman—and I know that this is a view which is commonly held on the other side of the Committee—referred, again in scathing terms, to the fact that a large part of the Income Tax concessions will go to limited companies. He referred to figures given to him, I am certain with great accuracy, by his hon. Friend the Member for Sowerby (Mr. Houghton), to indicate that some of these companies are very wealthy and getting along nicely anyway. It seems to me extraordinary that the right hon. Gentleman, who has been Chancellor of the Exchequer, and who has had wide experience of business and industry, should not realise that companies are the industrial life of the country upon which the standard of living of all of us depends. Unless these companies have sufficient profits to put to reserve and to invest, the standard of living of every one of us, instead of increasing as it has done in the last three and a half years, will tend to decrease.
My worry is a very different one indeed. It is whether or not the surplus of about £150 million above the line, which the Chancellor still has left, will be sufficient at a time when, quite clearly, there
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are certain inflationary tendencies in the system. It is purely a matter of opinion and the facts will show in 12 months' time as they have done during the last three years, but and I believe that the Chancellor has it about right, unless people spend the whole of the tax remissions which it is proposed to give them in these Budget proposals. I am not in the least pessimistic about that.
Table 6 on page 8 of the "Preliminary Estimates of National Income and Expenditure, 1948 to 1954," shows, in the "Combined Capital Account," the savings of individuals, of limited companies, companies and public corporations in the seven years 1948–54. I find, for example, that between 1952 and 1953 the savings of individuals went up from £690 million to £910 million. The savings of limited companies, companies and public corporations in the same two years went up from £1,143 million to £1,309 million, rising again in 1954 to £1,437 million.
It so happens that these very substantial increases in savings of individuals, limited companies, companies and public corporations have coincided with the Budgets of 1952 and 1953 when my right hon. Friend, in his first Budget gave substantial personal Income Tax concessions to individuals and, in 1953, reduced the standard rate of Income Tax by 6d. It may be merely coincidental, but I do not think that it is. I believe that it is a good thing to trust the people, as we have done in the past, and I believe that a very substantial part of the tax remissions amounting to £153 million which it is proposed to be granted will go into savings.
Savings are of no avail unless they are invested. We have already had cross-talk on whether sufficient savings were invested in 1954 and I do not want to go into that again now. An indication is given in the Economic Survey for 1954. I believe that savings will be invested in industrial equipment and re-equipment provided that the net return from investing savings in plant, machinery and factory buildings is reasonable, and I believe that 6d. off the standard rate of Income Tax will make net earnings from new plant, machinery and factories more reasonable. I shall be surprised if the next Economic Survey does not have something very much stronger to say about industrial investment in 1955 than the Economic Survey had to say about investment in 1954.

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These savings are essential if we are to have increased productivity. The Chancellor reiterated an important and urgent warning note when he referred yesterday to the fact that output per man, over the economy as a whole, rose in 1953–54 by about 2½ per cent. but the increase in wage rates was over 4 per cent. There, we have an inflationary tendency if ever there was one. But we are told by hon. and right hon. Members opposite that one reason at least for these constant demands for increased wages is the tremendous increases in dividends which are being paid.
Once again I turn to the really invaluable "Preliminary Estimates." The "Corporate Income Appropriation Account" shown in Table 3 of that document gives the increase in dividends, not over two years but over the wider period of the whole seven years from 1948 to 1954, a very reasonable thing to do. Dividends, interest, and so on, rose from £686 million in 1948 to £1,029 million in 1954, a rise of no less than 50 per cent. Well, well! But Table 2 "Personal Income and Expenditure," in page 4 of the same document, shows wages and salaries over the same period rising from £6,140 million in 1948 to £9,265 million in 1954. That was not a rise of 50 per cent. as in the case of dividends—and this is not misleading Tory propaganda but facts taken from a Government White Paper—but a rise of 51 per cent.
That seems to show clearly that, at any rate, wages have kept step completely with dividends. If we go back further still and take the 11 years from 1938 to 1948, we find that dividends in that period rose by about 50 per cent. but earnings in industry rose by 250 per cent. Consequently, dividends have a very long way to go before they catch up with the very considerable increase in wages. There is, therefore, very little indeed in that argument.
The Chancellor had a very difficult course to steer yesterday in view of the balance of payments situation. I believe that he has steered that course with the greatest possible success. As my hon. Friend the Financial Secretary has quoted from the words of the hon. Member for Nottingham, South (Mr. Norman Smith) yesterday, 6d. off the standard rate of Income Tax benefits a very wide range of people. It brings benefits to many of
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those on whose behalf hon. Members on both sides of the Committee, in debates on the Adjournment and in Motions on the Order Paper, have tried to attract the favourable notice of the Chancellor.
It brings benefits to the wage earner, to the salary earner, to the Service retirement pensioner, and it makes things just a shade easier for those who have to pay school fees. It is of immense help and stimulus to trade, industry and commerce, and, provided the people save a substantial part of the remission of taxation and invest it, then I believe that the incentive and stimulus will pave the way to that increased productivity which alone will keep inflation at bay.
5.41 p.m.
Mr. Arthur Holt: The right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) made a very brilliant speech and put very forcibly the Socialist Party's case against this Budget and the policies being pursued by the Government; but it was not meant to be impartial and it was not impartial. As I listened to the glowing phrases in which he described the Labour Party's efforts when they were in office, I wondered why it was that they had to devalue the £ and why, in 1951, they left office because there was a crisis with which they could not deal.
I was also rather surprised at the efforts of the Financial Secretary in trying to put forward the Government's case for helping the Lancashire textile industry and in apologising for not doing more for that industry. I have never been one who thought that the case for removing Purchase Tax above the D level was quite as great in its effect as some Lancashire people made out. I do not think, in fact, that it is so. Many quality articles are being made, have been made, and will be made whether Purchase Tax remains or not. But there are marginal cases where we get a cloth which is just above the D level. Those are the kind which are probably not being made and are being depreciated in value, but those well beyond the D level will be made in any case.
The case put by Lancashire for the removal of this tax is that when an industry is up against world competition to such an extent that mills are closed, people are out of work and some com-

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panies are making a loss—as undoubtedly some are at the present time—surely it is hardly the time for any Government to keep on an irritant when those who have to sell the goods are aware that their sale is made more difficult by a tax which is maintained by the Government.
When one considers whether other sections of the community are being treated more favourably, and sees that the agricultural and food Vote is now at the colossal figure of £385 million, that the direct support given to farmers is now about £241 million, one cannot but be disappointed that when Lancashire is experiencing unemployment the Government say they cannot completely remove Purchase Tax on textile products.
I feel that on grounds of equity alone the Government have not made out their case. I appreciate the difficulties of reducing Purchase Tax on Groups 5, 6 and 7 down to nothing without altering Group I in the Purchase Tax Schedule, but that does not seem to dispose of the question. If Groups 5, 6 and 7 are not reduced to nothing, then either the tax should be removed completely on the whole range of clothing and textiles costing £42 million, or a substantial reduction should be made, say to 12½ per cent., on Groups 1, 5, 6 and 7. The Financial Secretary asked for suggestions. Those are mine to be going on with.
I should like briefly to make two points, one about the present inflationary troubles and the Budget proposals in relation to them, and the other on the Government's general policy about freeing trade and the liberalisation of trade.
I know that some economists will complain that the Government, by giving away some of their surplus, have made an inflationary situation slightly worse, but it seems to me that we should clearly distinguish between the causes which create inflation. If inflation arises from one cause, then it will not be dealt with by increasing inflation which comes from another source. If I may, I will put it in this simple way. From my experience, before coming to this House, in dealing with people looking after machinery, I often found there was a tendency for them, if they could not see what was the immediate cause of a fault in a machine, to make something else wrong and hope
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that the machine would run all right rather than correct the real cause of the trouble.
Economists, and, I am afraid, particularly what I would call Liberal economists, have for a long time complained about the high level of Government expenditure and of direct taxation, arguing that these things had an inflationary influence. I would have thought that any effort to reduce them would, therefore, be described as deflationary. The fact that we may have an inflationary situation caused by other sources does not seem to spoil the argument for reducing the inflationary effect of high Government expenditure. I think that probably our present inflationary troubles arise from the fact that the terms of trade are turning against us, and it seems to me that they can be corrected to some extent at least by dearer money, which will prevent people from carrying larger stocks than are absolutely necessary.
Mr. Harold Lever: Why should the turning of the terms of trade against us be inflationary? Surely that will be deflationary in its consequences.
Mr. Holt: It is inflationary in the sense that it turns the balance of payments against us and eventually depresses the value of the £. The value of the £ is something which we have to maintain if we are not to have an inflationary situation.
The other element of inflation is, I suggest, unwise wage demands which are not related to productivity, and which do not, in effect, succeed in transferring a larger proportion of the cake from one section of workers to another. If the result of some people getting an increase in wages is that others do not, in fact, have as large a proportion of the wealth of the nation, there may not be an inflationary effect. However, those matters cannot be dealt with in the Budget.
As regards the general freer trading policy of the Government, I quite agree with the remarks of the Chancellor of the Exchequer that they are most concerned, chiefly through G.A.T.T. and other organisations, to make fresh efforts to remove barriers to the free flow of trade and payments, and that many of the practices at present being carried on by other nations are of great concern to us.

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I feel, however, that we must differentiate between the types of restrictions which are now being imposed.
There are the taxes which are put on exports. There are the price interferences by Governments, for example, that which the Indian Government is at present practising against the cotton trade. There are the subsidies which the American Government is giving, also in regard to cotton—its support price for cotton—and there are the interferences in the wheat market. All these things are practices which we should constantly endeavour to get rid of. But we can only use our influence; they are not practices which we are able to control.
There are, however, restrictions which we ourselves impose. These are things that we can deal with, but I do not feel that the Government have their policy properly worked out in this respect. The Government seem to take the view that it is no good revising our tariff policy while we face those other major restrictions by which Governments interfere in the proper price of commodities which are being sold; and that to talk about altering the tariff structure is to talk of something which is of no moment. I suggest seriously that that is not the case and that even on a protectionist basis the tariff structure wants looking at, while on a free trade basis is wants a lot more doing to it.
Even on a protectionist basis, I should have thought that the Government should consider how tariffs are affecting the things which this country is buying and needs to buy to make itself competitive and which we require for turning into manufactured goods for sale abroad. There are, for instance, a number of commodities which are being imported over considerable tariff barriers. For example, some of the chemicals which are used in the plastics industry are imported over considerable tariffs which were imposed long ago, I think, in connection with the safeguarding of key industries. Furthermore, there is the question of import duties on machinery. I do not think that sufficient attention has been given to the Report on the Duty-Free Entry of Machinery into the United Kingdom, which states in page 9:
"… we see no substantial evidence over the whole field that the existence or non-existence of opportunities for duty-free entry has had any material effect upon the volume of imports of foreign machinery."
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And yet the idea of tariffs is to keep things out.
Mr. H. Lever: Or to raise their price.
Mr. Holt: If that is supposed to be a good thing when industry requires the machinery, we seem to be rather upside down. I should have thought that it was a good thing to buy the items as cheaply as possible if they are required.
The Report goes on to say:
"On the whole, therefore, we believe that over the last few years the existence of an import duty has operated as a discouragement of imports only in a limited field."
I suggest quite seriously that the import duty on machinery is utterly out of date. It serves no useful purpose, as some of my quotations from the Report show. One thing which I cannot understand about the Report is why there was no minority Report. In view of the eminent and sensible people who were on the Committee and bearing in mind those arguments which they presented, I fail to understand the conclusions at which the Committee eventually arrived.
If the Government are really to tackle the huge figure of £385 million for food and agriculture, they can tackle it only on the basis of making the farmer more efficient. The farmer buys fertilisers, machinery and other commodities which are protected, and until we reduce the farmer's costs it is obvious—each of our main political parties has had a shot at doing it—that we shall not succeed in getting the figure down to a reasonable amount.
Mr. Archer Baldwin: The hon. Member says that farmers get this huge subsidy, but he has pointed out that the Americans give price assistance—in other words, they subsidise the export of agricultural produce to this country. Would the hon. Member not agree that if we did away with price support and export subsidies, we as farmers might be able to stand on our own feet without any subsidy?
Mr. Holt: I agree that we want to get rid of all these undesirable things. I am merely pointing out that there are difficulties of one kind and another and that we must make a deliberate attempt to see our way through them. I ask the Government, whatever its colour after the Election, to face up to the problem of how

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we are to reduce costs, whether to farmers or to manufacturers. It does not seem to me that the Government will successfully do it without, as a beginning, a complete overhaul of our tariff system.
5.57 p.m.
Mr. Anthony Crosland: I should like to start by putting one specific question to the Financial Secretary to the Treasury, in the hope that one of the Government spokesmen who is to reply to the debate will be able to answer it. It concerns a point which was mentioned by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) and is really an elaboration of something to which he drew attention: namely, the question of why our net overseas income appears to be falling every year.
In 1950, we were receiving on balance from our investments abroad—that is, net as opposed to gross—about £150 million. This figure has been going down steadily every year until, in 1954, it was only £35 million. This seems to me to be a rather serious position considering the immense importance that we all, on both sides, attached after the war to the damage which we had suffered by having sold our foreign investments and having piled up a great volume of debt during the war.
We spent so much time saying how serious this was for our foreign balance and how desperately important it was to rebuild our investments abroad, that it is disappointing to find that after several years of investing abroad at the rate, according to the Economic Survey, of £200 million a year, our net receipts from dividends and interest have been going steadily down in the last four years until they are now about only one-fifth of what they were in 1950. It seems a rather poor return for the sacrifices which the country has made in providing this foreign investment at what has been a quite substantially high rate.
My right hon. Friend mentioned one or two of the reasons for the reduction in the past year or two—for example, higher interest rates in this country and higher dividend payments from this country—but it seems to me that there is more to it than that. I should be grateful if the Financial Secretary will ask one of his colleagues to give an explanation. We are rapidly getting into the position once again of being a net debtor in the matter
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of dividend and interest payments, which is an extremely disappointing result after the efforts we have made to build up a creditor position since 1945.
I should like to comment on one or two of the points made in the speech of the Financial Secretary and made also by the hon. Member for Langstone (Mr. Stevens). There seems to be confusion in the minds of the Financial Secretary and hon. Members opposite about our attitude on this side of the Committee to the distribution of the tax reliefs. The hon. Member for Langstone again brought up his favourite point that it is all right, under the circumstances, to help dividend recipients, because dividends have gone up much less than wages since before the war.
Of course, this is true. It is something which we on this side of the Committee think is thoroughly desirable. We are not at all impressed by the argument that because one form of income has gone up less since before the war than another it ought to be adjusted, for the logical conclusion would be that all incomes ought always to go up at the same speed and there should never be any redistribution.
Mr. Stevens: I thought the argument being used now was the other way round, that because dividends had so far outstripped them wages must rise.
Mr. Crosland: That is certainly the argument, because we think the relationship which applied four years ago was better than that in 1938 and we do not like to move away from that relationship.
The Financial Secretary made great play with a lot of extremely ingenious percentage figures. I congratulate him or his Treasury officials upon finding a totally new way of looking at tax concessions which, initially, I fully concede, puzzled some hon. Members on this side of the Committee. It seemed extremely impressive to point out that if we still had the tax rates which applied in 1951 Surtax payers would be paying only 12½ per cent. more in taxation, whereas people earning, say, £500 a year would be paying 400 per cent. more, until one perceives that people who are now paying nothing, but who in 1951 were paying a minute fraction of a penny per year, would be paying almost infinity more.This seems to reduce the argument to more or less its proper perspective. Of

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course, if a man's tax liability rises from 3d. to 1s. per week he will be paying 400 per cent. more; if he is paying only a little, the percentage increase is enormous.
Hon. Members should look at the figures for the absolute amounts and not the percentages. It is extremely misleading to come along with percentage figures, as if doing so really had any value, suggesting that an increase of 400 per cent. in a person's tax burden when the increase is from 3d. to 1s. a week is a very much larger burden than a 12 per cent. increase when the tax burden is in hundreds or thousands of pounds. To get any reality, we must have absolute figures and not percentages.
The Financial Secretary indicated that he was puzzled by an inconsistency which he detected in our attitude, in that, on the one hand, we say that it is an electioneering Budget and, on the other, we describe it as a rich man's Budget. The hon. Gentleman wanted to know which was our approach. There is no inconsistency between the two attitudes which have been expressed. No one has said that the whole of the tax concession goes to a limited class representing some 10 per cent. of the population.
What we do say is that the bottom 40 per cent. or so of the population gain nothing and that people then gain an increasing amount right the way up to the top of the scale. It is true that some people who are not Surtax payers will gain something from the Budget, but the distribution of the reliefs is heavily biased towards the upper end of the income scale. It is consistent to say that this is, as I believe it to be, an electioneering Budget and, at the same time, that the reliefs are very heavily weighted in the direction of the higher incomes.
When the hon. Member for Langstone spoke in terms of the ordinary wage earners gaining, he implied that the sums were substantial. The tables in the Financial Statement show that the average wage earner has not gained a great deal. Average earnings for the country as a whole are now about £10 a week, or about £500 a year. But this average wage-earner, if married and with two children, was only paying tax before the Budget at the rate of ½ d. in the £, and will really not have a very large gain. The average married wage earner with
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a child or two children who is earning the average weekly earnings for the country as a whole will gain an infinitesimal amount as a result of the concession.
I do not want to concern myself mainly—because it was partly covered by my right hon. Friend and will be covered again by other hon. Friends of mine—with the distribution of the tax reliefs. I want to deal with the arguments behind the Chancellor's decision as a whole. With due respect to him, it really is important that we should decide and the country should know whether or not it is an electioneering Budget. I have a great respect, as a much younger and less distinguished person, for the Chancellor's performance and integrity in the past, and it is a matter of interest to me to know whether the Budget can be justified on other than purely electioneering grounds.
The Chancellor started off with a sort of background justification by pointing out how very favourable our performance had been in the last year or two. He said that exports, investment, production and everything else were going up and our position was exceptionally healthy and reflected enormous credit on the Government. He omitted to say—my right hon. Friend hinted at it—that the last 12 months, during which all these things have been rising in this country, has been a period for the world as a whole of exceptional industrial expansion.
We cannot find a country where exports, investment and production have not gone up. It would be a unique performance on our part if we alone of all the countries in the world had not shown a rise in these various things in 1954. We do not need to be interested in whether these things have gone up. Of course they have gone up; they could hardly have avoided going up at a time of world boom. We need to be interested in whether they have gone up more or less than they have in our competitor countries.
When we look at the comparative figures for different countries we see that the background situation is a great deal less favourable than the Chancellor painted it. Take industrial production. It is true that it went up significantly in this country last year, by 6½ per cent. or so, but it went up more in Western Germany, France,

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Italy, Austria, Finland, Holland and Greece. Take exports. It is true that we had a small rise in the volume of exports last year, but there was a larger rise in Western Germany, France, Austria, Belgium, Denmark, Finland, Holland, Switzerland, Portugal and Norway.
It is true that industrial investment went up here, by more in the public sector than in the private sector, though all forms of investment went up to some slight extent. But if we look at our investment in both the public and the private sectors in plant and machinery we find that in 1954 investment in plant and machinery actually rose at last by a few million pounds a year above the 1951 figure. It has taken the Government four years to regain the level of investment in plant and machinery which they inherited from the Labour Government in 1951.
When we look at the rises in exports, investment and production and compare what Britain has been doing with what other countries have been doing, we certainly cannot say, as the Chancellor tried to suggest, that the whole industrial background is an extremely favourable one in which great risks can be taken and great concessions can be justified.
Let us take the immediate Budget background. So far as I know, there is no disagreement about what the background is. It is one of definite inflationary pressure at home with our resources producing full-out, practically no slack in the economy, and with a marked upward pressure on prices. It is one of a deteriorating balance of overseas payments and dwindling gold reserves. There is no dispute about these things: that compared with a year ago our home situation is more inflationary and our foreign balance position is worse.
These are non-controversial statements. Surely, in these circumstances, there can be only one course of action open to a Chancellor who wants to gain a reputation for honesty and patriotism and not excessive generosity, namely, to keep an extremely tight hold on the reins and pursue a policy of—we may call it what we like; it does not matter—austerity.
All this was recognised by the Chancellor himself in his famous statement of
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24th February, when he came to the House in an extremely different mood from that of yesterday and gave an extremely fair account of the inflation at home and the deteriorating foreign balance and said that it was so serious that we had to raise the Bank Rate to its highest point for 25 years and impose hire-purchase restrictions and, I use his own words:
"… moderate excessive internal demand."—[OFFICIAL REPORT, 24th February, 1955; Vol. 314, c. 1457.]
On 24th February the Chancellor would not have had any disagreement with any of the analysis which I have just made. There was certainly no hint at all on 24th February that any honest Chancellor could possibly introduce a Budget giving away concessions amounting to nearly £150 million a year. That is also the view which the financial commentators took, the sort of financial commentators which hon. Members opposite, when it suits their purpose, are only too willing to applaud.
The "Manchester Guardian" said that a "no change" Budget was suggested by the rising inflationary pressures. The "Investors' Chronicle" said:
"The conclusion must be that, on economic grounds, there can be no consideration whatever of concessions which would release any mass of new purchasing power."
The "Economist" said:
"The Economic Survey suggests strongly that he should leave existing tax rates alone … By stern reference to the economic conjuncture alone, the Chancellor can have little or nothing to give away."
To be fair, the "Economist," like the Chancellor, then made an extremely unstern reference to the political conjuncture and suggested giving a good deal away for exactly the same reasons as the Chancellor did, thus destroying the last shreds of its reputation for being an independent non-party organ.
One can imagine what the "Economist" would have said if the right hon. Member the Member for Bishop Auckland (Mr. Dalton) had introduced a Budget like this, at a time when gold reserves were falling and the foreign balance deteriorating, a month before a General Election. That is not. the language that the "Economist" would have used five years ago.

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There was thus no disagreement in the financial newspapers with the Chancellor's analysis of the situation on 24th February. Is it posible that the Chancellor was, in fact, being alarmist on 24th February? Is it possible that the detailed facts of the situation, if looked at closely, did not support the attitude which he was then taking? Of course, there is no suggestion that the facts were other than what I have been suggesting this afternoon and what the Chancellor then admitted. At home, there is every sign of serious pressure on our resources. There are certain slack spots, in Lancashire in particular, but, taking it as a whole, our economy is running flat out. Indeed, it is running so flat out that the Chancellor on 24th February came to the House and said that an increase of £100 million in hire-purchase loans was bringing us to the point of disaster and that he had to reimpose hire-purchase restrictions. That was how near to the inflationary point the Chancellor thought that we were on 24th February.
Wage increases this year are already nearly as great as in the whole of 1954. There is no sign of any slackening in inflationary pressure there. Home demand is manifestly spilling over into higher imports and so worsening the balance of payments. We can see that in the case of coal and in the rising trend of steel imports and certain manufactured goods. For instance, we are importing up to the full quota of cars from O.E.E.C. countries, which we were not two years ago. So there is no sign at home that on 24th February the Chancellor was exaggerating in the slightest degree.
And, clearly, there is no sign in the foreign balance situation that he was exaggerating. The foreign balance deteriorated badly from the first half of last year to the second half, and whether we take the United Kingdom home account, the dollar balance or the rest of the sterling area, nobody can possibly say that the Chancellor was then exaggerating the seriousness of our foreign position.
What, then, could possibly be the explanation of the extraordinary contrast of mood between the Chancellor's statement on 24th February and his Budget speech of yesterday; between the restrictions of 24th February and the lavish
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generosity with which he made concessions yesterday? Possibly it may be said that there has been some improvement since 24th February and that his measures then were so effective as to justify a completely different attitude today. Is there any sign that since 24th February pressure on the home economy has slackened, any sign that there are now scarce resources, unused resources which we have to bring into employment? Of course there is none whatsoever, and the Chancellor knows it perfectly well.
Is there any sign that our foreign balance situation has improved? It is quite true that the strength of sterling has improved, an extremely welcome thing which everybody on this side of the Committee welcomes as much as the Chancellor does. Funds have been attracted to London partly by higher rates of interest, and for the moment we have stopped commodity shunting operations as sterling has improved, and that is excellent. But this is not a basic change. Funds which flow into London one month can flow out of London the next month and, in the end, confidence in sterling and the strength of sterling will not depend on the movement of short-term funds, but on what the world outside thinks about the underlying balance, in other words, the level of exports and the level of imports. That is the only test; and in the end the actual state of the foreign balance will determine the strength of sterling.
Is there any evidence at all that in consequence of the Chancellor's measures on 24th February our imports are falling relative to exports and that the balance of payments position is improving? There is none whatsoever and the Chancellor knows it perfectly well. The March figures are extremely alarming and, if anything, worse than the January and February trend. They show a level of imports which the Chancellor must know quite well—or his advisers must know—we cannot conceivably sustain with anything like the present level of exports. It is true, of course, that the Chancellor said that his measures had not had time to have effect by March. However, by 19th April he could not tell any more than we could whether the measures would be successful. So we can say that if we take the underlying balance, there is

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no sign of improvement which could possibly justify the difference between the Chancellor's action in February and his actions in April.
Is there any sign that the Bank Rate is moderating excess demand? There is none whatsoever, and the Chancellor knows it perfectly well. "The classic medicine," as all the City journals call it with wonderful nostalgia for the way it used to work in the 19th century, or before 1914. But this classic medicine does not seem to be working very well. What is the Bank Rate supposed to do? This is a question to which there has never been any explicit answer, because all financial commentators, when writing of what the Bank Rate is supposed to do, take refuge in mystic terms and metaphors, and talk about things seeping into every crack in the economy and all the rest of it, but they do not complete the effect by telling us exactly what it is supposed to do.
Presumably, whoever is supposed to be influenced by the Bank Rate is influenced by the fact that a higher Bank Rate leads to a tighter money situation and a reduction of bank advances—unless everything which the Economic Secretary used to learn sitting at the feet of so eminent a tutor at his college at Oxford was completely false. A higher Bank Rate, or a higher rate of interest, is supposed to take effect through the reduction in the level of bank advances. What has happened to bank advances? Is there any evidence that bank advances have fallen? There is none, and the Chancellor knows it perfectly well. Bank advances in March, which is the last month for which we have figures, rose by £24 million. Not only did they rise, but they rose by more than for March last year.
In the light of this, can anyone feel able to say that the Chancellor's measures of 24th February are working so well and have produced such an improvement in our economy that he can now come along, without any hint of crisis in his speech of yesterday, apart from a few words at the beginning, saying that things were not very well, but there was the great spirit of this island country and all the rest of it? Nothing in the situation since 24th February would justify so complete a change of mood since then. There is no sign that inflationary pressures are less,
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or that the foreign situation is better, or that the Bank Rate has restricted home demand.
Did the Chancellor himself give any justification in his Budget speech for saying that things had so far improved since February that we could have very large concessions? Of course, he gave none. He looked ahead and said that this demand may go up, that demand may go down, and that may remain constant; but all this was entirely without any figures on which either he or the Committee could possibly say whether or not his actions were justified.
Then he had a very curious argument about future consumption and future productivity in which he proved to his own satisfaction the reverse of what every single expert considering the matter has assumed, namely, that consumption would go up more slowly than last year and production would go up more rapidly. I can see no evidence for either of those assumptions. How one can say that consumption will rise more slowly this year than last year when, in the first three or four months of this year, we have had wage increases equal to those in the whole of 1954, is quite beyond me; how one can say that production will go up much faster than last year when last year we had an increase in the labour force of 350,000—a quite exceptional increase which the Economic Survey itself says cannot possibly be repeated this year—how the Chancellor could deduce those two things is a total mystery.
The right hon. Gentleman, clearly, did not take this argument very seriously and, in the end, he came down to his favourite argument and said, "Of course, we must not be timid; we must have faith in our people; our island history is a glorious one, so we must take 6d. off the standard rate." All this was justified by a lot of vague talk about incentives.
It is a curious claim that this year, of all years, we need 6d. off the standard rate to provide incentives. Why did not the Chancellor think about incentives on 24th February? What is the Bank Rate supposed to be except a disincentive to people to do various things? What are hire-purchase restrictions except a disincentive to people to do various things? Why was not there a lot of talk about our island story and incentives then instead of everything being put off until now?

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If all the Chancellor is concerned about is incentives, why give this concession to companies? Companies are not short of cash. The Economic Survey shows that perfectly well. Companies will not invest any more because of this incentive. If the Government want an incentive to investment then they should give one directly. They should increase investment allowances instead of giving a general indiscriminate gift to companies, to be used exactly as they like.
In any case, there is a very curious implication in this incentives argument. It implies that the great majority of working people who are paying no Income Tax at all, or only very small amounts, are all working like niggers already. They do not need any incentive. It is only the middle and upper classes who are slacking, and who need a bribe to work rather harder. That is certainly a curious implication from a Conservative Chancellor of the Exchequer.
The Economic Secretary to the Treasury (Sir Edward Boyle): As the hon. Gentleman was kind enough to refer to me, perhaps he will allow me to say that many people will know that as a result of the Budget they can work harder and earn more without becoming liable to tax.
Mr. Crosland: If the people paying a halfpenny a week in tax will be so much encouraged by this, may I put a question to the hon. Gentleman? If Income Tax concessions are so vital for incentives, as the Chancellor says they are, why did he not give them last year and not this year? Last year, there was less inflation and more slack in the economy. Last year, there was a surplus on our balance of payments and not a deficit. Last year, we had rising gold reserves and not falling gold reserves. But the Chancellor said, "No, we must still have a standstill Budget." He resisted all the pressure from his hon. Friends to give Income Tax concessions. He said, "The country cannot afford it; we are flat out; the position is not favourable enough."
Yet this year, when there is more inflation, when we have a deficit and not a surplus in our foreign balances, when gold reserves are falling and not rising, the Chancellor can afford it. The Committee must admit that it seems a very serious coincidence of events—a worsening balance of payments situation, an
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Election in a few weeks' time and the sudden recollection by the Chancellor of the importance of incentives. It is a coincidence which will not impress the country as a whole very favourably.
It seems quite clear that one cannot say that there is any improvement in the situation since 24th February, and that either the statement which the Chancellor then made or his Budget statement yesterday is totally and completely fraudulent. He was either misleading the country about the crisis in February or misleading the country in the middle of April. In particular, to say on 24th February that we must take measures to restrain demand, and then, on 19th April, to increase demand by nearly £150 million, is an inconsistency so obvious as to amount to complete chicanery.
When the Chancellor, at one point in his speech yesterday, after relating the measures which he had taken on 24th February, said:
"… thank goodness that we took action in time … "—[OFFICIAL REPORT, 19th April, 1955, Vol. 540, c. 39.]
there was a devout and complacent cheer from the benches opposite. What action; in time for what? This electioneering Budget in time for 26th May. That was presumably what the cheer was really for. Otherwise, can hon. Members opposite really justify this action at this time?
Do they deny that the economy is at full stretch? Do they deny that the foreign balance is still worsening? Do they deny that there is no sign whatever of improvement since 24th February? Do they deny that there is no sign that the Bank Rate is, in fact, moderating excessive home demand? Do they really suggest that the position is any better than it was on 24th February, that there is any improvement which can justify this total change in mood?
There is one thing about this Budget from our point of view on this side of the Committee and that is that we shall not have any more of this story of the Labour Government running away in 1951, because the present Government are also running away from an economic crisis; but they are doing much worse. They are leaving behind them a Budget which cannot possibly be justified as providing any help in that crisis.
Somebody said this afternoon, "Would not the Labour Government have intro-

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duced an electioneering Budget?" With great respect to the Chancellor, I really cannot imagine a Labour Chancellor of the Exchequer coming along six weeks before a General Election, after what he had said on 24th February, and introducing a Budget like this. The howls of horror there would have been from the benches opposite can very easily be imagined.
It may be that the Chancellor was quite wrong on 24th February and that there really is not a serious crisis; everything is going to get better; consumption is being restrained; and by October we shall be in a very good foreign balance situation. I very much hope that that will happen. If it does it will justify the Chancellor's Budget and prove that he was extremely ill-informed on 24th February; but if it does not happen, and if the Chancellor was right on 24th February, I suggest to hon. Members opposite that they will buy their extra votes at a very heavy cost to the reputation of the Chancellor, to the reputation of the Conservative Party of Great Britain, and to the financial security of the country.
6.28 p.m.
Sir Herbert Butcher: The hon. Member for Gloucestershire, South (Mr. Crosland) is sometimes muddled in his thinking. In his concluding remarks he suggested that the Government were running away from their responsibilities, but in the previous sentence he had suggested that this was an electioneering Budget brought forward at this time and framed solely and exclusively for the purpose of securing the return to power of the present Government. Surely those two thoughts are mutually contradictory.
The hon. Member made a most interesting speech, to which the whole Committee listened with interest, but he allowed his enthusiasm for his cause to run away with his better judgment. He referred to the concessions in this Budget as "lavish generosity." When one regards a remission of taxation of £134 million in the part of the year we are now considering, and in a full year of £155 million, out of a total national expenditure of £4,305 million, it really is stretching language too far.
I found the hon. Gentleman in agreement with the former Chancellor of the
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Exchequer, the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell). They both agreed in comparing the export achievements of this country unfavourably with those of other countries. But I found him somewhat in disharmony with his right hon. Friend, because, according to the whole tenor of his speech, this was an occasion when no concessions, no remission of taxation could be made at all. What did the right hon. Gentleman for Leeds, South say? He said that there is no relief of indirect taxation at all—nothing off beer, nothing off tobacco and nothing off petrol. So the right hon. Gentleman and his hon. Friend should get together, if they propose to speak on the same afternoon in the same debate.
On the other hand, I think we should congratulate the right hon. Member for Leeds, South on a remarkable political performance. I cannot help feeling that it gave great pleasure to all those who heard it. I doubt whether it will give the same amount of pleasure to some of his right hon. Friends who were not in the Chamber. Certainly, the cheers which greeted him when he sat down were the loudest I have heard given to any Socialist leader for a very long time. If I may comment in the absence of the right hon. Gentleman—I am sure he will forgive me—I would say that I fully understand the reason for his absence from the Chamber.
The right hon. Gentleman dealt with the question of production under the Labour Government—30 per cent. in five years—and suggested that it was so much better than what was being achieved now—[HON. MEMBERS: "Thirty-five per cent."]—but in a country which is converting from a war-time economy, with trained and skilled men pouring back into factories which have been closed or consolidated, it is a comparatively easy task to expand the economy. It is easy for many people to run a mile in six minutes. It is the stretch to get the mile within four minutes which taxes the skill of the athlete.
Again, the right hon. Gentleman contrasted the present position with that under a Labour Government and gave most attractive and illuminating figures of investment in various industries. For example, he mentioned the £19 million invested in the coal industry. To my

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way of thinking, that proves at least one thing: that under this Government we have accepted and endeavoured to work wholeheartedly the policy of nationalisation which we inherited. If the result in terms of coal out-turn for the £19 million investment are disappointing, that is not due to the fact that we have starved the industry of capital in any way.
The right hon. Gentleman was somewhat unguarded and unfair to the miners when he went on to suggest that perhaps, under a Tory Government, the miners are not likely to be quite so active. I consider that to be a slander on any section of the working community. I believe that all members of the working community do not allow their production or the size of their wage packets to be influenced by the political complexion of the Government.
The right hon. Gentleman went on to criticise the policy of my right hon. Friend the Chancellor because of the Government's policy to expand our export trade during recent years. With much gusto, he gave figures for Italy, Holland, Belgium and for Western Germany. I am sorry that, in his desire, and quite laudible ambition, to wrest the leadership of the Socialist Party, the right hon. Gentleman the politician did not consult the right hon. Gentleman the political economist. The reason why exports have expanded all at the same time in the countries which he mentioned is quite simple.
It dates back from the time when the West German Government, under the Wehrungsreform, established a sound and stable currency. What happened? Instead of a currency that was depreciating even quicker than ours depreciated in value under a Socialist Government, real, good, honest money was available to the German people. With that honest money available to them, they started to produce goods which they sent overseas to get the food they needed. Among the countries to which they sent first was Holland, to secure dairy produce. Other countries included Italy, to secure fruit and similar produce, and Belgium, in turn, made a similar contribution.
That is the reason why the figures for Italy, Belgium, Holland and West Germany are available to be compared by the Socialist Party to the detriment of this country. It is the logical effect of mutual trading between those countries and it
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stemmed from the one act of the West German Government in establishing a sound currency in its community.
The right hon. Gentleman made great play with the question, where would the country have been but for the policy of the Labour Government with regard to exports? I cannot help feeling that that was somewhat ingenuous on his part. After all, he was elected in 1950, and if he had any kind of desire to see what would have been the effect of the policy under a Labour Government, he could have had a little more courage and remained in office, and introduced a Budget in 1952, in 1953 and in 1954. Indeed, the term of office of that Government would have expired only about two months ago.
Mr. C. R. Hobson: With a majority of six?
Sir H. Butcher: The right hon. Gentleman said that there is a substantial rise in the volume of our dollar exports. That, in the main, has been due to the fact that we have had to import large quantities of coal, because of the failure of the nationalised coal industry to give us the coal we need. A large proportion of the dollars expended could have been saved, if production by the nationalised coal industry had been higher.
The right hon. Gentleman referred to the rise in prices as the biggest inflation that the Stock Exchange has ever known. I thought him a little forgetful of his right hon. Friend the Member for Bishop Auckland (Mr. Dalton), who is now sitting on the Opposition Front Bench. If the right hon. Member for Bishop Auckland will allow me to say so, I have always had feelings of friendship for him. After all, a man who can nearly succeed in winning Holland with Boston cannot be entirely bad. But to be forgotten by his right hon. Friend as the architect of the greatest and largest inflation this country has seen since the South Sea Bubble really was unkind.
Mr. Hugh Dalton: I am obliged to the hon. Gentleman for his kind reference to me and to his own constituency. It may be that some day someone will do what I just failed to do some years ago.
On the relative size of the two price increases on the Stock Exchange—it is

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a statistical question and, indeed, it will be found so, as I have checked over a number of figures—the rise in the Stock Exchange prices under the regime of the present Chancellor of the Exchequer has been greater—because it was much more widely spread over all classes of securities—than it was in my day. Without forestalling something which I hope I may be able to say tomorrow, if I am fortunate enough to be able to speak—I cannot go into this argument in detail now—may I point out that in my time it was the national credit that was greatly raised? There was a further appreciation of actual Government securities. There was not the comparable expansion in the securities attaching to the private sector. Under the present state of affairs the most grotesque of all the capital gains have been obtained in the private sector.
Sir H. Butcher: I am grateful to the right hon. Gentleman for his intervention and I shall look forward to his further remarks, if he has an opportunity to speak tomorrow.
It may be that under the present Government there has been a more steady and widespread rise, reflecting a more widespread measure of confidence in all securities. But the right hon. Gentleman must not be too modest. His name has passed into history. While, according to the custom of this House, it is not permitted to mention it in the Chamber, "Daltons" are frequently quoted on the Stock Exchange; and while good, honest, unsuspecting people contributed £100 of good money in those days—as we are frequently told by hon. Members opposite—currency has depreciated and stock as well, and, as a result, they have suffered a double loss. Nevertheless, the right hon. Gentleman is no longer Chancellor, although he is probably just as good as, though equally probably not much better than, the right hon. Member for Leeds, South, and doubtless one or other of those two right hon. Gentlemen would occupy the office of Chancellor of the Exchequer in any future Labour Government.
What are the complaints made by the right hon. Member for Leeds, South? They are that the remissions of direct taxation in the Budget are not accompanied by remissions in indirect taxation. If the Chancellor is prepared only to make so small a remission—and it is a
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very small remission—of about £155 million in a Budget of this size, it really ought not to be split between these two categories unless there is a definite reason for doing so.
I do not know whether it is the policy of the Socialists that if anything is done by way of a remission of direct taxation it must automatically be accompanied by a remission of indirect taxation. In other words, that one must never step forward with the right foot unless one does so also with the left foot. I think that the policy of the kangaroo would fit the party opposite, because it has gone from place to place with great rapidity. But such a policy would not suit a Conservative Government.
The Chancellor is to be congratulated on producing this Budget. It is a Budget which will do a lot to help the family and to help thrift, which are things that the country needs at the present time. Some people have suggested that it is an electioneering Budget. It may be designed to bring help to all the people, but there is nothing wrong in that. That is what Governments are for. Their job is to improve the benefits given to the people of the country as a whole, and to ensure that those benefits are spread as widely as possible.
Who are the beneficiaries under these Budget proposals? There are 19 million taxpayers, of whom 2,400,000 will be entirely removed from the charge to pay tax, and every one of the remaining taxpayers will receive at least some concession. But 19 million is not the limit to the number of people involved. The figure must be augmented by the number of children who receive benefit by way of the child allowance. It must also be increased by the number of wives who are not themselves taxpayers in their own right. The result is that the total number of persons who will directly benefit financially is probably more in the neighbourhood of 25 million or 30 million than of the 19 million specific, known taxpayers.
It has been suggested that this remission of tax is inflationary. I do not believe that for one moment. What is obvious is that under the existing rates of taxation—before taking these benefits into account—the thrift movement has already taken quite a substantial upsurge

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in recent years. If there is to be more investment by the lower income groups, then here is an opportunity which I believe they will eagerly seize.
The higher income groups will be able, owing to the tax remission, to make the necessary investments, thus enabling a thriving industry to make a bigger contribution in the field of capital investment. One thing that appeals to me about the Budget, apart from its universality of appeal, is that it is a recognition of the important part played by the middle-age groups. In the main, the remissions go to the married men of 35 to 45 years of age, because they are the people who, on the whole, have children dependent upon them.
It is on this group that so much depends. They are the young technicians, and it is from them that the leaders of the future will be drawn. We must encourage them at this time to give of their best. They are willing to work for the pride of job, but they equally wish to work and are determined and are happy to work because, out of their earnings, they can provide a better home and a better chance in life for their children. The Chancellor has recognised that. While maintaining the financial stability of the country, he has endeavoured to spread his benefits as fairly and as widely as he can, and he should be congratulated both on his courage and on his wisdom.
6.45 p.m.
Mr. Austen Albu: I am not surprised that the hon. Member for Holland with Boston (Sir H. Butcher) gave up the attempt to answer what I think all of us on this side of the Committee and most hon. Members opposite considered the brilliant speech of my hon. Friend the Member for Gloucestershire, South (Mr. Crosland). I do not think that I have ever heard a speech more damaging to the political character of a right hon. Gentleman, and when what my hon. Friend said is known in the country I do not think it will be easy either for the right hon. Gentleman the Chancellor of the Exchequer or for his hon. Friends to restore his character.
While my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) was speaking, I noticed that, from time to time, the Prime Minister turned
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towards his right hon. Friend the Chancellor with an inquiring expression on his face from which I gathered that he was asking whether or not the facts given by my right hon. Friend were correct. For one moment, I thought that the Prime Minister was thinking of giving his right hon. Friend the sack.
I wish to draw the attention of hon. Members on this side of the Committee to what I believe is going to be the alibi of the Government if towards the end of the year the economic situation takes the course which most of us think it is likely to take under the present Administration. It is quite clear from what the hon. Member for Holland with Boston has just said, and from something which the Chancellor said, that the Government are proposing to throw the responsibility for the collapse on to the coal industry, although they are well aware of the many factors which have made the winning of coal more difficult in recent years. I warn them that if they attempt to do this, they will draw down upon themselves not only the wrath of the miners, but that of every fair-minded person in the country.
Captain J. A. L. Duncan: Heaps of coal.
Mr. Albu: This is the Chancellor's third Budget, but it is the first at a time when world economic factors are turning against him instead of, as they have been for most of the time that he has held his present office, moving in his favour. He and hon. Gentlemen opposite have for the last two or three years made some very extraordinary claims for the achievements of their economic policy. But the underlying factors are now beginning to reappear.
We have already heard—and nobody has denied it—that the gold and dollar reserves are still falling, as they have been steadily falling since June last year. It may be, as the Chancellor said, that at the present time they are only falling at half the rate at which they were falling in 1951–52. However, there is every sign that if things continue as they are at present, this rate of fall will accelerate, and there is no reason to believe that under the present policy the rate of loss will not again reach the 1951–52 level.
As my hon. Friend the Member for Gloucestershire, South said, the measures which the Chancellor has taken may

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check the speculative moves against sterling, and may even have done so already, but they certainly cannot deal with the underlying causes. In the end, the Lord Privy Seal will find that he may have cause to blush for the exaggerated remarks which he made soon after the present Government came to office.
It is now clear, as my right hon. Friend pointed out, that all the improvements, particularly that in the balance of payments and the rise in the gold reserves in 1952 and 1953, were due not only to the change in the terms of trade which took place at that time, but also to a recession or, at least, stagnation of our economy during those years. Therefore, the improvements in the economy last year are not improvements on what had taken place under the Labour Government, but merely on the low level to which they had fallen under this Government.
For instance, the average rate of increase of production, which was rising by some 7 per cent. a year from 1946 to 1951, when the Labour Government were in office, fell in 1952, and between 1951 and 1954 it has only averaged some 3 or 4 per cent. In passing, may I say that it is not only in the textile industry that unemployment is beginning to grow. It is also appearing in the furniture industry owing to the clumsy methods employed by the Chancellor of the Exchequer. As a matter of fact, I am told that there are already more than 400 unemployed furniture workers on the books of the Tottenham Employment Exchange, and about 1,000 more who are working on short time. I do not know the figures for the country as a whole.
It is true that the volume of our exports at the present time is at an all-time high level, as it was in every year, under the Labour Government, after 1947—but it is also true that their volume today has risen only to a paltry extent over what it was before. My right hon. Friend the Member for Leeds, South said that it was 3 per cent. over 1951. Even some of the most advertised expansions are not really expansions over the 1950 and 1951 levels.
The motor-car industry, for instance, is frequently talked about as the great expanding industry. It is true that the value of its exports last year were at an all-time high level, but I wonder how many
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Members know that the actual number of motor cars and chassis exported last year was fewer than in 1951. The total value of road vehicles and aircraft exported has been relatively stable for the last two years, and is certainly lower than it was in 1952. In the category of electrical machinery and apparatus, which is very important in view of the nature of present world markets, exports have been falling since 1952.
I now turn to the question of industrial investment. This was the subject upon which the heaviest and most pompous attacks were made upon the Labour Government and their policy. Those of us who were in the House at that time remember the heavy humour with which the present Lord Chandos supported his reputation as an industrial tycoon when he sat upon these benches, and the attacks which he made upon the late Sir Stafford Cripps and my right hon. Friend for the policies they were pursuing.
We all remember the speeches of the company chairmen of that period, who never seemed to spend much of their time at their annual general meetings informing their shareholders about their companies' policies, but spent it in making propaganda speeches. We also remember that the Federation of British Industries undertook research to find out what was happening about investment in British industries. It did not quite manage to prove what it hoped for, but that did not stop it from continuing to shout that under a Labour Government it was impossible for industry to replace its assets, and certainly quite impossible for it to expand.
I took the trouble to examine the relevant figures at that time rather closely, and I wrote a lengthy letter to "The Times" in which I showed that the figures proved exactly the opposite; that industry had succeeded in replacing its assets and had dealt with its deferred depreciation by 1949, and at that time was quite capable of carrying out a considerable industrial expansion and investment. The argument was then dropped, first, because the F.B.I. was not very sure of its figures and, second, because the Conservative Government came into office and nothing rude could then be said.
We now have some confirmation of my calculations. Not only Mr. Redfern but

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many other economists have been examining the figures of British industrial investment, particularly in fixed assets, during those years, and it is now quite clear that the arguments which I used at that time were correct; that industry had made good the depreciation of its equipment by 1949 and was expanding at a record rate. In fact, investment in fixed assets in industry in 1950 was 40 per cent. above the pre-war level. Even in the manufacturing and distributive industries it was at that level, and that was quite apart from the expansion in the nationalised industries. By the end of 1953, under the present Government, however, investment by the manufacturing and distributive industries in fixed assets had fallen back to the utterly inadequate pre-war level.
Sir E. Boyle: I hope that the hon. Member will not forget that it was the right hon. Member for Leeds, South, who suspended the initial allowances in the 1951 Budget, and that suspension took effect only in the financial year 1952–53. I am not criticising that decision—I think it may have been a good one—but it was surely bound to have the effect of depressing the volume of investment in industry.
Mr. Albu: I am beginning to have some doubt whether these initial allowances have much effect. We shall see during the course of this year.
The Government claim that they have substantially increased investment, but the figures with regard to investment, at any rate in plant and machinery, last year, do not show any real expansion. I do not think that there has been any substantial change in investment, although at the present time industry has much more liquid assets than it had before.
It is clear, therefore, that we have been living on the fat built up under the Labour Government, during a period in which wage restraint was exercised by the trade unions, as the concomitant of a policy of dividend limitation, and that this enabled us to make the supreme effort of reconstruction. This dividend and wage restraint, and the consequent investment which the country was enabled to make, were matters upon which the late Sir Stafford Cripps was always attacked as "Austerity Cripps" by the more glib Members of the party opposite.
It was the fruits of this policy which have been the basis of the recent Stock
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Exchange boom—the rising dividends and enormous capital profits that went with it. When the hon. Member for Portsmouth, Langstone (Mr. Stevens) referred only to the relationship of the increase in dividends to that of wages and salaries he was being a little ingenuous, specially for a chartered accountant, because we all know that the rise in dividends has brought with it an even more substantial rise in capital profits, which must be several thousand million pounds in value. Quite a good proportion of that has been spent upon current consumption.
In one of his usual glamorous passages, the Chancellor talked about encouraging the free and expanding mood of the economy, but the industrial expansion took place under the Labour Government, and what has taken place under the Conservatives is an expansion in profits and dividends. It is interesting to note that, with profits and dividends rising, investment has been falling.
I do not understand the Chancellor's policy on industrial investment. Last year he bribed industry with investment allowances, which constituted an indiscrimina-tory incentive, and this year he has raised interest rates, which constitutes an in-discriminatory deterrent. Now he gives industry between £40 million and £70 million in tax reliefs, at a time when there is no shortage of industrial capital but an apparent reluctance to use it. I do not see how that will raise investment.
It is not a question of incentives, but of the will to invest in the direction which is most advantageous to the country. We need a selective expansion, especially in those industries which are making capital goods which must increasingly take the place both of textiles and our other declining exports. This is not happening fast enough. We are still too dependent upon one or two exports, such as motor cars and consumer durable goods, which are also very vulnerable because they are products of the kinds of industries which are started up by countries which are beginning to industrialise themselves.
Parallel to our expansion of exports we have to reduce our imports. There is no merit in foreign trade as such; we have to find an optimum level. I cannot see why we should continue to export coal when by doing so we have to import even more expensive coal. The Government's own figures show clearly that in the vears

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to come we shall be increasingly dependent upon other sources of power. There is, therefore, no need to retain our export market in coal. We shall need every single ton of coal that can be produced for our own use at home.
But it is in agriculture that the greatest opportunity arises for saving imports, and here we have the greatest example of the unplanned muddle which the Government have got into. Paragraph 140 of the Economic Survey refers to the
"unnecessarily high consumption of costly imported feedingstuffs … "
and the Chancellor reminded us of the need to encourage more home-grown feedingstuffs. That is exactly what we told the Government in the debate on agriculture on 3rd June last. The Government were at that time gambling on what might prove to be a temporary fall in the prices of coarse grains, and in the process of doing so they wrecked the grass-drying industry of this country, which could save the country tens of millions of pounds in imports.
Hon. Gentlemen on the Government side are trying to make "planning" a dirty word, but there is no solution to our problems in this world of giant industries and of permanently changing world markets, except that of planned, co-ordinated, and selective industrial expansion. It is no use arguing that better industrial decisions are taken by hundreds of thousands of individual entrepreneurs; they are not. They are taken by a handful of giant companies the policies of which affect other giant companies, and in that way affect the whole economy.
For instance, the proposed vast expansion of the motor-car industry by two or three firms only will have a serious effect upon the steel industry, again run by only a handful of firms. Let us bear in mind that in the coming year we shall have to pay a very heavy bill for imported steel. In the steel industry, decisions have to be taken by this handful of firms independently, and there is since denationalisation no central, government co-ordination or planning of their investment policy.
The only alternative to a plan of selective industrial expansion is the use of the crude financial policy of the Chancellor of the Exchequer, and if, as seems
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highly likely, our balance of payments seriously deteriorates this year, and if, by an unlucky chance, the present Chancellor should still be Chancellor of the Exchequer in the next Parliament, we shall presumably be given more of the same medicine.
In the article in the "Manchester Guardian" quoted by my right hon. Friend the Member for Leeds, South, the City Editor of that paper has prophesied a 5½ per cent. Bank Rate in the autumn. That would be pretty stiff medicine, would it not? I do not know how it is supposed to effect the required result, for it seems to me that it can only have the effect of damping down our whole economy and of creating for the first time since the war large-scale unemployment. That is where the doctrinaire economic Liberalism of the Chancellor of the Exchequer and of the young theoreticians who support him on the Government benches is leading the country at the present time.
7.3 p.m.
Mr. Geoffrey Hirst: We have listened to large slices of gloom from the hon. Member for Edmonton (Mr. Albu) in the very racy manner in which he always speaks and gives us his warnings of impending disaster. Hon. Gentlemen on the Opposition benches ought to know a good deal about impending disaster, because they landed us into one in 1951. Our party rescued the country from it. [HON. MEMBERS: "Oh."] There is no shadow of doubt about that, and the people of this country feel a great regard for the Chancellor of the Exchequer and for this party for what they have done.
Anyone who has listened to the whole of this debate, as I have done, will agree that all the talk from hon. Gentlemen opposite about dividends should cease. It has already been answered effectively by two speeches from this side of the Committee, and particularly by the speech made by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens). It should be remembered that the late Sir Stafford Cripps made his appeal for dividend and wage restraint about six years ago, and that when we were on the Opposition benches we supported him in that general thesis.
Mr. S. Silverman Mr. S. Silverman indicated dissent.
Mr. Hirst: We did. After a very short time the tendency to restraint fell off in the case of wages, but maintained itself in the case of dividends. [HON. MEMBERS: "Oh."] It is a fact. I am not making a political speech now. More recently, there has been a certain amount of catching up on the part of dividends. Since the appeal to which I have referred, wages have increased by 39 per cent. and dividends by 37 per cent.
Mr. Silverman: Does not the hon. Gentleman see a connection of any kind between two contemporary and simultaneous manifestations, one a continuous rise in prices and the other a rise in wage demands?
Mr. Hirst: I am making a very simple point. Over a cycle of six years, when prices have been going up, there has been a substantial increase in wages to meet that rise in the cost of living. I see no reason why those who lend their money to industry and thereby create the circumstances which give employment should not have their turn.
Despite the gloom which is being spread from the Opposition benches, I uphold completely the opening phrase in the article in the "Yorkshire Observer" today that my right hon. Friend's Budget is a cheerful Budget. I do not see why we should not have a cheerful Budget. To judge from the restrictionist speeches made by hon. Members opposite, the country consists of people who work to economic formulas. That is wrong. The country consists of human beings who respond—and we have seen them in the last few years responding—to the way in which this Government has given them the lead. They are responding with a large amount of trust in my right hon. Friend the Chancellor of the Exchequer. They are repaying him, and they will go on repaying him, in that way. That is our basic ground for faith in his Budget and I am sure that it will be rewarded.
The various allowances, and the reduction in the standard rate of Income Tax, will be a very great incentive. The family man will appreciate them. Some people may find that they are relieved of paying Income Tax altogether. Sir Stafford Cripps once said that we could not take away tax from those who do not pay it. A great many people will gain something from this Budget, and it will be a great
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incentive to overtime working. There is a psychological dislike to paying Income Tax on overtime earnings. Some of us have been paying Income Tax for years, and have had that feeling of dislike for a very long time. Other people have only recently come into the field of Income Tax, and they regard it as a disincentive.
I come to the only flaw which I find in the speech of my right hon. Friend, and I intend to be candid about it. It is in relation to Purchase Tax. On previous occasions I have been taken to task by the right hon. Member for Huyton (Mr. H. Wilson) for being too complacent about the Budgets of my right hon. Friend in respect of Purchase Tax, but, in fact, I wished to be fair to my right hon. Friend. In 1952, with other hon. Members, I urged him to help the textile industry, and I respected and admired the way in which he met that situation. I did not want to be unfair by badgering him every year. I am sorry that the right hon. Member for Huyton is not here at the moment. Nobody can get at me today, because I am going to say honestly to my right hon. Friend the Chancellor of the Exchequer that I am disappointed.
In his Budget speech yesterday, my right hon. Friend said:
"No adjustment of Purchase Tax can be a panacea for the complex problems of any industry."—[OFFICIAL REPORT, 19th April, 1955; Vol. 540, c. 56.]
I absolutely agree, but it is an oversimplification. I have also heard it said that the D-line takes most textiles out of the range of Purchase Tax, and that is equally true. Both these beg the question. These are vital considerations to my constituency, Shipley, and to the neighbouring towns in it, Bingley, Bailden, Cullingworth, Wilsden, and Harden, all of which are substantially, if not entirely, dependent on the textile trade. That is my excuse for speaking on this matter.
The public are Purchase Tax conscious. There is a certain degree of consumer-resistance to Purchase-Taxed articles. The chain stores are reluctant to include Purchase-Taxed articles in their purchases, mainly because of that public feeling. That sets the general pattern. If the D-line were raised—of course, elimination is desirable, but perhaps that is to ask too much—the whole position

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would be changed. The better qualities would then find a ready market. Such conditions could not but help our export trade. It is no less than a truism to say that a soundly based home market is essential to a competitive export trade, since, in particular, it gives the manufacturers those long runs which are so essential to low costing.
I was impressed with a further comment made by my hon. and gallant Friend the Member for Rochdale (Lieut.-Colonel Schofield) yesterday about design. I will spare reading it to the Committee; it is reported in HANSARD at column 78. His point is an important one. In the old days, before this difficulty to which the D-line gives rise, it was possible for manufacturers to "chance their arm" a bit in the matter of textile designs to gain export trade but in the realisation that if their hopes were not successful they would have the home market to fall back on. That is exactly what they had not got under these conditions.
Quite frankly, I feel a little militant on this Purchase Tax matter.
Dr. H. Morgan: Very little.
Mr. Hirst: No. Really, this cut of £3 million is rather mean, and to me is most exasperating because wool has been excluded. Purchase Tax is a disincentive to production of that quality which must be the main plank of British exports far more now and in the future than ever in the past. A small cut amounting to less than 1 per cent. of the whole Purchase Tax is rather—and I am not here to be taken to be speaking literally, because it is completely to the contrary—like fiddling while Rome burns. The only snag is that, so far as the West Riding is concerned, we have not even got "fiddling."
Purchase Tax started as a planner's device. It has become a revenue tax and descended down the line to a mopping-up exercise. I do not underrate the Chancellor's task and his need to watch and discourage over-consumption, but there are other and important aspects that arise particularly in the textile field where this imposition is a disincentive to the expansion of the export trade which is so vital to our economy.
To refer, briefly, to beer, I quite happily disclose a somewhat modest inter-
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est. I am sorry that there is no reduction in the duty. The law of diminishing returns has undeniably begun to beset this very over-taxed industry. Yesterday, the Chancellor drew attention to a fall last year of £4 million in beer Excise Duty, and in page 24 of the Financial Statement he budgets for a further fall of £5 million this year—a total of £9 million. Perhaps my right hon. Friend cannot do anything this year, for reasons which we know, but I must make a plea that perhaps a modest reduction of 1d. a pint in the price of beer would cost the Exchequer very little, apart from the first year, but would encourage consumption.
I realise the need for simplicity in the Finance Bill in the circumstances of this year, but I still feel that we want a little more realism introduced into depreciation allowances; on the one hand, for commercial buildings—which is a matter of justice—and, on the other, for plant and machinery. I am grateful for the concessions made last year by the investment allowances, but we are still handicapped as compared with countries with which we have to compete, such as Germany and America. Plant and machinery are the tools for the job. If we are to meet the ever-growing competition in world trade, our workshops must not only be the most modern, but taxation should not penalise that outstanding and essential objective.
I am not of the opinion that some very modest help with Entertainments Duty would be other than directed into vital channels. Bearing in mind his generosity last year, I am afraid that I never had any hope that my right hon. Friend could seriously touch Entertainments Duty on cinemas this year—certainly not on the lines of the representations made to him. I wish to plead for the small cinemas which are undoubtedly being crushed out of business, and from which many consequences will flow. One will be to affect the independent film producers who need the wide scope of possible showings to justify their own work. The very small ones do not get very much chance. I hope that the Chancellor will bear in mind that we are going to lose a considerable number of small cinemas which will to a large degree affect the production of films by the small "independents" for whom I have most thought.
I turn now to death duties. Everyone, including the manual workers, should

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recognise that if the country's capital in the form of death duties on private businesses is taken as income at the rates in force today there must come a time when efficiency, and even high employment, might be somewhat undermined. As I see it, the private business is the cradle of industry. As we take an increasing care of our children, so should we take care of these concerns.
Those businesses are affected in a way mentioned by my hon. Friend the Member for Bolton, West (Mr. Holt), who referred to the limit for duty-free imported machinery. We must get some sense into those provisions. At the moment, the limit is £2,000. That is a great penalisation on the small firms, and to a number of the smaller firms in the textile trades it is a real handicap. I am in touch with the Minister of State, Board of Trade, at present about many such cases. He always gives a most courteous answer—he is a most courteous person—but that is all I can say about his replies, though I have no doubt that he has his difficulties. Nevertheless, it is something which is definitely affecting the economy of smaller firms.
Much of my comment and criticism is intended for thought and action of some future occasion. For the present, I deplore the Chancellor's attitude to Purchase Tax on textiles. On the other hand, I applaud him for the soundness of his decisions in present circumstances and for the undoubted incentive given to greater productivity. I applaud him for his trust in the common sense of our people. As the "Yorkshire Post" editorial says today:
"Mr. Butler's policy represents an act of trust in the nation."
I thank him for that, and I am confident that the nation will not be unmindful of that trust.
7.19 p.m.
Mr. Harold Lever: I shall not follow for too long what was said by the hon. Member for Shipley (Mr. Hirst), but I warmly welcome his support of the Lancashire case for a reduction of Purchase Tax on textile goods. He said that he was a little militant about it, but I regret that he did not put Lancashire's case as forcibly as he might—although any help is welcome.
Mr. Hirst: I left that to Lancashire.
Mr. Lever: If the hon. Member wishes to know the meaning of militancy he should consult the Minister of State, Board of Trade, who will tell him of his reception in Manchester, where many of those who spoke to him were of his own political persuasion. Still, we welcome the hon. Member's support.
Mr. Hirst: I was not trying to speak for Lancashire. I have the honour to represent a West Riding of Yorkshire town, and I thought that Lancashire could speak for itself.
Mr. Lever: I was speaking about the Purchase Tax in relation to the textile industry, and I welcome the hon. Gentleman's support, even though I thought he over-estimated his own militancy.
As I have some very severe strictures to make upon the motives of this Budget, I think that I ought to begin by saying that the whole Committee recognises that the Chancellor has grown in stature intellectually and in the grasp that he has shown of the affairs of the country in the years that he has been in office. We all know that he has found great expression for his talent in the office he occupies, in spite of the many personal difficulties which have afflicted him during the period of his office. On the other hand, his Budget is something of an outrage from various angles.
It will not do to quibble, as the Chancellor has done, and to say that this cannot be a rich man's Budget and an unscrupulous electioneering Budget at the same time. Of course, it is both. It is both unfairly weighted in favour of the rich, and it is also an electioneering Budget. There is no contradiction, for this reason. In so far as Income Tax reliefs will benefit mainly the well-to-do, it is a Budget unfairly weighted in favour of the rich; and the fact that it does not give any relief to the poorest section of the community does not demonstrate the Chancellor's electoral or financial integrity. Not at all. What the Chancellor has done is to rally the ranks of his own supporters and to show a superb indifference to the poorest sections of the community whom he knows will, in any event, vote against the Conservative Party at the coming Election. Therefore, there is no contradiction in the assertion made by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) that this is,

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at one and the same time, an unscrupulous electioneering Budget, and also a Budget unfairly weighted in favour of the well-to-do.
I do not suppose that any person who heard my right hon. Friend the Member for Leeds, South this afternoon, and heard him objectively, would voluntarily entrust the conduct of the affairs of this country at the moment, so far as foreign trade is concerned, any further in the hands of a Conservative Government. The only danger that exists for the country, and the only hope for the Conservative Party, is that the public will not perhaps appreciate as quickly as we must in this Committee, and as the party opposite clearly appreciated, how hopelessly indefensible Government policy is with regard to our import-export situation.
The ridiculous contortions, wriggles, and financial acrobatics which have characterised the Chancellor's policy show that the Government are at their wits' end—and no great distance has been travelled to get there. The Government are attempting to do two impossible things. They are attempting to have a glorious anarchic, free-for-all in foreign trade, and at the same time they are attempting to balance overseas payments. They hope that by some miraculous, spontaneous act on the part of hundreds and thousands of individual buyers all over the country there will be bought the right quantities of goods that will balance our imports. I suggest that such optimistic expectations cannot be seriously maintained.
By abandoning all control of our export-import position, the Chancellor has done precisely what he is accused of, and has thrown away a great opportunity for building up the reserves of this country. How important that is can surely be gauged by the fact that in order to catch up with six months of bad foreign trade all sorts of remedies are applied, hot and cold, to different parts of the economy in the attempt to find the balance, whereas if there are reserves one can take a long view and let things even themselves out.
It was fortunate for the economy of this country that the first half of last year was fairly prosperous in terms of export-import balance, and that it was only in the latter half that we went into serious
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deficit. Had it been the other way round we should have had hot and cold poultices applied all over the economy and all sorts of things tried to remedy the position.
I do not want to talk about the import-export balance because, quite frankly, no serious-minded person in the Committee supposes that the Government have any kind of policy about it. I want to talk about the home financing of the Budget, which was dealt with in the Chancellor's speech. It was a rather remarkable speech, I think, because, for the first hour, it seemed to have been written wholly under the influence of the austere, calculating prose of the Economic Survey. As for the proposals, they all seemed to be written under the influence of that popular American classic: "How to win friends and influence people."
There is no relation between the theme of the first hour of the Chancellor's analysis of the principles on which he based the Budget and the taxation proposals which he then proceeded to make. Having pointed out that we could not afford any taxation remission, and having subscribed to the theory which, I must confess, is popular on this side of the Committee as well as on the other side, and which I do not in the least support, and having professed himself an adherent to the view that a Budget surplus is necessary to combat inflation, he then proceeded to demolish any prospect of a Budget surplus.
Sir E. Boyle: We are having a Budget surplus.
Mr. Lever: Very small.
Sir E. Boyle: No, £130 million.
Mr. Lever: We had a Budget surplus of £433 million below the line last year, and the Chancellor is now budgeting for a smaller surplus. It seems remarkable in the circumstances that, as he has told us, we have a greater inflationary danger to face even with the £433 million surplus. It is a dangerous assumption that a Budget surplus counteracts inflationary pressures in a healthy and desirable manner. I hope to proceed to prove that even the exponents of that theory have not the courage of their own convictions.
What has happened? We have been told for several years by the economic

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pundits that what is required if we are not to experience economic inflation is to take from the people in taxation more than is actually needed for current expenditure, not because we need it to finance our payments, but in order to prevent inflation, and that the bigger the Budget surplus the more counter-inflationary the Budget is.
I have hinted for some years past, when I have intervened in the Budget debates, that I do not subscribe to these strange theories. The most striking example of this fallacy is illustrated in the present financial year. Last year, the Chancellor did not budget for a surplus at all, or, I think, for only £10 million. I am sorry that I cannot absorb the blue book figures as readily and accurately as some of the more well-informed Members of the Committee. I do not claim to be an expert, and if anyone wishes to correct me I shall welcome his correction. I think, however, that the Chancellor budgeted for about £10 million surplus, which I think hon. Members will agree is negligible. He budgeted for a flat balance of expenditure and revenue for the current finances of the year. Quite unexpectedly he got a surplus of over £400 million, which, according to the theory to which all Chancellors have been wedded, is highly deflationary.
What has been happening? We have had an unexpected Budget surplus, and one would have expected an unexpected deflation to match. Having produced a deflationary surplus of over £400 million, however, instead of producing an expected disinflation to match the Chancellor's unexpected and unhoped for Budget surplus, what do we find—roaring inflation. That is very astonishing. It is not conclusive, but it means one of two things. It means that either the Budget surplus is not disinflationary and might even be inflationary, or it means that what was required by the present circumstances was not a Budget surplus of £430 million, which the Chancellor got, but a Budget surplus of £800 million, or something of that order, which is ridiculous and impossible to achieve.
I want the Economic Secretary, or whoever is to reply, to tell us two things. First, I want him to tell us why it is disinflationary to take more off the people in taxation than is spent; and, secondly,
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I want him to say why, if it is disinflationary, it has not produced that disinflationary effect this year. I want to know why, when we need a greater disinflationary effect, the Government are budgeting for a smaller Budget surplus than the one we had this year. It is past all logical comprehension.
Let me demolish as speedily as I can a popular misconception on this subject. This theory of the Budget surplus proceeds from the erudite and is accepted by the ignorant. The ignorant say that that it is obvious that if people's purchasing power is taxed, they cannot spend what is taken in tax and, therefore, there is less inflationary pressure. But that assumption does not stand up to examination if one proceeds to follow the money into the Chancellor's pocket. The mere transfer of money from the taxpayer to the Chancellor is not necessarily disinflationary at all.
What does the Chancellor do with a Budget surplus? I am not saying that it could not be disinflationary, but I am asking where is the evidence that it is disinflationary. The Chancellor may use the surplus to pay off a debt. Let us say, for example, that he pays off to the Prudential a £1 million loan. The Prudential, instead of having £1 million of Government loan, have got £1 million back. Does it do nothing with it? Of course not. It puts it to a more inflationary use than when it held Government stock.
Suppose the Government have raised £1 million by taxation, instead of borrowing it from the Prudential. All the Government do by having a Budget surplus to pay off their capital expenditure is to avoid borrowing the money. They would have found the money anyway. Instead of borrowing £1 million from the Prudential, they would have taken it in tax from the citizen.
It may be more inflationary not to borrow from the Prudential and to take the money from the citizen, because if the Government do not borrow from the Prudential and other big lenders, the lenders have still got the cash and they may spend it more vigorously—I do not say they may not spend it desirably—than if it was borrowed from them.
Let me give a single example to show that the so-called infallible logic does

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not always apply, and that this matter is far from simple. Take Mr. Poorman, and take 5s. from him by way of Entertainments Duty. He has 5s. less in his pocket, and therefore he can only go to the cinema 10 times a year instead of 15 times a year which he would like to do, including afternoon matinees when the cinema is only half full. If Mr. Poorman had an extra 5s., he would have been extremely inflationary on paper; he would have spent an extra 5s. on helping to fill the cinemas which already have projectionists and films. But he would be getting 5s. more goods and services.
That is what happens when the money is taken by way of Entertainments Duty. But by taking it from Mr. Poorman and several millions like him, with no beneficial effect whatever on the ratio between goods and services on the one hand and money on the other, we leave in the hands of the merchant bankers and other investors large sums of money which would have been loaned to the Government and immobilised in that way. But they are left with the money, and they spend it financing all sorts of projects.
The truth of the matter is that it is an entirely unproved assumption that a great Budget surplus in all contexts, and especially in the present one, acts in a disinflationary manner. At any rate, the least that innocent laymen like myself are entitled to have is some well documented case to prove this assumption.
It is an extraordinary proposition that we should be taxed far more than we need be for the running of the country unless a cogent, detailed and convincing case is made out to prove that it is necessary and desirable in the general interests of the country. It is an unproven assumption, and on that unproven assumption we have been heavily taxed for some time.
I go even further and say that it is doubtful whether it does not even work in the opposite direction. I would ask the Minister to tell us why, when we have had an unexpected dose of disinflation by an unlooked-for surplus, we have not now got an unexpected dose of deflation. I am sorry if it causes the Economic Secretary some trouble. All I want him to tell us is why, when he did not reckon on the disinflationary surplus which was achieved this year—if it is disinflationary
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—we have not had an unexpected deflation to match it instead of an unexpected inflation, which is what we have got. It is perfectly plain, although it appears to cause anxiety, doubt and misery to the Economic Secretary.
Sir E. Boyle: I shall not be replying to the debate, but I will do my best to answer the hon. Gentleman's question. I agree that to tax people more in order deliberately to create a surplus is a blunt and unsatisfactory instrument to cure inflation. My right hon. Friend the Chancellor of the Exchequer himself said that in his Budget speech in 1953. But to give away the whole of a large prospective surplus of £280 million in tax reliefs could well be too inflationary. That is altogether different.
Mr. Lever: I do not agree that a budgetary surplus is disinflationary at all. What I want the hon. Gentleman to explain is, if Budget surpluses are always disinflationary, when we have an unexpected budgetary surplus of a very large size as we have this year why do we not get an unexpected disinflation or deflation to match it? Why have we got instead an unexpected inflation?
The other point I want to make about the Budget surplus is this. There was a growing volume of congratulations from everybody as it became more and more apparent that the Chancellor, who had only budgeted for a Budget surplus of £10 million, or some negligible amount, was going to get a great Budget surplus. It is extraordinary for hon. Members to congratulate themselves on major errors on the part of the Treasury and the Chancellor. All that an unexpected Budget surplus means is that the Chancellor has made gross miscalculations. I am sorry to spell out this A.B.C., but all that a Budget surplus means is that we have got more money coming in than we spend.
The Chancellor did not expect to have more money coming in than he was spending below the line. Instead of coming to the House humble, penitent and apologetic for having taken £430 million more from us than was necessary for the good of the country, he has come here proudly, saying, "We have made a grotesque mistake. We have got £430 million more from you people last year than my economic advisers thought was good for the country."

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It is extraordinary that the lofty, economic theory which prevails in most quarters of the House has brought us to the stage at which we can congratulate ourselves on our mistakes, and the bigger the mistakes the more grounds we seem to have for pleasure. All that this Budget surplus means to me is that the Chancellor has made a gross miscalculation, and the economic experts who advise him were wholly wrong, although it may not be their fault.
The theory behind the Budget surplus should be exploded once for all, because if the economic experts can be so wrong about the outcome, it does not lie in their mouths to say, "We cannot afford £20 million for this and £50 million for that or to make a concession to the poorest people by means of reliefs in Purchase Tax, Entertainments Duty and the tax on beer, tobacco and textiles. We cannot afford £3 million for textiles. It would ruin the economy." They have got it worked out to three decimal places in the Treasury. But see how inaccurately they have got it worked out. Their £430 million is wrong—not upon the general economic equation of the circumstances in this country, but on the simple balance between expenditure and income for one year of the Government.
How dare people who inevitably make mistakes of this size come forward in the House, or prop up the Chancellor when he comes forward in the House, to deny the textile trade a reasonable relief of Purchase Tax, which would cost another £3 million, on the ground that we cannot afford it? They do not know to the nearest £500 million or £1,000 million what we can afford in the current year.
I put this to anyone who is interested in the economic forecasters, in their predictions and the relevance of their predictions to reality: they are all extremely talented and brilliant men who write lucid prose—and that is very rare among economists, most of whom bespatter with unintelligible jargon every paragraph which they write on our economic situation. The Economic Survey, on the other hand, is lucid and reasonably free from the normal economist's patter.
But if we take these predictions over the last few years, as seen in the Economic Survey, we find that on every single major item in the equation they have always
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been tens and hundreds of millions of pounds wrong. Ask them how much we shall spend on capital investment next year. Let us look at the Survey—I have not read it all this year, but I will get round to doing so in a few months' time. I have read the previous Economic Surveys, and they will serve equally well. I have read parts of this Survey and have found it very amusing so far, and I hope to continue my reading so that I can give the House the benefit of my reactions during the Committee stage—if the Budget is ever before the House in Committee in appropriate time.
In the past, every one of the predictions and estimates has been wrong in every single one of the major items required for the economic calculation. Look at the question of capital expenditure. If hon. Members look through the old Economic Surveys they will see that the percentage errors there were so vast that they make one tremble. Look at the figures for the export-import trade. There were vast inevitable errors about steel production and things of that kind—all hopelessly incorrectly estimated. The estimate for the percentage increase of production was inevitably and wildly wrong.
Hon. Members should not fall into the popular error of believing, when I attack these figures, that I am opposed to planning. I have said this over and over again in the House: I am against arrogance in planning, that is to say, dogmatic arrogance on the assumption that these estimates have some sacred validity rather like a bank account entry.
I have heard Chancellors of all complexions take up these figures, which are only very rough estimates, necessarily, about what is going to happen next year, and treat them as if they had Biblical sanctity. One deviation from the figures, one missing link in the carefully worked-out chain, and everything goes to pieces and we shall be bankrupt—that is the attitude which they have adopted. They have said, "We should like to do it but we cannot afford it." They have regarded these very rough estimates as the sacred balance sheet drawn up by the numerous talented, lucid young men, and I understand ladies, in the Treasury appointed for the purpose.
This will not do at all. It may not be the fault of the Treasury planners; it may be that the arrogance is solely on the part

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of the politicians, and it may be that the politicians have been warned, "Do not try to bamboozle and bulldoze the House in this way. These are only tentative figures."
Do hon. Members know how the Economic Survey figures on which our taxation is based are arrived at? They are not arrived at, as a rule, on any estimates of what is probable at all. The Treasury is very cagey; it does not like this new-fangled nonsense of making predictions and estimates. I understand that the Treasury takes the present and projects it 12 months ahead. It knows very well that in the next 12 months conditions will be wholly different, but the Treasury says, "We are not here to make speculative estimates on next year's conditions. We can only work to cold statistical estimates, and that means projecting this year into next year." That always produces a false result, and anybody who challenges me in saying that should look at the examples provided by past Economic Surveys which, as I have said, are part of my reading during the course of the year.
My hon. Friend the Member for Gloucestershire, South (Mr. Crosland) made a witty and devastating speech which I thought demolished the Chancellor's pretentions. Nevertheless, I could not follow my hon. Friend when he rebuked the Chancellor for not carrying out the advice of all the economic pundits. My hon. Friend drew attention to the fact that all the experts, to whom we are expected to genuflect respectfully, have said that what is needed is a "No change Budget."
Why on earth should we need a "No change Budget" if we are in an inflationary situation? If these pundits had had the courage of their convictions they would have said that a £400 million surplus and a 9s. standard rate of Income Tax is not enough. They would have said that we ought to have a £800 million or £1,000 million surplus. But none of them has said it.
Not a single one of the leading economic theorists all of whom have expounded in favour of a Budget surplus to relieve inflation, have had the courage to come out and say that. I expected my hon. Friend to say that we ought to have higher taxation than we had last
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year because obviously what we had last year has not prevented us from having inflation. I would respect the pundits more if they showed some signs of believing their own theories and of carrying them to their logical conclusions.
I want to make a comment on the unproved assumption about a Budget surplus. In so far as it leads to excessive taxation—unnecessarily—on a false assumption, it is in fact inflationary; and I will deal briefly with the main heads of my argument. Let me take wages, for example. Every piece of indirect taxation is a wage cut. Every time we take away a man's wages when he goes to the cinema or buys his tobacco or his beer, we are cutting his real wages. Naturally, if we do that, he wants more wages. By having unnecessary indirect taxation we are setting into play a dynamic pressure for wage increases.
In that way we have started to drive the cost of living up and to drive up the wage demands. What happens when the theorists say that we must have hundreds of millions of pounds extra in order to combat inflation is that we take a man's money by putting up the cost of his necessities and pleasures, and, not unnaturally, men get together and, having efficient trade unions these days, I am glad to say, they say, "We find it very difficult to manage and we want more money." They get more money. In other words, the man has replaced by increased wages the money which the Chancellor has taken from him in taxation, we are back where we were with inflation, and we have the so-called Budget surplus.
The Chancellor then says, "Tut, tut! Now that the man has more wages we must tax him even more." Then, not unnaturally, we find that we get higher taxation and the workmen balancing the situation all the time. Although we are back where we were in the sense that we have taken through taxation what has been obtained in wage increases, in fact we have set into motion something which was stationary. We have started a whole dynamic pressure upon the economy for more wages.
I am saying this in no hostile spirit to those who demand higher wages, but we all know that the biggest single item of inflationary pressure—although there are many other important items—must inevitably be the wage bill. Once the whole

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position ceases to rest in balance, as it did under the Labour Government, and the dynamic movement forward is started, we have done a devastatingly harmful thing in terms of dealing with inflation.
I want to say something which may not always be palatable to hear but which ought to be said. We have heard a great deal about incentives through the reduction of direct taxation. I want to tell my hon. Friends, and the whole House for that matter, that if we expect, even temporarily or partially, the management of private industry, running as it runs under present conditions, to be efficient on a standard rate of Income Tax of anything like 10s. in the £, we are hoping for the impossible. If that is reactionary, then I can only say that, as far as I am concerned, it is an honest attempt to appreciate realities.
As long as those who manage industry know that they will have the Chancellor of the Exchequer as an involuntary partner in every wasteful and speculative folly in which they are engaged, they will spend; and they will spend far less cautiously and intelligently and with far less shrewdness of appraisal than they would if the money were coming out of their own pockets.
It may be morally desirable that the standard rate of Income Tax should be high. When we compare the situation of the payers with that of the poorest people in the land, it may even appear morally desirable that we should take 15s. in the £ as the standard rate on company profits, but, from the economic working point of view, if we do this we must not expect that we shall get economy or efficiency from the people who are managing industry.
I know thousands of people in this country today, oddly enough, middle-class folk, who have been genuinely hit in many ways in their standard of life—doctors, lawyers and architects—tens of thousands of them who are now living at below their pre-war standard of living. Nevertheless, we find the odd anomaly that they run two cars. Before the war, we never found that the average doctor, dentist or lawyer could run two cars; this was a luxury left for millionaires.
Dr. Morgan: Yes, there were.
Mr. Lever: There may have been some doctors in that fortunate position.
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I suggest that there is a great deal of unnecessary expense on a very wide scale which only takes place because people know that the Chancellor is paying half the cost, and that we have cheapened the price of motor cars and petrol and many entertainments and luxuries, because the Chancellor is sitting as a silent, uninvited and involuntary host, meeting half the bill.
I do not say that it necessarily follows that we must reduce taxation by means of the standard rate of Income Tax, but that is the only suggestion put forward so far which mitigates that fault. Unless we find some other means of checking the inflationary and wasteful spending, which must result when one is sharing 50–50 with the Chancellor of the Exchequer in any loss or extravagance that is undertaken, then I am afraid, however reluctantly, that I shall be compelled to support the reduction in the standard rate of Income Tax. I think that a high standard rate, as it at present operates, far from being disinflationary, whether it produces a Budget surplus or not, is highy inflationary and demoralising in effect.
While I find it necessary to address these remarks to the Committee on the question of the principles on which the Budget is based so far as the surplus is concerned, it makes me even more indignant that the Chancellor has the cool effrontery to come before the people of this country and say that he can spare only £100 million or a little more in tax reliefs, because all the things which have been said about the incentive value of reducing taxation apply with at least equal force to the effect of reducing indirect taxation. But then even more moral force attaches to the fact that the Chancellor has given away the whole of his Budget surplus without finding a single penny piece for the poorest persons in the land, who are very badly hit by the rising cost of living which has taken place in recent times. For a Chancellor to have the hard-heartedness to speak in such terms when he does not even adhere to his own theories about the necessity for a Budget surplus is most deplorable.
I think it is wrong to suppose that the Labour Party is interested either in high taxation or austerity. The Labour Party did not come into being to support reactionary or regressive taxation to the extent now levied on the poorest people

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in the land—on their beer, their tobacco, their entertainments or necessities. In an earlier generation, it would have been regarded as highly reactionary to support indirect taxation of that degree. I do not support it. I know no justification for it. I think it is an offence, morally, against the principles of my party to support that level of taxation, especially on the basis of unproved assumptions as far as disinflation and the Budget surplus are concerned.
We know that it is almost impossible to combat the national belief that anything unpleasant will produce beneficial results, but I must ask the Committee, before we accept larger taxation than is necessary, to examine the arguments put forward to justify that. I condemn this Budget because it is an unfair Budget, because it is an unprincipled Budget, and because it is the most hard-hearted which has been offered by any Chancellor in the House of Commons since I have been a Member.
7.55 p.m.
Mr. John Rodgers: The Committee has just listened with relish to the speech of the hon. Member for Cheetham (Mr. H. Lever), but I found it a little difficult to reconcile the arguments which he advanced. He started by saying that the Chancellor's Budget was an unscrupulous Budget, a bribery of the electorate, and finished with a passionate plea for more disbursements this year, and a suggestion that the Budget surplus should be used to make greater concessions to the poor. I found these very antagonistic statements difficult to reconcile.
Mr. H. Lever: What I say is that relief has been given to the potential supporters of the hon. Gentleman, and that those who will vote against him—the poorest in the land—have been completely ignored. I merely wanted to correct the balance.
Mr. Rodgers: We have had some attractive speeches from hon. Members opposite, but they have all revealed the muddled thinking of the party opposite. The hon. Member for Gloucestershire, South (Mr. Crosland) wanted a much more austere Budget than we have had presented by the Chancellor. He thought it was quite wrong that there should be any dispersal whatever of the surplus to
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the British public. On the other hand, the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) gave us a list of things he would have done and of rebates which he would have made had he been in the fortunate position of Chancellor.
The right hon. Gentleman mentioned beer and other things to do with Purchase Tax, the fuel tax and a whole lot of other taxes which he was willing to cut, rather than adhere to the line taken by his hon. Friend the Member for Gloucestershire, South. Hon. Members opposite must make up their minds whether this is an electioneering Budget, in which we are giving away too much, or one in which we are not giving away enough. They cannot have it both ways, which seems to be what they are trying to do tonight.
Listeners to the right hon. Gentleman the Member for Leeds, South will remember that he was glorifying in the austerity which this country suffered under a Socialist regime. His ideal seemed to be "Airstrip One" of George Orwell's fancy. I believe that the Chancellor was right in laying down the three aims which we must have before us: first, expansion; secondly, efficiency; and thirdly, freedom, These are the main economic aims which we ought to pursue. We must expand our economy if we are to maintain our standard of living, and even advance it, and to do that we must ensure continual fresh investment in industry. We must have short-term replacement, the building up of stocks, and, above all, we must embark on long-term creative projects.
Our population is growing, and the proportion of people above the working age is also growing, and we therefore need a measure of expansion to keep the present standard of living and a much greater measure of investment if we are to match the increased standard of living for the British people, which is what we all desire. To do this means not only replacing existing plants, but we must have new and improved plants. Moreover, many are more quickly obsolescent owing to technological advances here and abroad. The changes are at a faster rate than hitherto. This sets us a very great problem.
There was one remark of the hon. Member for Edmonton (Mr. Albu) with which I agreed. I do not think that we can rely any longer on the export of basic products of the older routines in order to earn

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the necessary foreign currency to pay for imports into this country. We need to produce and to export new products, which are the result of creative effort—goods of quality and artistic goods, capital goods and the like—which we are not at present producing in anything like sufficient quantities.
Unfortunately, the new type of products we need to make and to export to pay our way in the world, so far as I can make out, require not the same, but much greater capital investment than the old type of export industries needed. They require much more foresight, more planning, much more imagination, much more enterprise and, above all, they require much more risk-taking over a long period.
I do not think that the terms of trade over the next few years are likely to move in our favour at all—
Mr. Lewis: That is why there is to be an election.
Mr. Rodgers: I mean in the long term.
Therefore, we are faced with the problem of how to raise the quantity of goods, not only for home consumption, but—more importantly—for export. We can do that only by getting more from existing plant, by replacing plant through depreciation and building new plants, by expanding foreign investments and by securing more visible exports. To do that, obviously, we have to stress the home investment programme. So far as I can work out the figures, we have available in any one year perhaps £800 million worth of new investments out of which to provide jobs in the private sector of industry and £700 million in the public sector which helps to keep jobs secure, to provide housing, communications, and amenities. Roads, rails, electricity, and housing must absorb a great deal of effort, and will strain taxation to the utmost limits.
Let us make no mistake, all investment is effort. We sometimes seem to forget what investment is and to think that it is a reward of effort, but it is itself an effort. For many years to come taxation will be strained to provide enough capital in the public sector to provide modernisation of road and rail communications in general and to look after other needs in the public sector. As I see it, therefore,
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the main burden of maintaining our complex community and increasing efficiency, as usual, must rest on direct and indirect investment.
I believe that all hon. Members, no matter what their political views, would agree that the voluntary saver does deserve a fair return for the risks he takes and the help he gives to the economy. I am sure that all of us, on both sides of the Committee, are delighted with the increase in saving during last year. I think that the Budget will help that movement on; that is one of the reasons I applaud it. I believe that the cut in the standard rate of Income Tax will help people to save more and will make more available for the sector in which it is most needed. I should say that at the very least we need £100 million over and above what is ploughed back by existing firms to meet the growing needs of new industries and the constructive ideas now coming forward, and search for new markets. That search costs money.
The right hon. Member for Leeds, South quoted statistics from a recently published book of the London Stock Exchange about incomes which flow from quoted securities of public companies. But the right hon. Member did not quote one figure which, I think, is very relevant to an examination of our present economic position. That figure is that at most only an extra £40 million or so, after tax, flowed in in 1954 to private investors for reinvestment, or spending. I believe that from this, and not from Government investment, the greater part of new project investment really arises. It is of paramount importance to maintain and develop this channel because there is much more flexibility to be achieved by applying the money in the right way where it is wanted, rather than as we have done in the last few years—by forcing the ploughing back of more than is necessary into the reserves of established companies.
I agree with the hon. Member for Cheetham that a great deal of expenditure by companies which is said to be investment nowadays is not investment. There is the creation of gardens, buildings and the like which only add to the cost of the merchandise, raise the prices and make it more difficult to secure a firm place in the export market, but it is not half as bad as would appear from a

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casual examination. Hon. Members opposite have an entire misconception that those who receive dividends squander them indiscriminately in riotous living. That is quite untrue and the idea could be scotched by looking at the figures. We may recall that £650 million more was spent by the public as a whole in 1954. The greater part of that, obviously, must have come from the £750 million increase in so-called earned incomes. The idea that riotous living is indulged in by those who depend on dividends for some of their income is immediately scotched when we consider that figure.
The Stock Exchange records show that the greatest return to investors from their savings in capital projects is at the most 6 per cent. before tax and, therefore, a little over 3 per cent. net after tax. I believe the Budget will encourage people to make new savings and to be willing to risk savings in new capital formation projects. I therefore believe that the path which the Chancellor is treading is in the right direction and that the country is being guided in the proper way by the wise and firm handling of our economic and financial affairs by the Chancellor.
Just as profits for reinvestment should be as flexible as possible, I wish to stress that I believe existing capital equipment should be used to the greatest possible degree of efficiency. I do not believe that we are using existing capital equipment in the country as efficiently and as continuously as we could. Long runs or continuous shift workings would bring great economies and minimise new plant needs. Incidentally, they would minimise the need for a great deal of building which we see today. Every device should be employed to bring about that end.
Hon. Members on both sides of the Committee know that any employer who tries to work his machinery to maximum efficiency faces many grave difficulties. A great many of those difficulties are based on our social structure. Our habits have become static and I believe that as a nation we are in danger of becoming slightly unrealistic in this matter. If we could work the majority of plants in this country two or three shifts, as is done in America to a great extent, that would involve changes in habits of shopping, catering and transport, but more progrts-
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sive countries are working their plauts much more efficiently and much more intensively than we are.
This is most important, not only to get the maximum out of investment in industry, but also because the pace of obsolescence is increasing and we must use our plant to the greatest extent in order to compete in the markets of the world. Today, there are so many rules and regulations which would have to be relaxed that I think the country should seriously ask itself whether a real change is not required in our social thinking.
This is a challenge to leaders of industry, to leaders of the trade unions and to the workers. New social thinking is required to solve the problem facing us now, a problem which will increase in the future. In some countries, such as Scandinavia and Switzerland, the cooperation of labour seems easier to obtain by management than in some cases in this country. The workers must appreciate—I am not making a political speech on this point at all—that managements have problems and they must try to help to solve them because the successful solution of the problems which face management is identical with the long-term interest of the workers.
There is no antagonism of ideals between management and workers—both of us are in this together. Only by real cooperation shall we solve the problems exposed at various times ever since the end of the war. Under full employment today there is little to be gained by the continuation of restrictive practices whether by management—there are plenty of restrictive practices employed by management—or by the workers. It should now have become self-evident to us all that such practices from whatever source, whether from management or from workers, inevitably lead to inflation and to a lowering of the standard of living of all the people.
One of the greatest problems facing us today is the proper deployment of the existing labour force. No one wishes to see longer statutory working hours, but for the life of me I see no reason why those who wish to work longer or more efficiently should not be allowed to do so if they want to increase their wage packet or their status. No one wishes to see any reduction in the amenities that the British people enjoy, but here again is a challenge

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to every one of us to consider whether a change in our social thinking is not necessary so that we can work more intensively the whole 24 hours round and thus get the maximum effectiveness out of the existing capital equipment and the new capital equipment that we will be putting into our factories.
There are other ways in which that desired result could be obtained. I have already said that management and workers must pull together, as they did so magnificently, as I saw when I was at the Ministry of Production, during the war. Management and men realised that they had a common aim to win the war and they pulled together and co-operated at all levels. We need that same spirit in industry today, and we need much more efficiency. I use the word "efficiency" purposely. There has been a lot of talk in the House and elsewhere about productivity, but "productivity" has come to be applied to factory output only. I want to use the word "efficiency." It is a good old English word and is much better understood. I do not like the American word "productivity." I prefer to ask managements and men to try to achieve a greater measure of "efficiency."
I believe that where we can get bigger returns if we can get more efficiency is in that section of the workers who are employed in providing services of one kind or another: in other words, the nonproductive side, which actually employs 60 per cent. of the gainfully employed people, a fact which is sometimes forgotten. We seem to concentrate far too much of our efforts, important though it might be, on output from the factories. I believe that people in the factories are very efficient and are working hard—that is my experience when going round the factories and watching them. The factory side is fairly efficient, but I am not so sure that there is the same efficiency or the same urge for efficiency in the other non-productive sector of employment: in other words, transport, distribution, office and commercial work generally.
It is on the non-productive side that an increase in efficiency could help. If the services provided by ten people, for example, could be provided by eight people without loss of quality or service, productive industry could absorb the extra one or two people or one of them
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could be used to give that 10 per cent. extra production that we require to maintain the standard of living at its present level. I believe that a drive for efficiency in this sector would pay national dividends, and I urge my right hon. Friend the Chancellor of the Exchequer to give thought to whether the work of the Productivity Council could not be extended into the non-commercial side of industry. Obviously an efficiency drive, to be effective, demands, first, scrupulously fair management; secondly, the willing cooperation of all concerned, and, above all, wise leadership by management and by union officials. I believe that a drive for this efficiency in the non-productive sector would have a greater impact and would do something to help solve our problems.
Speedier transport, speedier correspondence and clerical work would pay national dividends. At present, millions of man-hours are wasted because of transport delays. Much business is lost through correspondence—for example, quoting wrong currencies or wrong measurements. We are too inflexible and we need a new emphasis on efficiency in this 60 per cent. of our industry. Speedier communications, speedier delivery of better quality goods, speedier turn-over of stocks and better servicing of retail should all lead to increased returns and lower final costs, thus placing us in a more favourable position in the export markets.
All this presupposes a better understanding of economic policy and economic matters by the whole country. It also presupposes and demands a more progressive and adventurous attitude on the part of management and of workers at all levels. On the clerical side, if a man can get rid of one in every four workers and do the same work as efficiently, the management ought to be paid more and so ought the three remaining workers for being efficient. I believe that the Chancellor's Budget will help a little in that way. We have done a lot to try to squeeze down the size of central and local government, but in my experience much more could be done to make the central and local civil servants efficient.
Mr. Douglas Houghton: What experience has the hon. Member had?
Mr. Rodgers: I was for six years a civil servant during the war and I have been in touch with the Civil Service and local government for many years.
Housing difficulties are easing and restrictions on building and the redesigning of shops are being removed. The population is increasing. Soon we should be able to look forward to a greater mobility of labour and other changes in our social habits which will produce quality goods of the right type and price to sell in the export markets of the world. But one final thing that the country needs in addition is that the business men and the entrepeneurs should be given a freer hand now that the community is adequately fed and clothed and in full employment. We are getting on the level. There are dangers ahead, but we would like to see the brakes taken off. We need a free economy and free exchanges, free in spirit, free from further pressure and, above all, free from timidity and over-cautiousness.
I believe that the Chancellor's Budget gives a push along that road and will help to bring a more progressive and adventurous outlook in industry on both sides, among managements and men. If we can have this new spirit—it is not a very big "if"—given time and good will and a lot of effort by all concerned, the country can look forward to a standard of living, not merely maintained at its present level, but very much greater. But to achieve that, we need to achieve the three economic objectives of expansion, efficiency and freedom.
Whereupon Motion made, and Question, That the Chairman do report Progress and ask leave to sit again—[Col. J. H. Harrison]—put and agreed to.
Committee report Progress; to sit again Tomorrow.

BUSINESS OF THE HOUSE
8.19 p.m.
The Lord Privy Seal (Mr. Harry Crookshank): I beg to move,
That during the remainder of the present Session—

(a) Government business shall have precedence on Fridays;

(b) any resolution relating to taxation which may be reported from the Committee of Ways and Means may be considered forthwith by the House; and

(c) notices of amendments, new clauses or new schedules to be moved in Committee on any Bill which may be ordered to be brought in on any resolutions of the Committee of Ways and Means relating to taxation may be accepted by the Clerks at the Table before the Bill has been read a second time.

I will not inflict myself on the House for more than a few minutes. My hon. Friend the Financial Secretary to the Treasury will, of course, deal with any points which arise, but it is only right that I should explain the reason for this Motion. As soon as it was announced that there would be a dissolution of Parliament on 6th May, the Government took into consideration not only what essential business had to be concluded before that date—about which we shall be making a statement, not tonight, but tomorrow—but I also wanted to see how best we could suit the convenience of the House as a whole.
The first point that seemed to emerge was that we should try to conclude the debate on the Budget statement this week. To do that it will be necessary to give Government business precedence on Friday. That is the purpose of paragraph (a) of this Motion. In the Motion we use the word "Fridays," in the plural, so as to cover the two subsequent Fridays.
We are very sorry, of course, to have to ask the House to deprive hon. Members of those opportunities, but it is not so bad as it sounds. This Friday the first Motion, which would have been moved by my hon. Friend the Member for Hertfordshire, South-West (Mr. G. Longden), deals with the North Atlantic Treaties. I should think that with a little ingenuity he will be able, between now and the dissolution, on general debates which may arise, find an opportunity to make a speech on that subject. A second Motion has not been put

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down on the Order Paper at all. An hon. Member, I suppose, did not think there was much hope of our reaching that one.
The Motion will mean that on Friday next week, 29th April, my hon. Friend the Member for Dorset, North (Mr. Crouch) will lose his opportunity of moving the Second Reading of his Slaughter of Animals Bill, but as there will be no chance of its proceeding that would be a useless way of spending the time. As for 6th May, of course, no Ballot has yet been taken, so no hon. Member can be aggrieved about that. I do recognise that it is hard to ask hon. Members to sacrifice those days, but I would ask them to look at the matter, as the Government have, from the point of view of the House as a whole.
The Motion will enable us, therefore, to conclude the Budget debate by Friday, all but for one point which is contained in paragraph (b) of the Motion. Under the practice of the House it is not proper, unless an amendment is made, to take two stages of a Budget Resolution or of the Finance Bill on the same day. Hon. Members will realise that the Budget debate takes place on the last Resolution, which is left open, the Question on which was not closed yesterday. The proposal is that on Friday we shall conclude the debate on the outstanding Resolution; but to complete the whole of the Budget debates we would desire to take the Report of the three Resolutions.
As the House knows, under recent procedure those are no longer debatable. We could leave them over, of course, until Monday, but if we did it would be impossible to introduce the Finance Bill and circulate it during the week-end. For the convenience of hon. Members the Chancellor of the Exchequer yesterday produced a White Paper of the draft of the Bill, but even so it is a much more tidy procedure that the Bill should be introduced forthwith and circulated. That is the purpose of paragraph (b).
Paragraph (c) of the Motion is for the convenience of hon. Members, because that lays down that although the Bill has not been read a Second time it will be possible to propose Amendments, new Clauses and Schedules as if it had been. That, older hon. Members will recollect, was the practice during the war, and which was brought to an end in 1950, for reasons which are very good reasons—I
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am not questioning them—but this seems to be an occasion on which it would be very reasonable to revive it for the general convenience.
That is all this Motion does. It takes away the three Fridays of private Members' time that remain before Dissolution, but the purpose of it is to enable the Budget debates to be concluded this week and the Finance Bill to be presented and circulated during the week-end. I do not know whether there are any other points which may occur to hon. Members on the matter, but, as I said, the Financial Secretary will answer them, I hope, if they are brought up. I think that, on the whole, hon. Members will feel that the Government have done their best to meet the convenience of everybody concerned.
8.25 p.m.
Mr. Ede: I sympathise with the right hon. Gentleman in the trouble that he is having with his throat. It has prevented him from presenting this Motion to us in his usual sprightly way, in which he would doubtless have produced for us many amusing reasons to persuade us that it hurts him a great deal more than it hurts private Members to deprive them of their time. That is a customary procedure of Leaders of the House on occasions such as this. I do not intend to find quotations from speeches made in the past when hon. and right hon. Gentlemen opposite were in opposition, when they were valiant defenders of private Members' time, and when they were suggesting that members of this party were its foes.
We have to face the fact that the Prime Minister decided on a General Election. As far as we are concerned we are very glad he did, and we shall meet him and the Lord Privy Seal on the stricken field somewhere or another. That being so, it is desirable at least that this Session and this Parliament should wind up with a reputation rather better than being the Session and Parliament which passed the horror comics Act. I suggest that that would not be sufficient legislative cargo for the right hon. Gentleman to take into harbour. I regret, therefore, that one very useful Measure which has been through Committee upstairs has not been salvaged.
I allude to the Measure which was introduced by my hon. Friend the Mem-

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ber for Newcastle-upon-Tyne, Central (Mr. Short), dealing with public service vehicles and travel concessions. That is a Bill which was caused by a decision in the courts, which, I think, many town clerks did not expect to go the way it did. They rather regretted that the issue had been raised. There was a concession made with the good will of the bulk of the population of the country to old-age pensioners and other people, enabling them to travel, in vehicles owned by municipal corporations, at reduced fares, or, possibly, at no fare at all. That concession was declared invalid.
In the passage of the Bill through Committee my hon. Friend and those associated with him had the very valuable and practical assistance of the Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation, for which they and, I think, the local authorities concerned are very grateful. Now that this matter has been declared invalid by the courts, local authorities are, of course, incurring expense illegally—knowing it to be illegal—in continuing this procedure.
But part of the arrangement that the Parliamentary Secretary and my hon. Friends reached was that the Bill should apply retrospectively so as to cover these breaches of the law which it was thought should be countenanced, as it was expected that the Bill would become law during the current Session. Otherwise, local authorities might have had to promote Private Bills, or a Government Measure might have had to be introduced to enable the local government auditors to sanction the expenditure to which, undoubtedly, their attention would have been directed.
I understand that, after careful and friendly negotiations, an arrangement was reached in Committee which would probably have meant that there would have been no serious Report stage, and that a Third Reading might have been anticipated. So far as I know, there is no opposition to this Bill. It is a practical Measure to deal with a situation such as we know is occasionally created by the courts. I have even heard it suggested that the Government have brought forward a Measure before the courts have reached a decision on a matter, because the Government have gathered, from the way in which learned judges looked at
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their counsel, that they would probably be in trouble; and so they have stepped in to meet it.
We are all agreed that the General Election must be fought. No one would suggest that we should prolong Parliament until the date on which this Bill would come up on the Report stage in the ordinary way merely to get the Bill passed. This is a Bill to enable local authorities to continue something that everyone desires them to continue, and as we are agreed on those two points, I think the Government might afford time—perhaps after 10 o'clock at night, or something like that—for the further stages of this Bill.
The Leader of the House may take it from me that if he is able to meet us in this matter, we on this side of the House will do everything we can to facilitate the passage of this Bill.
Mr. Crookshank: To do what the right hon. Gentleman wishes would require a procedural Motion to bring the Bill back from the date for which it is set down, namely, 13th May. In view of what he said, we can discuss this matter further to see what we can do to help to get it through this House and also, I hope, through another place—although, of course, about that we cannot speak with such certainty. But we appreciate the point which the right hon. Gentleman has made, and accept his offer of cooperation.
Mr. Ede: May I thank the right hon. Gentleman and express my regret that the mauling which the Road Traffic Bill received in another place should have made him so nervous about his capacity to control what happens there. In another place, they are not often "bad boys" twice to a Conservative Government.
I thank the right hon. Gentleman for the way in which he has taken up the point I raised and everything I have said about the Measure applies also to the procedural Motion.
We come now to the other parts of this Motion, and I must say that I do not regard them as being quite so easy of acceptance. This House is the custodian of the public purse. It is the duty of this House to examine with care the financial proposals of the Government for

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the year. Although it may be said, "Well, they are rather meagre this time," after all, they are the Government proposals for the year. I understand that in 1929 the Budget was divided into two parts. One part was taken before the General Election on the assumption that the other part would be proceeded with by the Chancellor of the Exchequer after the General Election. I hope that the omen is a sound one on this occasion.
We have been examining these proposals for the year, and here I should like to pay a tribute to the courtesy of right hon. Gentlemen opposite who have provided us with a White Paper containing a draft of the proposed Bill. Paragraph (c) of the Motion gaily talks about Amendments, new Clauses or new Schedules. Our examination of the Bill and of the Resolutions makes us very doubtful as to whether there is any need for paragraph (c) in view of the careful work of the Government draftsmen in preparing the documents. I gather from the smile on the face of the Prime Minister that he is not surprised that we have made the discovery.
It is not for me, at this stage, to indicate what situation may arise if, in fact, it is impossible to draft and lay Amendments which will be in order. Of course, as we are sitting in the House we can get no guidance as to whether any suggestions that we put forward would be in order or not. But I must warn the right hon. Gentleman that if my surmise that it is not possible to draft Amendments which can be accepted by the Chair proves correct, a very difficult situation may arise with regard to the discussion of the Finance Bill on Second Reading and during the subsequent stages. I do not want to say any more than that tonight, but I should like the right hon. Gentleman to know that we have been studying the position.
Apart from that, I think that the time during which the Bill could have been examined—had it been possible to draft Amendments—might have been rather longer than the time which we understand will be allotted to it after it has been introduced. If, by the ingenuity of the draftsmen, we are prevented from having a full discussion on the Measure, the right hon. Gentleman must expect some difficulty in arranging the business of the House.
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I thank the right hon. Gentleman for what he has said about the Public Service Vehicles (Travel Concessions) Bill. I regret that we have these misgivings about paragraph (c) of the Motion, and I can only say that it will depend on what answer we receive on that point what advice I shall give to my right hon. and hon. Friends as to the course that they should take when the question is put from the Chair.
8.39 p.m.
Mr. Edward Short: I had intended to make a speech supporting my right hon. Friend the Member for South Shields (Mr. Ede) in his plea concerning the Public Service Vehicles (Travel Concessions) Bill, but, in view of the co-operation of the right hon. Gentleman the Leader of the House, all that I now propose to do is to thank him and his colleagues for what they have said in the matter.
The Bill is a small one, but is very important. Its passage through Committee was marked by very friendly cooperation between the Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation and hon. Members on my side of the Committee. It completed its Committee stage, and, as far as I am aware, there is no opposition to any part of it on either side of the House. I am very grateful to the Government for their help in the matter, and I am quite sure that the local authorities throughout the country which are affected by the Measure will also be grateful to them.
8.40 p.m.
Sir William Darling: I readily join in the observations made by the hon. Member for Newcastle-upon-Tyne, Central (Mr. Short). I sat with him in the Committee stage of the Bill, and I agree that it was a valuable piece of legislation which he initiated. I am grateful to my right hon. Friend for so readily agreeing to the attempted effort to provide facilities for its acceptance. I am sure that the House must have been quite touched by the sympathy which the right hon. Member for South Shields (Mr. Ede) offered to my right hon. Friend. Such expressions of sympathy I am always delighted to see, and it is gratifying to have them at the close of a Parliament.The Motion appears to me to be one which should commend itself to the

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House. It is true that my party was the defender of Parliamentary time for private Members, but the right hon. Member for South Shields failed to point out that his Government did not yield very much to our protestations. During the period of office of the Labour Government we were continually pleading for what we never got. We sought it assiduously, but failed to obtain it. Perhaps it can be said that what the Lord gave the Lord is entitled to take away.
Judging from the speeches made by hon. Members opposite during the last two days, it appears that the Opposition is desirous of having a General Election. I am sure that hon. Members opposite would not like to have it lie against them that they hesitated to join the fray. It is for that reason that I hope they will support the Motion. Let us get on not only with the business of the House, but with the business of the General Election.
Paragraph (a) of the Motion says:
"Government business shall have precedence on Fridays."
This is something about which I feel less anxiety than some other hon. Members. I confess that I am very rarely here on Fridays. Owing to a suitable arrangement with an hon. Member opposite, I am usually absent on those days. I can give away what I have never very much enjoyed, and I give it to the Government as a sacrifice, quite willingly.
Paragraph (b) says:
"any resolution relating to taxation which may be reported from the Committee of Ways and Means may be considered forthwith by the House."
I have never wholly followed the circumlocutions of public business, but a certain urgency and promptitude is shown by the phrase "may be considered forthwith." That is a mark of a Government of determination. We want no dilly-dally and delay. That part of the Motion should be readily accepted as showing that the Government are altruistic in their consideration of these matters.
Paragraph (c)—with a consistency which is a remarkable characteristic of mine—I find admirable. It says:
"notices of amendments, new clauses or new schedules to be moved in Committee on any Bill which may be ordered to be brought in on any resolutions of the Committee of Ways and Means relating to taxation may be
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accepted by the Clerks at the Table before the Bill has been read a second time."
It will be of guidance and help to the Clerks at the Table. I hope that the Motion will be accepted. My main reason for hoping that is that I want to get on with the business of the House, the death of which has already been announced—and get on with it with the greatest expedition.
The sacrifice of private Members' time which would be called for would be a burden which we could lightly and logically bear. The problem of Amendments under paragraph (c) will not, with ingenuity, be insuperable. For these reasons I hope that the Motion will have general and prompt acceptance.
8.46 p.m.
Mr. David Jones: I quite understand the hon. Member for Edinburgh, South (Sir W. Darling) being worried about this Motion, and his reluctance to agree to Fridays being given up. To escape the wrath of the Patronage Secretary the hon. Member will have to be in London for the next few Fridays instead of being in Edinburgh.
I would remind the Lord Privy Seal that he has a measure of responsibility for a Private Member's Bill promoted by my hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Short), because the Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation, speaking on the Second Reading of the Bill, said:
"The case of Prescott against Birmingham Corporation has occasioned the drafting of the Bill. The Government have naturally had to consider all its aspects, not only from the purely technical transport point of view, with which I am primarily concerned, but also from the point of view of broad human sympathy with those who, under this decision, are in danger of having taken away from them concessions which they have been accustomed to enjoy for a very long time.—[OFFICIAL REPORT, 18th February, 1955; Vol. 537, c. 794.]
For that reason I hope that the right hon. Gentleman will exert all the efforts he can to make the Bill law before Parliament is dissolved. If he does not, there will be great difficulty in a large number of local authority areas. Some corporations who had promoted Private Bills have withdrawn them, I understand, anticipating that my hon. Friend's Bill would become law. If the utmost cooperation is not exerted to see that the

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Bill becomes law before 6th May, a good deal of hardship and discomfort will also be caused to a large number of elderly and maimed people by the danger of their privileges being taken from them.
I hope that, after the assurance given to my right hon. Friend the Member for South Shields (Mr. Ede), the Lord Privy Seal will endeavour to see that the Bill becomes law.
8.48 p.m.
Captain J. A. L. Duncan: In general, I object to Private Members' time being taken away, but on this occasion it is obvious that in the time left in the present Session it will be impossible to get any Private Member's Bill on to the Statute Book. However, I want to ask my right hon. Friend the Lord Privy Seal one question.
In the Scottish Standing Committee tomorrow my hon. Friend the Member for Edinburgh, South (Sir W. Darling) will be discussing the Public Libraries (Scotland) Bill. If that discussion leads to the expected result that the Bill is returnable to that Committee, my hon. Friend will, naturally, be anxious to see it passed through its remaining stages in the House and the other place before the end of this Parliament. I should like to know whether the Government can facilitate the passage of the Bill if it receives unanimous consent from the Scottish Standing Committee tomorrow, so that we can strike a blow for the libraries of Scotland in the time that remains to us in this Parliament.
If my right hon. Friend can say that should all parties agree—should all Scotsmen agree—to this Measure it will be adopted by the Government, and that facilities will be given to my hon. Friend in Government time to ensure that the Bill goes through this House, I am sure that the other place would not delay its passage. In that case, my hon. Friend would have the great distinction of having been responsible for the passing of a Private Member's Bill of considerable interest to the literary people of Scotland in the last few weeks of this Session.
If that is not possible, then my hon. Friend would have to take his luck in the Ballot, maybe next year. [An HON. MEMBER: "If he is returned."] Well, we are expecting my hon. Friend to be returned with a greatly increased majority. I am quite certain that everyone in the House who knows my hon. Friend will
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realise that there is no better representative possible for South Edinburgh—but not for South Angus—than he.
The Private Member's Bill procedure is always rather complicated and is a great gamble. I have been in the Ballot for years and have never drawn a Private Member's Bill. I am one of the unlucky ones in this world. My hon. Friend is fortunate now; he may never again be fortunate in this respect in his life. I appeal to my right hon. Friend to say that if, tomorrow, there is a quorum in the Scottish Grand Committee and if the Measure is accepted unanimously by that Committee, facilities will be given by the Government to proceed with this Public Libraries (Scotland) Bill so that it receives the Royal Assent before the end of this Parliament.
If I may turn to paragraph (b) of the Motion. I agree that in the circumstances, when we have had a decision that a General Election shall take place on 26th May, it is important that we should get through the business necessary for this Parliamentary Session with the utmost possible expedition. Ordinarily, of course, things would be very different. It would be necessary to have detailed and long discussion and consideration of all the problems arising out of a normal Finance Bill.
I spent many hours on the various aspects of the Finance Bill of 1952, particularly dealing with Purchase Tax. I remember having an argument with lady hon. Members on various aspects of that tax. The Bill made a tremendous difference at that time to the housewives of Britain, because by it we were able to lighten their burdens by reducing Purchase Tax on many household articles. The same applies in a limited sphere to textiles now. In short, I think that in view of the exceptional circumstances, it is necessary to pass this Motion tonight, and I hope that it will be passed unanimously.
8.55 p.m.
Mr. Harold Davies: No matter what Government may be in office I have always considered that private Members' time is of paramount importance not only to this House but to the people whom we represent. There are many occasions when hon. Members have a private point of view which may not be in line with that of the parties they may have to

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represent. Nevertheless, in this House they should have the opportunity to press forward their legislation, if lucky in the Ballot or in other ways. What I want to know tonight is where exactly do the Government stand about the Bill which I moved on Second Reading the other Friday, and for which we obtained the approval of the House, namely, the Non-Industrial Employment Bill? This Bill implements the Gowers Committee's Report. It is no use any hon. Member on the other side of the House running away from this question. There is much talk about what we will do for the unorganised white-collared workers and for the agricultural workers and others, and here is an opportunity for the Government to demonstrate their sincerity.
The Non-Industrial Employment Bill went through the House. The Government had not the courage to vote against it because so many hon. Members opposite had been lobbied by their constituents on account of the importance of the Bill. Fiddling criticism was made of the way in which the sponsors and others had constructed the Bill, but whatever criticisms were made it was, nevertheless, a better Bill than any produced by hon. Members on the benches opposite, because they have produced nothing for the workers since the findings of the Gowers Committee.
There are six days left in which we can go into Committee upstairs and discuss in an amicable fashion this Bill and accept Amendments. [Laughter.] It is not a matter which I would treat with hilarity—the conditions, health and welfare of 12 million people. I do not consider it a laughing matter, neither do I consider it a matter for Micawber-like speeches from hon. Members opposite.
I hope that the Leader of the House will make the same concession to us as he has been kind enough to make to both sides of the House over the excellent Bill introduced by my hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Short). I should like an assurance that if we take this Bill in Committee for two or three days before the dissolution of Parliament, we will have an opportunity for discussion and to put forward suggestions which will be of value in the next Parliament. We owe that to the people in the country who believe that a
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Parliament that gets into power will ultimately do a job of work which will benefit their health, welfare and safety.
I should like the Leader of the House to give an assurance now, if he would be kind enough to give it, that we will be enabled to go into Committee for at least the two or three days that are available to discuss this Bill.
8.58 p.m.
Sir Lionel Heald: I should not like to mar the harmony of this occasion by entering into any controversy with the right hon. Gentleman the Member for South Shields (Mr. Ede). I am to a certain extent in agreement and to a certain extent in disagreement with what he has said.
In the first instance, I should like to reinforce what has been said by other hon. Members about the great importance of not interfering with private Members' time and private Members' rights. I have had some pleasing and some not so pleasing experiences of Private Members' Bills through being responsible for one myself and through having had to deal with a number of complicated matters at short notice on a Friday. I should be the last person in the world to want to support any unnecessary interference with those rights.
I did not quite agree with the right hon. Gentleman when he said that he thought that we had to end with a desirable thing, or an undesirable thing—the horror comics Bill. I should have thought that it might have been said that a suitable Bill to end these proceedings just before a General Election would be the Slaughter of Animals Bill, because that might possibly have certain other applications in the course of the next few weeks. But there it is.
There are various matters which we would have liked to have proceeded with, and I am sure that we all agree with the right hon. Gentleman, and on this side of the House we are grateful to him for taking such a statesmanlike view and for not taking advantage of this opportunity to make political capital out of what he recognises to be a very proper, desirable and commendable Parliamentary procedure.
I did not understand him to have any violent objections to paragraph (b), and

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I think that in the circumstances it will be agreed that it is a quite sensible provision. With regard to paragraph (c), I find it a little difficult to follow what the right hon. Gentleman was concerned about, because he seemed to think that there might be some difficulty in putting down Amendments. But, after all, it would be simple for the right hon. Member for Leeds, South (Mr. Gaitskell) to put down an Amendment to Clause 1 of the proposed Finance Bill whereby Income Tax should be charged not at the standard rate of 8s. 6d. but at the standard rate of 9s. 6d. No doubt, he would have plenty of opportunity of raising the question.
Mr. G. R. Mitchison: Has it escaped the attention of the right hon. and learned Gentleman that such an Amendment would obviously be out of order?
Sir L. Heald: Certainly there would be no difficulty in proposing a reduction to 7s. 6d., which no doubt would be desirable to many hon. Members. For example, in the case of Clause 2 (7) relating to the rate not exceeding £210 and the rate between £210 and not exceeding £360, it would be possible, within appropriate limits, to make Amendments. But no doubt those are not the Amendments which the Opposition want to make. The Opposition want to introduce Amendments dealing with an entirely different subject matter outside the range of Income Tax, and that matter is left out very advisably because there are no proposals relating to it and it is unnecessary to occupy the time of the House discussing it.
Therefore, if there are any relevant matters—and I apologise if I have taken the wrong example with regard to Clause 1—it is possible to devise Amendments, but they would be Amendments which would be undesirable from the point of view of the Opposition in a General Election. The real complaint is that the only Amendments that could be put down would be those that would not be politically desirable from the point of view of the Opposition. The Amendments that it is suggested they may be debarred from putting down are Amendments which have no relevance to the Finance Bill at all. Therefore, we are glad that the matter has been approached in this
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way, and it appears that the policy of the Government in this matter is accepted generally in the House.
9.3 p.m.
Mr. C. W. Gibson: I want to reinforce the plea that some thought should be given to providing further discussion on the Non-Industrial Employment Bill. This question affects 12 million workers. It is also one in which the whole trade union movement is vitally interested, and it would be a reflection on the Government's appreciation of the importance of the trade union movement if that Bill were slaughtered without further consideration being given to it. There are a few days in which it could be considered in Committee, when Amendments could be considered and the ground prepared for a better conception of the Bill in time for the next Parliament.
Unlike the hon. Member who said that he had never been successful in being able to raise a subject on a Friday since he had been in the House, I was successful once in a period of 10 years. But then my Motion, which dealt with the very important question of the reform of the rating system of this country, was defeated by a count being called. I think we are entitled to ask the Government not to be too greedy and grab all the time that is left between now and the end of this Parliament.
What is going to happen to the Rating and Valuation (Miscellaneous Provisions) Bill, which aroused a lot of discussion in the country and about which chambers of commerce and ratepayers' associations have been passing resolutions? I agree that it is Government business, but I should like to know whether we shall have any time to discuss the matter. It has aroused enormous interest and is of great importance to ratepayers and local authorities all over the country. Is it to be dropped? The country and the House are entitled to know whether any further progress is to be made on a Bill of that kind, and I hope that whoever is to reply will say something about it.
I conclude by expressing the hope that attention will be given to the plea for further consideration of the Bill dealing with the recommendations of the Gowers Report. If there is one section of the working people of this country which has been neglected in this field all down the years it is that covered by the Bill—the

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clerical workers, shop assistants and others for whose benefit the Gowers Committee made some strong recommendations and on whose behalf my hon. Friend the Member for Leek (Mr. Harold Davies) made a valiant effort in drafting the Non-Industrial Employment Bill which he introduced. It would be a shame if this Parliament ended without giving further consideration to what is proposed in the Bill, and I strongly press the Government to give some hope for further discussion of that Bill.
9.8 p.m.
Mr. Hugh Fraser: Hon. Members on all sides will agree that it is a sad thing that private Members' time should be lost, but surely the present position is exceptional.
After listening to the speech of the right hon. Member for Leeds, South (Mr. Gaitskell) earlier today, I thought that a debate on this issue would scarcely be necessary. So intoxicated was he with the exuberance of his own apparent economic virtuosity that he wanted an Election right away with nothing to stand in the way of it. Indeed, the dessicated calculating machine seemed to have new life. Like one of those fairy stories from Grimm or Hans Andersen, suddenly the machine became alive, and the right hon. Gentleman received rousing if not rip-roaring support from his own side of the Committee before his economic fallacies were fully exposed by my right hon. and hon. Friends during the debate.
The issue here is comparatively simple. As the right hon. Member for Leeds, South clearly said, what the nation needs is an Election—
Lieut-Colonel Marcus Lipton: A new Government.
Mr. Fraser:—and a Government with a greater power and a larger working majority.
The point raised by the hon. Member for Leek (Mr. Harold Davies) about his own Bill is rather typical of the difficulties which befall us at this period. Undoubtedly, the hon. Gentleman's Bill is an important one, but to conceive that it can be got through before 6th May is surely folly, deluding people and trying to play politics with things which cannot, within the time available, be made actual and effective.
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As my right hon. Friend the Leader of the House has already said, the Government have agreed—subject, of course, to the acceptance of the Bill in another place—that the Bill put forward by hon. Gentlemen opposite will be put through, but the time ahead is short. Hon. and right hon. Gentlemen opposite cannot have it both ways. They cannot, on the one side, ask the Government to provide, so to speak, a Dutch auction of time for the number of Bills, they would like to put forward, and, at the same time, have a proper debate on the Budget Resolutions. I believe that the course put forward by my right hon. Friend is the most sensible course in the conditions with which we are faced.
Finally, I believe that private Members' time, important and sacred though it be to back benchers in this House, would be wasted if Bills were to reach the initial stage of their passage, without any possible chance of going through the Committee stage and receiving the necessary assent from this House and another place. That would merely be opening up the possibility, at this late stage before the General Election, of an attempt at electioneering from this House. Indeed, certain hon. Members might well find HANSARD charged against them as an electoral expense.
9.12 p.m.
Mr. Tom Brown: I hope that the House will not dismiss this important question very lightly. I do not mind a little hilarity or a few jokes, but this is a very important question, affecting ordinary back benchers.
I recall very vividly the fight we put up many years ago when an attempt was made during the war period to take away private Members' time. There was violent opposition to the proposal, and that opposition was justifiable, because if there is one thing which we as private Members in this House covet it is the opportunity to present a Bill dealing with some matter near and dear to our own hearts. Therefore, there is no justification for the Leader of the House or the Prime Minister asking us to give up our time or our privileges without giving us an assurance that we shall have a quid-pro quo in return.
I know that the Leader of the House, when he mentioned this proposal yesterday, claimed that the Government had

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restored private Members' time, and had the right to take it away again. If that is the only argument which the right hon. Gentleman can advance, it is a very weak one indeed. All Bills, no matter from which side of the House they come, are important, particularly if they are introduced by private Members.
The hon. Member for Stafford and Stone (Mr. H. Fraser) said that Private Members' Bills were important to an hon. Member who was fortunate in the Ballot after a long period of waiting, and who, in the situation facing us now, must forgo the opportunity of seeing his Bill reach the Statute Book. I know that sound arguments can be advanced from the Government benches, but that is because of the fixing of the dissolution of Parliament by the Government. If the Government had examined Private Members' Bills on the stocks, or passing through their various stages, they would have given some consideration to the rights and privileges of ordinary back benchers.
Of the several Bills concerned two, in particular, deal with a large number of people. My hon. Friend the Member for Leek (Mr. Harold Davies) promoted the Bill dealing with non-industrial employment. That is a very important Bill. If the Government knew of the rejoicing there has been among people who have been long neglected by this and preceding Governments when they heard of that Bill, they would hesitate to deny it the opportunity of reaching the Statute Book. All those people were looking forward to the Bill getting on to the Statute Book, but the Government say, "We must get the Finance Bill through all its stages by 6th May."
I want to reinforce the plea of my hon. Friend the Member for Leek and my hon. Friend the Member for Clapham (Mr. Gibson). Can the Government give an assurance that that Bill, which affects the lives of 12½ million, may be sent to Committee upstairs, receive its Third Reading in this House and, finally, the Royal Assent?
There is an old saying, "Where there's a will there's a way." I know that the Leader of the House has the ability to find ways and means of getting the Bill on to the Statute Book. If he would give us an assurance that the Bill would reach the Statute Book by 5th May there
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would be a possibility of us refraining from dividing the House. I do not want to do so and I know that my colleagues do not, but we are very covetous of the rights of private Members. No one can blame us for that because it is very rare that we get an opportunity to present a Private Member's Bill, sometimes after waiting many years. Hon. Members have said that they were fortunate in being successful in the Ballot after 20 years, 10 years, or 12 years.
Surely we are not acting fairly, justly, or honestly with ordinary back benchers if we take away from them the right to promote Bills dealing with subjects which are near their hearts. I therefore ask the Leader of the House, very seriously, to give an undertaking that the Bill promoted by my hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Short), which has gone through all stages but Third Reading, and the Bill promoted by my hon. Friend the Member for Leek, who is anxious that it should reach the Committee stage, will be helped through Parliament. If we can get that undertaking we shall consider not dividing the House against the Motion.
9.19 p.m.
Sir Gurney Braithwaite: The hon. Member for Ince (Mr. T. Brown) is a greatly respected Member of this House. I would join with him at once in agreeing that, whatever the complexion of the Government of the day, it is our duty as back benchers to be extremely jealous of private Members' time. A back benchers' trade union on that matter would be a very useful organisation, whatever the complexion of the Government and the circumstances of the House.
I well recall, when I first entered Parliament, how we always had two days a week for private Members' business, Wednesdays for Motions and Fridays for Bills. Gradually the Executive—more than one Executive—has eaten into those privileges and prerogatives. When the Second World War broke upon us, the House, with universal approval, surrendered all these rights.
Mr. T. Brown: Not without a fight.
Sir G. Braithwaite: We were confronted, the hon. Member will agree, with an external enemy who had to be confronted, and we wanted to give all the time possible for the prosecution of the

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war to the Ministers concerned in that very vital matter rather than take up their time with private Members' business. It is true that there was a fight, but it was something of a sham fight. We went through the motions; we never fired our rifles.
When the war ended, there was a general anticipation that private Members would have these privileges restored to them. In fact, on that fateful Sunday, 3rd September, pledges were given from the Treasury Bench that with the cessation of hostilities, we would regain these very important opportunities for promoting legislation. I hope I carry the House with me up to this point, anyhow.
But the General Election of 1945 returned to power a Government composed of right hon. and hon. Members opposite, who proceeded to take unto themselves, in time of peace, not only for the first Session of their reign, but for the first two Sessions, all private Members' time and privileges including—I speak from memory but I think I am correct—the Ten Minutes Rule. For the first two years, no facilities of any kind were given for private Members' time.
I am sorry that the right hon. Member for Lewisham, South (Mr. H. Morrison) is not in his place, because he was leading the House at that time, aided and abetted by the right hon. Member for Blaydon (Mr. Whiteley), who was then, as he is now, his party's Chief Whip. The right hon. Member for Lewisham, South, said that so important and urgent was it to pass certain Measures, which have brought great evil upon us, nationalising various industries, that private Members' time must be surrendered in toto, not because of any external enemy, but so that Socialism might continue its onward march.
I do not remember whether the hon. Member for Ince protested at that time, not against three Fridays being taken from us, but against the two whole Sessions of Parliamentary time in which there were no private Members' opportunities at all.
Mr. Brown: Yes, we did make several attempts to secure the restoration of private Members' time in 1945, 1946 and 1947.
Sir G. Braithwaite: That is true, but since this Motion was put down I have
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had time to look at the Division lists, and I have looked in vain for the name of the hon. Member for lnce or of any of his hon. Friends, so eloquent and persuasive were the speeches of the then Lord President of the Council and Leader of the House, the right hon. Member for Lewisham, South.
There were some mild fulminations. The right hon. Member for Ipswich (Mr. Stokes), I remember, got peevish about it. I do not think that the hon. Member for Ince made a speech. I have not had time to look at all the debates but his name is certainly not in the Division lists, and that, after all, is the acid test of conviction in this House.
And so, when the hon. Member tells us that he bleeds for the private Member, let me tell him that I bled in the Lobby in 1945, 1946 and 1947. The hon. Member tonight appears before us respected and with a whole skin. He never went to the front line—at any rate, in defence of the private Member. So much for that.
I well remember our ex-colleague Sir Alan Herbert, the independent Member, throwing on the Floor in disgust three Bills which he had prepared and which he was anxious to introduce. He threw them at the feet of the then Leader of the House, the right hon. Member for Lewisham, South as a protest against tyranny. I think they dealt with betting and divorce; not subjects in which I am particularly interested. However that may have been, no opportunity was given for their consideration.
Indeed, one of the best speeches made in defence of the procedure that was followed was made by the right hon. Member for South Shields (Mr. Ede). I have had just time enough to look him up on the subject. He said that we could not go back to the old days when private Members had more time, because there was too much legislation and the House was too busy, but that we might some time get back to having Fridays, with Motions and Bills alternating as now, but not to the full amount of private Members' time of the old days, when there were Wednesdays allotted.
I did not quarrel with that. Parliament is overloaded with legislation. Though it was some years ago, I thought that the right hon. Gentleman made out a good case, though not good enough a case to keep me out of the Lobby, I admit.

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I bled again on that occasion, and I regret to say that the hon. Member for Ince was one of the butchers.
We have listened to speeches from hon. Gentlemen who have Bills prepared or before the House. May I have the attention of the hon. Member for Leek (Mr. Harold Davies) for one moment? He has a Bill which is at issue here, a Bill dealing with the conditions of non-industrial workers. It is disappointing, of course, when one has had a Bill read a Second time, not to have a chance to take it to Committee. It is a most galling experience.
Mr. Gibson: We know that.
Sir G. Braithwaite: However, the hon. Member for Leek seems to be showing a lack of confidence in the forthcoming appeal to the country. If this Bill has the support of his hon. and right hon. Friends on the benches opposite, and of some of my hon. Friends over here, has he no confidence either in the result of the General Election or in any Government which may be formed from amongst his own right hon. Friends? That Bill has been described by the hon. Member for Clapham (Mr. Gibson) and the hon. Member for Ince, jointly and separately, as a most important Measure.
Mr. Brown: It is.
Sir G. Braithwaite: I agree, and far too important to be rushed through between now and dissolution. It ought to have the most meticulous examination in Committee. It is capable of improvement, and ought to be examined in Committee. The hon. Gentleman takes the view that if he does not get the Bill by 6th May he will not get it at all. I wonder why.
Mr. Harold Davies: I did not take that view at all.
Sir G. Braithwaite: Has he no confidence in the result in the Leek division, no confidence in the result of the General Election as a whole?
Mr. Davies: The hon. Member for Leek has complete confidence in his own division and complete confidence that he will be returned, in view of the fact that the party opposite has neglected the small farmers I have had to represent. It has completely neglected them for the last four years. I must point out to the hon. Gentleman that I am concerned with that Bill as a private Member. The hon.
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Gentleman has been talking about the rights of private Members. I am having regard to my right as a private Member. I do not want the juggernaut of any party machine to roll out of a Committee room without our having a chance to discuss that vital and important Bill. I hope the hon. Gentleman will remember that, despite the leadership of the ex-Prime Minister in 1945 and the hopes of the party opposite, it was this party which was overwhelmingly returned to office, and I beg the hon. Gentleman not to count his chickens before they are hatched. I was simply asking the Leader of the House for an assurance that that important Bill would go to Committee.
Sir G. Braithwaite: That was a very lengthy interruption. I was merely suggesting that if the hon. Gentleman had any faith in his chickens being hatched—
Mr. Davies: I am not concerned with that.
Sir G. Braithwaite:—he need not worry, and we can leave it to the small farmer, who is embarrassed by the holding up of a Bill dealing with non-industrial workers—
Mr. Davies: The hon. Member has not read the Bill.
Sir G. Braithwaite:—;and the prospect, to which we shall look forward, of watching a juggernaut rolling out of a Committee room upstairs. I hope I shall be there to see that. If the hon. Gentleman has any faith in the chances of his party and its support for his Bill, he need not worry too much about the fate which has overtaken it.
There is another Bill dealing with transport, and I think that the hon. Member for Newcastle-upon-Tyne, Central (Mr. Short) is unlucky about that. If he can recognise his Bill in the form in which it emerged from the Committee, he must have a very strong imagination. If he can get a Third Reading for the Bill, well and good; if not, what is all the trouble about? I do not see that anything is holding us up there.
This is the sort of thing which overtakes hon. Gentlemen on both sides of the House from time to time. We all sympathise with private Members whose Bills get held up in this way, but we cannot accept hon. Gentlemen opposite appearing

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as champions of the private Member when we remember the period from 1945 to 1947.
I remember that my right hon. Friend the Leader of the House, sitting then in Opposition, protested warmly and eloquently—as he always does—against that particular outrage. So did I, and it is a matter of great comfort to me that as soon as the present Administration took office no one was more meticulously careful to safeguard the rights of private Members than my right hon. Friend. It is all very well for the Socialist Opposition Members to make a hullabaloo about losing three Fridays, but they will lose not only three Fridays; they will lose the respect of the electorate, and the Election.
9.32 p.m.
Mr. Michael Foot: Hon. Members on both sides of the House have been moved by the recital of the hon. Member for Bristol, North-West (Sir G. Braithwaite) of the number of times he has bled for the cause of private Members and Private Members' Bills. Were there any logic in that part of his argument, it is surely right that he should bleed again tonight. If, in fact, he was so sincere in the votes he cast in 1945 and 1946—when he was under the same kind of instruction as he would be tonight if a vote were taken—he could prove it tonight by voting with hon. Members on this side of the House. Then, at last, we should know that on those previous occasions in 1945 and 1946 the hon. Gentleman, instead of merely being driven in the herd through the Division Lobby, had been sincerely expressing his conviction. If he was genuine in the martyrdom he displayed on those earlier occasions he should repeat the performance tonight for the gratification of us all; and then, in retrospect, we should be willing to pay a tribute to him.
Sir G. Braithwaite: The fact is that I have not yet sufficiently convalesced from my Socialist wounds.
Mr. Foot: I thought that it was all a piece of hypocrisy.
We all know exactly what happened on those occasions. The votes on private Members' time in 1945, 1946, 1947, 1948, 1950 and 1951—in fact, on almost every occasion—were cast with the Whips on. Therefore, it is cant, at any rate for most
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hon. Members on either side of the House, to pretend that they fought great battles and made great sacrifices for private Members' time. It may be regrettable, but we know that practically all hon. Members voted exactly as the Whips told them. Speeches about how much they opposed and how deeply they are prepared to attack their own leaders on this issue are just so much cant.
A great deal of cant is talked on the subject of private Members' time, and a good contribution on that line was made tonight by the hon. Member for Bristol, North-West when he said that the fact that private Members' time was taken away in 1945 and in 1946 was a monstrous invasion of the rights of private Members. I do not think that that was the case at all.
Some people might imagine from such statements that if private Members lose their time in which to introduce Bills or to move Motions, therefore private Members cannot contribute to the debates in this House. We all know that to be a fallacy. In fact, it is a perfectly proper procedure on occasions when private Members have a Government which they think have a long list of useful and effective Measures—probably more useful than Measures which are likely to be introduced by most private Members—to accept the proposals of that Government to abandon private Members' time for a certain period.
I believe that in 1945, 1946 and 1947 it was absolutely right to do this, because, in fact, the time taken from private Members was used to pass a whole series of first-class legislation. Indeed, had it not been for the passage of those Measures, the Chancellor would not have been able to get up yesterday and pay his generous tribute to nationalisation.
A number of Measures were introduced and passed at that time. There were the nationalisation Measures and the National Health Service Bill, which was opposed by members of the present Government on at least three occasions, and a whole series of other Measures. I do not think that hon. Members were wrong in giving up their time to facilitate the passage of those Measures through the House.
Everyone knows why it was done, and everyone also knows that the martyrdom of the hon. Member for Bristol, North-West and his opposition to the withdrawal

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of private Members' time on that occasion were more because he hated the Measures which the Government intended to put through than any desire on his part to introduce private Measures of his own. If the hon. Gentleman is so passionately desirous of introducing a Private Member's Bill, why does he not do so? I cannot recall his coming forward to introduce a Private Member's Bill under the Ten Minutes Rule—at any time during the last two years.
In the present situation, it is possible for any private Member to present a Bill under the Ten Minutes Rule every Tuesday, Wednesday and Thursday. That means that we could have three Bills every week. Why does not that happen? It does not happen, first because it is known that there are not so many of these Private Members' Bills, and, secondly—and this is much more important—because most Members know that even if they get a chance in the Ballot they will not get their Bill through anyhow. The chances against their getting a Bill through are fifty or a hundred to one.
That being so, do not let us have any more of this hypocrisy about private Members' time. Of course, there is a good case for such Private Members' Bills as that of my hon. Friend. His is a first-class Bill, but very often we have a series of twopenny-halfpenny Measures about various kinds of animals. A Bill which was coming up on 29th April sought to rob Jewish people of their rights in this country. I am glad that that Bill has been strangled under this procedure, and I congratulate the Government upon it.
My objection to this Motion is an entirely different one. The Motion is typical of the way in which the Government have run the business of the House ever since they were elected in 1951. One has only to look at their record to see that there has been a most appalling series of mismanagements in Session after Session. The Leader of the House is still there. We all like him very much for the way in which he presents his usually bad case. He always does it with great skill and courtesy, but he is not so good at managing the affairs of the House of Commons. I do not hold him entirely responsible; we know that the Patronage Secretary has had a finger in the matter, and that may explain it all. The fact remains that for Session after Session the
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business of the House during this Parliament has been hopelessly mismanaged.
In 1951, for instance, we had the King's Speech, and a number of Measures which the Government said they were going to put through, such as the denationalisation of steel, the denationalisation of road haulage, and a Measure to ensure that the brewers got their chance in the new towns. All the main Measures failed to get through in that Session. The only Measure that did manage to get through, after the Government had used the Guillotine during the Committee stage upstairs, was the one which handed over to brewers the public houses in the new towns.
Mr. Speaker: The terms of the Motion provide for a wide debate, but not for one so wide as that which the hon. Member is now putting before the House.
Mr. Foot: I was proposing, Mr. Speaker, to move very swiftly from 1951 to 1952.
It is clear that the Government made the same kind of mistake in 1952. Then, we had only the two Measures to which I have already referred, and everyone now agrees that it would have been very much better if they had not been passed through the House, because, even in 1955, the Government have not been able to sell off the properties which they had arranged to sell off.
To come to more modern times—we spent a Session in considering what the Government referred to as Operation Rescue." How many houses have been rescued by that Measure? Precious few. One can go to city after city and find that nothing has been done under this great Measure.
Mr. Speaker: I can imagine this being an admirable speech in a certain context and upon another occasion, but it has little relevance to the Motion before the House.
Mr. Foot: I understood that the relevance of what I was saying was that we should not be surprised at the way in which the Government have had to truncate the business of the House upon this occasion, because we have had experience of it before. The Government have bungled their legislative programme now, just as they did upon previous occasions.
Mr. Arthur Lewis: On a point of order. Is it in order, Sir,

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for my hon. Friend to suggest that "Operation Rescue" was not successful when, in fact, rents did go up?
Mr. Speaker: That is not a point of order. The only point of order with which I am concerned in connection with the hon. Member's speech is that of its relevancy to the Motion. Although it is permissible to discuss the question of private Members' time, that does not bring in an unlimited discussion of Government time, which is quite another matter. The hon. Member seems to be devoting most of his speech to what was done in Government time, rather than in private Members' time.
Mr. Foot: I am sorry if I have in any way gone further than I should have done. I was seeking solely to argue that the Government have bungled matters on this occasion by having had to knock out Bills upon which a considerable amount of the time of the House has been spent. We have had several days of discussion about Measures whose heads are now to be lopped off. All that time is now apparently to be wasted. That is typical of the way in which the Government have managed legislation.
Some of us ask ourselves—because we do not expect an answer from the Government—"Why is it that the whole affair has been rushed in such a way that these Bills have to be set aside as casualties?" I am sure that the former Prime Minister, the right hon. Member for Woodford (Sir W. Churchill), would not have tolerated this interference with the normal conduct of the House of Commons. The party opposite had to get him out of the way. They pushed him overboard and determined to rush through with the election because of the perilous economic situation which has now been so clearly described by the Chancellor—quite irrespective of what may happen to private Members' time, Government time, or anyone else's time.
The Prime Minister's colleagues said, "We have to get it through by 6th May at all costs." They were in some difficulty, because they had been hoping to carry out this other "Operation Rescue"—the real one, as they believe—upon three or four previous occasions. The right hon. Member for Woodford would speak for private Members if he were here today, and if the Whip had not been
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withdrawn from him. Whether the Whip had been withdrawn from him or not, he would say, "Why is this being done?" The fellow members of his Government have tried to do it on three or four previous occasions. We might have had this spectacle last year. That is what the Chancellor of the Exchequer wanted. He wanted a General Election last year. Everybody knows that. He thinks that the Government are taking a terrible risk in leaving the General Election so late.
The Chancellor of the Exchequer does not care about all these Bills being set aside. He said, "As soon as we have got rid of the 'old man' let us get on with the General Election as quickly as possible." He has got his way, and he has had to bring in these Budget proposals and put them through. We do not know why the Government want to do all these things, but for goodness' sake let us not have this kind of nonsense talked about private Members' time. We all know that neither Front Bench cares twopence for private Members' time.
9.47 p.m.
The Financial Secretary to the Treasury (Mr. Henry Brooke): In other circumstances, the Leader of the House would have wished to wind up this debate himself, but hon. Members who were present about an hour-and-a-half ago will be aware that my right hon. Friend has, in the past two days, already given the House the best of his voice. Indeed, he has jeopardised his voice to such an extent that he runs the risk of appearing before the electors of Gainsborough like a Trappist monk. He has, therefore, invited me to wind up the debate and to deal with a number of relevant points which have been raised.
The debate has ranged rather more widely than anybody could at first have foreseen. We have watched my hon. Friend the Member for Bristol, North-West (Sir G. Braithwaite) licking the blood from his wounds of seven or eight years ago, and we have heard a disquisition from the hon. Member for Devonport (Mr. Foot). In one way and another the House has had a good time.
A great deal that has been said was really by way of objection to an early Dissolution and was not relevant to the main subject of the Motion, the taking of three Fridays of private Members' time. It has been rather difficult for me

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to square the objections I have heard to the impending demise of this Parliament with the assurances given by the right hon. Member for South Shields (Mr. Ede) that he and his hon. Friends were anxious for an Election at the earliest possible moment and that they were going to face up to what I noticed he called a "stricken field." His friends will be stricken; but the Motion does not concern the date of the dissolution. That would be going far beyond our power. It concerns, in the main, what is to happen on the next three Fridays.
A number of hon. Members have asked about the fate of certain Private Members' Bills which are, so to speak, in the pipeline. I hope that none of those who have spoken on this subject will take offence if I mention that one of the Bills concerned stands, for two reasons, in a special position. I refer, of course, to the Bill introduced by the hon. Member for Newcastle-upon-Tyne, Central (Mr. Short) which, I think, has changed its name in its progress and is now the Public Service Vehicles (Travel Concessions) Bill. That Bill was introduced into the House because a decision given in the courts upset the arrangements, working in a number of cities, to which people had become accustomed, and a great deal of local ill-feeling, so I am informed, would have arisen had no action been taken to restore the position. It was not a Private Member's Bill which was just thought up as a good idea; if arose from a situation which was none of this Parliament's creating.
The second respect in which it is unique is that it has already not only had a Second Reading but has passed through Committee and is down for consideration on Report on 13th May. That Bill, therefore, stands in a place by itself, and those hon. Members who were here earlier will recollect that the Leader of the House said that, on the assurances given by the right hon. Gentleman the Member for South Shields, the Government would seek to facilitate its passage through this House.
It will be realised that there must be a procedural Motion to bring it forward from 13th May to an earlier date. I understand that that Motion will be taken as agreed and that no difficulty will be caused from the other side of the House
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in the course of the remaining stages of the Bill. I therefore hope that it may be possible for that Measure to be sped on its way to another place.
There are 22 Bills which have not yet received a Second Reading. I think that hon. Members on both sides will probably agree that, in any circumstances, the chance of their passing all stages in this House and in another place within the next 16 days is relatively small.
Two Bills have had a Second Reading—the Public Libraries (Scotland) Bill, sponsored by my hon. Friend the Member for Edinburgh, South (Sir W. Darling) and the Non-Industrial Employment Bill sponsored by the hon. Member for Leek (Mr. Harold Davies). I have no doubt that both Measures deal with important subjects. I would not myself venture to express an opinion on a Scottish matter. As regards the Non-Industrial Employment Bill, let me assure the hon. Member for Leek that I, as a London Member, am interested in the purposes which that Bill seeks to secure, although I do not wholly agree with the methods the Bill itself proposes. I understood him to volunteer the information that it would probably require Amendment.
I believe that the Bill consists of 22 Clauses, so the hon. Member will probably recognise that whether or not Fridays are available for Private Members' Bills the chance of any Bill of 22 Clauses passing successfully through Committee and its remaining stages here, and passing through all stages in another place, is limited. I cannot say more about those two Bills than this. It is impossible to indicate what can happen to either Bill in the House when neither has yet passed through Committee.
Mr. Harold Davies: But could the hon. Gentleman give an assurance that at least the Non-Industrial Employment Bill will go into Committee in the coming week?
Mr. Brooke: I have no power to stop it in any way. So far as I know it has been referred to a Standing Committee, and there is no power whatever in the hands of the Government to claw it back. What may happen to that Bill in Committee, and, still more, what may happen to the Public Libraries (Scotland) Bill in the Scottish Grand Committee, are hypothetical questions on which I really cannot be called upon to pronounce.
Sir W. Darling: I should like to answer this hypothetical question. There is to be a meeting tomorrow at 10.30 of the Scottish Grand Committee and I have had assurances that in half an hour the Public Libraries (Scotland) Bill will be approved.
Mr. Brooke: I always like to accept my hon. Friend's assurances. He no doubt knows a great deal more about the Scottish Grand Committee than I do.
There have been, I am glad to say, two Private Members' Bills which have not only passed through all their stages but received the Royal Assent in this Parliament—the Imperial War Museum Act and the Trustee Savings Bank (Pensions) Act. More of the 22 which I have mentioned as still awaiting Second Reading might have proceeded further but for the energies of the hon. Member for Loughborough (Mr. Follick) who has gone in, I will not say for total abstinence, but for total objection to Bills every Friday at 4 o'clock.
Mr. M. Follick: The hon. Gentleman must not blame me; he must blame the Leader of the House for chucking out my Decimal Currency Bill.
Mr. Brooke: I think that as a Treasury Minister I had better not be led into decimal currency at this hour of the night.
The hon. Member for Clapham (Mr. Gibson) asked about the Rating and Valuation Bill. He and I share a common interest in local government, but we are today dealing with private Members' time and Private Members' Bills, and no doubt the Leader of the House will, on a future occasion, make a statement about Government business. The whole House will, I think, regret that, on what may be a unique occasion, when my hon. Friend the Member for Hertfordshire, South-West (Mr. G. Longden) has been successful in the Ballot on two successive occasions for bringing private Members' Motions forward on Fridays, although he got the first one, he will, under this procedural Motion, lose his second one. I had the duty and pleasure of replying for the Government on the first one. I believe that I might have escaped replying on the North Atlantic Treaty Organisation, but, in any case, I feel that even he will agree that he has had his fair share.
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As regards paragraph (b) of the Motion, I believe that there is no precedent for it, and I should hate to be the one to urge upon the House that it should take action that in any way curtails debate on finance, which not only in my official position but according to my personal predelictions I consider the House ought to treat with the utmost care. Erskine May, in page 674, states:
"In the case of motions and bills of a financial character the ancient practice of the House prescribed the rule that not more than one stage should be taken on a single day.… The effect of the standing orders concerned with this matter has been to reduce the rigidity of the rule by abolishing some of the intervals required by practice."
The interval between the two stages of a Ways and Means Resolution preceding a Finance Bill has, so far as I am aware, never previously been shortened in this way. On the other hand, it is only in the last seven years or so that our standing Orders have been altered to preclude debate on the Report stage of such a Ways and Means Resolution. Therefore, paragraph (b) of the Motion in no way interferes with the rights of the House to debate. It only provides that the Report stage may be taken on the same day as the Committee stage. That, of course, is purely for the convenience of the House because otherwise it would not be possible for the Finance Bill to be brought in and made available to hon. Members before this week end.
Finally, there is paragraph (c) of the Motion, which is designed to restore the wartime practice under which it was possible to put down Amendments to Bills before they had had a Second Reading. Again, this paragraph is presented wholly for the convenience of the House in order that the opportunity to put down Amendments may not be confined to the period between the Second Reading of the Finance Bill next week and the time when the House goes into Committee on that Bill. The text of the Bill has already been published as a White Paper, and, if the Motion is agreed to, it will be possible for hon. Members to put down Amendments at an earlier stage than would otherwise have been possible.
The right hon. Member for South Shields raised questions about the scope of the Bill and the type of Amendments that will be in order. I am bound to point out that this Motion is without prejudice to what Amendments to the Bill

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may or may not be in order. In that sense it imposes no restriction whatever. It merely widens the time during which Amendments can be put down. Whether a particular Amendment is in order is entirely a matter for the Chairman of Ways and Means. It would be wholly wrong for any member of the Government to seek to express an opinion on that, and I would have said that the Chairman of Ways and Means himself could hardly have given his opinion until the Amendment was on the Order Paper. This procedural Motion will expedite the time when Amendments can be put down.
If the right hon. Gentleman is still concerned about this, let me remind him that my right hon. Friend the Chancellor of the Exchequer, in his Budget speech, in no way ruled out the possibility of another Finance Bill later in the year. The right hon. Gentleman said that he welcomed the idea of an Election. I presume from that that he, however vainly, hopes to win the Election. If he wins it, there will then be freedom for him and his right hon. Friends to bring in a Finance Bill containing whatever Clauses they like. I think that that is the possible scope for action which is open to him after the Election. As to what is available between now and then, let me assure him that by agreeing to this procedural Motion, he will in no way be restricting the number of Amendments that will be found to be in order.
Question put and agreed to.
Resolved,
That during the remainder of the present Session—

(a) Government business shall have precedence on Fridays;

(b) any resolution relating to taxation which may be reported from the Committee of Ways and Means may be considered forthwith by the House; and

(c) notices of amendments, new clauses or new schedules to be moved in Committee on any Bill which may be ordered to be brought in on any resolutions of the Committee of Ways and Means relating to taxation may be accepted by the Clerks at the Table before the Bill has been read a second time.

EMPLOYMENT, CAERNARVONSHIRE
Motion made, and Question proposed, That this House do now adjourn.—[Mr. R. Thompson.]
10.5 p.m.
Mr. Goronwy Roberts: I am very glad to see the new Parliamentary Secretary to the Board of Trade in his place on the Front Bench, and I should like to extend to him my congratulations on his appointment. Naturally, I cannot undertake to assist him to extend his tenure of office. No doubt the electors of the country will cut that as short as possible, but as long as it continues I can sincerely wish him all personal good fortune, happiness and success in that office.
I am raising tonight a matter which I have raised many times before in the House—namely, the problem of unemployment in my county of Caernarvonshire. The historic and honourable county of Caernarvon shares with its neighbour, the Isle of Anglesey, the tragic distinction of having the highest percentage unemployment in Great Britain. I should like to give a few figures for January of this year to prove my point. Throughout the United Kingdom, out of every thousand insured persons, there were 12 unemployed. But in Caernarvonshire the figure was 65, or almost six times as high.
Even this does not fully indicate the gravity of the situation, which is masked by the steady migration from our county of our young people and, indeed, many middle-aged family men, too, with poignant difficulties attending upon their movement, to other parts of the country to search for work. If those emigrants had stuck it at home during the past two or three years, the number of unemployed in Caernarvonshire would not be about 2,500, which it is at present—and which is high enough—but twice or three times that number.
Despite the persistent emigration of our youth, the figures for January which I received from the Ministry of Labour only this morning show that our small towns and rural districts are carrying a load of unemployment out of all proportion to their capacity, their population and their

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deserts. I see the Secretary of State for the Home Department and Minister for Welsh Affairs in his place, and I am grateful to him for his presence. He must agree that for a small market town like Pwllheli to have 632 people unemployed is a tragedy, and that for Portmadoc to have 120 unemployed is again a tragedy, as it is for Penygroes to have 179, Caernarvon to have 532 and gallant little Bethesda to have 113. These figures represent a sum of human misery in the contemplation of which I could detain the House for a long time.
But I want to pass to other matters. The economic and social consequences of such a state of affairs in any community would be serious, but to our community it carries a special threat, I am not saying that we are any better than any other community. All I am saying is that in a very peculiar and a very valuable sense we are different.
This is an area in which the language and manner of life of Wales have survived the strain and the challenge of centuries with vigour and beauty. Take away the livelihood of the people of this province of Wales and you shatter the basis of a distinctive way of life, a democratic spirit, a co-operative and Christian manner of living, and I say quite sincerely that not simply would Wales be the poorer for the dismantling of this community but the whole of Britain and, it may be, the world.
The background of our problem is perfectly clear. The two industries on which the people of this Province of Gwynedd have traditionally depended no longer offer the same opportunities of employment as they used to do. Our agriculture is increasingly becoming a matter of family farms, employing more machines and fewer workers, and we cannot quarrel with that. It is a natural development, and there is great virtue in it. Our small farmers need credit facilities which will help them to rebuild and re-equip, and so increase their production and their turnover.
The second industry on which we have always depended is, of course, the slate industry, and although the slate quarries still command important markets, they have inevitably declined in the last 15 or 20 years in the face of the competition of cheaper products, especially tiles.
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Forty or 50 years ago, the North Wales slate industry employed 14,000 or 15,000 men, the majority of them in Caernarvonshire. Today, the number barely exceeds 3,500. The question is how we can come to the support of the slate industry so as to prevent this calamitous amount of unemployment, which in turn will destroy the very fabric of the community life of the quarrying areas.
It is quite true that a certain amount of new industry has come into the county as a result of the war and after the war, but it is far too little, and what little has actually come in has far too often been of an insecure character. I must give one or two examples of what I mean by this insecurity of work. I had a little to do with obtaining a grant from the Development Commission of some £50,000 for the erection of a new factory in one of our worst hit areas—the Nantlle Valley. I am very deeply concerned about reports of insecurity and discontinuity of employment, even in such a well-equipped and skilfully manned factory.
Here is a case in which the Ministry of Supply, which has a great deal to do with this factory, could easily intervene to ensure a steadier flow of work into Penygroes, and so promote a steadier policy of production and continuity of employment. Again, in the last few weeks, we have heard of the closing down, in these days of full employment, of one of our small shipyards—the Brooke Marine at Port Dinorwic, and of a small workshop, Technical Diamonds, at Bangor, and another 100 families are thrown on the dole and National Assistance. I repeat that- we have far too little work, and what we have is too insecure; and yet, while this is going on in Caernarvonshire, there is an actual shortage of labour on Deeside, in Wrexham, and in parts of South Wales.
I must ask why these overworked firms in other parts of the country cannot decant some of their orders to some of our small but highly efficient firms in Caernarvonshire. I hope that no one will suggest that our men should pack up and go away to work. Far too many of them have already done that, and we have suffered in every sense, socially, culturally, and economically, from the drain of the youngest and best of our population to places far away from their homes.

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Ours is not a naturally mobile community. There is a strong tie of language, and this is a community of tradition and deep roots—a community in which there is a good deal of personal ownership of homes, in which the children follow a very rigid system of education, and in which a movement away from home causes a more profound psychological and social disturbance than, possibly, a similar movement, let us say, within the English-speaking area. The place for these people is where their roots are. It is there that they should be enabled to earn their livelihood. It is there that they can best do that and make their fullest contribution.
I should like to make a few suggestions. First, I want to invite the Parliamentary Secretary—who this morning, when he met the deputation I took to see him, gave evidence of sympathy and keenness to assist in this matter, for which I pay respect to him—to give serious consideration to the possibility of applying to North-West Wales, not simply Caernarvonshire, the policy and techniques of the Welsh Trading Estates Corporation, which proved so successful in South Wales and Wrexham. I cannot see why that policy, which was crowned with such success, now that its job in South Wales and Wrexham has been completed, should not now be applied to the parishes and small towns of North-West Wales, which still languish in the shadow of unemployment. That is my first suggestion.
Secondly, I want to urge the hon. Gentleman to use his influence in his Department to see that major industrial concerns in other parts of the country sublet some of their massive contracts to some of our small workshops and shipyards. Instead of those firms buying expensive space in our local papers, as they are now doing, to urge and induce workers to leave their homes and go 50 or 150 miles away to work, why cannot they, with the aid of the Board of Trade, take some of their work to our workers? That would be much more satisfactory socially and, I think, in the productive sense.
Thirdly, I want to draw the hon. Gentleman's serious attention to two specific problems in my constituency. I refer first to the position in Llanberis and Llandwrog—the hon. Gentleman is already well versed in the pronunciation
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of these place names because we put him through his paces this morning—where about 450 men will become redundant in a few months because of the decision of the Air Ministry to close down its maintenance unit in that area completely. There we have ready to hand excellent buildings, which must have cost a million of the taxpayers' money, with available a skilled and keen labour force. I say, let them be put to new productive use. Surely if in 1939 they could so easily be set up it should not be difficult in 1955 to use them for productive purposes, when buildings and a labour force are ready to hand.
A very similar position obtains at the other end of the county, where, among the buildings at the Penrhos Airfield—in sight of my house—there are great hangars and permanently built hutments, which are virtually unused. There we not only have the buildings and workers, but also two undertakings which are ready to move in to a part of the airfield, if only the Board of Trade can persuade the military authorities to lease one or two of those buildings.
This matter was raised with the Welsh office of the Board of Trade last December. It is now mid-April and nothing at all has resulted. We are continually exhorted to help ourselves—we have done it; we have found the buildings, we have the labour force and have even produced two industries, but we still do not seem able to get any forrarder. I hope that the Parliamentary Secretary can do something about that.
Fourthly, I come to a comparatively new point but one of immense and, perhaps, national importance. I do not think that the country or the House fully appreciate the increasing importance to modern industry of a natural resource of which we in Caernarvonshire have an abundance—I mean water. Our rainfall has been a joke. It may be our salvation.
Industries all over the country, as we now hear, are experiencing increasing difficulties in securing adequate supplies of water for industrial processes—chiefly chemicals and textiles—and proper effluent facilities. Snowdonia is uniquely endowed in both these respects, and I trust that the Parliamentary Secretary will bear this in mind, particularly in

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some of the negotiations of the next few weeks. I leave it at that.
The people and their leaders in Caernarvonshire are ready and eager to facilitate any reasonable form of new industry. We only ask that the Government will help us to help ourselves.
10.21 p.m.
Mr. Peter Thomas: I am well aware that time is limited and I do not, therefore, propose to keep the House long. I support the hon. Member for Caernarvon (Mr. G. Roberts) in the plea that he has put forward for the county. It is most unfortunate that in a situation of general prosperity in industry—and, indeed, in certain parts of North Wales—this county of ours is not able to enjoy a great part of it.
I do not wish to go into detail, but I should like to say that my hon. Friend the Parliamentary Secretary was put in full possession of all the facts this morning. We are grateful to him for the attentive hearing that we had and for the very helpful way in which he dealt with the situation. He understands the matter and is appreciative of our individual problem in the area.
I should like my hon. Friend to say that he, on behalf of the Board of Trade, will renew and redouble his efforts to attract certain industry into these parts, where it can be so easily absorbed and where such good facilities can be given to industrialists, not simply to help the county but because we believe that those industrialists who go into various parts of the county will be rewarded for their endeavour.
10.23 p.m.
The Parliamentary Secretary to the Board of Trade (Mr. Donald Kaberry): It would be lacking in courtesy if I did not thank the hon. Member for Caernarvon (Mr. G. Roberts) for his kindly welcome to me at the Dispatch Box. How long I shall be here is a matter which we can discuss at other times and in other places, but I trust that I or someone else from this side of the House may be here to answer the hon. Member's Questions in due course after 7th June.
I should like also to thank the hon. Member and my hon. Friend the Member
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for Conway (Mr. P. Thomas) for the manner in which they presented their case, which, the whole House will agree, has been presented with sympathy and understanding. I am obliged to them for the reasonable approach they have made to the problem—a problem which, I know, has excited the attention of the majority, if not all, of their constituents. At any rate, I am sure that their constituents, in due course, will feel that in the two hon. Members they have good advocates in this House for the special problems which confront their areas.
The problem of unemployment in parts of North-West Wales has faced successive Governments since the war. Coming, as I do, new to this office and fresh to the problem, I am struck by the appraisal in the 1948 White Paper on the Distribution of Industry. After describing the specific problems in North-West Wales the White Paper made, in paragraph 90, this general observation:
"The Board of Trade are … giving very special attention to the needs of these places and making special endeavours to interest industrialists in setting up factories in them. In certain cases the Development Commission may be willing to finance factory building.…"
That has been the theme throughout the whole of the time that these discussions have been taking place.
I think it is right for me to say that it is recognised at the Board of Trade that there is a special problem in North Wales, not only for the reasons given by the hon. Member for Caernarvon, not only because of the need in general for employment, but also because of the desire on the part of the inhabitants to preserve that part of the United Kingdom, a part which is intensely proud of its Welsh-speaking tradition and all the character, customs and culture that that implies.
I should like to assure hon. Members that the Board of Trade and all other Government Departments concerned have done, and will continue to do, everything possible to fulfil the desire of all the representatives of the area for more industrial employment, but it is a fact that must always be borne in mind that industry cannot be directed to any area in any part of the United Kingdom. It is a painstaking and necessarily long job to match what an area has to offer with what an individual industrialist wants.

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A word about the district generally. The Caernarvon-Bangor district can offer a good supply of labour, and it has certain other advantages, such as a plentiful supply of water, good facilities for effluent disposal, good sites, and a willingness on the part of the workers, traditional to that area, to travel some distance to work. However, the fact remains that it is not easy to attract industry to any part of the country which is remote from industrial areas.
It is obvious that if we wish to interest industrialists and the Development Commission in North-West Wales we should keep ourselves abreast of the facts. It was on 14th April, 1954, that my predecessor said that for that purpose a survey of the area was being made. That has been done. Recently, my predecessor told the House, in the light of the report, and almost by way of reaffirmation, that the Government recognised that there was this special problem of unemployment in parts of the area surveyed, and the Government accepted that some further industrial development was needed. The Government undertook to try to steer suitable industry to the area and mentioned that assistance in building new factories might be forthcoming from the Development Commission.
Private industrial employment is not the only solution. Building and civil engineering schemes should help. I may mention among those the Dolgarrog power station, the new bridge at Conway, the Lleyn Rural District Council's water scheme, and the telephone exchange at Bangor. In addition, we should not forget the great natural attraction which this area offers, its great scenic attraction and the possibility that tourism may expand. I understand that the holiday camp at Pwllheli is to have extended accommodation. I believe a gradual expansion is expected in forestry and its ancillary products.
So far, I have been speaking about North-West Wales and Caernarvonshire generally. Coming now to the specific problem of the Air Ministry maintenance unit, I would recall the statement made by the Home Secretary, who is sitting here beside me to hear this debate, in the debate on Welsh Affairs in November last. He pointed out that the decision to
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close the unit was, unfortunately, unavoidable, but that the unit as a whole was likely to employ over 400 people for another two years. I am glad to learn, and I am sure that hon. Members are glad to learn, that nearly all those who have so far been redundant at Llanberis have been taken on by the Air Ministry at Llandwrog, and that work there is expected to last until 1957.
The buildings at Llanberis consist of widely separated 24 units more fitted for storage than for industry, but we have been doing our best to find industrial tenants. One of the difficulties is that most industrialists prefer to build their own factories exactly suited to their needs. It is, of course, usual to pursue a good many inquiries before securing an undertaking for any particular place. There are even greater difficulties over Llandwrog in regard to the construction of buildings, into which I do not think I need go now.
Llanberis and Llandwrog are part of a larger travel-to-work area. We shall do our best to secure industry for these two places, and, failing that, for the area as a whole. I am sure that the House will not under-estimate the value of the policy for this area which was announced last month. We believe that this policy is fitted to the special needs of the area, and in spite of the difficulty, which I have already mentioned, of attracting industry to parts of the country so far from the main industrial centres, it has already had useful results in the area since the war.
There has been an encouraging amount of industrial development in many parts of Caernarvon and in Anglesey and assistance has been given by the Development Commission in the building of factories in that area. I am glad to be able to say that in the last few days approval has been given for the erection, with moneys provided by the Development Fund, of another factory in Llangefni, which is expected to employ as many as 200 people. This may not be of much direct interest to the people of Caernarvonshire, but it shows that talk of help by the Board of Trade and Development Commission in North-West Wales is not mere empty talk.
The hon. Member for Caernarvon questioned whether the Industrial Estates Company could assist in this area. I am

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informed that the Wales and Monmouthshire Industrial Estates, Ltd., can operate only in a Development Area, and for the reasons given by my predecessor on 29th March the Government do not regard scheduling under the Distribution of Industry Acts as appropriate for North-West Wales. As I told the hon. Members for Caernarvon and Conway this morning, the Development Commission is prepared to assist in all suitable cases. I
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can assure them and the House that the Board of Trade will lose no opportunity to do whatever is possible, in co-operation with other Government Departments, to attract industry to this very important area.
Question put and agreed to.
Adjourned accordingly at twenty-six minutes to Eleven o'clock.

  KENYA (ARRESTED AFRICANS, NAIROBI)
  KENYA (ARRESTED AFRICANS, NAIROBI)
WEST INDIES
  Citrus Industry (Report of Inquiry)
  Citrus Industry (Report of Inquiry)
  British Honduras (Development Loan)
  British Honduras (Development Loan)
  NAVAL DISCIPLINE ACT
  NAVAL DISCIPLINE ACT
  TELEPHONE SERVICE (ELASTIC CORDS)
  TELEPHONE SERVICE (ELASTIC CORDS)
  FRUIT (GRADE ASSESSMENT SERVICE)
  FRUIT (GRADE ASSESSMENT SERVICE)
  DIPLOMATIC AND INFORMATION SERVICES, GERMANY
  DIPLOMATIC AND INFORMATION SERVICES, GERMANY
LOCAL GOVERNMENT
  Private Street Works, Newcastle-under-Lyme and Stafford
  Private Street Works, Newcastle-under-Lyme and Stafford
  Public Cleansing (Costing Returns)
  Public Cleansing (Costing Returns)
  Town Planning Officers (Qualifications)
  Town Planning Officers (Qualifications)
  NATIONAL ASSISTANCE, LINCOLN
  NATIONAL ASSISTANCE, LINCOLN
Preamble
The House met at half past two of the clock, The LORD MERTHYR on the Woolsack.
Prayers

  BUSINESS OF THE HOUSE
  THE EARL OF ONSLOW: My Lords, on behalf of my noble friend, Lord Salisbury, I beg to move the Motion standing in his name.
  Moved, That Standing Order No. 35 be suspended for the remainder of the Session for the purpose of giving Government Business (except with the consent of the Government) precedence over other Notices and Orders of the Day, and that Standing Order No. 41 (No two stages of a Bill to be taken on one day) be suspended for the aforesaid period.—(The Earl of Onslow.)
  On Question, Motion agreed to, and ordered accordingly.
  THE EARL OF ONSLOW: My Lords, on behalf of my noble friend, Lord Salisbury, I beg to move the second Motion standing in his name.
  Moved, That leave be given to advance the Second Reading of the Children and Young Persons (Harmful Publications) Bill (which stands appointed for Tuesday next), to To-morrow the 21st instant. —(The Earl of Onslow.)
  On Question, Motion agreed to, and ordered accordingly.

  FOOT-AND-MOUTH DISEASE
  2.37 p.m.
  THE EARL OF LISTOWEL THE EARL OF LISTOWEL rose to call attention to the Report of the Departmental Committee on Foot-and-Mouth Disease (Cmd. 9214); and to move for Papers. The noble Earl said: My Lords, I hope I have not inconvenienced many noble Lords by postponing this Motion which was originally placed on the Order Paper before Easter. If I have done so I apologise to those noble Lords who may have suffered some inconvenience; but my reason for the change was that the noble Earl, Lord St. Aldwyn, told me that
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  at that time Her Majesty's Government were not ready to express their views about the recommendations in the Gowers Committee's Report. As most of these recommendations cannot conceivably be carried out without the acceptance of Her Majesty's Government, noble Lords will, I think, agree that it was worth waiting until we had an opportunity of hearing the intentions of Her Majesty's Government before we discussed the Report. I am grateful to the noble Earl for agreeing to state this afternoon the views of Her Majesty's Government.
  I am well aware that there are many noble Lords who know a great deal more than I about animal disease and the problem of foot-and-mouth disease. We all look forward with particular interest to the speeches we shall hear from the noble Lord, Lord Adrian, and my noble friend, Lord Hungarton, both of whom were members of the Gowers Committee and served on that Committee during the whole time it was making its inquiries. My own remarks, therefore, are really in the nature of a curtain-raiser to the speeches of these noble Lords and others who are expert on this subject, and also to the important statement that we shall hear from the noble Earl opposite.
  There is no need for me to dwell on the ravages of foot-and-mouth disease, which are familiar to everyone connected with farming; but, though we all realise that this disease does tremendous damage, I believe few of us knew, until we read the Report of the Gowers Committee, exactly what had been the loss to farmers in this country in the past twenty-five years. That is my own experience and I imagine it is typical of a number of other noble Lords. I knew there had been a few extremely bad years when there was a large number of outbreaks and a good many less bad years with only a small number of outbreaks; but until I read this Report I did not realise the extent of our average loss of livestock every year during the past twenty-five years. The Report points out that the average number of animals slaughtered annually over this period of time has been 5,800 cattle, 6,300 sheep and 3,000 pigs—and that loss has to be taken into account in relation to an increasing population of livestock. It is perfectly clear from these figures that we cannot afford to relax our efforts during

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  short periods when the disease is comparatively quiescent; we must go on fighting it all the time and we must try to fight it more effectively in the future than we have done in the past. Only in this way can we hope to achieve our two main objectives.
  The first of these objectives is to prevent the disease from becoming endemic in this country as has happened in all countries that have not adopted an effective slaughtering policy in the early stages of the disease. The second objective, which I consider no less important, is to reduce the loss of food and waste of public money represented by this annual toll on our livestock population. It is true that our proximity to the Continent of Europe, where foot-and-mouth disease is endemic, makes it impossible for us completely to eliminate the disease as has already been done in the case of certain human diseases such as the plague. Unfortunately we are not in a position to take any measures that would stamp out this disease once and for all; but at least we can do more—I believe much more—than we have done in the past to keep it down. Certainly after the advice we have received in this Report we should be in a position to reduce the number of outbreaks and the extent of infection after an outbreak has occurred. By giving us their views on this subject—the most important of all subjects connected with foot-and-mouth disease—the Gowers Committee has rendered a quite invaluable public service. And perhaps I might be allowed to say, in passing, how deeply grateful we are to the chairman of the Committee and all its members for giving up no less than two years of their time to the preparation of the Report. They showed commendable and exceptional zeal by pursuing their quarry to the Continent of Europe and even to South America, and no one can mistake the constructive and reforming spirit that underlies the recommendations they have made to the Minister.
  I should like to pick out what I regard as the most important recommendations in the Report, and to ask the noble Earl, Lord St. Aldwyn, whether those recommendations are accepted by the Government; and, if so, what action, legislative or administrative, the Government will take in order to see that they are carried out. To my mind, by far the most impor-
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  tant recommendation is that on the subject of first-principle policy. I am particularly glad that the Committee were unanimous in saying that there is no alternative to the stamping-out or slaughter policy. I do not like this policy, any more than any one else does, but I cannot help feeling that it is very healthy and a good thing that the Committee have stated their conclusions so clearly and without any doubt on the part of any of the members. There are still, I believe—certainly there were—some people who think that vaccination to give immunity might be a practicable alternative to slaughter. The Report answers wishful thinking of this kind with quite devastating calculations of cost—into which I will not enter—and of the numbers of animals which would have to be vaccinated. It seems to me that it can do nothing but good for farmers to realise, even if it is an unpalatable truth, that the view taken by successive Governments, that there is really no alternative, whether it be vaccination or allowing the disease to spread, to the traditional policy of slaughtering animals infected or liable to infection by the disease, has now been supported by a committee of experts who studied the most up-to-date methods of dealing with the disease which have been tried in every part of the world.
  If more support far this conclusion is required, I think your Lordships will agree that it could come from no more authoritative quarter than from one of our colleagues, the noble Viscount, Lord Bledisloe. I had a letter from the noble Viscount yesterday in which he apologised for his inability to come here to-day to take part in this debate, and he gave me permission to quote from his letter. I should like to quote just one sentence. It is this:
  With the increase in numbers and value of our livestock, and in view of our relatively confined area, we cannot afford to 'let the disease rip' in the United Kingdom."
  I infer from that that the noble Viscount, with all his experience, endorses our present policy and the policy supported in the conclusions of the Gowers Committee.
  I fear that the only way to prevent slaughter is, in fact, to stop outbreaks of foot-and-mouth disease. The Committee make several valuable suggestions on this subject, and as implementation of these suggestions will require action by the

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  Government I am particularly anxious to know whether they are acceptable. First, and to my mind the most important, of the suggestions is the recommendation that all collectors of waste food should be obliged to sterilise it before it is sold and fed to livestock. It is an interesting fact, which was long suspected by the Ministry of Agriculture and has now been confirmed by the Committee, that swill containing waste meat imported from South America, or food contaminated by it, has caused more outbreaks of foot-and-mouth disease in this country than any other single source of infection.
  It is clear from this, I think, that the existing restrictions on the feeding of raw swill to pigs and poultry, such as the 1947 Order about the boiling of swill, have been entirely ineffective, or at least so ineffective that they have not prevented or lessened the number of outbreaks we have had since the Order was made. The case against the use of raw swill is strengthened, as the Committee point out, by the fact that it spreads other animal diseases, such as swine fever and fowl pest. There is therefore an overwhelming case for the compulsory sterilisation of waste food collected in substantial quantities. I leave it to the noble Earl to draw a line between substantial and insubstantial quantities, but I am sure he will agree with me that where a vital principle of policy is concerned, administrative difficulties must not be allowed to stand in the way. Of course, this principle applies equally to local authorities and to private collectors of waste food, equally to the towns and to the countryside. An important additional support to this recommendation of the Committee lies in the fact that it is fully endorsed by the British Veterinary Association. I should like to quote one sentence from a Memorandum I have received—and which I daresay other Members of your Lordships' House have also received—from the Association. The Association say:
  "It is the view of the Association that the requirement that all collected swill should be sterilised on licensed premises should be extended to the country as a whole."
  Of course, at the moment, these requirements are effective in only a very few places.
  The main disadvantage of compulsory sterilisation—and I think we must frankly
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  recognise the difficulties—is that owing to the high cost of sterilisation plant it is more than likely that much less waste food will be collected if a provision of this kind is incorporated in the law. That means that farmers will have to look to imports, at any rate for the time being, for more feeding-stuffs for their livestock. That, again, is a serious problem, at a moment when we are confronted with difficulty in balancing our foreign trade. Surely it is for the Government to decide whether we can afford extra imports or whether, alternatively, they should make some contribution towards the cost of treating waste food so as to make it fit for animal consumption.
  I think we can all agree about one thing, whatever the Government may decide—and they have much more information than we have on which to base a wise decision: there can be no possible excuse for ignoring a recommendation that would do more than anything else at the present moment to prevent further outbreaks of foot-and-mouth disease. If the Government decided to make the collection and sale of all swill illegal, then it would follow that more waste food would be included among refuse disposed of by local authorities; and therefore it would be essential that such refuse should not be dumped in places where it could be easily got at by dogs, birds and other animals. Again, if the noble Earl answers in the affirmative the first question, the more important aspect of this problem, then I hope he will be able to assure us that he is satisfied that local authorities will take the necessary precautions to prevent contaminated food from being easily reached by animals.
  Another quite different proposal of the Committee to which I attach a great deal of importance is that about international action for controlling the disease. As your Lordships are aware, foot-and-mouth disease is already endemic on the Continent of Europe. It flares up in one country and spreads rapidly to its neighbours. A serious epidemic in this country almost always coincides with a serious epidemic across the Channel. Therefore it is essential for the countries of Western Europe to help each other in the fight to stamp out this disease; and they will all benefit to a greater or lesser degree from mutual assistance of this kind. I believe that in 1952 thirteen countries in Western Europe agreed to set

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  up an International Commission for this purpose, but three years have passed and this Commission still does not exist. Its terms of reference have been worked out; its membership has been agreed upon; but these things have not yet been approved by the requisite number of Governments. The gap at the moment is only a narrow one: I believe that five Governments have approved, but the Commission cannot come into existence until one more has added its approval. I should like to know whether the noble Earl will ask his right honourable friend the Foreign Secretary to do his utmost to secure the approval of at least one of our many friends in Western Europe. Indeed, perhaps the noble Earl can tell us whether there is any reason why it is more difficult to secure Western co-operation in facing a common virus than it is to secure Western co-operation in face of a common enemy. We should be interested to hear the answer to that question. It will be a very real gain, in this campaign against foot-and-mouth disease, when an agency of this kind has been set up.
  Other proposals in the Committee's Report deserve no less careful consideration, and I hope that the Government will give us a considered opinion about all the main recommendations. It would be particularly interesting to hear the Government's view on vaccination during an epidemic and on the supply of vaccines for this purpose. Do the Government agree with the Committee's strictures about the administration of the Research Institute Pirbright? Do they agree about the desirability of a Veterinary Research Council, a co-ordinating body which would be a parallel organisation to the Medical Research Council? Of course, it is not a matter of the Government's setting up such a Council at the present moment, but I think it would be useful to have the Government's views. What is the Government's view about the suggestions in the Committee's Report for increasing the severity of legal penalties for delay in reporting an outbreak of the disease? These are some of the questions to which I think we should all like a reply from the noble Earl, Lord St Aldwyn.
  I hope that I have kept my remarks as short as I intended to keep them. I conclude by appealing to the Government not to miss this opportunity. This Report is probably the most thorough study of foot-and-mouth disease that has ever been
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  made in this country, and therefore it presents a unique opportunity for the improvement of existing methods of dealing with this disease. We are all against disease, animal or human, and it is not a Party matter, in any sense whatever. I can assure the noble Earl opposite that he will have our full support for the positive and vigorous action that is now required of the Government to implement these recommendations. I beg to move for Papers.
  2.57 p.m.
  LORD ADRIAN: My Lords, although the Committee had no substantial changes to recommend, I think we were all agreed on the need to maintain and enlarge the Research Institute at Pirbright. It was disappointing for the Committee to have no substantial changes to recommend. We should all have been glad if we could have come down in favour of a better method of dealing with foot-and-mouth disease. For sixty years we have done it by slaughtering all animals infected and all contacts, but there has been a great improvement in vaccines. Many countries rely on them, and much fundamental research has been done in our own station at Pirbright; so it would seem that the time has come when we could make some trial of vaccines here.
  Before the Committee were appointed we had just been through an epidemic in which 40,000 cattle were slaughtered. Most of them were healthy, and if they had caught the disease only a small proportion would have died of it—it is not a disease with a high mortality. If one is accustomed to thinking in terms of human sickness, it is hard to be reconciled to a method of stopping a disease by killing the patient. One has to think quite differently about foot-and-mouth disease, however; the arguments here must be based largely on practical economics. The disease is terribly infectious to cattle. Animals that have had it are usually left with some permanent weakness, and there is a danger that if it became established in this country our milk supply would be halved. The method which we use to keep it in check must be one which will give the maximum amount of safety and will be reasonably cheap to work and not too complicated to apply. We are forced to conclude that for this country, and for the present time, the slaughter

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  policy is safer and cheaper than any other policy would be.
  Vaccination is the only alternative which can be seriously considered at the present moment. Other methods have their backers, but when we considered the evidence in support of them it was quite clear that the claims for vaccination were far stronger. It has been tried out on a large scale, and, within limits, has been extremely successful. But the countries which now rely on vaccination are all countries where the slaughter policy would be quite impossible, because there is too much of the disease about. The disease is endemic in most of Europe and South America, and there the best, and in fact the only possible, method of coping with it is by vaccination, and they have found it a great help.
  This method, however, still has considerable limitations. No one claims that vaccines give 100 per cent. protection. Young animals cannot be immunised at all, and in adults the dose has to be repeated every six months. There is the usual difficulty with virus diseases, that an unexpected strain may turn up, with the result that the vaccine which has been prepared from the usual strain affords no protection. We can hope that this difficulty will not occur with the new vaccine for poliomyelitis, because there it looks as if the disease is mostly caused by one strain. But with foot-and-mouth disease there are at least three main strains of virus, as well as several subdivisions, and vaccine that will produce immunity has to be prepared from a particular virus, or from a mixture of all the viruses there may be; and then it is less effective.
  All these uncertainties do not matter very much in a country where the disease is always about. Vaccination can be a great help there, because it can reduce the severity of the disease when it does occur; and it can also reduce the incidence of the disease. But it could not be trusted to get rid of foot-and-mouth disease completely, which can be done by slaughter. But the slaughter policy is possible only in countries where, most of the time, there is very little of the disease. We are fortunate in belonging to the group of countries which have natural barriers against infection. Foot-and-mouth disease has never become established
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  in Australia, New Zealand, Canada, the United States or here. So we get only occasional infection from the Continent, and then we can deal with it by the policy of stamping out, which is far safer than wholesale vaccination would be.
  But vaccination does raise the resistance to infection, and we investigated the possibility of using it as an additional safeguard. Some countries slaughter infected animals and the contacts, just as we do here, but they also build up a ring of immune cattle round the outside of the infected area, or make a protective belt along the frontier to prevent the disease from coming in. We examined that idea, but we could find no clear evidence that a policy of that sort would be effective in the conditions that exist here. However, we were strongly attracted to the idea that valuable herds of cattle might be preserved by vaccinating them and raising their resistance when an epidemic threatened us from abroad. One could tell that an epidemic might be imminent by the figures of infection on the Continent, and there would presumably be time to type the virus and to get stocks of the appropriate vaccine.
  Even this limited use of vaccine, however, seemed to be too risky to allow at the present time. Vaccinated animals are more resistant, but for that reason there is some danger that some of them might contract the disease in a form which would be exceedingly mild—too mild to attract any attention to itself, but yet sufficient to spread infection. If we could be sure that vaccinating would give 100 per cent. immunity, then I think it would be reasonable to allow prize herds to be protected in this way; but with only 90 per cent. immunity there is the 10 per cent. risk of what is known as masked infection. It may be a very small risk, but we need more information before we can neglect it. There is really little danger that vaccinated animals or non-vaccinated animals would become perpetual carriers of the disease, as there may be carriers of some bacterial diseases; but in spite of that, they might have this extremely mild attack which would make them infectious for perhaps a fortnight, and they might afterwards carry the dried virus about on their bodies. It can survive in that state and be infective for several months.

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  It may turn out, of course, that the risks of masked infection are negligible. But at the present time, even if we thought the risks negligible, the countries to which we export our cattle are so convinced of them that they would close their markets at once if we began vaccinating, for whatever purpose. That is the position at present. Vaccination is too risky a method for us to use, and it may never be the right method for this country. On the other hand, we are threatened every few years by the big epidemics that occur on the Continent, and so any improvement in vaccines will be to our advantage. And the more they are used on the Continent the less we shall have to fear a recurrence of the sort of epidemic that we had in 1952.
  Although we do not use vaccines ourselves, it is most important that the Government research station at Pirbright should go on experimenting with them. There are peculiar difficulties in research on such a highly infective disease, and it can be done only in laboratories especially equipped to prevent any risk of the infection spreading outside. One does not want Pirbright to become the centre of an epidemic of foot-and-mouth disease in this country, and for that reason the experiments are bound to be tedious and expensive. There are not many research stations of this sort in existence, and Pirbright stands high among them. It has become the recognised authority on the properties of the virus and on the methods by which the various types of virus can be recognised; in fact, we found that it was playing a very worthy part in the international effort to check the disease, and we were convinced that such work deserved all support that it could be given.
  Pirbright is not only our research centre: it is also an insurance against possible disaster. There is increased traffic with the Continent, and that may mean that we shall lose some of our natural immunity. It is conceivable that, one of these days, we may be faced with an epidemic coming in from the Continent too severe to be controlled by slaughter. In such an emergency, the Continent would need all the vaccines they can manufacture, and we should have to rely on what we can make here; so Pirbright would have to make it or supervise the making of it. It is to be
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  hoped that that will never happen. It would take us a long time to get back our freedom from the disease. Without vaccines it would be a great disaster, but with them we could expect to reduce the disease until it became possible to deal with it again by our present slaughter policy.
  Of course, it is true enough that if we had to plan for all possible epidemics there would be no knowing where to stop, and the research work at Pirbright ought not to be penalised by putting too much emphasis on the emergency side—on the need for turning over to large-scale production if it became necessary. But it would be a mistake to have no plans ready. If we were ever forced to use vaccination instead of slaughter, we should need all the vaccines we could get. I know that the Ministries concerned have already taken steps to enlarge Pirbright Institute, and I hope that they will enlarge it sufficiently. Fortunately, there is a lull at the moment on the foot-and-mouth front, and this seems to be the time when we ought to be able to organise our defences.
  3.12 p.m.
  LORD BRABAZON OF TARA: My Lords, I count it a very great honour that I am able to be the first to congratulate my noble friend Lord Adrian on his contribution to our debate. His fundamental research on our nervous system has made him a figure distinguished throughout the world, his name is so well known. Within our own country, as President of the Royal Society and as Master of Trinity, he is indeed a tremendous figure who adds much to the status of our House. I sincerely hope that in his busy life he will take many opportunities of joining in our debates, because not only is he this remarkable, intellectual figure in our world, but he is beloved by everybody who comes in contact with him.
  I approach this debate with some misgivings, because I am not a farmer and, consequently, I feel rather like an Englishman butting into a Scottish debate. But I am clearly aware of the national less that foot-and-mouth disease entails, and also the fact that, as taxpayers, we are spending a lot of money on research. I take an interest in this subject for one reason only—because this disease is a virus disease. The moment virus is mentioned I get all excited. I must tell your

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  Lordships why. It is because a great friend of mine was suddenly struck down by disseminated sclerosis. Now disseminated sclerosis is a virus disease, and your Lordships may be perfectly well aware of the fact that the moment the medical profession come to a conclusion that a disease is caused by a virus they throw up their hands in complete despair and defeat. By a curious chance, and in desperation, I discovered an eminent doctor who has had a great career in Ireland and who was effecting cures. That was Dr. Crofton. I took my friend to him. I may say she was lame, paralysed in her arms, and had nothing to look forward to but death. After a year's treatment she is as healthy as anybody in this House. I was so delighted at this that I did my best to take this woman to the doctors who had seen her when she was in distress, to show them that a cure had been effected. When I told them what had happened to her and how she had been treated, no doctor would look at her. The only excuse they brought forward was that they had not diagnosed the symptoms rightly. That is wriggling of the worst order, and nothing else.
  There have been many notable cures effected by this particular treatment, and I was nothing short of amazed when I found there was a definite medical boycott against the exploration of this system of therapeutics. I consider it a shocking thing that that boycott should exist. It does not exist only in the medical profession, but in the veterinary profession, too. I am not going to give your Lordships a technical lecture, but there are one or two things I must bring forward because they are of fundamental interest. Doctors will not agree that you can grow the bacillus from the virus and vice versa. That strikes at a fundamental truth that they believe—that that is not possible. Your Lordships will read in the Report that it says:
  "If that is true"—
  that is, that you can grow the bacillus from the virus—
  "then it means the rewriting of all the bacteriological textbooks in all the civilised languages of the world."
  That is long overdue. We have had a rewriting of all the books on physics during the last twenty years, so why not on bacteriology? Are we so far advanced
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  that we can afford not to investigate some new claim that will rewrite the books? I should think it is high time that they were rewritten.
  I say that in a State like ours, where we spend money on investigation, this claim —if it is a correct claim that we can change and get the bacillus from a virus —should be investigated as a piece of fundamental research. It may be that Pirbright is not the right place; but it has to be done somewhere, because a great deal depends on it. There have been cures with this system. May I tell your Lordships what the system is? From the virus is grown a bacillus. The bacillus is bred in quantities. It is then killed and inserted into the bloodstream. Why the bloodstream is benefited by that we do not know. What happens is that the blood stream destroys the dead bacillus with great ease and builds itself up in a way—strengthens itself—in order to deal with the live bacillus and finally with the virus, which is always a very difficult thing to kill. From the point of view of size, if we look upon the bacillus as the size of an oak tree, the virus will be the size of a pinpoint. That is one of the troubles—the minuteness of the thing.
  I want your Lordships to know that in these cases it is not a question of giving a mild disease. I think that is always rather a dangerous thing. No harm at all can possibly accrue from injecting the dead bacillus into the bloodstream, and it has been proved absolutely conclusively that this system is a preventive and a strong prophylactic, and it is in many cases a cure. There have been some arresting examples of the efficacy of the system in polio, in hardpad and in foot and mouth; and yet relative to human diseases, to any animal diseases, there is a boycott which cannot be broken down. I raise my voice in asking the Government to see that a fair investigation is made into this matter so that we can know whether we are right on the fundamental basic principles of the turning of the virus into bacillus.
  Now I notice that there has been great talk in America over a cure for polio. There there is to be injected into the system the dead virus—again not a live disease but the dead virus. Dr. Crofton advances the fact—and he may be right or he may be wrong—that it is best to

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  put in the dead bacillus rather than the dead virus because, in training the system to defeat the bacillus, the virus will also be defeated eventually. Already in this country there is a growing scepticism against this particular system which has been proved with such enormous success in America. I think we should look upon that outlook as rather prejudicial to a very serious contribution which others are trying to make. I am not a farmer, but I view with some alarm and much misgivings a state of affairs in which a genuine process of cure can be boycotted by the profession for no apparent reason but prejudice. It may affect old-fashioned ideas on bacteriology, but, if it is right, it does offer tremendous possibilities, not only to human beings but to animals.
  3.22 p.m.
  LORD HUNGARTON: My Lords, may I first of all thank the noble Earl, Lord Listowel, for having initiated this debate. To me, as a farmer, it is a most important debate. Before I proffer some few observations, however, I should like, to add my thanks and congratulations to my noble friend Lord Adrian for the most able way in which he has spoken to us this afternoon. I should like also at this early stage to refer to the excellent leadership which our Committee, the Departmental Committee on Foot-and-mouth Disease, was given by Sir Ernest Gowers, our Chairman. I make that statement because I feel that it is really due to him, not only for the way in which he handled what was probably at times a rather difficult Committee, but also for the way in which he has compiled this excellent Report. I should also like to offer thanks which are due to our secretaries. They were of great help to us. We carried on for two years and got to know each other very well. I thank those good people for the great help which I, at any rate, received from them.
  I am not going to speak to your Lordships in any scientific or technical sense—that is rather outside my province, for I am simply a farmer—but I wish to refer for a moment or two to what has happened in this country during the past century, and to remind your Lordships that the first outbreak in this country occurred in about 1839. It spread slowly through the country—it was endemic here—for a number of years until 1871,
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  when there were some 3 million cattle affected by foot-and-mouth disease. The Government at that time, when there were 3 million cattle affected in Britain, began to sit up and take some notice, and they made the disease notifiable. It continued for some years as a notifiable disease, and a certain amount of control resulted from the fact that the farmers all the way round were notified that the disease was in a certain area. It was not until 1892 that stamping out—I use the words "stamping out" instead of the word "slaughter"—came into being. It was not long before this country had complete control of the disease. My father had this disease on his farm. The cattle all got better, and it was nothing. Of course they did well after they had had it, but what did they lose in the meantime? The losses, both to the individual and to the country generally, in the event of a bad epidemic were colossal.
  The Gowers Committee went to various countries. We made up our minds to go to at least three farms in each of the countries we visited, and interview the farmers. In every case, even in the Argentine, we were told that their losses when they had foot-and-mouth disease were somewhere between 30 and 40 per cent. of their cattle. That is a terrific loss. We sent a questionnaire round to various countries, and one of the questions we asked was this: "How much loss do you think your country sustained in the epidemic in a certain year? "Let me give you two of the larger replies. We had one from the Ministry in France which stated that they estimated that their losses would be somewhere about £45 million. From Western Germany the figure was higher: they said they thought it would be £50 million. That is from just one epidemic. I would say that it was a very modest estimate, because in France alone in 1951–52 they had 330,000 outbreaks—not 330,000 cattle affected but 330,000 farms affected—and in one year previous to that 390,000 farms were affected. With figures like that, it does not take long for losses to amount to many millions of pounds.
  An epidemic comes every few years, as has been so well said by my old friend Lord Adrian. We are just about due for another outbreak. I hope it will not come, but we are getting near the time. I believe that when there is one of these epidemics flying about, the losses throughout

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  the world can be somewhere in the region of £1,000 million in a year. Those seem gigantic and terrific figures, but, taking the two countries which I have just mentioned, which together had a loss of upwards of £100 million, one is not long in arriving at a loss of £2,000 million throughout the world. Can the world afford to lose such livestock? I very much doubt it. I am certain we cannot, particularly when we come to beef cattle, because the world is short of beef cattle at the present time. Something should be done, in so far as we can do anything, to protect those cattle against not only foot-and-mouth disease but other diseases, to which I will refer later.
  How is foot-and-mouth disease brought to Britain? At any rate we know that 50 per cent. of the primary outbreaks are caused by infectious swill. That is brought to this country by importing meat or offals from countries which have the disease. Unfortunately, we in this country have to import some of this infected meat. Those countries do their best to see that we do not get anything of that kind coming here, but it is bound to slip through occasionally. It may be that cattle in the first stages of the incubation period come through to the abattoirs. Such meat does slip through; it may get into our shops and be sold to our people, and unless it is thoroughly cooked the infection may be passed on through the swill tub. Then pigs get it, with the result that we have an outbreak of foot-and-mouth disease. That is the principal way by which the disease is brought into this country. There is little doubt that when there is an epidemic on the Continent of Europe some outbreaks here are due to wind-borne infection or caused by birds' bringing infection. We have no positive proof of this, it is true, but we are most definite in our minds that the disease is carried in this way.
  I have spoken of swill. Are we dealing effectively with our refuse? My noble friend Lord Listowel has already referred to that matter, which I am certain requires tightening up. Some authorities are efficient, but many are not. At the present time, licences for the collection of waste food are issued by the Ministry of Health. I think that we ought to consider the question of assigning to local authorities the task of licensing collectors. There appears to be some overlapping in this
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  matter. We already have inspection of boilers and sterilising plant, but one can pinpoint these things much better if there is one body dealing with all of them.
  Next we come to the disposal of refuse containing waste food. During the war, waste food was collected in separate bins. Men took it away to be made into such things as "Tottenham pudding"—and very valuable food it was to us at that time. We had some £2 million worth of food from swill. But to-day the authorities are finding it much too costly to pick up this waste food. Some people are picking it up from the larger hotels and places where there is a considerable quantity to be picked up; but the waste food of the smaller people, the ordinary householders, is not being picked up, and a great deal of it is going into the refuse bin. That is where the danger begins, and that matter should be tightened up a great deal.
  We see in the Report a recommendation that if the statutory obligations of the local authorities do not already include the disposal of their refuse so that no danger to animal health is involved, the law should be amended. If it is already the duty of local authorities, the Government Departments concerned should make every effort to see that it is carried out. May I refer for a moment to local dumps? I travel through the countryside in one certain direction. Along the route of my travels there happens to be a local dump. During the last week I have seen some twenty cattle roving about over this dump. I am sure that there are a certain number of bones, and so on, amongst this refuse, but I hope and trust that there will be no such thing as foot-and-mouth virus there. At any rate, the dump is there. We have been short of grazing space for our cattle, and people have got permission, no doubt from the local authority or from the person who rents the land for dumping purposes, to send cattle over it; and there they are, walking all over the dump. If it happened that foot-and-mouth disease broke out amongst those cattle, I should feel guilty that something had not been done about it at once.
  We are rather loose at the present time in regard to looking after our waste foodstuffs. If we are effectively to check foot-and-mouth disease, we must deal with it from an international point of

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  view. But the only international action of which I am aware up to now took place when the United States and Mexico got together, following an outbreak in Mexico in 1946. The United States thought that this was much too near and that they might be in trouble. They came to an arrangement with Mexico to pay half the cost of eradicating the disease from that country; and after four years of hard work they succeeded if a country like Mexico can be cleaned up, certainly we can clean up Europe. International collaboration is essential for effective control.
  This truth first received practical recognition when the International Office of Epizootics was first established in Paris with the support of fifty-three countries—that was just about the time when we discovered that foot-and-mouth disease came from a virus. All the people concerned were on their toes, but little transpired until, in 1952, thirteen Western European countries formed a Commission to tackle the problem. The constitution of the Commission was formally approved by the Food and Agriculture Organisation of the United Nations on December 11, 1953. Unfortunately, this Commission is not yet working because six countries are required to deposit notification of acceptance, and only five, including Britain, have done so. We were very disappointed about that. We, as a Committee, felt bound to record disappointment at the slow progress that has been made. We hope that Her Majesty's Government will take any action in their power with a view to resuscitating the interest of other European Governments in what promised to be the most encouraging development in the fight against foot-and-mouth disease. I hope that something will be done about that.
  Vaccination has been ably dealt with by my noble friend Lord Adrian, but I should like to make this one observation. To vaccinate all our cattle, sheep and pigs, two or three times a year would be a gigantic and expensive task—costing, probably, over £20 million per annum. Compensation to stock owners, however, over the past thirty years has averaged a little over £200,000 per annum.
  Pirbright Research Institute has been referred to. All I would say, so far as the Institute is concerned, is that it deserves the reputation it has widely won
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  as the most important centre in the world for research into foot-and-mouth disease. We are proud of Pirbright. Wherever we went abroad, we were welcomed simply because of the position which Pirbright held in the esteem of those countries. I am proud of that. I should like here to pay a tribute to Dr. Galloway and his excellent staff of scientists for the splendid work they are doing. They have been working at Pirbright for twenty-odd years, and I think such a tribute is due to them. Perhaps this matter was not within our purview, but we were not quite happy about the administration at Pirbright. The Ministry of Agriculture and the Agricultural Research Council stand opposite to each other, and the Governors of Pirbright wonder to whom they owe their loyalty—if you like, who is their "boss." At any rate, we think that the present administrative arrangements at the Institute should be clarified. I hope that the Minister will give early consideration to that matter, because it is important that everything should go smoothly and well.
  I am not altogether certain that the various bodies which we now have looking after foot-and-mouth disease and other aspects of animal health are quite as they should be. I suggest that another body might come into being to look after foot-and-mouth and other animal diseases. I would term this body the Veterinary Research Council, which would be similar in character to the Medical Research Council. I believe that we have many veterinary scientists in this country well able to do this work. The creation of such a body deserves the careful consideration of Her Majesty's Government. This Veterinary Research Council should be responsible for initiating and co-ordinating research, not only into foot-and-mouth but into all animal diseases. Losses in this country from various animal diseases are at present colossal, amounting probably to something over £80 million per annum. That is not my figure but has been given by men who have much greater knowledge than I of the position in this country and who, as the noble Earl can find out, are very responsible people. If we could save £40 million of that almost frightening total, what a godsend it would be to the country! I am certain that such an amount can be saved and I hope that that suggestion will be carefully looked into.

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  May I turn to the Ministry's control arrangements over infected areas. At present a 15 miles' ring is placed round an area of infection. The Departmental Committee have suggested that the radius should be reduced to 10 miles, that radius to be held tightly if desired. As noble Lords will know, the creation of that huge area of 15 miles causes great dislocation for some considerable time. All students, particularly young students, should go to the Pirbright Institute to see animals suffering from foot-and-mouth disease. Many veterinary surgeons, even the older ones, have never seen this disease. When my animals had the disease in 1923, the veterinary surgeon said it was not foot-and-mouth disease but wooden tongue. Although I had never seen the disease before, I was suspicious; but he, a man of sixty, had never seen it. Visitors need have no fear about going to Pirbright, for the noble Lord, Lord Adrian, and one of my noble friends have been there and can assure your Lordships that there is no possibility of disease getting out of Pirbright. After the careful way in which we were treated when we got into the Institute we can vouch for the fact that no disease will be passed. There is, therefore, no danger in young men going there for a few days to finish their education; in fact, their education is not finished unless they have mastered foot-and-mouth disease.
  I come now to penalties for delayed reporting. As the law now stands, the Minister has power to withhold compensation. We recommend that that power should never be used and should be abrogated at the first convenient opportunity. I am quite sure that the noble Earl, Lord St. Aldwyn, will appreciate the reason for that recommendation: the law is considered to be unfair. We recommend, also, that the maximum fine should be increased to £500—noble Lords may consider this a lot of money, but the increase is necessary—or where the offence is committed in respect of more than ten animals the fine should be £50 for each. It is important that immediate action is taken and that it is made clear that there is a duty to report immediately if there is any suspicion of the disease. The present maximum is £50. At present many men do not know that fines can be inflicted, but they would soon be
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  aware of the fact if they suffered such a penalty. I hope that Her Majesty's Government will agree.
  To sum up, I am now convinced that one vaccine to combat all the various strains of virus will be found within a few years. But until that time is reached, it would be unwise to attempt vaccination in this country. The Pirbright Institute, with people in other countries, is doing its best to find that one vaccine. I am convinced that if we had loyal international collaboration among the various Governments in Western Europe and really tackled the job, as was done by the United States and Mexico, foot-and-mouth disease could be cleaned up in this part of the world. I hope that Her Majesty's Government will consider giving a lead by inviting Western European countries to a conference to discuss ways and means of combating this dread disease.
  3.47 p.m.
  LORD BURDEN: My Lords, I am sure we are all indebted to my noble friend, Lord Listowel, for initiating this debate, and cordially join with him in the fine tribute which he paid to the work of the Departmental Committee on Foot-and-Mouth Disease. I am sure my noble friend and others will echo the tribute paid by my noble friend, Lord Hungarton, to the Chairman of the Committee, Sir Ernest Gowers. This Report exemplifies in a very marked way the teaching of Sir Ernest on the doctrine of "plain words" in both senses of that term; for there are plain words in the recommendations of this Report which Her Majesty's Government would do very great harm to our national economy by ignoring. I regret that I cannot speak with the detailed knowledge of my noble friend, Lord Hungarton, a practical farmer, nor with the great scientific knowledge of the noble Lord, Lord Adrian. Mine is a far humbler position. But I well remember, as a railway man, the circulars we regularly received from headquarters prohibiting movements from, to, by or through various areas because of outbreaks of foot-and-mouth disease.
  My interest in this problem also arises from my experience as a member of a local authority. There was a long debate in your Lordships' House in May of last year, and in view of that debate and of certain assurances which were given, both

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  in the course of that debate and in another place, I suggest that it would not be unreasonable to expect, this afternoon, some definite expression of views from Her Majesty's Government. What is the present position? I am directing my remarks mainly to the problem of the sterilisation of kitchen waste. In the Agriculture (Miscellaneous Provisions) Act of last year, Section 9, we find this:
  "A local authority in England or Wales may, whether in discharge of their functions as to the removal of house or trade refuse or otherwise, collect kitchen or other waste in their area for use as animal feedingstuffs, with or without processing."
  That is in the Act which has been in operation from last year. But in paragraph 34, on page 18, of the Gowers' Report one reads this:
  "Raw waste food has for years been branded as a danger by the law that forbids its being fed to animals untreated. It seems to us highly anomalous that any local authority (whose duty it is to be above reproach in matters of health and hygiene) should sell it to the public in that condition. Indeed we feel so strongly about this that we think it right to start with the promise that no solution is tolerable that permits this practice, whatever may be the consequences of prohibiting it."
  They are hard, definite and strong words— "plain words," if I may repeat Sir Ernest's phrase.
  May I suggest that it is right and proper also that due consideration should be given to the views of local authorities? I should like to quote two extracts from the Report of a special joint sub-committee of the Health and Law Committees of the Association of Municipal Corporations. The first is this:
  "We considered, however, that it was essential to ensure on grounds both of public health and animal health that all collections of waste food salvage should be subject to proper safeguards in processing. To this end, we suggested that there should be special provision enabling inspection by local authorities of all processing plant to ensure that processing was adequate to prevent the spread of infection. We accepted the principle that plant operated by local authorities should be subject to the same degree of inspection as privately owned plant."
  What I am quoting are representations made to the Minister at the time that the Agriculture (Miscellaneous Provisions) Bill was under consideration. Your Lordships will see from that short extract that the local authorities, or their representative body, are in full accord with the recommendation of the Gowers Report.
  May I quote a second extract? Here I come to the hope that we are going to
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  have something definite this afternoon. This is what the Sub-Committee reports to the parent body:
  "The Minister agreed that the present system of licensing in certain areas was a temporary makeshift, but the licensing powers which derived from the Defence Regulations would be reviewed from the viewpoint of the desirability or otherwise of permanent legislation when he received the Report of the Gowers Committee."
  That, if my memory serves me aright, is what the ex-Minister of Agriculture told the representatives of the Association of Municipal Corporations.
  There is still an effective demand for kitchen waste for feeding purposes, and I hope that those of your Lordships who remember him will forgive my reminding you of the tremendous service that the late Lord Morrison did during the 1934–45 War in developing at Tottenham and elsewhere the collection and sterilisation of kitchen waste. I mention that for another reason. I have a letter from the extremely capable and efficient cleansing officer of Tottenham, Mr. Gurney, the man responsible for "Tottenham pudding." Mr. Gurney, summarising the general position in London, writes:
  "Up to eighteen months ago there were six sterilising plants operating in the London area namely, Tottenham, Wembley, East Ham Paddington, Woolwich and Croydon. Paddington, East Ham and Woolwich have since dismantled and sold their plants, Croydon have handed theirs over to a private contractor and Wembley are continuing to operate on a very much reduced basis. The Tottenham plant is still selling approximately 450 tons per week but, since the withdrawal of Directions, we have lost nearly 20,000 tons of waste food per year. The demand for our product is still firm."
  I hope I am not being unfair when I suggest that the Ministry of Agriculture, in its policy, has discouraged and disheartened local authorities. They feel that the official interest in the collection and sterilisation of kitchen waste is either feeble or hostile. In fact it seems to me that, not unfairly, the attitude of the Ministry may be summed up in Clough's words:
  "Thou shalt not kill.
  But thou need'st not strive
  Officiously to keep alive."
  Some local authorities are still actively engaged in the work, notwithstanding this apparent lack of interest or this deterrence on the part of the Ministry of Agriculture. Perhaps it is love of my own local authority, on which I served for more than

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  twenty years, which leads me to say that I am glad to mention that only a few weeks ago they circularised all householders in East Ham pointing out that each ton of kitchen waste sold brings an income of practically £4. They went on to illustrate the value of collection from a sanitary point of view by saying that if kitchen waste were not collected and sold then it would cost at least 13s. a ton to destroy. Apparently, my old local authority takes a wider view of its national responsibility than that which seems up to now to have been the view of the Minister of Agriculture. But the snag is this. East Ham is selling this kitchen waste unprocessed and raw to farmers. I know we were referred in the last debate to an old regulation by which it was made illegal to feed this stuff without boiling it. But I wonder how many farmers, even if they know of the existence of the regulation, understand what "boiling" really means, what boiling is required to kill the virus in kitchen waste. Will they let the waste food bubble and say: "That has boiled"? Or will they boil it for sixty minutes, which is right and necessary in order to destroy virus in it?
  I venture to suggest that the clear and simple issue with regard to this kitchen waste problem is this. Now that they have the Gowers Committee Report, with its clear and explicit recommendations on kitchen waste, are the Government deliberately to continue taking the risk of serious outbreaks of foot-and-mouth disease by continuing the selling of unprocessed kitchen waste to farmers? Are they still going to rely on an old Defence Regulation which most people have forgotten about and do not honour to-day? The prevention of animal disease is a national responsibility, as the Gowers Committee emphasise, and there seems to be no justification for a licensing system (another point about which the noble Earl will be aware) which is not applicable throughout the country but applies only to certain areas at the present time. As we have been told from time to time by experts, by local authorities, by sanitary officers, by veterinary officers, and by the Gowers Committee, only by the proper sterilisation of kitchen waste can the outbreak of disease be
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  minimised. I hope with my noble friends, Lord Listowel and Lord Hungarton, that the noble Earl who replies for the Government will be able this afternoon to give us some positive assurance of how the Government plans to deal with these problems.
  4.2 p.m.
  LORD WEBB-JOHNSON: My Lords, I rise for only a few moments to express my regret that I was not here throughout the debate and did not have the pleasure of hearing the maiden speech of my noble friend and colleague, Lord Adrian. I also regret my absence because I gathered from the last few sentences of the speech of my noble friend Lord Brabazon of Tara that he had got into full run and had no brakes on in launching a full-scale attack on the medical profession. I did not know that he was a world authority on the use of vaccines, whether from bacilli or from viruses, or whether alive or dead. If I had known that he was going to deal with the matter, I should have made a point of being present. I rise only to apologise to my noble friend for not having been present, when I should have had great pleasure in joining issue with him. If, on a future occasion, he proposes to launch an attack on my profession, I should be greatly obliged if he would give me notice, and I would then endeavour to "give him satisfaction."
  4.4 p.m.
  THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL ST. ALDWYN): My Lords, I am sure that the House must be extremely grateful to the noble Earl, Lord Listowel, for having initiated a debate on the important question of foot-and-mouth disease, and I should like to congratulate him on the very able way in which he dealt with the problems involved. Cattle, sheep, pigs, goats and deer are all susceptible to this disease. Its devastating effects lie not so much in a high mortality rate—the disease is not fatal, as a rule—as in the appalling speed at which it can spread from one end of a country to another, leaving behind it a trail of greatly reduced productivity by way of loss in condition, fall in milk yield, abortion and sterility. My noble friend Lord Hungarton drew particular attention to this point. Cows may become totally

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  unproductive for a while. What is perhaps most alarming is that, once foot-and-mouth gets a firm hold on a country, it is likely to stay for a very long time, possibly for ever.
  We in this country are fortunate in having the sea around us. It acts as a barrier against the entry of the virus in a way that no land boundary could. But even that barrier is not impregnable. We get intermittent outbreaks of the disease, mainly through the feeding of unboiled scraps and waste from South American meat. This would not happen if the Boiling of Animal Foodstuffs Order were meticulously observed. Of course, it should be. But to the most law-abiding citizen, throwing a bone to the dog or the scrapings from a bone to the cat may seem harmless enough. Where there are farm livestock around, however, it can be highly dangerous. The odd bone or scrap of meat all too often comes into contact with livestock and leads to an outbreak of foot-and-mouth disease. These intermittent outbreaks cause a great deal of anxiety and loss. But despite thoughtless actions of this sort, the Boiling Order is effective in greatly reducing the risk that foot-and-mouth disease may be conveyed to stock through the feeding of garbage and waste.
  A more difficult situation arises when foot-and-mouth is rampant on the Continent, particularly if it coincides with the season of bird migrations. Then the disease can strike our shores in many places within a matter of days, or even hours, and can start spreading across the country from many different sources at once. This is what happened in the autumn of 1951 and in 1952. There is little that we in this country can do to prevent the introduction of disease in these circumstances. Our best hope is to help and stimulate the European countries to secure better control of the disease on the Continent. I shall have more to say about this later on.
  Foot-and-mouth disease is endemic on the Continent. I do not want to weary your Lordships with masses of figures, but I think that a few details of the 1951–52 series of outbreaks will serve to bring into sharp relief the sort of problem we in this country should have to face if ever the disease took a firm hold here. As my noble friend Lord Hungarton said, there were over 300,000 outbreaks in France, 200,000 in Western Germany,
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  about 60,000 in Belgium and close on 30,000 in Holland and in Denmark. In Great Britain the number of outbreaks confirmed during the same period was 600–odd. The contrast is certainly striking. It has been estimated by the Food and Agriculture Organisation of the United Nations that the 1951–52 outbreaks caused direct losses over the whole of Europe amounting to £143 million; and the indirect losses were probably even greater. The cost to France was in the region of £45 million, to Western Germany £40 million, and to Belgium £7 million. So far as this country is concerned, we paid out about £3 million in compensation for the 85,000 animals that were slaughtered.
  Although we suffered far less than some of the Continental countries, the number of outbreaks here was greater than at any lime since 1942. Inevitably, public attention was focused on the slaughter policy, and Her Majesty's Government decided to appoint a Committee, under the chairmanship of Sir Ernest Gowers,
  "to review the policy and arrangements for dealing with foot-and-mouth disease in Great Britain and to advise whether any changes should be made in the light of present scientific knowledge and the technical and administrative experience gained in recent years in this and other countries."
  It is the Report of that Committee which we are debating to-day. I feel sure your Lordships will agree that the Report is an extremely valuable and interesting document. The Committee investigated thoroughly the methods of control in this and many overseas countries, and their critical analysis of their findings is lucid and convincing. Sir Ernest Gowers and the members of his Committee richly deserve the warm thanks of all connected with agriculture. Here I should like to say how delighted I was to hear the two speeches of Members of your Lordships' House who were on that Committee, the noble Lord, Lord Hungarton, and the noble Lord, Lord Adrian; and I would add my humble praise to the noble Lord, Lord Adrian, on his maiden speech and say how much I hope that we shall hear him on many occasions in the future.
  Since the Report was published we have been taking the views of all interested organisations about the Committee's recommendations. I am glad to

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  say that there has been very little criticism of them, and I can tell the House at once that the Government propose to accept nearly all of them—subject, in one or two cases, to slight modifications or adaptations. The majority of the recommendations deal with details of administration, such as, for example, the size of infected areas, the method of disposing of carcases of slaughtered animals, getting information about outbreaks to farmers and others, and so on. Many of these recommendations can be made operative by administrative action, and this will be done in any future outbreaks. In some cases it will be necessary to make a new statutory instrument or amend an existing one, and the drafting of these instruments is in hand. We are, however, unable to accept one or two recommendations in this group that would have imposed additional responsibilities on the already heavily pressed police forces.
  On the main issue of policy, the Cowers Committee came to the conclusion that the stamping-out policy (which has been adopted since 1892) is right for this country in normal times. The Committee refer to the many uncertainties associated with the use of vaccination, as well as the probability that, as the noble Lord, Lord Adrian, said, if the stamping-out policy were abandoned in favour of vaccination, some of our most valuable export markets for livestock would be closed to us. The Committee's analysis of the situation should leave no doubt that in the interests of livestock farming, and of agriculture in general, we must continue to stamp out foot-and-mouth disease by slaughtering infected animals and those that have been in contact with them. They go on to recommend that vaccination might be valuable, or even indispensable, in combating an epidemic so serious that stamping out by slaughter was neither practicable nor economic.
  The Government accept these recommendations on policy, but I must make it clear that this country has never yet faced a situation in which an outbreak of foot-and-mouth disease was so widespread and difficult to control that the policy of slaughter combined with movement restriction broke down. The Government's view is that the circumstances of an outbreak would have to be exceptionally bad—much worse than anything so far
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  encountered—before the use of vaccination would be justified. As the Committee recognised, it would have to be left to the Minister to decide whether, and if so when, to impose vaccination. Frankly, the contingency seems rather remote. The Committee ruled out compulsory vaccination of particular herds in normal times, and also recommended that voluntary vaccination should not be permitted, certainly until we know more than we do to-day about the dangers of vaccination masking infection—that is to say, the danger that vaccinated animals might become unrecognised sources of infection.
  While there are differences of expert opinion on this subject, the Royal College of Veterinary Surgeons, in their evidence before the Gowers Committee, went so far as to say that they thought there was a strong possibility that vaccination might mask infection. Your Lordships, I know, will attach the highest importance to an expression of opinion coining from so authoritative a source. As the Committee said in their Report, in the absence of scientific proof the possibility of masked infection of animals vaccinated against foot-and-mouth disease cannot safely be ignored. It is known to be a feature of other animal virus diseases against which vaccination is used, and until we know positively that no such danger exists, I think the risks to the farming community in general that would come from permitting voluntary vaccination of a particular herd would far outweigh any possible benefit which individual farmers might gain. The same opinion is strongly held in the United States and in Canada, and also in Norway. I do not think there can be any doubt that the prudent thing to do is to wait and consider the advice of the Pirbright Institute. The investigations going on there are bound to take some time, so we shall have to wait a bit before we can get a definite answer to this question, and I think we must be patient.
  At this point, I feel that I should refer to the work of the Foot-and-Mouth Disease Research Institute at Pirbright. It has been said that if, in these days of rapid scientific progress, we have been unable to improve on the crude method of stamping out foot-and-mouth disease by slaughter, the fault must lie with our research workers. It is sometimes alleged that the Pirbright Institute, in particular, has paid too little attention to the possibility of vaccination and that no serious

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  attempt has been made to find a satisfactory alternative to the slaughter policy. This was certainly not the view of the Gowers Committee. Perhaps I may remind your Lordships of what the Committee said in their Report. One or two noble Lords have already mentioned this, but I think it is so important that, if your Lordships will bear with me, I will give it in full. The Committee said:
  " The Institute have long been alive both to the important part that vaccination is playing in reducing the incidence of the disease in Europe, and so lessening the danger to this country, and also to the chance that vaccination might be needed here in an emergency. Within the limited resources that have hitherto been available to them they have devoted much time and labour to the production and testing of vaccines. Indeed, the ready availability of susceptible animals here has enabled them to carry out investigations into vaccination that are not possible in countries where the disease is endemic. The Institute hold the largest collection of strains of foot-and-mouth virus in the world. Over 5,000 cattle have been used there for testing vaccine. Eight different methods of vaccine manufacture have been investigated. Our visits abroad left us with the impression that the Institute is held in unique esteem by veterinary experts in all countries: Pirbright seems to be generally regarded as the most important centre in the world for foot-and-mouth disease research."
  That was the Committee's view, and I would only add that the Government entirely endorse this tribute.
  The Committee made two recommendations affecting Pirbright. The first was that the relationship of the Governing Body of the Institute to the Minister of Agriculture and to the Agricultural Research Council should be more clearly defined—the noble Lord, Lord Hungarton, mentioned this point. I can say here that the whole question of the administration of agricultural research and the responsibilities of the Agricultural Research Council and the Minister are at present being considered by Ministers, and I hope that it will be possible to announce decisions before long. The intention will then be to clarify the position in the way desired by the Gowers Committee.
  The noble Earl, Lord Listowel, and the noble Lord, Lord Hungarton, both raised a query about the Veterinary Research Council. The Committee suggested that it might be worth while considering carefully whether a separate Veterinary Research Council ought to be created. This question was raised some time ago with the Privy Council, but after consultation with the Agricultural Depart-
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  ments it was felt that it would be a retrograde step to separate research in the fields of animal, crop and soil husbandry under different organisations. All these, matters are the responsibility of the Agricultural Research Council, on which veterinary interests are represented. It is to this Council, with its wide community of interests, that we must look for guidance on veterinary research.
  The Committee's second recommendation about the Pirbright Institute concerned its capacity to produce foot-and-mouth disease vaccine. A year or two ago it was decided that Pirbright should be expanded to enable it, in case of need, to undertake, among other things, production of vaccine on a commercial scale. The Gowers Committee did not think that, even with this expansion, the Institute would be fully adequate to meet any emergency that might arise. The position now is that the building work for the present expansion is nearly complete, and the additional scientific and other staff are being recruited. The next step will be to carry out trials of vaccine production on a commercial scale. I am advised that this will take some two years. During this time, as experience is gained of commercial production, we propose to review the potential output of vaccine of which the Institute would be capable in a serious emergency. It may be, for example, that no more physical expansion of the Institute will be needed, provided that there is a reserve capacity of output that could be called into use if necessary. I do not think we need make up our minds about this matter at present; we ought to feel our way carefully. It would be wrong to produce, at great expense, large quantities of vaccine which we should be quite unable to use. It would also be wrong to provide the capacity for producing more vaccine than the very limited number of veterinary surgeons that we have in the country would be capable of using in the event of an emergency.
  I come now to the collection and disposal of kitchen waste, or swill. There is no question that foot-and-mouth disease does occur at intervals in this country through animals being fed with, or having access to, untreated scraps from South American meat. The virus of this disease can live for up to five months in chilled and frozen meat. From the sole aspect of disease prevention, the ideal

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  method of dealing with kitchen waste would be to have it all treated at central sterilising plants. During the war, local authorities in the larger urban areas were required under Defence Regulations to collect kitchen waste and treat it in this manner, but after the war there came the inevitable, and quite understandable, pressure to remove many controls. Moreover, with the removal of feeding-stuffs rationing and the fall in prices, the demand for processed kitchen waste fell off, and many authorities found that these activities could be carried on only at a considerable loss. Consequently, the Government decided to relieve local authorities of the obligation to collect swill, but under the Agriculture (Miscellaneous Provisions) Act, 1954, local authorities were empowered to collect and dispose of it for animal feeding, with or without processing.
  The Gowers Committee gave a great deal of thought to this difficult problem, and came to the conclusion that there should be no compulsion on local authorities to collect. The Government agree with that view. The Committee went on to recommend that all waste food, whether collected by a local authority or privately, to be used for feeding to animals should be sterilised by the collector and that all substantial collectors of waste food, other than local authorities, should be licensed. The Government accept this recommendation, so far as private collectors are concerned, and we propose to make the necessary orders under the Diseases of Animals Act as soon as possible. The position will then be that any private collector or farmer who obtains swill which is to be fed to animals will have to get a licence. He will be required to use an approved sterilising plant, and his plant and methods will be subject to periodical inspection. The only private collector exempt from this licensing requirement (though not, of course, from the requirement to sterilise) will be the small man who keeps just a few pigs or poultry and who collects kitchen waste, probably from his immediate neighbours, to feed to them. This will give substantially more protection than we have now because only collectors operating in the old "scheduled areas"—the larger urban areas—are required to be licensed at present.
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  I come now to the difficult question of the position of local authorities. In the past, local authorities have collected a considerable amount of kitchen waste for feeding to animals. It seems inevitable that the amount of kitchen waste collected for this purpose by local authorities in the future will be very much smaller, and that the really important thing will be, as we now propose, to control the private collector and processor. The Gowers Committee recommended that local authorities who collect swill should be required to sterilise it. At first sight this would seem to be the safest course, but it might well be, in fact, that to impose a requirement to sterilise would be the surest way of discouraging local authorities from collecting, since in present circumstances it would almost certainly involve the local authorities in a loss. Kitchen waste would then be collected, and in many cases dumped, with other refuse; and, even where controlled dumping is practised, we have found by experience that it is impossible to prevent all risk to animals.
  The noble Lord, Lord Hungarton, was very concerned about these dumps, and they do present a serious problem. We have good co-operation from most local authorities, and the Ministry of Housing and Local Government are getting excellent co-operation on this matter. But even with the most perfect system of controlled dumping—in other words, where every few days the dump is covered with earth to a reasonable depth and is compressed—there is always to-day's dumping, which cannot be covered. Frankly, this is a problem to which I can see no complete solution. After all, there is no advantage to animal health if a requirement to sterilise results merely in more potentially dangerous material finding its way on to the rubbish dump. An alternative that has some attraction is that we should ask local authorities who dispose of raw swill to ensure that it goes only to licensed collectors. No doubt local authorities could be relied upon to be most scrupulous in observing any such request, and the processors, by the terms of their licences, would be under an obligation to sterilise the swill. This would do nothing to deter the local authorities from collecting kitchen waste separately and it would provide reasonable and practical safeguards from the point of view of animal health.

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  The Gowers Committee said that this problem did not admit of a wholly satisfactory solution, and that weighty arguments could be brought against every conceivable course. In this view, I think, there is much truth. It is a very difficult subject, and the Government have not finally made up their minds on the point about local authorities. As at present advised, we are not convinced that the course recommended by the Committee is the right one. We are giving the matter further consideration. We shall naturally pay very careful attention to what has been said on the subject by noble Lords this afternoon.
  Noble Lords will remember that the question whether local authorities should be put under an obligation to collect swill was discussed at some length during the Second Reading of the Agriculture (Miscellaneous Provisions) Bill. On that occasior, the noble Lord, Lord Burden, gave a spirited address with which I am afraid we were quite unable to agree. It was, of course, quite sensible to require local authorities to collect kitchen waste in war time, when there was a serious shortage of animal feeding stuffs and when we had to take steps of this kind in order to survive. Even then, many local authorities made a loss. Now that the more orthodox animal feeding stuffs are fairly plentiful and much cheaper than they were, the likelihood that local authorities will incur a loss is very much greater.
  The question has sometimes been raised whether a subsidy to cover this loss, either out of the rates or out of the Exchequer, would be justified in the present circumstances. On that question I have no doubts at all. The cost would almost certainly be out of all proportion to the cost of dealing with such minor outbreaks of foot-and-mouth disease as might arise from contamination from South American meat. In the past ten years, foot-and-mouth disease thought to be attributable to swill has involved the payment of about £250,000 by way of compensation: in other words, an annual average of about £25,000. It is extremely difficult to estimate what a subsidy on the collection of swill would cost, but it would certainly be far greater than the cost of the disease. In the year 1948–49, the Government paid out £400,000 to subsidise swill collection by less than a quarter of the local authorities in Great Britain, and
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  this at a time when the demand was reasonably good. I am sure your Lordships will agree that we should not be justified in spending such a large sum of public money at the present time.
  There is one more group of recommendations which I should like to mention and to which the noble Lord, Lord Hungarton, drew attention. The Committee proposed that the penalities for failing to report the disease should be increased, that the twleve months' stipulation in connection with liability for imprisonment for second offences should be removed, and that the Minister's power to withhold compensation in certain circumstances should be abrogated. In general, we feel that the Committee have made cut a good case for changes in these respects, although we have some doubt about the suggestion that the maximum penalty should be increased to as much as £500. These changes would, naturally, need legislation. Your Lordships will appreciate that I am not in a position to say anything about that at the moment.
  I have already mentioned that foot-and-mouth disease is endemic on the Continent. The Gowers Committee attached considerable importance to a project initiated by the Food and Agriculture Organisation of the United Nations for the establishment of a European Commission for the control of the disease. Her Majesty's Government have supported this project from its inception, and I am happy to be able to tell the noble Earl, Lord Listowel, and the noble Lord, Lord Hungarton, that the Commission has been formally established and is at work. In fact, if your Lordships would be interested to know, I may say that there are eight countries now involved. They are: Denmark, Ireland, Norway, Jugoslavia, Holland, Iceland, Austria and ourselves. Italy and Portugal have definitely signified their intention of joining, too.
  LORD HUNGARTON: The noble Earl will agree that I was right when I said there were only five at the time when we had that information.
  EARL ST. ALDWYN: Perfectly right. I am not at all criticising. I am happy to be able to give the noble Lord this information.
  LORD HUNGARTON: I am very glad.
  EARL ST. ALDWYN: As I said, the Commission is now at work. It is a bold and interesting experiment in collaboration between nations, with the ultimate objective of eradicating foot-and-mouth disease by a combination of measures which are most appropriate to the circumstances of the particular country. Her Majesty's Government, as a member of that Commission, will continue to play a full part in the proceedings.
  After the large number of outbreaks of this disease which occurred in 1951 and 1952, it became evident that it was time that we took a long and careful look at the policy and methods for dealing with the disease. That is what the Government have now done. We have reviewed the position and have come to the conclusions which I have explained. The general conclusion is that it would be unwise to depart from the broad policy which we have been pursuing for many years. I am sure that this is right. The changes which we are making affect only the administrative details involved in that policy.
  Everyone naturally regrets the necessity for a slaughter policy, but I think most of your Lordships will agree that it continues to be a necessity. I should like to emphasise again that we, in Great Britain, can count ourselves very fortunate in being able to keep our losses down to what, by comparison with many other countries, is a very low figure. In countries where the disease is endemic the farmers would, I know, be only too glad if, with the aid of other means, they could progress to a stage at which a slaughter policy would be feasible. The Gowers Committee came to the conclusion that in this country no other policy would be wise, and I hope the House will feel able to agree with the Government's decisions on the Committee's recommendations.
  Before I sit down I should like to deal with the point raised by the noble Lord, Lord Brabazon of Tara. Doctor Crofton's claim that he is able to produce a preventive vaccine has, as your Lordships know, received considerable publicity. He says, if I understand him rightly, that he can produce this vaccine from dead bacilli grown from the virus of foot-and-mouth disease. He contends that such a vaccine would be cheaper than the orthodox vaccine, would be non-infective
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  and would confer immunity for at least thirteen months (this immunity probably being transmissible from parent to offspring), and that a vaccine prepared from one strain of virus would be effective against all strains.
  Doctor Crofton gave oral evidence before the Gowers Committee. As my noble friend said, he himself admitted that if his theory were accepted this would involve re-writing all the textbooks in the world on this subject. It does indeed run counter to generally accepted scientific belief. The Gowers Committee very properly said that they were not competent to express an opinion on fundamental scientific beliefs: their responsibility was to consider whether they should support Doctor Crofton's plea for more exhaustive tests of his theory at Pirbright. I think I should point out that it is not part of the duties of the Pirbright Institute to investigate fundamental bacteriological theories. However, laboratory experiments were made with Doctor Crofton's vaccine at Pirbright in 1939; the result did not support the claim. Doctor Crofton has, I believe, asserted that the tests were not thorough enough to disprove his theory.
  LORD BRABAZON OF TARA: Could such an experiment be done somewhere else, if Pirbright is not a suitable place?
  EARL ST. ALDWYN: I think the sort of place that is most suitable certainly does not come under my jurisdiction.
  LORD CALVERLEY: Perhaps the noble Earl could tell us what is a suitable place.
  EARL ST. ALDWYN: My Lords, I think that would be more a question for the Minister of Health than for myself. No evidence was produced to the Gowers Committee in support of most of Dr. Crofton's claims, and the Committee came to the conclusion that if the case was put at its highest by ignoring all possible sources of error, and by accepting that the results of certain experiments in South America were correctly observed and reported and that all cases of immunity in vaccinated animals were rightly attributed to vaccination, then the efficiency of a vaccine produced by this method was much the same as that from an orthodox vaccine. The Committee, after having carefully weighed all the factors in the

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  balance, reached the considered view that they would not be justified in pressing Pirbright to reconsider its attitude that in the absence of prima facie scientific supporting evidence there was no justification for diverting the resources at the Institute from the promising research on other lines being carried out there. Dr. Crofton's claims have been referred to the Agricultural Research Council, who consider that, having regard to the great care with which these claims were examined by the Gowers Committee, no further action is called for. That is also the view of the Government. It would be utterly wrong to divert the Foot-and-Mouth Research Institute from its approved programme of research in order to make a prolonged study of claims to have discovered cures and preventives for foot-and-mouth disease for which there is no prima facie scientific evidence.
  4.42 p.m.
  THE EARL OF LISTOWEL: My Lords, it is not customary to make a speech in reply to a debate on a Motion, and I shall not offend. I should, however, like to thank all noble Lords who have taken part for the tone and temper of our debate. I think your Lordships will agree that it is not a bad thing that, at a moment when the Parties are about to plunge into a death or glory struggle far political power, Parliament should still, without the slightest trace of Party feeling, be able to consider problems of national importance such as foot-and-mouth disease. I should like to join those who have congratulated the noble Lord, Lord Adrian, on his maiden speech. Whilst it is true to say that in times past we have had many great scientists as Members of this House—we can all call to mind such names as Lord Rutherford and Lord Kelvin—I think
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  that living scientists of this order are most "rare birds." We are particularly fortunate to have one of the greatest living scientists among our numbers at the present time, and all the more fortunate that he is willing, as he has shown us to-day, to take part in our humdrum legislative work. I can assure him that we shall always welcome any help that he may be able to find time to give us in the future.
  I find it difficult to quarrel with the speech of the noble Earl, Lord St. Aldwyn. It is always difficult, even for the most carping critic, to complain when he is offered almost all that he has asked for. Your Lordships will remember that at the beginning of his speech the noble Earl said that the Government accepted nearly all the recommendations in the Gowers Committee Report. There is one loophole that causes me a little anxiety—namely, that local authorities will still be able to sell, without treating it, swill which they collect. The noble Earl has said that this matter is still under consideration, and I can assure him that in a few months' time I shall return to the charge and ask him a further Question—indeed, it may be that noble Lords opposite will be asking the same Question of noble Lords who at present sit on this side of the House. Apart from that, I can only thank the noble Earl for his extremely able speech and the Government for their willingness to take the administrative action and legislation required to carry out most of the recommendations of the Report. I beg leave to withdraw the Motion.
  Motion for Papers, by leave, withdrawn.
  House adjourned at a quarter before five o'clock.