Sitting of 8 March 1956

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  LEEDS CORPORATION BILL (By Order)
  Second Reading deferred till Thursday next.
  BRITISH TRANSPORT (No. 2) BILL (By Order)
  Second Reading deferred till Tuesday next, at Seven o'clock.
ORAL ANSWERS TO QUESTIONS
  EDUCATION

    New Schools
    Mr. Mossasked the Minister of Education what educational problems exist at Wilnecote in the constituency of Meriden in the County of Warwick; and what progress has been made and is expected to be made in solving them.
    The Minister of Education (Sir David Eccles): I understand that to meet the needs of this part of the county the Warwickshire local education authority has just added two classrooms at Wilnecote Infants' School, and plan shortly to build a new secondary school.
    Mr. Mossasked the Minister of Education what progress has been made in the improvement of educational facilities since June, 1955, at Castle Bromwich and Kingshurst on the Birmingham border, Kingsbury, Hurley, Polesworth and Dordon, where there has been rapid development in the coal mining industry, and at Meriden and Eastern Green; and what progress he anticipates will take place during 1956.
    Sir D. Eccles: Since June, 1955, the Warwickshire local education authority has brought into use two new primary schools on the Kingshurst Estate and
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    extensions to the secondary school at Polesworth. I am writing to the hon. Member to give him the details of the authority's plans for the future.
    Mr. Swinglerasked the Minister of Education what difficulties are being encountered with the project to build a new Catholic school in Church Lane, Wolstanton, in the excepted district of Newcastle-under-Lyme; and what steps are being taken by his Department to assist the Staffordshire education authority to overcome them.
    Sir D. Eccles: I hope to be able to approve the plans when a final proposal for the acquisition of the site is submitted to me. I am told that I may expect this within the next fortnight. But I understand that the promoters have not yet completed the bills of quantities or invited tenders.
    Mr. Swingler: Is the Minister aware that there has been a delay of several years in the negotiations on this project owing to difficulties in finding a suitable site in an area affected by mining subsidence, that it had been hoped that this project would be included in this year's building programme but that there have been further delays? Would the right hon. Gentleman, therefore, ask his office to give special attention to this project in order that it may be approved speedily when the plans are submitted?
    Sir D. Eccles: Yes, Sir, and, as I have told the hon. Gentleman, I hope that within a fortnight the full plans, including those of the site, will be submitted.

    Teachers, Midlands (Supply)
    Mr. Mossasked the Minister of Education what progress has been made and what progress he anticipates will be made in improving the teacher-supply position in Midland areas, which is suffering from an inadequate supply of teachers.
    Sir D. Eccles: Although the authorities concerned are employing more teachers than a year ago, the numbers are not enough to match their increased needs. It is not possible to forecast recruitment this year, but I have invited those authorities which anticipate special difficulties to come and discuss their problems with me.
    Mr. Moss: Has the right hon. Gentleman received recommendations to take any special measures, or has he considered taking any special measures to increase the supply of teachers in these areas?
    Sir D. Eccles: No special measures are being considered at the moment. I think it is better to talk to the local authorities whose concern it is, and perhaps between us we can find something worth doing.
    Mr. Shimmer: Is the Minister aware that the City of Birmingham is short of 600 teachers, and that this number is increasing? Is he further aware that, owing to the high cost of living accommodation in that city, unless he accepts the recommendation of the teachers' association to make some territorial allowance, the situation will be such that it will be necessary to have shifts for children in schools in Birmingham instead of their having a full day's education?
    Sir D. Eccles: The recommendation of a territorial allowance does not come to me from the Teachers' Association. It must come from the Burnham Committee and so far that committee has not recommended such an allowance.

    Teaching of English
    Mr. Smithersasked the Minister of Education whether he is aware that the standard of literacy amongst students entering the university is not satisfactory; whether he is satisfied with the present methods of teaching English in schools; and if he will make a statement.
    Sir D. Eccles: I have noted various criticisms that have been made. Although the standard of English teaching is first-class in many secondary schools, I am anxious that good plain English should be more thoroughly taught and widely used than it is. My Department is giving the schools all the help it can and as an example of this I am sending my hon. Friend a pamphlet issued last year on the teaching of English.
    Mr. Smithers: I am much obliged.
    Dr. King: Is the Minister aware that the last thing that British educational opinion would want would be the prescribing of teaching methods by a Minister?
    Sir D. Eccles: I am well aware of that.

    Average School Day, London and Middlesex
    Mr. C. I. On-Ewingasked the Minister of Education what, in 1955, were the number of days schooling and the average number of hours per day for primary and secondary schools in London and Middlesex, respectively; and how these compare with the figures for a representative inter-war year and a representative pre-1914 year.
    Sir D. Eccles: Practices vary from school to school, and I cannot give precise averages, but the normal school day in London and Middlesex lasts 5½ hours exclusive of the lunch hour. There has been no significant reduction during the last fifty years in the minimum number of hours per day and days per year that maintained schools are required to be open for secular instruction.
    Mr. Orr-Ewing: Is my right hon. Friend aware that these important statistics are not given in the annual report published by his Ministry? Will he consider publishing them in the future, and will he also consider the hours worked in the schools of West Germany, Holland, Belgium and Switzerland and some other countries with which we are in competition, to see whether the hours worked are comparable?
    Sir D. Eccles: I will certainly consider the first point. On the second issue, it is not only the number of hours, but the quality of work done in them that matters. I suppose that we should all like to see people work harder, in school and out.

    Primary Schools
    Mr. E. Fletcherasked the Minister of Education what plans he has for adapting general education in primary schools to take the fullest advantage of the proposed increase in technical education at higher levels.
    Sir D. Eccles: The recent White Paper on Technical Education recognises that the success of the technical colleges rests squarely on the quality of education in both the primary and the secondary schools. I am concerned to ensure that the primary schools give a good grounding in mathematics and English, and I am confident that teachers appreciate the importance of this.
    Mr. Fletcher: May I take it that the Minister really realises that if he is to make a success of his plans for improving the status and scale of technical education, there must be a change in emphasis in all education in primary schools and upwards?
    Sir D. Eccles: I think that the White Paper does recognise that good preparation in the schools is essential to success in taking courses in the technical colleges. It is a general education that is required so that specialisation can come later.

    Grammar Schools (Premature Leaving)
    Mr. Haymanasked the Minister of Education whether he will make a statement on the concluding sentence of paragraph 36 of the Report of the Central Advisory Council for Education (England) on early leaving from grammar schools, which indicates that in order to secure from the bottom third of the intake three pupils who will do very creditably it has been necessary to accept five who will do rather badly.
    Sir D. Eccles: The sentence to which the hon. Member refers illustrates the general principle that the higher the proportion of a given age-group that is admitted to grammar schools the greater the likelihood that some children will find the course too difficult for them. This is why, in my Foreword to the Report, I was sceptical about the wisdom of an all-round increase in the proportion of grammar school places.
    Mr. Hayman: Will the Minister also bear in mind that this paragraph indicates how unpredictable many of these children are in their intellectual development and that it is really undesirable to keep many of them at school beyond the compulsory school-leaving age?
    Sir D. Eccles: That is a very big question which I can scarcely answer at Question Time.
    Mr. M. Stewart: Does not the fact to which my hon. Friend has drawn attention also help us to realise how difficult it is to predict whether children at the age of eleven are unsuitable for grammar school education or not? Ought not the Minister altogether to re-examine the organisation of secondary education?
    Sir D. Eccles: This is, of course, intensely interesting. It is perfectly true that children progress at different rates. The whole secondary system is growing, and what I should Like to see is a little more transfer of children who have been misfitted at one time or another.

    Technical Education
    Mr. Albuasked the Minister of Education what steps he is taking to ensure that the fees charged to students of colleges of advanced technology who reside outside the controlling local authority are not so high as to deter their own authorities from assisting them in accordance with paragraph 63 of Command Paper No. 9703.
    Sir D. Eccles: Where students attend with the consent of the authority in whose area they live, their place of residence makes no difference to the fees charged to them.
    Mr. Albu: Is not the Minister begging the question? The question is the consent of the authorities concerned. Does he not realise that it is absolutely crucial, if his policy of increasing the education in advanced technology is to be successful?
    Sir D. Eccles: Yes, I do, and of course if the consent is unreasonably withheld, I am perfectly prepared to intervene.
    Mr. Speaker: Mr. Albu.
    Mr. Albu: Question No. 10.
    Captain Pilkington: On a point of order. While I am sure that the hon. Member for Edmonton (Mr. Albu) does not intend any disrespect to you, Mr. Speaker, ought he not to stand up, like everybody else in the House, when he asks a Question?
    Mr. Speaker: What has been said is quite correct. The hon. Gentleman should rise in his place when he asks a Question. Apart from the question of decorum involved, it is much easier for me to see an hon. Member if he rises in his place.
    Mr. Albu: I assure you that I meant no disrespect to you, Mr. Speaker. I normally rise some distance in my place, but I thought that it was for you to call me to order if I was doing anything that was out of order.
    Mr. Albuasked the Minister of Education on what scale the teachers in

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    colleges of advanced technology, listed in Command Paper No. 9703, will be paid.
    Sir D. Eccles: The Burnham Committee will shortly be negotiating new scales of salaries for teachers in technical colleges and submitting its recommendations to me.
    Mr. Albu: Will the Minister agree that if the courses in the colleges of advanced technology are to be of university level, teachers will have to be paid on a university scale?
    Sir D. Eccles: It is not for me to give direct guidance of that kind to the Burnham Committee, but I have no doubt that it will have studied the White Paper on Technical Education.
    Mr. E. Fletcher: Does not the Minister realise that he will not get an adequate number of teachers, unless they are paid on the university level?
    Mr. Chetwyndasked the Minister of Education why he has not included the Tees-side area in his proposals for the development and extension of colleges of advanced technology.
    Sir D. Eccles: The colleges listed in paragraph 68 of the White Paper are those to which I already give 75 per cent. grant. As indicated in the following paragraph, a few other colleges may be added to the list later.
    Mr. Chetwynd: In view of the tremendous contribution made to our economic strength by the chemical, ship building, steel and heavy engineering industries on Tees-side, would not the Minister reconsider this point and add to this list one of the many excellent colleges there, so that we may be assured of adequate numbers of technologists for this area in the future?
    Sir D. Eccles: The quality of the industry there is not the point. The point is whether there is any college which merits this particuar grading. If there is, naturally I will consider it.
    Mr. Marquand: Is the right hon. Gentleman aware of the Constantine College in Middlesbrough, which in 1953 secured no less than 22 per cent. of the higher national certificates awarded for England and Wales, and in 1955, so
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    progressive is it, that it had no less than 11 per cent. of the students following what are called sandwich courses? Will the right hon. Gentleman come and have a look at Constantine College at some time?
    Sir D. Eccles: I certainly will, but I must tell the right hon. Gentleman that this college applied for the 75 per cent. grant in 1953 and the application was carefully examined, but the college was found not to be doing a sufficient proportion of advanced work.
    Mr. D. Jones: Does not the right hon. Gentleman appreciate, bearing in mind the geographical size of the area, that there are more technicians required on Tees-side and that many more will be required in the near future because of the industrial development which is going on there, and that if he means what he says in the White Paper, he must do something about Tees-side?
    Sir D. Eccles: The argument of the hon. Gentleman is for building up one of these colleges to an advanced level and not for recognising one as it is today.
    Mr. Chetwynd: In view of the unsatisfactory nature of the Minister's reply, I beg to give notice that I shall seek to raise this matter on the Adjournment.
    Miss Baconasked the Minister of Education if he will make more clear his proposals for technological education in the West Riding of Yorkshire.
    Sir D. Eccles: I must first consider the proposals which the local authorities are making to me in the light of the White Paper.
    Miss Bacon: Can the Minister clear up the position of the Leeds Technical College, about which there has been a great deal of doubt?
    Sir D. Eccles: This is a very fine project, costing a great deal of money. Of course I shall discuss with the local authority what grade of technical college it will be. It is certainly going to be one of the outstanding colleges in that part of England.
    Mr. Albuasked the Minister of Education how he estimates that the £70 million worth of technical college building. to be started in the period 1956 to 1961, will be divided between colleges of

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    advanced technology, as described in Command Paper No. 9703, and technical colleges for work at the lower levels.
    Sir D. Eccles: It is too early to say, but perhaps roughly one-fifth of the total may be required for colleges of advanced technology and for the provision of branch colleges to relieve these of lower level work.
    Mr. Albu: In view of the fact that one-fifth is a relatively small sum, will the Minister ensure that it is not spread too widely over these colleges, and that their standard is maintained at the highest possible level?
    Sir D. Eccles: There are already building developments in progress at all but three of these colleges, and I am hopeful that, with the sum mentioned, we shall be able to bring some of them to a very high standard.

    Sub-normal Children (Special Schools)
    Mr. J. Edenasked the Minister of Education how many State schools cater especially for children who are backward, as distinct from those who are mentally deficient; and how many of these are boarding schools.
    The Parliamentary Secretary to the Ministry of Education (Mr. Dennis Vosper): There are 261 special schools in England and Wales for educationally sub-normal children, of which 105 are boarding schools.
    Mr. Eden: While thanking my hon. Friend for that information, may I ask whether he is quite satisfied that children who are only educationally backward are not sometimes classified as mentally deficient? Is he further satisfied that children who are backward, nervous or shy in any way get proper encouragement and individual attention to help them forward?
    Mr. Vosper: In reply to my hon. Friend's first point, I have in fact recently satisfied myself about the procedure for investigating those children who are ineducable, and I am satisfied that those cases are thoroughly investigated. The parent has a right of appeal to my right hon. Friend. To reply to my hon. Friend's second point, I hope that an increasing proportion of the resources available for special schools will be devoted to this purpose and this category.

    Teachers (Local Authority Membership)
    Dr. Kingasked the Minister of Education whether he will introduce amending regulations or, if necessary, legislation, to enable teachers living in excepted districts to have the civic right of seeking election to the local council.
    Sir D. Eccles: No, Sir. A teacher—or other paid officer—should not fill the dual rôle of employer and employee, as would be the case if he became a member of the local authority responsible for his appointment.
    Dr. King: Is the Minister aware that the tendency of post-war law has been to encourage teachers and other State and local government servants to play their full part in civic life? Is he also aware that the recent case has revealed an anomaly and is depriving a number of teachers in particular areas from exercising full civic rights which many members of the teaching profession exercise in other parts of the country?
    Sir D. Eccles: The recent decision of the court in the Lowestoft case does not add any law or impose any restriction on teachers that did not previously exist. If a teacher wishes to become a member of a local authority in an area in which he is not himself serving, of course he can do so. The only difficulty is where he would become his own employer.
    Dr. King: In this case, is it not a fact that the man is merely technically employed by the local authority of which he sought to become a member, and that his salary is paid by the county council, as in other parts of the country?
    Mr. M. Stewart: If a teacher in such a district cannot stand for election to the local council on the ground that the local council is his employer, would he be eligible to stand as a candidate for the county council?
    Sir D. Eccles: I shall have to look into that.

    Secondary Modern Schools (Examinations)
    Dr. Kingasked the Minister of Education if he will vary the grant Regulations to enable children in secondary modern schools to be entered for

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    examinations other than the general certificate of education if the head teacher and staff so desire.
    Sir D. Eccles: I shall consider carefully the comments on this and other points, sent to me in reply to the Circular (289) which I issued on examinations in secondary schools. As yet, however, I am not satisfied that the change suggested by the hon. Member would be in the best interests of the schools and their pupils.
    Dr. King: I am grateful to the Minister for his sympathetic reply. Is he aware that the aim of secondary modern education is not merely to provide certain able children with an opportunity to take the school certificate, but to cater for all kinds of ability, some of which may be measured by other examinations, in the opinion of the headmaster, and that such examinations give some sort of spur and stimulus to new groups of children? Will he bear these things in mind when he considers this question?
    Sir D. Eccles: Yes, I will. This is a very complicated question, as the hon. Member knows.

    School Building Programme (Secondary School Places)
    Miss Baconasked the Minister of Education what will be the effect on the provision of secondary school places of the postponement of part of the school building programme.
    Sir D. Eccles: I cannot add to the Answer I gave a week ago to the hon. Member for Stockton-on-Tees (Mr. Chetwynd).
    Miss Bacon: Is the right hon. Gentleman aware that, just at a time when there has been an increase in the number of secondary school places, to postpone the school building programme will prove very serious for the children who will enter the schools in the next few years?
    Sir D. Eccles: If that were the result, it would be serious, but I am hopeful that the action I am taking will allow more schools to be built in a shorter time. The present average length of time for building a school is too long, and I am hoping that, through spacing out the programme, we shall reduce the average length of time.
    Mr. M. Stewart: Does the Minister realise that the same argument was advanced four years ago and that since then, unfortunately, the average size of classes has increased?
    Sir D. Eccles: We have a very large programme, much larger than that in the days of the Labour Party, and we have to see that it is properly spaced out.
    Miss Bacon: May we take it that the announcement by the Chancellor of the Exchequer means a decrease in the number of school places to be provided over the next few years?
    Sir D. Eccles: I repeat to the hon. Lady that I am hopeful that the result of the action which I am taking will be more schools completed than there would otherwise be.

    Imperial Institute (Future)
    Lieut.-Colonel Liptonasked the Minister of Education whether he can yet state what new premises will be provided for the Imperial Institute.
    Sir D. Eccles: I would refer to the Answer I gave to the hon. Member for Chigwell (Mr. Biggs-Davison) on 15th February.
    Lieut.-Colonel Lipton: In carrying out the changes that will inevitably be involved, will the Minister try to save the existing building from destruction, because many people would regard that as an act of vandalism? Will the right hon. Gentleman, who is not without some reputation for artistic taste, use his personal influence to prevent this building from being destroyed?
    Sir D. Eccles: That is a Government decision which is in the interests of the Imperial College. We have a great project there which it would be difficult to carry out unless that building goes.
    Sir F. Medlicott: Is my right hon. Friend aware that he will gain much support from hon. Members on this side of the House if he uses his influence to prevent the vandalism which would be involved in the destruction of this beautiful and graceful building?
    Dr. Stross: Will the right hon. Gentleman allow me to add my voice to the plea that he should join with hon. Members on

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    both sides of the House to rescue the present building, and thus save himself the effort of having to find a new site?
    Sir D. Eccles: I will convey these feelings to my right hon. Friend whose responsibility it is.
    Mr. Albu: Will the right hon. Gentleman bear in mind that there are two views, among those who are competent to judge, about the artistic merits of this building? In 1953 the Government promised a site to the Imperial College and their plans are now being held up. Will the Government make no alteration about the existing plan?
    Mr. Anthony Greenwood: Will the Minister confirm that no irrevocable step will be taken until this House has had an opportunity of discussing the matter?
    Sir D. Eccles: It is not for me to give any such assurance. If the hon. Gentleman wishes to discuss that through the ordinary channels, he can do so.

    University Places (Foreign Students)
    Mr. Snowasked the Minister of Education if he will introduce amending legislation so as to permit the awarding by the Government, in deserving cases, of university places to foreign nationals.
    Sir D. Eccles: The British Council already has power to make awards to foreign students attending universities in this country, but the allocation of university places is entirely a matter for the universities themselves.
    Mr. Snow: Will the right hon. Gentleman draw to the attention of that organisation the possibility of offering Miss Autherine Lucy a university place as a demonstration that in this country we are against racial intolerance?
    Sir D. Eccles: There is no colour bar at any university in this country so far as I know; but I understand that the lady in question now has other preoccupations.
    Mr. Snow: If the right hon. Gentleman read his newspaper, he would know that that is incorrect.
    Mr. Gower: While it is obviously necessary and desirable that foreign students should have this opportunity,
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    does not my right hon. Friend think that there are grounds for some priority for students from the British Commonwealth and Colonies?
    Sir D. Eccles: We welcome students from both the Commonwealth and foreign countries.

  COMMONWEALTH RELATIONS

    Federation of Rhodesia and Nyasaland (Finance)
    Mr. Hector Hughesasked the Under-Secretary of State for Commonwealth Relations what approaches have been made to Her Majesty's Government by the Government of Rhodesia and Nyasaland for financial aid; and, in view of the need of the Federation of Rhodesia and Nyasaland for cheap money and interest-free loans to aid economic development there, if he will state the policy and plans of Her Majesty's Government in this matter.
    The Under-Secretary of State for Commonwealth Relations (Commander Allan Noble): The Federal Government and, before its establishment, the Governments of Southern and Northern Rhodesia, have been able to borrow on a substantial scale on the London market. We are in close and continuous contact with the Federal Government, and we are of course anxious to give the Federation all the help we can consistent with our own financial situation and the many other calls upon us. In addition, there is provision for access as appropriate to United Kingdom Government funds under the Colonial Development and Welfare Acts and from the Colonial Development Corporation. There is also an important flow of private investment.
    Mr. Hughes: I thank the Minister for that Answer, but does he not agree that Britain's policy in dealing with the independent realms within the Commonwealth should be no less forthcoming than her policy in dealing with other territories which are not so closely related to us?
    Commander Noble: In answer to that, I think I may say that during the last five years the Federal and territorial Governments have raised over £50 million

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    on the London market, and have been authorised to receive £8½ million under the Colonial Development and Welfare Acts and £6 million from the Colonial Development Corporation. I do not think that that is an insignificant contribution from this country.

    Pakistan (Consequential Provision) Bill
    Mr. Hector Hughesasked the Under-Secretary of State for Commonwealth Relations, in view of the action taken by Pakistan in declaring itself a Republic. if he will forthwith introduce legislation to define the constitutional changes resulting from that action.
    Commander Noble: I would refer the hon. and learned Member to the Pakistan (Consequential Provision) Bill, which was available yesterday afternoon.
    Mr. Hughes: Is the Minister aware that I thought he would give that Answer? Will he say why this Bill singles out for special treatment the law of Rhodesia and Nyasaland, as compared—
    Mr. Speaker: Order. The hon. and learned Member is now anticipating the discussion upon a Bill which is now before the House. We can discuss these matters when we deal with the Bill.

  TRADE AND COMMERCE

    Monopolies Commission
    Mr. Owenasked the President of the Board of Trade how many industries are at present being investigated by the Monopolies Commission; what they are; and when he expects the investigations to be finalised.
    The President of the Board of Trade (Mr. Peter Thorneycroft): I would refer the hon. Member to my remarks during the debate on the Second Reading of the Restrictive Trade Practices Bill last Tuesday.
    Mr. E. Fletcher: Is the Minister not aware that what he said on that occasion was most improper? The Minister has no power, merely because he has introduced a Bill, to curtail references which have already been made to the Monopolies Commission. Does not he realise
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    that he has no power to anticipate what Parliament will say about the future activities of the Commission?
    Mr. Thorneycroft: Improper or not, it gave a very full answer to the Question which has just been asked.
    Mr. E. Fletcherasked the President of the Board of Trade what further matters he is proposing to refer to the Monopolies Commission for investigation as a result of suggestions listed in his Department's Report for 1955 on monopolies and restrictive practices.
    Mr. P. Thorneycroft: Most of the suggestions and requests in the Report appear to relate to arrangements which, under the Restrictive Trade Practices Bill, will be outside the field of reference to the Monopolies Commission. Those which are within that field will be taken into account when deciding what further references are to be made to the Commission.

    Witham
    Mr. B. Harrisonasked the President of the Board of Trade what action he has taken, and is taking, to help the Urban District of Witham to attract factories to its industrial site.
    Mr. P. Thorneycroft: I will continue to consider applications for industrial development certificates on their merits. No application for Witham has been rejected.
    Mr. Harrison: Will my right hon. Friend please get his Department to do something active for this very progressive town, so that it may have all possible help in developing its industrial sites?
    Mr. Thorneycroft: I will certainly consider, on its merits, any application which I receive for an industrial development certificate.
    Mr. S. Silverman: Will the Minister let his hon. Friend know the history of the North-East Lancashire Development Board in the last three years? If his hon. Friend does consider that history, he may not regard his right hon. Friend's assistance as anything to be enthusiastic about.
    Mr. Thorneycroft: I think that my hon. Friend will be much heartened by the energy displayed by this Government, first in scheduling that area and then erecting in it the largest factory which has ever been erected by any Government.

    Motor Car Industry
    Mr. Edelmanasked the President of the Board of Trade what action he is taking to encourage the export of motor cars.
    Mr. Jayasked the President of the Board of Trade what further steps he proposes to take to expand British motor car exports.
    Mr. Chapmanasked the President of the Board of Trade what further discussions he has recently had with the manufacturers of British motor cars with a view to developing exports and restoring full employment in the industry.
    Mr. P. Thorneycroft: My Department is in regular contact with the industry, and the National Advisory Council, which met yesterday, considered the industry's export problems and prospects. The industry is fully alive to the need to increase exports to the maximum, and of the willingness of the Board of Trade to give as much help as possible.
    Mr. Edelman: Despite this rather bland statement of the right hon. Gentleman's future intentions, is it not the case that the present crisis in the motor industry stems indirectly from the catastrophic decline in the exports of motor cars from 73 per cent. in the last year of the Labour Government to 43 per cent. under the present Administration? In view of that fact, will not the right hon. Gentleman change his futile policy of exhortation and laissez-faire.
    Mr. Thorneycroft: I hope that the hon. Gentleman will hesitate before he casts too many reflections upon our motor car industry. The motor manufacturing industry of this country has a great record in exports, and last year it maintained its position as the premier motor car exporting country in the world.
    Mr. Jay: But is not this disastrous fall in the export percentages from over 70 per cent. to under 45 per cent. largely due to the inertia and complacency of the Government? Will the President tell us now, in practical terms, what he will do to restore energy to the export drive?
    Mr. Thorneycroft: It is not for any Government to export motor cars; it is for the motor car industry to do that. While it may have seen some decline in
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    its share of world markets, it is still the premier motor car exporter in the world.
    Mr. Jay: But is not the President aware that although it is the immediate job of the motor car industry to export motor cars, the rise in the percentage in the early years after the war was due to the generous assistance, encouragement and stimulus from the Government?
    Mr. Thorneycroft: The rise was entirely due to world markets at that time.
    Viscount Hinchingbrooke: In view of the various irrational fears about the operation of the credit squeeze, and in view of the fact that short time is now being worked in the motor industry, can my right hon. Friend say whether there is any evidence, so far, that motor car exports have diminished because of that?
    Mr. Thorneycroft: I would say that the operation of the credit squeeze will certainly have no bad effect upon exports. I am sure that one thing which we should avoid doing is to take artificial steps to expand home demand.
    Mr. Chapman: Can the President say whether any target figure has been agreed with the industry in relation to an increase in its exports for the coming year? Secondly, has he seen the article in the Financial Times stating that the failure of the motor car industry—in Sweden in particular—to promote sales, spares and follow-up services has directly resulted in the failure of British cars in that market?
    Mr. Thorneycroft: I have seen many comments about the failures of the motor industry and rather too little about the magnificent achievements of the men who work in that industry.
    Sir F. Medlicott: Is my right hon. Friend aware that the export of our cars will not be helped if the workers in the industry follow the advice given to them by a shop steward this week to go slow, as that will inevitably still further increase the cost of production?
    Mr. Jay: Would it not really be wiser if, instead of talking about the magnificent achievements in the past, the President were to take some practical steps to correct the situation now?
    Mr. Thorneycroft: One of the necessary steps in the field of exports is to

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    moderate home demand, not only in this but in other industries. This Government have shown that they have the courage to take the necessary steps in that direction.
    Mr. V. Yatesasked the President of the Board of Trade, in view of the redundancy in the motor car industry in the Midlands and elsewhere, if he will consult the advisory committee on the motor car industry and report the result of his consultations to the House.
    Mr. P. Thorneycroft: The position of the motor car industry was discussed at the meeting of the National Advisory Council for the Motor Manufacturing Industry yesterday. There was a valuable exchange of views. The proceedings of the Council are confidential.
    Mr. Yates: In view of the very disturbing news that is coming every day of further increases in redundancy and short-time, does not the right hon. Gentleman think that the time has arrived when he personally should hear the views of this committee from both sides of the industry, and then make a statement to the House about the action that can be taken?
    Mr. Thorneycroft: I am very willing to hear the views of this or any other industry on any occasion.
    Mr. Chapmanasked the President of the Board of Trade whether he will review the hire-purchase restrictions on motor cars in view of the further spread of short-time working and the emergence of unemployment in this industry and its ancillary trades and in order to enable manufacturers to dispose of the present unsaleable stocks of new cars.
    Mr. P. Thorneycroft: I do not consider that the situation in the motor industry justifies a relaxation of the restrictions.
    Mr. Chapman: Does not the President of the Board of Trade feel that acres of cars which no one can sell is some justification for helping the industry to get rid of them somehow? Has he no policy for dealing with those cars that are piling up, and which no one can buy?
    Mr. Thorneycroft: I cannot give any indication of any intention on behalf of the Government to vary the policies which they introduced only recently
    Mr. H. Wilson: Would the right hon. Gentleman say whether, in his view, the extent of the short-time working, the lost overtime and so on in that industry has gone as far as the Government want to see it go, or do they want to see it go a little further in pursuance of their economic policies?
    Mr. Thorneycroft: Short-time working and other things in the industry are due to a number of factors, seasonal and otherwise, including those to which I have referred about the Government measures, but I can give no indication at all that we intend to vary the policies which we have only recently announced
    Mr. Chapmanasked the President of the Board of Trade whether he will enter into consultation with the manufacturers of motor cars, with a view to sending joint missions to countries in the Eastern bloc to negotiate the sale of British passenger motor cars.
    Mr. P. Thorneycroft: No, Sir. It is the responsibility of the manufacturers and not of the Government to negotiate the sale of motor cars. I am informed that representatives of the motor industry have already explored the market prospects in most of these countries.
    Mr. Chapman: Is the President aware that his right hon. Friend the Minister of State has said that he is very anxious to extend trade with these areas? In view of the fact that the main proposals coming from places like China—which wants over a million tractors—come from Governments asking for a direct exchange of views with Governments, why do the Government not try to do something to get trade going?
    Mr. Thorneycroft: In the export trade with China the export of nearly all types of motor cars is freely allowed.
    Mr. Jay: Have not the President's Answers to Questions on the subject been wholly negative, and would not an expansion in our exports of motor cars to any market be beneficial from the point of view both of the workers in the Midlands and of the national interest?
    Mr. Thorneycroft: We cannot have anything better than a free market for selling in, and it is a free market there.
    Mr. Jay: But is it not this laissez-faire attitude of the Government that has got us into our present difficulties?
    Mr. C. Pannell: The President has just said that there is no limit on the export of motor cars to China, but is it not a fact that he is talking only of motor cars and that, of course, commercial vehicles and tractors are prohibited?
    Mr. Thorneycroft: I was asked about motor cars.

    Nickel-bearing Ores, Southern Rhodesia
    Mr. Leeasked the President of the Board of Trade what discussions he has had with the Government of Southern Rhodesia, with a view to obtaining supplies of nickel from the deposits now known to exist there.
    Mr. P. Thorneycroft: I presume that the hon. Member is referring to the indications of nickel-bearing ores found at Gatooma in Southern Rhodesia. No discussions between Governments are contemplated with regard to these deposits. I understand that the exclusive rights to explore them have been acquired by a British mining company and that exploratory work is now in progress.
    Mr. Lee: Does the President remember that he has already agreed that there is a world shortage of nickel? There is a very great demand for nickel, and would not it be a very great catastrophe for British industry if we were not to get in on the ground floor and obtain agreements by which our industries were helped to ensure the future of nickel exports to this country?
    Mr. Thorneycroft: I fully appreciate the hon. Gentleman's point, but if there is a world shortage of supply, and if there are some supplies here for which a well known mining company is exploring, that seems to be a very satisfactory state of affairs.

    Radio Sets and Radiogramophones (Imports from Germany)
    Captain Pilkingtonasked the President of the Board of Trade how many radios and radiogramophones were imported from Germany in 1954 and 1955.
    Mr. P. Thorneycroft: 7,872 complete radio sets in 1954 and 27,073 in 1955. Figures for complete radiogramophones were 143 and 1,219.
    Captain Pilkington: Has my right hon. Friend received any representations from the makers in this country, in view of the tremendous increase over last year?
    Mr. Thorneycroft: I do not think so. The tariff is, in fact, the same both ways—20 per cent. in this country and 20 per cent. in Germany.
    Mr. Bottomley: Is not this another example of lack of policy by Her Majesty's Government? Would the right hon. Gentleman not agree that the extreme measures doing away with hire-purchase restrictions altogether resulted in this vast increase of imports from Germany?
    Mr. Thorneycroft: I am glad to have the support of the right hon. Gentleman for our measures increasing hire-purchase restrictions.

    Hire-Purchase Restrictions (Credit-Sale Agreements)
    Mr. Gordon Walkerasked the President of the Board of Trade whether he is aware of an increase in the disposal by retailers of radio and television sets on credit-sale agreements for less than nine months; that this is defeating the purpose of the restrictions he has imposed upon hire-purchase and hiring agreements; and what steps he is taking to make his restrictions effective.
    Mr. P. Thorneycroft: I am aware that some retailers are offering to dispose of radio and television sets on credit-sale agreements for less than nine months, but I do not agree that such sales defeat the purpose of the restrictions. I have recently amended the conditions under which these agreements are permitted to ensure that the restrictions are effective.
    Mr. Gordon Walker: Is not the right hon. Gentleman aware that it is possible, under these agreements, for television sets and such goods still to be sold for a very small initial down-payment, whatever the merits of the general policy of hire purchase? Is it not stupid to leave this hole or gap, through which is now being done more and more business of the sort that the right hon. Gentleman was trying to stop?
    Mr. Thorneycroft: I am anxious to stop up any gap, but there does not seem to be one here. The object of the hire

    2301
    purchase controls is to compel people either to pay the whole price down or at any rate to restrict themselves to credit sale agreements for under nine months.
    Mr. Lindgren: Is the right hon. Gentleman aware that some manufacturers are already offering a loan for the initial deposit, to be paid off by weekly payments? Where are we getting to?
    Mr. Thorneycroft: I am quite willing to examine any point which the hon. Gentleman may put to me about obvious evasions but the point raised by the right hon. Gentleman is not an evasion. It is an ordinary credit sale under nine months and has never been caught by any hire-purchase restriction.

    United Kingdom-Irish Republic
    Mr. Chichester-Clarkasked the President of the Board of Trade whether he is aware that manufacturers of boots and shoes in Eire are permitted to send these into the United Kingdom under licence, which is freely granted, and that United Kingdom merchants are only permitted to sell boots and shoes in Eire under quota, which is strictly limited; and what discussions he has had with the Irish Republican Government on the subject.
    Mr. P. Thorneycroft: Yes, Sir. Representations were made to the Irish Republic last year, and the quota for leather footwear is now three times what it was.
    Mr. Chichester-Clarkasked the President of the Board of Trade (1) whether he is aware that, while furniture imported from the Irish Republic is duty free, subject to Purchase Tax, the Irish Republic levy a duty of 50 per cent. on furniture exported from the United Kingdom; and whether he will make representations to the Irish Republican Government on the subject;
    (2) whether he is aware that the Eireann Government impose a duty of 56s. per hundredweight, plus a package duty of Id. per pound on packages under seven pounds gross on United Kingdom exports of sugar confectionery; and, since imports from Eire are subject only to a duty of 4s. 9d, per hundredweight of sugar content, if he will make representations to the Eireann Government with a view to achieving reciprocity.
    Mr. P. Thorneycroft: I am aware of these facts. If the United Kingdom industries concerned consider that they are not enjoying an opportunity of reasonable competition in the Irish Republic it is open to them, under the provisions of the Trade Agreement of 1938, to ask for a review of the duties.
    Mr. Chichester-Clark: While I appreciate what my right hon. Friend has said and hope that industry will take note of it, may I ask him to look at the whole position again in the light of the effect that it must have upon Northern Ireland, where there is still considerable unemployment?
    Mr. Thorneycroft: I have received a request from the Northern Ireland Government to examine this duty position as it affects Ulster industry, including furniture. I am examining it at the present time.

    Whisky (Exports to United States)
    Mr. Emrys Hughesasked the President of the Board of Trade if he is aware of the concern felt by Scottish distillers at recent difficulties experienced in marketing whisky in the United States of America; that these difficulties will result in decreased whisky exports to the United States of America; and if he will make a statement.
    Mr. P. Thorneycroft: No, Sir.
    Mr. Hughes: Is the Minister aware that at the recent annual meeting of Teacher's, the distillers, the chairman drew attention to the phenomenal increase in the consumption of vodka in the United States? Does not this show that we are losing the cold war even in America, and what is the right hon. Gentleman going to do about it?
    Mr. Thorneycroft: I had a feeling there was something underlying this Question which I had missed. I have received no complaints on the matter from the Scotch Whisky Association.

    Anglo-Australian Trade
    Mr. J. Harrisonasked the President of the Board of Trade what representations he has received from the Australian Government concerning the adverse effect of Her Majesty's Government's trade

    2303
    policy upon Anglo-Australian trade; and what action he proposes to take to remedy this effect.
    Mr. Bottomleyasked the President of the Board of Trade if he will now make a further statement on trade with Australia.
    Mr. P. Thorneycroft: I would not wish to add anything to the reply which I gave to the right hon. Gentleman on 2nd February.
    Mr. Harrison: As the reply is not within my recollection, may I ask the Minister whether he is aware that it was the Minister of Trade in the Hosue of Representatives who made these allegations that we were aggravating Australian trade difficulties? Would it not be advisable for the right hon. Gentleman to 'consider doing something to remedy this most damaging statement?
    Mr. Thorneycroft: The Minister did complain of a number of things. He complained of State trading under the Socialist Administration and its effect on Australia, the level of agricultural subsidies over here and one or two other matter. I really do not think that any very useful purpose would be served if I answered all the questions or tried to reply to the comments which he then made.
    Mr. Bottomley: Could the right hon. Gentleman add to the reply which he gave on an earlier occasion? Has he made any reply to the comments of the Australian Minister? Is he aware that that it is absolutely due to the Government's policy of restriction of United Kingdom trade which has led to the Australians, in order to keep up their standard of living, borrowing dollars from the International Bank, which adds to the adverse sterling balance of payments?
    Mr. Thorneycroft: I am aware that there is virtual free trade for all Australian products coming into the British market. On the individual point which the right hon. Gentleman made on the earlier Question, I have seen that the facts in it are drawn to the attention of the Australian authorities.
    Mr. Stokes: Will the President of the Board of Trade at least agree that it is impossible for a developing country like Australia both to develop at the rate
    2304
    which is required of it in the international interest, and to have what is erroneously called a favourable balance of trade?
    Mr. Thorneycroft: I do not want to answer for the economic problems of the Australian Government on their balance of payments at the present time.
    Mr. B. Harrison: Would my right hon. Friend consider inviting the Australian Minister of Trade over here at the time of the Prime Ministers' Conference to discuss mutual problems of trade between the two countries?
    Mr. Thorneycroft: The Australian Minister of Trade is always welcome in this country on that or on any other occasion.
    Mr. H. Wilson: Has not the President of the Board of Trade heard that it has been announced in Canberra that the Minister of Trade is coming here with Mr. Menzies?

    Sports Footwear (Anglo- German Trade)
    Mr. Jannerasked the President of the Board of Trade whether he is aware that manufacturers of sports footwear in Leicester and elsewhere are disturbed about the large quantities of track and running shoes which are being imported into this country from Germany in consequence of the low duties which prevail on these imports, apart from other factors; and whether he will take immediate steps to inquire into and deal with the position.
    Mr. P. Thorneycroft: No, Sir. There are procedures whereby interests concerned can apply for changes in protective duties. I have had no applications in relation to duties on sports footwear.
    Mr. Janner: Will not the right hon. Gentleman inquire further into the matter and in particular into subsidised labour in Germany in respect of these shoes, the amount of wages which are being paid and whether young people under the age of those employed here are employed in this industry in Germany? Will he then do something about protecting the industry in Leicester?
    Mr. Thorneycroft: If the industry wishes to make an application for an alteration in the tariff it is free to do so. I have no evidence of subsidy in this matter.
    Mr. Jannerasked the President of the Board of Trade what rates of duty are imposed by Germany on sports footwear imported from Britain into Germany; and what rates of duty are charged on sports footwear imported into this country.
    Mr. P. Thorneycroft: As the answer contains a number of separate headings, and is therefore rather long, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Janner: Can the Minister say straightaway whether the duties which are charged upon this type of goods going into Germany are larger than those imposed on similar goods coming into this country, and if so, what he is going to do about it?
    Mr. Thorneycroft: If the hon. Gentleman will look at the table he will be able to make his own comparison. Some of the duties are ad valorem and others are specific, so comparison is not easy.
    Following is the Answer:
    The duties levied in Western Germany on sports footwear from all countries are:

    (i) On gym shoes with uppers of rubber (tariff No. 6401 C)—25 per cent. ad valorem.

    (ii) On gym shoes and tennis shoes with uppers of textiles (tariff No. 6401 F)—17 per cent. ad valorem.

    (iii) On special sports footwear (for use in football, hockey, cricket, foot racing or basket ball (tariff No. 6405)—18 per cent. ad valorem.

    In the United Kingdom tariff there is no special heading for sports footwear as such and it is chargeable with the duties applicable to footwear generally. The rates which would usually apply to sports types would be:

    (1) On footwear wholly or partly of rubber (except where the outer part of the uppers is made of leather or leather and elastic)—8d. to 4s. per pair, according to type and size.

    (2) On other footwear for men—15 per cent. ad valorem.

    (3) On other footwear for women—3s. per pair or 10 per cent. ad valorem, whichever is the greater.

    Thoroughbred Horses (Imports and Exports)
    Mr. J. J. Astorasked the President of the Board of Trade by what method he assesses imports and exports of thoroughbred horses in and out of Great Britain.
    Mr. P. Thorneycroft: Imports and exports of horses are recorded by Customs in the usual way. No assessment of the trade in thoroughbreds is made, as these are not separately distinguished in the Trade Returns, but I understand that they account for most of the value of the imports and exports recorded.
    Mr. Astor: Is my right hon Friend aware that his Department counts as an export all horses that in the breeding season visit France and Ireland for a few weeks, and that when they return with foals they are counted as imports? Is he aware that the figures as to exports and imports which the agencies and the association that actually deal with this have are completely different from those given by his Department?
    Mr. Thorneycroft: That may be so, but what my Department has to do is to record those horses which leave and those, which enter this country.

    Castor Oil (Sales)
    Lieut.-Colonel Liptonasked the President of the Board of Trade whether he will extend the Departmental inquiries into the sale of Government surplus stores decided upon last week, to the sale by his Department of 297,000 gallons of castor oil.
    Mr. P. Thorneycroft: During the past six months some castor oil from the strategic reserve has been sold by public tender. These sales are quite distinct from the disposal of surplus Government stores and have been made in the normal course of managing the stock of this commodity, which deteriorates if kept for too long.
    Lieut.-Colonel Lipton: Will the President say what moved the Government to keep such a lot of oil as this? Will he also say how much this lot cost, and how much it has been sold for, and what the poor taxpayer has lost as a result?
    Mr. Thorneycroft: There are strategic considerations for keeping this stock which I would prefer not to reveal. As to the value of this particular stock perhaps the hon. and gallant Member will put down a Question.
    Mr. Drayson: Can the Minister say whether the sale of this stock represents the final purge of his Department?
    Mr. Gordon Walker: Can the President say what is the strategic purpose of castor oil?
    Mr. Thorneycroft: It is not customary to reveal the strategic purpose of this stock.

    Patent Applications
    Mr. Remnantasked the President of the Board of Trade how many patent applications, considered to be in order for acceptance, are now awaiting their six figure numbers and formal acceptance.
    Mr. P. Thorneycroft: Four thousand four hundred and eighty on 2nd March, Sir.
    Mr. Remnant: Can my right hon. Friend say whether the number passed per week is about 450, and should not the procedure be speeded up, in view of the fact that any infringement is actionable only after publication?
    Mr. Thorneycroft: I shall certainly do anything I can to speed it. The position has been aggravated by the dispute in the printing trade, but steps are being taken to increase printing capacity, which I think will lead to a reduction in the delay.

  NATIONAL FINANCE

    Tax Law (Advertising Expenditure)
    Mr. G. Jegerasked the Chancellor of the Exchequer whether he is aware of the effect of advertising in stimulating spending; and whether he will discourage extensive advertising by refusing to allow expenditure on advertising to count for tax purposes.
    The Financial Secretary to the Treasury (Mr. Henry Brooke): My right hon. Friend does not see his way to propose as regards this particular kind of business expenditure, any amendment of the general rule of tax law allowing the deduction of expenditure that is wholly and exclusively laid out for the purposes of the trade.
    Mr. Jeger: Would it not be much better to prohibit or prevent the stimulation of spending which arises from advertising paid out of taxation, rather than to increase prices and force people to spend more, as Government action is doing now?
    Mr. Brooke: A proposal less far-reaching than that of the hon. Gentleman was brought before the House in 1947 and received such an unfavourable reception that it was withdrawn by Sir Stafford Cripps.
    Mr. H. Wilson: Does not the right hon. Gentleman think it extraordinary, at a time of year when the Chancellor is usually not anticipating his Budget statement, that he should be indicating that the Chancellor has closed his mind on the question? Secondly, since he refers to the proposals in the autumn Budget of 1947, is not the right hon. Gentleman aware that the reason given by Sir Stafford Cripps for reversing that proposal was a solemn and clear undertaking by the advertising profession and the F.B.I. that they would restrict the volume of advertising to the figures then obtaining, and that since that time the volume of advertising has more than doubled?
    Mr. Brooke: I well remember the circumstances of 1947, but my right hon. Friend the Chancellor of the Exchequer, not wishing, perhaps, to embarrass me by overmuch use of the phrase that I could not anticipate his Budget, authored me to make this statement today.

    Control Arrangements, South Africa
    Mr. Gordon Walkerasked the Chancellor of the Exchequer to make a statement on the effect as regards the United Kingdom and the sterling area of the decision by the Government of South Africa to impose restrictions upon the transfer of funds to the United Kingdom and other parts of the sterling area.
    The Economic Secretary to the Treasury (Sir Edward Boyle): The new control arrangements adopted by the Government of South Africa are not expected to have any significant financial or economic consequences to the United Kingdom or the sterling area or significantly to affect the central reserves. The South African authorities have made it clear that they intend to administer them in a sympathetic spirit and that the repatriation of British capital invested in South Africa will in no way be affected. The intention is no more than to enable the South African authorities to maintain

    2309
    the internal credit conditions they consider appropriate to the present state of the Union's economy.
    Mr. Gordon Walker: Is not the Economic Secretary altogether too complacent? Is he not really saying that restriction on the movement of funds in the sterling area makes no difference at all? Is he not saying that because he realises that one of the bad effects of the Government's reliance on the Bank Rate is that it disrupts the unity of the sterling area?
    Sir E. Boyle: The right hon. Gentleman might remember that similar powers are already possessed by India, Pakistan. Ceylon, Australia and New Zealand, and though we naturally a little regret any extension of controls, South Africa's move does no more than bring her into line with other independent sterling countries.

    Surtax (Deputation)
    Mr. Emrys Hughesasked the Chancellor of the Exchequer what representations were recently made to him by a deputation from the Institute of Directors on the question of the high rate of Surtax; and the nature of his reply.
    Mr. H. Brooke: On Surtax, the deputation suggested that the rates on earned incomes between 2,000 and £5,000 should be halved and the rates on earned incomes over £5,000 should be reduced by a quarter. My right hon. Friend promised to consider their representations on this and other matters.
    Mr. Hughes: Could the Financial Secretary tell us if this interesting deputation was led by our old friend Lord Chandos, and did the Government say that in all these cases of heavy expenditure their motto was "Do not be greedy?"
    Mr. Brooke: I was not present when the deputation was received so I do not know the exact membership of it, but I should have thought that a Scotsman ought to wish to maintain the principle that people who think they are paying out too much money should have the right to say so.

    Income Tax (Small Pensions)
    Dr. King askedthe Chancellor of the Exchequer to give an estimate of the cost to the Treasury of abolishing Income
    2310
    Tax on all incomes derived from pensions of any kind and of not more than £300 a year.
    Mr. H. Brooke: The cost of relieving from tax all pensions payable to persons whose total income from all sources, including such pensions, does not exceed £300 per annum, would be about £2 million.
    Dr. King: Is the Minister aware that a Measure along these lines is about the only way in which he could help pensioners who do not derive their pensions from State sources? Would he, in the light of the Bill which is being considered upstairs, look at this matter before the Budget?
    Mr. Brooke: I will certainly take note of the hon. Member's suggestion. I am not sure whether he realises that his proposal would be rather unfair to married people, because all married couples with incomes of under £300 a year have already been completely exempted from Income Tax by the Conservative Government.

BUSINESS OF THE HOUSE
Mr. Gaitskell: May I ask the Lord Privy Seal whether he will announce the business for next week?
The Lord Privy Seal (Mr. R. A. Butler): Yes, Sir. The business for next week will be as follows:
MONDAY, 12TH MARCH—The Government propose to give time for the Second Reading of the Private Member's Bill relating to the Death Penalty.
TUESDAY, 13TH MARCH—Second Reading of the Pakistan (Consequential Provision) Bill, and if agreeable to the House, the Committee and remaining stages.
Second Reading of the Agricultural Mortgage Corporation Bill, and Committee stage of the necessary Money Resolution.
Consideration of the Lords Amendments to the Dentists Bill.
Consideration of the Motion to approve the draft Police Pensions Regulations, and similar Regulations for Scotland.
WEDNESDAY, 14TH MARCH—Supply [7th Allotted Day]: Committee. It is proposed to take Supply formally. There

2311
will then be a debate on Cyprus on an Opposition Motion.
Consideration of the Milk and Eggs (Guaranteed Prices) Orders.
THURSDAY, 15TH MARCH—Supply [8th Allotted Day]: Committee. Army, Votes 1, 2, 5, 8, 10 and 11; Air, Votes 1, 2, 7, 8, 9 and 11; and Navy, Votes, 1, 2, 6, 10, 11, 13, 14, 15 and Navy Supplementary Estimates will be considered.
At 9.30 p.m., under the provisions of Standing Order No. 16, the Question will be put from the Chair on the Vote under discussion, and on all outstanding Estimates, Supplementary Estimates and Excess Votes required before the end of the financial year.
Report and Third Reading of the Criminal Justice Administration Bill (Lords).
FRIDAY, 16TH MARCH—Consideration of Private Members' Bills.
Mr. Gaitskell: While I have no questions to ask on the business for next week, may I ask the Lord Privy Seal whether he is aware that we wish to have an early debate on the employment situation, which is giving concern in a number of areas?
Mr. Butler: Perhaps we can discuss the opportunity for such a debate. It might arise, for example, on a Supply Day or on the Consolidated Fund Bill.
Viscount Hinchingbrooke: Is my right hon. Friend yet able to say whether the day on which we resume after the Easter Recess will also be Budget Day?
Mr. Butler: No, Sir. I will acquaint the House as soon as possible of the date of Budget Day and the date of our resumption.
Mr. Nabarro: My right hon. Friend will recall that a number of inquiries have been made during the last few weeks about providing for a debate upon the first independent Report on a nationalised industry—namely, the Herbert Committee Report. Can my right hon. Friend say whether there is any prospect for an early debate upon that important topic?
Mr. Butler: There certainly will not be an opportunity before Easter, but this
2312
stands among the many subjects which we realise the House will wish to discuss.
Mr. H. Wilson: On the assumption that we shall be getting the first of next year's Budgets fairly quickly after the Recess, will the right hon. Gentleman bear in mind the assurances which he gave during the last Autumn Budget in connection with the form in which the Money Resolution will be drafted? Will he, in particular, recall that in the whole of the last year, in all the Budgets we had last year, there was no opportunity at all to move any new Clause or substantially to amend the Finance Bill? Will he ask his right hon. Friend the Chancellor of the Exchequer to bear that in mind in preparing for the April Budget?
Mr. Butler: Yes, Sir. One has to consider these Resolutions rather in two compartments—one compartment apart from Purchase Tax and another compartment relating to Purchase Tax. Leaving aside the details for the moment, I should like to discuss this matter with the Chancellor of the Exchequer, and I will inform him of the point of view put by the right hon. Gentleman.
Mr. Jay: If there are any by-elections in progress in April, will the next Budget be postponed until May or June?
Mr. Butler: All I can say is that the by-elections, whenever they take place—and that is a matter in the hands of God—will, we are convinced, be more in favour of the Government the longer the Government hold power.
Mr. Lee: When the right hon. Gentleman replied to the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) in the negative, after the noble Lord had asked whether the first day back after the Recess would be Budget Day, did he mean that it would not be Budget Day or that the decision had not yet been taken?
Mr. Butler: It has not yet been decided.
Mr. C. Pannell: When the Lord Privy Seal says that the question of by-elections is in the hands of God, does he think that it was to assist the Almighty that the returning officer in Leeds insisted on getting the election over within ten days?

SECURITY (CONFERENCE OF PRIVY COUNCILLORS)
The Prime Minister (Sir Anthony Eden): Sir, I will, with permission, make a short statement on the report of the Conference of Privy Councillors on security.
A White Paper is being published summarising such of the contents of the report as can properly be made public, and copies will be available in the Vote Office immediately. The Government have decided to give effect to all the recommendations which the Conference have made.
I should like to express the Government's gratitude to the noble Lord, the Lord Chancellor, and the other noble Lords and right hon. Gentlemen in this House who took part in the conference for the thoroughness and despatch with which they have performed their task.
Mr. Gaitskell: While I must naturally reserve any comment until after I have had an opportunity of looking at the White Paper, I should like to associate my right hon. and hon. Friends with the thanks given by the Prime Minister to those who have done this job. They certainly worked extremely fast, and they must have worked very hard, too.

NORTHERN IRELAND PARLIAMENT (DISQUALIFICATION OF MEMBERS)
Mr. R. A. Butler: I have to inform the House that following the receipt of representations from the Government of Northern Ireland concerning the disqualification of four Members of the Northern Ireland House of Commons, including the former Speaker, and two Senators, Her Majesty's Government have decided to introduce legislation as soon as possible to indemnify all those concerned against common informer penalties. I regret to say that one of the Senators concerned, Senator Fleming, died on 29th February, and I should like to express the sympathy of Her Majesty's Government and of the House with his relatives. The proposed Bill will validate the elections of the other five disqualified Members.
2314
Legislation at Westminster is necessary because the Parliament of Northern Ireland has no power to legislate on the subject of the qualifications and disqualifications of its Members.
The facts are being laid before Parliament in the form of a White Paper, copies of which are now available to hon. Members in the Vote Office. The White Paper incorporates the Reports of Select Committees of the Northern Ireland House of Commons and Senate, and also the texts of Resolutions passed by the two Houses declaring the disqualified Members to have been incapable of being returned and proposing that representations should be made to Her Majesty's Government.
Mr. H. Morrison: Is not this spate of disqualifications somewhat disturbing, following, as it does, others in respect of the Members of the Parliament of Northern Ireland? Could the right hon. Gentleman not somehow convey some advice to the Government and Parliament of Northern Ireland whereby this can be diminished, because it is not good for the parliamentary institutions of either country. I admit that there has been a steady flow of disqualifications in Her Majesty's United Kingdom House of Commons, too, but for a small Parliament this is a rather disturbing feature.
Mr. Butler: I think this is fully realised by the Government of Northern Ireland, who regret the situation as much as we do, but perhaps have not quite as much trouble in putting it right. The position is covered by the House of Commons Disqualification Bill, which the House has decided, in its wisdom, to send to a Select Committee. We therefore hope that in due course this matter may be tidied up in a sense which I hope will be agreeable to the right hon. Gentleman.
Mr. E. Fletcher: Would the right hon. Gentleman consider whether it might not be more expeditious to give the Parliament of Northern Ireland power itself to deal with these matters?
Hon. Members: No.
Mr. Emrys Hughes: Are not the Government of Southern Ireland prepared to help in tidying up the matter?
Mr. Lee: Would it not be for the convenience of the House if we could have a list of the minority over there whose elections are valid?
Mr. Marquand: If the right hon. Gentleman can find time for this legislation, could he not also find time for the Bill to implement improvements in widows' pensions recently announced, on which I promised him that the Opposition would give him an easy passage?
Mr. Butler: I must, of course, in answer to the right hon. Gentleman in respect of that very important matter to which he draws attention, say that it is an obligatory duty which we have to perform. In regard to the other matter, we shall certainly take the earliest opportunity.

NORTHERN IRELAND PARLIAMENT (DISQUALIFICATION OF MEMBERS)

  BUSINESS OF THE HOUSE (SUPPLY)
  Ordered,
  That this day the Business of Supply may be taken after Ten o'clock and shall be exempted from the provisions of Standing Order No. 1 (Sittings of the House).—[The Prime Minister.]

ORDERS OF THE DAY
  SUPPLY
  [6TH ALLOTTED DAY]
  SUPPLY

    Navy Estimates, 1956–57
    Order for Committee read.
    MR. GEORGE WARD'S STATEMENT
    3.42 p.m.
    The Parliamentary and Financial Secretary to the Admiralty (Mr. George Ward): I beg to move, That Mr. Speaker do now leave the Chair.
    The House will have seen from the Explanatory Statement which accompanies the Estimates that the gross provision for next year of £401,670,000 is up by £9,700,000 compared with the provision made for the current year in the original Estimates and the Supplementaries. Next year's figure includes an amount, which we estimate at about £31 million, for increased naval and civilian pay and pensions and for increased prices of matériel and supplies. If we deduct this, we are left with an effective gross provision for next year of some £21 million less than this year.
    We expect to get £55·67 million of receipts, or £4.2 million more than this year. So Parliament is asked to make a net grant of £346 million, which is £5½ million more than the net grant this year. The receipts include £5 million of financial aid generously granted by the United States; £3½ million of this is aid for which we made provision in 1955–56 but which we now expect to get next year. In addition to this, the United States are also granting aid in support of the research and development programme.
    I believe it is much more thoroughly understood in the country today than it was some little time ago, that the advent of thermo-nuclear weapons has not changed the need for navies or their primary. Obviously it must affect the design of ships, the composition of fleets, the tactics of naval warfare. But it does not make navies any less important.
    This conclusion has been drawn by the major Powers in the world, including Russia, who has chosen in recent years

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    to accelerate the building of an already very powerful fleet. Clearly Russia recognises that massive land and air forces and the thermo-nuclear bomb are not enough, and that she must also be able to dispute command of the seas. Yet Russia and, indeed, the United States are largely self-sufficient. This country is not. In any major conflict, command of the seaways to these islands would be just as indispensable to the survival of our base as it has been in the past.
    During the defence debate several hon. Members on both sides of the House spoke of the rôle of the Navy in peace, in limited wars and in global war, but I got the feeling that they were not all very clear about it. Let me try very briefly to put the position as I see it.
    First, if local wars are not dealt with quickly, the danger of a global war is increased. The Navy is the most mobile of all three Services and can most easily operate independently of land bases. It is therefore especially valuable for dealing with local wars and preventing them spreading.
    Secondly, it is this mobility, I suggest, that gives the Navy its great prestige value in peace, because of its regular visits to Commonwealth and foreign ports.
    Thirdly, there is the rôle of the Navy in a global war. There are bound to be wide differences of view about the likely course and duration of a war fought with nuclear weapons. But I suggest that we should be most unwise to assume that in a war, of whatever length, the Navy has no part to play, since the enemy would certainly try to starve us into submission by cutting our sea communications.
    It has been suggested that a few atom bombs on the enemy's submarine bases would put an end to the submarine threat. But since we shall not decide when a war is to start, the Power that does so will presumably have the wit to see that its submarines and, indeed, its entire Navy, are at sea first, with adequate seagoing support to keep them there for some time, and it is with this threat that our striking forces and our anti-submarine forces will have to deal.
    Fortunately, we should not stand alone against the formidable Russian Navy. The British Fleet would be a part of the combined N.A.T.O. Fleet. But we must make
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    as powerful a contribution to that Fleet as we possibly can. If we do not we could hardly expect to have an effective voice in the strategy and disposition of the N.A.T.O. naval force.
    People naturally tend to compare the size of the Navy afloat today, or even the Navy's new construction programme, with those at certain times in the past; and they wonder why nowadays we seem to have less to show for our money. Let me try to give a few examples. A first-rate anti-submarine frigate today costs £2¾ million, which is more than a pre-war cruiser and roughly eight times as much as a frigate of the same displacement built fifteen years ago. The Daring class ships cost nearly £3 million each when they were built. For this sum we could have had half-a-dozen last-war destroyers of about two-thirds of the displacement; or for another £500,000 we could have had an aircraft carrier before the war. And, of course, aircraft for a given rôle may cost, I suppose, anything up to twenty times as much today as they did shortly before the war.
    Obviously, this is not just a result of the fall in the buying power of money. Ships now contain incomparably more equipment, especially electric and electronic devices, and their real cost has risen enormously. So we can hardly expect the Royal Navy to have the same number of big ships today as it had before the war.
    Even if men and money were available in unlimited quantities, I very much doubt whether we should want anything like the large concentrations of warships of the past. New weapons and guided missiles will give to navies a far greater hitting power. Our modern battle groups will be small by comparison with the Fleets of the past, but they will be more formidable both in attack and defence, easier to disperse and quicker to concentrate again.
    This doctrine of the smaller striking force does, however, put a still greater premium upon the quality and efficiency we must have in material and men. That is why it is so important to have a well-equipped, highly-trained Navy manned as far as possible by long-term Regular sailors.
    How are we getting on with building and equipping this kind of Fleet? Let me deal first with the ships and aircraft, and then with the men.

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    From time to time the House has been told of our progress with ships designed to combat the submarine and the mine. We know we have to reckon with potential enemies who have a huge submarine force and have made a special study of mine design and mine-laying techniques—including mine-laying from submarines. As I have already pointed out, even in the hydrogen age, the submarine and the mine would be a grave menace. Our present strength in escorts and minesweepers, in being and under construction, is set out in the Explanatory Statement, and I shall not go over that again. That is the defensive side of the Navy; but it is the offensive side—the striking power of the Navy—that I want to talk about now.
    There is, I know, some feeling of anxiety in the country because all our battleships are in reserve and we have only nine cruisers in the active fleet. But the principal striking power of the Navy today is provided by a balanced force of aircraft operating from floating bases. I am sorry that the hon. Member for Dudley (Mr. Wigg) is not in his place this afternoon. He said the other day that he was looking forward to seeing me defend the aircraft carrier. What he probably does not know is that before the war I spent three years in carriers; so, when I speak of carrier operations I need an Admiralty brief only to bring me up to date. While I confess that as a pilot I prefer my landing-ground to be neither pitching nor rolling, I have yet to find a more convenient way of greatly extending the range of a comparatively small aircraft than by taking my aerodrome around with me.
    Since 1951 the fleet carriers "Eagle" and "Ark Royal" and the light fleet carriers "Centaur," "Albion" and "Bulwark" have all been completed and are in commission, the "Bulwark" as a trials and training carrier. We now have a programme for adapting them to operate the coming generation of aircraft—the N. 113, the D.H. 110 and the new strike aircraft. The main additional equipments they need to do this, which so far only "Ark Royal" has, are the steam catapult and the new and more powerful arrester gear. The re-designed "Hermes" and the modernised "Victorious" will have both, and also a new type of radar which has a greater range than any set which we or any other nation
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    now have in service, and which can track more aircraft at any one time.
    Our front-line squadrons are now rearmed with Sea Hawk day fighters, Sea Venom all-weather fighters, Wyverns for the strike rôle and anti-submarine Gannets. The only piston-engined aircraft still in the front line are the American Skyraiders for early warning. These will be replaced later by a special version of the Gannet.
    As regards the new day and all-weather fighters, and also the new strike aircraft, I am glad to say that good progress is being made with their development and they all seem likely to meet their forecast dates.
    There is one change since this time last year of which I think I should tell the House. The first version of the N. 113 was to have been armed with guided weapons as well as guns. During development, however, it proved impossible to accommodate both weapon systems in the same aircraft without making it too heavy for carrier operations. So the first mark of this aircraft will be armed with four 30 mm. Aden guns—that will give it a tremendous punch—and it promises well in the interception and ground attack rôles In the strike rôle it will be able to carry an atomic bomb and will have a very good radius of action as well as speed. Investigations into the possibility of arming a later version of it with guided weapons as an alternative to guns are still going on. The development of the D.H. 110 is also going well, and this aircraft will, of course, carry guided weapons.
    The hon. Member for Dudley and others are fond of saying that the D.H. 110 is no good and was rejected by the Royal Air Force. I wonder whether I can take this opportunity of putting his mind and those of others at rest on this point. I was at the Air Ministry when the decision to have the Javelin instead of the D.H. 110 was taken. I very well remember the discussions we had at that time. The merits of each aircraft were evenly balanced. I remember we discussed the matter for a very long time. There was really nothing to choose between them, but finally we took the Javelin because we felt that there might be rather more development potential in the delta plan-form than in the more orthodox swept-wing plan-form. The Navy was never

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    faced with that decision, because it was always perfectly clear that the Javelin would be too heavy for carrier operations. So the Navy took the D.H. 110 and it got a first-class aircraft.
    The next point I want to deal with is the use of the helicopter for underwater warfare. It is proving very efficient at operating an asdic set from the air, free from ship noises and practically free from effective retaliation by the submarine. We are exchanging ideas and information with the Americans, who share our confidence in the great possibilities of this method of anti-submarine defence. As my right hon. Friend the Minister of Supply told the House last week, we are now planning to use the single-rotor S.58. We are also investigating the possibilities of using helicopters for minesweeping.
    Now from aircraft back to ships. Design studies for the guided weapon ships have been approved and the sketch designs are in hand. As the Explanatory Statement says, it has been found possible to design the new fleet escorts with a guided weapon instead of anti-aircraft guns. So both the fleet escorts and the guided weapon cruisers will be armed with the ship-to-air missile and with a modern gun armament for surface engagements and bombardment.
    The guided missile, I hope the House appreciates, is of course still far from being able to supersede the gun in all its rôles, and although we are switching the scientists away from developing new gun armaments and new gun fire control systems, our latest orthodox equipments will be in production for some years to come. Fortunately our range of advanced gunnery equipment is first-class.
    Mr. James Callaghan: Is it still the intention to arm the "Defence," "Blake" and the third cruiser with conventional guns?
    Mr. Ward: Yes, it is; the Tiger class will have conventional guns.
    The first of our experimental high-speed submarines will be ready for acceptance in April and the second will complete later in the year. They will be extremely valuable for developing antisubmarine techniques against targets with high submerged speeds.
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    I should like to say something now about research into nuclear-powered propulsion. Since my noble Friend's explanatory statement, it has been announced that a subsidiary company known as Vickers (Nuclear Engineering) Limited will be set up, whose board of directors will include Sir Ronald Weeks, Lord Hives of Rolls Royce, Major-General Dunphie of Vickers-Armstrongs, and Mr. Hopewell of Foster Wheeler. I expect that other companies may become associated with this project as it gets under way.
    It should not be many years before nuclear fuel becomes a good deal cheaper than it is now, and then great possibilities will open up in the use of nuclear propulsion for warships, merchant vessels, and locomotive power of all kinds. Indeed, the work done on this project may well reveal the shortest way to nuclear powered aircraft.
    We have chosen the submarine as the first vehicle for an atomic reactor at sea because the operational advantages which nuclear propulsion will confer on submarine warfare are very great, and are more decisive than we could get by applying nuclear power to any other type of vessel.
    Mr. Emrys Hughes: Does the hon. Gentleman not think that this development is likely to cost an enormous amount of money, if the atomic submarine which was produced by the United States was costing millions of pounds? Do we see in front of us the prospect of heavily increasing costs for the Navy?
    Mr. Ward: Of course it will cost money, but if the defence of these islands depends on it, as it may well, I am afraid we cannot shirk that.
    I must make it clear that it will be some time before we shall be able to lay down a nuclear-powered submarine, and that this stage is by no means imminent. The first thing is to build a nuclear plant and test it out on land; and no doubt the new company will want to build up the manpower and brainpower to start designing this plant and working out how to put it into a submarine hull.
    To sum up this part of my speech, the Navy of today has a fleet of modern carriers as its main striking power, supported by anti-submarine, anti-mine and escorting forces. Our plans for shaping

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    the Navy of the 1960's are necessarily long-term plans, because they involve the development of equipment embodying quite new principles rather than the improvement of our existing armoury. But we know what ships and aircraft and weapons we want, and we can see clearly the course we must follow to get them.
    I should like now to turn from the operational Fleet to the men in the Navy. Earlier in my speech I emphasised the need for high quality in the modern Fleet. In the past few years it has been becoming more and more evident that the Navy, in common with the other two Services, was failing to attract and retain enough officers and men of the right quality. The Admiralty's aim has been and still is, therefore, to reverse this trend and to build up a Regular long-service Navy. We have tackled this in four main ways. First, we are reforming the officer structure and improving the future promotion prospects generally. Secondly, we have revised the engagement structure for men. Thirdly, we have made really important improvements in the pay of both officers and men. And finally, we are concentrating more attention on improving living conditions both ashore and afloat. I want to deal very briefly with each one of those four measures.
    The new arrangements for officers were announced to the House on 25th January, and they are summarised in my noble Friend's explanatory statement. For permanent officers on the General List they abolish the old distinctions between the executive, engineering, electrical and supply branches and they give—or will give—better and longer careers as well as much improved chances of promotion to these officers. And they will enlarge the opportunity of promotion to the special duties list open to the lower deck while keeping the avenue to high rank through the Upper Yardman Scheme for young men of exceptional quality.
    These reforms result from the work of a high-powered committee done over the last two years—the most comprehensive review we have had in this field in the present century. That committee also devised the new scheme of training at Dartmouth which was introduced, as the House will remember, in May, 1955. Perhaps I may just mention here that we have had a good selection of candidates for Dartmouth and all vacancies have
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    been filled. The Dartmouth Squadron for training cadets at sea is already partly in operation, and it is expected to have its full complement of ships by May of this year.
    The new engagement structure for ratings and Royal Marine other ranks, which has been worked out during the past year, will get rid of the double-harness system of a 12-year and a 7-year initial engagement, and for most branches it will offer a single engagement of nine years. The 7-year engagement had for some time been spoiling the market for the 12-year one. We have chosen the 9-year initial period as the shortest that will suit the policy of a long-service Navy, and yet the longest likely in modern conditions, we feel, to be attractive to recruits. We think that the present re-engagement period probably asks a man to commit himself too far ahead all at once, and so we shall therefore follow the initial 9-year engagement by a 5-year engagement, and then another eight years to make up the 22 years for pension. As regards pay, we believe that the new service pay and other emoluments will really bear comparison with earnings outside. And we have introduced the new principle, which is most important to a long-service Navy, that the man who commits himself to a long engagement is at once paid more than the man who has only engaged for a short period.
    We hope that these reforms in careers, engagements and pay will reverse the recent trend of recruiting and re-engagement and will provide firm foundations for building up the manpower needed in a really healthy long-service Navy.
    In the remaining field of improving the living conditions ashore and afloat, there is still a vast amount of work to be done. Last year, my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) neatly analysed the problem when he pointed out that the provision of good shore accommodation is almost entirely a matter of money, whereas afloat there is the additional and intractable question of the space that is available and the amount of weight that can be put into it. I should like to develop this further, because the improvement of living conditions in our ships is one of the reforms most urgently needed today. [HON. MEMBERS: "Hear, hear]

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    When designing a new warship, the aim is—and, I understand, always has been—to produce the smallest and most economical ship that will do the job that is in mind. In the days when the equipment in a warship consisted of the engines, a large number of heavy guns with their heavy ammunition, and a simple form of gunnery control, the ship had to be fairly big simply in order to float and there was plenty of room for the ship's company. But now, the chief military characteristics are a few high precision weapons with a vastly increased amount of fairly light but very bulky weapon control equipment, and more men than than ever before are needed to operate and service these new devices. The result is that we can hardly provide enough space for the crew without making the ship a good deal bigger than it ought to be for fighting efficiency. I need hardly add that the cost of a ship rises fairly sharply with any increase in size.
    If we can get over these obstacles and build a reasonably comfortable ship, our best-laid plans are apt to be upset by the scientists who come and invent a new and brilliant magic box which cuts a bit more off the living space and adds a few more hands to the ship's company.
    There are various ways of tackling this problem. One is to discard any equipment that we can do without, as new devices are added. Another is to keep down complements by putting in labour-saving equipment wherever possible, such as all-electric galleys with modern kitchen machinery, vacuum cleaners and paint sprayers, stainless steel instead of brass, tank-cleaning vessels fitted with plant for cleaning dirty oil fuel tanks, and so on.
    When ships are taken in hand for modernisation or large repair we already do everything we can to make better use of the available space, trying to build in furniture and stowages individually to fit, re-arranging the run of pipes, wiring and trunking to give more room, and we often plan with models to see how to do it. In certain major conversions where we have been able to redesign the living quarters almost from scratch, the results have been really satisfactory—for example, in some of the destroyers converted into fast anti-submarine frigates.
    I think it is relevant to mention here also the introduction of centralised mess-
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    ing, under which sailors have their meals in a central dining hall instead of in groups on the mess-decks where they actually live. By removing the feeding from the mess-decks we can improve the sleeping arrangements in the messes.
    Not everybody prefers sleeping in bunks to the traditional hammock—I am afraid there is no possibility of a unanimous view on this—but the fitting of bunks in tiers of three undoubtedly makes it possible for more men to sleep comfortably in a given space, although it also raises questions of ventilation and lighting. Centralised messing is already the practice in some of the larger ships and will in due course be applied to all of them; and in a modified form it will be extended to destroyers and frigates as well.
    The last method I want to mention for improving living conditions at sea is by fitting air conditioning into living spaces to cope with Arctic or tropical climates. More air conditioning plant is being fitted into certain ships already in service, particularly those which serve in tropical waters. All ships now being designed, from frigates upwards, will have air conditioning of all their living spaces.
    My final topic is the Admiralty's civilian staffs. The House may well expect a newcomer to the Admiralty to have had at least a preliminary critical look at the numbers of non-industrial civil servants—or, roughly speaking, the salaried as opposed to the wage-paid civilian staffs; and I have done so.
    There are, I think, two common mistakes made in thinking about non-industrial civil servants. The first is the idea that civil servants are necessarily either clerks or executives or administrators, busily drafting regulations in Whitehall. The second mistake is the idea that there ought to be a simple and direct relation between civilian numbers, on the one hand, and the number of fighting men in uniform or, say, of ships in the front line, on the other hand.
    On the first point, important and indeed indispensable as those grades are, they are only part of the Admiralty team. Roughly half the non-industrial staff in Admiralty service, both at Headquarters and in the field, are professional and technical people, such as naval architects, scientists, engineers and draughtsmen.

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    The reason for their existence is, briefly, that the Admiralty is responsible for the production of most of the material which the Navy needs. The Ministry of Supply carries this responsibility for the other Services but it provides for the Navy only aircraft and their equipment, guided missiles, and some items common to all three Services. And besides production the Admiralty is responsible for research, design, modernisation and repair of ships and their equipment.
    It is also worth bearing in mind when thinking about this subject that the Admiralty employs civilians in the supply of stores, ammunition, food and clothing for sea-going ships all over the world. These people do a lot of jobs which are done by uniformed men in the Army and the Air Force.
    The second point is, as I say, the misgivings that people feel because the Admiralty had all these responsibilities before the war, and a bigger Fleet into the bargain, and yet there were far less civilian staff than today.
    One obvious factor in the increase is the Navy's taking over the Fleet Air Arm, a transfer which, the House will remember, took place only in May, 1939. As a result, the Navy now has an air training, repair and storage organisation ashore which needs many civilians as well as sailors. Another factor is the great increase in recent years in scientific research and development. There are several others: for example, the Admiralty Civil Constabulary now does what was mainly done before the war by the Royal Marine Police.
    I have said this by way of explanation, because there are many reasonable questions that can be asked about staff numbers—I have been asking some of them myself—and I wanted in fairness to make it clear that there are also a number of reasonable answers. That does not mean that we are complacent about these figures. On the contrary, my noble Friend has been taking a good deal of interest in them over the past four years, and in fact it is worth pointing out that the number of administrators, executives and clerks has been brought down by about 650 in the past four years in spite of the rearmament programme and in spite of an increase of nearly 2,000 in the overall numbers of professional and technical officers.
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    I felt some diffidence as the last of a long line of new boys in our defence debates, about giving the House this broad exposition of the purpose of the Navy, and of what we are trying to do to implement that purpose. But it seemed to me, from comment made both in this House and outside it, that there was still some room for a plain statement on what the Navy is for. For the rest, I have tried to report how we propose to equip and man the smaller but still more efficient Fleet of the next decade. I have surveyed briefly the plans for the ships. I have described how, by giving a new deal to officers and men alike, we shall try to resolve our manning difficulties which, I agree, are very serious.
    One thing more is wanted. I am making no mere rhetorical flourish when I say it is perhaps the most valued requisite. The Navy in our age needs the goodwill of the House and the country to enable it to serve the nation. It is in the belief that this House and the country will continue to give their goodwill and support to the Navy that I present these Estimates today.
    4.20 p.m.
    Mr. James Callaghan: I hope that you will not leave the Chair for a moment, Mr. Speaker, because there are certain observations which I wish to address to you in particular. I start by way of making a complaint. I have noticed increasingly in recent months, and perhaps years, the growing habit of Ministers not only of reading their speeches word for word from beginning to end but also of circulating copies of them before they are delivered here to persons who are not in the House. Judging from the rustle regularly taking place overhead, in a part of the Chamber that does not belong to the House, I gather that there are certain persons who have had access to material which the Minister has been using this afternoon before hon. Members of the House have had it here.
    Brigadier Terence Clarke: On a point of order. I saw the hon. Member look up to see if the Minister was reading his speech. When he discovered that he was, he decided to make that remark. The only paper I have been given is the Daily Mail, which I have brought in with me. We have not been given anything at all on this side of the House.
    Mr. Speaker: That is not a point of order of any sort.
    Mr. Callaghan: The hon. and gallant Member must not read too much into my words. May I make it perfectly clear? I deprecate the practice of circulating to the Press, although it may be for convenience, copies of speeches which, from beginning to end, can be read in the presence of hon. Members who do not have the advantage of having copies of those speeches. It is destroying all the vitality of the House. As a debating Chamber, this place is deteriorating fast. One cannot be rude to anybody now without being ruled out of order. I hope that you will consider what I have had to say about this matter, Mr. Speaker, because I think that most hon. Members will agree with it. I' know that the Parliamentary Secretary does not regard that as personal to himself. It is not so at all.
    The Parliamentary Secretary's first flight was extraordinarily creditable, if I may say so. I am sure that the former Parliamentary Secretary, now the Under-Secretary of State for Commonwealth Relations, must have wished in one sense that the First Lord of the Admiralty had been promoted to another place a little earlier so that the hon. and gallant Gentleman could have had the advantage of introducing the Estimates. That is a great privilege, as we all know, and one which some of us have shared.
    If I may refer to a hobby-horse of mine and an idea which is getting wider and wider acceptance, I think that the authority with which the Parliamentary Secretary spoke about aircraft and the comparison between the DH 110 and the Javelin and why we should have the one and not the other was the best advertisement and argument that I have yet heard for the closest integration at top level between the Air Council and the Board of Admiralty. I shall adduce the hon. Gentleman as one more argument for the need to integrate the Air Force and the Navy at the earliest possible moment. In one sense, I am sorry that we do not have the advantage of having the First Lord with us.
    Mr. Ward: I should like to remind the hon. Member that the Controller (Air) at the Ministry of Supply is, in fact, a member both of the Air Council and of the Board of Admiralty.
    Mr. Callaghan: But does he regularly attend? How many times has he been present at the last 52 meetings of the Board of Admiralty?
    Mr. Ward: I was not there.
    Mr. Callaghan: No doubt the hon. Gentleman will be able to find out and give us the reply. The former Parliamentary Secretary, the present Under-Secretary of State for Commonwealth Relations, is here; no doubt he can tell us straight away. May I ask him how many times the Controller (Air) from the Ministry of Supply has been present at Board of Admiralty meetings? The hon. and gallant Gentleman can speak for himself. He had the responsibility.
    Mr. Ward: Surely the fact that the hon. Member does not think that the Controller (Air) goes often enough to the Board of Admiralty meetings is not an argument for saying that the Air Force and the Navy should be completely amalgamated.
    Mr. Callaghan: I did not introduce that point. The hon. Gentleman did. All I asked was how often the Controller (Air) goes to the meetings. If the Under-Secretary of State for Commonwealth Relations does not wish to reply himself, surely he can whisper the information to the Parliamentary Secretary, who can tell us. I believe that the number of visits is extremely limited, and I should not be surprised if I were pretty close to the mark.
    Mr. F. A. Burden rose—
    Mr. Callaghan: Is the hon. Member a member of the Board of Admiralty?
    Mr. Burden: The hon. Member was himself at the Board of Admiralty for a considerable time. Perhaps he would say how often the Controller (Air) visited the Board of Admiralty when he was in office.
    Mr. Callaghan: Never. He did not come once. That is why I am asking how often he comes now.
    When I was interrupted originally, I was about to say that, if he cannot hear our words, I hope that the First Lord of the Admiralty will read them. He was a most agreeable and courteous Minister, and we always looked forward to his introducing the Estimates. Wherever he may be now, I should like the Parliamen-

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    tary Secretary to convey to the noble Lord that we on this side of the House always had the highest regard for him. The only complaint I have about him was that he was too agreeable and too courteous. If only he had been sometimes disagreeable and discourteous, especially at the Board of Admiralty, perhaps we should have got further than we have.
    I should like to deal in reverse order with the subjects with which the Parliamentary Secretary opened the debate and say a few words first about manpower. That is perhaps the most important subject of all. In defence of the Admiralty, I must say that it has made some praiseworthy attempts during the last year to secure a contented Service, and I think that it has made some very laudable attempts to get its officer structure right. The decision to introduce the entry of cadets on general grounds as distinct from introducing them in specialist capacities is a step in the right direction. It is certainly one which we on this side of the House would support.
    I also support the reform under which senior officers in engineering and supply branches will play a more important part in what has been regarded hitherto as jobs for senior executive officers. Can we now look forward to seeing senior officers—supply, secretariat, engineering and so on—as members of the Board of Admiralty? I think that it would be a good thing if they were introduced into the Board and had an opportunity of going to the top in that way. The Board should not be limited to executive officers only. I should like to know from the Parliamentary Secretary what is the Government's intention in that respect.
    There is another aspect of the functions and organisation of the Board of Admiralty. The Admiralty team has been mentioned. That hon. Gentleman has been willing to absorb rather a lot into his brief which I doubt he will be quite so ready to accept when he has been in office for another twelve months, but I put this to the Parliamentary Secretary. I think it is time that the functions and organisation of the Admiralty were reviewed.
    Some very interesting ideas have been emerging from the Admiralty organisation of the United States about their own Navy, and, goodness knows, it is an
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    efficient Navy. In the United States, the Navy Department is divided into seven Bureaux, and the organisation of the Bureau of Ships seems to impress every one of our people who goes to the United States and sees how this business is run there. I do not know whether it will be suitable for adaptation here or not. I do know that the Third Sea Lord and Controller is always heavily over-worked, and that during the 18 months I was there he always seemed to be the busiest member of the Board of Admiralty.
    I therefore suggest to the First Lord and the Parliamentary Secretary that there is a case for calling in business consultants to overhaul the present system of Directorates in the Admiralty. I think that in that way they might find that they can get rid of some of the specialists—architects and all the rest—to whom the hon. Gentleman referred earlier on. Some very powerful criticisms have been made about papers being passed from E.N.C. to D.D.E. and then to D.P., and then passed on to somebody else, the correspondence mounting up all the time.
    Although I am not qualified to say how that system could be improved, nevertheless I think it is high time it was looked into again, and especially in view of the fact that a good impression has been made upon our own people who have seen how the United States organise this matter in their own Service.
    To come back to the question of the officer structure, I disagree very strongly with the intention of the Admiralty to create a Special Duties List for men promoted from the lower deck. I think it was the hon. Member for St. Ives (Mr. G. R. Howard), who yesterday congratulated the Admiralty on getting rid of buttons with the mark S.D. on them. But that is no cause for congratulation. Why did they ever introduce them? These are the people who must accept the responsibility, and the question of what is going to appear on the buttons is extremely important I will bet my bottom button that it went before the Board of Admiralty and that a political decision was taken on it.
    Mr. G. R. Howard: Would it not be true to say that, during the hon. Gentleman's period of office at the Admiralty, steps were taken to alter the R.N.V.R. stripes, which we all thought was a most regrettable change?
    Mr. Callaghan: There were very mixed views about that; but the hon. Gentleman is not taking the point. That was in order to ensure that there should be no distinction between R.N.V.R. and R.N. officers. It was an attempt to give everybody straight stripes, whereas this was a system to distinguish between an officer recruited from the lower deck and another coming in through cadet entry. I say that it was extremely bad psychology ever to introduce this difference, and that it is now time to take the next step forward, having swallowed the buttons, by swallowing up the whole Special Duties List and merging it into the General List.
    Why should these men, for example, only be eligible for transfer to the General List in exceptional circumstances? I can see no reason for making a limitation of that sort. It seems to me to be harking back to the archaic and out-of-date system which I had thought and hoped we had already got rid of. Why should these men alone have selective promotion to the rank of lieutenant-commander and above, when every other cadet who enters goes automatically to the rank of lieutenant-commander? These are distinctions which I believe have their origin in the social class from which these men come. Of course this will be denied, but this is creating class hatred.
    We shall not find anyone on the lower deck who believes that these distinctions originated in anything else but some sort of snobbishness. I say to the Parliamentary Secretary that there is no harm at all in abolishing this Special List and merging it into the General List. There is absolutely nothing to be lost from turning these men into exactly the same sort of officers as their confreres at whose side they serve. I hope very much that the hon. Gentleman will look into it during the course of the next twelve months, and then bring us some better news.
    So far, I have congratulated the hon. Gentleman on some things and smitten him about others. As far as the lower deck is concerned, I am quite certain that the increases in pay will do some good, but we simply cannot expect men serving in this Service to be contented when they find their rates of pay dropping behind the increases in civilian pay and conditions year after year. The
    2334
    House must expect to find, in a period of inflation such as we have been living in—indeed, a decade of inflation—that there is going to be a regular and increasing cost if we are to keep the men in the Service contented. We must prepare to face that aspect of the matter. As the hon. Gentleman himself said, there are many other complaints, and I myself think that the increases in pay will do only a limited amount of good.
    Accommodation is still bad, even in some of our most modern ships. I was on the "Ark Royal" the other day in the living space, and I had to hunch almost double the whole time I was there. Admittedly that was not so where the men were eating in the messing room, but where they have their lockers and their equipment. The men will not put up with these conditions for ever, and no matter what the cost, the Admiralty must use its ingenuity to ensure that in our latest ships in the Fleet in the living spaces which the men use regularly they do not have to hunch up double to get about; otherwise, we shall not get the men.
    One very acute young rating wrote me the other day and said:
    "I regard a pay rise as a method by which the Admiralty can salve their consciences and dispense with the anguish of making extensive reforms."
    I do not know whether he is right or not; I hope he is not.
    I am firmly of the opinion that the Navy must overhaul its methods of discipline, I do not mean that we have to pamper the men, nor do I mean that the men themselves want to be pampered with bedside lamps and all that sort of nonsense. That really is not the point at all. It is a question of the relationship between the leaders and those who are led. The men will put up with an awful amount of hardship and discomfort if they feel that their job is worth while, if they can see an end in what they are doing and if they feel that the relationship between those who are leading and those who are led is right.
    I am bound to say, with a full consciousness of what I am saying—and I really do not care if hon. Gentlemen opposite disagree with me—that I do not believe that the relationship in the Navy is right today, and, because I feel it so strongly, I hope the Parliamentary Secretary will inquire into this matter.
    Viscount Hinchingbrooke: Give examples.
    Mr. Callaghan: Does the noble Lord really want me to give examples? I will think about it during next week and will decide whether it is a good thing to bring out that sort of thing. I hope the noble Lord will not sneer about it. There is a case for making general allegations of this sort without following up with specific examples. I do not want to accept the noble Lord's challenge, though I am not normally backward in accepting challenges, but I do not want to bring out what I have in my mind at the moment. I will conclude what I have to say on this matter by repeating what was said to me by one of my young correspondents who is serving on a 7- and 5-year engagement.
    "The Admiralty are failing to draw upon their vast human potential dormant in the form of a pent up desire to serve and achieve."
    That is only one man. but I wonder how many hon. Gentlemen who know the Navy would disagree that there is a lot in that criticism, and that there is a great deal in the feeling that men in the Services today do not clearly see the objective and do not feel that they are being asked to unite in a combined effort to achieve it.
    If this is so, if what is called in industrial establishments "job satisfaction" is not present, the Navy will not get the men to re-engage. The initial good will is there because the Navy gets many thousands of recruits, but if men do not re-engage at the end of the initial period of service, the Armiralty must look to itself to find out what is wrong. If the initial enthusiasm is destroyed, it is the Navy that is wrong and not the men.
    I will turn for a moment to the next item in the balance sheet, the ships and the aircraft. I have criticised consistently the slowness of the frigate programme. It was launched in 1951 with the intention of completing twenty-six frigates in the first half of the present decade. Last year the present Under-Secretary of State for Commonwealth Relations told us that eleven frigates would be completed this year, by which I take it he meant 1955–56. In fact, two only of the twenty-six are in service. Last year I said that none out of twenty-six was not a very good score but two out of twenty-six is not much better, and so the hon. Gentleman is
    2336
    convicted as a bad profit. What is the reason for this slowness in getting the frigates to sea? I know of the difficulties, but, as I have said before, when it is remembered that our shipyards are turning out well over a million tons of shipping a year, and that twenty-six frigates are equivalent to only 56,000 tons, the Admiralty should do better than it has done up to now in this programme.
    I still consider that it is folly to continue with the three conventional cruisers armed with conventional guns. In my view, the Admiralty is wasting £20 million. The assumption of the Minister of Defence, upon which the Government stand in their defence policy, is that the prospects of war are less. Why, then, go ahead with conventional cruisers of this kind which will become out-dated and obsolescent before they are finished? Why not wait until we can put in the guided weapons and guided missiles now being tested out in the experimental cruiser? I ask the Minister of Defence to reconsider this matter, about which I have protested before. I believe that the Admiralty has only been thrust into it because of what the Parliamentary Secretary calls the feeling of concern in the country that we have not enough cruisers but what I call the laments of retired admirals when they do not see enough cruisers around to please them, as they used to do.
    In regard to battleships, I congratulate the Admiralty on at last putting the "Vanguard" into reserve. Every year since 1952 I have asked why the "Vanguard" was not kept in reserve. I now know the reason. She was brought into commission when the right hon. Gentleman the Member for Woodford (Sir W. Churchill) became Prime Minister; she went into reserve when he retired from his post as Prime Minister. She is the price we have had to pay for having the right hon. Gentleman as Prime Minister. I am sure I am, near the mark in saying this.
    Only a year ago the present Under-Secretary for Commonwealth Relations told us that the "Vanguard" was engaged in an extensive refit, which I understand cost £1 million. The hon. Gentleman told us in this debate a year ago that when refitted she would be put back into commission. Alas, he was the only one not in the secret—he did not know that the Prime Minister was going. We wasted

    2337
    the million pounds. That has been spent. She has gone back into reserve and it is costing us £700,000 a year to keep her there.
    My hon. Friend the Member for St. Pancras, North (Mr. K. Robinson), who obtained those facts yesterday, will have something further to say about them later in the debate when speaking on this issue, but I say to the Parliamentary Secretary that, having wasted a lot of money on the "Vanguard", money that we could ill afford to throw away, it is no use trying to disguise the "Vanguard" and those other battleships by calling them, as is done in the Naval News Sheet, "super-cruisers" and hoping to get away with that. We still recognise a battleship even though it is called a super-cruiser. The Government stand convicted of grossly wasting money in connection with our battleships.
    Now I come to the new concept of the battle group of carriers. The Defence White Paper states in paragraph 22:
    "In limited war we plan to make immediately available in any part of the world a force of aircraft carriers equipped with modern aircraft and supplemented by cruisers and escorts."
    I shall refer to the words "equipped with modern aircraft" later.
    I wish we could have heard a little more from the hon. Gentleman this afternoon about our aircraft programme. It is treating the House casually to give us one paragraph of four lines in the Navy Estimates on the position of aircraft in the Navy, especially when that is the kernal around which the concept of the battle group of carriers is being built. This paragraph is concerned with only two aircraft, neither of which has yet been seen, and there is nothing about the current aircraft that should be in service.
    Are there to be any more orders for the Sea Hawk or is the DH. 110 to be regarded as its successor? Have we finished with the Sea Hawk now? I hope to have an answer to that question. More particularly, I would like to ask a question about the Wyvern squadrons. Although there is nothing in the Estimates about them, I gathered from the speech of the hon. Gentleman that they are now embarked in carriers and that there are one or two or three squadrons at the outside. These aircraft are known to be thoroughly unsatisfactory, incapable of performing the strike rôle that should be
    2338
    performed by any battle group of carriers that is being formed.
    I say to the Minister of Defence that to talk, as he does, about a force of aircraft carriers equipped with modern aircraft is misleading the House and the nation about what this group of aircraft carriers could do today. The plain truth is that there is no aircraft in service today, nor can I see one in the immediately foreseeable future, that is capable of operating with any battle group of the American Fleet on equal terms and striking to deliver the hydrogen bomb, not one. Therefore, to talk, as both the Navy Estimates and the Defence White Paper do, about the concept of the battle group centring around the modern carrier, as though this were something that could be done straight away, is grossly misleading.
    Last year we were told that work was still proceeding on the Wyvern to remedy its defects, but is it not mentioned in the Estimates. We ought to know what is happening to these aircraft without having to drag it up at the Admiralty by means of questions. I hope, therefore, that the section on aircraft next year in these Estimates will be much more informative than the present one.
    What has happened to the Seamew, which has dropped out of the picture? In 1954 we were told that the Seamew was being ordered to operate from trade carriers. Where is it today? What is the policy of the Admiralty? The Estimates are silent about it. Has it been abandoned, as I believe? If so, I want to ask the Admiralty why it was ever ordered and if we are continuing to order it. There is nothing in the Defence White Paper or Estimates to tell us what is happening about this aircraft.
    I wish the Parliamentary Secretary had let down his hair about these aircraft. I would like to hear his private view about naval aircraft by comparison with the R.A.F. I can sum up the attitude of those who fly them best by quoting a comment made not long ago to me by one of the men who was flying these aircraft. He said, "Scrap the lot and buy American." That is a very serious statement to make, but I wonder whether the Parliamentary Secretary would agree with him. If so, we ought to know. My own view is that the Navy is not likely in the near future to have aircraft that will match those of

    2339
    the R.A.F.; it cannot begin to match those of the United States Navy, and its aircraft will be in no way comparable with those that will be sent against them by the U.S.S.R.
    I object to a facade, a prospectus, a White Paper which talks about the modern carrier group which is to be operating with modern aircraft when we all know perfectly well that the Navy has not the aircraft. It is that sort of pretence which makes a mockery of defence, and I ask the Parliamentary Secretary and the Government to be more forthcoming about these matters.
    I have almost finished, but I wish to deal with one more matter, what could be called naval strategy. I firmly hold the view—more firmly as time goes on—that there is greater need for riveting together the Navy and the R.A.F., beginning at the top and working down. There is a case for going further, but I will start with that, if I can get agreement on it. There is a need to avoid inter-Service compromise, which in many ways is worse than inter-Service quarrels. I remember that the Chancellor of the Exchequer, when he occupied the post of the right hon. and learned Member, said that he had never heard of any quarrels between his advisers.
    That is a frightening thing, because it means that they are all agreeing among themselves to compromise so that each shall have a bit, but they will avoid an open quarrel. That could be as dangerous to the nation's defences as open quarrels conducted in the pages of aviation newspapers between retired admirals and retired air marshals.
    I have emphasised before the obvious fact that hunting U-boats is clearly a joint task for Coastal Command and the antisubmarine units of the Navy. That is demonstrable without argument. We now have this concept of the, battle group of carriers, which I suppose is to be capable in due course of delivering the H bomb—at any rate, I can see no other purpose for it. What will that group then be other than a sea-borne component of the R.A.F.? I have deliberately put it in that way, so that my hon. Friend the Member for Lincoln (Mr. de Freitas) will not be offended.
    The two are inter-locking; they are both to do the same job, one is to be
    2340
    based on floating platforms and the other on land airfields; but in a global war the objectives of both will be the same. The case for integration gets stronger every year, as does the case for the Minister knocking people's heads together. In some ways I am sorry that the right hon. and learned Gentleman is the Minister of Defence. In the past he has been the arch conciliator, the arch compromiser who brings everybody together and says, "You are all good fellows, let's all do the best we can." He must now knock together the heads of a lot of air marshals and admirals, and the sooner he does that the better I shall be pleased and the sooner the country will get value for money.
    In dealing with naval strategy, I want to bring out one or two figures for the sake of comparison. We now have about 120,000 to 130,000 men in the Navy; the U.S.S.R. has 750,000, about six times as many; the U.S.A. has 890,000, including the Marine Corps. The United States has 106 carriers, including five of the Forrestal class. The United States budget for the United States Navy is £3,000 million, twice the budget for the whole of our Defence expenditure on the three Services, plus the Ministry of Defence. To put it another way; the Americans are spending nine times as much as we are on the Navy; they have seven times as many men; they have seven times a, many aircraft carriers, and they are vastly superior in the aircraft which they can put into the air from those carriers.
    Compared with that, we can now stop singing "Rule Britannia," because it just does not mean anything any more, except as an old folk tune. It means nothing else. Of course, it is unpopular to say that, and nobody in the naval ports will like to hear it; but it is far more dangerous to continue putting our heads in the sand about this sort of thing and not facing the change which has taken place in the position of the Navy in the world today. It is starting from that point that I want to consider what the Parliamentary Secretary and the White Paper have had to say about naval strategy.
    It is a very interesting and illuminating exercise to go through all three Service White Papers and to see what they have to say about strategy. Clearly the Air Ministry is thinking predominantly in terms of V-bombers, the nuclear

    2341
    deterrent and how to deliver it as quickly as possible. To analyse its White Paper very shortly, the Army is thinking in terms of breaking up its divisions into units that will be capable of fighting in a nuclear war, without being in groups as large as divisions are. In other words, it is thinking in terms of defence in a nuclear war.
    What is the Navy's attitude? In paragraph 9 of that White Paper it says:
    "In a global war our sea lanes would be open to attack by a massive underwater fleet and a powerful surface fleet. The main purpose of the Navy would be to retain control of the seas by destroying the enemy ships, submarines, and aircraft."
    That assumes that there will be a traditional attack upon these islands made by traditional methods. I do not think that I have picked out anything unfairly. That seems to be the central passage of the way the rôle of the Navy is set out in the White Paper. There is something to be said for what the hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett) said in the defence debate, that the Admiralty seems to have its own strategy in these matters, while the Army and Royal Air Force are clearly thinking that they will be faced with a period of nuclear war.
    Does the Navy believe that or not, or is it in fact pinning its hopes on a global war in which there will be an attack by a massive underwater fleet in order to keep up its Estimates? There is really a hiatus between the White Papers. I may say that the Navy shares that view with Marshal Zhukov, who recently spoke in Moscow of the vital importance that massive sea battles will have during the next war. I do not know whether he is a sprucer or behind the times, but I frankly believe that both the British Admiralty and Marshal Zhukov will be disappointed if they are thinking in those terms.
    Let us suppose that the enemy, whoever he might be, does not use the H bomb, but let us assume that there is a very powerful attack upon our sea communications and that it looks like succeeding, so that we are being slowly strangled and asphyxiated. What will we do? We have not used the H bomb and the enemy has not used the H bomb. Is it really supposed that if we were as close to strangulation and defeat as we have been on two occasions previously we would leave our V-bombers sitting un-
    2342
    touched and unused on their airfields while we sent up the white flag? I do not believe it. I think it unrealistic to assume, whichever side seems to be facing defeat, that even if the war does not start with H weapons, it will not finish with them, and pretty quickly.
    My own view, which I express to the House for what it is worth, is that we should be very quickly in an era in which both sides would be using I-I bombs. I do not say that the war would be short. I think it quite possible that the U.S.A. and the U.S.S.R. would be able to carry on. What I do say is that even were the war long, this island would not be an effective base for any particular purpose at all, once H weapons were used, and I believe that they would be used. London and Liverpool, the two major ports through which 50 per cent. or 60 per cent.—certainly well over 40 per cent.—of our cargoes move, could be shattered by H bombs. Would the enemy spend a long and wearisome process of months or maybe years attacking a submarine fleet, when he could put this island out of action with half-a-dozen well-placed hydrogen bombs? I say to those at the Admiralty responsible for that paragraph that I think they are living in the past. I do not believe that the picture of any war in which this island would be engaged would resemble that at all.
    Although the Parliamentary Secretary made what I thought was a very powerful plea for the conventional approach, I beg of him not to forget his past altogether, but to try to assimilate his past in his present and give us a synthesis of things more realistic than that.
    I wish to ask what is the view about the convoy system today. We have heard nothing about whether it is intended or proposed by the naval tacticians who work these things out that the convoy system shall go on, and I must therefore expose my breast to public criticism and give my own opinion. I believe that whereas in the past merchant ships have had to huddle together to seek protection, in the future they may have to scatter in order to get that protection. It may well be that the day of the convoy system as we have known it—and it served us well in two wars—is over. I do not know about these things, I am not qualified to work them out. But I want some leadership and guidance from the

    2343
    people who are supposed to study them. I believe that the nation is entitled to that when we are spending the vast sum of money on the Navy, as well as on the other defensive Services, that we are today.
    The hon. Gentleman told us that things are much more expensive than they used to be and that, in any case, ships are more complicated. I would point out to him and to the House—I hope it will be a salutary reminder to the Minister of Defence and to the Parliamentary Secretary—that by comparison with the period of 1950–51, the period immediately before rearmament, we are now spending £346 million on the Navy, and then we were spending £193 million. In terms of an active fleet, a fleet at sea, we have one less carrier. If we include the Darings, we have three more cruisers. We have eighteen fewer destroyers and frigates and twelve more submarines. Practically every major unit is down by comparison with 1950–51.
    One test of any measure of this is, what have we at sea or ready to sail which could be put into battle? Although I fully understand and accept the explanation of the Parliamentary Secretary, any Minister of Defence pressed very heavily to keep down his defence expenditure must take these factors into consideration; because we are spending a lot more money and we have little more to show for it as a result of the last six years.
    I wish to conclude with half-a-dozen proposals. The Minister of Defence threw out a challenge, and I think it right to try to put some constructive proposals into the pot and see them stirred round, even though they do not all come to the boil. Let us have much more urgency about producing the new freighters and a new strike aeroplane to succeed the Wyvern. Let us get on with that and have something concrete to say in the next Navy Estimates.
    Let us scrap the battleships. Let us get rid of them, because they will not be worth anything any more. We have to save somewhere, because, as I see it, we shall not be able to go on spending £1,500 million a year on defence. Let us overhaul the Admiralty internal organisation, including the structure of the Board of Admiralty and the control of the
    2344
    Board, including especially the Controller's office. Let us have an independent inquiry into manpower problems, leadership and discipline in the Royal Navy. We are looking in another place into the Naval Discipline Act, but that is only part of it; that is the skeleton and I am concerned about the flesh on the skeleton. Both the Army and the Royal Air Force are having inquiries of one sort or another, and the Navy is as much in need of one. I make that suggestion to the Parliamentary Secretary and the Minister of Defence. Next, let us suppress the work on conventional cruisers armed with conventional guns. We are throwing away £20 million on this.
    Let us get ahead with integrating the Board of Admiralty and the Air Council, and then there are these other things which are very important. I have been examining the Commonwealth contribution to our naval defence effort, and I am rather apprehensive about whether we are all going our own ways a little too much. I know that in the past, because of the Statute of Westminster and all the rest of it, we had to be careful about saying anything to the Commonwealth countries that might lead them to imagine that their rather decrepit old mother at Westminster was trying to keep them on a lead. But that is not the case any longer. Canada has taken a lead in the United Nations and Australia has her own point of view; and because of the vital need for the defence of our trade routes, assuming that the Admiralty is right about these things, I say that there is a very good case indeed for calling the Commonwealth into much closer consultation about their programme and about ours, and for the co-ordination of our efforts.
    I know that we are building an aircraft carrier for one of them. That is a good thing, and I am delighted about it, but I wish to make a practical suggestion to the Minister of Defence. The right hon. and learned Gentleman should call a Commonwealth naval conference, side by side with our work in N.A.T.O., in order that we may jointly co-ordinate our defence effort on the naval side. We might also do something which I have pressed on the Minister before and shall continue to press. We should try to get some agreement with them about dispersing our Reserve Fleet, at present huddled in our exposed anchorages and harbours up and down the country, to other and

    2345
    less vulnerable parts of the world. These are ideas I have put forward more than once, and I have not yet received the answer that it would be a stupid and silly thing to do. Until I get such an answer, I shall go on pressing them.
    I would sum up the position today in this way. Were there a global war without H-bombs, which I doubt, I think that the Navy, in conjunction with our Allies, would make a substantial contribution in the war against the submarines. I think that there we could hold the position. But were it a war with H-bombs, I do not believe that our battle carrier group would play any effective part at all as a striking group in conjunction with the Americans. They would be little more than passengers capable of putting up some fighter defence. This battle carrier concept looks fine on paper, but it means little as yet in practice.
    The rôle of the Navy still seems to be uncertain. It still seems to be in the position where we say that we have a collection of ships, let us find a rôle for them, rather than having a clear definition of its duties. The Prime Minister should be giving some dynamic political leadership to ensuring a very much closer integration between the three Services so that the nation gets value for money, and secondly, so that we can say to the people of this country, "Within the economic limits at our disposal, we are doing the best we can to provide a reasonable defence system." I cannot honestly believe that that is so today.
    5.10 p.m.
    Major Patrick Wall: I count myself fortunate in having caught your eye so early in the debate, Mr. Speaker, and especially in being able to follow the hon. Member for Cardiff, South-East (Mr. Callaghan). During my period in the Service I always heard the hon. Member referred to as a man who deeply loved the Navy and who knew a lot about it. Having listened to him speak in three Navy Estimates debates, I heartily endorse that opinion, although I do not follow him in some of the more pessimistic points he has made about the future of the Navy.
    I had the privilege of serving in the Fleet for five years after the war, and those years were not the happiest of my Service career. It is never very pleasant to be in any Service during a transition
    2346
    period when it is running down. Accommodation afloat and ashore had little money spent on it. To some people there appeared to be very little future for the Navy. The ships which were being constructed were mainly defensive ships, such as minesweepers and anti-submarine vessels. I think it is true to say that the renaissance of the Navy started last year. That renaissance, which was brought out in my noble Friend's statement last year, has been continued and improved this year. The Navy quite obviously now has a purpose. It has under construction ships which will be of great value to the nation in the future, and it is giving to the men who man those ships a square and an honest deal.
    In a cold war, the purpose of the Navy is quite clearly brought out in page 4 of my noble Friend's statement. There is also a rôle for the Navy in the kind of warfare for which my right hon. Friend the Member for Woodford (Sir W. Churchill) coined the word "broken-back" warfare. I would remind the House that the Navy is largely responsible for the defence of the trade routes of the whole Commonwealth, and I am a little worried about the rate at which Reserve Fleet ships are being scrapped, because they will have a very important job to perform in any period of "broken-back" warfare. I heartily support the suggestion of the hon. Member for Cardiff, South-East that these ships should be dispersed throughout the Commonwealth or in the Colonies, where, presumably—labour being cheaper—they would be considerably less costly to maintain.
    But it is really the rôle of the Navy in the hot war which matters most. It is quite clear that the Navy has a most important job to perform in that sort of war. The reiterated conception of the battle group has shown that the Government have not paid too much attention to the advocacy of people who support the heavy bomber above all else. The Government have shown that they realise that the carrier has a very important rôle to perform in the future. It is mobile, and it is very difficult to detect. It is also relatively invulnerable when at sea. I am therefore particularly pleased to see the Fleet train referred to in this statement, because this is one of the things which make the carrier almost invulner-

    2347
    able when at sea. She is refuelled and restocked by means of the Fleet train.
    The carrier has a really powerful punch, and her aircraft can deliver atomic bombs and, presumably, hydrogen bombs in future. Surely that is a great contribution not only to this country, but to the Commonwealth, because if the gloomy forecast of the hon. Member for Cardiff, South-East becomes fact, the Navy will still have a great rôle to perform in protecting the rest of the world and operating from Commonwealth bases overseas. The deterrent of a mobile fleet, equipped with atom bombs, must give a considerable headache to any of our enemies.
    Presumably the aircraft carrier is in a transitional period of development—because the capital ship of the future will be armed with guided weapons rather than aircraft. In the same way as the bomber will pass, so will the carrier, but surely the capital ships of the future, with atomic engines and with guided missiles, will not be so very different from the carriers which exist today? The experience we gain from operating those carriers will be vital to the development of the future capital ship. Because the main weapon of the Navy in the future will presumably be the guided missile, and because the bomber will presumably eventually merge into the guided missile, there is a lot to be said for the view, advanced last year and again this year by hon. Members on both sides of the House, that there is a need for much closer co-operation, or even integration—I have just returned from visiting Malta and that word seems very popular there—between the Royal Navy and the Royal Air Force. I shall not develop that argument in detail now.
    The atomic submarine has been mentioned. I would ask my hon. Friend to tell us, if he can, a little more about the possibility of co-operation between the Admiralty and private industry in the development of atomic propulsion, not only for naval vessels but for merchant ships. It is absolutely vital to our future that our merchant navy shall have atomic propulsion.
    I now pass from ships to men. The conditions of the men who man our Fleet have improved a great deal. Last year we had the introduction of the discharge
    2348
    by purchase scheme; this year we have had better pay and, even more important, better pensions. During the debate on the Army Estimates a few days ago there was considerable talk of what was called "bull." I presume that in a Naval debate we must refer to it as "flannel." Much has been done to cut this sort of thing out of the Navy, but nevertheless a limited amount of ceremonial is liked, both by the people performing it and by onlookers. I would therefore plead with my hon. Friend—repeating a plea which I have made previously—to reintroduce full dress for the Royal Marines.
    On the subject of dress, I suggest that a young man really joins the Navy because he wants to go to sea, and I think it would be an aid to recruitment, and popular with many young men, if all lower deck ratings, except petty officers, were dressed in square rig. I feel that this would be an advance upon the dress of certain categories of lower-deck ratings, which is akin to the uniform of porters or can be compared to that of petty officers. They are quite often confused in this respect by the public.
    It is vital that we should have decent conditions afloat in the Navy. I appreciate the difficulties, and I shall not repeat them. Accommodation ashore also needs looking into. I should like to see the home-port barracks abolished completely, so that when a rating came home from foreign service he would be sent on leave until he was required to man another ship or to go on a course. In other words, we should abolish barracks, but we should keep our training establishments, so that we can preserve a correct proportion between home and foreign service. I hope that the Centralised drafting scheme referred to in the Statement is a step in this direction.
    The question of pay and the career factor are also extremely important. The new pay code has been received with universal approval. There are only one or two relatively minor points which I should like to make on this subject. First, let us be careful to preserve reasonable differentials. We should guard against reducing the status of the officer and petty officer too much.
    The only criticism I have heard of the pay code so far is that the sub-lieutenant, or second lieutenant in the Royal Marines, receives about 168s. a week,

    2349
    whereas the leading seaman receives only 4s. less and the petty officer receives more. This may be a very good thing, because the petty officer and the leading seamen are very experienced men, whereas the sub-lieutenant is under training. It is most important that the status of the officer and the petty officer should be preserved, and the differential adjusted as the conditions of the lower-deck ratings improve.
    There has been a rumour that charges for married accommodation and quarters ashore may be increased. I hope this is wrong and that the Minister will be able to say so. It would be a disaster if ratings and officers are, on the one hand, to have an increase in pay and, on the other hand, to have pay taken away from them by increased charges for accommodation. I hope that the Minister will keep up the level of these pay increases. The Services generally get a pay increase because the Government of the day are forced to give it to them by reason of dissatisfaction in the Services or lack of recruiting, but, as year succeeds year, the level of Service pay falls behind civilian pay. The Government have given the Services a square deal and I hope they will keep the relationship between Service and civilian pay roughly equivalent.
    We have a Navy with a purpose and a rôle. Fewer ships are being laid down and there are much better conditions. Therefore, recruiting should improve. We cannot tell yet whether the new pay code will increase recruiting; next year will tell. I hope that recruiting will be so good that we shall be able to end National Service, which is not regarded by the Navy as essential. The Navy has been very well served by National Service men, who have shown the highest possible standard, yet if we can get rid of the system we shall save both money and time.
    I see in the Estimates that the Cadet Corps which consists, roughly, of 20,000 costs the Admiralty £115,000. This is jolly good value for money. Last year some 1,300 joined the Sea Services, which is 30 per cent. of those eligible in the age group 15–18. As three years are involved we might almost multiply that 30 per cent. by three and say that 90 per cent. have joined, but I know that figure would be too optimistic.
    2350
    In addition to the money which the Admiralty allots to the Navy League and the very small amount that it allots to help the Sea Scouts, it might do a great deal more, not by increasing capitation grant or payments, but by allowing those youth services to have greater facilities. The Navy must have a lot of obsolete and obsolescent boats, including whalers and dinghies, as it is introducing new types of power whalers. Instead of selling the old boats at the relatively small sum of £200, why cannot the boats be passed over to the Cadets or to the Sea Scouts? I hope that the Minister will give consideration to that point and will answer it when he winds up the debate.
    The Sea Scouts do not want more capitation grants or more money from the Admiralty, but would welome boats and equipment when these become obsolete for the Fleet. As an example, may I mention MTB's which are held on loan from the Admiralty, but are not fitted with generators, which produce light and heat. When these generators are obsolete for the Navy, they can be hired by the Scouts from the Admiralty. That may seem a very good arrangement, but when each one is hired at a cost of £10 or £20 a year and a further £25 a year has to be paid for insurance, the scheme becomes impossible for a voluntary organisation which is subsidised by the Admiralty only to the extent of £800 a year. I hope that an improvement can be introduced and that my suggestion with regard to the free loan of boats and equipment will be borne very much in mind at the Admiralty.
    I turn to the Reserve. During the Army Estimates debate we were told that the Territorials were being streamlined, numbers cut down and efficiency increased. I hope that we shall hear of something like that being done in the Naval Reserves. There is a case for more money being given to the Reserves and for the amalgamation of the R.N.R. and the R.N.V.R. and cutting down their numbers so as to increase their efficiency. The money saved can be devoted to better, to more concentrated, more interesting and more up-to-date training.
    I have the privilege of commanding an R.M.F.V.R. unit. For the past six years we have our two weeks' training on the Devon moors, but every time I have tried to get more interesting and up-to-date training I have been told there was

    2351
    no money available. I hope that streamlining can make more money available for training and for creating a more efficient Reserve capable of being fitted into the mobilisation plan right at the start of an emergency.
    Now I turn to the subject near to my heart, the Royal Marines. I was very pleased to hear the Minister, replying yesterday to a Question by my hon. Friend the Member for Devonport (Miss Vickers), say that the rôle and functions of the Royal Marines remained unchanged. I hope that the House will bear with me for a further few minutes while I say one or two words about those functions. They were defined in 1946, and the first is to provide detachments afloat. As hon. Gentlemen know, marines are carried only in the larger vessels, but we have now only a very small number of ships, like cruisers and aircraft carriers, and in any case the latter are not very suitable vessels for marines. I hope that this essential link with the Royal Navy will be maintained because it is absolutely essential to the Service and that marines will be embarked in Daring class ships and in larger Destroyers.
    The second rôle of the Royal Marines, to provide commandos, has been criticised as being an Army job. In point of fact, the work of the Royal Marine Commando Brigade has been one of the Navy's major contributions to the cold war. The reference to this matter on page 4 of the Statement,
    "The Royal Marine Commandos have strengthened the security forces of the Army,"
    is a little ungenerous. Since the end of the war, this unit has served throughout the world in the hottest part of the cold war—Korea, Malaya, the Canal Zone. Palestine and so on. During that time twenty-eight officers and thirty-two other ranks have been decorated for gallantry and seventy-five of them have been mentioned in dispatches, while twenty-five officers and sixty other ranks have been killed. That is a pretty good contribution to the Navy's effort in the cold war, and is a credit to the Navy and the country.
    The third rôle, that of craft providing landing and raiding, is decreasing in numbers, but one must remember that in the early stages of the hot war it could be of great importance. It is important to have a highly-trained, if small, force available to make reconnaissance raids,
    2352
    capture prisoners, cut out guided-missile sites or radar stations, on the enemy coastline. I would repeat a plea which my hon. Friend the Civil Lord has heard several times before, that we must bring our raiding forces up-to-date with modern equipment. We must make sure that helicopters are available for them—or, as an hon. Member opposite interjected on the last occasion, vertical-lift aircraft.
    I think it would be fair to say that the "teeth-to-tail" ratio of the Royal Marines—that is to say, the operational numbers as opposed to the administrative—is good, and indeed slightly better than that of the Royal Navy as a whole. This ratio would be improved a lot if National Service were abolished, because the "sausage machine" of training has to be kept fully staffed to cope with the large and continuing annual intake of National Service men.
    My last point is this. If hon. Gentlemen examine the Navy Estimates, they will find that the strength of the Royal Marines has fallen to 10,440 men—and that includes about a thousand in the band service. I think that that figure is the very minimum which can give a reasonable career factor to the corps, and it cannot be cut further without doing irreparable damage. Already one commando of a three-commando brigade has been brought home, and that might be interpreted in some quarters as a sign of further cuts to come.
    My hon. Friend has already said that the rôle of the Royal Marines has not changed. Will he also assure us that the numbers will not fall below a round figure of 10,000? Otherwise, it may be that the force which has been referred to as "the country's sheet anchor," may start dragging its anchor, with disastrous results to the Royal Marines and to the Royal Navy itself.
    5.32 p.m.
    Mr. E. G. Willis: I would agree with the hon. and gallant Member for Haltemprice (Major Wall) when he says that the Admiralty appears in the last year to have made some efforts to improve conditions in the Service. One of the big things is, of course, the change in the officer structure, and I only want to say one thing about that. There is some danger that the common training for two years followed by division into

    2353
    the specialist branches may create a position in which certain branches acquire a status higher than that of others, and there would be a tendency for all the poorer types of cadets to drift into one branch.
    For instance, one of the dangers of the scheme introduced a few years ago for the common training of artificers for eighteen months is that, because of the emphasis placed on certain branches, they attract the better types and more skilled men, leaving the poorer types of artificers to other branches. That would certainly be bad if it occurred in this scheme also. With that qualification, I think that the improvements that have been made and the reorganisation that has taken place are generally welcome.
    Next in importance is the new pay code. Everyone welcomes it. It was overdue—let no one make any mistake about that—but it is not quite so generous as the Press would have us believe. I find that the improved pensions, for instance, are slightly worse in terms of today's purchasing power than those given under the pay scheme introduced after the First World War. The Chancellor of the Exchequer stated in December that in 1924 8s. 8d. could purchase as much as £1 can today. In 1924, the pension of a chief petty officer was 38s. 6d. and, in terms of money, today's pension is not really any improvement on that, although it is now rather more difficult to work it out because account must be taken of length of service as a chief petty officer, and so on. What has been improved—and I welcome it—is the terminal grant, but do not let us run away with the idea that the pension itself shows all that improvement.
    I want to say a word or two about pay in the artificer branches. I know I have spoken about this on a number of occasions, but I make no apology for returning to it. The Defence White Paper tells us:
    "This concept of smaller and better equipped forces does, however place a premium on the highly-skilled, long-service regular."
    I think that is perfectly true. It goes on:
    "…the newer weapons will demand for their proper use increasingly high standards of training and maintenance."
    When we consider artificer branches in relation to the new pay code, I find, for instance, that the substantive rate of pay for a chief engine-room artificer or chief ordnance or chief electrical artificer thirty years ago was 87s. 6d. per week. To that
    2354
    has to be added trade pay, charge pay, and certain other things so that we may make a true comparison with the figures given in the White Paper. The White Paper shows the new rate to by 255s. 6d. per week. In terms of purchasing power, that is only a few shillings more than the pay in 1924. That is wrong. Since then, we have increased our general living standards and our wealth as a nation and these men should be sharing in that. If, as the Defence White Paper says, these men are at a premium, I should have thought that something very much more should have been done to attract them into the Service, and to keep them in the Service.
    It is not good enough for the Financial Secretary to say that these rates of pay have been levelled up to those obtaining in outside industry. The man in the Service gives far more than the man outside. He gives twelve years of his future. He has sold his freedom for twelve years, and he has also sold himself for twenty-four hours a day. It is all very well for men to start work at eight o'clock in the morning and finish at five o'clock at night, but if a job has to be done in the Services, the man just has to work until the job is done—probably twenty-four hours at a stretch. I have done it myself—worked all night, stopped off for two or three hours and then gone on again because the job had to be finished so that the equipment might be ready.
    If a man in outside industry had to do that he would receive overtime—and very considerable overtime. It is, therefore, not enough just to say that the rates have been levelled up roughly to those operating outside. The men in the Service, and this applies to all branches—I quote artificers only because I am more familiar with them—have to be paid for the conditions I have mentioned. There is also the fact that a married man is a very long time away from his wife and family—a year or eighteen months. I want to add that note of caution about the new pay code. When its provisions are examined they are not as generous as we are apt to think.
    Mr. Ward: I am very interested in what the hon. Member is saying and I agree with a good deal of it, especially with his comment that men are on duty for long hours and must be available to go away at short notice. I hope he will

    2355
    bear in mind, however, that many of the things which they are getting in kind are those which have increased most in price in civil life.
    Mr. Willis: I fully recognise that. I was simply trying to relate rates of pay with those of thirty years ago. I have done this in a previous Estimates debate. I think in 1947.
    I still cannot understand the Admiralty's bias against the artificer. The chief engine room, electrical or ordnance artificer gets a fiat rate of 255s. 6d. The staff-sergeant, Class 1, in the Army gets 259s. I cannot understand why that should be. I am surprised that when the Admiralty was considering the officer structure and the new rates of pay it did not consider the complaints which have frequently been made about the fact that there is no rank corresponding to that of warrant officer in the Army. I know the Admiralty's argument about the Upper Yard Scheme and commissioned ranks, but that does not answer the question.
    If we consider the position of artificers generally, we find that they can take their examination for chief engine room or chief electrical artificer when they are first class, which means, probably, at the age of twenty-five or twenty-six. Once they have passed that, unless they become commissioned engineers, their promotion is ended until they are about forty. They have to wait for the roster to put them up to the chief rank, and then they are finished. I am sure that that is wrong.
    Many of them become chief petty officers before they are thirty, but there is no inducement to them, in terms of promotion, to stay in the Service. I should have thought that the Government could have introduced a rank equivalent to that of W.O.I and W.O.II in the Army and Air Force, giving an increase in pay to this rank, so that men did not have to spend ten to twelve years without some increase in pay. This would have been one way to offer an inducement to men to stay in the Service.
    It is imperative that the tradesmen and men in the technical branches should stay in the Service, because they have cost the Admiralty a lot of money. It has cost hundreds of pounds to have them trained and they have become accustomed to the nature of the work. To let them leave
    2356
    the Service at the age of thirty, after twelve years, is quite wrong, and every effort should be made to keep them in the Service.
    One effort which could have been made was to have done something about this gap which exists by comparison with the Army—the fact that there is not a noncommissioned rank equivalent to warrant officer rank in the Army.
    I have often pointed out in the House that one of the ways to keep men in the Forces was to ensure that they were able to settle satisfactorily when they left, and I have raised in the House the question of their being given certificates indicating to potential civilian employers their capabilities and qualifications. I have been glad to see the new certificates which the Admiralty have introduced, which are a great improvement and will, I think, meet the bill.
    The only question I should like to ask is whether the men could not get that part of the certificate which gives their technical qualifications three months before they come out on pension. That ought not to be difficult to arrange and it would be fair to the men and to the nation. One of the points which strikes me is that at present we are training an enormous amount of technical manpower—very valuable manpower—in the Forces and that, in the country's present situation, we cannot afford to allow that manpower to be wasted when the men leave the Services.
    In the Navy men often leave the Service at the age of forty. Strangely enough, most of the ex-artificers I know are in the Civil Service or similar non-technical work. Last year, in a similar debate, I quoted the example of some of these men who were museum attendants in Edinburgh. From the national point of view that is an enormous waste of manpower. Could the certificate giving the technical qualifications, at least, be given to the men so that it might be used in order to get a job before the men leave the Forces—say, three months before they are due to leave?
    In my opinion, the Ministry of Defence ought to examine for all the Services this question of fitting men with technical qualifications into suitable trades in civilian life. This applies to the Air Force and increasingly to the Army and of course to the Navy. I do not think it

    2357
    would require a great deal of organisation on the Government's part and it would be worth while if the Government would explore the possibility, from a civilian point of view, of assisting the nation's needs.
    I agree with my hon. Friend that some of these battleships in reserve ought to be scrapped. I am not certain that the Vanguard ought to be kept at present, either. This love of the big ship has cost the country far too much over far too long a time. Between the wars, we spent millions and millions of pounds on building immense battleships. No sooner had we built them than we had to put them in dry dock where, at the cost of another £2–3 million, we modified them, put blisters on them, and so forth. In the end, how much service value did we get out of them? Could not the money have been better spent in another way?
    I think we must get rid of the idea of the big ship. I am not certain that, in seeking to defend itself against attacks made on its privileged position in the past few years, the Admiralty has not built up for us a conception in which the big ship appears again. I was alarmed to read in the Navy White Paper the statements about the Tiger Class cruisers. We were told that
    "Work on the three Tiger Class cruisers, which will mount the new fully-automatic six-inch gun turret, is going on well."
    But these are out of date by the time they are built, because the design of the new type of cruiser with the anti-aircraft guided weapon is going forward. My hon. Friend was right when he said we ought to stop work on these three cruisers.
    The next part of the White Paper frightens me even more:
    "We are also looking further ahead with the object of planning the fitting of more powerful guided weapons which are now being designed."
    Of course, the more powerful the guided weapon, the bigger the launching platform. That was found to be the case with the guns. The bigger the guns mounted, the bigger and heavier had to be the ship, and there arose a large number of other considerations.
    Mr. Emrys Hughes: The more astronomical the cost.
    Mr. Willis: I am alarmed by this statement that aircraft carriers and battle
    2358
    cruisers are to become larger. I think that we should have some information about this. If that is true, we are committed to an immense Navy Estimates programme for a very long time. Before the House commits itself to this large naval programme, it ought to ask itself whether this is really necessary.
    Many hon. Members on both sides of the House have dealt much more fully than I have time to deal with the future rôle of the Navy. Reading the White Paper, it appears to me that the Admiralty still imagines that a potential enemy will launch exactly the same kind of attack on exactly the same targets as it did before. I do not think that assumption is right. Why should a potential enemy spend a lot of time trying to destroy individual convoy ships when, with one blow, it can destroy London or Glasgow? We have to ask ourselves whether this really is right. When we are dependent, as we are, on other countries for our food supply—and it is vital that we get food supplies and raw materials—it seems to me that, whilst the future job of the Navy will still be to protect our trade routes against attack, this will become increasingly an Air Force job. Therefore, we should be exploring that situation and not allowing the Admiralty, once again, to build itself up to the preeminent position which it held, when practically no one could challenge it. We should compel it to conform rather more to the ideas of this House. We must also examine the question of its integration and closer co-operation with the Air Force.
    When one examines these Estimates and looks at the figures in the White Paper, one gets the impression that the number of men afloat is very small. The hon. and gallant Member for Haltemprice said that every boy joined the Navy because he wanted to go to sea. At the present time, he may find it rather difficult to get to sea. Reading these Estimates as intelligently as one can, it appears that there is an enormous manpower at present in the Admiralty offices—some 12,000 personnel—to deal with a Fleet which consists of almost a handful of ships. It is time that this was looked into. Other Services have examined their manpower and their organisations, and, in fact, the Army has done it two or three times. I think that it is time that the Admiralty did the same.
    5.54 p.m.
    Mr. G. R. Howard: The hon. Member for Edinburgh, East (Mr. Willis) will, I trust, forgive me if I do not follow him, especially on the question of artificers, about which he obviously knows a great deal. I have been glad to see that the whole mood of the House has been to leave to their Lordships in general the overall strategic considerations, because they are the people who know most about them and who are therefore best equipped to deal with the subject.
    There has been a great deal of talk about cruisers. The hon. Member for Cardiff, South-East (Mr. Callaghan) quoted from the Statement on Defence. Is it not true to say that in any cold war the cruisers, even if they are armed with what some people describe as obsolete guns and equipment, will be extremely useful? As the White Paper, quite rightly, says:
    "The cold war is the immediate problem. The Navy is able to play an important part in upholding our interests and influence in peace-time in distant parts of the world. By its presence on foreign stations, by its close ties with the navies of other nations, and by the goodwill that it engenders in foreign countries, the Navy is a valuable weapon in the cold war against Communism."
    I feel, therefore, that cruisers certainly can fit into that picture.
    We have heard about the rôle of the carrier and of the fear of the Navy going back to bigger ships, which the hon. Member for Edinburgh, East mentioned. Assuming that there is another conflict—pray God there will not be—surely a mobile air fleet which cannot be strafed or atom-bombed immediately on the outbreak of hostilities is a very useful proposition for us. Let us consider the case of the R.A.F. bomber pilot who has been to deliver his load of bombs, whether conventional or atomic, on the target and who comes back to find that his airfield in England no longer exists. He has to look for another one. In his position, I should be happier if I had to fly back to a mobile airfield such as a carrier whose position can be varied according to circumstance.
    I ask the Financial Secretary if he can tell us anything about the Navy's rôle in N.A.T.O., and how far we have got in the combined exercises. Obviously, he cannot tell us everything about that, but can he tell us how far we have got with inter-service procedure, whether the Allies are
    2360
    working well together, whether the exercises are going well and how far ahead the Navy is in that regard as compared with the other Services; in general, how we fit in to the N.A.T.O. picture.
    There is one small part of that picture which worries me. I was at Fontainebleau some time ago, and I know of the very real grievance of our officers there. It is this. Officers of the other Services and other Navies of the countries represented there get certain allowances to meet the expenses necessary for maintaining the club which they all use. I understand—it was so when I was there—that our Service personnel do not get that allowance. They have to End the equivalent sums so as to be able to pay their share out of their own pockets. I think that is very wrong, and I hope that if that is still so something will be done about it.
    I hope that the recent pay and pensions increases will help recruiting, but I should like to know if it is quite definite that there is no deduction from pensions when a man leaves the Service to go into Government employment. I have mentioned this matter before, and it is most important. A chief yeoman of signals who went into the Post Office raised this matter with me. At that time, it was said that because men leaving the Navy were in receipt of a naval pension their pension rights and pay in Government Departments were cut. I think that is thoroughly unfair. Is it still true? A man has earned his pension in the Navy and it should not in any circumstances be deducted.
    Whatever the pay and pensions improvements, if the accommodation provided is wrong it will upset the good which has been done by those increases. I wish to ask if the problem of housing could be undertaken by local authorities where there are big stations such as naval air stations, on the strict understanding that those local authorities, in exchange for doing that work—which would fit in with their existing programme—would make allowance for Service personnel, especially for men, such as we all have in our constituencies, who are natives of the area and want to know what is to happen to them when they leave the Service and find difficulty in obtaining accommodation.
    I know of many of those housing cases. There is one in my constituency with

    2361
    which I was not unconnected, as the Civil Lord will know, where there were certain faults in the design of a house. One wonders whether it might be cheaper for their Lordships if that sort of civil engineering work could be handed over to local authorities, or outside contractors. I believe that in many ways a better job would be done, and it would be cheaper.
    In his excellent speech, the Parliamentary and Financial Secretary dealt with the question of accommodation in carriers. Could we be told whether there are any schemes afoot for modification of existing carriers? If it were known that such a step was being taken that knowledge might go down very well with the Fleet. All who have served afloat must know of the yard foreman in the bowler hat who asks, "Where am I to put this or that piece of equipment?" and how the space gets smaller and smaller. I know that it is a difficult and an almost insoluble problem, but it would be a good thing if it could be shown that it was being tackled.
    In regard to small ships, I wonder if much thought is being given to the problem in small ships like M.T.B.s, fast patrol boats, and so on. In the last war, I believe the German E-boat was nothing but a floating boxful of engines and fighting equipment. She was treated like an aircraft, and when she got back to her base the ship's company came off and went to really comfortable billets, whilst the maintenance team went on board and got on with the job of getting her ready for sea. I wonder if we could be told whether we are thinking on these lines.
    I should also like to ask about fishery protection. I know that representations have been made to the Ministry of Agriculture, Fisheries and Food and to the Admiralty on this subject. Now that we have modern motor minesweepers in the Fleet, I wonder if the numbers of ships on that duty could be increased, as that would be a great advantage for all. In West Cornwall it is said, in reference to fishing, that the only good Frenchman is one who cannot be seen, because if he can be seen he is inside territorial waters and doing something he should not be doing. We feel that we could do with more fishery protection vessels. There could be no argument that if more fishery
    2362
    protection vessels could be allocated it would be welcome to the fishing industry.
    That policy would also be a good thing as it would provide experience afloat, and there might be dilution by R.N.V.R. trainees, who could go afloat to do their share of this work. It would be good experience and good seamanship training. Plenty of experience in seamanship is still necessary and will always be necessary, however automatic a ship's equipment may be.
    The last point I make has been referred to already by my hon. and gallant Friend the Member for Haltemprice (Major Wall). It is the use of boats for pre-entry units. When I was Commissioner of the Sea Scouts after the war I used to visit an East End group of lads who were dead keen. They met in the crypt of a church, and there one boy said to me, "You must see our equipment." He produced a battered old sextant. I asked him if he did not think they should start rather lower in the scale. I think that a small, disused dinghy, or a whaler which is no longer required but is quite good enough for conditions in the Thames or the Lea would be of far more use to Sea Scouts than a battered old sextant in a box, which probably none of them would ever have to use. I think the Admiralty can be realistic about this matter. When I was doing my training before the war we had two old steam pinnaces, and we had to pay for our own coal to take them to sea. If there are suitable boats in the boat pond, surely something could be done about using them in this way.
    I did not agree with what the hon. Member for Cardiff, South-East said about "Rule Britannia." It rather reminded me of the famous story of the two sailors in ships which were alongside each other. One looked down to the other and asked, "What is it like to be in the second largest navy?" and the other replied, "What is it like to be in the second best navy?" I think that position still obtains.
    I do not mind what people say about the Service. If we look to the young people who are sailing in small boats today we find that their feelings are still the same about the sea. The Navy is entering a new era, and I am sure that we can trust their Lordships to take care of that. The Navy is to have a "new

    2363
    look." I am sure we shall also get the new type of young man who is growing up in this day and age, to fit this "new look." I hope that if we make the conditions right there will be no lack of recruits, and that the traditions of the Navy will go forward into this new age as firm and as great as they have ever been.
    6.8 p.m.
    Mr. W. A. Wilkins: There are only a few observations I wish to make, and I would not undertake to say that they will come in sequence, because the longer I have sat on these benches the more thoughts, recollections and reminiscences of the past have come to me from a fairly long period of time.
    The first thing I want to say is most sincerely to congratulate the Parliamentary Secretary. I think he made an excellent presentation of the Estimates today. It was very interesting to those of us who take an interest in naval affairs. I think the House is indebted to him for the way in which he has switched from the Air Ministry to the Admiralty.
    I propose to put two or three questions to the hon. Gentleman arising rather more from my ignorance than from my knowledge. I have felt concerned as I sat in the House today to note the very few hon. Members who seem anxious to intervene in the debate on what I would call the general issue concerning the Royal Navy as distinct from specific constituency interests. I hope that will not disturb my right hon. Friend the Member for Rochester and Chatham (Mr. Bottomley). It is regrettable that there are not more of us in the House who have an interest in the Royal Navy, an overall, general interest in its functions and service. Therefore, as I say, the questions I shall put arise from my ignorance rather than from my knowledge.
    It is thirty-nine years since I left the Royal Navy, and I imagine that an enormous lot has happened to the Royal Navy in those thirty-nine years. During the intervening period I have had only one opportunity of seeing a Royal Naval vessel, and that is the point I am trying to put to the Parliamentary Secretary. We cannot discuss these Navy Estimates intelligently or understandingly unless we have some sort of facilities to learn more about the Service in which we are
    2364
    interested. The Army and the Air Force have always gone out of their way to provide opportunities for interested Members of the House who want to visit stations, or barracks, or to attend exercises and things of that kind; we can always get an invitation from those Services to go and interest ourselves in those things we desire to understand. It may have been through the good offices of the hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett) for all I know, but an offer was made in September of last year, which I believe eventually collapsed for some reason or another.
    I am not suggesting that we always want to be running away from this House to be with the Royal Navy, but we ought to have some opportunities of seeing the ships, and particularly the aircraft carriers, which I suppose will be the major weapon of the Royal Navy in the years to come; we want an opportunity of seeing these things for ourselves; and even more, what concerns me most, we should not be denied the opportunity of meeting members of the lower deck. Now, I do not say this in any way offensively. After ten years I think hon. Members will know that I do not go out of my way to be offensive to other hon. Members, but the major representation of this Service in the House comes from the upper deck rather than the lower deck: there are very few Members in the House who have been through the lower deck of the Royal Navy. Even my hon. Friend the Member for Edinburgh, East (Mr. Willis) was what those of us who were stokers in the Royal Navy in the First World War used to regard as being one of the aristocrats of the lower deck. It is necessary for the point of view of the other ranks, the ratings, to be expressed in this House if we are to be truly representative.
    I was interested in two remarks made by the Parliamentary Secretary, one at the beginning of his speech and one at the end. The first was when he said that we were failing to attract men of the right quality, both for officers and men. I would not, of course, know just how right or wrong that assumption may be, but one thing is certain. If that is the case, there would obviously be a reason for it, and it would be for the Admiralty and the officials there to try to discover what

    2365
    that reason may be. I want to suggest one or two reasons which may account for the fact that we are not attracting quite so many long-term engagement men in the Navy, and why, according to the White Paper, there has been a decline in the number of ratings who have signed on for the extended period of Service.
    The first thing I suggest is that naval discipline has something to do with it. I made a note when the Parliamentary Secretary said that the Navy needs, more than anything else, the good will of the House and the country. I believe one of the first things that might be done to encourage at least serving men to sign on for their second period of time is something which it will take this House quite a fair amount of time to do, and that is the review of the Naval Discipline Act. I believe that to be a matter of urgency. We have had such a review for the Army, and I think the Air Force review was incorporated at the same time. I do not know whether it will take the House as long to review the Naval Discipline Act, or make suggestions for its revision, as it took to bring the Army Act back to this House after it went away for revision. I am a believer in discipline, and a very firm believer in discipline.
    Mr. Emrys Hughes: My hon. Friend is a Whip.
    Mr. Wilkins: That has nothing to do with it. I am very serious about this. I believe that discipline is good for people, and if it is not naval, military or air force discipline, people should know the way to impose self-discipline. I have no complaints whatsoever about discipline, but what I complain of is the type of discipline. The only word I can find to describe it is childish discipline. I do not believe that grown men respond to childish discipline. Here I must again emphasise that I may be speaking out of ignorance rather than knowledge, because I do not know whether the discipline in the Royal Navy has changed in the thirty-nine years that I have been out of it.
    The major resentment with which I left the Royal Navy in 1919 was the perfectly shocking kind of discipline to which I considered I had been subjected. We do not need the little pin pricks that occur, where because the new training rating on the parade ground in Portsmouth
    2366
    Barracks fails to discover the class with which he is training on the very first day, without any knowledge of what the Navy requires him to do, he is hauled before the commander of the barracks and given two hours 10A, which is, or was, two hours of five minutes walking and five minutes doubling around a pair of lampposts on the parade ground. If that is not sheer childishness I should like to know what is. I am pleading that the first thing to be looked at should be the removal of what I would call the inessentials of discipline.
    The second matter to which I wish to refer, and to which the Parliamentary Secretary referred, is the question of living conditions. I imagine that living conditions in the Royal Navy will now be considerably better than they were nearly forty years ago. If they are not, I do not know what the Navy has been doing in the intervening period, when certainly conditions in the other Services have been improved. I have never been able to understand why it is that, particularly on the larger vessels—the battleships, battle cruisers and vessels of that kind, and probably aircraft carriers for all I know—accommodation for the lower deck has not been better than it is. I remember going aboard an American battle cruiser which was with us in the Firth of Forth—and it stayed there almost the whole time; we exchanged fraternal visits. Even in those days I was amazed at the accommodation that was available to the lower deck ratings. There might have been a sacrifice of valuable machinery, but the mess decks were an amazing contrast against our own battle cruisers and larger ships. Even the two hush-hush vessels newly out of the dockyard had nothing like the same accommodation as that old class of American battle cruiser. Only the Admiralty can explain this. There needs to be greater concentration on the provision of living accommodation.
    I remember also the suggestion made last year by the hon. and gallant Member for Croydon, North-East that ratings, when free of their duties, might be allowed to go home. I should like to know whether any developments have arisen as a result of the hon. and gallant Member's suggestion, which was extremely well received in all parts of the House. Some of us, at least, were led to think that the Admiralty would take notice of it and would consider it.

    2367
    My third point concerns education. I should like the Parliamentary Secretary to say what advance has been made in the provision of facilities for education in the Royal Navy and what rewards are given for ratings who are prepared to sacrifice their leisure time on board for purposes of study. I know that, generally speaking, educational facilities afloat can be provided only on the very large ships, but facilities were provided even during the war. If a rating wanted to continue his studies, he was given the opportunity of attending evening classes.
    On this aspect, I have a matter of complaint. It arises from personal experience. I used to attend these classes and I enjoyed thorn, and in due course an examination was held. It was called the petty officers' examination. The petty officer was somebody in the Navy on the lower deck. In those days, however, after a rating had studied and passed the examination, it counted for nothing. The Navy was still sticking fast to the days of Trafalgar.
    There had to be an interval of three years before a rating could get the leading rate, seven years before he became a petty officer and thirteen years—in other words, he had to engage for his second period—before he could become a chief petty Officer. That procedure had to be rigidly adhered to irrespective of an individual's ability and no matter how studious he was in his endeavour to make progress in the Navy. I imagine and hope that that has now changed, but I mention it in case it has not.
    I have never regarded the Admiralty as a very fast-moving machine. It requires a long time to make up its mind to go in for advancements. Therefore, I have raised the question of education in particular because we are dealing today with the type of lad who, following the provision which is made for him during his ordinary schooling, might be prepared and keen to continue his studies while undergoing his National Service or even during Regular training.
    My hon. Friend the Member for Edinburgh, East suggested that the present rates of pay for the lower deck represent little more in purchasing value in comparison with pre-war days.
    Mr. Willis: Nineteen twenty-four.
    Mr. Wilkins: The comparison was with 1924. I would like to know from the Parliamentary Secretary whether the old victualling system is still in operation, and whether ratings get a messing allowance. in addition to having a certain amount of their food provided. I have always regarded it as an anachronism in the Navy that so much of the men's food should be provided and that they should then have a victualling allowance to purchase the remainder. I must, however, be careful, because, strangely enough, those serving in the Royal Navy seem to like this arrangement whereby they are able to buy a certain amount of their food themselves. Nevertheless, it seems strange to those of us who are not in the habit of feeding in that way.
    If the victualling system is still in operation, can we be told whether the amount allowed per head in the mess has taken account of the increased cost of living over the years? I remember that at one time the figure was only 5½d. I estimate that it would need to be in the region of at least 2s. a head today to compare in any way with the value of the food which the 5½d. would have purchased.
    Similarly, I should like to ask about the soap and tobacco allowance. Am I right in surmising that according to the figures in the Estimates, which I have tried to work out, the allowance is now 26s. a year, or 6d. a week? It would appear that it has not kept pace with the change in the value of money.
    Once again, I regret that there are not more Members in the House who are able to take a keen interest in this debate. The Navy is a great Service. There are those who would like to relegate it into third place—it may be that they will be successful—but the fact remains that it is a great Service, and one which merits the very close consideration of hon. Members. We know that not all hon. Members have the time to study naval problems and matters of that kind, but it is regrettable that there are not more here who are prepared to devote the time to, and to take an interest in, naval affairs.
    6.30 p.m.
    Vice-Admiral John Hughes Hallett: It is always a great pleasure to follow, in the debate on this subject, the hon. Member for

    2369
    Bristol, South (Mr. Wilkins), because his affection for the Navy and the interest that he has in it shines through all his remarks even after all the years since he was in the Service. He made a number of interesting suggestions and asked some interesting questions to which no doubt my hon. Friend the Parliamentary and Financial Secretary will reply. I should like to back his plea that hon. Members who are interesting in naval affairs should be given more opportunity to visit the Fleet and go to sea with the ships.
    I do not intend to say very much about general strategy because I think that I said quite enough about that during the defence debate, but I was most interested in the question raised by my hon. Friend the Member for St. Ives (Mr. G. R. Howard) on the subject of the Navy's relationship with N.A.T.O. I should like to make the point, from recent personal experience with the Navy, that the Navy is far ahead of the other two Services in its close integration with our Allies, the other N.A.T.O. Powers. That is a thing which we should bear in mind when we criticise the smallness of the forces which we maintain. We no longer stand alone, we are part of a unified, effective whole.
    At the end of the defence debate, I still considered that the emphasis which the Admiralty had laid in the White Paper on the trade war needed to be reconciled with the policy of meeting a major attack by all-ont nuclear retaliation. I had intended to repeat the question that I wondered whether the Admiralty believed that a global war might continue so long after the nuclear opening phase that various measures associated with trade protection in the last two wars would be needed once again. I feel that my hon. Friend the Parliamentary and Financial Secretary, in opening today's debate, answered that question, and it is dear to me from what he said that the Admiralty thinks it possible that such a war might last long enough to render the starvation of the country possible.
    I would not dream of expressing either assent or dissent with that view, because this is a very complicated and important matter which could be decided only by people who have access to knowledge which is not open to us. It depends, among other things, upon knowledge of the stockpiles of these nuclear horrors
    2370
    in different countries, and on how fast they can be replaced, which, so far as I know, are items of information known to few people in this country.
    Before turning to more detailed points, I should like to join in the congratulations which have been extended to my hon. Friend the Parliamentary and Financial Secretary on his new office. He comes to the Admiralty at a very critical time. I am sure that on both sides of the House we all wish him every possible success. If I may say so without impertinence, if my hon. Friend remembers that he is Financial Secretary as well as Parliamentary Secretary his term of office will be attended by that success.
    A most satisfactory feature of the Admiralty statement is the sign which it shows of the renaissance in the building of new warships. I hope that the Admiralty will press forward with the rebuilding of our Fleet with modern ships, and will finance that rebuilding by really ruthless economies in all that does not contribute directly to fighting efficiency in modern times. During the defence debate, and during the debates on the Army and Air Estimates, a number of hon. Members asserted that warships are back numbers and could not survive in a nuclear war. There is no more highly technical question than that, and I should certainly hesitate to express a firm opinion.
    Hon. Members who make that assertion should tell us on what they base their views. A bold assertion is not sufficient. I believe that it to be altogether premature to assume, for instance, that the days of aircraft carriers are over. I would agree that the American conception of a great carrier task force operating for days on end off a hostile coast, protected night and day by its own combat air patrol and its ring of anti-submarine vessels, is out of date. I believe that that conception belongs to the past.
    On the other hand, a single carrier which can maintain radio silence while it operates, can move about in secrecy and launch small but deadly strikes of aircraft armed with nuclear weapons, and can recover its aircraft and withdraw again before a counter-attack can be mounted. My guess is that for some years an aircraft carrier which was boldly handled could not only form a formidable supplement to the rôle of our V-bombers but could be the sole means of reaching and

    2371
    attacking effectively certain targets. Those are some of the reasons why I think it is nonsense to pretend that the days of the Navy are over. At the same time, it is none the less urgent to cut out all that is inessential and obsolescent if we are to build a modern Fleet.
    We come back, therefore, to the question of economy, and I should like to say a few words about personnel. The key question is whether we need, under Vote A, 128,000 officers and men, supported by 180,000 civilians, to maintain the exceedingly small Fleet listed in the White Paper. I put the matter very conservatively when I say that at least two uniformed men out of every three are serving ashore. One source of waste of personnel has been bound up with drafting and with depots, and I most strongly welcome the decision to create, at last, a central drafting organisation. I hope that it spells the end of depots as such, those great expensive mausoleums of buildings used only to house men and which date in conception to at least a century ago.
    Turning to a different but related question, I should like some information about the employment of National Service men. The House will recall that during the debate in the autumn on whether National Service could be shortened or not, my right hon. Friend the present Foreign Secretary gave some striking figures to show the dependence of the Services on National Service men for the carrying out of their highly-skilled jobs. I cannot remember whether he gave the figures for the Navy or not, but I recall the figure which he gave for the Air Force, and which is relevant to the Fleet Air Arm, for I have no reason to suppose that that figure would be very different.
    My right hon. Friend said that one-third of the skilled ground staff were provided by National Service men. That was a complete answer to the suggestion that we could at that time or, indeed, if it is still the case, at present either shorten or do away with the National Service period. If we are ever to end or even shorten National Service, which I take to be a major objective of both sides of the House, we have to escape from this dependence on National Service men to fill the highly-skilled posts.
    2372
    We must replace them by long-service volunteers, but I should like to call attention to the consequence of doing that, because I believe that those consequences are inclined to be overlooked. If we fill all our skilled jobs—and not only in the Navy, because this applies equally to the other Services—by long-service volunteers, it is perfectly obvious that there will be no skilled jobs left for National Service men. That means that we shall have to go through a period in which young men called up for National Service, no matter what their background or skill may be, will have to do unskilled jobs. That will be unpopular, but I submit that it is quite inevitable if we are really determined to get rid of National Service.
    We should face that fact, and I would welcome the views of my hon. Friend the Parliamentary and Financial Secretary on this point, because I must say that I was rather surprised and disturbed when my hon. Friend the Under-Secretary of State for Air, when replying in the debate on the Air Estimates, indicated that there was no change in the Government's policy to try to employ National Service men in such a way that full rein would be given to their skill. I think that is a point which needs clearing up.
    That brings me to my next question, which I do not, however, address to my hon. Friend, because although I am sure he would be only too pleased to answer it if he could, it cannot yet be answered by anyone. It is: what is to be the effect of the new pay rates? In 1950, the right hon. Member for Easington (Mr. Shinwell) himself admitted that the increases given then had proved to be only a shot in the arm. A number of reasons for this disappointing result have been put forward, and I wish to refer briefly to two, to which I think no reference has yet been made in this debate.
    The first is what I would call the misery propaganda conducted within the Services, with the knowledge, and therefore, one must assume with regret, with the tolerance, at least, of the officers. I will give the House my own experience. At the time when the 1950 pay rates came into force, I was serving at Bath, and my duties required me to make frequent journeys by road between Bath and Portsmouth. It was impossible to drive very far from Bath without hundreds of airmen "thumbing" for

    2373
    lifts, and equally impossible to drive far from Portsmouth without hundreds of sailors "thumbing" for lifts. In the course of the time I spent there, I must have given lifts to a very large number of men in my car. They were all very talkative, and it was very noticeable and rather disturbing that, only a few weeks after the pay rates had gone up, they had only one subject of conversation—their pay.
    It was very curious, because they never seemed to talk about it before, at all events to me. But they talked about it after the increase had been given, and it was one long whine about their low rates of pay. If one tried to argue with them, as I usually did, one was met with the conclusive and final answer, from their point of view: "It is all very well, sir, but even the officers admit that we are underpaid," or "Even the officers agree that we could get more outside."
    I submit that it is most important that we should not have any repetition of this, because there is really no justification for it. There was no justification for it then, because the pay rates in 1950, having regard to the cost of living as it then was, were very generous, and there is no justification for it now. I am greatly in sympathy with the interesting suggestion which was made in the debate on the Army Estimates by my hon. Friend the Member for Wandsworth, Central (Mr. Hughes-Young) that the Services would be well advised to quote gross rates of pay instead of the net rates. I did not entirely understand the reasons which were given for suggesting that this was impossible, because, after all, if one takes the trouble to look up the table of pay, one can see precisely what a man would get if he had to pay for his own board and lodging. There are recognised allowances, and indeed in the Navy the majority of men are married and serving ashore and at home, and are providing their own board and lodging.
    I should like to quote one or two figures, because I think it is possible that even now the House may not realise how generous these rates are. I take the case of three youths, aged 20, and unmarried. The first, an able seaman on a long-term engagement, receives £480 a year. The second, if trained in one of the artificer colleges and if he has become an artificer, receives £692 a year. The
    2374
    third, a sub-lieutenant, receives £647 a year, unless he happens to fly, when the figure goes up to £975.
    Now let us look at the position of the same three men five years later—and married. The seaman has now become a petty officer and receives £723 a year; the artificer has become a third-class artificer and receives £793 a year, while the officer now receives £1,195 a year. I submit that these rates of pay provide no justification whatsoever for grievance or complaint. I think that we here should make it quite clear to the Services that we are asking the taxpayer to pay a lot of money—£67 million a year extra—to raise these pay rates, and that we are determined to see that that this time the rates do the job which they are intended to do—to boost up recruiting so that we can get rid of the National Service system.
    There is another factor of an entirely different nature which I think deters men from joining up for long periods. I refer to the fear which they may have lest something may happen during the course of their engagement—some tragedy in their homes—which will make them wish to escape and to be released. We know that they can apply for compassionate release, and I would not for a moment suggest that these releases are not invariably given in conditions in which release is deserved. All that the men in the Services hear about, however, are the cases in which release is not approved, when all they hear is the point of view of the man who applied but was turned down.
    It is a basic principle of British justice that no man should be judge in his own cause, and one of the parties to these causes is the Crown. Furthermore, it is very difficult to deal with them by administrative action. I have often had to consider them, and there are many parties to each case—the couple of doctors who disagree completely, the man and his wife, who do not always agree with one another; and, at an early stage, the Member of Parliament comes into it. I have often said to my secretary, "If only we could get all these people together and hear their evidence in public and on oath, how much better it would be."
    The suggestion I would make to my hon. Friend is that the Services would be well advised to refer these cases to some type of tribunal, such as those to

    2375
    which people apply when they wish to claim exemption on conscientious grounds. These tribunals are greatly respected, and I think that the mere fact that the evidence is heard in public—and I believe on oath, though I am not altogether sure about that—greatly reduces the number of applications, because it has the effect of getting rid of the bogus ones. At the same time, the man with a genuine case is assured that he will have fair treatment. I believe that matter to be well worth considering, and it would have the additional advantage of allowing senior officers of the Services to escape from a most distasteful and difficult task.
    If I may now turn to the question of officers, I would start by congratulating the Admiralty on their bold acceptance of the sweeping changes recently announced. Here I must admit that I have to declare a prejudice, because I was myself a member of the Committee which recommended the alterations. The problems which faced the Committee were of great complexity, and of an interest which goes much wider than the Navy itself.
    I should like to say first that the age of entry was not in the Committee's terms of reference. That was a matter which had already been decided, and I refer to it now only because I should like to take the opportunity of paying my tribute to the 16-year-old entry cadets during the years in which the scheme operated. I think they have been very much maligned, and that an unfortunate political bias got into the matter at first. In any case, the new age, which cut across the curriculum of both the grammar and the independent schools, naturally mat with some difficulties at first. I took the trouble to go into this matter carefully when I was on that Committee, and I am certain that the record of the 16-year-old boys compares favourably with that of both young age and of the special-entry older age throughout all the years that the other two systems were in force.
    In passing, I should like to draw the attention of my hon. Friend to what I understand is a grievance of the survivors of the 16-year old scheme, although I speak subject to correction. There are still a few of these lads left at Dartmouth, and they have not benefited from the large rises in pay announced recently.
    2376
    It appears that they still receive 4s. a day whereas the older and newer entries get 8s.
    Contractually, of course, they have no ground for complaint. That I concede at once. At the same time, they are sharing the same accommodation, they are working alongside the others and, what is more I am sure that a number of those who have joined under the new system were ones who competed and failed under the earlier system alongside some of the young chaps with whom they are now working. It is a bitter pill to the 16-yearolds when they find the others getting twice as much, and the cost to the Government of making this concession would not be great. Of course, if it has been made already I apologise for wasting the time of the House in mentioning it.
    Now I wish to mention briefly the efforts made to ensure complete integration between Fleet Air Arm officers and the remainder. There are two facets of the problem. First, the pilots must become qualified as seamen, and, secondly, the seamen must understand air operations sufficiently to enable them to direct them when they become more senior. I am satisfied that the new scheme ensures this, and I only mention it because it is of great significance in determining the feasibility of my own hobby horse, which is the ultimate merger between the Navy and the Air Force. Such a merger would enormously reduce the overheads and the Votes under consideration tonight.
    I thought that the manner in which my right hon. Friend the Secretary of State for Air dismissed this project when he wound up the defence debate was rather too casual. After all, it is not a new idea. Some of us have been thinking, writing and talking about it for seven years. It is more than two years since it was first raised in this House, and it has been supported by hon. Members on both sides. Certainly there is no question in my mind of rushing it. The only proposal that I have ever committed to paper in detail visualised a period of thirty years, which I should have thought would satisfy the most obstructive people in Whitehall. I think that my right hon. Friend was misinformed on one point. He laid great stress on the difficulty of shaking paraffin and water together, but paraffin is not the liquid supplied to the

    2377
    personnel either of the Navy or the Air Force. If my right hon. Friend had thought in terms of rum and gin he would have known that they mix very well with water and make an excellent beverage.
    Finally, I want to refer to the number of officers and to justify the suggestion which I ventured to make in the defence debate, that the Services should reduce their officers' list by between one-third and one-half. I will take as an example the simple case of the captains' list in the Navy today. A captain spends nine years in that rank, of which it is agreed that three have to be at sea. It follows, therefore, that the total sea list of captains must not exceed three times the number of sea commands. If we assume that there are fifty sea commands, which is about true, then the sea list must not exceed 150. which leaves 100 officers for serving ashore at any given moment.
    Yet the captains" list today totals about 450, so that there are another 300 captains on the non-sea-going list also available for shore commands, making 400 available all told. Yet we are informed that the necessary jobs are available for them. It is true that there are jobs of sorts, but where I part company with the Admiralty is that I cannot accept the view that all those posts are necessary. I should like to see every one of them reviewed, with the object, if possible, of eliminating it altogether or, failing that, of replacing the officer with a civilian.
    I am convinced that if that course of action were pursued with resolution it could lead to the necessary reduction. Here I submit to the House that it is a cardinal principle that we should never employ officers in the Fighting Services in a job which can be performed by a civilian. I say that because not only are the officers more expensive, which is an important consideration in these days, but if we misemploy them in this way we debase the officer currency, if I may so express it. It means that the high qualities called for in officers are being put to a wrong use.
    It used always to be naval policy to employ civilians wherever possible. That is how the lists of naval officers have been kept so low in the past. I am afraid that this navalisation, as it is called, is largely a disease that we have caught from the Army. Although I know that what I am about to say is tinged with controversy,
    2378
    I regard it none the less as a disease which is as mortal as cancer and as contagious as leprosy. We should reverse this process, and try to return to the old integrity which the Navy had at one time, of employing naval officers only in positions where no one of lesser calibre and training would do.

  ROYAL DOCKYARDS
  6.58 p.m.
  Mr. A. G. Bottomley: I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof:
  "this House urges the need for the modernisation and re-equipment of the Royal Dockyards to provide for improved conditions for the workers and to meet the changing requirements of the Fleet having particular regard to the developments in weapons and electronics; and calls for the appointment of a Select Committee."
  The Parliamentary Secretary to the Board of Trade in the debate last Tuesday referred to my own entry into the House with five distinguished Members of the Opposition Front Bench. It has been my privilege to represent the constituency of Rochester and Chatham since then, and although in my observations Chatham will be particularly in my mind, what I say will apply equally well to all the Royal Dockyards.
  My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), in his usual excellent speech from this Front Opposition Bench, referred to the need to bring about a merger of the Royal Air Force and the Navy. He was supported in that view by the hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett). I would go further than both of them and say that we are fast approaching the time when we ought to think in terms of one Armed Force, and not three. In this connection, of course, it was heartening to see the Government take the step of appointing a chairman of the Chief of Staffs Committee.
  No one will deny that whatever the position of our Forces in the future, the Navy is a necessity. Perhaps I may be permitted to make some personal observations based on my own experience. During the war I was a deputy-regional commissioner for the South-Eastern Region and one of the fears we had was that the enemy would drop paramines and would

  2379
  use mustard gas on all the Forces. We feared for the future activity of the Navy.
  Supposing we had been frightened, as some people try to make us today, about the hydrogen bomb. Although I am second to none in my admiration of the airmen who fought in the Battle of Britain, I am convinced that the invasion of this country would have taken place had it not been for the Royal Navy which stopped barges leaving the ports in enemy occupied France, Belgium and Holland.
  We must all agree that the Navy still has a vital part to play. I will not develop that theme, but we should recognise that when we talk of the Royal Navy, we are thinking not merely of the United Kingdom, but of the Colonies and the Commonwealth countries which in time of war would be very important areas for which the Navy would be responsible in protecting communications, carrying supplies and troops, and work of that kind, which will have to go on whatever may happen to this island.
  As has been said this afternoon, other countries, like the Soviet Union and the United States, are certainly not neglecting this Service. The other day an aircraft came down and it was Royal Navy ships which made an attempt to save the life of the pilot. There are many other indications of the immense amount of good will which the Navy is able to promote by going to the succour and rescue of those who have been tortured by earthquakes or other disasters.
  This is another reason for supporting the Royal Navy. Last year the Explanatory Statement on the Navy Estimates said:
  "The Royal Navy requires…carriers operating the latest aircraft; powerful ships armed with guided weapons; escorts capable, in co-operation with carrier and shore-based air forces, of providing protection for our shipping; submarines and amphibious forces; and minesweepers to keep the sea lanes clear for vital supplies."
  That summed up the position, and emphasised the need for the Royal Dockyard. I do not accept the view of my hon. Friend the Member for Bristol, South (Mr. Wilkins) that this is a narrow constituency point of view. It is certainly not.
  If we are to make sure that work in the dockyards is done to the standards required, we have to take note of what
  2380
  the Parliamentary Secretary said this afternoon when he said that we had to have new designs and that these designs would bring problems of control detection and computer equipment and precision machinery, not only for sea, but for land bases, too. This calls for new skills and new techniques, and if it is to be done properly there must be the provision of special workshops and machines.
  I take pride in the fact, if I may make one political comment, that the Royal Navy is an excellent example of a nationalised industry. It was the first nationalised industry. The men who work in the dockyards are first-class and have great courage and resolution. Often there are disasters and lives are lost and hon. Members who represent dockyard towns will know that we have more than our fair share of having to attend to unfortunate circumstances following a disaster of one kind or another.
  Above all, the men are loyal and conscientious in their employment. Sometimes I think that their loyalty is stretched a little too much, but it is comforting to know that there has been no strike in the Royal Dockyards since 1780. The hon. Lady the Member for Plymouth, Devon-port (Miss Vickers) yesterday put a Question to the Civil Lord about the low basic rates of workers in the dockyards, and I agree with what she said. In his reply, the Civil Lord said that the hon. Lady should draw a distinction between wage packets and wage rates.
  I had occasion earlier in my life to work in the railway workshops, and I admit that my earnings were higher than my basic rate, but I can tell the Civil Lord that when there was illness, or at holiday times, one felt the need for an extra source of income. I know that the trade unions do all they can to get the best possible conditions and rates of pay, but they would do better if the Civil Lord would concentrate on getting more money in the dockyard section of the Navy Estimates in order that these very eminent requirements could be met in order to look after those employed in the dockyards.
  Since the war we have been very fortunate with dockyard workers. After the First World War, they were thrown out of work and there was no opportunity

  2381
  for them to keep to their craft, but after the last war something else was provided to keep them in employment. We had the same circumstances—that we did not intend to make men-of-war—but the Government of the day saw to it that ship-repairing work was undertaken by the dockyards for Government Departments and commercial undertakings on a repayment basis. By that means men have been kept in continuing employment, and to date there have been no dismissals.
  If the maximum use was to be made of the dockyards, modernisation was necessary. Nobody will dispute that at the end of the war that was difficult to accomplish. Twenty-five per cent. of our national wealth had been destroyed and there were the calls on industry to provide homes, factories, hospitals and schools and the need to provide for our export trade machine tools which had to be sent overseas to pay for our food and our raw materials. These calls made it difficult to do what was necessary in the Royal Dockyards, but as soon as possible the Labour Government set up a Committee to study the provision of a postwar plan for the Royal Dockyards. We may be told something about that Committee.
  Last year I referred to the fact that there were inadequate plant and buildings. At Chatham there is one machine dated 1815 which is still in operation, and, I am glad to say, doing a very good job, but in due course it will have to compete with more modern methods of production. It is used for making cord and in these days of nylon production we may have more formidable competition than at the moment. There is also a building there dated 1763. We have to do something about that slate of affairs. Conditions are very different from what they were in 1955 and in the difficult years immediately after the war.
  Machine tools are now in reasonable supply and building materials and labour are more plentiful. We have to provide special workshops and machines. We want new shops for the welding of ships' structures and for electrical and electronic work. We want more modern workshop appliances and improved craneage facilities. Those will not only lead to increases in efficiency, but will result in cheaper production costs and, therefore, a saving of some of the money now spent on the Navy Estimates.
  2382
  A good deal of modernisation and reorganisation has been carried out in private shipyards. A lot was done with Government grants during the war, but when, as we know from the Comptroller and Auditor-General's Report, the ships in the dockyard are produced more cheaply than those in the private yards, that says much for the skill and craftsmanship of the dockyard worker and shows what can be done if the yards are modernised. There must be the best possible shops and the finest equipment and machinery if the best use is to be made of the manpower in the dockyard.
  I should like to see the prototypes of all new classes of ships made in the dockyard. Doing that would achieve a team spirit and a sense of achievement and would keep together design staffs, draughtsmen, craftsmen and others who would see the beginning and the end, and who would see the ships going on trials and what they had accomplished. That is something which we ought to consider. Certainly, if this work were done in the dockyards, production would be on time and there would be no question of pushing aside the building of a ship because a much more profitable commercial undertaking had presented itself. This would also be one of the ways of encouraging young men to come into the dockyard and to stay there.
  I wish to ask about the training scheme for apprentices which has been going on for many years and has been successful. I am sure that the Civil Lord would agree, however, that established schemes tend to get out-of-date. While every endeavour has been made to bring the training scheme up-to-date, nevertheless, it does tend to get into a groove and to fall behind modern requirements. Perhaps the Civil Lord could give us some idea of what kind of changes have been made. Are the dockyard schools efficient and useful in the way in which they ought to be employed to meet modern requirements? I know that they are now called technical colleges. I hope that it is not merely a change of name, but a rebirth with the emphasis which is needed in these days on automation and atomic energy.
  I should like to know what happens to the boys after their training. The Select Committee on Estimates in 1950–51

  2383
  showed that there were large scale losses of young men who had completed their apprenticeship. I should be the last to suggest that we should not go on with this work. I take the view that this kind of training is never lost. It is good for the country and is employed in one way or another. But it is a loss to the Admiralty and I should think it impossible for the Admiralty to lose craftsmen without suffering. Perhaps the Civil Lord could tell us whether that loss has been arrested and whether apprentices are coming forward. As he knows, there was a loss, and we do not want that to happen.
  If we are to keep these apprentices and give them an opportunity to be interested in their work, there must be opportunities for advancement and promotion. Many of these young men desire to become professional engineers, and if they have the latent ability I think that they should be encouraged and given the opportunity to become professional engineers. I know that it is not possible for all to achieve that objective, but I should like to know whether there is opportunity for promotion to subordinate technical officer or whether that is restricted to the older men. Do the young men feel frustrated? Is the chance of apprentices becoming qualified engineers so small because recruits come from the naval side rather than from the dockyard side?
  I wish to ask the Civil Lord whether the management gives the maximum encouragement to all who are employed in the Royal Dockyard. I have heard that workmen have put forward ideas to improve production and that their views are not taken seriously. I can well imagine that for good reasons some of these ideas may be impracticable. But I suggest that it is worth while to consider these ideas carefully and to let the men know that an interest is being taken in them. If necessary, an explanation should be given about why some idea is unworkable. I am sure that there are many ideas which might be utilised with advantage.
  There are views about a naval officer being the superintendent of a dockyard. I do not want to enter into a controversial subject at this stage, and I am pleased to see in the Estimates that the industrial deputy superintendent is apparently to be kept on. I hope that is so and that the
  2384
  practice will be extended. But in 1950–51, the Select Committee called attention to some features of management that were not satisfactory and I should like to examine them.
  Are the professional, technical, accounting, planning and estimating staffs able to give of their best. I do not doubt the capacity of the staffs, but I question whether there is proper co-ordination. The more complex the work in a dockyard becomes, the greater the need for proper co-ordination. I should have thought that length of service was an important factor in a man's understanding of a job and his ability to get to grips with a problem.
  Is the length of time for a senior officer appointment too short? I have heard of delays caused in the dockyards because there has not been proper co-ordination; because one department has held up the work of another. If there could be this proper co-ordination without any delay, it would result in more work being done in the yards and it would be possible to build more ships, which would obviate the necessity for the Admiralty to put out to contract as much work as they are compelled to do at the moment.
  The appointment of a personnel officer at Chatham was an experiment, but I hope that it will prove much more than that. As we know, in progressive private industry the personnel officer helps in the training and selection of workers. He is able to make suggestions about appointments and the promotion of staff. In addition, he maintains personnel records and is responsible for working conditions, welfare and canteen facilities and the methods of joint consultation. I hope that the Civil Lord can tell us that as a result of the experiment at Chatham, this kind of officer will be kept on and the idea developed.
  I wish to emphasise something which I know that all hon. Members representing dockyard constituencies would say is necessary, that there should be greater civilian control in the dockyards. We are fortified in this view by the Hilton Committee which in 1927 made this suggestion. During the war there was no actual recommendation, but consideration of this was favourable and, as we know, the Select Committee of 1950–51 also supported that view. No one will dispute the fact that the system of management

  2385
  should be able to produce the highest possible standard of service and efficiency. As I have said, the men in the dockyard have the capacity to do that, but one must have doubts about the system. The work of the Royal Dockyard is of prime importance both in war and peace, and the security of our country is as much dependent on the efforts of the men in the Royal Dockyard as those serving in the Armed Forces.
  I feel that the Navy Estimates are over-weighted in favour of the Fleet and that more ought to go to the dockyards. My hon. Friend the Member for Cardiff, South-East gave us good reasons for thinking in that way by his observations about particular ships and their future usefulness. The Royal Dockyards must have a better share and a more reasonable share of the Navy Estimates. In talking about management and the workers, I would say that both management and the trade unions fully accept their responsibilities. The Whitley Council machinery works extremely well in the Royal Dockyards, and it is worth recalling that each yard is the equivalent of some of the largest factories in the country.
  The dockyards have a fine tradition of service, both by hand and brain. They employ the most skilled and conscientious workers and if we are to make use of these valuable resources, we must keep in step with modern developments and use to the full the talents at our disposal.
  7.19 p.m.
  Mr. F. A. Burden: It is a very great pleasure for me to follow the right hon. Member for Rochester and Chatham (Mr. Bottomley). I do so with added pleasure because my constituency forms the other part of the Medway towns. Since we each represent a part of the area which houses the workers in Chatham Dockyard, it is inevitable that in matters which affect this area we must often find ourselves in agreement, and I find myself in complete agreement with a good deal of what the right hon. Gentleman has said.
  We have our differences, of course. I maintain that the greater part of Chatham Dockyard is in my constituency of Gillingham—and there is always a disagreement between us on the question whether H.M.S. "Victory" was built in that part of the dockyard which is in the Chatham area or in that part which is in Gillingham. I am convinced that she was built
  2386
  in the part of the dockyard which is within my constituency boundaries.
  I find myself in disagreement with the right hon. Gentleman about the integration of the Air Force and the Navy. I shall not say very much about that, or I shall be very much out of order. Although I represent a naval constituency, I was in the Royal Air Force during the war, and in my opinion it is essential, if our Air Force is to be deployed to its greatest effect, that it should have an independent target priority and should not be allied to either of the other Services. That is my very humble view.
  The right hon. Gentleman and I both agree that the dockyards have a very great tradition behind them. I believe that they also have a very great future. We all pray that there will never be need for our ships to sail on warlike missions again, but it is an undoubted fact that the very nature of our country is such that we must maintain a Fleet which is relatively large in comparison with our size as a nation, not only to protect ourselves but to keep open the sea lines and communications between ourselves and the great countries of the Commonwealth. The importance of the dockyards cannot be overestimated. The right hon. Gentleman and I are certainly in complete and absolute agreement that they are vitally important to the welfare of the people whom we represent, because they employ a far greater number of people than any other single employer in our two constituencies.
  I have gone round the Chatham Dockyard. I was quite amazed at the extent and the complicated nature of the work carried on there. I was still further impressed to see the tremendous skill and devotion to duty of the workers in the shops within those great yards. The right hon. Member made a very important point when he said that there has not been a strike in the Royal Dockyards since 1780. That shows that dockyard workers are an extremely responsible body of men.
  Much is said about the quality of the work which is turned out by private firms, but if our industries were to maintain the standard of workmanship which is maintained in the Royal Dockyards there would be none of the complaints which we sometimes hear about shoddy merchandise being exported from this

  2387
  country. I have made inquiries in this matter. Most people would agree that ships' captains are extremely exacting individuals in relation to the refitting of their ships, but very, very few complaints are received from them when they take delivery of their ships after they have had a refit in the yards.
  Not enough is made of the fact that the work given out by the Admiralty to private yards is inevitably more costly than the same work when it is carried out in the Royal Dockyards. We know that there are some critics. Most of them are unjust in their criticisms. In every organisation there is some back-sliding and shoddy workmanship, and the bigger the organisation the more chance there is of it occurring, but it happens far less frequently in the Royal Dockyards than in many great private undertakings. I am convinced that this criticism is very greatly exaggerated, and I am also sure that much of it really amounts to nothing more than good-humoured banter on the part of the people who live in the dockyard towns. It is a sort of tradition that those people should sometimes "have a go" at the people who work in the dockyards. I repeat that most of the work is of a very high quality.
  I also agree with the right hon. Gentleman that even greater credit is reflected upon the workers and the standard of their work when one takes into account the fact that much of the machinery which they use is obsolescent, and would certainly have been replaced many years ago if it had been in private firms. Such machinery has undoubtedly been so replaced in private yards, where the same standard of workmanship is attained. I was delighted to hear that a £7 million programme of dockyard modernisation was to be undertaken. That was two years ago, and we now know that about £3½ million has been spent.
  Some indication of the progress which has been made was given in the Explanatory Statement issued by the First Lord, but I should like my hon. Friend to enlarge upon it. We know that a new electrical shop has been completed at Chatham, and that a new gunnery equipment shop is nearing completion. The right hon. Member implied that the electrical shop was still under construction, but I understand that it is finished. I
  2388
  should like to know what other improvements have been started or are envisaged in the Chatham yards. How are working conditions being improved? Some of the shops are rather—I emphasise "rather"—draughty, and the conditions in which the men work are certainly not admirable.
  I also hope that the Civil Lord will be able to state quite frankly that no cut in modernisation expenditure is contemplated as a result of the credit squeeze.
  Two years ago—I follow broadly the line taken by the right hon. Gentleman—a departure of a somewhat revolutionary character was made at Chatham Yard, when a Deputy-Superintendent was appointed who was a man of industrial rather than naval knowledge. We have had little information about how that experiment has worked. Some time must be allowed for the new scheme to settle down, but information should be now available as to the benefits or otherwise which have resulted from the change. I hope that the Civil Lord will give us information.
  Is it intended to introduce this idea in other yards? If not, is it desirable that it should be continued at Chatham? How has production per man-hour increased, and how does it compare with production per man-hour two years ago before the change, which was aimed at increasing production, was made?
  The workers in the dockyards will be pleased to know that 1956–57 will bring more overtime to the yards than they have had for several years. This will impose increased strain on the workers. If we are to benefit from their increased production there is need for modernisation. We should be wise to look very carefully at that matter. We are rebuilding the Fleet, and the Navy will take on a new look. If the dockyards are to play their part it might be good to give them a new look by modernisation which will increase their efficiency. Modernisation should be effected quickly so that the dockyards can start off on the right foot as the character of the Navy changes.
  Many new techniques will be required. Each month brings new machinery which is vital to the efficiency of the modern vessel, and it will require servicing in the dockyards. If we are to have efficient dockyards in the future we shall require men of much higher intelligence in many

  2389
  more posts than we require them in today. Far greater technical knowledge and skill will be required.
  That leads me to the question of technical education. We are all at one in the House in believing that one of the most important matters is to ensure that our rising generation has the highest possible technical education. That requires good training and good facilities for training. Those facilities do not exist in the Medway towns. A certain building there has caused a great deal of heart-searching, certainly in the right hon. Member for Rochester and Chatham and myself. The Civil Lord will agree that we have, individually and collectively, pushed him about a bit to know what is to happen to the Royal Marine Barracks. We tell him that, individually and collectively, we shall pursue and pillory him until we get satisfaction.
  Yesterday, in answer to a Question by the right hon. Member for Rochester and Chatham, the Civil Lord said, referring to the Royal Marine Barracks:
  "I can now confirm that the main part of the existing buildings could not be converted satisfactorily or economically for any naval use. The possibility of using the site for a combined dockyard technical college and apprentices training centre is therefore being further examined. This scheme would certainly offer many advantages; ".—[OFFICIAL REPORT, 7th March, 1956; Vol. 549, c. 2094.]
  I hope that the idea will be pursued actively and urgently. Action must be taken soon to lay the foundation. It is not good enough to put off consideration to another year. I beg the Civil Lord to give this matter his immediate attention, and to give an undertaking to the right hon. Member for Rochester and Chatham and myself that the matter will be looked at urgently. We believe that it will solve the problem of the creation of the right sort of building and will bring satisfaction to the people of the Medway towns. It will also save us an awful lot of time and worry from our constituents.
  I turn to the building of repair ships. Every time there is a debate on military matters we are told of the danger that one atomic bomb will wipe out a great area of our country. The dockyards are vital. With some ancillary services they are essential for getting ships repaired and turned round, but there is a danger of our dockyards being knocked out. If so, we should not be able to carry out
  2390
  repairs, although the Americans would probably offer us facilities.
  With the new concept of the aircraft carrier as the centre of the battle force we should do well to look at the possibility of building repair ships to sail with the Fleet. Because of their manoeuvrability and comparative invulnerability, they would be a useful adjunct to the dockyards, which are assured of a considerable amount of work for a very long period.
  I hope that the Civil Lord will make it clear that the dockyard "matey" and others who work with him are fully appreciated, and show an awareness that the standard and quality of their work compares well with any that is done in private yards. I hope that the Government will ensure that the workers are given the right tools with which to do a very valuable job.
  7.39 p.m.
  Mr. Percy Wells: If proximity of constituency is to be taken into consideration, it is only proper that I should follow the hon. Member for Gillingham (Mr. Burden). I congratulate the right hon. Member for Rochester and Chatham (Mr. Bottomley) once more upon the terms of the Amendment that he has placed on the Order Paper and moved so efficiently. I do that the more readily because the Amendment gives me an opportunity to deal with a constituency manor which is causing very grave concern to thousands of my constituents.
  I am pleased to have the opportunity to speak on the Amendment, because we should remember the important functions which the dockyards perform in servicing the Royal Navy. Paragraph 67 of the Explanatory Statement says:
  "The record of loyalty and reliability of the Royal Dockyards in peace and in war is one of which the country may well be proud…there has been nothing in the nature of a strike in the home dockyards since 1780."
  I think it will be agreed that 176 years without a strike is "going some," especially when one remembers what used to happen. I can remember when dockyard "mateys" got together—usually in the local pub—drew up a petition, which they sent to their Lordships of the Admiralty, waited six months and then got the inevitable reply, "Not acceded to." That paragraph which I have quoted pays tribute to a great record, and all

  2391
  of us who have had contact with the dockyards know very well that it N true. A tradition has grown up in the dockyards—and in the dockyard towns, too, because the community that grows up around a dockyard has its life centred in the work done there—and that tradition is one of which all are very proud. The Royal Dockyards have a great record and a great history.
  All this is applicable particularly to Her Majesty's Dockyard at Sheerness. Rumours have been circulating for some time—some of them rather disconcerting—as to its fate. We have had such rumours for many years—I remember them way back in 1931. The dockyard is situated in the Isle of Sheppey and is its main source of employment. Apart from a small pottery, a glass works and a chemical works, there are no other sources of employment there. The dismay caused by reports that work is to be taken from the dockyard can be appreciated.
  The Civil Lord will perhaps pardon me if I refer to matters about which I would not normally trouble the House. I say that because I have in mind the statement made by the hon. Member for Bristol, South (Mr. Wilkins) about hon. Members speaking in the Navy Estimates debate on constituency points only. Because of the rumours which were circulating, the First Lord called me into conference and said, "Things are not so bad as is thought in Sheerness. All that is going to happen is that the constructors are to be transferred. You will lose the submarine refitting work and the dockyard is to be regraded a repair depot." Far from allaying the fears which existed in the Isle of Sheppey, that seems very much to have increased them, and I have since had very little peace from the Press, from dockyard deputations and from others associated with the Isle.
  It is true that the Director of Dockyards has visited Sheerness to reassure the trade union side of the yard Whitley Committee that, whatever happened, there would be no discharges and that if work was taken away other work in compensation for it would be brought in. The Director denied a regrading of the dockyard. I hope that he is right, but if there is to be no reduction of staff—apart from the constructors who are to be transferred—it is very difficult to
  2392
  understand why any regrading at all is necessary.
  The Civil Lord of the Admiralty (Mr. Simon Wingfield Digby): Perhaps I can clear up that point at once. Technically, from the point of view of the Admiralty, there will be a regrading, but there will be no reason for the yard not to be known as the Sheerness Dockyard. It will still be known by that title. It will, therefore, not make any difference, although it will be a slightly different type of work.
  Mr. Wells: If it is to make no difference, why should the yard be regraded? If it means a loss of status, will that be taken into consideration when deciding what work to place at Sheerness? I should like further assurance on that.
  The main point is that here the Government have some responsibility. When they establish a dockyard they establish, in fact, something more than just a dockyard—especially when they establish it, as was done centuries ago, on the Isle of Sheppey. They have some responsibility to the community that grows up around that establishment, and if there is to be any serious reduction in the work at Sheerness, what will be done will be to make Sheppey another Jarrow. Those are not my words; they appeared in the local paper last week. However, I am very glad to see that the Civil Lord is vigorously shaking his head, which rather indicates that he is certain that there will be no reduction in the amount of work made available to Sheppey Dockyard.
  Mr. Wingfield Digby: Perhaps I may intervene once more, to say that we think there will be just as much work and that it will be possible to avoid any redundancies at all.
  Mr. Wells: I am very pleased to have that assurance. I realise that one cannot maintain a place like Sheerness if it is not doing a useful job. It is well known that Sheerness has done a useful job in the past. One of the things which has been taken away is the unconverted T and S submarine, but about three years ago a naval officer told me that he liked to have his submarine refitted at Sheerness because he got a better refit there than anywhere else. It is, therefore, surprising to know that that class of work is to be taken away, particularly as it is one which employs practically all trades and so helps

  2393
  to preserve a proper balance. I should like the First Lord to investigate the possibility of retaining the work on those submarines.
  Both the Director of Dockyards and the Civil Lord have told me that what will happen is that, whilst there will be no immediate reduction, wastage will not be made up, except in certain trades in order to preserve a proper balance. That indicates that whilst there are to be no reductions now, the yard is eventually to be allowed to run down. Does the previous assurance which the hon. Gentleman gave me cover that position? If it does, I shall be happy.
  Mr. Wingfield Digby: I should not like to commit myself on that. That is possible. There will be no discharges at the present time, as far as we can see.
  Mr. Wells: I cannot say that I consider that entirely satisfactory, and I am certain that it will be difficult for me to convince my constituents, who are so much concerned about this matter, that their future is as secure as it was before the question of the regrading of the dockyard was first mooted.
  I turn next to the question of costs, and this is a reason that we are so touchy about these things. Certainly in peacetime, costs are taken into consideration when one considers which work should be sent to certain dockyards. I want to ask the Civil Lord, therefore, why payment by results has not been operated to the maximum extent at Sheerness Dockyard. My information is that it has not been used to anywhere near the maximum extent at Sheerness and that when it has been used, earnings have been limited to 45 per cent. I understand that that does not obtain in any other dockyard. Since it is generally agreed that work on payment by results is cheaper than time work, I cannot understand why this situation has obtained at Sheerness. I understand that the production committee has gone into the matter from time to time.
  These are very important points. Some years ago, the storehouse was removed from Sheerness. We protested vigorously at the time and I took a deputation to the Admiralty about it. We then received certain assurances and were told that the removal of the dockyard to Chatham would not inconvenience
  2394
  Sheerness at all and that we should get a 24-hour service of spares and stores. In fact, that has not happened. Sometimes men are waiting for days for stores and spares. Unsuitable tools have been sent to Sheerness, and what concerns the men and me, too, is that when these unsuitable stores are received, Sheerness is charged 12½ per cent. on-cost, although they are later returned to Chatham. That increases the price of work at Sheerness Dockyard. It is one of the points which I should like the hon. Member to look into very carefully.
  I hope the hon. Gentleman does not think that I am being unfair in raising these matters, but they are so important that I feel I must do so. I have already referred to the waiting period. Men are taken off P.B.R. to do some day work until the stores or spares for which they are waiting arrive, and this adds to the cost of the work. We still have a storehouse and a staff at Sheerness, and I wonder whether it would be possible for a certain proportion of pocket stores—I think that is the term used—to be held at Sheerness in order to meat this difficulty about which people are so much concerned.
  For many years the training ships have been serviced at Sheerness, and the reason given to the yard committee for taking them away was that they could not be completed in time. My information is that they could be completed in time if the men were allowed to work overtime. I am told that the internal combustion engine shop is not working to capacity and that engines which could be refitted there are being sent to private contractors to be overhauled. Engines which could be repaired as what are called day or timework jobs when there is no other work outside are being sent to private contractors.
  Another point which is causing concern at the dockyard is the work which is sent outside, but which should and could be done inside the dockyard. This involves an electrical contract, and if it is true—and I am reliably informed that it is—I suggest that something ought to be done about it. It is the case of an electrical contract which has gone to a local firm which before the nationalisation of road transport was a haulage concern. This Government contract is being completed by men who leave the dockyard electrical shop at 5 p.m. and then go to work for

  2395
  these private contractors on the Admiralty contract. If this is occurring, then the contract should be carried out, if possible, in the yard.
  May I make a point in connection with the new electrical shop? Is that to be completed? I notice from the White Paper that new shops are being built at Chatham, Portsmouth, Devonport and Rosyth, but for some reason or another Sheerness is not included. Is that an oversight or is it intended not to complete the new electrical shop which is so badly needed at Sheerness? I do not know whether the Civil Lord will be able to reply to that question tonight, but I should like a reply at some time.
  What is happenning about the new slipway? I am informed that if this were built it would remove the need for the proposed new ship-fitting shop and would result, ultimately, in considerable saving. Amongst other things, it would allow men to work under cover during inclement weather. Is it intended to proceed with the extension of the No. 3 dock at Sheerness? I understand that when this was investigated a year or two ago it was considered very desirable that this dock should be enlarged.
  What is to happen to the oil fuel depot on the Isle of Grain? There is a rumour that the oil fuel depot is to be handed over to a private company. Is that correct? If it is, what is to happen to the men who will be redundant? Will they be guaranteed the provision of jobs which are no less favourable than those which they hold at present?
  Finally, I am told that the number of apprentices to be entered at Sheerness Dockyard is to be severely cut. I hope that that is not true, particularly as there is some difficulty in balancing trades in the dockyard. If it is true, will it interfere in any way with the excellent technical college which we have at Sheerness Dockyard? I am sorry to have to trouble the Civil Lord with these questions, but they are important from the point of view of the Isle of Sheppey. I hope the hon. Gentleman realises that they are being asked because there is so much concern in the district.
  I recognise that the changing nature of naval warfare and the change in the size of the Fleet means that there must be
  2396
  certain dockyard changes. All I am asking is that when these are being made, existing establishments and staffs should receive full consideration, and that when they can be worked into the new organisation, that should be done.
  8.0 p.m.
  Miss Joan Vickers: I hope that the hon. Member for Faversham (Mr. P. Wells) will not mind if I do not follow him in all the matters which he mentioned, as they were constituency points. I have many which I hope to mention. I have informed the right hon. Member for Rochester and Chatham (Mr. Bottomley) that I did not go all the way with him in his Amendment on the Order Paper. I welcome the fact that he wants to have re-equipment and modernisation of the dockyards, but I am not at all certain whether a Select Committee is the correct way in which to do it. I have read the Report of the Select Committee on Estimates for 1950–51 and it does not seem to have done very much good in many of the dockyards because many of the suggestions in the Report have not been carried out.
  I suggest that in these days, when dockyard organisation has become very technical, it might be better if we had an inquiry by some technical expert who could go into the question of the modernisation, particularly on the managerial side, because I am convinced that we could do far more in the dockyards if we could improve the managerial side of them. I realise that when one comes into this House one has a great deal to learn, and I hope that hon. Members will also realise that I have had to learn dockyard language.
  Mr. Cyril Bence: The hon. Lady must not use it here.
  Miss Vickers: If I have to give some rather technical descriptions I hope that the House will bear with me.
  I was disappointed, when I asked a Question with regard to wages yesterday, to find that I was unable to get separate figures concerning the wages of mechanics, skilled labourers and labourers in the dockyards. I was told that they were not available. It struck me as a little odd that employers were unable to give the figures of the wages they were paying to their employees. I

  2397
  should like again to draw the Civil Lord's attention to this matter in relation to the wages of unskilled labourers who are totally unable to get extra overtime and the extra earnings that it brings.
  I part company with the right hon. Member for Rochester and Chatham because I should like something more definite. I should like a definite policy for the dockyards in future, although I realise that if we have a smaller Navy that makes changes inevitable. If we could have some definite plans from the Government it would be of enormous assistance to the dockyard towns, many of which have been extensively blitzed. I want to draw attention to the fact that in Plymouth, 24,000 out of 218,000 people work in the dockyard and the victualling yards. The next biggest employers in Plymouth are the distributive trades, employing 11,000 people. If we had unemployment in the dockyard it would lead to great distress in Plymouth.
  Since I have lived in Devonport, I have been very concerned about the lack of industry there other than the dockyard. I have been trying to get other industries to come to this area. Every time I have done so, I have been told, "Please do not get any heavy industry because we want all that type of work at the dockyards." What happens? We get light industries, and they are mostly luxury trades, and if we get a recession we have unemployment. I should like some definite policy about the number who can be employed in the dockyard—the number we need for the heavy industries there—in order that we can get other industries in Plymouth, because it is very unsatisfactory to have everyone working in one type of job.
  On 16th January—the last figures which I have been able to get—we had an average of 2–7 per cent. unemployed whereas the national average is 1–2 per cent. Therefore, I was interested when I looked at Command Paper 9697, page 15, to see that:
  "An extensive programme of modernisation is necessary to keep the ships up-to-date and fit them for a modern war."
  and also to see it stated in paragraph 71 that:
  "There are however limitations on the extent to which existing dry docks and refitting basins can be modernised, because of the physical layout of the dockyard."
  2398
  We have been in very great difficulty in Devonport because shortly after the war a great deal of land was taken and a large number of houses pulled down so that 300 people can be moved nearer to the dockyards when they are extended. Otherwise, the only thing which has happened to us is that 17½ acres have just been handed back to the city council.
  When one walks down the main street of Devonport at the present time one sees large dumps of materials, old anchors, etc. In the two years that I have been there, the only difference has been that the notice boards to the dockyards which formerly said "Keep Out" have now on them "Please Keep Out." I think that it is high time something was done to make this principal street in Devonport tidy by clearing up the mess and handing back the site to the city council, or by putting up a wall and letting people know what is going to happen in that future shopping centre.
  There is another question. I want to know what is to be the guarantee of employment in the victualling yards. Are the people there to be allowed to go to this new depot, and will they qualify for travelling allowance? I understand that it will not be easy to recruit people from the district where those new shops are to be. I understand that it is possible to get a travelling allowance if one cannot recruit locally. I hope that every endeavour will be made to keep on the existing people. We have a great many shops in what is known as "mothballs" in Devonport at the present time.
  I read in Command Paper 9691, the Statement on Defence, that the Admiralty:
  "plan to keep in the reserve fleet only those ships capable of putting to sea at short notice and fighting effectively in a modern sea war."
  If we are to have all those ships in addition to those which we have at present attached to the Devonport Yard, I suggest that we shall need a considerable number of personnel there to look after them. It is rather like a fire station: the firemen are there whether there is a fire or not. If, as suggested in the Statement on Defence, these ships must be capable of putting to sea at short notice, it will be necessary to get a certain number of people there soon to deal with them. I should like an assurance from the Minister on that point.

  2399
  I want to make further reference to what has been said concerning the setting up of another Select Committee. In the Report of the Select Committee which met in 1950–51, there are descriptions of the existing shops in Devonport. The then Admiralty Superintendent was asked:
  "Have you any suggestions for improving the efficiency of the yard, anything which you think might help?"
  He said:
  "Undoubtedly. Give us the money to build some decent shops for the men to work in."
  He was then asked:
  "You are suffering in that regard?"
  and he replied:
  "The position is frightful. It is amazing how the people turn out the work they do."
  We have been lucky in having two new shops, but I should like to remind the Civil Lord that we still have a great many very old shops. I could take hon. Members to the Rope Walk, where they could see still there the old gallows which were used for hanging the French prisoners when they worked in the yard. We hope that that is not symbolic of what is to happen to our yards in the future.
  I recognise that there is a need for economy. I know that the Civil Lord will have to look for his pound of flesh, but I hope that he will not take it from Devonport. If he does, he will be cutting the main artery and letting out the life blood of the City of Plymouth. If he does intend to do that, I hope that he will let us know so that other stable industries can be brought to the area before we get unemployment again.
  I make a further suggestion. If any time comes when my hon. Friend feels it necessary to keep men there and there is not sufficient employment for them, I would point out that we should like to have the Tamar Bridge built. That might come under the road programme, and I understand that the dockyard would be prepared to do that work, which would be a great asset to the city.
  The general point which I should like to discuss has been supported by what my hon. and gallant Friend' the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) said on the subject of civilianisation or navalisation. There have been some changes in the dockyard. Recently the electrical department has
  2400
  been put under the Navy, and so also has the engineering department. Civil engineering comes under the engineering department, and naval arms come under the victualling yard. We suggest, especially in view of the larger payments to be given, that there will be great inequality unless other salaries are put up equally; and it would be better from a managerial point of view if we could have all civilian personnel for this work. We think that continuity in the yard would be beneficial. Those people, with their previous experience, are more used to dealing with these men. Perhaps they have a different approach to this type of work. We should like the Civil Lord to look into the matter, because we think it would be very useful if civilian employees were used in this way.
  If we could have a little better management I understand we could increase production by at least 50 per cent. I am told that the fault is not with the workman but with the old-fashioned organisation and because there are too few able men at the managerial level. I suggest also as a long-term remedy that we could recruit managerial staff by way of the dockyard apprentice avenue and, as a short-term remedy, I would refer to the Question I asked last December. I then asked if we might get a corps of volunteers of suitably qualified officers to come into the yard for experience and to be re-employed as civilians.
  I end by asking a question about apprentices. I understand that there is to be a new student-apprentice entry in 1956, and that there is to be a change in the curriculum. We are a little worried about that because of the watered-down educational requirements. I understand that mechanics is to be cut out, physics to be reduced and chemistry, mathematics and biology are to be increased. I understand that in Devon-port 190 are passed through the dockyard, about 40 complete the course, and there is a limited entry of about 16. My reason for making this point is that those with the watered-down education who do not go to the dockyard will not stand so good a chance of a job of the type they would have had if they could have gone in for other work.
  I do not know whether I should be in order in raising the question of the new uniforms to be issued from the victualling yards, but I should like to hear from

  2401
  the Civil Lord what type of new uniforms are to be supplied.
  I hope the points that I have put forward might be considered, and I wish to assure the Civil Load that I have put them forward in good faith, and in the hope that he will see that something is done to safeguard the future for Devonport.
  8.15 p.m.
  Mr. Cyril Bence: After reading the explanatory document on the dockyards and listening to the hon. Lady the Member for Devonport (Miss Vickers) and my right hon. Friend the Member for Rochester and Chatham (Mr. Bottomley), I find it extraordinary that in March, 1956, we should hear statements about the British Royal Dockyards being out-of-date when, although it may not be well known, the Royal Navy was the first engineering enterprise in Britain to use automation to the full degree. In fact, in 1856, the Royal Navy was producing biscuits for the Navy by automatic processes whereby the biscuits were untouched by hand. The Navy was the leader in this field, but now we have all the naval experts and hon. Members representing dockyard towns telling us that the Navy is out-of-date.
  Mr. Willis: They still produce the biscuits.
  Mr. Bence: I can understand that that may be so, but it is a reflection on our generation that we should be debating the condition of Royal Dockyards being so far behind private yards and the yards in the United States when actually the Navy was the leader in technological processes in the middle of the last century. Why have we slipped back so far? In Scotland we have a very fine dockyard at Rosyth. I am sorry to enter the claims of Rosyth in competition with those of Rochester, Chatham and Devon-port, but we have to make our claim. It looks as if I may be the only Scotsman making the claim for a naval yard in Scotland.
  Commander C. E. M. Donaldson: I have tried repeatedly to raise the question during the last four years, but without success.
  Mr. Bence: I am sorry, but we all have the experience of trying to get in with this, that or the other question from time to time. I seem to be fortunate tonight in raising the question of Rosyth. It seems extraordinary that my right hon. Friend the Member for Rochester and Chatham should have put down his Amendment dealing with the need for research and development in engineering when there is this admitted capacity in the country, and that the White Paper should state that buildings are functionally out-of-date.
  In laying down a modern plan for the production of anything, one of the most vital and essential things is that the building in which the plant is to function must be functionable. It is absolutely hopeless to try to put down modern technological processes of production in some of the out-of-date factories and buildings of shipyards and dockyards. New buildings are essential.
  We discussed this question in the Army Estimates when the same problem at Woolwich was mentioned. It exists in the dockyards, but not at Rosyth. That may be because Rosyth is not so old as Chatham or Devonport. It was built later and therefore it is more suitable for research and development than Devon-port or Chatham. It was built when production processes had evolved to a more advanced stage. It is, therefore, functionally more adaptable to modern processes.
  Here we have this tremendous capacity. We have in the Navy Estimates a statement of an expenditure of £20,000 a year purely on the administration of merchant shipbuilding and ship repairing. We are now considering the dockyards. What work can we put into these dockyards? There has been an announcement in the Press that an engineering firm, Rolls Royce, Vickers Armstrong, a shipbuilder, and an American firm are to form a company to develop nuclear power for ships. Why in the name of fortune cannot the Admiralty do this? The Navy did not ask a factory to produce its biscuits in the middle of the nineteenth century; it did it for itself.
  Why should the British Navy, with these wonderful dockyards and the engineers with their technical capacity, farm out this work to these private companies? There is the technical skill at the Admiralty. Why should they not

  2403
  do this? This would not be the first time that the Admiralty had given a lead in ship construction and marine engineering. The Admiralty did it in the nineteenth century. Why not do it now? It was the Royal Navy which was then giving the lead in ship construction. Now, in the middle of the twentieth century, it is financing private enterprise to give the lead and then sell the patents and have a licence for the manufacture of its products for sale back to the Navy. That is the position we have reached.
  I cannot discuss other fields; I am an engineer myself, but I know that the same story can be told of other things. Certainly in the Navy this should not arise. No matter whom one meets in the country, none of them lives very far from the sea, and there is an inherent love of the sea and of the British Navy. If we are to get such reports and admissions as we have had today about our Royal Dockyards, our people will begin to despise the Royal Dockyards, and even employment in them. In my own constituency on the Clyde there is a shipyard called John Brown's. Every man is proud to work there; they are the finest shipbuilders in the world. I have worked with men who were apprenticed to Royal Dockyards, whose certificate of apprenticeship used to be better than that of any other engineering shop in Great Britain. That is not true today. The finest certificate of apprenticeship today in the shipbuilding industry is not from the Royal Dockyards, but from private shipbuilding yards.
  Mr. Bottomley: Rubbish.
  Mr. Bence: I can assure my right hon. Friend it is not rubbish: it is true.
  Too much work has been farmed out from the dockyards. The Government have refused the finance to the Royal Navy to keep abreast of naval construction and naval development generally. Too much has been farmed out to private shipbuilders. In Rosyth there is a tremendous capacity to do as good marine engineering work as in any marine engineering shop in Great Britain. I am not saying they have not that capacity in Rochester and Chatham; probably they have. Our buildings in Rosyth may be newer because it is a newer yard. Money would have been well spent to improve the technical capacity of these Royal
  2404
  Dockyards. The Admiralty have got the technicians.
  Millions of pounds could have been saved by achieving this development within the organisation of the Navy itself rather than having to finance it by contracts running into millions, maybe hundreds of millions, to private companies to develop nuclear power for our ships. Why should they be doing that? Is it beyond the capacity of the Royal Dockyards? Would any hon. Member with a dockyard in his constituency say that it was beyond the capacity of the technicians and scientists employed by the Admiralty in those dockyards to do this very important work? Those of us who have been in engineering all our lives know that when any Government Department, be it the Admiralty, the Army or any other Department, puts out a contract for work or research, the Government gets milked, and make no mistake about it. It is the finest bank for any company in the country to get an Admiralty contract. The "Tiger" on the Clyde is not being handled by the Royal Dockyard; it is being handled by a private company.
  I hope that my right hon. Friend's Amendment will not be just passed over, but that there will be an inquiry into the use of the resources of the Royal Dockyards. Although I make a claim for Rosyth, my claim is justified for all the others. There is the organisation in shipbuilding and research for the evolution and development of ships, sufficient, I should imagine, for the needs of the British Royal Navy. We have about 170 ships, most of them small. We have this tremendous potential capacity within the Navy which should be used to the full to carry out research and to develop nuclear power as the motive power for our ships. It can do it. If it is handed over to private enterprise it will cost the Government an awful lot of money, whereas if it is done in the Navy, as it was in the last century, it will cost the taxpayers of this country much less, provided the Navy is given the go-ahead to carry out this research in the Royal Dockyards.
  8.29 p.m.
  Mr. J. J. Astor: I agree with the hon. Member for Dunbartonshire, East (Mr. Bence) when he says that to do first-class work the

  2405
  dockyards must obviously have first-class plant, but I am not in entire agreement with him on his other points. Nor am I in agreement with the right hon. Member for Rochester and Chatham (Mr. Bottomley) when he asks for a Select Committee.
  I intervene to make one point only, and to my personal knowledge this is the fifth year that it has been made in these debates. It has been made from both sides of the House and it has never been answered to my satisfaction, but that is no reason for not asking it again tonight. I refer to the possibility of an investigation into the best use of dockyard personnel when the time comes that Admiralty work does not absorb all its labour.
  Devonport is so situated that the 24,000 men employed there dominate the whole labour picture in Devonport and in Plymouth. Cornwall and Devon being rural and agricultural areas, there is no alternative employment for these men. As my hon. Friend the Member for Devonport (Miss Vickers) said, there is a certain amount of light industry in the Plymouth area, but there are never likely to be sufficient orders to absorb the 24,000 men, or even a proportion of them, if the Admiralty work is not sufficient.
  I am well aware that the employment position in Devonport Dockyard is at present very good and is likely to remain so for a few years. It is very good compared with the position of some of the people in the Midlands and in light industries in the Plymouth area, but I impress upon my hon. Friend the Civil Lord that the first point is the complete dependence on Government employment of those who work in Devonport Dockyard.
  Having studied the utterances of Service Ministers and Chiefs and of hon. and right hon. Members on both sides of the House, I am not convinced that any of them have the slightest idea what our armament requirements will be in five to ten years' time. I do not think they know. There may then be a situation in which the Government might say that the writing on wall is that our Dependencies are diminishing, and, therefore, our needs for conventional weapons are diminishing. If the economic situation does not get better—and it is perfectly possible that in five or ten years' time it may not be better—the Government might say that
  2406
  we cannot afford conventional and unconventional weapons; it may not be possible for the country to do it. In that case, I suggest that the Government would sacrifice the conventional weapons and would favour missiles with atomic warheads, and so on.
  The whole pattern of history shows that the Service Chiefs and the heads of the Service Departments, however brilliant they may be, really never know what weapons will be in five or ten years' time—they simply cannot know—and they are particularly ignorant now, when not only is science advancing by leaps and bounds every year, but also the position of our country in the world is changing from week to week and even from day to day.
  I should have thought that there was a case for the Admiralty either setting up a small committee or using its existing organisation for studying how the 24,000 men situated in the otherwise rural and agricultural area of Devonport can best be used if and when a Government decide that the conventional weapons cannot be afforded by the country. It is just possible that the Admiralty may have its plans. It it has, or if it can say that these matters can be decided quite soon, it would give confidence to those working in the dockyards if the Admiralty answers this question or says that two or three experts are studying it.
  The hon. Member for South Ayrshire (Mr. Emrys Hughes), in a previous debate like this, once made the point that there were two or three times as many admirals as ships.
  Mr. Emrys Hughes: I did not make the point, but I am quite prepared to accept responsibility for it.
  Mr. Astor: No doubt one or two of those admirals who have been in charge of dockyards could be on such a committee. I hope that the Civil Lord tonight can give an indication either that the Admiralty does not consider this a serious point or is making investigation or inquiry. I hope that this point will be answered.
  What investigation is taking place as to the best method of employment by the Government of those who work in the dockyards if and when the Government cannot afford conventional weapons? I am

  2407
  not impressed by anything I have heard that anyone knows what the pattern of weapons will be in five or ten years' time, because I do not think that anyone really knows.
  8.35 p.m.
  Mr. Emrys Hughes: The hon. Member for Sutton (Mr. J. J. Astor) has touched upon one of the vital points of the debate. I believe that the case for the appointment of a Select Committee, called for in the Amendment moved by my right hon. Friend the Member for Rochester and Chatham (Mr. Bottomley) has been made out in the hon. Member's very thoughtful speech, which also underlined the argument for the whole Amendment. I do not remember having made the statement about admirals which the hon. Member attributed to me, but I suggest that everything in connection with admirals needs to be reexamined these days.
  I am very sorry that I cannot take exactly the point of view of hon. Members on both sides of the House in this matter, though I can understand it. Naturally enough, they are stressing the case for their constituents. They have put very reasonable requests to the Minister in order to secure the continued employment of their constituents. They are naturally thinking of the future of the men and women—if there are women—working in the dockyards. But I am against spending any further money on capital investment in the Royal Dockyards if it is to provide the kind of programme which the Minister outlined today. Already this year we are spending £346 million on the Navy, and the hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett) has already described seaport towns as likely to be huge mausoleums.
  Mr. Burden: What my hon. and gallant Friend the Member for Croydon, North-East said was that the places from which the drafting is done were like mausoleums. He was not referring to the towns.
  Mr. Hughes: At any rate, a huge mausoleum was referred to somewhere, and I am against investing money in a mausoleum. I think that that is a reasonable attitude, in view of the fact that we are in a state of great financial
  2408
  emergency. I represent the taxpayer in this debate, and I am not prepared to invest any further money in the Royal Dockyards in the terms of the Amendment. I am in favour of a three-year plan for the liquidation of the Navy, because I believe that the Navy is obsolete, the dockyards are obsolete and that the ships which are likely to be made in the dockyards are obsolete.
  Mr. Deputy-Speaker (Sir Rhys Hopkin Morris): That might arise on the main Question, but I do not think that it arises on the Amendment.
  Mr. Hughes: I would point out that the Navy will have to be prepared in these dockyards, and that the whole argument has been that the ships will have to be changed and that we shall have to modernise the weapons and have new electronic developments. All that, presumably, would be done in the Royal Dockyards.
  I quite agree that the hon. Members who have already spoken on the Amendment have a very difficult problem because these dockyards employ a very large number of people. Whilst I am in favour of liquidating the Navy, I am thinking in terms of the future employment of the people who are in the dockyard towns. I do not want the dockyard towns to become potential pools of unemployment. I do not want to see dockyard workers unemployed as a result of the transition to a new policy.
  Although I am regarded as an enemy of these institutions, I am thinking of the people who will have to do a different kind of work there. I find that in the Royal Dockyards there are boilermakers, bricklayers, coppersmiths, fitters, hose-makers, joiners, masons, painters, pattern-makers, plumbers, sailmakers and shipwrights—a very large number of very skilled workers. You will find all these, Mr. Deputy-Speaker, on pages 274 and 275 of the Navy Estimates, and there we see that the total number of people employed amounts to 58,657.
  My argument is that it is not in the interests of the people now working in the Royal Dockyards to give the impression that we can possibly continue these dockyards in the way in which they have been institutions for countless numbers of years. If all the arguments that we

  2409
  have heard are correct, we have to remember that these dockyard towns are concentrations of population that might be bombed, and I would certainly hesitate to accept the point of view of the hon. Member for Gillingham (Mr. Burden), much as I have sympathy with him. To build a technical college in a place which is likely to be bombed by the first rocket that comes across is a mistake, and I do not think we should encourage it from the national point of view.
  I understand the problems of Sheerness and Chatham, but I should like hon. Members to pause to think what would happen if an atom bomb dropped in the Thames. I do not want to see an atom bomb dropped in the Thames, but if one were dropped, what would become of the Royal Dockyards?
  Mr. Deputy-Speaker: I do not see how an atom bomb falling on the Thames would affect this Amendment at all.
  Mr. Hughes: Let me explain. The proposed Select Committee is to inquire into the Royal Dockyards and their future. Some of the Royal Dockyards are adjacent to the Thames, and very frequently in this debate we have heard that if atom bombs were dropped on this country, they would probably be dropped on the Thames and on Southampton Water and on places which are the bases of the Royal Navy. Therefore, in these days when it is so easy for Chatham and the Medway to be bombed—it was possible to bomb them with rockets in the last war, so that it is quite possible that they may be attacked in any future war—I am not in favour of placing too many eggs in this particular basket.
  What would this Select Committee inquire into? Would it inquire into the possibility that this very large number of skilled men, who must do something, who have been trained to build ships, might be employed in building ships likely to be used in some other capacity? I would employ all these skilled workers in the shipbuilding industry, not in repairing ships for the Royal Navy, but in building other kinds of ships which might be used in the big rivers of the world, ships which could help our export trade, and the construction of which might transform the Royal Dockyards into really useful hives of industry. There would then be no danger to anybody, and nobody would
  2410
  regard those places as potential targets to be bombed.
  I now want to stress a point made by the hon. Member for Dunbartonshire, East (Mr. Bence). Personally, I am not interested in Rosyth. I do not make any spectacular claims for Rosyth because it happens to be a port in Scotland, as against Sheerness or Chatham. I think that exactly the same arguments can be used about spending any more money on Rosyth. If Rosyth is to be regarded, as it was in the last war, as a potential centre for repairing ships, then it is in great danger. If, as the hon. Lady the Member for Devonport (Miss Vickers) has pointed out, conventional weapons change, the result will be that in Rosyth a pool of unemployment will be created as weapons become outmoded.
  I suggest, therefore, that we must not take a local constituency point of view about these ports, but that we must think in terms of the national interest and of reorganising the employment of these workers in such a way that they will be absorbed into constructive industry over a period. So, when I advocate a three-year programme for changing the whole character of the Royal Dockyards, a three-year plan for liquidating the British Navy, I am more in keeping with modern strategy than hon. Gentlemen who have spoken earlier tonight.
  I want to stress the point made by the hon. Member for Dunbartonshire, East. He has more experience of engineering than I have, and he has put his finger on what I believe to be an important point. If we reorganise the Navy on the lines of using atomic energy for ships, then there is no case for handing it over to private enterprise. The work should be done in the Royal Dockyards. I am pointing out that there are immense dangers in the new developments forecast by the Minister today.
  I have here a cutting from the issue of the Evening Standard of the day following the Admiralty announcement, which states:
  "A powerful new partnership between Vickers, Rolls-Royce and the American oil engineering firm of Foster Wheeler is announced today. Its aim is to develop atomic power for ships."
  The cost of that appals me. If we are to have atomic power for ships, whether built in the Royal Dockyard at Rosyth or

  2411
  anywhere else, it is likely that next year the First Lord will come here with grandiose plans for spending. more money on the Royal Dockyards—
  Mr. Deputy-Speaker: The hon. Member has strayed from this Amendment to the main Question.
  Mr. Hughes: As I understand it, Mr. Deputy-Speaker, it is that a Select Committee should be appointed.
  Mr. Deputy-Speaker: The main Question is, That Mr. Speaker do now leave the Chair. The Amendment that we are now discussing deals with the Royal Dockyards.
  Mr. Hughes: But surely the Amendment before the House, Mr. Deputy-Speaker, is the one moved by my right hon. Friend the Member for Rochester and Chatham, and it is to call attention to the need for a Select Committee?
  Mr. Deputy-Speaker: Yes, to the need for a Select Committee for a specific purpose, to deal with the Royal Dockyards.
  Mr. Hughes: I may not be explaining myself as clearly as I might, Mr. Deputy-Speaker, but I am trying to deal with the problems affecting the Royal Dockyards.
  I am trying to pursue the argument first dealt with by my hon. Friend the Member for Dumbartonshire, East, that, if there is to be adaptation of ships for the use of atomic energy, then it is only right that this work should be done under national ownership in the Royal Dockyards instead of by these various companies.
  Who will do the work if the Royal Dockyards do not? We are told that there is to be a new concern called Vickers Nuclear Engineering Ltd. Presumably that concern will take over some of the work now being done in the Royal Dockyards. Therefore, unemployment will inevitably result in Plymouth and in Devon-port and in all the other places, because a lot of the work will not be done in the Royal Dockyards but in the Rolls-Royce works.
  I see, as the hon. Member for Dunbartonshire, East sees, a potential menace to the Royal Dockyards in that development. Behind all this—and I apologise for not having made myself as clear as I should have wished—I see that if the policy of atomic-driven warships is adopted, there will in future years be an
  2412
  enormous bill in the Navy Estimates. We should have the Select Committee now. Let it begin immediately; let it face the real problems; let it face the whole problem of dealing with the naval population of the dockyards and transferring it to useful work to become a national asset instead of a national liability.
  8.50 p.m.
  Mr. John Harvey: I shall not detain the House very long. Unlike a good many hon. Gentlemen who have spoken, I cannot claim to represent a constituency which has any direct interest in dockyards. It is true that when one becomes a Member of Parliament, no matter how well one thought one knew one's constituency beforehand, one afterwards discovers all sorts of things about it which one did not know in the first place. But I am sure that I shall never discover a dockyard in my constituency.
  Notwithstanding that, it gives me great pleasure to participate in the discussion tonight, if only to underline what was said by the right hon. Member for Rochester and Chatham (Mr. Bottomley) when he refuted the suggestion that this was a debate affecting purely constituency interests. It may well be that in future years the Civil Lord will have dockyard Members representing constituencies of which we had not thought before tonight, and, of course, I have Malta in mind. In the meantime, I should like to say a word about the dockyard in Malta, not because it is my prime hobbyhorse tonight, but because I am particularly interested in merchant shipping.
  I intervene in the debate with some diffidence, because, as one who for many years sailed under the Red Duster, I naturally feel a little hesitant about intervening in affairs of our younger, if more sophisticated, sister. Nevertheless, it occurs to me that in this matter of dockyards and in the matter of Malta there is some identity of interests on which we might all reflect for a moment or two.
  Last year there was published an Interim Report on the Economic Problems of Malta prepared by Thomas Balogh and Dudley Seers, which said:
  "…we hope that with the establishment of more effective machinery for handling problems common to the Governments of Britain and Malta, it will be possible to bring the

  2413
  Navy into the reconstruction of the harbour: it may be found that slight modifications in the areas used by the Navy would considerably improve the facilities available for merchant shipping, and open up possibilities of repairing civilian ships, especially tankers."
  At present, a great many British-owned or British-managed merchant ships, notably tankers, constantly ply through the Mediterranean and are regularly in need of overhaul, refit and repair. Today, as a result of that, in certain European countries important industries have developed for overhauling and repairing British-owned or British-managed ships. Some of our biggest tankers regularly go to Cadiz in Spain, and sterling is paid for work to be undertaken there for which we have not the room in our shipyards in this country.
  I wonder whether now or in the future it might not be worth considering how far the dockyard in Malta could be used for work of this sort, because in Malta, perhaps more than anywhere else, the economy of the whole island is so intimately bound up with the dockyard. If there were some way in which the prosperity accruing to Malta from the dockyard could be increased, we should be doing Malta much greater good than any number of round-table conferences in themselves could do, because, after all, it is economic prosperity which Malta has to get from somewhere as the foundation for all else it wants.
  Arising out of that point, it is, I believe I am right in saying, the fact that the Admiralty can quote for the repair of non-naval vessels to be undertaken in naval dockyards. But I am also given to understand that in instances where quotations have, in fact, been made, they have been exorbitantly high by comparison with anything that merchant shipping yards can offer.
  Mr. Wingfield Digby indicated dissent.
  Mr. Harvey: The Civil Lord shakes his head, and I grant that where naval ships are concerned the naval yard could do the job at a very profitable price. But I have been given to understand that instances, which I could perhaps bring to the attention of the Civil Lord, have occurred, certainly in the recent past, where the system of quoting for merchant shipping repairs and refits has shown prices which do not compare favourably with other yards.
  2414
  Be that as it may, is it nevertheless possible that the Admiralty has considered, or will in future consider, to what extent Malta, which lies on the main route from this country to the Middle East, may be used to a greater extent to service the merchant ships, notably tankers, which are at present being serviced in foreign countries with, in many instances, some loss of sterling to our own economy? Surely, if this idea is at all feasible, Malta could benefit from the suggestion which I have made.
  8.58 p.m.
  The Civil Lord of the Admiralty (Mr. Simon Wingfield Digby): I wish to congratulate the right hon. Member for Rochester and Chatham (Mr. Bottomley) on the way in which he moved his Amendment. It is particularly appropriate that we should have had a right hon. Gentleman representing a dockyard constituency to do so, and I am grateful to him for the reasonable manner in which he spoke.
  I thought that the first thing I had better do was to brush up my history of Chatham. Although it may not be the oldest dockyard, it was founded as long ago as 1547. There are one or two other things which I learned about Chatham. I learned that a flag was used. the Cross of St. George, for "in muster" and that the yard was guarded by mastiffs, a version of the police dogs in which people place so much faith these days from the security point of view.
  As one or two hon. Members have mentioned, in 1759 "Victory" was laid down there, although I gather that there is a dispute between my hon. Friend the Member for Gillingham (Mr. Burden) and the right hon. Gentleman as to whose was the constituency in which she was laid down. It was, again, to Chatham, some years before Trafalgar, that "Victory" went back to be refitted, so that by the time she fought at Trafalgar she was known to be forty-six years old, which I have personal reasons for thinking is a very good age indeed.
  One of the first sights that greets one on entering Chatham Dockyard is the covered slipways, now under the care of the Ministry of Works, where "Victory" and other ships were built, and I think they provide an example of the difficulty which is experienced in adapting old

  2415
  yards to modern conditions. We are not free to lay them out again as we might do if we were to start afresh.
  Before I leave the subject of Chatham Dockyard, I must make a brief reference to the splendid part which it played in the last war, when no fewer than 1,360 ships were taken in hand there, and the production of torpedo tubes was increased fourfold.
  We have had a most interesting debate this evening. It has been rather narrower than the wide considerations of strategy which have engaged our attention in the last week or two, but it has been a pleasant debate. Most of the Members who represent dockyard constituencies have taken part, and many points have been raised. I shall answer those which I can, and the others I shall write about afterwards.
  During the last four and a half years I have paid many visits to dockyards at home and overseas, and on those visits I have always had informal talks with the managers of the main departments and also either with the full Whitley or trade union officials of the Whitley Committee. From what I have been able to learn from those visits—although it is true that I undertake them primarily as a "landlord" and also a welfare officer, being responsible for the buildings, the jetties and the docks, and also for labour relations—I have received the impression that our dockyards are going well. I admit at once that there is room for further improvement, as there always must be at a time when the needs of the Fleet, and also techniques, are changing.
  The first point I make is that the dockyards exist to serve the Fleet, with all its changing needs; needs which change from day to day and from year to year. The real test of the Royal Dockyards is how far they meet those needs. Today, they deal mostly with repairs, ranging from simple dockings to extremely complicated conversions, but it is essentially a matter of bespoke tailoring, so to speak. No two jobs are alike, and no two ships are alike. Even if ships are of the same age and class, one may be supplied with alternating current and the other with direct current.
  Again, much of the work is what might be described as pioneering, such as work upon the angled deck, which produces new problems because it overhangs the
  2416
  dock; work upon the steam catapult, and work which is now going on at Devon-port upon H.M.S. "Girdleness," which is the first of our ships to be fitted for guided missiles. If one compares the complexity of a ship today with what it was 20 years ago, one appreciates the point. For example, I am told that the modern frigate has no fewer than 3,000 valves and 50 cathode-ray tubes, which is in very great contrast to the dreadnought of olden days.
  In addition to the essential rôle of repair that takes up so much of the time of the dockyards, they have other important rôles. There is the rôle of construction. The right hon. Member for Rochester and Chatham has asked—and the question has often been put to me when I have been going round the yards—whether it would not be possible for the Royal Dockyards to do more actual building of ships. I know that there is a general desire to see that done. The survey ship, H.M.S. "Vidal,' has been built since the war at Chatham Dockyard—and very well built, too. At the present moment, however, the dockyards are so fully occupied with repair work, which we are anxious for them to do, that it is not very easy to allocate much construction work to them—although two frigates are being built in them at this moment.
  Another of the rôles of the dockyards is to look after shore establishments. There has been a system by which work-people went out from the dockyards, and sometimes went on quite long journeys, in order to maintain the mechanical and electrical equipment at shore establishments. We have recently decided to change that system. In future that work will be done under the control of another clepartment—the department of the Civil Engineer-in-Chief—and, if necessary, the work will be done by contract. At any rate, the dockyards will now be able to concentrate even more upon their main business of repair.
  There is one other general point which I must make about the Royal Dockyards. Devonport and Portsmouth employ 17,000 workpeople, which makes them as large as any single shipbuilding yard in the United Kingdom, and about four times as large as the largest repair yards, namely, Cammell Laird's, on the Mersey.
  While on the subject of the rôle of the dockyards, I would tell the hon. Member

  2417
  for Faversham (Mr. P. Wells) that Sheerness Dockyard will have a slightly different type of work. Smaller ships will be attended to at Sheerness, and we hope that it will be possible to avoid all redundancies. The electrical shop will go on; the building of it will start this year.
  One or two hon. Members have queried the justification for the Royal Dockyards, including the hon. Member for South Ayrshire (Mr. Emrys Hughes), who is not in his place at the moment. My hon. Friend the Member for Sutton (Mr. J. J. Astor) asked what would happen if there was less work for the dockyards. So long as we have a Fleet we must have dockyards to render it the necessary support. I believe that there will be plenty of work for the dockyards so long as we have a Fleet of anything like its present size. Indeed, our anxiety is to get all the work we want done into the dockyards. Should a time ever come when we are short of work, I feel sure that the workshops and the skill of the people in our dockyards will ensure that we shall be able to carry out work on such projects as the guided weapons of the future.
  We have work done in the commercial yards as well, which has the advantage of keeping those yards familiar with warship work. Let me explain why we can do the work better in the Royal Dockyards. Merchant ships and warships are becoming increasingly dissimilar. Technical improvements to warships have meant that more and more special equipment is necessary to carry out repairs to them. Commercial yards are not able, in the majority of cases, to carry out all that work work on equipment such as gun mountings and radar have to be subcontracted, which costs extra time and money. On a pure cost comparison, we find that even the Comptroller and Auditor-General has said that the work carried out on warships at the Royal Dockyards is cheaper than that carried out in commercial yards.
  Mr. William Ross: Can the Civil Lord go a little further, and tell us whether he can confirm the recent findings of the Select Committee on Estimates that it is even cheaper in Rosyth Dockyard than in any other?
  Mr. Digby: It is true that the Select Committee found that to be the case. Since then I have had no new figures,
  2418
  but I am sure that the work of the Rosyth Dockyard is thoroughly efficient.
  Mr. Ross: Has the Minister acted on the advice given by the Select Committee, and seen to it that more work has been directed to Rosyth?
  Mr. Digby: We have sent as much work to Rosyth Dockyard as can satisfactorily be done there.
  In justification of the dockyards, let me point out again that a great deal of the work is modernisation, by which we are able to turn out a new ship at about one-third of the cost it would take to build a completely new ship in a commercial yard.
  Mr. Callaghan: What about the "Victorious"?
  Mr. Digby: The hon. Gentleman will remember that work on the "Victorious" began when he was at the Admiralty.
  Mr. Callaghan: The expense has been incurred during the time that the hon. Gentleman has been Civil Lord of the Admiralty.
  Mr. Digby: I heard it suggested that it might be a good thing if the dockyards were not so concentrated but were more dispersed, in this age of nuclear warfare. I suppose that if we were starting again we should give serious consideration to the dispersal of the Royal Dockyards, but the fact is that great sums of money have been sunk in buildings, docks, jetties and plant of various kinds, and we have also the advantage of a skilled labour force in each of the dockyard towns. It would, therefore, simply not be practicable, even if the money were available; it would be a most difficult operation to disperse the dockyards at the present time.
  If we look further into the matter we see that from the point of view both of a cold or of a limited war the dockyards are the best way of supporting the Fleet and carrying out the necessary repairs. In the event of a nuclear war—which we hope will never occur—the essential thing will be to get as large a fleet as possible to sea as early as possible, and there is no doubt whatever that that can best be done from the dockyards as they are at present, with their skilled labour force and special equipment. Nevertheless, we are spending rather more money on a Fleet

  2419
  train, including Fleet depot and repair ships. Hon. Members will see from my noble Friend's explanatory statement that we are spending more on that, but I must say at once that it is an expensive method of repair, compared with the Royal Dockyards.
  The modernisation plan, which has been mentioned this evening, will pay for itself in time of peace—and pay for itself quite soon—by increased efficiency. With reference to the use of the Royal Dockyards, not only at home but throughout the world, one may take the case of a particular ship. I have before me the history of H.M.S. "Birmingham," actually built at Devonport Dockyard. We see that in the 17 years that have since elapsed she has spent 4½ years in various yards—almost entirely in the Royal Dockyards. She has visited Simonstown, Singapore and Hong Kong and several of the main yards, so we see the service which the yards are giving to the Fleet.
  The right hon. Member for Rochester and Chatham refers in his Amendment not only to the need for the modernisation and the better equipping of the dockyards, but also to the need for a Select Committee. Although I have already said that I believe the dockyards to be efficient at the present moment, I realise that it is possible to improve them. We have been carrying out improvements during the last few years. We have been putting more money into machinery—as I shall show later—and more money into buildings. We have been introducing courses for management and new managerial appointments.
  We have also in the past had a number of committees that have examined the dockyards. In 1951 the Select Committee on Estimates drew up a Report on the dockyards, and we have adopted some of its suggestions. Again, in 1953, we had an internal committee which looked into the management side of the dockyards and, as a result, a second deputy-manager is to be appointed to each of the main departments in the home yards.
  Some months ago, however, my noble Friend decided that a high-level committee should be appointed to examine the organisation at the Admiralty and at outstations for dealing with the requirements in matériel, from research to production and repair. Ships and weapons are included in this, and the committee is being
  2420
  asked to make recommendations. This covers the entire field of the dockyards. The committee will also advise on staffing, both civilian and naval, having regard to the amalgamated general list, and the naval Ordnance Design and Inspection Pool—let me add here—will be included. Preliminary to the work of this main committee, a working party has been sitting now for a few months under the chairmanship of a Vice-Admiral.
  I think that the House might wish to know the names of the members of the main committee. The Chairman of it is Sir Barclay Nihill, former Chief Justice of Kenya, and the members are Lieut.-Colonel Eustace Smith, of Smiths Docks Ltd.; Mr. W. W. Watt, Managing Director of the British Oxygen Company; Admiral Sir Michael Denny, a former Controller and former C.-in-C., Home Fleet; Rear-Admiral Dawnay, Deputy Controller, and Mr. J. F. Mountain, an Under-Secretary at the Admiralty.
  The terms of reference are wide and cover the dockyards fully. The committee will in no way be limited in the recommendations which it makes.
  Mr. Callaghan: Will the recommendations be published?
  Mr. Digby: I do not think so. It is not usual to publish the findings of a committee of this kind, which is set up to advise the Department. I do not think it likely that the findings will be published.
  Mr. Bottomley: Did the First Lord not consider that a trade unionist might be included on the Committee? If not, why not?
  Mr. Digby: It was considered, but in this case it was not thought necessary.
  The House will agree that as the committee has been set up and is already starting its deliberations, it would be inappropriate to have a Select Committee as well. Although I am most sympathetic with the other part of the Amendment, I regret that I cannot accept that part which suggests the setting up of a Select Committee.
  We have been carrying out various improvements in management, and are still trying to improve the quality of the management and organisation of the

  2421
  dockyards, but the recruiting of professional and technical grades is difficult, as outside industry also finds. We have had difficulty in recruitment to the Royal Corps of Naval Constructors, and we have decided to start this year a new form of entry to that Corps, to try to increase its strength, of boys leaving school between 18 and 19½ years of age. They will serve a five-year probationary period at Manadon and Greenwich. After that, they will be accepted in the Corps. I would remind the House that the junior appointments in the Corps of Naval Constructors are more highly paid than those of any other comparable professional civil servant.
  To turn to a slightly different level—the drawing office staff—we have started special schemes for training craftsmen in the various departments to do drawing office work.
  One or two hon. Members have mentioned the apprenticeship scheme. We are starting this year a new dual-stream apprentice scheme. There will be an upper stream of apprentices, recruited between the ages of 16 and 18, and these apprentices will carry out a five-year training period. If successful, they will be guaranteed established posts on the non-industrial level. There will also be a lower stream on much the same basis as at present, except that after one year those who are particularly promising will be transferred to the upper stream. It is hoped that one-third of the upper stream, who will be the subordinate officers of the future, will be recruited in this way. I believe this will go a long way towards strengthening the yards in subordinate officer posts.
  I was asked whether there was a heavy loss of ex-apprentices. It is a little difficult to say precisely what we are losing. We have made analyses for the years 1947 and 1948 and we find that we are losing a certain number because of National Service and other factors. When we know the final figures they will probably be somewhere between a half and one-third, but I must add that this is not very different from the experience in industry.
  I should like to refer to the question of capital equipment in the dockyards, which the Amendment points out is required. May I remind the House again of the considerable amount of war
  2422
  damage which occurred in the two major yards at home and the two major yards abroad. Even in such yards as Chatham, which did not receive war damage, there are many shops which we should like to see replaced. We have spent a great deal of money on that recently. As an example, in 1951–52 we spent £600,000 and £900,000 on works and machinery and in 1956–57 we shall be spending £2 million and £2·1 million respectively. It will be seen that our expenditure is rising very rapidly.
  I turn now to labour relations, and I am happy to say that they have been good, and that, in particular, the production committees in the yards are functioning very much better than they have been for some time. Labour relations abroad have perhaps not been quite so good as those at home. Unfortunately we had a strike at Singapore the other day and a "go-slow" in Malta last year.
  We are making a big effort to improve the conditions in the yards. We abolished the closed fortnight in the yards and went back to staggered holidays because we believed that was in the interests of the majority of the workpeople. On my visits to the yards I have found that the trade union representatives are pleased that we have been able to do that.
  The new shops that are going up as a result of this extra works expenditure are making for better conditions, although I confess that I was a little disappointed when in Devonport the other day to find that there, where we have an excellent new shop which has only just been completed, they were having difficulty in manning it because many of the men preferred to work in the old shops. I am quite sure that when they have had more experience of the new shops—which I believe compare very favourably with those outside: I go around a large number of commercial shipbuilding yards in this country—the men will get used to them and will like them very much.
  Another manning problem is that of heating some of the shops. Some tend to be cold. That again costs much money, but we are spending more on it, and I believe we are making good progress in dealing with that problem.
  The question of wages was mentioned. At present we are in negotiation about

  2423
  the basic wages of our employees. I would emphasise once again that our rates compare favourably with those outside, although it is true that wage packets tend to be smaller because we work very much less overtime. As was mentioned by my hon. Friend the Member for Gillingham, next year there is to be increased provision for overtime. Provision for overtime will go up from £2 million to £3 million in the next year.
  We are also doing everything we can to introduce payment-by-results and other incentive schemes, but there is no type of work to which it is more difficult to apply such schemes than that of the repair work which we have to do in the dockyards. It does not lend itself to that type of scheme, but we are trying to do all we can to introduce new ways of payment by result.
  I would remind the House, in regard to pensions, that the number of established men in the yards has been raised since 1952 by no fewer than 3,300, so that pension prospects are very much better. We raised the merit pay maximum last year by 5s. and it will be raised a further 3s. very shortly.
  If I may summarise, we have appointed the Committee which I have mentioned to look into the various problems of the dockyards, and we hope to get a great deal of help from it. In the meantime, we have introduced a number of changes and alterations in management. We have introduced new training courses for everyone from chargehand to superior officer so as to get them used to problems of management.
  We have introduced a new apprentices' scheme, and we have incurred heavy expenditure on new machinery for the yards and new workshops. We realise that there is a need for modernisation, and within our resources we shall do what we can. Modernisation must depend on the amount of money that can be made available from Navy Votes, but in so far as we can make it available, we shall press on with modernisation.
  In conclusion, I should like to repeat that we have plenty of work for the yards to do, and I should like to do all I can to dispel any anxiety among those who work in the yards that there is not enough work for them. We have all the work that we can put into the yards at the
  2424
  present time, and a great deal more overflows outside into the commercial yards, so that with a Fleet of about the present size there is plenty of work for those who live in the dockyard towns.
  Mr. Burden: Would the Civil Lord also state that that applies to the foreseeable future and not only to now?
  Mr. Digby: That applies to the future so far as I can see it. We are trying to get more work in the yards than they will take, and we have been obliged to go a great deal to the outside yards.
  I should like to say one word in praise of the good work done by all those who work in the dockyards. They do not get very much appreciation for the work which they do. There is a real spirit of loyalty in our dockyards, and we shall endeavour to foster this in old ways and in new. Finally, I ask the right hon. Gentleman if he would be so kind as to withdraw his Amendment.
  Mr. Bottomley: In thanking the Civil Lord for his courteous reply, I am bound to express regret that no trade unionist has been included as a member of the committee which is to examine the problems in the dockyards. Before I seek your permission, Mr. Speaker, and that of the House to withdraw the Amendment, I emphasise once more that I shall continue to urge that better provision be made for the Royal Dockyards, and particularly Chatham. I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Main Question again proposed.
  9.28 p.m.
  Mr. J. Grimond: I speak with some diffidence in this general debate because I think I am the first speaker who has not served in the Navy. If one needs an excuse for taking part in a discussion on Britain's Senior Service, my excuse is that I have in my constituency a place called Scapa Flow, which is not unknown to many people who serve in Her Majesty's ships, and I see a certain amount of the Navy which is very pleasant.
  It is particularly difficult for me to speak in the general debate almost immediately after the hon. and gallant Member for Croydon, North-East (Vice-Admiral

  2425
  Hughes Hallett), who speaks with an experience and authority which I cannot hope to emulate. But I should like to reiterate, if I may with respect, a very important point which I think he made about manpower. From the point of view of the country as a whole, even leaving the Navy aside, it is important that we should save as much manpower as possible and avoid any under-employment of highly-skilled naval officers such as he hinted might be taking place at the present time.
  I should like for a minute or two to follow up a line which was first embarked on by the hon. Member for Cardiff, South-East (Mr. Callaghan). He referred to paragraph 9 of the Explanatory Memorandum, and it occurred to me that that was a very important paragraph since it deals with the main rôle of the Fleet today. It does not seem to me that we should attach too much importance to the need for maintaining our prestige in the cold war by keeping up a large conventional Fleet. There seemed to be some suggestion that that was an important rôle for Her Majesty's ships.
  I do not by any means say that this is a matter which can be simply swept on one side. There are certain parts of the world, such as the Persian Gulf, where the Fleet may have a considerable prestige rôle to play, and where it might be very unfortunate if we appeared to be outgunned, so to speak, not only in boats but in seniority of command by other nations. Nevertheless, I should have thought that we could not at this moment, with all the claims on our resources, give too much attention to the question of mere prestige in the cold war.
  When it comes to the Fleet's rôle in active war, again it seems to me that the hon. and gallant Member for Croydon, North-East was, as far as I know as an amateur, absolutely correct in saying that integration in N.A.T.O. Forces was vital for our Fleet. I was very glad to hear him say that he thought integration had gone further in naval matters than in those concerning the other Services, and I suppose within that orbit he would include integration with the Commonwealth as a whole. I only wonder whether integration has extended far enough, not only into strategic and tactical co-operation, but into the planning of the actual building programme. I am sure
  2426
  these matters are discussed among the N.A.T.O. countries, but how far are these programmes, in fact, integrated?
  To the amateur such as myself there seems to be a tendency for each N.A.T.O. country to build up what might be called a pint-size complete fleet of its own, regardless of the fact that, as the hon. Member for Cardiff, South-East said, the American fleet is so incomparably bigger now than any other single allied fleet. It would seem that such a policy must involve a great deal of waste. Speaking entirely as an amateur, I think that ideally it might well be the right policy for the other parties to N.A.T.O. to specialise in one form of ship. I quite see that there are objections to that. Obviously, for one thing, we should want to keep our own dockyards and shipbuilding yards capable of building various forms of shipping. Nevertheless, some degree of specialisation would seem to be very necessary.
  May I turn now to the building of cruisers, which sems to be a relevant consideration to this question of specialisation by N.A.T.O. countries. Some officers are in favour of cruisers and think that they have a big part to play, while others feel that their day may be passing. What seems difficult to understand is why we are building the particular number of cruisers we are. Apparently we are to construct, at considerable expense, three cruisers, of traditional type, armed with what might be called traditional weapons. It is difficult to believe that three are enough if we are to have cruisers at all, or if we are not to rely on cruisers very much longer whether it is worth building even these three at considerable expense. I cannot help thinking that the reason we are building three is because they happened to be on the stocks anyway.
  I now turn for a moment to the question of our defence against the submarine. It was suggested that the time may come when this country feels that it is being strangled, as it was in the last two wars, by submarine warfare. Presumably the Russians do not construct a great number of submarines without having some rôle in view for them. We may perhaps visualise therefore a state of affairs in which nuclear weapons have not been used, but in which we find our merchant shipping being sunk in large quantities. It has been argued that at

  2427
  that point inevitably we should use nuclear weapons, and that the right riposte would be the bombing of enemy submarine bases with some form of nuclear weapons. I quite see that. All I ask is, should it not be clearly decided—obviously we cannot have an answer to this now—in public? But it should be clear in the minds of the Government, and agreed as a by-partisan policy with the Opposition, that in those circumstances we will retaliate with nuclear weapons. Otherwise, our whole strategy against the submarine does not seem to rest on a very sure foundation.
  If we are in any doubt about the possibility of retaliation with nuclear weapons even though the enemy has not yet used them, obviously we have to lay out a lot of money on escort vessels, frigates, and so on. If, however, it is clearly understood that should we be threatened by a large submarine campaign, we are prepared to go to the utmost in bombing the submarine bases, clearly the question of building frigates and so on is greatly altered.
  Mr. Dudley Williams: While I agree with the hon. Member about the submarine menace, will he say how he would propose to deal with the enemy cruiser force—if the Russians were our enemies—if cruisers were not built for this country?
  Mr. Grimond: I have said that I cannot claim to be a naval strategist. All I say about cruisers is that if it is right to have cruisers at all we should have far more than three now building.
  Mr. Williams: I agree.
  Mr. Grimond: To return to submarines, I suggest that it would be a difficult matter psychologically in a democratic country to be the first to drop the hydrogen bomb. Unless a clear decision on this is taken long before war breaks out, we might find ourselves hamstrung at the vital moment by doubt as to whether our people would accept a decision of that kind.
  Mr. R. T. Paget: Why the hydrogen bomb?
  Mr. Grimond: I meant any form of nuclear or atomic bomb.
  It is generally assumed that in a world war the enemy would almost inevitably
  2428
  use nuclear weapons on a big scale against this country. That may well be so. I do not think anyone can visualise the circumstances of the next war with any confidence, but I make this suggestion. It is assumed, of course, that the enemy is the aggressor and will not require to drop these bombs, at any rate in the first stage, in self-defence. It must also be assumed that if the enemy does drop these bombs on this country, he would virtually wipe it out.
  Any aggressor, surely, must hope to occupy the country which he attacks, and if he could succeed in obtaining the surrender of that country without wiping it out with atom bombs and making it virtually a desert, I should have thought that he would be tempted to try to do so. The mere fact that Russia is building up a very large submarine and cruiser force shows that she contemplates a position in which she might fight a war against us without dropping the, hydrogen bomb, at any rate in the earlier stages.
  I understand that the Navy is conceived to have a rôle in a broken-back war. That is a type of warfare that I find it difficult to visualise. It seems to me that in the broken-backed war we will not only have a broken back, but everything else will be broken too. If war were carried on at all after nuclear bombing, it would have to be carried on from very remote bases. If it is seriously visualised that the Navy has an important rôle after the world has been devastated by nuclear weapons, one wonders whether we have prepared those remote bases. These are merely considerations which, in my ignorance, I almost hesitate to put forward. I simply leave them with the House.
  May I be permitted to say a word of two about my own private naval base, so to speak, at Scapa Flow? I should like it to be put on record how grateful we are to the Navy. The Parliamentary Secretary, in opening the debate, spoke of the importance of the Navy being sustained by the good feeling of the country. I assure him that the Navy has itself sustained the very best type of feeling in the Island of Hoy and throughout my constituency. Not only have we gained greatly economically, but it has gone far beyond that.
  It might be thought a back-handed compliment to thank the Navy for the

  2429
  fact that we have the Churchill barriers, but all the naval personnel, and especially the commanders who have been resident naval officers there, have gone out of their way to co-operate and help us in every possible way. If there must be any radical change at Lyness, I hope that the change will be made as gently as possible. The base there is an important factor in local life. It provides a ferry across the Flow, for instance, among many other services.
  There is one other point. The Admiralty has there a rather powerful electric lighting plant which we have always hoped might eventually be used for the supply of light to civilians. We can quite see that it might involve some arrangement by which if the Admiralty needed the plant everyone else would be switched off. If the Financial Secretary would look again to see if it could be used for general local use, I should be grateful.
  I hope that we shall continue to have the most happy relations there with the Navy. Certainly, we are most grateful for their many services which have gone far outside their normal duty.
  9.41 p.m.
  Mr. Geoffrey Stevens: The hon. Member for Orkney and Shetland (Mr. Grimond) wondered whether he was the first speaker in this general debate on the Navy Estimates who had not served in the Royal Navy. If that was the case, I am the second speaker to suffer from that disability, if indeed it be a disability. It may be entirely out of order in a debate on the Navy Estimates to say this, but I served for six years in what is rapidly becoming the senior Service—the Royal Air Force. [HON. MEMBERS: "Oh."]. I am sorry to hear the shocked murmurs around me but I think that movement in the last twenty years has been in that direction.
  It is about aircraft in the Royal Navy that I want first to say a few words. I want to refer to the Short Seamews of which the hon. Member for Cardiff, South-East (Mr. Callaghan) spoke. The Seamews were produced by Short Brothers in answer to a specification requiring a modest performance, primarily for anti-submarine duties, but in particular an aircraft which was to be exceedingly cheap and easy to construct.
  2430
  It was to be an aeroplane which would be capable of operation not only from a carrier but also from small and restricted airstrips.
  As I understand the situation, the Short Seamew has undoubtedly fulfilled the requirements of the original specification, but in the last month or two reports and rumours have reached me that, now that a few more Seamews are available, Navy pilots who have flown them are not entirely happy with their performance. They have found that the Seamew has a cruising speed which is far below modern operational requirements and that its terminal diving speed is not much more than 300 knots, which is also below what is required.
  I do not know whether these rumours are true. If they are, a rather curious situation arises. I have never heard a report or a rumour that the aircraft does not fulfil the original requirements. Yet when it comes into service it is found to be unsatisfactory. Surely, that opinion should have been expressed when the original requirements and specifications were first published. Is it possible that money has been wasted on an aeroplane which has never been and could never be of great value? I have seen the Sea-mew perform. It is an ugly plane, and it is sometimes said in the world of aeroplanes that if an aeroplane is beautiful then in nine cases out of ten it is a good aeroplane as well. Nobody could say that the Seamew was a beautiful aeroplane. It is not. It performs reasonably well, but I confess that I am uneasy about the reports which have come to me.
  At the other end of the scale, I am delighted to hear that the N.113, to which the Parliamentary Secretary referred, is armed with four Aden guns, and what a punch. I hope, however, that the N.113 is able to fire those guns at operational height, and that we shall not in any circumstances have a repetition of what happened in the case of another aeroplane, which was ordered, not for the Royal Navy but for the Royal Air Force, which was supplied with a tremendous punch but a punch not capable of being used at operational height.
  My hon. Friend said that the N.113 would carry the atomic bomb, and I am delighted to hear that. He also said that the first mark of that aeroplane would not be able to carry an air-to-air guided

  2431
  missile. It seems to me that the history of the Battle of Britain shows that to be one jump ahead of the enemy in firepower as far as aeroplanes are concerned might just about turn the scale. I am convinced in my own mind that the four Aden guns, powerful though they may be, will not be that jump ahead of a potential enemy with air-to-air guided missiles.
  The tremendous advantage of the air-to-air guided missile is that not only has it a punch, but that that punch will probably hit the target as well. I am not at all certain, however, that the four Aden guns, when operated by pilots of the Royal Navy, will always be able to hit the target. It is perfectly true that the D.H. 110 is a very good aeroplane which will carry the air-to-air guided missile, but I think that we want the two in double harness. I am quite sure it would give great satisfaction if we could be assured that the Mark II of the N.113 will soon go into production and that, before a year or two has passed, will be in service with the Royal Navy.
  I turn now from aeroplanes as such to what seems to me to be a very important improvement in the Royal Navy recently. This is the development of the steam catapult, which is a great advance on the catapult previously used in aircraft carriers. I think I am right in saying that not many weeks ago the steam catapult for the Royal Navy was grounded for the time being, because instead of catapulting aircraft safely off the carrier, it hooked one or two over the bows with disastrous effects. We are selling the steam catapult to the United States, and I hope that the Parliamentary Secretary will be able to assure us tonight that any defect which there was has now been put right.
  I should also like to hear more about the mirror deck-landing aid, which seems to me to have tremendous advantages over anything previously known, and over the old baton method, which was a very slapdash way of getting a pilot to land safely on a carrier. The mirror deck-landing aid is a tremendous advance, and I hope we shall hear that it is operating satisfactorily.
  Coming from the air to the true home of the Royal Navy, the sea, one reads that work is going forward on ship-to-air missiles. It is a very long time now since
  2432
  I saw a photograph, I think in the Illustrated London News, of an American cruiser which is fully fitted with apparatus for the discharge of ship-to-air missiles. Are we so very far behind the United States in a vitally important matter of this sort? Are we so far behind that, whereas they have now at least one ship and possibly more already at sea fitted for discharging ship-to-air missiles, all we can say at present is that work is going forward on apparatus of that kind?
  So far as nuclear fission is concerned, I was perturbed by what the Parliamentary Secretary had to say about the future possibilites of British submarines engined with nuclear power. Once again, I saw many photographs in all the papers not long ago of an American submarine called the "Nautilus" which is now fitted with nuclear power. Not many months ago, I was talking to Sir John Cockcroft, who knows something about atomic energy in this country, and he said that, as far as the peaceful use of nuclear energy is concerned, we in this country are some years ahead of the United States.
  I should have thought that power plant producing steam for the propulsion of a submarine was peaceful use as distinct from warlike use of nuclear fission. Warlike use means the atom bomb or the hydrogen bomb, not steam-producing plant. I was a little alarmed, therefore, to hear that we have not begun to construct a submarine, but are only thinking in terms of the production of the power plant. So we are many years behind the United States in that respect.
  Now I turn to another modern development, radar. I want to ask the Parliamentary Secretary what is the position about radar research in the Royal Navy and if there is full cooperation between the Royal Navy and the Royal Air Force in this respect. On Monday we heard that early warning stations are now being sited in Western Germany to assist the defence of this country. Is there full co-operation between the Royal Air Force and the Royal Navy in this respect?
  Is there full co-operation between the two Services and the Ministry of Supply? The Ministry is carrying out extensive research and development programmes. Two points occur to me there. First, is there still inter-Service rivalry?

  2433
  Does the Royal Air Force get on to something hot and then sit on it because it wants to be ahead of the Royal Navy, or vice versa? Or is there a complete and free interchange of ideas? Is there the same interchange of ideas between the two uniformed Services and the Ministry of Supply?
  Secondly, is there overlapping? Is there waste of money? Are men and resources being used wastefully by the three Services? For instance, could waste be avoided by more co-operation on radar research and development between the Services and the Ministry of Supply? I do not know the situation and I would like reassurance from my hon. Friend on that point.
  Finally, I have a question to ask arising out of something I have seen in the evening papers tonight. I have read that a Gannet and Venom aircraft operating from the aircraft carrier "Ark Royal" in the Mediterranean are missing. Will my hon. Friend in his reply this evening be able to give us any information about the fate of those two aircraft?
  9.53 p.m.
  Mr. R. T. Paget: I want to discuss a question raised by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) and by the hon. and gallant Gentleman the Member for Croydon, North-East (Vice-Admiral Hughes-Hallett) about the integration of the Services. They suggested that the time had come for the integration of the Royal Navy and the Royal Air Force. With that I agree, but I am not certain that I would not take it further.
  One important aspect of this matter seems to me to be that integration might give us a common strategy among our Forces. We talk about a common strategy with our Allies but we do not seem to hear of a common strategy even amongst our Services. After all, the most important strategic assumption we have to make is as to whether, in a major war, this island would be available as a base for war purposes. The Army has decided that it would not be. That is why the Territorial Army has, in effect, been disbanded. It has been disbanded because it is the Army assumption that it would be quite impossible to mobilise it, or if we did mobilise it, it would be quite impossible to transport it.
  Mr. Speaker: This discussion seems to be more appropriate to the Army Estimates than to the Navy Estimates.
  Mr. Douglas Glover: The hon. and learned Member for Northampton (Mr. Paget) is rather inaccurate. Two Territorial Army divisions are at high priority—
  Mr. Speaker: In any event, that topic is one that belongs to the Army Estimates and not to the Navy Estimates.
  Mr. Paget: May I say in my defence that I was talking about the integration of the Forces, a topic which has already been raised, and whether the Navy and the Royal Air Force should be joined? The argument which I was advancing was that integration would at least give us a strategic conception common to the various Services. At present we have assumptions in the Army that this island is not available as a base and assumptions in the Navy and the Air Force that it is available. That is the point, and I submit that it is a relevant point, which I desire to make.
  It seems to me that in an atomic war the Army assumption must be the right one. At our best in the last war we were able to intercept 10 per cent. of an attacking air force, night after night, and that was enough to destroy it; but in an atomic war we should need to stop, not 10 per cent., but 100 per cent. of a force travelling at more than twice the height and more than twice the speed of the aircraft of the last war. Is that in the least conceivable, even as a hope? If one therefore assumes that this island is not useable as a base in the event of a major war, a great deal that we are now providing becomes quite irrelevant and a great deal of that which we have provided in the Air Estimates becomes irrelevant, because to provide an Air Force, Navy or any other defence which one knows must fail, is only to make this island a target more attractive than it would otherwise be.
  I have always believed in what is called the two-circle idea of defence, that in this island and other forward areas, from Alaska through Northern Canada to France, we should have our forward air bases and in Australia, New Zealand and South Africa we should have air bases

  2435
  which are out of the range of an immediate attack, but from which we may move into the assault, touching down on the fields that remain available after a preliminary attack. I will not enlarge upon that.
  If we adopt the assumption that this island will not in fact be available as a base for use in atomic warfare, what of the various things for which we are asked to provide? What of the anti-submarine rôle of the Navy. The hon. Member for Orkney and Shetland (Mr. Grimond) was talking in terms of the possibility of a generalised sea war in which submarines were attacking our lifelines, but in which atomic armaments were not to be used. That would, of course, involve the assumption that a war on those lines developed on the sea without there being a war in Europe, because we know that N.A.T.O. has decided that if there is a war in Europe, then at least technical atomic -weapons will immediately be used. Indeed, the N.A.T.O. plan is based upon that assumption. It seems to me so unreal as not to merit consideration for US to seek to imagine a generalised sea war with peace in Europe and in which we cannot use an atomic weapon defence. In order to defend oneself one has to reject the fantastic, and I believe that is an assumption which we may indeed forget.
  What about the atomic threat, the submarine threat in an atom war in which this island has been destroyed, at least in terms of a base usable in war, that is we say, in which our major ports are no longer available? I should have thought that the one anti-submarine weapon of any value then is indeed the atom weapon upon the enemy's submarine bases. There are not many of them, and they are approachable. The vessel which seems to me to be of incomparable value and which, although it has been mentioned by myself and others for a number of years, does not yet seem to be available, is the atom-launching submarine.
  I should like to see, if things "hotted up," an atom-launching submarine lying off all the enemy ports, so that when the "balloon went up," within a matter of an hour every one of those bases would be atomised. That seems to me to be the naval weapon of the future. Yet what
  2436
  is happening about it? More than two years ago I saw an atom-launching cannon in Germany which could be mounted on tractors and moved over roads. Surely, a gun which can be moved over roads could be mounted on a submarine, even today? I do not think that a cannon would be the most desirable method of launching. Surely there are rocket means of launching already available which could be used on a submarine?
  The hon. and gallant Member for Croydon, North-East referred to aircraft carriers, and said that although the group would no longer be able to operate, at least the single carrier might be able to launch its strikes and get away. I think that a possibility, but the chances would be infinitely more remote for a carrier than for a vessel which could get away by going under the waves. An atom-launching submarine would have that sort of rôle which seems to me the only remaining rôle, certainly in a hot war, for an aircraft carrier. It could be infinitely better performed by an atom-launching submarine. I hope that we may be given an indication, if that be possible without trespassing beyond the bounds of security, that something is being done about that sort of weapon.
  So far as a hot war is concerned, an atom-launching submarine seems to me to be the only naval vessel which would be of value to us. As to a cold war, it is perfectly true that in the Korean war aircraft carriers were of some value, although not of very essential value, but that was a very peculiar circumstance. We had a war on a peninsula in which, owing to the fact that the Russians were not completely involved, we had complete command of the sea without threats to our ships at sea. I should have thought that that circumstance was rather unlikely to repeat itself.
  An aircraft carrier is a mobile, floating airfield. In a localised war I should have thought that if we had the airfields, it would be easier to use our aeroplanes from those; and that, if we did not have them, we should not dare to bring a carrier anywhere near the localities of such airfields. As to cruisers, they might have a rôle in the Persian Gulf—I do not know—but as a means for getting force quickly where we want it, I am very doubtful whether they would be anything like as valuable as a group of transport aeroplanes.

  2437
  I put those questions quite interrogatively, because I do not feel that, without expert knowledge, we are in a position to answer them; nor do I think that we shall find anybody who will give us the answers so long as the Estimates are competitive between the Services. While that situation continues, two answers will always be put forward. Each Service will claim the virtue of its own arm, and there will be no layman in a position to judge between them.
  We are in very grave danger. Our survival—certainly as a great Power—is in the balance. We cannot afford a luxes flotte today. We cannot afford to waste money upon the inessential or even the less essential when we need so many things so vitally. The only way in which we can ensure that a really dispassionate judgment of what is most needed is made is by bringing the Services together by some form of amalgamation or integration between the various branches, so that the officers of the one can serve in the other. Only then shall we get a real judgment of what is needed.
  10.8 p.m.
  Mr. Dudley Williams: I want to refer only to one point made by the hon. and learned Member for Northampton (Mr. Paget). It is a subject which has been raised several times in the course of the debate, namely, the amalgamation of the Royal Air Force and the Royal Navy. I am not taking a Service point of view on this subject, although I was brought up in the Royal Air Force, but I think that it would be quite fatal, at this juncture in our history, for any tendency to develop between the Service Departments which would affect the integrity of the Royal Air Force as it is at the moment.
  I should like to refer to the great amount of thought and service which was rendered to this country by the late Lord Trenchard. He was sufficiently far-seeing to appreciate the importance of maintaining an independent Air Force, and in 1918 he gradually welded it into the Royal Air Force. It would be quite fatal if, at this moment, the Royal Air Force were welded, into the Navy, because I am quite certain that the use of air power would be gravely impaired and that the Air Force would be used merely as an auxiliary to the older Service.
  2438
  The remarks which I shall make follow those made by the hon. Member for Orkney and Shetland (Mr. Grimond). I am concerned with the contribution that the Royal Navy will be expected to make in what we colloquially call the hot war. All hon. Members agree about the functions of the Navy in the cold war and in peace. My fear is that in considering the problems of the hot war we may try to create a rôle for the Navy which cannot exist.
  In a major outbreak of war in Europe, the attack will probably come from Eastern Europe, from Russia and/or her satellites. Considering these problems, officers of the Royal Air Force have come to the conclusion that there will be an intensive phase which cannot last more than from one to three weeks. During that time there will be such complete and utter destruction that the intensive phase will stop and we shall start what my right hon. friend the Member for Woodford (Sir W. Churchill) called the "broken-back" war.
  When the intensive phase is going on, I cannot see the Royal Navy making any effective contribution. In the short period of time in which the struggle will be waged, the Navy will only have time to start up its convoy system and no time to make any effective contribution to battering down the enemy's defences. I do not think it would dare to venture close to hostile territory either in North Russia or in the Balkans. When the new phase of the war commences the Royal Navy will be faced, equipped as it is today, with a grave and difficult problem.
  It would be of assistance at that stage to have a force concentrated on the carrier on the lines that the Navy is developing at the moment. It is not essential, and, indeed, I doubt whether it is desirable, to develop such a force. The Russian threat, as the hon. Member for Orkney and Shetland said, will be to our supply lines in the North-West approaches. I will not say anything about the threat of the submarines There will be a considerable number of surface raids by heavy Russian cruiser fleets out in the Atlantic doing tremendous damage to our shipping.
  To deal with them we should need am increase in the number of cruisers, either equipped with normal gun weapons, or with guided missiles. There will be no

  2439
  threat from this possible enemy from a force concentrated on battleships or aircraft carriers, for the simple reason that the enemy have not any of them.
  Mr. Paget: Surely a raiding cruiser would be found much more quickly by an aeroplane and dealt with by an air strike.
  Mr. Williams: The hon. and learned Gentleman is forestalling the words which I was going to say. When the intensive phase of the war is finished, the Royal Air Force would be released to a very great extent from its duty of pulverising the enemy, and could begin to break down his will to resist. At that moment, the Royal Air Force will be available to co-operate with the Royal Navy in finding and destroying the raiding cruiser. It would be a great advantage if, at the same time, we could have a reasonable number of cruisers to shadow and engage these enemy craft. That is my view as to the policy which the Admiralty would have been better advised to follow.
  There is an additional consideration which should be borne in mind were this policy to be followed. By the elimination of the Fleet Air Arm, the carrier-borne aircraft and the carrier itself a tremendous burden would be taken off the British aircraft industry. That industry is already overstrained, and certainly the number of V-bombers which it can deliver to the Royal Air Force would be greatly increased if it had not at the same time to cater for the Fleet Air Arm, which I do not believe would play an effective part in the struggle.
  I would ask my hon. Friend to look again at the strategic proposals for the Navy to see whether it would not be better to concentrate on developing a further surface force of cruisers instead of this large Fleet Air Arm, for which I do not believe we are getting value for money in terms of its being able to hit the enemy. I strongly believe that the proposals would affect the hitting power of the Royal Air Force, which is all-important in the initial stage of war, and I believe that the surface vessel is far better equipped to deal with the surface raider when the broken-back war commences.
  10.17 p.m.
  Mr. Emrys Hughes: When I see the hon. Member for Worcester (Mr. Ward) sitting on the Government Front Bench tonight, I seem to be under the delusion that we are still discussing the Air Estimates. He always figured so prominently in the debates on those Estimates that it is now rather strange to find him taking part now as Parliamentary and Financial Secretary to the Admiralty. I do not know whether he has been promoted or demoted.
  Mr. Dudley Williams: Promoted.
  Mr. Hughes: I thought that perhaps he had come from the heights to the depths. Judging from some of the comments one hears about the Navy, he would seem, in coming from the Air Ministry to the Admiralty, to have come from the sublime to the ridiculous. Indeed, that was the argument of the hon. and gallant Member for Macclesfield (Air Commodore Harvey) this week. During the debate on the Air Estimates he made most interesting attacks upon the Navy, and I rather look forward to the hon. and gallant Member taking part in the Navy Estimates debate and dropping a rhetorical bomb on his old colleague.
  To congratulate the Minister, I must say that in the Explanatory Statement there is one paragraph with which I cordially agree. Never have I found myself so much in sympathy with the Admiralty. I see in page 4 a paragraph which almost converts me to support the Navy Estimates. In paragraph 12 I read:
  "H.M. Ships have a permanent mission of good will."
  That is a new definition of the objective of Her Majesty's Navy, and I am all in favour of it. If that were the purpose of the Royal Navy I assure the House it would have no greater supporter than myself.
  The paragraph continues:
  "In October last year there was a valuable exchange of visits with the Soviet Navy."
  That is splendid—a good will mission to the Soviet Navy. This was the Navy which, according to the hon. Member for Exeter (Mr. Dudley Williams), we have to be ready to pulverise. I could not quite follow his argument of the sequence

  2441
  of events, because after we had pulverised the Russian Navy we were by some strange magic to meet the cruisers somewhere in the Atlantic.
  I speak, of course, as a layman. I listened in a growing mood of interrogation to many of the weird speeches in the debate. My hon. and learned Friend the Member for Northampton (Mr. Paget) is, of course, a master of that kind of speech; he talked about submarines launching aeroplanes from somewhere near the Russian ports. I do not know how they are to get near the Russian ports through the North Sea, through the Kattegat and into the Baltic Sea. I do not see how they will get within a measureable distance of Leningrad or Kronstadt.
  Mr. Paget: Submarines.
  Mr. Hughes: That is all very nice; I do not know. They are also to go to the Black Sea, I gather. This conception of a broken-back war, and of these submarines and cruisers defending an island which has been practically destroyed, is strange. During this time the broken-back war will continue. What is to happen to us? We are the people whom the Royal Navy is supposed to be defending. Indeed, that is the sole excuse for this bill for £400 million. I read from the Estimates:
  "Thousands of Russian sailors and civilians, in Portsmouth and Leningrad, had their first sight of the British."
  I am glad that the Russians had their first sight of the British—I think it was of the hon. and gallant Member for Portsmouth, West (Brigadier Clarke), and if that did not frighten the Russians I do not see them being frightened by any of these preparations. One conversation with the hon. and gallant Member should do that. He is a life-long Communist, because he has been for most of his years in the Navy, which is the worst form of State Communism.
  Brigadier Terence Clarke: I was in the Army.
  Mr. Hughes: I do not see why we should not continue these missions so that the Russian sailors may come here and see the grave of Karl Marx and our sailors can go to Russia and be taken to Moscow to see the tomb in the Red Square. If the ordinary men and women
  2442
  of both countries get to know each other the possibilities of war will recede. I welcome this enterprise by the Royal Navy and hope that it will continue and be developed. I can see no better use for the "Britannia" than to be employed regularly going to and from Russia taking the Archbishop of Canterbury, dignitaries of the Church of England, members of the T.U.C. and so forth—a mission of good will.
  Mr. Glover: Does the hon. Member suggest that these gentlemen should stay there?
  Mr. Hughes: Well, it might be good for both countries if we swapped some of our prominent personalities.
  The argument throughout the debate has been about the Russian menace. We have no German menace at present, although in about five years' time we shall have a German menace offered as a reason for the Estimates. The Russian menace may have receded by 1965, and there will be a German menace instead.
  What is the case about the Russian navy? We have heard over and over again the assumption that there is a remarkably strong and powerful Russian navy. I wonder how much truth there is in it. I hope that the British sailors were taken to see the film of the cruiser "Potemkin" when they were in Leningrad. I am not sure that it was a good thing from the point of view of morale to send them to see the "Aurora", because the "Aurora" shelled the Winter Palace in the Russian revolution.
  I have tried to find out exactly what is the truth about this wonderful Russian Navy. Is it a reality or is it not quite so bad as it is presented to us. I read in The Times last week some facts which are supposed to summarise the strength of the Russian Navy. The naval correspondent of The Times asked:
  "What is the Russian naval strength that compels such a concentration of N.A.T.O. effort? It is not only the size of the Russian Navy that impresses but its rate of increase since the war."
  This amazing increase of the Russian navy presumably has taken place under Communism, so Communism must be wonderfully efficient, contrary to the general belief, if it has managed to create this wonderful navy since 1945.
  Mr. Dudley Williams: It is also assisted by the 20 million people in the slave camps.
  Mr. Hughes: I do not see how 20 million people in slave camps can all be employed on making the Russian navy. The act of creating a navy involves a complicated industrial machine, a complicated system in engineering, and cannot possibly be achieved by 20 million people in slave camps.
  Mr. Bence: The more people there are in slave camps the less labour there is for the intricate process of shipbuilding.
  Mr. Hughes: I do not think that we can include that as a serious factor in estimating the strength of the Russian Navy.
  As the correspondent of The Times went on to say:
  "In October, Admiral Lord Mountbatten said that the Soviet Navy had 350 modern submarines and 4,500 aircraft."
  I have seen it estimated at far more than that. I have heard some very curious estimates since 1951 in this House. The estimates change and sometimes grow, but let us try to find out, as realists, the facts. Presumbaly these facts are given us by our Intelligence. The Times correspondent went on to say:
  "Since 1945 the Russians have built 20 large first-class cruisers, more than 100 destroyers, and more than 100 large and 60 small submarines. How much of this Navy is kept in the Black Sea is not publicly known. But the major part is likely to be in the Baltic and on Russia's northern shores."
  We have to accept that kind of picture year after year, but how far does it correspond to the truth. There is an estimate of the Russian Navy in the publication called "Jane's Fighting Ships", which I sometimes peruse for light reading. That is British intelligence. What about American intelligence. I turn to an article by the military correspondent of the New York Times, a very distinguished writer on military affairs, Mr. Hanson W. Baldwin, who does not give the same picture of the Russian Navy as 'does the naval correspondent of the London Times. Is there no co-ordination of intelligence at all betwen ourselves and the Americans?
  10.30 p.m.
  Mr. Deputy-Speaker (Sir Charles MacAndrew): Although it does not specifically say so, it is the British Navy we are discussing.
  Mr. Hughes: Thank you, Mr. Deputy-Speaker, I know that it is the British Navy we are discussing, but the British Navy, presumably, is adapted to fight the Russian Navy.
  What I want to find out, however, is what estimate has been made of the strength the British Navy should have, and what, therefore, are the comparable strengths of navies of other States in other parts of the world. I would not dream of making any estimate of the American Navy at this moment, because I know that if we had to pay to build a comparable navy the estimate of the cost would frighten everybody in the House. I want to know what potential strength that we have to face.
  Hon. Gentlemen talk about Russian submarines and Russian cruisers. In the New York Times we are told:
  "At sea, the Soviet Navy has been built up and modernised since World War II. Its submarine fleet of about 400 vessels is the largest in the world, although only 120 to 150 of these submarines can be classed as modern, long-range types."
  So there are not quite so many. According to the correspondent of the New York Times,
  "Russia has no nuclear-powered submarines and no aircraft carriers. Her vaunted cruisers of the Sverdlovsk class are armed—despite their large size—with only 5·9-inch guns, and there is circumstantial evidence these guns do not have radar fire control. Her fleet is essentially defensive and unbalanced and in total fighting power cannot compare with our own."
  That is the American version, and we ought to get the picture into proportion. If we are to fight the Russian fleet, we shall have fighting with us this overwhelmingly powerful American fleet, which is far bigger than any other fleet. We ought to take that into consideration, and ought not to let fantastic ideas about what the Russians are doing or can do influence the making of our Navy Estimates.
  I have asked the Russians in Russia about their navy. I asked them, "Why do you need such a big fleet? You are not a maritime nation. You are by tradition a land nation." They replied, "We need a fleet because the British Fleet has been in the Baltic and the French fleet has been in the Black Sea." Last summer I went to the Crimea. It appears that at one time the British Fleet had been there. I have forgotten what the British Fleet was doing in the Black

  2445
  Sea at the time of the Crimean War and what exactly it was going to liberate then, but the Russians remember something about it. They have a vague idea at the back of their minds that at one time there were a French fleet and a British Fleet in the Black Sea, that there was a British Fleet at Kronstadt. So they argue, as hon. Gentlemen here argue, that warships are for purely defensive purposes, and that they have no idea of entering the Atlantic Ocean to carry on war of the kind of the Second World War.
  Instead of acting on the assumption that there is a Russian menace which can be countered only by building up a huge new fleet of expensive atom-driven ships, I suggest that the commonsense thing to do is to send the sailors back, and for both sides to negotiate. That suggestion is as good as any of the strategic suggestions that I have heard in any of the innumerable debates which we have had here in the time during which I have been a Member of the House.
  The hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett) told us that officers should not come out with this "misery" story; that they should not exaggerate their poverty; that they should not talk too much about their pay. I hope that I have not done him an injustice, but I gathered that was his argument. Occasionally I read the Sunday Times, in which there has appeared an interesting series of articles on the Navy by a naval correspondent called "Watchkeeper". The third article in the series was headed, "Officers—'wet' and 'dry'." In Scotland we use the words "wet" and "dry" in connection with the licensing Acts, and if we refer to an officer as "wet" we are not thinking of salt water but of something stronger.
  This naval correspondent wrote:
  "An abstemious lieutenant-commander I know has a monthly wine bill of approximately £8–8 per cent. of his income (few naval officers today have private incomes). He has an overdraft of £300 at the bank, and that overdraft is slowly but steadily increasing."
  What has this poor officer to thank the Government for when he has to live on his £300 overdraft and the rate of interest is steadily rising?
  Surely, the Government are not doing very much to encourage "wet" officers in the Navy. They are even penalising them by sending up the rate of interest
  2446
  on their overdrafts. If I were in a position of this kind, if I had to spend £8 a month on wine and I saw my overdraft going steadily up, I should be inclined to come out with a "misery" tale too. My sympathies are all with the officers as against the hon. and gallant Member.
  In this article it is stated:
  "In 1934 the ' Statement relating to the Civil Staffs of Government Departments' listed the staff of the Admiralty Office at 7,409. Last year the same statement listed 33,538. In 1936 civilians employed on fleet services (excluding, of course, the Admiralty) cost £200,000. In 1955 they cost £8 million. In 1936 the Navy required £2,200,000 for works and buildings; in 1955, £18 million. Miscellaneous services cost £600,000 in 1936. In 1955 they cost £10,900,000."
  Allowing for the change in the value of money and the increase in the cost of living, we appear to have an enormously expensive Navy compared with 1936, when we did not have this powerful American fleet behind us. I could continue to quote from the article, but I recommend hon. and gallant Members to read it. Then they will realise that there is something very wrong with the Navy. The final paragraph of this article in the Sunday Times says this:
  "The Admiralty defends its expansion as in the interests of efficiency. One Naval officer put it to me that we were rapidly approaching the point where the Admiralty would be 100 per cent. efficient and we would have no ships at sea at all."
  Can it be wondered that that destroys my morale? This is reinforced by the very disturbing remarks that have been made by the naval authorities in this debate.
  The time has come for adopting the suggestion that I made about six years ago, that the whole business of the Admiralty should be investigated by a committee of hard-headed businessmen. The R.A.F. has actually done that. In the debate on the Air Estimates we heard about an investigation into the affairs of the Royal Air Force by a committee of three, one of whom was a director of Schweppes and another a director of Woolworth's. I would put the director of Schweppes and the director of Woolworth's on to the Navy in order that we should try to find the answers which an innocent spectator like myself inevitably asks when considering these Estimates. I am quite sure that if we had a committee of hard-headed businessmen like the hon. Member for Pollok (Mr. George)

  2447
  and the hon. Member for Louth (Mr. Osborne), inquiring into the Admiralty, we should have a much more satisfactory bill for the Estimates next year.
  I find that there is what the lawyers would call a prima facie case for an inquiry into the expense of the Navy. The lawyers, of course, are not interested in the Navy.
  Mr. Bence: Why not?
  Mr. Hughes: Obviously because there is nothing to be got out of the Navy.
  I do not see why the constituents of the hon. and gallant Member for Portsmouth, West should write to me, but I get periodical letters from Portsmouth, which is one of our bases, complaining about extravagance in the Navy. In future I shall refuse to answer any of these letters and send them to the hon. and gallant Gentleman, who seems to be neglecting his correspondence. I do not see why it should come to me.
  Here is a quotation from the Portsmouth Evening News—although I do not like the Portsmouth Evening News at all. It is headed:
  "The Duke plans to come by helicopter,"
  and goes on to say:
  "Subject to weather conditions, the Duke will arrive in Portsmouth by helicopter on Thursday, and will probably land at H.M.S. Vernon. At the Southern Railway jetty today food supplies were being taken aboard the Royal Yacht, which will sail on Thursday with the Duke aboard to take part in the combined Home and Mediterranean Fleet exercises in the Western Mediterranean. The jetty was being given a wash and brush up in readiness for the Duke's arrival."
  Surely that is a question for the hon. and gallant Member, and not for me; I am not interested in the jetty at Portsmouth. It goes on:
  "Safety chains surrounding the jetty were being painted silver and bollards 'spruced up' in black and white."
  What I am suggesting is that there is some expenditure which could be reduced in Portsmouth.
  Mr. Glover: If there is set up the committee the hon. Gentleman is suggesting, what does he think the director of Schweppes will say about all this "black and white"? Surely he will approve of that.
  Mr. Hughes: I cannot go into that, but from the point of view of the national interest, I suppose I should have to defend black and white.
  It goes on to say
  "Guards and bands will be paraded by ships,"
  and that
  "The Lord Mayor of Portsmouth is to attend a luncheon in the Royal Yacht…"
  Everyone seems to have been there except the hon. and gallant Brigadier.
  I suggest that there appears to be considerable waste in the Navy—in the frills. I believe there is a very good case for an all-party committee of Members to inquire into the Navy's expenditure. After all, we are in an age of change, and one cannot reconcile war in a nuclear age with the Battle of Trafalgar or even the last war. Surely the time has come for a realistic appraisal of our Armed Forces in order to find out exactly why we need to spend this huge sum of £1,500 million at a time when we are being urged national economy. If we are to continue to spend this large sum we shall inevitably have unemployment, and with unemployment there inevitably comes Communism. So if hon. and gallant Members opposite are afraid of Communism, I suggest they must realise that the national economy simply cannot stand the imposition of this big, heavy, annual burden.
  I note that the Explanatory Statement indicates that people cannot be recruited into the Navy. In that respect the Navy is just like the other Services. In the Air Estimates debate, the hon. and gallant Member for Macclesfield asked what he was to do with his boy of 14. He said he could not put him very well in Bomber Command, because in fourteen years' time there would be no bombers to command. So we are faced with the fact that young people are not going into the Services for the simple reason that they look on the Services today as a dead end. They look to us to find some sort of answer to the problem. We have to face the fact that we are in the nuclear age and are not going back, so I suggest that those of us who are putting these questions are doing so in the interests of the country, and that these questions deserve an answer.
  10.48 p.m.
  Brigadier Terence Clarke: I am very glad to be called after the hon. Member for South Ayrshire (Mr. Emrys Hughes), who in all previous debates has spoken after me. The hon. Member always refers to me as a Communist, and I believe he thinks that I am. I have never referred to him as one, and I know he is. But that is meant in the best of terms, and he and I know that it is a joke we have between us. I know he is really not one at all.
  I am surprised that we both seem to read much the same sort of newspapers. He always brings in a sheaf of them and reads them to us over again. We have heard them before, but we always come to quite different conclusions. It seems a pity that when people go to the trouble of writing to The Times, the hon. Member can put one interpretation on it and I can put another. But I suppose that is what makes different parties, and why some turn red and some blue.
  The hon. Member referred to the Portsmouth Evening News—a paper normally quite strange to him—and talked about the Southern Railway jetty. He referred to the fact that I was not there to see the ship off. But that was because I was here; otherwise, of course, I should have loved to have been there. What is described as the Southern Railway jetty might well belong to the nationalised British Railways. Would the hon. Gentleman have any objection to its being painted, and will he raise that subject the next time we consider the affairs of the nationalised railway industry? It may well be that it is British Railways that is wasting paint and not the Admiralty. It may be that the jetty is part of British Railways: it may not be—I do not know, and I am sure the hon. Gentleman does not, and so we had better leave it at that.
  There is something else that I want to say, and I want to say it in a friendly way because I like the hon. Member who said it, but I feel that he said it by mistake. He said we could no longer sing "Britannia rules the waves." That is a terrible thing to say.
  Mr. Emrys Hughes: I did not say that.
  Brigadier Clarke: No, the hon. Member for South Ayrshire had not thought of it, but in making two speeches that is about all he left out.
  2450
  We may not have the biggest Navy in the world today, but we have the most efficient one. There is very little else left that we rule, and I still like to think, say and sing "Britannia rules the waves". I can only sing it in my bath, but I still feel that Britannia rules the waves and I shall hate the day when she no longer does so. Before the last war I heard people saying that the Navy was out of date, but if it had not been for the Navy none of us would be here today.
  I am loath to hear anybody suggest that we should abolish the Navy or integrate it with the Royal Air Force, for I do not believe that that would make for greatest efficiency at present. There may come a time when all our ships have to fly, and then we shall not want a Navy and shall be able to regard it as part of the Royal Air Force, but we are still a long way from the time when all our ships will be in the air. While the only practicable method of moving the large quantities of materials that our country needs is by sea, we still require a Navy. I hope no one will start messing about with the Navy and trying to integrate it with the R.A.F. Even with the threat of the hydrogen bomb, we need a Navy more today than we ever did. With all the present unrest in the Middle East, our Navy is more important than ever.
  I was particularly glad to read that the United States is sending a ship to the Mediterranean with marines on board. I am glad it has happened, for it will do a great deal to raise the prestige of the West there. The Middle East situation at the moment is a very tricky one. We still have interests there. There are certain sheikdoms that we have promised to protect, and in that area is great wealth in the form of oil on which we depend. All we have to defend it and the sheikdoms of Kuwait, Qatar and Bahrein, etc., is the Royal Navy, plus a few miles of desert. I was in that area less than two years ago, and I can assure hon. Members that everyone out there is very thankful for the British Navy. I recommend that we should have more ships of the frigate-destroyer type which could go to the Persian Gulf and look after our interests there even better than they are being looked after now. It should be remembered that there are very few troops in those parts, and Saudi Arabia

  2451
  is not very far away. Also, if we have the Navy there, we can do something to protect our oil interests.
  Mr. Emrys Hughes: What about the American marines?
  Brigadier Clarke: I expect they would tell the hon. Gentleman all about the marines. I am not going to.
  The main defence barrier is our Navy. I want to pay tribute to those of our men who spend all the year round, and perhaps more than a year, in those climates. There is a most shocking climate there at the best time of the year. At the worst time there are very few pleasures and astronomical temperatures. People forget that we have our sailors in those parts of the world suffering in those temperatures in order to keep the hon. Member for South Ayrshire and myself safe in these parts.
  Before turning to other subjects nearer home, I should like to draw attention to two matters which have been brought to my notice recently. The first concerns the wearing of plain clothes when men go on shore leave from Her Majesty's ships. This question causes a great deal of trouble. Admirals do not like it being done. When I was a soldier, no soldiers were allowed to walk out in plain clothes. It was considered quite wrong to allow a soldier to get into civilian clothes once he had joined the Army. We have got over those old ideas, and soldiers are allowed to change into civilian clothes in their free time.
  It is high time that sailors were allowed the same privilege. It is extended to patty officers and other officers, and I do not see why disciplined men should not be allowed to wear civilian clothes when they go on shore leave in other than their home ports. They can do so in their home ports, but there is an idea that sailors in civilian clothes in other ports might not be recognised when they went aboard. Surely that is a poor reason. I should have thought that ships' companies ought to know each other pretty well.
  The second matter is the question of discharge by purchase. I bring up this subject every year and each year we get a little further, but we are still a long way from getting satisfaction on it. I hope that the Parliamentary and Financial Secretary will make a note of the
  2452
  matter again, because I shall not leave the subject until we have had full satisfaction. We now give our sailors a fair amount of pay and reasonable pensions, and if men are not happy in the Navy it is quite wrong to keep them there. We shall never make a good sailor out of an unwilling one who, for one reason or another, wants to get out of the Service. The authorities have always been frightened that if discharge by purchase were made possible there would be a catastrophic rush to get out. I do not think that there should be any such result. If a man wants to get out of the Navy for some reason and he is kept in, great harm is done to recruiting. I am sure that if men knew beforehand that they could get out of the Navy by purchasing their discharge they would be more willing to join in the first place.
  Mr. J. T. Price: My attention has been drawn many times to the same aspect of release by purchase, and I take the opportunity of confirming that the administrative machinery of the Admiralty appears to be so badly drawn that this arrangement is never operated. The Admiralty constantly delays valid applications for discharge. Men who do not make good sailors are retained against their will, and the right to buy themselves out is not exercised.
  Brigadier Clarke: I agree with all that the hon. Member has said. I am certain that the Admiralty would do well to consider the matter, and see whether it cannot assure sailors that they can get out of the Navy by purchasing their discharge.
  Commander J. W. Maitland: Has my hon. and gallant Friend's attention been drawn to paragraph 48 of the Explanatory Statement?
  Brigadier Clarke: I have read the Statement but my attention has not been specifically drawn to that paragraph.
  Commander Maitland: I would point out that out of 1,885 applications for discharge by purchase, 1,555 were approved last year.
  Brigadier Clarke: I should like to see them all approved. I have had refusals in three cases today. I am continually told that applications will be looked into when the next selection is made in February, March, or six months or a quarter ahead. If a man wants to go out

  2453
  it ought to be made as easy as possible for him to do so. Such a man will not be a good sailor.
  I turn now to matters nearer home, and in particular to the dockyards. I made a special point of finding out whether I would be in order in doing so by asking Mr. Speaker, and he said that for once it would be in order to speak about the dockyards. At least twice a year I go round Her Majesty's Dockyard, Portsmouth. I have been agreeably surprised at the improvements which have taken place ill the last few years. Some reasonable workshops and other places have been put up. The dockyard has been modernised, and a number of amenities added and improvements made. There is still room for further improvement, and I hope that the Civil Lord will continue the good work which has been done recently.
  I am glad to read that the dockyard personnel is to get a pay rise, the members of the engineering unions having all had rises. I hope that the Civil Lord will do something to back-date the increase. I am not glad that the engineering union is getting a rise in wages for its members, because those men all do overtime, and get good wages, anyway. The dockyard men do not get the same benefit from overtime as these other people do in civil industry, and I think that something ought to be done to try to pay more to the skilled and semiskilled men used in the dockyards as labourers, and paid as labourers, although doing fairly skilled work. The union prevents their being made into skilled craftsmen because they have not passed the union's test. Nevertheless they are used in these jobs but are not given the full pay which goes with them. The Admiralty ought to back up these men, and see if it can get a little more for them.
  There is the merit award; but it would not matter if the whole dockyard were 100 per cent. efficient: all the men could not get the merit award. That rankles deeply, and seems unjust. A merit award is either given because a man has merit, or is withheld because he has not; yet if all the men had the same amount of merit, a merit award could be given to only a proportion of them. Those outside that proportion feel that strongly.
  I shall be glad if the Parliamentary and Financial Secretary will tell us
  2454
  whether he intends to do anything about the chargehand. I regularly raise this grievance year after year. Chargehands have considerable responsibility. They have no assistance in carrying out their duties, and are not paid for doing them.
  I am glad that the Pensions (Increase) Act has removed the means test. We have had considerable trouble about Pensions (Increase) Acts over the years because of the means test. Men in the dockyard have lost money because their wives have earned 5, 6, or 10 shillings a week; the man consequently finds himself over the limit, and is not allowed to draw the pension increase. A man recently discharged lost his pension, and it was only after a battle that I was able to get it back. That will not happen now that the Act has been changed. At the same time, the Admiralty still looks at previous Pension (Increase) Acts in a way different from the way in which they are looked at outside. Many men are entitled to a pension increase by every standard except that set by the Admiralty.
  If they do not work in the Admiralty works, nobody knows anything about their pensions; but if they work for the Admiralty, immediately they get a bit of overtime, someone clamps down on them and stops the pension increase. If hon. Members carefully read the Pensions (Increase) Bill, they will see that what counts is total income in a year and not what a man draws at a particular time at some special period when he is doing some overtime. There has been a complete lack of faith with these people working in the dockyards in this matter of pension increases. I hope that the Parliamentary and Financial Secretary will study the Pensions (Increase) Acts and make good the money still owed to these people.
  I am sorry to have kept the House so long, but this is an annual occasion in which I get all my naval problems off my chest. I am sorry if I have bored some hon. Members who are not as interested as I am in these problems, but I can assure them that they are important to me.
  11.6 p.m.
  Mr. Douglas Glover: I make no apology, even at this late hour, for addressing the House on the Navy Estimates. Everyone in the House is concerned that we should get an efficient de-

  2455
  fence Service at the minimum of expense to the Exchequer. It is for that reason that I rise to speak on these Estimates. For the first time—and this is rather surprising—I find myself to some degree in agreement with the hon. Member for South Ayrshire (Mr. Emrys Hughes)—something which I never thought would happen—in particular with that part of his speech when he referred to the article in the Sunday Times, which pointed out that in 1936—and I am speaking from memory—we had about 8,000 civil servants in the Admiralty whereas in 1955 we have 33,000 civil servants.
  In 1936, we had 12 battleships in line ahead sailing the high seas; today we have one battleship, which I understand is to go into reserve, the remainder being already in reserve. Our ships and personnel are certainly fewer than they were fifteen years ago, and I agree therefore with the hon. Member for South Ayrshire that it would be in the national interest to have an inquiry into the civilian element, which is a great load of expense in administering a Navy not as large as it was fifteen years ago.
  Another topic which I want to raise is very much in line with that raised by the hon. and learned Member for Northampton (Mr. Paget), who said that in this changing situation we have to start and to continue thinking about whether we are not hidebound as a result of preconceived ideas, and whether we are today facing the new situation that confronts us. I was brought up on a diet of Nelson, Rodney and Howe, and if anybody had told me even five years ago that I should be standing in the House of Commons suggesting a drastic alteration in the Navy, I should not have believed it. However, it is not in the national interest to allow ourselves not to face facts and to close our eyes to the situation that confronts us.
  Let us look at the strategic problem. Against whom are we building our Navy? For what purpose is the Navy to be used? In the answers to those questions we can perhaps get an answer to the sort of Navy that we require. The only conceivable major naval opponent that anyone in the House can possibly visualise is Russia. It is also agreed on all sides of the House that if that awful day arrived at which we were at war with
  2456
  Russia, that war would in fact be a thermo-nuclear war. If it is not, then let us face this question. If it does not start as a thermo-nuclear war, neither side will be beaten without using that ultimate weapon.
  If that does happen, then the idea that light fleet carriers, escort vessels, and cruisers—even the "Vanguard" which is in reserve—will be required to fight a war such as the last war, cannot be supported. Because if this country were devastated, as it would be, then what we should require would be far more of the frigate type of vessel, or something even smaller; we should not, in that situation, require aircraft carriers and cruisers.
  If that is agreed—if not, then at least let it be considered—we have next to think of another type of war; that which we describe as a limited war." If we have such a war, who, and where, are we going to fight? In Korea we fought in a peninsula and Russia did not enter into the war. Because this area was surrounded by water we were, therefore, able to use, to a useful extent, light fleet carriers in support of the troops on land. But it would be a most extraordinary coincidence if the same set of circumstances arose again. If we had further trouble in Malaya, or if there were hostilities in Indo-China, a navy, as such, would not become operative. In the Middle East, the same situation would apply. What is the view about the sort of vessels which we seem to be building?
  If immediate trouble arose, we should be more able to deal with it adequately and swiftly by the landing of troops from the air rather than from the sea. These are problems upon which we cannot reach a final decision tonight; but when we are spending £400 million a year on Navy vessels and establishments, we really should look at this problem very seriously.
  We should look at our only and likely opponents, and look at where the type of weapons which we are building might be used; and if we do those things, we should come to the following sort of conclusion. First—and let me say I think there is much to be said for the remarks of the hon. and learned Member for Northampton about atomic submarines—we want long-range motor tor

  2457
  pedo boats, which may have to deal with local rebellions and protect the landing of troops on hostile shores.
  Secondly, I can see no reason for keeping "Vanguard" in existence. A proud, great battleship she is, and I personally heard with no pleasure that she might be scrapped; yet remembering the record of the battleships in the last war, I cannot see what use they would be in another. "Vanguard" would involve us very heavily in her own protection; at least one carrier and goodness knows how many aircraft, a flotilla of destroyers and countless men would be needed. We should immobilise half of our Navy in her protection, so the sooner we take out of the Estimates the cost of keeping her in reserve, the better for the efficiency of the Navy.
  Any idea of an alteration in the structure of the Navy does not fill me with pleasure, but we must face facts. Air power every day becomes more powerful, with greater range and greater striking power, as against the slow mobility of the Navy and the limited range of naval aircraft compared with landplanes, particularly for the kind of operation in which we think we shall be involved.
  The whole nation, and particularly the Admiralty—and, even higher than the Admiralty, the Cabinet—should give close and urgent thought to the question of whether we are at this moment producing the Navy that will be required under these new, changed circumstances. There are many Members, on both sides of the House, who are disturbed as to whether we are looking far enough into the future or are still dealing with a Navy ready to fight in the past.
  11.16 p.m.
  Mr. Kenneth Robinson: We are now approaching the end of the annual round of defence debates—what I always regard as the annual defence fortnight. The general line of the Opposition's criticism has been consistent throughout the three debates on the Service Estimates and in the general defence debate.
  We on these benches assert that the Government have not faced up to the implications of modern warfare, let alone the warfare of tomorrow, and that they have not recast their thinking or their
  2458
  defence plans in the light of developments of modern weapons. We believe that vast sums of money have been spent on unsatisfactory weapons, many of which are out of date before they have been completed, and that manpower has been, and is being, wasted. In no sphere, as this debate has shown, are these criticisms more valid than in the case of the Royal Navy.
  One fact which has not been mentioned in this debate is that it is surely fantastic that at this stage we are discussing Navy Estimates which have gone up in a year when the Estimates for both the Army and the Royal Air Force have gone down. Whatever the rôle of the Navy, I do not think anyone can possibly imagine that it is a rôle which is increasing in importance relative to the other two Services.
  Many hon. Members have divided their speeches into two halves—ships and men. That is a convenient division, and I propose to start by saying a few words about the ships. Despite the very persuasive way in which the Parliamentary Secretary introduced these Estimates, we must still ask ourselves: What is the rôle of the Navy in the various possible types of warfare which may face this country in the next few years?
  There is the question of all-out global nuclear warfare. Then there is the possibility of a major global war which is not fought with nuclear weapons. Finally, there are the various types of limited war in which this country might be involved. It seems to me that in deciding the future of the Navy, the Government have been thinking in terms of the least likely of those three possibilities: that is, in terms of a major war which is not fought with nuclear weapons. I certainly do not altogether blame the Government for being reluctant to face up to the naval implications of an all-out global nuclear war. It is difficult to see what rôle the Navy would play in that kind of warfare. In introducing the Estimates, the Parliamentary Secretary said that in his view the advent of thermo-nuclear war does not affect the primary rôle of the Navy. If I have quoted him aright, that seems to me a rather extraordinary statement for him to make.
  Some hon. Members in this debate have discussed the rôle of the Navy in the broken-back war which would follow the initial nuclear attack. I think that the

  2459
  hon. and gallant Member for Haltemprice (Major Wall) spoke along those lines. I rather thought that the whole concept of the broken-back war had now been exploded. It had a very short run indeed, and I thought that it had passed out of the Government's defence thinking. I am afraid that I must agree here with my hon. and learned Friend the Member for Northampton (Mr. Paget) in saying that there appears to be very little common ground on strategic thought among the three Services.
  I believe—and here I am speaking only for myself—that thermo-nuclear war would be short, sharp and probably fatal for both sides. In the light of these possibilities, I should like just to take a look at the make-up of the operational Fleet today, and, of course, the first type of vessel one must consider is the aircraft carrier. The Admiralty has clearly said, "We have two or three of these vessels and two or three light fleet carriers. What plausible rôle can we think up for them?"
  I cannot believe that the description of the battle-group and its purpose has arisen out of any deeper thinking than that. Incidentally, I should like to ask the Parliamentary Secretary to tell us a bit about the "Victorious" in his winding-up remarks. The First Lord's Explanatory Statement says very modestly that the modernisation of the "Victorious" is going on satisfactorily. It rather tends to obscure the fact that that modernisation was begun in the year 1950–51. It has already been going on for nearly six years, and the best the Admiralty can say about it is that it is going on satisfactorily. Will the Parliamentary Secretary tell us whether he can estimate when the "Victorious" will be ready and what it will have cost?
  When we turn to the description of the battle-group and its rôle on page 6 of the Explanatory Statement, we are told:
  "The concept of the battle-group, centred round the modern carrier with its multi-purpose squadrons of aircraft, is nearing realisation."
  The hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett), whose speech I thought was not only informed—which was what one might expect from someone who has so recently served in the Navy—but also very thoughtful and constructive, said
  2460
  that in his view the American type of aircraft carrier task force was already obsolete. I must say that I am inclined to agree. It seems to me that if that task force is obsolete, then it is very difficult to explain what the rôle of the aircraft carrier battle-group is going to be.
  I think that in an all-out war it is just conceivable that a case could be made out for a mobile sea aerodrome, so to speak, which could perhaps operate after the land bases in our own country had been destroyed. But that could only happen subject to two provisos, the first that the carriers would be based permanently outside our islands as from this moment, and the second that they would be capable not only of delivering atomic weapons as is suggested here, but of delivering them long distances and getting back to their base. That is obviously not going to be possible with any of the type of aircraft that we are able to envisage at the moment.
  There is, of course, a task for the carrier in the limited war, and, as has been said, carriers operated very successfully in the Korean War; but do we expect any more Korean Wars—major, but limited in the geographical sense and without the use of nuclear weapons? There is no case for carriers at all unless they are equipped with first-class modern aircraft, both offensive and defensive, and, in view of the unhappy experience of the past, at this stage we can only hope that the new aircraft which the Parliamentary Secretary described will be delivered quickly and will come up to expectations.
  One must place a large question mark against the aircraft carrier as an effective weapon of war in the nuclear age. On the answer to that question must depend the whole structure, size, function and future of the Navy. I do not think the answer to that question will be found merely by seeking plausible arguments for retaining carriers because we happen to possess some; it will be found only through, to quote a phrase which has been used elsewhere. "an agonising reappraisal"—and in my view that sort of reappraisal will be obtained only when we have integrated the Royal Navy and the Royal Air Force.
  When I was first converted to that idea three or four years ago, I thought it would immediately be resisted by

  2461
  everybody in the Royal Navy, and I was surprised to learn that there were many serving officers in the Royal Navy who had come to the same conclusion. They were very quiet about it, but one could get the information out of them after discussing the problem. Now the hon. and gallant Member for Croydon, North-East comes out strongly in favour of integration. Throughout the debate, hon. Member after hon. Member, on both sides of the House, has said that this is a development which should and must come. Admittedly, the hon. and gallant Member for Croydon, North-East suggested that it ought to take 30 years. I do not think we have time for that.
  The only way in which we can find out dispassionately what value the carrier has, and hence what the future structure of the Navy ought to be, is by everybody concerned with the air weapon getting down to the job of assessing the relative values of air and sea-borne aeroplanes. I do not want to develop this now, but I should like to see integration carried a good deal further. I do not think there is a case for separate Service Ministries on the scale that we have now. If I may say so without any personal disrespect to the hon. Gentleman or the Civil Lord, I have long thought that there is no possible case for having three Ministers at the Admiralty when we have two at the Air Ministry and two at the War Office. That is one contribution to a saving in manpower which the First Lord might make.
  The future of the cruiser is also a matter of great controversy at the moment. We are told in the Explanatory Memorandum that
  "the next stage in the development of the battle group will be to add the new cruiser."
  But for what are we to add it? Is it solely to increase the anti-aircraft protection from the carrier? I think experience in the last war was that carriers were their own best protection, by fighter cover and their own closer-range anti-aircraft weapons. Even if it is thought that cruisers with guided missiles would be necessary as antiaircraft protection for the carrier groups, I still think that no case whatever has been made out for completing the three cruisers with conventional gun armament. It would have been a much bolder and wiser policy to call it a day and
  2462
  dismantle these half-constructed hulks on the stocks.
  Equally, of course, the future of fleet escorts is tied to the subject of the battle-group. I notice that now four fleet escorts with guided weapons are on order. I should like the Parliamentary Secretary to say when we can expect delivery of at any rate the first of those.
  As for the smaller ships, I suppose we need frigates as long as the Russian Navy possesses some hundreds of submarines—100, 200, 300—nobody seems to know how many. I am grateful to my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) for his researches into—not, perhaps, the strength of the Russian Navy—various and conflicting estimates of the strength of the Russian Navy in American and English newspapers. I wonder, however, whether the Russian policy of building submarines in considerable numbers is a policy which the Russians would adopt now. Certainly, it must have been conceived before they had the hydrogen bomb, and probably before they had the atomic bomb. I am not at all sure that we are not centring a large part of our naval defence policy on an imaginary Russian threat which the Russians themselves are probably at this moment seriously reconsidering and very probably abandoning. I say that despite the remarks of Marshal Zhukov at the Communist Congress the other day, which my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) quoted in his speech at the beginning of the debate.
  Similarly, we have to consider the question of minesweepers. We have 227 minesweepers operational and in reserve, and 69 building. Do we really think that in this day and age an enemy will go to the trouble to mine our ports, a fairly laborious business, when the dropping of one atomic weapon can make a port radio-active and unusable for a very considerable time? I should have thought not.
  Commander Maitland: In his amiable speech the hon. Gentleman has abolished the aircraft carrier, the cruiser, the escort vessel and the minesweeper. He is speaking officially for the Opposition. Will he tell us frankly, is it the Labour Party's policy to abolish them all? There would not be very much of a fleet left.
  Mr. Robinson: No, I have not abolished any of these ships. I have said merely that there is a case for considering very much more thoroughly the rôle of these various types of vessel than the Government have done so far. I believe that it is most necessary at this stage that one should re-examine everything from first principles, because the advent of the hydrogen bomb has changed the whole nature of war—a fact to which the Service Departments have not fully awakened yet.
  Of future building programmes, we are told that design studies of guided-weapon cruisers have been approved. Is it possible now to say how long it will be before those will join the fleet? As the hon. Member for Langstone (Mr. Stevens) said, the United States Navy has now got guided-weapon cruisers and one, probably two, nuclear-powered submarines, but the best we have been told about our nuclear-powered submarines is that it will be some time before we even lay one down. That really does show we are a very long way behind the United States in the development of modern naval weapons.
  I consider now the reserve fleet—and there I would abolish a few ships. There are far too many obsolete and obsolescent vessels. I shall talk in detail of only battleships, which come in for a lot of pummelling today—I think, very rightly. Anything I say against the battleships I say with some sadness, because the "King George V" was my home for rather more than three years in the last war.
  There can be no possible future rôle for these four "King George V" class battleships. The Parliamentary Secretary told me in reply to a Question that they would cost £4 million to bring to a state of readiness, even though they would still be unmodernised. That is a considerable sum of money, and the operation would take a considerable period of time. Would not the best thing be to take the decision here and now to scrap them? I think that the same remarks apply to the "Vanguard." The "Vanguard" is not costing us the small amount that the "King George V" battleships are costing: it is costing £700,000 a year to keep in reserve.
  Now I turn from ships to men. I should like to say something about National Service. We are told that the
  2464
  need of the Navy for National Service men is falling from 6,000 in the coming year to 2,000 in the following year. I have long thought that the National Service intake in the Navy was merely a token intake. The time has now come for the Board of Admiralty to say, "We do not any longer need National Service men in the Navy," and somehow or other they must make up the deficiency that would arise from the loss of the 2,000 National Service men whom they expect to get in the year 1956–57.
  I certainly agree with the hon. and gallant Member for Croydon, North-East in his desire that the whole organisation of the manning of the Navy should be overhauled and, in particular, that the number of officers should be reduced. He did not extend his strictures to flag officers, because I think he said that there were no more than there were in 1938. With the size of the Navy as it is today, sixty-five flag officers are rather too many, and a certain saving might be made there.
  The hon. and gallant Member for Haltemprice mentioned the Royal Marines. I should like to ask whether the Royal Marines still do officer's steward duties. I have always thought that was a most inappropriate job for the Royal Marines to do. I once had a Royal Marine servant myself, and I must say that I found him very efficient, but I never thought that it was a job which fitted in with the rest of the Royal Marine's functions in the Service. I hope that these men are no longer doing steward and servant duties in their ships.
  The hon. and gallant Member for Haltemprice asked for an assurance that there would be no reduction in the size of the Royal Marine Corps. Although, on the whole, I am in favour of the contraction of defence manpower all round, I think I should be in favour of an expanded Royal Marine force within a contracted Service. The job the Marines do is probably more appropriate to modern forms of warfare, certainly of limited warfare, than that done by many other Service personnel.
  I have, perhaps, been a little overcritical. Certainly the hon. and gallant Member for Horncastle (Commander Maitland) thought so. Perhaps at this stage I might echo the congratulations of my hon. Friend the Member for Cardiff,

  2465
  South-East on the changes in the officer structure and on the new central manning organisation. I should also like to echo the hope that that will lead to getting rid of those—they were in my day and probably still are—horrible Royal Navy barracks. My brief stay in Pompey barracks was not the happiest period of my stay on the lower deck in the Navy.
  On the question of the officer structure, one must make the qualification that it is a pity that it has been found necessary to have this differentiation of the special list. I hope that that will be reconsidered. I do not think it is necessary, and I think my hon. Friend was right when he said that, however the motive setting it up may be rationalised basically, the motive was a snobbish one.
  Turning to the Reserve, I notice that the cost of the R.N.V.R. has gone up this year by one-sixth; it now costs well over £1 million, and I should like to ask what its real value is. Is it not a Reserve into which men drift and out of which they drift, rather as they please, without any particular obligations in time of emergency? Could we know something of the annual turnover of the R.N.V.R.? We are told in Paragraph 63 of the Explanatory Statement that the maximum bearing is expected to be 4,000 officers and 9,000 ratings. Perhaps we could know what the turnover is in the course of a year. At the risk of incurring even more of the wrath of hon. and gallant Members opposite, I should also like to ask whether there is any case still for the Women's Royal Naval Volunteer Reserve? Is it really necessary now? I know that there are always the claims of sentiment to maintain these organisations, but is not this possibly a field in which a small saving might be made?
  On the living conditions of the men afloat, the Parliamentary Secretary gave us a long catalogue of ways and means which are being adopted to increase and improve men's living space, both in new ships and in ships undergoing refit; and he explained to us, what I think we all know, how new gadgets come along in the course of construction and encroach on the men's living space. We know that the corps of constructors are always full of good intentions, but the fact is that it is the men's living space which in the last analysis is regarded as expendable, and in my view that is what is wrong.
  2466
  I hope that when for the new ships being built it is decided what is the proper amount of living space for the ship's company, that will be regarded as inviolable, and if it is desired to add new gadgets during the course of construction they should be added at the expense of old gadgets. I believe that far too often new gadgets have been piled on top of the old ones which are obsolescent and could easily be dispensed with, instead of which the crew's living quarters have to pay the price.
  There was one suggestion made by the hon. and gallant Member for Croydon, North-East which I should like to support, and that was his proposal that applications by men for compassionate release from the Service should be heard before an independent tribunal. I thought his arguments in favour of that were quite unanswerable, and such a tribunal would give the men concerned a sense that they have had a really fair and impartial hearing, which certainly is not the case now when they are unsuccessful in their applications.
  The Parliamentary Secretary told us that the Navy needs the good will of the country and of the House. I think it is obvious to everyone who has served in the Navy that the Navy retains the good will, and indeed the affection, of the country, and I am quite sure it also has the good will of this House. Because we criticise it, and because we submit it, as is our duty, certainly in the Opposition, to a searching examination, and even if we think that it should contract in size, is not to withhold our good will. We on this side of the House are equally concerned to see that we get the kind of Navy we need for our defence, and I think we all want a modern, efficient and, above all, a happy Service.
  11.44 p.m.
  The Parliamentary and Financial Secretary to the Admiralty (Mr. George Ward): A winding up speech which attempts to answer some of the points raised in a debate is bound to be somewhat disjointed and scrappy. I want to make that sort of speech, and I apologise for it beforehand, but it is my experience of winding up four Estimates debates in the past that that is what the House prefers rather than inflicting another set speech upon hon. Members. If it is any comfort to the hon. Member for Cardiff,

  2467
  South-East (Mr. Callaghan) far from reading a script, I shall be hard put to it to read from the scrappy notes in my own handwriting which I have been able to make during the debate.
  The hon. Member started by asking whether officers of non-seaman specialisations would be able eventually to be members of the Board of Admiralty. The answer is that the new officer structure has been especially designed to bring the best men to the top, regardless of whatever specialisation they may belong to, and officers of the specialisations other than seamen are certainly not debarred from the highest posts.
  I was then asked by the hon. Member whether we should not overhaul the Admiralty Directorates, and he mentioned particularly the Controller's side of the house. If he was here during the intervening debate, he will have heard my hon. Friend the Civil Lord speaking of a Committee under the Chairmanship of Sir Barclay Nihill which is going to do precisely that. It is going to examine the Controller's side of the house, and we shall certainly then consider what other changes within the Department may flow from the result of that Committee.
  The hon. Member also asked about the living conditions in the Ark Royal. We are the first to admit that living conditions in the Ark Royal could be very much better, but she is coming in for a six months' refit very shortly, and then we shall do all that we can to improve living conditions, within the limitations, which the hon. Gentleman knows very well, of being able to make improvements without starting from scratch or having a very considerable amount of rebuilding to do.
  The hon. Member wondered whether we ought not to stop working on the Tiger class cruisers because they were only to be fitted with conventional guns. I think the answer is that these guided weapons are to take still a little time to develop and become operationally efficient. We have to discover how to handle and operate them, and how to operate them at sea. As he knows, the object of the "Girdleness" is to do intensive and extensive sea trials with this purpose in mind, and there are then to be full range trials. Meanwhile we have
  2468
  got to have something. We cannot leave ourselves entirely naked.
  Mr. W. Yates: Is my hon. Friend saying that the Royal Navy, the Senior Service, today has no ship—no aircraft carrier or cruiser—capable of launching atomic weapons?
  Mr. Ward: I was talking about guided missiles. Today we have no ship-to-air guided missile ship, but this year we are producing a ship called the "Girdleness," which will do preliminary trials with a view to eventually carrying the first of the surface-to-air guided weapons—and that is the one about which I am talking. But, until these trials have been done, I feel we would be very unwise to leave ourselves without the conventional gun Tiger class cruisers, and I would like to make clear that these guns and their control systems are the very last word and the most modern which can be devised.
  I can tell the hon. Member that we are not placing any more British orders for the Sea Hawk. We have had two Wyvern squadrons embarked in the "Eagle" for the last year, and they have given us valuable service. Since then several improvements have been integrated, but once again there are no more of them on order.
  We are having some Seamew aircraft in the R.N.V.R. The new strategic concept brought about by the hydrogen age has rather altered our thinking, in terms of the original use for which we ordered the Seamew, but it is certainly a perfectly good aircraft. I believe that the fears of my hon. Friend the Member for Lang-stone (Mr. Stevens) are unfounded, and that it will be very useful in the R.N.V.R.
  My hon. Friend the Member for Lang-stone also suggested that the aircraft that we now have in the Fleet Air Arm would not be a match for any opposition which the Russians might put against them. I hope that that is not an assertion which is either widely made or widely believed, because I do not think it is borne out by the facts. Both the Sea-hawk and the Sea Venom have a good margin of speed over anything that the Russians would be likely to use to strike at our Fleet now. I emphasise "now". Far too many people make the mistake—I remember the mistake being made over and over again in debates when I

  2469
  was at the Air Ministry—of comparing the aircraft that we have now with what our potential enemies may have in a few years' time. They temporarily forget that when the enemy's new aircraft are in service our new aircraft will also be in service. This time factor is very important. I can assure the House that the speed and other performance attributes of the N.113 and the DH.110 will be very much better than those of the Seahawk and Sea Venom which they are to replace.
  My hon. Friend the Member for Lang-stone also asked about the guns of the N.113 and wondered whether we should suffer from the same trouble with that aircraft as the Royal Air Force has been having with the Hunter. It is always fatal to prophesy, and I will not try to do that, but I can say that because the guns are in a different position relative to the engines in the N.113 it looks more than likely that we shall avoid any such difficulties. Of course, we still have a good many more tests to carry out.
  Complaint was also made about there being no guided weapons on the first version. Once again my experience at the Air Ministry has taught me that one of the greatest problems with which the aircraft constructor has to compete is that of weight growth. The problem is, of course, aggravated considerably if one is thinking in terms of carrier-borne aircraft, for it is then much more difficult. Nevertheless, we are still hopeful that later versions will be able to carry both weapon systems. Meanwhile, this aircraft will have a particularly valuable low level, as well as high level, performance.
  The hon. Gentleman suggested that the Special Duties List ought to be merged in the General List because those in the Special Duties List, he felt, were not getting a fair deal. I think he has some misconception about the new structure, and I should like to put him right. There are two avenues from the lower deck to commissioned rank. The first is the upper yardmen's scheme, and they go on to the General List, where they can go right to the top. The second is for the rather older men from the lower deck, and they go on the Special Duties List. The Special Duties List is in no sense a new separation from the General List. It is the old branch list with very much
  2470
  enhanced status and prospects for those on it.
  To begin with, all ranks have been stepped up one. There are more of them and, therefore, the opportunities have increased. It is not possible to merge them with the General List, first because they have not quite such a wide experience.
  Mr. Callaghan: They have wider experience.
  Mr. Ward: Well, a different experience. They have not such a wide experience of command, and therefore they are not so generally appointable. They get better pay in the lower reaches than they would if they were in the General List, and they have their own special avenue of promotion to command which is free of competition from the General List.
  Mr. Callaghan: Is it not rather misleading the House to say that their avenue of promotion is free of competition? It is true, of course, that they are free from the General List. On the General List men go automatically from sub-lieutenant to lieutenant and from lieutenant to lieutenant-commander, with a chance of three in four of becoming commander. But on the Special Duties List there is a process of selection at all levels—nothing automatic about it—with very little chance of becoming commander.
  Mr. Ward: They might be even worse off if they were mixed up with the General List. We are as keen as ever to make the greatest possible use of promising material from the lower deck, and last year the lower deck provided nearly half the new officer entry. The proportion of upper yard men selected for commissions worked out roughly at the same level as before.
  We are already thinking about some of the other interesting points which the hon. Member for Cardiff, South-East made, including the idea of a Commonwealth Naval Conference and also a new approach to man management.
  My hon. and gallant Friend the Member for Haltemprice (Major Wall) mentioned reserves. We are already looking into the size and shape of our reserves in the light of the new strategic concept. We also share with my hon. and gallant

  2471
  Friend his enthusiasm for providing as many boats as possible for Sea Cadets and Sea Scouts. We make them available as far as we possibly can.
  The hon. Member for Bristol, South (Mr. Wilkin), the "old salt," asked for more opportunities for Members of Parliament to see the Navy. I can assure him that hon. Members are always more than welcome on any trips they can make and that we try as far as possible to arrange such trips. In the last two or three years we have held an exercise called "Shop Window," which has been very well patronised by hon. Members from both sides of the House. Unfortunately, it has not been possible to arrange it this year for operational reasons. There certainly will be other opportunities, and I hope that hon. Members will avail themselves of them. The hon. Member for Bristol, South also spoke of discipline. I can assure him that in the 39 years since he left the Navy very much has altered. I wish he could come back and see for himself.
  There is one little example, not directly related to discipline, which would, I think, interest the House. The hon. Member for Devonport (Miss Vickers) has asked us to say a word about it. It is the improved uniform for ratings, the square rig, which we have been testing. The tests are now complete. I know that the hon. Member for Cardiff, South-East took a lot of interest in this. The square rig has been modified, having a zip fastener down the front of the jumper and the trousers, and side pockets in the trousers. We are having an improved diagonal serge which is more comfortable, smoother, and smarter than the present one. It will be used as a walking-out dress, or what the Navy calls "The No. 1 suit." There is also coming into use a cap with a waterproof plastic top which does not have to be washed but can be sponged with soap and water. This cap will be worn all the year round in all climates.
  The hon. Gentleman can see that things have changed. Promotion prospects also have changed. If the hon. Gentleman would like to know more about promotion prospects on the lower deck, I hope he will let me know. I will then arrange for him to talk to someone about them. I am also happy to tell him that
  2472
  victualling allowance is adjusted according to the movement of prices. At present it is a little more than three shillings.
  The hon. Member for Croydon, North-East (Vice-Admiral Hughes Hallett) was worried about there being no skilled jobs left for National Service men in a long-term Regular Navy. While that may apply to the other two Services to a certain extent, it does not apply to the Navy, because very few National Service men are in highly skilled technical jobs in the Navy. There are a few hundred. He also asked about the 16-year old cadets. They have gone up two shillings a day in the new pay code. I am sure he will agree that there is no reason why they should go up as much as the 18-year olds.
  The hon. Member also suggested that there ought to be tribunals on the lines of those for conscientious objectors to hear compassionate cases. Apart from the constitutional objections—and there are some—there are practical objections about which I think he will agree. The delay involved in getting decisions from independent civilian tribunal would rarely be acceptable, and the naval drafting machinery would be slowed and clogged with applications. The tribunal would provide a perfect opportunity for anyone who wanted to delay, for example, being drafted abroad. Officers would have to be briefed to give evidence before the tribunals, witnesses would have to attend, and the tribunals would not be in a position fairly to weigh the effect of their decisions on the efficiency of the Service. I am sure that the people best fitted to maintain the difficult balance between the welfare of the individual and the needs of the Service are those associated with both problems in the normal naval chain of command.
  The hon. Member for Orkney and Shetland (Mr. Grimond) asked about Scapa. In our survey of the support services of the Navy, we are looking at the naval installations at Scapa. When we have gone a little further in our examination, I will, of course, bear in mind his suggestion about giving careful thought to the interests of the local people, and, in particular, I will go into his suggestion about lighting. I am very grateful to him for raising those matters.
  My hon. Friend the Member for Langstone asked about the steam cata-

  2473
  pult. We did have a little trouble, but it has been cured by modification. The mirror sights are entirely satisfactory and, since both the mirror sights and angled decks have come into use, the accident rate of deck landings has been considerably reduced. He also asked about the accidents in the Ark Royal last night. They will, of course, be the subject of boards of inquiry. The bare facts are that a Gannet crashed into the sea after taking off with its crew of three. A Sea Venom with its crew of two disappeared during a night exercise. I greatly regret to tell the House that all five men must now be presumed drowned. The next-of-kin have been informed, and I know that the House will join with me in expressing the deepest sympathy to them in this tragic affair.
  Mr. Stevens: I raised a question about co-operation between the Navy, the Royal Air Force and the Ministry of Supply in radar development.
  Mr. Ward: I am sorry that I shall not be able to deal with every point. If my hon. Friend would like to discuss that at some length—and it is a matter which lends itself to being discussed at some length—I am entirely at his disposal at any time, but I can assure him that there is the closest co-operation among the three Departments.
  The hon. Member for St. Pancras, North (Mr. K. Robinson) asked why the Estimates had increased. I pointed out at the very beginning of my remarks that if one deducts the estimated £31 million for increases in Naval and civilian pay and pensions and the increased price of material and supplies, the provision for next year is actually £21 million less than in the current year. He also asked about the rôle of aircraft carriers. There again, I said in my opening speech that today the main striking power of the Navy is provided by a balanced force of aircraft flying from floating bases. It is the main strike of the Navy and is clearly a very flexible weapon. The aircraft is a far more flexible weapon than the surface ship, and although one might expect someone coining from the Air Ministry to have some prejudice, I can assure hon. Members that I am not a convert. I have always believed in aircraft carriers, because I have always believed in the air.
  Mr. Emrys Hughes: Can the hon. Member devote some time to replying to Lord Montgomery's criticism of aircraft carriers?
  Mr. Ward: Much as I admire Lord Montgomery, I very much doubt whether he served three years in aircraft carriers as I have done, and I think that I may probably be even better qualified to speak about them than Lord Montgomery.
  The hon. Member also asked about the 65 flag officers. I ask him to remember that the number of flag officers in the Navy depends on the command structure rather than on the number of ships. The number of admirals is high, mainly because of the N.A.T.O. and Allied staff jobs which did not exist before the war. The hon. Member spoke about the need for an "agonising reappraisal." I agree, and I can tell him that it is going on all the time. If he does not believe that, he has only to ask my right hon. and learned Friend the Minister of Defence—or, perhaps, better still, the Chancellor of the Exchequer. There has to be an "agonising appraisal" when our resources and manpower are so limited. Of course, one would need the wisdom of Job to get the thing in absolutely right perspective so far as all three Services are concerned; but we are not far wrong in the size and shape of the Estimates of each one in relation to the tasks which they have to do, although there may be minor adjustments which we can make.
  Of Russian submarines, he said he did not think that the Russians would have built so many had they known of the possibility of a hydrogen war. But the number of their submarines has increased in the last seven years by 200, and I cannot believe that the whole of the increase occurred before the possibility of such a war was known.
  Mr. K. Robinson: It is conceivable that the Russians may take as long as we do in changing our defence plans.
  Mr. Ward: Then there is no point in having a dictatorship; one might just as well have a good old, slow democracy.
  Mr. Paget: But one may be shot on any day.
  Mr. Ward: A good deal has been said about integration of the Royal Navy and the Royal Air Force. I do not want hon. Members to think that I am shirking

  2475
  anything, but I do not want to get into a long argument at this time of the night on this subject. Obviously, a proposal of that kind ought not to be dismissed out of hand. But giving what is purely my own view, and nobody else's, and speaking as one who has served in both Services, I would say that the advantages to be gained from a complete integration of the Royal Navy and the Royal Air Force are more illusory than real. But I am quite prepared to consider what has been said, and to consider any other suggestions.
  Brigadier Clarke: Before my hon. Friend sits down, would he give an assurance on two points? First, that he will look into the Admiralty's interpretation of the Pensions (Increase) Act? I have tried for two years to get the Admiralty to show some sense about this; I have tried with his predecessor, and with the Civil Lord, and I would be very grateful for such an assurance. Secondly, could he say something about the speeding up of a decision on the matter of discharge by purchase?
  Mr. Ward: I will look very carefully into what my hon. and gallant Friend has said. I will take great care to answer any points that I possibly can by letter.
  Having said that, I would extend my thanks to the House for its kindly reception of my first Navy Estimates, and say how much I look forward to our next discussion on that item.
  Question put and agreed to.
  Supply accordingly considered in Committee.
  [Sir CHARLES MACANDREW in the Chair]

  ROYAL DOCKYARDS
    NAVY ESTIMATES, 1956–57

      VOTE A.—NUMBERS
      Resolved,
      That 128,000 Officers, Seamen and Boys and Royal Marines, who are borne on the books of Her Majesty's Ships and at the Royal Marine establishments, and members of the Women's Royal Naval Service and Queen Alexandra's Royal Naval Nursing Service, be employed for the Sea Service, for the year ending on the 31st day of March, 1957.
      Resolution to be reported.
      Report to be received this day; Committee to sit again this day.

      PUBLIC ACCOUNTS
      Mr. Ernest Davies and Mr. Goronwy Roberts discharged from the Committee of Public Accounts; Mr. Collins and Mr. Thornton added.—[Mr. Wills.]

  FLOATING DEBT
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wills.]
  12.16 a.m.
  Mr. F. M. Bennett: When I first heard that I had been allocated the Adjournment debate tonight on a highly technical and complicated subject, I somewhat sadly envisaged speaking at a much later hour than this. I am grateful for this opportunity to raise what is, particularly at this time, an extremely important subject when we are undergoing considerable economic difficulties.
  In recent weeks and months we have had a great deal of controversy on the subject of Treasury bills and their inflationary or other effect. In my humble opinion, those who have attacked the Treasury bill most savagely as being directly inflationary are just about as wrong as those who have defended it too hotly and said that by the provision of cheap money for the Government it is, on the contrary, the reverse of inflationary. To my mind, whether the use of the Treasury bill is inflationary or not depends upon the purpose for which it is used and the circumstances in which it is used.
  If it is to serve its proper purpose, the Treasury bill should be used in exactly the same way as a commercial bill, for it is intended to provide for the Government the same sort of money as the commercial bill provides for private trade, both internal and overseas.
  What are the normal uses traditionally associated with a bill drawn on London? The first is that it should essentially be short-term, and the second is that it should be self-liquidating as regards the purpose for which the money is obtained. As the subject is a wide one and I have only a short time to cover it, I will content myself by giving three brief examples of how I consider the Treasury bill should be used in its proper rôle, in which it should not suffer criticism.

  2477
  First, there are seasonal revenue trends and movements. At the beginning of the year there is a shortfall of revenue, and during this period, while Government expenditure must continue, it is entirely proper for the Government to issue Treasury bills until the revenue shortfall is cured in due course, when the bills can be paid off. In this instance, both conditions—short-term and self-liquidating—are fulfilled.
  Secondly, in these days when the Government are making overseas purchases of commodities, a good example of the proper rôle of a Treasury bill arises when the Government, in purchasing overseas a commodity such as sugar, are able to obtain a good bargain during the spring or early part of the year. It would be quite right for the Government to buy the commodity and raise the money by Treasury bills, which would mature later in the year when the commodity was released to meet demand in this country.
  Thirdly, in the case of a Government bond or other loan issue reaching maturity—this is one of the few instances in which a Treasury bill might have even a disinflationary effect, if only temporarily—the Government could use the bill to absorb an excess of money when the issue reached maturity and was encashed.
  Those are three examples of how the bill ought to be used. In my opinion, they are unhappily in marked contrast with recent developments. I am afraid that in post-war years the tendency has grown up—through a belief that by borrowing day-to-day money more cheaply the Government are saved higher interest rates—to use Treasury bills for something for which they were never intended and ought not to be used, such as long-term finance for the building of roads, schools and undertakings of that sort. The use of the Treasury bill for such purposes tends to produce an inflationary effect unless other circumstances, to which I will refer in a moment, coincidentally mitigate against it.
  I suggest anyhow that it is an illusion that to borrow short and to lend long, which is the classic thing one should not do either in private or public business, you really save money. The legend has grown up that by borrowing at a time when day-to-day money rates are cheaper
  2478
  than the Government could obtain on the market, we have been saving money. Although that was so on the face of it, it was only temporarily so for two reasons; first, because by its contribution to the inflationary effect the value of the money which the Government thought they were saving was lowered, and, secondly, when the process ultimately comes to an end, higher rates of interest have to be paid than if the transaction had been launched on proper lines for its proper purpose in the first place.
  There is ample proof of what I am saying in the Government's recent—overdue, in my submission, but nevertheless welcome—5 per cent. 15-month loan issue which was floated within the last few days, I do not think that the Economic Secretary to the Treasury or any other Minister would deny that had this step been taken in the lush days of 1952 we could then easily have obtained the same money at 3½ per cent. for twenty years whereas now the Government are having to pay 5 per cent. for fifteen months. If in those happier days the Chancellor had done what we asked, the Exchequer would now have to pay the rate now payable. So the illusion that by the use of Treasury bills for long-term finance when day-to-day money is cheap the Government save money is wrong on every count.
  Such methods are wrong, too, on a variety of grounds, theoretical and practical, and hence I can only hope that the recent change of heart on the part of the Treasury is due not only because day-to-day money is at the moment just as dear, or even dearer, than long-term borrowing, but because it really is a change of heart and not merely due to the belief that this idea of saving interest rates cannot even be valid in the temporary effect at present.
  The Government nowadays have gone into business and finance. They ought to behave ethically in business and finance in precisely the same way as they expect private enterprise to abide by the code which they lay down. I know only too well that where commercial bills are concerned, the Bank of England and the Treasury regard this question of short-term equality and self-liquidation as all-important. I have heard all this before. In the last Parliament I pressed the Minister to extend the ordinary commercial bill from ninety to 120 days. It is astonishing how difficult it was to

  2479
  obtain even that concession. We were not suggesting that there should be any long-term finance by bills but simply that there should be an extension of thirty days on a genuine self-liquidating bill.
  I well remember the Minister's answer in which he pointed out that the bill on London was only suitable for really short-term self-liquidating purposes. Yet at the same time, the Government have blissfully gone on over the years using Treasury bills for financing precisely the sort of projects which the Bank of England would never look at so far as commercial bills are concerned; which would never rediscount if private enterprise tried to use day-to-day money.
  I will now explain why I think the economic effect of an excessive or improper use of Treasury bills is also bad. In 1952, after the Conservative Government had been returned to power and public confidence in our economic stability had been restored, there was a great increase in savings and deposits in the banks. While savings rose, they concealed the inflationary effect which, in the mounting volume of Treasury bills, would otherwise have shown itself sooner.
  For the moment savings are not rising in that way, nor are deposits, and for the first time we have been seeing the real effect of a constantly mounting volume of Treasury bills. I put it to the Economic Secretary that if he followed my suggestion too literally tonight, steered away from Treasury bills and converted into long-term loan issues all outstanding bills which were financing long-term projects, he would be as horrified as the rest of the country at the illiquidity of the banks which such a situation would demonstrate to exist.
  Why do I think that bills are wrong in their effect on the banking system? This is a highly technical aspect, and I could argue for some time with illustrative figures, but I will cut it down to the barest minimum. Since the banks can only meet increasing demands for Treasury bill finance by drawing on cash deposits, and yet have to maintain the cash ratio at 8 per cent., this can only be done by banks, in one way or another, obtaining more money to restore the 8 per cent. ratio from the Government and thus adding to the inflationary pressure.
  2480
  If we contrast the long-term loan, in this context, we see the complete difference in its effect on the banking system. If we are properly to float long-term loans, for long-term financing purposes, rather than resort to Treasury bills, then there is a totally different effect as to public subscriptions to such a loan: the deposits in the bank which the public use to buy the long-term loan are really removed from the banks instead of it being only a paper transaction, as is the case with subscriptions to Treasury bills. In due course, then, when the money comes back from the Government and is spent and returns to the banks, the liquidity ratio and the ratio of cash and other deposits are restored.
  As for the banks' subscriptions to such a long-term loan, it is of course true that the investment sector of their deposits rises, and immediately, without any credit squeeze being imposed or requested by the Chancellor, the banks will take the appropriate steps to curtail advances so as to restore their own liquidity ratio.
  I should like, finally, to mention three general points to show why I welcome recent signs that the Government are determined to steer away from Treasury bill finance. If we continue to develop Treasury bill finance, it should be clearly understood that we are doing great harm to London as a world financial centre. If we constantly reduce the amount of short-term money which is available for the financing of international trade in this country, by drawing off that money for the internal financing of Treasury bills, we must lessen the amount of overseas trade which this country can finance. That does great harm to London as a financial centre, not only for the sterling area but for the world.
  In that event, too, we lose not only the amount of commission on the commercial bills, since we no longer have money to devote to them; we lose the other things for which people come to London—shipping and insurance, for instance. If they do not come to London for their bills they will not come to London for the ancillary purposes either.
  Second, when the Chancellor wishes to use Bank Rate as the flexible weapon it is meant and purported to be, I hope he will remember that the field in which it has the most immediate effect—the commercial bill is now, I believe, down to only about 14 per cent. of the whole at

  2481
  the moment, with the rest of short-term money tied up in Treasury bills outside the most effective scope of a high bank and discount rate. Thirdly only if we have in good, boom times real orthodox, long term, steady financing in these conditions have we means in reserve against the time when the slump comes along. We can help best to face a deflationary situation and a slump only if we have in reserve the means at such a time to pour out Treasury bills to get money flowing in the country again. We cannot do so if we have used up in boom times all that power which the Government one day will want to have at their disposal, if there should be—what we hope will not occur—serious deflation.
  I have tried to speak constructively and not to be critical. As far as one can see the Government are showing welcome signs that now they believe that relying too much on Treasury bills for internal financing has gone far enough, if not already too far. 'The very action they have taken in their new issue is evidence of their determination to return to more orthodox methods of long-term finance for long-term purposes. After that recent evidence one does not want to be recriminatory about the past, and I welcome the new steps they have taken, and I urge them to carry on the good work.
  12.32 a.m.
  Sir Henry d'Avigdor-Goldsmid: I know how much the House wants to hear the Economic Secretary, who is always extremely interesting, but particularly on this subject which he has made so very much his own, and I shall not intervene between the House and my hon. Friend for more than a moment or two. I appreciate very much my hon. Friend's kindness in allowing me these few moments in which to speak.
  I would draw attention to the fact that with a high Bank Rate and Treasury bill financing we have an estimated amount of about £300,000 million of foreign money here on which we are paying interest at the Treasury bill rate, which means an annual outgoing in hard foreign exchange of about £150 million at current rates. The recent changes in Bank Rate in the year have about doubled the figure. A year ago it would have been about £75 million. Now it is £150 million.
  2482
  I urge most strongly that, in considering what must be done to build up the requirements of British industry, and the effort it must make to make up £75 million in exports, we should see how important it is for our national standard of living and our balance of payments to make some real effort to get the Treasury bill rate down. Historically, there should be no reason at all why the Treasury bill rate should be, as it is now, higher than the long term rate. I do hope that in the consideration of these matters the Economic Secretary will—as I am sure he does—consider that the management of our short term debt is one of the major items on the road to recovery. If it is properly handled we shall be a long way along towards achieving the results we desire.
  12.33 a.m.
  The Economic Secretary to the Treasury (Sir Edward Boyle): I would assure my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) that I fully realise the effect of the higher Bank Rate and the higher Treasury bill rate on our balance of payments. I am sorry that the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) and the right hon. Gentleman the Member for Battersea, North (Mr. Jay), who would have been particularly pleased to have heard his remarks, are not here tonight. Although I do not want to mitigate its effect, all I can say is that I think a high Bank Rate and high Treasury bill rate have mitigated the danger to this country and the sterling area from devaluation. I strongly believe myself that the recent increase in Bank Rate has done something to convince opinion overseas that we intend—as we do—to hold the £ sterling at its present parity. However, I do take the point my hon. Friend has made.
  I am sure the House is grateful to my hon. Friend the Member for Torquay (Mr. F. M. Bennett) for raising this matter tonight. As the hon. Gentleman has not said it, I cannot resist saying that it is perhaps suitable on this evening, when we have been debating the Navy for some time, that we should be discussing the floating debt.
  The operations of the Exchequer involve the flow of very large sums in and out of circulation and are therefore of course of the greatest importance to the

  2483
  execution of our monetary policy. The Exchequer must borrow to replace maturing debt and to meet such outlay as is not covered by the Revenue surplus and other receipts.
  The point of immediate importance is the question of the effect of bill borrowing on the control of credit and on the money supply. Let me begin with one or two points on which I think we should all be agreed. When the Exchequer borrows from the public, in the widest possible sense of that term, it takes money out of circulation. I think the hon. Member for Torquay would agree that it makes no difference whether the borrowing is by issue of stock, by issue of bills, by issue of tax reserve certificates or by issue of Savings certificates.
  Indeed, from this point of view, Treasury bills have been of value already as witness the big transfers from bank deposits into bills in the early part of 1955, and should be of value again if we may judge by the number of non-market applications for bills at, for example, the tender on 25th February of this year. I think the effect on a bank's finances is the same whether the bank buys a bill or any other security. Therefore, it is all one whether the Treasury borrows by issue of bills or otherwise, but the point which I think hon. Members have in mind, as have other people outside this House, is this: the difference comes when the bank is the lender, because to a bank a bill is a liquid asset and other investments are not.
  As I understand it, the point which is frequently made is that the more bills the bank holds the higher the bank's liquidity ratio and therefore the higher the bank's ability to act. This point was put very clearly by Mr. Wilfred King recently when he said that bill borrowing is inflationary because in the end—and these are his words—the banks will lend up to the limit of their liquidity ratio. As I see it, the point that is frequently advanced is that bill borrowing in itself is not inflationary but bill borrowing from the banks can be inflationary if the banks operate on their conventional liquidity ratio.
  Let us examine this thesis in the light of what actually happened in 1955, because I think that the events of 1955 show very clearly that it is wrong to
  2484
  assume that the issue of Treasury bills must add to the money supply and cause inflation. In fact, the opposite occurred in the early months of 1955, when companies and other investors were attracted by the high rates offered by Treasury bills and transferred their liquid savings from bank deposits into bills. Nor, indeed, need an increase of bills in the assets of the banks result in an increase in the money supply. In the period June to November of 1955, the clearing bankers' holdings of floating debt rose by £325 million, but net deposits went down by £53 million.
  Also, of course, exactly the same story is seen if we look at advances. The banks, moved partly, I admit, by the special request of my right hon. Friend the Lord Privy Seal on 25th July, but partly by fear of pressure on their liquidity after the turn of the year, operated what was in effect a liquidity ratio of 34 per cent., to 38 per cent. instead of the conventional 30 per cent. and reduced advances during the latter half of 1955 while adding to their bill holdings.
  While I suggest that the figures which I have quoted show quite clearly that an increase in Treasury bills need not be inflationary—and as a matter of historical fact in the latter half of 1955 was not inflationary—at the same time it is, I think, common ground that an increase in Treasury bill borrowing must relax the monetary pressure on the liquidity of the banks. Hence I entirely agree, if credit policy is to be supported by pressure on bankers' liquidity, everything possible must be done to reduce the volume of the Floating Debt, or at any rate arrest its increase.
  Now, what is being done? Here our first object is to reduce the requirements of the Exchequer by using the Budget revenue surplus to redeem debt, and by doing all that is possible to reduce the capital outlay, both of the Government and of public boards, that is financed by Exchequer borrowing. It is also our aim to reduce Exchequer borrowing by diverting the local authorities from the Exchequer as a source of capital to the stock and mortgage markets where they can attract savings by borrowing on their own credit. Hon. Members will recall this policy was inaugurated on 26th October last, and I remember defending it. I remember too, a very able speech

  2485
  in its defence by my hon. Friend the Member for Oldham, East (Sir I. Horobin). Furthermore, this policy has been more successful than anyone could have expected in the markets we have experienced during the last five months. During this period, three local authorities have raised £11 million in the stock market, while in the mortgage market loans raised and already arranged are approaching £100 million, and I can assure the House that this policy will continue.
  Having done what we can to reduce the amount of Exchequer borrowing we next attend to the methods by which we borrow so as to reduce the amount that is financed by bill borrowing and an increase in the floating debt. A good deal has recently been said in the Press and elsewhere about the virtues of "funding,"—if I might use this expression funding which "is rather the rage" just now. It would, of course, impede the effectiveness of the Treasury's loan operations if I were to give advance indications of the form and timing of what is proposed, but I would assure the House that the critics are wrong if they think that what is, as a general term, called "funding"—that is to say, Exchequer borrowing by sales of Government securities—has not been taking place in the past year and will not continue during the present year. I can assure the House, and my hon. Friend for Torquay in particular, that the Treasury will not fail to take all suitable opportunities to reduce the Floating Debt and attract savings by such operations. I think that the issue of £300 million worth of 5% Exchequer Stock, 1957, on 7th March—that is to say, yesterday—is evidence of the authorities readiness to act whenever opportunity offers. I can also assure the House—and I hope this will be taken note of, both by the House tonight and outside, if by any chance anyone should read the report of this debate—that this issue is not in any sense of the word the end of our operations.
  There are just two things I should like to add in the last two or three minutes. There has been a tendency, I think, recently in the Press and in some financial quarters to suggest that we could deal with the problem of inflation quite easily if we went back to the classical monetary
  2486
  methods of the 'thirties. I have myself a classical education, but I am always a little nervous when this adjective "classical" is used, in rather an emotive way, as what some philosopher rightly called an adjective of persuasive defence.
  I would make just these two points. As a guide to 1956, I think the experience of 1955 is of more practical value than the experience of 1930. People who assume that what worked in 1930 will work today sometimes ignore the complete change in technique that must follow from the change in the size of the Exchequer's dealing with the money market. Apart from any loan operations, the Exchequer revenue account today may in a single week have a surplus or deficit on the market of over £100 million, whereas the corresponding figure in 1930 would be only £15 million or £20 million. Similarly, the bills offered at the market tender today run up to £300 million compared with only £40 million to £50 million some twenty-five years ago.
  My last point of all is this, and I make it to the House seriously. There is, I think, an idea that a reduction in bank advances is somehow more meritorious if the banker does it from monetary pressure. But after all, in practice the banker has to make exactly the same decision—that is to say, which advances to cut—whether he is asked to bring down the level as a result of initiative taken by the Chancellor of the Exchequer or whether he does it simply to right his liquidity ratio. I think the House will agree with me that either process must inevitably be equally painful to the customer, and while I entirely agree with my hon. Friend for Torquay that this question of the management of the floating debt is of great importance, do not let us imagine that we can solve our problems of inflation by some, as it were, mystical monetary means that will not involve some pain to somebody.
  The Question having been proposed after Ten o'clock on Thursday evening and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at fourteen minutes to One o'clock.

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Preamble
The House met at three of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers

  HOME OFFICE INSTRUCTION ON EXECUTIONS
  3.5 p.m.
  VISCOUNT WAVERLEY: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
  [The Question was as follows:
  To ask Her Majesty's Government whether their attention has been drawn to an article by Arthur Koestler in the Observer of 4th March entitled "Behind the Bulletins" which purports to quote a confidential Home Office instruction to prison governors and refers to incidents alleged to have occurred at the execution of Edith Thompson; and whether they have any statement to make.]
  THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR THE HOME DEPARTMENT (LORD MANCROFT): My Lords, Mr. Arthur Koestler's article in last Sunday's Observer purports to quote a confidential instruction to prison governors about executions which, as quoted, suggests that governors are instructed that they should invariably say, in reference to the manner in which an execution is carried out, that
  "it was carried out expeditiously and without a hitch."
  Mr. Koestler's quotation omits important parts of the original Home Office instruction and gives an entirely misleading impression of its sense and intention. The passage as a whole reads as follows:
  "No details as to any execution should be given to anyone but the coroner. The reply to any inquiry at the inquest as to the manner in which an execution has been carried out should be confined to as few words as possible, e.g., 'it was carried out expeditiously and there was no hitch'."
  The words in the instruction, which I will now read, were omitted from Mr. Koestler's quotation; the passage should read:
  " e.g., 'it was carried out expeditiously and there was no hitch' or as the case may be.
  220
  If there has been any hitch or unusual event the fact must, of course, be stated, and a full explanation given."
  Mr. Koestler's quotation then continued, correctly:
  "No record should be taken as to the number of seconds, et cetera, and if pressed for details of this kind the governor should say he is not able to give them as he did not time the proceedings, but 'a very short interval elapsed,' or some general expression to the like effect may be used."
  The quotation then omitted the final sentence of the instruction, which is as follows:
  "If there has been any undue delay it must be so stated and an explanation given."
  Mr. Koestler also mentions the case of a woman, and I am afraid I must quote,
  "whose insides fell out before she vanished through the trap."
  This appears from the context to be a reference to the case of Edith Thompson. It is untrue that anything of the kind alleged occurred at the execution of Mrs. Thompson, or of any other woman. Mr. Koestler quotes a speech made by Mr. (now Sir) Beverley Baxter, in 1948, in which Sir Beverley referred to a visit to his office at the Daily Express by two prison warders who had been present at Mrs. Thompson's execution and had told Sir Beverley that she had
  "disintegrated as a human creature on her way to the gallows."
  My noble friend Lord Waverley may remember that when Sir Beverley Baxter's speech was reported in the Press, one of the only two prison officers who had been present at Mrs. Thompson's execution wrote to the noble Lord to say that the statement that he had called on Sir Beverley was untrue. The prison officer subsequently made a formal statement in which he said,
  "There is no truth in the suggestion that I and the other officer were extremely upset after the execution. We were the only two officers taking part and it is quite untrue that we went to Mr. Beverley Baxter's office after the execution had taken place. Nor is it true that Mrs. Thompson was in a state of collapse at the time."
  He added that the execution was carried out without a hitch.
  I apologise for the length of this answer but the matter seems to my right honourable friend the Home Secretary and myself to be of some importance.
  VISCOUNT WAVERLEY: My Lords, I am glad that my noble friend Lord Mancroft has been able to clear these matters up, and I hope that noble Lords will agree with me that it is most deplorable that a controversial case, whatever its intrinsic merits or demerits, should be bolstered up by misrepresentations so gross as those now exposed.
  VISCOUNT TEMPLEWOOD: My Lords, while I fully agree with the observations of the noble Viscount, Lord Waverley, as to the objections to using sensational stories for prejudicing a case, am I not right in thinking that charges of this kind were made in 1948? If my information is correct, it was expected then that the Home Office would make an official disclaimer; but they made no such disclaimer. That being so, I should like to ask the noble Lord, Lord Man-croft, what has happened since then to make the statement now necessary.
  LORD MANCROFT: My Lords, why an official disclaimer was not made at the time in 1948 I am afraid I cannot tell the noble Viscount without notice. The reason that it has now become necessary is because this legend has recurred, coupled with the statements by Mr. Koestler in his article, which go far further and are of a slightly different nature, though equally serious; and my right honourable friend thought that for the sake of accuracy, the facts ought to be put in their proper perspective and the truth known.
  VISCOUNT HAILSHAM: My Lords, is it not the fact that these untruths were repeated in the Observer as recently as last week? Having regard to the fact that, as appears from my noble friend's answer, the author of the article there referred to fell far short of the standards of integrity expected of a responsible author, and that the newspaper appears to have fallen far short of the degree of care which is required in the publication of a responsible newspaper, is it not clearly in the public interest that this should be made known? Might it not possibly be a suitable case for the Press Council?
  LORD MANCROFT: My Lords, I think there is much strength in what my noble and learned friend Lord Hailsham says. I perhaps ought to say, for the benefit of your Lordships' information,
  222
  that this article which appeared in the Observer is part of what will eventually be a book by Mr. Koestler, and since it was clearly going to have greater permanence than some of the articles which had appeared previously on this subject, it appeared all the more necessary to get the facts in their right perspective.

  THE ECONOMIC SITUATION
  3.8 p.m.
  Debate resumed (according to Order) on the Motion moved yesterday by Lord Pethick-Lawrence, That there be laid before this House Papers in regard to the economic situation.
  LORD WILMOT OF SELMESTON: My Lords, I am sure that your Lordships will agree with me if I say that the debate which we had yesterday and adjourned last evening was one of the most interesting and important that has occurred for some time. I know that in reflecting upon it later I felt privileged to have been here yesterday to listen to the debate, and I shall feel even more privileged if your Lordships indulge me enough to allow me to make some contribution to-day. I know there are a number of noble Lords who still wish to speak in the debate and therefore I will try to be brief. The contributions which noble Lords made yesterday included several which fell from those of long experience in this field and who speak with unquestioned authority. I make no such claims; I am no expert in this matter but an ordinary business man who, by conscience and conviction, has for many years been a member of the Labour Party. However, I ask your Lordships to believe me when I say that in the remarks I make to-day I shall try not to be actuated in any sense by Panty politics. I believe the subject which we are discussing to-day is of such importance, is fraught with such grave consequences to the livelihood and welfare of our people, that we ought to try to find a way in which everybody can make some contribution to its solution. It is with that in mind that I shall say what I have to say to-day.
  Yesterday, I felt that we displayed much agreement over a wide area. From all sides of the House there seemed to be agreement as to the nature of the problem. My noble friend Lord Pethick-Lawrence gave us a definition of inflation

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  which I think can hardly be equalled. He said it was the exercise of the power to spend more money than, at existing prices, there were goods and services to satisfy. That seems to me to be a perfect definition of that half of the problem. The other half is that we are increasingly buying from abroad more than we can pay for from the proceeds of what we are able to sell abroad, and that is the only source of our ability to pay if we include the sale of invisible as well as visible exports.
  I think we also agree as to the peril of this situation. Unless it is abated, and abated swiftly, I see inevitable and disastrous consequences. We were also agreed as to the duty of everybody—and all of us in public affairs have a special duty laid upon us—to do whatever he can, whatever his ability, whatever his occupation or position, to bring home to people the nature of the problem and the seriousness of its consequences. Mr. Macmillan in another place, in concluding his recent speech, made an appeal of this character. He said [OFFICIAL REPORT, Commons, Vol. 549 (No. 100), col. 59]:
  "In the past our common national effort saved our freedom and redeemed our greatness. I only beg that faction may not now destroy what unity then achieved."
  I accept that duty, and I should like to be able to make some contribution. But I am bound to say there are certain prerequisite actions which must be taken before it becomes possible to do much. I agree with what the noble Viscount, Lord Bruce of Melbourne, said yesterday: this problem is as much psychological as technical. In fact, I think it is more psychological. If we could solve the psychological problems involved in it, the technical problems could be easily adjusted.
  I am bound to say that I see no hope of bringing the public at large to a realisation of this serious situation unless the Government themselves are prepared to do a lot more and differently from what they have already done or have indicated they are prepared to do. Mr. Macmillan said that the Government must lead, and that is true. He said the Government are prepared to lead, but that is not true, apparently, for no lead whatever has been given. What is required, first of all, is an
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  admission by the Government that their past policies have been wrong and ineffective, and unless they are prepared to do that I do not see how it is possible to get people to do the unpleasant things for them which are necessary to help solve the problem.
  I think it is also necessary that the Government should bring forward an entirely new set of proposals embracing a number of actions which they have, for Party reasons, ruled out, and to admit what most honest people are prepared to admit some time or other: that things were not as they thought they were, and the things that they did proved to be ineffective and wrong. Now is that too much to ask of the Government in this situation? It is a good deal to ask. Politicians are loth to admit past errors, and Parties are even more loth than individuals. But I wonder if we appreciate what it means to working people, first of all to listen and then to act in the direction which they must act if they are to make their contribution to the solution of this problem. I think we should agree that unless we can get the working people to do things which, although in the common interest, are not in their personal immediate interest, then we shall fail altogether.
  Consider the position of a working class family. It is easy for people to say that the trade unions are unpatriotic to press wage demands, or that the workers are demanding more and more. But these are individual people with individual families. They find themselves in an era of rapidly rising prices. They find that all around them those who have goods to sell pass on their increased costs to their customers. The workman has only one thing to sell—his labour. His costs are increasing, and it is not surprising that in a sellers' market he passes on the increased cost to his consumer, the employer. Few workmen more than pass on their increased costs, and whole sections of working people have not been able to pass that much on. Many of them find the cost of living rising much faster than any adjustment of wages. So we are asking working men and women to behave in a non-commercial way. We are asking them to charge lower prices than the market is prepared to pay for the only thing they can sell, and out of very slender margins indeed to bear themselves the rising costs which they must

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  pay, not in deprivation of luxuries, but in many millions of cases the voluntary going without of the essentials of life.
  We are asking them also—and let us remember this—to take part under a Conservative Government in a mass attack on inflation and a move towards deflation. I venture to suggest that there is not a working class home in this country which either consciously or subconsciously has not got bitter and hateful memories of the last time a Conservative Government embarked upon a policy of deflation. It put millions of people on the streets for many years. When you see men not working their best and slacking, and demanding that modern machinery, which is intended to save labour, shall be overmanned, the core of all that feeling is back in the 'twenties and the 'thirties, when deflation caused Jarrow, Maryport, West Cumberland and South Wales to be areas of death and decay. These things are in the very heart of the nation. They are just as deep in the soul of the English working men and their families as are the national hatreds to which we became accustomed in various parts of Europe. If noble Lords feel that, in asking the Government completely to revise their policies and approach, I am asking something which is impossible, then I say that it is impossible to get working people to co-operate in this matter.
  There cannot be any doubt that since 1951 the Government have been wholly in error in their policies adopted in this matter. They still seem unconscious of its gravity and magnitude. One has only to read the speeches which have been made by the last Chancellor of the Exchequer, by the President of the Board of Trade, and even by the Prime Minister himself during the past year, to realise how completely they have failed to grasp the seriousness of the situation and how they have misread the indications, which were clear enough to some other people. In his speech last April Mr. Butler said [OFFICIAL REPORT, Commons, Vol. 540, col. 39]:
  "…it became clear by February that we needed to take action to moderate the growth of imports and to encourage exports. And from the result, all I can say is thank goodness that we took action in time."
  Later on he said, in the same speech:
  "But the situation has been brought under control, as, for example, is shown by the movement of the reserves since then and the latest rates for sterling."
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  Then we had the Election broadcast, when he addressed millions of people and had to persuade them to take an entirely different view. He told them then:
  "We have restored the national solvency. We are begining to see the first effects. Our trade figures are better and we are once again holding the position of our reserves."
  That is what Mr. Butler thought of the Situation. But other people have thought differently. I have here the report and accounts of Lloyds Bank for 1955, one of our greatest joint stock banks. I see the names of numerous noble Lords who were present yesterday, and who are also, I am happy to say, here to-day, upon the list of directors. The chairman of this bank, Sir Oliver Franks, a man who has served the Governments of both Parties for many years with devotion and distinction, can see clearly enough. He says:
  "…all the major decisions of policy in the economic sphere during 1954 were of a nature to stimulate activity rind release additional demands upon, the economy, and not exercise a restraining influence."
  He goes on to say something which ought to be read and understood by the Chancellor of the Exchequer and those around him—I apologise for a somewhat lengthy quotation but it has not been mentioned in this House. The chairman went on to say—and here he was dealing with the other side of this problem, the even more serious side, the question of the exchange reserves:
  "Conditions in recent years could scarcely have been more favourable to the building up of a strong reserve hid our policies been directed primarily towards that end. The volume of world trade has been expanding; the terms of trade have not been too un-favourable; the rest of the world has beet gaining gold from the United States. It is a sobering thought that the purely regional currencies of Western Europe are collectively backed by exchange reserves four times as large as those supporting sterling, the currency in which nearly half the trade of the world is conducted. Since the end of 1951, the Continental countries have accumulated some 5,000 million dollars of gold and dollars; our own reserves have actually fallen on balance and are indeed lower than in 1945, when prices were half their present level. This is a state of affairs that we must surely all find deeply disquieting."
  Those are very serious words from the chairman of a great bank. I suggest to noble Lords that they indicate quite clearly that during that period the Government were pursuing the wrong policy.
  The other test of the Government's actions, other than the measure of the

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  exchange reserves, is the level of internal prices, because that is the index of domestic inflation. That was realised by the present Government before they became the Government, for they put in their Election proposals a statement that the Government would be judged by the effect of their policies on costs and prices. That is a very fair method of judgment. For comparison, in the two years ending in the autumn of 1951, while import prices rose by 66 per cent. the cost of living rose by 14 per cent. Consider the contrast with the period after the Conservative Government took office. In the four years to December, 1955, while import prices, instead of rising by 66 per cent., fell by 7 per cent., during that period the cost of living rose not by the 14 per cent. which I have just quoted but by 23 per cent. So that the record of the effect of their policies on the domestic price level is completely disastrous.
  Therefore it seems to me that, on both these tests, it must be admitted, to whichever Party one belongs, that the Government have failed. This spectacular rise in the cost of living, despite the fall in the cost of imports, is unique to Great Britain. Our rise in domestic prices during the period of this Government and their predecessors, the previous Conservative Government, has been steeper than the rise in the United States, Canada, Switzerland, Norway, Sweden, Holland, Belgium, France, Germany, Japan and Italy. The cost of living has risen faster since 1951 in this country than in any other country in the world.
  That seems to me a complete condemnation of the Government's internal policy. Therefore, I do not think it is an exaggeration to say that among ordinary people, whose lives are outside Parliaments, politics and Parties, there is no confidence in this Government in this matter. As I go about—and noble Lords must have the same experience—talking to working people and business people, I find that nobody believes that the Government know what is wrong or what to do about it. I find that in banks, commercial circles and everywhere else. Sir Anthony Eden seems to me to share this same delusion. In June last year, when things were really getting bad, he said:
  "The gold and dollar reserves have remained without any significant change since February, and in all the circumstances I think that is a pretty satisfactory solution."
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  This self-satisfaction spreads alarm and despondency among people who really understand the nature of the problem and the perils which confront us. There is this boasting of the prosperity which has resulted from the advent of the Conservative Government, these posters talking about Conservative freedom to enjoy the things so long denied us, and above all, it seems to me, the unbelievable folly of forcing through Parliament the commercial television project, which is costing millions of pounds and is making great demands upon one of our most important export industries, the electronics industry, which is a direct competitor with every form of scientific research and development. This whole apparatus of low-level entertainment is financed almost exclusively, apart from some Government money, by revenue coming from advertisements.
  What is happening? We read these economic homilies. We read these feeble speeches. Then the people go home to sit in front of a screen from which with all the devices of modern advertising, they are urged to spend more money on consumer goods. That situation has been brought about by this Government, in the face of opposition from my right honourable friends and against the advice of a great many people who could see what it was going to mean. The cumulative effect of what in our present situation is nightly poison in the homes of working people is something that we must work hard to offset. I say to the Government that we regard this as a test: that if they really mean what they say, if they have any hope of regaining public confidence, they have got to stop this. We cannot afford to have people listening every night to exhortations to spend more money upon consumer goods and then expect them to listen to anybody who tries to tell them exactly the opposite. It seems to me that if the Government are prepared to be frank with the people, if they are prepared to say, "We have been wrong," if they are prepared to stop this nightly advertising—in other words, if they are prepared to make some original, fearless demonstration of their determination—
  THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALIS-BURY): Might I ask the noble Lord a

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  question? Is he proposing that the I.T.A. advertising should be closed down, or advertising by all mediums?
  LORD WILMOT OF SELMESTON: I am referring particularly to commercial television.
  THE MARQUESS OF SALISBURY: Would the noble Lord apply it to other mediums as well?
  LORD WILMOT OF SELMESTON: I should see what happened first. The noble Marquess is so good at this kind of interruption that I am not really able to compete with him. He knows very well what. I mean; so does the noble Viscount, Lord Waverley, who took a courageous stand on this matter; so do many other noble Lords, who know that this boosting of consumer goods in working class homes is against the national interest in these circumstances. I would say this to the noble Marquess: if it is found to be ruining our economic position we should deal with it; and if he really means what he says, so would he. If he is not prepared to deal with it, then I do not believe what he says about the rest of it—I mean that this would be just another Party political stunt.
  If we really believe in the seriousness of this matter, if we believe in it in the same way that I know that the noble Lord, Lord Balfour of Burleigh, believes in it, then we shall do something and we shall do it whatever it costs, because not to do it will cost even more. If we could get some statement of that kind, some proof which will offset the bitterness in the hearts of many people about the reduction in income tax, while the price of bread and milk is increased, and if we could make the sort of statement that Sir Winston Churchill used to make to the nation when he was calling on us during the war to make sacrifices and to endure unpleasant things, then, upon that basis, if the declaration were sincere and the policy right and bold, I think there would be some hope of a broad flowing of national response that would carry us out of this danger. If not, I see little hope—and I am bound to reflect that time is running heavily against us.
  3.35 p.m.
  LORD GRANTCHESTER: My Lords, the continuous slipping away of the value of our currency under successive Govern
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  ments since the war is so serious a matter that I think a little plain speaking is desirable. It is common ground that continued inflation is deplorable in theory, but in practice there appears to be general addiction to this value-destroying drug. What I should like to say on this subject of inflation is, I think, complementary to what my noble friend Lord Beveridge said yesterday, and also to what was added by the noble Lord, Lord Winster. It has been made clear in this debate that there is more than one contributory cause to inflation although, as I shall seek to show, I believe that it is within the power of Her Majesty's Government so to adjust their policies as to bring this inflation to an end without worrying too much about some of the factors which are at present adding to the inflationary pressure—among these I would number those mentioned by the noble Lord, Lord Wilmot of Selmeston, in his concluding remarks. If I do not follow him in his historical analogies from the 1920's it is because I think those analogies are false.
  I was brought up in a Liberal school, which looked critically upon any intervention in our economy by the Government, believing that Governmental interference rarely does good and often does a great deal of harm. Certainly no better example of the disastrous effects of Government intervention could be found than the action first of the Labour Government, and then of the present Government, in their relations with the banks. I said that straight speaking was necessary, and I am not putting it, too strongly, I think, if I say that the banks have been unduly influenced by pressure, which would have been thought unbelievable not long ago, to adopt certain policies. Under the Labour Government there was overhanging the banks the threat of nationalisation unless there was conformity with that Government's views on an expansionist credit policy. As a result, many businesses have been over-trading on bank overdrafts, largely in a tariff-protected market where there is no real competition to check over-pricing. Now along come the present Government, asking the banks to restrict credit. Undoubtedly, under pressure from the Labour Government many credits were granted or allowed to run too long, and under the present pressure some credits are being refused which normally would be granted.

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  This is a sorry story of disastrous intervention by successive Governments. By their spending and monetary policy the Government can, of course, influence the volume of bank deposits, and so the volume of credit; but within their resources the banks should be left free to conduct their normal business of making advances on a business assessment of the risk, and it should be recognised that the Government cannot influence their decisions in this field without causing grave dislocation and courting disaster. I am unhappy even on the subject of changes in the bank rate. I should like to know where the initiative in this important matter now rests. Is it with the Court of the Bank of England or is it with the Chancellor of the Exchequer? Has advice been tendered by the Governor of the Bank of England, and, if so, on what occasions during the past seven years? Has this advice been taken at the time it has been tendered or has the Governor waited upon the Chancellor of the Exchequer's instructions? I should feel much happier if we could be assured, at any rate under a Government who profess to uphold a market economy, that decisions upon changes in the bank rate will be made on the advice of the Bank. While I am referring to the Court of the Bank of England, I wonder whether it might be better informed of the practical difficulties of industrial banking if a representative of the joint stock banks were appointed to the Court.
  What is the measure of this problem of inflation? It is quite simply the overweight of some £400 or £500 million of spending each year. Who are the real sinners in this matter? The note circulation, which in 1947 was some £1,400 million, stood last week at some £1,800 million. Bank deposits increased during the same period by £1,000 million, although a fall seems to have set in during the last month. For this increase Government spending is largely responsible. It would appear that in the last four years outstanding Treasury Bills have gone up from £4,000 million (which I believe was the figure on February 23, 1952), to some £5,000 million in the corresponding week of this year. I believe that those figures are correct because the noble Lord, Lord Clitheroe, took the figures as at October
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  this year, compared with October four years ago, and made it £900 million. The figure in February comes out at £1,000 million. This increase in note circulation and increase in Treasury Bills is the easy way to meet Government over-expenditure. It also makes more likely an increase in the credits which can be extended by the banks. By these means the currency has been debased by one-third of its value—that is the real meaning of the increase in retail prices since 1947 which, as the noble Lord, Lord Clitheroe, mentioned yesterday, are up by some 53 per cent.
  It has been argued by respected economists (and a year or two ago the Economist printed an article agreeing with these views) that no Government in a free society can, with impunity, take from its citizens more than about 25 per cent. of the national income. Under post-war Labour Governments almost 40 per cent. of the national income was taken in central taxation, local rates and National Insurance contributions. In spite of its promises and professions, the present Conservative Government have not reduced to any appreciable extent, this monstrous proportion. Out of a national income of something like £15,000 million, £5,500 million is still taken from private citizens. Let us be clear what this means. It means that the Government are forcing the spending of two-fifths of the people's income before they have any chance of making any expenditure themselves. Surely that is why over-taxation is inflationary and why any arguments for increasing taxation to mop up the individual's spending power are so wrong. The proceeds of taxation are spending power in the hands of Government. Here, I contend, is the root cause of inflation, the root cause of the inflationary pressure, because spending is maintained constantly at too high a level. Her Majesty's Government should practise what they preach to the banks and cut their own expenditure by something in the region of 10 per cent.
  On what can Government expenditure be reduced? Administrative economies, although necessary, are not sufficient, as the noble Lord, Lord Clitheroe, said yesterday; major changes of policy are called for. First the Government are forcing the expenditure of the people's money on defence. That is the largest single item, and one to which the noble

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  Viscount, Lord Ridley, referred yesterday afternoon. They are forcing expenditure on all kinds of development projects; they are forcing expenditure to give subsidies to the needy and the not-needy alike. Under the heading of "Defence" the Government order tanks, bombers, fighters and guided missiles—all and everything that either America or the Soviet Union may attempt, with a population four times as large as that of this country. We are told that this is supposed to enhance our national prestige. An overspending and bankrupt nation has no prestige at all in the world. If it is prestige that Her Majesty's Government are worried about, this would be enhanced far more if the citizens of this country were rich and prosperous than by the number of weapons they may he thought to possess.
  As we all know, these weapons which we manufacture are constantly becoming out of date even before they are in commission; and some are often produced just for the scrap heap. After all this expenditure, do Her Majesty's Government even pretend that they are providing us with security? This cannot be their contention because, rather casually, they talk of evacuating one-third of the population should disaster overtake us. So what is the virtue in this expenditure of £1,500 million every year? Someone seems to think that there is magic in this figure, for although in the search for economics it was found possible to save something like £67 million in the Estimate for the coming year, a sum was then added to the research Estimates, so that the figure of £1,500 million was restored—as if this figure were sacrosanct.
  I should like to ask, frankly, how much less secure should we be if this £400 or £500 million of over-expenditure which is causing the inflationary pressure were knocked off the Defence Estimates? Nothing could so greatly help our export industries, which need the material now being used on tanks that are obsolescent, if not already obsolete. I am glad that in another place a few days ago the Minister of Defence appeared to have come to the view that defence expenditure must have a limit, having regard to the financial safety of this country. I hope that by the time the Defence Estimates are discussed in your Lod-ships' House we shall hear something more definite on cutting defence expendi
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  ture. I hope that the Estimates will not be allowed to go unchallenged, and that they will be revised for the current year.
  I do not want to be accused of being unrealistic in this matter. Some months ago we on these Benches were accused of being unrealistic for suggesting the abolition of National Service. Now this is declared Government policy. Nor do I believe that a cut such as I have suggested in the defence expenditure need weaken the defensive strategy of the West. If the Atlantic Alliance means anything, it should eliminate duplication of expenditure upon experimental weapons. So far as Europe is concerned, it might be the start of getting nearer a united European effort, with all that that could mean in economy. In fact, a decision to cut our expenditure, and keep it within what we can afford, I contend, might prove, to be the dawn of reason in introducing a more realistic and co-operative spirit into the Western Alliance. It is a question of making up our minds with our Allies that we are part of a larger organisation in which there must be mutual confidence. If that is not the purpose of the Atlantic Alliance what is it?
  The cutting of expenditure in the way I have suggested must be reflected in a reduction of taxation, so that costs fall instead of rise. I will give but two examples, to illustrate what I have in mind. It is proposed, I believe, to raise the salaries of senior civil servants because they are so much worse off than they were before the war—chiefly because of the steep grading of taxation. But instead of increasing their salaries from £4,500 to £7,500 a year, as is proposed, how much more sensible it would be to reduce the amount they pay in tax by raising the surtax level—as one noble Lord suggested yesterday—to the equivalent of its pre-war value, which would effect the same result so far as the impoverished civil servants are concerned and keep costs down. This matter of not raising costs in any sector by Governmental action is important, and the Government should surely never be a party to hindering the process of lowering costs as it was last week in fighting for the imposition of a 10 per cent. tariff on imported Danish bacon. My second example relates to what is happening in countries where taxation is lower. Liberia is now

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  the fourth largest ship-owning country. Why is this? Because taxation here puts British shipping at an impossible disadvantage in competition. The Government try to tinker with the problem by special investment allowances, and make the position of the country generally worse. No one is wise enough to discriminate between one and another in granting special privileges to particular industries. Taxation should be equal, and if too heavy must be reduced for all. Let us get back to this sound democratic principle.
  The other matter that I should like to suggest to your Lordships is that the time has come for a major change of policy in social outlook. It is ridiculously expensive to give to all and sundry, irrespective of need, whether it be subsidies on such items as bread or milk, or even maternity benefits. By all means let us be civilised, and help those in need, but we can the better do this if we conserve our resources and do not overburden the Administration. I am aware that this means some kind of test, and here I should like to make a suggestion. Concessions in the form of subsidies are surely more appropriately confined to those who do not pay income tax. The proper manner to help those who pay income tax is not by making subsidies to them, but by increased allowances in reduction of that tax. I believe that a reorganisation could be carried out if some such guiding principle were accepted as the basis of a reorientation of social policy.
  There are one or two other matters upon which I should like briefly to touch, if your Lordships will forgive me. There is the necessity for increased productivity to help our balance of payments. This has been stressed again and again by everyone. But I must say that the acquiescence of the Government, and of the trade unions, in preventing the stepping up of coal production is nothing but a scandal over which both Her Majesty's Government and the trade unions should hang their heads in shame. For there is no other item of national wealth which could be so easily developed to help our balance of payments. To be importing coal and paying for it expensively in dollars is nothing but a national disgrace. I am very glad that this matter is being raised by the noble Lord, Lord Teviot, in your Lordships' House in the
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  near future. Increased productivity will best be secured by increased incentives, and the best incentive Her Majesty's Government can give is to lower taxation, both personal and corporate. And the best contribution to increased efficiency that Her Majesty's Government can make is by the elimination of restrictive devices. We shall be interested in the discussion of the Bill on this subject which will soon be coming to your Lordships' House.
  The final matter I should like to mention is the question of savings. I think it is useless to go to the public and suggest that they should exercise restraint in spending when they are promised a rising standard of living. If I might refer for a moment to what Lord Wilmot of Selmeston said in regard to television, what individuals do is simply to make a choice. After all, every individual is limited in what he can spend. If he spends his money on one thing he cannot spend it on another. That is not true of Her Majesty's Government, who are not so restricted, because they can always find in Treasury Bills the wherewithal to meet expenditure which they have not checked. Instead of this approach to the public with a request for the exercise of restraint, I suggest that there should be a positive appeal to save to build up security by instalments. It should be brought home to every wage-earner that security cannot be provided in all contingencies and circumstances, but that a nest-egg of savings tucked away can go far to relieve anxiety for an uncertain future.
  The policy of recent Governments has been to whittle away the inducements to save—by reducing, for instance, the tax allowances on insurance premiums. Here perhaps I should declare an interest, but I should like to point out that if a policyholder wishes to increase his savings under a policy from a premium of £10 per year to one of £25, a material increase which would be desirable at the present time, he gets no more inducement to put by £25 a year than he does to save only £10 a year. I should also like to suggest again that the Government should arrange that their tax inspectors do not chase small savings accounts in the Post Office. There should be a limit free from such prying eyes. As we know that the amount involved is small and it is a disincentive to put money in the Post Office

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  if it is going to be dug out and disclosed possibly to another member of the family—
  VISCOUNT ALEXANDER OF HILLS-BOROUGH: My Lords, I should like to be quite clear about the noble Lord's suggestion on insurance premiums. Does he actually propose an increasing rate of help per £ on every rising £ of premium paid?
  LORD GRANTCHESTER: I think the old arrangement was to give a rebate in tax to the extent of half the rate on premiums paid with a limit of one-sixth of income, but that has been altered by a rather complicated arrangement which amounts to a two-fifths tax allowance on a £10 premium, but it goes up to £25 without any corresponding tax allowance on the increase. There is no tax inducement for the individual to save £25 instead of £10 a year. I should like a more imaginative campaign, with inducements to popularise every form of saving. But before this can be expected to be really effective, the Government must show that inflation will not destroy the value of the labour and savings of the thrifty people of this generation as it has destroyed the labour and much of the savings of the older generation, to which some of us belong.
  4.4 p.m.
  LORD BALFOUR OF INCHRYE: My Lords, like other noble Lords who have taken part in this debate, I feel privileged to be able to do so on an occasion which has been enriched by the effective and authoritative maiden speech of the noble Lord, Lord Clithcroe, who is an old friend to many of us and whose maiden speech in another place I remember some twenty-two years ago. His maiden speech in another place was just as effective in that Chamber as his maiden speech was in your Lordships' House yesterday.
  Last November, Her Majesty's Government hoped and believed that the Autumn Budget steps would halt the economic decline and check the imminent inflationary clangors. The description was given us then that the Government were grasping the nettle while there was yet time. Yesterday, my noble friend Lord Balfour of Burleigh gave another description when he said that the steps which were taken last autumn were both "too little and too late." It is no good jobbing
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  backwards. The Government were sincere in their belief that they were doing what was necessary at the time. However, the situation has not worked out as they expected and here we are with another set of proposals, another economic debate and another hope that the steps that are proposed will be adequate to meet the situation.
  Again we must ask ourselves the question that many noble Lords, including myself, asked last autumn: whether the proposals which we are now considering, coupled with those of the Budget yet to come, will bring about the early, drastic and essential transformation in our international balance of payments position which the circumstances of the time render necessary. The Chancellor of the Exchequer's proposals are undoubtedly courageous and deserve, I believe, the support of all noble Lords in every quarter of this House. Particularly do I believe that his steps in dealing with the artificial prices of essential foodstuffs are courageous, though unpopular. I think it is right that we should come down to reality, as the Chancellor of the Exchequer is gradually making us do. I do not believe the strictures of the noble Lord, Lord Wilmot of Selmeston, that these proposals are going to bear harshly on millions of people in our land. The extra cost is about 2d. per week per head, and we have to remember that the Government have raised considerably the allowances of dependants and pensioners since they have been in office. I do not believe that the steps which have been taken are going to hear very harshly on the people, and I believe that they will be accepted as part of the sacrifices which the difficulties of the position render necessary.
  Having said that, I would remark that some of us here and some others outside are fearful whether the monetary weapon is able swiftly and positively to do what is expected of it by the Government. They expect the monetary weapon to decrease consumer demand and divert the flow of production into export Channels. They hope it will halt the rising costs of production and discourage excessive imports. In fact, it is the hope of the Government, which all those who support them share, that the monetary weapon will bring about the circum-

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  stances required to remedy the worsening balance of trade position. But I find some difficulty in seeing anything in the Chancellor of the Exchequer's proposals which is likely to reduce what I consider is the intolerable position of steadily increasing dollar imports of supplies which we could, and should, produce from sterling sources within the sterling area and within the British Commonwealth. Last year we imported £55 million worth of animal feeding-stuffs, mostly paid for in dollars. Imports of barley from Canada rose from £13·6 million to £21·3 million. Imports of maize from the United States rose from £18·4 million to £28·7 million.
  Last year we spent £74 million, mostly in dollars, in importing some 12 million tons of coal. And because this country has never been a coal-importing country and we have not suitable docks for importing and unloading coal, this coal had to go to Rotterdam, be unloaded in Rotterdam into barges and brought in barges from Rotterdam to this country. No one can deny that from our soil and from the soil within the British Commonwealth we could have produced the feeding-stuffs, the import figures of which I have just given to your Lordships, and to that extent have eased our dollar situation about which my noble friend Lord Bruce of Melbourne spoke so forcibly yesterday. No one in your Lordships' House or outside, could deny that we should be a coal-exporting nation rather than a coal-importing nation, and that beneath our soil and the soil in parts of the British Commonwealth exist rich undeveloped coal deposits—undeveloped in the sense of being mines linked to an efficient mine-to-port railway system. In Rhodesia there are rich collieries and rich coal deposits. Had we ten or fifteen years ago concentrated upon building the necessary transport outlets to the sea from where those deposits lie, we might have had to import coal but it would not have been for dollars; it would have been for sterling.
  My noble friend Lord Balfour of Burleigh yesterday declared that there were two ways to check excessive imports: first, direct physical controls; and secondly, the reduction of internal spending. He hoped that the measures which the Government are proposing would achieve, through the second
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  method, the reduction of internal spending, and thus check the excessive imports. I should like to submit that there is a third course which might give immediate relief to our critical dollar position. It is what I would term a switch of imports from dollar to sterling sources. This does not mean Government control and limitation of imports; nor does it mean relying solely upon the working of the monetary weapon. It is a sort of half-way house. It would not need legislation; but it would need Government leadership, Government directive to trade associations, Government direction and Government pressure on the interests concerned, to switch their requirements, even at some sacrifice to their own interests, to a far greater degree than at present, away from dollars to the sterling area. We cannot go on indefinitely with our dollar deficiency. We cannot go on indefinitely spending two dollars in imports for every one dollar we earn by exports, which is roughly what we are doing at the present time.
  VISCOUNT ALEXANDER or HILLS-BOROUGH: I should like to hear the noble Lord's views on the other side of the picture. If it is two dollars to one dollar between imports and exports, what will then be the amount of your exports in dollars to the dollar area if you make this switch? How does the noble Lord propose to arrange for that?
  LORD BALFOUR OF INCHRYE: I am afraid I cannot argue on the actual figures. The noble Viscount will have his opportunity in the debate, and no doubt he will be able to deal with this point. I am only putting forward a general point, that we are facing to-day an avoidable and, to a large extent, intolerable importation of dollar requirements which could be obtained from sterling sources. I think we might have a slogan, "Reduce and replace" as a guiding slogan for examination of dollar imports by Her Majesty's Government to see in regard to which commodities greater encouragement could be given than at present to their importation from sterling sources.
  I believe that more than ever now we need in this country a new policy of closer British Commonwealth and Colonial Empire economic integration. As a first objective, we should lead in developing alternative sources of supply

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  from an economically interwoven Commonwealth and Colonial Empire. It was brought out in yesterday's debate how much more necessary than ever before is such a policy, because the political and constitutional changes that we see going on all the time in our Colonial Empire must be accepted. Some may think that they go too fast, others that they go too slowly; but they are like the weather; it is with us, and we cannot change it. But these very territories which are now gaining their political and constitutional independence are our main dollar earners. The noble Earl, Lord Selkirk, yesterday reassured my noble friend Lord Clitheroe upon the future position of Malaya. Malaya, with its tin and rubber, is one of our biggest dollar earners. The Gold Coast, with its cocoa, is also a great contributor, and I would ask the noble Marquess the Leader of the House, who is to reply, if we could have the same comforting assurance, to the extent that was given to us yesterday concerning Malaya, in regard to the Gold Coast, and whether, in the political evolution that is now taking place in the Gold Coast towards granting them full independence, there will be the same safeguard for the dollars earned to come to the sterling area pool.
  The noble Earl, Lord Selkirk, said that one cannot bind the future. I hope he does not see a day when he regrets the description he gave yesterday of the arrangements as being "fairly satisfactory," because territories fresh with political independence are liable to have nationalistic outlooks—for example, we see it in the Sudan. If they choose to withhold all or part of their dollar earnings from our contribution of dollars to the sterling pool, our economy could be dealt, almost overnight, a devastating blow. It is well to remember that in 1954—these are the last figures that I have, but the tendency has been the same since—the United Kingdom spent 263 million dollars more than she earned; but the Colonies earned 283 million more dollars than they spent. So one can see at once the value of our Colonial Empire as regards dollar-earning for the United Kingdom. I doubt whether the citizens of the country realise fully, or realise enough, the grave economic risks we are accepting while we are advancing these countries along the road of political independence. The very risks which we
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  are taking—and I think we have to take them, and one can only rely on whatever Government may be in office at the time to obtain such safeguards for our economic position as are possible—through this political advancement, stress the urgency of developing the policy upon which I spoke a moment ago, of economic integration of the Commonwealth and Empire to a far greater degree in the future than has been the case in the past.
  Such a policy would at once need a review of the present levels of colonial development capital allocations. Two Sundays ago, the Observer had a powerful and clear article on this particular subject, and the noble Lord, Lord Beveridge, spoke about it yesterday. In a normal year the London money market provides a sum of £22 million of new capital for colonial projects; last year we supplied £9 million only, and as a result of the remedies we have to take for our own domestic difficulties which we are debating to-day, remedies which we have to accept for ourselves, we must be loading the under-developed Colonies which require capital with heavier burdens for the money they obtain. I suggest that Her Majesty's Government should take into account, and try to give some special preference in some form or another to, colonial requirements, so that the Colonies can contract out of the penalties put upon them through our own domestic needs. Such a policy of economic integration would require boldness and need acceptance of implications on the present adherence of Her Majesty's Government to the international trade policy of non-discrimination in international trade.
  My noble friend Lord Balfour of Burleigh, who told me he could not be here this afternoon, sees a favourable world situation for us provided our goods are competitive. The noble Lord believes that any general growth of world trade must automatically be to the advantage of this country. I cannot see that. If world trade grows in textiles from Asia or in motor cars from Germany, it is not automatically to the advantage of this country, though the figures of world trade may be enlarged. Let us remember that we have deliberately limited our competitive ability in relation to the products of other countries in the world. Many noble Lords who have knowledge of in-

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  dustrial matters know of costed-out industrial jobs. You take your material, you take your direct labour, you take your on-cost and you express it in terms of percentage on direct labour when you prepare your estimate. We have put upon ourselves deliberately—I do not say wrongly—the national on-cost of the Welfare State, the on-cost of a high standard of life, which we must see represented in our costs of production and which must affect our competitive ability in relation to other people who do not so load themselves with the social standards we rightly consider necessary.
  I believe that, sooner or later, we shall be forced to abandon strict adherence to non-discrimination, particularly when so many members of, what I would term the non-discrimination club do not obey the rules. So often Britain joins an international club and plays the game and obeys the rules while many others do not but indulge in such things as hidden export subsidies and many other devices which I could mention. My noble friend Lord Balfour of Burleigh dragged in the "fear of retaliation" bogy if we extend our preferential area of trade. In fact, there are only three foreign countries in the world with whom we have a favourable trade balance of more than £10 million a year—that is to say, who buy more from us than we buy from them. One is Norway, the second is Liberia, which is not in the General Agreement on Tariffs and Trade, and the third is Burma, with whom we have a preferential system. Therefore, I do not think the fear of retaliation is a formidable one.
  My noble friend Lord Bruce of Melbourne spoke of carrying the people with us in the difficulties which we face. I believe we all, to whatever Party we belong, seek some rallying point, some inspiration, some cause which will rouse the people as they have been roused in times of stress, emergency and war. I believe that here is the call: a British Commonwealth economic integration of policy which would give this country the economic independence which I do not see we shall otherwise obtain. In such a policy we could afford differences of method towards a common objective, and we could afford differences of emphasis and direction in a common policy. But in the British Commonwealth and
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  Colonial Empire lies the means of that rallying call for British economic independence. Broadly, I believe that we are a fairly well administered country. But administration is not enough. We must have leadership and inspiration; and it is that leadership and inspiration that we hope to find from Her Majesty's Government in the weeks to come.
  4.25 p.m.
  LORD SALTER: My Lords, at this late stage in our debate I think I can best serve your Lordships by commenting upon some of the suggestions that have already been made, rather than attempting to add new ones. I agree with a good deal of what the noble Lord who has just spoken has said, but I could not accept it all without some qualifications with which there is not time for me to deal this afternoon. I hope we shall have a later opportunity to discuss a subject which certainly merits a day's debate to itself.
  The first proposal on which I wish to comment is that impressive appeal made by the noble Viscount, Lord Bruce of Melbourne, yesterday. He said—and I believe that everyone in this House, not least those who sit on the opposite Benches will agree—that it is of the utmost importance to attempt a combined effort to make the country realise the kind of danger with which it is confronted. I was greatly encouraged for the moment by the opening words of the noble Lord, Lord Wilmot of Selmeston. I was equally discouraged a little later, because I do not think it is a practical thing to say: "We quite agree with you about the nature of the peril confronting the country. We quite agree that many of the people who ought to understand what this peril is, if we are to be successful, do not understand it. We will do our best to help you in making it clear to them what it is, on condition, first of all, that you say that you are wrong and we are right." Really that is not reasonable.
  I am not going to say that the present Government are right in all respects, and still less that Conservative Governments in the past have been right: there are many respects in which I think they have not been right. But I cannot accept the implication that Labour Governments, when they have been in power, have been right or more nearly right. I came into office in October, 1951, and I well

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  remember the situation with which we were confronted then in the Treasury. I do not want to go over that matter now: I do not want to recriminate. But I must not he asked, before I go any further, to admit that the Labour Government were innocent in regard to the situation which then occurred, and that we have been wrong since.
  LORD WILMOT OF SELMESTON: I know the noble Lord too well to think that he would wish to misrepresent me. I did not say that we were right. I merely said that the facts proved that the present Government were wrong.
  LORD SALTER: To be quite honest, I think that both Governments have, in certain respects, misjudged the situation in the light of what, by later events, it proved to be. So much I would admit. But I think it is even more unreasonable to expect the Conservative Government now to go into a white sheet because of what the noble Lord called the deflationary policy of a Conservative Government between the wars. Undoubtedly mistakes were made then. If the noble Lord will look at the terrible unemployment figures at that time, he will find that they were not so very different in the periods of office of the Labour Governments of those times and of the Conservative Governments. Again, I do not wish to recriminate, but I am able to say this, I think, a little more freely, because during that time I was working very hard with Maynard Keynes and others of the Economic Advisory Council to press certain measures, measures that were then regarded as unorthodox and heretical in Whitehall but which have since been accepted by both Parties, and by this country, America and a large part of the Continent, as useful and orthodox.
  It is surely not reasonable to say that the Government must say, "We are wrong" before we make the kind of reasonable appeal that the noble Viscount, Lord Bruce of Melbourne, made yesterday. That is not to say that the Party of noble Lords opposite should in any way sacrifice their views or give up the advocacy of what they want, but only that where they agree on a matter the public should be enabled to understand the position; that they should say so, and say so in a way which will help us in spreading an understanding which is essential, whatever remedial
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  policies are adopted by whatever Government are in power. Cannot we respond to the appeal of the noble Viscount, Lord Bruce of Melbourne, by disentangling what is non-controversial from what is controversial and, up to the point of diagnosis, speak more or less the same language and attempt to educate the public? Of course, it is not only the right but the duty of the Labour Opposition to criticise the Conservative proposals where they think they are wrong, and to advocate their own proposals when they think they are better; but that position would not be prejudiced. I believe that the diagnosis of the position is very alike on the part of the responsible leaders of both Parties. I think, however, that the position is not really understood by the public. The public generally understand what is the effect of inflation so far as their home experience is concerned, but they do not understand what is the significance of the drain on the reserves. There is no difference of opinion between the responsible leaders of the two sides as to what is the significance of this drain, and I trust that it will be possible to get some kind of co-operation in explaining it.
  Several noble Lords have called attention to the critical, and indeed, in its extent, the unique, danger of this country through its dependence upon imported food and raw materials at a time when its ability to sell abroad is impaired by great and increasing inflation. But the consequences of a continuance of that position are not, I think, fully realised. Let me suggest what I think would be the sequence of events if the measures that have been proposed or that may be undertaken in future should be ineffective in preventing a continuous loss of our export trade and a continuing drain upon our reserves. In the first place, of course, there would be unemployment in the particular branch of our exporting industry which was failing to compete successfully. That we have already seen in the motor industry which has been able to sell competitively abroad much less this year than at the same time last year. The Government, whatever Government it was, would have to prevent that outside loss of sales from being compensated by an expansion of home demand, because they would realise that the underlying cause and difficulty was largely an inflation which increased home demand would only

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  increase. Very soon there would be the same phenomenon in other export industries, again with unemployment. As that happened, the reserves would run down further and further. Very soon, anybody who could change his dealings in sterling would begin to speculate upon a devaluation. When that happened, through methods of action upon which I need not now dilate, the process of the drain of the reserves would be accelerated. Soon, probably, we should reach the point of actual devaluation—though not because it was wanted.
  I am quite sure that Sir Stafford Cripps was entirely sincere when almost right up to the eve of devaluation in September, 1949, he said, in effect, "Never, never." There I would differ from the noble Lord, Lord Clitheroe, who, in his brilliant speech, talked about the act of policy of the Labour Government in devaluing at that date. It was not an act of policy; it was a surrender to forces beyond the control of the Government of that time. Here again, I am glad that the Labour Party have clearly said this. Mr. Harold Wilson said the other day that the Opposition were just as strongly as the Government against any change in the value of the currency. Yes, but that does not necessarily mean that the forces will not get so strong that it will happen, and then the familiar evils will again result. For every dollar we earned, you would have to put in more human effort and use more materials. And, of course, inevitably prices would go up and up, because everything we bought from abroad would have to be paid for with more pounds.
  When we got as far as that, we should be very near the point at which we should literally be unable to find the dollars to buy the food for our present standard of living, or even something a good deal less than that; and, in particular, the raw materials to keep our factories employed. When we reached that point, we should get mass unemployment. In my view, that is far and away the greatest danger, and perhaps the only danger, of mass unemployment that confronts this country. It is the kind of danger against which all the Keynes remedies are no remedy at all, for they were designed to stimulate and supplement a flagging home demand. Applying them to such a situation as I have just described would not only not
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  cure but would aggravate the trouble. That is the position which I think needs to be brought home to the people of this country as a background to whatever is the remedial policy adopted. I suggest that the Labour Opposition, while fully maintaining their right, of course, to criticise and advocate alternative policies to those proposed by the Government, might collaborate with us in doing so.
  So much for the suggestion of the noble Viscount, Lord Bruce of Melbourne. I should now like to come to a question which has occupied a number of the speeches during this debate—that is, the part that wage inflation is playing in the general inflation which we are discussing. I agree with the noble Lord, Lord Clitheroe, on the whole, in quoting Professor Pigou, that there are two main causes of inflation. One is public expenditure and the way in which it is financed, and the other is wage inflation. Of the two, particularly at this moment, in view of what is happening on the wages side, there can be no doubt whatever that far and away the more dangerous is wage inflation. Wage inflation, although not the sole kind of inflation, is indeed the characteristic form that inflation has taken since the last war, just as much as note printing was the characteristic form of inflation on the Continent of Europe after the First World War.
  Wage inflation results from one perfectly simple thing. To avoid it does not mean that wages should not increase; it means just this: that you should create your wealth before you spend it. The whole of the trouble in wage inflation has been, as the noble Lord, Lord Beveridge, pointed out quite clearly, that people have tried to spend beforehand the wealth that they or others hopefully anticipated they might produce in future but which, in fact, they did not produce. That putting of the cart before the horse, and increasing your spending power in the hope that you may increase the objects upon which you are going to spend it, instead of producing the objects first and then sharing them, has been the root cause of our difficulties and the biggest trouble from which we are suffering in the economy of this country.
  That evil has been immensely increased, as Lord Beveridge said yesterday, by the particular contribution made to it by the nationalised industries. As he

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  said, quite truly, they have led the way to the rounds of wage inflation. Why is that? I think it is for one simple reason. The whole of the system under which wage rates are negotiated was built up and developed its traditions when privately owned industries were competing with each other. Nobody on either side of the table in negotiating questioned the fact that, whatever might be the proper share of the profits between the management and shareholders on the one hand and the workers on the other, both sides had to draw from earned profits. That essential basis of the system was cut away when there was established a national monopoly which, because it was a monopoly and not subject to competition, could meet extra costs for wages by putting up fares or prices to the consumer, and, because it was nationalised, could if the consumer could no longer be persuaded to pay more, in ore way or another put the cost on to the taxpayer. In fact, that is what has happened, and that is why the national industries are spearheading the wage inflation process. That is the most disastrous thing in our present economic history.
  The real fact is that the nationalised industries have, in regard to the authorities which represent the public interest, power without responsibility. By this I mean that they can do things which compel the Treasury to pay, without any responsibility for collecting the money in taxes with which payment has to be made. At the same time, in relation to their workers they have responsibility without power, in the sense that they are responsible for organising their business efficiently and for negotiating rates of wages. But they have not got, for the reasons I have just mentioned, the power to compel, because behind their negotiations the workers feel and say, as they never did at the time when the system of wage negotiations was being built up, "Well, if you cannot pay these extra wages, put up prices; and, if that is not enough, then go to the Government."
  That, I suggest, is one of the biggest evils and dangers confronting us. Behind it is the whole question of full employment or the relation between the demand for and the supply of workers. Practically everybody who speaks on this subject confines himself to saying, "I am in
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  favour of full employment."But he is usually most reluctant to take the trouble to define exactly what he means by that phrase. There are same things that I think ought to be said in order to give perspective and proportion to what is likely to be the course of events in the weeks and months that follow. I should like to approach this matter by quoting from those who can speak, and have spoken, with great authority.
  First of all, let me take the pioneer and protagonist of full employment, Lord Beveridge, whom I am sorry not to see in his place at the moment. In his book, written in 1944, he said that full employment does not literally mean no unemployment; it means no more than 3 per cent. of unemployment as compared with the 10 to 22 per cent. which Britain experienced between the wars. It is well to keep that figure in rnind—3 per cent. of unemployment is what he defined as a state of full employment. Then, a few years later, in 1949, Sir Stafford Cripps, having experienced the consequences of people thinking of full employment as meaning not a single person ever without a job, was careful to say that full employment did not mean that an individual was guaranteed continuance in his particular job or even his particular trade, and that to insist upon the rigid maintenance of the present pattern of employment would be to destroy all hope of full employment. That was in 1949. Then, as recently as 1951, the Labour Government made a formal declaration of what they meant by a full employment policy. They said they had decided to express the full employment standard of the United Kingdom as a level of unemployment of 3 per cent. at the seasonal peak.
  Compare that with the present and what has been the recent position. Three per cent. unemployment means about 550,000 unemployed people in all. Over this last winter the percentage has been about 1 per cent., and that 1 per cent., or something a little under 200,000, covers "casuals" and people who have been unemployed for only a short time, after which they have usually quickly got better employment somewhere else. I emphasise all these figures because it may well be that, not because of a desire to create unemployment but in order to cure this fatal disease of inflation, any Government may have to adopt measures

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  that, as Mr. Gaitskell recognised only a few months ago, may well have as an incidental effect an increase of the figure, particularly of short-time unemployment, so that it rises to somewhere nearer 2 per cent. rather than the present 1 per cent. I ask the Labour Opposition to help us in getting over the view of what has always been understood to be the real meaning of the kind of full employment which should be the objective of Government policy. All that I am suggesting at the moment is that in itself that should not be regarded as a bad thing.
  I do not think that it is a good thing that there should be, as at this moment, about twice as many vacancies seeking men as men seeking jobs. When that is the position, when there is such a small number of people available for any new development or expansion that may be needed in the most crucial and vital industries, there is really no chance of making the progress in prosperity and the creation of wealth which the country otherwise could achieve. Therefore, I should like to ask that the sense of horror at any kind of number of unemployed, however small and however temporary, should be dissipated by the combined efforts of both sides. There must be a margin of people who, at any given moment, are seeking new employment, and the present measures of relief might conceivably be added to. That would be immensely better from the point of the working classes as a whole, and indeed of those temporarily unemployed, than that, as Sir Stafford Cripps saw, the present pattern of employment should be crystallised and made rigid, thereby preventing any future increase in prosperity.
  I should like to make one or two remarks about monetary policy. I agree with Lord Pethick-Lawrence and Lord Pakenham when they demonstrate, as they did demonstrate, the great cost and the great disadvantages of high interest rates long continued. I was glad, however, that the noble Lord, Lord Pakenham, and I think the noble Lord, Lord Pethick-Lawrence, agreed that, in its proper place, combined with and assisted by other measures, the high interest rate has its utility at certain stages of an inflationary period. But I agree that it is of the utmost importance that not too much should be put upon
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  that or any purely monetary weapon. I agree with the noble Lord, Lord Clitheroe, when he pointed out that under the present conditions of the market, with the great number of Treasury Bills, for example, the old classical weapons of monetary policy—open market operation, high rate of interest and so on—are not so effective as they were; and if they are not given the right environment and supplemented by other measures they would be much too expensive and not effective enough. In that connection I should like to see Treasury Bills restricted a good deal. It is all very well for Sir Edward Boyle to say—as he can say with literal truth—that Treasury Bills are not necessarily inflationary. But when they are increased to the extent and at the pace of Treasury Bills in recent years, and are devoted, as so much Treasury Bill finance is, to long-term expenditure that ought to be financed by loans subscribed to out of the savings of the people, then they are seriously inflationary.
  I believe that we have a good deal to learn from modern America in its use of the monetary weapon, both as to liquidity ratios and also as to the use of a much better system of intelligence and information about the movements of boom or depression. I hope that we shall try to learn the necessary lessons from them. Monetary policy could be made a great deal more effective if it were supplemented by some of the weapons that have successfully been used in America. Among those monetary weapons I would add one that has been used both here and in America and which I have always thought, for many years, to be an extremely valuable one—hire purchase. That is one of the best regulators. To ease up with hire purchase in days of depression and to tighten hire purchase in the case of a boom is a very simple and effective method.
  There was considerable debate as to whether high taxation is inflationary or deflationary. I did not entirely agree with the noble Lord, Lord Clitheroe, who said that it was at present inflationary. I believe one cannot give a plain "yes" or "no" to that question, for it depends on the time, and whether one is thinking in terms of a short crisis or the long-term effect; and it depends, too, on the kind of taxation. The first effect is, of

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  course, deflationary: it reduces the spending power. It may later, however, reduce incentives to the creation of new supplies, in which case it ultimately becomes, in that sense, inflationary. In that respect, it is exactly like reductions of investment. We are now trying to help the immediate critical position by reducing expenditure on investment. Continued over a long time, that process would have the effect of reducing production and thereby worsening the ratio between supply and demand. Whether or not taxation is in-flationary depends a good deal, also, on the form of taxation. Frankly, I regretted, in the Autumn Budget, the extension of purchase tax to pots and pans —articles which previously had not been subject to tax—because I think purchase tax has a more direct and sensitive relationship to wage demands than any other tax. When one finds what was really in itself a very small tax in its immediate reduction of expenditure (and which therefore could not do much good) applied, with the provocation that these were articles of domestic necessity which previously had not been taxed, the indirect result in causing inflation through increased wages was probably greater than the immediate advantage of reducing expenditure.
  The noble Lord, Lord Beveridge, referred in a very interesting part of his speech, with which I wish I had time adequately to deal, to the general system of wage negotiations. I have said something of the particular part played in that matter by the nationalised industries, but the case he put before your Lordships goes a good deal wider and further. There is a great deal in what he said: in that we want some mitigation of the complete union sovereignty of separate unions in dealing with wage negotiations. As he, or some other noble Lord, said yesterday, it is quite useless to say to a particular union: "Do not press for an extra 10 per cent. on wages, for the only effect of that would be to put up by 10 per cent. the cost of things you buy." That is not true, because the fact that they ask for, or get, that 10 per cent. will not necessarily result in other people getting it; and if they do not ask for it, that will not prevent other people from getting it.
  But what is not true of separate unions is true of the union world as a whole. If
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  we could get in regard to wages a policy that was in the interest of the union world as a whole, it would, in my view, be a policy almost identical with the national interest. That does not mean, however, that if we were able to do so it would be wise to have national negotiations for all wages conducted, let us say, by the T.U.C. That would be, likely to mean a uniformity of wages which would destroy the proper differential between different classes of workers, and would prevent a proper increase of wages for the expanding new industry as against the old static industry. Even if one could get a plain 4 per cent. increase, as in Sweden, or any other percentage, as the noble Lord, Lord Beveridge, seemed to think desirable, I do not think it would be a good thing. Some element of variability and flexibility is needed. But it is true that the disadvantages of inflation quantitatively fall, perhaps as to more than half, upon union members as a whole; and if one adds to that half those classes of the community who are not economically better off, the proportion is more like four-fifths. There is therefore a strong case for developing a system which would, to a greater extent, make effective on particular union negotiations the interests of the union world as a whole. This subject might be a suitable one in itself far debate—I ventured to put sonic proposals before your Lordships in July of last year.
  Lastly, a number of noble Lords referred to the necessity of recovering the dynamic character of our society. They were right; but, of course, one has to say that when we are in a critical position in regard to the exchanges and our reserves, as we are now, a solvent society is an essential and prior condition of a dynamic society. Once we can get past the critical danger of the drain upon our reserves, then we can be free to concentrate in every way upon incentives to extra production and the removal of all restrictions, whether on the workers' or the employers' side, that impair greater production of saleable goods. There is then hardly any limit to the extent to which wages can, with no harm to anyone and with great advantage to the workers themselves, advance, subject only to the fundamental condition, which has unhappily not been observed in the past, that you should first create your wealth and then decide how to share it.
  5.0 p.m.
  LORD SEMPILL: My Lords, may I join with your Lordships who have spoken previously in congratulating the noble Lord, Lord Pethick-Lawrence, upon initiating this debate and in thanking him for his interesting opening speech. I should like also to add to the tributes already paid by your Lordships to the noble Lord, Lord Clitheroe, on his maiden speech. The speech of the noble Viscount, Lord Bruce of Melbourne, which has already been referred to by Lord Wilmot of Selmeston and Lord Salter, impressed me very much. I thought it a notable speech, since, whilst dealing with the technicalities of this involved situation, the noble Viscount stressed again and again the psychological aspect. The psychological aspect was emphasised again to-day by Lord Wilmot of Selmeston, Lord Salter and others. I think it is vitally important. In fact, as I understood it, the noble Viscount, Lord Bruce of Melbourne, whilst indicating his view as to what should be done technically, pointed out that success would be achieved only when there came about a change in the attitude of mind all over the country. With that view I completely agree, as others of your Lordships have intimated that they do also. The noble Viscount, Lord Bruce of Melbourne, said at one point [OFFICIAL REPORT, Vol. 196 (No. 68), col. 156]:
  "we are up against as serious a crisis as we have ever been in our history, except in time of war."
  There is surely only one sound remedy for inflation, a subject upon which much has been said in this debate; and that is increased production. We ask ourselves whether this is possible to-day. As one engaged in production engineering, I would say "Yes," without question—but only provided that we stop pretending we have full employment to-day, when restrictive practices abound on both sides of industry. "Go slow;" "work to rule;" two or three men doing one man's job—this sort of thing is going on all over the country. Your Lordships will remember that the noble Lord, Lord Clitheroe, in his maiden speech yesterday, referred to full employment. He emphasised that it was a term only partly understood. Lord Salter said the same thing to-day. Lord Clitheroe used these words [col. 148]:
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  "It is not a true use of language to describe as full employment a situation in which everybody can get full wages. Full employment also must mean that everyone should do as much work as he can reasonably be expected to do."
  The result of these practices to which I have referred, as your Lordships well know, gives rise to dissatisfaction and an overall feeling of frustration. This is inevitable. These restrictions, broadly speaking, do not, however, apply in the expanding industries, since employer and employee are still aware of each other as fellow human beings. I suggest that the question which needs to be answered is why, in a period of crisis, in which we are to-day, and of inflation, should not restrictive practices be abandoned and production increased up to the full volume of purchasing power.
  There are probably several answers. For example, if labour-saving or output-increasing devices are effectively used, they must inevitably reduce the amount of labour required in those industries where, for any reason, demand does not expand correspondingly. This is consistently denied on the grounds that in expanding industries, like, for example, motor car production, productivity has increased sixteen times in forty years; and still there are more people employed than ever before. Is it seriously considered that during a similar period the British coal industry could either have sold sixteen times as much coal or have reduced its personnel to one sixteenth? Your Lordships will have heard recently a great deal about automation, which is already here. It brings with it the possibility of an enormous increase of man's capacity to produce—perhaps by twenty to thirty times. Has anyone made clear how the present economic system adjusts the ability to purchase what is produced, bearing in mind that prices cannot be cut to one-twentieth or one-thirtieth because of the very large capital investment in automation which has to be amortised?
  Surely, my Lords, we have to ensure that the supply of the right volume of money, issued at the right time, is the main objective of monetary policy. The periodic boom or slump indicates that this is quite haphazard; and, that being so, the question of ensuring that the right volume of money is put into circulation is crucial. Would it not be correct to assume that the reason why the Government of New Zealand not long ago set up a Royal Commission on Monetary

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  Policy, was to consider, and find answers to, such questions as this? I understand that the Commission's Report is due some time next month. As noble Lords of far greater experience in economic matters have spoken on these questions, emphasising the seriousness of the position to-day, may I, who am but a student in the economic field, say that in my opinion it surely cannot be many months before we strike bottom and then commence to learn the results of past errors of judgment the hard way. That, I suggest, is the only sure road to recovery.
  5.10 p.m.
  LORD DOUGLAS OF BARLOCH: My Lords, the noble Earl, Lord Selkirk, who spoke for the Government yesterday said that their policy was to attack causes and not to attack symptoms. That is a sentiment with which I, and all of us, no doubt, would sincerely agree. But I wonder whether the measures which have been proposed by the Government do, in fact, reveal the implementation of that policy. They appear to me to be a diverse mixture of measures, some of which are dealing only with symptoms and not with the causes at all. There is a large measure of agreement in your Lordships' House that the root cause of the difficulties with which we are at present confronted is inflation, but I am not so certain that there is uniformity of view as to what inflation really consists in. For my part, I understand inflation to be a condition in which the price of commodities is increasing and in which that increase of price is caused by an increase in the amount of money in circulation—that and nothing else. And that is precisely what we are suffering from at the present moment.
  Take what has happened during the last seven years. Between 1948 and 1955 the volume of industrial production rose by about 35 per cent. During the same period the amount of currency in circulation rose from some £1,200 million to over £1,700 million. What was the inevitable result? There was an increase in prices, so that the increase in consumer expenditure during that period amounted to £4,000 million a year, of which £3,000 million was due to increase of prices. The inference from these facts is perfectly clear. If one goes back over a longer period, one finds that the currency in circulation in 1938 was only £442 million, and now it is about four times as much.
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  The inevitable result has been a tremendous increase in prices, compared to what they were before the war. If inflation is to be prevented, it is essential that in the first place the Government should control the note issue and should prevent it from going up year after year as it has done. I do not forget for a single moment that the circulation of bank credit is also a form of currency and that it has gone up pari passu with the increase in the note issue. But the final and ultimate responsibility for all this rests upon successive Governments, which have steadily pursued this policy.
  If this is the truth of the matter, it is clear that the policy which the present Government are pursuing is erratic and contradictory. What, for example, had the measures which were included in the emergency Autumn Budget to do with the increase in the note issue? Nothing whatsoever. The increase in purchase tax and profits tax has nothing to do with controlling the volume of currency in circulation. So with regard to the more recent measures which have been proposed. The reduction of housing subsidies has no relation at all to the increase in circulation; nor has restriction upon hire purchase, though both measures may in themselves be defensible. It may be perfectly true that it is highly undesirable that people who are well able to afford to pay for accommodation should have their houses subsidised. It may also be true that hire purchase has a demoralising influence and tends to make people forget that they ought to earn before they spend. But that is not, in itself, a cause of inflation so long as hire purchase is financed by the saving of somebody. Of course, if hire purchase is financed by the creation of credit, and if the Government allow credit to he created for that purpose, then we have inflation. But that is not the result of the institution of hire purchase; it is the consequence of the inflationary position which is allowed to come into existence.
  These measures have really nothing whatever to do with the fundamental difficulty with which we are confronted, which is due entirely to the policy of successive Governments in allowing the creation of currency and of credit to proceed at the rate at which it has done. I know that it is said that we can control this tendency by controlling expenditure. That was the advice which Keynes gave

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  to the Treasury in 1940, and the Treasury were acting upon that advice when they introduced the system of post-war credits as a means of combating inflation. But that measure has failed, as every measure of that kind is inevitably bound to fail: such steps will not and cannot work. What we have seen during the last fifteen years is the proof of it. Inflation is bound to follow so long as Governments are content to allow the note issue in circulation to increase year after year.
  I deprecate also the view which has been expressed by some speakers in this debate that the cause of our troubles is mainly the work of the trade unions in forcing up wages. That has not created the inflationary position with which we are confronted—indeed, it has little or nothing to do with it. I do not deny that it is possible, if the demands of the trade unions are excessive and they are granted by employers, that troubles can flow from that. It could easily happen that the cost of production might rise so high that it would become impossible to sell goods at a profit, particularly in foreign markets, and consequently our exports would fall away and our ability to buy the food and raw materials which we require would be diminished. But that again has nothing at all to do with inflation in itself: that is an entirely separate and different problem. Therefore, it is not correct to say that the trade unions, by securing increases in wages, have been responsible for this situation. It was not they who increased the monetary circulation. It was successive Governments who were entirely responsible—and I draw no distinction between one Government and another, so far as this matter is concerned.
  During this debate we have been told—and this I understand is the view of the Government—that in order to combat inflation the public ought to save more. I am all in favour of saving. I was brought up to believe in thrift; I was brought up to believe that you should not spend money which you had not got. But once more, what is the position? What is the use of any Government advice to people to save, so long as conditions remain as they are at present? The workman who puts his money into savings certificates finds in the course of time that, even with the addition of interest.
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  they purchase less than at the time when lie invested his money. When he is invited to put his money into things of that kind, he is being asked to lose it, because of the inflation which is taking place year after year and which is reducing the purchasing power of his investment. In those circumstances, for which the responsibility must lie upon the Government, it is futile to ask intelligent people to put their money into investments of that kind, because they know they will inevitably end up with less purchasing power than they had to begin with.
  It is absolutely essential that we should restrict the volume of currency in circulation and prevent the price level from continuing to rise year after year. If that is not done, these troubles will continuously recur, and we shall march forward from crisis to crisis. I wish that I could see on the part of the Government some clear and definite recognition of this fundamental fact. It is dangerous to our economy; it is unjust and unfair to important, respectable sections of the community; it pillages the old age pensioner, the man who has saved up his money in order to provide something for himself, the executive, and the scientific, technical worker who is not a member of a mass union and whose wages or earnings do not keep pace with the continual increase in the cost of living. It is injurious to everybody of that class, and it is helpful only to those who are in the position of being speculators, and who are able to put their money into things which are increased in price because of the diminution of the purchasing power of money.
  This, of course, is a doctrine which is well known and which has been borne out by hundreds of years of experiment. Country after country has given illustrations of this kind of thing; yet it seems that nobody is willing to profit by the experience of the past. Nobody is willing to learn the simple lesson that it is necessary to prevent prices from being increased and to stop multiplying the amount of money in circulation, and that the real criterion, with a properly developing economy, is that when production is increased the prices of commodities ought to fall and not rise, so that the benefits of industrial progress are spread more evenly over the whole community. That is the lesson of this situation, and I wish I could see signs that the Government realised it more clearly.

  PRIVY COUNSELLORS' CONFERENCE ON SECURITY
  5.26 p.m.
  THE MARQUESS OF SALISBURY: My Lords, with the permission of your Lordships, I should like to intervene to make a short statement on the Report of the Conference of Privy Counsellors on security. A White Paper is being published summarising such of the contents of the Report as can be properly made public, and copies will be available in the Printed Paper Office immediately. The Government have decided to give effect to all the recommendations which the Conference have made. My right honourable friend the Prime Minister, who is making a similar statement in another place, wishes to express the Government's gratitude to my noble and learned friend the Lord Chancellor, and to the other noble Lords and right honourable gentlemen who took part in the Conference, for the thoroughness and despatch with which they performed their task.
  VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I am much obliged to the noble Marquess for giving us that information. I have not yet had an opportunity of seeing the White Paper, but when I have done so I will consider whether there is anything more to be said. I should say, from the reports I have heard, that the Government are taking the right action, and I imagine that it will not be necessary to raise the matter again. However, I should like to read the White Paper before committing myself.
  THE MARQUESS OF SALISBURY: I shall, of course, be at the disposal of the noble Viscount at any time he wishes to see me.

  THE ECONOMIC SITUATION
  5.27 p.m.
  Debate resumed.
  LORD COLERAINE: My Lords, this is the first, and I believe the most important, of a series of debates which will occupy your Lordships during the coming weeks, all of them dealing with different aspects of the same problem. To-day and yesterday we have been discussing the economic situation; next week there is to be a debate upon Middle Eastern policy; the week after that, I believe, there is to be a debate on defence; and then again, later, a debate on general foreign policy. I believe that each one of these debates is concerned with the same thing—namely, the weakness of Britain in the second half of the 20th century. I consider that this debate is the most important of them all, for unless we can solve the economic problem we can have no effective defence, because we cannot afford it; and certainly we can have no effective foreign policy. In the final analysis, the success of a foreign policy must be commensurate with the power behind it. Foreign policy cannot be based on mere bankruptcy. That is what we have been seeking to do since the war, and that is what we are seeking to do now. But it just cannot be done.
  I believe that the economic and fiscal measures which the Government have taken will be effective to resolve the immediate crisis, and will be effective in the short run. Provided the Government stick to their guns, as I believe they will, and provided they are prepared to face any unpopularity that they may incur, I am sure that we shall surmount this crisis, just as we surmounted the crises of 1951, 1949 and 1947. But it will not be enough that we get over this immediate difficulty. It will advantage us very little if we get over the immediate difficulty and then start off again on the old "rake's progress" and face another crisis in a year's, two years', or three years' time.
  I do not believe that we can continue indefinitely on the course that we have followed since the war. I do not believe that we shall he able to walk for ever along a precipice in a kind of stupor of inflation, sometimes with one foot dangling over the edge and sometimes withdrawing a yard or two from the edge. I do not believe we can do that indefinitely; and if any noble Lord does believe that

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  we can go on for ever and ever as we have gone on for the last ten years, I would recommend him to read the seventy-six pages of Mr. Krushchev's speech delivered to the Communist Party in Moscow a week or two ago. We have either to get right away from the precipice or one fine day we shall find that we have tumbled into it.
  I am not an economist, and I cannot follow the noble Lord, Lord Douglas of Barloch, in his highly complicated but interesting diagnosis of the situation. But probably I should not be contradicted if I ventured the platitude that the root of our difficulties is that ever since the war expenditure has outrun income. Now there are two ways of dealing with that situation. The quickest, most effective and, probably, in the short term, the only way, is to cut expenditure. But, in the long run, in my judgment, that is not sound policy. In the long run, we can only draw finally away from the precipice, not by reducing expenditure or going in for a policy of contraction, but by a policy of increasing income. I hope that, while the Chancellor of the Exchequer is dealing with our present difficulties, while he is battling with the present currents that have so nearly overwhelmed us, he is turning over in his mind the longer-term aspects of our national problem.
  Now how can we increase our income? There seems to me to be two ways of doing it—by working harder, and by having at our disposal more horsepower. In other words, we have to recover those old-fashioned virtues to which the noble Lord, Lord Douglas of Barloch, referred, of hard work and saving. Some people, far more knowledgeable than I am, say that there has been too much investment and that that is what we are suffering from. In a sense, no doubt that is true; but in another sense it must be quite untrue. I do not know whether your Lordships remember a couple of extremely interesting turnover articles that appeared in The Times about a month ago called, "How much Investment?" The story those articles told was that in the first years after the war, in the years of the nationally planned economy and the Labour Government, while we all thought we were depriving ourselves to increase our investments in order to become more competitive in the
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  future, statistics, not only from this country but from other countries, showed that nothing of the kind was happening. On the contrary, the figures for 1950 showed that in this country we were spending far more on consumption than the United States, France, Germany or Italy, and that we were putting far less into investment than any of those countries, even Italy. If those calculations are correct, it is obvious that we are not suffering from too much investment—except in this sense: that if there has been too much investment it is because there has been too little saving, and not because there has been more investment than we need to increase our productivity.
  Are there any measures which the Government can take to encourage hard work and saving? Most definitely there are. I believe nothing would do more to increase our national income and national output than a reduction of taxation. That affects management at all levels. At its present level, taxation is a definite deterrent. It is a deterrent to the managing director and it is a deterrent to the youngish man with all his family responsibilities who is just coming into the higher levels of management. And it is a deterrent just as much to the charge-hand in the works. I think that most people who have any experience of the factory floor would probably agree with me that it is sometimes extremely difficult to get people to become charge-hands. They are afraid of the extra responsibility, they are afraid of breaking away from their old friends and they are afraid of becoming "one of them" instead of "one of us," and they do not do it. One reason why they do not do it is that if they do, the effect of the present P.A.Y.E. system is that any addition they get to their wages by taking on the extra responsibility is only marginal. It affects a charge-hand just as much as it affects the managing director.
  My noble friend Lord Clitheroe, in his lucid, moderate and most compelling speech, which I can assure him sounded quite as well as it read in Hansard this morning—and it read very well indeed—referred to this question of taxation. My noble friend said that he did not regard high taxation as being deflationary. The noble Lord, Lord Salter, just now rather

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  took issue with him on this point. I, for my part, side with my noble friend Lord Clitheroe. I do not believe that high taxation is deflationary and, conversely, I do not believe that low taxation is inflationary, provided that the increased spending power given to the individual is balanced by less spending power at the disposal of the Government. In other words, there must be a reduction in taxation. I am certain that we cannot survive indefinitely with Government expenditure at anything like its present level and with taxation taking anything like the proportion of the national income that it does today.
  The last time I referred to this problem of public expenditure and taxation in your Lordships' House, my noble friend the Leader of the House made the perfectly fair point that there was not much purpose in talking widely and handsomely about reducing expenditure unless you could give some indication of where expenditure might be reduced. I will try to meet that point which, as I say, is a perfectly fair one. I have no doubt at all that some administrative economies can be made, and that they would be worth making, but I grant freely that they would not be substantial in the sense that they could make any real difference to the weight of taxation.
  If we are to reduce Government expenditure—and I regard it as an essential of survival—then we have not only to look at the administration, but at policy itself. We must get out of the habit of mind of believing that there are certain subjects which are too sacred to mention and which must be left out of our discussion. Whatever the policy is, however desirable it may be, however worthy it is, if it is bringing us to ruin we have to call it into question.
  I should like to say a word on the social services. I do not believe there is anyone in this country, in any Party, who does not want the best social services that we can afford, in the sense, at least, that, so far as we can prevent it, no one will suffer through misfortune that is outside his control. That is not at all the same as saying that the Welfare State as it has developed since the war must develop indefinitely, for ever, or else the people will be defrauded. There are some respectable authorities—for instance, Mr.
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  Colin Clark—who maintain that the Welfare State as it is operating to-day not only is imposing a burden which the country cannot bear, but does, in fact, constitute a colossal fraud on those who imagine that they are being benefited by it, and in particular a colossal fraud on the working classes. Whatever may be the truth of that, there is no doubt that the Welfare State carried too far must act as a deterrent on effort, because people do not have to work, because things which they ought to get for themselves are provided free; therefore they have more purchasing power to spend on other things. It seems to me that that must have an effect on society.
  I would appeal to noble Lords opposite—I know they will not agree with what I am saying—not to feel that this is a subject that cannot be called in question. A year or so ago I had the privilege of visiting the Soviet Union with some Members of your Lordships' House. One of the things that struck me very much about Russia was that they had an elaborate system of social services, far more elaborate and comprehensive than I had anticipated before I went there, but, so far as I could make out, there was not one single social service provided in Russia for which the recipient did not make some payment according to his means. I do not believe that that would be a very bad principle for us to look into.
  There is another field of expenditure that must be in our minds—that is, defence. I would not for a single moment say that we can afford to cut defence in order to get some advantage in some other field. We cannot afford to cut defence in that sense. But I am not at all sure that we ought not to recast our whole thinking about defence in terms of the modern world. It seems to me fantastic for a country in our position, with the economic difficulties that we have, to take the line, as successive Governments have, that we ourselves must at all costs manufacture the hydrogen bomb because, if the United States made it for us, it would be derogatory to our dignity. I believe that the attitude of the West German Government is far more realistic. So far as I know, they are rearming and are going to fulfil their obligations; but they are placing the orders for their arms elsewhere. Somehow, I think we have to realise that defence is no longer some-

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  thing which is the duty of every little individual country. It is a responsibility which has to be spread over the whole Western world and all the nations who are trying to organise their defence together. I do not know what economies can be made in that direction, but I am certain that some could be made if there was a recasting of our whole view of defence.
  There is one other matter that I should like briefly to raise. It is this. My noble friend Lord Salter a few minutes ago said that the nationalised industries were the spearheads of wage inflation and that wage inflation, in his view, was the main cause of our immediate difficulties to-day. He is probably right that the nationalised industries are the spearhead of wage inflation, but there is another spearhead. It is this. There is a tendency whenever a Government contract is held on a cost-plus basis—and I believe that in the defence programme a number of contracts are given on that basis—for the contractor, who is afraid of being short of labour, to go out of his market and bid for labour even though he does not want to use it. That has the effect of forcing up prices and increasing the inflationary effect of unreal wage demands.
  I am afraid I have taken a few minutes more than I had intended to, but I would ask the Government to look into this question of public expenditure, to be afraid of nothing and to remember this. The noble Lord, Lord Salter, just now, talking of a dynamic society, said that one could not expect a dynamic society with an unstable currency. That is true, but there is another truth: we shall never get a dynamic society growing out of a feather bed.
  5.50 p.m.
  LORD BRAND: My Lords, I had not intended to say anything in this debate because I have been out of the country for two months and felt that I was out of touch; but after listening yesterday afternoon to the debate, I thought that one who comes from the City, as I do, ought to express his opinion about the statement recently made by the Chancellor of the Exchequer. I therefore take this opportunity of saying that I fully agree with all that the Chancellor of the Exchequer has done. His statement concerns mainly investment but, of course,
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  in the Budget he has still to deal with the other side, which is internal consumption demands apart from investment. We must wait for the Budget to see what he is going to do about that. But I have no doubt whatever that drastic measures are required, not only such as have been taken now but others too.
  I think we have reached a dangerous point on our inflation journey. It has been going on for a long time; it is gathering force and, if know anything about inflation—as I have told your Lordships before, I have seen it with my own eyes in an extreme form in Germany and other countries—at a certain point it becomes more and more difficult to stop. I think we have reached the point where either we must stop it or it will go a great deal further and produce disastrous consequences. In my opinion, there is no time to lose, and I think severe measures such as a bank rate of 5½ per cent.—which is very severe—are better than tinkering, because if the severe measures have the required effect the Government can then quickly take them off. I dare say the noble Lord, Lord Pethick-Lawrence, will agree that all experience shows that you have to stop these tendencies at an early date—the earlier you stop them, the quicker you can take off the brakes. We have not done that as much as we should have, and I think now is the time to do it.
  Some economists, in talking about capital investment, say that the whole trouble is that we have suddenly spurted with our capital investment during last year and this year, and that that has broken our back. But our capital expenditure is not nearly in proportion with the capital expenditure of our competitors. We are behind-hand with our capital expenditure; we have been behind-hand ever since the war. I well believe that the great increase in capital expenditure—or capital starts, as they are called—in this last year or eighteen months may have been the proximate cause of our increasing troubles. But that only shows that we have left no room for the capital investment which we must have. We have no room, partly because of defence expenditure and partly because of consumption demands on too high a scale. Yet room must be made for capital investment on a large scale if we are to progress and are to compete with our

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  competitors. Nevertheless, as the Chancellor of the Exchequer's statement indicates, for the moment, until we get straight, capital investment has to be curbed. It is sad that it should be so, in my opinion, but these things have to be done. First of all we must avoid disaster.
  I agree with what the noble Lord, Lord Pakenham, said yesterday: that another way of talking about inflation is to say that our vital need is a strong, stable and convertible currency. Certainly we are far from that at present. I have never thought, and do not think now, that convertibility is possible until inflation has been stopped and until public opinion has accepted the necessity for a strong, stable and convertible currency. Public opinion does not now accept that. Probably a large part of public opinion that matters does not know anything about a stable convertible currency. What is happening about wages at this moment shows that the wage-earner does not fully understand inflation and does not accept the need for a stable currency. That may apply to many employers, too, because, until the trouble gets serious, employers like inflation just as wage-earners may. Profits are good under inflation and the employer gets plenty of orders. The more home demands increase the better for him, because home trade is much more easy than export trade. Why should be bother about exports if he can sell all his goods in this country? Therefore there is sometimes a sort of conspiracy between capital and labour. The only trouble is that in the end it brings disaster on both.
  To show what is happening at the moment, let me quote some figures for wage increases—basic wages, not earnings—in the last few years, 1954, 1955 and 1956, which I took out this morning. I believe these figures to be correct. In 1954, they increased by £185 million; in 1955, by £265 million; in 1956, in the middle of March—that is, in two and a quarter months—they have increased by £180 million. There are further claims now which would add up to at least £300 million. Leaving out for the moment the further claims, those two and a quarter years have seen increases of £630 million in basic wages, and, if we were to assume that further wages are going to be granted as demanded, the figure would rise to £930 million. All that means that, as
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  long as this process continues, the task of the country and of the Chancellor of the Exchequer grows more formidable all the time. We have not only, somehow or other, to counterbalance or to reduce the too great demand that exists now, but we have got to catch up with all these new demands; and that is a formidable task.
  I do not want to enter into Party politics, but my feeling is that, while the Chancellor of the Exchequer has a great responsibility, trade union leaders also have a great responsibility. As we all know, they are men of great ability and moderation, who have a great knowledge of industry. They must know that ultimately the maintenance and improvement of the standard of life and of employment depends on this country having a strong, stable currency, and that this requires strong reserves. Other countries seem able to earn them, but we do not. A figure was given the other day in regard to Europe, by, I think, Sir Oliver Franks, in his annual statement to Lloyds Bank shareholders. He stated that European gold and dollar reserves had increased by 5,000 million dollars in 1955, whereas we scramble along trying to prevent ours from falling. Yet the need of our country for reserves against sterling is vastly greater than the needs of other countries, because sterling is a world currency which everybody requires and which everybody can "bear" on the markets of the world if they think it looks weak, and particularly because we are huge debtors to the world, especially to the sterling area.
  These, too, are not only our gold reserves; they are the reserves of Australia, Malaya and every other part of the Commonwealth, and we must be ready to provide the dollars they want. While we cannot get going in increasing our reserves, these other European countries can do so, just as, while we cannot stand the amount of capital expenditure we ought to stand, they go ahead with very much greater proportionate capital expenditure. How is it that we cannot do it? I believe the noble Lord, Lord Coleraine, has some of the answers: that we lead too easy a life, that we do not work so hard and do not accept new ideas as the Americans and the Germans do; and, generally speaking, that we are not dynamic. How we are to change and get like our competitiors, I am not sure.

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  In another way, the present situation must be somewhat distasteful to trade union leaders. I do not want to enter on controversial ground. No politician dares to mention the word "wages." I read the speeches of our leaders. They never mention wages, although they sometimes say something about dividends, because they know that those who receive dividends have not many votes, while wage earners are a different matter. In my opinion, trade union leaders have always been against all privilege. Now inflation forces upon them the necessity of demanding for their followers, at frequent intervals, privileges in the way of increased incomes which no other sections in the community can or do ask in the same way. I do not blame the trade unions for saying "We are not going to suffer from inflation—as the cost of living goes up, so do our wages go up; and if they do not go up, we must coerce the community until we get what we want," but the rest of the community cannot do that. They are not organised. The other day I thought how much I wished that the tax-gatherers would go on strike. Why should they not? They are probably badly paid, or not nearly so well paid as many other classes who do work of a similar nature.
  VISCOUNT ALEXANDER OF HILLSBOROUGH: They seem to get what they want without striking.
  LORD BRAND: Ultimately, they do, for a year or two later the Government say "We must do something for the Civil Service" and their earnings are put up, because the wage-earners have it already. Despite the present attitude of the wage-earner that it is wrong if incomes do not immediately follow the cost of living, the increases do not obtain for other sections of the community. I say, therefore, that the trade unions are now in a privileged position. In the end this is dangerous to the trade unions and to our democracy as well. For this reason alone, a return to stable prices is very desirable. At the moment for this large section of the community—namely the wage-earners—the wage increases, as I have shown, are not in any way under the control of the Government or the Chancellor of the Exchequer. This naturally adds great obstacles for the Chancellor's plans for reducing internal demand.
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  Our great difficulty in our democratic community seems to be that of making people aware of the terrible dangers of very serious inflation. Inflation looks very pleasant to a great many people, including the recipients of dividends, because profits increase with inflation; but I fully support what my noble friend Lord Selkirk said about its disastrous implications. I can think of nothing more disastrous to this country, or bringing greater danger, than to allow the present condition to continue to develop. I support the most drastic measures to stop the rot, and I believe that it is the work of all patriotic men to support such measures, and for all Parties to join together in preventing what all would, in the end, consider a disaster—that is, the further progress of inflation.
  6.8 p.m.
  VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I am sure noble Lords in all parts of the House will agree that the setting aside of these two days for a discussion of the economic position has been really worth while. It was opened by a survey of the situation by my noble friend, Lord Pethick-Lawrence, with his usual calmness and that impartiality in assessing the various components in the problem which we always expect from him, laying the foundation for a wide and interesting debate. I thought that the Chancellor of the Duchy of Lancaster, the noble Earl, Lord Selkirk, although I did not agree with all that he said, showed evidence of having made a careful study of what he was going to say before he made his contribution to the debate. There has been fairly general agreement upon the definition originally given in the speech of the noble Lord, Lord Pethick-Lawrence, of what constitutes inflation, although I was exceedingly intrigued by the much later contribution on the same subject from my noble friend Lord Douglas of Barloch. I had great sympathy with him when he came to deal with remedies for the total of the note issue and its effect on the actual economic position of the people of this country.
  In spite of all the good intentions of my noble friend, Lord Wilmot of Selmeston, in opening his speech, I am bound to say I find it almost impossible on such an occasion as this to separate the responsibility of the Government as such, at the end of four and a half years

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  of office, from the situation that we face to-day. It is not as though we have not had economic crises of similar components, although different in magnitude, at various times since the last war; but we are now dealing with a situation which, as was pointed out by my noble friend who opened the debate this afternoon, is, in our view, directly the result of Government policy. Whatever Lord Brand may say about the responsibility of trade union leaders, you must remember first of all that the Government set out the text of the position and wrote the prescription in the Election address of 1951, which has already been quoted by my noble friend Lord Wilmot of Selmeston.
  LORD BRAND: I should like to point out that I did not say that the trade unions caused inflation. I do not think they did. I am only saying now that inflation is increased by what may be regarded, perhaps, as very natural demands for wage increases which are made at more and more frequent intervals.
  VISCOUNT ALEXANDER OF HILLSBOROUGH: As this debate progresses and stage succeeds stage, I find that noble Lords on the other side differ with each other in almost every speech. Yesterday we had one banker, Lord Balfour of Burleigh, disagreeing with the noble Lord, Lord Clitheroe, who was making his maiden speech—and making it, I thought, in an excellent style, such as we, old comrades of his in the House of Commons, should expect. I wish to make clear my firm belief that when there is a crisis in the country, whether it be an internal one in relation to our economic position, whether it be in relation to our economic safety in connection with the overseas position, or whether it be the kind of crisis which we had in 1939–40, the Britisher has something in his heart which always shows at such times and makes him want to spring to the aid of his country—if he knows the position.
  The noble Lord, Lord Salter, who spoke earlier—I am sorry that I was out of the Chamber for part of the time when he was speaking—stressed the need for co-operation in telling the truth about the situation so that it might be understood by the people. I am all in favour of that. But our people have been very seriously misled during this past four and
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  a half years—very seriously misled indeed. And we were misled in 1951. The Government of which I was a member, with a majority of only four or five in another place, felt that in view of the situation then arising we were bound to ask the country for a mandate in order to control that situation—which, undoubtedly, was getting dangerous, just as it has been getting dangerous recently. And what were we accused of? We were accused of running away because we asked for a mandate to put our own really well-tried policy into operation. So it is not possible to get away altogether from the past in approaching this subject now.
  I would say next that if co-operation is to be obtained in telling the truth to the people, we shall need a certain basis for that co-operation. If remedies are going to be applied which will be costly and hurtful to the people, it is only right that you should go to them and, if they have other remedies to suggest, you must be willing to consider those remedies and then put into operation the sort of measures in which you find the people are willing to co-operate. There must be agreement on the best remedies to be applied. In the course of statements which they have made about their proposals for dealing with the situation, the Government have said, again and again, that they are willing to apply any kind of control which they think will be effective in the circumstances. But we never get any effective control suggested by them except the use of the money weapon. Up goes the bank rate. The effect of that move is quite indiscriminate. Very often it is most hurtful to the things that it is most necessary should be allowed to continue. And the Government is really leaving it to the hank managers to carry out a control policy which is intolerable to the bank managers. The policy ought to be settled and carried out by the Government, with the assent and co-operation of the people of the country.
  The monetary remedy is the main one which is being applied, together with that extraordinary part of Government policy which arises from their idea that they are going to check inflation and help to restrain the organised operations of trade unions for maintaining the economic position of the workers, by increasing the

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  prices of basic necessities of life. If you think you are going to get the cooperation of the trade unions in a policy like that, you should think again. The Government seems, furthermore, to believe that increasing the price of necessities is going to curb consumption. If you follow that line you are not going to get co-operation from the trade unions. How can you expect it? When I think of that side of the picture, I cannot help feeling that noble Lords opposite have a very poor idea of what the real situation is. First of all we had the removal of subsidies which helped the consumer. Incidentally, many of those subsidies always seem to be misinterpreted as being subsidies to agriculture, but they were, in fact, a great cushion for the general consumers in the country. When it comes to seeking the co-operation of the workers by saying that one of the main planks of your policy is to increase the price of bread and milk to the extent of £38 million a year, I suggest you will find it difficult to make them believe that that is going to be effective. You may assure them how serious you are and how much concerned you are about their basic welfare—not, perhaps, just in regard to their present condition, but having in mind what inflation might do to them in the future—but if you proceed on those lines you are indeed going to have a difficult job to get them to co-operate with you.
  How right the noble Viscount, Lord Bruce of Melbourne, was—and others who followed his line also—in pointing out the importance of the psychological aspect in this matter. How are you going to get the people on to your side with a Government policy such as this, which, in our view, is really a foolish one? That is our case against the kind of policy which we have had portrayed to us. Moreover, if you are going to rely entirely on those two weapons, to which I have alluded, then, as the noble Lord, Lord Pethick-Lawrence, pointed out, in the national Budget it will be found that the cost to the State for its borrowing is vastly increased.
  The noble Lord, Lord Balfour of Burleigh, apologised for not being able to be here. He seemed to be very concerned about the fact that I might be touching upon some of the matters which
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  he mentioned. And I must refer to what he called "the Dalton cheap money inflation" in the post-war period. When the State was able to borrow money on Treasury Bills at the percentage which existed in 1951, the cost to the State was roughly £17 million. For the year 1955 the noble Earl, Lord Selkirk, thought the figure was about £123 million. Taking into account the increased charge upon the national Exchequer which will result from the last decision to increase the bank rate, we may say that the cost to the Treasury or to the nation if the bank rate continues at the same level for another twelve months will be nearer £160 million. Then, in a few months, as my noble friend Lord Pethick-Lawrence pointed out, £840 million worth of 2½ per cent. National War Bonds fall due for redemption, and whoever watches the markets knows that he will then be able to get 4 per cent., 4½ per cent., or even 5 per cent. interest instead.
  And you have driven the local authorities away from getting loans in the decent orderly way from the Public Works Loan Board and sent them to the market. You will have driven them away from borrowing at 3 or 3½ per cent. to borrowing at 5¼ or 5½ per cent. on the market. Bankers may well be able to sit above the storm and pour out their medicinal remedies upon us: they will not be touched by it either way; they get the rates they fix for the market. I do not blame them, if they can go on doing it in that way. The Government will not be able to borrow at much less than 5 per cent. for that conversion. Does anybody suggest that that is not so? And by the time this increased cost is added to the Budget, there will be an additional charge upon the nation of something nearer £200 million than £150 million.
  Even then, we have not arrived at the whole cost of the Government policy, because, as was pointed out in another place, of the effect of the increased charges an our overseas balances. If, in 1954, this had already reached, through the direct policy of the Government, an increased charge of £110 million per annum, to-day it must be nearer £200 million because of the increased cost of borrowing as a result of the 5½ per cent. bank rate. In my judgment, the cost altogether is going to be somewhere between £350 and £400 million. Your

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  Lordships will see from the Financial Statement issued with the Budget that it takes an income tax of 6d. in the £ to raise £116 million. Everybody is telling us to-day that the only way to induce more production and deal with the situation is to reduce taxation. But what sort of taxation? A number of noble Lords have said that they want a reduction of direct taxation. Who do they think are going to benefit by this? It must be the managing director or the manager, or even the charge hand—but not the great body of workers. Those are the people who will benefit from a reduction of direct taxation.
  LORD COLERAINE: And of indirect taxation.
  VISCOUNT ALEXANDER OF HILLSBOROUGH: Who will pay the increased cost of this borrowing policy? Are the Government to go on increasing the prices of milk and broad, cut the tariff on Danish bacon, go on taxing the necessities of the people—in order to make things better for them? It is a policy out of Bedlam. And is all this not simply because, whatever kind of financial situation the Government find themselves in, as a Party they are tied by the heels to this political dogma: that they can deal with these matters only on the basis of a "free-for-all," of free enterprise? Look at what it has done for you. You have missed the opportunity you had when the terms of trade turned in this country's favour.
  Then it was said by the chairman of Lloyds Bank, and again by my noble friend to-day, that the Government ought never to have been in a position, when the terms of trade turned in out favour, to allow an absolute decline in the gold and dollar reserves—they ought to have been building them up. Instead of that, what do we find? The very people now urged to accept cuts in this, that and the other, are "led up the garden" by the Government. You had a General Election specially staged, with a Budget in which you gave away largesse, mostly to those who paid income tax, with only a small relief in purchase tax. And now what have you done? In the latest adjustments, you have increased purchase tax again, sometimes putting it on afresh. You are taxing commodities now all the time, and that has to be paid for by the people you are concerned about, by
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  workers who have produced an unprecedented increase in the volume of commodities, a greater volume than ever produced at any time in the history of this country.
  Let us be fair to them. You say that you can treat this evil by taxing what they have to live on. If it is not something that goes in the mouth, you proceed to tax the places where they live, by reducing the housing subsidies. There will be further stages of the Housing Subsidies Bill introduced the other day in which subsidies are to be reduced, and everybody in a provided house will have to pay increased rents. There has recently been a re-assessment of rates, and consequently, everybody has been saying that there will be much lower rates. But they are being decreased by nothing like the extent they might have been if interest rates to public authorities had not been constantly going up over the last three years on the basis of the Government's policy.
  So the Government have been steadily turning it over in this way, all in order to maintain their dogma that they cannot deal with this at all by way of physical controls. There are now bankers, as well as others—as we see if we read their speeches carefully—who are convinced that they will not be able to manage this inflationary position entirely by monetary controls. The noble Earl, Lord Selkirk, said yesterday that there were certain disadvantages about physical controls and made some comments about quotas. I know that sometimes these things are awkward, but we cannot get fairness in the distribution of a commodity the consumption of which we wish to reduce unless there is physical control. How do the Government propose to act? Do they propose to go on taxing the commodities consumed by the people time and time again, irrespective of the size of their incomes, or are they going to have a system of distribution which lowers consumption but distributes fairly to all the people? "Oh, no," you say, "that might mean rationing." It might or might not.
  THE MARQUESS OF SALISBURY: Does the noble Viscount mean rationing?
  VISCOUNT ALEXANDER OF HILLSBOROUGH: I am just putting it into your mouth. I say that it might or it might not. We think that a great deal

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  of control could be managed without rationing. But we say that if you let your policy run not by trying to curb consumption by taxing commodities, you will produce the most unfair results you can imagine. If you go to the trade unions on that basis and try to get cooperation, you might as well save your journey and your breath, because you will not get it.
  If this Government will look at the situation anew and say to themselves that they must deal with inflation on a basis on which there can be the maximum cooperation between sections of the community, that they will not shut out of their plans and ideas any kind of physical control that may be required, in addition to monetary control (for, as Mr. Gaitskell said in another place and as my noble friend Lord Pethick-Lawrence said yesterday, we are not without appreciation of the power of the financial weapon in the right place and in the right quantity), something might be done. But when the Government rely upon the monetary weapon to the extent that it is their one main weapon, all I have to say is that they must look elsewhere for co-operation. If they take the broad view that they might have to use both and then seek co-operation from those who can be so powerful in helping them, then they may be able to deal with the situation. There is much more to say, but I will leave it at that. I am grateful to all noble Lords who have helped to make this debate sincere and lively. Perhaps I have been a bit lively, but I speak as I feel. If the Government want to get the country with them, they must be fair to all the people and not merely to a class.
  6.30 p.m.
  THE MARQUESS OF SALISBURY: My Lords, I am sure we shall all agree, even if we do not agree about everything, that we have had a debate during the last two days which it would be a gross understatement to call useful or even valuable. To my mind, it has been a most remarkable debate; in fact, it has been one of the most remarkable debates that we have had since I have been in your Lordships' House. It has been illumined, in particular, I think, by such notable contributions as those made by the noble Lord, Lord Clitheroe, whom we were all so glad to hear, the noble Viscount, Lord Bruce of
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  Melbourne, and the noble Lord, Lord Balfour of Burleigh, yesterday—and, of course, I would not exclude the noble Lord, Lord Pethick-Lawrence, whom we all, in every part of the House, are always delighted to hear—and to-day by the brilliant and statesmanlike speech made to us by the noble Lord, Lord Salter, and the later equally interesting speech made by the noble Lord, Lord Brand. I am sure we all agree that every one of these speeches deserves earnest study from audiences far wider than merely your Lordships' House, and I hope that they will get it. Personally, I feel extremely diffident in intervening in such a symposium of authorities.
  The last time we debated the economic situation in your Lordships' House was, if I remember rightly, at about the beginning of November. I am afraid that I then inflicted an intolerably long speech on your Lordships, and I am sorry to say that, owing to the length of this debate and the number of issues raised, I am bound to take some little time this evening. But one thing, at least, I can spare your Lordships. Last time, greatly daring, I attempted to define the nature of the problem facing the country at that time, as I saw it. I do not propose to inflict such an experience upon your Lordships this evening, for, apart from everything else, so far as I know, the character of the problem has not changed in any way since that date. Two main things, I believe, have emerged from our discussion. One is the serious nature of the situation that faces us. That, I think, was recognised by noble Lords in every part of the House, and it was re-emphasised this afternoon by the solemn, almost grim words, as I thought, that were used by the noble Lords, Lord Salter and Lord Brand. Secondly, I think it is generally agreed that the problem, if I may so express it, is not so much a problem of earning as a problem of spending.
  I imagine—I believe the noble Lord, Lord Wilmot of Selmeston, said so this afternoon—that on all these things, and, indeed, on what I may call the definition of the problem, there is no difference between us in whatever part of the House we sit; that has been brought out in almost every speech that we have listened to. It is universally agreed, I think, that if the British people were not spending

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  quite so much at the present time, the inflationary pressure on goods and services would be immediately reduced. I do not say that our present anxieties would then be at an end, but, at any rate, they would be greatly lessened. The real question, as I see it—and it is not an easy one—is how, and by what possible means, the British people can be discouraged or restrained from doing something which, in itself, at the proper time, is not only harmless but desirable, but which, at the present moment, at the scale at which it is taking place, is definitely harmful and, indeed, dangerous to the country.
  The noble Lord, Lord Pethick-Lawrence, last November, dealt in his usual wise and objective manner with this very point, and if I remember rightly (I have looked up his speech again) he listed five ways in which he suggested that inflation might be restrained. The first was by increased production; the second was by monetary methods, which, of course, in plain words, means raising the bank rate; the third was by reducing the amount of money in the hands of consumers by direct taxation; the fourth was by extensive control of the whole economy; and the fifth was by putting up the price of consumer goods by placing some special impost on them—that is to say, by indirect taxation. The noble Lord indicated that he, personally—and I hope I do not misrepresent him—preferred the fourth alternative: namely, extensive control of the whole economy, and I think he said so in so many words. He believed that that was better than what he called the "indiscriminate bludgeon" of the bank rate; and gather that that is still his view, because I think he used the same word, "indiscriminate," in his speech yesterday.
  In my reply I explained why my Party had never liked extensive controls. One reason, at any rate, was expressed on that occasion by the noble Lord, Lord Brand, far better than I could possibly have expressed it, when he said, advocating the monetary method: [OFFICIAL REPORT, Vol. 194 (No. 27), col. 156]
  "… to my mind it is vastly superior to attempting again to control directly our incredibly complicated financial machine by civil servants in Whitehall."
  It will not be any news to noble Lords on the other side of the House if I say that Her Majesty's Government share
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  that view; they have always shared it, and they share it still. In saying that, 1 can assure your Lordships that I imply no criticism of the admirable and devoted officials who advise Ministers on these matters. It is merely that in our opinion—and we represent a wide body of opinion in the country—this particular job is beyond either their sphere or their powers.
  When, therefore, action had to be taken to curb this exuberance of spending, if I may so call it, we decided, as your Lordships know, to apply a combination of the other methods mentioned by the noble Lord, Lord Pethick-Lawrence, which, to our mind, were much more applicable to a free economy. We did our utmost to increase production; we employed the monetary method, and the bank rate was raised twice; we put up the prices of consumer goods by indirect taxation, instead of increasing direct taxation which I believe would have been the method of the two that would have been preferred by the noble Lord, Lord Pethick-Lawrence. Broadly speaking, those were the methods that we employed last October.
  I gather it is the view of the noble Lord, Lord Pethick-Lawrence, and of the noble Lord, Lord Wilmot of Selmeston, and others who have spoken from the other side, that these methods which were applied by the Government have utterly failed. I certainly would not accept that. I think it is an example of the well known fallacy of post hoc propter hoc. Even last November several noble Lords with wide knowledge of the City, and among them, I believe, the noble Lord, Lord Brand, stressed that it was likely to take a few months for monetary influences to produce their full effect; and the noble Earl, Lord Perth, who speaks with extensive knowledge of this sphere, told us yesterday that there were already signs that the measures of the former Chancellor of the Exchequer, which were applied at the end of last year, were beginning to bear fruit, as I understood him to say, at any rate in the sphere of private industry. As I say, I would not accept for a moment that these measures, which were bound to take some time, had been ineffective in their operation. It is too soon yet to say that.
  VISCOUNT ALEXANDER OF HILLSBOROUGH: I am interested in this matter, and I should like to put a point to the noble Marquess. These operations have been in being since the end of 1951 or the beginning of 1952, in different circumstances—namely, when the terms of trade were favourable, and also when the terms of trade were unfavourable. The net result, after four and a half years, is that the Government's balances are in greater jeopardy than they have ever been.
  THE MARQUESS OF SALISBURY: These measures were not applied until last year. The raising of the bank rate began last year, and there have been two cases of it since. But I am proposing to deal with the situation, and I am not out to burke the full facts, as your Lordships will see from what I have to say. I certainly agree—and this is what I was coming on to—that it is far too soon to suggest that we are anywhere near through our troubles. On the contrary, as we all know, in every Party, there are pretty formidable figures on the debit side of our account which might appear—and I say this frankly to the noble Viscount, Lord Alexander of Hillsborough—to nullify any advantages which have yet been earned. If exports have gone up by 8 per cent. in value, imports have gone up by 15 per cent. The rise in imports is, indeed, as I understand it, more than twice the rise in industrial production. In any case, the rise of 8 per cent. in exports of this country, which is in itself an excellent thing, compares with rises in exports of the United States, Western Germany and Japan of 9 per cent., 18 per cent. and 27 per cent. respectively. The result is quite obvious—the trade gap has widened. It widened from £50 million a month in 1954 to £72 million a month in 1955. As we all know, during the same period the gold and dollar reserves fell, though there has been, as your Lordships know, a recent recovery since December of upwards of 90 million dollars. I have not tried, I hope the House will agree, to blink the facts. I do not want to blink the facts, and I think it is quite right that both this House and the country should know them.
  There is another hard fact that we have to face. Throughout the year which I have mentioned, world conditions have been favourable to industrial expansion, and the total value of world trade is going
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  up. Our own unsatisfactory state of affairs can be attributed only to conditions at home. It is not that production has been flagging even here. Production, as I have said, has shown a rise. The fact is that we have been consuming far too much at home, and as a result we have not been able to sell enough to other countries to pay for what we have bought from them. That, as I see it, is, quite briefly, the hard situation with which we are faced, and that is the reason for the new measures which the Chancellor of the Exchequer has announced.
  Those measures have been fully discussed during the last two days. First, the bank rate has again been raised, as your Lordships know, from 4½ to 5½ per cent. That step has been approved by some. It has been approved by the noble Lord, Lord Brand, by the noble Lord, Lord Balfour of Burleigh, and it was approved, I think, by the noble Earl, Lord Perth. It was disapproved of by others, by the noble Lord, Lord Pethick-Lawrence, the noble Lord, Lord Wilmot of Selmeston, the noble Viscount, Lord Alexander of Hillsborough, and others. I do not propose to go again this evening into all the arguments which were traversed last November and again during the last two days. I should like to say only this. It has, I think, been made absolutely clear during this debate by those who advocate what is called, or has been called, the monetary weapon, that the main purpose of raising the bank rate is to produce an astringent effect on all those engaged in enterprise, at times when inflation is a danger. It is a warning to go slow. For this purpose, no doubt, it is well suited, because we all know the effect is immediate and widespread, since with it go up the Treasury Bill rate, the bankers' deposit rate and the cost of bank overdrafts. In fact, it affects the whole field of borrowing. It is, to use the expression which was used yesterday afternoon by the noble Lord, Lord Balfour of Burleigh, "a pervading influence"—a very good phrase to describe the effect of it.
  But the whole essence of that policy, as the noble Lord, Lord Brand, has emphasised, if it is to produce its desired effect, is that it should make the maximum impact on those whose operations make the rise necessary. Unless it does that it will have failed in its purpose; and that is why, as I understand it, it

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  has been decided to raise the rate once again. I would say, in answer to the noble Lord, Lord Grantchester, who asked me a question, that, although I have not been able to verify it, I think there is no reason to suppose there is any difference between the Chancellor of the Exchequer and the Governor of the Bank of England on this particular question.
  LORD GRANTCHESTER: I asked whether the initiative was with the Chancellor of the Exchequer or the Governor.
  THE MARQUESS OF SALISBURY: I do not think that the machine works in that way. There is very close contact between the Chancellor of the Exchequer and the Governor. The sort of idea that there is a bargain between them I do not think operates. They are two people working together for a common end.
  VISCOUNT ALEXANDER OF HILLSBOROUGH: It is quite clear now that under the new Statute the Chancellor of the Exchequer has the final say. I think that is what the noble Lord, Lord Grantchester, is arguing about.
  THE MARQUESS OF SALISBURY: That is the result of legislation which the noble Viscount's Party thought it right to introduce. The purpose of raking the bank rate was to leave no doubt in anyone's mind of the determination of the Government to carry through this policy and to curb inflation at all costs. That is its purpose and that, I submit, is its justification.
  The same, I think, is true of the second method which has been employed by the Chancellor of the Exchequer to achieve his purpose; and that is credit restrictions. First, there are restrictions on issues which are operated by the Capital Issues Committee. I do not purpose to say anything about them, because I think they were dealt with by my noble friend Lord Selkirk. Secondly, there were the other restrictions on credit, to companies and to individuals, operated through banks. Broadly speaking, of course, the object of these is exactly the same as the object of raising the bank rate, which is to reduce the flow of money which goes out and which, ultimately, is bound to increase the volume of consumption.
  LORD WILMOT OF SELMESTON: Could the noble Marquess answer this point? Is there any differential in the directive in favour of export enterprise?
  THE MARQUESS OF SALISBURY: No, I do not think there is, but I am going to deal with the question of controls in a moment.
  Some noble Lords have complained (I think the noble Viscount, Lord Alexander of Hillsborough, did, and I do not object to his having done so) that the effect of these restrictions has been harsh. That, too, I think, was the view of the noble Lord, Lord Pethick-Lawrence. The honest truth is that I am afraid any measures to restrict credit are bound to react harshly on somebody. That is the hard truth which we have to face. Even the operation of the extensive controls which have been advocated by noble Lords opposite would have had a harsh effect on those to whom they applied. It would be no good to tell the workers, or others to whom these controls were applied, that their particular product was less important than some and that therefore the Government had decided they must suffer first. They would only reply that that was not their concern. All they knew was that it was they and not others who were laid off or put on short time. Whether the methods of noble Lords opposite or the methods applied by the Government were adopted that would still remain the same.
  Moreover, the policy of import restrictions, as was pointed out, I think, by the noble Lord, Lord Balfour of Burleigh, last night, is most unlikely to achieve the desired result, or at least to the same extent, because, as he said, import restrictions are applied to a limited number or range of commodities. The danger is that though, no doubt, that would reduce the consumption of those particular commodities, it merely diverts the desire to consume on the part of the community to another range of commodities; and then it becomes necessary to put an import restriction on those. So, gradually, it is necessary to build up an immense machinery of control which cannot be, in our view, at any rate, in the interest of the free economy.
  Perhaps it is because, subconsciously, they know that fact that the noble Lord, Lord Pethick-Lawrence, and others who have spoken did not seem particularly

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  anxious to define their Party's policy when they were challenged yesterday. The noble Lord said that they had not got the information. Throughout the two days' debate—and it has lasted a good many hours—we have never had any definition of the official Labour policy, either from the noble Lord, Lord Pethick-Lawrence, or from the noble Lord, Lord Wilmot of Selmeston, who made such a slashing attack on the Government—or, indeed, from anybody else. There was no single policy proposed. That is surely rather odd. If the Opposition have all the facts and figures that are necessary to enable them to condemn the policy of the Government root and branch, is it not a little queer that none of the facts and figures should enable them to put forward some alternative to that policy?
  LORD PETHICK-LAWRENCE: With all due respect to the noble Marquess, I do not think that is quite fair. It is always understood that the Opposition can only put forward their proposals in general. We cannot put them forward in detail because we have not the figures. I was most careful to put forward proposals of quite a specific kind, though I could not tell the precise results.
  THE MARQUESS OF SALISBURY: I am not disputing that at all. I did not hear any proposals. I did not interrupt any other speeches and I hope that I may be allowed to continue uninterrupted, as the hour is rather late. Nor did I get any more light on Labour policy from the speech of the noble Viscount who leads the Opposition. I had been looking forward to that speech. As the obscurity continued through all of these speeches, I said to myself: "I must wait for the speech of the Leader of the Opposition. He will divulge this well-kept secret; he will let the cat out of the bag." Then, as his speech went on, I became more and more despondent. I am sure that that was the reaction of all of us.
  VISCOUNT ALEXANDER OF HILLSBOROUGH: The noble Marquess does not look despondent.
  THE MARQUESS OF SALISBURY: Gradually, I realised that there was nothing at all coming. There was the same attack on the Government. I grant the noble Viscount that at the end there was a very general reference to the possi-
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  bility of some physical controls; but nothing more. I can only conclude from this sad experience that either the noble Lords opposite have not been able to agree on a policy—and, of course, that is always a possibility—or, perhaps, they have agreed on one but they think it would be too unpopular for them to mention in public at the present time.
  VISCOUNT ALEXANDER OF HILLSBOROUGH: It has been mentioned all right.
  THE MARQUESS OF SALISBURY: I can only conclude that what they have in mind is a kind of petrified forest festooned with rules, regulations and controls, and possibly rations. At any rate, the complete silence of the Opposition Front Bench, as a Party, on an alternative policy—except, of course, for the cutting of the advertisements of the I.T.A. which was mentioned by the noble Lord, Lord Wilmot of Selmeston—is very odd. I could not help feeling that it slightly weakened the force of their attack.
  There have been, indeed, some positive suggestions in this debate. There was one which came from the noble Lord, Lord Grantchester, on the Liberal Benches, who proposed that we should drastically reduce the expenditure on defence. I am afraid that, in the present unhappy situation of the world, that is not likely to appear practicable to most noble Lords in this House. Then there were the constructive proposals put forward by the noble Lord, Lord Balfour of Inchrye, in the extremely interesting and, as I thought, important speech that he made, with regard to the replacement of imports from sources outside the sterling area by imports from inside the sterling area. I can assure him that I shall pass on everything he has said to the proper quarter, but for the moment I can only say that the more rapidly we can increase the productivity of the sterling area, and in particular the Commonwealth and Empire, the better I am sure it will be both for us and for the world in general.
  LORD WILMOT OF SELMESTON: The bank rate will not do it.
  THE MARQUESS OF SALISBURY: That does not prevent me from saying that it would be a very good thing to happen. At this point, I might also say a word in answer to a question which the

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  noble Lord, Lord Balfour of Inchrye, asked, whether I could give any assurances as to the economic arrangements which are to be made, or might be made, between this country and the Gold Coast when the Gold Coast obtains Dominion status. The answer is—and I am sure he will accept it—that these arrangements have not yet reached such a stage; but I can assure him that the point he has made is being borne very much in mind.
  Then the noble Lord, Lord Coleraine, who made a most courageous speech, not only put forward a powerful plea for economy but did what I have hardly heard anybody have the hardihood to do; he suggested where the economies might properly be made. First of all, he mentioned the Welfare State. He certainly will not expect me to say anything on so delicate a subject when I have had no notice of what was in his mind. The noble Lord also mentioned defence. As I understood him, he asked: Why did we make the hydrogen bomb? Why did we not leave it to other people? There I am afraid that I cannot agree with him. I believe that the hydrogen bomb to-day is the main, and perhaps the only, deterrent to world war. I do not think we could properly unload on to our Allies the whole of the burden of making this deterrent. Moreover, if we did, I believe that we should lose all control over foreign policy and, ultimately, all control over our destiny. I feel, therefore, that that is not a proposal which would commend itself either to the House or to the country. I hope the House will forgive this digression which I have made into these various points which have been raised by noble Lords who have spoken.
  Now I should like, if I may, to return to the main argument with regard to the chief speeches which have come from those who sit on the Front Opposition Bench. I have said that I regretted that there was no clear statement of the official policy of the Party opposite, but I must add that we have had the personal views of the noble Lord, Lord Pethick-Lawrence, and of a number of other Labour Peers. That, at any rate, is something. I would add this to what they have said. I do not suppose there is a single one of us who sits in any part of this House who likes the credit squeeze in itself. There are very few people who do not suffer, directly or indirectly, from
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  the result of it; but, as I see it, that is all the more reason for acting firmly, stopping inflation and getting back to normal as soon as possible.
  That brings me to one other step which the Government have taken, and that relates to the question of Government expenditure. If I remember aright, this was the subject of the main attacks which were made upon the Government when we had our last debate last November. We were told again and again at varying times, from all sides of the House, that the Government were asking everybody else but themselves to economise. I was therefore glad to hear the noble Lord, Lord Clitheroe, say that in his view that was at any rate not a reproach that could be levelled against us to-day. Indeed, the reductions that have been imposed on Government expenditure in the latest measures of the Chancellor of the Exchequer are severe——they might even be called savage. The estimates of the nationalised industries have been cut by £50 million. Capital expenditure in other spheres financed directly by the Government has been cut by £20 million. Expenditure on education has not been cut—it is too important for that, even in these times; but at any rate it has been slowed up.
  The grant of loan sanctions to local authorities and other capital schemes has been severely restrained. The bread subsidy and the milk subsidy have been about halved, with a saving of £38 million. That particular measure has been criticised to-day by more than one noble Lord, and the impression was given, I think by the noble Lord, Lord Wilmot of Selmeston, and also by the noble Viscount, Lord Alexander of Hillsborough, that it would inflict a severe hardship on all working people.
  LORD WILMOT OF SELMESTON: On the poorest.
  THE MARQUESS OF SALISBURY: On the poorest, on the poorer people. I hope that noble Lords will not seriously contend that it will inflict severe hardship on the ordinary working man and his family at his present rate of wages. A population who can spend £887 million on alcohol, £880 million on tobacco—those are both the latest figures—and £250 million on sweets—that is for a year back—are not going to be reduced

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  to penury, when spending on that scale, by an extra charge of £38 million a year on bread and milk.
  VISCOUNT ALEXANDER OF HILLSBOROUGH: May I just ask this question? If that is the Government's policy, the noble Marquess seems to prove, by his reference to the other commodities, that putting on taxation would never curb consumption. Nearly all these things are highly taxed now, yet consumption goes on and on. The Government seem to want to curb consumption now by putting a tax upon milk and bread.
  THE MARQUESS OF SALISBURY: Is not the difference really this: that on milk and bread there is actually a subsidy? The people who buy bread and milk were getting and, to some extent, are still getting, some subsidy from their fellow citizens, and that puts those commodities in a slightly different category from those to which the noble Viscount refers. The noble Viscount himself ought to realise that they are in a different category. If I may say so, I thought that a large part of the argument used by Lord Wilmot of Selmeston was founded on an illusion, since he gave the impression that during the years of the Conservative Government the cost of living had risen more than the purchasing power of the people. That is not true; his information is not correct. The fact is that during that period the purchasing power of wages has risen by 18 per cent. as compared with the cost of living. Those are the official figures.
  LORD WILMOT OF SELMESTON: I believe I did not really fall into that error. But there are large sections of the public whose purchasing power has not risen as high as the cost of living, and therefore they resent what the Government are doing.
  THE MARQUESS OF SALISBURY: If we come to the poorest of the poor, we have our wonderful social services, the best in the world, which are specially devised to deal with cases of that kind. The noble Lord, Lord Wilmot of Selmeston, said in his speech that he was not actuated by Party motives. I must congratulate him on his ingenuity in starting with a measure of strict impartiality: but he did, in fact, make far the most powerful
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  Party speech of anybody who has taken part in this debate.
  My Lords, lastly—and this is the last measure that I want to deal with—there were the measures of the Government with regard to hire-purchase. I am told that these have been criticised in certain quarters, although I do not think they have been in the last two days. I feel sure this House, at any rate, will agree that the Government have been absolutely right in the present situation in placing severe restrictions on an over-expansion of hire-purchase. After all, looked at in one way, hire-purchase is the most inflationary of all forms of trade; it is the opposite of thrift, for it means that those who indulge too freely in it not only put by nothing out of their present income but mortgage their future. Of course, I do not want to say that hire-purchase is always wrong; it can fulfil a most useful and valuable purpose. There are, as we all know, circumstances in which there is no other way open for those with small incomes to provide themselves with necessities—as when young married couples have to furnish their homes. For that sort of purpose, hire-purchase is of the utmost value. But it is certainly not a luxury which we can afford to indulge too freely at the present time, especially when, as the Chancellor said, practically everyone is employed and wages are higher than ever before.
  I am sorry to have kept the House so long but I am coming gradually to my final remarks. Those are about the measures which have been taken during the last few weeks by the Chancellor of the Exchequer. I have tried to describe the motives that led him to take them. Though, in some respects, they are different from those announced last October, the purpose underlying them is, as I have said, basically the same. They have a dual object: first, they seek to make it more difficult for the British people to buy on the inflated scale that lately they have been doing; and secondly, they aim at diverting the goods which the British people would have bought to the export market, to pay for those essential imports without which we cannot live.
  One would like to think that they will have one other long-term result, which I am sure would be agreeable to everybody in this House: namely, that they will help

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  to re-create in our people a spirit of saving. On this, I agree most profoundly with what was said both by the noble Lord, Lord Pethick-Lawrence, and by Lord Winster in the wise and moderate speech which the noble Lord delivered yesterday. Individual saving is surely the best of all antidotes to an inflationary spiral of the type which we are now experiencing, for it automatically sups up, if I may use that phrase, surplus spending power, without any action on the part of the Government, and yet it does not take away from the producer the wealth he has earned. It is there when he needs it, and in the meantime it is being used productively to increase the wealth of the country. Personally (though it may seem to some people old-fashioned) I do not believe that this country will ever really recover until people again begin to save.
  I know very well that saving is much less attractive than it used to be. Some sections of the population are so heavily taxed that they simply cannot save. That, I think, is the position of the greater part of the middle classes. And those sections which are better off than they used to be have not the same reasons for saving as they used to have. In the old days, to use an old phrase, they used to "put by for the rainy day;" but now, happily, under the Welfare State, I do not say there is no rain, but the rain is likely to be much less heavy than in former times. Moreover, there is, as Lord Winster said yesterday, another reason for the reluctance of the people to save: it is the fear that if they do save their savings will lose their value. That we all know to be true. We all know people who have been influenced by that particular consideration. But they are really their own worst enemies, because it is the very fact that they all rush in and spend that further depresses the value of the £, and in that way, as I see it, they themselves help to destroy the purchasing power, not only of the money that they save, but also of the money that they spend. No, my Lords, I am sure that that is not the way to preserve the value of the currency and to restore prosperity. In the long run, I am certain—and I am sure I represent the view of nearly everybody here—that individual saving is the only way in which the wealth of the country can be built up and the future secured.
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  I have tried this afternoon, at the end of this very long debate, to bring once more to your Lordships' minds the nature of the crisis with which we are faced and the measures which the Government are taking to deal with it. I am not going to pretend this afternoon that these measures are going to achieve the results for which they were introduced without temporary inconvenience, and indeed, without temporary sacrifices, by the people of this country. It would be foolish and unwise to suggest anything of the kind, for, after all, the object of the whole policy, as of all policies that aim at curbing inflation, is to induce people to do without something, even if it is something that they would very much like to have. That is the only way that one can reduce the pressure on goods and services which produces an inflationary spiral.
  Noble Lords on the other side of the House may fairly suggest that ours is not the best way to achieve that object. They may be inclined rather to favour alternative methods—methods of higher taxation and of more extensive centralised control. But even if the methods favoured by the Opposition were adopted, the result, I submit, must be largely the same: it must be to induce or compel people to buy less than they are buying now. That must be the purpose, and unless a policy—any policy, I do not care what it is—achieves it, it will fail to avert the dangers which are at present threatening the country. The value of money in terms of goods and the purchasing power of the £ in the markets of the world, will continue steadily to fall and there will be nothing before the country but misery. My Lords, here I agree with what was said by the noble Lord, Lord Beveridge: nothing that the Government can do will be entirely effective unless they have the willing co-operation of the people. I do not say that restraint cannot be imposed by force; I suppose in the ultimate event, it can. But I hope most profoundly that that will never happen here, for, if it did, it would mean that that system of free democracy, which has always been our greatest pride, would have failed.
  A free democracy is not an easy form of government. It is probably the most difficult to operate that has ever been devised by the mind of man; for it means a high degree of public duty on the part

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  of all sections of the community, and a willingness on the part of every individual citizen to subordinate his own interests, to some extent at any rate, to the interests of the community as a whole. Up to now, always, in peace and war, the British people have been ready to do this: they have always been ready to rise to the level of their responsibilities. Once they have realised the gravity of the situation they have never flinched from any measures which might be necessary to restore it. To-day, in my view, we are faced with just such another crisis in our history.
  To-day, as we all know, we are faced by many perils without and within our borders; but I believe profoundly, like the noble Lords, Lord Bruce of Melbourne and Lord Coleraine, that perhaps the most dangerous, and certainly the most insidious, of all is in the economic field. The noble Viscount, Lord Ridley, in the speech he delivered last night, reminded us that we are a trading country, and that is profoundly true. We live by trade, and unless we can trade and sell in the markets of the world we shall die as a great nation; and we shall richly deserve to die. There is in this country to-day much talk of what we ought to have, of the standard of life to which we are entitled. There is only one standard of life to which any country is entitled—the standard it makes for itself by the effort it puts forward by the sweat of its brow.
  As the noble Lord, Lord Conesford, said last night, that is the harsh reality we all have to face. If we wilfully ignore
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  facts, if we try to take out of industry more than is in it and put up the cost of production to a level at which foreign customers will not buy our products, and if, while doing that, we still expect the same standard of living as before: if we do all those foolish things then it will be the end of our reputation in the world on which our system of life depends. But if we face the facts, if we are prepared to exercise restraint and are ready to put by, not for a rainy but for a sunny day, then assuredly the sunny day will come.
  7.12 p.m.
  LORD PETHICK-LAWRENCE: My Lords, in rising to withdraw my Motion I want to say just this: I am quite sure that, on whatever side of the House we sit, we have tremendously enjoyed the badinage of the noble Marquess. The noble Marquess sends plenty of arrows in our direction, but they are not poisoned arrows and we do not resent them. The time will come when we shall pour arrows on his side, but for the moment I will content myself with withdrawing my Motion.
  Motion for Papers, by leave, withdrawn.

  SEXUAL OFFENCES BILL [H.L.]
  Reported from the Joint Committee on Consolidation Bills, with Amendments, and re-committed to a Committee of the Whole House.
  House adjourned at thirteen minutes past seven o'clock.