Sitting of 6 November 1957

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

PENSIONS AND BENEFITS (INCREASES)
The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter): I should like, with permission, to make a statement.
First, war pensions. The Royal Warrant is being amended so as to raise the basic rate of pension for 100 per cent. disablement by 17s. 6d. a week, with proportionate increases for the less severely disabled. Thus, the rate for a private with 100 per cent. disablement will be raised from 67s. 6d. to 85s. The standard rate for war widows with children or for widows over 40 years of age or incapacitated will be raised by 13s. 6d., with appropriate increases in the rates for their children. Thus, a private's widow in these categories will have her own pension increased from 52s. 6d. to 66s.
There will also be increases in certain of the supplementary allowances paid to war disablement pensioners. For example, the normal maximum rate of constant attendance allowance will be increased from 30s. to 35s. and the rate for the most serious cases from 60s. to 70s. The unemployability supplement payable to men whose war disability prevents them from working will be increased from 45s. to 55s.
Application for the new rates will not be necessary. They will come into force on the first normal pay day after 26th January next. The additional cost to the Exchequer will be £16½ million in a full year.
I will circulate a list of all the principal changes in the OFFICIAL REPORT.
I understand that corresponding improvements will be made in disability awards administered by the Service Departments.
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I now want to say something about the tobacco token scheme. This benefit in kind has been much criticised as unfair between pensioner and pensioner. We felt, however, that the scheme could only be dispensed with at a time when improvements in benefits were being made so that due account could be taken in that way of the position of those affected by its withdrawal. We have now decided, subject to the necessary legislation being approved by Parliament, that the scheme should be ended at the same date as the increased pensions which I am about to announce come into force.
Under the Bill which I am presenting today and which, with an accompanying explanatory White Paper and a report by the Government Actuary will be available in the Vote Office at 4 o'clock this afternoon, it is proposed that the standard rates of National Insurance retirement pension at minimum pension age, and of unemployment and sickness benefit, shall be raised from 40s. for a single person to 50s. and from 65s. for a married couple to 80s. The new standard rate of widow's pension will also be 50s. The widowed mother's allowance including the payment for the first child, will go up to 70s.
The higher rates of pensions and benefits under the National Insurance Scheme, together with the increases in Industrial Injuries benefits which I shall mention in a moment, will add about £177 million in the first full year to the expenditure of the two Funds. As the House knows, higher benefits under a contributory scheme of National Insurance must carry with them a higher contribution. Accordingly, the contribution paid by the employed man will be increased by 2s. to become 9s. 5d. and that paid by his employer by 1s. 11d. to become 8s. 1d., including in each case the separate National Health Service contribution. The contribution for the self-employed man will be increased by 2s. 3d. to become on the same basis 11s. 6d.
There will be corresponding increases in other contribution rates. These increases in contribution will carry with them an immediate increase of about £35 million a year in the supplement from the Exchequer and, in addition to this, the Bill will, of course, have increased substantially the long-term Exchequer liability.

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Under the Industrial Injuries Scheme, the standard rate of injury benefit and of the 100 per cent. disablement pension will be increased from 67s. 6d. to 85s. The widow's pension of 45s. will be raised to 56s.
In view of the intended repeal of the tobacco token scheme, we propose that non-contributory old-age pensioners should receive a special addition to their pensions of 2s. 4d. a week, the cash equivalent of the tobacco token.
Our aim is to bring the changes in National Insurance benefits and contributions into force at the earliest possible moment. If the Bill is passed into law this month, it is intended that the increased rates of retirement pensions and widow's benefit shall operate by the end of January and that the other new rates of benefit and the new rates of contributions shall come into force by early in February.
Finally, National Assistance. The increased benefits and pensions which I have announced will, of course, have to be taken into account in calculating assistance grants to those who are drawing supplementary assistance. I have, however, received proposals from the National Assistance Board for increases in the assistance scales with effect from 27th January, which, the Board tell me, take into account the proposed repeal of the tobacco token scheme. The proposed increases are 5s. a week for a single householder and 9s. for a married couple, with appropriate increases to the other rates. The Government have accepted the Board's proposals, and I have already laid the necessary draft Regulations.
The House will appreciate that, in present economic circumstances, changes in the main rates of benefit larger than ever previously made since the inception of the schemes concerned are not easy to effect and must involve some sacrifice by the community as a whole. They are a clear indication of the determination of Her Majesty's Government to provide the fullest possible measure of help for those who have suffered in the service of their country, for the old, for the sick, and for the unfortunate.
Mr. Marquand: The whole House will be glad to hear what the right hon. Gentleman had to say about increasing
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war pensions. We on this side of the House are certainly very glad that it has been possible to make these increases, and we have no hesitation in recommending Parliament to bear the necessary cost. I hope, however, the right hon. Gentleman will feel that we can deal with the question of war pensions—as he has dealt with it this afternoon—quite separately from that of National Insurance, and that we can have a separate debate on war pensions. The right hon. Gentleman will agree that it is at least two years since we had a debate on war pensions, and it is time that the House had another.
As for what the right on. Gentleman said about the proposed increases in National Insurance—and, of course, we are glad that Industrial Injury benefits are correspondingly increased, as has always been the custom—we are glad that the pressure we brought to bear in February last—[HON. MEMBERS: "Oh."]—and again in August, has had some effect. Though obviously there will be very little time left for me this afternoon to go over all these complicated figures, I feel that, before we enter on the debate next week, I might be allowed to ask the right hon. Gentleman whether he is aware that the niggardly increases now proposed will cause deep disappointment to all the old people and the unemployed and the sick.
Does the right hon. Gentleman really think, despite arguments which have been advanced from both sides of the House about the tobacco tokens, that, for an increase of only 10s. a week, it is wise to withdraw the whole of the value of the tobacco token? When he has worked out this proposed increase in National Insurance pensions and the National Assistance grants and has taken into account the withdrawal of the tobacco tokens and the anticipated and inevitable increase in rents which most of these people are going to pay, can he tell us what amount is left over? Am I wrong in saying that, so far as National Assistance recipients are concerned, they will not benefit at all, that they will have no increase in their standard of living whatsoever under these rates? So far as the insured old people are concerned, those who do not smoke will get a tiny benefit, and those who do will get scarcely anything at all.

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Will the right hon. Gentleman tell the House whether, before he formulated these proposals, he consulted the Trades Union Congress—
Mr. Logan: Their members are going to pay.
Mr. Marquand: If the right hon. Gentleman tells me, as he may well do, that it would be constitutionally improper to hold discussions of that kind, will he undertake to do so before we have the debate in this House—
Dame Irene Ward: Why?
Mr. Marquand: —because the Trades Union Congress, representing as it does the vast majority of people who have to pay these increased contributions, will need to have its point of view taken carefully into account before this House enters into any debate?
Is the right hon. Gentleman aware, for example—is the House aware, are hon. Gentlemen and hon. Ladies behind the Minister aware—that the increased contribution now required will amount to some 7 per cent. of the wages of the lowest-paid workers? What do hon. Members opposite representing farming constituencies think about that? I should like to have the Minister's confirmation of my rapid calculation that this may represent 6·7 per cent. of the wages of the minimum paid agricultural workers at the present time. Is the right hon. Gentleman aware that we on this side of the House regard that proposed level of contribution for the lower-paid workers as completely intolerable?
We on this side of the House will do nothing to hamper the passage into law of measures which will provide some increase for the old people, but we are quite unable to promise that the debates will be without controversy. We shall need a very searching inquiry and strong effort to try to improve the Measure which the right hon. Gentleman brings forward.
Mr. Boyd-Carpenter: Regarding war pensions, as the right hon. Gentleman knows, the changes are effected by amendment of the Royal Warrant, which does not, therefore, in that way come before Parliament Any question of a debate is not for me. No doubt the right hon. Gentleman and his right hon. Friends, if they so wish, will deal with that matter through the usual channels.
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I noted the right hon. Gentleman's reference to the level of the proposed increase in National Insurance retirement pensions and other benefits. I am bound to say I found the adjective "niggardly" a little difficult to square with proposals which raise the level in real terms to a higher level than these benefits have ever attained, and in real terms to 12s. for the single person more than they were raised to by his right hon. Friends in October, 1951.
The right hon. Gentleman is quite wrong in saying that recipients of National Assistance will gain nothing from this. They will, of course, gain the full extent of the National Assistance increases which were included in my statement and come into effect at the same time as the improvements in National Insurance. Regarding consultation with other bodies, I have had the advantage of advice on this matter from the Trades Union Congress and other bodies who have been good enough to send it to me. But beyond that, consultation in the more strict sense is not possible in a matter which is the responsibility of the Government.
Finally, as regards contributions, I think the mathematics of the right hon. Gentleman are broadly accurate, inasmuch as the full stamp in February, excluding the Health Service contribution, that is, the contribution from both sides, will amount to approximately 7 per cent. of average earnings. The right hon. Gentleman will be aware, however, that when the 1946 Act was taken through this House the contributions then proposed amounted to a slightly higher level of average earnings, and even when they came into law in 1948 represented 6·7 of average earnings. So I think I can say in this respect that the proposed contributions are not out of line with precedent.
Sir I. Fraser: Does my right hon. Friend appreciate that the British Legion and ex-Service men's organisations generally will regard the proposals he has made as going a long way towards what they would have wished and as being generous? If the proposals are taken into account with what has been done in the last few years, they represent in many ways an even more generous provision for the old and for some of the most severely disabled. Will my right hon. Friend believe me when I say that I think the great majority of ex-Service men throughout

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the country will also think that this is a fair and generous settlement?
May I, then, ask my right hon. Friend whether he will join me in inviting the taxpayers and the workers throughout the land to accept our thanks, that is, the thanks of the disabled ex-Service men, for having given us, so to speak, our turn at the front of the queue for a few brief moments? May I hope that all in this House and in industry generally will co-operate to see that the real value of these awards is maintained? Finally, may I ask when the Royal Warrant and the appropriate Instruments will be available for us to study them?
Mr. Boyd-Carpenter: I am grateful for the first part of the question of my hon. Friend, and I fully accept what he so well said in the second part. The Royal Warrant is being submitted at present, and I hope it will be available in the very near future for consideration. As my hon. Friend knows so well, the Royal Warrant is not formally laid in this House.
Mr. Hale: is the Minister aware that, on the basis of only 25 million contributors, the proposals mean an increase in contributions of about £130 million a year and that, if he adds that to the saving in tobacco coupons and to the very clear and substantial saving in National Asistance by the swindle of giving reduced increases by comparison—which they have done before—he is really going to make a profit out of this for national funds? Is the Minister not perpetrating a swindle on the old-age pensioner by giving these very meagre increases, which are much less than was expected or forecast, and which require this very high increase of contributions?
Mr. Boyd-Carpenter: The hon. Gentleman cannot have it both ways. He cannot at the same time complain of the burden of the increased contributions and then say that the community is not making a sufficient effort to help its older section. In truth and in fact, this does, as I said in my statement, involve some sacrifice by the community as a whole for the aid of its older people.
Mr. Hale: Give us the figures. The Minister has them all.
Mr. Boyd-Carpenter: I will give them to the hon. Gentleman. If he likes to go to the Vote Office in an hour's time, he can have them all. As the hon. Gentleman has calculated, there will be a very heavy contribution increase for National Insurance, bringing in, I think, about £167 million, and for Industrial Injuries over £20 million. I think those are burdens which will be willingly accepted by our fellow-countrymen as a means of doing something to restore the balance in favour of the retirement pensioners.
Mr. Marquand: The right hon. Gentleman has not given the House the figure which was asked for. What is the saving in National Assistance?
Mr. Boyd-Carpenter: The figure for National Assistance, which I do not think I was asked for by the Member for Oldham, West (Mr. Hale), is this: on the face of it, the increased assistance rates will cost £26 million. That will be more than offset by the saving of Assistance amounting to £34 million, that will ensue, owing to the reduction, which I have no doubt the House will welcome, of the number of people on assistance.
Mr. Nabarro: While welcoming my right hon. Friend's statement and the comprehensive proposals for all pensioners, will he tell the House whether he has in mind, as a result of the increased retirement pensions scale, an alteration in the present earnings rule?
Mr. Boyd-Carpenter: There are no proposals in the Bill relating to the general structure of the scheme. This is substantially a rates bill.
Mr. Wade: While welcoming the increases in pensions, so far as they go, may I ask the Minister two questions about contributions? Has he finally closed his mind against any proposals for relating contributions to the earnings level of the contributor? Secondly, as regards the self-employed, who come into a rather special category and do not receive all the benefits from National Insurance, would the right hon. Gentleman consider introducing a sliding scale of contributions?
Mr. Boyd-Carpenter: We have not closed our minds to any proposals on the subject mentioned in the first part of the hon. Gentleman's question, as indeed my right hon. Friend the Prime Minister said

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from this Box yesterday. The hon. Gentleman will appreciate, however, that any proposals of that kind, of whatever nature, would take a very considerable time to introduce and still longer to have any real effect on pensions. Therefore, the only way to give immediate relief to the large body of existing pensioners is through the machinery of the present scheme. That applies equally to the hon. Gentleman's proposal with respect to the self-employed. When the hon. Gentleman has time to study the figures, which I appreciate he has not yet had, I think he will find that our treatment of the self-employed, as compared with others, is not at all harsh.
Mr. Beresford Craddock: Can my right hon. Friend indicate, with regard to the 100 per cent. disabled ex-Service man, the total that such a person will have under the new increases, taking into consideration the comforts allowance.
Mr. Boyd-Carpenter: As my hon. Friend, with his experience, will appreciate, it depends for which particular allowance the man is eligible. I would rather not give an example which might prove to be exceptional. My hon. Friend will appreciate that the 100 per cent. disabled man will, in a great many cases, be receiving not only the additional 17s. 6d. on the standard rate, but will derive some advantage from the increase in some of the allowances. I shall be happy to furnish my hon. Friend with examples, but I would rather not do so off the cuff.
Miss Herbison: Is it not a fact that the right hon. Gentleman's expression of his Government's care for the sick, old and unfortunate is rather belated and is completely belied by the Government's action in April and August? Is he also aware that our old people will consider the proposed increases completely inadequate? Since the Prime Minister is continually telling the nation that we have "never had it so good", does not the right hon. Gentleman realise that our old people are sick to death of his continual harking back to the real value of the previous increases and what the new values are going to be? [HON. MEMBERS: "Oh."] Cannot our old people have some share, in view of the continual statement of the Prime Minister?
Mr. Boyd-Carpenter: I cannot accept for a moment that this is belated. This is the third change of this kind which this Government have proposed. That which came into effect in 1955 created a new high level of benefits. The proposals which I have just announced carry the work on to a still higher level.
Mr. J. Griffiths: May I ask the Minister one question on a detailed point which I may have missed from his answer? In announcing the increases in war pensions, which we all welcome, he indicated that, in addition, the basic rate of unemployability allowance would be increased. When he came to speak of Industrial Injuries, if I got him aright, he indicated that there would be an increase in the basic rates, but there was not a word about the unemployability allowance. I would ask him, therefore, if it is proposed that there shall be corresponding increases in the unemployability allowance of the Industrial Injuries Scheme?
That is the first question, but there are two other points. In reply to the hon. Member for Huddersfield, West (Mr. Wade), on the Liberal Benches—
Mr. Nabarro: The Liberal Bench.
Mr. Griffiths: I accept the correction—the Liberal Bench—the right hon. Gentleman referred to the statement made by the Prime Minister yesterday. The Prime Minister told us yesterday that the Government were undertaking a study of the longer-term problems of old age. In view of the fact that, since the publication of the Labour Party pamphlet, there have been conferences at Chequers and the Government have been busy talking about it, are we to understand that the Government are undertaking a study of the longer-term problems, including the implications of the growth of voluntary superannuation schemes and the desire of the country for a national scheme? Is he now not convinced that the flat rate contribution, about which we have asked for a long time, has reached a scale at which it becomes an intolerable burden for the lower-paid workers, particularly in view of the fact that National Insurance contributions rank for taxation? The only ones who pay the full insurance contribution are those who do not earn sufficient to pay tax. Therefore, the burden is proportionately greater upon

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them. In view of that, will the right hon. Gentleman reconsider this matter?
Finally, I ask the Minister to tell us, now or at the time when the Bill comes forward next week as he announced, what the extra amount provided by the Exchequer immediately for these increases will be. Will he set against that the corresponding savings made by dropping the tobacco concession and savings in National Assistance and state how much extra the State will give with one hand and take away with the other, and what is the net increase provided by the State at this moment?
Mr. Boyd-Carpenter: On the first question, on unemployability supplement under the Industrial Injuries Scheme, the right hon. Member is quite right, I did not announce anything in respect of that. Nor did I announce anything in respect of a great many other matters. I hope the House will bear with me, as my statement was long enough, but, as I said, these details will be in the White Paper which will be obtainable in the Vote Office at four o'clock. We are, in fact, dealing with unemployability supplement for industrial injuries and raising it from 40s. to 50s.
Mr. Griffiths: What about war pensions?
Mr. Boyd-Carpenter: The war pension increase of unemployability supplement, which I think I gave, is from 45s. to 55s. I cannot read out a whole long list of figures, which will be in the hands of hon. Members, but I have taken the trouble to secure this information before we have the Bill.
On the second point made by the right hon. Member, in respect of pension schemes, I have really nothing to add to what the Prime Minister said yesterday and what I said in reply to the hon. Member on the Liberal Bench a few moments ago. As the Gracious Speech said, we are continuing to study this matter and certainly do not exclude from consideration the various ideas and proposals to which the right hon. Member referred, but I do not think it would be fruitful or really serve the purpose of Parliament, for me to go into these wide questions in the course of supplementary questions relating to a statement in respect of forthcoming legislation.
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Finally, as regards the costs to the Exchequer, there are various figures I could give to the right hon. Member. He may have noticed the most immediate one—which I gave in the course of my speech—that the increased contributions to the two Funds will carry with them automatically under the formula an increased Exchequer contribution of £35 million. He will also recall that, under the provisions of the 1954 Act with respect to deficiency payments, the liabilities of the National Insurance Fund, which will be increased very substantially as the result of these increased benefits, will also impose a very considerable Exchequer liability. I do not think the right hon. Member need be concerned that the community as a whole is not accepting a very serious burden indeed.
Mr. Griffiths: May I put a question?—[HON. MEMBERS: "Oh."] The statement the right hon. Gentleman has given us today is very important, and my hon. Friends will certainly do everything to facilitate the passage of the Bill, but we are entitled to information. The figures must be in his possession. He referred to £35 million as the immediate expenditure by the State. Will he tell us what saving is made by dropping the tobacco concession and in respect of National Assistance?
Mr. Boyd-Carpenter: I want to give the right hon. Member any information I can, and I am grateful for what he said about the passage of the Bill. I did give the figure a few moments ago in respect of National Assistance. The figure on assistance is a net saving of £8 million, the increased cost of £26 million being more than offset by the assumed saving—of course, it is only a calculation, and I would not give it to the House as necessarily a complete figure—of £34 million. The abolition of the tobacco concession will save something of the order of £16½ million. That, again, is not a precise figure, because it depends on the effect on consumption. I ask the House to have a sense of proportion on this matter. Neither of these figures is necessarily of very great relevance against the background of an increase in benefits totalling £177 million a year at once.
Several Hon. Members rose—
Mr. Speaker: Order. This matter can be debated next week when the Bill conies up for Second Reading.

Present Rate

Proposed Rate

Disablement pensions (100 per cent. assessment):

ex-private or equivalent

67s. 6d. a week

85s. a week

ex-non-commissioned officers

Increase of 17s. 6d. a week

ex-officers

Increase of £46 a year

ex-Regular officers—disablement addition

Increase of £46 a year

(The amounts of weekly allowances and terminal gratuities for assessments of less than 20 per cent. will also be increased proportionately.)

Constant Attendance Allowance:

Normal maximum

30s. a week

35s. a week

Exceptional maximum

60s. a week

70s. a week

Unemployability supplement

45s. a week

55s. a week

(The special additional allowances for wife or other adult dependant and first child payable with this supplement (and with treatment allowances) will also be increased from 25s. and 11s. 6d. respectively to 30s. and 15s.)

Allowance for lowered standard of occupation

up to 27s. 6d. a week

up to 34s. a week

Widows' pensions:

Widow of ex-private or equivalent

52s. 6d. a week

66s. a week

Widows of ex-non-commissioned officers

Increase of 13s. 6d. a week

Widows of ex-officers

Increase of £36 a year

Allowance for each child:

Other ranks

21s. 6d. a week

25s. a week

Officers

£63 10s. a year

£73 a year

Rent allowance for certain widows

up to 20s. a week

up to 25s. a week

Pensions for unmarried dependants who have been living as wives of men deceased:

Other ranks

45s. a week

58s. 6d. a week

Officers

£141 a year

£177 a year

Orphans' pensions:

Other ranks:

Under 15 years

25s. a week

30s. a week

15 years or over

35s. a week

40s. a week

Officers:

Up to 18 years

£99 10s. a year

£112 10s. a year

Adult orphan incapable of self-support

40s. a week

50s. a week

Parents' pensions:

Increase in basic means standards used in calculating the need of parents who lost sons as a result of the 1939 War:

From 60s. a week to 70s. a week for one parent and from 90s. a week to 105s. a week for two parents, and comparable increases in the means standards applicable to the parents of officers.

BILLS PRESENTED
  EXPIRING LAWS CONTINUANCE
  Bill to continue certain expiring laws, presented by Mr. J. Enoch Powell; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 1.]

  MILFORD HAVEN CONSERVANCY
  Bill to make provision with respect to the maintenance, improvement, protection and regulation of the navigation of Milford Haven; and for purposes connected therewith, presented by Mr. Watkinson; supported by Mr. Henry Brooke, Mr. Airey Neave, and Mr. Renton; read the First time; to be read.
  Following are the principal changes in war pensions:
  a Second time Tomorrow and to be printed. [Bill 2.]

  NATIONAL INSURANCE
  Bill to increase contributions and benefits under the National Insurance (Industrial Injuries) Acts, 1946 to 1957, and the National Insurance Acts, 1946 to 1957, to repeal Section four of the Finance Act, 1947, to increase pensions under the Old Age Pensions Act, 1936, by an amount equal to the current value of tobacco tokens issued under the said Section four and to amend the conditions of entitlement to benefit under the Industrial Diseases. (Benefit) Acts, 1951 and 1954, payable to or in respect of a person who

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  contracted the disease of byssinosis; and for purposes connected with the matters aforesaid, presented by Mr. Boyd-Carpenter; supported by the Chancellor of the Exchequer, Mr. R. A. Butler, Mr. John Maclay, Mr. fain Macleod, Mr. Wood, and Miss Pitt; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 3.]

  SLAUGHTERHOUSES
  Bill to make provision with respect to slaughterhouses and knackers' yards and the slaughter of animals; and for purposes connected therewith, presented by Mr. Heathcoat Amory; supported by Mr. John Maclay, Mr. Iain Macleod and Mr. Godber; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 4.]
  TRUSTEE SAVINGS BANKS
  Bill to amend the law relating to trustee savings banks, presented by Mr. J. Enoch Powell; supported by Mr. Nigel Birch; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 5.]

BUSINESS OF THE HOUSE
The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): I beg to move,
That—

(1) save as provided in paragraphs (2) and of this Order, Government business shall have precedence at every sitting for the remainder of the Session;

(2) Public Bills, other than Government Bills shall have precedence over Government Business on the following Fridays, namely, 6th December, 24th January, 7th and 21st February, 7th and 21st March, 18th April, 2nd and 16th May and 20th June;

(3) on and after Friday, 18th April, Public Bills other than Government Bills shall be arranged on the Order Paper in the following order:—Consideration of Lords Amendments, Third Readings, Considerations of Reports not already entered upon, adjourned Proceedings on Consideration. Bills in progress in Committee, Bills appointed for Committee and Second Readings;

(4) the ballot for unofficial Members' Bills shall be held on Thursday, 14th November, under arrangements to be made by Mr. Speaker, and the Bills shall be presented at the commencement of Public Business on Wednesday, 20th November;

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(5) unofficial Members' Notices of Motions and unofficial Members' Bills shall have precedence in that order over Government Business on the following Fridays, namely, 29th November, 13th December, 31st January, 14th and 28th February, 14th and 28th March, 25th April, 9th May and 13th June; and no Notices of Motions shall be handed in for any of these Fridays in anticipation of the ballots under paragraph (6) of this order;

(6) ballots for precedence of unofficial Members' Notices of Motions shall be held after Questions on the following Wednesdays, namely, 13th and 27th November, 22nd and 29th January, 12th and 26th February, 12th March, 16th and 23rd April and 21st May;

(7) until after Wednesday. 20th November, no unofficial Member shall give Notice of Motion for leave to bring in a Bill under Standing Order No. 12 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business) or for presenting a Bill under Standing Order No. 35 (Presentation or introduction and first reading).

I do not wish to detain the House for long, but I want to make one or two remarks about the dates for private Members' business. This proposal means that there will be the same number of days for Bills and Motions as in previous Sessions, and is in accordance with the recommendations of the Select Committee in 1946. The Fridays will be alternately devoted to Motions and Bills, as in the past. The first date is Friday, 29th November, and on that day Motions will be taken.
Once again, the first six of the Bill Fridays will be for Second Readings and the last four will be for those Bills which have made most progress. I believe that the arrangements made in recent Sessions, whereby twenty days are available for private Members, meet with the general approval of the House and we are certainly following precedent in this matter. There is a period of nine days from today until the Ballot for Bills and then there is a further period of six days between the Ballot and the day for presentation of Bills. Hon. Members who are lucky in the Ballot will, therefore, have adequate time to decide on their proposals. Hon. Members will be asked to sign their names for the Ballot for Bills in the Noes Lobby on these two dates, namely, Tuesday and Wednesday, 12th and 13th November. The first Ballot for Motions will take place in the House on Wednesday, 13th November, that is, for Friday, 29th November. There will be a certain degree of notice. As in recent Sessions,

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it is proposed that once the Ballot for Bills has been taken private Members should he free to present Bills in the ordinary way or under the Ten Minutes Rule.
Mr. J. Griffiths: On behalf of my right hon. and hon. Friends, I would say that this Motion is satisfactory and that we certainly approve of it.
Mr. Parker: I want to ask the House to face the question whether we are not wasting time by allocating these dates for Private Members' Bills. Bearing in mind the time we spent during last Session on Private Members' Bills and the few that reached the Statute Book, I should have thought that that experience showed that we need to look again at the whole question of Private Members' Bills. Until we face the need of amending Standing Orders in respect of Private Members' Bills we are largely wasting the time of hon. Members who take part in trying to get such Bills on to the Statute Book. Their time is wasted both on Second Reading debates and in Standing Committee.
At present, private Members, who have not the resources of parties and Whips behind them, have extraordinary difficulty, first, in getting a Second Reading for a Bill and, secondly, if they are lucky enough to get a Second Reading, in getting the Bill through Standing Committee. I suggest that the House should face the question first by making one or two sensible reforms, for instance, in respect of the Closure on debates on Private Members' Bills on a Friday. I suggest that 40 would be a reasonable figure to vote in favour of the Closure instead of the 100 needed at the moment. One can readily accept that 100 is necessary for a Government Bill. If 40 were sufficient for Private Members' Bills there would be a chance of many Bills getting a Second Reading on a Friday.
Secondly, I suggest that 10 be the figure for a quorum and for the Closure in Standing Committees on Private Members' Bills. I agree that this makes a distinction between such Bills and ordinary Government Bills passing through the House, but in view of the changes which have taken place over the last fifty years or more, in that Government Bills have become the main business of the House and Private Members' Bills have become
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a small part of the business of the House, it is high time that we faced the need for a change. If not, we shall get increasingly into the position of finding that the whole of the time given to Private Members' Bills is a farce, an elaborate obstacle race in which hon. Members waste their time in the House and in which people outside who are interested in the Bills also waste their time.
I suggest that wasting time in that way is not to the credit of the House or of hon. Members, and I therefore suggest that the House should consider setting up a committee to look into the question of Private Members' Bills and the need to consider Standing Orders in relation to them before we pass paragraph 5 of this Motion.
Mr. Nabarro: Will my right hon. Friend reject absolutely the plea made to him by the hon. Member for Dagenham (Mr. Parker)? Is my right hon. Friend aware that if he does anything to curb the traditional and long-established rights of private Members to bring in private Members' legislation he will face a great deal of opposition from me, and from many of my hon. Friends? Does he realise that it is an admirable curb upon the Executive that private Members are allotted this substantial amount of Parliamentary time and that private Members propose zealously to safeguard it?
Mr. Woodburn: Has the right hon. Gentleman made up his mind about the Select Committee which has already discussed the question of procedure in Committees, including the Scottish Grand Committee? Is it still his intention that the House should discuss that question before the Government's proposals are made, or will he bring forward the Government's proposals and have a discussion upon them?
Mr. R. A. Butler: It was our hope to have had a discussion on these matters of procedure in the last Session, but the Opposition will remember that we devoted two days, at their request, to economic affairs. This Session has a long way to go, and it is quite possible that we may have a discussion on procedure and consider the report of the Select Committee on Procedure. I will say no more about it today.
In that connection, we should certainly pay attention to the proposals on

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quorums, or quora, made by the hon. Member for Dagenham (Mr. Parker), who was trying to extend the rights of private Members on a Friday. I shall also try to digest the view of my hon. Friend the Member for Kidderminster (Mr. Nabarro) to ensure that we pay respect to his wish, namely, that we do not limit the undoubted rights of private Members. That is the object of the Government in moving this Motion.
Sir T. Moore: I should like entirely to dissociate myself from the remarks of the hon. Member for Dagenham (Mr. Parker). I have been a long time in the House and I have been able to get nine private Member's Bills through the House.
Mr. Mellish: All about dogs and cats.
Sir T. Moore: I have found that if a private Member has a good Bill which commands the support of the House and also of people outside, it is always possible to get a quorum, but if he has a bad Bill he will not get a quorum. It is no good hon. Members opposite complaining that hon. Members will not attend on a Friday. Hon. Members do not intend to attend on a Friday to support a bad Bill. They therefore stay away. The answer lies in the hands of hon. Members; hon. Members should select a good Bill, bring it forward, and it will get through.
Mr. Royle: Will the Leader of the House consider a very important point which arises from what was said by my hon. Friend the Member for Dagenham (Mr. Parker)? It has been possible—we have plenty of examples—for a Bill to get a Second Reading with the permission of the whole House but, when it reached Standing Committee, for it to be easily defeated. One of the best examples is the Bill introduced by the hon. Lady the Member for Plymouth, Devonport (Miss Vickers). Because half the Standing Committee were opposed to that Bill, no quorum could be obtained. I hope that the right hon. Gentleman will bear that point very closely in mind when he is considering any revision which might be made of procedure concerning Private Members' Bills.
Mr. Dudley Williams: I hope that my right hon. Friend will pay no attention to
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the comments made by the hon. Member for Dagenham (Mr. Parker). I think it is quite wrong that private Members' time should be used to introduce controversial Measures. That would happen if the rules of the quorum were revised. Many of my hon. Friends feel that it would be most unfortunate if any such amendment of the rules were made.
Mr. Mellish: I remember that the late Sir Herbert Williams, at one time Member for Croydon, East, used nearly always to oppose Private Members' Bills, particularly when they related to animals. I once asked him why, and the anwser which he gave me was very good; it was one of the things which the hon. Member did very well. He was anxious that there should be a consolidating Bill embracing all forms of animal life and giving them protection. If any hon. Member wanted a wild bird to be given protection, he could make application and it could be included in the consolidating Bill without the necessity to promote another Private Member's Bill.
What is the truth of the situation? An hon. Member can get a Bill through the House only if it is completely innocuous. That is why so much of the time of the House on these Bills is taken up with questions concerning the protection of wild life and subjects of that character. The hon. Member for Ayr (Sir T. Moore) said that he had got nine Bills through the House. I believe that the vast majority of them concerned animals of one kind or another. They did not concern human beings, not the things which matter. I have no doubt that there are some hon. Members who, if they are lucky to be drawn in the Ballot—I have never had the luck to be drawn in the Ballot—will introduce a Private Member's Bill to make certain that if we launch a satellite we do not put a dog up there. That will probably mean that we shall have to go through all the Bill procedure. That sort of Bill may get some support in the House.
I ask the Home Secretary whether it is not about time that something was done about the promotion of Private Members' Bills for the protection of this or that animal. I am serious about this; I would support many of those Bills, but surely we can devise a system whereby we do not have to have a Private

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Member's Bill every time, to go through the procedure of the Ballot and to be pestered by people outside from organisations which, in the main, get their living from promoting Bills of this character. That is why we have so many of these organisations. It would be a good thing if we abolished all that rubbish. When we have Private Members' Bills let us talk about something intelligent and to the benfit of mankind.
Dame Florence Horsbrugh: Would not my right hon. Friend agree that in, say, the last ten or fifteen years many Private Members' Bills of great importance to the whole country have become Acts of Parliament? I am not saying anything against Bills dealing with animals, birds or things like that, but I do say that if hon. Members would get a list of the Acts of Parliament that have been brought forward as Private Members' Bills they would see that it included an extraordinary number of extremely useful Measures, some of which have certainly been controversial.
I cannot think that the Private Member's Bill brought in concerning divorce was anything but controversial. There have been a great many excellent Bills of this type, and it is a great pity that there should be an idea that only when something small and stupid is concerned do private Members bring in Bills. They do not. My right hon. Friend will, I think, agree that this is a useful part of our legislation.
Mr. C. Pannell: Has the Leader of the House considered what happened to Private Members' Bills last Session, and the relative failure of Bills then? The principal architect of the destruction of a very useful Bill was the hon. Member for Exeter (Mr. Dudley Williams), who seems to have a vested interest in this destroying of Private Members' Bills. I speak as Vice-President of the Association of Municipal Corporations. All municipal corporations have wanted a Bill called the Promotion of Bills Bill—[Laughter.] That laughter only betokens the fact that other people do not know what they are laughing about.
At present, local authorities have to promote a great many Bills by means of very expensive procedures. The Promotion of Bills Bill was aimed at saving
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public money, by streamlining public procedure, and all the local authorities in the country wanted it. It was destroyed by the vested interest of bookmakers and all sorts of people who got working on hon. Gentlemen opposite in the last Session—[Interruption.] It seemed to me to be a curious coalition of bookmakers and funeral furnishers. It was a fact that some of us here—
Sir P. Agnew: On a point of order. Mr. Speaker. As one of the hon. Members of the Standing Committee concerned with that Bill, may I ask whether it is strictly in order for the hon. Member for Leeds, West (Mr. C. Pannell) to suggest that bookmakers began to work upon us?
Mr. Speaker: I took the words, placing on them the best construction that I could, to mean that hon. Members on the Committee had received representations from bookmakers. Hon. Members of this House receive representations from a great number of people, and I saw nothing I could check in that remark.
Mr. Pannell: I am quite prepared to believe—
Mr. Dudley Williams: On a point of order. No bookmaker spoke to me, Mr. Speaker.
Mr. Pannell: I think you know, Mr. Speaker, that the hon. Gentleman did not raise a point of order there.
Mr. Speaker: I did not hear the point of order of the hon. Member for Exeter (Mr. Dudley Williams), but I would point out to the hon. Member for Leeds, West (Mr. C. Pannell) that we are discussing the Motion before the House and not the Bill to which he has been referring. I understand that that matter has been decided, one way or the other.
Mr. Pannell: As my hon. Friend the Member for Dagenham (Mr. Parker) had spoken generally about the waste of Parliamentary time because of the failure of Private Members' Bills to progress and as the right hon. Gentleman the Leader of the House had answered, I thought it reasonable to give to the House a specific instance of a worthwhile Bill that would have saved public money but was made completely abortive because of the action of hon. Members. We held about seven meetings of that Committee, and although

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a majority was in favour of the Bill we were obstructed simply because we could not get the Closure.
I suggest that for a small Committee of this House a Closure of 20 is far too high a figure. The opinion of many members of the Committee was that, in all the circumstances, such a Closure of 20 was quite ridiculous. I believe, though I speak subject to correction, that 20 Members are necessary for the Closure whether the Committees are of relatively small or large size, which makes the position quite ridiculous.
All I will now say is that the Bill to which I refer was one that local government itself really wanted—[Interruption.] Local authorities wanted this Bill, there is no question about that, but at present we have to go through a completely old-fashioned procedure that is completely time wasting. In the case of which I speak, the Committee was made completely abortive, because we are not at present armed with the necessary procedures. The words of the immortal Samuel Weller might be applied to Private Members' Bills, when he said that he wondered whether it was worth while going through so much to achieve so little.
Mr. Gresham Cooke: Although there have been given examples of Bills that have not gone through the House, is my right hon. Friend aware that useful and contentious Measures have been brought in? One was brought forward by my hon. and gallant Friend the Member for Rochdale (Lieut.-Colonel Schofield), and passed into law as the Advertisements (Hire Purchase) Act. Another extremely useful Bill which started as a Private Member's Bill and later became a public one was the Cheques Bill, now the Cheques Act.
Mr. Mitchison: I have two very short points to put to the House. The first is in connection with a very useful type of reform that at present depends practically entirely on Private Members' Bills. I refer to non-contentious law reform. It is a great pity that that has to depend quite so much on Private Members' Bills, but while that position remains it is very important that there should be time given for that type of Measure. I stress that I mean non-contentious law reform.
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The second point is this. On this side of the House we welcome this Motion, and we hope that the results of the labours of the Select Committee which dealt with questions of quorum and of Closure in Committees will be given effect to as soon as possible. They are very relevant to the type of point my hon. Friends behind me have raised. Without wishing myself to be contentious, I believe that at present there are too many facilities for hon. Members in a minority to block Bills by excessive loquacity in Standing Committee.
Mr. Baldwin: I should like my right hon. Friend to give some attention to the question raised by the hon. Member for Dagenham (Mr. Parker), of the number of hon. Members necessary on a Friday to get a Private Member's Bill through. I think that 100 is far too many. I speak as one who suffered in that way with a Private Member's Bill—a very good one—which had the support of many hon. Members opposite. Although that Bill was carried on a Friday by a majority vote, because there were not the necessary 100 Members present it went on the shelf. Thereafter, it was only necessary for one hon. Member in the House to say "Object" every fortnight to prevent that Bill ever passing into law.
This is something to which consideration should be directed. Do we want to reduce the number required to be present on a Friday?
Mr. Monslow: I should not have intervened were it not for the fact that some of my hon. Friends have suggested that all Private Members' Bills are innocuous. I do not accept that view. I have had the privilege of piloting two Private Member's Bills through the Commons. They were highly controversial. The one I remember particularly was the Married Women (Maintenance) Bill, which I regarded as a very necessary Measure. By it, a Private Member's Bill, we changed the law, which had not been changed for about fifty years, and we increased the scale, as a result, from £2 to £5. In my view, private Members should have an extension of the facilities they now enjoy.
Mr. V. Yates: I wish to mention one matter in reply to the hon. Member for Ayr (Sir T. Moore). After twelve years

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in the House, I feel that some of our finest discussions have taken place on Fridays, on Private Members' Bills. Therefore, I should very much deprecate any suggestion that we should reduce private Members' time.
The hon. Member for Ayr suggested that hon. Members stay away from a Committee which is considering a Bill only when it is a bad Bill. Of course, that is not true. During the past year we have had experience of what has happened to really good Bills. There was one Bill the purpose of which all penal reformers support and which, they believe, would bring about a fine reform and improvement in our penal system. Yet Friday after Friday hon. Members on both sides of the House were to be found standing outside the Committee room and refusing to enter. That is an abuse of private Members' time, in my view.
The right hon. Gentleman might well consider very carefully whether the number required for a quorum is a fair number, especially in view of the kind of abuse to which I have referred. I hope that, as we go on to discuss our Private Members' Bills, he will decide to look at the question of the quorum generally and, in particular, its application on Fridays. It is a great tragedy that we should have the privilege of introducing Private Members' Bills and that hon. Members on both sides should unite to destroy that very privilege which we fought for and have retained for so many years.
Mr. Ernest Davies: Is the Leader of the House aware that, had it not been for a certain Private Member's Bill which went through the House the Session before last, the funds of many local Tory and Labour parties would be in a far worse position than they are?
Question put and agreed to.

ORDERS OF THE DAY
  QUEEN'S SPEECH

    DEBATE ON THE ADDRESS
    [SECOND DAY]
    Order read for resuming adjourned debate on Question [5th November]:
    That an humble Address be presented to Her Majesty, as follows:
    Most Gracious Sovereign,
    We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament—[Lads Tweedsmuir.]
    Question again proposed.
    Mr. Speaker: I think it would be for the convenience of the House if I were to say that the debate today on the Motion for an Address will be of a general character. I understand that it is intended tomorrow, Thursday, to deal with defence in particular, and, on Friday, to deal with foreign affairs and disarmament.
    These are only suggestions for the convenience of the House which appear to meet the wishes of both sides.
    3.35 p.m.
    Mr. James Callaghan: As you emphasised, Mr. Speaker, this is a general debate today, but I hope that hon. Members will not mind if I devote at least a little attention to the affairs of our Colonial Territories, which are of such supreme importance at the present time.
    If I may just give an advance indication so that those who are not interested may leave the Chamber, I wish to refer to one or two other matters also. I shall particularly wish to return to the question of collective bargaining, especially in the public services, and to ask the Government some more questions about that. Also, I propose to address some observations to the House about the consequences to this country of the artificial satellite which is circling the earth and is, I believe, almost over the House of Commons at this moment.
    First of all, I should like to make it clear to the Government, lest there should

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    be any doubt in their mind on the question of pensions, that we believe the figure of 10s. increase to be a niggardly sum which does not represent the increase which should be conceded in order to give old people the standards which they have a proper right to expect. It is the view of the Labour Party, which has been expressed many times, that any increase in pension should be of the order of £1 on the basic rate, and that, in fact, what the Government should have aimed at is a basic rate of £3 a week.
    We recognise the difficulty of the Government in providing for the proper increase so long as they cling to a system of flat rate contributions, and it may well be the very fact that the Government find it difficult to increase the contributions by more than 2s. a week which has of itself limited the amount of the increase conceded to old people.
    If it is the amount of contribution which is to be, at any rate, a limiting factor in this respect, then clearly consideration of the Labour Party's superannuation scheme or something similar is overdue. There, at any rate, is a substantial attempt, well thought out, to get rid of the flat-rate contribution system and to relate contributions to ability to pay. We shall not know until we hear the debate, but it may well be that we shall have to say to the old people that they cannot have a proper rate of pension until we move over to a rate of contribution related to wages. I leave that point with the House for the moment.
    The second factor we regard as vital in any fresh reconsideration of the pension system is that there should be transferability of pension rights and expectations from one employment to another.
    Thirdly, we have seen, as a result of the investigations which have been carried out—notably by those economists and experts in the social sciences who assisted the Labour Party in the preparation of its document—that there is a growing gap between the standard of life enjoyed by those entitled to some measure of private pension and the standard of those dependent purely on the State pension.
    In fact, there are arising two nations In old age, as it were, and it seems to
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    us that it should be the intention and aim of the Government, as it certainly is our aim, to remove that gap which is now growing and producing such a disparity that we find there are two quite different standards of life in old age. With that, I leave the question of pensions because I understand that it is to be a subject of legislation. What I was talking about, Mr. Speaker, was, of course, a superannuation scheme which is not the subject of legislation, though I and my hon. Friends very much wish that it were.
    Yesterday, we had a rather languid oration to support a rather tepid Queen's Speech. The Prime Minister was very bold. He attacked my right hon. Friend the Member for Ebbw Vale (Mr. Bevan), in his absence. I have no doubt that, if he had been here, my right hon. Friend would have made a suitable retort to the Prime Minister. As he is not here, I should like to repeat what I believe would have been his verdict of the Prime Minister's speech, a verdict which he passed upon another Cabinet Minister's speech a little earlier. About that other speech, my right hon. Friend said that it was a badly written essay read in a turgid monotone. On behalf of my right hon. Friend the Member for Ebbw Vale, I should like to repeat that today.
    It will be remembered that about three years ago, the hon. Member for Aberdeenshire, East (Sir R. Boothby) got into awful trouble for walking out in the middle of the speech of the then Prime Minister. Yesterday, fifty people walked out but nobody even noticed. I am bound to say that none of us could have felt inspired by what we heard yesterday nor about what the Prime Minister had to say concerning a number of our problems. As far as his great conception of a new international system of government is concerned, I merely say that I will wait until I see it. The first reactions that have come from Mr. Dulles this morning are, at least, not very hopeful. I believe this to be another piece of the Prime Minister's showmanship of which his occupation of the post of Premier has become such a striking exhibition.
    I want to turn to the question of collective bargaining. The Prime Minister said yesterday that increases in wages must be determined by, and be dependent to some extent upon, an increase in productivity

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    or they must be financed out of savings or by a cut in services. How do the Government relate this test of the necessity for an increase in productivity to those services, public and otherwise, whose effort cannot be measured in terms of productivity?
    It is all very well to announce the intention to relate wages to productivity in, say, engineering establishments, although even there, if the economic policy of the Government is designed to curb an expansion in production, they may well be asking for two directly contrary things. In the public services, however, that is a much more difficult test to apply and the millions of people who are engaged in the public services of one sort or another are entitled to a little more explanation from the Government of the tests that are to be applied to their levels of remuneration.
    Let us take some examples. The remuneration of probation officers is fixed by regulation. As I understand what has happened in the Health Service case, if the probation officers were to secure an increase in remuneration, following the example of what the Minister of Health has done in the Health Services case, the Government would rule out the making of a regulation in respect of probation officers.
    How is the probation officer's productivity to be measured? Has he to reform more criminals? What has the fireman got to do? If he is to put out more fires, somebody must start them in the first place. The policeman, of course, has to arrest more criminals. On that test, the police are entitled to an increase in pay, because arrests went up last year.
    What about nurses? Are they to nurse more patients? Is the test to be more beds per nurse? What is to be the test of productivity that is applied in these occupations where productivity cannot be measured or production increased in the way which the Prime Minister told us must be the test by which increases in pay are to be determined? This is a question upon which the House and those employed in the public services are entitled to more explanation than we have had so far.
    Now, I come to the next question. It is a simple question which was asked first last week by my hon. Friend the Member for Newton (Mr. Lee). It was repeated by my right hon. Friend the Leader of
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    the Opposition and it was asked again by my right hon. Friend the Member for Blyth (Mr. Robens) of various Ministers, but we still have not had an answer to it.
    Where the Government are interested in wage claims—that is, in the public services—or where they are indirectly interested in wage claims, as, I suppose, in the case of the Health Service, are their representatives to continue to consider claims on their merits or are any special instructions to be given to representatives of the Government on wages councils of one sort or another that, irrespective of the merits of the claim, the claim itself cannot be considered?
    This question has been asked more than once. I repeat it again this afternoon and I press the Government for a reply on it. What instructions are being given to the Government's own representatives when they are considering claims made by the public service? It is a simple question and can be answered quite simply. Are these claims to be considered on their merits or are the Government saying that whatever their merits, the economic position of the country is such that they cannot be conceded? It seems to me, from what has happened in the Health Service case, that it is the second test which has been applied, because the Health Service employees, from what I have read of their last arbitration case—I read the whole of the case last December—and from what I can make out from the correspondence which has passed on their latest claim, have established a claim on merits.
    Every one of us knows that the public services are never in the vanguard of wage increases. They are always at the end of the queue. The Health Service employees were not only behind industry in their claim, they were not only behind the Civil Service, but they were also behind the local authorities. The Health Service, heaven knows, was right at the tail end of the queue. If anybody had established a claim on equal comparisons with what had happened elsewhere, it was this particular group of people; yet it is this very claim, in which, I should have thought, the case was overwhelming, that the Government have chosen to make a test case.
    I wonder why the Government have chosen the Health Service employees, unless it is that they belong to a union

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    that is too respectable to affiliate with the T.U.C., unless they are a group of people who, it is known, will not strike, or unless it is the fact that they are a middle-class group of people. We all know the Government's affection for the middle classes and their desire to help them. I must say that if I were a Government supporter, I would have wondered what had come over my Front Bench. Instead of taking on a group of workers who cannot in any way be construed to be of the middle class, the Government select the very union in which there is, I suppose, greater political division than almost anywhere else, and the very union from which they drew a great many of their supporters, and they say, "Here is the group we shall select. The group which has the best case of all for an increase in pay, we shall do them down." If the middle classes continue to stand for this, I tremble for their future.
    I do not know what Government supporters will say to Members of their own Front Bench when they get them in the privacy of the committee room, but I wish that they would say something to them here in the House. The Government could not have selected a worse case from their point of view than the one they have selected for this action.
    Let us examine the matter a little further. If claims are not to be considered on their merits—and this claim certainly has not been—what the Government are doing is to shuffle off their responsibility on to the arbitration tribunals. This is a most dangerous and unwelcome development. It means the end of collective bargaining in the public services. When I hear the Lord Hailshams and the Lord Mancrofts and the others speak, I sometimes wonder whether they have any conception at all of what happens in trade union committee rooms. Lord Hailsham did say that he was more at home in a university, and sometimes I wish that he would go back there. He said that he was fundamentally an egghead. Some people might move to delete "egg" and to substitute "block."
    It is quite clear, as the Prime Minister said, that there is no national wage policy in this country. What does exist, and what the Government are now tearing asunder, is a very delicate and intricate relationship between wages in various
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    occupations and especially in the public services. It has been a network that I have watched for over twenty years. All these claims are related to each other, they all depend upon each other and a very close relationship has been established between them.
    What are the Government doing? In the case of town hall employees, for example, in which they have no direct interest—nor do those employees have representatives on the negotiating machinery, nor do they come to the Minister to make regulations—what the Government are saying to them is, "If you can establish a case to the satisfaction of your employees, although we would like them to refuse it, we cannot do anything about it."
    When, on the other hand, the firemen establish their case and go to the Home Secretary and ask for a regulation he will say, as the Minister of Health has said, and what has been said quite clearly, "No, we are not willing to concede the agreement that has been made." So they disturb immediately the relationship between the firemen on the one hand and the town hall employees on the other.
    What is to happen with the Civil Service? There has been a criterion established, laid down by the Royal Commission in 1955, that the levels of remuneration should be dependent upon fair comparisons with what is happening outside. My hon. Friend the Member for Sowerby (Mr. Houghton) asked about this last week. I read a very ominous note in The Times this morning. It puts in a negative way that what is happening in the Post Office does not necessarily mean that the Government are going to adhere to this principle of fair comparisons in the future.
    Do the Government really know, I wonder, where they are getting to in this matter of wage claims? I wonder where they are getting to. They say they do not want a war. Nations have blundered into war before. If the Government want to avoid a war they must reverse some of the decisions and pronouncements which have been made over the last few days.
    Mr. R. Gresham Cooke: Have we got to give way to every wage claim?
    Mr. Callaghan: The hon. Gentleman asks if we have to give way to every wage

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    claim? [HON. MEMBERS: "Who are 'we'?"] I take it the hon. Gentleman means the Government.
    Mr. James Griffiths: The hon. Gentleman used the word "we".
    Mr. Callaghan: Do the Government demand unconditional surrender from the trade unions, if there is to be no war? The hon. Gentleman will have many constituents who will know what is at stake here. Many of his constituents are people in the middle classes, and are members of the Civil Service or of other governmental authorities, and they are the very people who are always last in the wages queue. They have a right to ask the Government today by what test their remuneration is to be measured.
    It cannot be on the basis of profit. It has been in the past on the basis of comparison with what is happening elsewhere. It has been on the basis of the movement in the cost of living. We have no indication yet from the Government of the positive tests they will apply. The only indication we have had is from the former Chairman of the 1922 Committee, a most appropriate Minister to do this, and that is to rule out and disallow a claim which has been undoubtedly established on its merits.
    He says, or it is said on his behalf—I believe he said it himself—that the official side has no responsibility for finding the money.
    The Minister of Health (Mr. Derek Walker-Smith): The management side.
    Mr. Callaghan: The official side is the management side.
    Mr. Walker-Smith: No.
    Mr. Callaghan: The Minister is displaying that he has no knowledge of the term which is commonly used in these matters.
    Mr. Walker-Smith: Surely the hon. Gentleman understands that the management side consists, in this Whitley Council which he is discussing, of some official representatives, that is to say, representatives of the Department concerned, and some unofficial representatives not representative of the Department but, nevertheless, on the management side.
    Mr. Callaghan: I am much obliged to the right hon. Gentleman. I am not
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    going to have a verbal quibble with him. He can call it the management side or the official side, whichever he likes. The point remains the same. It has been called the official side in all these negotiations for the last twenty-five years, to my certain knowledge. However, let us leave it.
    The management side, if I may use the Minister's term, has no responsibility for finding the money; so that it is in effect in a more independent position than if it had to find the money. In the face of the protestations to the Minister, in the face of these authorities who have gone on record as saying that this claim should be conceded, and who, indeed, voted down the Minister's representatives in order that the claim might be conceded, does he say that they have no responsibility? If I were a member of an official side or management side which was treated in that way I should wonder if it was really worth my while carrying on. And what is the Minister to do if he does not have the support and help of people in that position, who have been giving up a great deal of their time to that work?
    The plain truth is that the Government are going to make more anomalies than they can possibly solve. To the railwaymen's claim they will say, "No." They say, "We are not going to finance any wage increases. If they go to arbitration they can get them, but it is for the British Transport Commission to decide whether they will implement the awards. We are not going to give any money for them." On the other hand, they say that with the employees in the electricity industry and the employees in the gas industry, it is, of course, plain sailing, and if they can make out a case, it can be conceded.
    The Government must realise that they will get themselves into an impossible position if they go on in this way. I beg of them to think again about what they are doing, and to face up to the fact that in the public services, where they have started this policy, they are running very grave risks of dislocating much of the machinery which has been patiently built up, on which the people concerned place a great deal of importance and in which they place a great deal of trust, and who therefore do not strike. It is this machinery the Government are putting a spoke in.

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    I refer to one particularly wild speech made by Lord Mancroft at Lewisham last week. He said:
    "Socialists would like to see a little industrial strife if that would help to discredit the Government."
    We do not need anything else to discredit the Government. They have been rejected by the electorate from Tonbridge to Gloucester. That last half-dozen by-elections have shown that there is no support for the administration. Indeed, if they were to do their duty they would resign and go to the country, because they are governing now against the majority of the people. How long they will carry on doing that I do not know, but what they will find is that a Government who continue to govern against the will of the country have their authority slowly but certainly drained away. I do not know how long they can carry on in circumstances like those.
    I know there is a contest in the Cabinet. I place the Prime Minister and the Minister of Labour on the side of those who are more sensible and who do not want to revert to the condition of having two nations such as we had in the 'thirties. The Lord Mancrofts and Lord Hailshams and a lot of other wild men are willing and ready to force the position in order to have an industrial showdown. Let them beware of the consequences of this. They might win a General Election that way, if they were able to precipitate sufficient trouble as to be able to go to the country and ask, "Who is to govern? The Government or the trade unions?", but the harvest they would reap afterwards would be bitter indeed.
    Mr. J. Griffiths: They know it.
    Mr. Callaghan: Now I turn for a brief while to the question of the Colonies. We welcome very much the statement in the Gracious Speech about the proposal to enhance the status of Singapore. All of us are watching with very great interest the struggle to establish the democratic system in that State.
    We were glad to hear the Prime Minister say that satisfactory progress was being made with the constitutional arrangements with Malta. I understand that the constitutional differences are being ironed out. I hope that is so, and I trust that the financial arrangements
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    which are to be made will be generous in view of the very special dependence of Malta upon the Dockyard.
    I would say how much we regret the Government's decision to go ahead with the Constitutional Amendment Bill in Central Africa. We believe that they are making a mistake there. The African Affairs Board has declared that that Bill is a discriminatory Bill. It is the first time it has taken this decision, and because it is the first time it has taken this decision the Africans are watching very closely to see what action the Government will take. The Africans at least believed that the African Affairs Board, under its most distinguished Chairman, Sir John Moffat, who has been resident in Northern Rhodesia many years, would try to hold the balance for them.
    Now that the Government have decided to rule against the African Affairs Board, the consequence to the political stability of the Federation, in my view and in the view of many of us who have recently had the good fortune to go there, will be extremely serious. We shall ask for a full day's debate on this matter in due course, but as the Under-Secretary of State for Commonwealth Relations gave a Written Answer to us last week on this matter, I think it right to say straight away that we really cannot accept the Government's assessment of the situation. We believe that they are making a very unfortunate mistake.
    The Prime Minister referred to the abortive international discussions that have taken place on Cyprus during the summer, but he made no reference to the other side of the coin, which we have always emphasised as just as important, if not more important. That is the need to get internal talks going with the people of Cyprus. I very much regret that he had no comment to make at all about it, because I am bound to repeat the charge that I made last July that the Government are frittering away the months accorded to them since the truce arrangement of last February or March and since the release of Archbishop Makarios, and that nothing is happening. No discussions at all are going on.
    Surely it must be clear to the Government sooner or later, and heaven send that it be sooner, that they must start talking with the Greek and Turkish

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    Cypriot people. The Greek Cypriots are in a substantial majority, but the Turkish Cypriots have a right to have their minority interests protected. The Government should call representatives of these people to London and start discussions on how a representative Government can be set up. Archbishop Makarios is now in New York, where we are told he is having a remarkable reception. Why we do not engage him in sensible discussions in London, instead of allowing him to parade the world, I do not know.
    This is what Archbishop Makarios has said about discussions:
    "Minority problems"—
    He was referring to the Turks—
    "have existed in many parts of the world and have been given their proper solution by proportional representation and guaranteed minority rights. We are ready and willing to have those rights guaranteed by international instrument to the Turks of Cyprus with whom we wish to live in perfect harmony as we have done in the past. But we certainly cannot accept that the wishes of the minority should be allowed to override the will of the large majority…"
    Is it not worth the Government's while, for the sake of peace in Cyprus, to bring the representatives of the Greek and Turkish Cypriots here to discuss this and to see how far, by means of proportional representation, international guarantees, or any other proposals that we or Archbishop Makarios can make, we can be enabled to get a representative Government going?
    I am interested to see that the Tory rebels have on the Order Paper an Amendment to the Address in reply to the Gracious Speech. The major Amendment in the whole welter of economic and political troubles that concern us urges that sovereignty over Cyprus should continue to be guaranteed. It is proposed, as an Amendment to the Address, at the end, to add:
    "and whilst welcoming your Majesty's Government's intention to seek a just and enduring solution of the problems of Cyprus, trust that your Ministers will safeguard your Majesty's sovereignty."
    The Prime Minister must be glad to have these rebels out of the way so that he can go ahead with the more commonsense members of his party to try to solve this problem. Nothing that the Government have done over the last few months has led us to alter our conclusion that their policy so far has been disastrous.
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    We only hope that the appointment of a new Governor will mark a turning point in the sad history of that island.
    I should like to make certain points about the consequence to this country of the artificial satellite which, I have calculated before this debate started, will have revolved round the world five times before we finish the debate at ten o'clock tonight. I am almost beginning to lose the capacity to wonder, and I shall not be at all surprised if I hear that the Russians have landed something on the moon, however distant and remote that would have seemed to us five years ago. But these remarkable achievements of the Russians might have been met with a slightly different response from the Prime Minister yesterday. I believe that the reaction of the British people is one of frank and ungrudging admiration for these tremendous scientific achievements. The Prime Minister might have spoken for us if he had said that when he referred to this matter indirectly yesterday.
    Though it comes as a surprise, what the Russians have done should not have been a surprise if we had looked back upon our own history and upon past debates on this subject. The Labour Party, in opposition over the last six years, has consistently pressed on the Government the need for a larger scientific effort. We had a debate on the subject following the issue of a White Paper on technical education in February, 1957. These achievements by the Russians should not have been a surprise to us, for this reason—the very simple fact is that the Russians are producing far more scientists than we are and they have a planned economy. Those two things put together make it inevitable that they should go ahead in scientific research and technological development.
    I quoted figures in the House eighteen months ago to point out to the Government the need for an enlarged scientific effort. I said that in terms of graduate engineers Britain was producing 57 per million of the population and the U.S.S.R. was producing 280 per million of the population. On an exactly proportionate basis, that is 57 against 280. Is it surprising that the Russian scientific effort should be capable of these remarkable achievements?
    On the day when the satellite was launched, the Government's own Scientific

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    Advisory Council published its Tenth Annual Report. Almost every year the Council has referred to this problem. This year its words were:
    "The main limiting factor in our scientific effort today is the shortage of trained manpower…."
    We on this side of the House have pointed that out before. We point out again now that this country has not enough scientists or technologists to keep pace with developments in the modern world.
    I shall bore the House—but I am afraid that it must be bored with them—by repeating figures which I quoted two years ago on the disparity of effort between the Russians and ourselves in this matter. Before I do so, I should like to emphasise the startling fact that there has actually been a decline in the number of graduate scientists and technologists produced in our universities since 1952–53. In 1952–53, when the last of the students who went in under the Labour Government were emerging, there were 7,957 graduates. The following year the number dropped to 7,496. The next year it declined to 7,313 and last year it went down to 7,263.
    We are told that the number of students is again increasing, but what about the years that we have wasted? I was astonished at the complacency of the Chancellor of the Exchequer's comment last week when, throwing out his chest, he said he was glad to be able to say that the technological education proposals were not being cut in any changes and rephasing which was taking place in education generally.
    Dr. Barnett Stross: Has my hon. Friend noticed from the figures that the situation looks even worse if one takes into account the number of people with doctorates in philosophy, and particularly in physics, who are emigrating as soon as they graduate?
    Mr. Callaghan: One of the greatest achievements of this Government, after six years of Conservatism, has been to replace the dole queues of the 'thirties with the emigration queues of the 'fifties.
    By comparison with the United States, our effort is too small. The Scientific Advisory Council points out that British industry's expenditure on research was
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    only one-half of that of the United States on a comparable basis. In terms of money, their effort is seven times as great as ours. The Report states:
    "The resources devoted to civil research and development have been, and still are, far too small for a country whose competitive position in world trade is dependent upon the economic development of new products and new processes…"
    How pathetic, in the face of this situation, is the proposal of the Government to double the number of scientists by 1970. This is out of all proportion to what is needed.
    Let me point out one other thing which we have said before in this respect. We are still not making nearly enough use of the number of young men who are apprentices in industry, and the employers, either through lack of knowledge, interest or desire, are failing to use the day release scheme. There is a vast, untapped pool of reserves and skill there which is not being used.
    According to The Times this morning, I notice that the American President is going ahead with what was called a personal crusade to increase the flow of scientists. What we are going to do is to change over to a block grant system, which will mean that the educational services will become the prey of all those who have other interests to serve. The Government are really failing to face this situation in the way they should. When I look at the Front Bench opposite, I am not surprised. It is about time that this bunch of old Etonians was replaced by a few people from board schools, grammar schools and technical schools, who would tell them what the scientific age is really about. [An HON. MEMBER: "And Wykehamists?"] There is an old Wykehamist there, too, and I see plenty of old Etonians as I look around.
    The plain truth is that the Government are not willing to make the necessary choices that are essential if we are to keep up to date in the world that exists in this generation. The element of choice, the selection of priorities, is essentially a part of the Labour Party policy and programme, an element which the Government reject. It is for this reason that the Government are being rejected at this moment by the people of these islands.
    4.12 p.m.
    The President of the Board of Trade (Sir David Eccles): The hon. Gentleman the Member for Cardiff, South-East (Mr. Callaghan) began by asking some questions about the attitude of the Government towards wage claims and collective bargaining in Government services. He will get answers to those questions and on the general principles about which he inquired in the course of this debate. My right hon. Friend the Minister of Health, if he is able to catch your eye, Mr. Speaker, will intervene later this afternoon on the particular problems of the Health Services, This is a general day, and, therefore, I hope that the House will understand if I do not follow precisely what the hon. Gentleman has just said. He talked about the Colonies, and I agree with what he said about the necessity to press on with solving our general colonial problem of raising the standard of life and the political maturity of the Colonies. I will say something about their economic problems in the course of my remarks.
    If I do not discuss domestic politics, I hope the hon. Gentleman will agree that in the long run what we do at home determines our influence abroad, and that it is important to remember that there is no country which has more reason to care about what others think of us than we have. For my part, being largely concerned with the overseas picture, it is that which I wish to discuss this afternoon.
    We are always asking ourselves what contribution the Government can make to holding world trade on a steady course of expansion. Since I spoke on this subject in the Budget debate, the world's economic barometer is not as set fair as it was. Central bank reserves have shown big movements, exchange rates have been under pressure, commodity prices have fluctuated, not all downwards. At the same time, international trade in manufactures has continued to expand strongly and many countries have taken fresh measures against inflation.
    Looking at all this from the point of view of the United Kingdom, far the most important event this summer has been the threat to sterling. When, in September, the Chancellor of the Exchequer spoke to his fellow-governors of the International Monetary Fund in Washington, where
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    sixty countries were represented by their Finance Ministers and central bankers—the greatest annual gathering of borrowers, lenders, spenders and printers of money the world knows—those listening to my right hon. Friend, of whom I was fortunate enough to be one, had a concentrated, unbelievably sharp impression of the importance of sterling to the whole of the rest of the world.
    Almost every country represented at that meeting was suffering in some degree from the same disease, inflation. Almost everyone let us know, inside or outside the conference, that they regarded the United Kingdom as far and away the most important test case of whether a free country could cure itself of this chronic affliction.
    The measures announced there by my right hon. Friend were greeted with satisfaction by large and small, by creditor and debtor countries. The good effect on the sterling exchanges and reserves is there for all of us to see. If it was not as swift and dramatic as some people hoped, it is as well to face the fact that there was in some quarters a reservation to the welcome our policy received. Doubts were expressed whether the United Kingdom would stand the rigours of the treatment till the cure was complete.
    Would we stop half way and find some excuse for allowing the pressure against sterling to begin again? After a few months of recovery in the gold reserve, would we relax our policy? It was made clear to us that the world is still waiting to see whether, this winter, we can hold our costs of production. We shall not disappoint them, if only because it is so clearly in our interest to check the rise in prices and to rebuild the reserves.
    The good effect of the Chancellor's measures was most clearly seen, as we would expect, in the Commonwealth itself, when we moved from Washington to the conference at Mont Tremblant. There, ten Finance Ministers of the Commonwealth—New Zealand was represented by her Minister for Foreign Affairs—met as a family and discussed their cash and their overdrafts as only a family can. I should like to record our admiration for the Ministers from Ghana and the Federation of Malaya, the two new members who were at this Commonwealth gathering for the first time. Everyone present

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    was impressed by the standard of the contributions made by Mr. Gbedemah and Sir Henry Lee.
    Canada, our host, which is not in the sterling area, was in the chair at the conference. Perhaps that was a good thing, because it gave Mr. Donald Fleming the chance, which he took with great skill and sincerity, to show the rest of us that Canada shares to the full the problems and the hopes of all the other members of the Commonwealth. The old hands at these meetings, like Sir Arthur Fadden, told us that it was one of the most successful and useful they could remember; successful because of the strength and determination to solve the problems of Commonwealth finance and trade by realistic measures taken in common; and useful because we reached full agreement with the Commonwealth on our European policy, and went on to recommend to our Governments the holding of a full-scale Commonwealth Trade and Economic Conference some time next year.
    I should like to try to explain to the House what gave to the Mont Tremblant conference this new sense of reality and unity. It came from two related and unanimously accepted propositions: first, that the £ sterling is not just Britain's currency, but is of vital concern to the Colonies and to all other members of the Commonwealth, including Canada; and, secondly, that we all are going through a common experience of being unable to find enough capital to carry out our development plans.
    These two facts of present-day life were recognised by all of us and the relationship between them was far better understood than ever before. As each country told the meeting, one after the other, about the difficulty it was running into in financing the development plans on which it had set its hopes, it became clear that the resources for these plans depended on what we all and each of us did in our domestic policies and that it was unquestionably our common interest to act more closely together than hitherto.
    We saw that there are only two sources from which the needed capital can come, greater savings inside the Commonwealth and greater borrowings from outside. We accepted the fact that our ability to save
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    and to borrow is in direct relation to the soundness of our money. And here, of course, we were back again face to face with the problem of sterling.
    The Chancellor of the Exchequer and I posed our own dilemma, namely, that the United Kingdom has commitments and capital programmes that strain our resources and, at the same time, we very much want to be able to lend more abroad. We said that the amount we could lend depended, in the long run, on the surpluses we could earn in our trade with the whole of the rest of the world. It was plain to the whole meeting that the demand and supply of capital for the Commonwealth was something we should have to put very high on the agenda of next year's conference.
    I have no doubt that the rest of the Commonwealth understood and accepted the fact that sterling must first be strong before the United Kingdom can lend more abroad. After all, nations can export capital only when they have first made themselves rich. It cannot be done the other way round. We have been lending as much as or more than was safe for sterling; and it is as much in the interests of the countries who use sterling as it is in our own that we should not overlend.
    The degree to which that was appreciated and understood was remarkable. Perhaps, as an illustration, I might digress for a moment and take the case of India. Here, we all know, is the largest member of the Commonwealth faced with great temporary difficulty because her second Five-Year Plan is far too big to be financed with the resources available. The United Kingdom is doing more to help India than is generally realised. India takes one-twentieth of all our exports, but of the total of outstanding insurances on credit underwritten by the Export Credits Guarantee Department India's share is one-fifth, and that fifth represents well over £100 million more than it did eighteen months ago.
    None the less, India needs far more money than we can provide, and we should like to see her and other developing countries in the Commonwealth borrow from creditor countries who can lend without endangering their currencies.
    Indeed, a great lesson in international finance is being learned, and we needed to learn it, too. In a world which wants

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    to do so much more development than there is money to finance that development without inflation, no justification exists for jealousy as between one lending country and another.
    There is ample room, indeed, there is a great human demand, for the genuine savings of all countries to be mobilised and invested in raising living standards throughout the world. The formulated plans for development which so far outstrip available resources are the guarantee that a world slump of pre-war proportions cannot recur.
    I turn now to the action which the Government are taking, and contemplate taking, to secure the orderly expansion of Commonwealth trade and investment. My first point is simply that we are independent nations and the United Kingdom, therefore, cannot force her partners to adopt any particular development programmes, or decide the pace of the development or lay down for them their internal financial policies.
    All that we can do we must do by example and consultation, and since we are the financial centre of the sterling area what we do about our own costs and prices, savings and investment, Government expenditure and monetary policies, must have a preponderating influence upon the others. Hence the overwhelming importance of winning the present campaign against inflation.
    If, for any reasons, however politically attractive, the attack on inflation was called off too soon, what chance would we have to persuade other members of the sterling area to keep their own finances in order? It is a matter that the whole British people, who are all taking part in the campaign against inflation, should understand, as of course hon. Members do, that this campaign has so great an effect outside our own country that if we fail it will be hard to dissuade other members of the sterling area from drawing upon their balances here, for example, at a rate which would cause the most severe difficulties.
    The right hon. Member for Huyton (Mr. H. Wilson) gave us last week his programme for dealing with this situation. I have studied his five points with care and I must tell the House that I think that his policy is self-defeating, for it rests on a contradiction. He thought that the United States should give us further massive help, either in the form of
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    additional monetary reserves—because he said international liquidity was inadequate—or, I suppose, in the form of increased American inflation, while at the same time his fourth point was that we must make ourselves more independent of the United States by further discrimination against her exports.
    This does not make sense. Even if I thought that this extraordinary feat could be achieved—that is, to borrow more from and to discriminate more against the United States—it would be the wrong policy in a world which is so interdependent that we need, all of us, to expand together in concert with the United States, whose resources are the greatest in the world.
    Mr. Harold Wilson: The right hon. Gentleman is knocking down an Aunt Sally of his own creation. I said nothing then or at any other time about borrowing from the United States. The Government are doing quite enough borrowing in the United States on their own account.
    What I referred to was the proposal that there should be more international liquidity made available through the International Monetary Fund or other international monetary institutions, because of the effect of the dollar and Deutschmark shortage in drawing off liquidity from world trade. There is not the same contradiction between the first and the fourth points to which the right hon. Gentleman refers.
    Sir D. Eccles: I should like to quote the right hon. Gentleman. In column 76 of the OFFICIAL REPORT of our last week's debate, he said:
    "We must first deal with the problem of ensuring adequate liquidity in international payments. This means more funds available to the International Monetary Fund and to other international monetary institutions."—[OFFICIAL REPORT, 29th October, 1957; Vol. 575, c. 76.]
    The right hon. Gentleman knows as well as I do that the great source of these funds can only be dollars. He may say that the International Fund is there, and, certainly, it would do the lending to the countries the liquidity of which requires to be increased. Even so, the right hon. Gentleman goes on, later, to say that we must discriminate against the country from which he desires to see large new

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    quantities of dollars put into the Fund's reserves. It simply does not make sense.
    I should like to take another point which the right hon. Gentleman raised, and that was his plea for support-price agreements for primary commodities. Whether we think this policy desirable or not, there are very few commodities in which it could succeed without the active participation of the United States. They are the largest importers. They hold big stocks already of most of these commodities, and only with their finance could effective arrangements be made to handle such new surpluses as might appear. Yet, in spite of that obvious fact, the right hon. Gentleman wants us to begin new discrimination against United States trade.
    Do we need these commodity arrangements? Of course, stability in earnings is a great boon to any primary producer. None of us with the experience of the 1930s could remain indifferent to the consequences of a collapse in world prices. At the moment, according to the best information we have, and I believe that it agrees with the United Nations' index, commodity prices are not below the pre-Korean War level and the volume of international trade is keeping up well. It is the volume of international trade which really matters. None the less. I fully agree that the situation has to be carefully watched.
    Here in London we have a responsibility for the Colonies, and through our membership of G.A.T.T. we are participating in discussions on commodities. In the G.A.T.T. discussions last week this question was raised by many of the members who produce the same kinds of commodities as our Colonies, and I supported them as much as I could. One has to admit that wars and rumours of wars have always brought great prosperity to primary producers, but their long-term interests in times of peace can best be secured by a steady expansion in the industrial countries. We hope to achieve just that kind of expansion by the increase in trade that will come about both through the Free Trade Area in Europe and the Commonwealth Conference which we are to hold next year.
    Yesterday, the Leader of the Opposition commented on the omission from the Gracious Speech of any reference to pro-
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    duction in this country. Production is running at about 3 per cent. above last year, and shows no signs of contracting. It is very difficult to make a forecast, but perhaps one of the best indications is the level of imports, and imports are running at such a rate that I think that businessmen generally must be confident that a continued expansion will be with us.
    There is no sign at the moment of any slackening in total demand at home, while in many lines we could sell more abroad if we could deliver more quickly and our prices remain competitive. I am constantly being given examples where British industry could do more business overseas if it were not for the pressure of demand at home. The fact is that at the present level of the supply of money, and given the increased efficiency of industry due to past investments, we can, if we keep our costs right, anticipate a reasonable expansion in Britain.
    One other promising market, as the House knows, is Canada. I am sure that we will all give a very warm welcome to the Canadian Trade Mission which is due to arrive here on 22nd November. This mission, through its composition and the length of time—about three weeks—which it intends to stay in this country—is proof that the Canadian Government's desire to take immediate steps to buy more from Britain is to be translated into action. I am confident from the talks which we have had that it will be possible to find many ways in which our goods can be bought by Canadian institutions, such as the Canadian Government and Crown Agencies, in quantities greater than we have seen hitherto.
    Another cause for thinking that production must go up is the fact that we shall continue to invest £1,500 million a year in the public sector alone. There is not much chance of a slump, provided that that is the figure of investment. If, six years ago, total investment had been anything like as high as it is now, the Labour Government would have claimed it as a triumph of a planned economy.
    On the subject of production, I am sorry to see that the Opposition still believe that production today could be raised by a return to controls. Of course, they call them selective controls nowadays, because the idea of controls pure

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    and simple is so obnoxious. The right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) said a most extraordinary thing last week. He said:
    "Selective controls…do not choke off activity."—[OFFICIAL REPORT, 29th October, 1957; Vol. 575, c. 164.]
    What nonsense that is. The whole point of a control is to stop somebody doing something that he wanted to do, and experience shows that, although physical controls may direct activity into particular channels, they always restrict it in total.
    I agree with my right hon. Friend the Chancellor that it is right to consider carefully individual controls on their merits, and without political prejudice. We have done this, and we cannot believe that detailed controls by Whitehall would help us today, either in our own economy or as an example to others, any more than they did in the past. We see no change in present circumstances which would justify one in thinking that what failed ten years ago will succeed now.
    We are exercising detailed control in the public sector through the decisions over the expenditure of public money, and that is quite right, but in the private sector we believe that the generalised control of making money dearer and profits harder to earn gives the greatest measure of flexibility and the greatest chance of growth where growth is most beneficial to the nation.
    There was one point on which I did agree with the right hon. Member for Huyton. It was when he said that we ought to do more East-West trade, and he spoke particularly of trade in goods which are now embargoed. If the strategic lists are to be reduced, it will be our policy to try to do that in agreement with the Americans and with our other partners. We should all agree that the stronger the free world can make its own defences, the less there is to fear the build-up of the Soviet economy.
    However, there is plenty of trade which we can do here and now. If the Soviet authorities would only listen to the wishes of their own people we could do a great deal more trade in goods without any military significance. The House will remember the Russian athlete who was seized with the desire to possess some
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    hats. I am certain that that lady is typical of millions behind the Iron Curtain. Would there be anything wrong with buying for all those households behind the Iron Curtain the things which they want and, in return, selling to us more of the products of the Soviet economy?
    As the hon. Member for Cardiff, South-East said, the Soviet Government have recently given us great proofs of their scientific and technical efficiency, but they still apply to the daily lives of their peoples the austerities of an underdeveloped country. One of the differences between the Soviet economy and ours is that they concentrate their scientists on armaments.
    Mr. Callaghan: So do we.
    Sir D. Eccles: Not to the same extent. If the Soviet people could get washing machines instead of satellites, who knows how many washing machines they would buy?
    The hon. Gentleman referred to education in this country. We do not have a bad record in that respect. The rate at which we have increased the expenditure on education, both on what one might call the plant and the teachers, is so much greater than anything ever contemplated under the Labour Government that that record is not one which hon. Gentlemen opposite should bring out.
    Yesterday, my hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir), who moved the Motion for the Address with such dignity, said something which has very much wanted saying, because it is so true. She said:
    "I often feel that there are two tremendous tasks which the Government are trying to do and which, by their very nature, are little understood by the public. The first is to establish a new system of trade and the second to establish a new structure of defence."—[OFFICIAL REPORT, 5th November, 1957; Vol. 577, c. 10.]
    We have to fashion a new system of trade and it is hard to make and explain so many breaks with the past. The world in which all the industrialised nations are fully employed and where every country is short of capital is a very different place from the world of the 1930s. Then we were wholly preoccupied with unemployment at home and now our chief concern is how to pay our way abroad. We were then a creditor country and now we are

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    the largest debtor in the world. The problem then was how to find investments to absorb idle savings. The problem now is to find savings to match the investments which we all want to make.
    What a change has taken place in the use of the tariff! In 1932, we went protectionist in order to increase employment and to secure Imperial Preference. Today, we use the tariff not to protect full employment, but primarily as a bargaining weapon to expand the markets for our goods overseas. As stated in the Gracious Speech, a Bill will be introduced to revise the tariff structure of the United Kingdom. This will be a very large Measure and will tidy no fewer than eight previous Acts and 70 amendments to Finance Acts. It is designed to put into our hands a modern instrument for the making of a tariff and to rewrite our tariff in a way which will enable us to carry out such great projects as the Free Trade Area.
    We shall ask the Commonwealth, at next year's conference, to look at all means of expanding trade between us, including tariffs and quotas and agricultural arrangements, but we all know that development plans now take a higher place in the thoughts of members of the Commonwealth than do tariffs and, since they are convinced that the pace of development is directly related to the soundness of sterling, we shall have a fruitful theme for next year's conference.
    Among all the adjustments to the new world of technology, full employment and shortages of capital there is nothing harder to accept fully than the consequences of putting international co-operation in the place of independent action in matters of economics. Yet if we have full employment at home we can get richer only by more efficient work and by international division of labour. The right hon. Gentleman the Member for Huyton put too much emphasis on action by others to help Great Britain and all too little on what it is in our power to do for ourselves and, as we get stronger, to do for others.
    The Prime Minister told us yesterday that in defence
    "…the nations of the free world must make an even more significant contribution of their national sovereignty to the common cause than hitherto."—[OFFICIAL REPORT, 5th November, 1957; Vol. 577, c. 39.]
    Defence and economics are inextricably bound up. We cannot pursue different
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    policies for each. We as a single country cannot, Western Europe as a group cannot, the Commonwealth as a group cannot, safely pursue a policy of economic independence against a background of interdependence in defence. That is not to say that economic arrangements by groups of countries inside the free world cannot add to the strength of the free world as a whole, provided that they are outward-looking and do not become protectionist blocs.
    There open out before us great possibilities of wider markets in Europe and expanding trade over the Commonwealth. What we are trying to do today is new in both directions and our people have a fine part to play in the mobilisation of the free world's resources. It is a task which suits our genius and is fully worthy of our tradition as the greatest mercantile nation. I hope that we shall never forget our invisible exports which add so much to our balance of payments.
    We shall, of course, derive great material benefits from the growth in international economic co-operation, but also great spiritual satisfaction in helping to raise the standard of life of peoples who have not worked so hard or so ingeniously as we have in the past. Certainly, my hon. Friend the Member for Aberdeen, South was right to tell us that the Government are trying to make a new system of trade. Only if we enter that system wholeheartedly and refuse to cling to old ideas shall we remain the centre of the Commonwealth. In short, and to sum up what I have been trying to say, this is a good time to be alive and to be engaged in industry, commerce or agriculture.
    4.50 p.m.
    Mr. Dingle Foot: For the benefit of those hon. Members who arrived here since the year 1945, I should like to explain that this is not a maiden speech. The last occasion when I had the privilege of speaking in this House was a little over twelve years ago, but I appreciate that the lapse of time does not give me any claim to immunity or indulgence. The most that I can expect is that faint curiosity which is aroused by the spectacle of a Parliamentary ghost which has unexpectedly been re-embodied and has come back to earth.
    When one returns after a lapse of a good many years, everyone asks the same

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    question. Everyone says, "What changes do you see in this House as compared with the House of Commons several years ago?" Without wishing to seem presumptuous. I would say that I have observed one very considerable change. I observed it during the debate on the Franks Report on Thursday of last week. I believe that that debate was extremely significant, not because of the detailed proposals which were discussed and are contained in the Report, but because of the general approach of hon. Members. We had speech after speech from hon. Members on both sides emphasising that considerations of administrative convenience must give way to the rights of the individual.
    That was a remarkable thing to anyone who remembers what took place in the days before the war. In those days we had available to Parliament an equally authoritative document, known as the Donoughmore Report, which made almost precisely the same proposals as those contained in the Franks Report. In those days, in the course of six years between 1933 and 1939, we could not even obtain from the Government a single day upon which to debate what the Report contained, and its conclusions were almost consistently ignored. It is a rather remarkable development that we should have a similar Report produced to this House and that it should meet with such universal acceptance from hon. Members on both sides.
    But the Franks Report, and the debate last Thursday, were confined to this country. It seems to me that the principles which were so clearly laid down in the Report and so generally accepted in this House are not very evident when we look at the scene in the Colonial Territories, and especially at the territories in East and Central Africa. My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) welcomed that passage in the Gracious Speech which said:
    "In accordance with their belief in responsible self-government by free peoples My Ministers will continue to promote the economic and constitutional development of the territories overseas which are in their care."
    We all welcomed that passage, but I do not believe it is possible to promote the economic and constitutional development of territories for which we are
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    responsible except upon the basis of respect for human rights. I want to draw the attention of the House to certain respects in which I do not believe that that is evident. I want, first, to call attention to the question of passports. In November of last year, a Socialist conference was held, I believe, in Bombay. The organisers of that perfectly legitimate conference invited certain African delegates, from Nyasaland, Northern Rhodesia and Uganda. In each case application was made for a passport, and in each case the passport was refused without any reason being given.
    We cannot imagine that happening in this country, and I suggest that it is a very dangerous development. A passport was originally a facility; now it almost becomes an instrument of tyranny. I want to ask the Under-Secretary of State for the Colonies what possible justification there can be for refusing facilities to three British protected persons who wanted to go overseas in order to engage in a perfectly proper and legitimate political activity.
    I now want to turn to something which is a good deal more serious. Hon. Members all know that in Kenya many thousands of Her Majesty's subjects are still detained, in some cases having been detained for as long as four or five years, without charge and without trial. I remember the debates which took place in this House on Regulation 18B and the attacks made on my right hon. Friend the Member for Lewisham, South (Mr. H. Morrison) when he was Home Secretary. In those days we had to have some form of detention because we were engaged in a life and death struggle, but I do not think that there was any Member on either side of the House in those days who did not loathe the whole thing. There was not one of us who did not rejoice when the necessity for it came to an end.
    But we have detention without trial on a far larger scale in Kenya. Looking back through the Parliamentary records of the past four or five years, it is rather remarkable to find that all the protests against that state of affairs have come from hon. Members on this side of the House. Last year and the year before I visited the detention camps, where I was given every possible facility and shown every possible courtesy by the

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    Kenya authorities. I want to say something about the people in those camps. I know that their numbers are falling, but I hope that we shall not be told by any Minister in this debate that the situation is covered by rehabilitation.
    It is true that a number of devoted people are engaged as rehabilitation officers inside the camps, and I do not deny that they may be doing extremely valuable work, but we must realise that no one is a candidate for rehabilitation until he has confessed to Mau Mau activities. That system is not without its dangers, because it means that there is always a temptation to make a confession even though it may be false, because that is the only way in which one can obtain one's freedom, perhaps after having been shut up for years.
    But I am concerned not with those who are candidates for rehabilitation; I am concerned with some of those sometimes referred to as the "hard core," who will say that they have never taken part in Mau Mau activities. Last year I went to Manda Island, and there I saw a number of detainees, who showed me statements of the grounds for their detention supplied to them when they appeared before the advisory committee.
    I want to give three examples illustrating the grounds upon which people are locked up. The first example concerns a man who had been a journalist. He had been locked up almost since the beginning of the emergency. In his case, as in almost all other cases, there was the general accusation that he had been an active supporter of Mau Mau. That means nothing unless it is supported by particulars, and those particulars in this case were, first, "That you had been a close associate of Paul Ngegi." Here is an example of guilt by association. Secondly, and more startling, "You had been editor of a 'near-seditious newspaper'"—here follows the name of the newspaper—"which has now been proscribed." What is "a near-seditious newspaper"?
    I want the House to observe the way in which the process works. First, one takes emergency powers; then one uses those powers to suppress a newspaper, and then one uses the suppression of the newspaper as a ground for keeping a man in prison for four or five years. I
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    do not believe that prolonged detention can possibly be justified on such grounds.
    My second example concerns a man whose case was raised in the House not long ago by the hon. Member for Wednesbury (Mr. Stonehouse). In this case, the man had taken part in politics, and the allegation was as follows:
    "You made inflammatory speeches against the Government of Kenya and Europeans calculated to stir up sedition and inter-racial enmity."
    That was all; no particulars of any speech whatsoever—simply that general allegation. That man has been detained on Manda Island or elsewhere ever since the beginning of the emergency.
    I now come to the third case, the case of a member of the Koinange family, the son of the ex senior chief Koinange, who was aquitted by a court of law, but, none the less, who has been interned ever since. The following was the allegation made against the son:
    "You acted as your father's clerk and to that extent had knowledge of Mau Mau plans, and to the extent that you did not reveal them became a participant."
    That is remarkable enough in itself, but it is still more remarkable when one considers the charges made against the father, because it is not even charged against the father that he was ever a member of the Mau Mau organisation.
    I suggest that these are matters which deserve the attention of the House. It is no less important when Her Majesty's subjects of Kenya are locked up without trial and kept without trial than it was in this country during the war when people were so locked up. The point I want to make about this class of case is that we are not here dealing with terrorists, not with men who have been in the forest and not with people who have taken part in any violent action, but simply with a class of political prisoners. They have been kept locked up for four or five years because of the general political views they have expressed either in speech or in writing, and I respectfully suggest that these cases ought to be reviewed, and reviewed in the very near future.
    I make the further suggestion that these cases ought to be reviewed by someone with high judicial experience sent out from this country. I say nothing either against the judges or the law officers in Kenya. I think that they have played a

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    very considerable part during these years in maintaining English notions of justice and the rule of law, and have done so in extremely difficult circumstances. But I think it is very difficult for anyone who has been there throughout these years—and I do not underestimate what many have had to go through in Kenya during the emergency years—anyone with that background, to bring a fresh mind to bear on cases of this sort.
    I pass now to one other matter which arose in Northern Rhodesia. It is just a little over a year ago since we had a declaration of emergency in Northern Rhodesia. Hon. Members will recall what happened. There had been a series of strikes on the Copperbelt. There had not been any public tumult, but there had been strikes which may have appeared unreasonable to a large number of people. The Deputy-Governor invoked his powers under the Order in Council, 1939, to declare a state of emergency. The leaders of the African Mineworkers' Union were arrested. They were taken away without trial and were, as it afterwards appeared, detained unlawfully. Most of them, if not all, have been detained or rusticated ever since. They are not allowed to return to their homes on the Copperbelt and very often have to live in a very confined space in their own villages. As I understand it, many of them are undergoing very great hardship at the present time.
    The point I wish to make is that, to my mind, it was a most questionable procedure to invoke the 1939 Order in Council in order to deal with industrial disputes. The Order in Council was framed to meet circumstances where there was something in the nature of bloodshed or riot. Here it is being used for a wholly different purpose. These are just three examples which I desire to give the House.
    I would add that there is, of course, a complete lack of uniformity between the various Colonial Territories about another matter, that is, the matter of deportation. I am not going to enlarge on that a: this stage. We can all think of examples of deportations in recent years and in every case the deportations have proved to be wrong. But in all these territories we have different laws. It is an anomalous thing that whereas in Northern Rhodesia if a man is threatened
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    with deportation he is entitled to a judicial inquiry, generally conducted by the chief justice himself, whereas in the neighbouring territory of Nyasaland the Governor merely issues his fiat and the man is deported there and then without any opportunity to know the grounds on which he is being deported or to state his case.
    I have ventured to emphasise the importance of these matters, and I hope that we are not going to be met at some stage with the argument that we must at all costs trust the man on the spot. I always dislike the argument about the man on the spot. For one reason, there is nearly always more than one man on the spot. If a detention order is made in Kenya by the Governor or district officer against an internee, then there are two men on the spot—the man who makes the order and the man against whom the order is made. It is very unlikely that their views will coincide. Therefore, it seems to me that we have to realise where the responsibility lies.
    We in this House should, of course, always attach very great value to the views of those who are entrusted with the actual task of administration, but when passports are refused or when Her Majesty's subjects are interned for years without trial, or when emergency powers are misused, we cannot get out of our responsibility simply by saying that the decision has been taken elsewhere. The responsibility always rests with us in this House.
    I conclude by saying that we all realise, or at any rate all of us who are at all familiar with the problems of the African territories, how very great are the difficulties ahead. It is not easy to combine political and economic development. It is not easy to see how the problems of plural societies are going to be solved, but quite certainly we are never going to solve them unless we in this country are prepared to concede to all the colonial peoples under our rule the same standards of freedom and justice that we here claim for ourselves.
    5.7 p.m.
    Colonel Richard H. Glyn: I ask for the indulgence of the House on the occasion of my maiden speech. I should like to start by saying how conscious I am that my election was

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    made possible by the loss to the House of a Member who was widely respected on both sides.
    I shall not attempt to follow previous speakers in the debate, because today I must not be contentious. However, I should like to refer to a matter which was discussed briefly yesterday. I refer to the possibility of, as it was said, women taking their seats among the Lords. When I heard this matter discussed I was reminded of the story of the last time that a group of women took their seat among the Lords. Although this happened a long time ago, I would like shortly to relate the story, because one of the women concerned was a resident of North Dorset.
    It is officially recorded that about the year 1306 King Edward I convened a Parliament to which he summoned his Lords, his Commons and also his Prelates, as the custom then was. He summoned them to Westminster, to appear concilio nostro apud Westminster, that is to say, to take their seats in the Old Westminster Hall. Tradition has it that in those days Prelates and Lords sat in one part of the Hall and the Commons in another. It is a matter of history that on that unique occasion a summons to appear was sent to the Abbess of Shaftesbury and to three other Abbesses, and it is a matter of tradition that, having been summoned to appear "apud" Westminster, "apud" Westminster they went and took their seats, among the other Prelates, with the Lords. History makes it perfectly clear that they were never asked to come again, but history does not record why, which, of course, remains a matter of speculation. The Abbey over which the lady ruled is now a ruin, but the broad acres with which it was endowed are still the centre of a busy agricultural community which I have the honour to represent.
    Agriculture is of the greatest importance to North Dorset, and agriculture and its auxiliary industries and horticulture are really the most important industries in my constituency. Therefore, I wish to welcome the statement in the Gracious Speech that the Government intend to continue supporting agriculture. I know that many people ask why agriculture, of all our industries, needs to have what we call support prices and what are sometimes called subsidies. I know many
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    people think that because foreign food is sold very cheaply here in Britain it follows that it must have been produced very cheaply by the foreign producers. Statistics to which I shall refer show that this is not always the case.
    The United Nations has published figures of great interest which are available to hon. Members in the Library in the monthly bulletins of agricultural and economic statistics. It would be very wrong for me on this occasion to detain the House with a great list of figures, however important. But perhaps it is worth noticing that if we take an average for the last three years for which complete figures are given the British wheat grower is shown to be one of the lowest paid in the world.
    This was so interesting to me that I referred the matter to the Department of my right hon. Friend the Minister of Agriculture, Fisheries and Food and asked if it were right to say, as the United Nations did, that these figures included all British support prices and subsidies. I got back a most helpful answer assuring me that this was the case. This being so, I can say with confidence that the only country which during those three years which was paid less for its wheat than Birtain was Canada, which received less to the tune of 17 American cents per metric ton of wheat.
    Butter and cheese were formerly articles of great importance to the small farmers in my constituency. They used to augment their incomes by turning milk into butter and cheese and making a little profit that way. But this can no longer be done, and the United Nations figures show that British farm prices for butter are the lowest in the world. They further show that the French farmer gets actually 92 per cent. more for his butter on the three-year average than is paid to the British farmer.
    Regarding cheese, it was announced only last week that the farm cheese price is now less than before the war. The British farm cheese price for Cheddar cheese was said to be 80 per cent. of what it was in 1938, and I can think of no other commodity of which that would be true. It is interesting to note that, on the United Nations figures, the Italian farmer is shown as being paid on a three-year average 106 per cent. more than the British farmer for cheese.

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    I do not want to weary the House with more figures, but it is right to say that there is another side to this question. On two commodities only have British farmers benefited according to these United Nations figures. They show that for eggs the French farmer gets 4·7 per cent. less than the British farmer and that for milk the Italian farmer gets 5 per cent. less. For every other commodity supplied for human consumption, the balance of advantage is with the Continental farmer. That being the case, it may be asked, how is that that foreign food is sold so very cheaply in this country? We are the lowest paid butter producers in the world, but we import 5,000 tons of butter every year. The answer is, I think, that foreign food is sold in this country at an artificial and false price, below the price that the farmer who produces it is paid for producing it. The reason for this, I think, is that some countries have a surplus of agricultural products which they have to sell somewhere and they compete with each other as to how to sell them; and because we are the biggest market for food in the world, they compete with each other to sell their surplus food to us.
    To give one example of this, the price of French wheat two years ago off Avonmouth was £23 a ton. The French farmer producing it was paid over £37 a ton on the United Nations figures. I think that gives the true picture. The real position is that a great quantity of imported food is sold here, not only at less than the farmer who produces it was paid for producing it, but in some cases less than it could be produced by any farmer in any part of the world. If that be accepted, it is clear that, so long as this position continues, British farmers will have to have the help of some kind of subsidy or support price.
    The British community benefits enormously by buying this cheap food, and it is right and proper that it should. But what benefits the rest of the community would be a great cause of loss to the farmer if he were not supported or aided in some way. So I suggest that these support prices are neither a badge of sloth nor a cloak for inefficiency. They are part of a system under which we buy our food so cheaply that it is necessary to help our farmers with these
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    support prices. For all these reasons, and because of the importance of agriculture and horticulture to North Dorset, I welcome the phrases in the Gracious Speech which indicate continued Government support for these industries.
    5.17 p.m.
    Mr. Marcus Lipton: It is a privilege to follow the hon. and gallant Member for Dorset, North (Colonel R. H. Glyn), because it enables me to congratulate him on one more distinction in addition to those which he already holds. I shall have the support of all hon. Members when I warmly congratulate the hon. and gallant Gentleman on an excellent maiden speech. In fact, I think that one may say that he is a very worthy successor to the Abbess of Shaftesbury who preceded him in the representation of the constituency.
    It was very refreshing to hear what the hon. and gallant Member had to say, because as a small agricultural producer I have for long felt that I am not getting what I ought to get for my produce. I hope that the changes which are to be introduced will not worsen the situation. One of the puzzles for pig producers, for example, is that while they are getting much less for their pigs than they received 12 months ago, the housewife is not reaping the advantage of the difference in price. But I shall have to reserve my comments on the agricultural problems with which we are faced until some other occasion. I wish now to say a few words on some of the contents of the Gracious Speech.
    Reference was made in the Gracious Speech to the possibility of creating life peers. I do not regard that as a matter of very great importance. In my view, it would have been better had we first put our own House in order. We should do far more than has been done already to improve the working conditions for hon. Members and their secretaries. In the last Session, or the previous Session, there was a Sessional Committee set up to consider these problems of accommodation and the facilities available to hon. Members. I hope that steps will be taken to set up that Committee again, because the problems with which it attempted to deal have by no means been solved. While I am on this topic,

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    may I beg the authority concerned—it is always difficult to know which authority is directly concerned—to take whatever steps are possible to reduce or minimise the odour of fried fish which so very frequently permeates the Central Lobby and other parts of the Palace of Westminster. It is certainly not a dignified aroma for the Mother of Parliaments to conduct its business in, and I make a firm plea to whoever is responsible to do what is possible to minimise this rather annoying inconvenience.
    In discussing the economic situation, it it difficult to know exactly what the Government regard as inflationary. The Prime Minister made a long speech yesterday which did not do very much to enlighten either the House or the country. The Prime Minister is a political Sputnik, because no one knows, including himself, how, when or where he is going to come to earth. He certainly did not come to earth on more than one topic to which he referred yesterday. Despite his attempt to explain the duty of Her Majesty's Government on the subject of increased wage demands—the increased wage demands put forward by people in the hospital services—responsible trade union leaders are still dissatisfied and suspicious.
    The Government are putting up a tremendous smoke-screen to create the impression that the trade union movement is the principal cause of the current inflation. The point that I should like to make very briefly is that we can only ask for a wages standstill if the cost of living is held steady, and until Her Majesty's Government can give that assurance it is idle to expect the trade union movement to refrain from making wage demands where such demands are considered essential.
    No reference has been made by any of the Government spokesmen to the inflationary effect of giving £100 million to landlords under the recent Rent Act. No reference has been made to the inflationary effect of the Government giving £100 million by way of extra interest on the National Debt. No reference has been made to the inflationary effect of giving £35 million by way of a present to Surtax-payers in this year's Budget, and certainly no reference has been made to the question of post-war
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    credits, the repayment of which ought really to be speeded up. At the current rate of repayment, £17 million a year, 1984 will indeed be a memorable year, because it will not be before 1984 that post-war credits will be finally paid off.
    Another point that I want to make is that, by October next year, the full effect of the Rent Act will be felt, and it will be felt at the very time when, since the Rent Act has been put on the Statute Book, the Government have decided to impose a 20 per cent. cut in housing during the next two years. I think it is true to say that of all the cuts that are being imposed by the Government housing bears the most savage cut of all. So far as the property-owning democracy is concerned, it is sufficient to take note of the fact that the 7 per cent. Bank Rate has virtually put out of business for the time being almost every building society in the country. Just try to obtain an advance at the present moment for the purpose of buying a house.
    In October of next year many decontrolled tenants will be thrown to the wolves. The Government, it is true, have increased or are going to increase in the very near future old-age pensions and the National Assistance grants. I should like the Government to tell the House how much increased expenditure to be incurred by the National Assistance Board in the next year or two will be devoted to paying the increased rents of recipients of National Assistance. In effect, the Government will be paying to some extent the increased rents required by landlords from old-age pensioners and others in receipt of National Assistance.
    The magnitude of the problem can be gauged from one very simple fact, which I can quote, from the Borough of Lambeth. Since a rent advice bureau was established at the town hall a few months ago, 8,600 inquiries have been received at that one rent bureau. Many cases have come to my notice in which a landlord has given notice to quit in October, 1958, and he does not want to consider any offer, however vastly increased the offer may be, by the tenant to pay increased rent; what he wants is vacant possession.
    The Minister of Housing and Local Government made an appeal to landlords to be reasonable. That appeal has, I am sorry to say, fallen on deaf ears in all

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    too many cases. What is even more galling is this. The Government are still pretending that the Rent Act will increase the number of unfurnished houses and flats to let. I very much hope that the Government are right and that I am wrong in prophesying that in October, 1958, there will be vast distress and dislocation in London and other large centres—people being made homeless with nowhere to go.
    What I fear is that the county court procedure, which will have to be employed for the purpose of evicting people, will break down simply because there will not be sufficient bailiffs to ensure the ejection of all those unfortunate people. In Lambeth, for example, the problem is aggravated for another reason to which I have previously drawn the attention of the House. Three years ago, I asked the Colonial Secretary whether he could announce the result of an examination which the Government were then making of the problems arising from the emigration of British subjects from the West Indies to the United Kingdom. The then Minister of State for Colonial Affairs said that the Colonial Secretary was still in urgent consultation with other Ministers concerned but was riot yet able to make a statement.
    I pointed out that the longer this matter was allowed to drift the more difficult it would be to find a solution satisfactory to the increasing number of immigrants in this country and to the local authorities which are very much concerned and whose resources were considerably strained. The Minister of State replied:
    "I can assure the hon. and gallant Member and the House that the Government are very conscious of the urgency of this matter and are doing their best to deal with it as rapidly as possible."—[OFFICIAL REPORT, 15th December, 1954; Vol. 535, c. 1768.]
    That was three years ago. The Lambeth Borough Council sent a deputation to the Colonial Office almost immediately after I put that Question in the House, and we are still waiting to know what the Government are going to do about it. It is proving impossible to enforce the Public Health Acts. The terrible results of overcrowding are constantly brought to our notice and very bad cases of exploitation by landlords, white and coloured, are also coming to our notice.
    Mr. Cyril Osborne: Is the immigration still as great today as it was three years ago?
    Mr. Lipton: I have not up-to-date figures on that. All I would say is that during the past three years there has been further immigration into this country which, of course, has made this situation in London and other large cities even more difficult. The point I am trying to make is that the situation is now more difficult than it was three years ago, but the Government, although stating that they were giving the matter active consideration three years ago, have not done one thing since to show any willingness or give any evidence of their intention to deal with the very difficult problems which are involved. As a matter of fact, for that, if for no other reason, I welcome the Labour Party's proposal to municipalise rented property. That, combined with the economic aid to under-developed areas overseas, including the West Indies, may help to deal with this very difficult problem.
    We have at present a Government which is drifting in a rudderless fashion, not only regarding this problem, but regarding problems in other spheres. The whole effect of the Government's policy is to create hardship and anxiety for vast numbers of people, among them old-age pensioners who are living in dread and do not know what is to happen to them in October. 1958. Surely, it is ironical to produce a Gracious Speech in which appears the following sentence:
    "My Ministers will continue to promote the social welfare of my people."
    That particular sentence will come as very hollow mockery to many tenants whose future is indeed black, unless there is a very radical change in the Government, or the policy followed by the Government.
    5.31 p.m.
    Mr. Michael Clark Hutchison: Like my hon. and gallant Friend the Member for Dorset, North (Colonel R. H. Glyn), I ask for the indulgence of this House as this is the first time that I have had the privilege of addressing it. I should also like to mention my predecessor, Sir William Darling, who. I know, was a very popular Member in this House, and whose retirement through ill-health is much regretted.

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    I was very pleased to see in the Gracious Speech reference to the development of our Colonial Territories. Here I should like to pay tribute to members of the Colonial Service. Very often policy decisions are issued in this country, and directive go out, but we overlook the difficulties of the men who have to implement them. Frequently, they are handicapped by lack of adequate staff, lack of funds, and lack of understanding of their position. Very often, their deeds are misrepresented by foreign nations. All these things they have to fight against, but nevertheless, our Colonial Service is staffed by men and women of great integrity, men and women who spend their lives—often at great cost to themselves—in furthering the welfare of colonial peoples, and I should like to pay respect to them.
    It seems to me that there is one small way in which we could recognise their services; that is, to grant them the vote in this country. As I understand, under the Representation of the People Act, a Crown servant employed overseas and paid from United Kingdom funds has the franchise here. That means that a certain number of colonial servants do have a vote in this country because they are paid from United Kingdom funds, but the vast majority do not because they are paid from colonial funds. It seems that it would be a reasonable and generous step to place those men who are recruited here and who are domiciled in Britain in the same position as members of the Armed Forces and to grant them the vote. I hope that my right hon. Friend the Secretary of State for the Colonies will look into that matter.
    There is one particular point to which I should like to refer, the question of how our information and publicity services in Arabia and East Africa may be improved. Great advances have been made in those territories, but very often, because of the deplorable lack of publicity services, our achievements are belittled and we are thrown on the defensive. It must be remembered, and I am sure the House knows, that Cairo Radio can daily reach thousands in Arabic and millions in the Swahili language and that much of this propaganda is, indeed, hostile. When I left Aden three years ago, there was no anti-British
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    feeling, but I am sorry to say that today the position has changed. It is because the people of Aden have been influenced by this hostile propaganda.
    Against that, we have the B.B.C. Its Arabic programmes are often excellent, but it has to cover a very wide and diverse area, including advanced countries like Syria and mediæval lands like the Yemen, and sometimes its programmes are very unsuitable. I was told, but have not been able to verify it, that not long ago it had a programme on the life and habits of the grasshopper. That programme cannot have had a great following in Arabia. There is obvious need for a much closer liaison between our local officials on the spot and programme planners in this country.
    In addition to the B.B.C., there are local stations but, frequently, these are handicapped by lack of finance and lack of staff. The one in Aden, for example, is a most ramshackle affair and the total vote for publicity services in that Colony is under £30,000 a year, plus a grant of £8,000 from Colonial Development and Welfare Funds. Not much can be done with that. I do not blame the local staff: I know many of them; they work hard, but they just have not the tools.
    I know that expansion will cost money. One means would be by setting up an efficient organisation for Aden and the East African territories, an efficient broadcasting organisation, so that the resources of those countries could be pooled. Within that framework programmes can be directed to each local territory according to its needs, the state of its educational services and general standards obtaining.
    There is one other point. Throughout Aden, the Protectorate and the East African Territories down to Zanzibar, there is a vast quantity of local military, police and security forces. In the Aden Protectorate there are six such forces. All have different standards of recruiting, different uniforms and different equipment. Here, surely, is a field where some sort of uniformity can be undertaken. We can streamline those forces and get much greater efficiency while saving much money which could go towards our propaganda services and broadcasts. I wonder, once again, whether my right hon. Friend the Secretary of State for the Colonies will look into this matter.

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    Finally, I should like to say that territories like Malaya have reached maturity and have taken their places in the Commonwealth, but that we must not overlook the needs and aspirations of the small territories. It is my belief that very few, if any, of them will be able to stand on their own feet and be fully self-supporting. Nevertheless, they must develop and we must help them to do so. One way out may be to ask the great Dominions to interest themselves more in such Colonies which lie within their orbits.
    The British Commonwealth is changing. It will need all our imagination to ensure that as Colonies come to be more self-supporting they stay within the family circle. I have great faith in our nation and in the Commonwealth. I hope that careful consideration will he paid to these matters which are supremely important and take precedence over any question of European free trade or anything of that sort.
    5.44 p.m.
    Mr. Thomas Hubbard: It is my good fortune to catch your eye, Mr. Speaker, just after we have heard a most interesting maiden speech on a very interesting subject. The hon. Member for Edinburgh, South (Mr. M. Clark Hutchison) obviously spoke with a great deal of knowledge and sincerity. I am sure that on behalf of the whole House I can offer him our most sincere congratulations.
    I am particularly interested in the subject matter with which the hon. Member dealt. We know that he has had a long experience in colonial work. I am aware that he was in Australia when the war broke out and there joined the forces and rose from private to major. That is evidence of his ability. After that, he went into the Colonial Service in Palestine and elsewhere. He knows his subject, and his knowledge will be of the greatest service to this House in the future.
    It is not surprising that the hon. Member should deliver a good maiden speech when we remember that his father served in this House for six years after 1920 as Member for North Midlothian. Not far removed from where the hon. Gentleman is now sitting is another member of his family, the hon. Member for Edinburgh, West (Sir I. Clark Hutchison), who has served this House for a long period. The
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    hon. Member's family has thus made quite a contribution to Parliament. I am sure that he will look forward to future debates, when he can join in the battles which are enjoyed so much by hon. Members on both sides of the House.
    I wish I could be as sincere in congratulating the Government on their proposals. One of the strange things about our proceedings is that one may congratulate a maiden speaker in the kindliest terms one can think of and immediately afterwards have to address oneself to the Government, when one cannot find terms harsh enough with which to criticise. I do not think any Government deserve criticism more than the present Government. I have read carefully through the Gracious Speech, and I have imagined all the things that might have been in it. One of the most effective parts is that in which the Government make the resolve to
    "take all steps necessary to maintain the value of our money, to preserve the economic basis of full employment by restraining inflation, to strengthen our balance of payments and to fortify our reserves."
    Up to now, the Government have taken all possible steps to destroy the value of our money. Even at this late stage, if we could accept what they say in the Gracious Speech as likely to be true, we might be able to help them.
    I do not wish to go further in my criticism. After hearing the speeches that have been made in this debate, I very much doubt whether the Government are capable of maintaining the value of our money and preventing unemployment. If one were to be guided by speeches made here by the Government and their supporters, as well as by speeches made outside this House by Ministers, Government supporters and other Conservatives who are not members of this House, one might be misled into believing that the Government had had a long run of success and had brought the country into prosperity by creating conditions in which, as the Prime Minister has said, we have "never had it better". In point of fact, everyone, excluding the Prime Minister, knows that there has been a steady deterioration since the Government were elected.
    Many things have happened during the last year, not excluding the Suez crisis. The by-elections have shown in

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    clear terms that the Government ought to go to the country, rather than continue in office when they know that the country no longer has confidence in them. It is not a question of the so-called war against the Government by wicked trade union leaders, or of Opposition Front Benchers or back benchers trying to destroy the success of the Government. The Government have had no success.
    It is a rather pitiful story. We have gone from bad to worse, year after year. Now we find ourselves in the sorry position in which the Government's own deliberate policy has increased the cost of living and, therefore, has reduced the standard of living. Having done that, they tell us and the country that it would be wrong for trade unionists to ask for increased wages and for the Government to approve them, whether before or after arbitration, because they would be inflationary increases. It is the question of whether the hen or the egg came first. Everybody knows that the Government, by giving large sums of money to one section of the community, have created conditions which have caused us nearly to reach bankruptcy.
    No one on this side of the House wants to see inflation. One of the things which annoys me is to have to listen to right hon. and hon. Members opposite making speeches, both inside and outside the House, on the basis that the patriots are on their side of the House. We believe that they are on this side of the House and in the trade unions and the workers whom they represent, some of whom have been derided by hon. Members opposite.
    Throughout my short lifetime the low-paid wage earners in this country have always responded when the country was in difficulties, whether in war or in peace. My memory takes me back to conditions to which none of us likes to refer. When the First World War broke out nobody said, "We are the people who have been so badly treated that we have little to gain by fighting." They went to war and fought. The very same people who fought in the First World War had been receiving wages of about 17s. a week in the linoleum industry. These are the old-age pensioners of today. We are told that they ought to have saved for their old age. The ordinary people were the great patriots.
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    We all know that this country cannot survive without production and manufacture. The Government recognise this. Our problems cannot be solved simply by a few kind words; more must be done. Someone from the Government Front Bench ought to pay a full tribute in respect of the co-operation which the Government have had from the trade unions since they were elected. When we remember the conditions in which the miners have worked in the past and realise that after long years of struggle they have achieved a five-day week, we also recollect that they have continued to work a six-day week. People in other industries who have worked for very small wages in the past are today working long hours of overtime.
    In spite of this, all we can hear from the Government and their supporters are references to the average earnings of the people, forgetting that these are the results of the miners working a six-day week instead of a five-day week and of many others working longer and harder. This criticism of the earnings which the workers make is far from a credit to people who make such remarks.
    By the production of all industries in this country, engineering no less than any other, by working overtime, by making greater effort and by increasing our production, they are assisting the Government, but the most they can get from the Government and their Tory supporters as well as a large section of the Press is a continued report about the average earnings of the people in this country, without any explanation that these earnings have arisen because the people have worked harder and longer.
    That is not the way to treat a single section of the community. I agree that everybody's efforts are needed if we are to make our money worth something. It used to be worth something. It requires everybody's efforts, but the Government select a single section of the community, whether for a tax reduction or, for the landlords, an increase in rent. In many cases there will be no limit on the increased earning capacity of the landlords, and there is no suggestion of disloyalty because they have raised their rents as high as they wished. Apparently there is no crime in that; it seems to be all right. It does not appear to be disloyal for a group of people, at the very moment

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    that the full impact of the financial crisis struck this country, to make fortunes overnight on the Stock Exchange. There seems to be nothing unpatriotic in that, according to the Government.
    On the other hand, when people find that their standard of living is affected by these things, apparently it is unpatriotic when they try to maintain it. If the rent rises and if the price of everything else goes up because of increased interest charges, the only way in which people can maintain their standard of living is to ask for an increase in wages. I cannot see that there is anything wrong in an ordinary wage earner wanting to maintain his standard of living if at the same time there is nothing wrong when another section of the community makes the sky the limit.
    I have had a long experience in the mines, but my constituency must be about the largest linoleum manufacturing centre in the country. The industry has been of great assistance to the town. Many people are employed in it. I know little about what goes on in the head office of the linoleum industries in Kirkcaldy, but from time to time we hear what has happened in the Linoleum Manufacturers' Association, of which all the linoleum manufacturers, including those in Kirkcaldy, are members. I know that there was an examination of that industry by the Monopolies Commission, and I was delighted to hear that the Commission thought That no action was necessary.
    Although they are more or less in steady employment at the moment, the workers in the linoleum industry cannot be described as high wage earners. They are lucky if their wages fall between £7 and £8 a week. Despite this, I notice that it has been decided to increase the cost of linoleum by 5 per cent. I have not heard that there was any suggestion of arbitration about this or that anyone suggested that it was likely to prevent us from placing our economy on a sound footing. Nobody was consulted about this. I am quite certain from statements made by the Chancellor, the Minister of Labour and all others who have spoken from the Conservative benches that if the workers in that industry were to ask for an increase in their income by 5 per cent. they would be told that they were jeopardising the country's economy and that it would be an inflationary increase unless attached to greater production.
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    It is because of this that I think the Government's policy is unfair. The country cannot overcome the crisis lidless we do it together, and if we are to do it together, then the policy must be as fair for one section as for another. We cannot say to one section of the professions, trade or industry, "You can have a 5 per cent. increase", if to another we say. "You cannot have a 3 per cent. increase". If we do that we cannot go forward together, and I am convinced that if we cannot go forward together, then we shall move backwards together. We shall do that unless, pretty quickly, the Government have more to tell us than the sort of things to which we have been listening for the past fortnight—something more concrete and something which will be found agreeable by the people as a whole and not merely by a section of the community.
    We know that everybody cannot be engaged in productive industry, but we must be convinced and be able to convince others that those who add most to the pool are entitled to take most out of the pool. Those who add nothing to the pool are not entitled to take anything out of it. I am afraid that at present those who make little contribution take far too much out of the pool.
    I listened with some interest to the debate last week when it was stated that if, after arbitration, the British Transport Commission might seek to give an increase in wages to its employees the Government would have to do what the Minister of Health has already done—decide whether or not such an increase was inflationary, and, if it was decided that it would be inflationary, refuse to give it. Not that the British Transport Commission could ever be accused of being too generous. The Commission looks after a nationalised industry, it is true, but an industry that was bankrupt before it was nationalised, that had been receiving subsidies for donkey's years before then, and that had never stood on its own feet. The Minister now says that it must stand on its own feet.
    Among my acquaintances there are some who have given long and loyal service to the railways. I have spoken before of a friend of mine in my constituency who, on the very day that he was 65—though he was enjoying good health and manpower was required—was told to pack up and go home. That was

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    after forty years' service. While it is true that he had not given long service to the British Transport Commission itself, he had given a continuity of service to the railway company, and one would have assumed that the Commission, when it took over the railways, would take over the human liabilities as well as the assets.
    This man was informed that, by virtue of his service, he was to be awarded a pension of 6d. a week. It is a year since I spoke of that, and I have not since received evidence that the Commission is now any more generous or more likely to throw about public funds. A letter dated 27th September, sent to the same man reads:
    "I have to inform you that as a result of the amendment to the rules of the B.T.C. (Male Wages Grades) Pension Scheme, which came into operation on the 19th August, 1957, it is now possible to offer you a lump sum in lieu of pension of 6d. per week you are receiving. On the advice of the Actuary, it has been determined that the sum of £11 14s. is the estimated capital value of your pension of 6d. per week."
    From that, it would not seem that we need be suspicious that the B.T.C. will spend public funds without regard. Here is a man with 6d. a week pension. It is true that they do not ask him to go to the office every week to collect it. They allow him to collect the magnificent sum of 2s. each month, and now he has been offered that meagre sum in complete satisfaction of his claims on the Commission. Nevertheless, the Minister says that we might not be able to trust the B.T.C., that it might even advocate an inflationary increase.
    I do not want to say much today about old-age pensions, because I hope that we will have an opportunity to discuss them in the near future. Nevertheless, it would not be out of place, perhaps, for an honorary official of the British Council of Old Age Pensioners' Associations to say the old-age pensioners see no reason to thank the Government. They do not believe that the Government have done great things since the 1951 Election. Increases have always come too late and have always been too small.
    It is not for me now to go into the questions raised by the Bill now available in the Vote Office, but it is right and proper to say that I believe that we have got into the habit of looking on old-age
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    pensioners as a separate population. We look upon them as people who ought to be content to live a sub-standard life. That is very wrong. Who are the old-age pensioners for whom I speak? They are our fathers and mothers—just ordinary people, but ordinary people who have given great service to the country.
    They worked for not very big wages, and they raised big families. Many of them served in the First World War, and many gave their families to serve in the second. When they were working, they often worked twelve hours a day for seven days a week. They were industrious. Now we talk of them almost as though they were people to whom we must give a hand-out. The old-age pension does not allow them to have the standard of life that I would like for my own people.
    The hon. Lady the Member for Aberdeen, South (Lady Tweedsmuir) interpreted—she did not quote—Robert Burns. Burns wrote:
    "O wad some pow'r the giftie gie us
    To see oursels as others see us!"
    I do not think that needs translation.
    Mr. R. J. Mellish: Yes it does.
    Mr. Hubbard: My Cockney hon. Friend often speaks, and I cannot understand a word that he says.
    We should not be thinking in terms of the translation, but in terms of the philosophy. We should be searching for some power to enable us to seek for others something that is good enough for ourselves. When I think of the degree of comfort there should be for old-age pensioners, I think in terms of the comfort I want for myself. I do not think that my job is yet completed. Young people today, who have made little effort, are always ready to condemn the old people, many of whom worked hard until they were nearly seventy years of age.
    The old-age pensioners have for long been looking forward to an increase in pension. Last February we had a long debate on the subject, when we on this side pleaded with the Government to give an increase. The Government did not give it. That was before the Prime Minister said that we had "never had it so good." Some time later he gave a

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    great gift to the Surtax payers, but he could not give anything to the old-age pensioners. Now the Minister tells them that, if they behave themselves, they will get it by the end of January. But we know perfectly well that because of the Government's monetary policy and of the rent increases, even a 10s. increase in pensions will not then meet the increased cost of living.
    During the passage of the new Bill I hope that I shall have an opportunity to tell right hon. and hon. Members on both sides to think of the old-age pensioners, not as people who are a burden, but as people who made this country as great as it is, and who, in their time, made a contribution equally great as that we are now calling on their successors to make. They should think of them in those terms, and should say that, however the money is to be provided, the old-age pensioners have earned it far more than those associated with the Stock Exchange. These old people are entitled to a decent standard of living. Every time the weather is very cold and we have to put on an additional fire we should remember that, whatever the cost-of-living index says, the old-age pensioners cannot afford that extra bag of coal. That fact alone contains greater criticism of the present attitude than any words that I could use.
    The House should remember some of the things done by the late Sir Stafford Cripps—, things that were so much criticised by hon. Members opposite. It should remember that throughout their lifetime the Labour Government, with all their difficulties, made some attempt to get the country moving, even with wage restraints. They did not succeed 100 per cent., but at least they made 100 per cent. effort. If I could feel that there was even 20 per cent. sincerity behind the Government's policy I would be happy. Be that as it may, if we are to win we shall have to win together. The victory will not be the result of what happens on the Government's side, but of the response we get from people who can feel that they are in the fight together.
    6.10 p.m.
    The Minister of Health (Mr. Derek Walker-Smith): I welcome this opportunity of catching your eye, Mr. Deputy-Speaker, in order to give to the House a short explanation of the decision relating to the agreement reached by the National
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    Health Service Administrative and Clerical Whitley Council, which has been referred to both by the hon. Member for Cardiff, South-East (Mr. Callaghan) in his speech earlier this afternoon and by the right hon. Gentleman the Leader of the Opposition in his speech yesterday.
    Before coming on to that subject, I should like to welcome the maiden speech of my hon. Friend the Member for Edinburgh, South (Mr. M. Clark Hutchison). As the House has seen, he spoke with confidence and, although he had copious notes, he did not have to refer to them. The subjects on which he spoke are very far removed from what I have to say, but I noted that he made constructive suggestions which will, I am sure, be considered, We all look forward to hearing him again, and I associate myself with the fitting and eloquent tribute paid to my hon. Friend by the hon. Member for Kirkcaldy Burghs (Mr. Hubbard).
    Perhaps I might, without impertinence, also welcome the first speech for many years in this House of the hon. and learned Gentleman the Member for Ipswich (Mr. Foot), with whom I have been fortunate enough to enjoy a personal friendship for over a quarter of a century.
    I welcome the opportunity to say a word about this Whitley Council matter not least because a good deal of misconception and misunderstanding has been revealed by the comments which have been made upon it. Perhaps I might start by indicating briefly what is the statutory position in which we had to act in this matter.
    The regulations which govern our action are the National Health Service (Remuneration and Conditions of Service) Regulations, 1951, which are made under Section 66 of the National Health Service Act, 1946. The operative words of the Regulations for this purpose are these:
    "The remuneration of any officer who belongs to a class of officers whose remuneration has been the subject of negotiations by a negotiating body and has been approved by the Minister after considering the result of these negotiations, shall…be neither more nor less than the remuneration so approved…."
    As the House will see, there are two clear steps contemplated and provided for. First, there is negotiation by a negotiating body, and then there is Ministerial consideration with a view to approval or otherwise.

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    So far as the first stage is concerned, the negotiating machinery is the Administrative and Clerical Whitley Council, which is, in fact, one of nine functional councils for negotiating rates and conditions of employees in the National Health Service. It is right that I should make clear what is the composition of the management side, because in this context it is a very important matter. The hon. Member for Cardiff, South-East sought this afternoon to take me to task for asking him to call it the management side and not the official side. He pointed out, with some asperity, I thought, that it had been called the official side for twenty-five years.
    The hon. Member for Cardiff, South-East is wrong. Indeed, in many cases his dogmatism is in inverse ratio to his accuracy. It is quite true that, in the Civil Service, that nomenclature is used, but in the National Health Service the terminology is that which I used, "the management side". Of course, no question of twenty-five years comes in, because the thing has been in operation for only nine years.
    Mr. Cyril Bence: So what?
    Mr. Walker-Smith: I will tell the hon. Gentleman "so what". I say this not because I am quibbling about nomenclature, but because there is a very important point underlying this distinction, and if he will be good enough to await the explanation, he will have it with, I hope, reasonable clarity.
    The management side comprises 18 members; 10 are representatives of hospital authorities, three are representatives of executive councils, and five are official or Departmental representatives, that is to say, representatives of myself as Minister of Health and of my right hon. Friend the Secretary of State for Scotland. There is here, I should have thought, some paradox, in this sense, that only those five representatives, the minority, are concerned with finding the money for any wage increases, because although the hospital authorities and executive councils are technically the employers, the wages in these cases come directly from the Exchequer, that is, directly out of the taxpayers' pockets.
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    The hon. Member for Cardiff, South-East, had his own idiosyncratic way of referring to this state of affairs. He said that the fact that certain members of the management side had no responsibility in the economic sense, no connection with the finding of the money, made them more independent. That is, of course, one way of putting it. One might equally well say that the customer entering a shop takes a more independent—some would say a more lavish—point of view in ordering his goods if he does not have to foot the bill. It might be a more reasonable and sensible way of putting it to say that this is a clear exception to the general rule that he who pays the piper calls the tune.
    In this case, the statutory Regulations ensure that the payer of the piper has his say at a later stage, but not within the management side of the Whitley Council itself where he is in a minority.
    Mr. Arthur Moyle: Not even with five of the Minister's own representatives on the Whitley Council?
    Mr. Walker-Smith: As the hon. Member will appreciate, five out of 18 is a minority so small as not even to be capable of forming a quorum.
    I have indicated the first stage. The second stage is Ministerial consideration. On that, the House will appreciate that there is a clear, express statutory duty laid on Ministers. In this case the soft option of doing nothing is not available. Ministers must grant approval, or withhold approval; or they may take the course which we took in this case, which was to withhold approval in present circumstances, coupled with an undertaking to review at an appropriate time.
    It is not, as has sometimes been represented, an outright rejection for all time, but it is a withholding of approval now in the context of the present economic situation, with an undertaking to review. [HON. MEMBERS: "Oh."] Definitely. If this is new to any hon. Member, it merely shows that hon. Members have failed to familiarise themselves with the basic facts of a matter on which they have not been slow to express uninformed opinions. The point was quite clearly taken in the letter which I wrote to the chairmen of both sides of the Council last week.
    Mr. Stan Awbery: Would the right hon. and learned Gentleman say how many times the approval of the Minister has been withheld since the establishment of the Whitley Council in 1917?
    Mr. Walker-Smith: I can deal only with the position in the Health Service, with which I am concerned. The Minister has not previously had to withhold his approval, even in the context in which I am speaking now.
    Mr. Awbery: Is the right hon. and learned Gentleman aware that he is establishing a precedent for the future for all Ministries?
    Mr. Walker-Smith: I am seeking to point out that Ministers are under an express statutory duty to consider these questions when they arise. I think that it would meet the convenience of the House if I now came to the question of the relevant considerations which should be taken into account; that was one of the questions put to me by the hon. Gentleman this afternoon.
    Mr. Callaghan: Concerning the statutory responsibility of the Minister, if I may put it in a semi-interrogatory manner, the right hon. and learned Gentleman is obviously aware that before 1951 he had no responsibility in this matter. It was only in 1951 that he assumed it because of the regulations that were made. Is he aware—have his researches carried him to this point—that precisely because the staff side of the Whitley Council could see the danger of putting the Minister in this position, it wrote to the Ministry in 1951 and had a reply on 4th August, to this effect:
    "The regulations do not supersede in any way the work of the Whitley Councils in regard to remuneration and conditions of service in the National Health Service and the Minister would not wish the Whitley Councils to be in any doubt on that score."
    Is the Minister aware that what he is doing is to use the statutory powers, which he took in order to ensure that all hospital boards kept in line on the payment of remuneration, to refuse a general increase that has been conceded by the very body whose powers he said he did not wish to supersede?
    Mr. Walker-Smith: I am certainly not superseding the negotiating machinery of
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    the Whitley Councils. [Interruption.] As I have already explained to the House, as matters now stand there are two stages. My right hon. Friend and myself have a statutory duty in this matter, which I have already defined.
    The hon. Member asked whether consideration would be given to claims on the merits of the case or in the light of the general economic situation. This is the answer. Those aspects are not a direct antithesis, nor are they mutually exclusive. A claim has to be looked at on its merits, yes, but its merits not in an isolated context but in the general context of the economic situation, including the necessity to counter inflation. I do not believe that anybody would think that the general economic situation and the inflationary position are not immediately and immensely relevant to a decision such as this.
    Mr. Roy Mason: Is this not a case of penalising the workers for the failure of the Government's economic policy?
    Mr. Walker-Smith: I am not prepared to debate the whole economic situation with the hon. Member at this time, because I have a duty to expound to the House the particular matter with which I am concerned. I will, therefore, say quite shortly, although I do not think it will surprise the hon. Member, that I do not accept the premises on which his intervention was based.
    The Government's policy was stated quite clearly by my right hon. Friend the Chancellor of the Exchequer on 29th October, when he said:
    …they"—
    that is, the Government—
    "should, where they are themselves the employer, seek to follow policies similar to those which they urge upon others."
    My right hon. Friend went on to say:
    "If wage increases on the scale which they have been given in the past, and are still being today demanded, were, in fact, granted, I have no doubt as to the result. It would be a disaster to this country…"—[OFFICIAL REPORT, 29th October, 1957; Col. 575, c. 56.]
    It is, of course, open to right hon. and hon. Members opposite to argue whether my right hon. Friend was right or wrong in his analysis of the situation. What it is not possible reasonably to say is that these matters are irrelevant to the decision which my right hon. Friend the Secretary

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    of State for Scotland and I had to make in this context. It cannot be Tight to say that this decision should be taken in a vacuum isolated from these general considerations. If it were so, it would be said that the Government were saying one thing but doing another, that they were proclaiming a general principle but ignoring its application in practice.
    Mr. Moyle: Was it not the view of the Minister of Health, when the setting up of the Whitley Council was approved by him, that such a council was a far better and more competent judge to determine issues of this kind than the Minister himself? Secondly, does the Minister's veto mean not only the withholding of the award, but excludes the reference of the question to arbitration?
    Mr. Walker-Smith: I will come to those points in a moment. I wish to pursue the pattern of my argument and to put the basic facts of this matter before the House.
    In the case of the staff in question, their last pay increase was one of 3 per cent. with effect from 1st January last, or in some cases from the preceding month. Since then, the cost-of-living index has risen somewhat. There is no dispute about those facts. The question really for us was whether such a short-term adjustment as that was compatible with the policy of halting inflation. On that, it seems that common sense and experience combine in saying, "No". It is not compatible with the halting of inflation to make such short-term adjustments for such relatively small rises in the cost-of-living index.
    The trouble is that that sort of adjustment is part of an inflationary race in which there is no finality. The trouble with the inflationary race is that there is no winning post. What one person regards as his winning post, somebody else regards as his starting point, so it is a sort of relay race, in which the baton is passed from hand to hand, an endless succession of inflationary laps with the Joneses always in the lead. Against that general background, we were faced with the clear, narrow decision of "Yes" or "No". We had to make our choice and our decision, however unwelcome and unenviable it might be.
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    May I deal next with the remarks made by the hon. Member in the course of which he kept on referring to the selection of this as a test case? It is quite wrong—
    Mr. Eric Fletcher: Before he leaves the point, will the Minister explain on what ground of economic policy, and what ground connected with the battle against inflation, he discriminates between those earning less than £1,200 a year, whose claims he rejects, and those earning over £1,200 a year, whose increases he approves?
    Mr. Walker-Smith: Because they were more out of line with the general level of remuneration and had been out of line for a longer time. That is the reason for that. Obviously, a Minister aware of the presentational difficulties would not have made that decision unless there were very proper grounds for such a differentiation. They had not had an increase nearly so recently as the people with whom we are concerned today.
    If I may be allowed to pursue the thread of my argument, I would say that the hon. Gentleman is not right—I ask him to accept this in describing this as a selected test case. It is nothing of the sort. I am bound to say that I rather resent the reasons which he suggested for why they had been picked on—that they were weak, not affiliated to the T.U.C., and so on. If the House has followed my argument so far it will be quite clear that there was no question of selecting this case at all.
    The time factor was imposed upon us. The claim had been made; it had come before the Whitley Council; we were fixed with the statutory duty under the regulations; and the time factor was determined by those circumstances. It is quite wrong and inaccurate and unhelpful to talk about the selection of a test case.
    Mr. William Hannan rose—
    Mr. Walker-Smith: I have given way many times already and I should be trespassing unnecessarily on the time of the House if I gave way any more.
    I should just deal with the collective bargaining matter. I think everybody is now quite clear this is not an arbitration proceeding, and, therefore, there is no

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    question of interference with arbitration or of a blow at collective bargaining, as I sought to make clear in a speech I made about this last Friday in the country. I see that it has been said that we could have prevented the error made by the Leader of the Opposition at the weekend if we had made clear from the start that it was not an arbitration proceeding; but it is novel doctrine that Ministers should have to explain, for the benefit of the Leader of the Opposition, that Whitley Council procedure is what it has always been and is not what it never has been. [Laughter.] The matter is now quite clear. I am sorry that hon. Members should laugh when I refer to the speech of the right hon. Gentleman the Leader of the Opposition as making it clear.
    Mr. Callaghan: I think the right hon. and learned Gentleman will agree that these are very important matters. One can go to arbitration only when there is disagreement between the management side or the official side and the staff side. Here, as I understand, the management side itself proposed by a substantial majority the increase of 3 per cent. and of 5 per cent. If there is no disagreement between the two sides, under the Ministry of Labour proceedings there is no provision for arbitration. What advice does the Minister give to the staff side in these circumstances?
    Mr. Walker-Smith: The staff side has not, in fact, asked for advice on this. What the Whitley Council as a whole has done is to ask to see me. Representatives of both sides of the Council are coming to see me on Monday, and this and any other matter can certainly be discussed between us then. At the moment, the position is quite clear, that no arbitration proceeding is involved; and this was admitted, very fairly and clearly, by the right hon. Gentleman the Leader of the Opposition yesterday.
    May I just deal with the point referred to by the right hon. Gentleman yesterday and by the hon. Gentleman the Member for Oldbury and Halesowen (Mr. Moyle)? I am sorry that I did not hear the hon. Gentleman's speech yesterday. I did not know he was going to speak on this matter. Of course. I have read it with much interest
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    this morning. They both referred to this as being a unanimous decision of the management side of the Whitley Council. The right hon. Gentleman used the word "unanimously," as may be seen at column 22 of the OFFICIAL REPORT of yesterday's debate, and the hon. Gentleman used the word "unanimously," as may be seen at column 97.
    I think it is important that I should indicate to the House—and there has also been some misunderstanding about this outside the House—what the position is. That is why it was necessary for me at the beginning of this speech to explain in some detail the composition of the management side. If we regard the management side as, as it were, a monolithic structure, it is, of course, true that at the full meeting of the Whitley Council 3 per cent. was the management side offer, just as it is true to say that when a Bill passes this House it becomes an Act of Parliament, although that does not mean that the House was unanimous in the sense that all Members agreed to it or voted for it.
    So far as the management side is concerned, I must make it clear that the five Departmental representatives, the five official representatives on the management side, never approved this increase. They opposed the offer on precisely the same grounds, that is, the general economic context, as those on which my right hon. Friend and I found it necessary to withhold our approval to this agreement for the time being, and, as the hon. Gentleman quite fairly said today, my representatives voted against it, as he put it, on the management side. Further, the unofficial majority on the management side, if I may so describe it, were left in no doubt that approval might well have to be withheld from this agreement by myself and my right hon. Friend if, in fact, it was entered into.
    I say, therefore, that the Ministerial course in this matter has been clear and consistent throughout and at all times related to the general context of the economic situation and Government policy on inflation.
    Mr. Mellish: Is it not a fact that the main basis on which this claim was conceded and the main reason why it was put forward was the terrible problem of the

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    shortage of staff, of which the Minister knows very well? Unless we get more staff there will be a breakdown. Everybody knows it. That is why the claim was advanced, and when it was advanced the management side unanimously recognised that something had to be done to improve the position. I would ask the Minister, how are we to overcome the shortage of staff if this claim, which has been conceded, is not met?
    Mr. Walker-Smith: What the hon. Gentleman puts forward is an important consideration. It is one of the considerations which have to be taken into account, together with the general economic considerations of which I have been speaking. This is a very difficult question, and nothing that I say would ever represent it as anything else. Indeed, if the hon. Gentleman talks about selecting a test case I would ask him to believe that this matter has caused me and my right hon. Friend very great personal anxiety and difficulty in coming to a conclusion as to what was the right course.
    Dr. Edith Summerskill: I hope that the Minister will forgive me for interrupting again, but this is a very important matter, in which hon. Members on both sides of the House are taking an interest. He said tonight that he wanted to explain the position. I must say that he was a little legalistic. Has he forgotten that he is in charge of a most important human Ministry and that personal relations in his Ministry are of the utmost importance?
    The right hon. and learned Gentleman really cannot divorce this action which has been taken by the Treasury—I recognise the Minister's problems—from the conduct of this big Department. I listened very carefully to the Prime Minister's speech yesterday, and he said that when the claims of the workers are considered the further question must be considered whether the workers are producers or whether their claims can be related to some savings. If the worker does not come into either of these categories the claim must be considered very much more seriously.
    The Health Service workers are not producers. Neither can their claims be related to saving. Nurses are some of the lowest-paid workers in the whole country. When a Whitley Council recom-
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    mends an increase for nurses who are non-producers, or for any of these categories in the right hon. and learned Gentleman's Ministry, who, by the way, feel that they have a vocation and will not take any industrial action, can the right hon. and learned Gentleman assure us that the action taken with respect to this Whitley Council recommendation will not be repeated in relation to those other Whitley Council recommendations?
    Mr. Walker-Smith: I am obliged to the right hon. Lady for what she has said about the human nature of the problems with which we are dealing. It is true that I am a lawyer, but I assure her that the human aspect to which she refers has not escaped me. It is very present in my mind and that of the Secretary of State for Scotland. The question of people who are not directly productive is very important. It was raised earlier by the hon. Member for Cardiff, South-East and it has been raised in newspaper comment. It was referred to in a leading article in the Daily Telegraph yesterday, for example.
    The general test of productivity with which I am concerned for this purpose is the overall test that money incomes should not increase faster than productivity. [HON. MEMBERS: "Lawyers"] Yes, there are people, like lawyers, who depend upon the general wealth produced by the productive section of the population. But in an expanding economy there should, of course, be scope for improving prospects for those who do socially useful but not directly productive work. The only thing is, however, that it would not be compatible with countering inflation to apply the test of precise comparability in such a way as to match every inflationary rise in the cost of living immediately it takes place.
    The right hon. Lady the Member for Warrington (Dr. Summerskill) referred just now to the human aspect. The matter is a difficult one, but this is a decision which I am satisfied had to be taken in relation to the general economic context and could not reasonably or sensibly have been taken in isolation from it. Surely, this is clear. These are the sort of workers who would suffer in an unrestrained inflation, not perhaps most of all—because those who would suffer most are the pensioners, the retired people and the fixed-income people—but they

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    form a sort of middle category, and obviously, would suffer more in an inflationary race than the mass of industrial workers, with their massive position in the economy and their greater bargaining power.
    I return, therefore, to my earlier point and say that there is no direct antithesis here between the interest of these people and the general interest, because it is in their interest as well as in that of the community as a whole that inflation should be held. It was with this consideration in mind that we had to take the decision to withhold aproval from this agreement, with an undertaking to review it at an appropriate time.
    Hon. Members: Shame.
    6.45 p.m.
    Mr. Clement Davies: It is right and proper that the Minister should have intervened as early as possible in the debate, for there is no matter recently that has caused so much anxiety and apprehension as his decision to withdraw approval of this award made by the Whitley Council. I am not sure that the right hon. and learned Gentleman has done anything today to allay that apprehension. On the contrary, I think that he has increased it.
    Let us look at the position. The Whitley Council has long been regarded as the best machinery for settling, as between the Government and employees, what should be the fair remuneration that should be paid. The Minister, in answer to an interruption, admitted that this is the first occasion on which withdrawal of approval has taken place and the Government have refused to accept an award; and that at a time like this. Not only are we entitled to look at the merits of the decision, but also at the way in which the decision has been taken. That, I think, has deeply offended the whole country. It certainly caused great apprehension, because it looked as if we were heading for a direct clash in which the Government were saying, "We are taking an absolute stand here against any increase."
    A distinction, apparently, is being drawn between a Whitley Council award and an arbitration. It is a very narrow one, for a Whitley Council is the machinery which has been adopted as the means of deciding what should be a fair remuneration. Arbitration has arisen when employers and employees cannot agree. The matter
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    is then referred to arbitration. Now the Prime Minister has said that in the case of arbitration the Government would not dream of interfering. They would allow that to go on.
    In this case, merely because a Regulation was made in 1951, the Minister says. "I am entitled to refuse my approval and I do so, really, because of the financial situation." Is that the only consideration that should be in his mind? Here is a service which is absolutely essential to the whole country. We know the difficulties in which the service is placed at present in the matter of increasing its staff. Yet consideration is given to one side only—the present financial position—without giving at least equal consideration to what I should have thought was the much more important side, that is, the service that the country expects from these very people.
    Mr. A. Blenkinsop: Does the right hon. and learned Gentleman feel that in this case the staff side should have been advised to persuade the management side to reject the claim or not support it, so that it could have gone to arbitration and obtained Ministerial acceptance in that way?
    Mr. Davies: I do not want to take up more time on this subject. I have expressed what I believe is the general view, which is one of great dissatisfaction not only with the decision, but with the way in which it was arrived at.
    I turn to the more general matter of the Gracious Speech. Like The Times, I cannot feel myself very exhilarated by its words. The Times has very rightly described it as a little thin and airy, but that newspaper might have gone on to consider and call attention to a certain part of the Speech. I have never seen such a conglomeration of sentiment and excellent clichés as appears in one paragraph. May I remind the House of them? They read:
    "My Ministers are resolved to take all steps necessary to maintain the value of our money, to preserve the economic basis of full employment by restraining inflation, to strengthen our balance of payments and to fortify our reserves, upon which depends the strength of sterling and hence the strength of the sterling area as a whole."
    I am sure that the right hon. Gentleman the Prime Minister must have had

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    in mind those wonderful clichés which we often get from the Foreign Office. If those are right, as I think they are, they should have been in the mind of the Government throughout. Since the Government have now been in office since 1951, why have they allowed the country to fall into the state in which it is in at present? We would all like to know whether the Government are aware of the mistakes which have led to this inflation and what steps ought they to have taken to stop that inflation. Still more, we want to know what steps they are now proposing to take in order to carry out what they say is their general aim.
    On that, with the exception again of some general statements and the raising of the Bank Rate to 7 per cent., I have not heard of one step except the general one that there should be increased production. We all know that. But what do the Government propose to do to help to increase production, to encourage it in any way, to encourage investment that will be profitable to the country generally? We would like to know, for example, what is in the mind of the Chancellor of the Exchequer to spur the use of more up-to-date machinery and plant and to discourage the use of out-of-date equipment, so that we can be in a position to compete on the world market. We would like to know, step by step, what the Government are proposing in order to effect a halt to this inflation.
    I now turn to another matter. I was very glad that yesterday the Prime Minister departed from precedent. One remembers the days when the Speech from the Throne was considered in this House, some perfunctory statements were made by the leaders on both sides, and then the House adjourned. Yesterday, very rightly, the Prime Minister made a full and general statement, and I was glad that he did so. I do not take the disparaging view of that statement which has been expressed. It was a first-class statement, and one which we needed so that we might know what is in the mind of the Government.
    The most important part was the Prime Minister's reference to what had taken place in Washington and what he hoped might come of it. I am sure the whole
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    world will agree that what was achieved at Washington was made much easier by the two greatest ambassadors this country has ever seen, Her Majesty the Owen and His Royal Highness Prince Philip, who have done more than anyone else to bring about good relations between the United States of America and this country.
    Now I turn to what the Prime Minister said on what took place in Washington, where he set out what had apparently been agreed between the President and himself. He said:
    "Nevertheless, whatever may be the outcome of these discussions at N.A.T.O., I feel that in the near future—perhaps the comparatively near future—the nations of the free world must make an even more significant contribution of their national sovereignty to the common cause than hitherto. The journey may be a very long one, but the goal must be the same. Any advance towards the effective union of the free world, by which alone it can be defended from the pressures and dangers which now confront it, must be on the basis of this principle of interdependence which we tried to declare at Washington. At Washington, we made a first beginning."
    A little later the right hon. Gentleman very rightly said:
    "…this is a turning point in history."—[OFFICIAL REPORT, 5th November, 1957; Vol. 577, c. 39.]
    I agree. What I have been puzzled about since 1948 has been that further attention has not been paid to that and that further efforts had not been made to bring about what is obviously now in the mind of the Prime Minister. Article 2 of the N.A.T.O. Treaty, which was signed at Brussels in 1949, provides for this very matter, and I have never been able to understand why it was that the thirteen nations which first signed the agreement, and the two that joined them afterwards so that there are now fifteen in all, have been content hitherto merely to agree to pool their military resources to a certain extent and to put them all under one generalissimo at Paris, and have paid no further attention until recently to Article 2, which had been much more clearly set out in the Brussels Treaty.
    Articles 2 and 3 of the Brussels Treaty stated that the desire of the four parties signing it was not merely that they should assist one another in case of war—that came later—but that they should endeavour to bring about a closer co-operation socially, economically and politically.

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    Yet, so far as I am aware, no step has been taken by this country to try to implement those two Articles; in fact, rather the reverse. For when Mr. Schuman put forward his great plan, which was one for closer co-operation and interdependence, it was the Labour Government in those days which refused to collaborate, although they were the signatories to, and had actually made, the Brussels Treaty and the N.A.T.O. Treaty.
    We have continued thus ever since, and it seems extraordinary that we should say that we would pool our military resources but in the meantime do nothing to help one another economically. Then one finds that one or other of us is in either economic or financial difficulties. France is going through them now in exactly the same way, and has again had to devalue the franc. Yet that economic co-operation is a necessary element in defence of our general freedom. In the same way, except for the Council of Europe and the European Payments Union, there has been no effort whatever to bring this about.
    At last, however, the Prime Minister has turned his attention to it. Very rightly he referred not so much to the military danger—I have felt all along that we must be prepared to meet any such aggression that may come to us—but to the real danger facing any country today arising from an economic war. The Prime Minister said that in Russia there is central control of all that vast territory from the German Oder to the China Seas, all under one control, and all, therefore, can be turned to whatever is decided by Moscow as the thing they most need.
    In the meantime, the three countries which are pledged to defend our freedom—and even the fifteen that have realised they are not strong enough to stand alone—pursue each their own separate ways. They pursue their own foreign policies separately and they pursue their own economic and financial policies. But at last, apparently, that has come to the attention not only of the Prime Minister but of the President of the United States.
    The most important matter that has happened since the end of the war has been this decision that the heads of the Governments of the fifteen nations shall now meet to see how we can co-operate in order to build up our strength, not only our strength but that of all the other nations and peoples who are so dependent
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    on us at the present moment. Without doubt, as the Prime Minister pointed out, Russia is in a position to undermine any influence that we have had in the past upon those peoples. While we are separated in this way, Russia, because of her strength, is in a position to direct or finance goods or whatever else it may be to help those peoples and then turn In them and say, "We are your friends."
    I sincerely hope that out of this meeting in Paris there will come a realisation of our interdependence upon one another, and that at long last we shall cease to worship sovereignty as if that was the only thing that mattered. In this small world we are now nearer and nearer to one another than ever before and are dependent upon one another. I sincerely hope that out of that there will come some form of agreement which will enable us to work much more closely together than we have been able to do hitherto.
    I now turn to one or two other matters referred to in the Gracious Speech. First, I would mention Cyprus. I wish that the Cyprus problem had been settled long ago. It could have been, and should have been. I do not believe for one moment that Turkey would ever have intervened in the slightest degree if in those days, before any trouble had started, agreement had been reached to give the people of Cyprus what we are apparently prepared to give now—self-government—and to give them also self-determination within a reasonable time. It is merely because of the reply which was given in this House, that if they had ever hoped for their freedom the answer was that they would never have it, that there was trouble. Since the trouble started, we have gone from one disaster to another. I sincerely hope that we are now about to reach an agreement.
    I am also very glad that the negotiations with the Prime Minister of Malta have proceeded so well, and I hope that in a very short while we shall have news of complete agreement there.
    I turn now to the proposal to deal with local government. We had a debate on this subject last Session. I strongly disapprove of what is being proposed by the Government in their new Measure. All that is really being proposed is to enact what has been agreed by the various local authorities represented by their institutions—the County Councils Association,

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    the Urban District Councils Association, the Rural District Councils Association, and the associations representing boroughs. All that the Government have been able to get from those associations is an agreement upon the lowest common denominator.
    What I have felt all along is that too much attention is being given to the councils and too little to the people who are subject to their administration. I should like a much more thorough inquiry into the whole working of the system and the introduction of a really radical Bill which would deal with the situation as it is today and not be concerned merely with patching up the situation as it existed seventy or eighty years ago.
    There is a reference in the Gracious Speech to the rating system, but apparently all that is to happen is that industry is now to return to 50 per cent. rating. Why it should not be 100 per cent. I do not know. Has not the time come for us to ascertain whether there is not a much better system of financing local authorities than this absurd system which was invented as long ago as 1601?
    Surely the time has come, when we are inquiring into local government, for us to consider whether we do not want a far better, wider system which will provide a far better administration locally and at the same time relieve this House. Without a doubt, this House is overwhelmed now with a mass of detail which ought to be dealt with by regional authorities. I am dealing very briefly with this subject because I hope to have another opportunity when the Measure is introduced. I would remind the House how little it is troubled with the details of what must necessarily be done in Northern Ireland. I do not see why that system should not be copied for London, for central England, for Scotland, for Wales, and so on.
    One thing that I am certain will do an infinity of damage is the proposal to put all the local authorities on a block grant system. I do not know how, when that is finally settled, Lord Hailsham can remain a member of the Government. It means that there will be a cutting down of the amount devoted to education at a time when we need such expenditure more than ever, and Lord Hailsham, prior to the change of office when he was Minister
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    of Education, continually referred to the fact that we were not spending enough on education. He said that if anybody suggested that we were spending too much, he would be thirsting for a fight with him. I hope he has that fight with the Cabinet here and now. Moreover, any increased expenditure which has to be incurred by local authorities will now fall on the rates, and the poorer authorities are quite incapable of carrying out the duties they would like to carry out.
    With regard to pensions, I do not think that the amount of increase will bring much comfort and much warmth to the old people, and they very much need that during this winter. Also, it does not help those people to know that this is an increase upon what has been given previously and that it is more than some other Government gave at some other time. What we all want to know, and what the old people especially want to know, is whether it is sufficient to keep them adequately and in comfort and in warmth.
    The last subject to which I wish to refer is the reform of the House of Lords. So far as it goes, it is right that life peers should be put in the House of Lords, but that is merely tinkering with the problem. I still think that the best solution of all was the one upon which we all agreed as long ago as 1947. The first recommendation in Command Paper 7380 relating to the Parliament Bill, 1947, was:
    "The Second Chamber should be complementary to and not a rival to the Lower House…"
    That means that no extra power should ever be given to that second Chamber.
    "…and, with this end in view, the reform of the House of Lords should be based on a modification of its existing constitution as opposed to the establishment of a Second Chamber of a completely new type based on some system of election."
    I was adamant against any question of the election of a second Chamber, because it would not be right that the second Chamber should ever be in a position to say that it could challenge this House because its members had been elected just as Members of this House are elected.
    The second recommendation was:
    "The revised constitution of the House of Lords should be such as to secure as far as practicable that a permanent majority is not assured for any one political party."

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    The third recommendation was:
    "The present right to attend and vote based solely on heredity should not by itself constitute a qualification for admission to a reformed Second Chamber."
    I absolutely agree with that.
    It is proposed to add a few life peers in order that they may attend day by day, but if any great question arises they can be hopelessly out-voted by the 800 hereditary peers who will turn up in order to out-vote the others. If this is only an initial step just to secure attendance in the other place, then by all means let it be done, but surely the right thing to do is to—
    Mr. Ellis Smith: Abolish it.
    Mr. Davies: No, I would not abolish it. If we want a proper second Chamber, surely the right thing to do is once again to revive what was agreed by the leaders of the parties in 1947. Why what was agreed was not carried out at that time, I do not know, but I am convinced that those who were responsible for breaking that agreement have deeply regretted it ever since.
    7.10 p.m.
    Mr. R. Gresham Cooke: The right hon. and learned Member for Montgomery (Mr. C. Davies) referred to the Whitley Council dispute as a direct clash, but, of course, it is not a direct clash between independent outside employers and employed. It is quite strictly a matter for the Government.
    Mr. C. Davies: I did not say it was. I said it looked as if the Government were heading for a direct clash.
    Mr. Gresham Cooke: I accept the phrase. What I was saying was that this is a matter for the Government. We are here as representatives of the taxpayers, and these employees of the National Health Service, while they may not be civil servants, are the servants of the Government. The Minister of Health is the accredited Minister in charge of the National Health Service, and surely we as the Parliament of this country have a right to say what these National Health Service employees are to be paid.
    On this side of the House, we are very satisfied with the explanation which the Minister has made today of the nego-
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    tiations in the Whitley Council, and of how he came to withdraw support for the discussions which that Council had about this rise. What is the alternative? The hon. Member for Cardiff, South-East (Mr. Callaghan)—I am sorry he is not in his place at the moment—advised the Government earlier to avoid all trouble. When I tried to analyse how the hon. Gentleman would avoid all trouble, it seemed to me that he was telling the Government to advise every employer to give way to every wage claim. That was how the hon. Gentleman was going to avoid all trouble. Of course, that is highly inflationary, and is paying for trouble with a will, if ever there was a way of doing it.
    Mr. Blenkinsop: Does the hon. Gentleman think that the Whitley Council automatically grants every claim submitted by the staff side?
    Mr. Gresham Cooke: I was not saying that. I was only referring to what the hon. Member for Cardiff, South-East said, or what he gave us to understand—that we should agree to every wage and salary claim put forward. However, I will not continue this sterile debate, but will return to the Motion before us for an Address.
    I am certain that many millions of people will be happy that the Government are introducing so soon a Bill to increase old-age pensions. I am particularly gratified that a Bill is also to be introduced for the creation of life peerages for men and women, because this will surely increase the prestige of the House of Lords and strengthen the legislature by bringing in a number of national figures who would not otherwise find their way into Parliament at all. It will later on give us the opportunity of saying to younger hon. Members of this House whose fathers are peers that, on the death of their fathers, they need not go into the House of Lords.
    I should like to see another place so reform itself that it was able to select 250 of its number to be peers of Parliament, with the right to sit in another place, and so disfranchise the other 550 from sitting there. That would seem to me to strengthen another place considerably. If one takes the trouble to go and hear a debate there, one cannot but be struck by the fact that the Opposition

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    side of the House is particularly weak when it comes to a discussion during the Committee stage of a Bill. I think the creation of life peerages will enable the Opposition to be strengthened, so that more Members will take part in the debates on Committee stages.
    I cannot agree, and I do not think many Members on this side of the House will agree, with the Leader of the Opposition in his second proposition in his speech yesterday; namely, that membership of a second Chamber should in no wise be based on the hereditary principle. It seeems to me that acceptance of that proposition would be attacking the whole basis of the monarchy in this country. If we give up the hereditary principle in some part of our constitution, we shall soon be saying that we do not believe in the hereditary principle in regard to the monarchy.
    Turning from discussions of our constitution, I should like to deal for a moment with the problems of industry, on which the strength and prosperity of this country depend absolutely. I say "absolutely" because not many people realise how greatly we are dependent on the strength of our industry. We had a predominant position at the end of the last century and the beginning of this one, mainly because we had a two-Power standard for the Royal Navy, which was stronger than any other two combined. That was so because we had an iron and steel industry and a shipbuilding industry that could outbuild any other nation in the world.
    Mr. Jack Jones: Only just.
    Mr. Gresham Cooke: The hon. Member for Rotherham (Mr. Jack Jones) will appreciate that more than anyone, but our position in the world has declined relatively, because America and Russia have supplanted us as the two great industrial powers. Therefore, we have to see the problems of industry in the light of the following phrases in the Gracious Speech referring to the need
    "to strengthen our balance of payments and to fortify our reserves,"
    the establishment of a European Free Trade Area and the advance of science into the unknown.
    Taking the last point first, the flight of the Sputnik has not, from the point
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    of view of defence, shown anything beyond what we know already; namely, that the Russians have an intercontinental missile. I do not think it shows anything more than that, but the expense of research into the project, and of making and launching a space satellite, must be tremendous. I have seen a figure of £500 million estimated as the cost, and, having regard to the low standard of living in Russia and the overcrowded conditions of the people, I should say that Russia should be the last country to have attempted such a thing. America might possibly be able to afford it. I do not think we could, but, from the point of view of social conditions, though Russia has launched this space satellite, she must have diverted workers and plant from the production of houses and consumer goods needed by her suffering people. Perhaps she thinks that its propaganda value all over the world is worth it.
    The lesson facing British industry today, which stands out a mile, is that obviously we are up against an extremely hard-working and highly scientific country in Russia. In fact, most countries in Europe, and I am sorry to say particularly in the European Free Trade Area, work harder than we do.
    Mr. Ellis Smith: That is not right.
    Mr. Gresham Cooke: It is true on hours of work, and, from what I shall say in a moment, I think it will be seen that it is true.
    According to the best estimates which I have been able to obtain, the total capital value of the buildings, plant and machinery of British industry is about £18,500 million. It is tragic to contemplate that this great capital gathered together over the years is standing idle for nearly 70 per cent. of its time. It is used to only just over 30 per cent. of its capacity. That is because in this country we work one shift and a five-day week.
    A Ministry of Labour survey in 1954 revealed that only 12 per cent. of workers in industry were engaged in any form of shift working. When I worked in Sheffield, the steel plants worked a continuous three-shift system and the coal mines in the surrounding area of South Yorkshire worked a similar system. That was quite normal. People liked working on the morning shift from 6 a.m. to 2 p.m.

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    because they had the afternoon free. Nor did they object to working on the afternoon shift. However, in other industries, such as non-ferrous metals, manufactured goods and even textiles, the amount of shift working is very small, almost non-existent.
    The advantages of shift working are very great. There is better use of expensive modern machinery and a given value of production concentrated on a smaller number of machines and therefore in a smaller space, thus avoiding expensive extensions and the absorption by industry of agricultural land. Problems of shopping and of transport for workers are considerably easier because they are spread over a longer period and are therefore less acute. The load on electricity power stations is more evenly spread and therefore lower at any one time.
    Because of the shortage of labour, it is obvious that shift working can be introduced only very gradually, but we should turn our attention in that direction, particularly where new plant is being built in a new industrial district. The two-shift system is fairly common practice in the U.S.A. and in Germany—I have seen it at the Volkswagen plant where three shifts are worked. Nearly every British productivity team from America has advised it. I take at random the report of the Letterpress Printing Team which said:
    "In the U.S. widespread use is made of two and three shift working. In practically every plant visited the machine room works three shifts, and the remainder of the works either two or three shifts. Thus, in addition to productivity per man hour being much higher than in Britain, the output per unit of plant, machinery, and equipment is also very high indeed. The advantages, having regard to the high cost of new machinery, equipment and buildings are obvious."
    Mr. Mellish: Surely it is managerial responsibility to say whether there should be shift working. There would be much more logic in the hon. Member's argument if he gave a list of enterprising managements which had suggested shift working and which had been turned down.
    Mr. Awbery: From where will the labour come for the second and third shift?
    Mr. Gresham Cooke: I have dealt with that. I said that we can introduce this system only very gradually. This is something for the Government. The Govern-
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    ment have to lead the country and the Government should suggest that industry should look at this matter to see whether we ought not to copy some of our American and European competitors.
    Mr. Bence: In general, British industry has not objected to working the three-shift system in the past. The great difficulty in engineering has not been getting workers to work three shifts, but getting executives, the people who have status and who take responsibility and make decisions, to work shifts. British industry cannot get a £2,000 a year man to work shifts.
    Mr. Gresham Cooke: That is certainly not true of the steel industry, nor of the iron industry. They have been able to find superintendents for shifts and I see no reason why the engineering industry should not do the same. We want some education on this idea.
    Mr. Jack Jones: All round.
    Mr. Gresham Cooke: All round. I am coming to that. On this subject of the hours of work, I should not be honest or fair to industrial workers if I did not criticise the hours of work in the City of London. In many offices they are too short. Some offices are working only 32½ hours a week. That is a disgraceful example to the nation. For example, an insurance company in the City of London working only 32½ hours could, by working a full week, do with a smaller staff, thus saving valuable manpower in the office. Incidentally, not enough people are available on the telephone in the City of London before 10 o'clock.
    Mr. Bence: They are in bed.
    Mr. Gresham Cooke: Not only must we make the best use of our scientific trained manpower, but we have to realise the virtue of work. We should apply that notion to every grade, to management, office workers and men. This is no time for a shorter working week, for a 40-hour week. The claim of the A.E.U. was particularly dishonest after it had agreed last May not to make a further claim after that settlement. However unpopular it may be, we have to emphasise the need for hard work and for a full working week throughout every class of society, in short, a call for work. As has been truly said:
    "Man's record upon this wild world is the record of work—and of work alone."
    7.27 p.m.
    Mr. Ede: The hon. Member for Twickenham (Mr. Gresham Cooke) has put before us a number of his ideas about the reorganisation of industry. Of course, to carry them out he would need to treble the population over a great part of the country. In our existing difficulties, our present population is as big as we can expect to carry; and, certainly, the importation of further raw materials and food to deal with a trebled industrial population would cause difficulties about balance of payments and the dollar gap which would make the Chancellor's present troubles seem almost a state of supreme happiness.
    Mr. Gresham Cooke: The right hon. Gentleman should have listened. I was not advocating that we could do this in one step. I was advocating that in new areas with new factories we must set up a two-shift system of working.
    Mr. Ede: Now we are beginning to reduce it to something more nearly approaching reality, but even then, as my hon. Friend the Member for Dunbartonshire, East (Mr. Bence) pointed out, it would demand an increase in the number of people who could accept positions of responsibility at all ranks in the industrial process and at the moment there is no sign of getting those people. Our late friend Richard Stokes often used to discuss with me the problem of finding men prepared to take positions of responsibility, not the commissioned officers and the field marshals of industry, but the sergeant majors, the sergeants and the corporals.
    It would be difficult even to get people who would be prepared just to show their merit as unpaid lance-corporals—a rank for which I know my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) holds the highest respect. To get anywhere near what the hon. Member, in his modified scheme, wants would involve such an amount of Government planning that I am quite sure the first thing that would happen would be a revolt on the benches behind him against interference with the way of life of the leisured classes who make most out of modern British industry.
    The Minister of Health was not very successful this evening. He confirmed my worst fears and aroused a few suspicions
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    that I had not previously harboured. We understand that this is a matter to which the gravest consideration was given by the right hon. Gentleman, by his right hon. Friend the Secretary of State for Scotland and, surprisingly, the Chancellor of the Exchequer—because generally, in these negotiations, at about that stage friendship between the spending Ministers and the Treasury diminishes with an almost unbelievable rapidity. I should like to know at which stage in these proceedings these three right hon. Friends, in the friendly spirit prevailing between them, decided that they would refuse an increase to the lower-paid and grant an increase to the higher-paid group of people with whom they were negotiating.
    My hon. Friend the Member for Bermondsey (Mr. Mellish), only a few months ago, raised, on an Adjournment Motion, this very question of the recruitment of these officers in the hospital district with which he is so honourably associated. What happened? The Parliamentary Secretary to the Ministry of Health, as she then was—now the Joint Under-Secretary of State for the Home Department—reproved him in the most unmeasured terms for venturing to say anything which interfered with the secret and private work of these Whitley Councils at which these matters are decided.
    I took some part in the debate, in support of my hon. Friend, and I tried to analyse exactly what she meant. Let it be now understood that when the Government want to interfere it is all right, but if my hon. Friend, concerned as he is with the efficiency of the Service and the recruitment of the staff, intervenes, that is something approaching treason.
    Mr. Mellish: My right hon. Friend will probably remember that the Parliamentary Secretary, as she then was, told me that it was most improper for anyone to interfere with Whitleyism, and that the last thing the Minister would want to do would be to interfere with this very sacred thing.
    Mr. Ede: My hon. Friend has not yet been an Under-Secretary. I doubt whether he will be; I rather imagine that in about two years' time, at the latest, he will be a Cabinet Minister. But let me assure him, as one who has been a Parliamentary Secretary, that they sometimes get the most awkward briefs from their Parliamentary chiefs, and if they do not

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    stick to them they get into very severe trouble.
    What has happened in connection with this matter will cause the gravest unrest among all those connected with Government services. Does this rule apply to the Burnham Committee? Does it apply to the police? They hive asked for a 10 per cent. increase. Everybody knows that we cannot get policemen in sufficient numbers. I do riot know exactly how they could add to the country's production. I know that the Government were so perturbed about the situation last Session that they took steps to ensure that policemen should not attend magistrates' courts as frequently and in such numbers as they had hitherto—a view of their duties which I regarded with grave misgiving. Very elaborate machinery has been created by which their wages and salaries are to be computed in future.
    Mr. Bence: My hon. Friend the Member for Bootle (Mr. Mahon) told me a story yesterday. I was hoping that he would have been able to tell it himself to the House today. He told me that dockers on Merseyside often work as hard as they can to get steel off the ships and on to the lorries, and then the lorries often get held up for three hours at Stanley Bridge, which crosses the River Mersey.
    Mr. Ede: I am grateful to my hon. Friend for enlivening my speech with a story which he has borrowed from somebody else. I hope that it will not be reckoned against me, in the matter of delaying the House, that he has taken so much of my time in order to ensure that my hon. Friend the Member for Bootle (Mr. Mahon) should have immortality.
    I do not understand any basis which the Government have so far announced to be their guide in this matter. Was there a time in the past when wages and merit were related so closely as to be beyond challenge? When I started as a trained, certificated teacher, in 1905, if I had had £1 a year more I should have had a salary of 35s. a week. My salary scale ran from £90 to £130. I left the teaching profession for its own good, as I was assured by the profession itself, and I have tried to make that true in
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    a way which the profession did not mean. The present teacher's salary bears no comparison to that, and I rejoice in the part that I played in seeing that that became the case.
    Let us consider the people in the Health Service with whom we are dealing. They cannot produce any more to put into the economics of the country. Was there a time when their circumstances were so just that they could say, "If the cost of living goes up, our wages go up with it, because that represents merit"? Distinctions are drawn in all occupations and professions between one grade and another—the differentials. These are among the things that have varied very considerably in recent years. The Government are always telling us what wages and prices are now compared with what they were a few years back, but I know of nothing that they have said which indicates what they regard as the accurate date or datum line in all these comparisons.
    I hope that nobody thinks that any comparison between an agricultural worker's wage today and that which obtained between the two world wars could be regarded as other than an exercise in pure mathematics. The relative importance of a profession or occupation at one stage of the country's existence to its importance at another is a matter on which we do not get any guidance from the Government. If we are to get down to any basis at all we shall have to have something far better than the statement of the Minister of Health this evening that he and two right hon. Friends seriously considered this problem and the astounding result was that the lowest-paid workers get nothing and the higher-paid workers get what was awarded to them. Unless we can get some guidance on general grounds from the Government as to the basis they are adopting in this matter, it will be quite impossible to accept the decisions they reach apparently in so arbitrary a manner.
    I pray the indulgence of the House while I deal for a few minutes—I promise the House that I will not take long—with some matters which arise out of the Gracious Speech. I notice that in the third paragraph of the Speech the

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    Government put into the Queen's mouth these words:
    "They"—
    that is, the Government—
    "will pursue their endeavours to achieve an agreement on disarmament, mindful that, at this momentous time, the advance of science into the unknown should be inspired by the hopes, and not retarded by the fears, of mankind."
    It is an astounding thing, which would have been unbelievable before the First World War, that the growth of knowledge in these very intricate sciences should cause mankind to live in fear rather than to rejoice in hope. Knowledge brings power and the increase of knowledge in the post-war period has given a few men such power that none of our ancestors would have believed could be confided to mortal man. We are well aware that one frivolous or wicked man could now bring the whole of civilisation to an end. Such power arising from knowledge has never been contemplated before.
    Why does it bring fear? It is because all these matters are now arranged in secret. When Newton started this great physical revolution in the seventeenth century he published his results to the world and all the world knew them. When Priestley, in the late eighteenth century, discovered that the air was not an element but a mixture, he did it with apparatus that a secondary modern school would not tolerate on its premises in these days. He immediately published his findings to the world, with the result that the great French chemist, Lavoisier, was able to build on what Priestley had discovered and carried the triumph of that chemical discovery to reaches that Priestley himself had not contemplated. What is the position today? Only great wealthy States and very wealthy financial industrial corporations can carry on research. We have said we cannot afford to make a satellite.
    On the one o'clock news I heard what Mr. Khrushchev says about his satellites. He hopes that the Americans and other people will have satellites which will be running about in outer space to the enjoyment of people who have high-powered telescopes and will be able to watch what is going on. I rather imagine that if he has his way there will be an international commission appointed to define areas in which each nation may
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    run its satellites and that pathways will be marked through outer space just as there are now pathways in the lower air in which it is agreed that the various air services of the world shall operate.
    I listened with great interest to that part of the speech of the Prime Minister yesterday which many people found so dreary. I could not help thinking that it was dealing with this particular problem. It was not aimed at this House. That was quite obvious, as the House found it difficult to take any interest in it at all and, as my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said, even some of the Prime Minister's supporters walked out while he was speaking. It was aimed at the American Congress to support the President of the United States when he asks for the modification of the McMahon Act.
    Knowledge gained in secret by men who are under an oath not to disclose it will not add to the hope of mankind; it only adds to the fear. Until about three weeks ago everybody was hoping that we were one jump ahead of our competitors. Now we fear that we are several jumps behind them. I say this quite deliberately. I could wish that the first agreement that we could reach would he an agreement that all these atomic cards should be placed on the table, face upwards, by their possessors. I made that remark about a year ago, in one of the great American universities before the science faculty. They agreed and, when I added, "and if they were I do not think many secrets would be revealed," one of the leading scientists in that university said, "How right you are."
    I am not quite sure that tonight some secrets might not be revealed if that process were undertaken. It may be that we have lost one chance of getting an international understanding which we shall not be able to get until more money has been spent and more experiments carried out by those who hoped, until three weeks ago, that they were ahead. I regret to see the hysteria which this has caused in some circles in America. I hope that we in this country will keep our heads and that we shall express the hope—and work for it—that secrecy of this kind shall not be maintained.
    I had to deal with two men who had taken oaths of secrecy and who were convicted in the courts of having broken

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    them. If a man takes an oath of secrecy he is bound by it and must obey it. The scientist of modern times whom I most honour is the late Professor Soddy who, when asked to engage in this work under an oath of secrecy, declined to accept the offer of the job because he said that the knowledge which he might discover should be available for all mankind. I have no respect for those people who, having taken the oath of secrecy, then for a miserable pittance hand over the secrets which they have discovered not to all mankind but to one other Power. There can be no defence of such an attitude as that.
    I could understand and respect a man who said, "What I have discovered is so fraught with danger for mankind, if not properly controlled, that I must publish it to the world; I must read a paper to my scientific society." That I could understand, but I do not understand the man who, having taken an oath—and being a man of education he must know the implications of what he is doing—then hands over what he has taken an oath to keep secret to some Power he must regard as being likely to use it against those whom he has sworn to protect by maintaining his secret from outside sources.
    This brings me to one other point with which I want to deal. It seems to me that when everybody in the world expects the future to be dominated by the source of strength which we can derive from science, we cannot run any risk about the education of the children in our schools. I speak for myself alone in saying this, but I think that the Government's decision to break up the partnership between local education authorities and the Government and put it on a new basis on which the Government is a sleeping partner, with its liability limited in the partnership, so that the other party has to bear any unexpected demands which are made on it, is fraught with disaster, particularly at this time.
    Hon. Members on both sides must be aware of the dismay which is caused when children in the primary school do not get what their parents think they deserve as a result of the 11-plus examination. I have trained too many children not to know that there are a good many parents who think they have Derby winners in
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    their stable when the most they have been able to produce is a couple of miserable selling platers. A woman came to me once to complain that I had not promoted her boy from standard six to standard seven. I showed her the work which he had done. After about 20 minutes she pointed to her wretched offspring and said, "I suppose you are right, Sir. You see, I was always afraid that he would take after him."
    From 1962 onwards the tremendous birthrate of the immediate post-war years will he reaching the top of the secondary schools. The parents of those who have won the 2,000 Guineas by getting into the grammar schools will expect at least the same proportion of them to go on to the universities as during the thin years from which at the moment we are recruiting university students. I wish I could see some sign in the universities that they appreciate the might of the problem with which they will be faced. I am certain that in this age of nuclear power we shall want every trained scientist that we can get, not merely the people on top but those whom I have previously called the non-commissioned officers and warrant officers. We shall want in the scientific army those whom we have not been able to recruit for the industrial army.
    It will not make finance committees of county councils and county borough councils happy if they are faced with the prospect that they will have to deal with that problem on a block grant system. To my mind, that is the final condemnation of the Government's proposals.
    I rejoice at only one sentence in the Gracious Speech. It comes at the end of that wonderful paragraph which the right hon. and learned Member for Montgomery quoted, in which they asked Her Majesty to say,
    "My Government believe that these are purposes which should command the support of all sections of the nation,"
    That may be their hope. I cannot imagine that any other sensible person in the country shares it. They have said nothing in the course of this debate to indicate that they realise how seriously they have forfeited the confidence of the nation and how lacking are their proposals in any approach to the realities of the situation.
    7.58 p.m.
    Sir Henry d'Avigdor-Goldsmid: Necessity makes strange

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    bedfellows, and the debate on the Address makes for odd sequences. It is, therefore, a particular honour which I feel in following so distinguished a figure as the right hon. Member for South Shields (Mr. Ede).
    I had thought that in the House we were united as far as we could be about the war against inflation, but I detected, not only in the right hon. Gentleman's speech, but particularly in that of the right hon. and learned Member for Montgomery (Mr. C. Davies), the former Leader of the Liberal Party, a trace or an echo of an utterance from a well-known Confederate General in the American Civil War. Briefly, he addressed his troops on these lines: "Men, the honour, chivalry and beauty of the South is looking towards you. These are occasions when men act as heroes. I welcome this because I know that you will prove yourselves worthy of that immense responsibility. My advice to you is this: wait until you see the whites of their eyes, then fire. A volley should be devastating. If that does not stop them, use your bayonets. My horse is not very fit so I shall be waiting for you some 30 miles in the rear." The war against inflation has many generals issuing orders of that sort.
    I should like to bring the debate back to where the President of the Board of Trade started it, which is a discussion on our economic situation. We face a situation which could very well be compared with the Battle of Alamein. We have to beat this enemy, and to beat him here. I particularly remember reading in one of the most interesting accounts I have read of the Battle of Alamein, which appeared not very long ago in the Sunday Times, which was written by General Horrocks, that he stated that he was entrusted by Field Marshall Montgomery with 60 Grant tanks. These were the most precious reserves of the entire British forces. If we had failed at E1 Alamein, the war would have been lost. It would not have been lost in one day or in one week, but lost it certainly would have been. That is the exact parallel of our economic position today.
    In the short time I have been a Member of this House, every economic debate has turned on the shortage of reserves. It is terrifying to think how little we have
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    with which to meet the enormous calls upon us, due to our past indebtedness. According to the last figures I have seen, the total sterling balances held in this country amount to about £3,400 million. Of that, about £1,600 million is held by the independent countries of the sterling area; £1,300 million by the Colonies, and about £500 million by non-sterling area countries.
    Against that, the figure of our reserves is pitifully small. What we have to do is to hoard those 60 Grant tanks until they can become the nucleus of the force that will be required if we are to advance again. I say that because, let us make no mistake, although E1 Alamein was a battle that we had to win, it could not win us the war, but had we lost that battle we would have been defeated in the war. If we lose the battle against inflation now we are defeated, but we shall not regain our position without positive advances, and we must hoard our reserves.
    I was struck by a sentence in the speech of the Chancellor of the Exchequer in last week's debate, when he said:
    "In any event, we have not the slightest intention of being beaten by technical difficulties. There is no technical difficulty which does not have a technical solution."—[OFFICIAL REPORT, 30th October, 1957, Vol. 575, c. 346.]
    That is perfectly correct, but the important thing is to find a technical solution at the right time. About a year ago I indicated to the Treasury my view that it was taking an unduly optimistic view of the cost to our finances of investment in Canada. The Treasury replied that it was satisfied with the situation. It took some six months before the Kuwait gap, as it has come to be called, was stopped, during which time the loss of reserves was about £100 million. All these are published figures.
    As there is an absolutely confident attitude in the Treasury on all these technical matters, I would put another technical point to it. It is one that I am quite sure could be equally easily brushed aside, but one about which, I am also quite sure, we shall eventually do something. The present position is that although the United States of America produces only the very smallest fraction of world gold production, it controls the price of gold. There is absolutely no reason that I can see—and my

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    researches have gone back some time—why we should not pay a premium for gold newly mined within the sterling area.
    I have figures here which show that the total world production of gold amounts to about £500 million a year. Of that, the British Commonwealth, without Canada, produces nearly half—about £232 million. South Africa produces £198 million. The present position is that we in this country do not get the benefit of any of the South African gold at all. That South African gold is used by South Africa for its own purposes. It uses some of it to meet its indebtedness to this country, but that is all. The gold reserves of the sterling area do not benefit by one penny from the enormous South African production.
    I should have thought that this was a time for our Ministers to scratch their brains to see whether we can rake up some of these precious reserves. I should have thought that an approach to the South African Government by which we paid a premium for newly-mined South African gold would attract a great deal of that production here. Not only that, but it would increase production as, of course, a good deal of gold is no longer mined because the cost of production is now too great. There could, therefore, be an increase in production as well. I think I heard an indignant voice opposite say, "We do not want it." If hon. Members believe that, they can believe anything—
    Mr. Bence rose—
    Sir H. d'Avigdor-Goldsmid: No, I want to develop my argument.
    Mr. Bence: The hon. Member accused us of saying "We do not want it." The question I pose, and it is one that I have posed all my life, is: why should the arts and crafts of humanity and the satisfaction of human needs depend on the process of digging gold out of the earth in South Africa and putting it in holes under the Bank of England or in the vaults at Washington? Why should it depend on that?
    Sir H. d'Avigdor-Goldsmid: The hon. Member has developed an argument that was very popular when I was at school and university, which is still popular at
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    school and university. The fact remains that the great majority of the nations of the world do not accept it. Whether one looks East or West, they value that metal which the hon. Member treats with such contempt; the metal which I remember being described as being fit only to stop holes in teeth. He must overcome his natural resistance to anything that appeals to the majority of people and accept the fact that the majority of them like this stuff, and value it.
    There is one nation, of course, that will object to such behaviour on our part, and that is the United States. In connection with gold, the United States has adopted a policy at once logical and parsimonious. It fixes a price, it is unwilling to encourage production, does all it can to discourage it, and does all it can to stop it coming in. America does not want any more, because if more is produced it appears to the Americans that some of it will find its way to them, and they have to pay for it. It is a very simple and reasonable attitude, but I would remind the United States that as recently as 1933 it paid a very much higher price than the world price at that time for newly-mined gold produced within its boundaries. The Americans did not then consider themselves to be behaving in any extraordinary fashion.
    Here we have this commodity that is saleable in unlimited quantities and obtainable within the sterling area. Surely, after all these years, it is time that we did something to encourage gold production. Such action could have only one result—to fortify our reserves. It should be realised that the action of the Indian Government, announced last weekend, in taking power to draw on their sterling balances £246 million, leaving £64 million, is liable to cost us £182 million in the next six months. Where is that money to come from? Some will go out in foreign exchange, and some as goods which would otherwise earn foreign exchange. In either case, it will be a dead loss to this country.
    In those circumstances, when we are as vulnerable as that, I beg the Government to look really seriously at this proposal and not to dismiss it as trifling with the problem. It is absolutely vital that we should hoard this ammunition that we still have. It is not too late to do it. I will not develop the argument further.

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    I cannot imagine that any country except the United States can have any conceivable objection to a proposal that we should pay a higher price for newly-mined gold within the sterling area.
    I leave with hon. Members the thought that, as far as I can see, only two nations in Europe have been able to maintain their overseas possessions since the war, namely, Belgium and Portugal. They have not done it by expensive weapons nor by large armies; they have done it principally by putting their financial affairs in order. I commend to the Government the suggestion that there is something to be said for that.
    8.10 p.m.
    Mr. Simon Mahon: The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) will, I hope, forgive me if I do not pursue the arguments which he has presented to the House. I wish to concentrate on an aspect of affairs within our society which I view with grave anxiety.
    Yesterday, the Prime Minister in his comments on the most Gracious Speech of Her Majesty to both Houses of Parliament, referred to the great desire for peace in industry. I remember that, in 1955, when I was quite new in this House, the Prime Minister's predecessor, on a similar occasion, spoke about peace in industry and profit-sharing in industry, expressing his desire to end what he termed at that time the class war.
    Rather than improving, the position in industry seems to be deteriorating. I have spent some time in industry and in trade union circles, and I know the repercussions which a speech made by a trade unionist can have in factories, on the dockside, and elsewhere. This evening, therefore, I want the House to appreciate that what I am going to say, at least, is said with a measure of responsibility, and I hope that my speech will be helpful in bringing to industry the peace which I have so ardently worked for for so many years.
    Over many years of industrial growth, we have evolved a system of industrial relations which, despite its weaknesses, has stood up to many severe strains and has served the country well in difficult times. Now, however, it is the honest opinion of many experienced people that
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    the Chancellor of the Exchequer and the Minister of Health have dealt a severe blow at this system by their recent pronouncements, particularly regarding the Whitley Council negotiations and arbitration courts within the public sector of industry.
    For the Chancellor to say that the Government will not honour the carefully considered decisions of these courts in public industry is to undermine the faith and good will that millions of workers inside and outside the trade union movement have built up over many years. As a result of their recent actions, the Government are undermining our whole system of collective bargaining in industry.
    I say these things not with malice, but in the hope that the Government will take note of what is said by a back bench Member who spent some time in industry as a boy and also on the management side at the age of 26, having worked within the same industry all the time. I ask the House to believe that I am without bias in this matter. As I continue my speech, I hope that that may become evident.
    I have pointed out that years were spent in forging these instruments of industrial collective bargaining, and I say, in all honesty, that the pronouncements we have heard in the last three or four days were, to ordinary trade unionists, nothing less than a declaration of industrial war. The Government must realise that there can now be no secure future for our country on the basis of conflict between Her Majesty's Government and organised labour.
    No responsible person inside the Labour Party wishes for conflict in industry. I believe, also, that no responsible Conservative Member of the House would wish for conflict in industry. Surely, over the years we have all suffered too much as a result of conflict in industry. These things have been self-evident, and, as I said before, the trade union movement has served both Labour Governments and Conservative Governments well in some of their most difficult days.
    I know that an effort has been made—we heard it again today from the Minister of Health—to avoid the charge which is made, but I must repeat to the

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    House that the charge is made with honesty by some of the most responsible people in the country. Some of those who have spoken to me have made their objections with a very real measure of sincere regret. I should like to quote from some of the comments which have been made. The National and Local Government Officers' Association, which, as we all know, is not the most militant of associations, has said, referring to the recent action of the Government, that
    "it will not be taken lying down".
    The National Union of Public Employees has said:
    "It undermines the sanctity of agreements and will incite industrial strife in spheres where strikes are unknown. In the face of 'his"—
    continues the Union—
    "angels would be incited to strike."
    The British Medical Association, a responsible body, said:
    "It is bound to lessen the confidence of those dependent on the Government for their remuneration. The medical profession's own pay claim is getting on for two years old and dates back to 1951. This latest decision of the Ministry in overruling agreed negotiating machinery is bound to accentuate anxiety."
    Even though I am not a trade union Member of the House, my own membership of a trade union goes back to the time when I was 14 years of age, and I am exceedingly proud of it. Perhaps I may quote the words of Mr. Frank Cousins, the General Secretary of my own union, the Transport and General Workers' Union, who said:
    "This is the road to industrial id ocy"
    He went on to say that the Government had told the unions that they should use arbitration procedures to the full. Now the Government have said that if the unions did, and if awards were given, they were not likely to be met.
    Those are the opinions of responsible people who have earned their laurels in industry, people with whom many hon. Gentlemen opposite must have sat round the negotiating table on many occasions. The nation is right, I believe, in its judgment that the trade union movement is something of which we may be proud. One of our greatest statesmen described the trade union movement in past days as an Estate of the Realm, and I think it has earned that title over many years of industrial and economic growth.
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    Trying to be reasonable about this, I would say that, if any Government wished to have the full co-operation of the trade union movement it would be only reasonable to assume that they would ensure that their policies were not directed continually at the reduction of the standard of living of organised workers. It must be remembered by those who are so glib and who criticise the trade union movement, that it is, and always has been, the prime duty of that movement to safeguard the living standards of its members, and it should be no surprise to anybody that the trade union movement is always prepared to do that.
    As a responsible trade unionist and one who wants peace in industry, I would, however, say that it would have been remarkable had the trade union movement looked with equanimity or complacency at the abolition of the food subsidies, the abolition of price control, the abolition of the housing subsidy—a subject in which I am extremely interested—or at the Rent Act, which is having such grave repercussions amongst our people. Surely, when they were pushing this legislation so avidly through Parliament, the Government knew that it would result in demands for increased wages. They knew it then, and now they have taken this action to offset what they knew would happen.
    When we consider the general economic position of the country, we are all aware—the Government are quite right in saying this—that the trade union movement has a great responsibility resting upon it. No knowledgeable person would accuse the trade union movement over the years of not fulfilling this responsibility or of failing to consider the common good of the nation and its people.
    The Government, on the other hand, have the full responsibility for the welfare of the nation and all its people. One would have thought that in these difficult days, because of this tremendous responsibility, the Government would have fostered and maintained the former excellent relationships the T.U.C. had with previous Governments, both Conservative and Labour.
    Unfortunately, however, in one way or another, irrespective of what the Minister of Health has said today, this precious relationship between the Government and the trade unions is being assailed. One

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    could be forgiven for thinking that the Government, beset with such great difficulty, are looking about for a scapegoat upon whom to blame their failures. If I may offer them a friendly warning, they would be ill-advised to choose the trade union movement for this kind of treatment, for they would be doing that movement an injustice and, in the long run, causing great harm to the nation.
    I urge the Government to refrain from their pursuit of industrial war and, as they have been requested by my right hon. Friend the Leader of the Opposition, to try again, by policy and by good will, to re-establish the correct relationship that they should have with this important movement. We would all agree that nothing good could come out of industrial strife. Its dubious advantages would go to our foreign competitors and to those who have a vested interest in industrial unrest. It is no use hon. Members on my side of the House burking this issue, either.
    In all these years, as I have said before—and I have a long family history in the trade union movement—we have always deplored any tendency to industrial strife and class war. We have worked for its cessation and for its replacement by a system of industrial relations based upon mutual respect and a desire for social justice. That is what we have worked for and that is what most of my colleagues on these benches have worked for, in spite of what irresponsible people say from time to time. If we had not worked for it, we would not have achieved what we have achieved over these long years.
    Having said that, however, we all know that we have in our society people who do not think this way, people who see in class war and in industrial strife opportunities which are not afforded to them by normal democratic processes. These people see industrial disturbance and industrial strife as an end in itself. I have opposed these people always. I have been a virulent opponent of Communist infiltration on the Liverpool dockside. Communists are a menace to society, to Government—any Government—and to the trade union movement, and they have always been condemned by the trade union movement. By virtue of that opposition, their scope is very small indeed, but their influence is still with us and
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    their exploitation of industrial circumstances has been detrimental to succeeding Governments and to the progress of the nation as an industrial power.
    I hope that the Government will take these remarks in the spirit in which they are given. Remembering the opinions of many Government supporters, it would be sad and paradoxical if those undesirable elements within our society were assisted in their work by the inflammatory speeches that we have had from Government spokesmen in recent days and which appear to be directed at the trade union movement. I say that in no rhetorical sense. I know that advantage will be taken by these disruptive elements in our society to whom the Government are giving the chance to do the very thing of which we have been trying to deprive them for so long.
    It is reasonable for any Government to expect the full co-operation of the trade union movement and the full co-operation of every able-bodied worker, so that our economy can grow and be healthy and strong to the mutual advantage of everybody. That is my belief and it would be wrong if I thought anything different. It is, however, equally necessary that the ordinary worker—not all workers are clever, intelligent people—should know and should feel that the Government are directing their policy towards furthering the common good and that it is not directed solely to the maintenance of sectional interests.
    That does not mean that the Government should concede every point to the trade unions. We have been brought up on opposition and the trade union movement would not expect otherwise, because by its nature it has to contend with opposition. I want to say this in case some of my own people make a mistake. There is nothing intrinsically wrong or illegal or immoral if there should be a first-class row between the Government and the T.U.C., or between the T.U.C. and the Government. The Government, even some of our own people, at times think there is something wrong about it. With my background, I have always regarded that as naturally as tide beating upon a shore. It can be a healthy prelude to a reasonable settlement, and as long as both sides are seeking truth with honesty, the outcome of it can be an adequate, if not always a completely satisfactory, compromise.

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    It is when prejudice and acrimony cloud the industrial atmosphere that injustice and unhappiness can result. I must say that I fed that the Government have lent themselves and are lending themselves to unjustifiable prejudice against the trade union movement, and I say that because when they were passing their legislation to which I objected they must have known that it was impossible for the trade union leaders to assist them to further those policies which are against the essential interests of the workers.
    I have been speaking for rather a long time, but I may as well finish what I have to say, for do not often get the opportunity of addressing this House, although I try hard to get as many opportunities as I can. I think that my hon. Friends will agree with that.
    I was not in the House in the days of the Labour Government, but was in industry, and I remember that the Labour Government did not have an automatic absolution from industrial conflict and trouble. We had a lot of it to contend with, and the Conservative Party was not slow in pointing to the difficulties we had and, as was its duty, in blaming the Labour Government for much of the conflict then going on in industry.
    Now, Government supporters, with some justification, will point, in mitigation of what the Government are trying to do, to the grave loss of working days in industry through strike action. I could make a good comparison between British time lost and American time lost. I think it is to the credit of the British trade union movement that we are holding the position as well as we are.
    Nevertheless, to be fair, I would say that I have always regarded the unofficial strike as the bane of both employers and trade unions. Since the war it would appear that its use has been extended and intensified. It is no use, however, the Government making that a basis for a new attitude towards industrial arbitration, for this form of industrial strike action, the unofficial strike, grave as it is, does not warrant the undermining of the whole of the system of collective bargaining, simply because it is a weakness in the system.
    The Prime Minister is reported as saying about these matters that errors are being committed on both Right and Left
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    about what the Government can do in the industrial field. They have great difficulty. I want to pay them a compliment. I was always pleased at the attitude of the Minister of Labour and I was always pleased with the attitude of his predecessor, and I think the relationships were excellent. When the Prime Minister says that about the limitations of the Government, he can apply it also to the limitations the trade union movement itself has in the control of the industrial field at certain times. To blame the trade union movement for whatever happens in industry is to betray limited knowledge of industrial affairs generally. In a free society such as ours many forms of activity are deplored, but to take Governmental action against them would undermine the structure of the free society itself.
    However, there is no doubt—and I have said this to people who have presented the question to me—that there have been times in recent years when ordinary citizens, anxious for the welfare of their country, were sickened by the stupidity of some unofficial strikes. I say it. I have been sickened by some of the unofficial strikes and the stupidity of them. There has been no sense in them.
    Those unfamiliar with the intricacies of collective bargaining and the pitfalls which attend it have often asked me and other people, "Why do not the Government compel those people to come to an agreement? Why not insist on compulsory arbitration?" Those of us who have first-hand knowledge of the heartbreak that strikes of that sort always cause have wished that compulsory arbitration were not as full as it is of dynamic repercussions and dire consequences.
    There are good reasons why the Government, the trade unions and management disallow the use of compulsory arbitration. I do not want to go into those technicalities, because they would take some time. The reasons why we would not wish to use compulsory arbitration are well known to everyone on both sides of the House. If the time ever came, even in the direst conditions, when we resorted to compulsory arbitration we should only be exchanging a greater evil for a lesser one.
    The Government's attitude on this matter is dogmatic and final, but they are now indulging in their very practice in reverse. Their practice is dangerous,

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    inasmuch as they are destroying the faith that our people have built in the system of voluntary collective bargaining. It may have the effect in industry of putting too much accent on the strike as a means of settling claims. That would be disastrous. I again honestly plead with the Government to review their action, because I feel that this action can result among working people, management, Government and trade unions only in discords and dissension and possibly a resuscitation of class hatred, against which I have always fought. This sort of action will never result in prosperity for our nation and its people.
    8.37 p.m.
    Mr. Philip Goodhart: Like so many who have taken part in the debate today, I also wish to begin with that part of the Gracious Speech which refers to the necessity of preserving an economic basis of full employment by restraining inflation. There are many views in the House on how inflation should be restrained, and those views divide us. We have even heard an argument today whether or not gold should or should not be valuable. We certainly are united in the belief that strikes are undesirable.
    I believe we are also united in thinking that waste is undesirable and that combating waste is a necessary part of the fight against inflation, particularly in the nationalised industries. Some months ago a constituent of mine, Mr. E. L. Gethin, who had been contract adviser to the British Transport Commission, made certain allegations about waste in the activities of the Commission. The Minister of Transport asked Sir Harold Howitt to carry out an independent investigation into those allegations.
    I am sure that we are in Sir Harold's debt for having done that, and, in particular, for having put out the relevant facts in some detail so that they might speak for themselves. I am grateful to him for doing that, although I must admit that some people think, despite the fact that he is a distinguished accountant, that he appears in certain instances to have made two and two equal five.
    I do not wish this evening to go into the technicalities of Sir Harold Howitt's Report, but merely to draw attention to two quotations from it. In paragraph 56 Sir Harold says:
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    "There is, I think, no doubt that this emphasis towards more financial control and safeguards, which Mr. Gethin rightly urged, was on occasion resisted by the users, sometimes for technical or other reasons which in the event did not prove to be correct."
    Finally, in paragraph 218 he says:
    "It is of course of vital importance that the directive on the Supplies Organisation"—
    this means the new purchasing director for the British Transport Commission—
    "shall be implemented in the spirit in which it is written."
    I believe that in industry generally there is almost bound to be a clash between those responsible for purchasing and those responsible for the engineering and technical side. Those who are interested in purchasing are naturally interested in buying at the lowest possible price, whereas those primarily interested in the technical side and engineering are chiefly interested in such things as delivery dates, and fancy specifications, and are not so interested in questions of price.
    The engineers, the technical men, are usually higher in rank in the organisation than the purchasers, but in most private firms they can look for certain allies on the board or committee of the board because those companies are profit-making concerns and, therefore, are primarily interested in making money. I do not want to imply that those on the boards of the nationalised industries are not interested in making money or in saving money, but they are not as interested in making money and in saving money as the directors on the boards of private, profit-making firms.
    Therefore, I think that in a nationalised industry it is particularly important to support those on the contracting side against those on the engineering and technical side. Look at the situation now. If a contracting man, one interested in buying, comes into contact with the engineer and wants to keep his job, he is likely to knuckle down to the engineer. Mr. Gethin stood up against the engineers, and what did he get? He got the sack. So it seems to me that anyone who wants to keep his job would be well advised to pipe down and not follow that example.
    So I think it is essential to give particular help to the contracting men. I should like to see this done by the setting

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    up of an independent commission, rather like Sir Frank Tribe's watch-dogs, who from time to time would study the contract procedure of the nationalised industries, and also the purchasing practice—
    Mr. Awbery: For all industries, not one section.
    Mr. Goodhart: Such an independent commission could do two specific things. Firstly, it could check on the actual theory of purchasing in these organisations. Sir Harold Howitt, as well as a number of other investigators has shown that the organisation of purchasing in the nationalised industries can often be improved. Drastic changes have had to be made on the British Transport Commission side. The recommendations were first made as long ago as 1949, but it has taken a long time to bring them into effect. An independent commission could check whether these practices have been put into effect.
    Secondly, it would strengthen the hands of the contract men in their battle with the engineers and the technicians. The knowledge that an independent commission would be coming round in two or three years' time and might look into a certain contract would be of great help to them. I ask the Government to consider the setting up of such a commission.
    Another part of the Gracious Speech which I particularly welcome is that which refers to penal reform and the treatment of offenders. Another constituent of mine, Mr. Taylor, recently had his daughter Edwina most brutally murdered. Since that time, Mr. Taylor has made certain proposals. He has proposed that a register should be kept of all those who have been convicted of some form of sexual assault, and that they should be required to report to their local police station from time to time and notify their movements and their changes of employment to the police. In other words, it would be the "ticket of leave" system.
    Mr. Taylor has, of course, this deep, personal tragedy behind him. He is not an expert of punishment, the law or the detection of criminals. I also am a layman, and most of this House is composed of laymen in this sphere. I would ask the Home Secretary to obtain the views
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    of chief constables and other members of police forces on whether a change in the treatment of offenders—some modification of Mr. Taylor's suggestion—might be desirable. I ask that the matter should be investigated. I think this would set at rest the minds of many parents who are deeply worried at the moment.
    8.48 p.m.
    Miss Elaine Burton: I wish to deal with three matters referred to in the Gracious Speech, not—as my hon. Friends will be glad to learn—at any length. [HON. MEMBERS: "Hear, hear."] I note that some of my hon. Friends cheer my statement. They certainly have not been sitting here any longer than I have, although they may have been sitting here as long. At all events, I shall be as brief as possible.
    I turn first to the statement in the Gracious Speech concerning the European Free Trade Area. It says that the
    "…Government also welcome the recent declaration by the Council of the Organisation for European Economic Co-operation…"
    on this subject, and that the Government intend to do all they can to bring it about. One may as well start with approval, and, while I know that there are varying opinions in the country about the European Free Trade Area, I am in favour of it. The differences which exist cut right across party, right across industry, and, I think, right across nations. I believe that people very sincerely hold different views on this subject.
    With many other hon. Members of this House, I have had the opportunity of going to the Council of Europe and of working in other European organisations, and I am very much in favour of the idea. I hope that the European Free Trade Area will become an actual fact. Apart from thinking that it would be a good thing, I am also quite convinced that it is inevitable. Therefore, I would like to see us go into it as soon as we can.
    I appreciate, as the House does, that it is very necessary for the trade union leaders to see the Minister responsible, as I know they have done, on the matter of maintaining employment and wages in connection with the European Free Trade Area. I think it is quite true to say that, where the motor industry is concerned,

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    the imports of motor vehicles into the prospective Free Trade Area have doubled since 1950. I have been looking at some estimates made by economists—and I do not pretend to be one—stating that these imports may increase to about four times their present value by 1970. Whether that figure is correct or not, I think there is little doubt that they obviously will greatly increase.
    I know that there are many people—there are people I know in my own City of Coventry—who have their doubts about this Free Trade Area. But I would say to them that if the Free Trade Area does not materialise, and if what we call the six Messina countries continue with their Common Market, British motor manufacturers will be virtually excluded from the largest part of the European vehicle market. That would mean their exclusion from about 70 per cent. of the potential market of the European Free Trade Area. Obviously, that would be very damaging to sales, but it would also greatly damage the efficiency of the motor car industry, because the greater the sales the greater the production and the greater the efficiency.
    I have only two figures which I should like to give on this subject. I have been told that the failure of the European Free Trade Area to materialise would probably mean that the total United Kingdom production of vehicles in 1970 would be only four-fifths or 82 per cent. of what it would be if Britain were to participate in the Free Trade Area, and if industry used its advantages to the full.
    Two very simple facts about the matter are these. If the Free Trade Area does come into being, reliable experts in the trade visualise that the United Kingdom should be able to extend its share of the commercial vehicles market to 30 per cent. of that total and of passenger cars to 20 per cent. That obviously would be of very great benefit to the industry.
    Leaving the European Free Trade Area, I now want to say a word or two about something else mentioned in the Gracious Speech, and that is the matter of retirement pensions and contributions. Obviously, I do not intend to dwell on it, because it is a matter for legislation. While I welcome, as everybody does, any increase in retirement pensions or any other pensions, I believe quite sincerely
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    that the amount given is too little, that it is too late, and—and this is the real point I am making—that it is based on a wrong system of payment. I believe, and I would have thought that everybody in the House and in the country would agree, that it is quite impossible to give anybody a pension on which they can exist—I will not even say live, because they are not existing today let alone living—on a flat rate contribution, because I think it has to be much too high. We have heard today what it is to be for this modest increase.
    While I am quite convinced that there is nobody in this country who would begrudge any increase to the old people, I think it is manifestly unfair that a person earning £5 a week should pay exactly the same as a person earning £20 a week. This, I submit, is quite indefensible. I should have thought that a sliding scale of contributions was essential. The second major joint I want to make, as a basis, is that I cannot see how any pension, whichever party or Government may give it, will have any validity unless it is linked to the cost of living. It is quite impossible. Whichever party has been in power, we have all seen that increases in pensions have been swallowed up long before the old people have got them. That is a wrong foundation. There should be a sliding scale of contributions and the pensions themselves should be linked to the cost of living.
    To the relief of my colleagues. I am coming to the last point which I want to make. I wish to deal with the House of Lords reform and life peerages for men and women, something which I hope will never affect me. Perhaps differently from some people, I believe in the necessity for a second Chamber. It does very good revisionary work on what goes to it from this House. But, even more firmly than I believe in the necessity of having a second Chamber, I think that the hereditary principle should go absolutely and completely. Therefore, I hope—I do not know with what success or foundation—that the Opposition will oppose this suggestion when it comes before the House.
    I want it opposed, firstly, because I do not take the view that to admit life peers or even women will be a breach in the hereditary system in the House of Lords. I believe that it will bolster it up. Secondly, presumably the life

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    peers, anyway at the start, would have to be Labour peers, or the balance of Members in the Upper House would become even worse, and I understand that that is one of the things it is wished to rectify. Thirdly, if we are to have life peers who would give a great deal of time to the work of the House, which I gather is the reason for appointing them, they will have to be paid for a full-time job. Fourthly, in spite of the peers we may appoint, there is always the danger or possibility that suddenly the 800 backwoodsmen, as we call them, will appear, purely because of the hereditary principle which entitles them to be there, and will vote and swamp any Measure.
    I do not believe that a few Labour life peers, or the admission of women, should be used to bolster up the other House as it is. In common with a good many other Members, I have had a look at the debates in another place. When this matter was discussed, the Government spokesman there said that he thought that there was a need for the second Chamber and that the country would accept that. I agree, but he went on to say something quite extraordinary. He said:
    "I think there are two matters which, in the debate over these two days, we can probably agree to by-pass. The first is any alteration in the powers of this House, and the second is the abolition or reduction of the right of hereditary Peers to legislate."
    I cannot see why those two matters, which are most important, should be bypassed if we are discussing possible reforms of another place. Equally, I should have thought that consideration of possible amendments to the constitution of another place was not the prerogative of that place.
    The Assistant Postmaster-General (Mr. Kenneth Thompson)The Assistant Postmaster-General (Mr. Kenneth Thompson) indicated assent.
    Miss Burton: I should have thought that we would have a say in the matter—and I see that the Parliamentary Secretary agrees with me.
    The Government proposals with regard to another place are the admission of life peers, the admission of women, and the payment of expenses, which has already begun in a limited way. During the debate last week the statement was made that not many life peerages would be created at a time. If that is really to be so, it will take a very long time to redress the balance of Members there.
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    The statement then referred to the value of the people whom I have perhaps somewhat discouragingly referred to as the backswoodsmen. The Government spokesman said that the peer uses Parliament when he has first-hand knowledge to contribute to the debate and that the other place benefited from that exceedingly,
    "and…from the contributions of backwoodsmen; people who come from the country, people who do not live in London, and who know intimately the conditions of the country people among whom they do live."
    I am sure that their contributions are very valuable—we know that they come very seldom—but I cannot see that that is any reason for allowing them to vote. Certainly they should be allowed to speak, but they should not be allowed to have a vote.
    The spokesman continued:
    "So, although we may come to a comprehensive reform which will limit the numbers of hereditary Peers in some way, I think there are two things which we have to prove to ourselves before we can do it. The first is that there is a great measure of agreement between the Parties."—[OFFICTAL REPOR. House of Lords, 30th October, 1957; Vol. 205, c. 588–92].
    If there are enough people on my side of the House who think as I do. I am quite sure that there will not be any great measure of agreement among the parties as to what we ought to do with another place, and, if there is no measure of agreement between the parties, does it mean that another place is to stay as it is for ever? That would seem to be the logical conclusion.
    The spokesman's second point was that any scheme suggested for the future should offer a better result than the present scheme. That I entirely accept. The number of peers twenty years ago was 772; the number today, with the admission of the latest one, is 872. It will not strain any of us, even at this late hour, to appreciate that that is an increase of 100 in twenty years. In twenty years' time, therefore, if we do not have any changes the number may have grown to 1,000. Is it suggested that we should add to that 1,000? Is it practical?
    I should have thought that there were four points of agreement upon this matter among most people: firstly, that we should not have a Chamber open to many people who never enter it; secondly, that

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    there is a necessity for a second Chamber of some sort; thirdly, that women should be admitted, and, fourthly, that people might be willing to serve if life peerages were introduced and the financial question could be solved.
    Who will disagree with the Government's proposals? Obviously those whom we may call the diehards, and the extremists. The diehards say, "No change at all," and the extremists say. "Sweep away the lot; let us get rid of them." On the other hand, there is a large body of moderate opinion which says, "Let us have these changes that the Government suggest and see how they work out, and then we can see what will happen in the future."
    I should like to see women there. I see no reason why women should be debarred from the other place when they are admitted to this House, but, if it is a question of admitting women while the hereditary principle is maintained, I take my courage in both hands and say that I should prefer not to see women there, because I think that the hereditary principle should disappear first.
    If we are not going to pay 872 peers full-time money for doing a full-time job, how on earth is it proposed that we should select the few that we are to pay? If we did not pay them we should not be able to get them to do a full-time job. They have not got the money—certainly those on this side of the House have not got the money—to afford to do the job without payment.
    And so, finally, on this matter of the House of Lords, I think that the hereditary principle should disappear. I think we should have peers of Parliament, men and women, but that the hereditary principle should go first, and I hope very much that my right hon. and hon. Friends on this side will agree with me.
    9.5 p.m.
    Mr. John Baldock: The hon. Lady the Member for Coventry, South (Miss Burton) did a good service by drawing the attention of the House to the benefits that would be likely to follow for the principal industry in her constituency if this country were to enter a European Free Trade Area.
    I was not able to go along with the hon. Lady quite so well when she spoke
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    about pensions, particularly in the rather depressing view she takes that a pension will never be permanent because it will always be left behind by the rising tide of inflation. I believe that Her Majesty's Government are determined to make a stand against that. It is perfectly true that we have had this serious evil with us ever since the early days of the war, but I detect a real determination to strengthen the £ and real resistance towards inflation.
    I hope that the hon. Lady will find that she need not take quite such a gloomy view about any fixed pension being left behind by the falling value of money.
    Mr. Hannan: Will the hon. Member not agree that what is happening today is part of the price the Government have to pay for their failure to deal with inflation since 1951—not since last week?
    Mr. Baldock: For the hon. Member, apparently, history began in 1951. This inflationary process has been going on since the early days of the war.
    Mr. Ede: Mr. Randolph Churchill said in the Evening Standard that inflation started after Agincourt and has been going on ever since.
    Mr. Baldock: I am grateful to the right hon. Member for South Shields (Mr. Ede) for correcting my history, but I think he will agree that it is the pace of inflation that matters and that, while it may creep slowly forward always, it is when the pace becomes fast that it becomes more serious.
    I believe that there are some in this House and elsewhere who take the view that all emigration to the Commonwealth is good whatever form it takes, but I believe that there can be very few indeed who do not regard with apprehension the considerable drift of young and early middle-age people of high quality living in this country to North America. I wish to examine some of the reasons for those people of high quality and ability drifting from this country to North America.
    One thing is perfectly clear. It is not that they have any desire for Socialism, because if that were what they wanted they would not choose North America. What they want is a place where they can find greater opportunity, greater freedom and a chance to keep more of what they earn. I believe that they have something

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    more than a suspicion that the best days of this country are behind rather than ahead. I think that there are a number of other causes, although perhaps they are relatively minor, which increase the feeling of irritation and discontent with things as they are here now.
    For instance, if they are busy people, and want to save time by not waiting in doctors' surgeries, and, therefore, become private patients, they are annoyed and feel it unjust if they then have to pay for their medicines. They make an above-average contribution to the Exchequer and an above-average contribution to the National Health Service, and they feel that they should be at least on equal terms with others. If they pay for their children's education—and they make a larger contribution towards education and all other State expenditure than does the average person—they feel that it is unjust that they are not given any return in allowances for what the State has saved by not having to educate their children. These may well be only small matters, but they add to these irritations.
    The most important of all the reasons that this drift is taking place is that these people have a feeling that there is a lack of opportunity in Britain at present and that an excessive part of their salaries is taken by taxation, giving little opportunity for saving or accumulating any substance. I am glad to say that the Government have moved in the right direction by reducing the proportion of the national income which is taken in taxation. They have made a substantial reduction while they have been in office. That is quite contrary to the policy adopted by hon. Members opposite, who seem to believe in taxation for taxation's sake and who wish to endeavour to obtain a state of artificial equality which both nature and good sense abhors as much as a vacuum.
    Perhaps they might learn a lesson from the Sputniks, because the country which so successfully first launched these space vehicles, or whatever they are, gives very big rewards to its scientists and technicians compared with its unskilled manual workers. There is certainly no attempt at equality in that State which has produced such successful results.
    Mr. Bence: Stockbrokers or bankers do not get anything in Russia.
    Mr. Baldock: It seems a little ironical to me that those who are leaving the United Kingdom, feeling that perhaps the best days of this country are over, should do so when the possibilities are greater than they have ever been and when the chances of links with Europe and greater influence in Europe are opening out before us. The opportunities undoubtedly exist if we solve our economic problems and we can build up a strong, respected and honest £.
    In my view, much strength would be injected into industrial life by changing the emphasis between direct and indirect taxation. This is the main point which I want to make. Heavy direct taxation not only dissatisfies those who subsequently emigate. It is an important reason why they leave. More than this, it is strongly disliked and even resented by a great many people who pay it. That applies not only at levels where three-quarters of a man's earnings are confiscated but at the very first rung in the taxation scale. Heavy direct taxation is bad not only because it inhibits savings and reduces incentive, but because it falls inequitably and provides temptations and distractions which distort the whole economic pattern of the country.
    For a man earning a high salary it is more profitable to devote time to so arranging his affairs that they suffer less taxation than to earn more salary. Thousands of manual workers find it more remunerative to do odd jobs in the evenings and week-ends, such as driving week-end buses, helping in public houses, decorating, and doing odd building jobs, than to do any overtime with their employer, because their overtime earnings would be taxable. For those whose transactions are mainly in cash the temptations of heavy direct taxation are obvious.
    For all these reasons, but particularly because of the reduction of incentive that is brought about by heavy direct taxation, it seems important to lighten the load of direct taxation as much as possible, both by raising the lower limit so as to exclude as many as possible from paying direct taxation at all, and by reducing the rate for those who do pay it. Both are equally important, because the weight of both forms of taxation at present is a disincentive—a disincentive

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    to those on the verge of paying higher tax and to those already paying it.
    The Government have done both by reducing the share of the national income taken in taxation. They have reduced the rate of direct taxation and have also raised the level at which Income Tax becomes payable. Both those steps are excellent, but if we are to be realistic we must admit that that process of reducing the proportion of the national income taken in taxation cannot go on indefinitely. The reverse is the case. There are several spheres, such as education, in which the Government have repeatedly said that more money will have to be spent, and I do not think that anyone in this House would quarrel with that forecast.
    It is not realistic to continue beyond a certain point reducing the proportion of income required for revenue. The only solution is to change the way in which it is raised and to collect more by indirect taxation. Such taxation is not a disincentive either to increased production or to savings. It may be said that to increase indirect taxation is inflationary, but I would hardly think that anybody would claim that that was so in the case of beer or cigarettes. It is quite the reverse.
    I should like the Government to explore the use of a wider tax on consumer goods. There are many things that might well be the subject of taxation—
    Mr. Bence: Such as?
    Mr. Baldock: —and which would lead to a reduction of direct taxation; such as, to reply to the hon. Member for Dunbartonshire, East (Mr. Bence), restaurant meals, which are taxed in other countries; sweets, at any rate the more expensive ones—
    Mr. Bence: Tax the children's toffee apples?
    Mr. Baldock: I said the more expensive ones. Per head, we are the largest consumers of sweets in the world. I do not think that anyone can say that expensive sweets or restaurant meals are necessities though, if the hon. Gentleman thinks so, he will perhaps take the opportunity to say so. There are several other commodities. The cost of quite a few licences has not been adjusted to the decline in
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    the value of money—such as dog licences—and it would all result in bringing in a little more revenue.
    To sum up, I believe that a change in emphasis from direct to indirect taxation should be most seriously considered by the Government. I think that it would be the most immediately effective action which could be taken to bring about that state of economic strength which everyone in this House desires, and to which reference was made in the Gracious Speech.
    9.19 p.m.
    Mr. Cyril Bence: The speech to which we have just listened is one of the most extraordinary I have heard in this House. The hon. Member for Harborough (Mr. Baldock) started off with the proposition that we are getting heavy emigration from this country because people feel that too much of their income is being taken in taxation. He ended by suggesting that more of the people's incomes should be taken in taxation, not at the point at which they earn it, but at the point at which they spend it. But, in either case, they will be losing income through taxation to the central Government. What the hon. Gentleman suggests is not that we should reduce taxation but that we should take it from the people in a different form in the hope that they will not notice it.
    Mr. Baldock: I hope the hon. Gentleman will allow me to make a correction. I thought I made it clear that I was entirely in favour of reducing the whole weight of taxation, and I gave credit to the Government for having done something to that end, in taking a smaller portion of the national income. However, I believe that there is a difference in incentive to save and to produce between different methods of collecting those taxes.
    Mr. Bence: I am certain that everyone always hopes to pay less in taxation. Most of us pay taxes, and we wish we did not. That is a quite natural feeling; no one likes to see part of his income being taken in taxation. I read in some statistics not long ago that, out of every £1 I pay in Income Tax, 16s. 4-id. can be accounted for by interest on and management of the National Debt. Now, with Bank Rate up to 7 per cent., I find that a greater proportion of what I pay in taxation will go towards interest on and management of the National Debt.

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    I went through some statistics of local authority finance. Taking my own local authority of Clyde Bank, I find that about 15s. 8d. out of every £1 collected in rates goes to satisfy, not the immediate, physical services of the administration of the burgh, but to satisfy interest on and service of moneys borrowed by the local authority. It seems, therefore, that the principal reason for taxing the community as we do is not to provide these physical services which are rendered, but it arises rather from the existence of a system of compound interest on the basis of which we try to work our industrial society. If the hon. Member for Harborough wants a reduction of taxation, he should press his hon. Friends to reduce the burden of the debt structure we have created by our monetary system.
    Mr. Gresham Cooke: The hon. Gentleman ought not to leave the impression that interest on the National Debt is responsible for 16s. 4½d. out of every £1 of tax which he pays. I have not got the figures; it may be responsible, possibly, for 16s. 4½d. of Income Tax, but that cannot be true over the whole range of taxation, taking into account Purchase Tax, duty on cigarettes and alcohol, and so on. I do not think he ought to leave an unfair impression.
    Mr. Bence: I quite agree; I did not include the others. I meant Income Tax, and I believe that I referred specifically to it.
    I want to speak this evening about a subject which is very dear to me, a subject which has caused me a great deal of heartbreak in my relations with the party opposite, because although I oppose hon. Gentlemen opposite in ideas, I have looked upon many of them as friends. I have many friends among Conservative Members, and I have always felt that they really believed in home ownership. I believe also that the bulk of people in this country have a great respect for the concept of the family and the good home.
    Between the wars, I was always pleased to see drives by local authorities, by public bodies in general, and by the building societies, to encourage home ownership. My own trade union, the Amalgamated Engineering Union, did all it could before the war to foster home ownership through the union; we financed it, and we still do. The Tory
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    party campaigned between 1945 and 1951 to end building licences and to encourage, the ordinary people of our country to acquire their own homes.
    Mr. Denis Howell: "A property-owning democracy".
    Mr. Bence: Yes, we remember that phrase. I have always felt there to be a good and natural argument for home ownership. It is a good thing for a man to own the place where he can function as an individual. In modern industrial communities, a house and home is about the only thing left where we, as individuals, can function with our families and own what we have about us. The home is the last bastion of individual ownership and function open to us.
    I admit that there has been an increase in housebuilding for private ownership during the last few months, but I see in the Press this morning that a national building society is proposing to increase to 8 per cent. the interest rate on mortgages for people wishing to buy through that society. This is a frightful situation. Do hon. Members realise what this means to thousands of young people—young men, for example, who have completed their National Service, who are married and have quite modest incomes, many of them in the professional groups? They have undertaken the obligations of acquiring a house of their own. They have taken on responsibilities for repairs. They have taken on a terrific responsibility for thirty years.
    Many of these people are the backbone of a solid society. They feel personal responsibility, and they organise their lives in an orderly manner. I have had deputations from them in my own constituency. They have entered into obligations on 30-year and 35-year terms. They calculated that when they reached pensionable age at 65 they would draw a modest pension and would have paid for their house and be free of liability. In the last three years, however, every upward movement of the interest rates has added periods from ten to thirty years to the term of repayment of their mortgage. This is a tragedy for millions of young people.
    The hon. Member for Harborough talked about emigration. Many people are leaving the country, not merely

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    because they are discontented with their jobs or with the taxation system, but because of housing and the conditions of house purchase. I know of two cases in which this has happened to people who bought houses in Scotland. They say that this is the last straw.
    It is said—I do not know with what justification—that immediately the Government introduced their legislation to free 700,000 or 1 million houses from rent control an increasing number of young folk who were contemplating marriage went to the building societies to negotiate house purchase as a consequence of the increased rents brought about by the new Rent Act. But immediately this flow begins—a flow in the right direction to people owning their own homes—the Government do something that makes house purchase more difficult for them than ever.
    I know the old arguments that we hear from the Government. I have argued this before, and I am arguing it again tonight, because these are things that I must get off my chest. When we suggest any action that would relieve many of these people, who deserve relief, from the heavy burdens being placed upon them as a result of house purchase, and would relieve ratepayers and local authorities, who will suffer considerably as a result of the 7 per cent. Bank Rate, we are told that to discriminate between one borrower and another or between one enterprise and another is wrong and that there must be no discrimination. I can never understand that.
    I was brought up to believe that my life was a process of discriminating between alternatives and between one action and another. My life was a battle every day. It was a struggle I had to make with myself in discriminating and choosing what action to take, how I did things and the motives that actuated me in doing things. I believe that society has to do the same thing. The idea that in a society we should not discriminate is wrong and immoral. We should discriminate.
    What society has ever evolved or devolved in which people were not prepared to discriminate between what was good and what was bad? What bank manager has not had to exercise discrimination between one borrower and another? Of course bank managers have to do it.
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    There is discrimination all the time. I had a balance-sheet sent to me a fortnight ago which showed that the overdraft of the company had gone up from £3,750,000 to £5,500,000, and yet the bank managers worry small families to death about their overdrafts. There is discrimination.
    I am glad to see the Secretary of State for Scotland here. He told us some time ago that he is doing all in his power to expand industry in Scotland. What expansion of industry are we likely to get with a 7 per cent. Bank Rate? Consider the terrible effect it will have on one of our chief industries, the shipbuilding industry. It will have a terrible effect in every branch of capital development, and Scotland is still a country of heavy industry.
    This policy which the Government pursue, the policy of the monetary mechanism, as an alternative to discrimination is bad, and not in the best interests of the economy. I believe it is the duty of the money interests, the money power, of the Treasury, to use discrimination in the creation of credit, the creation of the cash basis for the credit structure, and to discriminate in the use and investment of that money in such an economy as ours.
    Mr. Gresham Cooke: The Government do not lay down what is to be the rate of interest charged by the building societies to borrowers. There is discrimination because the rate of interest on mortgages differs between one mortgage and another. The hon. Gentleman has mentioned one building society, but there are other building societies lending at below 8 per cent.
    Mr. Bence: Yes, but the pressure is on. The society I mentioned is outside the Building Societies Association. Once it charges 8 per cent. the presure will be on other building societies to increase their charges. At the last meeting of the Building Societies' Association it was only by a very small majority that it was decided not for the present to increase the interest rates.
    How young people can equip their homes and maintain them and raise their families and pay these charges I do not know. I feel very deeply for them. The party opposite says it believes in a property-owning democracy, but then it uses the monetary mechanism and an

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    undiscriminating interest rate on all money loans and all credit throughout the country. It is dealing a deadly blow to a property-owning democracy, and harming an important part of our social life, and those of our people who desire to have homes of their own.
    What I am now about to say I do not say from any lack of appreciation of the great scientific achievement of the scientists of the Soviet Union in sending those satellites round the earth. We should show very bad grace if we did not recognise that that is a tremendous achievement. I am as appreciative of it as anyone else. However, there is an aspect of the modern world and of Western civilisation which worries me. We continually hear the plea for more scientists. Of course, we need more scientists, but I remember a conversation I had with the general manager of a very important company in Scotland and of how he said to me, "I can get all the technicians and engineers I want, but I cannot get men with human understanding, men who can understand human relationships. Those are the men I am short of."
    I believe that society will get very short of these men. Specialised education and vocational training are all very well. That kind of education makes a man a scientist or an economist or some other kind of specialist. I may be old-fashioned in still believing that human life will be brought to a pretty sorry end if the world is not peopled by human beings whose standard of measurement is not some great scientific or technical achievement or production output but the sum total of human attitudes, the forms of behaviour and general association of human beings.
    This is one of the reasons why I believe that the British Commonwealth, a family of nations, should not worry about whether we can do this or that technological or scientific feat in projecting satellites into their orbits. Our contribution to the world and to the United Nations is surely our capacity to evolve out of an empire. India has had her freedom. We are a tolerant people. We have very few racial complications and we preserve in wide measure our freedom. Both parties in their long history have made their contributions to our concepts of society.
    These are our contributions to the world, and the sum total of human happiness should be the yardstick by which
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    we measure progress. Let the scientists and the technologists achieve their great technical masterpieces but, for goodness' sake, do not let us worship those achievements as the purpose and the ideal to which we as legislators and the people of our country should chain our ambitions.
    We should not supplant the humanities in our educational system by vocational education. We should marry the two. That will mean tremendous sacrifices. We shall have to spend more on education. We shall have to provide longer periods of education for our children so that they may be educated in the humanities as well as the sciences and so be enabled to preserve a balance. We should not measure our lives and our society by achievements in production but by the sum total of human happiness, by the conduct and behaviour of our people, by the affection of our families, and all that emanates from those bases. Those are the things that to me mean progress.
    9.38 p.m.
    Mr. Archer Baldwin: I am glad to know that the hon. Member for Dunbartonshire, East (Mr. Bence) likes a property-owning democracy, but I wonder how he will square that idea with those of his leaders when they take over, as they have suggested, all the houses that they can possibly get hold of.
    Mr. Bence: The hon. Member must not take advantage of a point which I made quite clearly. I said that I can always find a good argument in favour of the individual who desires to own that within which he functions, but there is ownership of hits of paper and of thousands of pounds of value in land by people who never function within that property. I could never justify that.
    Mr. Baldwin: I agree that there is nothing like owning property. I am glad that the hon. Member agrees with that idea, though I thought that was contrary to the ideas held by his leaders.
    I also agree that there are certain features which tend to be lacking in our educational system. We are spending too much time and energy on technical and other so-called education for our children instead of providing for them that human touch which was provided in the smaller schools of the past. Therefore, I agree with the hon. Gentleman's sentiment in that direction.

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    Tonight I want to deal with the Franks Report. I endeavoured to speak last Thursday, Mr. Speaker, but I am glad I did not catch your eye because many things have happened since then. I welcomed the statement of the Prime Minister today that the Government propose to repeal the judicial and disciplinary powers of the 1947 Agriculture Act. Most of us on this side of the House will welcome that. I was also glad to hear in the debate last Thursday that the Franks Report has been accepted to a large extent by the Opposition. That is probably the reason why my right hon. Friend felt prepared to deal with the Report quickly.
    We have had a great many Reports since I have been in this House, but this is the first occasion on which a Report of this character has been dealt with so quickly. The members of the Franks Committee are to be congratulated, because it shows that the time and trouble they took in preparing their Report has been worth while. I can only hope that steps will now be taken to implement it as soon as possible.
    The judicial and disciplinary powers conferred by the 1947 Act have acted prejudicially to the farming industry. When, ten years ago, the Bill went through Standing Committee, some of us pointed out to the then Minister of Agriculture the effect of sonic of the powers that were to be given to the county agricultural executive committees. What we said on that occasion has proved to be correct and I am glad that it has fallen to a Conservative Government to repeal part of that Act. At that time we pointed out that too much power was being given to Whitehall and not enough left in the countryside. If these powers are taken away from the county agricultural executive committees, I suggest that the committees themselves will no longer be necessary. They are clogging the machinery by which they pass land from tenant to tenant or from landlord to tenant.
    I know it may be said that the county agricultural executive committees will still be needed to operate various schemes for which claims can be made for assistance under the various statutes. That duty can be exercised by the National Agricultural
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    Advisory Service. There are, I know, some excellent agricultural officers in every county who are at present attached to the county agricultural executive committee against their wish. It has proved to be the case that instead of these advisers being called in to help farmers who are on the margin of productivity, those farmers have hesitated to call in the advisory officer for fear that he might report to the county agricultural executive committee that their standard of farming is not good. Therefore, I suggest that the advisory committees should now revert to the control of the county council, under the supervision of the county land agent, as used to be the case. If that is done, there will be no need for the county agricultural committees.
    The statement in the Franks Report to the effect that these committees have not proved to be entirely satisfactory is correct. During the war and in the period immediately after the war they were necessary, but they have outlived their usefulness, and so I hope that the Government will abolish them.
    Mr. H. A. Marquand: Will the hon. Gentleman allow me to ask a question? I may not be sufficiently familiar with these provisions to understand exactly what he is saying, but as a representative of a municipal constituency, I understood that we had struck a bargain with the farming community that, in return for subsidies and aid from the Exchequer, we were to have the satisfaction of knowing that farmers would be required to farm their land properly. If the hon. Gentleman is now suggesting getting rid of all those committees which discharged that responsibility, is he not repudiating one side of a bargain?
    Mr. Baldwin: That is the suggestion made by the Franks Committee. With Part I, which gave farmers guaranteed prices, went Part II, which laid down a standard of cultivation, but circumstances today are entirely different from what they were then. Now we have reached the stage of over-production with many of our products, and, therefore, the necessity for putting people under supervision, for snooping and so forth has been removed, and we need something fresh to take its place. I am not suggesting that we want to encourage a bad farmer, but, at the same time, if a

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    farmer farms badly, he suffers the penalty which is suffered by anyone who does not conduct his business properly.
    The Franks Committee did not anticipate that the Government would do away with all the judicial and disciplinary nowers, and it made the suggestion that minor tribunals should be set up as a preliminary to a final appeal to the Lands Tribunal. As those powers are now to be removed, I suggest that it is quite unnecessary to set up any further tribunals. We have too many tribunals, committees and so on. The more we can do away with that sort of machinery, the more we shall reduce the expense of governing the country.
    I support my hon. Friend the Member for Warwick and Leamington (Mr. John Hobson). Like myself, he has had some experience of executive committees and appeals. He was emphatic that the minor tribunals should be dispensed with and that matters should be settled by the existing Lands Tribunal. Too much has been made about the question of law. The question of law as between tenant and tenant or landlord and tenant very seldom arises. The decision is mainly one of fact. Whether a farmer is farming his land well or not will be the most disputed fact.
    I should like us to adopt the procedure which was common to agricultural disputes before the war. In those days valuers on each side met to try to settle the problem. If they could not settle it, they appointed an arbitrator. If they could not agree upon an arbitrator, an appeal was made to the Minister of Agriculture, and he appointed an arbitrator from a list of selected men. The list of arbitrators was agreed by various organisations dealing with land. Consequently, all the problems dealing with land were settled without any cost to the Treasury.
    The decision of the arbitrator was final. There was no appeal against it except on grounds of misconduct. If a question of law arose, the arbitrator could sit with a legal assistant, and the valuers could also have their legal assistants, and any matter of law was argued out at the arbitration. Alternatively, if a question of law arose during the proceedings, the arbitrator was asked to state a case so that a county court decision could be obtained, and the decision of the county court was final.
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    We could dispense with all the paraphernalia from which we have been suffering for fifteen years by reverting to the old procedure, which was fair and inexpensive and settled problems without undue trouble. Under that system the expenses fell not on the Treasury but upon the parties. There should be provision for the Lands Tribunal to decide how the expenses of the hearing should be met. The great thing about the procedure is that there can be no delay. However, if we set up minor tribunals, before an appeal can be made to the Lands Tribunal from a decision of the minor tribunal the circumstances on the farm may have altered entirely, because over the course of a few months it would be possible to remedy many of the troubles and difficulties which existed when the case arose.
    I am glad to know that my right hon. Friend is to reduce the over-security of tenure which exists at the present time. That was another matter which we argued in the debates in the Standing Committee before the Bill was passed. We pointed out that if over-security of tenure was given, there would be a tendency to do away entirely with the landlord and tenant system, and that, in fact, is what is now taking place because of the over-security which now exists. It means that a landlord who lets his farm to a young man virtually parts with the possession of the freehold of that farm for his lifetime. All he has to do is deal with the repair bills as they come in. The result of that is and I expect that hon. Members representing agricultural constituencies will bear me out—that there are very few farms today which are being relet when they become vacant. I think that is a very great mistake.
    We have in the country a large number of energetic young farmers, who want farms, but with the over-security of tenure that exists they will never get them. I think that it is to the detriment of this country that it should be so. I have always felt that a reasonably good tenant had all the security he wanted under the 1925 Agriculture Act. Under that Act, if he were given notice to leave by the landlord, he had the right of claiming up to two years' rent as compensation for being turned out. Under that system, a landlord hesitated to give a tenant

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    notice, knowing that he would be faced with a pretty considerable Bill if he got rid of his tenant.
    Mr. Mellish: In view of the fact that it is now pretty hopeless to try to catch Mr. Speaker's eye, although I have been waiting since half-past two, would not the hon. Gentleman agree that all the points he has been discussing could have been made on the Bill which will have to be brought before Parliament by the Government in order to do the things they want to do and on which he has expressed himself so freely? Is it not a fact that all this could have been said on the Bill which the Government will have to bring in later on?
    Mr. Baldwin: I am sorry, but I could not catch what the hon. Member said.
    Both the National Farmers' Union and the Central Landowners' Association have agreed that the present system is not in the interests of the farming community, and both will agree to some relaxation of the over-security which exists at present.
    I welcome the decision to end the emergency powers on the acquisition of land, which have been completely unfair to the owners of property, whether land or houses. If land is required by the public, it should be acquired at a fair price, and that price should not be based on 1939 values. I have known cases in which a local authority has been loth to acquire land, knowing that it was to be acquired on 1939 prices, which would be completely unfair to the owner. I am glad to know that that power is now to be done away with, and I hope that if land is to be acquired, whether for the Services or any other purposes, it will be acquired on the basis of what it is worth and not at pre-war prices.
    We have done quite a bit in amending the Rent Act towards giving the owners of house property a little more justice than they have had for a long time, and if we repeal the power to acquire land at 1939 prices, it will be much more fair to owners of property. I hope that when my right hon. Friend is considering these propositions he will deal with that aspect of the matter as well.
    Debate adjourned.—[Mr. E. Wakefield.]
    Debate to be resumed Tomorrow.

    PRIVILEGES
    Committee of Privileges to consist of Ten Members:
    The Attorney-General, Mr. R. A. Butler, Mr. Clement Davies, Mr. Ede, Mr. Elliot, Mr. Gaitskell, Mr. Mitchison, Sir Patrick Spens, Mr. James Stuart, and Mr. Viant:
    Power to send for persons, papers and records:
    Five to be the Quorum.—[Mr. Oakshott.]

    STATUTORY INSTRUMENTS. ETC. (PROCEDURE)
    Ordered,
    That except in such cases as the House may otherwise order:—

    (1) No Proceedings on a Motion to which this Order applies shall be entered upon at or after half-past Eleven o'clock.

    (2) If such a Motion is under consideration at half-past Eleven o'clock, Mr. Speaker shall forthwith put the Question thereupon to the House, provided that, if he shall be of opinion that—

    (a) owing to the lateness of the hour at which consideration of the Motion was entered upon, or

    (b) because of the importance of the subject matter of the Motion,

    the time for debate has not been adequate, he shall interrupt the business and the debate shall stand adjourned till the next Sitting (other than a Friday).

    (3) A debate which has been adjourned under paragraph (2) of this Order shall not be resumed later than Eleven o'clock, but shall stand further adjourned till the next Sitting (other than a Friday), and the foregoing provisions of this paragraph shall apply to any debate which has been further adjourned under this paragraph as if the further adjournment were an adjournment under paragraph (2) of the Order.

    (4) The Motions to which this Order applies are—

    (a) any Motion for an Humble Address to Her Majesty praying that a Statutory Instrument be annulled, and any Motion that a draft of an Order in Council be not submitted to Her Majesty in Council, or that a Statutory Instrument be not made.

    (b) any Motion that, or for an Humble Address to Her Majesty praying that, any other document which may be subject to proceedings in the House in pursuance of a Statute be annulled, or cease to be in force, or be not made.

    (5) That this Order be a Standing Order of the House.—[Mr. E. Wakefield.]

    STATUTORY INSTRUMENTS
    Select Committee appointed to consider every Statutory Instrument, every Scheme or Amendment of a Scheme requiring approval by Statutory Instrument, and every Draft of such an Instrument, Scheme or Amendment, being an Instrument, Scheme, Amendment or Draft which is laid before the House and upon which proceedings may be or might have been taken in the House in pursuance of any Act of Parliament, with a view to determining whether the special attention of the House should be drawn to it on any of the following grounds:—

    (i) that it imposes a charge on the public revenues or contains provisions requiring payments to be made to the Exchequer or any Government Department or to any local or public authority in consideration of any licence or consent, or of any services to be rendered, or prescribes the amount of any such charge or payments;

    (ii) that it is made in pursuance of an enactment containing specific provisions excluding it from challenge in the courts, either at all times or after the expiration of a specified period;

    (iii) that it appears to make some unusual or unexpected use of the powers conferred by the Statute under which it is made;

    (iv) that it purports to have retrospective effect where the parent Statute confers no express authority so to provide;

    (v) that there appears to have been unjustifiable delay in the publication or in the laying of it before Parliament;

    (vi) that there appears to have been unjustifiable delay in sending a notification to Mr. Speaker under the proviso to subsection (1) of section four of the Statutory Instruments Act,
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    1946, where an Instrument has come into operation before it has been laid before Parliament;

    (vii) that for any special reason its form or purport calls for elucidation:

    and if they so determine, to report to that effect:
    Mr. Ronald Bell, Mr. Cronin, Mr. Harold Davies, Mr. Eric Fletcher, Mr. Hector Hughes, Mr. Robert Jenkins, Dr. King, Mr. Gilbert Longden, Mr. Page, Sir Harold Roper, and Mr. Spence:
    To have the assistance of the Counsel to Mr. Speaker:
    Power to sit notwithstanding any Adjournment of the House, to report from time to time, and to report the Minutes of their Proceedings from time to time:
    Power to require any Government Department concerned to submit a memorandum explaining any Instrument or other Document which may be under their consideration or to depute a representative to appear before them as a Witness for the purpose of explaining any such Instrument or other Document:
    Three to be the Quorum:
    Instruction to the Committee that before reporting that the special attention of the House be drawn to any Instrument or other Document the Committee do afford to any Government Department concerned therewith an opportunity of furnishing orally or in writing such explanations as the Department think fit:
    Power to report to the House from time to time any Memoranda submitted or other evidence given to the Committee by any Government Department in explanation of any Instrument or other Document:
    Power to take evidence, written or oral, from Her Majesty's Stationery Office, relating to the printing and publication of any Instrument or other Document.—[Mr. Oakshott.]

  EDUCATION, EAST HERRINGTON
  Motion made and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]
  9.58 p.m.
  Mr. William Blyton: Tonight I want to raise a very vexed problem concerning the area of East Herrington in my constituency. This village lies on either side of the main road from Sunderland to Durham City and extends along the road for about one and a half miles. There is no school for about one and a half miles. There is no school of any kind in the area, and the absence of a school, especially for young children between the ages of five and ten, has been a source of considerable discontent and much inconvenience to small children and their parents who have to take them to school.
  There are 616 houses in the village, nearly all of them of the middle-class bungalow type. In this area there are sites for 180 private houses to be built, and for 72 local authority houses.
  It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]
  Mr. Blyton: At the present time 190 children are going to schools at Silks-worth and New Herrington, and of those 190 children who are going to schools outside their area because none exist in the village, 47 are going to private schools. Of the child population of East Herrington going to school next year, 28 will be between 4 and 5 years of age; 28 between 3 and 4; 33 between 2 and 3; 35 between 1 and 2; and 27 under 1 year of age. In addition, 28 children will become eligible for school next year, making a total number travelling outside their area of about 220.
  The Minister may tell me that at Silks-worth and New Herrington school places are available, but if we examine the position we find that the New Herrington school is due for demolition as a slum school and the Church of England school at Silksworth is a dreadful building. There is no doubt that there is a case
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  for new schools being built to replace these very old schools on the slum list. The condition of the Church of England school is really deplorable.
  Out of the 47 East Herrington children going to private schools, the contacts that I have made convince me that if a new school were built for the inhabitants the great majority of those children would be likely to go to that new school. All these children have to travel nearly two miles to get to school, and the hardships which the parents and the children have had to endure in years gone by will undoubtedly be aggravated in the years that lie ahead because of the increase in the child population which I have illustrated. The mothers are very worried because the very little children are exposed to danger from the heavy traffic which travels along the main road from Sunderland to Durham.
  When I raised this issue in a letter written to the Minister on 1st October, he replied by saying that
  "the Durham Local Education Authority did not consider a new school to be sufficiently urgently needed to merit inclusion in the proposals they sent my predecessor for the 1958–59 building programme,"
  I think this was very unfair, to say the least. I can assure the Minister, from my dealings with the Durham County Education Authority, that they are as keen as I am to have a 5-classroom school for children between the ages of 5 and 10 in East Herrington. I can also assure him that nothing but good will exists in the Durham Education Committee in regard to this problem.
  What has been the reason for our not getting this school in the 1958–59 programme? Ever since 1953 we have agitated for this school. I am concerned only with children between the ages of 5 and 10. We are prepared to put up with the inconveniences to children over that age. The Minister ought to know why the school was not put in the 1958–59 programme.
  In March, 1955, this school was submitted to Durham Education Committee to be embodied in the 1956–57 programme. In February, 1956, this was considered, but it was not submitted because of the unsuitability of the site owing to mining subsidence. If there had been clearance of mining subsidence that school

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  would have undoubtedly figured prominently in the programme, but the education committee could not submit the school if clearance was not forthcoming. In March, 1957, proposals were made to the Minister in connection with the 1958–59 programme, and again owing to mining subsidence the school could not be submitted.
  The Minister should know that in my area, especially in relation to school building, we will always have the problem of mining subsidence. It was not use submitting this school if land clearance could not be obtained. I am sure that if it had been submitted to the Minister he would have crossed it out, quite rightly, as it would have been a waste of public money to build a school when the strata beneath the site was continually moving.
  I made representations to Durham Education Committee in April this year to discuss the whole situation. I had to face the chronic problem of mining subsidence, and I was told that the members of the committee were as keen as anyone to get the school, but they could not do anything until the N.C.B. gave clearance. The education authority during that period asked the Minister to allow a modern school to be built as an extra item, but he informed the committee that no projects could be added to the 1958–59 programme except by substitution of some other project. Because of that reply, the school at Herrington was not put to the Minister as an extra item, but it was decided to give consideration to this school in the 1959–60 programme.
  I met the National Coal Board on 18th April on the mining subsidence problem and the N.C.B. was good enough to show me the plans. As an ex-miner, I understood the problem very well. It was ultimately agreed that clearance of this site would be given in September, 1958. In the light of that, I wrote to the Minister asking him to allow it as an extra item in the 1458–59 programme in order to try to alleviate the hardships of these little children.
  I have a minute of the education authority informing us that the school will be considered for the 1959–60 programme. Whilst I am dissatisfied that the Minister would not allow any school as an extra item in the 1958–59 programme, I was alarmed by his letter of 21st October in which he indicated that
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  because of Peterlee, Newton Aycliffe, Jarrow, Hebburn and Boldon, together with new secondary school places for years ahead, the resources of Durham County Council would be fully utilised. The paragraph which alarmed me was that in which the Minister said:
  "The Durham Local Education Authority's major building programme is needed entirely for either meeting the needs of developing areas like Peterlee, Newton Aycliffe, Jarrow, Hebburn and Boldon or for providing extra secondary school places throughout the county, and they will be obliged to concentrate on these tasks during the next few years."
  Am I to take it from that paragraph that this school will be vetoed by the Minister if it is put to him in the 1959–60 programme? Is there to be no hope at all for these constituents of mine in East Herrington who have no school at all? Am I to deduce from the Minister's reply that the schools which he mentioned in his letter will become a fact before East Herrington can be considered for a school for its children? If that is the Minister's outlook, it is a very gloomy outlook indeed for this developing area of East Herrington.
  Even if we cannot have the school as an extra item this year—and I hope that we can have it—will the Minister give me some assurance about the interpretation of that paragraph? Does it mean that these people are to be condemned for years, until other projects have become a fact, before they can have a school? If that is the position, it will mean that in the years ahead 300 schoolchildren will be travelling two miles to school.
  I do not want to take up too much time, but in conclusion I want the Minister to give me some assurance about and definition of the letter of 21st October. My constituents have suffered for a long time, and I think they are entitled to have a school for their school-children between five and ten years of age to save the great inconvenience which they face at present. I ask him to give us some hope that a school will be built in this area. I assure him that we have the good will of the county council and its support for this school. In a letter to me in April this year the county council wrote:
  "Thank you for your letter of 21st April and for the trouble you have taken to meet Mr. Kellett in connection with the school site at East Herrington. The necessary machinery will now be put into operation in an endeavour to provide the new school."

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  I ask the Minister to give us the same good will for this village to have its school, and I ask him to support the project for a school in this area.
  10.12 p.m.
  The Parliamentary Secretary to the Ministry of Education (Sir Edward Boyle): This is the first time that I have stood at this Box since the Summer Recess ended and I hope, Mr. Deputy-Speaker, that you will allow me to say how pleased I am for one, as I am sure is every other hon. Member, that you are back with us in such good health.
  The hon. Member for Houghton-le-Spring (Mr. Blyton) has put his case very clearly and very comprehensively and I will certainly give him an answer which, although I am afraid he will not altogether welcome it, he will regard as clear and unequivocal. First, he asked whether the last paragraph of the Minister's letter of 21st October, meant that parents in the East Herrington district would have to wait a long time for their school because we have to meet the needs of developing areas such as those which he mentioned. I must tell him frankly that that is so.
  I hope that the hon. Member has borne in mind the previous paragraph of the Minister's letter, which. I think, put the position very clearly. Perhaps I may read that paragraph:
  "All over the country our school building resources must be concentrated at the moment on the most essential tasks of providing new school places in developing areas and extra secondary school places in all areas to meet the increase in the secondary school roll. These essential tasks absorb all our major school building resources, except for a small part which we are using for building secondary schools for rural areas which did not have any already."
  That is likely to remain the position for a considerable time. The project for which the hon. Member has so fairly and so reasonably put his request is one of a kind that we shall be likely to have to turn down for a good many years to come. If we agree to put on building programmes primary schools for all new communities of this size which are at present served by existing primary schools a mile or two away, we should need building programmes of substantially larger size than those we have at present.
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  I am sure the House will realise that I say that with no pleasure at all, but I thought that it is important to be as explicit and unequivocal about this as I could be. Of course, there cannot be any parents who would not like to see primary schools as conveniently available to their children as possible, but one has to look at this question in the light of school building priorities all over the country.
  The Durham local education authority has, I know, done a great deal of excellent building since the war, and it is an index of the problems that are facing it that its major building programme, like those of all other local education authorities, must be devoted entirely either to the provision of new school places in developing areas, or to the provision of extra secondary places to make room for the increased number of secondary school pupils we must expect to fill the schools in the next few years.
  Just to cover the hon. Gentleman's point about subsidence—which he put very clearly, and I take his point—I can only repeat, as the Minister's letter of 21st October said, that it must be very disappointing for people that, now this difficulty has been resolved, the school is still unable to get a place on a programme for other reasons.
  However, that I must say frankly to the House that it is quite clear to me that the East Herrington school in no way comes within the categories that I described a moment or two ago. After all, pupils from East Herrington can he found places in school, admittedly at some inconvenience to their parents and themselves, whereas there are still many places ail over the country where some children will not be able to attend school at all unless new buildings are provided for them. Surely, these areas must have the first call on our building resources.
  The children from East Herrington now either attend private schools in Sunderland—I am aware of the sort of social complexion of this area, which the hon. Gentleman described—or they attend the new Silksworth County Primary School, which is just under two miles away. This school is fairly full, but two additional classrooms for the junior department will quite soon, I am told, be ready for occupation.
  Having looked at all the papers on this subject, and bearing in mind the present

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  system of priorities, my own feeling is that the local education authority was fully justified, on all grounds, in not putting this project forward, because this is Just the sort of project, as I have already said, which we shall be unlikely to be able to approve for some years to come. I think that it is essential to put this point to the hon. Gentleman as fairly and clearly as I can.
  Perhaps I could just end on a personal note. During the ten months that I have been at the Ministry I have, so far, paid 34 visits to local education authorities. That leaves me with 112 local education authorities still to visit, but I am trying to get through as wide a range of areas as I possibly can. Much of what I have seen is evidence of absolutely first-class work in administration—and, incidentally, in school building, too. We have, in fact, built nearly 3,500 schools since the war in England and Wales alone. I think that that has been one of our greatest national achievements in that time.
  I have also seen some wretchedly depressing and unsuitable school building, which, in my view, should be replaced as soon as we can manage to do so. At the same time, I know, from the correspondence I receive from hon. Members on both sides of the House, that some areas have not even the schools they need, let alone schools in unsuitable premises. In the next four years, somehow or other, we must concentrate, first and foremost, on providing
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  places for the greatly increased numbers of children who will be entering secondary schools for the first time.
  I said at the beginning of my remarks that my right hon. Friend regards a new school for East Herrington as, in principle, highly desirable. In the next few years, however, we shall have consciously to delay a number of desirable projects all over the country in an attempt to ensure that nothing absolutely essential is overlooked. Within current policy, my right hon. Friend cannot see a sufficient case for including this school in a current building programme.
  I ask the hon. Member for Houghton-le-Spring, however disappointed he may be with this decision, to accept it as being consistent with a policy designed to ensure that no child fails to gain admission to school over the next few years. We must, first, achieve the task of beating the bulge. We shall then have the problem of replacing highly unsuitable schools. Therefore, as I say, however disappointed the hon. Gentleman may be, we must face the fact that, if we were to agree to put on to building programmes primary schools for communities of this size, which are, at any rate, served at present by a school in which there is room, even though it be two miles away, we should then be forced to have a very much bigger programme than we have had at any time during the past few years.
  Question put and agreed to.
  Adjourned accordingly at twenty-one minutes past Ten o'clock.

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
The Viscount Cross—Took the Oath.

ADDRESS IN REPLY TO HER MAJESTY'S MOST GRACIOUS SPEECH
2.35 p.m.
Debate resumed (according to Order) on the Motion moved yesterday by Earl Waldegrave—namely, That an humble Address be presented to Her Majesty as followeth:
"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal, in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."
LORD PETHICK-LAWRENCE: My Lords, we had a debate on July 30 on the economic situation which took the form of a discussion on the Second Reading of the Finance Bill. Since that day three important events have happened in the world of finance and economics. The first was the crisis with regard to the position of the pound sterling in the world as a whole; the second was the decision to raise the bank rate to 7 per cent., and the third has been the decision of the Minister to overrule the Whitley Council in the Health Service. All those three matters are, of course, interrelated, and it is mainly with those three questions that I propose to deal to-day.
In my speech in July I urged the Chancellor of the Exchequer to do something with regard to the inflation which was threatening this country, and I pointed out that unless something was done and not merely talked about, serious consequences were likely to ensue. Of course, mine was not the only voice urging that upon the Chancellor of the Exchequer and the Government; a large number of other people throughout the financial world of this country were also urging action on the Government. But
30
nothing new was done and the position grew from bad to worse. A financial crisis arose threatening the pound and based upon the belief that there would have to be devaluation in this country. Therefore I say that the Government ought not to have been taken by surprise when it happened. Nevertheless, they appear to have been so, and the main remedy which they adopted was to raise the bank rate from 5 to 7 per cent. in accordance with the policy that they have pursued pretty nearly the whole time they have been in office.
I have no doubt that your Lordships will expect me to express my opinion with regard to that action, and I am certainly not going to shirk giving you a direct answer. I realise, of course, that, faced with the unhappy situation of the immediate prospect of upsetting the pound, shock tactics were necessary, and among those shock tactics I am certainly prepared to say that a rise in the bank rate may have been necessary temporarily. That is not in the least to suggest that I resile to the slightest degree from my hostility to the use of high bank rate, dear money, as a means of conducting the financial and economic policy of this country. I will give the House a parallel. There are some people who, when they drive a motor car, drive it on the hooter and the brake. They go full speed all the time, they blow the hooter and then, from time to time, they violently put on the brake. I disapprove of that method of driving a motor car, but if, as a result of their doing so, they find themselves in a situation of great peril, I certainly would not deny them the remedy, if it is the way out of it, to put on the brake temporarily, even though that damages the machine. Because they are in great difficulty or on the edge of a precipice or whatever it may be, they will, of course, have to take some violent action of that kind; and to that extent I am willing to admit that the Government may have been right in adopting the very high hank rate at that moment.
I do not wish to repeat what I have said on previous occasions, and in particular last July, as to my objections to a high bank rate as a monetary policy—the main monetary policy. I think we must all admit that if there are objections to it as a rule, the fact that it has now risen to 7 per cent. adds greatly to the difficulties, inconveniences and financial

31
loss which a high bank rate necessarily involves. There are two separate evils which a high bank rate brings about. In the first place there is the additional burden on the Exchequer. I may be wrong, but I do not remember any estimate ever having been made by Her Majesty's Government of the cost to the Exchequer of a high bank rate. I will therefore ask one of the noble Lords opposite, either the noble Viscount the Chairman of the Conservative Party or, as he is speaking so soon after me, probably the noble Lord, Lord Mancroft, whether he will be kind enough to get for me, if they can be had, the facts as to what precisely is the additional cost to the Exchequer.
The main part of that cost will, of course, consist of the higher rate of interest paid to holders of the floating debt in whatever form it may take, and I would ask your Lordships to realise that a considerable part of that interest will not be shared by people in this country but will go to foreigners and will therefore add very much to our overseas financial obligations. But not only is the cost of the National Debt itself affected. There are other matters for which the Exchequer has to borrow, among them being the cost of financing the development of the nationalised industries. The House will remember that only recently the Chancellor of the Exchequer has decided to finance those industries directly, by borrowing.
The figures of the direct cost to the Exchequer will, of course, be gross figures. I realise that there may be some abatement, and if so I should like to have the net figures as well as gross. I would ask the noble Lord to be good enough, when he comes to reply to the debate, to give me those figures which, so far as I am aware, have never been stated in full. If they have, I am open to correction. The comparison I want made is what is the cost to-day on the basis of a 7 per cent. bank rate lasting for a whole year as compared with the cost in the early days after the war, when the bank rate stood at 2 per cent. and when (unless my memory deceives me) the actual cost of borrowing was at a rate very much below that figure. That is a loss to the Exchequer and therefore to the country. I do not know exactly how much it will be, but it must certainly be
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in nine figures and it may well be up to, or passing, the equivalent of 1s. on the income tax.
But that is only part of the grave burden that this high bank rate places on this country. The major harm it does is through the effect on industry and the bulk of the people. If it be true that there is a gap between the working power of the country and what it is asked that the country should produce, it is for Her Majesty's Government to tell us that. Instead, this high bank rate throws industrialists into a certain degree of confusion. They do not know what is expected of them. They do not know whether they are to go forward or to retreat, and they have to pay a high consideration for any money which is not self-financed.
But in addition to the effect on the industrialist, large masses of the ordinary men and women of this country are filled with discouragement, in particular those who have been thrifty enough to arrange to own their own houses through a building society. If this high bank rate is kept up much longer, many building societies will be placed in great difficulties. Loans are made which are supposed to be paid back in interest and paid-off capital year by year. Last time the bank rate went up many of the individuals concerned, rather than pay additional cost each year, extended the length of their loan; but I understand that if the 7 per cent. is to be maintained many building societies will be unable to carry that process any further, for in many cases it is contrary to their articles. Thus both the building societies and individuals will be placed in very great difficulties. Those are only individual cases. There are other matters where, as we all know, the high bank rate works with great discouragement for the people as a whole. Of course, the Government will say that every form of dealing with inflation is disagreeable to somebody. But I venture to suggest that this reliance on the bank rate does more harm than almost any other method of dealing with inflation.
Another point to which I want to draw the attention of your Lordships is the comparison of to-day with the early 'twenties of this century. At that time the design of a high bank rate was to reduce the profits of industries, to drive

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some of the less efficient into bankruptcy, to lower wages, to create unemployment, and thereby to reduce the purchasing power and force down prices. The question which I want to put to your Lordships is this: Is that really what we want to do to-day? Will it happen, in the first place? Has the situation remained so nearly the same that what was successful in those days will be successful in the same way to-day; and, if it is so, are the results what we really want to see? I venture to think that it is very doubtful whether, when we realise all the different methods of finance that are used to-day, the high bank rate will have the results the Government profess to think it will. It certainly has not had them up to now in respect of inflation. But if it did, would it be desirable?
I should like to call your Lordships' attention to what actually happened, as some of your Lordships will remember and as the younger noble Lords will have read. The Bank of England in those days ruled the roost in the matter of the bank rate; the Government had no direct power to interfere with what the Bank of England did. The Bank of England put the rate up in 1919 to 6 per cent., and in 1920 to 7 per cent. They kept it up until 1921 when they reduced it to 6½ per cent. Of course, it was designed for the express purpose of reducing prices and bringing back the gold standard. What was the consequence? The consequence was that there was a terrific slump, one of the greatest slumps there have ever been in this country; a vast number of industrialists went to the wall; unemployment ran into millions and there was general depression and dependence on the dole—the most deplorable condition that has been known in this country in the whole of my lifetime. Are we going to repeat that today if we keep the bank rate of 7 per cent. for any considerable length of time? I venture to suggest that there is a very considerable chance of depression and deflation setting in, and I do not think that the Government will find it any easier to turn round and go back again than it was found to be in the 'twenties of this century.
What happened after that? Going on a few further years, I recall that the depression in this country was supplemented by a terrible deflation in the United States. The result was that we
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had terrific unemployment in this country. I happened to be Financial Secretary at the time, so I certainly remember this. I was opposed to the policy of the Bank of England then, just as I am now against a high bank rate, and when I was offered a post in the National Government I refused to accept because I disagreed with the policy that was being adopted.
I am certainly not going to prophesy what will happen; I do not know. Still less am I willing to prophesy what is going to happen in the United States. But there is one rather dangerous sign in the United States which exists to-day and which I do not think existed in the days of which I am speaking. The Congress of the United States saw fit some little time ago to make a ceiling in the total of the American national debt. The ceiling is, I understand, 275 billion dollars—(it is billions, not millions, of dollars)—and I am told that the borrowing of the American Government is very close to 275 billion dollars and that the Administration head is bumping against the ceiling all the time. if that ceiling has effect and the Administration find it necessary considerably to curtail their expenditure so as to obey the law Congress has passed, it is quite possible, at any rate (I will not put it higher than that), that there may be a very serious slump in the United States. We all know that unemployment and slump are exportable, and it may be that we shall import them from America if a depression takes place there. That is an added reason for not starting a serious slump in this country. I need not remind your Lordships that in the thirties the depression which had taken place ten years earlier was greatly aggravated in this country. I will leave that as it may be.
I turn now homeward to the nationalised industries. I notice that another step that has been taken by the Government in combating the financial crisis of the pound is to cut down the programme of the nationalised industries—I am referring, of course, to the programme of development and capital expenditure. How far that has been cut it is not very easy to see, although I have read interesting accounts of it. So far as I can see, for the most part it affects subsequent years, and I have always rather a suspicion of figures relating to a time several years ahead because I know perfectly well that an intervening

35
Government, the same Government or a Government of a different political complexion, may easily reverse the plan that has been proposed. But it is proposed to cut down the expenditure of such industries as coalmining (I think coalmining will be the least affected), railways, electricity, gas, nuclear activities, and so on.
It is only a few months since the Government delivered fully mature thought as to precisely what these industries would expend in the next few years. It seems to me in keeping with the policy of the Government to change carefully decided policy at very short notice, having put out with deliberation what it is intended to do. That is one of my main criticisms of the whole Government policy with regard to inflation. The Government has blown hot and cold after very short intervals, and sometimes almost in the same breath.
One illustration I will give your Lordships is that when Mr. Butler was Chancellor of the Exchequer he elaborated a new scheme for giving higher depreciation allowances to industries to encourage them to make greater investments, and then, within a very short time—I forget whether it was within one year or two—the Government decided to reverse the whole of that policy. I suggest that that is a very discouraging way of proceeding. Another illustration is that, at the very time they were making great appeals to people to economise and not to spend, they reduced the income tax and later made reductions and allowances in the surtax. The Government must pursue a consistent policy. If they are going to say inflation is a very dangerous thing and that every effort must be made to control it, they should not tell us at the same time that. "We have never had it so good as it is at the present day."
I think the country is entitled to know a little more than the Government have told us. What is the nature of this inflation? The inflation that used to occur, and which most people understood, occurred when people tried to do more than their various resources enabled them to do. Then they had to learn to cut their coat according to their cloth. We are now entitled, I think, to ask the Government whether, in their opinion, there
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really is a gap between what the resources of the country—capital, labour and everything else—can produce and the production of food and other commodities which the country has said shall be available for sale to the general public, in addition to the development programme of the Government and of private individuals. If they think that there is such a gap what does it amount to? Can we know that, and will the Government say that they will bear such-and-such a share? Industrialists will then understand that they have to cut a little off to come down to that figure.
There are, however, quite a number of economists to-day who say that there is no such gap, and that in that sense there is no inflation of the old-fashioned kind. I am not in a position to know whether they are right or wrong, but certainly, there is a body of economists who take that view: They say that it is wholly a "wage-cost" inflation. We can understand, though not all of us quite clearly perhaps, what that involves. But what action are the Government taking in that matter? I can understand its being thought right of the Government to act, if they see various factors scrambling for a share in industry, and if between them they put up costs, and are continually doing so. People, it is said, want higher wages, on the one hand, and more profits on the other, but they cannot have any real increase in the aggregate unless they produce more. I understand that argument, but in dealing with a question of that kind you have to go about it very carefully. You have to consider how the various factors are to be induced to conform to the pattern to which you want them to conform.
I do not find that the Government have done anything of the kind. They have taken a very crude attitude towards this matter. They say: "We are not going to have any more claims. We may in certain cases allow wages to go up, but in many cases we do not think there should be any increase at all." Perhaps the noble Viscount, Lord Hailsham, when he speaks on behalf of the Government, may say that I am misrepresenting the Government. I do not want to be too particular about this point, but I think he will agree that the general impression left by the words of different members of the Government—particularly the Chancellor of the

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Exchequer—is that there is going to be a great drive to prevent increases of wages. That seems to me to be the wrong way to go about it. Not only that: the Government have taken a particular case. They have said that the rise that was to pave been given to people in the Health Service, and which had been decided by the regular proceedings of the Whitley Council of that Service, was to be set aside so far as the lower paid workers were concerned: there was to be no increase at all for them.
When I was Financial Secretary, I had some knowledge of the Whitley Council, and I know that its decisions were based en fairly definite grounds. It must be remembered that there are quite a large number of persons in this country whose wages are already determined on a sliding scale, according to the cost of living. I believe that the number is somewhere in the neighbourhood of three million—the actual figure is not very important and no doubt I shall be corrected if I am wrong. These people automatically get rises according to rises in the cost of living. Other civil servants do not come under this scheme, and the important factor which the Whitley Council had to consider was that civil servants are forbidden to strike. I am not sure what the punishment for striking would he, but at any rate it is part of the tradition of the Civil Service that its members do not strike. In reward for accepting that tradition it is understood that in bargaining, either on the employees' or the employing side in the Civil Service, they should get the same type of wages as those paid to people in similar employment outside the Civil Service. I have no doubt that this particular branch of the Civil Service, and the Whitley Council applied that principle in coming to the conclusion which was reached. Now, for the first time in the history of the Whitley system, the member of the Government responsible in the particular instance has reversed the decision of the Council. It strikes me as one of those actions which weak men take when they want to look strong. We have had other illustrations of that policy from a Conservative Government in the past.
I imagine that there are quite a number of Conservatives in this country who will now say: "Jolly good thing! The Government are taking a strong and firm line with the trade unions at last. I wish
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them good luck in going forward with it." Personally, if I were a Conservative I should be appalled at the action of the Government, because I should have come to the conclusion that, of all cases in which they could have picked a quarrel with the trade unions, they have taken about the very worst case imaginable. Here is a tradition which has gone on since the days of Speaker Whitley—because that is the origin of these councils. They have worked according to pattern and with great success. People on both sides have said how splendidly they have worked. And now the present Government are taking this opportunity to break the tradition which has gone on all these years with such great success They have aroused opposition not only from those trade unions immediately concerned, but from large masses of trade unionists all over the country.
The Chancellor of the Exchequer made unfortunate remarks about wage increases to the monetary body when it was meeting on the other side of the Atlantic, and many trade unionists take exception to what he said. On his behalf it ha; been said that he did not mean it in the way they took it. But since this recent case in which he has encouraged a member of the Government—I will not say to break, because of course the decision was subject to his approval, but to reverse what was the decision of the Whitley Council, the fears of those trade unionists have been enormously increased. They are now saying that this Government are out to destroy collective bargaining. I thought that perhaps some of the Labour criticisms of the Chancellor of the Exchequer had gone too far, but since this decision I am bound to say I think that there is great justification for the trade union fear of what is going to happen in the result. Therefore I say that if I were a Conservative I should feel very sorry that my Government had taken this most inept action.
My Lords, I have nearly finished. You may say: "Well, if you do not believe in that action of the Government, what would be your policy?" There are two things I would try to do. In the first place, in the monetary sphere, having accepted the temporary higher bank rate, I would reduce it as soon as possible, because I think that its continuance for months will be very injurious to the whole

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well-being of the country. In the second place, I would try to sit down and reason with the trade unions and try to find a real basis. Of course, two points have to come in. First of all, the question of the cost of living. It is one thing to say to the workers, "You cannot expect a rise in wages unless there is an increase in production"—I can understand that—but it is quite another thing to say, "From whatever cause the cost of living goes up, you shall not get an added monetary wage, and therefore your standard of living shall fall." I venture to suggest that that is practically what the Government are saying to certain unions. If I were the Government, I would sit down with the unions, if I could, and try to reach a basis on which some of their proposals might be granted, either in full or in some part. But this decision to shut down upon an already agreed proposal has put up the backs of the labour leaders, and I think that is a great danger both to the nation as a whole and, incidentally, to the Government. It reminds me of the Latin saying:
Quos Deus vult perdere prius dementat.
3.12 p.m.
LORD BALFOUR OF INCHRYE: My Lords, as the first private Member on this side of the House to take part in the debate, I should like to be allowed to associate myself with the congratulations so deservedly given to the noble Lords who moved and seconded the humble Address yesterday. The gracious Speech from the Throne deals with the economic picture which the noble Lord, Lord Pethick-Lawrence, has been dealing with just now, and which seems to me to be overshadowed by two themes—the danger of inflation and the danger of industrial unrest.
I would submit three propositions to your Lordships. The first was stated by the noble Lord, Lord Pethick-Lawrence: that the danger of inflation and the question of industrial peace are interrelated, and in any examination of the situation both must be taken into consideration as factors. The second proposition is that the fight against inflation will not be won without new and further drastic measures and also, important as are material measures, without a reborn spirit of united determination sweeping through the country. The
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third proposition I would submit is that a nation divided cannot hope to win this fight against inflation.
Nearly half the nation, some 23 million, are what is technically known as "employed persons," and there are nearly 10 million trade unionists. Without the understanding and support of this half of the nation, including the body of trade unionists—I am not speaking of the leaders—no Government measure can succeed. To read some of the speeches now made in authoritative quarters on the dangers of inflation, one would think that it was something new and sudden which had to be faced. In fact, of course, successive Governments have faced this inflationary danger since the era of Dr. Dalton and of cheap money, which has been so costly to the fixed interest investor and to the small rentier, and so profitable, temporarily, to the equity holder. Successive Governments since the boom in commodity prices following Korea have had to face this danger. I was looking at Hansard in the Library, and began to count the number of "crisis statements" made since 1946; after I had got to twenty, I lost count. We have had eight of these statements in Parliament since 1951.
Your Lordships can look back on the debates in this House over the past six or seven years and read the warnings given from all sides on the danger of the external position of the currency and of the balance of payments. While we have been "living pretty" internally, we have been living dangerously externally. Your Lordships can look back on many familiar phrases, such as the "costs spiral" and "too much money chasing too few goods". Your Lordships can look back at the warnings of the effects of the crushing industrial and personal taxation, and on the need to reduce Government expenditure. Yet now, to read some speeches, one would think that the battle was just about to start, instead of its being a time when the battle should be won. To talk about a "death-bed repentance," is, I think, unfair and too harsh, but I do not think it wrong to talk about a stricken man realising his bad state and suddenly taking emergency doses in haste in order to remedy his immediate position.
The reply to the warnings given by noble Lords in all quarters of the House

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on these many occasions has usually been ministerial assurances, in general form, often in. statistical form, that "all is under control and, after all, what has anyone to complain about? "Even so late as this April the Chancellor of the Exchequer in another place (I paraphrase) said that he thought the temperature of the economy had been brought down to a more normal level by the disinflationary policies of the last eighteen months. For instance, he said that money value had been falling since 1745. That is true, but there is a difference between a gradual fall and the slide we have seen over recent years. The Party of which I am a humble member were returned on the promises of restoring the value of money and of halting the rise in the cost of living, and—let us be quite frank about this—the electorate will not forgive if the Government fail to fulfil these two promises. All the perorations and, with respect, all the bell-ringing will not save the Government if they fail in these two directions.
I do not believe that it is too late, but there is all too little time left, and I will turn for a few minutes to some possible ways of retrieving the position which I would submit for consideration. The 7 per cent. bank rate is an emergency measure, I believe that the need for this severe measure has obtained the support of all thinking people, irrespective of Party, in this country. Already we are seeing its beneficial effect; but by the very severity of its effects it can only be—must only be—a short-term measure. If it is kept on too long it will seriously damage tour competitive powers in the world's markets just at a time when the Government are leading us into the European 'Free Trade Area project where competition is bound to be much more intense than it has been before. The 7 per cent. bank rate, meaning that one borrows at 7½ per cent. or 8 per cent., impedes our ability for capital investment here, in the Commonwealth and the Colonial Empire and industry cannot replace essential plant and machinery on the financial terms such as have to be accepted at the present time. Therefore, while one says that is necessary, I would strongly support what the noble Lord, Lord PethickLawrence, said: that it is necessary but must be accepted only as a temporary measure.
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I would submit to your Lordships that our long-term economic policy overseas and at home needs some re-thinking in the light of present events. We must try to set out to achieve a position that frees our social standards and our industrial activity from the effects of the man in Zurich or the recession on Wall Street. To have our financial structure dependent, to a large extent, on the ebb and. flow of fugitive money is not a sound basis for us to contemplate for a long period ahead. For that reason I am very grateful to the Government for having taken the lead in arranging for the Commonwealth Trade Conference in 1958. I believe that we must do some rethinking on the objectives of international, universal and multilateral trade and on convertibility as being one of the prime aims of our economic policy for stability. We are to debate these affairs of Commonwealth trade, of European Free Trade and other matters to-morrow and on later occasions. Sufficient for me to-day to suggest to your Lordships that we must do some re-thinking on these matters.
I should now like to turn for a moment to home affairs. To me, any thought of a head-on collision between labour and management or Government is to think in terms of economic disaster at home and catastrophic loss in confidence in Britain's credit abroad. I believe that any such loose talk on either side or from any quarter is a national disservice at a time of national stress. We seem to be drifting to some extent, in the direction of that national danger; but it is intolerable to contemplate, and I believe that it can be and must be avoided.
Here I come back to some ideas which were put forward in this House by some other noble Lords and myself some two years ago, when, naturally, for want of time the Minister who replied was unable to deal with the points. However, I think we have to get a "new deal" in industry and that all sides must contribute voluntarily; for Government compulsion by direction and legislation is bound to arouse sectional resistance and sectional objection. On the one hand, we see wage-earners pressing for wages to level up the cost of living and, in so doing, sacrificing the standards of many members of their own families—pensioners or those living on fixed-income savings. They then press for these

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latter to be increased, and so on. On the other hand, statistical profits have risen, though it can be shown that dividends lag behind wage rises; and it can be shown by figures that the dividend is only a small contributory factor to inflation. Nevertheless, bigger dividends are a political irritant—we must face that fact—and politically full of prejudice far beyond the justification in the sum of money actually represented by the payment of dividends. Like it or not, to carry a united nation we must face that fact.
I have suggested before, and I suggest again, not a statutory measure for dividend limitation (I believe that that method is full of troubles, evils and unfairnesses, and I do not think it would work) but a voluntary standstill for one year of distributed profits, as a moral recognition that it is better to do this by voluntary means than by compulsion. This standstill should be linked to a voluntary wage-increase holiday, and also a holiday for all applications for shorter hours. I should like to see the unions abandon restrictive practices in return for any increase in wages during that standstill period based directly on increased productivity. Then, so far as the Government are concerned, one would like to see them make a greater effort to reduce expenditure and also review expenditure on non-essentials.
I believe that we must be empirical in our approach to this matter and not doctrinaire from either side, either politically or economically. Perhaps we are all rather liable—and I am as guilty as anyone—to be somewhat doctrinaire in our approach to particular economic problems. But on the question of the direction of priorities of resources, I think there are worse things than some control on buildings, because while we cut back schools we are going on with less important buildings and less important works. I think there are worse things than some restrictions now, rather than later, on the import of dollar nonessentials and dollar luxuries. When we come to the end of the standstill period—one year, as I have suggested—then let us all think again and see whether we can progress, possibly on modified lines.
I believe that at the present time of great crisis Her Majesty's Government must lead; and I feel that the Govern
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ment must lead in a more definite way than expressed (again I paraphrase and do not quote) by the Chancellor of the Exchequer in another place quite recently in terms of what I call rather tepid tea, when he said that our object is to secure that increases in wages and profits are more difficult to get. He was not appealing to anyone, but was saying in regard to profits that restraint in distribution would be a help to our national purpose. With respect to the Chancellor of the Exchequer, that is a little wishy-washy; it is not leadership. In a democracy you can govern only by leadership, by example and by the conviction of an assenting electorate to measures which the circumstances of the times render necessary. It is for that leadership that we look to the Government with hope and confidence at the present time.
3.29 p.m.
LORD BRAND: My Lords, I wish to approach this subject from a somewhat different angle from that taken by the noble Lord, Lord Pethick-Lawrence, and the noble Lord, Lord Balfour of Inchrye. I should like to say a good deal about what Lord Pethick-Lawrence said, but I will leave it to the occupants of the Front Bench, because I want to express what I might call a City view of the fundamental position of this country and what flows therefrom. I wish to lay stress on certain outstanding aspects of the problem. We have reasonably good exports, though not enough; our Budget position is good, but inflation continues, and inflation must be stopped. The world situation is a little uncertain. The latest information I have about America is that to the Americans things do not look so bad. They do not expect much improvement this year, but they do not expect a great downward development. In my opinion, the big fall in some commodity prices is the most significant symptom. It will damage many countries who produce these commodities and who buy our exports, and it is likely, if it continues, to affect our own exports and make them more difficult.
First of all, I wish to draw attention to what I regard as our most fundamental weakness and the really vulnerable point in our economy. This is a point which I think I have always raised in your Lordships' House but it has become more significant than ever in the last few

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months, and that is the lack of enough gold and dollar reserves. Since the war our reserves have never been sufficient to enable us to take any serious strain. The United Kingdom is like a great bank with great call liabilities but wholly insufficient liquid assets. The main cause why comparatively minor unfavourable fluctuations in the world so affect our own internal conditions and produce a crisis, and sometimes a run on sterling, forcing us to take drastic action, is that we have much too small reserves. No Government since the war has been ready to take sufficiently prolonged and drastic measures to remedy this fundamental defect. It must be said that to do so would have involved asking for certain sacrifices from the general public over some prolonged period of time.
I compare the effort that we might have made to increase our reserves with what the Russians have done to create Sputnik. They have no doubt made their people suffer austerity to get that great result. We are a free nation, and we find it very difficult to persuade our citizens that something so abstruse as gold reserves is worth doing anything about. The temper of the citizens of our State, after winning a most exhaustive war and still heavily burdened with defence, was against such sacrifices. While our gold and dollar reserves in 1950 were 3·3 billion dollars, they were stated by the Treasury yesterday to be just over 2 billion dollars. I am inclined to believe—I could not quite make out the figures—that in that 2 billion dollars there may be some money we have from the International Monetary Fund, and also from the Export-Import Fund—the latter certainly so—and I am not sure whether the real net figure, if debts that we have to repay are deducted, is not somewhat smaller.
LORD PETHICK-LAWRENCE: The noble Lord said 2 million dollars. Did he not mean 2,000 million dollars?
LORD BRAND: I beg your Lordships' pardon. I meant 2,000 million dollars; I thought I said 2 billion. Take the case of Germany. Germany in 1952 had, I gather from the International Monetary Fund, about 1,600 million dollars. Now it has something like 3,300 million dollars. We may not have much more than half of what we had in 1950, and Germany has more than doubled what she
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had in 1952. Moreover, Germany has now hardly any foreign liabilities. We have great liabilities to the external world. We have, put at its highest, £700 million in reserve—I think it is less—and we have current liabilities to the rest of the world, more or less call liabilities, of about 4,000 million to 4,500 million dollars. Before the war, I think our liabilities abroad were covered 100 per cent. by reserves. Now our reserves are only about one-sixth of our call liabilities.
Owing to this shortage of reserves, every crisis takes the form of a flight from sterling. Your Lordships will understand that, if you were depositors in one of the Big Five banks which had only one-fifth of the liquid assets which the other four banks had, you would probably not leave your deposits long with the first named bank. That is the danger we run. The United States has no trouble of that kind. They have about 20 billion dollars of gold. Even so, the United States is determined to stop inflation. I should like your Lordships to remark that, with no balance of payments problem, they see the great dangers that arise from inflation. With our balance of payments and reserve problem we ought to be doubly frightened of what inflation may do to us. Thus we shall live on the edge of a precipice until our reserves are sufficient, and this, in any case, must take not months but years of effort.
How near the precipice is we have seen from recent months. The whole world knows perfectly well our position and fears particularly the vicious circle of rising prices, wages and other incomes in this country. On this apprehensive frame of mind there came the news of the French devaluation, or near-devaluation, and the knowledge of Germany's growing strength. As a result, confidence in sterling evaporated and the withdrawals we all know about took place. We have now, by the drastic measures taken by the Government, made some recovery and are slightly further from the precipice than we were. But we shall get at a safe distance only when we have held inflation at bay and, ultimately, when we have increased our reserves.
I should like to consider for a moment whether there is any quicker progress to be made as regards reserves by not lending so much abroad. We can lend abroad only out of the surplus on our balance of

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payments. We now lend about £200 million a year. In the first six months of 1957 we lent £170 million, or at the rate of £340 million a year, which is more than the total likely surplus this year, in which case nothing could be added to our reserves. Socialist enthusiasts strongly support our lending much more. Perhaps they do not understand that such loans can be made only out of our balance of payments surplus. I may have quoted to your Lordships before a saying of Lord Keynes in a memorandum I once saw. He said that this country was like the Lady Bountiful who lived near a village which she had for years helped by deeds of charity and otherwise. Her solicitors and lawyers came to her and said, "You must stop. You have not got the money to lend." But the habit was ingrained and she went on doing it. It was only when the bailiffs came along and took the furniture away that she realised something serious was happening. That happens when we overrun our balance of payments.
Nevertheless, I should not favour greatly reducing external loans. We reap advantages in the end and, of course, so do the borrowing countries. It would be very hard on the latter to cut off supplies, when they may be in great difficulties. Moreover, in so far as the loans are spent here, they increase our exports, although for the time being of course they are "unrequited exports". But anybody who wants to increase loans abroad must also want to increase the surplus of our balance of payments. Indeed, he should be in favour of all steps towards this end; in the way, for instance, of seeing that, as in Germany, personal consumption at home remains within bounds so as to make room for more exports. He should also be strongly in favour of halting inflationary increases in wages, salaries and dividends, and therefore of keeping inflation in check. Inflation, particularly if we inflate more than other countries, will undoubtedly produce consequences such as a reduction of exports, which will render foreign lending more difficult and will make additions to our reserves impossible.
It is possible, of course, to hold a different view from the one I am expressing, and some friends of mine do hold an opposite and more fatalistic view. There are some who hold that the burden
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of our debts, internal and external, and our load of defence costs will ultimately be found insupportable; and that in the end the donkey will kick off the burden which he cannot endure. Those who argue thus would envisage letting the sterling exchange go free, letting it fall where it would or where it might be forced to fall, writing off all debts, internal and external; presumably abandoning generally our position as the centre of the sterling area and the greatest banking centre in the world, and then, after that, making a new start, as Germany did in the 1920's. But no British Government could adopt this policy voluntarily. We must do our best to pull ourselves through by our own strength, fortitude and hard work, all of which, of course, require a community less deeply divided than appears now to be the case.
Others, like Sir Robert Boothby, see the greatest trouble in the world in the shortage of international liquid assets. There is in my opinion much truth in this view. But how is it to be remedied? Lord Keynes's attempt at the Bretton Woods Conference, at which I was one of the British representatives, proved insufficient owing to the huge dollar gap, which showed itself shortly afterwards. Fortunately, for a time this was magnificently remedied by Marshall Aid. But the gap may now be reappearing. I see great difficulty in increasing the world's liquid assets. Few currencies are now sufficiently strong to offer themselves as acceptable reserves. They are the United States and Canadian dollars, I hope we can include sterling, marks, Swiss francs, and Dutch and Scandinavian currencies; but in actual fact most people now prefer gold and dollars. If we can strengthen sterling and make sterling an absolutely acceptable international currency for the future, with no doubt whatever attaching to it, as it was when I first went into the City, we should do much to meet Sir Robert Boothby's point. But at present we have not done so.
I should like to refer to one possible other alleviation, and that is the price of gold. I have had lots of correspondence with American friends of mine on the question of the price of gold but have never succeeded in making a dent of any kind on them. They regard increasing the price of gold as what they call debasing the dollar. They do not see that

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in terms of goods—that is, real values—they have been debasing the dollar continuously since the end of the war. At any rate, they feel that to increase the price of gold would cause further inflation in the United States. But if you look at the problem logically, it seems to me simply fantastic, if the world regards gold as a valuable commodity—and they do regard it as a very valuable commodity—that it should be the one commodity in the world which is not allowed to have its price raised, not allowed to put up its price; and that is, of course, because there is one buyer, the United States Government. In the end there is only one final buyer, and the United States Government does not see its way to increase the price of gold.
But imagine if, in the case of other commodities, with wages and commodity prices and everything going up every day, you were not allowed to raise the price of the thing you were producing. My own feeling is that if it had not been for two things, the discovery of the Orange Free State goldfield and the discovery of uranium on the Rand, not a great deal of gold would now be being produced in South Africa; and one way undoubtedly of increasing the liquid reserves of the world would be to make it more profitable to produce gold. 'I have raised this point but I do not see any chance that a decision of that kind will be taken.
I would repeat, however, that certainly if we do not stem inflation here and in the world at large—my own view being that inflation leads ultimately to deflation—then the United States strength, and the use of its strength, as in Marshall Aid, might alone prevent the consequences from being very serious everywhere, in this country included. But let us hope that any depression that comes is small and none of these things will happen.
All I have been saying may, however, seem to your Lordships far away from trade union policy and continuing wage demands, but it is not. It is certain that, with continuing inflation, we shall not be able to increase our reserves or indeed hold our position, certainly if other countries inflate less. Inflation here and now is our immediate problem, and it must be tackled now, unless we are prepared to risk bringing on ourselves
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great troubles, including unemployment. Our position as banker to the sterling area and a great international centre might then go with the wind, and there would be other serious consequences.
The only alternative, then, is to master inflation. In my view, this means bringing to an end the system where it suits employers and employed—almost, one might say, compels them—to co-operate in agreeing to inflationary wage and salaries rises which please the workers temporarily and are tolerable to the employers so long as they can make inflationary profits. This policy is not only to the great damage of the rest of the community, but can only seem successful for a very short time if we enter on a stable or deflationary world. Of course, if wages rise now, prices will rise again; next month wages will again rise, because prices have risen; and so on, it would seem ad infinitum. But not in fact by any means ad infinitum, because in my view after a period inflation turns to deflation, and that time may not be so very far off. If other countries manage to control inflation and we do not, then our exports will soon be out-priced we shall not be able to buy enough imports for food and so on that we in this country require. It should be remarked that as prices abroad, and certainly the prices of our imports, are now falling, any increase of prices here must be due entirely to internal and not external causes—that is, to rising incomes here.
Now I come to one point of the noble Lord. Lord Pethick-Lawrence. Economists seem to differ greatly as to whether we are suffering from what they call a cost inflation or a demand inflation. Roughly, as I understand, a cost inflation is when, for instance, wages rise and the costs of production go up, with the result that prices go up. A demand inflation, as I understand, is when incomes are too high and the result is an excess demand on the total national product, this also tending to raise prices. I must confess that there seems to me to be no very clear line between the two. If, for example, I am a worker who gets more wages, I add to costs and so help on cost inflation. But I am also a consumer and, having more wages, my demand for consumption is probably increased, and therefore I help to bring on demand inflation.

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I really do not see how a clear division is to be made between the two.
I understand that most economists, including what one might call our Left Wing economists, agree that we are suffering at any rate from a cost inflation, from too constantly rising wages and salaries. As I understand, that is what most economists, even of the Left Wing, feel, but they doubt whether there is a demand inflation, partly because they say we are capable of greater production which, if accomplished, would make demand not excessive. I hold the opinion that it is over-full employment which forces employers to pay higher wages to get the men they want and which enables the unions to succeed in their claims, and that somehow or other, while we all want full employment, we must restrain over-full employment into something like ordinary full employment, with some margin of men and women between jobs; otherwise, it seems to me that we are doomed to inflate and, if others are not doomed to inflate, our last state will be worse than our state now.
Mr. Gaitskell said yesterday in another place that more production is the main thing. I know it is, but we must remember our circumstances. More production for home consumption means more imports. For those imports we must pay with more exports. Supposing our customers abroad are suffering from a big fall of prices and cannot buy what they are buying now—in fact will buy less—then we shall not be able to buy great additional imports without perhaps facing a deficit, rather than a surplus, on our balance of payments, and another crisis in sterling. Thus, we are always brought back again, in my opinion, to the fundamental question of our balance of payments. The Opposition and the trade union leaders have been long complaining that it is the Government's policy which puts up prices, and that it is for the Government to see that prices do not rise. The trade unions have disclaimed, as I understand, all responsibility; and, of course, if conditions are such that employers will willingly give increases while inflationary profits exist, it is easy to see why trade union leaders do not restrain their followers. Yet now that the Government have determined, if they can, to do their part to stop prices rising, the trade unions, and indeed some of the
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Opposition, cry to the heavens at such an iniquity.
I do not wish to detain your Lordships further by discussing all the measures of the Government. On the whole, I agree with them, and I hope that the Government will maintain their determination to push them through. I agree that a 7 per cent. bank rate is bad, and I agree with much of what Lord Pethick-Lawrence has said about a very high bank rate. But we must face the fundamental facts of the situation. We cannot go on as we are. For instance, in the first half of the year 1957, while prices were up 3 per cent., wages, salaries and profits were up 5 per cent. It is highly desirable that we should not limit production by our restrictive measures more than absolutely necessary, and one naturally hopes that a 7 per cent. bank rate is to last only a short time. But I do not think the rate can be reduced until there is some sign of agreement between the Government and the trade unions and the Opposition as to how best to act in the interests of the welfare of the whole community. I believe that the Government are right in the way they are treating the national industries. Why should a Government who believe inflation must be brought to a stop deliberately finance further inflationary steps? We have reached a highly critical moment in our history. There are signs that other countries are getting control of inflation—indeed, Mr. Gaitskell may be right in fearing serious deflation. I doubt whether it will come, but it might come. If we go in the opposite direction, what chance have we of escaping grave trouble?
What I have tried to show is that in our highly artificial economy we must earn larger and not smaller surpluses on our 'balance of payments. If we inflate and others do not, we may, as I have argued, have no surplus at all shortly. With reserves as they are, this would mean more trouble. Do trade union leaders understand this sequence of events? One would suppose that they must. A great deal depends on their wisdom and moderation. Great responsibility goes with great privilege. Trade unions claim great privileges which are claimed by no other section of the community, the privilege of using coercion to get their own way. All the greater now, therefore, is their responsibility.
4.0 p.m.
LORD GRANTCHESTER: My Lords, sitting behind by noble friend Lord Samuel, to whom I, among others in your Lordship's House, owe so much for his words of wisdom on many occasions, perhaps it might not be out of place for me to offer him our congratulations on his 87th birthday to-day.
I want to refer to a much more limited aspect than that dealt with by the noble Lord, Lord Brand, in the masterly survey which he has just given us. I should like to take a sentence in one paragraph of the gracious Speech:
"My Ministers are resolved to take all steps necessary to maintain the value of our money … by restraining inflation.…"
It would appear that during the summer months Her Majesty's Government have been making discoveries. On September 19 last the Chancellor of the Exchequer said:
There is no remedy for inflation and steadily rising prices which does not include, and indeed which is not founded upon, a control of the money supply."
On October 9 he said:
"Our policy is to halt the increase in the supply of money."
On November 1 the Prime Minister, speaking at Manchester, said:
"The Government has decided not to finance inflation."
These statements are extraordinary for two reasons: first, because they are announced as discoveries by Her Majesty's Government, who have been in office for six years, during which there has been a fall of 2s. in the £ in the value of our money and during which we were brought to the verge of a second devaluation of the f and secondly, they are extraordinary because they are very different from what Government spokesmen were saying even a few months ago.
In July the Chancellor of the Exchequer went to the City and made a speech which asked:
"How honest is our money?"
The Chancellor of the Exchequer spoke of the, nation paying itself more for doing no more work, and pointed out that a rise in prices must inevitably follow. Then he said something which shocked some of us very much at the time:
"No economic or governmental magic, no system of controls, can stop that process.…
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Inflation is an intractable problem.…Other countries had to face it; none had yet found a satisfactory solution."
That was only in July last. Let us accept and welcome the paragraph in the gracious Speech as evidence of genuine conversion. But I am intrigued to know what caused this change in attitude. Still more, I am interested to know how far it is going to be effective in practical measures as well as in profession.
First, what caused it? When the threat of being forced to a second deflation became obvious, was there a revolt against the Treasury? Did the Bank of England regain some of the courage which was stifled by its subjection to the Treasury by noble Lords alongside us in 1946? If so, what gave them that courage? Was it reinforced by advice from the Federal Reserve Bank or by the example of the success of an independent central bank in Germany? If Her Majesty's Government have at last seen a light, what are they going to do to see that it continues to shine and to influence their decisions? What about future decisions on the bank rate? Was not the decision to raise the bank rate taken too late? If it had been raised, say, to 6 per cent. a couple of months earlier, would it have been necessary to have a 7 per cent. bank rate to-day? Do Her Majesty's Government propose to restore a little more independence to the Bank to take decisions on technical matters of monetary policy like the bank rate? With respect, I differ from the noble Lord, Lord Pethick-Lawrence. I believe that changes in bank rate, if they are not politically manipulated, should be taken as the result of conditions prevailing, conditions already created.
What do Her Majesty's Government mean by "controlling the supply of money?" Is it intended to limit the note issue or to restore some automatic mechanism or check to limit the note issue? Is there to be a restriction on the power of the Chancellor of the Exchequer to increase the note issue as he can do now? The note issue is now five times the 1938 figure? What about Treasury Bills, which are now at five times the 1938 figure? I ask Her Majesty's Government—I believe we should ask them—how far has their conversion to the view that they can and must control the supply of money really gone? Let us be clear. Inflation, as several noble Lords have

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already said, will not be arrested solely by a high bank rate. A high bank rate has obvious disadvantages. It is one of the means appropriate in certain conditions, but if it is not successful within a short time in bringing about an adjustment of the economy, it may itself develop into an inflationary factor. I am not quite so worried about high interest rates as the noble Lord, Lord Balfour of Inchrye, because the Germans have done very well on an overdraft rate of 9 per cent, for quite a long period; but all the same it is a rate which we should not like to see for any long period.
This is why the implementation of measures complementary to a high bank rate, of which Her Majesty's Government have spoken, is urgently necessary; and first and foremost the drastic cutting of Government expenditure. I would suggest something more: the submission of all capital investment programmes, including those of the nationalised industries, to the test of the market. If they will leave this matter to the market, abandoning authoritarian devices such as the Capital Issues Committee; put their own house in order in their management now of one-third of the economy, they can, I suggest, well abandon any interference between banker and client. If they will tell us what they propose to do on some of these matters we shall be able to judge whether their professed conversion is real and genuine.
Perhaps I may make one final comment. The gracious Speech refers to the necessity of fortifying our reserves. The noble Lord, Lord Brand, has dealt with this matter very adequately. Reserves are vitally important. But confidence—confidence in the integrity of our monetary policy; confidence that contracts and the rights of individual ownership will be respected; confidence in the good sense of the people of our country is also a most important factor. It is not generally realised, I think, how small were the physical reserves upon which we worked before the wars, when confidence reigned. My Lords, the Government have a responsibility to be frank; those who believe in democracy share the responsibility with them of creating an informed public opinion on a matter which affects the lives of us all but which it is not easy to explain in simple terms.
4.12 p.m.
THE LORD PRESIDENT OF THE COUNCIL (VISCOUNT HAILSHAM): My Lords, the debates in this House on economic affairs never fail to attract authoritative speeches from a number of experts, experts of acknowledged authority who never fail to help us with analyses of the situation which are of great weight. I am bound to say that on this occasion, as on a number of other occasions, the experts have agreed that something is wrong, and have at times agreed about the nature of what is wrong; but I very much doubt whether there ultimately emerges from the four or five excellent speeches to which we have listened this afternoon a single policy which it would be possible for Her Majesty's Government, without alteration, to put into effect.
To-day's debate has been consecrated, by agreement, to a discussion on economic affairs, and that is as it should be, because the economic situation is by far the most important of the immediate issues in front of Government, Parliament and people. But let us begin by reminding ourselves that, important as economic issues are, they are only means and not ends. It was for that reason that I heard with gratitude my noble friend Lord Balfour of Inchrye say, in the course of his remarks, that only a reborn spirit of united determination could assist us with the problems with which we have to deal. That spirit may be difficult to create, but I agree with him that it is a necessity. And so, in an age like the present, it is right and indeed necessary that those who approach economic matters should never forget that the ultimate human values and ends which it is the business of Governments to cause economics to subserve are not merely economic and not merely material in character. I make no apology for saying this at the outset of my remarks because of much that has fallen from noble Lords in the speeches to which we have listened this afternoon. If there is to be discussion between Parties and organisations about these important economic issues it is largely these fundamental human questions which will have to be discussed and threshed out.
The society in which we live consists of many different sorts of people, with divergent interests and different tastes, and often different demands; and the object. I suppose, of our economic policy

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must not be to prefer one set of these our fellow countrymen rather than another, but to try to reconcile, in accordance with some ultimate principles of justice, the various demands which they pat forward. That is certainly our ideal. Our ideal and our aim is to make each group within society feel that, subject only to the interests of the whole nation, they are there selves wanted, admired, and even beloved members of society. In approaching economics from that angle I think we exalt and not disparage the importance of economic problems, for it is worth while reminding ourselves that the most banal of these economic questions has immediate social, political, and hardly less immediate moral and spiritual, repercussions.
The reason I have said this is that I think it has a direct bearing upon the subject which we have been mainly discussing this afternoon. From what we have heard, I imagine that no one of your Lordships would doubt that, of all these questions, none is more urgently pressing and none is of more immediate consequence than the battle upon which we are now engaged for a stable currency—the fight for the pound against foreign speculation, against inflation, and against the constantly rising cost of living. This is, of course, a purely economic battle, but its success or failure is fraught with consequences far beyond the economic and material fields. It is because of that that I want to underline the truth that was enshrined in the speech of my noble friend Lord Balfour of Inchrye when he spoke of a reborn determination to secure the object for which we struggle; and he emphasised—and I would say at once rightly emphasised—the essential rôle of Government in this matter when he emphasised their responsibility for leadership.
When the noble Lord, Lord Pethick-Lawrence, complained that we were driving on our hooter and our brakes, I would say, by way of gentle criticism of that observation, that if, by referring to our "driving on the hooter," he is complaining of an attempt to exercise a degree of moral leadership then I think his criticism is misplaced. I think our function is to emphasise, by means of exhortation as well as by compulsion (if one compares compulsion to the brakes), the immense importance, not merely from the economic point of view, of fighting
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for a stable currency. It is, in fact, a stable currency about which we are talking this afternoon.
For the truth is, my Lords, that a stable currency is at the root of a stable society, It is the condition of the honourable discharge of contractual obligations, whether by a business or by a nation; it is the prerequisite of thrift, for in conditions of inflation the saver is frustrated by a depreciated currency and his savings destroyed; it is the essential vehicle of international trade, which can flourish only in terms of an established medium not too difficult of acquisition and yet not varying in value to an extent to render the possession of it speculative or its value precarious. It is the pride of any nation to have a stable currency, for a stable currency is the one mark of material greatness which cannot be counterfeited and which offers no threat to its neighbours. It follows that a stable currency is worth fighting for. It is something for which it is not illegitimate to conjure up feelings of national loyalty, or the spirit of individual service, self-sacrifice or restraint. It is, on the contrary, something which I profoundly believe ought to engage both the good will and the co-operation of every class in the community.
And again I would underline something which fell from the lips of my noble friend Lord Balfour of Inchrye, when he said that a divided nation could not, in the end, hope to cope with its great problems. We have therefore to set before the people, as an ideal for which they can co-operate, the ideal of a stable currency, if we are, in fact, to succeed in any measure in fighting for its success. In the post-war world, it is true to say that the battle for a stable currency has now been fought, with varying success and non-success, for upwards of twelve years. I think it is as well to remind ourselves that such a battle is not a single engagement, or even a single campaign. It is for this reason that I would respectfully reject some of the criticisms directed at our heads, to the effect that the battle is not over already, or that the fact that we have now to reassert the necessity to fight it involves some conversion of mind. That is not so.
There is no single master stroke of strategy, and there never has been any single master stroke of strategy, which

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can decide the event, which can turn defeat into victory, which can bring about a victorious peace which, once signed, can send the combatants back home. The fight for a stable currency is a running fight with many vicissitudes. It is a war demanding versatility as well as tenacity, and persistence as well as courage. This is, I think, in itself a partial answer to those who say that after six years of office we are still preoccupied with this topic. Why, they ask, after six years is it necessary to continue worrying about this question? Why was it not dealt with in the first two or three weeks, or the first two or three months at most, of the life of this Government? To this, I would reply, quite simply, first, that it would be odd, in a world which has throughout its length and breadth been subjected to these inflationary pressures, if we alone had escaped their consequences. Throughout the period under discussion inflationary pressure has been continuous all over the world. With greater difficulties than many, we have fared better than most; our counter-measures have been continuous, and have continuously met with some degree of success.
Secondly, I would say that, as I tried to indicate on the last occasion when we held our discussions, the problem is one far more complex than was generally admitted. Under the single name of inflation there are at least four separate, if interrelated and allied, enemies which we have to fight. We have to deal with the question of our balance of payments, the tendency of that balance of payments to remain too low, or even to become adverse. We have to seek to increase the level of our reserves—a task which, I would agree with my noble friend Lord Brand, is very nearly at the heart of this complex problem. We have to fight the tendency under a system of full employment for the amounts of personal incomes to rise without corresponding increases of production or productivity, and so to push up the prices. We have to fight the tendency of a high level of taxation to encourage extravagance and reduce efficiency. All these matters have at one time or another pressed heavily upon us. Each requires separate counter-measures. Though, on the whole, our campaign against adverse balance of payments has been successful, we have
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recently had renewed trouble with our reserves, and though we have reduced taxation over the last six years, we still have not conquered the tendency of wages to push up prices.
Thirdly, I would say that we have endeavoured throughout not to put on the people a heavier burden than the circumstances warranted. In 1951 and 1952, I believe, we faced far more severe restrictions than at present. In 1957, faced with an attack on our reserves, we have had to resort to a bank rate higher than in 1951. All these expedients are, in a sense, temporary. There is no sovereign remedy. Inflation is a world-wide disease; the counter-measures we take are necessarily, to some extent, palliatives. All economic pressures result in hardship and injustice, and it is the duty of the Government to counteract the effect of these pressures. It is not possible for individual Governments to reverse them entirely.
That brings me to certain remarks of the noble Lord, Lord Pethick-Lawrence, and to certain speeches and correspondence in the newspapers which suggest the possibility of an impending slump or a trade recession. Lord Pethick-Lawrence drew on his deep experience of the period of the 'twenties. He asked us whether our policy of increasing the bank rate was not designed, or would not have the effect, of producing consequences comparable with those. That was not the design; nor do I think that such consequences are likely. I do not feel called upon to comment fully upon the possibility of a slump. My noble friend Lord Brand referred to the fall in certain commodity prices and to the possible effects of such a fall. If there were a world recession our measures would clearly require revision to counteract its effect, but that does not alter the fact that we are now dealing with a boom and with inflation. Moreover, any measures designed to counteract world recession would, in my judgment, have to be concerted with those of other Governments, for I could not see without disaster an isolated Government here endeavouring to inflate against deflation elsewhere. But I would, on the whole and in the meantime, say that we need in this context to be on our guard against an excess of cleverness. For the moment,

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at least, it is not a slump with which we have to deal.
I have the clearest recollection of 1946 in another place. I recall Mr. Harold Wilson, who was then, I think, President of the Board of Trade, predicting a recession, in the face of quite insufficient evidence, as it turned out. It remains to be seen whether the evidence of an impending recession is sufficient now. I cannot help thinking that this talk in some parts of the Party opposite of recession, in the face of Government measures to deal with inflation, is inspired, at least in part, by wishful thinking. The measures are unpleasant, and I can assure noble Lords opposite that they have been adopted with reluctance. The noble Lord, Lord Grantchester, seemed to say that we had been too late. On the whole, I think it wise, when one is going to adopt measures which inflict hardship and which will no doubt give rise to corn-plaint, to do so only when the need to inflict them has been made fully apparent to those who will suffer from them. The measures are unpleasant, and some in the Party opposite, I feel, are unwilling to face them. Therefore they tend to invent in their imagination the possibility of a recession in order to obviate the moral necessity for accepting such unpleasant measures. I do not think that that is, on the whole, an attitude which will lead to constructive thinking.
The truth is, my Lords, that the problem facing us in 1957 is not the same problem as faced us in 1951. Here I would for a moment join issue to some extent with the noble Lord, Lord Balfour of Inchrye. I would agree that, in a sense, the problem of inflation has been chronic since the end of the Second World War. But in 1951, when we had just assumed office, the main economic task before the Conservative Party was, as I see it, to create abundance. An immediate flight from the pound threatened, but had been stemmed by the middle of 1952, and the problem then was to get rid of rationing, to build 300.000 houses a year, to develop school buildings and to invest in electrical generating power and fixed capital formation. Abundance has been created. The shops are full of goods; generating capacity has been developed and is being developed; schools have been built and are being built, and fixed capital formation is running at
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an all-time high of £3,000 million a year. Therefore, for the time being we have dealt—and I should have said dealt not unsatisfactorily—with that series of problems. Indeed, part of our trouble is that we have dealt with them so satisfactorily that many people have forgotten that they ever existed. Food rationing has gone. Controls have gone. Red meat is a thing of the present and not of political controversy. Houses, schools and hospitals have been built. Load-shedding is a thing of the past and generating stations have gone up. Personal savings have risen, and everything goes to shots that consumption is at an all-time high.
Therefore, I would say to my right honourable and noble friend that the problem is now a different one from that which we then had to face; or perhaps it would be more accurate to say that our very success in dealing with the problems which I have enumerated has brought back to the fore, perhaps in a more chronic form but certainly in a more obvious one, the underlying problem of reconciling a stable currency with a free society and full employment, a purpose which we intend to achieve together.
We have now to face a wages spiral which has developed since January 1, 1957. In a previous speech I tried to set forth to your Lordships the bare bones of that problem. In a period in which production did not particularly rise there have been increases in personal incomes to the extent of about £1,000 million, of which wages, after deduction of tax, form rather more than nine-tenths. Wages during that period have gone up by about 11 per cent. and prices have risen by only 7 per cent. But the difference is this: everyone has to pay the increase in the prices—the pensioner, the professional man, the housewife, the retired man and the small business man; only the wage earner gets the benefit of the rise in wages and is the lucky one who is able to contract out of inflation. But unfortunately all wage earners are not equally lucky, as the noble Lord, Lord Pethick-Lawrence, reminded us. Some are worse off, and even those who are better off are uneasily aware that their new-found prosperity reflects something unhealthy in the economic state of the nation.
The measures taken by the Government have been carefully selected to cope with the disease, or at any rate with the present

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phase in which the disease finds itself—the bank rate increase to counter the drain on our reserves, the limitation of the credit base to hold the increase in personal incomes, whether expressed in the form of profits or wages. Both measures have been misunderstood, both have been misrepresented; but really there is no need, I think, to misrepresent or misunderstand the purpose of either. May I say again that our wages policy is not an overt declaration of war against any section of the country. I should have hoped that I would not have needed to say this again, since it has been said so often, but as it has been misrepresented I think perhaps no harm can be done by reiterating what needs to be said upon this matter. Since words of mine have been misquoted and distorted out of their context to support this misrepresentation, I would crave leave to refer again to those words which I used, to indicate what is, and has always been, our intention. Referring to a statement of the Leader of the Opposition that it was our policy to wage war on the trade unions, I said:
"That, in a compendious form, as Sir Winston Churchill used to say, is almost the exact opposite of the truth."
LORD PETHICK-LAWRENCE: My Lords, can the noble Viscount tell us where he made this statement?
VISCOUNT HAILSHAM: At Brighton, on October 10. I am obliged to the noble Lord; I should have made that plain. I added this, which I think makes clear my own feeling in the matter:
"On the other hand, I am more than a little suspicious that one or two of these leaders are rather anxious to pick a quarrel with us. This would be a disaster for both sides, but I must say frankly that I do not believe that Britain would tolerate or forgive an attempt by trade union leaders to dictate to the country, or to Parliament, or to the Government, what our economic policy should be. By the like token"—
I added—
"I do not believe that Britain would encourage or condone in a Government any attempt to provoke a quarrel with the unions; and we shall provoke no such quarrel."
That is what I said on that occasion, and I certainly intended to convey, and now try to convey to your Lordships, my belief that our economic problems are not best solved by a head-on collision between any organised sections of the community.
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On the previous occasion I said, and again I should like to repeat it to your Lordships, but without wearying the House with the exact quotation, that although I would not accede to the proposition that the unions, any more than any other public institutions, should be immune from criticism or that their leaders should be immune from criticism—I do not suppose that noble Lords opposite would ever put that proposition—I have said before, and I say now, that we are proud in this country of the institution of the trade unions. We recognise the part they play in promoting industrial peace and industrial efficiency, and it is because we want to see them efficient and playing a responsible part in the industrial life of the nation that we are anxious that there should be no head-on collision in this matter.
There is only one thing which I do not think it would be right and proper for me to do in this connection, and that is to conceal from the House my true belief about the nature of the problem which we have to face, or to conceal from the House my belief that it is necessary to face it honestly, and that I do not suppose noble Lords opposite would ask me to do. With that introduction, I should like to reiterate that it is not part of the Government's policy to undermine the system of collective bargaining which has been built up over so many years. Nor do we intend to overthrow or disparage or interfere with the elaborate machinery of arbitration and conciliation which has grown up over the years. Incidentally, I may add that I do not believe that we could do it, even if we wanted to. There is nothing which we can do to prevent employers from granting wage increases by agreement with employees, if they are willing to face the economic consequences to themselves and to one another; and there is nothing we can do, or wish to do, to prevent the implementation of awards made after a fair hearing.
I think it might be convenient if I referred here, in a few sentences, although it is slightly off the main subject of this debate, to a matter to which the noble Lord, Lord Pethick-Lawrence, referred in some detail—a reference which must afford my excuse and justification for doing so—that is, the decision of my right honourable friend the Minister of Health to withhold his approval of the proposed

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increase in the salaries of certain National Health officials. I think, with respect, that for once the noble Lord was betrayed by the length and breadth of his own experience. It is true, of course, that the body which was negotiating and which ultimately arrived at an agreement in this case was a Whitley council, but it had this essential difference from the Whitley council with which the noble Viscount's immense experience naturally makes him familiar: it was a Whitley council in which the majority of the members on the management side were neither controlled by the Government nor representative of it. Whatever may be the merits of the particular decision which is under consideration, it would be altogether wrong, at least in my judgment, to draw inferences from this particular decision, which arose out of a very special case of a unique type of council, which would be applicable generally over the whole range of Whitley councils more normally constituted.
The facts of the matter—and with that introduction I think I can refer to them perhaps at a little greater length—are that on October 11 the Administrative and Clerical Officers' Council of the Whitley Councils for the Health Service agreed to increase the salaries of the administrative and clerical officers employed by the regional hospital boards, hospital management committees, teaching hospitals and executive staffs. The agreement was that salaries above £1,200 should be increased by 5 per cent. and that salaries below £1,200 should be increased by 3 per cent. On October 30 the Minister of Health wrote to the chairman of the management side of the Council informing him that he and the Secretary of State for Scotland, had decided, after considering the agreement in the context of the general policy of the Government in regard to the general economic situation, not to give their approval to the part of the agreement which gave 3 per cent. to all officers with salaries below £1,200. That part of the agreement, therefore, could not come into operation, since under regulations governing the remuneration of hospital staffs in the National Health Service, ministerial approval is required.
Of course, all the monies which are paid for these wages come out of Government funds, and the anomaly which
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I think exists is that the management side of the Whitley council is not controlled as to majority by the Government. The management side had the clear indication from the Minister before the agreement was made that, in his view, this offer should not be made, and the Minister's advice was, in fact, over-riden. Whatever the merits of that decision, I cannot myself believe that, in the circumstances, the approval of the Government could be treated as a foregone conclusion, or that the Government, who had to find all the money, should be bound by an agreement to which they had never consented; and I cannot myself sec that, whatever may be thought about this particular case (it may be that there was a strong case or a weak case for an increase; I do not argue the merits; it does not seem to me that the Houses of Parliament is a very good place to argue merits on wage disputes), the decision right or wrong, gives any justification for the widespread inferences, no doubt honourable, which noble Lords and other members of the Labour Party in the country have sought to draw from the facts. Those facts are special to the particular case, and it would be wrong to infer from them that there was any general desire to override agreements of Whitley councils when they are representative of the Government point of view, or any desire whatever, or in any circumstances, to go back on an agreement to which the Government have been a party.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I should like to have a little refreshing of our memories on this particular Whitley council. Could the noble and learned Viscount tell us what were the exact numbers on each side; that is, the employers' side, the representatives of the Government and the non-representatives of the Government? Perhaps a little later on he may be able to explain to us exactly what effect his views expressed this afternoon may have upon the future of conciliation boards, set up after long years of development of collective bargaining, such as, for example, those we have had for thirty years in the Co-operative Movement, with thousands of employees, where the recommendations, after consideration, may sometimes be sent back but where we always accept the final

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decision of the conciliation board, which is like a Whitley council. Are we now to expect employers to follow the example given in this case?
VISCOUNT HAILSHAM: As regards the first point, so as to be sure of accuracy, I will ask my noble friend when he comes to reply to the debate to give the figures as to the composition of the Whitley council. I will see that the noble Viscount is given those figures. As regards the second point, I really do not think (and I am sure the noble Viscount wishes us to be as conciliatory about this as possible, because it is an important matter about which I think there has been some genuine misunderstanding, as well as quite legitimate disappointment) there is any reason whatever, as I think I said to begin with, to believe that we in any way wish to undermine or cast doubt upon the value of the elaborate system of conciliation and arbitration which has been built up. I am not sure that it would be profitable to enter into the various types of conciliation board or negotiating machinery: they differ widely in particular industries, and often in particular industries different types of machinery are dealt with for different types of case.
But I do wish to give the noble Viscount this absolute assurance—this is not a debating point; I am trying to reassure him about something about which he is genuinely concerned—that there is no reason, so far as I know, why he should feel that the negotiating machinery which exists in industry, as we have known it over a large number of years, will in any way be weakened as a result of what has been done. This was a deliberate act of policy in relation to a particular case where the facts were of the most specialised kind, and where, I venture to think, and I think rightly, they are not generally understood. When they are more generally understood, I cannot but believe that, whether one accepts the view of the Government on the matter or criticises it, the general inferences which have been drawn will not then be drawn.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I am obliged to the noble and learned Viscount, and I will look carefully at what he has said to-morrow. But I am speaking with great sympathy for the organisation
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which covers the majority of the people concerned in this particular award—namely, the National Association of Local Government Officers. I was the county secretary for Somerset of that organisation for some years, and I think we got the first Whitley council ever set up by a county council in 1920. Therefore, I am most concerned that all the conciliation bodies in this organisation—it is a fine organisation, not a quarrelsome one, representing the best traditions of municipal service—should not now have to fear the result in all the other conciliation bodies covering employees whom they have organised.
VISCOUNT HAILSHAM: Obviously there are difficulties in the way of a Lord President of the Council giving all the assurances the noble Viscount may wish for without having consulted with his colleagues, but I give them, believing every word of what I am going to say and believing that there is absolutely no reason why it should be falsified on further consideration. On that point I think there is absolutely no reason to feel disquiet at all. I would say—again without having made the necessary consultation, but still believing it to be true—that I am certain that, if the secretary of the body concerned (of whose responsible character I have every knowledge, because anyone who has practised in the courts as long as I have cannot fail to know which bodies are responsible, and I absolutely agree that it is a responsible body) feels that discussion in a friendly spirit on this particular point and its possible implications would be of benefit, neither of my right honourable friends the Minister of Health and the Minister of Labour would wish to reject that.
I am not saying—and I want to make this clear—that there is any reason to believe that the decision to withhold approval in this particular case (which was the occasion for my discussing this matter at all) would necessarily be gone back on. That I have no reason to say. But I can quite see that the noble Viscount has genuine apprehensions about the structure of conciliation. I believe them to be wholly groundless. If, by reason of that fact (and I am not in consultation with my colleagues in saying this), the officials of the bodies would like to reassure themselves by consultation with my colleagues, I feel certain

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that my colleagues would be only too glad to give them that assurance.
LORD BURDEN: My Lords, will the noble and learned Viscount say whether it is not a somewhat unusual proceeding for a Minister to intervene in the management side of a Whitley Council before a claim has been considered on its merits? Was not the intervention designed to throw responsibility on to the manage-merit side to decline this claim, whereas after full consideration they recommended it to be implemented?
VISCOUNT HAILSHAM: I would not seek here to pontificate about the usual methods of procedure in such cases. All I would say—and as, indeed, I have said—speaking as a layman in such matters, but still as a member of the Government, is that it seems to me absolutely unthinkable that, where the whole of the money comes out of public funds, as is the case here, the Government are to be held bound by an offer and held bound as if by agreement to do that to which it never consented, when it had given notice it did not approve.
LORD BURDEN: My Lords, I do not wish to pursue the matter now, because there may be an opportunity later on to debate the whole subject on a specific issue. But surely the management side have the benefit of the advice of representatives of the Ministry, and their advice is always taken into full account when consideration is given to claims of this kind.
VISCOUNT HAILSHAM: I am not sure that they did take it into full account. Perhaps it is not for me to speculate as to what went on in their councils, because it might be embarrassing to all concerned. What I would say is that I think this again is something which ought to be considered. It may well be that this particular event, happening at this time, has revealed a defect in machinery. I believe that it is for all of us to consider, and to consider constantly, whether machinery can be improved. I know that my colleagues in the 'matter would be anxious to improve any defect of machinery.
I mentioned that matter in the course of this speech for only two reasons (because this is really a debate of a rather more general character than one which lends itself to detailed discussion), and
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I think the noble Lord, Lord Pethick-Lawrence, will forgive me. First, I wished to make it plain that the general inferences which were being drawn, to the detriment, I think, of good relations over quite a wide range of subjects, were not legitimate; and I wished to give reassurance on that point. The second was to emphasise what I believe to be the legitimate general observation of policy, that whether or not you agree with this particular dispute, the Government can hardly be supposed not to have an interest, and perhaps a controlling interest, in an agreement in 'which they are to provide the whole of any sum of money which arises out of it. It was only on those two general points that I wished to delay the House on this particular subject this afternoon.
LORD SILKIN: My Lords, the noble Viscount, having raised this matter, will not, I hope, mind if we try to understand the case that he is making. I know that he is being very conciliatory, and wants to assure us that nothing the Government have done should be deemed to undermine the procedure of the Whitley Councils. But I wish he would explain how it comes about, first of all that the Government seek to intervene and influence the tribunal before they have made the decision, and, secondly, that when the tribunal have arrived at the decision the Government feel themselves in the position not to implement it. Are the Government not in the position of every other employer? The decision having been made, what right have they, more than any other employer, to ignore the decision?
VISCOUNT HAILSHAM: My Lords, I think the noble Lord is fogging himself by the use of totally inappropriate language about this particular machinery. This was not a tribunal and there was no decision. The noble Lord's difficulty arises from the fact that he supposed it was a tribunal, and then supposed that the tribunal had arrived at a decision. This is a Whitley Council; it is not a tribunal, and it does not arrive at a decision. If the Whitley Council had disagreed, I imagine that there could be arbitration proceedings. There is, normally, in relation to Whitley Councils. That arbitration award, if it had been arrived at, could be legitimately described as a decision.

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The anomaly in this case—and I am not seeking to say that the machinery may not require examination—arises from a series of facts. The first is that a body which was purporting to negotiate on behalf of the employers—namely, the management committees of hospitals—was not negotiating on behalf of those who had to pay all the money—namely, the Government. The second fact was that, precisely for this reason, no doubt—it may be that it is true in other cases as well—the agreement, when made, was not a binding contract on either side but was made expressly subject to Government approval. Therefore, nobody can complain when Government approval was withheld, because in relation to this particular type of machinery Government approval is anything but, and must be anything but, a foregone conclusion when they have to find all the money to implement the award.
The position, therefore, is that no binding agreement was made. An agreement was arrived at, subject to Government approval; and that approval was withheld. Of course, one is entitled to argue one way or the other on the merits as to whether the claim was a good one or a bad one. But the only point I think the House is concerned with this afternoon—because, after all, this is a general economic debate—is that no general inference can be drawn from that very special set of facts. I felt that, as so many general inferences have been drawn and were, in fact, drawn by the noble Lord, Lord Pethick-Lawrence, it was worth my while, and worth the while of the House, to delay the debate by trying to explain the very special circumstances of this case in the hope of creating a better atmosphere.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I am much obliged to the noble Viscount. I shall be interested in going over all the points he has made. For the moment, may I ask him one further question? He said, of course quite rightly, that the Whitley Council is not a tribunal. But if I speak as the president, as I do, of a very important national voluntary hospital, in which we always pay what we consider either the professional or, in a Labour sense, the trade union rate, what is our duty now, when the same organisation which put their case to this Whitley
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Council come to us and say, "You have always observed Whitley Council recommendations. Do you observe it on this occasion?" We are not a State hospital.
VISCOUNT HAILSHAM: I should have thought that that was a very different question, but if the noble Lord is really in difficulties on that particular point I shall seek, if he wants an answer, to find an answer for him. Personally, I should have thought the problem was not a particularly difficult one. I do not venture to put forward my own solution in case I may be falsified by events.
I think I have now, so far as this debate is concerned, succeeded in establishing the fact that the general inferences sought to be drawn by the noble Lord, Lord Pethick-Lawrence, were in fact unjustified, not because he did not put them forward in a thoroughly reasonable way but because he drew too much upon his general experience of Whitley Councils and too little upon the actual facts of this individual case.
LORD PETHICK-LAWRENCE: My Lords, I knew the facts, because I read what the Prime Minister said in another place. I still do not find the noble Viscount's answer satisfactory.
VISCOUNT HAILSHAM: My Lords, what I was seeking to do in this particular case was not to convince the noble Lord entirely, because perhaps that would take a much longer time than we have at our disposal. What I hoped to do was to destroy part of the bad feeling which seems to have arisen about this case; and I think I have gone some way to do that, irrespective of whether or not noble Lords agree with what I am saying. What I believe is very much more important than the question whether this decision was right or wrong is the question whether bad feeling is unnecessarily aroused over a much wider field; and it was that sort of fear I was trying to allay. What I think we can do in relation to this whole question—and this brings me back to the point at which I was guilty of divagation—is by our monetary policy to discourage inflationary consequences of agreements and awards. Whatever arbitrators may do, and whatever negotiators in industry may do, the Government cannot abdicate its responsibility for the public interest.
Here I should perhaps say a word or two by way of answer to my noble friend Lord Balfour of Inchrye. I do not think

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it would be fair to make the suggestion that the Government are deliberately refraining, for doctrinal reasons, from the use of weapons in their armoury which would otherwise prove effective. We are not refraining, for instance, from the use of import restrictions or building controls simply for doctrinal reasons. We have no ideological objection to import controls as such. Unless I am much mistaken, in 1952 Mr. R. A. Butler indulged in quite savage import controls to deal with the economic crisis which we faced when we took office. But we do take the view that the use of this particular weapon is not appropriate at the present time to an extent greater than is being employed.
My noble friend referred to dollar import controls. But convertible sterling is so easily convertible into dollars in one way or another that it is not really effective to treat dollar imports as a separate water-tight compartment, quite apart from the difficulty (which I am advised in practice is almost insuperable) of differentiating between Canadian and United States dollars. Secondly, United States imports of luxuries, so far as they are separable at all, are already limited by quotas. You cannot easily obtain a Cadillac motor car. Some foodstuffs are, but the question which foodstuffs can be described as luxuries is one into which I will not enter in detail. In our view, it is not generally in our interest, except in emergency, to legislate to control imports in this particular way when the countries against which we legislate are in a position to retaliate by countervailing legislation against our own exports. I do not believe we have an acute ideological objection to import control. The situation is merely that we are not satisfied we stand to gain much if we employ them at the moment.
I think that a similar case could be made in relation to physical building controls. I confess that I have in my own mind a certain ideological objection to them, and I should be less than candid if I did not confess that fact quite frankly. But here there are very considerable practical objections, as well as ideological objections. In the first place, a considerable time-lag would operate before such control could become effective. A building control can effectively operate only to control starts; buildings
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in course of erection cannot be economically restrained. Secondly, only retrospective legislation, doubtfully effective in achieving its purpose, can prevent forestalling. This would have to be contemplated if we were to legislate. Thirdly, I do not believe that any case has been established that certain types of building are qualitatively undesirable or luxurious in themselves. Cinemas, so far as I know, under the present credit squeeze are being erected only near new population centres. Office blocks are not intrinsically uneconomic. Garages, which are usually cited, must bear some relation to the number of new cars, and if to be restrained at all might be restrained by quite a different type of legislation. I am not at all satisfied that a sufficient or significant difference in the wages spiral could be achieved at the moment by any form of building control.
On the other hand, there are some quite certain and positive disadvantages of imposing a control. We should have to recruit a large, expensive and fairly high-class administrative staff in order to work it. It is not a short-term operation. I think it would be difficult to conceive that a general control could operate without a return of the black market, with its army of spivs and drones and contact men, and always possible chances of scandal. If I may add a personal note, I do not think it was possible for anybody who worked in the courts in the realm of contract law during the working of the building control to overestimate the extent to which it encouraged dishonesty amongst traders and customers. A very large number of starts were made with the full knowledge of the Government, even with the encouragement of local officials, in advance of actual agreements.
LORD BALFOUR OF INCHRYE: May I thank the noble Lord for his full reply to the point? I was not advocating it. He has given me the complete assurance I wanted, that the Government have an open mind. And if, on examination, it turns out that the advantages would outweigh the disadvantages—the Government have the knowledge and I have not—I am quite content.
VISCOUNT HAILSHAM: I am very much obliged to the noble Lord. I will now try to bring these rather disjointed remarks to a close. I would do so with

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this sentiment to the House. We are bound to set before the country what we believe to be the causes of the present rise in prices. We are bound to attach to the rise in wages, as against the rise in productivity and as against the rise in prices, the same kind of significance which the noble Lord, Lord Brand, attached to them. We would beg noble Lords on all sides of the House to use such influence as they possess to discuss these matters objectively, and, if possible, to arrive at some kind of constructive solution. So far as we are concerned, we know of no alternative policy of sufficient size or power to deal with the situation other than that which we propose. We are not convinced at all by any suggestion which has so far emanated from the Labour Party. Of course it is true that we can ask the Germans to help; we can ask the Americans to help; we can ask the Commonwealth to help—which was the immediate reaction of the Leader of the Labour Party. I am not sure that any such request would be likely to be successful, even if it were honourable, if those three parties to whom we addressed ourselves for help were not satisfied that we were doing enough to help ourselves. Such requests can therefore be no possible alternative to a constructive policy.
I noticed that a number of noble Lords suggested that we should talk with various bodies in this country. Speaking personally, I certainly hope that the spirit of discussion will always prevail in these matters. But here again it would be wholly wrong if I were to suggest that, however much one may desire to discuss things—I certainly always prefer discussion to any other method of procedure—anything we could discuss would lead us to fog what we regard as the clear issue of the cause of the present inflation, or to seek to adopt anything less than what we regard as the minimum in order to cure it. Of this I am absolutely certain—and I think I can say it with assurance we have always believed that restraint by co-operation is a better policy than the type of restraint which we are compelled as a Government to impose. Whatever proud words may have been spoken at one time or another, and by one side or the other, if a policy of restraint by agreement and co-operation can be worked out which meets the needs of a
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situation, certainly I would hope and pray that nothing I have said would ever stand in its way.
5.12 p.m.
LORD LATHAM: My Lords, I should like to begin by saying how much I agree with a good deal of what my noble friend Lord Pethick-Lawrence said in a speech which, if I may say so, I thought was admirably cogent, convincing and informed. I share his view that the Government is wrong in attaching too much importance to, and in relying too much for results upon, what is known as the monetary mechanism—a high bank rate and a credit squeeze. However efficacious such mechanism might have been in other conditions before the war—there are, I think, grounds for doubting whether it was efficacious—in the new economic set-up of this country I submit that reliance upon the monetary mechanism is outmoded. After all, we now have as a basic foundation of our economy full employment, not, as was the case, unhappily, between the wars, a vast army of unemployed; and all Parties are pledged to the maintenance of a high level of employment. Yet it seems to me (and there is a considerable body who share this belief) that the operation of the Government's policy of a high bank rate and a credit squeeze may seriously endanger the maintenance of a high level of employment.
There is also a growing volume of opinion which is doubtful as to how far the Government's present policy is likely to be effective in arresting inflation. The point of view is held by some that, whilst its short-term result may have some advantages, the long-term consequences—a restriction of investment always has long-term consequences—may be most disadvantageous to the economy of the country. One of the great defects of this procedure is that the operation will be so indiscriminate and so unselective that it will check investment for necessary purposes at the same time as it may check investment for undesirable purposes. It will have this effect: it will make necessary, essential, required investment, whether in the private or the public sector of industry, much more costly. It seems a curious situation that those who, whether in the private or the public sector, proceed to invest in

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desirable projects—the equipment industries, the export industries, and other essential industries—will have to pay, not only now but it may be for twenty or more years, a high rate of interest in order to stop some other person from doing what ought not to be done in the interests of the nation. That seems to me to be an almost indefensible situation.
There is plenty of money available free of control; and if the money is available at present there is nothing to prevent capital expenditure, not only on luxuries but on undesirable projects. Each year, for instance, there accumulates as undistributed profits something in the region of £1,500 million. That was the accumulation during the year 1956, and that was the sum after tax. Most of the capital investment last year was made out of undistributed profits; only £236 million was raised by new issues. Accordingly, that money is available with no restraint upon the quality and character, the necessity or otherwise, of the capital project upon which it may be spent. It seems to me that the monetary mechanism is a blunderbuss when what is needed really is a precision instrument. It cannot be satisfactory to the Government that, as a result of the Government's monetary policy, Vickers should be compelled to go to the market and offer 6 per cent. at a discount, for money for projects which are eminently desirable in the interests of the nation; or that Monsanto should go to the market and pay 6 per cent. at a discount—the price was 95—on money to be repayable in 1977–82. This high rate of interest must increase costs for, as I have said, some twenty years or more.
Then there is the situation which was referred to by my noble friend Lord Pethick-Lawrence, of the nationalised industries. Those nationalised industries are of the very foundation of our economy, but they are to have their capital expenditure restricted. The railways have been starved of development and modernisation for many years—before the war because of the inability of their then private owners to find the money, and since the war because the railways have always had to take something of a back seat when questions of priority arose in regard to capital expenditure. The nationalised industries are in need of
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development and expenditure. As Mr. Roy Harrod said in the Financial Times of September 21:
"I judge the programme of the nationalised industries ought to be stepped up in the next two years by £300,000,000 per annum (at 1957 prices)."
Instead, so far as one can judge from the pronouncements made by representatives of Her Majesty's Government, the nationalised industries may have their capital expenditure curtailed. It is noteworthy, also, that whilst the proposal for physical controls has been rejected by Her Majesty's Government, some of them for some of the reasons given this afternoon by the noble and learned Viscount, Lord Hailsham, nevertheless it is a fact that physical controls, or controls ministerial, are to be applied to the nationalised industries and to the expenditure of local government.
I want now to say something about the effect of this high bank rate upon the finance and activities of local government. Perhaps I should say, first of all, that, incredible as it may seem, it is the case that since the present Government took office in 1951 there have been fourteen changes in the interest rates charged by the Public Works Loan Board to local authorities. During the period 1946–51 there was only one change. I put it to your Lordships, how can a local authority really plan its capital expenditure with changing rates of interest such as I have indicated? How can they utilise their resources and exercise their borrowing powers to the best advantage, with this constant instability and ignorance of the rate of interest which they will be required to pay?
Up to 1951, local authorities could borrow for their general purposes at 3 per cent. For loans to home purchasers, they could borrow at 3¼ per cent. Now the London County Council have to pay, or are being called upon to pay, 7¼ pet cent, for loans up to five years and 6¾ per cent, for loans over five years; and the London County Council is in as good a position to borrow at the lowest rates as any local authority in the country. In October, 1955, the Public Works Loan Board indicated that they would be willing to advance monies to local authorities only as a last resort and that local authorities were first to exhaust all the possibilities of borrowing money, either

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in the money market or in the mortgage market. This has meant competition between authorities which has no doubt resulted in higher rates being charged. Moreover, it has forced local authorities to that form of borrowing which they do not regard with very much favour—namely, on short-term mortgages. One metropolitan borough was offered, by a finance house, £100,000 at 6¼ per cent. for sixty years, with no break clause—and that was when the bank rate was 5 per cent., not 7 per cent.
The importance of this high rate of interest for local authorities will be better appreciated, perhaps, if I give some figures indicating what an important—one might almost say, what an oppressive—element it is in the expenditure of local authorities from year to year. In fact, the debt service of local government is the second most expensive service. The only one which exceeds it is the education service. In the year 1954–55, the loan charges of local authorities amounted to £168 million, of which £95 million was in respect of interest and £73 million in respect of redemption. As regards the London County Council, its loan charges in the year ended March, 1956, were £8 million, or thereabouts, for interest, and £4 million—about half—in respect of redemption.
The effect of the interest rates to which I have referred—namely, the 7 per cent. bank rate and the interest rates flowing from it—will have this result on certain activities of the London County Council. The difference between 3¾ per cent. and 7 per cent. on a sixty-year annuity (which is the basis on which the financing of houses is done by local authorities) means, in regard to flats, an additional cost of 10s. 1d. per week for each room. In regard to cottages, the increase in the charge as the result of the movement from 3¾ per cent. to 7 per cent. is 7s. 6d. per week for each room. These figures exclude the cost of land and, as your Lordships will be aware, the cost of land in London is very high.
If we turn to education and ascertain what its effect is upon the annual cost, per place, in the schools, again excluding the cost of land, we find it is as follows: for primary schools per place, an additional £4 10s. per annum; for secondary
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schools, per place, an additional £7 16s. per annum. And, of course, those increases of charge have to be borne, generally speaking, by all the local authorities up and down the country. That is the effect upon the finances of local government of the policy which the Government are pursuing. Much of the local government expenditure is essential. The affairs of this country could not be carried on without the activities of local government; and yet, although its expenditure is proper expenditure, although its capital expenditure is upon projects which are necessary and essential, it is to be penalised in many cases for a period of no less than sixty years—not for anything which local government itself has done wrong, not because local government itself is acting against the declared policy of the Government, but because the weapon of a high bank rate is regarded as appropriate to prevent other persons from doing what it is considered in the interests of the nation they ought not to do.
Housing will be cut down. If the Government's policy is to limit expenditure for the next two years to the ceiling of the expenditure of this year, it follows that local government activities must be restricted. Indeed, it is already expected that housing will be cut down by some 20 per cent. over the next two years. In many local authorities loans for house purchases are being refused or the number is being seriously reduced. It is the case that the increase in the rate of interest on monies advanced to house borrowers from 3¼ per cent. in 1951 to 5¾ per cent. in 1956 meant, on a £2,000 house, no less an increase than 15s. a week. There has now been added something in excess of a further 10s. as a result of the movement of the rate of interest up to 7 per cent., or thereabouts.
The Times in its issue of October 23, referring to the programme of capital restriction, said:
"The school building programme has never kept pace with the famous 'bulge' and it would be dangerous to reduce it."
But if the ceiling is maintained, it will be impossible not to reduce it. It will be impossible not to cut down proposed programmes of expenditure, whether on schools or other social services, which would inevitably take expenditure beyond the ceiling, because of (a) the general

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increase in costs, and (b) the increase in costs which will flow from the higher rate of interest. We all know that there is still a serious shortfall in school places; there is grievous overcrowding of classrooms in many schools in many places. And yet the programmes to remedy that at the earliest possible moment will be cut down. I am sure that your Lordships will realise how disastrous this increase of the bank rate to 7 per cent. will be upon the finances of local government. It will put up the rates and, not incidentally, because it is important, it will increase the sums to be paid by the Government on all those services where there is a percentage grant.
It seems that the Government's policy, from a national point of view as well as from the more limited, but not unimportant, point of view of local government, is a disastrous one. It is ill-conceived, it will be misapplied, and in operation it will be unfair and unjust; and it ought not, it seems to me, to receive the approval of your Lordships' House.
5.36 p.m.
LORD SALTER: My Lords, my contribution to-day will be a very fragmentary one. It will consist of a few comments, necessarily rather disjointed, upon what others have said before me. In the first place, I should like to refer to a remark made by my noble friend Lord Brand, who said this afternoon that the case for this country embarking upon a counter-inflationary policy was much stronger than that of America doing so. The noble Earl who moved the Address yesterday, Lord Waldegrave, after quoting a recent declaration by the Chairman of the Federal Reserve Board, said the same thing. I entirely agree with both noble Lords, but I think neither of them emphasised sufficiently the fundamental difference between the compelling necessity under which we in this country are to start such a policy, and the rather doubtful and debatable issue of policy that is presented to the United States.
Think, my Lords, of our position in the sterling area and of what that institution means both for us and for others. Think of the position of sterling, still, I believe, the greatest currency as a medium of international trade; and think of what would happen to the sterling area and to the retention by sterling of its r½le in regard to world trade if, after the devalue
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ation of 1949, we were forced into another devaluation now. Think, my Lords, of the weakness of our reserves, to which Lord Brand referred this afternoon. Think not, indeed, of an actual deficit in our balance of payments, but of the quite inadequate margin to meet the strains with which it will be confronted, and of our commitments. Think, above all, my Lords, of our dependence, greater than that of any other considerable country, upon foreign imports, and, therefore, on our power to buy the exchange with which to purchase foreign imports of food and raw materials. In all these aspects, our position is not only different but fundamentally different from that of the United States.
People have spoken about the danger of unemployment in one contingency or another. But consider, my Lords: is it not the case that the most serious danger, and, indeed, perhaps the only serious danger, of mass unemployment in this country, is that we should be unable to purchase the essential raw materials without which neither the full working of our industries nor full employment would be possible? Our ability to purchase these imports must depend on our exports being competitive in world markets and not having their cost increased by inflation, or at least not to a greater extent than the costs of other countries competing with us in world markets.
These are not just differences between our case and that of America; they are fundamental differences. I confess that if we were, in all the respects to which I have referred, not in our actual position but were in that of America should in present circumstances not advise a counter-inflationary policy. Indeed, I think that with the world currency systems what they are at this moment, they can hardly be made tolerable, hardly be consistent with the proper maintenance, and still less the expansion, of world trade, unless there is not only a policy of counter-inflation by countries whose balance of payments is weak, but also a complementary and different policy on the part of countries which are in precisely the opposite position; countries which have embarrassing surpluses in their balances of payments and whose surpluses are endangering the reserves of all other countries less fortunate than themselves.

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We have recently had a few tokens of the principle to which I am referring, of a differentiating policy between countries which I may call surplus and non-surplus countries. When the Chancellor of the Exchequer made his declaration at Washington a short time ago as to our determination to maintain the £ at its present value, and combined with that the increase in the bank rate from 5 per cent. to 7 per cent., that was accompanied by a complementary declaration on the part of the representative of Germany, whose balance is rather embarrassingly surplus rather than deficit, and there was a small token of the kind of policy I am suggesting in the fact that when we raised our bank rate from 5 per cent. to 7 per cent. the Germans reduced theirs from 5 per cent. to 4¼ per cent. We had a rather similar experience in O.E.E.C. a few years ago when I was a member of the Government. There was a rather embarrassingly surplus position in the case of Belgian currency. Not only did deficit countries take action in the nature of counter-inflation, but, by agreement, the Belgian Government similarly took action to liberalise their policy and encourage imports without at that time expecting similar action from other countries whose balance of payments was negative. That is why I should like to emphasise that, if we were in the position which America is in, the argument against a counterinflationary policy at this moment. having regard to the possibilities—if no more—of a world economic recession. would lead me to oppose such a policy at this time. But in our case not only is the case for it overwhelmingly strong, it is a compelling necessity.
What should that policy be? I am not going to attempt any general appraisal of what the Government are doing or intend to do, partly because I have not the knowledge of all the factors to which the policy must be adjusted, partly because the Government have not told us everything that they intend to do, and partly because the Government, to some extent, have still to develop their policy empirically in relation to any developing situation. I agree, however, with the noble Lord, Lord Pethick-Lawrence. when he speaks of the increase in the bank rate in itself as not being an adequate policy
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but as in the nature of an emergency action which should be brought to an end as soon as possible.
The noble Lord used a metaphor which I think was a little misunderstood by the noble Viscount, Lord Hailsham, when he spoke about a car being driven towards a precipice after having been hooting its way till the last moment. I should like to use the same metaphor but slightly changing it. I think the clamping on of a high bank rate recently was like the action of a driver who has been taking the wrong course (when I say a "driver" I do not mean just the Government; I mean the whole of our economy in which the Government have a part, an important part, but a part only), finds himself on the edge of a precipice and then clamps on the brake, at the cost of considerable discomfort but so avoiding disaster for the moment. That action is necessary and, in the particular case of ourselves, has averted the immediate danger. I am very glad that it has. But it is neither a solution nor action that can, without loss and disaster, be continued for a very long time. And it is no alternative to other forms of counter-inflationary action of which some suggestions have been made to-day.
It is too big a question for me to attempt to propose a general policy at the moment, but I agree with the noble Lord who has just spoken that an increase in the bank rate is not a precision instrument. I do not think he suggested any alternative instrument that was more of a precision instrument, certainly not physical control of imports whose abolition he appeared to regret. There are a number of things which could be done which together I think would make a policy which would make it unnecessary to retain so high a bank rate for any very long time. I notice that Sir Frederick Leith Ross, in a striking article in the Financial Times, suggested that we should so arrange our policy that we can reduce the bank rate within a period of something like two months. I thought that reasonable, but it will be extremely difficult to do. We have very real and widespread fears that whatever we may want to do and to avoid, the £ might again be devalued. Directly that fear arises, for any kind of plausible reason, you have not only the whole forces of speculation against you, but what is normally much

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more important, the decisions taken by people who in the ordinary course of their business—buying and selling materials, entering into contracts of one kind or another, in one currency or another—have to form a view about the future value of the currency, not because they are speculators but because they must do so to run their current business.
It is true to say that in normal circumstances the speculator, the "mere speculator", as he has been called, who is just attempting to make a profit by guessing what is going to be the future of a particular exchange, is only like a jackal scouting about ahead of a much more formidable creature—the ordinary trader—behind him. This individual would not normally do very much damage, or be dangerous himself, but for the existence of the more formidable creature behind. But when the reserves of a country are as weak in relation to the stresses upon it as ours are, when future policy is uncertain, and the future course of our economy is as difficult to foresee as it has recently been, even speculation by itself may be a very dangerous force in anticipating, in accelerating, in aggravating and possibly in causing, disaster, as I think those of us who remember the history of the French franc after the First War will agree.
I have only one or two further comments that I should like to make. I think that every speaker has said that to tackle our problems successfully we need a united nation and that it is essential that there should be something like an agreement between the forces of unionised labour and Government policy. I do not think that all the real difficulties of securing such an agreement have been stressed. I am not going to argue now whether some things recently said have increased the difficulties or not, but I do not think it is quite fair to speak as if those in the separate unions who are now engaged in dealing with wage demands are abusing a privileged position if they do not have so much regard to the interests of the country as a whole as to what, after all, is their immediate task, that of looking after the interests of their own members.
The essential difficulty—and this is no disparagement of those now engaged in leading the unions, whether centrally or in particular areas—is that effective trade
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union policy is made by the separate unions (if not, indeed, by shop stewards and others against even the local trade union leaders), and there is no effective guiding and controlling influence by the trade union world which gives the essential views of the leaders of the trade union world of what would be the interests of trade union members as a whole. That is something which cannot be dealt with by short-term measures, but in the long run the trade union world will need to develop an organisation which enables it to have an effective responsibility commensurate with the power of unionised labour.
Such an organisation does not exist at the present. The leaders of the Trades Union Congress may take the most reasonable view of what would be in the interest of their own members, but in fact they do not effectively guide and control the negotiations in the separate unions. I believe that if there were central and efficient collective authority in the union world, because the interest of the union members, though not identical with that of the country as a whole, is so nearly coincident with it, our problem would be relatively easy to solve. But we are at the moment a long way from that. However, this is too much of a long-term matter for further discussion this afternoon. I have put it before your Lordships at greater length on other occasions. This afternoon I have attempted merely to throw out a few comments upon the actual proposals and arguments that have been used by those who have preceded me. That is the reason that what I have said has been, I fear, so inconsecutive and fragmentary.
5.54 p.m.
LORD BARNBY: My Lords, the experienced and fluent analysis by the noble Lord, Lord Salter, has followed many other speeches of a high order which give this debate an authoritative character. At this stage of the debate most points one wished to raise have been adequately covered by other speakers. I would particularly refer to the noble Lord, Lord Brand, who made a contribution from his long experience to which it was a privilege to listen and which merits being widely read.
I admit my own perplexity. If I may have your Lordships' indulgence to try to describe the situation in a somewhat

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lighter vein, I would describe it as being like a horse race where in front of the body of the field we find a horse called Inflation with, a little behind the field another called Deflation and among the field itself a horse called Wage Demands. In sporting parlance Inflation should "come back to his horses," Wage Demands should have an even chance, and Deflation should catch up with the main body but not advance beyond it. There seems to be some perplexity about what the rest of the race should be. For myself, I am entirely confused and I suspect that there are a great many industrialists who are likewise.
We have had pronouncements from various Ministers but they have seemed insufficient. Fortunately, we heard yesterday from the Prime Minister what seemed to me to be a clear definition and we are indebted to him for it. But many of us feel that the measures taken to date will not suffice. There are many who suggest that the first thing is to reduce Government expenditure. I remember that in the discussion in your Lordships' House before we rose for the Summer Recess it was suggested that we needed another Geddes Committee. I was interested to see that this suggestion found support from no less an authority than Sir Frederick Leith Ross, formerly of the Treasury, to whom the noble Lord, Lord Salter, referred. That appealed to me as a very desirable suggestion. The Government would then decide which saving recommended should be selected.
There have been several references to the nationalised industries and their ability to withstand wage claims made. This is another instance of the unfortunate decision to transfer the financing of the nationalised industries from private finance to reliance upon the Treasury. There is psychological effect in the necessity to present a picture of current achievements when seeking funds from the market, even if they carry Government guarantee.
The noble Lord, Lord Balfour of Inchrye, appealed for moderation in speeches. Certainly the tone of his speech was conciliatory, giving us an admirable lead. Among other things, he referred to the need for limitation of dividends, carrying with it the suggestion that profits should be curbed. But,
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surely, if earnings are not adequate, how are industrial companies, in going to the market, going to secure resources to buy new equipment, which alone will keep them up to date and give proper conditions of employment to their workers? Some suggest that there is need to decrease home consumption and so to make more savings available for investment—and I will return to that point in a moment.
The noble Lord, Lord Pethick-Lawrence, emphasised in his analysis of the effects of the high bank rate how it was burdening our balance of payments through the greater interest on sterling balances here and also the increased rate paid by the Treasury on its short-term indebtedness. I repeat that there are many who feel that stronger measures are necessary and that this will compel considerable unemployment. It seems hypocritical to pretend that we can get real correction without producing considerable under-full-employment.
For industry to enjoy the highest production there must be no increase of cost; that is to say, there must be no wage advances unless they are associated with increased production. In many industries the necessity is to work two or three shifts, which means that instead of machinery being employed for only eight hours a day it should be employed for sixteen or twenty-four hours a day. That would require some modification of the Factory Acts. At the moment there are many unions which resist either overtime or two or three shift operation. In both the highest standard of living countries, like the United States, and the lowest in Europe, like Italy, habitually three shifts are worked. It is hard to see from that how it can be suggested that the social conditions in this country ought not to be aligned with what is done in other countries. if progress is to be made on re-equipping industry, the initial allowances and depreciation rates should be more generous, otherwise the national equipment will run down to the disadvantage of labour. A third point, following the suggestion that we should consume less at home, relates to a general sales tax, which would deflect from domestic consumption to export.
I cannot refrain from quoting from The Times of last Saturday, when it referred

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to the uncertainty aroused by current wage claims. It said:
"The foreign operator is obviously watching the trade union attitude to the Government's new measures fairly closely… the speeches of trade union leaders are now being studied with great interest in Zurich and other centres … it is the issue on which the pound's future will be eventually decided."
I refer to the commodity situation, mentioned by the noble Lord, Lord Brand. Judging from the prices to which many commodities have fallen—copper, tin, rubber, tea, cocoa, and particularly wool—I think it is obvious that the primary producing countries' income must be so reduced that exports from this country will be gravely imperilled.
While to-day the debate is confined to the economic side, and to-morrow will deal with overseas affairs, I want to say a word about migration to the Commonwealth. I fervently believe that a steady outflow to maintain the British "content" of new arrivals in the Dominions is essential to maintain the inclination to "buy British" when imports are negotiated. Sentiment in Canada or Australia will inevitably influence buying decisions. This fad in the value of commodities may well compel the receiving countries, particularly Australia, finding themselves short of the necessary savings to finance an inflow of migration, to impose import restrictions to protect their balance of payments.
Returning to the general economic position, I should say, in conclusion, that noble Lords on the opposite Benches, members of the Party not called "Socialist" but "Labour", must have great influence with trade union leaders in this country, and they can rightly explain the illogicality of demanding shorter hours or resisting the revision of trade union practices, and can in that way, with sound counsel, contribute much to the peaceful solution of industrial problems.
6.10 p.m.
LORD SHEPHERD: My Lords, I believe it is customary after six o'clock in the evening to refer to "this late hour"—
SEVERAL NOBLE LORDS: No.
LORD SHEPHERD:—so I shall be as brief as possible. There are three points in the gracious Speech that we heard yesterday afternoon on which I wish to speak. First, I would refer to that part of the
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gracious Speech which speaks of the need to preserve the economic basis of full employment by restraining inflationary influences. I do not think it will be disputed that the general public are confused and dismayed by the economic position of this country as it is now being presented to them. Since 1955 we have had a regular series of crises, each appearing more grave than the last. I believe that this country reacts better to the truth, particularly if it is in a language the people can understand. But to-day we find a country which is bewildered and divided. This situation cannot continue. If it does, we shall fail to mobilise our full resources and thereby risk the loss of our high standards of social security.
The Government, to whom the people look for guidance, must be consistent in their statements. It is no good claiming success and prosperity one moment, and the following month telling the people of the serious inflationary tendencies which have been brought about through overindulgence. I do not believe there is any useful purpose to be served in exaggerating our difficulties, but I believe it would be a greater disservice to attribute our present difficulties to any one section of the community, as is being done at present. Inflation is being largely attributed, by Government spokesmen and by the national Press, to continued selfish demands by the workers. A Government spokesman was reported in The Times of last Monday as saying that there is a faint suspicion that the Socialists would like to see a little industrial strife if it would help discredit the Government. The trade union leaders and members of the Labour Party rejected many years ago industrial action for political ends. Our position, I believe, is sufficiently grave without any incitement or provocation to industrial strife. All sides of industry, political spokesmen, and particularly, I believe, our national Press, who enjoy great freedom, should recognise that we are now going through a period when great responsibility on all parts is called for.
The gracious Speech gives us little indication of what is the long-term economic policy. In fact, there is hardly any mention of the need for a great increase in our exports. As we move from one crisis to another, each is met with emergency treatment, with much the

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same medicine, except that it is in stronger doses. We fight a tactical battle close at hand whenever the emergency arises, but there is no indication that we are getting to the root of our problems. The present "medicine" is the 7 per cent. bank rate, and a tighter credit squeeze. What most people are asking to-day is how long we can afford this high bank rate and, above all, what will occur to our economy when the bank rate is reduced and if it is not replaced by some measures which will hold inflation in check.
The high bank rate was once described in your Lordships' House as a blunt, rusty sword. It hits at everyone—the manufacturer producing entirely for the home market, and the manufacturer and merchant who are struggling to maintain our position in the world export markets in keen competition with our main competitors. I hope, both for the sake of our manufacturers who are doing their best for exports and for the sake of the merchant, for an early reduction in the bank rate. It must be replaced by a policy that will channel our efforts into these export markets. It is only through the development of these export markets that we can ensure increased productivity and the lowering of our production costs. The Government have pointed to our continued increases in exports, but the present rate is far from sufficient. I believe, too, that our exports are far too dependent upon those markets where we have preferential treatment—Australia, New Zealand and South Africa. I believe that it is vitally necessary to expand our trade in Europe and America.
To-morrow there is to be a debate when trade in Europe will be discussed. I would ask your Lordships' forgiveness if I speak on that subject now, because I do not wish to speak to-morrow. As your Lordships know, there is a certain nervousness in this country about our participation in the European Free Trade Area. After careful consideration, I cannot see that there is any answer for us other than that we must enter the European Free Trade Area; for apart from obvious trading possibilities, the political aspects also play their part. If we stay out, Germany will dominate Europe; and clearly we cannot afford that. Apart
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from that, such domination would eventually effect our own position in our present export markets.
In connection with the European Free Trade Area, I believe that what is most vitally necessary is that we fully mobilise ourselves now to take immediate advantage of all those large and important markets. We just cannot afford to delay. We must start now. We must be in a position to deliver the goods. This will mean a considerable increase in our productivity, for Europe, like America, will expect immediate shipment on order. I see that I have spoken far longer than I had intended, but I believe that this European Free Trade is a great challenge to us. It is a challenge rather similar to that given in days long ago, when our merchant adventurers went across the seas to the Far East. If we do not take advantage of this challenge, I think the consequences will be serious for us.
Before I sit down, I should like to refer to the question, mentioned in the gracious Speech, of Singapore. I was recently in Singapore, and I must say that I was gravely disturbed with the conditions that I found there, and in particular with regard to internal security. Whilst I believe that great credit should be given to Mr. Lim Yew Hock and his Ministers, the Communist infiltration in the schools and in the trade unions is very grave. I should like to ask Her Majesty's Government whether they can give us an assurance that, when they bring the Bill to this House and to another place, they will give us ample time to consider all the implications. Apart from the people in Singapore, who have to be considered, there are people in the Federation of Malaya and in the other S.E.A.T.O. countries. I hope that Her Majesty's Government will give us that assurance.
6.20 p.m.
LORD HAWKE: My Lords, I could not disagree with most of what the noble Lord, Lord Shepherd, said, and therefore I do not propose to follow him in his remarks. Our crises are generally of two kinds: of balance of payments or of confidence; and fortunately this time it is a crisis of confidence only. If we were talking of a crisis of balance of payments at a time when world trade had been booming, indeed our future would be very dark. As my noble friend

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Lord Brand remarked, the reserves are just not big enough to counter the changing of the sterling balances into other currencies, such as India has been doing on a very large scale and looks like doing again shortly, and at the same time act as a counterpoise to what is described as speculation but is very often normal trading activity. As a former merchant, I can only suggest that the majority of the merchants of the world to-day would be more likely to be short of a pound held at a fixed level than to be long of it. I do not think it is right to measure the crisis by the amount the reserves fall, or vice versa, because many of these balances are undoubtedly balances of the moment that flit here and there, and they do not count one hundred per cent. in a division.
This problem has been with us for several years, in fact ever since the war. As a matter of curiosity I looked up what. I said when I last had the honour to address your Lordships in an economic debate, over four years ago, and I found that I made almost exactly the same speech as I am making to-day. The problem is how to remedy the situation—and here I depart slightly from agreement with my noble friend Lord Brand, because I do not believe that it is realistic to think that we can achieve great surplus trading balances, and translate thorn into some desirable form of currency. I say that for this reason: so long as we remain the banker of the sterling area, and a great exporter, the pressure on us to lend is almost overwhelming. Only too often, I am afraid, it is to lend long what we have been borrowing short. To illustrate my meaning, look at how the Finance Minister of India has been globe-trotting in search of funds. We are the people to whom he first turned. We are the people who should have been able to provide them, but we have not sufficient surplus to do so. Then again, with regard to lending to foster our export trade, I read that we had secured a great contract in the Argentine, but only by giving many years' credit. That is an investment to foster our trade for the length of the payments.
I can see only three real solutions. The clean solution is a realistic price for gold. I get a little impatient when I hear people dismissing that automatically because we know the American prejudice against that
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idea. My noble friend has mentioned one prejudice, that it would mean debasing the dollar. I have always heard that there was another equally strong one, that it would mean increasing the economic power of the second biggest gold producer in the world, which is Russia. But it is not much good allowing one's friends to sink for fear of doing a favour to one's enemies. I believe that we ought to lose no opportunity to "plug away" at the Americans the whole time to make them realise that until this question of a proper price for gold is resolved there will be this permanent imbalance in the world; and, moreover, the outside world is going to cost their taxpayers an enormous sum of money in gifts and loans and so on to create a balance.
I wonder whether the second solution, which is the curtailment by ourselves and by the whole of the sterling area of American imports, is quite so impracticable as my noble friend the Lord President suggested. I should have thought that a tentative embarkation on a policy of that nature might well lead to results in the field of the revaluation of gold. I can see no justification for our spending enormous sums of money every year on American tobacco, though tobacco can be grown in the Empire, when at the same time our reserves of dollars are so small that we cannot properly defend the pound. The third course is one which sounds almost unthinkable to us, and that is to give up being banker to the sterling area. I think that would have very grave and unpredictable results to our export trade. It would be a terrible shot in the dark, but it is a solution to which we might be forced if other things were not found. I am afraid the solution of the Opposition, that of exchange controls, I cannot accept as a real solution, because I think history has shown that you cannot get a real system of exchange controls unless you are prepared to have a postal censorship; and even then it has to be reinforced by a firing squad if it is to be 100 per cent. effective.
If the reserves of ourselves and the sterling area are inadequate, we must obviously employ them to the best advantage. That means that our way of living must create the confidence of our creditors. One method of doing that is to preserve a high rate of investment, because a high rate of investment gives them promise for the future that Britain will be

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economically prosperous. We have been trying to do this, of course, for years, but the trouble is that the resources were just not there to do what we wanted to do. We had to look after consumer expenditure in this country, private capital expenditure, Government expenditure, and Government capital expenditure; and somehow or other the total of those four always exceeded the resources available to meet them. Attempts to make a hole in any of them, to make the pattern fit, have always failed; and so we have had inflation.
The economists and the Treasury experts have attempted to make the pattern fit by reducing consumer expenditure by taxation, but I think history shows us the folly of that. By so doing you "soak" the pensioner, but everybody else in the country goes on strike for more pay to pay the taxation. Private capital expenditure is so important for the future of this country that one does not wonder it has been difficult to keep that down sufficiently. All Governments say that Government expenditure cannot be reduced, and Government capital expenditure is the very infra-structure of future prosperity. So it boils down to four sections in the economy, none of which can be reduced. And the result is that over the years we have inflated the resources to meet the demand. To-day, wage claims take the headlines. I agree that wage claims act as a sort of rocket booster, but they are not by any means the origin of the inflation. The inflation started with Doctor Dalton and devaluation and this perpetual policy of trying to buy more resources than really exist in the country.
If we can halt the creation of new money, that means that we must either have less investment or else we must save more. Therefore it follows, as a corollary, that one of the best ways to inspire confidence in the pound would be to save more. There is not a great deal involved in that classic "sixpence in the pound" of which we have heard before, but a 2½ per cent. switch from consumer consumption to capital resources would probably just about do the trick. But such an enormous proportion of our capital expenditure has to be invested by the Government that a large proportion of the savings of the country must be lent to the Government, and all
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round we have been seeing the exact opposite. This inflation has been brought home to the people in the cost of living.
One of the Chancellor's greatest worries must be the fact that he cannot borrow genuine savings. We have seen the evidence of this in the disposal of Government stocks—the portfolios of insurance companies, investment trusts, and all sorts of property owners have seen a reduction in their holdings of Government stocks. As a sign of the times, I may remind your Lordships that next week we in the Church Assembly expect to pass the final stages of a Measure which, if passed into law, could result in many millions of pounds of Church funds passing out of Government stock into various other forms of investment. With this background, it is vital that the Chancellor should make Government stock once more a desirable holding.
He has been criticised a great deal for the bank rate. I think that the criticism is unjustified. After all, he is dealing in that scarcest commodity in the world to-day—genuine savings. The world is crying out for capital, and the people of the world are just not saving sufficient to satisfy the need, and the difference is being made up by printing presses everywhere. If the presses stopped, then the demand must fall on an inadequate supply, and therefore money must be dearer, irrespective of what the Chancellor does to the bank rate. After all, 7 per cent. less 8s. 6d. in the pound—that is, 4 per cent.—is not all that generous a reward for frugality. Still, we do not want 7 per cent. for ever. And if we do not print money we must save money, and the Chancellor must somehow produce an atmosphere which would encourage savings.
At the moment the atmosphere is very much the reverse. We have been passing through the intoxication of a trade boom, with profits easy and wages mounting. The atmosphere has been one of prodigality rather than frugality. By the incidence of taxation the Chancellor is the major partner in every financial decision in trade and industry in this country, ranging from about 60 per cent. in the public company up to as much as 92½ per cent. in some firms and partnerships. I may say, in parenthesis, that in such a partnership the cost of an overdraft would

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be less than 1 per cent., and in this atmosphere only the best is good enough for the firm when the Chancellor pays most of the Bill. Why stop at a Ford if the Chancellor will stand you most of a Bentley?
Then, when we turn to the individual, we find that the individual at the top sees an almost absolute ceiling on income. He is rather like the consulting engineer in the Conan Doyle story of the engineer's thumb, where the lift is going up the whole time but the top of the press is immovable. Measured in pre-war pounds, the ceiling is a very low one indeed. Many people are not prepared to go on successively paring their commitments the whole time. The result is that they have to find other methods of ekeing out their living, other than by a genuine income. Some live on capital; some put down to farm and firm expenses which their grand-fathers would have paid out of their own pockets.
The result is that over the whole of industry and private life at the top there is a general lessening of the control of expenditure and the exact opposite of an atmosphere of saving. In the middle incomes, saving is done to a certain extent by life insurance, but lower down the National Savings Movement makes a pretty dismal picture. I doubt whether its net efforts offset the dis-saving of the better-off caused by over-high taxation. Just as people at the top live on sales of capital and expense allowances, so lower down they live by borrowing money on the hire purchase system. In a nation that spends its time "keeping up with the Joneses" a wrong atmosphere at the top speedily transmits itself all the way down to the bottom. We have a wrong atmosphere at the top caused by a ridiculous rate of taxation of income in the higher brackets—up to 92½ per cent. This mistaken policy has been built into our economy as an automatic inflator by many successive Chancellors.
One can attack inflation in various ways; taxation and savings are only two. But the overall aim is quite a simple one: to create a reduction in demand on our resources to the level of the actual resources. I hope that the measures which the Government are proposing will do this and that they will once more do what the Chancellor has described—make our money honest. Then Ministers
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can go with a clear conscience to the people and ask them to save for their old age. Savings in Government stock are one of the chief keys to our situation, because without them we cannot pay for the infra-structure of prosperity unless by using a printing press. As the result of two wars I believe that we shall always have to contrive our way through the world with inadequate resources. But if the world sees us maintaining a large programme of expansion based on genuine savings, we shall be able to face any lack of confidence which arises with calmness. The first step to take is to make people believe that when they lend money to the Government, the Government will repay them in the same coin.
LORD BURDEN: My Lords, may I ask the noble Lord this question? He said that if a Measure is approved by the Church Assembly this week, it will lead to the sale of a quantity of Government stocks. Did I hear that correctly? Is it not the position that since the amalgamation Measure the Church Commissioners could sell Government stocks? If I am wrong in that, surely before the Measure becomes law it will require the Affirmative Resolution of both Houses.
LORD HAWKE: My Lords, I intended to say "if passed into law", and that covers the noble Lord's second point. In reply to his first point, I may say that this proposal covers a large area of trusts and funds at present in the hands of dioceses and parishes which at the moment are not the concern of the Church Commissioners. It widens the field.
6.41 p.m.
LORD BROCKET: My Lords, we have had, as is usual in this House, a very interesting debate and one that has cut across ordinary Party questions. We have just been listening to what I thought was a most interesting speech from the noble Lord, Lord Hawke, particularly with its ending on the question of savings. I had not intended to deal particularly with that subject, as it has been so adequately dealt with by the noble Lord, but it may be of interest to him and other noble Lords to realise that since the end of the war the immense figure of £2,000 million has been taken in death duties by successive Governments. I am quite

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impartial, even though I sit on these Benches, in saying that one Government is equally to blame as another.
I had intended to back up any pleas made this afternoon to lift the question of inflation out of Party politics, if that is possible. In Her Majesty's gracious Speech the words used were:
"My Government believe that these are purposes which should command the support of all sections of the nation."
Those purposes are to maintain the value of our money and to try to conquer inflation. I should therefore like to say that I deplore speeches from either side which tend to inflame either wage-earners or Her Majesty's Government; and I hope that, if possible, leaders of trade unions and of the Government will be rather more careful of what they say than they have been in the last few weeks. The question of inflation is even more important than other questions which are regarded as almost non-Party—foreign affairs and agriculture. There is a great measure of agreement on both foreign affairs and agriculture, and I suggest that there should be a greater measure of agreement on how to combat inflation than there appears to be at the present time.
On the question of high money rates I am personally wholeheartedly on the side of the noble Lord, Lord Pethick-Lawrence, and I agree with what was said by the noble Lord, Lord Latham, about London County Council borrowing money at high rates for a great number of years, because that must itself cause inflation. If the rates in the area of the London County Council go up, that will add to the costs of business, households, and everyone living in the County of London. I have worked out these figures, which I have given before: if a council, whether a big council, as in London, or a small rural district council, wishes to build houses, the difference between borrowing money at 4 per cent. and borrowing money at 8 per cent. means 35s. a week on the rent, Who has to pay that extra rent?—the worker living in the house; and it is no surprise to me, at any rate, when he asks for extra wages in order to pay the rent. It is quite obvious that he will do so. I deplore high money rates if they last too long.
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As I am not an international financier with the knowledge of the noble Lord, Lord Brand, I cannot speak on the international implications of a 7 per cent. bank rate, and I am glad to see that the pound is now in better shape than it was before that increase in bank rate. But I cannot help feeling that this medicine, while it may be all right if it is strenuously applied for a short time, will, if it goes on for a long time, have a very bad effect on industry in general. I know of one company (which must remain anonymous) which produces electrical equipment and does a lot of Government work. I was told that the additional interest it has to pay, through the raised bank rate, on its overdraft—which it uses quite legitimately for carrying on its work—may be more than £300,000 a year. That must mean that its costs are raised, and when this company does work for the Government or private industry its costs will be higher, thus causing further inflation.
I wish that all political Parties could get together on the question of inflation and work out any common ground they have. On the question of the bank rate, for example, the Government of the day—whether it be a Conservative or a Labour Government—will have to decide whether or not this high rate is a good thing if continued for a long time. I heard the noble Lord, Lord Latham, say that since the Conservative Government came in, in 1951, there had been fourteen different rates for loans to local authorities. That is not good for industry, and I say that although I speak from these Benches. Her Majesty's gracious Speech says the proposals "should command the support of all sections of the nation" and I feel that all Parties should somehow get together to see whether there is any common ground as to means by which inflation can be fought.
The next question I should like to tackle is high taxation. I always imagined that what I might call the "obsolete" Treasury view is that if we take by taxation a greater proportion of the income of the inhabitants of this country they will have less income to spend, and therefore their smaller income will chase fewer goods and inflation will thereby be fought. I believe that that view has been proved to be not only obsolete but absolutely wrong. In his Autumn Budget

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in 1955, Mr. Butler put increased purchase tax on pots and pans. That was known as the "pots and pans Budget". I thought it was completely wrong at the lime, and I was quite sure that it would cause further wage rises—which it did. 'That Budget asked for wage rises, and it got wage rises.
I believe that if the working man's weekly budget is increased it is quite reasonable, particularly in a period of over-full employment, that he should ask for more wages; and in a period of over-full employment he always gets them. If there was unemployment, it would be quite possible to resist a claim for a wage rise, but in over-full employment the worker will get a rise every time, in order that his wife and he himself should pay for Mr. Butler's increased purchase tax on pots and pans. In that case purchase tax is undoubtedly a great contributory factor to a higher cost of living; and a sales tax such as is suggested would similarly be a contributory factor. fn fact, all forms of taxes—on whiskey, cigarettes, beer and everything else—are factors contributing to make life more expensive, and they all make the workman want more income with which to pay for them.
There is another question. Like many of your Lordships. I am connected with industry and agriculture, and I believe there is no doubt that when an employee looks at his weekly wage packet he does not really care whether National Health Insurance takes 5s. 9d. and Pay-As-You-Earn takes so much more. He is interested only in the net amount that he can take home to his wife. To him that is the only thing that counts, and it is absolutely right to say that Pay-As-You-Earn, National Health Insurance and all such charges on the wage-earner's pay packet add to the cost of production. The money from Pay-As-You-Earn may go to the Government, who may spend it wisely or unwisely; but it all adds to the cost of production.
If I may take an instance at the other end, we have heard that executives of companies and well-known scientists have to be paid high salaries in order to attract their services—and in my opinion they really earn those higher salaries. If an executive of a company is given a gross salary of £10,000 a year, which is the
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same salary as the Prime Minister gets, he pays £5,659 5s. in tax, leaving £4,340 15s. I have calculated for a single man only because it is very difficult, with all the different children's allowances, to calculate for a man with two or three children. But that means to say the executive's pay packet, if I may so call it, is £4,340 15s. a year, and not £10,000 a year. If that employee of a company does particularly well, and the directors wish to reward him, then in order to give him an extra £600 net salary a year they have to give him £5,000 a year extra gross income. That amount adds to the cost of production of the company, and means that their goods are more expensive and that they will probably be able to export less. I feel that this question of high taxation is quite definitely inflationary. It is one of the chief reasons why in future years, if other countries such as Germany, Italy, Japan and so on, beat us in export trade, it will be to a quite considerable extent due to the high taxation of British industry.
My Lords, there is one other criticism I have of the gracious Speech. It is that the Government's panaceas or remedies for inflation are largely negative. A 7 per cent. bank rate is negative; high taxation which has not been reduced is negative, and high expenditure goes with high taxation: the two go together. I feel that what we want is to be able to increase production at lower cost. But, of course, if we increase production it is quite useless doing so unless we can sell our production, either in this country or in foreign countries, and we get back again to this question of the high cost of production. If our costs of production are too high we cannot sell our exports in other countries. I feel, therefore, that these questions of high taxation and a high bank rate are two questions which should be looked at from an all-Party point of view, rather than from the point of view of just one Party or the other. I do not know whether my hopes are too high, but I feel that inflation should, if possible, be put on the same sort of basis as foreign affairs, and I should like to see the Prime Minister—I think he is the only member of the Government who can make such a suggestion—call a conference of leaders of political Parties to go into this question.
6.53 p.m.
LORD STRABOLGI: My Lords, I think it is generally agreed on all sides of the House that in the inflationary field this country is in as great a danger as it was in the military field during the war. During the war when this country was in very grave danger her people rallied round and, by a magnificent war effort, saved her. They did this through their innate and deep sense of patriotism, but also because they felt they were fighting for a better world. Another thing was that we had a policy of fair shares for all. After the war, due to the Labour Party, we had what has been called the "Silent Revolution" and that policy was continued. Since 1952 we have had what I think future historians will undoubtedly refer to as the "Counter Revolution". The gaps between the classes, the financial gaps, have been widening, and the policy of fair shares has been thrown overboard. All appeals for classes to tighten their belts, and to organised labour not to make any further wage demands, have been directed purely at organised labour and at the working class. I have never seen any appeals to the richer classes in this country to cut down their expenditure, which not only contributes to the inflation but, I think, is psychologically very bad, as it provides a bad example.
In fact, all the Government seem to be able to do is to say to organised labour and to the working class, "You have never had it so good." Because, for the first time in their history, the working class of this country have at last succeeded in gaining a moderate standard of living, they are told, "You have never had it so good." Of course they have never had it so good. It is rather like a bad landlord, if I may use a mythical example, who has neglected to repair the roofs of his tenants' houses and is eventually induced to do so, turning round and saying, "You have never had it so good."
LORD BROCKET: "You have never had it so dry."
LORD STRABOLGI: Of course they have "never had it so good" when their position is compared with that in which there were two million unemployed before the war. But we on this side of the House hope they will have it a good deal better.
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Why is it always the working classes in this country who have to be the ones to tighten their belts and not put in any more wage claims? I agree that these wage claims are a very important contributory factor to the inflationary spiral; but I think it would be equally desirable if the Government would make an appeal to the so-called upper classes of this country to curtail their expenditure. How is it possible for organised labour to feel that they are still getting a fair share when one sees London full of large and expensive limousines, and large hotels in this country full of people having expensive meals, on expense accounts, when it is possible for somebody to spend on one night's party as much as would keep, say, ten families in comparative comfort for a year? I think it would be agreed that this expenditure by a comparative minority does not have a very great effect financially on the inflationary spiral, but I think that its psychological influence is almost incalculable, and that is why I hope the Government will take it into account.
When I speak of people giving a bad example I do not mean that this by any means applies to the great majority of those in the upper income brackets in this country; but there is a small minority who are not, I think, behaving in the way that they should. I hope that the Government will make an appeal not only to organised labour but also to every other class in this country, so that together we can defeat this grave threat to our economy.
6.58 p.m.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I think we must agree that to-day, at this stage of our discussions on the loyal Address in reply to the most gracious Speech from the Throne, we have had a very interesting, and I hope profitable, debate, with speeches from all parts of the House. We are once more indebted to my noble friend Lord Pethick-Lawrence for an introductory speech which made quite certain that the debate would be interesting. His survey of the situation, and the specific reasons he gave for his views, as well as the questions he asked, made quite certain that the debate would be interesting and I am once more indebted to him for the manner in which he introduced the discussion this afternoon and

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for the excellence of the quality of his speech.
I hope that the noble Lord who is going to reply on behalf of the Government in the final stage will, whatever else he cannot cover, in replying to my noble friend Lord Pethick-Lawrence, answer his first point about the cost to the Government of the borrowings during the time of the high bank rate. Although a certain opinion has been expressed by the noble Lord, Lord Brand, one knows that there is a difference between schools of economists with regard to the present inflation; they differ as to whether it is "wage cost inflation or" upon demand inflation. The noble Lord does not seem to think that there is much difference between them. I should like, however, to have an answer from the Government Front Bench upon this point. Lord Brand, I know, has had great experience himself, and has at his disposal the knowledge of nearly all the greatest economists in this country. None the less, I should like to have the answer from the Government to my noble friend's question.
LORD BRAND: I should like to say that I have never discussed the question with a single economist up to the present time. I have read some of their documents but I have never discussed the matter with any of them.
VISCOUNT ALEXANDER OF HILLSBOROUGH: I did not intend any reflection on the noble Lord. I have known him for many years. I recall the old days at Chatham House, and I know what resources he has behind him in this connection, what economic advice he can call upon at any time if he needs it.
I was very much interested in the speech of the noble Lord, Lord Balfour of Inchrye. We can both look back on long years of political cut and thrust, both here and in another place, and I must say that I thought he made a statesmanlike speech to-day. Coming, as it did, from the Conservative Benches, I was greatly interested in it. He struck a note which has been sounded by other speakers on the Government side. He asked for tolerance and the largest amount of co-operation that can be achieved between different Parties and interests in the country in order to deal with this terrible problem
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of inflation. Of course, I welcome very much the manifestation of that spirit, but I think we should be less than frank if we did not seek to show that we in the Labour movement have been rather put in the dock by statements made by Ministers and others in the Conservative organisation.
We have been treated as if we were in some way responsible. It was even suggested that there was some kind of conspiracy between the political side of our Labour movement and the industrial organisation. To make such suggestions is not a good way to start a "get-together" and to enlist co-operation. So, whilst I say at once that I welcome very much the changed tone heard in the speech of the Lord President of the Council to-day (it was very different from some of the statements to which we have listened in the past, although he claims he has not always been fairly reported, and that may well be so in the modern Press) I feel bound to say that one of the most bitter periods of this foreshadowed controversy—for in the past it has been foreshadowed—came at a very early stage in our debate last July.
On that occasion the Lord President (as recorded in Column 344 of Hansard for July 30) devoted a whole paragraph of his speech to an attack which was clearly intended to be directed to the leader of the Transport and General Workers' Union—the largest trade union we have. He certainly used terms and phrases which were inappropriate. I am not going to quote them at length, but I just cite this passage [OFFICIAL REPORT, Vol. 205 (No. 98), Col. 344]:
"It is here that I come to some recent statements out of doors by a trade union leader who has been widely reported. I am bound to say that he has not, so far, thought it expedient to bear the burden of Parliamentary responsibility."
My Lords, that is not the way to achieve a "get-together." The target of those remarks was the leader of the greatest trade union in the country, the largest and one of the most powerful—a union extending into a great many industries. If we are to get anything like the right spirit of good will and co-operation there must be a different approach. So I welcome the improved tone used in this connection by the Lord President of the Council to-day.

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Nevertheless, it would be wrong for us to leave the House with the impression that all the fears in this matter expressed by Lord Pethick-Lawrence have been allayed. In the circumstances there is bound to be a lack of confidence on the part of leaders of the trade unions and large numbers of their members by reason of the follow-up of earlier conversations, statements and comments, by the action of the Minister of Health in dealing with the award of the Whitley Council. There is bound to be a lack of confidence. I was responsible, as county branch secretary for Somerset of N.A.L.G.O., in 1920, for getting what I think was the first county Whitley Council set-up. It had great influence on relationships at that time. May I say, frankly, as a Labour man, that I think there was a fine example of intelligent dealing with the situation as it was at that time by a Conservative county council. I never once knew in the course of the negotiations and discussions arising from that Whitley Council, a case in which the actual recommendations of the Whitley Council were turned down by the local authority.
If the Government now are going to take the line that there are special circumstances in the present case, because the money comes from the national finances, and to maintain that they were not really directly represented (of course they had their representatives on the body but they were not in a majority), it means they are giving a very bad lead in a campaign designed seriously to improve co-operation between industrial representatives and those responsible for the national economy and the prosperity of the country at large.
I feel greatly obliged to my noble friend who spoke last for the comments which he made. He has spared me the trouble of saying something on the subject of the principle of equality of sacrifice being exercised in present circumstances. But let me just say this. There are some people who have what I would call "temporary money" in investments. Whether those investments are "blue chips" or not, if they follow the details given recently in the Financial Times I think they will see that there has been a drop, on the average, of about forty points. There must be
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people on that side of the House who, if they have investments of such a character that they have been affected, have made a great deal of money, or, as is more probable, have lost a good deal owing to the fall in values. I therefore think there ought to be more support—though it is true we have had some from the other side of the House—for Lord Pethick-Lawrence's plea that there should be at the earliest possible moment some reduction in the present high bank rate.
A very telling point was made by the noble Lord who put before us the fact that in the last six years there have been great variations in the bank rate, up and down, up and down, so that many leaders of industry have not been able to assess exactly what their overheads would be in their capital expenditure. That relates especially to capital expenditure which must be made if the necessary stocks are to be available at any given moment to carry on businesses which nearly always have to be carried on upon a bank overdraft. It puts them in a most difficult position in assessing their actual liability for the coming year. I think that to rely upon the increased bank rate as one of the main factors for dealing with the stabilisation of the pound and attacking inflation is wholly insufficient, and brings hardship in many cases where hardship ought not to exist.
The hint has been dropped here and there by different speakers that this inflation has grown steadily from the days before 1951 and that the responsibility cannot be wholly placed upon the present Government, and I agree with that. Let us please remember that from 1945, when Lease-Lend came to an end, we had a state of affairs to deal with during the following few years which was very different from that which was visualised by the noble Viscount, the Lord President of the Council, in his speech. He seemed to think that when, in 1951, the Conservative Government came in, their principal task, their great problem, was to fight against inflation, not by a carefully controlled economy but by a "free-for-all." Although he did not use these common words, which are so frequently upon the lips of my noble friends now, that was what he said; and if your Lordships will read the report of what was said by the Lord President of the Council

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you will see his claims about abolishing rationing, letting people have what they want when they like, and all the red meat they want—taking off all the constraint aid control which the wicked Socialist Government had continued and always contemplated. Now the Government want to be able to say that after six years we "never had it so good." But we have never been in a worse currency crisis than we are in now.
It has been proved, to our satisfaction at any rate, that the general financial policy which has been adopted by the Conservative Government since 1951 cannot control the kind of situation that has arisen since the end of the last war. That is the justification for our criticism at all times of Conservative policy. In 1945 the Labour Government started from a literally bankrupt position, at a time when we had to turn over entirely from war production to peace-time production and restore export markets which were not there, and we could not do it without control. So long as we have the present debt of £30,000 million, let alone the other factors which have to be met by the programme which the Government have in view, it is quite impossible, especially out of the limited resources, to which the noble Lord, Lord Hawke, referred in his speech, to escape the crisis we are dealing with at the present time.
I would add to what my noble friend said at the end of the speech in which he opened to-day's debate that I would certainly take all necessary steps to tackle inflation and reduce its ill effects, and I would not hesitate to use control. But what will be the reply from the other side? They will say, "All that is old stuff. We are not having any of it"—not because controls were not effective, but because it is a political dogma which they cannot accept now after they have won power in two elections by promising the people all they could possibly want. 'They have been saying, "You have 'never had it so good'"; now they do not want to say, "You have got to have it worse." I think that that is a very inconsistent way of going on.
I am quite willing to talk to all my friends in the industrial labour movement on the evils of inflation and to reason with anybody, but I am bound to say that the case I have in my heart was never better stated than it was this after
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noon by the noble Lord, Lord Brocket. What counts in the working-class home is what finally gets into the working-class home to meet necessities. When it is said that wages have actually gone up above the indices of prices that are published, I find myself in difficulty in accepting that, because the usual run of experience of trade unions and their members is that wages always follow prices. The argument in the reverse direction that I have always put as a Labour leader over the last forty years is that when prices fall there is a grave lag in the corresponding fall in wages. It is very difficult to force the fall of wages in a falling price market without wide and deep disputes, but the general experience has always been that in a rising market wages lag behind prices.
I have read many economic articles on this question and it has never been proved to me conclusively that the incomes of the workers have been forging ahead of prices or ahead of real production. Therefore we must approach this matter with a considerable amount of restraint. I think I can speak for all my noble friends on this Bench when I say that we are certain that the consequences to our general economic life in this country and our markets abroad will be exceedingly serious unless we get greater stability. We are in favour of that. I have not the slightest objection to saying: "Let us unite so far as we can in discussing how this is to be brought about," but I would say, hacking what has already been submitted to us from the other side of the House by more than one speaker, and especially by the noble Lord, Lord Balfour of Inchrye: for heaven's sake, avoid statements on behalf of the Government which are calculated to produce a head-on collision with organised labour! There is no need for it.
If the Government would really get down to cases with the industrial leaders, I am sure, speaking from my experience of them right through the days when I have been connected with them, sometimes from the point of view of an employer in co-operative production, that if the Government are reasonable with the trade union leaders, they will be reasonable with the Government. Many of the men leading the trade unions who were called "Left

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Wingers" and "wild men" in the early days because they put forward just pleas on behalf of their members, when it has come to a question of sticking by and honouring a contract have stood up against all pressures—men like Ernie Bevin and Arthur Deakin; and other great leaders of the trade unions are today in no sense less earnest and responsible towards the commitments of this country, as well as to their own members, as they were then. If the Government want their co-operation they must go and get it in a responsible and decent spirit. I am sure that when the trade union leaders make all the contributions they can to the success and prosperity of the country, they cannot be expected to do it at the constant expense of the standard of living of their members.
I do not know how other noble Lords felt when the Lord President of the Council was giving us that rather long and technical homily on economics, but I will tell you how I felt. So many economists write as if human factors hardly ever come into economics at all. When a Government have to deal with it and try to put a policy on to a right basis, their duty in a modern age is to try to avoid at all costs the experience of 1920 to 1926, when the whole basis of the argument of the economist simply meant that you threw on the table as a counter, human life, the welfare, the experience, the blood and the sweat, the unemployment and the suffering of labour, without which you cannot possibly run your country. If you want to get that kind of thing put upon a right basis, I beg of you to approach the trade unions in the proper way.
7.21 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD MANCROFT): My Lords, my noble and learned friend Lord Hailsham has had to leave your Lordships' House in order to honour a public engagement from which he could not withdraw, and he has asked me to apologise to your Lordships on his behalf. I offer further apologies for my inadequacy in winding up this most interesting debate. As the noble Viscount, Lord Alexander of Hillsborough, rightly said, it is a debate that was bound to be interesting when it was initiated in such a typically calm and responsible way by
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our old friend Lord Pethick-Lawrence. At this hour of the night I do not propose to traverse familiar ground, but the noble Viscount, Lord Alexander of Hillsborough, will forgive me for reminding him, in reference to his speech, which certainly we all on this side enjoyed, that controls did not stop us having three financial crises, and devaluation, between 1945 and 1951. I should like to offer one or two brief observations on the theme that has been running through the debate, and I will also try to answer one or two of the questions that are still outstanding.
The noble Viscount, Lord Alexander of Hillsborough, commented yesterday on the lack of any specific reference in the gracious Speech to defence matters, particularly recruiting, which worries him, as it indeed worries me, and asked if we could have an early discussion on the matter. It is not in my hands, but I can assure the noble Viscount that I am at his service and that of the House, and no doubt the matter will be arranged through the usual channels. However, this debate to-day is hardly a suitable occasion for dealing with defence, save from one point of view, that of the economic aspect, and I propose just to touch upon that.
VISCOUNT ALEXANDER OF HILLSBOROUGH: I am obliged to the noble Lord for his reference to the debate which the noble Earl the Leader of the House has kindly promised he will endeavour to arrange. But before that happens could we have in the Printed Paper Office the printed Dispatch of the General Commanding our Forces to the Suez? I see that in the other place one or two Members have it, but we have not got it in the Printed Paper Office, and I should like it to be available for noble Lords who will take part in the debate here.
LORD MANCROFT: I thought that it was already in the Printed Paper Office, but if it is not I will make it my business to see that it is made available to the noble Viscount and to any other noble Lord who wants it. I propose to touch on only one aspect of Defence for which I have particular responsibility in your Lordships' House—namely, the economic one, because it was the huge defence bill which had such a marked effect upon the original inflation problem.
I want to sound a note of warning, and I will tell your Lordships what worries

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me. It is the feeling current in some circles that as a result of the important steps which Her Majesty's Government have recently taken we are immediately going to see a striking reduction in our defence bill. Your Lordships will remember that the White Paper made clear that one of the reasons for our new defence policy was that we have been trying to do far too much. We felt that we had to reduce the burden of the defence programme on the economy of the country, a point to which several noble Lords have referred to to-day; that the bill for men, money and materials was more than we could sustain. To use the words of my right honourable friend the Minister of Defence, it is no good spending so much money on insurance premiums when you have not enough money to spend on bread and butter.
The bill, as things were running, might have amounted to something like £2,000 million next year. We told our Allies—and our Allies were frankly consulted throughout—that a bankrupt ally was a rotten ally. We therefore undertook a general reassessment, a pruning to meet the needs of our stategical requirements, and not a mutilation to meet those of politics. We are at the moment giving careful consideration to the possibilities of streamlining our administrative arrangements, and we hope that the new Forces will have a great deal more "teeth" and less "tail". But paragraph 72 of the White Paper stated that it was not possible to forecast the level of expenditure in later years. I cannot promise that the expenditure will show a decline in any way comparable to manpower strength in the Services.
I want to re-emphasise, as a note of warning, that we cannot expect to see by to-morrow morning any spectacular reductions in our defence bill. The benefit to the economy of the new programme will inevitably take effect in later, rather than in earlier, years of our five-year plan. Initially there may be some increase in expenditure—due, for example, to the rates of compensation which have already been announced to Parliament for those whose careers have been prematurely ended. I would ask those who are clamouring now for vast increases in pay and a huge building programme of barracks, to bear that point in mind. The trouble is, as we have frequently seen, particularly from the conference agendas of both
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political Parties, that everybody is always cursing any Government for spending too much and, in the same breath, demanding expenditure on a large number of their own pet hobby-horses—I myself have frequently been guilty in that respect.
I say this to those constantly accusing us of weakening the Forces: that we cannot be strong everywhere and meet the universal demand for a greater economy in our defence programme. I say, with respect to those noble Lords who have been Members of another place, that we have heard our colleagues in that other place say so often that we must have a great reduction of Government expenditure "except in my constituency"; we are all prepared for the Government to cut to the bone—except our own bone. I want to sound this note of warning, in case there is over-optimism. We have high hopes, following the Washington Conference, of better arrangements being made to avoid duplication with our Allies in the field of research and development, and we hope that, in the long run, this will bring about considerable economy.
So much for the defence aspect of our economic position. I now turn to some of the points made in the debate. The noble Viscount, Lord Alexander of Hillsborough, asked for the figures of the particular Whitley Council we have been discussing to-day. The figures are: hospital authorities, 10 executive councils, 3—total 13; Ministry of Health, 4; Department of Health for Scotland, 1—total 5: grand total 18. The noble Lord, Lord Shepherd, talked about Singapore, and I was glad to hear him mention Singapore, because he will remember that it was on Singapore airport that he and I met for the first time. I will certainly give him the undertaking that he asks for, and we will make sure that he has all reasonable time to study this Bill.
My noble friend Lord Hawke made an extremely interesting speech. If I understood him aright, he implied that investment had flagged in recent years, and that the one way to obtain the confidence of our international creditors is to sustain that high-level investment. But I would remind my noble friend that investment has been increasing steadily in this country in recent years, both absolutely and as a proportion of the total national income. It is now running at about 18 per cent. of our

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national income, as against a figure of 13 per cent. before the war. I can assure my noble friend that it is the aim of the Government, so far as the public sector element is concerned, to keep investment at the current record levels.
LORD PETHICK-LAWRENCE: Do I understand that the 18 per cent. covers private and public investment?
LORD MANCROFT: So I understand. The noble Lord, Lord Latham, implied that the nationalised industries in general, and British Railways in particular, would suffer a reduction in their investment programmes, and also that education would be hard hit. Those were the points he particularly stressed. I should like to assure the noble Lord that, whilst the Government intend to hold the total of public sector investment in each of the next two years at this year's level, the programmes of the nationalised industries will, within the total, show a substantial increase in each of these years. In particular, a significant increase in expenditure by the British Transport Commission is being allowed for.
LORD LATHAM: Less than would have been the case but for this restriction.
LORD MANCROFT: That is a different matter. I can see the noble Lord's point. My right honourable friend the Chancellor of the Exchequer has explained—the noble Lord, Lord Latham, has probably noticed this—that although economies are being sought in respect of education, the main school building programme and the programme for technical education will both continue unchanged.
The noble Lord, Lord Pethick-Lawrence, asked me a very technical question, one which I understand he has asked before and to which he has never received an answer to his satisfaction. He wanted to know what is the cost to the Exchequer in a full year of having a 7 per cent. bank rate as compared with the immediate post-war level of 2 per cent., in terms of National Debt charges; additional cost of advances to the nationalised industries and overseas sterling balances. I have consulted the pundits about this, and they tell me that there is no direct connection between movements in the bank rate and in any of the costs which the noble Lord mentioned, while estimates
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of the various indirect effects depend on unwarranted assumptions about the duration of the rate and the future course of rates generally. For instance, the cost to the Exchequer of servicing the National Debt is immediately affected through a change in the interest on the floating debt—that is, on market Treasury Bills. But if I have understood this correctly—and I am not for a moment prepared to guarantee that—the market Bill rate can and does diverge from the bank rate. Furthermore, the debt charge would also be affected by other consequential changes, such as the cost of funding maturing stocks and any changes that might become necessary in the interest paid on National Savings securities. I have had that explained to me twice, and at one moment I thought I understood it. I still think I do. I should be grateful if the noble Lord would consider it carefully, and tell me in due course whether he thinks that is right or not.
LORD PETHICK-LAWRENCE: I think the people who put that answer up to the noble Lord are really hiding the facts. It may be true that you cannot make that estimate to the last halfpenny, but broadly speaking the amount of money paid on Treasury Bills is governed by the bank rate, and you have only to look at the figures year by year to discover the immense increase in the cost of servicing the National Debt. If the Treasury people who know the facts do not care to disclose them, I am bound to say that we on this side of the House think there is something rather shoddy about it. I am not including the Minister, but I think people are anxious to hide the facts which I shall continue to claim run into several hundreds of millions a year.
LORD HAWKE: May I answer the noble Lord's interruption? It seems to me extremely difficult to discover which of the holders of the floating debt are subject to tax and which are not. For that reason, I should have thought that it was impossible for an official to make an estimate of the net cost.
LORD PETHICK-LAWRENCE: should have thought the figures were fairly clear. It may be true that there can be some doubt as to the proportion they get back in the form of higher income tax, but I should have thought

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that some approximate estimate could have been given. I am sorry that once again the figures for which I have asked seem to be unobtainable.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, may I say that I thought there would be no real challenge to the statement made from the Labour Benches in another place, that the cost of this last rise in the bank rate was over £100 million. I have seen no real answer to that, and I should have thought it was a still larger figure. We try to understand things here. Only the week before last, the rate tendered for Treasury Bills was £6 12s. and either a halfpenny or three-farthings. If you work it out, that £280 million was borrowed over a period of three months—possibly extended afterwards. There is no interference with the cost of those particular drawings, and it seems to me that the cost must be very heavy indeed.
LORD MANCROFT: My Lords, perhaps I might join in again now. This is a very technical matter. I spent a long time trying to understand it, and I have obviously explained it wrongly, inaccurately or unhelpfully, and I apologise. I will look into the matter again in the light of what has been said by the noble Lord, Lord Pethick-Lawrence, the noble Viscount, Lord Alexander of Hillsborough, and also my noble friend Lord Hawke. But I will not allow the noble Lord to say that the Treasury officials are behaving in a shoddy manner. Your Lordships may blame me for describing it badly or inaccurately. You must not allow me to stand here and shield behind anything the Treasury officials have done. I take the sole responsibility. If there is any shoddiness it is mine, and I can assure the noble Lord that there is nothing of the sort, There may be a genuine difference of opinion.
LORD PETHICK-LAWRENCE: I withdraw what I said, but I do think that even if there cannot be an exact estimate there could be an approximate one. That is what I have been unable to obtain from the Government, on the advice of their advisers.
LORD MANCROFT: I am obliged to the noble Lord for withdrawing—it is typical of him. I will look into the matter again and see whether I can give him an
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answer which will satisfy him better in the future.
The last point is one to which every one of your Lordships has referred. War has been declared, but we are all agreed that it is war upon inflation that has been declared, and not war by any one section of the community against any other section. I was glad to hear the noble Viscount, Lord Alexander of Hillsborough, come a long way to meet everybody on the desire to have no further "Yah boo—you're another!" which will do nobody any good at all. If there has been provocation on the one side, there may have been provocation on the other. The matter is too serious for hot blood or quick words, when cool heads are what is required to get on with this war against inflation.
I warmly support the views put forward by the noble Lord, Lord Brocket, and others who expressed themselves strongly on this matter. As the noble Lord, Lord Salter, told us in a particularly interesting speech, if we do not win the war, if we carry on abusing each other within our own ranks, that way lies suicide. I do not know how many of your Lordships had the honour of serving during the war under the command of the noble and gallant Viscount, Lord Montgomery of Alamein. One of the things which I chink contributed measurably to his success as a soldier in the field was the way in which he always insisted that everybody, down to the last lance-corporal, under his command should know whom he was fighting, what he was fighting for and what was in his General's mind. I believe that something of that sort, carried into our industrial life and industrial relations a bit further, would do an immense amount of good.
My noble friend Lord Brocket said that people were confused, and that they could not understand. There is a lot of mystique and ju-ju about economic talk, and as the noble Viscount, Lord Alexander of Hillsborough, rightly said, economists all too frequently forget the human element. Our real difficulty is that there are not enough "Lord Brands" to go round. If we had a few more like him, who can explain things so clearly and simply, there would not be so much cynicism and so much misunderstanding. Frankly, people just do not understand the problem. They have been told it so

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often that they become cynical about it. They can understand a rise in the cost of living, particularly those who cannot offset it by any rise in their wages. But I agree cordially with my noble friend Lord Balfour of Inchrye, in his most interesting speech, concerning the need for closer relationship between employer and employee if we are to get this sort of understanding and co-operation. It is very noticeable that in the firms where you have good relations, where employers take their employees into their confidence, tell them what they are doing and why, and explain the difficulties, you then have far better productivity.
We have reached the stage when dividends and wage rises and profits have, for some people, become rude words. The noble Lord, Lord Hawke, and the noble Lord, Lord Brocket, both spoke eloquently upon this and explained why it was wrong. But an incredible amount of political nonsense is talked about these things. There are misapprehensions and prejudices concerning profits and dividends which we can no longer afford. I agree with the noble Lord, Lord Strabolgi, in one thing (though I agreed with very little of what he said), that vulgar, ostentatious display of wealth must have a provocative effect on people in humble walks of life, earning humble wages. That has been so for thousands of years; it always will be so. There will always be vulgarians who show off their wealth, and I regret it as much as he does.
LORD STRABOLGI: My Lords, it is not so in the Soviet Union.
LORD MANCROFT: My Lords, there are many things in the Soviet Union that are not the same as here. I suppose in the Soviet Union, if they do have Bentleys which they can have "on the firm," they are probably compelled to write the name of the firm on the side of the Bentley. I am not certain that it would not be a good idea here.
I agree that there are irritants which cause conflict and trouble and which we must try to reduce to the minimum. There are irritants on both sides. I must say that I had some sympathy with one of the employees in a firm concerned in a
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take-over bid. He could not understand the financial aspects, he could not read the balance sheet which was highly complex, and he did not like working for a firm that treated him like a sack of potatoes in an auction market. I have a great deal of sympathy with him. I feel that the more workers can be told clearly what is happening and why, the more chance there is of beating the problem of inflation, because people are more willing to work for something they understand. The number of firms who now attempt to increase productivity by breaking down their balance sheets into diagrams, showing how much goes in wages, taxation and profits and so on, is rapidly increasing.
I speak with some experience of this matter because I was for some five years the chairman of a joint advisory council, that of the carpet industry, one of our finer craft industries. I became very much impressed with the benefits of joint consultation and frank exchange of views between workers and employers from every point of view. I realise how difficult it is and how much room there is for more education. That is a point which several of your Lordships made this afternoon: the need for the Government to tell the people more of what is going on and what the problem is. The Government have done, I think, the best they can and used every medium available to them to explain the dangers of inflation, the battle we are fighting and the risks we run if we do not win the battle. The trouble is that too many people like inflation, although, as the noble Lord, Lord Brand, explained, they will not like it very much longer. The reasons we now know; they have been broacast up hill and down dale.
The noble Viscount, Lord Alexander of Hillsborough, asked me to give a definition of the Government's attitude towards inflation. That I cannot dare to do, whether it be wage inflation, price inflation, or cost. Whatever it may be, we have come this afternoon in this debate to one conclusion: whether what we are doing is right or wrong, too much or too little, we are paying ourselves too much for doing it. I hope the debate has left no doubt in anybody's mind as to the gravity and complexity of the problem that faces us. I hope it has left no doubt

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in anybody's mind that it cannot be solved whilst two branches of the community are fighting each other. It cannot be solved by petty squabbling or by mere catchphrases or shibboleths but by sitting down quietly and deciding how we can avoid committing suicide. I hope that this debate has also shown Her Majesty's Government's determination to do everything possible in their power to win the battle.
THE EARL OF LUCAN: My Lords, on behalf of my noble friend Lord Ogmore I beg to move the debate be now adjourned.
Moved, that the debate be now adjourned.—(The Earl of Lucan.)
On Question, Motion agreed to, and debate adjourned accordingly.
House adjourned at a quarter before eight o'clock.