Orders of the Day — Development (Loan Guarantees and Grants) Bill.

– in the House of Commons on 23rd July 1929.

Alert me about debates like this

Order for Third Reading read.

Motion made, and Question proposed, "That the Bill be now read the Third time."

Photo of Sir Basil Peto Sir Basil Peto , Barnstaple

One of the objects of this Measure is to set up machinery for dealing with the unemployment problem. We have been told that the grants and guarantees under this Bill are not in any way final, but that the Bill is intended to carry us over until the House re-assembles. I think it is appropriate this afternoon to consider the policy for which this Bill provides the machinery. The principal part of the policy of the late Government in dealing with unemployment was to relieve productive industries of a part of their burdens. In this Bill the effect upon productive industries is not direct, although hon. Members will realise that to supply assistance to public utility undertakings which provide transport, water, gas, electricity and power is undoubtedly calculated to be of indirect assistance to productive industry. But there is no doubt that whatever may be done under this Bill must be of very small account. The right hon. Gentleman the Member for Epping (Mr. Churchill) pointed out that the effect of the great scheme of the late Government which comes into operation on 1st October, will be to afford direct relief to productive industry to the extent of £30,000,000 a year, which means, capitalised, a grant to industry direct of something worth £600,000,000. I think it is appreciated in all quarters of the House that the only real solution of the unemployment problem lies in taking such steps as may be open to us to increase the prosperity of productive industry. Any other measures must be either palliative or else a method of indirect assistance. I am encouraged to think that this Bill, when it is passed, will do more than that. My reason for holding that view is that at the very outset of our Debates on 3rd July the Lord Privy Seal let the House into his confidence and showed the House the working of his mind. At the very commencement of his speech dealing with the Government's policy for the cure or mitigation of unemployment, he asked himself this question: What is there that we import to-day that we can make ourselves? "—[OFFICIAL REPORT, 3rd July, 1929; col. 93, Vol. 229.] That is the most momentous admission of the working of the right hon. Gentleman's mind, and it was very remarkable that the right hon. Gentleman the Leader of the Liberal party followed that up by saying: 'Substitute steel sleepers for wooden ones'; where you are going to buy them and whether any steps are to be taken to ensure that they are manufactured here?"—[OFFICIAL REPORT, 3rd July, 1929; col. 148, Vol. 229.] 4.0 p.m.

Those are not statements which conform to the existing interpretation of Free Trade. We have always been told that imports—steel sleepers or anything else—from foreign countries, are very good for employment in this country, for they encourage manufacturers here to produce something else in exchange for them. Yet we find, I am very pleased to notice, at the very outset of Government policy, on this positive side of it, this good, sound Protectionist sentiment: "What is there that we import to-day that we can make ourselves?" But there is another branch of the Government's policy, and I should take a more hopeful view of the operation and effect of this Bill if it were not for that other branch. We have been told in the last few days that it is the intention of the Government to introduce legislation to speed up the time when the school-leaving age can be raised to 15, in spite of the reports of three expert bodies who have considered this question, and that it is now intended by legislation to throw a great fresh burden upon local authorities and upon industry, either by increased rates or by increased direct taxation, or by both. At the other end of the scale we are told that it is the Government's policy to take steps—they are now having an inquiry into the subject, one of the many inquiries that are going on—to get people out of industry at an earlier age. You cannot take people out of industry at the age of 60, or any other age, without providing them with the means of subsistence, and there, again, you have a part of the Government's programme which means an enormous addition to the annual Budget of this country, an immense addition to the burden that is placed upon industry.

Therefore, we find that on one side the Government are taking steps, as they do under this Bill, in the same direction as the policy of the late Government, and in the other part of their policy they intend to initiate legislation which will re-impose burdens which we have been taking off industry, and will, in fact, neutralise this branch of their own work. Coupled with the Government's policy to remove all the Safeguarding Duties and the duties on which we can give Imperial Preference, it seems to me that the part of the Lord Privy Seal is indeed the part of Sisyphus. As I see it, he is by this Bill busily trying to roll painfully up the hill a great mass of unemployment, while the Chancellor of the Exchequer, behind his back, all the time is acting like the immutable law of gravity in order to undo that work. While the Lord Privy Seal is busy trying to fill the bath with his little pint pot, the Chancellor of the Exchequer is pulling out the plug of the waste pipe, by repealing the Safeguarding Duties, doing away with Imperial Preference, and, indeed, undoing his work by a part of his programme which involves placing burdens upon industry. As far as I am concerned, so long as the Government proposals, and particularly this one of the Lord Privy Seal, proceed on the lines of this Bill, and even indirectly assist the productive industries of this country, he will have my whole-hearted support, but when he proceeds with other Measures that have been outlined, not only in the Speech from the Throne, but in the election programme of the party who are now on the opposite benches, and imagines that he is going to cure, or help to cure, this problem of unemployment by putting a fresh burden of rates and taxes upon the industry of the country, then I shall oppose him at every stage.

It will be in order, I think, to point out, in passing, that this Bill and the Colonial Development Bill, where finance is to be provided to carry out transport work, such as the Zambesi Bridge, and other work, will be neutralised by the proposals of the Chancellor of the Exchequer. What is the use of developing transport if we take no stops to see that the goods transported will be raw material for our industries at home, and manufacturing produce which is finding employment in this country? I think these general considerations ought to be brought to the attention of the House. I do not want to strike any gloomy note as to the success of this part of the Government's programme. I not only wish it every success, but I believe it may be of very great use. Therefore, I am satisfied that we of the Opposition are pursuing a wise course in lending the assistance we have to the passage of this Bill, and not giving it any serious opposition, or, still more, dividing against it; but I wish to contrast the operations of this Bill with the other, as I think, injurious part of the Government programme as far as the unemployment problem is concerned, in case we should be accused of inconsistency in having started by supporting the Government and assisting them in dealing with unemployment, if when we meet again in the Autumn and later, we find it necessary to point out that they are themselves, by the proposals they will then bring before the House, defeating the very purpose which is enshrined in this Bill.

Mr. PALMER:

I have ken somewhat surprised at the urge which has come from the Opposition in support of the Government in making good much work which should have been done to cure this outstanding problem of unemployment. This must be said in support of the Third Reading of this Bill, that it is part of the price which we have to pay. We have got to make provision under this Bill to enable the Government to get utility works going to the full extent, and at the earliest possible moment. We have got to face the tact that certain undertakings have been made, and that certain expectations, as to helping the ranks of the unemployed, are looked for fulfilment from this House and this Government. The question was asked yesterday by the ex-Chancellor of the Exchequer: Can you, by borrowing money and spending it on public works, diminish the problem of unemployment? The question again arises out of the old philosophy that production must always be for profit instead of for use. When something like £19,000,000 was taken out of the Road Fund, the amount of employment that that represented positively accentuated the unemployment problem, and it is the work of the Lord Privy Seal, and those of his colleagues associated more intimately with him in this great problem, to see that money which has been diverted into wrong channels is placed at once in the right channel in order that employment may be found. When I use the word "employment," I am not thinking of digging holes and filling them up again for the sake of finding work. When I say "employment" I take the implication to be that as soon as you put the next thousand men into employment, those men have their spending power, which means that clothes, boots and other things, of which people have gone short, will be provided, and so the wheel will go round, and consequently trade will improve and things become better.

We have in this Parliament to hasten the time when unemployment shall be reduced, and we have got to give unstintingly all that is required. I repeat what I said the other day on this subject. We have got to face the fact that unemployment is a costly business, and we have to make it even more costly, if need be, in order to bring it home to the consciousness of the legislature that they have got to pay, and pay dearly, for the ghastly mistakes of bad administration in the past. I have never shared the view, and never shall share the view, that unemployment on the present scale is necessary. The old philosophy seems to be that you must have two men for one job in order to keep the rate of wages down. Recently there has been a wage war, and, while profits have been showing a tendency to go up, the rate of wages has been falling. A 2½ per cent. cut has been suggested in the case of railway workers, and what does that mean? There has also been proposed a 12½ per cent. cut in wages in the cotton trade—

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

The hon. Member seems to be travelling rather wide of this Bill. On the Third Reading, we must confine ourselves to what is in the Bill.

Mr. PALMER:

I will conform to your Ruling, Mr. Speaker, and come back to the Bill. This Measure is one to authorise the Treasury to guarantee certain loans. Money has to be found. and consequentially it has to be found by the Government. That is the first and obvious step to take in order to find work for the unemployed, and to give the workers the essential spending power. Unless we get an increased spending power in the hands of the people we cannot hope to secure that trade prosperity' about which we hear so much, and which was referred to by the last speaker. We require not only the provisions of this particular Bill, but we need further Bills in order to carry out the unswerving policy of this Government. We must continue making such provisions as those which are proposed in this Bill in order to mitigate the great problem of unemployment.

Photo of Mr Samuel Hammersley Mr Samuel Hammersley , Stockport

The object of this Bill is to enable the Lord Privy Seal to deal as quickly as possible with the problem of finding work for the unemployed. The intention is to assist national equipment by providing a certain amount of national facilities for public works, and it is proposed to provide a subsidy for the sheltered trades. I want to inquire whether the giving of assistance to sheltered trades will really help to solve the unemployment problem. The burden of unemployment in this country is well known to exist largely in the basic export trades, and there is nothing in this Bill which will make it easier to export another yard of cotton cloth or an extra ton of coal or steel. We are all aware that something like 700,000 more men could find employment at the present moment if we were exporting the same volume of goods as we exported before the War. One wonders why it is that these particular basic trades, which provide such a large volume of employment in this country, are specifically excluded from the operation of this Bill. We have been told that rationalisation is taking place in a considerable measure in our basic industries, and that it would be a mistake to interfere in the way suggested at the present time, because Government interference might prevent the Successful working of this process, produce inefficiency, and interfere with the proper reorganisation of our basic trades which many of us know to be so necessary. One of the essential conditions of the giving of Government relief under this Bill is the acceleration of programmes put forward on behalf of the people who require money it seems quite reasonable to suppose that it might be possible for the Government, if not by this Bill, to bring forward at some future time a Measure whereby the basic industries could be dealt with on the same terms in order to secure acceleration.

One other matter which has been mentioned for our consideration is the so-called Treasury view. I have no knowledge of the Treasury view, but I have had some experience of ordinary economics. The view is that the volume of credit in this country under existing conditions is practically fixed. It seems to me that when we come to consider that state of affairs we find that over and above the amount of the fiduciary issue you cannot increase the amount of guarantee or credit in this country except by backing the increased amount of currency issued pound for pound by gold. Therefore, if you wish to expand the volume of credit, you must have the ability to attract gold, and you can only do that by selling goods. The same cause—our inability to sell goods abroad—is responsible for the main volume of unemployment, and makes us unable to expand our volume of credit. This particular Bill makes no reference to those main essential criteria which must be attended to if the unemployment situation is going to be dealt with in a successful or a drastic fashion. I believe that the intentions of the Government are good, but, on the other hand, it is quite clear to any student of unemployment that the real question at issue has been burked. It may be that at some later stage the Government will come forward with some more drastic proposals, and, if that is so, there are Members sitting on this side of the House ready to welcome any really sound method of dealing with this problem. I do not think hon. Members on this side of the House will offer any opposition to this Measure.

Photo of Mr Daniel Hopkin Mr Daniel Hopkin , Carmarthen

I ask the indulgence of the House, because this is my maiden speech. I want to pay a tribute to the work which has been done by the Lord Privy Seal during the month he has been in office. It must have been a month of strenuous effort on the part of the right hon. Gentleman to produce the schemes which he has already announced, and which we on this side believe are only the foreshadowings of much greater schemes which will be brought forward later on. I wish to offer one or two suggestions to the Lord Privy Seal. My first is that work must be co-ordinated. I also suggest that Wales should be treated as a separate entity, and that we should set up a national development board for Wales. Wales has its own special problems, advantages and disadvantages, and, instead of dealing as the right hon. Gentleman has to do now with twelve separate bodies in Wales, I am sure it would be an immense advantage to him to have to deal with one body which would be responsible practically for the whole of the unemployment problem in Wales. There are certain problems in Wales which will form the test as to whether this Government or any other Government will be successful. Take, for example, the problem of the Rhondda Valley. My submission is that it is impossible to solve the problem of the Rhondda Valley from Whitehall, and it must be dealt with by men on the spot who know the whole district and the psychology of the people there. They must be men who are intimately associated with these problems which cannot be dealt with from London at all.

Take the problem of the Pembroke Docks. It is unfair to throw the onus of finding a solution of that problem on the one Member of this House who represents that constituency. It is a national problem and can only be solved on national lines. I ask the Lord Privy Seal to harness Welsh sentiment for the solution of these purely Welsh problems. Another example is afforded by the problem of afforestation. In Carmarthenshire we have 6,600 acres of land ready for planting, and since the War over a period of 11 years we have planted only about 720 acres. If we bad a central body they could make it part of their duty to cultivate this land which now lies idle, and work could be found for some 400 or 500 of those who are now unemployed in the Rhondda Valley.

With regard to road development, it is well known that in Wales the trunk roads run from east to west, and there are hardly any roads running from north to south. Something should be done in order to make better road connections in Wales. We have had a good example of what can be done by this kind of development by the successful harnessing of water power under the Shannon scheme. It has changed the whole face of Ireland in that particular area. Let the Lord Privy Seal stand back a bit from the picture, and see in South Wales a huge storehouse of power, a storehouse that contains 28,000,000,000 tons of coal. My right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) asked what inducement could be given, say, to Courtaulds or to tobacco companies to go into the Rhondda or Merthyr Valley. The inducement is that it would be perfectly simple to give any firm that wished to go into these valleys power for nothing.

The great experiments which are being carried on now in low temperature carbonisation show that the gas which can be produced by these methods could be given away with advantage. These firms could be given power free, if only, as I very humbly suggest to the Lord Privy Seal, he took a big view of South Wales. What has been done in Lens can be done in South Wales. I was in Lens during the War, and I saw there the pits which had been completely destroyed by the Germans. To-day those pits are creating power which supplies Paris with its light. In Wales we have a tremendous storehouse of power which I say could be sent to practically all parts of the country: I mean that industrial concerns could be given power at a very low rate. In conclusion, I would' ask the Lord Privy Seal to earmark, out of this £25,000,000, a sum of £1,000,000 for pensions for aged miners. There are about 68,000 miners over the age of 60. We must, in order to be fair to other workers, show that the mining industry itself can bear these pensions. I submit that the amount of money required, namely, about £4,500,000, could be obtained by a penny on the Welfare Fund, by 5s. in the £ out of royalties, and the £1,000,000 which I suggest should be earmarked out of the £25,000,000.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

I am loth to interrupt a maiden speech, but the hon. Member must understand that on the Third Reading we can only discuss what is in the Bill itself. The matters which the hon. Member is now raising are entirely other than what is proposed in the Bill, and, although they might have been raised at a previous stage of the Bill, the discussion on the Third Reading must be con-fined entirely to what is in the Bill itself.

Photo of Mr Daniel Hopkin Mr Daniel Hopkin , Carmarthen

I will conclude by assuring the Lord Privy Seal that there are men and women in South Wales who are looking to him for a broad scheme that will utilise, not only the power that exists in the coal-mining valleys of South Wales, but the many hundreds of acres of land in Carmarthenshire which have not been used at all.

Commander WILLIAMS:

It falls to my very pleasant lot to congratulate the hon. Member for Carmarthen (Mr. Hopkin) on the very charming maiden speech that he has made this afternoon. Quite clearly and obviously he speaks for Wales, and I derive additional pleasure in congratulating him from the fact that I bear a name which has been so largely copied by Welsh people. The hon. Member has drawn the attention of the House to two points which are not, possibly, of very considerable importance, but which still are points of real importance in connection with this Bill. I do not think that in any of our discussions the question has been answered, or, for that matter, has even been put, as to whether, under any of the three parts of this Bill by which money is granted, it will be possible for any of that money to go to the help of forestry. I feel sure that in replying the Chancellor of the Duchy of Lancaster will be able to inform the House whether it is intended, among other things, to help forward schemes of forestry under any of these three heads.

The second point which the hon. Member raised is that one of the most important things for the development of industry at the present time is that we should have a very considerable development of power supplies in this country. That development, as the hon. Member will know, has been going on in regard to electricity during the last 4½ years, and I believe that at the present time in this country schemes are coming forward, roughly speaking, as fast as materials can be obtained for them. The real need at the present moment is to accelerate the supplies of such materials, and that, I think, is met under this Bill, so that there may be an additional output of the machinery and materials necessary for the growing electrification of this country. As we are dealing with the subject of electricity, I should like to ask the Chancellor of the Duchy if he can give some answer to this question: There are two distinct forms of electrical thought and development in this country, the one concerned with the generation of electricity from coal, and the other with the generation of electricity by water power. It would be a great help if, during the Debate on this Bill, we could be told whether the Bill will be used rather for the development of coal, or for the development of water power, or for both. I would ask the hon. Baronet, in his reply, to give some guidance on the point, so that people who may be applying to him under these various schemes will know which of the schemes the Government think will be most useful for absorbing unemployed labour at the present time.

Passing to the financial questions involved by the Bill, I have noticed that during the whole of these discussions there has been a curious, and, perhaps, wise reluctance on the part of the Treasury to be present very much in the House, but we have arrived, or, rather, we arrived by the end of last evening, at a very curious position. We find that under this Bill there are three distinct forms of loans, the total of which, I understand, will possibly amount to £75,000,000. That is a very large sum, whether it be in the form of guaranteed interest or of guaranteed capital, but it is the fact that, with the passing of this Bill, we definitely commit this House to a possible expenditure of £75,000,000. I am not at all sure as to how long a period that will cover; it has not yet, I believe, been definitely decided; but, according to one of the Clauses at the end of the Bill—and I think it is well worth while to bring this to the attention of some hon. Gentlemen opposite, who apparently believe that already under the Bill work is being produced—we do not begin spending, or, indeed, guaranteeing these schemes under Clause 6 of the Bill until the end of August. That, of course, is, naturally, put in to give the Treasury time to consider these matters, but the point to which I desire to draw the attention of the House is that, in regard to these commitments which are being entered into, although every one of us sympathises with and would do what he can to help the Government to relieve unemployment, there is a point of view in this country at the present time, though it is not very often expressed, that, by diverting money from the natural course of trade, as the Government are doing here, you are not ultimately giving more employment in this country. May I illustrate it in this way? You have under this Bill some £75,000,000, possibly. You have under the Colonial Development Bill a further sum. Yesterday we passed a Housing Bill, which will take more money. The whole thing adds up, and it means that, during the three weeks for which we have now been sitting, the House as a whole has committed itself to an expenditure not far short of £100,000,000.

The effect of this expenditure on the money market must be, in the first place, a certain shortage of money in different directions, and, secondly, it must mean that if the Government, as a Government, enter into the money market for the purpose of guaranteeing these loans, or for any other purpose, as they will under this Bill, the standard of interest which the Government has to pay will tend to get higher. That can be seen on the Stock Exchange practically every day at the present time, and I believe that the gradual realisation of the burdens which the nation is shouldering is making it, or is liable to make it, more difficult for the Government when, in the next year or two, they have to arrange for the repayment of various loans. Their difficulties then will be great. I make that point not with any desire to handicap the Government in this respect, but because, in my experience of this House, I have seen Government after Government come forward with various schemes such as we have in this Bill—Governments representing practically every party and under different Prime Ministers, These schemes, whether for helping to develop harbours, railways, mines, or whatever it may be, have all been described as excellent and likely to give a certain amount of work, but in the end I do not believe they have really helped the unemployment question at all, but rather that they have tended to put off the day of our doing the two main things which must be done if unemployment is to be relieved—the one to help to put our heavy industries on a sound basis in the future, and the other to recover our foreign markets throughout the world.

May I point out another difficulty which has always occurred whenever Governments have said that they would help this or that form of industry? Sometimes we call it a subsidy, sometimes we call it another name, such as a grant-in-aid; but the ultimate effect is always the same. It tends to make people connected with industry, and local authorities also, for that matter, always think that perhaps if they go to the Government they can get money a little cheaper and a little easier, and that that is the best way of doing it. It tends to make the trades and industries of this country too reliant on the Government, and not reliant enough on their own skill and enterprise in going out into the markets of the world. After all, a subsidy is a subsidy, whether it be paid as it is in the case of the sugar industry, or whether it be paid by guaranteeing a loan. That was put much more clearly than I can put it by the right hon. Gentleman the Member for St. Ives (Mr. Runciman) earlier in the year. It is a subsidy all the time and every time.

I say frankly that I believe it would be very much better for trade and industry if the House could agree that, instead of the Government always stepping in and guaranteeing this or that trade, the real effort of the Government should be in the direction of removing barriers with foreign nations, encouraging the collection of knowledge as to the different markets of the world, and the making of it available to those engaged in industry, and giving direct encouragement to capital in every shape and form, not by means of a partial subsidy or partial lift-up by Bills of this kind, but rather by encouraging a reduction in many directions of the general expenditure of the nation as a whole. I know that in days such as these, just after an election, it is not always a very popular thing to advocate economy. It is not always the person who will advocate what he or she may think is the most popular thing at the minute that is doing the most valuable work, but after a series of years here, having seen other Governments fail, although I hope the efforts we are making in this Bill, which is going through practically unopposed, may do something to help trade and industry, yet I am convinced in my own mind that really the best method of helping to re-establish trade and industry on a sound basis is that those engaged in the industry should realise that they have to work out their own salvation whether they are employers or employed people.

Photo of Colonel Albert Ward Colonel Albert Ward , Kingston upon Hull North West

Everyone in the House, and probably in the country, is agreed on the immense importance of electrical development, but I cannot help expressing a wish, in view of the electrical development that is going on at present, that the Government will not be too hasty and will not embark on any large schemes until they have seen how the schemes that are at present being developed will turn out. In the course of the Debate suggestions have been made as to the development of electrical power on two lines. One is by means of the Severn Barrage and the other is by means of the development of electricity on a gigantic scale in the Welsh coalfield and transmitted, if not to the entire country, at any rate to the whole of the South of England. On the other side of the water we have an opportunity of judging the result of two schemes that are at present being developed on those lines. In Ireland we have the gigantic scheme of the Shannon Barrage, which is now approaching completion, by which means they hope to supply cheap electricity to the entire Irish Free State. In France we have a corresponding scheme of putting down—to some extent it has already been done—gigantic power stations in the Lens coalfield to provide electricity, both for lighting and power, to the whole of Northern France. With those two schemes in full operation we shall have the opportunity of judging which is likely to be the more successful in this country, development by water power by means of the Severn Barrage, or electrical development by means of the Welsh coalfield. I suggest that the Government should wait a year or two years to see which is likely to be more successful.

Before we pass from the Third Reading of this Measure, I do not think it would be unfair to ask the Chancellor of the Duchy whether he can give us any estimate of the effect this expenditure is likely to have on unemployment, I do not mean this year or next year, but over the course of some five or six years in the immediate future. It seems to me that the principal object of these schemes is to expedite undertakings which normally would not be undertaken for two or three, or perhaps four or five years—to undertake work now which, under normal circumstances, the firms or undertakings could not commence for four or five years. That is to some extent mortgaging employment for the future. We are doing work now which normally would be done four years hence and, it seems to me, unless that work is of such a productive character that is will in itself produce further employment, we stand a chance of providing work now only to find that in three or four years' time it is still more difficult to provide. I have listened perhaps to as many Debates on unemployment as nearly any Member present, and I can remember 10 years ago, when unemployment first burst upon us, it was looked upon as a passing phase. It was expected that all we had to do was to provide temporary relief work and the evil itself would pass away. Unfortunately that has proved to foe wrong. We are now wiser and I hope we shall not fall into the error of imagining that in four years' time everyone in the country will be in full work. It is therefore essential that all work that is undertaken under these schemes shall be of such a productive character that, when it is completed, it will of itself produce further employment, and that not only shall it increase the wealth of the country but actually increase the potentialities of employment for the workers, otherwise we run a great risk of mortgaging the future for the sake of the present.

I should also like to express a wish that no part of this money should be employed in endeavouring to resuscitate what are to all intents and purposes moribund industries. An instance was given in an earlier Debate of a port on the East Coast which formerly was the head port of a fleet of trawlers. The fleet has now gone to a harbour which has more natural advantages and is better suited for that undertaking. I sincerely hope no attempt will be made, as was suggested, to bring it back to the port from which it formerly worked, because to do that will not increase the net total of employment at all. It will simply be robbing Peter to pay Paul. You will be depriving one port of work simply for the sake of giving it to another, which is less fitted as a headquarters and where the work will be done less economically than where it is being done now.

With regard to the finance of the scheme, one has heard a good many views expressed of what has come to be called the Treasury view. I do not entirely hold that view. Although one naturally rather concludes, that what applies to an individual applies to some extent also to the State and that if money is spent in one way it cannot be spent in another way as well, I do not think that applies quite as rigidly with regard to a Government as it does to an individual and I think it is possible to make a wise use of credit provided, of course, it does not go as far as inflation. A great deal can be done in the way of providing employment without starving existing industries or normal employment of their necessary finance. But all this goes back to the absolute necessity of choosing schemes which, although they may not be immediately productive, shall within two or three years, if not show an actual return upon what has been expended, at any rate produce further employment, otherwise the money that will be expended under this Bill will be expended in vain and in the immediate future we shall find that the state of unemployment is no better and may easily be worse than it is row.

Photo of Mr Thomas Lewis Mr Thomas Lewis , Southampton

I should like to put a point which I am sure will receive favourable consideration from the Chancellor of the Duchy. I am sure the Lord Privy Seal must be very pleased with the way the Debate has been conducted. On the whole, the schemes outlined have been very favourably received and, except perhaps for the natural pin pricking which one expects from an Opposition, there is very little to cavil about. I am sure my right hon. Friend is as anxious as I am that, in any steps that are taken to subsidise schemes, nothing shall be done which would perhaps cause unemployment in other industries. We do not want anything in the nature of make believe. We want to feel sure that practically all the money to be spent will mean additional employment. I represent a seaport town. One ought to take, not a narrow, parochial view, but a broad national view, and I hope I do. Nevertheless, one has to face facts, and when one's attention has been called to the possibility of the coastwise shipping industry being materially affected unless there are some safeguards in connection with the further grants to the railways, one is bound to take notice and call attention to it, and ask the Lord Privy Seal to give it his attention. The industry is only a small one, perhaps, but an important one, because it employs a large number of people and serves foreign-going ships as well.

5.0 p.m.

In reply to questions, the Minister of Transport said the De-rating Bill did not adversely affect coastwise shipping traffic. My information goes to show that it will have a distinctly adverse effect upon the shipping industry by virtue of the fact that, if the railway companies expend the money that has been voted to them in a proper way, it will reduce freights and compete adversely with the coastwise shipping traffic. He further stated that a certain proportion of the monies voted would go to harbours and docks, and they would be expected, although I know of no mandatory authority, to give some of these monies over to the coastwise shipping traffic in order to enable it to meet competition. I know something of harbour boards, and I know something of docks under the control of our shipping companies. I think that the coastwise shipping would have all their work cut out to extract very much from the Harbour Board, and they would certainly have greater difficulty in extracting much from the docks owned by the railway companies of this country. It is now urged in connection with this Bill that still further facilities should be granted to the railway companies, and I understand that these constitute one of the big features of the proposals of the Lord Privy Seal. He seems particularly to be looking after the railway companies of this country. I am assured by those engaged in coastwise shipping traffic that, if greater facilities are given to the railway companies in connection with reliefs in their freight charges it will have a very adverse effect upon coastwise traffic. I hold no brief for the shipping interests of this country. As a matter of fact, I have had occasion for the greater part of my life to fight the shipping interests of the country on behalf of the men employed. Notwithstanding that if it is intended to give relief to various trades in this country, that relief must be given equitably so that no particular trade shall suffer an injustice. As the Lord Privy Seal and the Chancellor of the Duchy represent the party to which I belong, I am sure they are going to give, and probably have given, the utmost consideration to the points I have raised, but I repeat that, coming from a shipping port, I naturally must put my particular point of view. I hope, therefore, that the Chancellor of the Duchy will give this matter his utmost consideration, so that no hardship shall be inflicted upon a very important part of the community.

Photo of Mr John Remer Mr John Remer , Macclesfield

We have debated this Bill for several days, and the more I look at the Bill the more I find myself in opposition to it. In my opinion, it is a thoroughly bad Bill. So far from finding any employment for the working people of this country, it will, in itself, actually create unemployment and will delay employment coming to the people of this country. For a few minutes I am going to outline the ways in which the Bill will actually create unemployment. The Bill, in effect, tells the people that in considering schemes of one kind or another the Government are going to give guaranteed loans. What is going to be the effect upon these public utility undertakings? Obviously, these undertakings are going to wait until the Bill has gone through before embarking upon schemes which would be carried into effect in any case, so that they can get the Government guarantees which will enable them to borrow money at a quarter, or a half per cent. cheaper, or even better, than would be the case if this Measure were not in operation.

If this Bill is passed to-day, as I have no doubt it will be passed, where is the money coming from which will be subscribed to the loans to be guaranteed by the Government? It seems to be in the minds of hon. Gentlemen opposite that there is a kind of bottomless purse out of which, either by taxation or by loan, they can secure money in order to provide public works. There is only one source from which these funds can come, namely, from the deposits at the Joint Stock Banks. It is because of the deposits at the Joint Stock Banks that traders can go to their bankers to secure overdrafts to enable them to carry on their businesses and to obtain the necessary capital for the development of their businesses. If the Government come along and borrow £100,000,000 out of those funds at a time when it is common knowledge to the business community of our country that the Joint Stock Banks are lending up to the hilt—they are lending, I believe, to the extent of one half of the deposits whereas in pre-war days it was not considered safe to lend more than about one-third of the deposits—the effect will be to deplete those deposits and make it more difficult for the traders of the country to borrow money from their bankers. I venture to repeat, therefore, that the Bill will actually create unemployment instead of creating employment.

There is one further point which I want to submit. Those who were in this House when the late Sir Fredric Wise was a Member will remember that he never failed to raise the point which I am about to submit to the House this afternoon. On every occasion when there was a Government guarantee suggested, whether by a Conservative Government, a Coalition Government, or by the first Labour Government, the late Sir Fredric Wise advised the House, in very much more able financial terms than I am able to use, against taking such action. By this guarantee you are creating a new Government security in competition with existing Government securities, and by that means you are delaying the time when the Government will be able to convert their 5 per cent. War Loan into stock at a lower percentage. I should have thought that hon. Gentlemen opposite, with their hatred of the capitalists, would have disapproved of a scheme as a result of which the capitalist would pay a higher rate of interest. By this Measure they are actually creating a position under which the owners of Government stock will continue to be paid the existing rate of interest, and the Government also very probably will have to pay higher rates of interest. I do not think that it can be too often demonstrated that the best means of securing a reduction of taxation is by refraining from making competitive issues of capital with Government guarantees and so forth, and by converting our 5 per cent. War Loan into stock at 4½ per cent., and, as I hope eventually, into stock at 4 per cent. By these means, it would be possible to secure a reduction of taxation quicker than by any other means. This Bill will not find a single man a job. If the right hon. Gentleman thinks that he is solving the unemployment problem by this means, let him get the idea out of his mind as quickly as possible. He is only deceiving himself. As I have said, the Bill is a thoroughly bad Bill. I have put down an Amendment for its rejection, but, unfortunately, the hon. Member who agreed to second it on the Second Reading is unable to be here. Although I am not going into the Lobby against the Bill, I believe that it is a Bill which ought not to be passed as it will cause grave injury to employment in this country.

The CHANCELLOR of the DUCHY of LANCASTER (Sir Oswald Mosley) rose

Photo of Sir Waldron Smithers Sir Waldron Smithers , Chislehurst

Can the Chancellor of the Duchy give us the names of the proposed committee?

Photo of Mr Oswald Mosley Mr Oswald Mosley , Smethwick

The names of the Lord St. Davids Committee, which is continuing to function under Clause 4, are already well known to the House. I am very sorry that I am not in a position to state the names of those who will be engaged on the Committee which will deal with Part 1 of the Bill. The hon. Gentleman the Member for Macclesfield (Mr. Remer) has stated in rather a different form the dilemma which the late Chancellor of the Exchequer has so often presented to the House during the consideration of this Measure. In brief the argument, as I understand it, runs that any loans for Governmental purposes will merely compete on the money market with existing industries and will, divert from current industrial uses, money which industry needs for its ordinary purposes. That dilemma is, on the face of it, not entirely logical, or it would apply equally to every new concern which is launched on the money market. Every new company that came on to the market would strike a blow at existing industries, and, on the balance, would throw men out of employment if this argument was pursued to its logical conclusion. It is so easy by pursuing that argument to its extreme to demonstrate its logical absurdity.

Photo of Mr John Remer Mr John Remer , Macclesfield

The difference is that, if you give a Government guarantee, it is easier to go on to the market and obtain underwriting facilities than it would he if there was no Government guarantee.

Photo of Mr Oswald Mosley Mr Oswald Mosley , Smethwick

Yes, but the point still holds good. If a new company comes up and successfully raises money on the market, it is taking that money from existing industries—if it is successful in securing the money which it wants.

Photo of Mr John Remer Mr John Remer , Macclesfield

Not to the same extent as it would if there was a Government guarantee.

Photo of Mr Oswald Mosley Mr Oswald Mosley , Smethwick

By whatever means a company secures money, if it is successful in securing money, it is taking it from existing industry, and on the arguments of the hon. Gentleman and the late Chancellor of the Exchequer it is, therefore, damaging existing industries. I will not deny, and I never have denied, that on the basis of a restrictive credit policy there is some force in the dilemma. If you pursue as the right hon. Gentleman the late Chancellor of the Exchequer pursued for a period of years, a policy of acute deflation, well then, there is a great deal of force in the dilemma that, with a restricted pool of credit, any fresh demand upon the money market, whether by the Government or by a private company, is liable, if successful, to deprive existing industry of money which it greatly needs. Any Government pursuing a vigorous employment policy in this country must take cognisance of that situation. Our problem raises this question: Is it possible within the limits of the gold standard to supply a sufficiency of credit both for the current needs of industry and for combating the unemployment problem? That is a question which I shall not attempt to resolve this afternoon, as I have said before, by any arbitrary pronouncement of Government policy. It is sufficient to say that all the experts are by no means on one side, that there is a great body of expert opinion and authoritative opinion which holds that it is possible to supply sufficient credit for the needs of industry and for the unemployment struggle without any risk to the gold standard and without any risk to inflation or risk of serious loss of gold. That is a large and authoritative body of opinion, and any Government dealing seriously with this subject must face up to the dilemma which confronts us owing to the policy which the right hon. Gentleman the late Chancellor of the Exchequer has pursued for many years past.

When the right hon. Gentleman talks of Treasury policy he means his own policy, which ho has pursued during recent years. It is that policy of severe and acute deflation which is responsible for very many of the industrial troubles which now confront us. If I do not wander too much on to controversial matters, I would say that that policy was chiefly responsible for the great struggle of 1926. But I do not want, on the occasion of the passing of Measures which, on the whole, have been so very happily received, to wander on to controversial grounds. Hon. Members on both sides of the House have, subject to the limitations which have been imposed upon us, given a very cordial and helpful reception to the Measures which we have been considering. I would merely point out that there are many people, people whose opinions we must respect, who do not hold that credit problems are ineluctable phenomena of nature, absolutely outside the control of man, whose effects operate very much as the effects of sun spots operate. There is a great and responsible body of opinion which holds that just as the Federal Reserve Board of America has been able largely to meet these problems, so it may be possible, after due deliberation, for the Government of Britain to arrive at a solution of such problems.

The hon. and gallant Member for North West Hull (Sir A. Lambert Ward) asked how many men would be settled at work fey this Bill. That, obviously, depends upon two factors, to neither of which I can give a complete answer at the present time. In the first place, it depends how many useful schemes we can produce for the consideration of these Committees, and how many schemes under Part II of the Bill the local authorities can produce. In the second place, it depends upon how much money the House of Commons will permit us to spend upon the schemes that we produce. We are now working under the statutory limitation of Clause 1, and under the limitations in respect of Clause 2 and Part II, which have been imposed by the House of Commons. Subsequently, Clause 2 and Part II will be subject to annual Parliamentary Votes, and the amount which we can spend will depend upon the will of Parliament. These two factors, of how many and how large schemes we can produce and what money Parliament will permit us to spend, governs the number of men which can be set to employment under this Bill, but if adequate schemes are forthcoming and if the money is allocated, then we have here the machinery with which to press on a very considerable way.

I do not pretend, and I never have pretended, that this Bill and the other Bill which we have considered this Session, are anything approaching a solution of the unemployment problem. They are merely the beginning of a great work, and the major Measures of the Government may be expected at a later stage. The hon. Baronet who opened the discussion said that he was prepared to support these Measures because they were relatively small, but that when we came to such Measures as the raising of the school age and the removing of those old people who desire to retire from industry, he would very vigorously oppose them. I should not be in order upon the Third Beading of this Bill in following the hon. Baronet very far in that direction. His argument mainly consisted in the contention that such Measures would involve considerable taxation, which would place burdens upon industry. He discounted altogether the possibility of contributing largely to such costs through economy in such matters as armaments, which are now under the consideration of the Government and are the subject of international activity. Apart from that, why does the hon. Baronet assert with such dogmatic emphasis that taxation must of necessity be a burden upon industry? We have the recommendations of the Colwyn Committee, both the Majority and the Minority reports, in support of the view that such burdens are not to anything like the extent formerly supposed, a burden upon industry.

The hon. Baronet referred to rates. By the admission of all parties, rates which fall as a charge upon industry, as an overhead charge, prior to the distribution of profits, are a burden upon industry, but it has been strenuously combated from this side of the House by many of my right hon. Friends for many years past that Income Tax, and taxes which fall within that category, are a burden upon industry in the same sense that rates are a burden upon industry. The hon. Baronet went much too far in saying that any such Measures would pile up an enormous burden of expenditure as he called it, or would impose any crushing burden upon industry. I was glad, after his expression of those fears, to hear him say that the effect of the Measure we are now considering would do something to introduce greater efficiency and prosperity to industry.

One hon. Member asked what this Measure would do for the export trade. There is no direct assistance to private export trade in a Measure which deals with public utility companies, but will anyone for a moment deny that Measures to improve transport and to improve every public service which industry utilises, do nothing to improve the export trade, together with the general industries of the country I This is a Measure designed to assist in the great task of bringing Britain up-to-date, to assist us in giving new force and new life to the great public services upon which industry subsists, and it is idle to deny that such Measures, if carried though on any large scale, will not do a great deal for the general industrial life of the country, and develop our powers to compete even in foreign markets. There are one or two minor points with which I have not dealt. One of my hon. Friends asked me whether in giving assistance to the railways we would also bear in mind any possible increase in their competition with other services of a similar character in the transport world. Of course, we must in all such developments hold a proper balance between all existing services of that kind. It would be definitely wrong if public money was used to kill one development and to benefit another at its expense.

The hon. Member for Carmarthen (Mr. Hopkin), in a very interesting maiden speech, asked about afforestation. That is a matter which comes primarily under the Forestry Commission and is already receiving the attention of the Government in another sphere. I think I have covered the main points raised in the Debate and as we have other Orders on the Order Paper, and I believe this Measure is wanted rather urgently in another place, I should be very grateful if the House would give us the Third Reading of the Bill as soon as possible. We have accepted such limitations as the will of the House desires to impose upon us and as I understand from the Debate to-day that this is now practically an agreed Measure, I thank hon. Members for the consideration that they have given, and trust that the Measure will lead to some contribution to the solution of our unemployment problem and some improvement in the industrial life of the country.

Question put, and agreed to.

Bill read the Third time, and passed.