We are coming to the end of this day's Debate. With regard to the subjects mentioned in the Gracious Speech from the Throne, I think we are in general agreement that the two themes mentioned by the hon. Member for the Combined Universities (Mr. Edmund Harvey) are those which are chiefly interesting most Members of the House, though their thoughts may be directed to those two things from different aspects. We desire to let it be known that however perplexed the country may be, and however interested it is—and it is interested—in the difficulties of foreign relationships to-day, we are just as interested and insistent on immediate attention being given to the grievances and inequalities in our social life in our own country, and, whilst we shall say what we have to say in relation to the Amendment which will be moved later in the course of these Debates about foreign affairs, we have a great deal to say to the Government about social conditions, which we think are not adequately treated in the Address before the House.
There is no one on this side of the House who does not know that it is to a large extent the Government's handling of international relationships which has weakened the prospects of social amelioration. The condition that we look out upon to-day in the world at large, the lack of confidence in what has been hoped for in the direction of collective security, and the terrible conflict going on in the Far East, are not only bringing home to our hearts and minds the tragedies of modern warfare and the horrors of the bombing of open towns and civilian populations, but are having a very serious effect upon the trade and investment position of this country in the Far East. It is a serious effect which is not merely immediate but is bound to have a farreaching influence on the industry and life of our people. Not only does it bring to our minds all the horrors of what has been going on in the civil strife in Spain, but it shows to us that a Government capable of all the weaknesses with which we charge it in the handling of foreign affairs can, nevertheless, when it is aroused, when it cannot find money, find credit and add to the National Debt in order to pile up armaments.
At the very moment when our requests from this side of the House for social reforms for our people are most persistent, we have the answer that we have had for years, that the country cannot afford money for the common people of the country, but it can be found at once for the provision of the implements of death. That is one of the aspects that we wish to bring before the House and the country, and into the light of day. On that particular point, I would like to make a slight reference to one of the answers given across the Floor of the House this afternoon by the Minister of Health. In reply to one of the points raised by my right hon. Friend the Member for Wakefield (Mr. Greenwood), he said he hoped that a remark of my right hon. Friend did not mean that we on this side of the House were going to whittle away in any shape or form—I think I have the right words—Labour's statement already issued about the armament position. I think that I can speak for my right hon. Friend right away and say that we are not in the habit of whittling away our statements. It is perfectly true that the capitalist Press, as soon as the National Council of Labour issue a statement, will put its own construction upon it for its own purposes. It is true that the national Press and that some Conservative politicians—[An HON. MEMBER: "Some?"]—I say "some "; I cannot count every one of them and I speak only of the ones of whom I have read—some Conservative politicians have said that Labour has executed a volte face in relation to its armaments policy. That is not true.
What is true is that we have constantly, from the moment that the Covenant of the League was laid down at Geneva, said that we stood behind the Covenant. We have always insisted in the official programme of the party that a proper observance and support of that Covenant would mean disarmament by agreement. We have always said that we believed that if you supported the Covenant effectively you would get collective action, and that, if you told us what you wanted for collective action, we would vote the money. That has been the actual attitude of our people consistently right the way through, and the fact that you now have an armaments programme which is costing many fortunes—an enormous sum in the next five years—is in no sense due to any fault or action by Labour in the past. On the contrary, we say to the Government that, in so far as this volume of expenditure is necessary to-day, it lies at the door of the National Government who for four solid years, from 1931–1935, neglected to take their opportunities in obtaining collective action, and that since the General Election of 1935 they have, by their handling of the Abyssinian situation, and, if I may say so with respect, the non-intervention position in Spain, and by the encouragement thereby given to dictators, allowed the international position to deteriorate.
We have to say to our people in the country that, although we shall go on with the exact view we had before, behind the Covenant and collective security, we cannot promise them immediately reduction of armament programmes until we can rehabilitate the position so sadly deteriorated by the National Government. That is the position, and I will challenge any one of the Ministers on the bench opposite to say anything contrary to what I have just said in any statement of mine on Defence Estimates at any time from this Box. That is the position we have taken up, and there is not the slightest official change in the attitude of Labour in the explanation it has now given to the country of its position.
We face this situation as a result of six years of National Government. We face a difficult position at home largely because the situation has deteriorated on the failure to handle the foreign situation. What a situation that is. We shall deal with it later on. One of the most regrettable things, when a citizen like myself goes abroad to-day, is to find a sort of lack of faith or trust in the British word. That is a very serious factor indeed in the present international situation and I hope that the Government are going to make up their minds to act, in regard to international affairs in the near future, in such a way that more reliance will be placed upon them. I do not like to overstate a case, and it is not that we wish to suggest at all that there are not other very serious contributory factors in the international situation. We would not be so foolish, but we do say that the vacillation and the weakness in the last five years in the National Government's handling of foreign affairs has led to that lack of confidence in our action and our word in the foreign situation.
I shall not forget for a long time—I think I mentioned it once before in this House, but I will repeat it—the way a Chinese leader put his view to me on the Manchurian situation at a conference which we attended last year. We had been making overtures to try and get common action for peace between China and Japan. He said, "Do you think we can trust Japan?" He then said, "I will ask a more pertinent question. Do you think we can trust you?" When I asked him to explain it a little further he said, "We have looked at the situation largely from the point of view of the speech made by your former Secretary for Foreign Affairs, in which he said, when challenged in the British House of Commons, As for me, I am enough of a pacifist to say that whatever else comes from this position in the Far East my country, at any rate, must not get into any trouble about it.'" It is the assessment of that attitude to the Covenant of the League by Chinese leaders which made them say to me last year, "There is only one thing for us to do and that is to proceed with the unification of the mind, the heart and the spirit of our nation and to ask them to fight to the last, if it means that the liberties of our people are to continue, and repel the aggression of Japan." If that is the measure of the Government's loyalty to and support of the League, we can only expect them to distrust us.
Coming to the home position, notice has been directed by the Labour party to omissions from the Gracious Speech. There has been reference to the omission of any mention of unemployment. When hon. Members from this side have drawn attention to this point, we have had speeches from the other side, from hon. Members like the hon. Member for Gateshead (Mr. Magnay), deprecating anything which would seem to paint a gloomy picture of the future or to cast any shadow of doubt on anything in the trade position. I listened very carefully to the speech of the hon. Member for Gateshead and I welcomed both sections of it, because no one from that side of the House up to to-night had so completely whitewashed the Labour Government and absolved them from any responsibility for the financial crisis of 1931. I think he did it very well. He was very anxious for us to refrain from anything in the nature of pessimism; he thought that we ought to talk up the position and not to grumble about high prices.
I want to look at the position and see why it is that the Labour party thinks it necessary to draw attention to the fact that unemployment is not mentioned in the Gracious Speech. I will take the returns for the last few months in order to show why we are anxious about the situation. Anyone who watches the records of building contracts in the past few months knows that although the Minister of Health dealt with housing, that was a small part of the picture. When we deal with the whole building position we find that there are thousands of pounds less in contracts than a few months ago. I am glad to say that in the last six weeks in one or two departments there has been some striking improvement. I hope that it will continue, because I want to see good trade and not bad trade. But it is no use putting our heads into the sand, like ostriches. We have to view the situation as it is and not as we want it to be.
Look at the evidence of the stock market. I know that the hon. Member for Gateshead does not like me to mention that. However much we may discount the amount of speculation that gees on on the Stock Exchange, and whatever little sympathy we may have with the man who uses his money in speculation on the Stock Exchange, there is a very large part of the business that takes place on the Stock Exchange in this country and in New York that gives a very fair assessment of what is going on. The evidence from the Stock Exchange has been used many times in this House as a justification for the condemnation of our arguments. Confidence in the stock market has been made a very important point of argument by the Chancellor of the Exchequer and others on the Government side, and I am therefore entitled to use the argument now. Although there has been a good deal of the bottom falling out of the market owing to over-speculation, a considerable amount of doubt has been revealed there as to the future.
When we look at the position in America we see that that view is confirmed. For instance, the production of steel in the United States is going down instead of up. That is a very serious position. If we go to the steel industry leaders in this country and get them to talk frankly and honestly they will admit that they are having a very fair time, especially those who are engaged mostly in production for munition purposes, but when one asks them about cancelled orders from the Far East and the restriction of trade in our export markets, one finds that they have little or no confidence in the position beyond the next nine months. I am not talking without the book in this matter and I am sure that when the Chancellor of the Exchequer spoke yesterday he also had received certain hints about the situation. He was very careful to say that there was no need to have fears over the whole of the field. I do not complain of what he said, because I think he put it fairly from that point of view. What I want to stress is this, that when my right hon. Friend the Member for Wakefield quoted the Prime Minister in regard to the whole movement of industry in relation to employment, he could have added, and he would have done so had there been time, the actual figures which make us nervous of the effect on employment of any near recession in trade. We can stand a recession in trade to-day less than in any prewar period.
Let me take the relation of unemployment to production. I will take the official figure for comparative years. If we take June, 1929, that will be the first month in which the Labour Government operated and the last normal month of the previous Government. In that month the figures of unemployment amounted to 1,163,000, but if we take the corresponding month of this year, June, 1937, we find that the registered unemployment amounted to 1,370,000. In assessing that figure we have to remember that there was an alteration in the method of publishing the returns in 1933, so that in order to make the figure comparable to June, 1929, we ought to add approximately 170,000. Therefore, the figure of unemployment for this year is 1,540,000 compared with 1,163,000 in June, 1929, so that there is an increase of unemployment of 380,000 or 390,000 over the 1929 figure. I want to put alongside that the Board of Trade official index of production. From those figures the average monthly production for 1929 was 108.5 and the production in June, 1937, was 135 in round figures, an increase in production of nearly 26 points in face of a net increase of 380,000 in the number of unemployed.
That is the point my right hon. Friend was bringing out this afternoon in relation to the quotation from the Prime Minister's speech, and also what the hon. Member for Llanelly (Mr. J. Griffiths) had in mind in what I thought was an excellent speech. That is why we are so anxious to bring to the notice of the Government, not merely as a criticism of what is omitted from the Gracious Speech, although we do not hesitate to do so, but because we are concerned about it. We ought to be preparing now to deal with a possible recession of trade and the handling of that situation. If that is not the attitude of the Government, then all I can say is that so far from the Minister of Health being able to refer in Committee on the Estimates to the hard core of unemployment as those who have been out so long and are found in the distressed areas, we shall have to accept the whole of the present figure as the hard core of unemployed, 1,300,000 with no hope and no chance of having a job.
When the Government have made no real preparation in the Gracious Speech they will find some difficulty in resisting the claim of Labour, not a new claim as it was made as far back as the last year of the War by the late Mr. Arthur Henderson in the book he published, for public works and other operations to prevent unemployment. [Interruption.] I overheard that remark. The Chancellor of the Exchequer says, "Why did not they use it when they were in office?" We were told that we spent so much public money in other directions that we created an unsound financial situation. The right hon. Gentleman is now in charge of the finances of the country. He is a party to, even if he was not the adviser, an inflationist policy for dealing with armaments. He is borrowing the money to a large extent.
I take my "Economist" every week to see how things are going. We have already increased our floating Debt by well over £200,000,000 since March 31st, and by at least £70,000,000 or £80,000,000 over the comparative week of last year, and that is on top of the issue of the 2½ per cent. National Defence Bonds amounting to £99,000,000. If you can do that for armaments you are going to have great difficulty in persuading the working men of the country that it is a wrong policy to borrow for real assets in public works. In these circumstances we are entitled to ask now for schemes to be laid before the House for dealing with the provision of employment and preventing a slump in trade, which is being referred to so much not merely by us but by business men throughout the country. In regard to the trade position I remember that in the financial crisis members of the Conservative party continually insisted about the balance of trade. I have been looking up the figures. In 1936 we showed an actual visible adverse balance of £347,000,000. The Minister of Transport, who is to reply, will no doubt talk about the situation with great clarity and great insight, whether he is going to give us any hope is another matter. We argued about this on one or two occasions last year, and the net result is that, in spite of tariffs, quotas and licences, we showed an adverse balance of payments of £19,000,000.
I want to draw attention to the position this year. The adverse balance of trade in the first nine months of this year is already £54,000,000 more than last year, and if the growth of imports over exports goes on at the same rate we shall have an adverse balance increase this year of over £70,000,000. If we have the same experience as last year, in which we gained about £35,000,000 on the previous year in invisible exports, if we allow the same growth in increased receipts on investments overseas, in that case we are going to show a net increase in the adverse balance of payments of something like £35,000,000 to £37,000,000 more than last year, which means that we shall be defaulting on our balance of payments to the extent of £54,000,000 to £60,000,000. I am entitled to say that this is probably an under-estimate and that in all probability at the end of the year we shall have an adverse balance of payments of over £60,000,000.
If that is so, what is the effect going to be on our credit, our exchange and upon the export trade position about which we are so anxious if we are to keep our people employed? It is no wonder that hon. Members who represent constituencies in which the heavy industries are concerned, which depend so much on the export market for their trade and the employment of their people, are disappointed that there is no mention of unemployment and the trade position in the Gracious Speech, and until we get satisfaction from the Government we shall continue to draw attention to proper provision being made in this respect.
A word or two about the cost of living. We have had a remarkable speech from the hon. Member for Stoke (Mr. E. Smith) about one aspect of ex-service pensions, and the House is indebted to the hon. Member for the way in which he drew the widespread feeling among exservice men to the attention of Members of the House. As far as the cases in my own constituency are concerned, there are many of great hardship, where the present pension warrant is not meeting the situation fully, and other cases where the claims for pensions are difficult to establish after so long a period since the termination of the War. They clearly show also that there are medical cases which are often turned down because of a formula in the Act.
When dealing with the sort of case put to the House this afternoon by my hon. Friend the Member for Stoke, it is always necessary to speak not only with feeling, but with caution and reserve as to the legal position; but I was very interested to notice that my hon. Friend did not press the Government for any money or for any special promise on a given line of pensions advance. He asked for an investigation, and I think that he made an overwhelming case for an investigation. From their general experience, I think my hon. Friends will say that the whole basis of ex-service men's pensions needs re-examination. That re-examination should be made in the light of medical experience since the War, and should also have regard to the difference in the cost of living.
As regards the cost of living, my hon. Friend drew attention to the position of old age pensioners, both contributory and non-contributory. Earlier in the Debate, my right hon. Friend the Member for Bow and Bromley (Mr. Lansbury) emphasised how difficult it is to get adequate data as to the extent to which old age pensioners are turned on to the public assistance committees owing to its being impossible to get evenly-balanced returns as between contributory and non-contributory pensions. When we have raised this question, Ministers—including the Minister of Labour, with regard to unemployment allowances—have said that the cost-of-living index figure has not yet reached the position in which it was in 1931 or 1929, or whatever year they seize upon. I beg the Minister of Transport, when he replies, not to treat our case regarding the cost of living purely on that basis, because I do not think that would be dealing fairly with the present social situation.
If the right hon. Gentleman will do me the honour, before the Debate is finished during the next few days, of reading the statement I made in the Debate on the Budget as to the cost of living since the new consciousness on matters of nutrition led to inquiries and the formulation of scales, he will see that there was a British Medical Association scale laid down on the basis of the cost of living in 1933 when the Ministry of Labour index for food alone was 18 as compared with 43 now. That is an actual increase, in food alone, of 25 points in the Ministry of Labour index. Under that scale about 5s. 9d. was the figure fixed by the British Medical Association, but on present prices one would require about 8s. per person per week on that very low scale drawn up by the British Medical Association.