Industrial Concentration and Retail Trade.

Part of the debate – in the House of Commons on 23rd July 1942.

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Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

On the last occasion when we had a general discussion on the affairs of the Board of Trade on a Supply Day, now more than two years ago, at the time of Dunkirk, the discussion principally turned upon the question of export trade. Since that time there has been a great change in the relative balance of importance of the matters dealt with by the Board of Trade. Exports no longer hold a predominant place relatively to the problems of the Home front which they held then. This is due partly to the fact that, owing to the very generous Lease-Lend policy of our American friends and Allies, exports are no longer so immediately necessary to pay for imports as they were when my predecessor last addressed the Committee on the subject, and, in the second place, it has become necessary that we should reserve for the urgent needs of our own people certain supplies which otherwise, in the ordinary course of trade, we should export. On the other hand, we have by no means forgotten the vital importance of the export trade in the postwar world. We have had for the time being to reduce exports very severely. We still export on a certain scale to meet the urgent requirements of our friends, and some neutral countries, from whom we get important imports in return. But in the post-war world the importance of the export trade will evidently again become paramount, and plans are even now being closely studied in the Board of Trade, and in consultation with other Departments and persons in industry and trade who are concerned in the matter, so that we may start a new export drive immediately conditions permit it.

To-day I do not propose to cover a very wide field of subjects. I propose to speak, as I understand is the general desire, first of all upon the policy of industrial concentration and utility production which is now being pursued and then to deal, I am afraid at some length, with the questions of retail trade, with special reference to the recent Report of the Retail Trade Committee. I shall refer to policies initiated by my two predecessors, who are now respectively Minister of Production and Minister of Supply. I hope and believe that the Board of Trade has played, and is continuing to play, an important part in mobilising effectively the home front for war purposes, and, in so far as that is so, a large part of the credit is due to the energy, determination and drive imparted by my two right hon. Friends who preceded me in this office to the work of the Department. There is continuity of policy in many matters initiated by them and being further pursued now by me, including the concentration of industry, various measures for the control of supplies, clothes rationing and various other policies. I should also like to thank and to pay my tribute to the constant cooperation which I and my predecessors have had from various elements with whom we naturally have to do much co-operative work, the representatives of various sections of trade and industry, who have taken extremely well on the whole and in a very fine spirit indeed various most disagreeable Regulations which we have had from time to time to impose in the interests of the war effort. Those measures have sometimes involved the complete extinction, at any rate for the period of the war, of particular businesses or sections of industry, and they have been taken exceedingly well. I should like also to thank representatives of the trade unions concerned in the various branches of our work, and of the T.U.C., for their most valuable help in many directions, and not least in that most ticklish job, the allocation of supplementary coupons under the clothes rationing scheme.

I should like to run over the various stages of control of supplies which have been operated by the Board of Trade and to show that this is a continuous policy pursued from the outbreak of the war till now, though varied according to the changing conditions which we have undergone. At the very beginning of the war restrictions were imposed on production for civilian needs. This was done generally through control of raw materials, and that is a matter which falls largely not under the Board of Trade at all but under the Minister of Supply, who exercises the main raw materials control, although my right hon. Friend and I are constantly in consultation on matters arising from that. In April, 1940, we followed up these restrictions by the first so-called Limitation of Supplies Orders. These limited the quantity of goods which any manufacturer or wholesaler might sell in the home market in relation to his pre-war sales. The original intention of these Orders was to promote the export drive and to deflect supplies from the home market, which was then relatively well supplied, to the export market. Later these Orders have been used for a rather different purpose, namely, to deflect resources in labour, materials and space from provision for the civilian population at home to the direct war effort. The Limitation of Supplies Orders have been enforced in terms of percentages which have gradually been increased. They began in the first half of 1940 with a cut of 33⅓, and have later been increased to 50, 75 and in some cases higher percentages. The number of people working for the home market in the trades covered by these Orders fell by more than 50 per cent., as we desired it to do, between June, 1940, and February, 1942. I have mentioned this in order to show why the policy of concentration of industry was decided upon.

When these limitations were imposed upon the sales which individual manufacturers might make it was evident that many industries would be working very much below capacity. There would be machinery, factory space and administrative and operative staffs not fully used, and that would have led to an increase in overhead costs and a rise in the costs of production as well as a waste of space and labour. For that reason the present Minister of Production, when he was President of the Board of Trade, decided, in March, 1941, on the policy of the concentration of industry. The idea was to concentrate production in a certain number of so-called nucleus firms which would work at full capacity and, therefore, with minimum costs of production. Factory space and equipment in other forms would be released for direct war use and in some cases factory, space for the storage of war supplies. When industrial concentration was first decided upon it was the desire of the Government, which has been carried out, that as far as possible, concentration should be based on voluntary agreement between individual firms and not enforced from Whitehall. The nucleus firms were to make their own financial arrangement with those whose output they took over, and they would also take over from those firms the liability for export, Government contracts, and so on.

One of the most valuable aspects of the concentration policy, as it has worked up to date, is that it has enabled the Board of Trade to assist the Minister of Labour to arrange for the withdrawal of labour from various industries in those areas and at those times which were most appropriate not only for maintaining civilian production but for expanding war production. Looking back over the period during which we have had experience, of this concentration policy, I want to say two things. First, it has undoubtedly promoted industrial efficiency. I wish to add that this policy is a war-time policy and does not prejudge the post-war situation of particular firms. It will enable the firms that have temporarily ceased production to restart under more favourable conditions after the war than if concentration had not been pursued. Second, concentration of industry has been a difficult policy, but it has been carried through with a smoothness and speed far greater than was originally anticipated when it was introduced. There has been the closest co-operation throughout between the Board of Trade, the manufacturers and the trade unions concerned.

The policy has been applied in a flexible way, and there has been no attempt to apply a rigid or uniform scheme of concentration in different industries. To a large extent each concentration scheme has been worked out and operated by the industry itself. I have had the most valuable assistance, for which I am much indebted, from Sir Samuel Beale and other members of the Industrial and Export Council of the Board of Trade. They have been helpful in working out, in consultation with the industries and other interests concerned, these particular schemes. In the 14 months since the policy of concentration was initiated, close on 250,000 workers have been released as a result of it for other war work and more than 55,000,000 square feet of factory space have been liberated for other uses. Nor have we reached the end of the process. There are at the moment certain concentration schemes actually proceeding. There will also be cases where a reconcentration will be necessary—the concentration for the second time owing to the shrinkage of materials or a greater need of labour for war purposes than was previously anticipated.

I would like to say a word about one branch of war production which is growing in importance, to which, as President of the Board of Trade, I attach great importance, and which I desire to see developed so far as is reasonably possible. That is utility production. This originated with clothing. Shortly after my right hon. Friend who is now Minister of Production introduced the clothes rationing scheme it was felt that it should be supplemented by the production of utility clothing, the original idea being, on the one hand, to check the rise in clothing, prices which was then taking place and giving much concern to the public and to the Government, and especially to the Chancellor of the Exchequer, since it was causing a rise in the cost of living; and, on the other hand, to provide good and durable clothing with all reasonable economy of material and labour. Utility clothing, as I think is now generally recognised, does not mean uniform, rigid standardisation. The utility specifications leave a wide scope to manufacturers for variety, style and ingenuity. Utility clothes have on the whole been very well received especially by women. A lady Member told me yesterday that she was wearing a utility frock and liked it very well.