Orders of the Day — Economic Affairs (Manpower)

Part of the debate – in the House of Commons at 12:00 am on 28th February 1946.

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Photo of Mr Herbert Morrison Mr Herbert Morrison , Lewisham East 12:00 am, 28th February 1946

This important Debate was adjourned last night after a speech by the hon. Member for Edgbaston (Sir P. 'Bennett), with some of which, as he would expect, I did not agree. But I thought it was an excellent contribution to the Debate, with a fine stream of British commonsense running through it. We all enjoyed the hon. Member's contribution very much. He is an old friend of mine, having been in the days of Dunkirk a servant and worker under me at the Ministry of Supply, where he rendered important service to the nation. I much enjoyed listening to his speech, and indeed to the whole Debate, in which my right hon. Friend the Prime Minister gave to the House information of the fullest character that was available to him. I think that was welcomed by the House. My right hon. Friend gave the House a good and, I think, fair picture of the economic situation of the country at the present time.

Of course, we are all addressing, not only the House of Commons, on a matter of this kind—a sort of economic inquest of the nation—but also the country at large. Indeed, I think that the idea of this Debate was a very good one. We have an annual financial Budget, in which we analyse and discuss the public finances of the nation, and to some extent wider issues. I am not at all sure that it would not be a good thing, if we could adjust our Parliamentary time table and save some time somewhere else, to have, in future years, an annual Debate on the industrial and economic state of the nation. It would be of great value, not only as a Parliamentary occasion; it could be of great value to the country as a whole, to the industrialists, business people, trade unions and the general body of the citizens.

The points made by the right hon. Member for Aldershot (Mr. Lyttelton) were partly dealt with by my right hon. Friend the Prime Minister; others will, no doubt, be dealt with by the President of the Board of Trade, and, in the course of my own observations, I shall make some reference at least to points which he raised. There was one small. point he made which I can dispose of at once; it concerns the Ministry of Aircraft Production. The right hon. Gentleman said—he did not himself allege it—that it had been stated, and that if it could be denied it would do good, that Stirling aircraft, which, to our certain knowledge, have been obsolete for some years, have quite recently been produced, and have been scrapped as soon as they have left the production plant."— [OFFICIAL REPORT, 27th February, 1946; Vol. 419; c. 1952.] I have made inquiries at the Ministry of Aircraft Production, and they say they do not understand this. They say that no Stirlings of any type have been made for two years. I mention that; I make no complaint about the right hon. Gentleman mentioning it. In fact, he said quite frankly that these were things that had been said. I would only say it would be better if people who say those things outside, and start these stories, made sure. of their facts first, before making allegations which, at this time, tend to spread "alarm and despondency," to use a famous phrase. I would also refer to the speech made by my hon. Friend the Member for Smethwick (Mr. Gordon-Walker), which was a valuable contribution to the Debate. He raised some points in regard to the machinery of economic administration and planning, to which I hope to make, reference in the course of my observa- tions. And there have been admirable speeches from both sides of the House. 1 agree with my hon. Friend the Member for Stoke (Mr. Ellis Smith) that there is a growing realisation throughout the country that we need to be seriously concerned about our economic situation. That indeed is the purpose of this Debate.

The most important question with which I propose to deal, apart from the more general speech I wish to make, and in which I will seek to give some of the wider economic background of the situation, and the Government's approach to it, was the point that was referred to by a number of hon. Members— the question of a wages policy. Whilst I can make no final statement about this highly complex and difficult subject, I will say something on it. It is the case that a number of hon. Members have urged, and indeed it has been urged outside, in the Press and otherwise, that there should be a national or Government wages policy. Up to now the spokesmen or the writers who have urged that this should be done, have themselves been somewhat cautious in elaborating such a wages policy. I do not complain; I think they are wise to be cautious, because it could start up a good deal of complication and trouble. I shall be cautious, so that I am in no position to complain about them. We need to be clear what this term "wages policy" means. We can mean a policy which ensures that wage earners, as a whole, receive a fair share of the national income. In all this discussion about our economic condition, and particularly when we discuss the matter of more production, it is vitally important not merely that we should—as we do and shall do—appeal to the workpeople to co-operate in getting greater production; it is profoundly important that all of us, whether Labour, Conservative or Liberal, whether employers or trade union leaders, shall state the case upon the basis, and firmly and genuinely accept the basis, that the work people are to have their proper and adequate share of the increased production which is coming along, because that will help the situation.

It is true that we are incurring liabilities. The National Insurance Bill, which is now before the House, is a costly Measure. It must be paid for somehow* In the end, it must come out of pro- duction in one way or another. Somebody on the other side—it may have been the right hon. Gentleman the Member for Aldershot—said he was a bit depressed about the liabilities that were being incurred. It is a fair point to make, since liabilities are being incurred, that we should pause by the wayside. and consider from where the wherewithal is to come. That is quite right and perfectly legitimate. However, hon. and right hon. Members opposite must not scold us about this, because both sides were in it during the Coalition. In the Second Reading Debate on the National Insurance Bill there was no Division and there was general support for these proposals. I entirely agree, and we had better all face the fact that, whether it is the well-to-do who are incurring liabilities, whether it is the workers who are demanding more wages, or more social services, that these things can only be got, and can only be handled, on the basis that they have to be produced. They have to be paid for in some way or other. That is true, and I affirm it with all the keenness for which anyone would wish. It is right. We must never imagine that these things come by magic. They come through human toil.

We on this side have been too long saying that all wealth comes from human labour for us to forget it and believe that Beveridge schemes come from somewhere else. They do not. They have to be carried by toil, by industry. Let us not forget it. On the other hand, there is the memory of the production drive which took place at the end of the last war. It was referred to by my hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood) in a speech with some of which I did not agree. Nevertheless, he had a right to draw attention to history. There were posters, telling people "Produce more," and calling for "More, production," and various Labour leaders permitted their pictures to appear on them. I am bound to say from my own knowledge that, two years afterwards, they wished their pictures had never appeared. It is not enough to say '' more production,? If I have any complaint about the recent manifesto of the Federation of British Industries, which had its uses, it was that it urged "let us get on with production and set aside other things." That indeed has been urged by the Opposition speakers. If we are to get the good will and co-operation of the workpeople, and indeed if this Government are going to advocate this policy, I say quite frankly to the House, we shall only advocate it upon the basis of, and as part of a policy of social justice, a policy of achieving more production to carry the standards we have got and hope to get and to carry the social services. But as production increases in the new order of things—this is the new fact that has to toe brought out, affirmed, and seen to—we must, not only for reasons of abstract economy and social justice, but for hard economic reasons, have increased consumption, in due course, following up and accompanying the increased production. If we do not have it, we get to the absurdity of so-called over-production. I want to be quite fair and balanced. On the other hand, if we get more consumption, more taxes, more burdens upon the public purse, more wages, without the production taking care of them, then we shall get not over-production but inflation and a financial smash, a financial crisis from which the working classes will suffer as much as anybody else.

That is the attitude of economic balance and economic sanity in which His Majesty's present advisers approach this problem. So it is with wages. We say that the workpeople are entitled to a fair share of the national product of the planning machinery which the Government are devising. We hope to help employers and employed for the first time to judge what this fair share should be. That is the first element in all this controversy about wages. Indeed, it is the first element in all Parliamentary Debate on what we can afford in the way of social services and social advance. In the past everybody has been too much in the dark about the facts. Debate has taken place across the Floor of the House. Hon. Members on one side have said, "We cannot afford this. The nation cannot carry it." Somebody on the other side says "We can afford it" or, "What does this cost represent compared with the cost of a Dreadnought?" That does not seem to me to be a particularly relevant argument, if I may say so, even though it has been used on our side. In fact, Parliament has been in the dark as to what we can and what we cannot afford. We say, therefore, "Let us have the facts. Let the facts come out." I am glad to note that the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) appears enthusiastically to agree with me. I only said past Governments have not been enthusiastic in seeing that the facts were available. The Government are going to make a change in that respect. The facts which the Prime Minister gave in this Debate and the publication of the monthly Statistical Digest, which will be followed by other things, are all part of a process of letting the nation know the facts. Then we shall have the joyful sight of hon. Members of the House of Commons having to face the hard and sometimes inconvenient facts, which His Majesty's Ministers have got to face anyway in private. I am all in favour of the process of facing and wrestling with hard and unfortunate facts being shared in common by all Members of Parliament, and not merely by the Members on the Treasury Bench.

So it is in the field of wages policy. In many trade disputes, there is an argument on a demand by workpeople for an increase, or a demand by employers for a reduction, and one side says, You can afford it, and the other says, We cannot. In too many of these cases the facts are not known. Moreover, when we come to general wages policy, often the wider facts are not known as to within what limits we can adjust wages, without getting into an inflationary spiral, or without causing economic depression. Therefore, our first point as a contribution to wages policy is that, so far as we are concerned, we shall take all practicable steps to let the parties to the argument know the indisputable facts. That, in itself, will be a very important contribution. It may be that as the years pass, we shall be able to say enough to enable it to be established and agreed that arguments about wages are circumscribed within certain elastic considerations, but circumscribed nevertheless by limitations of facts.

The next question is whether when those limitations are settled the Government are to step in, and say to employers,You must put wages up by so much, or to the trade unions, "You must not demand more than so much, or "You must accept a reduction "? Are we to tell particular trades and industries, or particular employers, what the wages should be? I do not think we are anywhere near that point yet, and I do not know that we had better be near it. I am all for everybody knowing the size of the cake, and letting the discussion be directed to an argument about what is within the cake, but I do not think we are yet heading for the State to take a hand in fixing wages for particular trades or industries, at any rate more than it is pushed or kicked into doing so. If ever we get a complete Socialist State, it will be another matter. Even then, there will be some argument about it. It may not be free from discussion. But we are not there yet, and we are not going to be there for some time. [Hon. Members: "Hear, hear."] I am talking about a complete Socialist State. Anyway, I would say to hon. Members opposite, do not be too comforted, because we are making reasonable speed—I understood it was strongly complained about.

It is all going according to plan so far. We are not there yet, but we have established in this country, I think, perhaps, with more success than almost any other country in the world, very good machinery for bargaining about wages between employers and employed. It goes ahead with a remarkable degree of good sense—anyway, good temper, and, to a great extent, good sense—and decisions are arrived at amicably, while the Ministry of Labour are ready to take a helpful part now and again. I do not know that we should be wise to take this process of bargaining out of their hands and try meticulously to fix wages, as a matter of State organisation, but we can help to see that the economic facts are known, and that, I think, would be distinctly helpful.

The Government fully recognise the importance of ensuring that wages settlements—and here the State has an interest—do not upset or thwart the national economic plans, and it is actively considering ways and means of meeting the situation. Indeed, the State published a White Paper during the war on these issues and the economic doctrines behind them. The Government are confident that our purpose can best be achieved without destroying the constitutional method which has been worked out in. industry. The problem will be solved by fuller information, good will and good sense, and it is being tackled in that spirit.

Coming to the more general considerations involved in this Debate, together with some specific items of information and fact, it is suggested to the House, as a matter upon which there should be general agreement, that 1946 is a year like no other. It is not a year of world war. It is not a year of settled peace, nor of normal production. It is not a year like 1919, at the end of the last war, a year of hasty scramble for short-term selfish ends, to be followed inevitably by a slump. Much has been achieved since fire ceased in this recent conflagration, but months of further adjustment will be needed before the lay-out of national resources can be placed on anything resembling a peace footing. This is because, as we see it, throughout 1946, the run-down of defence manpower and resources will be proceeding as rapidly as is consistent with our obligations to world security, and with orderly administration and fair treatment of those affected.

On the other hand, throughout the year 1946, men and women from the Services will be taking up posts as free citizens. The labour controls are diminishing. They have not entirely gone, and cannot entirely go yet, but they have diminished by general demand and by general assent. So these vast numbers of workers, who were formerly ordered and directed about, are coming back as free citizens, and that involves new considerations. The benefit of these labour reinforcements to the home front will be felt only by degrees. Service men and women are entitled to, and are mostly taking, leave before starting civilian work. People are changing jobs faster than ever in the nation's history. Every week, over 200,000 men and women are starting their new jobs from scratch or after years of interruption.

As the hon. Member for Edgbaston brought out so well in his speech last night, factories are having to be retooled, raw materials and component parts assembled, blueprints, contracts and removals arranged. The flow of production is swelling, but the results cannot be felt immediately by consumers, because many thousands of tons of urgently needed goods are, at any moment, moving by rail, road and water, or are being sorted in warehouses or passing through the various processes of wholesale and retail distribution. It is important to recognise that we have a pipeline to fill up before the inflow of resources is matched by the outflow of goods at the other end. The number of men and women who will be working in 1946 on the goods which cannot reach consumers until 1947 is even greater than the number working on materials and preparations for houses, which cannot be finished before 1947.

It was one of the things that we learned in the course of war production, often to our embarrassment, that, from the moment the process of designing and planning begins, until a tank is available for fighting purposes, is a very long time—18 months, or 12 months, if we were lucky, and we had to be very lucky for that. It is sometimes forgotten that exactly the same thing must obtain in respect of the beginning of peace production. We start from scratch, and the goods will not be in the shops until the whole process of organisation, preparation, manufacturing, retooling, distribution and so on has been gone through. Therefore, it is bound to be the case that the mere return of workpeople to the civilian front, does not produce the goods the week after they have so returned. There is the pipeline, which, at the moment, the new civilian workers are largely engaged in filling, in starting the process, but the results of the process obviously cannot be seen for some little time, except in goods which are very rapidly produced.

Therefore, 1946 is inevitably a year of continued shortages, although it will also be a year in which a number of tiresome shortages will be brought to an end. It will be a year of laying foundations for the future and of reviving much social and economic activity which has had to be damped down during the war. For this and other reasons, 1946 will also be a year of national labour shortage, and, therefore, of a high level of employment. In the year and a half from the end of the war, until the end of 1946, it is the fact that over 5,000,000 workers will have been gained for home civil and export production. The right hon. Member for Aldershot suggested that today this labour force was still 2,500,000 less than mid-1939. I am glad to be able to assure him that this deficit, which was correct two months ago, has already been reduced by one-third—a sign of the speed at which the workers are swinging back to civil production. Therefore, it is very important that both industrialists and hon. Members should, perhaps, be a little careful about quoting figures that were true—