As I was saying, in the Debate on the Second Reading of the Finance Bill in 1946 I pointed out that of the national income such proportion as is currently spent by individuals is ordinarily spent upon consumption goods, and that the most that can be invested in capital goods is the total amount of the national savings. If an attempt is made to carry out more capital works than can be covered by the total amount of savings, the effect must be internal inflation. In that speech I was several times interrupted by hon. Gentlemen opposite who kept on talking about materials and labour being the important thing and not money. I tried unsuccessfully to make it plain that I was only using money in the sense of the common denominator, by which it is possible to measure the total amount of labour and materials required for any particular goods.
Nearly two years afterwards we find two things. First, we find in the country a state of imperfectly suppressed inflation, and it is quite vain for the hon. Member for Gravesend to expect us not to say what we believe to be the truth about this internal inflation, namely, that it is due to the unwise policy which has been followed by the Government. The other thing we find is that, at long last, a White Paper has been issued in which the Government now admit that, in point of fact, they have undertaken more than it was possible for them to complete. This has occurred in the case of a large number of industries, and perhaps the most notable of them is the building industry. In paragraph 4 the Government say:
The volume of new investment undertaken must be brought into proper relationship with the reduced supplies of materials, industrial capacity and manpower that we can afford to make available for this purpose.
I would have preferred them to admit quite frankly that in the course of the last year in particular they have actually tried to carry out works far in excess of what it was economically possible for the country to perform.
I would say to the Economic Secretary to the Treasury, whom I should like to congratulate on the extremely responsible office to which he has recently been promoted, that it would have been a good thing if, on the occasion of that Debate on the Finance Bill, the Chancellor of the Exchequer of that time had been good enough to pay attention to the request I humbly put to him from the back benches here to consider the problem of all the vast capital programme which different colleagues of his had endorsed. Had he done so, he might have foreseen that two years after, he or anyone else responsible for the economic policy of the Government would find himself in difficulty.
I certainly cannot be accused of having no interest in the modernisation and expansion of British industry. During the war some of my hon. Friends on the Tory Reform Committee and I produced a book in which we pointed out how very inadequate is the industrial equipment of this country as compared with that of the United States of America. The limit of what can be done is, in the first place, the limit of the total savings available; and, secondly, of the capital goods industries. What I had hoped would be done in the years immediately after the war was that, to a very large extent, consumption goods would be sent into the export markets in order to pay for the food and the raw materials which we have to import, and that, to a great extent, our heavy engineering industries would expand and modernise the capital equipment of this country.
Of course, that was conditional upon there being high production and low consumption by the people of this country, and so, in certain White Papers and especially in the Economic Survey for 1947, the Government propounded a most excellent principle. They said there must be no reduction in hours unless it was accompanied by a corresponding increase in production, and they urged upon the trade unions that they should not at present press for higher wages. The hon. Member for Gravesend can hardly blame His Majesty's Opposition if we point out that ever since that White Paper was issued in February of this year, the policy of the Government has not in any way coincided with the principles that were laid down. In all these months there has been a steady stream of negotiations in one industry after another, and in nearly every case that has resulted in a reduction in hours and in many cases an increase in wages. All this is contributing to this internal inflationary pressure which now exists in the country. There has not been that increased production which is desirable, and the increase in wages has undoubtedly contributed to the difficulty to which the Chancellor referred this afternoon when he said that since the sellers' market is now coming to an end, the question of price is becoming of steadily increasing importance in the export markets.
Now, belatedly, we have this White Paper which announces a restriction in the capital investment which is proposed. In the light of this White Paper, how absurd appear such speeches as were made by the former Chancellor of the Exchequer and the present Minister of Transport during the Second Reading of the Transport Nationalisation Bill, when they spoke about the large-scale rebuilding of the great London termini in order that they should be more cheerful and attractive places. At a time when it is quite obvious that the building industry is already overstrained, and when all the Government departments are being asked to accept economies in even the most urgent and necessary work, it is hardly likely that we shall hear anything more of the rebuilding of the London termini.
I am glad to see that the Minister of Health is now present. I note that the actual reduction in capital investment which is proposed is now £130 million and not £180 million. It has been said that he is responsible for the very small cuts that are proposed in the housing programme. I would like to ask him how it is intended administratively to ensure the maximum number of houses being built for the benefit of the agricultural and mining industries, when for very many months ahead the building industry will be fully occupied in building the houses which have already been begun and for which contracts have already been made. I know it is now the accepted policy of his Department to try to concentrate upon those two kinds of houses, but I do not see how that can be reconciled with what we have been told about the way in which the existing housing programme is to continue without modification. Quite obviously, the present housing programme has not yet resulted in any great success so far as the agricultural areas are concerned. I believe only 3,000 new houses have been built for agricultural workers up to the end of October, 1947.
The hon. Member said that only 3,000 houses had been built for agricultural workers so far. It would be more correct to say, that about 30,000 houses had been built for workers in agricultural areas, any one of which could have qualified for the additional subsidy, but that only 3,000-odd agricultural workers have been found to go into those houses.
The point is this. An especially large subsidy is provided for houses to be occupied by agricultural workers. Only 3,000 houses have qualified for that higher subsidy up to the end of October, 1947. It appears to be a reasonable deduction to draw from that fact that if the local authorities had been able to draw the higher subsidy as a result of houses being occupied by agricultural labourers, they would have done so.
A large number of houses—between 30,000 and 40,000—have been completed in rural areas, and a very much larger number are under construction at present. The additional housing subsidy is given to a local authority if a house is occupied by a person belonging to the agricultural industry as such. The additional subsidy is given in order to encourage local authorities to provide houses for that purpose. The figure of 3,000-odd is obviously a reflection of the fact that the local authorities in the rural areas, predominantly manned by individuals belonging to the party opposite, have not selected more agricultural workers.
Let me finish my sentence. He cannot expect me to take seriously his rather unworthy gibe about the membership of the local authorities. He need not try to put all the blame on the local authorities.
The right hon. Member for Aldershot (Mr. Lyttelton) has quoted the circular that I sent out, and the hon. Member himself is a member of the Central Housing Advisory Committee. He knows that the authorities responsible for letting houses are the local authorities, which could have let houses to agricultural workers if they had been in greater need than other workers.
I see no reason to suppose that the local authorities have not been letting them to agricultural workers in those cases where they had built houses, and they were available for that purpose. Before this Government came into office, it was decided to try to increase the personnel of the building industry to 1¼ million workers. At that time the "Economist" took the view that that was a larger building industry than this country would be able to support. I see by the White Paper that it is the intention of the Government to reduce the size of the building industry. I hope that in the reduction of capital expenditure the Government themselves will set an example. I was sorry to see that it was not proposed in the White Paper to stop the building of new Government Departments in Whitehall. I think it would be an extremely good example to set to the country if the Government stopped the building of the new House of Commons. The accommodation we have at present is quite adequate for us, and I should have thought that it would have been possible to postpone constructional work on the new House until other more urgent necessities had been met. I hope that, so far as possible, there will be great economy in new construction for the Ministry of National Insurance. There is also great scope for further economy on roads. The wild figures which the Minister of Transport gave last year have largely been abandoned, but I think there is still scope for more economy. Certainly, it is my impression that in my county it seems quite unnecessary to straighten and widen roads at the present time.
In conclusion, we must note that despite all that has been done, when the present policy of the Chancellor has been carried to success, when the target for his exports has been reached—if it ever is—and reductions have been carried out in imports, and capital expenditure has been cut in the way that is proposed in the White Paper, we shall still have an unfavourable balance of trade with the North American continent of over one billion dollars per year. Those are the facts of the situation which the country has to face, and I feel that the White Paper is a belated attempt to reduce the capital investment policy of the Government to something more in accordance with our resources. It is plain that it has not gone far enough, and that in the next few months we shall be made even more painfully aware of the fact that the policy of this Government has been too little and too late.
I hope that the hon. Member for The High Peak (Mr. Molson) will forgive me if I do not follow his speech in detail. He made a number of interesting and controversial points, but he also made some exceedingly trivial and frivolous points. I may make a few comments on them later, but I realise that my time is limited, and that there are more Members of both sides of the House who wish to take part in this very important Debate. I want to refer to certain special aspects of this problem of capital expenditure, and to ask the Government to give special attention to them, but before I do that, I want, if I may, to make a few general observations on the subject we are debating, and to relate them to the general economic Problem which provides both the reason and background for this Debate.
Capital expenditure is not something that exists in a vacuum; and it cannot be considered in isolation. It must be related to the structure and pattern of our whole economy, and considered in relation to the background of our general economic situation. During the last few months we have had several Debates on the general economic crisis, and many proposals have been put forward for dealing with it. Already, the Government have taken a number of very drastic steps. They have decided to cut down imports both of food and raw materials; they have decided to denude the home market of many essential goods in an effort to close the gap in our balance of payments. There is no doubt that these cuts constitute a severe strain on the British people, but however onerous they have been, it is evident that they have proved inadequate to meet the crisis. The crisis has not yet been overcome, and shows no signs of being overcome. There is still a yawning gap of about £600 million in our balance of payments, and the remnants of our gold reserves are leaving the country at an alarming rate.
It is clear that even more drastic steps are needed. Some time ago we had a statement from the Chancellor that our capital expenditure would have to be reduced by £200 million. Later, that figure was amended to £180 million, and now it is given as £130 million. We have now had the White Paper which gives us the reasons for the cuts, breaks down the global figure, and shows how and where the cuts will have to be made. These cuts in capital expenditure are very serious, and must have far-reaching effects on our whole economy. This step is probably the most serious yet taken by the Government to deal with the present crisis. The White Paper has already caused widespread concern and even consternation, and it calls for very serious consideration, especially by this House.
Two arguments have been advanced in favour of the proposal to cut capital expenditure. First, that the spending of capital has been in excess of our resources; and, second, that it is an inflationary factor and intensifies the inflationary pressure. I agree that there is a great deal of truth in all this, and that we must limit our expenditure in accordance with our resources. But we must take very great care to maintain some sense of proportion in these things and to be careful that in any proposals we make we do not reduce our productive capacity. To do so would be a major blunder, which would have incalculable consequences. It might indeed jeopardise our whole prospect of recovery.
The White Paper refers to the effects of the war upon our capital equipment. There is no doubt that the war caused enormous damage to our capital structure. We have had presented to us the figures about the effect of the war in physical destruction, in under-maintenance and in the postponement of essential schemes. The war placed a terrific strain upon our economy, a strain which was almost beyond our strength. We have to remember, however, that our economic difficulties did not start with the war. They go back to the wasted years before the war, and some of them have very ancient roots. Long before the war our economy was in a most unhealthy state. For years we experienced a serious decline in our basic industries—coal, textiles, tin plate, shipbuilding, iron and steel, agriculture, and many others. Those industries were starved of capital. They contracted year by year and, for a whole generation they suffered from technical stagnation and paralysis.
Although, in the interwar years, our basic industries were starved of capital, there was plenty of capital for luxury activities, such as cinemas, hotels and race tracks. It was to that state of affairs the late Lord Keynes referred when he said that we were developing our basic industries as the by-product of a casino. We are now suffering not simply from the aftermath of war, but from years of neglect to equip our basic industries properly. For that omission the party on the other side of the House has to bear a very serious responsibility. There is now an enormous accumulation of work to do. These accumulated arrears represent a prodigious task. This is a matter of the greatest urgency and should have a very high priority, even in our present straitened circumstances. We cannot postpone this task indefinitely, because to do that would hamper our economy and might even make recovery impossible. However difficult the present situation, we must have some thought for the morrow. This is an essential feature of planning, and capital cuts need very careful planning.
We cannot scrap capital expenditure without regard to the serious social and economic consequences of such action. One criticism I have to make of the White Paper is that it makes no attempt to assess or to estimate the social consequences of the cuts. The Government cannot afford to ignore that very serious aspect of the matter. Neither can this House. Those consequences are many, and serious. I want to refer to three of them. The first is housing, which is one of the most serious problems of our day. I agree with the right hon. and learned Member for Montgomery (Mr. C. Davies), who said that the housing problem was a running sore. It is responsible for a vast amount of human suffering among our people. Moreover, it reduces what the economists call the mobility of labour. I do not like that expression. I have seen vast numbers of the Welsh people uprooted from their native land and made mobile for jobs in other parts of Britain.
We need large numbers of men in the mining industry and in agriculture, but because of the serious shortage of houses in mining and agricultural districts we cannot get the men. I am pleased to notice that the Minister of Health is present. When he replies to the Debate I hope he will say something about the special houses for miners which have now been allocated to certain mining districts. I do not know the number which has been allocated, but whatever that number is—according to the figures I have it varies from 4,000 to 15,000—it does not touch the fringe of the problem. In many large areas of the coalfield there has been no allocation at all. In the district of South Wales with which I am familiar we have about 20,000 miners and 40 pits, covered by ten local authorities. We have had the grand total of 20 aluminium bungalows for miners.
I subscribe wholeheartedly to what was said by my hon. Friend the Member for Stoke (Mr. Ellis Smith) about the re-equipment of industry. We cannot afford drastic cuts in capital equipment for industry. Some of our industries are technically in a serious plight. A large part of our existing equipment is worn out and obsolete. Replacements are urgently needed. There is danger, if that replacement is postponed, of a still further deterioration in technical equipment. Industrial re-equipment is already proceeding far too slowly, and at all costs we must not allow our productive capacity to decline further.
I should like to say a word about another serious aspect of the problem of capital cuts, and that is in relation to the development areas. I hoped that the Chancellor would have said something about that matter. Since the first statement was made about the cutting down of expenditure there has been widespread consternation in South Wales and in the other development areas. In 1945, the Distribution of Industry Act came into operation and brought new hope to the people of the development areas. It was hailed with enthusiasm, but much of that enthusiasm has now waned. There is a growing sense of disillusionment in every one of those areas. The Government have a vast programme of factory building with the object of providing employment in alternative industries and to correct the one-sided dependence on one or two basic industries in those regions.
I am afraid that reality falls very far short of the promise. In Wales very few factories have been completed. On 30th June, 1947, only 23 Government-financed projects had been completed, and 20 privately financed projects. Others are in prospect The difficulty is said to be shortage of materials such as steel, timber, cement, plaster and components of all kinds. When the matter has been raised with the Board of Trade we have always been told that the rate of construction has been slow because of the shortage of materials and the lack of essential resources. We find, however, that those resources have been going elsewhere. Between December, 1944, and 30th September, 1947, the Board of Trade approved 3,259 projects for new factories and extensions to existing factories. Of these 1,076 were in the Development Areas and 2,183 were outside the Development Areas. In other words, only about one-third of the entire factory building programme has been allocated to the Development Areas.
The total cost of all these projects has been estimated at £161 million. The White Paper gives the figure £159 million, but the Statistical Digest gives £161 million. For the Development Areas the total is £82,672 and for the non-Development Areas £78,495. That means a tremendous concentration of factory buildings in the Midlands and the London area. There has already been far too much concentration in those areas. The Barlow Commission called attention to that and its recommendation has since been reinforced by our experiences in war, by the planning which has become an accepted thing since the war, and above all, by the serious shortage of labour which now exists everywhere outside the Development Areas. We who come from Development Areas find it difficult to understand why so many factories have been built and will be built in areas where there is a shortage of labour, whereas areas where there is a surplus of labour, like Wales, Scotland and Durham, are getting very few factories, and these factories are going up very slowly and very few have been completed.
The Development Areas have been starved of capital for 25 years. They were the centres of the old basic industries which were allowed to decline for a generation. No new industries were established for almost the whole of the inter-war period. Vast areas became derelict and hundreds of thousands of people had to migrate in order to get a living. I agree that the Government have done much for the Deveolpment Areas. They have done much to repair the havoc caused by the party opposite, but still more needs to be done. It would be fatal—I stress this on the Government— to cut down the factory programme in the Development Areas. I notice that a number of professional economists from our ancient seats of learning have been advising the Government completely to stop factory building in the Development Areas. I hope the Government will not pay heed to those siren voices. The economists——
—are always wrong. I could give innumerable instances where they have been proved wrong in recent months and years. Their remedies are always theoretically perfect, but in practice they are disastrous. There seems to be a tendency on the part of our economists to live in ivory towers and to ignore the existence of real men and women and real social problems. They live in a world of theories, abstractions and statistics, and in their concern with arithmetical figures they forget the human figures behind them. To stop or to cut down the programme of capital expenditure in the Development Areas would have four disastrous consequences. [Interruption.] This matter is no joke. Some of us have lived through the tragedy of the inter-war years in the Development Areas. There will be four very serious consequences, and if the right hon. Gentleman the Member for Bromley (Mr. H. Macmillan) will have patience I will deal with them.
Firstly, it would mean a tremendous amount of waste in the work already done and the material which has already been used. Already in South Wales we have a rash of abandoned industrial undertakings of all kinds, monuments to the private enterprise of the inter-war years. I do not want the factories now being constructed to be abandoned as a monument to failure to plan. I hope these factories now in course of construction will be completed, and completed soon. Secondly, to abandon this programme now will condemn a quarter of a million people to prolonged idleness and enforced unemployment. Britain is desperately short of manpower. For months we have been hunting Europe for labour, and these people in the Development Areas—men and women, ex-miners and others—can make a tremendous contribution towards the solution of the problem of production.
Thirdly, it would break faith with our people. These people in the Development Areas made the Labour Movement. They laid the foundation for the Labour Government. They provided the cradle and the nurse for the Labour Party, the trade unions and the Labour Movement. They have been loyal to their traditions and their principles, in fair weather and in foul, and they have had more than their share of suffering. Fourthly, to cut down this programme now would react on the morale of the men in the basic industries, which are still in and around the Development Areas. This would do profound psychological harm, and we need the goodwill of these men more than ever.
I urge the Government to proceed with the Development Area programme, to complete the present programme, to speed up the work and to give those areas a real priority which they have not had up to now. This will make a tremendous contribution to the solution of our economic difficulties. It will bring in more manpower, it will increase our productive capacity and it will help to close the gap in our balance of payments.
We have this afternoon heard from the Chancellor of the Exchequer a most comprehensive survey of the investment programme for next year. It was perhaps a little unfortunate that we did not have available in print the very extensive and interesting figures of our national balance sheet which he gave us; it was a little difficult to absorb them as they were given. The national balance sheet and the national investment programme are so closely interwoven that they should be considered as one rather than as two. From the information we were given this afternoon, it seems that the one essential thing to look for in this country is food. That is the one thing we must have to preserve life. We must manufacture a great many goods partly for consumption in this country and partly for export in order to purchase the raw materials and food which cannot be produced here. Undoubtedly we should all like bread and butter and plenty of jam, but the crucial point at the present time is to be sure of having sufficient bread during the next two or three years.
The more information we get about the financial position of the country, the more serious it seems to be. Most people would agree that the depreciation of plant and machinery in this country in the war period was greater than that of any of the other victorious nations. For one reason or another, it suffered to a far greater extent, and for that reason we have to make good far more depreciation, and the setback is much greater than other countries have had to face. It is suggested that capital investment for next year should be reduced by only approximately 10 per cent. on the figures which were put forward before. In reading through the White Paper, which must be of great interest to everyone, it would seem to me that the Departments which are concerned in most of this expenditure have been vying with each other in seeing how much of that expenditure they could retain, rather than seeing how much they could cut it to a minimum for the national wellbeing.
I suggest that the way to build up estimates of capital expenditure is to put first the top priority industries such as agriculture, coal, and certain manufacturing industries, and then gradually to give a little to the other less important industries as time goes on. However, from reading the White Paper, one gets the impression that all the Departments have been asked to think of a figure for their expenditure and then reduce it as much as they could, which is not very much. We know a vast amount of expenditure is required, but, in the circumstances, I believe that the cut suggested is insufficient.
We have a considerable amount of plant in second-rate condition in this country. We have a known amount of labour and a certain amount of materials, and it seems to me to resolve itself into a Chinese puzzle as to how this can be best fitted together to produce food first, consumable and export goods second, and then further goods which represent jam on the bread and butter. As the Chancellor pointed out, it is most difficult to arrange a change of labour from one industry to another without some unemployment; but there must be considerable alterations in order to change from a wartime economy to some semblance of a successful peacetime economy.
I come back to the one industry which I regard as being of the greatest single importance at the present time, agriculture. I was glad to hear the Chancellor lay such emphasis on agriculture and food. I believe the Treasury has at last come to recognise that it is the greatest dollar saver in this country. It is possible that we may be much more hard up for food in the next few months than we believe possible at present. Foreign exchange may be much more difficult to get than it is even today. We knew the necessity for producing food at all costs during the war, and it is strange that apparently the output of agriculture has diminished since the end of the war. In spite of all the difficulties of production, of enemy action, of the Services taking a large acreage, of a shortage of housing and machinery for the land, a tremendous amount of agricultural produce and food was grown very rapidly in this country. I am not satisfied that we are doing our best at the present time, and I urge the Government to look into that side of the question most carefully. By the end of the war a tremendous impetus had been built up in agriculture, but after the war it seemed to run down and diminish. The impetus for production has not been built up again, and the longer it is left to run down the more difficult will it be to recapture.
I urge the Chancellor to do everything he can to help agriculture, because it is of first importance. As is well known, the essentials are houses and machinery of all kinds, and I wish to emphasise what my hon. and gallant Friend the Member for Ludlow (Lieut.-Colonel Corbett) said this afternoon. There may be very great possibilities in extensive grass driers, run on a co-operative basis in different parts of the country. The output of feeding-stuffs per acre is, I believe, greater from grass drying than from any other method in parts of the country, especially where the rainfall is heavy. One hears of people and co-operative societies having great difficulty in getting these grass driers for next year. I urge the Chancellor to try to help these people in this fundamental industry because that will be helping the country.
I entirely agree with what was said by the hon. Member for Stoke (Mr. Ellis Smith) about the necessity for increasing the efficiency of our factories. In many cases there is great room and need for increasing that efficiency. As soon as we can get it, money could very well be spent on that, but it is not as important as primary food for consumption and export goods at the present time.
An hon. Member suggested that it was easy to criticise this White Paper, but asked what suggestions could be made. In view of the absence of information, it is difficult for me to suggest anything of a constructive nature. The Government have the information. I suggest that there are economies which could be made. For instance, there is the expenditure of £4 million on rebuilding Euston Station. We all know it probably would be very much better rebuilt, as no doubt most of us have used it regularly for the last 20 or 30 years; but surely a matter of that kind could be left for two or three years while work of much greater importance was put in hand. Probably it is not necessary to construct all the new roads which are projected. I was surprised to read of the large increase in expenditure proposed for the Scottish Home Department. If I were in the Government, I would scrutinise that expenditure very carefully.
Another matter not mentioned in the White Paper is the great expenditure on Colonial development which is about to be sanctioned by the House. It may be very easy to spend large sums abroad, which means sending from this country machinery and consumable goads to meet the wages which will be paid on the spot. That expenditure now will be redeemed in goods—in this case I am thinking particularly of groundnuts—in three or four years' time. But it is of the utmost importance that all expenditure made now should yield either exchange or foodstuffs in the nearest possible future. Therefore, I urge the Chancellor to peruse the White Paper on Capital Investment again, and when doing so to have in his hand a stout blue pencil, which he should use effectively.
I am in agreement with many of the points which the hon. Member for Eddisbury (Sir J. Barlow) has made, and in particular with his desire to secure an efficient agriculture, and to equip it with much machinery of which it is now short. I think he also made a strong point about the drying of grass. I was rather surprised to hear him urging that we should cut out the project for rebuilding Euston Station, because that has already been decided upon, and is, in fact, in the White Paper which we are discussing.
I agree with the Government that there is an urgent need for a careful survey of the whole of our capital expenditure at the present time. Everything that calls for a diversion of effort from the immediate main task of closing the import-export gap should be most carefully examined to see whether it can be permitted to continue or not. That applies even to housing, despite the fact that that should be the last piece of capital expenditure that is not positively and immediately productive to be cut. Nevertheless, it should be considered if the necessity arises. The Government should not flinch from that, because there is no value in any family having a nice house in which to live if they are not to get sufficient food on the table to keep them alive. I was pleased with the Chancellor's statement on this point that it would probably be the last piece of this type of expenditure which would be cut.
I would like to think, as the hon. Member for Eddisbury does, that the present period is the most difficult that we shall be facing. I believe that that is not true, and that our greatest difficulty will come when the present sellers' market disappears and a buyers' market replaces it. We shall then meet our greatest trouble. Our present difficulty is to make exports; our difficulty then will be to sell them. That will be the problem. The price factor will be one of considerable importance when we have to endeavour to maintain an export of some 25 per cent. of our total output in a buyers' market, with a production efficiency of approximately one-third of our main rival, the United States of America, in conditions which will be, to us, a matter of life and death, and to that rival a mere frill on its life.
At the present time considerable stupidity is being displayed by exporters who are sending abroad inferior goods at too high a price. Recently, in Denmark, I heard numerous criticisms of the inferiority of the goods we are sending there, and the price which is being charged for them. That might produce an immediate advantage, but obviously it will be a disadvantage to this country in the long run. We cannot afford to do that sort of thing with a market such as we have in Denmark.
Everybody is aware of the result of the run-down of our capital equipment during the war period. What is not so immediately obvious and what is glossed over considerably is the run-down of our capital equipment which took place during the period between the two wars. The Chancellor's statement on the transport industry dealt only with the war years, and he dealt particularly with the difficulties caused by the run-down of our capital equipment during the war period. Surely, at the same time he should have dealt with the run-down of our equipment which took place during the whole of the period 1919–1939. That was a period during which the capital equipment of the railways was steadily deteriorating and the replacements were not sufficient to maintain a really efficient undertaking. The road-rail corn-petition prevented the railways from raising the capital which was so vitally necessary if they were to maintain an efficient industry.
We are competing, and we shall continue to compete, with the United States of America, where, as was pointed out by the hon. Member for Stoke (Mr. Ellis Smith), there is an efficiency in industry which we have so far been unable to attain. If we take the physical output per head and give Britain the figure of 100, the United States, even before the last war, were well ahead. Output in blast furnace products reached 361, compared with 100 in Britain. Other American figures were: smelting and rolling of iron and steel, 168; iron and steel foundries, 186; iron and steel products of wire, cutlery, iron stoves, tools and implements, 400; motor cars, 482; and rubber tyres, 266. This was secured as a result of a greater capital expenditure per head of the workers employed. An indication of this is to be found in the fact that the horse power at the elbow of every worker in the United States was over double that available to his opposite number in England.
How are we to meet that competition? How are we to challenge that supremacy when the competition begins to get tough, as inevitably it will? Can it be secured by wage reductions in this country? Already, we have a wage advantage for competitive purposes because wages here are about half those of the United States? I do not think that the solution can lie there. An estimate has been made that a 10 per cent, cut in wages in this country would leave British labour costs still far above the level of those of the United States. I do not pretend that low wages cannot give a country some competitive advantage. It is obvious from what happened during the period between the wars in our competition with Japan that, in fact, it does give advantages. Nobody in their senses would suggest today that we should be able or attempt to cut wages to such an extent as would enable us to meet the competition from America on the same price level.
I am inclined to regard low wages as a cause rather than an effect of low productivity. The reason for the delay in the introduction of a high standard of mechanisation in this country was largely because there was a large well of cheap labour upon which employers could draw in the past. In face of the competition which we must meet, we cannot overlook the importance of a large home market which can absorb the goods and ensure that we have the best starting point for a healthy export trade.
I believe that, at this time, despite any difficulties, we ought to be tackling, as energetically as possible, the technical requirements of our main industries. We ought now to be facing capital expenditure on such a scale as will enable us to live in the difficult years which lie ahead. How is this going to be done? How are we going to make capital expenditures in the vital industries in the difficult situation in which we now find ourselves? I do not believe anybody should make airy statements about capital equipment and technical re-equipment, unless they are prepared to indicate from whence that capital equipment should come, and, indeed, the materials and labour. We ought to be ensuring a capital and technical re-equipment of our industries even if it means the delaying of the relaxation of austerity, and putting off increased consumption in this country—and even at the risk of being reminded of the old cry of "Pie in the sky for the workers"—for the sake of being better equipped to face the difficult years that undoubtedly do lie ahead.
I believe we ought to be getting our capital expenditure in the right places, partly by cutting all unnecessary expenditure. There is plenty of unnecessary expenditure to be seen in this country today. I would even refer to some of the expenditure that we were discussing in this House yesterday. I am convinced that there are far too many people who are not earning their corn, and are not participating in production as they should. The economy of this country has developed into something like an inverted pyramid with the primary producer at the apex and, swelling out above him, a number of people who are not doing a real and vitally necessary job of work. It is part of the job of the Government, in this connection, to examine carefully what is being done by all the people in this country, and to see if it is possible to ensure that they are, in fact, doing work really necessary to our economy.
I believe that the proposals of the White Paper itself will partly help us to meet urgent expenditure in every direction. Some of the cuts in expenditure, I think, are right and it was necessary that they should be made, in order that more vital expenditure could be made in other directions. It is time we had an even more drastic cut in the Armed Forces. The surest defence of this country does not lie in a big Army, a big Navy or a big Air Force, but in a soundly based economy. It lies in a thoroughly up-to-date, and properly technically efficient economy, with capital expenditure and capital equipment in the right place. That would enable us to undertake the defence of our country, if it ever became necessary to do so.
I believe that we ought at this time to be encouraging certain parts of the private sector of industry to embark upon new capital expenditure; that encouragement should be given only after careful examination, and that allowances should be made which would permit those parts of industry which are vitally necessary to lay aside more and more the necessary capital expenditure. I believe that there is a need for a drastic examination and reorganisation of the whole of the private sector. This is vitally necessary. During the period of re-equipment, there will undoubtedly be an urgent necessity for higher output per worker employed with the same capital equipment. As the Chancellor said, the mass of the working people in this country have responded to the call of this Government, and the figures which my right hon. and learned Friend gave are evidence of that fact. This increased output per worker with the old type of equipment is something that cannot continue. We have to give the worker the tools to enable him to do the job. It is possible for us to ensure that, but we must also take care that we properly direct the materials and the labour to the right things.
If this country is to maintain its importance, it must stand on its own feet, and we can only stand on our own feet if we get into a position to shake off the moneylenders, and I do not mean that in any derogatory sense. Other countries have climbed to industrial supremacy from our shoulders. They started where we left off. Now, somehow, we have to get over what is going to be a difficult period during the closing of the gap, and we shall have to meet all the difficulties that will be consequent on the sellers' market turning into a buyers' market. We now have to take a leap from their shoulders, and start from the point they have reached, and so build up our capital equipment, that we shall be able to restore this country's old greatness.
I want at once to sound a note of alarm, and, if possible, give this House, the Government and the country an electric shock. When I read through this White Paper, I must confess that I was gravely concerned when I read pages 25 and 26, which deal with the present and future of the electricity supply of this country. I am not alone in my anxiety about this, because I have had, during the past few days, letters from manufacturers all over the country who are desperately anxious, as we all are who are concerned in productive industry, to help the Chancellor to meet his export targets.
We are concerned about the outlook ahead, having regard to the cutting down of the programme for increasing the electric power plant of the country, to the extent which is foreshadowed. I do not know whether hon. Members appreciate what this cut amounts to. It is something like 840,000 kilowatts, or over 1,100,000 horse-power, of which we shall be short. We had hoped that, in the next two or three winters, the present situation of shortage might have disap- peared, and that we would have adequate power plant available both for industry and domestic use, as we used to have before the war. We now have to face the prolongation of this state of affairs for another five years.
I agree with much that was said by the hon. Member for South Derby (Mr. Champion), who stated that, in America, the horse-power per employee was about twice what it is in this country. In America, also they are short of power plant. What are they doing? They are going all out in a programme of power station extensions. Where would Russia have been during the recent great war, if they had not, in the prewar years, gone in for an immense power programme expansion? That programme included great projects, like the Dnieper Dam and similar undertakings, which put the country in a position to produce the munitions of war, and all the rest of it, and enabled them, with the help of other countries, to fight successfully with their allies in the recent great conflict.
At present, we are meeting the situation in industry only by reducing the demand that we make on the power stations by staggering hours. The staggering of hours has not been easy to arrange, and nobody, neither employer nor worker, likes it, and it is not easy to work. It is causing, particularly in this time of great housing shortage, intense trouble in the homes of the people, because one lot of workers are at work during the day and another lot at night, and those who have to do their household duties during the day have to creep about the place, so as not to disturb those who are trying to snatch a few hours of sleep during the daytime. Our people may be able to stand that for a year or two, but, under this programme, we are faced with the probability that they will be asked to put up with it for another four, five, or six years. I think it is too much to expect the people of this country, willing as they are to help, and doing so well as they are at present, to face a prospect of that kind, if we can do anything to avert it.
I am not criticising without putting forward a suggestion which I think may, at least, be worthy of exploration. If we cannot spare the steel in this country to provide for these power station extensions, plants, and so on, have we tried to see whether they can be procured from Switzerland, from Sweden, or from France? The Swiss make excellent generating plant as also do the Swedes. We could get boiler plant, I should imagine, from France or Belgium. At any rate, there we have an alternative which is worth exploration. At a time when we are grieviously short of power to drive our industrial plants, which are essential to achieve the export targets that the Government wish us to reach, we ought not to leave any alternative unexplored. We ought to see whether there is any alternative of that kind which we could call to our aid as a temporary measure to meet our straitened circumstances.
So much for the shortage of electric power plant. There is only one other matter about which I want to say a few words. I have said—and I am sure the Chancellor of the Exchequer knows this is true—that those of us who are engaged in productive industry are anxious to help the Government in any way we can to produce the maximum for export. It is not an easy matter for the Government to produce proper targets at which we should aim in our productive programme, but even that is simple compared with the task of achieving them. I think we have to face the difficulties when we see them, and see what can be done to overcome or avert them.
In the first place—and I think the Chancellor mentioned this in his speech this afternoon—we are up against the import restrictions of many countries, and that is already having a most serious effect upon many of us so far as our exports are concerned. I know at the moment of cable manufactured for India, not suitable for any other country, built to the specification which is necessary in that country, lying in its drums in the ports at this moment because there is this import embargo placed by India. That may be aggravated a hundredfold, and while I quite believe that the Government are treating this as an urgent problem and are trying to induce other countries to lift these embargoes or to meet us as far as they possibly can, I would impress on the Government that there is really not a moment to be lost in coming to agreements with these countries if we are to do what the Government are asking us to achieve.
It is also true that the sellers' market is disappearing and is rapidly becoming a buyers' market, as the hon. Member for South Derby has just mentioned. Another difficulty confronting us all—and the Chancellor knows it quite as well as I do—is that which we shall very quickly have to face in competing for export business with other countries because of the high cost of fuel, steel, wages, rail and shipping freights, and so on, all of which have an enormous cumulative effect on the total cost of putting one's goods on the other side of the world in the hands of the customers whom we are seeking to serve.
I think it has been a matter for congratulation that, so far as transport in this country is concerned, which last winter was frequently a bottleneck to us, there has been a co-operative effort during recent week-ends in getting the thousands of trucks emptied so that there could be more interflow of traffic. I hope that will be continued throughout the winter, so that one of the difficulties—delays in getting material and so on—will be removed. One of the difficulties that does hamper manufacturers, when they have packed the products upon which they have been engaged, is to find at the last moment that it is impossible for them to be put on rail or ship. Manufacturers get their workshop capacity cluttered up with stuff which they cannot get away, and that in itself is a very serious factor limiting production.
One could talk for hours upon this White Paper, but these are the only two points I particularly wanted to stress tonight. I am filled with alarm about the power position of the country. It may be asked why I am worrying about it, because, although I have been responsible for providing power for consumers in recent years, in a very short time that responsibility will be taken from me. My responsibility does not end there, as I am a consumer as well, and I shall be on the consumers' side in future, and not on both sides. I am most anxious to ensure that the efforts of those associated with me in business are not going to be hampered—they are real efforts to help the Government pull this country through—by the fact that the Government have not tried every alternative, including the possibility of purchasing plant from abroad, to en- able industrialists to obtain their full electric power requirements and to carry out their full productive programme.
If the solution of this crisis that faces us lay wholly with the people in this country, I must confess that I should be feeling more easy in my mind than I do tonight; but the serious fact is that, until there is a better relationship between the world price levels for food and raw materials and those of manufactured products, so long as there is no better relationship than has existed during the last few years, I am afraid that world price levels will gradually move increasingly against us, as they have done. Consequently, that places us in a situation in which, as now when compared with last year, we may well be continuing to export more and more, to import less and less. I have been struck during this Debate by the fact that hon. Members on the other side of the House seem to have realised for the first time the true, grim nature of our economic crisis. [Laughter.] The last time the Leader of the Opposition spoke in this House, he pithily analysed the nature of our crisis by saying it was due to the fact that Socialist maladministration and red tape had broken the mainspring of the watch. Let hon. Members laugh at that.
The real, grim nature of our crisis is the fact that, though we are producing more steel than ever before, more coal than for many years past, 15 per cent. more foodstuffs than in 1938, and manufacturing 38,000 railway wagons a year instead of 25,000 railway wagons a year, as before the war—although, in other words, the whole economic machine is working much faster and more efficiently than before the war—we are still falling into debt at the rate of £50 million a month. That is the grim nature of the crisis.
If, indeed, the economic machine was slowing down, if our production figures were less than in 1937 and 1938, and there was still a grim gap of £50 million a month, then indeed the solution would be, as the right hon. Gentleman the Leader of the Opposition thinks, a comparatively easy one. It would be to get rid of in- competent administrators so that we could get back to the production figures of prewar days. However, as I say, the real, grim nature of this crisis is that, although the all-round production figures in important sectors—indeed, in vital sectors—of industry are at higher levels than in prewar days, there should still be this grim gap. I must say that when I said hon. Gentlemen opposite had at last understood the grim nature of our crisis, I should have excepted, apparently, the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) who opened the Debate from the Opposition side today.
It is obviously important that at this juncture, with steel and other raw materials in such short supply, there should be the optimum efficiency of administration shown by the Government. In one particular aspect, namely, building in the Development Areas and the non-Development Areas, especially factory building, I have been very interested for many months, and I put a Question to the President of the Board of Trade about the number of factories in the Development Areas of 50,000 square feet or over now building. I wanted to find out the relationship between factory building in the Development Areas and factory building in the non-Development Areas. The Board of Trade apparently did not like the Question. They switched it to the Ministry of Works. I got an answer this afternoon:
This information cannot be obtained without a detailed inquiry. Under present circumstances, I do not think the time and labour involved would be justified.
The Government admit that they cannot easily determine, such is the labour involved, the number of factories with a floor space of within 50,000 square feet now built outside the Development Areas. I think that shows a grave lack of administrative urgency. The amount of building inside the Development Areas, as compared with non-Development Area building, is a very important matter, and should be well known to the Government.
When one takes the express north from King's Cross one sees, as one nears Doncaster, hundreds of tanks apparently rotting under tarpaulins, and hundreds of carriers. I ask the Government, in view of the intense shortage of steel which menaces our building programme, what action they propose to take to make use of the vast number of carriers and tanks which are littered all over the country, as well as on railway sidings, so that the steel may be used for productive and urgent purposes.
I was glad to hear the Chancellor say that the real hold-up was not money, but labour and raw materials. Therefore, since money, apparently, is not to constitute any hindrance, I would like an assurance from him—and I think that hon. Members who represent the Development Areas as a whole would also be glad of an assurance—that the wide powers given to the Government under Section 5(1) of the Distribution of Industry Act to acquire sites in Development Areas for amenity purposes, so as to make these areas a little more healthy to work in, can be gone ahead with. An immense amount of valuable work can be done which does not involve the use of raw materials. In the building of the new Czechoslovakia a considerable amount of preparatory work is being done by voluntary labour. I think that the same enthusiasm and faith exist in Britain.
This clearance of derelict factory sites could be done not only by the 30,000 unemployed who still exist in the North East Development Area, and represent a great wastage of human material, but also by students. Students in that area have recently approached the Minister of Labour asking to be allowed to take part in these clearance schemes, and they have been repulsed. I ask the Minister of Health if he will take note of the fact that people anxious to build a better Britain have not received that amount of encouragement from the Government to which they are entitled.
I rise now because so many points have been raised that I shall not be able to answer them all at the end of the Debate. Will my hon. Friend give an example of a local authority which has been discouraged? I have the distinct impression that local authorities in the Development Areas, in respect of this particular matter, have been encouraged.
They have been encouraged, but there has been difficulty about the financial grants. Local authorities have been backward in many parts of the development areas. I suggest that on many occasions the local authori- ties might well have had a prod from the Government to get on with this work, but that lead has not been given. Local authorities are no more perfect than Government Departments, and sometimes they can help each other to be a little more efficient than they are.
I wish to say how relieved I was that the Chancellor of the Exchequer, in his opening remarks, showed a true realisation of the immense importance of housing in connection with the production drive. Housing is an investment in future production. It must not be forgotten that men in the engineering shops and in the shipyards, who have worked so magnificently during the last two years, have been living under extremely dismal conditions. Mental overcrowding is often worse than physical overcrowding, especially in the case of young people. The gap between generations is always difficult, but it is more difficult when the two generations have to share the same home. Housing is not capital expenditure which can be dispensed with, without repercussions on the production drive. Housing is one of the most important incentives we have to increased production. I notice that the "Economist" last week drew attention to, and attacked the Minister of Health for, his exaggerated housing programme. No doubt, he has seen the article himself. Can anything be more fantastically unreal?
The "Economist" did not mean that. They were talking about the expenditure of the raw materials and the houses actually built. To hearten the Minister of Health and to bring this Debate from the general to the specific, I would point out that in Newcastle-upon-Tyne, between 1918 and the beginning of 1921, not a single house was built for renting within the city's boundaries. In 1924, there were 12 houses built. It is not to be wondered, therefore, that there are 15,000 or 16,000 families, the heads of which are almost certainly production workers doing an important job, queueing up for houses, and experiencing all the frustration that a housing shortage means, with its consequent effects on industrial efficiency. We have built just over 1,000 temporary and permanent houses in the last two years. So much for the failure of the housing programme. Hon. Members opposite had better make up their minds whether they are attacking the Minister for building too few houses, or too many.
Since the Chancellor of the Exchequer said today that the real difficulty in housing is timber, may I put this specific question to the Minister of Health? There are immense timber resources, both of hard and soft woods, in Africa. Have the Cabinet asked the Colonial Development Corporation to make an African survey of the available timber resources, to see whether we cannot get timber from these non-dollar areas? Has that been done, and if so, when can we expect a report? So far as hard timber is concerned, we imported 2.4 million cubic feet in 1938, 4.9 million in 1945, which is twice as much, and 5.2 million in 1946. There are these immense timber resources in Africa, and I hope a survey will be made in order to find alternative sources of supplies.
Housing is not only a human problem, and the biggest social problem we have to face, but is one of the reasons for a certain distortion of our economy. When people have no proper homes to return to in the evenings after finishing work, they tend to visit the greyhound tracks and the public houses, and those other forms of mass entertainment which have given the Government such a headache in their attempt to control the evil effects upon our economy. One of the ways in which we can cut down, and, indeed solve, this vast expansion of the gambling and entertainment industries, is by making absolutely certain that we go all-out on the housing programme.
What is at stake in this crisis, in the immense problem of our balance of payments and the relationship between the world price levels of foodstuffs, raw materials and manufactured goods, is not only the fate of the Government—although that would be important—but the whole of our democratic life in this country, and tthe whole of our kindly tolerances and decencies. Hungry bellies and Parliamentary democracy do not go together; they never have done in any other country. When the Government put their efforts into solving this crisis, let them remember that what is at stake is not only the existence of the Labour Government, but the existence of the decent, kindly tolerances to which the practices of Parliamentary democracy have led in this country. If hon. Members opposite would only realise the seriousness of this crisis and the issues at stake, they might be a little more constructive in the future than they have been in the past.
The hon. Member for Central Newcastle (Mr. Wilkes) is probably sitting on the wrong side of the House. He started and concluded his speech by attacking this side of the House, while spending most of the rest of his time attacking the Government. It is most unfair to attach a wrong commencement and a wrong peroration to a speech; it rather confuses my hon. Friends.
I was delighted to hear the Chancellor of the Exchequer proclaim that the economy of our country today had become entirely unbalanced and unhealthy; and when he said we were losing markets because of our high and rising prices, he only echoed what experts have been saying for a considerable number of months, that our markets are growing smaller and more limited. That is a fact which can be denied by nobody. When he said in March of this year:
It is only if there is an expanding international trade generally, that we can possibly hope to attain our export target.—[OFFICIAL REPORT, 24th March, 1947; Vol. 435. c. 888.]
he was making a statement which ought to have made a great deal of difference to the Debate today. That expansion just is not apparent today, and nobody can see it appearing in the near future. Yet we depend upon that expansion in order to eat; and all the talk that has been going on about industrial development omits entirely the real question which we should be discussing, namely, how we are to eat.
I believe that it is time we returned to the traditional policy from which we departed 100 years ago—[Interruption.] I would ask hon. Members not to interrupt me as I am trying to condense what I have to say. If we return to the traditional policy which we abandoned 100 years ago we should be very much safer than we are today. I contend that our economic policy should be based on a policy of food procurement, and if this policy is adopted instead of the policy of full employment, which was the policy until today, it would be to our advantage. I am very glad that the Chancellor of the Exchequer was realist enough to admit that we have to abandon for the time being the policy of full employment. [Interruption.] I made a note of what the right hon. and learned Gentleman said, and I do not think that I am in any way misquoting him. That is what I really understoood him to say when he said that full employment was not now an overriding policy.
If I am wrong—I do not mean to wrong him—I will withdraw what I said. I was trying to point out that he was taking a more realistic line and concentrating entirely on one policy.
What my right hon. and learned Friend was pointing out was that it would be necessary in order to bring about a transfer, a re-emphasis and a redeployment of labour for labour to leave some industries for industries of another kind, but that is not unemployment.
I made a note of what he said at the time and those are the words I put down. If I am wrong I withdraw them, because I do not want to misinterpret what the right hon. and learned Gentleman said.
If the policy of food procurement is developed as a policy, then our capital investment programme should go along on clear lines. First, home production; we could increase our own food production in the next five years by up to 60 per cent. of our total requirements, and in the next 10 years by 65 to 75 per cent. of our total requirements. The second priority would be the production at home of manufacture which will buy food and raw materials, and I include in that animal feedingstuffs. The criterion would then be, is a capital investment an earner of food or raw material? If the answer is "Yes," then it is administratively possible to cut away the strangling controls which are slowing down production and sales abroad, and we could concentrate the bureaucracy on sharing out the productive capacity of the country that is left, amongst less vital needs. That is my main argument, but I want to put an important subsidiary argument.
The capital investment policy seems to put its main emphasis upon the procurement of coal and upon exports generally. Other needs flit about, according to political considerations. One point stands out clearly, which is that steel is the real bottleneck in both those needs. It is in the distribution of the steel output that the Government have created the greatest chaos. In the proper allocation of the steel output lies the foundation for a realist investment policy. I am well aware that, in order to carry out the food procurement policy, it would be necessary to give a disproportionate amount of steel to those industries of the country, including agriculture, which are to be used mainly for the procurement of food, but I do not think that is a difficulty which the Chancellor cannot overcome.
The section of the White Paper which deals with agricultural works and buildings is based upon the programme put forward by the Government in September—or so I presume, and I do not think that I am wrong. That programme is wholly unrelated to our needs and to the potential productivity of the agricultural industry. Also has the Minister of Health examined the possibility of saving on the water supply schemes, which I know to be necessary? Such a saving might be brought about by an intensive anti-pollution policy, under which water for towns that need it would be obtained from the rivers rather than from the gathering grounds? I believe there is something in that suggestion.
I was a bit alarmed to hear the Chancellor of the Exchequer say that the economies implied in the White Paper would be put into effect if the necessity intervened. Surely the necessity has arrived. I was surprised that he should take an attitude which suggests that we are not in a necessitous period.
Home food production could be considerably increased within two years, and more rapidly after that, if the Government would accept certain assumptions. The first is that the problem is mainly—here I must speak somewhat technically—an increase in the production of proteins, as well as in increased labour plus an increase in the importation, of foodstuffs. I want to refer particularly to the increase in the production of proteins. The production problem is entirely a capital investment problem. No increase in production is possible to any large extent for human food from our existing arable acreage. A considerable increase is possible, however, by increased production of protein through livestock, because the protein is already present in the country in our grass. If grass is grown specifically for cutting and drying, the protein can be collected and stored. Some examples have been given and I will give a further one. There are over 3,000,000 acres of oats grown in this country. If one million acres—this is theoretical and could not be put into practice immediately—were turned from oats to grass for drying they would produce all the protein produced by 3,000,000 acres of oats, and we should then have the remaining 2,000,000 acres for the production of dried grass or some other commodity. Moreover, oats is not a balanced food, whereas dried grass is.
The examples which have been given demonstrate the possibilities, but today virtually nothing is being done. There are probably only 300 grass driers in the country and they use about 60,000 acres of land. The Milk Marketing Board hope to produce 20 more before next spring. They "hope" because they do not know whether they can get the steel for the buildings, machinery and equipment, and they cannot go further for reasons partly of financial and partly of productive capacity. If the Government are prepared to accept the assumption that the production of protein is necessary, it can do a very great deal in providing the steel, the productive capacity and the finance to enable the Milk Marketing Board and private farmers to instal this machinery. One thing that convinces me is that I never heard of a farmer who has given up drying grass once he has gone in for it. There must therefore be sound economic reasons why this should be pressed forward.
The equipment of a grass-drying plant requires between 40 tons and 80 tons of steel according to the size of the plant. The cost of the building and machinery and field machinery is between £3,000 and £8,000, according to the size of the plant. To indicate what could be done, it the Government undertook a really energetic campaign, before the spring of 1949 a further 300 grass-drying plants could be set up. That would take a great deal of capital in various forms for buildings, machinery and so on, but the amount of protein stored would far outweigh any disadvantages accruing from having to take steel and capital investment from other parts of our economy.
In the building section of the White Paper it is probable that an increase of about 25 per cent. would be necessary, and in the machinery section of the White Paper dealing with agriculture, probably the same amount of increase would be necessary. In addition, it would be necessary to allow the manufacturers of the various parts of the programme an extension of factories. I would point out, however, that there will be considerable unemployment in the structural steel industry—in fact, it is starting now—and this necessary food procurement policy would also have the added advantage of absorbing possible unemployment in that industry.
In conclusion, I would not fear the future if the Government would undertake a policy of procuring food for this country. I believe it is possible to do this to a considerable extent by increasing our home food resources, but I am afraid that the White Paper policy, and the general attitude of the Government on the matter, leaves me with the feeling that the whole of their outlook is entirely inadequate to meet the food needs of the country in the near future.
I should be the last, as things are at present, to feel concerned about any further expansion of the steel industry, but there are many aspects of the position which make me wonder whether possibly a few years hence we shall find our steel industry seriously over-equipped. If a considerable expansion of factory buildings occurs in some industries, those buildings and equipment can possibly be transferred to other industries, but if we have an over-expansion of the steel industry, we shall find that the type of building used for steel production, steel smelting, steel rolling, and so on, will not be amenable to transference to another industry.
Again, steel is up against serious competitors in the development of nonferrous metals, such as aluminium. Then, with regard to structural steel, we have to bear in mind that there is a serious competitor, which will increase in the near future, in the form of ferro-concrete buildings for which far less steel is used than in normal structural engineering buildings. Therefore, while I am vitally interested to see the reasonable optimum reached in the steel-producing industry I think it ought to be kept under careful review.
With regard to housing, I am concerned that capital expansion should be limited in this present crisis. Housing appears to be particularly vulnerable, having regard to the present need for capital restriction. It is not like machinery. To restrict capital expenditure on machinery might be argued to be a very narrow-sighted policy. It may be argued in regard to housing that, after all, it does not bring any future improvement in our general expansion of industry. On the other hand, houses are very important to our standard of living, with special reference to the poor. We need to ensure as far as possible that the poor are not singled out by the special circumstances of the case for un- reasonable retrenchment. I urge the Chancellor to avoid what appears to be an economic case for retrenching on housing, and to do what is possible to preserve and extend housing so far as circumstances permit.
No constructive proposals or alternatives for capital restrictions have been put forward in many speeches which have been made today, other than those which were proposed in the speech of the Chancellor. The reason is that the problem is exceedingly difficult. It is a tantalising problem to find a constructive line. The Minister of Health is subsidising housing, and is to be congratulated on the degree of such subsidy; but there is a startling fact in that the subsidy today on a normal house is equivalent to a capital expenditure of £577, which is a considerable capital payment for a normal house. In regard to flats on more expensive sites, the subsidy goes up to £1,100 and, if my memory is correct, up to £1,700. Where does that money go? On a final analysis, we find that a large amount of that excessive capital outlay goes to the landowner. That all points to the necessity for the taxation of land values.
I appreciate the point, but after all, this is a Debate on the reduction of capital expenditure, and I am submitting a practical line on which we can bring about an effective measure——
I bow to your Ruling, Sir, and leave it there. Fortunately I know the Minister of Health has a very receptive mind. That was going to be my peroration, but I will leave it there, and hope that what I have said in regard to steel and housing, although the latter is ruled out of Order, may have the careful consideration of the Chancellor.
I am glad to have the opportunity immediately to reply to the statements of the hon. Member for North St. Pancras (Mr. House) about the steel industry. As a representative of one of the greatest cities connected with steel, I know something of the demands made upon the industry at the moment. I can assure the hon. Member that the demand of consumers for steel is very great and on this supply depends the future prosperity of this industry.
That point is made, and I will leave it. I wish to associate myself with the warning given by my right hon. Friend the Member for Aldershot (Mr. Lyttelton) about the seriousness of the situation. The point I wish to make is that although I agree as to the industrial illness through which we are passing, I think that the remedy does not really lie in the issue of the reduction of expenditure about which we are talking tonight. Upon the progress of capital expenditure depends the prosperity of this country. Whether one is speaking of a firm, a business or a nation, one finds that once it begins to stagnate in its capital expenditure, great harm is caused not only to the morale of the people but also to the trade or industry concerned.
We have heard tonight from various quarters of the House suggestions about directions in which the Government have been asked not to cut down capital expenditure—machine tools, grass drying, housing. We have had various suggestions from all sides of the House to the Government as to what should be released from the cutting down of capital expenditure. This is quite logical. It is impossible to be able to say where expenditure should be cut down and should not be cut down, as each particular item fits into the whole structure. As I see it, the real issue in the next six or seven months is whether we are to get the raw materials with which to keep our industries going.
The argument I wish to pose is that our export drive with which the Chancellor dealt in great detail depends upon people abroad buying our goods. I am referring to people in the soft currency areas; I am not now speaking so much about the dollar area. The people who buy our goods will have to pay for them in some currency or other. The question is, what are our exporters to receive in payment? They can either receive sterling which is held by those countries, or else they can receive the currency of those countries.
One of the greatest difficulties about exporting at the moment, and I can assure the Government of this—I see it happening in Sheffield now with regard to the light steel trades and other trades—is that the demand is filling up on the Continent and elsewhere, and it is becoming increasingly difficult to export these goods—goods of good quality—because of the difficulty of getting payment for them. The average exporter is quite prepared to accept sterling but is not prepared at the moment to accept payment in francs, pesetas or drachmas or some other currencies because of the artificial values of those currencies. The franc is pegged at 475 to the pound but its actual value is nearer 900. No exporter will export for payment in francs at 475 to the pound when their real value is 900 to the pound. That means that we are only able to export where payment in sterling is possible which in turn means only from countries from which we have imported something.
That brings us to the point which the Chancellor made about bilateral agreements. The policy of the Government at the moment is to get bilateral agreements, in other words, a barter trade. That is one side of the picture. The other side is that the Chancellor made it clear that our past prosperity depended upon triangular trade. We could not pay for all our dollar requirements by barter, and, therefore, we had to have triangular trade through other countries. The two things are quite inconsistent. We cannot build up bilateral agreements with Sweden, Russia or other countries, and at the same time expect to have triangular trade with the United States. The difficulty which will come upon this country in the next six months will be the slowing down of our export drive for that reason, that we shall not be able to find markets into which our goods can go. The best will and the best agreements in the world will not help us if the export market goes and we will eventually find that our warehouses are filling up with the goods which should be going abroad. The result of that will be that we shall be cutting down our imports further and further, and that eventually we shall not have the raw materials with which to carry out our production programme.
I want to deal very briefly with the point raised by the Chancellor of the Exchequer with regard to production. I am afraid I must state that I consider that the note which he struck was too optimistic. He mentioned tractor production. I entirely agree with him about tractor production; but what about rubber tyres for tractors? At the moment, there seems to be great difficulty in obtaining them. A A tractor without tyres is not very much good. He mentioned scrap iron. That is something in which Sheffield is particularly interested. There is a great shortage of scrap. Why, when part of the Italian fleet was allocated for scrap, were ships and submarines recently given back? I know that an answer was given that our break-up shipyards are full. That is only a temporary phase which could be got over. I have seen the results which this deficiency of scrap has had in our steel production in Sheffield.
I do not intend to go into detail at this stage about the question which was raised about dirt in coal. I think that the Minister of Health intervened upon that subject. I can assure him from my own experience with regard to coking coal—the coke which makes the steel—that the ash content has gone up in the last year, or year and a half, from about 13 per cent. to 15 per cent. That is one example. Moisture is another. The amount of water in slack is increasing, in some cases up to 20 per cent. I hope that the right hon. Gentleman will not try to make out a case that there has not been an increase. Everybody in trade and industry knows that there has been. I hope that he will use his influence with the National Coal Board to reduce the amount of dirt in coal.
I want to turn to the cost of coal. The Chancellor of the Exchequer said that we must try to keep our costs down in order to export. I entirely agree with him; but it is no good saying that tonight, when yesterday the Ministry of Fuel and Power raised the price of coal by 2s. 6d. That means 5s. on the price of steel and 3s. 6d. on coke. That has its effect throughout our basic structure. The answer, surely, is—and sometimes hon. Members opposite suggest that we are not constructive—that under the theory of nationalisation there was to be a saving on administrative overheads. Let us ask the Coal Board to exercise economies and cause a saving in administrative overheads. The recent increase of 2s. 6d. could be dealt with in such a way. If we ask our exporters to export goods at a price to be met abroad, we cannot continue increasing, by 4s. and by 2s. 6d., the prices of coal and other basic commodities at home. Methods must be found by which economies can be effected.
To sum up, I wish to say that I think we are making a mistake at this stage in cutting down our capital expenditure. That view may not be held by many Members in this House, but I feel most sincerely that it is a mistake at present to cut our capital expenditure, because upon our capital expenditure depends our prosperity in years to come. It is the very last thing which we should do and only when everything else fails. Then, possibly as a final measure of despair, we should accede to some such idea as this.
I have tried to put to the Government another method of freeing the currency restrictions. I am certain that America would be prepared to listen to an advance on those lines if it was made from this country. I have noticed that in the Press recently there have been some very damaging remarks about the value of the £ to the dollar. I believe that some figure like 2.10 or even 2.8 dollars to the £ was the price given. I am certain that that is most damaging to the confidence of this country. One of the guides to the real rate is the position in the nearest international zone to this country, which is Tangier, where there is a free exchange of these currencies. There, the price as recently as a month ago was 3.75 dollars to the £, which means only 25 cents to go before parity with the dollar was reached. Therefore, we have not got so far to go before we can see parity between sterling and the dollar, and once that is done, it will be possible to get more overall agreement between the major powers in order to allow the free exchange of currency; to allow freedom to buy forward francs or pesetas in the export trade in the ordinary course of business activities.
These are the points to which I hope the Government or the Minister of Health will reply. They are essential and funda- mental, and our whole prosperity depends upon our export drive in the next six months. I am sorry to say that I have seen that export drive, even with the best will in the world on the part of exporters, beginning to slow down. Once that happens, we come to great difficulties. But there is yet time in which action can be taken, and I ask the Government tonight to take that action now.
A little while ago, my hon. Friend the Member for Neath (Mr. D. J. Williams) in a very persuasive speech, spoke of the academic economists in certain universities attacking the expenditure of capital equipment in the Development Areas. I have no objection to economists doing that, because their work is seldom read by people other than economists, who usually disagree with all they have said, but when the Press, and not merely the penny Press but the twopenny and threepenny Press, like the "Manchester Guardian" and "The Times" sees fit to devote editorials to attacking the Government's Development Area policy, I think it is time something was said in this House. On 8th December, the "Manchester Guardian" wrote in this way:
For 18 months, the policy of building new factories in what used to be called the Depressed Areas to guard against a return of heavy unemployment, has been doing more harm than good.
I think that would sound very harsh upon the ears of many thousands of people in Durham, South Wales, Scotland and Cumberland who in the past have known serious unemployment, and I do not think that it can go unchallenged.
Then, again, it is said that much of this money was used to set up in the Development Areas certain light industries of such a kind as the manufacture of electric fires. That may be so in isolated cases, but, really, the Development Area policy has been to bring a light and diversified economy into the Development Areas, and many of these projects have a direct contribution to make to the export trade and a direct contribution to make to the health of our basic industries. It is quite clear that, on economic grounds alone, the Government is right to pursue this policy in the Development Areas.
There we have the sole remaining substantial source of possible labour, and it is not fair to expect these people at this time to be forced to move from their homes to take up employment elsewhere. The limiting factor there is, of course, housing. We cannot move people from Durham into Birmingham or other places unless we can provide houses for them, and I am really surprised that the "Manchester Guardian" takes this line when it says:
To get the essential jobs done in time, we must move the workers to them.
In view of the attitude of the Liberal Party in the Debate on the control of Engagement Order, I wonder if the "Manchester Guardian" now favours large-scale direction of labour in a much more brutal form than could ever be contemplated by this Government.
I would like to say that there are certain things that must be done immediately if we are to get the fullest benefit from this Development Area policy. It is still a fact that 39 per cent. of the total of wholly unemployed males in the country are to be found in the Development Areas, and 50 per cent. of all those who have been unemployed for over six months are in these areas. As regards the women, it is even worse. Fifty-seven per cent. of the wholly unemployed, and 77 per cent. of those unemployed for six months and over, are in these areas, whereas there is relatively little long-term unemployment elsewhere. Firstly, we should have a campaign to finish those factories not yet completed. That may mean that more building labour should be diverted to those schemes, but, in both the short and longterm view, that will pay this country.
Secondly, there must be a greater selection from the many potential tenants. Now that we have various firms competing for factory space, it should be more possible for the Board of Trade to select those firms which can make the greatest contribution to our export needs. Then we must make certain that the guarantee given on page 12 of the White Paper, paragraph 20 (4)—
Within the reduced volume of factory buildings, preferential treatment will continue to be accorded to the Development Areas"—
is not just a paper priority. We have the promise of all possible priorities of raw materials to the firms in Development Areas. It is our hope that this
promise given in the White Paper will be translated into action.
There was some argument at the beginning of this Debate as to whether we should talk success or pessimism in the country. I believe we have much of which we can be proud. Many successful things are taking place in this country today, and it is only right that we should take every opportunity to stress this. There is no need for all this gloom and despondency, because, after all, the success of this Government, and our plan, to conquer this economic crisis will, in the end, depend upon the individual workman—whether he has his tail up or whether he has it down. It is our job, as responsible Members of this party, and of this House, to see that we do everything we possibly can to encourage the success of the workers in this country. There is a tremendous amount of enthusiasm in the country, in spite of what is said in America about this being a dying nation. One has only to go to football matches and greyhound races to find it. [HON. MEMBERS: "Hear, hear."] Oh, yes, there is, but we have to make it our job to canalise this enthusiasm behind the Government.
We can do it by making one Minister responsible for what I would call the coordination of voluntary labour. The recent success of the turn-round of wagons, is just one indication of what can be done. We can unload wagons, clear up bombed sites, work in the fields, help in the Christmas deliveries and, best of all, we can help with the collection of scrap. I would like to see this scrap iron collection taken out of the hands of the barrow boys, and the junk boys, and made a voluntary effort in every part of the country. There could be scrap depots and people could be encouraged to collect scrap and dump it at weekends at these depots. By canalising all this enthusiasm I am convinced that in the next six decisive months, which will decide the fate not only of this Government but of the country, the actions of this Government will pull us through.
Many admirable speeches have been made from all quarters of the House in the course of this Debate, and I hope I shall be excused of discourtesy if I cannot refer to them all. There is one to which I would particularly like to refer. Although he cannot claim the immunity accorded to a maiden speech, I think it would be in accordance with the courtesies of our political life if I were to welcome the intervention by the hon. Baronet the Member for Gravesend (Sir R. Acland). Much as I regret his return to this House on public grounds, may I be allowed to extend to him a welcome on a private basis? I am indeed sorry that, in abandoning the Whig tradition in which he was nurtured, he also shed that intimate knowledge of ancient literature, which was once the pride of his ancestors. It is perhaps typical of his rather confused, if amiable, temperament that, while he was induced by a kind of atavism to attempt a classical quotation, his apostasy led him to attribute the quotation to the wrong writer—about a century wrong—about the wrong person, also about a century out of date. Perhaps that may be regarded as typical of the degree of accuracy he has learned in his long political pilgrimage.
The Debate has covered a very wide field which is, indeed, natural and proper, for it deals with a very wide subject, one of grave interest to the whole world, and one of vital import to us. These are indeed the years of destiny. In the years that lie ahead, there hang suspended in the balance no less than the continuance and development of the British Empire and Commonwealth, or its gradual decay and dissolution. We who debate and deliberate here are charged with a double responsibility. We are the elected representatives of the central assembly of the Commonwealth, and we are the trustees of that whole system of Parliamentary government which is our chief pride and glory, and also the chief objective of the malice and spite of our enemies at home and abroad. Yet, if this Debate has covered a wide range, if the optical glass of inquiry has traversed a huge panorama, it has observed or revealed singularly little. We have not been given in a single comprehensive statement all the figures and facts necessary for a proper appreciation of the situation, still less have we the basis for constructive solutions.
Even the Chancellor of the Exchequer in his, if I may be allowed to say so, admirable and comprehensive speech, gave us only one figure which we had not had before, which was the rate of drain for the month of November, and which, by an agreeable chance, whether one puts it in dollars at 55 million a week, or in pounds at £55 million a month, comes to a sum easily understood by the worst mathematicians. That is the only new figure we had. In other words, we have had little pieces of this jigsaw puzzle, but we have hardly started to put them into a reasonable picture. It is true that, on this occasion, we have not had the advantage of one of those illuminating surveys which we used to get from the Lord President of the Council who is also the Leader of the House. I am sorry he is not in his place.
Indeed, I do not know what has happened to the Lord President. In the old planning days, he used to plan, or, should I say, went in first for England. But now, he seems to have been dropped from the side, and, naturally, having been left out of the first eleven, he has become a little peevish and restless. It is all right; he goes along playing in every league and club game he can get into. I never open a paper without seeing that he has lunched here and dined there, and whenever he has a meal he makes a speech. Really, that must be very fatiguing for everybody concerned. I liked his last broadcast. It was nice, old fashioned, comfortable, respectable, rather dated stuff which I personally found very enjoyable—like a breath of Edwardian fresh air blowing into the Socialist House. All that stuff about the class war and how the Tories started it. I am afraid he must have given up reading my "Middle Way"; I always fondly believed that to have been his favourite bedside book. He must have borrowed some manual from M. Molotov—the greater the falsehood, the better the propaganda. The Tories started the class war! Oh no! Really, the Lord President cannot get away with that. It will not do at all. Let him tell that to the marines or, perhaps I should say, let him tell it to the Secretary of State for War.
On the other hand, we on this side, and I personally, have great respect for the Chancellor of the Exchequer—the new one, I mean. We respect his learning, his diligence, his intellectual power, his selflessness, his singleness of purpose. If we do not always trust his judgment; it is because we cannot altogether forget the extravagances into which the very vigour of his doctrine has sometimes led him. He has had a terrible past. But it is indeed past and, really, as we all know, there is no greater asset for a politician than a rather disreputable past. It is a very good technique. It is so much easier to live down a past than to live up to one. Everybody is so much relieved when one turns over a new leaf. Words of ordinary common sense, such as "the undesirability of permanently living upon capital instead of upon income," phrases like that, carry little or no conviction when they are enunciated by an ordinary commonsense man, but when they come unexpectedly, with every felicity of phrase, from the lips of a genius, they have some inspired wisdom.
At any rate, the Chancellor of the Exchequer has this claim upon our confidence. Almost alone among his colleagues he seems to realise that this administration, in the financial and economic sphere at any rate, has, during the last two and a half years, done almost everything it ought not to have done and left undone almost everything it ought to have done. Now, if the nation as a whole is to construct and carry through a proper plan of national recovery, I would venture to say quite sincerely to him that I hope we may have a more comprehensive presentation of the facts. I cannot frankly say that we have yet been given the full facts. There are too many gaps. There are too many uncertainties. There are too many queries. There are too many estimates. There are too many targets. Figures given to hon. Members in the course of debate are very difficult for them to use effectively. It is very hard to take them down. I think the right hon. and learned Gentleman will agree that, in order that they may be intelligible, it is much better that they should be supplied in a detailed and tabulated form by way of White Paper, or printed document of some kind, prior to the opening of a Debate.
Let me explain the kind of figures which, I think, we require. First, we should have a far more accurate estimate or forecast of the so-called export targets. We should have these industry by industry. Then we should know how far each industry was consulted before the targets were fixed. We should know how far each industry has fixed its own target, how far it has been made by the Board of Trade, and how far the industry has agreed it is practicable. We should like to know how far the figure is being attained month by month, and what is the trend of targets in each case. We do not now get this entirely out of the "Board of Trade Journal." I know from knowledge of my own industry that it is very difficult in these great groupings to get the kind of analysis I mean. The figures of exports, as I understand them, are figures of values of goods invoiced out of the country. I think that is correct What proportion of these exports is actually sent in response to orders? What proportion is invoiced to the account of subsidiary companies, which is, therefore, really not valuable to us until the goods are sold? What proportion is sold on consignment or on sale or return? All these are very important as indicating the trend of trade. What are the actual sales in all the currencies? How much in the free currencies and in the restricted currencies and in the blocked currencies?
Since the whole basis of the plan for survival is the export drive, I feel that if the Chancellor will give us more detailed information about this daily progress it will be of the greatest value. It will be of the greatest value to those of us in industry and commerce, because then, by contrivance and co-operation, we can make adjustments here and improvements there. We can cut down on what is not selling well, and put fresh effort behind the more marketable lines; we can see where we really need to put our main effort, or where we need to switch over our effort. For it would be indeed tragical if the more profitable lines which could be exploited were not forthcoming because of any remediable shortages of materials and labour, and materials and labour were being tied up in lines which could not readily be sold.
The export drive is, of course, now in its easiest stage. The Chancellor, in his very well balanced account, gave us a warning that there was a certain hardening in that situation, but, broadly speaking, we are still operating in a sellers' market, and there are many things which can be sold which may not be readily saleable again. Therefore, it is all the more important that we should put our full efficiency into the more permanent lines we can reckon on as of permanent saleable value.
The Chancellor spoke to us about the textile industry and he gave us some moderately encouraging figures but two and a half years have passed since he took over from my right hon. Friend, and I fear that industry has neither been refitted with new equipment nor so improved by a variety of temporary measures, especially in the shape of amenities, as to attract labour to anything like the full extent required. What are the prospects now in the slight rise—I will say substantial rise—to which the right hon. and learned Gentleman was able to call attention today? Let us have, therefore, the export estimates set out trade by trade, industry by industry, showing whether the figure is a target, and whether it is a target made by the Government or by the trade. Perhaps it would be useful to have—certainly I would wish it if I were in charge—in one column what is not merely the optimistic target, but what balance we can reasonably rely on so that we get both a more conservative and a more optimistic figure. On this basis it would be possible to create one side of a comprehensive balance of payments account, and I think on this basis we should have something on which we could judge the progress we are really making.
On the other hand, on the payments side, surely we could have a more detailed account than the Chancellor of the Exchequer has given us up to now of purchases and imports in hard and soft currencies. We find, certainly in the trade in which I am interested, that we are told to purchase things in hard or soft currencies, but that is only a temporary and not a fixed state. Currencies which are soft become hard and currencies which are hard become soft. Traders cannot switch trade and the organisations they have made for trade with the same rapidity as changes take place in the currency situation. Every possible assistance should be given to industry from that point of view.
Then what about barter arrangements? How far are they really a big saving to us, for remember that in most of the barter arrangements we have we are in fact paying in the hardest of all currencies, namely, heavy machinery, about the most valuable thing in the world today. Thirdly, there are the arrangements which we ought to make for an increase in our invisible exports; and I feel myself that here is a vast field, by experiment and by controversy, fortified by fiscal assistance, for the increase of the earnings of invisible exports, especially in creative work, if greater incentives and greater assistance could be given. We should not forget that the income from the investments this country made in the past and which has supported it largely as a rentier country throughout a great period of our history, was from investments which were sometimes in the form of great masses of capital goods but were also in the form of the genius and skill of individual traders who founded businesses with very small capital and ventured in marketing and enterprise abroad and are paying very large dividends still to this country. So to that part of our investment, assistance ought to be stepped up to a far greater extent by every possible means in our power.
Of course, we should welcome the announcement, which I feel we must mark with our recognition, of some reduction upon our dollar expenditure abroad, on the occupation of Germany and Austria. The agreement which the Government of the United States have made, in conformity with the comradeship and friendship of the people of the United States with ourselves, is one which I think we ought not to let pass without expressing our appreciation and gratitude.
Only in the light of such information as I have been trying to describe is it possible for the capital programme to become intelligible. From this White Paper we can deduce little. I observe that in different quarters of the House hon. Members of all parties have drawn quite different deductions. Some said we are not spending enough on capital account, both on this side of the House and on the other side. Some have said the cuts are not sufficient, both Members who support the Government and Members of the Opposition. The truth is that we can deduce very little from the information at our disposal and we do not really know whether the total is still too high, for what we can bear or not. It is, of course, not too high for what we need. The need for capital reconstruction is enormous. The question is whether it is too high or too low, and that cannot be judged quantitatively except in relation to figures which are not at our disposal.
Is it then qualitatively correct? We cannot judge without a complete picture. Are we selling too much of certain types of machinery abroad and keeping too little at home? Are we selling too much machinery to soft currency markets, and too little to hard currency areas? Is there any value in getting rid of machinery to soft currency areas—they are called un requited exports—when we could have kept that machinery at home, and got consumer goods as a result of employing it in our own factories? What about agricultural machinery? Are we selling too much of it abroad when we could be getting some food by keeping it at home, or is it argued that this machinery, exported to the liberated and suffering countries of Europe, might give us a revenue in food which we shall always require unlike the products of some of our other exported machinery?
These questions lead to the whole question of the export of productive machinery. Take the case of the textile industry, for example. Are we, by the export of textile machinery, building up overseas rivals who will challenge us when the sellers' market begins to fade away? Would it be wiser to keep some of that machinery at home, and put it into our own factories so that we may hold the field now and in the future? This leads to another question—the dollar gap, which is indeed formidable. The Chancellor of the Exchequer gave us the figure of the estimated dollar gap at £300,000,000 worth of dollars. I think that he was temporarily misled by a question into stating that that was the amount in the whole sterling area. I think that I would be right in saying that that was only on account of the United Kingdom dollar shortage with the Western Hemisphere. Obviously, the sterling area as a whole is much larger.
This gap is great as it is now, but what will it be as the months go by, and one country after another begins to exclude our goods artificially, for the very reasons which have led us to restrict the import of goods from other countries? What, too, will happen if the sellers' market begins to decline naturally because other countries' goods, in sufficient quantities, perhaps of better quality, or at a more attractive price, are produced? Excellent and valuable as the Chancellor of the Exchequer's statement was, we have not had a full opportunity of studying it, and I think that he would agree that we should have the fullest opportunity for thinking about it, and we must ask for a further Debate for two or three days when Parliament reassembles. We shall ask for a Debate in public, and, if necessary, in private, as we did in the last Parliament, greatly to our advantage. We must have fuller debate and fuller information for we do not know the future, the real plan for recovery, or the plan for survival.
We do not know if the Government have a plan, or if they are in the dark themselves. At any rate, they cannot blame the people of this country. The public has had a series of shocks during the last 30 months. I fear that there are more to come. I do not wish to overstate this case, or make purely party points, but for whatever reason, I think it is true to say—and I think even the Financial Secretary, who is a very emotional but very charming character, will agree with me—that, after the long efforts of the war, people expected an alleviation rather than an intensification of their sacrifices, to put it no higher than that. Many of them expected much more both at home and abroad.
It is true that the former Chancellor by a prodigy of prodigal financial policy succeeded by the help of foreign loans on an unprecedented scale for one year in creating at home a false sense of security, a sort of mirthless, Micawberish gaiety which now rings hollow indeed. H there was to be ease and prosperity at home it was to be universal peace, disarmament and international unity abroad. If only Conservative Ministers could be removed, Socialists and Communists could lie clown together, and it was thought ill-mannered, not to say reactionary, to inquire which was the lion and which the lamb. At any rate, the Socialist Government in England was to be the natural buddy to the Communist Government in Moscow. Birds of a feather flock together, it was argued; though which could be plucked none could tell. But in these last days this bubble, too, has been pricked.
The Foreign Secretary made today one of the gravest statements I have ever heard in this House. What is the truth? The truth is that the Grand Alliance, the victorious instrument of victory, the great instrument of victory, in the second world war was formally and finally dissolved on Monday night at Lancaster House. That is a solemn event. Yet in spite of all these trials and disappointments the people have done their part, both in the nationalised and in the free enterprise section of industry and commerce. They are working well. The coal output, even if subjected to a critical scrutiny related to past output in respect of quantity and quality, shows a welcome improvement, and when we take into consideration the inevitable confusion which must have followed so huge a change-over, the problems of organisation involved, I think we must all feel that all engaged in the industry deserve the thanks and congratulation of this House.
The transport industry is about to pass into a new, and, as many of us think, an almost unworkable system; but however much it is regretted by those who have been long associated with it, I am sure that all concerned, all who remain in the service of the new authority in every grade, will continue to give of their best to the service of the public from the first of January when the change comes. In the free industries, which after all, are by far the greater part of the whole of our effort—some three-quarters—steel, engineering, textiles, general manufacturing, the results are, as I think is generally admitted, remarkably good, exceptionally good. Capital, whether widely distributed or held in small private firms, has cooperated loyally with the Government. We all know that many of us merely by saving and ploughing back capital have in many instances rendered the most useful service which we can perform at this time.
Management is working with a devotion and enthusiasm, which has earned the praise of all but the least responsible of the right hon. Gentleman's colleagues.
Have the Government any charge to bring against labour? Certainly not. It is fully pulling its weight, and the workers are working with a great and remarkable degree of variety. With all sincerity then we can say that on the whole the effort of the nation is at a very high level. Naturally there is fatigue and exhaustion, and in some cases there is a sense of frustration and irritation. Actually there are weak points here and there, but I do not see how the nation could be ex- pected to do much more than it is doing now.
The people are playing their part. What of the Government? I pass over the last two and a half years. I would prefer, so far as human frailty and the original Adam allow, to speak without undue prejudice, but if the nation is so highly geared—and this is the point I want to impress on hon. Members—if there is very little fresh sacrifice that can be imposed upon our internal standards, and if there is very little more we can do by way of exports—because these are higher than a normal figure owing to the world shortage and the consequent pressure of world demand—the outlook is still uncertain if there is still left this dangerous situation this gap between solvency and bankruptcy which is so perilous.
What is our long-term or even short-term plan? On what do our calculations rest for the years 1948 and 1949? By what criterion is it to be judged? By what policies is it decided? What is the grand design? We must have the facts, accurate calculations and intelligible estimates, and know more of the targets and causes. We must have a true and objective statement of the situation. Responsibility rests upon the Ministers and they cannot evade it. It is no light thing to be charged with the Government of a great nation in dark and uncertain days. It is a problem which, I am convinced, cannot be solved piecemeal. Foreign policy, defence policy, Empire policy are all essential factors, inextricably intertwined with our economic and commercial policy. If we are to survive we need vision and imagination. We need statesmen as well as accountants and lawyers. We must try to lead events and not merely follow in their wake. We are too apt, in my view, after the second world war to try to make comparisons and draw conclusions from the years after the first. I see little reality in these analogies. [Laughter.] Hon. Members opposite laugh and are very fond of these hollow cachinnations, but I do not observe that it adds very much to the brain power they bring to these matters.
I was venturing to put to my colleagues in the House on this very great occasion tonight that the second world war has shaken the whole balance of the world, thrown down all the old landmarks and broken through the crust—so delicate, alas, though it often seemed to us so firm—of two thousand years of civilisation drawing its inspiration from the sometimes separate, sometimes parallel, and sometimes confluent streams of Christian and classical tradition. We have in the last few days heard and read tributes to a great and greatly-loved English statesman. Behind those tributes has lurked one reservation in some minds, sometimes latent and sometimes overt, and sometimes, if I may say so, expressed in quarters whose own record has least entitled them to express criticism. But what was the criticism? It was that he had neither the vision to foresee, nor the courage to prepare for the coming storm. In all the circumstances, in all the baffling and perplexing uncertainties of these years, this may seem to historians a venial fault. Repeated, it becomes a crime.
Pray God, we may not have to carry that burden in this House. With much that divides us, there is much which unites us also. This very week, the issues have been greatly clarified. Only the appeasers, the wishful-thinkers, the fellow travellers, go droning on their treacherous theme song. Compared to the great gulf that divides all the rest of us from this poisonous crew, our differences, though great and vital—great as they may be—should not blind us to all that we have in common. I implore the Government to tell us the truth, the whole truth, and nothing but the truth, about the position of this country. And when we reassemble, in the light of the detailed and objective information, however serious, let us take counsel together, and if we cannot agree upon the remedies in every sphere, we may yet perhaps reach some common ground. At least we can play our respective and responsible parts in the great drama that will be unfolded during the coming years as fellow citizens and fellow subjects.
I have very often been envious of the ability some hon. and right hon. Gentlemen in the House to stand apart and perpetrate the most extraordinary speeches in cold blood. We have just heard a speech read out to us, at the end of an exhausting day, which has little or nothing to do with the subject before the House—not that I blame the right hon. Gentleman for avoiding it, because it has many embarrassments for him. He prepared and probably wrote most of his speech before the Debate started. Some of it has sounded quite flat-footed to those who have been listening to the Debate, though I confess that when he referred just now to that book "The Middle Way," I felt somewhat contrite because I believe I am partly responsible for landing the party opposite with him. I remember I had a debate in Middlesbrough a long time ago with the right hon. Gentleman when he was in more respectable company than he is now. The debate was on the subject of his book "The Middle Way," and I pointed out—and I think it had some influence on him—that he could not possibly poise his views in such a manner because after all his was a purely parasitical position. The middle is always the point equidistant between two other points and he never knew what position he was to take up till he knew that his opponents had taken up theirs. From that time on the right hon. Gentleman deserted his untenable position and moved naturally towards the Right.
The speech that we have heard is an extraordinary one in so far as it has skirted around the subject and has never approached it realistically; but the right hon. Gentleman indulged in one very important Parliamentary trick that I commend to my hon. Friends. It was given to me first of all by a right hon. Gentleman who was one of the most distinguished Parliamentarians of all time—David Lloyd George. He said, "Always, if you have no policy to advance, ask a series of questions." The right hon. Gentleman spent a great deal of his time—three parts of it in fact in asking a series of questions. This has become habitual with hon. Members opposite. It seems that they have infected some parts of the more respectable Press, because you have only to open the newspapers morning after morning to find otherwise quite experienced columnists asking, "Why don't the Government tell us the facts?" They almost always imagine some secret, mysterious fact lurking behind, which, if it were brought forward, would illumine the whole field.
I have spent many years in this House and I have never known in the whole of my experience, and certainly never in the time or the experience of any administration for which the party opposite was responsible, such a stream of information as pours out now on every aspect of our political and national life. I have been watching this for some time and this is what is the matter with the Opposition—they have no longer a Civil Service to digest the facts for them. That is what is mainly responsible for the incompetence which has been revealed today. I do not blame them—it might happen to us—for if you have been dependent on a great machine to pre-digest information for you, then one day you fall upon lazy ways. It is fairly obvious that the right hon. Gentleman who opened the Debate for the Opposition today had been slightly fatigued in reading the White Paper—and we were slightly fatigued ourselves at the end of his speech—but I would like to ask hon. Gentlemen opposite, what position are they really taking up about the White Paper?
But I am going to give the answers as well! The right hon. Member for Aldershot (Mr. Lyttelton) made a lugubrious speech, far different from the speech which we had from the right hon. Gentleman who wound up. It was a most lugubrious speech. What did he say? He said that the capital investment programme was too ambitious.
Oh, no. I have the words down here. He said, "Capital expenditure far too great," and he went on to say, "I have been protesting about it for a long time." Other hon. Members speaking from those Benches said that the capital expenditure programme had been cut too much; and in October—I do not know whether the right hon. Gentleman was speaking for his party or not, because there are so many different streams of opinion in the party opposite that it is awfully difficult for us to find any intelligibility amongst them—he said:
The more we concentrate——
I have here the "Industrial Charter", a statement of Conservative industrial policy. Now may I ask a question, because it is very necessary for my purpose, and indeed, after all, the Opposition is an important part of the Constitution and the nation should know what its position is; because if at some time the alternatives are presented to the nation, the nation should be able to decide what kind of choice it should make. Do I understand that this is an authoritative statement? Would the right hon. Gentleman answer whether this is an authoritative statement of Conservative policy? It is very important to know. This is the "Industrial Charter." It was ratified in October. The spokesman for the Opposition said that the investment programme contained in the White Paper was too ambitious. But this is what they said in October in a document which I understand has not yet been changed:
The more we concentrate on re-equipment and modernisation now, the sooner we can raise our standard of life. The estimate of £1,700,000,000 capital goods given in the Economic Survey for 1947 is inadequate as a total.
Is that the position the right hon. Gentleman takes up?
The right hon. Gentleman asks me a question. If he will read what I said in HANSARD he will find that I said the total capital expenditure foreshadowed this year was totally inadequate for our postwar needs, but nevertheless it was now, owing to the mismanagement of the Government, necessary to cut it at short term because we were facing an immediate crisis.
And confirmed in October. That may not be the normal period of gestation, but the fact is that the child was born, and was christened here in this document. The position is, therefore, that the spokesman of the Conservative Party—he has not been elevated to the leadership yet, and probably will not get it after this—said the expenditure was inadequate. Many hon. Members behind him repudiated that contention, and said that, so far from the capital investment programme being too low, it is too high.
The choice between gaining an advantage in the world market and developing the technical efficiency of our basic industries is a very difficult one for any community to make, and our task would be far lighter today if the situation in 1938 had been approached more realistically. In 1938 there were over 1.7 million unemployed in Great Britain—very nearly 2 millions. If those unemployed people had been put to work in our steel works, in our mining industry, in our textile industry and on generating stations, we would have doubled our capital equipment and our position today would have been rendered far easier.
Now we have to deal with those years of neglect in circumstances of very great difficulty. We can understand—hon. Members opposite saying, "What is the use of making these comparisons?" We understand that they do not want comparisons to be made. If it were merely the scoring of a political point it would not be worth while. We have to deal with the hard, practical, realistic consequences of the fact that today all those industries are not sufficiently expanded for our purpose. And it is essential that the rest of the world should understand why it is that we have these difficulties today. We have them because of the criminal neglect of the party opposite. I must say I was a bit shocked by the references of the right hon. Member for Aldershot to a past Conservative Prime Minister. It appears to me that the party opposite have not got the ordinary instinct of gentlemen, because they did the same thing at Gravesend. They put up people, and then they spat on them afterwards. I sat in this House when the party opposite——
I must say I did not until he became saviour of the Conservative Party.
The fact is that we have to meet these difficulties. The right hon. Member for
Aldershot went on to say, in confirming a statement made by my right hon. Friend the Chancellor of the Exchequer, that it would be increasingly difficult to sell some of our goods in some of the markets in which we are pushing them now because these markets had been partly saturated. He said, therefore, "What is the good of trying to push these goods into those markets, because if you do so very much more, the terms of trade will move progressively against us?" That is exactly what he said. If the right hon. Gentleman believes that the capital investment programme can be reduced and we ought not to push—[Interruption.] I am within the recollection of hon. Members on this side of the House. The fact is that the right hon. Gentleman did not know what he was saying.
I am sure the right hon. Gentleman has retained some sense of fairness even in the height of his eloquence. I said nothing of the kind. I only pointed out that if we balance the figures of our national economy on the assumption that we can increase our ex port by £31 million extra, we place it on a false basis.
He said the terms of trade were bound to move against us even more. I should really like to know what he would do. If we reduce our capital investment programme and we do not increase consumption or export goods, what do we do with our resources? Leave them unemployed? There are only two things that we can do with our economic resources. We can either devote them to, additional capital investment or we can devote them to the production of consumption goods. There is a third thing we could do—and that is, do nothing at all and have unemployed people. We understand—we have had it before—that the real solution of the problem for the party opposite is to have an army of unemployed.
Because if we had an army of unemployed in Great Britain they would get the social disciplines they would want, and they would not have such high standards of consumption as would enlarge our import programme. They would achieve exactly what they want, because that is the only consequence of accepting the position taken up by the right hon. Gentleman. I know he does not like it, but this is the logical consequence of the position that he has taken up. He went on to discuss another aspect of the matter. The right hon. Gentleman is a little angry, but if he will look at HANSARD he will find complete confirmation for every statement I have made tonight. Of course, he did not make the deductions I am making; they are my own deductions.
The right hon. Gentleman asked certain questions about houses. I want to know—once more I will ask the question and give the answer—what hon. Gentlemen opposite want to do. Do they want to build more houses or fewer houses? We should like to know. Of course, up to now they have done a very clever thing, They have inspired the organs of opinion that support them to demand a reduction in the housing programme, but they have cleverly avoided making a specific demand themselves. The right hon. Gentleman came nearest to it tonight, because he said that the only way in which we are to provide houses for miners and agricultural workers was to stop houses being built in another part of the country. Does the right hon. Gentleman deny that?
I was listening to the right hon. Gentleman very carefully. I wanted to find out what his policy was. We take the view—and we insist upon it—that there can be nothing sillier than to spend large sums of money and much labour and material on bringing houses to a certain stage of completion, and then leave them uncompleted. We think that is nonsense.
—at a rate of over 15,000 permanent houses a month at the present time. I can inform Members that that rate of completion is being maintained, and I see no reason why it cannot be maintained right through the winter. But, of course, we are not so able in this matter as Members of the Opposition. We are not as competent builders as the Leader of the Opposition, because he would build his houses without using any timber at all. But this is nothing new. The right hon. Member for Woodford (Mr. Churchill) made a prediction in 1944.
He was speaking on the postwar housing programme. He said that he was going to rely for the satisfaction of British housing needs upon the steel house for the first five years after the war, although everyone could have told him that if he had built steel houses to that extent there would have been no steel for any other purpose whatsoever. It is characteristic of the party opposite that they disregard the realities. We have to buy more than 40 per cent. of our timber from dollar sources. I have not yet heard of anyone who can build houses in this country without any timber at all.
We will build in 1949, if we get the timber, more houses than are in the projected programme, and between now and 1949 we shall finish the 350,000 houses that are under construction and in contracts. Even with the limitations imposed upon housing, even with the dollar difficulties, we shall still have reached before 1950 the target set by the last Government for houses in this country. [HON. MEMBERS: "Two years."] We shall have built 750,000 houses. I do not want to make this argument over and over again because it is familiar to everybody, but we have built in the first two and a half years at the end of this war more houses than were built in ten years at the end of the 1914–1918 war—and that in addition to the repairing of all the war damage.
I have been asked a question about agricultural houses and I want to answer it. Members opposite have continually been making reference to the supply of houses to agricultural workers and have said that 30,000–40,000 houses have been completed in rural districts and only 3,000 or 4,000 or 5,000 agricultural workers in them.
I said 3,000 or 4,000 agricultural workers in these houses. What hon. Members fail to realise is that the agricultural worker himself, the employee in the agricultural industry, is a minority even in the deepest rural areas. The mechanic who is repairing ploughs and agricultural machinery is as essential to the farmer as the hedger and ditcher and cowhand. The more you mechanise agriculture, the more you have diversified the ancillary services serving the farmer——
Because agricultural houses are not merely to house agricultural workers: they are occupied by all persons serving the agricultural industry. I should have thought that it was an obvious truth that if you have a mechanic in a garage whose job it is to repair ploughs and tractors, he is as at least essential as the farm labourer.
I will give the answer at once. Because for many years during the war most of the agricultural workers were retained at home. They are still living in their own homes, and there is not the same situation as exists in other industries. I can tell the right hon. Gentleman that there are rural areas in this country where rural authorities have not got farm labourers on their lists at all. The real problem is an entirely different problem from that. It is to add to the total amount of housing accommodation available in the rural areas. Despite our difficulties we are building far more houses for agricultural workers in two years than was done in 50 years—[Interruption.] Look at the facts. Those are the facts. Of course hon. Members opposite want to run away from the facts.
Does the Minister not realise that, as a matter of fact, there has been a big revolution in the whole job of farming in this country, and that it needs more labour on the land than we have ever had before. Merely to quote what was necessary by way of houses before, is no answer at all.
I thought I had been referring to that revolution. The revolution has been the mechanisation of agriculture, and also the policy of ploughing, up the land. That is perfectly true. Therefore to test the amount of cottages available for agricultural workers by the actual number of agricultural workers living in houses is a false test.
This is true, too, of mining. The mining areas already have a very large housing programme in progress, and one of the reasons is that in the mining areas are some of the most progressive local authorities in Great Britain. A far larger proportion of housing is going on than in any other part of the country—[An HON. MEMBER: "Because you favour them."]—Of course we favour them. That is what priority means. In addition, we said last July and August that we would provide aluminium bungalows to supplement traditional housing in the mining areas. Those bungalows have already started to arrive, and are arriving week by week, month by month. Eleven thousand to 12,000 of them will add to the housing accommodation of miners and key workers, so that within the programme we are looking after miners and agricultural workers. We cannot look forward further than the middle of next year, and if we cannot obtain more timber than appears to be available, the housing programme will have to be reduced. It will be reviewed next year in the light of timber supplies should we have sufficient available to extend the programme.
I have been speaking of the White Paper, and of the national investment programme, and my remarks have been much more relevant to the purposes of the Debate than the speeches of the hon. Gentlemen who preceded me. We have had in the last few months a very remarkable example of the resilience of the industrial population of this country.
Under private enterprise, says the right hon. Gentleman. We were taunted a year ago by hon. Members opposite and in the Press that the nationalisation of the mining industry would prove a complete failure. Hon. Members opposite lost no opportunity of pouring scorn upon the miners—[HON. MEMBERS "Nonsense."] Editors of newspapers supporting hon. Members opposite wrote editorial after editorial as though they were trying to dig England's:grave with their pens. They poured vitriol day after day—[HON. MEMBERS: "Never."] The miners have shown that they are not only the most politcally mature, but the most responsible and patriotic, body of citizens in Great Britain. They have shown a recognition of the significance of their position, although that industry was the most poisoned industry in Great Britain——
—and although the nation did not deserve to be requited as it was—[Interruption.] Of course, that is why we are here; the miners know their friends—and their enemies. That is why there is no Member for that party representing a mining constituency. Hon. Members failed to dig England's grave, but they dug their political graves over the last 25 to 30 years in the mining areas.
Coal is coming from those areas now at a time when we badly need it. The same is happening with steel, in spite of past behaviour. We are having more steel, but we need three to four million tons more than we can have from the industry, and that is largely the result of the policy carried out between the wars. We are getting ships from the shipyards which were neglected. There are two Britains. There is the Britain of Waterloo, the Britain of Trafalgar, the Britain of Blenheim, the Britain of Mons, and the Britain of Dunkirk—[An HON. MEMBER: "And the Britain of Ebbw Vale."]—and there is the Britain of the Levellers, of Peterloo, and of the Chartists. History has two Alain streams of whispers. For us, from those older industrial areas on which we depend, tradition has a different whisper from that which it has for hon. Members opposite. That is our tradition; in that tradition we shall live, and in that tradition we shall conquer.