10.15 p.m.

I beg to move, in page 10, line 20, at the end, to insert: excepting only expenditure on the following classes of equipment:—

1. (a) Boilers, firegrates, lagging and insulating plant and similar equipment installed as replacements of existing plant, in industrial, commercial and farming establishments, demonstrably for the purpose of economising in the consumption of coal and/or other solid fuel.
2. (b) Electrical generating equipment installed in industrial, commercial and farming establishments to provide local electricity supplies, independent of mains supplies."

I am sure that in this connection I shall have an exceptionally sympathetic hearing from the Treasury Bench, because I believe it is without precedent in the history of this House that the Chancellor should, immediately prior to going to the Treasury, have held the position of Minister of Fuel and Power. The present Chancellor of the Exchequer was Parliamentary Secretary to that Ministry from May, 1946, to October, 1947, and Minister of Fuel and Power from October, 1947, until March, 1950. During that period, he will, no doubt, have had ample experience of the benefits that can accrue to our national economy by pursuing an energetic policy of fuel economy in industry and the optimum utilisation of our available fuel and power resources.

Perhaps, at the outset, I should quote the present Minister of Fuel and Power in support of the Amendment which I am moving. On 1st February, 1951, he said: I could say much about our measures to promote the better use of coal, and the future may well depend upon our success in that regard. In my view, we need a national plan, not only for coal production but for saving coal."—[OFFICIAL REPORT, 1st February, 1951; Vol. 483, c. 1115.] What is the Minister of Fuel and Power doing about it? So far as I can see nothing, other than to continue and perhaps enlarge certain advisory services that he has at his Ministry, with their regional offices in 12 areas of the country.

It is fortunate for the purpose of my Amendment that we did not reach it last evening, because only last night the fifth Annual Report of the National Coal Board was published, and I like to think that I am the first Member of this House to quote from it. There is something in that Report which precisely fits the purpose of this Amendment. I have given the Chancellor prior warning that I intend to quote from that Report and, in particular, Chapter 5, entitled "Efficient Use of Coal." On page 32, paragraph 123, there appear the following words: More important still, there is the question whether it is better for the nation to use capital and labour to expand coal production or to apply some of these resources to ensuring that each ton of coal is converted into a greater amount of useful heat or energy. That is the purpose of this Amendment—to induce by fiscal measures the installation of more efficient coal-saving equipment in industry. The Coal Board's Report continues—and this is even more pertinent—in paragraph 124: Much of the 200 million tons of coal used in this country every year is wastefully burnt. An irreplaceable asset on which the country's industrial future depends is too often being squandered. Paragraph 125 sets out three problems. The first is to make coal go further. The second and third problems would, Sir Charles, be out of order. [Interruption.] The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) will know that his own smoke-polluted atmosphere in the Potteries is a glaring example of the inefficient use of coal in industry.

There are two methods of inducing more efficient equipment for burning coal and other solid fuels in industry. The first is through the medium of the advisory services to which I have referred and which are run by the Ministry of Fuel and Power; and the second is the method which has not yet been used in this country, the use of the fiscal weapon as an inducement, through the weapon of taxation, for persuading industry to install more efficient plant.

While initial allowances were in force, there was some mild inducement to industry to spend capital sums on putting in more efficient plants for burning coal and other solid fuels, but there is quite a different argument to be applied to consideration of fuel saving equipment from other forms of capital equipment, which the Chancellor referred to in his Budget speech of 10th April last, when he said: The initial allowances, after all, were introduced at the end of the war as a means of stimulating re-equipment and modernisation. That is, of course, a very desirable aim, but in our present circumstances to stimulate capital expenditure in this way would, I am satisfied, positively endanger the defence and export programmes too much."—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 842.] There might be a good case—although the general arguments against it will, no doubt, be adduced on a later Amendment to this Clause—for opposing the withdrawal of initial allowances on capital equipment generally. In my view, there is no case for supporting the withdrawal of these initial allowances on fuel saving equipment, because if anything is likely to endanger the progress of our defence programme and the programme of exports, it is a shortage of coal. One cannot begin to envisage re-armament in Britain unless we are assured of a continuous flow of coal to industry.

Therefore, considering that out of our total coal consumption in Britain last year we used no less than 105 million tons for the purposes of industrial production, excluding power house consumption, it follows then, that every ton of coal saved in industry is equivalent to another ton of coal deep-mined. That is the measure of the problem. On many occasions in the House hon. Members have referred to the potentialities for saving coal in industry. I hope the Committee will bear with me this evening if I give just a few technical but very glaring examples of what can be achieved by fuel-saving plants.

I purposely select these from a large number of such items available, because it is the class of equipment which I have specifically referred to in this Amendment. At the beginning of the Amendment, boilers are referred to. Every hon. Member will know the effect upon fuel consumption of using an old Lancashire boiler. The hon. Member for Rotherham (Mr. Jack Jones) would be an expert in the matter. The effect very often is to increase fuel consumption from 50 per cent., to 100 per cent.

The Tories did nothing about it.

The period to which the hon. Member is referring is presumably until 1939 and, so far as I am aware, the National Coal Board was not in existence then. Therefore, there was no shortage of fuel.

In the period to which the hon. Gentleman refers, there was a surplus of coal because people could not afford to buy it and industry could not afford to waste it.

I am sure that I should be out of order if I replied to the hon. Member for Rotherham as to the economic implications of the coal surplus in the 1930's. The question whether we should replace fuel consuming equipment in industry is a problem which applies to 1951.

My first example is of an industrial concern that spent £13,500 upon installing a waste-heat boiler, the life of which was approximately 20 years. It was capable of saving 3,000 tons of coal a year. That figure means little unless it is related to miners' effort. For the purpose of simplicity, I take the average output of one British miner as 300 tons in a full year. Therefore that one piece of equipment was capable of saving the efforts of one miner for 10 years or of 10 miners for one year. Surely it is worth the Chancellor's while as a matter of broad national policy to provide every possible form of tax and fiscal inducement to British industry to install equipment of that sort.

My second example concerns the fitting of an economiser to a Lancashire boiler. There are many similar examples in recent issues of "Fuel Efficiency News." It was installed for the modest expenditure of £2100 and again the life of the plant was 20 years. In this case the coal saving was 580 tons in one year. At the average rate of output of 300 tons of coal per year by one miner that represents a saving in the first year of installation of not less than two years' effort on the part of one miner or one year's effort on the part of two miners. Hon. Members will recognise that there must be tens of thousands of Lancashire boilers installed in all parts of the United Kingdom. Inducements should be provided for many of the smaller industrial undertakings to look to their heating equipment.

The third example again concerns a Lancashire boiler with a superheater fitted to it for a capital expenditure of only £675. The fuel saving is of the order of 255 tons in one year, representing approximately nine months' output on the part of one miner. The fourth example, which I have picked purposely because it can apply not only to industry but to farming and to any commercial building in the country heated by steam methods, refers to sectional magnesia lagging applied to a 4-inch steam pipe. Hon. Members will be aware that the efficiency of steam for thermal purposes depends in large degree upon the efficiency of the lagging applied to the pipes. The cost of this equipment was only £1,815 and the life was 10 years. It seems incredible to say so, but the fuel saving amounted to 1,985 tons of coal in the first year.

10.30 p.m.

Is that not an inducement by itself?

If the hon. Gentleman will allow me to continue, I will come to the strictly taxation aspect of all this in a moment. There are advantages other than the direct saving of coal—

Mr. Messer rose—

The hon. Member sits for Tottenham, which is a suburb of North London, a long way removed from the coal mines. He would be well advised to study the principle for which I am pleading which is, that not one minute of a miner's labour should be wasted.

I am very interested in this able speech of the hon. Gentleman, and I want to give him some further information which he can use. In 1919 and 1920, I advocated and negotiated a coal-saving bonus scheme for the men on the furnace to which he is referring, long before the management thought of doing so.

I am indebted to the hon. Gentleman for his intervention. He has always been a principal exponent of joint consultation in industry and of the advantages that may be derived from recommendations made from the workers' side. I also support that, as he knows well enough.

The fifth example that I want to give, which fits closely the Amendment, is in connection with insulation. There is not a building in this country that is heated by steam methods, or by many of the other similar methods which is not capable of showing fuel economy by improved insulation. Only 48 hours ago I was talking privately to one of the present Ministers about this Amendment, and in discussing insulation with him he confirmed my view. He said that in his experience of over 25 years in industry, he had rarely come across an industrial building in which the insulation could not be improved by the use of a moderate amount of material. From the use of that material the direct derivative is a great economy in the use of coal or other solid fuel.

I have endeavoured to demonstrate, from the technical point of view, all the advantages to be derived from improved fuel utilisation, and I now want to turn to the fiscal aspect for a few moments. There are some paradoxical considerations inherent in this Amendment. I believe that if the Chancellor would agree not to withdraw the initial allowance for fuel-saving equipment in industry, it would result in an increased revenue to the Treasury in the course of the next few years. That is the paradox to which I refer.

Clearly wasteful coal burning in industry represents an excess expenditure on the part of an industrial undertaking burning the coal; but that excess expenditure is admitted by the Inland Revenue as a charge for trading purposes for computing Income Tax and Profits Tax. Therefore, it results in a diminution of tax collected by the Treasury. Every ton of coal that is burned excessively in a British industrial undertaking today represents a decline in tax yield to the Treasury of approximately £3, assuming that the pithead price of coal is £3 a ton. An initial allowance costs the Treasury nothing. Hon. Members opposite have often argued this point with me. They seem to think that it is money given by the Treasury to the industrial undertaking. It is only an interest-free loan from the Treasury.

Mr. Glenvil Hall:

I would remind the hon. Gentleman, now that he has been good enough to give way, that in the third year the suspension of initial allowances will yield and save the Treasury £170 million.

It would not, and that is where I must cross swords with even so eminent an authority as the former Financial Secretary to the Treasury. Over a period of a decade, that is, 10 years—the right hon. Gentleman well knows that it does not cost the Treasury one iota. All that it means is that, the Treasury grants 40 per cent. in the first year and commensurately less in the remaining life of the plant. Before the introduction of initial allowances the plant or equipment was allowed for depreciation purposes in equal annual sums over the whole life of the plant. Therefore, the initial allowance is only an interest-free loan.

What I am trying to explain to the learned Attorney-General, who I hope will be answering me—[Interruption.]—I apologise to the Economic Secretary to the Treasury, who I understand is to answer—is that there is an indisputable argument in the case of fuel-saving equipment. If initial allowances are not withdrawn, it will result in an increase of revenue for the Treasury. I hope that argument will not be considered disingenuous. Also there is a complementary argument which I think the Committee should consider at this stage.

As things are and assuming an industrialist did not regard as important the national aspect of saving coal, it would pay him to go on wasting coal in old boilers and fire grates rather than to spend money on new capital equipment. It would pay that undertaking to go on wasting coal—

And killing men with silicosis.

—because of the cost of every ton of coal that was wasted in outworn equipment £2 out of every £3 would be paid by the Treasury. The Chancellor of the Exchequer takes approximately two-thirds of the gross profits of industry in the form of Income Tax and Profits Tax and the fuel costs of an industrial undertaking are admitted as a charge for the purposes of computing those taxes.

Once the Chancellor withdraws the initial allowances, there is no inducement to an industrial undertaking to spend capital on fuel-saving plant, which, in fact, would be very low down on the list of that undertaking's capital equipment priorities. There is scarcely a business today that is not short of working capital due to the high cost of raw materials and replacement of productive machinery, such as lathes, machine tools and other similar plant. Therefore, fuel saving equipment would stand well down on the list of priorities, especially as there is no direct inducement to such industries to install such plant.

I pass now to consideration of the possible reactions of the Chancellor to these proposals. I know he will have objections, and I think it is fair to anticipate what some of those objections may be, for there is an effective answer to each of them. He will undoubtedly say that he cannot create a precedent by retaining initial allowances on only one group of plant and equipment in industry and treat it under a special heading. I would remind the Chancellor that under the 1944 Finance Act, Part IV, and under Part VI of the 1945 Finance Act, special provisions and allowances were given for every form of scientific research. That, in itself, creates a fiscal precedent, and in the 1945 Finance Act, under Part IV, a special allowance was given in respect of agricultural buildings.

The Chancellor will undoubtedly ask—and this objection has often been advanced to me by other people interested in this problem—how the Inland Revenue can obtain proof that the plant and equipment installed in a certain industrial undertaking is capable of saving fuel. That is why I, perhaps inadvisedly, used the rather clumsy word "demonstrably" in this Amendment. According to the English dictionary, "demonstrably" means "capable of positive proof". The positive proof I want provided for the Inland Revenue in regard to the certification of fuel-saving plant in industry should come from the advisory services of the Minister of Fuel and Power which he maintains in the 12 regions of the country for—by exhortation mostly at present—advising industrialists how best they can improve their methods of fuel utilisation. Therefore the method of certification for fuel saving plant to rank for continued initial allowances is in the hands of a Department other than the Treasury, but a Government Department nevertheless—the Ministry of Fuel and Power.

May I pass now to the second group of equipment under this Amendment, that is, the independent generating plant which is shown under paragraph (b). It comprises electrical generating equipment installed in industrial, commercial and farming establishments to provide local electricity supplies, independent of mains supplies. That equipment falls broadly into two important groups. It is either generating plant which is independent of mains electricity and is worked by waste steam or by similar methods, or the second group, of course, would be independent generating equipment which is worked by Diesel oil.

I do not suppose that we in the United Kingdom, except in remote rural areas, would have ever seriously considered installing generating plant independent of mains supplies had it not been for the force of the circumstances which have arisen in the last five years. I hope I make this point in no party political or highly controversial vein when I say that hon. Members in all parts of this Committee must be aggravated and often dismayed by the devastating effects of power cuts. And they are not diminishing. The power cuts in the Midlands in the course of the past few weeks have been worse than ever before.

The purpose of paragraph (b) of the Amendment is to endeavour to provide a fiscal inducement to every industrial undertaking in the country to install for the use of its own factory or workshop or farm a generating plant which can be fired—I use that word metaphorically—by waste steam or by fuel oil, to make that factory independent of mains elec- tricity. Many hundreds of factories have done it already. There is a two-fold advantage. First, it enables the factory to continue its production without interruption when load shedding or power cuts take place. The second, and much more important, point is that if an aggregation of thousands of firms install these independent stand-by generating plants, the effect of abating the load on the electricity mains would be such, particularly at peak hours, that it is probable we could dispense with power cuts and load shedding altogether.

I have followed the hon. Gentleman's argument carefully up to the present, but the installation of this special equipment does not replace electricity from the point of view of load shedding. It is suitable only for auxiliary services, such as lighting and small matters. The actual cost involved is such that it does not pay an ordinary industrial undertaking to put in sufficient Diesel oil plant to be able to run the whole factory in the event of load shedding.

10.45 p.m.

While I am always prepared to listen to an hon. Member who is capable of giving advice, I should state in this instance that I have operated these plants for many years past; furthermore, I have bought such plants, particularly as an insurance policy against power cuts.

I hope that the Committee will bear with me while I read a letter which expresses the experience of an undertaking in Norwich—[An HON. MEMBER: "It is only one."] The hon. Gentleman says it is only one. This is one example selected from hundreds of such cases. I have already said that I have myself operated these plants for many years, and it is now possible, by mechanical means, to install automatic switchovers so that when the power from the mains is shut off or shed, one can automatically bring into use the stand-by generating plant; and hundreds of commercial undertakings have done just this.

The undertaking in Norwich to which I have referred, employs 1,500 people, and if the hon. Gentlemen who represent Norwich constituencies are here, they will probably know of the firm to which I refer. After the close-down of power stations in 1947 had necessitated the closing down of three mills, this firm determined that such a thing should never happen again. They therefore installed independent generating sets in each of their three mills. These installations were concluded before the autumn of 1948, and this firm was able to have a full, normal working day. Staggered hours were suggested to it, but staggered hours meant working until 10 p.m. and this was with a staff which consisted in the bulk of young girls living in the country some miles from Norwich. That meant that there was not the transport to get the girls home.

This is the letter from the Managing Director of Francis Hinde and Hardy of Norwich: After the closing down of all the power stations in 1947 which necessitated the closing down of Messrs. Francis Hinde and Sons, Ltd. for three weeks, we determined that such a thing should never happen to us again. We therefore installed an independent generating set in each of our three mills. The sets installed were 100 KV.A or 80 KW each, 400 volts on 4 core cable for distribution.These installations were completed before the autumn of 1948 with the result that when all industries were asked to institute staggered hours, we were able to carry on with our normal day. If we had been obliged to adopt staggered hours, it would have meant that a large number of our workers would have been on duty until 10 p.m. and in view of the fact that the bulk of our workers are young girls, several of them living miles outside Norwich, it would have meant that they would not have been allowed to come and there would not have been any transport for them in any case.We normally take over the major part of our load from the end of September till the end of April by arrangement with the local authority, so that during these months we are free from the constant power cuts.We should be quite content to carry on providing our own power after this date, but we were advised by the local authority that this was unnecessary. In the event, however, there have been many power cuts since that date, and it would probably have been to our advantage had we continued generating our own power.Although we have a standing contract for the supply of power involving the minimum charge, if we take over the load ourselves by agreement with the local authority, this charge is waived.With regard to cost, there is very little difference in the two sources of supply. In our opinion, the installation of these power units has been of the utmost service to us, and has well repaid the trouble and expense. No one can deny that here are two economic weapons for beating the fuel and power cuts. By installing such independent generating sets, there is continuity of power supply. But, as with solid fuel-saving equipment in industry, unless there is a fiscal inducement to firms to put in the equipment of this sort—which there is not if the initial allowances are withdrawn—then stringency of funds, and the high cost of raw materials and of replacement of production equipment, will mean that this independent generating equipment is not likely to be installed.

I apologise for having kept the Committee so long, but I am dealing with an issue of primary and fundamental importance; and if, without ranging too far from the precise words of this Amendment, I may give a further warning, I should like to remind the Attorney-General that, notwithstanding that over the first four months of this year, by the magnificent efforts of the miners, there was an increase in coal production of 2,300,000 tons compared with the first four months of 1950, yet coal consumption in the same four months was 2,600,000 tons greater than in the preceding year, and we exported 3 million tons of coal less than we did in the previous year.

Today coal stocks for this time of year are lower than they have been at any time since 1945, including the disastrous year of 1947. Unless we provide the fiscal inducements for which I ask in this Amendment as part of a national policy and plan for the scientific utilisation of coal, other solid fuels and fuel oil, then in the course of next winter or the winter after, or both, we are likely to face calamity or a major disaster in a repetition of the complete stoppage of all our factories which we experienced in 1947.

The hon. Member for Kidderminster (Mr. Nabarro) need not have apologised to the Committee for staying so long on his feet. The Committee will agree that it is a long time since we heard such a splendid speech on the question of fuel saving. He has rendered a valuable service to the public in dealing with the matter from the technical aspect. In fact, I think many hon. Members will be convinced by the logic of his arguments, and I hope that my hon. Friend the Economic Secretary to the Treasury will keep an open mind on the first part of the Amendment dealing with the question of allowances as an inducement to industrialists to take steps to ensure that there is the maximum amount of fuel saving.

I shall not keep the Committee long in what I have to say, but I should like to refer to one point on which I made an intervention, and which I think the hon. Member did not take too well. The installing of independent sets as an auxiliary form of electricity supply so that factories could continue to produce in times when there was a check on the public supply is not, in my view, an argument that can be applied generally to industry as a whole.

The hon. Member gave an example of sets to produce 80 k.v.a., but that is for a very light industry indeed. In the majority of cases there are 1,000, 2,000 or 3,000 k.v.a. employed, and the hon. Gentleman can accept my assurance that it does not pay a medium or heavy industry to undertake to install independent Diesel oil engines to produce electricity, particularly as they have only to be operated for a few days in the year. So the majority of industrialists in heavy industry could not afford to do so, as it would not be a sound economic policy to install these independent sets.

I quite agree with the hon. Member's arguments as they apply to light industries. I know something about this, because I have employed one of these sets myself. It is extremely useful when there is load shedding. The only value of independent sets in heavy industry is as a small supplementary supply to keep the auxiliary floaters running and the services in operation.

The hon. Member used the word "auxiliary." I used the word "alternative." There is a subtle difference between the two. My second point was that the shortage of power megawatts over the country as a whole at the peak period was not more than 10 per cent. It would more than fit our purpose to put independent genertors only in a part of the light industries, for that alone would prevent power cuts over the whole industrial and domestic field.

I am sorry that on that technical point I must disagree. The amount of capital investment involved in installing sets to do what the hon. Gentle- man said would be necessary to avoid power cuts is such that, if he had the figure before him, he would not contemplate this proposition. I will leave that point, because he made such a magnificent speech on the other aspect of this matter that we are begging the question on this point of particular power sets.

I will add my voice to his in expressing the hope that the arguments he has advanced in respect of inducing industrialists to take every possible step to install plant in order to save fuel and power—and I can heartily endorse every word he said about fuel-saving equipment, especially in regard to lagging and economic modern boilers, which have a must greater efficiency than the old-fashioned type and in circumstances where the question of coal-saving and fuel-saving is of such vital importance—will lead to my right hon. Friend to indicate that he will give this Amendment, even though tonight he is not prepared to accept it, his consideration and advise the Committee at a later date on the decision which the Treasury are prepared to take on the matter.

Perhaps it would not be thought inappropriate if I were to intervene briefly on a subject with which I have been familiar for a great many years. I have been one of those who have found it necessary to adopt what years ago I considered to be an absolute heresy. When I was first associated with the management of electric power undertakings, it was our policy to provide a supply so efficient and so cheap that it was quite unnecessary for any power user to do other than take his whole supply from the public service undertakings. Unfortunately, the experience of the last few years has made it essential to modify that policy.

Now I have no more to do with supplying power, but I have still a fair amount to do with its use. In some of the engineering works with which I am concerned, we have found it necessary to install a certain amount of stand-by plant to assist the national production and, so far as practicable, to maintain our production uninterrupted. I agree with the hon. Member for Bolton, West (Mr. J. Lewis) that there are very few cases in which it would pay to put down a com- plete alternative plant. Nor is it really essential.

What is required by many firms still—although many firms have spent money on providing a certain amount of alternative stand-by plant—is to find out what percentage of cuts one is expected to submit to during times of peak loads in the area in which one's works may be situated, because it is not quite the same in different parts of the country. In some cases, if one were to provide 150 horsepower where one's ordinary load is 1,000 horse-power, that would probably suffice to meet the cut one was called upon to effect, by cutting out some of the motors which would ordinarily be running. Therefore, although I agree more with the hon. Gentleman the Member for Bolton, West, than with the mover of this Amendment, nevertheless it does not detract in any respect from the arguments submitted by my hon. Friend the Member for Kidderminster (Mr. Nabarro). His argument holds absolutely.

11.0 p.m.

I ask the Treasury to give careful consideration to this Amendment for another reason. The more that industrial establishments can be encouraged to install a certain amount of alternative stand-by plant for themselves, the more it will become less necessary for the domestic user to submit to the horrible inconvenience which so many of the women have had to endure during the last few months, and which we are told by Lord Citrine, the head of the British Electricity Authority, are part of a condition which is likely to last for many years.

He has warned the Government, as plainly as any man in the country, of the serious consequences of the cut in capital expenditure on the provision of more power plant in our power stations. I do not know whether his warnings have fallen on deaf ears so far as the responsible members of the Government are concerned, but unless they pay serious regard to what he and others have said, they are carrying a very heavy responsibility.

Clearly, one of the ways in which we can meet the situation which, according to those who know best, we are likely to face for some years is to adopt the proposal contained in this Amendment and to facilitate an easement in the situation, which can be brought about only by the installation of a certain amount of standby plant in our industrial establishments, in the absence of a further speedy extension of our power stations. In serving all of us in our homes, the women of this country are being called upon to face most serious handicaps and inconveniences. In this time of austere living, that is a powerful additional argument why the Government should give sympathetic consideration to the Amendment, which I wholeheartedly support.

I think it would be wrong if one more voice were not added from this side of the Committee in approbation of the speech of the hon. Member for Kidderminster (Mr. Nabarro). As one practical man to another, I should like to compliment him on what I consider to be one of the most brilliant speeches of a practical nature made in the House for a very long time.

At the same time, I would remind the Committee, and particularly the Tory Party, that that speech was a complete indictment of the utter failure of the industrialists of the past to make the best possible use of what God gave to this country—its coal. I speak as one who has seen several million cubic feet of gas wasted. Today there are still millions of cubic feet of gas being wasted—every day, for 24 hours a day and for seven days a week—all because of the lack of an integrated policy in the use of that gas.

Let hon. Members come to the place where I live, Irlam, in Lancashire, and see the bleeder which for many years was never out—before the war broke out—burning millions of cubic feet of gas. Go to Kettering, and to Shelton, Stoke. For years there has been a lack of an integrated policy in the use of our most precious possession—coal. One would see these flares lighting up the countryside, while on the road nearby one would see the headlights of ambulances taking to hospital the miners who produced the very commodity which was being wasted.

I compliment the hon. Member for Kidderminster on a brilliant speech, but I would again remind him that it was a complete indictment of the utter failure of industrialists in this country in the past to make the best use of our coal.

I want to say a few words in reply to the hon. Member for Rotherham (Mr. Jack Jones). I think he forgets that before the war the problem was the disposal of the coal. We had more coal than we knew what to do with. We were trying all sorts of ways to dispose of it. We spent a lot of money in obtaining plant to make oil from coal. The problem then was to get rid of the coal and to keep the pits going.

I wish to support this Amendment, which is not only a most practical suggestion for the saving of coal but is in conformity with sound financial doctrine. I bring to my support a document with which I think the Treasury will not be unfamiliar. About two years ago a Committee was set up by the Treasury on the Taxation of Trading Profits—the Tucker Committee—and I want to refer very briefly to one of their recommendations. In paragraph 124 they say: We accordingly recommend that a minimum rate of initial allowance should be prescribed; that any association which represents a particular industry should be entitled to apply for a rate of initial allowance in excess of the minimum"— that is exactly what my hon. Friend the Member for Kidderminster (Mr. Nabarro) is doing tonight— and that the authority responsible for determining these applications should be entitled to take into account both the price level of the plant and machinery in question and also the importance of the particular industry to the national economy. I suggest that also is what is being done tonight. Finally, they said: It would be more appropriate to entrust the task not to the Inland Revenue, but to the Treasury as the Department responsible for general economic policy. That is the third point made by my hon. Friend. It is in the interests of the national economy that this should be done, and should be put straight to the Treasury. In this case an exception should be made to the general rule. I shall not touch on the other points. I approach it merely from the financial point of view. I have quoted the advice the Treasury have already had on the subject, which I hope they will accept.

I wish to add my support to the most able speech which we have heard from my hon. Friend the Member for Kidderminster (Mr. Nabarro). Whereas we may not be able to install plant to take the full industrial load, as mentioned by the hon. Member for Bolton, West (Mr. J. Lewis), we can make a very useful contribution by permitting these initial allowances and encouraging industries to put in stand-by plant which, if it cannot take the full load, can at least keep many shops in an industrial plant working.

I think the Committee will appreciate that so many processes in industry today are concerned with sub-assembly and with producing light components which eventually go into the making of the completed product. This sub-assembly and the manufacture of those small components are, in general, undertaken by women, and we have a real obligation to keep these processes going at a time when we suffer fuel cuts. It will be disastrous if this Amendment is rejected and many industries and plants throughout the country are compelled to close down, as they were forced to do last year.

I ask the Financial Secretary to consider this Amendment, which is put forward with great seriousness, and is designed not only to keep our industries going, but at the same time to make a valuable contribution to the defence of the country. It may be that on some future occasion when we are called upon to defend this country the main supply on which we are so largely dependent may be cut. In those circumstances, a very valuable contribution can be made by standby plants. We have not only a peacetime need, which will take away from our peak load which cannot be met for some years to come, but we have also a wartime need, and we therefore have a very real obligation to support this Amendment which can make a worth-while contribution to the industrial efficiency of this country.

I should like to support the Amendment moved in the extremely able speech of my hon. Friend the Member for Kidderminster (Mr. Nabarro). He has, I think, put before the Committee the first step in carrying out a practical policy for fuel in this country. We have so often in our debates on this subject confined ourselves in the past to looking to, as it were, blood on the coal and, at the present time for the consumers, stone in the grate. By putting forward very practical proposals, my hon. Friend had made a definite suggestion by which we can make a big step forward in using better the coal we raise in this country.

In his Amendment he has, in particular, suggested how fuel economy can be carried out. The important word, it seems to me, in the first part of his Amendment is "demonstrably," because it is possible, by putting suitable instruments on to the boilers, to prove to the management, and also to the firemen, the saving they are making by proper control of their boilers. But these instruments will cost money, and if they are to be installed in the numbers that are necessary in order to achieve large economies, they certainly should have the encouragement of the Treasury in the form of the 40 per cent. initial allowances that have been made to date, and which, alas, in the present Budget it is proposed to withdraw.

With regard to the second part of my hon. Friend's Amendment, that pertaining to electricity, despite what the hon. Gentleman the Member for Bolton (Mr. J. Lewes) has said, there are undoubtedly a great many users of electricity—not the heaviest users, but in the textile mills and many others—who would find it possible to meet cuts which will occur when peak demand comes on to the national grid by installing Diesel-driven generators. Although it may mean that some of the plant will have to be cut out, production will be able to be maintained with only a small loss by installing these Diesel-driven generators. But they are expensive, and again, if this is the policy we should adopt—as I am sure it is—in order to reduce these electricity cuts in this country, those who are prepared to take the risk of installing them should be encouraged by being allowed the initial allowances they have enjoyed to date.

There is one additional point. In the Amendment my hon. Friend refers to lagging. We lose enormous amounts of heat, and therefore coal, by not lagging our pipes in this country. Let me give the Committee one homely example. We know that very often, when we run the hot water to wash our hands, it takes a minute or so to run off the cold water before the hot water comes. That cold water which first comes has all been heated but has lost its heat in the pipes just because those pipes have not been lagged. Although I do not suggest that this allowance should be given for the in- stallation of pipes in our homes, that homely example does show the loss of heat which results from not lagging our pipes, and it could be multiplied many tens of thousands of times in industry.

It is for these reasons that I ask the Economic Secretary, when he replies, to consider with great sympathy this Amendment and, if he cannot accept it in the exact wording put before him, to be prepared to say that on the Report stage he will move a formal Government Amendment with which all of us can agree. By doing this he will be forwarding the first attempts to formulate a proper fuel policy in this country.

11.15 p.m.

I also support the Amendment which has been particularly ably moved by my hon. Friend the Member for Kidderminster (Mr. Nabarro), and I support it because it seems to me to be a constructive attempt to tackle a fundamental problem in this country.

When I think of the chances of surmounting the problems connected with re-armament, of meeting the rising cost of living and preserving our standard of life, our one major hope seems to me to lie in the direction of increasing productivity. When, from my experience of industry, I turn my mind to this problem, it seems that one of the major threats to this hope lies in the shortage of fuel and power. After all, when our experts return from America one of the most common things that is said is that the American workman has more horse-power at his elbow than the British worker, and if we are to increase our productivity we have to give British workmen more power at their elbows. That is why I support this Amendment which attempts to deal with this fundamental problem.

If we are to overcome this threat of a fuel and power shortage, the best hope lies in the great scope which undoubtedly exists in the field of industry for improving our efficiency in fuel consumption. My hon. Friend the Member for Kidderminster gave many examples. I should like to add to them some figures, which I had the privilege of giving in an earlier debate on the coal situation in February of this year, relating to the relative efficiencies which exist in British industry in the matter of steam raising.

Inquiries have shown that the average cost of raising steam in different factories in this country varies between such wide limits as 3s. per 1,000 lbs. to around 11s. per 1,000 lbs. We must admit that that is an enormous scatter in efficiency. If we could bring the average down to something like the 3s. mark, we should have achieved an enormous saving in our coal consumption in industry. In fact, experts have estimated—and, of course, it is only an estimate—that the potential saving of coal consumption in this way may be as much as 20 million tons of coal a year.

My hon. Friend the Member for Kidderminster put forward what I thought was an ingenious and able point to the Chancellor of the Exchequer on the financial aspect of this Amendment when he said that it would prove to be a gain and not a loss to the Revenue. If he was right in his argument—if we can save eventually 20 million tons a year—at £3 a ton that is a saving of £60 million. If that is added to the profits spread over industry, the result is £35 million in revenue to the Exchequer. I would support his argument that this Amendment is potentially a revenue raiser if we are prepared to take a long-term view of it.

But this suggestion of saving coal by putting in this sort of modern equipment is not only offering us a direct saving of coal in steam raising in industry, but is also offering us help in the problem of electricity supplies. I have in mind not so much alternative or auxiliary supplies, such as those whose points were discussed earlier. If we could persuade more firms to use, for example, the back-pressure turbine method of raising steam, we would not only have cheaper steam raising, but also a permanent and not just an alternative method of supply. Many firms, I think, would be able to offer electric power to the common grid, and could do it with greater over-all efficiency than could be achieved by any power station of a public utility. That was admitted by the right hon. Gentleman the present Minister of Labour in replying to the coal debate on 1st February.

These schemes of fuel saving, however, need new plant. They involve capital expenditure. There is an urgent need to install new plant of this kind. That is the fundamental reason for this Amendment. We know the Chancellor's general argu- ment for repealing initial allowances: he says there is a need to damp down demands for capital equipment. In the present circumstances of the re-armament programme there may be such a need, and I am glad that he has proposed to do it by financial means rather than by direct physical controls. I am not sure that the initial allowances is the right method, but that is not the argument here. I submit that, whether or not we admit the Chancellor's general argument, we certainly ought not to admit the Chancellor's argument in this special context of plant which will stimulate greater economy in fuel consumption. On the contrary, it is vitally important that we should not repeal allowances in this connection, but should stimulate the introduction of this type of plant.

How can that be done if not by incentives? First, there are propaganda and persuasion. I pay credit to what the Ministry of Fuel and Power are doing in that way, but it will not be sufficient to get the results we want quickly enough. Something must be done to supplement that work of propaganda. Is it to be compulsion? I asked a Question of the Minister on 5th April on that point, and he replied that the Fuel Efficiency Committee advised that the co-operation of consumers was preferable to compulsion. I was very glad to get that answer. I do not think compulsion can possibly work. But if you reject compulsion, then you have to turn to this method of financial incentives, and that is why I think this Amendment should be agreed to.

What are the Government's possible objections to this Amendment? There may be the objection of administrative difficulties. I also questioned the Minister of Fuel and Power about this, and he replied that the Fuel Efficiency Committee had from time to time suggested various financial incentives but their use raised considerable administrative difficulties. No doubt they do, but I should like to draw attention to the fact that the difficulties were only called considerable, and not insuperable. I appeal to the Chancellor not to hide behind the skirts of this very old lady of an excuse. If there are administrative difficulties, let the Government explain to the Committee something of the nature of these difficulties so that we can weigh them up, and not just use that cliché of these two words.

If it is not administrative difficulties, what other difficulties can there be? It seems to me to lie in this principle of discrimination. It may be argued that if we discriminate in favour of plant for stimulating fuel efficiency, why not in favour of other plant? That is a difficult path to tread, but, as the hon. Member for Kidderminster said, it is a path which has already been trodden in other applications. In any case, it is a bad argument to refuse to do one good thing because it is not possible to do other good things as well.

Moreover, if we are to achieve the industrial flexibility, efficiency and enter-price which we must have in this country, coupled with the degree of direction of our economy necessary to avoid some of the abuses which go with a system of unrestrained laissez faire, then the only way we can do it is by means of a fiscal and monetary policy which must be made a more delicate weapon than it has been in the past. Such an attempt must involve a discrimination of the sort represented by this Amendment.

The Amendment is an example of such a step forward. I hope the Chancellor is going to accept it, because it provides constructive help in this fundamental problem. I make a final appeal to him, if he thinks this Amendment is not acceptable as it stands, to accept at least the principle of financial incentives for this purpose, so that when we come to the Report stage we shall be able to put forward alternative suggestions which are acceptable and on which we can all agree.

I submit to the Committee that this is not a controversial Amendment, but one of fundamental importance to this country. We must stimulate greater fuel efficiency. I hope hon. Members on all sides are going to support this Amendment or press the Government to put forward one designed for the same purpose when we come to the Report stage.

I am sure that all hon. Members who have been here since this Amendment was moved will have listened with pleasure to all that has been said about the need for fuel efficiency, and I do not want to say anything which in the slightest way detracts from what has been said about that need.

I should like to add my congratulations to the hon. Gentleman the Member for Kidderminster (Mr. Nabarro) on what I thought was an admirable exposition of the need for fuel efficiency in our present fuel and power circumstances. If I am not able to accept the conclusions which he and other hon. Gentleman have drawn, it is not because I want in the slightest degree to contest anything they have said about fuel and power efficiency.

Although we are not at this stage debating the general problem, it is important that we should recognise that this Amendment and others on the Order Paper have to be considered in relation to the general problem. The hon. Member for Mitcham (Mr. Carr) recognised that this was the real problem. The defence programme to which we are committed cannot be fulfilled in addition to current civilian and export demands. That is the real problem, which cannot be avoided. So far as we are concerned, it is important that we should do nothing which undermines in any serious way the measures we propose in order to try by fiscal means to do something to damp down the demand especially for those products needed for the defence programme.

11.30 p.m.

The hon. and gallant Member for East Grinstead (Colonel Clarke) quoted the recommendations of the Tucker Committee in aid of his case. I think, as the hon. and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd) indicated, I believe during the Second Reading debate, that there are very different views about this particular recommendation. I do not want to get drawn into this matter tonight, because it is somewhat complicated and highly controversial, but I hope it will be agreed that there ought to be no question of implementing these recommendations in the existing circumstances. Therefore, it seems to me that in bringing in that recommendation the hon. and gallant Gentleman really is not helping his case forward—at any rate from my point of view, nor, if I may add it, from the point of view of some hon. Gentlemen opposite. I am merely going on what the hon. and learned Member for Wirral said.

I do not think, whatever we might feel about this Amendment, that we ought to accept it because the Tucker Com- mittee recommended a system of variable initial allowances. It has been said that I would argue against the Amendment because it would be administratively difficult. I think it would be; but I am not concerned to argue against it on those grounds. What I am concerned to argue is that the moment we start on this path of trying to single out particular categories of plant we are in the greatest of difficulties.

There are other Amendments on the Order Paper dealing with this matter—indeed the hon. Gentleman who moved this one has his name down to another one where he wishes to keep initial allowances, and I can think of a number which have not yet found their place on the Order Paper, and no doubt hon. Gentlemen in all parts of the Committee can do the same. I would not know, nor, I think, would anyone, how to resist the extension of reliefs on other classes, how to draw the line to prevent widespread dissatisfaction among users of plant who were excluded from the scope of the relief.

It has been suggested that initial allowances are only a mild form of inducement, and it is also worth while to point out that expenditure on this kind of plant does pay for itself fairly rapidly, even without any taxation relief. I was interested to note that the hon. Gentleman, in one of his examples, said that it had been worth the trouble and expenditure, and I entirely agree with him. I know from my own experience that some of the devices do pay for themselves in a remarkably short time.

I am not at all disposed to argue the revenue aspect of this, because the suspension of initial allowances is an economic case, as has been made clear by my right hon. Friend the Chancellor. It seems to me that, if we were to accept this Amendment tonight, we should be put in the position of almost certainly having to accept a large number of other cases, and we should then find that the instrument we had intended to be used to damp down a demand by industry was failing in our hands. While I fully appreciate the need for promoting economy in the consumption of fuel and power, I do not think it would be right to do what is now suggested. If we were to do so, we should find ourselves in the greatest difficulty.

I think it was the hon. Member for Clitheroe (Mr. Fort) who gave one or two examples of what might be called minor forms of fuel economy, and perhaps it is worth pointing out that where an industrial concern incurs expenditure in making minor or temporary adjustments of the kind to which the hon. Gentleman referred—like the lagging of steam pipes and so on—then in general that is treated as an expense for taxation purposes. Indeed, any expenditure designed to secure fuel economy which is of a genuine revenue nature is so treated.

So, while I commend everything that has been said about the need for fuel economy, I have to resist the Amendment because, if I were to accept it, I should start on a course which would only end in the complete abandonment of the principle of the suspension of initial allowances which we believe in the present economic circumstances is necessary and which, therefore, I put it to the Committee, should continue.

I am sure the Economic Secretary to the Treasury will forgive me if I make a paraphrase of his argument. It is this: "We have made up our minds to cancel the initial allowances, and when we come to examine the perfectly sensible exceptions which people wish to make to that general rule, we find they are so many that we cannot agree to them without upsetting our original decision." Really that will not do, and all hon. Members who have heard the speeches from this side of the Committee, and indeed the speech of the hon. Member for Rotherham (Mr. Jack Jones), thought that the case for these fuel conservation plants was amply made out and would not commit the Treasury to any further concessions, and we propose to press this matter to a Division.

The whole of our industrial effort depends upon our getting enough coal and we must increase, as several hon. Members have said, the horse-power behind the men at the bench. This is one of the ways by which that can be done. I do not wish to follow the fiscal argument into the effect upon the Revenue, but I impress upon the Economic Secretary that here is a means of greatly increasing our industrial effort. The hon. Gentleman said that in the present circumstances we have to turn over to armaments and, so on, and that he did not wish to stimu- late capital equipment; but I do not think that argument applies when we are considering the particular form of fuel conservation which my hon. Friend has ably described.

Therefore, unless we can get some statement from the Treasury Bench that they will look at this matter again before the Report stage, my hon. Friends and I will challenge the Government in a Division.

My right hon. Friend has already indicated the disappointment which we feel on this side of the Committee, and which I am sure is shared by hon. Members opposite, at the response which the Economic Secretary to the Treasury has made to the proposals in this Amendment. The hon. Gentleman said that the type of development which it envisages would undermine the defence programme, but I should have thought that anything which would assist in solving the recurrent fuel crises in this country would be of as much assistance to our real defence as would the manufacture of arms itself.

The provision of adequate coal and power for Britain in the future seems to me to be an essential part of our security, not only economic but military, for future years. If I might go further, I would draw his attention to paragraph (b) of the Amendment, which has a definite defence consequence. The possession of auxiliary electrical generating plants throughout the industrial centres of the country would not only be of advantage in the case of power cuts in peace-time, but also of the greatest assistance in the event of bombing in air raids; and I should have thought that it would have been wise and prudent for the Government to encourage in every way possible the type of development which is envisaged in this Amendment.

It would perhaps not be acceptable to hon. Members opposite, or even to my hon. Friends on this side of the Committee, if I gave as my opinion that in actual fact the efforts to increase coal production in the immediate future, at any rate, will not succeed in covering the gap between production and consumption. Therefore, we must find other means of bridging that gap. I draw the Committee's attention to the article, which has already been referred to, by Sir Charles Lidbury, who stated that leading fuel technicians claim that industry's efforts are the best means of saving coal, on balance, to bridge the gap between production and consumption in the immediate future.

Then we have the Annual Report of the National Coal Board, which says that the British Iron and Steel Federation estimates that in 1923 it took 62.7 cwts. of coal to produce one ton of finished steel, but in 1949 only 36.1 cwts. to produce the same amount. In the same Report, it is stated that the annual saving involved was in the nature of 15 million. Now, in case it should be thought that I am partial to private enterprise by quoting that example, let me tell the Committee that in the same Annual Report the National Coal Board states that in 1948 the colliery consumption of coal was 11.3 million tons for an output of 197.6 million tons, whereas in 1950 it was 10.7 million tons for an output of 204.1 million tons.

I merely introduce these figures to give an example of what has been done in practice to save this precious raw material, coal, by two great industries—perhaps the most important that we have. The National Coal Board states that economies on the scale that I have referred to would reduce consumption of 36 million tons a year to about 28 million tons, and I should have thought that that saving would have been something which we should use every endeavour to bring about.

I think that under the Socialist Government the conception of the Finance Act may have changed from the original conception in the past, which was that one of the most important considerations was inducements, and not deterrents, to gain desirable economic ends. Here, surely, is a way in which the Chancellor could achieve the most desirable of economic ends by providing a financial inducement.

I cannot accept the argument, which is the typical, unimaginative argument of the Treasury, that if one exception is made to the general rule, it will be difficult not to allow a large number of other exceptions. After all, what is the purpose of a Government who intend to govern and to have a definite policy in coming to this Committee and saying that, if they make this exception in the case of fuel-saving equipment and electrical generators, they will find it hard to draw the line between those and other forms of desirable improvements and will, there- fore, cause dissatisfaction to other users? Maybe they will, but surely it is public policy at the present time to make every effort to solve the central industrial problem of Britain, which is shortage of the raw material of coal.

11.45 p.m.

I should like now to turn briefly to other aspects of this Amendment. It happens that there is in my constituency one of the firms that is mainly concerned with the production of Diesel generating engines. When the first fuel crisis took place in 1947, this firm, with the enterprise which has perhaps been associated with it, decided the time had come to make a special drive to sell its engines as supplementary generating units. During the subsequent campaign, it sold 700 engines of various horse-power, with a total horse-power of 150,000 and with a combined generating capacity of 100,000 kilowatts.

I merely use those figures because it is interesting to compare that total generating capacity with the generating capacity of one of the newest and most up-to-date generating stations built by the British Electricity Authority, the station at Ipswich, which within the last few weeks had a capacity of 120,000 kilowatts, although it will rise in the future to something like 160,000 kilowatts. The point I am trying to make is that this firm, by means of the small Diesel engines which it produces, has not only been able to assist in meeting the problem of dislocation of British industry which resulted from power cuts, but has added to the generating capacity of this country by almost the equivalent of one of the most modern power stations.

I believe that anything that can be done by His Majesty's Government to encourage this type of development will not only be in the interests of the efficiency of industry, and thereby incidentally and indirectly increase the revenue coming to the Treasury, but also will be of immense assistance in solving that great problem, which has been referred to so often on this Amendment, the shortage of coal in Britain.

I did not intend to intervene in this debate, but I found it impossible to sit here silent listening to the many speeches-which have been delivered by hon. Members opposite. I listened entranced to the speech that was made by the hon. Member for Kidderminster (Mr. Nabarro). I thought it was brilliant. Its brilliance lay in wrapping up almost complete nonsense and selling it hook, line and sinker to an otherwise intelligent Committee.

I may be completely wrong, but I must declare my interest. I happen to have been in this trade for 20 years. My firm has manufactured, designed, sold, supplied and installed fuel-saving appliances, and I do know something about it. At least, I ought to know something about it. It may be, again, that I am entirely wrong, but at least I think I am right when I say I am the only Member of Parliament in this Committee who is in this particular trade. The hon. Member for Kidderminster made two points which I should like to discuss, but before I come to them I should like to take up one point made by the hon. Member for Clitheroe (Mr. Fort) which was typical of some of the specious points made in so many of the speeches.

The hon. Member made a short speech indicating that it is extremely inefficient because, when one turns on a hot water tap, it is a minute or two before the water runs hot, and therefore there ought to be greater lagging. Does he realise that if, in fact, one had a hot water tap which instantly it was turned on provided hot water, it would have to be so efficiently lagged that one would also have to lag one's cold water pipes otherwise they would freeze in winter? One of the reasons one does not lag hot water pipes is that one wants the radiation from the hot water pipes to prevent the cold water pipes from freezing if one happens to leave a window open in winter. Of course, it is possible so to arrange the pipes for hot water that the water does run hot immediately. One can have a ring-main; but it is sometimes more inefficient to put in double pipes and so to save a certain amount of heat at the expense of putting in the extra pipes. The net result is inefficiency.

Now let me come to the points made by the hon. Member for Kidderminster. He is claiming in his Amendment that the Government would be wise to provide a financial inducement from these firms which would install fuel-saving machines or appliances. I have sold these things for some 20 years of my life and I would not be honest if I did not say that most firms do waste an inordinate amount of their fuel by sheer inefficiency. It is not the least bit surprising that manufacturers of appliances, such as my firm make, can indicate that by fitting them they can save sometimes as much as 50 per cent. of the fuel bill.

This is possible because any engineer who goes to those firms, by giving them a few simple tips, can often save 25 per cent. in nine cases out of 10. Firms generally under-pay the individual who stokes the boilers because they think this is a ham-handed job, but in fact they could save a large sum of money if they paid a man who is more intelligently-trained to stoke their boilers in a different fashion, The case for installing fuel-saving appliances is often the case for doing mechanically what an intelligent stoker ought to be able to do himself.

Therefore, the real thing to do with a firm that wastes a great deal of its fuel is to show it what can be done most simply and most economically to save some of that fuel. Let me say perfectly frankly that it pays firms not to buy some of the appliances which are sold. [Interruption.] I happen to know that there is on the market an appliance which is not worth buying. I have said it often, and I make a boast that my firm have said time and again that it is not good business in the long run to sell a man a machine which he does not really require. There are appliances that are sold which, at a price of about £50 or more, can be applied to a boiler and which often save 10 per cent. of the fuel; but one can save precisely the same 10 per cent. by putting a wedge in the boiler door and letting secondary air into it. It is merely that the carbon monoxide is not being burned. Let a little extra air in, and the boiler is more efficient.

I am glad that the Government do not intend to accept the Amendment. If they were to give financial inducement for the use of appliances of this kind, they would be tackling the problem of fuel efficiency from the wrong end. It is logical to say that if a firm spends money in order to be more efficient in its fuel burning, there should be some financial inducement, but at lease there is a good case for saying that a higher-paid stoker is often a better investment than an expensive mechanical appliance. One could advance an argument for some inducement for expenditure on fuel saving which is not shown in any of the items listed in the Amendment.

I will go further and add that fuel saving is desperately important, but we do not always save fuel most efficiently by putting in mechanical contrivances. There are other ways of saving fuel. Incidentally, the most efficient way I know of saving fuel in this country is the new mobile fuel efficiency vans which the National Coal Board are hiring out to any firms which will make use of them. These vans are staffed by experts who, for a period of a week or two, will give to a firm expert advice in order to save its fuel. That is the best investment I know. Obtaining that van and those experts is often better than buying any of the equipment which manufacturers advertise. That is honest advice which I am happy to give.

Is it not a fact that the experts to whom the hon. Gentleman refers who give advice, and have, in fact, given the advice, recommend the use of the very gadgets on which he speaks so disparagingly?

No doubt they do. I could not have survived in business, nor could my firm have survived, unless very often there had been a sound case for installing the things we were supplying. All I say is that a firm should not buy mechanical appliances until it has discovered whether it is not more efficient to save its fuel in some other way. I will not labour the point, however.

I should like to make one further comment on the very skilful speech of the hon. Member for Kidderminster. I thought his case for the installation of independent stand-by generating equipment was about as specious as the rest of his speech, and just about as short-sighted. It is perfectly true that it often pays many firms to install this generating equipment at great expense for use perhaps on only two or three days in a year. It certainly pays some firms to avoid the difficulties which arise from a sudden power cut. That is perfectly true. But why are there power cuts at all? [HON. MEMBERS: "Oh! "] Power cuts happen because industry is now so thriving that the demand for power is very great and the power stations, being short of equipment and of generating equipment in particular, are not able to keep pace with the rapidly growing demand.

The point is this: there is a shortage of manufacturing materials and human skill to provide electrical generating equipment. That skill can be used, to a certain degree, either in making individual generating sets which are supplied to some firms to be used on one or two days in a year; or it can be used for manufacturing the main equipment to go to the big power generating stations which are used almost continually.

The hon. Member for Kidderminster proposes that it is more efficient for hundreds of firms to have hundreds of stand-by equipments, which are very seldom used, because it pays each of them individually; on the other hand, we know that it pays the nation, and all of them collectively, far more that they should not have it but that that equipment and that skill should go direct to the central power generating stations. The hon. Gentleman in effect suggests that it might pay to rob Peter to pay Paul. I suggest that his suggestion is a question of robbing a bob from Peter to pay only a penny to Paul. The thing is absolutely absurd. I am glad that the Opposition propose to divide the Committee to support such a silly Amendment, and I hope they will enjoy doing so.

12 midnight.

The hon. Member for Yardley (Mr. Usborne) referred to the remarkable speech of my hon. Friend the Member for Kidderminster (Mr. Nabarro) as specious and short-sighted, and he applied the word "nonsense" to it. In doing that he was in direct contradiction with his hon. Friend the Economic Secretary to the Treasury, who went out of his way to compliment the hon. Member for Kidderminster, and indeed I thought endeavoured to marshal serious arguments to rebut the case he had put forward.

I should like to examine some of the arguments used by the Economic Secretary. He referred to this, in his opening remarks, as a general problem, which of course it is. What we must guard against is allowing the Treasury in this matter to treat the general problem of fuel economy solely as a Treasury matter. We believe that it is a general problem which must be considered on the broadest possible ground, and that therefore it is right that the Treasury and the Ministry of Fuel and Power should be associated in such a scheme as my hon. Friend has put forward.

There is no dispute that this Committee is eager to find a way in which the provisions of this Finance Bill can best assist the defence programme. The Economic Secretary thought that this proposal might interfere with the implementation of the defence programme. Those of us who support the Amendment believe that it will make a very real contribution to the defence programme, on these grounds: first, that we are modernising the industrial plant of the country; secondly, we are relieving the mines and the mining industry, to some extent, of their capital expenditure; and, above all, we are economising—I shall not go over the ground covered by my hon. Friend—in the work and the labour of miners.

The Economic Secretary then went on to even more dubious ground when he said one could not pick out particular categories of plant which should receive initial allowances. I believe that that is exactly what my hon. Friend has done. If the words proposed are not acceptable to the Treasury, I am quite sure that satisfactory words could be found. As I understand it, the argument which is being applied in the speeches supporting the Amendment is that great economies can be made on the steam-raising equipment in factories throughout the country.

Indeed, so clearly defined is that steam-raising equipment that factories which have been laundries, or breweries, or cotton mills, are sold, and before being sold are gutted of their technical machinery, but the boiler and shafting and generating set are left in because they are of almost universal application to any trader who rents or buys that equipment. Therefore, to say that it is not possible to pick out one particular form of machinery is, I believe, quite wrong. I believe my hon. Friend has put his finger on the one kind of machine which it is possible to pick out.

To pass to another argument used by the Economic Secretary, he said that there would be some feeling of injustice if certain users were excluded from the scope of relief. I do not think that argument would hold water for a moment. I do not believe the user of a motor van is going to feel any sense of grievance at all because he does not receive on his motor van at the present time exactly and precisely the same initial allowances as are to be extended to the man who instals a new boiler and who is going to make a substantial economy in finance and, above all, in fuel.

We have listened with great interest to the speeches from the hon. Members for Rotherham (Mr. Jack Jones) and the hon. Member for Bolton, West (Mr. J. Lewis), both of whom have experience in industrial management. I believe this is one of the cases where the Treasury have looked at the thing from far too narrow a point of view. The Treasury are not infallible. I remember, back in the days of the war, that a proposal was put forward that a scheme of war damage insurance should be instituted. The Treasury decided it was quite impossible. The Minister responsible advised the House in that way.

The Economic Secretary will find some interesting correspondence in his Treasury files from a former hon. Member for Spen Valley, in which the Treasury said how extremely difficult it was to institute a system of Pay-As-You-Earn. The fact remains that, when these matters are pressed by practical means upon the Treasury, the Treasury, by great skill, find an admirable way of carrying out the decisions of the House. I believe this is a matter where similar results can be obtained.

I support this Amendment, and I wish to say what a very poor argument the Economic Secretary used in turning it down. With regard to the speech of the hon. Member for Yardley (Mr. Usborne), I thought his main trouble was that he was trying to be too fair-minded. He started by giving a certain amount of advertisement to his firm, and he had to end by running down his own sales policy.

I was impressed by the speeches of the hon. Member for Bolton, West (Mr. J. Lewis) and the hon. Member for Rotherham (Mr. Jack Jones), and I should like to know whether they are satisfied with the speech by the Economic Secretary. I was much impressed by the point of view they both expressed that this, in itself, was a good idea, and I do not think they have heard any sound reason against it from the Government Front Bench. I shall await with great interest to see which way they vote when we divide.

Only for a very short time during this fairly long discussion have I seen the Minister of Fuel and Power upon the Front Bench. He came in for about two minutes. The question I should like to ask the junior Minister is whether there have been consultations with the Minister of Fuel and Power about this matter, because it is obviously one about which the Ministry must be very keen.

What did the Economic Secretary actually say in his speech? He said that he wanted to deter current demand and to damp off the demand for such products. Is he really telling the Committee that he wants to damp off demand for products that are going to save fuel?

I am sure the hon. Gentleman would not want to misrepresent what I said. I made it perfectly clear that I was talking about products required for the defence programme, and he must not use my words in any other sense.

Very well. Does that mean, therefore, that he does not wish to damp down the demand for these economising users of coal?

The answer is that if they are required for the defence programme, yes.

Very well. I see that the Minister of Supply is here. I am sure he would tell the Committee that steel is very necessary indeed for the defence programme. In point of fact, I understand there has been an agreement between the Minister of Fuel and Power and the Minister of Supply to give priority to steel, and I will tell the Economic Secretary that one cannot make steel without coal. It comes to this, that we are at the moment importing something like £4 million worth of coal from America, and here are practical suggestions whereby a large amount of coal could be saved, unless the Minister wishes to damp off the demand.

It is no argument for the Economic Secretary to say that he wants to refuse this Amendment because he feels that it might create a demand which might hamper the defence programme. This demand is very necessary to the defence programme, and I shall strongly advise all Members of the Committee, including those who have supported the Amendment from the other side, to go into the Division Lobby against the Government.

Listening to the Economic Secretary, I formed the opinion that no matter how good the Amendments are, he is going to refuse all of them. I should like to ask him whether he has considered them in relation to how far they go towards helping the re-armament programme, because I am certain from his reply that he has not appreciated what this equipment means in the furtherance of the defence programme. I beg him, instead of giving a bald refusal, to consult those who know what would be the full effect of these Amendments. It is pretty evident that the Minister does not know of their effect, because he accepted the proposition of the hon. Member for Kidderminster (Mr. Nabarro) as perfectly sound; but he did not give the Committee any idea that he has considered the full effect of these Amendments on re-armament, and I beg him to do so.

12.15 a.m.

The very unsatisfactory reply of the Economic Secretary will come as a great disappointment to a number of industrial concerns in my constituency and throughout the whole of the North of England. In fact, he has earned for himself, not the title of Economic Secretary to the Treasury, but that of Uneconomic Secretary to the Treasury.

The hon. Member for Kidderminster (Mr. Nabarro) dealt very extensively with

the question of Lancashire boilers which are the normal power unit in the cotton and woollen mills in Yorkshire and Lancashire, and I know myself of a number of instances where schemes of fuel economy have been under consideration which will now be postponed owing to the withdrawal of the high initial allowance. As has been pointed out, because wasteful fuel consumption in many instances ranks as a normal charge on industry, it will continue because more economical plants cannot be contemplated.

I should like to repudiate the unwarrantable attack on stokers made from the benches opposite. The stokers in our industrial plants today are some of the finest workers we have, and they have had to put up with a great deal from the Socialist Government, especially in the form of dirty coal which has been provided for them and which has added enormously to their work. Many of them, by sheer skill and hard work, have managed to maintain steam in the factories in spite of the poor quality of the fuel the Government have supplied them. Many of them had hoped that with the more ample supply of fuel-saving devices now becoming available, much of their heavy work, and many of the difficulties they have had to put up with in the past few years, would have been overcome.

I hope that the Government will look at this matter again, and see whether they cannot do something to help not only these men but industry in general.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 284; Noes, 292.

I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

I move this Motion to elicit from the Leader of the House what the Government's ideas are about the future course of business today. We have had a very valuable and well-sustained debate from both sides of the Committee, in which matters have been examined with great attention and thoroughness by both parties, and we have reached just that period, or thereabouts, in the sitting at which the right hon. Gentleman the Leader of the House moved a similar Motion last night. It seems to me that, as he saw there was no need to utilise, as he could have done, another two hours, we ought to put to the Government a question whether we should not follow the course he indicated last night, and let the Committee terminate their labours for this particular sitting at a reasonable time.

I should like to know what their intentions are—[Interruption.]—I was asking the Leader of the House. I think it is much better to have a series of sittings terminating at a reasonable hour, rather than the trial of strength or tour de force that the Government are trying to put on us by driving us through the night. Two hours could have been expended in useful discussion last night, and we could consume another two hours tonight, but I should like to know from the right hon. Gentleman what view he takes. Why was a pathetic appeal made by an hon. Member of the House even older than myself not to choose Thursday night for a particularly late sitting? I really think the matter should be clarified by the Leader of the House. Two hours were wasted last night. We could do another two hours tonight. After all, there is plenty of time this Session. As I said earlier in the day, the Government have no legislation to propose—

12.30 a.m.

On a point of order, Major Milner. Are we here to do serious business or to listen to this mockery which is now being carried on?

The Chairman:

That is not a point of order.

I should like an indication from the right hon. Gentleman of his intentions.

I thank the right hon. Gentleman for this opportunity of making clear our intentions. As I said some hours ago, we do not regard adjourning at this time or in two hours' time as being something that meets with the general convenience of the Committee. [HON. MEMBERS: "Why?"] Therefore, we propose to sit for some hours yet, and we hope that during that period we may be able to make substantial progress with the Bill.

May I say that if we sit through the night there are some extremely technical Clauses which have to be discussed raising very fine legal points. Does not the Leader of the House think it undesirable, when such matters of grave public importance and such fine legal points are concerned, that they should be discussed at a time when proper consideration cannot be given to them?

No, I should not have thought so. I see that the right hon. Gentleman is himself supported with considerable legal talent, and I have noticed that my right hon. and learned Friend the Attorney-General seems to shine brighter the smaller the hours of the morning.

Might I, with great respect, put another consideration to the right hon. Gentleman? We are about to enter upon that part of the Bill which deals with initial allowances for shipbuilding—in which the Government have an Amendment of their own—a matter which vitally affects both the general public and our constituents, who are entitled to know what steps are being taken to stimulate our merchant shipping in the event of war. Is it proper that this discussion should take place at a time when, owing to the shortage of newsprint, it is most unlikely that that debate will receive adequate reporting in the Press?

Question put, "That the Chairman do report Progress, and ask leave to sit again."

The Committee divided: Ayes, 282; Noes. 292.

12.45 a.m.

I beg to move, in page 10, line 20, at the end to insert: excepting only expenditure on the installation or improvement of plant and equipment for the purification of trade effluents discharged into a public sewer or a stream. I should say that, while I agree absolutely with the recent remarks of my right hon. Friend in regard to reporting Progress, as an inexperienced Member of this Committee I should personally have been heart-broken. I understand that this Amendment might have been called 24 hours ago. Had it not been for the stubbornness of the Government in considering the constructive propositions put forward by the Opposition, I should have got this speech, with which I have been so long pregnant, off my chest a very long time ago. To delay that step for another 24 hours or longer would be more than I could bear. The object of the Amendment is in a way similar to that of the last Amendment, in that it is to provide an incentive to industry.

It is stillborn.

In this case it is an incentive so to improve trade effluents as to maintain and improve again the purity of our rivers. I am unfortunate that I cannot plead this case with the eloquence of my hon. Friend the Member for Kidderminster (Mr. Nabarro), nor indeed is it so attractive in that it does not promise the same sort of immediate and productive results; but nevertheless I do claim, and I hope I can prove, that it is of great national importance. In fact, if anyone who is interested in this particular subject cares to think for a moment of the effect of two great wars on the state of our rivers, and to think of what the added effect of a further expansion of production may be on these rivers, I think the importance of my Amendment will be appreciated.

It is perhaps a pity that we are dealing with this Clause, to some extent putting the cart before the horse. That, perhaps, cannot be helped, but at least, from my point of view it would have been far easier to put my arguments in this limited case if the main arguments relating to the Clause had already been put. I can very well imagine that hon. Gentlemen who accept the fact that there should be a suspension of initial allowances may regard it as absurd that I should put forward an Amendment with an apparently insignificant object compared with the other enormous problems which face industry at this time.

Personally, I do not at all believe that initial allowances should be wholly suspended. I agree that the 40 per cent. allowance has in some small measure encouraged capital extravagance, but only in minor matters. It is true that when we consider capital expenditure having in mind the initial allowance, some of us are apt to show as much irresponsibility in our own affairs as does a woman in a hat shop with the housekeeping money. But these extravagances are only in minor matters. It may be that they require some change in the system, but I am certain that complete suspension is a bad policy.

In passing, I would say that in the initial allowances we have the one feature of our system of taxation which has, for a purpose, encouraged the purchase of quality goods, whereas other taxes have simply driven us to standards of the cheapest and the nastiest. That is at least one excellent argument which can be applied to the initial allowances. Already there is an acknowledged exception to the Chancellor's Budget intention—ship-building; and if I judge correctly, apart from the false impression given by a Division under present circumstances, it is the feeling of the Committee that fuel economy should also be an exception.

On a point of order. There are some Members lying down in the Members' Gallery who appear to be in distress. Do they require a doctor?

Without going further into the general principle of the allowances, I suggest that there should be an allowance, first, for capital investment which can justify itself as having an immediate effect on productivity; secondly, for capital investment which has as its object some means of national economy, as in the case of fuel economy; and thirdly, for capital investment which has within it some point of great national interest, in which category I claim we should regard this question of pure rivers.

Now may I turn briefly to the detailed points of the Amendment? It is a logical sequel to the Rivers (Prevention of Pollution) Bill, which had its Third Reading in the House as recently as last Thursday; so at least it is topical. Hon. Members are familiar with the arguments which were deployed in favour of the principle of the Bill and there is no need for me to repeat them. [HON. MEMBERS: "Hear, Hear."] I can only hope that hon. Members who say "Hear, Hear" have read the OFFICIAL REPORT, if they did not take part in the debate on the Bill, because the arguments were extremely cogent.

They are just ignorant.

This Amendment is aimed not only at helping the installation of equipment for anti-pollution work, but also at the improvement of existing equipment. One of the points made in the discussion on the Bill was that although industry was prepared to do its best with the position today, it very much doubted whether it could cope with the great extension which will arise out of the defence programme and with the extra pollution problems attached thereto.

The second point, which I believe to be very important, is that this Amendment purposely relates to effluents discharged, not only into streams and rivers, but also into public sewers. Under the Public Health (Drainage of Trade Premises) Act, local authorities have a great responsibility for the receipt of these effluents and for their purification, and in discussion on the Rivers (Prevention of Pollution) Bill fears were expressed that grants for the improvement of sewerage schemes of such a size as to cope with the ever-increasing problem would not be forthcoming from the Government.

While it is the Government's duty to help local authorities with those schemes in so far as the outflow is concerned, this Amendment will greatly ease the burden on local authorities by lessening the problem at the point whether the effluent is received into the sewer. I believe that for that reason alone it will be welcomed by local authorites. It should also be welcomed by the Government as decreasing the demands that are likely to be made on them for grants to help local authorities with their sewerage schemes.

The other point that came up constantly throughout discussion on the Rivers (Prevention of Pollution) Bill was the cost of anti-pollution measures—the cost today and the cost as it would be in an expanding programme. Those objections were made before the Budget Statement, when initial allowances were still an accepted fact. Now the objections must be greatly increased. There is no question of anti-pollution plant paying for itself, as the Economic Secretary said fuel economy plant would do. Anti-pollution pays for nothing from the point of view of industry. All it provides for is the quality of the water in our rivers below the particular industry for the use of other people.

This Amendment offers only a mite towards the burden of the cost; really only an encouragement; but if it were accepted it would at least prove that this Committee supports, with good will, the spirit and the purpose of legislation which it has only just passed. It is sometimes thought that the reason for having pure rivers is limited. I know hon. Members may have heard it all before, but this supports the Amendment, and I shall be as brief as I can.

On a point of order. Are we discussing the Rivers (Prevention of Pollution) Bill or the Finance Bill?

We are discussing the Amendment on the Order Paper, and the hon. Gentleman is perfectly in order. I have been listening to him very carefully.

If the hon. Lady had paid me the small compliment of listening to my inexperienced discourse, she would have heard me say that this was a logical sequel to the Rivers (Prevention of Pollution) Bill. I will not keep her from the pleasure of listening to other hon. Members for more than another two or three minutes.

Pure rivers are wanted, above all, by industry, and that is the important thing. Any one trade or factory has a responsibility to other trades and other factories below its outflow. In the past, industry has done much to destroy the purity of rivers and has subsequently done a great deal to restore it, but not enough. I submit that this Amendment will help to maintain the trend towards restoration. Pure rivers are wanted by water undertakings for the people. I feel sure that would appeal to the hon. Lady. Pure rivers are wanted, too, by people for recreation and amenities. Lastly, and I purposely put it last, pure rivers are wanted by fish. First of all because fish are a criterion of purity, and secondly because there are two million fishermen.

1.0 a.m.

The cost of this Amendment would not be large in a technical sense, and it does not make any drain on re-armament. It is an exactly similar point to fuel economy, and I trust that hon. Members on both sides of the Committee, who showed such great interest in this subject in the previous discussion of it—and there are hon. and right hon. Members who can at least adopt an attitude of benevolent neutrality—will help to convince the Chancellor, if he needs convincing, that this concession is one that I put forward with the purest motive, unpolluted by political bias.

I cannot conceive that anyone can really object to this Amendment. The hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) drew attention to the fact that there had been a good many arguments heard about the prevention of pollution. I am reminded that on no side of the House was there anything but extreme enthusiasm for that particular case. We passed that Bill on Monday of this week, and I can imagine no better send-off to the river boards in their new task, which is a very heavy task, than that the Chancellor of the Exchequer should show some imagination and give them this concession. It would cost little and has none of the objections that the Economic Secretary made out the previous Amendment had.

Let me remind the Committee of what he said. He said, with regard to that plant, that he wanted to do anything that damped down demand for products that competed with the re-armament programme. Anyone who knows about the installation of equipment for sewerage works, knows that one can hardly find any activity which competes less with the rearmament programme. Talking in general terms of accepting this suspension of initial allowances, the Economic Secretary made out that there were considerable administrative difficulties. Here, again, there is no administrative difficulty whatever, because the whole of the administration would be done by the river boards which the Government have just taken steps to set up. So that argument is disposed of.

The third argument used was that if we gave the concessions to certain pieces of plant, there would be jealousy in other directions; there would be great dissatisfaction in other trades and in respect of other machines. But I can assure the Economic Secretary, even if it does not leap to his eye as it should, that there will be no dissatisfaction on the part of people who are offered a reduction of the money they spend on providing the plant to deal with effluents. The people most likely to show dissatisfaction are the people required by the river boards to undertake this work.

When we were discussing the river boards, we all realise that it must not be a case merely of uniting people to do things they do not necessarily want to do, and on every occasion one need not invoke the law. We all hope—and there is considerable experience to justify the hope—that the whole work of river purification will be carried out largely by co-operation between the people concerned in it. Therefore, it is essential that we should give the maximum amount of financial inducement to people to cooperate with the river boards to undertake to install and improve their plant and equipment for this purpose. It has already been said that this does not pay for itself. There can be no question of that in the short-term view. Of course, in the long-term view one might say that any worth-while improvement pays for itself, but in that respect this matter cannot be placed in the same category as the fuel economisers.

The acceptance of this Amendment would not make any call on the mechanical engineering industry. It would fall almost entirely on civil engineering. For these reasons—and I do not wish to develop the argument at any greater length—it is quite clear that this particular form of plant has a greater and unique claim compared with any other category of plant that can be named. It will help this new crusade we are undertaking for the purification of rivers, and by showing good will, benevolence and a little imagination—a quality of which I am sorry to say the Chancellor has shown himself to be completely destitute—these new boards can be given a good send-off in a task which received the unanimous approval of the House last Monday.

The hon. Gentleman who moved this Amendment said that it was similar to the last one. I think I need not weary the Committee by going over all the arguments I used on that occasion, but the mere fact that he has said that it is similar proves one of my main points against the last Amendment. If, let us suppose, the last Amendment had been accepted, the hon. Gentleman would at once have used that acceptance in favour of our acceptance of this Amendment.

The hon. Gentleman made that perfectly plain. He said that it was of the same kind, but the right hon. Member for Aldershot (Mr. Lyttelton) said on the last Amendment that we could accept it without commitment on anything else. It is, however, quite clear that already we are in the process where Members are trying to build one case on the other, and I have no doubt that when we come to other Amendments we shall see the same effect. It looks as if hon. Gentlemen opposite are trying to achieve their purpose on the side, instead of making it explicit that they want to avoid the suspension of initial allowances.

Is not the truth of the matter that any one of us could make out a very good case for any one of our enthusiasms? This particular matter happens to be one of my enthusiasms. I made a number of speeches in the last Parliament on river pollution. I had a great deal to do with what I might term the incubation of the Rivers (Prevention of Pollution) Bill, because I was concerned with it when Parliamentary Secretary to the Ministry of Health. There is nothing I would rather see than our rivers free from pollution. I said once that there was a time when the difficulty was to catch the fish, and now the difficulty was to find the fish to catch. It is, of course, one of the blots on our rural life, and to some extent on our urban life, that our rivers are so badly polluted.

We can all find things of this kind which we are keen about. The truth is that we cannot adopt the principle of saying "Let us wait until we have done everything else we want to do before we give really serious consideration to the defence programme." If we were to take the word of the hon. Member for Burton (Mr. Colegate), we would have more civil engineering people engaged in this work; but it would be difficult to find an industry which is more pressed, and is going to be more hardly pressed, because of the defence programme.

In these circumstances it would be the height of folly to do anything which encouraged a greater use of these resources, which is what the hon. Gentleman is asking for. In circumstances in which our first and real endeavours must be devoted to the defence programme, we must not do anything which diverts resources from that programme; and we must not take too narrow a view of what resources are. In this case they include manpower. Although we might be keen to see more of this work done, we should be doing a great disservice if at present we asked for more of it to be done.

I agree with what both hon. Members have said, that the sooner we can get to the day when we can turn our attention to these matters in the way we would like, the better; but in present circumstances we cannot do everything at once. We cannot do all these good things about which we are agreed and yet carry on the defence programme to which I think we are all committed. For these reasons, together with those which I gave on the last Amendment, I must ask the Committee to reject this Amendment.

I was much disappointed to hear the Economic Secretary, who has such deep sympathy with the object of this Amendment, reject it in so few words. While it is true that all of us are here to support re-armament, I was unconvinced by his argument that the additional civil engineering which might result from the implementation of this Amendment would draw away a noticeable quantity of manpower from re-armament industries. If we are to put into effect the Bill we sent to another place a few days ago, industry will be involved in the expenditure of large sums of money. If industry is to spend these large sums, and the law lays upon it the obligation to do so, these initial allowances will be very necessary.

The best information I can get is that in a very large range of manufacturing industries—chemicals and textiles, dyeing and printing, steel—about 10 per cent. of the total capital cost at present replacement rates will have to be spent on the treatment of effluent and the necessary sewers to carry it away. On a factory costing about £3 million, a sum of £300,000 will have to be spent on the equipment necessary to treat effluent. Similarly, with a textile finishing concern going up now at a cost of £450,000, the effluent treatment will cost £50,000. If industry is to be called upon to spend these sums, and implement the Bill we passed so recently, it is only fair and reasonable that it should have some assistance by being allowed to continue these initial allowances.

1.15 a.m.

I was surprised to hear the Economic Secretary sweep aside this Amendment with a far too elementary argument, drawing his deductions from the previous Amendment. In the light of the figures I have put before the House and the recent passing of the Bill to prevent river pollution, I ask the Economic Secretary to reconsider his decision and the Committee to agree to this Amendment.

I would not have spoken but for the extraordinary argument made by the Economic Secretary. I understood him to say that the Government do not wish to encourage by any means the erection of purification plants.

I do not think that anything I said could in any way be interpreted to mean that. I was trying to refute the arguments that had been advanced for more and more of this work to be done now. We cannot afford to do more and more of this work with the defence programme upon us. We should have competition in the civil engineering industry which would make it difficult for the defence programme to be carried out.

That is a very different paraphrase of what the hon. Gentleman said; but if there is any difference, I gladly withdraw what I said. What have the Government done? Within the last six months they have made it a statutory offence for any industry to put effluent into a river without treating it. At the time they brought in that Bill there was a 40 per cent. initial allowance. While the Bill was passing through the House, the Chancellor, no doubt for a very good reason—perhaps for a bad one—withdrew the initial allowance. Either the Government should withdraw or postpone the Rivers (Prevention of Pollution) Bill or the Chancellor should accept this Amendment.

The Economic Secretary told us earlier that he was present at the incubation of that Bill. I cannot congratulate him on the success of his incubating efforts, because when it was brought to the House hon. Members found it completely unworkable and it had to be altered so that it would do what was intended. I think that, in view of the attitude he has taken and the attitude the Chancellor has taken, the Chancellor ought to consider whether he should not postpone the obligation which that Bill places on industry or accept this Amendment. If an enterprise does not carry out this obligation, it is liable to heavy financial penalties, and in cases of repeated failure to observe the conditions of the Bill, there is a sentence of imprisonment. I think it is a matter of grave regret that the Economic Secretary addressed such an argument to the Committee.

The main argument of the Economic Secretary was that we should not do anything to hinder the re-armament programme. I suggest to him that one of the most important things that can be done to further the security and safety of this country is to set up plant to stop the pollution of rivers. We know that at the present moment a considerable amount of raw materials do pass into rivers, and it is of the utmost importance that these raw materials should be conserved wherever possible. Sulphuric acid is but one of those materials, and I should have thought that it was of the utmost importance that every encouragement should be given to firms to get on as rapidly as possible with the installation of this type of equipment, for in doing so they would conserve raw materials, which in case of war or national emergency would be urgently needed.

I make this plea—will not the hon. Gentleman look at this matter again to see whether he can discover the value, which I believe to be considerable, of raw materials which ought to be saved by the installation of this plant? If my arguments are sound, as I believe them to be. I think I have put forward something which might make the hon. Gentleman reconsider his attitude. I hope he will consider the point I have made and in doing so find that he has full reason to change his mind.

In view of the fact that the main discussion on this matter is evidently to be postponed until we have taken the Amendments, I propose to reserve my argument for the main debate. On this particular Amendment, I wish to indicate that we have here a typical example of Government planning. They deliberately included in the Gracious Speech as the chief piece of legislation the matter of river pollution, and obviously they intended that Bill, which has passed through this House, to have priority, otherwise there was no need to mention it in the Gracious Speech.

In view of the speech of my hon. Friend the Member for Thirsk and Malton (Mr. Turton) and also because the hon. Gentleman the Economic Secretary says he has a special interest in the subject, we shall take the matter to a Division, because we consider that it should be pressed in that way because of the priority the Government have given to the matter.

In endorsing what my right hon. Friend has said, may I add one word? I think that all hon. Members were concerned in the debate on the Rivers (Prevention of Pollution) Bill were impressed by the way it was treated on a completely non-party basis. Hon. Gentlemen on all sides were dealing with the matter absolutely objectively, and it is rather disappointing to find that no one from the other side, except the Economic Secretary, has expressed any view about it now.

I think all of us can say that what the Economic Secretary has said is in conflict with what the Minister of Local Government and Planning had to say during the passage of that Bill. The right hon. Gentleman certainly gave an indication that he was in favour of the earliest possible action being taken to prevent river pollution. I do not think we should forget what the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) said, when he intervened during the Report stage. He remarked: Just because the factory is man-made and the river God-made, it does not follow that man ought to be in front of God there."—[OFFICIAL REPORT, 31st May, 1951; Vol. 488, c. 473.] The right hon. Gentleman placed it on a high theological plane, but the Economic Secretary has brought us down to earth and drowned us in a polluted river. He has certainly brought us back to more mundane matters and it was unfair of him to compare the Amendment of my hon. Friend with the one which preceded it. I think there is something rather more important, and perhaps more eternal, wrapped up in this Amendment than there was in the preceding one. I am one of those people who believe that one of the greatest sins we can commit is to do something ugly, something which destroys natural beauty. I think that all the hon. Members who took part in the debate on the Rivers (Prevention of Pollution) Bill would agree about that.

The Minister of Local Government and Planning said that his right hon. Friend the Member for Ebbw Vale was the father of the Bill, and added that he thoroughly agreed with what his right hon. Friend had said. What the Economic Secretary has said tonight shows that he certainly does not agree with what the Minister of Local Government and Planning said throughout the proceedings on that Bill, which was that he wanted every step to be taken that could be taken to stop river pollution as early as possible.

The hon. Gentleman tonight has laid some emphasis on the fact that we do not want to interrupt our defence programme. Of course, we do not; but will he bear in mind one important point, that there are some aspects of defence and preparation for defence which are particularly injurious to rivers. Not the least of those is the manufacture of explosives, because there is nothing which is more harmful to a river than TNT if the effluent is not properly controlled. Its manufacture has presented great problems in the past, and it is highly possible that there will be an increase in the manufacture of such materials.

If we have new factories starting up, shall we deliberately encourage them, by the refusal of this Amendment, to start operations with no proper equipment for the prevention of pollution? If so, it is a very different story we are being told tonight from what the Minister of Local Government and Planning had to say. It is another example of the complete and utter lack of liaison between any of the Government Departments. What the hon. Gentleman has said tonight is a crying scandal. It has dashed the hopes of hon. Members on all sides of the Committee, and I certainly hope that some of them who spoke so forcibly in favour of the Rivers (Prevention of Pollution) Bill will join us in the Lobby.

With the main argument of the Economic Secretary I personally find myself in agreement; that is, that owing to the rearmament programme, however desirable it may be to install this equipment, we may have to postpone it. But I did hope that we could have some remark from the Government Front Bench on this point, which struck me, as it struck the hon. Member for Thirsk and Malton (Mr. Turton), and the right hon. Member for Saffron Walden (Mr. R. A. Butler).

There may be certain statutory obligations on companies to install this machinery with which they have to comply and on which they may now find their initial allowances removed; but that is inevitable when there is a Bill for the purpose of compelling the installation of this machinery. On the other hand, there is the valid argument that this installation ought to be postponed because it interferes with the re-armament programme. I think, therefore, that the Front Bench ought to indicate that they will take this point into consideration, and that either some instructions will be given on this matter to public authorities and others who may become liable to install that machinery under the Rivers (Prevention of Pollution) Bill, or, as suggested by the hon. Member for Thirsk and Malton, some Amendment to the Bill ought to be introduced.

I want to add a word to what my hon. Friend the Member for Thirsk and Malton (Mr. Turton) and my right hon. Friend the Member for Saffron Walden (Mr. R. A. Butler) have said. It may have escaped the notice of the Minister that, in addition to the Rivers (Prevention of Pollution) Bill for England, there is a similar Bill for Scotland, put forward by his right hon. Friend the Secretary of State for Scotland. The right hon. Gentleman put his Bill forward in forcible terms, explaining how urgently necessary it was that the rivers of Scotland should be freed from this pollution to the greatest possible extent. One of the inducements held out was that plant installed for the purpose would carry the benefit of this initial allowance.

1.30 a.m.

Has the hon. Gentleman or the Chancellor of the Exchequer consulted with the Secretary of State for Scotland about these statements which have been made on behalf of Scotland? I doubt it very much, because I am quite convinced that the Secretary of State for Scotland is seldom consulted or considered in anything. If we are to have two Bills going through the House, both of which carry implied guarantees, more or less, of these initial allowances being made, why are we now told that they are all washed out?

The Economic Secretary said, if I understood him correctly, that we on this side seemed to think that re-armament was not necessary, or that we had tried to hinder it. But why is it so much more urgent, and so vastly more costly, today? Because the Government did not take our warnings and start it three years earlier.

Why not 30 years earlier?

I do not propose to answer all the questions, but I say this again, referring to this Government—and it is this Government with which we are concerned—that if they had taken our advice, the position would have been very different.

Commander Pursey rose—

The hon. and gallant Member belonged to the silent Service, and it is no use his pointing at me and making remarks. I did not belong to a Service which professed to be silent, but he did, and he should be quiet. If the Government had taken our advice on re-armament, it would not have been so urgent or so costly as today. When the Minister says this is because of urgent re-armament, it is not for hon. Members opposite to point an accusing finger at us. We were going to have all this a great deal earlier, and not, if I may so describe it, by the easy instalment system.—[An HON. MEMBER: "What about Korea?"]—The Korean conflict did not happen yesterday.

Nor the pollution of the rivers.

The hon. Member is wrong. They were being polluted yesterday just as much as today, and we want this machinery so that we may improve the state of our rivers which are polluted.

I cannot repeat what I have said, but I hope that those who interrupt me will have a word with the Government on the subject we are debating at the moment, because I have an uncomfortable feeling that they are left out of the consideration; and I think that includes the Secretary of State for Scotland. As I have said, there is an implied guarantee in this matter which seems to have been deliberately washed out by the Chancellor in his action in producing this Clause on initial allowances, and I hope that we shall go into the Lobby against it.

Miss. Ward:

I shall not detain the Committee for more than a minute, but while all these speeches have been going on I have turned over in my mind this thought. Why are the Government so persistent in their attitude of refusing to accept any Amendment we have proposed this evening? I have come to the conclusion that this can only be an indication that the Government have lost their grip on affairs. It seems to me that a decision must have been taken that in no circumstances, in case they got themselves into further difficulties, must they make any concession, however valid might be the arguments put forward. If the hon. Gentleman had come to the Committee and been prepared to consider each case on its merits—

We are considering one case at the moment.

Miss. Ward:

I was only discussing why this particular Amendment had been refused. All I want to say is that presumably the hon. Gentleman had decided that in no circumstances, and no matter how valid the arguments advanced were, would he agree to any suggestions in case he got into future difficulties. The Government are losing their grip on affairs, and instead of being a "Oui, oui" Government they are a "non, non" Government.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 278; Noes, 297.

1.45 a.m.

I beg to move, in page 10, line 20, at the end, to insert: except that when machinery is required for new processes of manufacture or packaging in industry an initial allowance of one-fifth shall be retained. I believe that this Amendment is totally different from the two Amendments which have preceded it and I hope, therefore, that it will meet a happier fate. It deals with a matter which is important to the whole of our national life and I trust that it will receive support from both sides of the Committee.

I am fully aware of the vital need for the Government to gear the machine tool industry and the general engineering industry of the country to the re-armament drive so that we get full production of the necessary equipment, but we must remember that if we are to maintain our standards of living and prevent economic collapse, we, more than any other country in the world, must see that our efficiency in production becomes even greater so that we can always maintain and develop export from this country—and it is by exports that we live.

That can be done only if we are prepared to encourage all our manufacturers to continue to improve their production methods and the way they package their goods so that they are more saleable in world markets. If we do not give manufacturers financial encouragement to continue improving their methods, they are likely to retain in practice many of the older machines which have long ceased to be satisfactory in competing with more efficient machines of other countries.

At the end of the war, because of our far greater mobilisation per man in the war effort than any of the allied countries—and I do not mean this in any disparaging way of America—we found that America had captured most of the world's markets. This was due to her great wealth, her enormous manpower and perhaps to the fact that she came into the total war later than we did. During the war she had been able to develop research and improved manufacturing methods in all types of industry which gave her a considerable lead in export markets at the end of the war. This country and many of its industries have made tremendous and very gallant strides to recover that lost place, and they have succeeded, but I do not wish to see them fall into that difficulty again, either during or at the end of this rearmament drive. I believe that we can prevent it if the Chancellor will give some financial encouragement to all industries to keep on improving their processes by the introduction of new methods, and I feel that they must have some financial inducement and assistance to do so.

We can only pay for our re-armament drive and for our ever-increasing standard of living if our efficiency is greater than that of any other country in the world so that we produce better goods, and produce them more cheaply, and thus maintain the largest export trade in the world. That can be done only by a continual improvement in industry, with better and better machines. I realise that it is necessary for the Treasury to secure the maximum revenue by deflecting capital investment into the re-armament drive, but I believe that the small amount that I suggest should be put aside for encouraging this development in machinery would not be felt by the Government in their re-armament drive, and yet it would give a tremendous impetus to improving industry generally.

I wish to make my remarks very brief indeed, because I think the point is obvious to all hon. Members, and because others may wish to speak on this vitally important matter. I hope the Chancellor will give an assurance that he will give careful consideration to this proposal between now and the Report stage.

This Amendment warrants the consideration of all hon. Members because it is vitally important that all companies concerned in manufacturing and handling finished goods today for sale, both in this country and abroad, should be given every inducement to install new machinery to assist them. At present we are in many respects still quite a long way behind, in competing with the United States in particular, in the packaging of many of our goods that we sell in competition abroad, and we are in many ways behind in the presentation and appearance of the finished article.

That can be overcome only by the installation of more modern and up-to-date machinery, and can only be put into effect, particularly by small concerns, if some financial inducement is given to the companies concerned. This Amendment is extremely well designed because, although it might rightly be said that in the difficulties of the moment it is not fully justifiable for our own home trade at present, it is essential to remember that if we are to be competitive in our overseas markets we must have machinery which will enable us to have the length of runs in our production to make that possible. It is not possible to go out to get export trade unless we have a good production turnover upon which to base our manufacture. How can a company install machinery of this kind unless it has sufficient markets and the financial support to make it really worth while from that company's point of view.

I suggest that the Government would do well to consider granting allowances of this kind because, if they do not do so, there will obviously be a continuing tendency to carry on with the machinery the companies have had in store for a considerable time, and which they cannot afford to modernise under present conditions. It is becoming very difficult for many companies to find the necessary finance to keep going with their increasing stocks and all the additional finance required for getting going today, and initial allowances of this kind are necessary to help in the installation of machinery to get the most modern production in these competitive times.

The marketing abroad of many of our light industries, in particular, is becoming increasingly difficult, and it is not easy today to obtain the orders we received some years back. I feel that, unless British industry is in a position to be competitive in its efforts by means of modern machinery, we shall gradually lose money on our markets abroad, and give ground to our competitors. German, and indeed Japanese, competition, which is starting to develop now and make itself felt quite considerably in many markets, is going to be a matter we shall have to face realistically.

I hope the Government, when they respond, will give us a definite assurance that something will, and can, be done, bearing in mind that it is essential to be in a position to maintain our markets. I think that the suggestion of the initial allowance of one-fifth being retained, does not go too far in asking for reasonable help for most manufacturing and packaging concerns. The food industries and light industries should be able to get modern equipment to make us competitive in the appearance of our products. Much of the work has to be done on machines to be excellent in appearance. I hope that, after due consideration, the Government will decide that this is a worthy Amendment and will be prepared to accept it.

I imagine that we would all agree, in general terms at any rate, with what the hon. Gentleman had to say in moving the Amendment. It would indeed be a sorry day for us if we in any way impaired the development and undertaking of radically new processes. As I understood him, the hon. Gentleman is not concerned with the mere replacement of machines. He is concerned with those changes that take place in industry when a process really takes a leap forward. I myself have had experience where processes have been almost completely revolutionised and the change has been so radical that one really produced everything new in relation to it.

2.0 a.m.

The Government have appreciated this and, as hon. Members know, we have at work now a new corporation which exists for the development of inventions and for the introduction of these new inventions or new processes into industry. I think, however, that in terms of the Amendment as it stands it is a very difficult matter. I think everyone would agree that it would not be easy to define the processes. I am not sure, anyhow, whether this is the way any help should be given, and I am also in considerable difficulty because the proposal—and I know the hon. Gentleman is trying to be helpful—does in fact introduce the principle of what would be regarded as a differential allowance, and that in itself is a great difficulty.

I shall not, therefore, conceal from the Committee my own feeling that this proposal is not really a practical one, although the purpose behind it, namely, that we should help the development and introduction of essential new processes, is one which has my sympathy. Therefore, while I do not really see how the essential point that the hon. Gentleman has in mind can be made in the way proposed. I will consider what he and his hon. Friend have said.

I do not propose to contest, although I feel it is contestable, what the hon. Gentleman has said. I propose to address myself to the part of the Amendment to which he has made no reference. I hope that when he has had an opportunity of considering it, he will give us another reply. I support this Amendment because it also includes the part to which the Economic Secretary did not refer, namely, the machinery required for packaging.

I was very careful not to say new processes in manufacturing. I was talking about new processes in any kind of industry. The hon. Gentleman must not assume I was excluding packaging.

I am dealing with that part of the Amendment which does not deal with new processes. He will see that the machinery to which I am referring is packaging for industry, and not for new processes. That is an entirely different matter. It is machinery required for packaging, either by old or new processes, but as far as that particular part is concerned, processes, new or old, do not come into the matter at all.

I want to refer to that aspect of packaging which has occupied the attention of the House in recent weeks and which deals materially with the agricultural and horticultural side of the industry. It is a branch of the main packaging industry of the country, and one which, particularly in Britain, owing to the improvement which can result therefrom to health, hygiene, and the marketing and distribution of food as a whole, is important. I am glad that the Minister of Agriculture is present now, and I hope he will support us in this Amendment. The Government have already expressed considerable interest. We have had three debates on this subject. We are all agreed that a considerable debt is owed to the hon. Lady the Member for Coventry, South (Miss. Burton), who has pursued this matter with great diligence and who has at least succeeded in catching the ear of the Parliamentary Secretary to the Ministry of Food, who has replied to her on numerous occasions.

The exhortation addressed by the Government to the industry has quite rightly been one that agriculturists and horticulturists should take steps to improve the packaging of all goods of a perishable character which they offer for sale through the shops. The Committee do not need any assurance that it is the desire of the horticulturists to be able to improve those conditions of marketing over which they have any control, and packaging is one over which they should have control, but grave difficulties are experienced in the supply of materials and particularly the supply of machinery. It is very difficult for the industry to take steps by itself to introduce machinery for this purpose.

As the hon. Gentleman may or may not know, the agricultural industry has this year accepted a contribution to be found from itself of about £45 million towards increased costs being incurred by the industry. In addition, it has now been saddled with another 4½d. a gallon on the cost of petrol, which is of substantial incidence to the industry. There is no suggestion which I have heard of any special price review.

I mention these matters to show that the industry is unable without further assistance to embark on such long-term capital projects as the installation of machinery for packaging the goods and articles it wants to sell in first-class condition. If the industry is to do this job which the Government are exhorting them to do, it is essential that they should have some assistance, as implied in this Amendment, whereby they will obtain an initial allowance.

I was not surprised but much disappointed with what the Economic Secretary said. It is such a familiar gambit now from hon. Members opposite. They have the greatest sympathy, they think industry should be equipped with the latest tools and equipment, but not a single sign of practical assistance is given. Crocodile tears are shed over the industry, and the crocodile then proceeds to eat the industry. We are entitled to ask the Government what alternative they have. They are familiar with the technique of, "What would you do, chum?" It is now our turn to say that to them. If the Government think British industry should be equipped with the latest tools and machinery, and that the newest processes should be introduced, what proposals have they to bring that about?

This Amendment may not be a practical proposal; it may be undesirable to introduce differentiation into taxation: but it is a proposal, and there is no other proposal before the Committee. We are entitled to ask the Government to accept this Amendment or to introduce proposals of their own directed to the same end. My hon. Friend the Member for Chichester (Mr. Joynson-Hicks) has been dealing with the second part of the Amendment which refers to packaging processes.

I think there is probably a misunderstanding. I think the hon. Gentleman who moved the Amendment will confirm what I am about to say. As I understood it, when he talked about machinery required "for new processes of manufacture or packaging," he meant that the words "new processes" should cover both manufacture and packaging. That is the point I was making in an earlier Interruption. I merely make this intervention because it would be a pity if we got at cross purposes.

The Economic Secretary's interpretation is the correct one.

Perhaps it shows that the Amendment was drafted in a confused manner. At the same time the principle underlying the Amendment is the same, that new processes of manufacture or packaging should have preferential treatment. What a revolting word "packaging" is. It is a word of trans-Atlantic origin and the Americans are streets ahead of the British industry in matters of packaging. I would support this Amendment with equal fervour if it dealt with packaging alone, because the success of our export trade depends on the adoption of the latest methods of packaging. This applies particularly to the smaller industries and concerns, where the burden of the cost of machinery falls heavily.

To sum up, if the Government do not like this Amendment and are genuine and not hypocritical in the views they express with regard to British industry being equipped with the latest processes and machinery, it is up to them to produce their proposals. We on this side have produced ours.

I read this Amendment and found it, like many Liberal Amendments, a trifle obscure. I thought it meant that new machinery and packaging were intended, and I was brought to my fleet because I know of export markets which have been already lost. From 1935 to 1939 there were several large firms in this country doing a profitable business in importing wood from the Scandinavian countries and Latvia, turning it into three-ply boxes and exporting them to India and the Straits for packing tea, rubber and other goods which came back here I know that in 1951 that market has been largely lost.

I thought this Amendment might help manufacturers to regain this market, because competition is very keen. These firms employ a great number of workpeople. I am afraid that if they are not helped by the Finance Bill this will be another of our export markets lost.

I must confess to a certain degree of mental confusion, not entirely due to the lateness of the hour. I do not understand what the Economic Secretary meant when he said he was going to consider this subject. If that was just a soft answer to turn away any possibility of Liberal wrath, we should know. What does he mean by his answer and where are we getting to?

2.15 a.m.

I think this is a thoroughly bad Clause as a whole. It is a mistake of Government policy to withdraw the initial allowances at the present time. The hon. Gentleman referred to what I said about the Millard Tucker Report. What I did not like about the Report was that it suggested that the initial allowance should be varied according to the value of the industry concerned. I thought that would open all sorts of difficulties. I think that different considerations' apply to this Amendment, because we have a thoroughly bad Clause, and the more industries and processes we can get outside the scope of it, the better it will be, and to that extent it will be improved.

Therefore, I find no difficulty, so far as consistency is concerned, in supporting the Amendment, but I should like to learn from the Economic Secretary, when he says he is going to consider the suggestion carefully, whether it is with a view to maintaining initial allowances in manufacture and packaging, or possibly the proper assessment of profits so that such industries, in common with others, should only pay tax on true profits but not on false profits as now. What has the hon. Gentleman in mind when he says he is going to consider carefully the suggestion? Unless he can give some definite information about the kind of action he is going to take, I hope that this Amendment will be pressed to a Division.

The Government are showing great ingenuity in turning down these Amendments one after another. I do not think I can ever remember arriving at such a stage of the Finance Bill when so few concessions have been made. It seems to me that an order has gone forth that no concessions will be made on this Bill, and that we shall have to swallow it practically unamended. If some of the ingenuity in turning the Amendments had been devoted to helping industry in a constructive way, it would have been much better.

I should like to refer to the packaging side of this Amendment. If there is one series of blunders the Government have committed during the past few years, it has been in the obtaining of the particular raw materials required for this industry from overseas. It started with the great mistake made three years ago with Canada, and since then there has been one mistake after another and one handicap after another. It would be bare justice if, on this occasion, this Amendment could be accepted just to rectify the wrong that has been done to, and the handicaps that have been fastened on, the packaging side of industry.

I do a good deal of export business all over the world in a considerable range of articles—textiles among them—and one of the great handicaps in the textile industry alone is that of packaging, and it is well known to everybody who has had anything to do with it. If the hon. Gentleman, who has considerable knowledge of these things, could sit and think what his refusal means, he would, after the reconsideration he has promised, come forward perhaps with a differently worded Amendment which would have the practical effect of assisting those who have to compete against the brilliant presentation of goods from well-equipped countries such as the United States, Japan and Germany.

So long as the consumer has any choice in the world he will go for those goods which are presented more attractively. It is no good saying that the quality of goods will sell them in the end. It is no longer true in the world today. It is packaging which will attract the consumer and the Economic Secretary should talk a little less lightheartedly and not dismiss this Amendment in so cavalier a fashion.

In the moment or two during which I wish to intervene in this debate, I should like to put a question to those who are going to speak after me, because I am puzzled by an apparent contradiction between two set speeches we have heard from hon. Gentlemen opposite. The second of the set speeches on the Amendment referred to exports, and it was suggested that we can overcome the difficulty only by increasing expenditure on new packaging equipment and seeking concessions in terms of initial allowances and a reduction of the Profits Tax to encourage the maximum possible expenditure on new capital equipment. The other set speech, of which we have had a great number during the Finance Bill, is that which calls for higher rates of interest and dear money, presumably to have the reverse effect of reducing what we are spending on capital investment and capital equipment.

I want to ask the Opposition speakers who will follow me what is their attitude? Do they believe in dear money in order to restrain capital investment, or do they believe in putting back initial allowances and reducing the Profits Tax in order to expand capital equipment?

I am sure that not only the Economic Secretary but all Members of the Committee are in sympathy with the line of thought which lies behind this Amendment. The British nation at the present time is trying to have its cake and eat it; that is to say, we are trying to embark on an increasing re-armament programme and, at the same time, to make the absolute minimum reductions in our standard of living. There is only one possible way in which these two things can be done at the same time, and that is by increased industrial production in this country.

How can one get increased industrial production? We all know that raw materials are exceedingly short. So also is the labour. There is no surplus labour worth talking about in the country at the present time. The machines cannot turn any faster than they do, and no one suggests that we should work longer hours. Therefore, increased production must come not only by improved management but by improved machinery and manufacturing techniques of one kind or another. So any fiscal policy which will have the effect of making it more difficult for manufacturers continually to turn to modernisation and new processes is extremely harmful.

I agree with the Economic Secretary that it is impossible to define what is a new process, because so many of what may be called new processes are only an improvement in one way or another on a previous process. Therefore, I think that in this respect the Amendment of the hon. Member for Roxburgh and Selkirk (Mr. Macdonald) is completely impracticable. I wish it went much further and proposed that the initial allowances be one-fifth not only for new manufacturing processes and packaging but for all replacements of industrial plant, which would restore the situation to what it was in 1945. At that time, when the proposal of the initial allowances was introduced, it was considered necessary to encourage replacement of plant and machinery. But what have been the increases in the cost of replacement since 1945? If the initial allowance were necessary then, how much more necessary they are today?

In view of the sympathetic remarks which the Economic Secretary made a few minutes ago, for what they were worth. I hope the hon. Gentleman will consider bringing forward a new Clause to restore the initial allowances to the figure of 20 per cent. for all replacements, and not only for those which are covered by this Amendment.

The hon. Member for Gloucestershire, South (Mr. Crosland) tried to put the Opposition in a difficulty, but perhaps his mind would be made clearer on the subject if he looked at the Government's own difficulty in this problem. What the Government are intending, or trying, to do by this Clause is to restrict capital investment; and whether that is done by a high rate of interest or a Clause such as this is for the Government to decide. What we have to do is to see that, on the one hand, the maximum resources available are put to the re-armamentand export drive; and this Clause surely goes some way in helping the export drive which must run simultaneously with our re-armament effort.

Some of my hon. Friends say that they are not in agreement with a differentiation of taxation and allowances, but it seems that the principle of supporting the packaging and processing industries—so essential to our export efforts—should be given special consideration. In the period of difficulty through which we are bound to go over the next few years, the question of pure equity in dealing with industries, as with individuals, in this country must unfortunately be abandoned to some extent.

But the method of taxing to get the maximum effort where it is most economically possible by giving special privileges and assistance to certain industries should be followed and the packaging industries should be given these special allowances which the Liberal Party has put forward in an Amendment self-obfuscating and difficult to comprehend. But the main object is clear enough, even if the verbiage is so thick that it is all difficult to follow. What the Liberals need here is some processing and good packaging but perhaps the Liberals may divide, some going into one Lobby and some into the other. None the less, their hearts are in the right place and when the Minister replies I hope he, at least, will be quite clear in his own mind as to what needs to be done.

Surely what is needed is a special allowance for industries which benefit us so much and industries whose capital expenditure will not be on a vast scale. In putting forward this Clause, surely the object has been to restrict capital expenditure. Whether the Clause does that is, I think, doubtful, and possibly the hon. Member for Gloucestershire, South, may wonder if it will work. But surely the Government can agree that in the stage we are in now—when it is vital that there should be maximum efficiency—there are certain key industries where special allowances can, and should, be made; and the packaging and processing industries should have devised for them something supported by so many hon. Members on this side of the Committee.

There is a danger, and the Economic Secretary will agree with me, in regarding the re-armament drive as contained within a short-term programme. It will succeed only if we are able to finance it, and the nation will not be able to finance it unless industry is modernised and becomes more efficient with everything possible being done to encourage new processes. Something should be done; it is of vital importance. In that connection, I think a useful purpose has been served by bringing forward this Amendment and allowing the Committee to have the discussion which has taken place. I was glad to hear the support that has been given to this Amendment. Views were expressed about the wording of the Amendment, but I do not think it is difficult to understand. It is a very difficult point. The important thing is that something should be done.

2.30 a.m.

I welcome the remarks of the Economic Secretary, which were encouraging, and certainly more so than some of the replies given on other Amendments. I hope that consideration of the subject will produce some really practical results. As I have said, the main thing is that something should be done. It is a matter of vital importance not only to the industries concerned, but to the country as a whole. I hope the Economic Secretary will give us some more specific assurance than he has been able to do hitherto.

On a point of order. It may be my personal feeling, but is not this place getting rather hot? It seems to me that hon. Members are going to sleep in all quarters of the Committee. I think the temperature—the physical temperature I mean—is rising.

Move for ice.

The Chairman:

The air should be the same in all quarters, but I will have inquiries made.

I wonder whether the Economic Secretary could give us a little more assurance than he has done. It may be that the arguments he has heard, or the intrinsic merits of the case or some other consideration which has not been expressed, may have made him doubt whether he should continue to resist the Amendment. I do not think the Committee are altogether satisfied with the vague and ambiguous reference to some consideration. Could the hon. Gentleman give us some idea of the direction in which his mind is moving, or the new Amendment or Clause which his further consideration is likely to crystallise? That would have a considable effect upon the continuance and the conclusion of the debate.

On previous Amendments which I felt bound to reject I was accused of having a closed mind. I listened very carefully to what the hon. Member for Roxburgh and Selkirk (Mr. Macdonald) had to say in moving this Amendment. I appreciate, as I think all hon. Members do, that these revolutionary changes in technique are important. I made it perfectly clear to the Committee that I did not think that the initial allowances method was the method that could be used to further a matter of this kind. Having listened to what was said, I said that I would consider those views, and I hope the Committee think I was behaving honestly by them; but I should be dishonest if I were to suggest to the Committee that this particular way of doing it is the best way. I said that before, and I am saying it again in order to make the issue perfectly plain.

I feel that the Committee as a whole are grateful to the hon. Member for Roxburgh and Selkirk (Mr. Macdonald) for initiating this extremely valuable and interesting debate, which at one time or another looked as if it might develop on perhaps a wider front than the hon. Member intended. For instance, the hon. Member for Gloucestershire, South (Mr. Crosland), who happens to be my Parliamentary neighbour, extended a courteous but alluring invitation to have a discussion on dear money, Major Milner. But on a Clause confined to initial allowances, one cannot discuss whether the bank rate should be raised. One might get into conflict with the Chair, which I am anxious to avoid. We can only discuss the question of initial allowances on the lines indicated by the hon. Gentleman who moved the Amendment. The Economic Secretary, in his first reply—I think I have the words down correctly—said it would indeed be a sorry day when the Government sought to impede British industry.

Mr. J. Edwards indicated dissent.

No? Not sorry day?

The words "sorry day" were used but I was concerned with these new and radical changes in the processes of industry. I did say it would be a sorry day if we discouraged these revolutionary changes of technique, which are important.

I think that is what I understood the hon. Gentleman to say. It is therefore a sorry day, because that is precisely what the Economic Secretary has done in his remarks. I frankly was disappointed, following the speech of my hon. Friend the Member for Chichester (Mr. Joynson-Hicks), when the debate took a course which denied us from hearing the Minister of Agriculture, because when the right hon. Gentleman entered the Committee a short time ago, I felt pleasurable anticipation that he was going to intervene. I realise he is here in his capacity of Minister of Fisheries as well and as we know the shipbuilding Amendment follows this one, I shall hope to hear him then.

I think the moral of this debate emerges quite clearly, as it did from the previous Amendment, and as, I think, it is likely to emerge again when we move on to the next Amendment. The moral of the story surely is the ham-fisted methods which-the Government have employed in this matter in removing at this moment these initial allowances obviously without considering what the impact of their action was going to be in various spheres. The river pollution has just been debated, and I cannot return to that, but the hon. Gentleman the Member for Roxburgh and Selkirk, in one of his opening sentences, said this would have a deleterious effect upon machine-tool production which was in itself an important and vital factor in a re-armament programme.

My actual words were that I realised how vital it was for the Government to gear the machine-tool production and general engineering to the re-armament drive but at the same time to give encouragement to new processes.

On a point of order. Is it in order for the hon. Member for Newcastle-under-Lyme (Mr. Mack) to be flat out on a seat over there with his legs up and fast asleep?

The Chairman:

I do not think that it is out of order or altogether unusual.

Further to that point of order. Surely it is essential that we should preserve the dignity of Parliament?

What about the Tories?

Surely, there must be some lengths beyond which we should not go in taking part-relaxation whilst sitting in the Chamber? I ask you, Major Milner, if we should unwittingly per-haps, transcend the bounds of dignity that perhaps you will call us to order?

The Chairman:

I am obliged to the hon. Member. I will certainly do so. I am afraid that if I were to call attention to every apparent infraction of the rules, I should be intervening in the debate most of the time.

On a point of order. Is it not specifically laid down in Erskine May that it is out of order to lie at full length on the bench?

The Chairman:

I should not like to say offhand whether that is so, but according to my observation the hon. Member is not lying at full length.

Major Milner, may I call your attention to the hon. Member at the end of the Opposition bench?

I think it would be best, Major Milner, if I were to take the blame for the whole incident, for it is obviously the soporific nature of my remarks which is responsible. I do not at all complain of hon. Members taking their rest so long as they do so in an orderly manner. When this interlude came upon us, I was about to remark that this Amendment—[Interruption]—hon. Members should permit me to develop my argument; one of the disadvantages of these all-night Sittings is that when this sort of thing happens it is difficult to conduct the business. I am endeavouring to make a serious contribution on a matter of some importance, and it is difficult to do so in face of this hilarity. I do not know what the hon. Member for Accrington (Mr. H. Hynd) is pointing at—I hope it is not at me.

You have a dead body over there.

The Chairman:

Order! We must keep order. I hope that the hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite) will conclude his remarks.

May I say that I propose to continue my remarks, Major Milner, and that they will reach their conclusion in due course?

The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) will wish to support this Amendment because the effect of it would be greatly to strengthen British industry in its forthcoming contest with Japanese competition, to which he so rightly called our attention yesterday. May I say that I, for one, support his attitude on that matter and hope that he will succeed in getting a debate on it, although that is outside the Clause about initial allowances which, if continued, would do much to help in that problem. I shall look forward to walking through the Lobby very shortly, arm-in-arm with the hon. Member for Stoke-on-Trent, South.

I feel that in this matter the Government have allowed their greed for revenue to overcome their better judgment and in so doing have gravely neglected certain re-armament processes. That is why I was disappointed that the Economic Secretary, in speaking a second time, removed the impression he had first created—at least, the impression which he had made on me. I thought the hon. Gentleman was saying that he thought the form of words was unworkable; and I am sure the hon. Member for Roxburgh and Selkirk is not wedded to any particular verbiage and would be pleased to see another Amendment, accepting this principle, moved by the Government on Report stage and carried into effect.

2.45 a.m.

I hope the Economic Secretary will not abandon his task because the assistance of the skill of learned Law Officers is readily available to him—one of whom, now sitting on his right hand, is noted for his industry and assiduity and who, I am quite sure, could before the Report stage produce a form of words to give effect to the hon. Member's intention. I hope that will be done. It is always easy to criticise the wording of Amendments which are drafted by Private Members; we have not the facilities which are afforded to Ministers; we have to do our best, and very often our wording is imperfect; we all know that.

However, I should like to hear the Government say that they agree in principle to the suggestion and policy put forward by the hon. Member for Roxburgh and Selkirk. If they do not say so, and if there is to be no consideration of this matter between now and the Report stage, then, speaking in my own capacity, although I do not think I am alone, I hope that the hon. Gentleman will press this matter to a Division. If he does so, I shall be pleased to support him.

Several hon. Members:

Several hon. Members rose—

The Chairman:

I hope the Committee will soon agree to come to a decision.

I shall not detain the Committee for more than a moment or two, but there is one point I particularly want to make. Again and again Ministers have emphasised the great importance of, first, re-armament, and secondly, the export trade. If Ministers mean what they say, they could implement it by agreeing to accept this Amendment, because there are certain processes of packaging in the United States which would be of the utmost importance to our re-armament programme, and which ought to be encouraged in this country.

I speak with some special knowledge of this business and I beg the Economic Secretary to examine the matter, if he does not already know about it, because we ought not to be left behind in these new processes of packaging, which are taking place across the Atlantic, if our rearmament programme is not to suffer. Other hon. Members have dealt with the importance of making our packaging efficient and up to date for our export trade and I do not want to speak further on that. I beg the Economic Secretary to implement what Ministers have said by agreeing to this Amendment and so showing that Ministers mean what they say.

In supporting this Amendment—although a change of wording might be necessary, and I am sure the hon. Member for Roxburgh and Selkirk (Mr. Macdonald) would not mind provided the effect were the same—I should like to refer to what was said by my hon. Friend the Member for Chichester (Mr. Joynson-Hicks) on the effect of this on the horticultural industry, which is of the greatest importance in both Scotland and England, and which every year will become of greater importance.

The greatest difficulty facing the horticultural industry is that of imports, and the greatest feature in that difficulty is the fact that the stuff from abroad is packed in non-returnable containers of the highest quality and of the best possible design, which our own horticulturists cannot produce because they have not the materials. They are discouraged by this Clause from installing the machinery to produce those containers. I am sure the Minister of Agriculture will agree that that is the greatest difficulty facing the horticultural industry at present.

I shall not harrow his soul by referring to the vagaries of the Minister of Food who imports masses of foreign stuff when British crops are ready for cropping. It is a fact that on the production of non-returnable containers will largely depend whether or not the British horticultural industry is successful. If the encouragement they hope for under this Amendment is not given, they will have an added burden, which the Minister of Agriculture will recognise.

I was not going to detain the Committee for very long, but in view of the welcome given to my rising, it may be I shall be able to expatiate on this matter for some time. It seems to me that the hon. Member for Stafford and Stone (Mr. H. Fraser), who, having made his oration, is no longer in his place, was rather concerned to belittle this Amendment merely because it was a Liberal Amendment. Having said it was rather obscure, he then said its main object is perfectly clear. Another hon. Member above the Gangway said the same thing.

The hon. Member for Stafford and Stone indicated that there was a risk that the Liberal Party might find itself divided, but on this occasion it is the ranks of the Conservatives which are divided, because some Conservative Members indicated that they would not be able to support the Amendment, while others said they would support it. It is perfectly clear that in all parts of the Committee the main purpose of this Amendment has been well received, and hon. Members have realised the fundamental importance of it.

It is generally realised that the initial allowances the Government introduced since the war have played a very great part in modernising the equipment of British industry. I only wish we had had these allowances during the years between the wars when we had the labour force. The Economic Secretary has twice said he will give the most careful consideration to this matter. For my part, I think we can leave it at that, but if my hon. Friend wishes to divide, we shall of course support him in the Lobby.

The Economic Secretary will now have had an opportunity of realising the views of the Committee. I feel there has been no opposition to the main terms of the Amendment from the other side. In view of the Economic Secretary's helpful assurance, which he

has given twice to the Committee within the last few minutes, that he will give consideration to the matter contained in this Amendment, I feel that no good purpose would be served in taking it to a Division. I beg to ask leave to withdraw the Amendment.

Hon. Members:

No.

The hon. Gentleman has asked leave to withdraw the Amendment, but there are processes to prevent that. I shall delay the Committee only for a moment to say to the hon. Member from some part of Scotland that he cannot humbug us in this way.

Question put, "That those words be there inserted."

The Committee divided: Ayes. 283, Noes, 291.

I beg to move, in page 10, line 20, at the end, to insert: Provided that this subsection shall not apply to expenditure on the provision of a ship for the purposes of a trade if it is shown to the satisfaction of the Commissioners of Inland Revenue that on the tenth day of April, nineteen hundred and fifty-one, the ship was actually under construction for the persons who were carrying on the trade on the said tenth day of April or who were on that date about to carry it on. During the Budget debates, although little anxiety was expressed about the suspension of initial allowances in general, a number of hon. Members referred to the exceptional case of shipping. On the Second Reading of the Finance Bill, my hon. Friend the Financial Secretary said that, in view of the special importance and circumstances of shipping, it had been decided that we would put down an Amendment at this stage of the Bill excepting from the suspension of initial allowances any expenditure on the provision of a ship even though it may have been made after 5th April, 1952, on account of ships that were actually in course of building on Budget day. This Amendment gives effect to that undertaking.

I think it would be for the convenience of the Committee, Major Milner, if you would allow me to move the Amendment to the Amendment standing in my name and then permit discussion to range over the subject matter of both the Government Amendment and mine.

The Chairman:

I do not see any objection to that course, especially if it will expedite business in any way.

I beg to move, as an Amendment to the proposed Amendment, in line 1, to leave out from "that," to the end and to insert: nothing in this subsection shall apply to expenditure incurred in pursuance of a contract for the sale of a ship. The effect of this Amendment, if adopted, will be to exclude altogether from shipping the operation of this Clause withdrawing the initial allowances. After the rather lively interchanges we have had, I am glad we are now discussing a subject which is politically non-controversial and on which we are not divided by any question of principle, as has been made clear by the fact that the Government have proposed an Amendment which goes some way, although I regret to say a very little way—certainly not far enough—to meet the case which we raised in the Budget debate. At the same time, I am sorry that a subject which will I hope excite neither levity nor angry emotion should come before the Committee at an hour with which levity and anger are both frequently associated.

By the Amendment they have proposed, the Government have clearly recognised that the full application of the Clause as it stands to shipping would be against the national interest. As the Chancellor has stated clearly—and the Economic Secretary repeated it today—the object of the Clause is not to get revenue at all; it is to effect a certain economic purpose—namely, to reduce the pressure of home demand on the engineering industry for plant and equipment for civilian purposes.

If that is the object of this Clause, the first consideration that must occur to one's mind is whether or not a Clause applying to all industries would really have that effect. One would have thought there would have been a distinction between the application of the Clause to industries which in time of national stress should not be encouraged to extend and its application to others which the very defensive preparations themselves make it desirable should have some extension. The Chancellor recognises this. In his Budget speech he said: 'The production Departments will, of course, take whatever measures are necessary to ensure that the suspension of these allowances does not result, in the case of undertakings engaged on the re-armament programme, in difficulty in providing any necessary addition to their equipment.—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 842–3.] That may be a sufficient measure of countering the evils to some of the munition industries that would otherwise result from Clause 16, but it is quite clear that it has no application at all to shipping. If the shipowners cancel their contracts for new ships now, the Minister of Transport can do nothing to secure that addition to the Mercantile Marine that would otherwise have resulted. The Government have given some recognition to that, but I think it is a very inadequate recognition.

The reason I am proposing this Amendment which goes so much further is that I think the Government's proposal is in some respects both ambiguous and inadequate. It is ambiguous because it limits the concession to shipping that is "already under construction." I do not know whether the Government know what "under construction" means. Does it mean a ship whose keel has already been laid? If it means that, then it certainly does not really cover construction in the full sense.

A few years ago I was in another country where I have seen the interval between the laying of the keel and the launching of a ship to be only three days, because the greater part of the construction was pre-fabricated. We have not got to that stage yet in this country, but we have got to the point where, although the keel has not been laid, the essential parts of the ship, such as the engines, have been begun in pursuance of an order. I do not know whether under the Government's Amendment, if passed in its present form, the ship which had been partly pre-fabricated outside in the yard, as in the example I have just quoted, would be counted as a ship under construction, but I should imagine that probably it would not.

There are, however, much more serious objections to the Clause. It is completely inadequate in its scope. It applies only to ships that are in some sense or another under construction. That concession would doubtless have the effect of enabling some of the orders that have been placed not to be cancelled. But other orders where the keels have not actually been laid, but which are waiting for their turn on the slips, would be cancelled. When those orders were placed the shipowners had in mind the financial situation of their respective companies. One of the factors was the expectation of the 40 per cent. allowance, and they had no knowledge that this was going to be withdrawn suddenly this year. It is inevitable—and the Government appear to have recognised this—that some of these contracts will have to be cancelled.

What is the result of that? The places vacant on the slips which would have been occupied by ships constructed for British shipowners will be used to meet orders from shipowners of foreign nations, who may, if war comes, be allies or not. They may be neutrals. Do the Government really want at the present time to have slips which should be occupied by British ships occupied by foreign orders to the exclusion of British orders that have already been given?

3.15 a.m.

I can hardly believe that this Amendment proposed by the Government is their last word on this subject. I am proposing my Amendment, which goes so much further, not only from an intellectual conviction that the national interest will be served. It so happens that in each of the two great wars of this century I have been associated with the control of shipping. I have been in a position where I have seen directly, and not merely learned as I otherwise should have done, that the fate of this country at a time when the fate of the free world and its security against aggression depended upon the adequacy of our Mercantile Marine in the face of a serious and dangerous submarine attack.

In each of those two wars I have had the responsibility at some time or another of actually finding and allotting ships to the different Departments—to the Munitions Department and to the Supply Departments of our Forces overseas— and I have been through months of wearing anxiety as to whether an inability to find and allot the ships might not fatally impair the success of our Armies abroad, or fatally injure the economic life of our country at home.

Does the right hon. Gentleman remember National Shipbuilding Securities and their effect?

Let me say this to the hon. Member, that with that experience in the first war, when I came into this Parliament between the wars—[An HON. MEMBER: "Get on with the job."]—I devoted myself, more than to any other subject—[Interruption.]

Too much noise on that side.

—to doing what little I could—[Interruption.]

I think it would be better if we had fewer Interruptions.

If I may continue—I devoted myself more than to any other object to supporting any measure which would to any degree reduce the danger of a shortage of shipping if another war should come. That is true as regards stockpiling and as regards such measures as affected the shipyards at that time, to which the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) has referred.

The scope of any special provision—and the Government admits that some special provision must be made for shipping—depends not only on the importance which is attached to securing an adequate Mercantile Marine, but to some idea of the scale of Mercantile Marine which it is desirable in the national interest should be attained in this country. Therefore, I beg the Committee to listen while I suggest certain considerations why it is vitally important that the Mercantile Marine should be increased beyond its present size, and increased more than it would be if nothing more than the Government's Amendment were now passed.

The British Mercantile Marine has made a wonderful recovery in the last few years. After losing in the war no less than 11½ million gross tons—considerably more than half the total tonnage with which we started the war—we have practically got back to the same total tonnage as before. But that does not mean that we are as well equipped as before to face the dangers of another war, even if that war were not greater in scale than the one through which we have passed; because there are certain sections of the fleet, particularly ordinary deadweight tramp tonnage, which have not reached their former dimensions. The total has been brought up because we have had, for reasons everybody can understand, to increase our tanker fleet so much.

But even if we had in every part of the Mercantile Marine as big a tonnage as at the beginning of the war, it would be a terrible thing to have to go through, once more, with so very small a margin even if submarine attack did not increase; and let me remind the Committee that my right hon. Friend the Leader of the Opposition has warned the nation in stern phrases that we must expect to prepare for an even more dangerous submarine attack in any future war.

But it is not only for the eventuality of war that I urge so very strongly the full encouragement of an increase of the Mercantile Marine. British owners have ordered ships, and would be prepared to order ships, unless discouraged by the sudden withdrawal of these allowances. I cannot believe that the Government really desire, by financial methods, to restrict the increase of the Mercantile Marine sailing under the British flag and in British hands which would otherwise occur.

Let me ask the Government how far they really think it desirable, by a special provision for shipping to encourage British shipping, to go. They certainly do not want to stop orders as much as the full application of Clause 16 would do. The Government have shown that by their own Amendment. Do they really wish to restrict the cancellation of orders already given where construction has not begun in the shipyards? Do they really desire this as an economic purpose? Surely if they do they would not help the re-armament preparations as a whole? They would surely weaken our position. Surely they must regard the Mercantile Marine as a fourth arm of defence, which, if deliberately weakened, must make our defences suffer and not gain? The Government can have DO other purpose. Their declared purpose is not to increase revenue. It is solely to help our defence preparations, but here is a financial method which apparently has the deliberate purpose of cancelling orders given by British owners.

I would go even a little further and say that I think it is extremely undesirable that the withdrawal of these allowances should have the effect of discouraging owners from placing new orders which they have not actually placed for ships which they may have intended to built to complete the general pattern of their respective fleets. What is the reason for stopping short of the complete exclusion of shipping from the operation of the Clause altogether? I can hardly think, unless the Government contest some of my arguments, not only as to the importance of shipping in our defensive preparations and not only in war if it comes, but also as an essential adjunct to our munitions and defence preparations in other spheres, that they really desire this. The whole of our defensive preparations depend on an adequate supply of vessels to carry the raw materials, as much as we depend on the Royal Navy for purely warlike activity.

Will the right hon. Gentleman admit that our Mercantile Marine is now more efficient and modern than it has ever been? Will he admit that there is more tonnage being built than ever before and that the shipbuilding industry of this country has greater orders on its books than ever in its history?

First I would say to the hon. Member for Stoke-on-Trent, South that I wish I could agree that the British Mercantile Marine is in all its essential parts more efficient and greater than it has been in the past. That is true of some classes, but not of all. Secondly, I wish still more that I could say that for any future danger of submarine attack it was as well equipped to meet that danger as in the past. Thirdly, I wish I could agree that as many ships are being built as ever. Our shipbuilding industry had a higher rate of output in the past. Fourthly, what is the use of the hon. Member saying that the order books are full, when it is the whole point of my contention that the Government, by withdrawing this initial allowance in this way and at this time, subject only to the limit proposed in their Amendment which covers only ships that are being constructed, will be the means of depleting those order books by what they propose? That is why I ask for an extension of this special provision beyond the narrow limits of the Government's Amendment.

What can be the reason for limiting this special provision to ships actually under construction? Special provision is admitted to be necessary. Why is its scope so narrow? I cannot believe that the Government desire to restrict the increase in the British Mercantile Marine, for all the reasons I have mentioned. I can only feel that perhaps one reason has operated. They perhaps feel that this might be a precedent which could be used by other industries in their claims for similar special provisions. That is the kind of consideration which arises heavily in a Government Department. I also have been in Whitehall, and I know that well. It is argued, "If we give this concession to one industry, will not others claim it, too?"

I suggest to the Government that perhaps in this case the danger of a wide extension beyond what they would desire or think wise might be greater if in the very special case of shipping they devised a provision which was not clearly impossible or impracticable for many other industries. If the Government take shipping, which differs by so many characteristics from any other industry, and make special provision for it along the lines which I have advanced in my Amendment, then I suggest that they are less likely to have it used as a precedent for other industries.

I have attempted to put my case for this Amendment on broad lines, and solely from the point of view of what I believe to be vital to the national interest. I am not concerned in any degree whatever by its effect upon the finances of the shipowning firms except in so far as there is a financial effect which induces a reduction in the British Mercantile Marine below what it would otherwise be. The effect of the Amendment which I propose would be to cancel any danger of that kind.

This is not a revenue point, on the one hand, any more than on the other, it is a question of reducing taxation falling upon a particular class. It is what economic purpose we desire to serve, and what is the best method of achieving that purpose. I believe, beyond any doubt, that the reasons I have mentioned for the complete exemption I propose would serve our purpose best. My hon. Friends who follow me will doubtless, with their current and daily contact with and knowledge of the shipping industry, which goes far beyond mine, add a great many technical considerations to those I have put before the Committee. I venture to put these broad reasons on the wider Amendment I have submitted.

3.30 a.m.

I am not clear which Amendment the right hon. Gentleman is discussing.

I am sorry. Would you allow me to take this Amendment of mine, the one for the complete exclusion? It is an Amendment to the Government's Amendment, in line 1, to leave out from "that," to the end, and to insert: nothing in this subsection shall apply to expenditure incurred in pursuance of a contract for the sale of a ship. I was proposing that it should be taken now as an Amendment to the Amendment proposed by the Economic Secretary on behalf of the Government. I was not proposing that we should cover now the other Amendments on this subject that appear later on the Order Paper.

To some extent I feel I should discount my own remarks by saying that in the matter of taxation I think one is predisposed to hold the view that an industry with which one is connected merits special or exceptional consideration. Certainly I believe that the shipping industry and ship-building do deserve special consideration in connection with these initial allowances. After hearing what the right hon. Gentleman the Member for Ormskirk (Sir A. Salter) has said, and whatever additional remarks are made by myself and other right hon. and hon. Gentlemen on this side of the Committee, it will, of course, be for the Committee and, in particular, the Chancellor of the Exchequer and his Economic Secretary, to decide whether our convictions are justified or not.

The question of initial allowances for the shipping industry can be tackled from a large number of angles but, in presenting the case for special consideration, I desire only to adduce two arguments either of which I feel would be conclusive, but which taken together must prevail.

The first point I want to make arises out of a consideration in connection with defence itself. I would say that surely this is not the moment to do anything to discourage the building of ships. When the Committee has been dealing with previous Amendments to this Clause, attention has been drawn to the fact that initially these special allowances were introduced to stimulate the modernisation and the re-equipment of industry. It is, however, understandable that in the special circumstances of today and over a large field of civilian expenditure, the Chancellor should desire to restrain capital expenditure because of the over-riding need to fulfil our defence programme.

But surely the provision of an adequate Mercantile Marine must be considered as part and parcel of our defence programme. If he will forgive me for saying so, the Chancellor of the Exchequer is commendably young, but he must recall—indeed he has been reminded of it today—the grave peril in which this nation, and indeed the whole free world, found itself in World War II because of the shortage of ships. I think he has probably heard of the similar and equally grave dangers which faced this nation in World War I.

We have been told on more than one occasion of the large number of submarines which Russia is building—far-ranging submarines of high speed. The power of the bomber certainly does not grow less. Should there be another war, I am sure that this nation and other participants will have to face grave losses in their Mercantile Marine. I am glad that the right hon. Member for Ormskirk drew attention to the truly miraculous recovery which the shipbuilding industry has made and the very large replacement programme which has already been carried out, although of course he was right in warning the Committee that by no means all the gaps left by comparison with the pre-war strength of our Mercantile Marine have been made good.

I am glad to see the Minister of Transport on the Government Front Bench. On grounds of security he still prohibits the sale of certain classes of British ships to foreigners. I think that that is a wrong decision from every point of view. It is a pity that over the last four or five years British owners have not been allowed to sell their old ships and to be enabled thereby to place more orders for new ships, but that is not a question I want to discuss now, and I should be out of order if I attempted to do so.

If the Minister of Transport holds the view that the British Mercantile Marine is not sufficiently strong today, then surely it must be wrong to discourage the construction of new tonnage. Either the Minister of Transport is right in his view that the Mercantile Marine is still inadequate or the Chancellor of the Exchequer is right in discouraging further building. But both Ministers cannot be right. I want to point out to the Chancellor and the Economic Secretary—and, indeed, to the Committee—that purely on grounds of defence it must be obvious that this nation should do all it possibly can to add to the strength and efficiency of its Mercantile Marine as soon as possible.

My second argument is based on the fact that the ships of all nations compete in the same freight market. Competition is truly international; it is ship against ship and flag against flag. In this competition and international market British ships already carry a load of taxation which in the past has placed, and today still places, serious disadvantages on British shipping vis-à-vis that of foreign countries. The consequence of that is that when rates of freight are high, foreign competitors are able to acquire large reserves.

They can buy modern ships more easily than British shipowners can, and generally they are able to increase the efficiency of their fleets more easily than are British shipowners. When freights are low—and the freight market will fall some day—foreign owners will be able, by the reserves they can acquire today on a greater scale than British ship owners, to keep their ships running because of the efficiency of the modern tonnage they are able to buy today. I hope I am in order in reminding the Chancellor that in other Clauses the difficulties of British shipowners are being added to. There is to be a higher Profits Tax and higher Income Tax, and those two are adding to the direct taxation which is already more onerous on British shipping than any burden borne by ships sailing under any other flag.

That was the last point I wanted to make. I do not want to detain the Committee further. I feel that on the grounds of defence alone, and of the ability of British shipowners to compete in an international market, the Chancellor should be very careful before refusing to agree to the Amendment so ably moved by my right hon. Friend the Member for Ormskirk.

As the Committee has already been reminded, the Financial Secretary, in his speech on Second Reading, recognised the very special importance of shipbuilding. He used the word "very," and he made a promise. It was a wise and understanding promise, but since I have been in this House I have learned that Treasury promises are not always fulfilled by wise deeds, and this was no exception, because the Chancellor's Amendment is, quite honestly, no credit to the wisdom of either the Treasury or the draftsman who prepared it. My answer to the Chancellor's Amendment would be: "Thank you for nothing."

Let me list my objections. First of all, we are not dealing here with a low-priced article. We are dealing with an industry in which Britain is supreme the world over. We are dealing with an industry on which Britain depends more than any other for her life. We are dealing with an industry which, twice in my lifetime, we have called upon for our very survival, and which, twice in my lifetime, has answered the call.

If the Chancellor is worried about establishing a precedent, I am sure I can speak for hon. Members on both sides in saying that no one will mind if he does establish a precedent for the British shipbuilding industry. The British shipbuilding industry is without precedent and therefore no special treatment given to this industry can create a precedent for other industries.

The proposals of the Chancellor are, to my mind, remarkable for their lack of elementary common sense. Why give the concession to ships that are actually under construction? What does that mean? When and where does construction start? It leads me to suppose that the Treasury are completely removed from what actuaally goes on in life and in industry today. Where does construction start? Does it start on the drawing board? Does it start in the sub-contractor's shop? Does it start in the tool maker's shop or the pattern maker's shop? Does it start when special components are ordered by the shipowner from an outside firm even before the order for the hull is placed?

It starts, as we know, in a variety of ways and in a variety of places, and a great deal of expenditure can already be incurred before the actual keel is laid. Why pick on one feature of this complicated and long-term process and say, "That is the point to which I am going to apply the concession"? Why exclude components and machinery that are ordered by the owner or shipbuilder direct from outside firms? If the Chancellor wishes to bring chaos into the shipbuilding industry, this is the way to do it. The only practical dividing line is either when the order is placed or when the ship is completed.

3.45 a.m.

I have another complaint about the Chancellor's Amendment. The proposal of the Chancellor is to come into force at once. When a Government Department wants to make a change, they can have plenty of time to do it. We are told that changes cannot be made suddenly. I remember that the right hon. Lady the Minister of Pensions came to the House only a few weeks ago wanting to make a change. She wished to give 4s. 0d. rise in the National Assistance scales for old folk. The change should have been made right away, and yet she gets five months in which to do it.

She is only dealing with paper—there is plenty of paper in Government Departments—but we are dealing with ships, ships that take years to build, some of which are ordered now, and thank God for it, but may not be completed until 1955, 1956, or even 1957. It takes time, it takes courage, and it takes considerable financial adjustment to find hundreds of thousands of pounds—nay, millions—to build a ship. This sudden change of policy is wrong. The shipbuilding industry is one on which I consider we should take a five-year view. It is an industry which cannot expand unless they do take a five-year view.

But why not exclude shipbuilding altogether from that cancellation of the 40 per cent.? The arguments are indeed powerful. There is a queue waiting to place orders for ships now. If British shipowners withdraw their orders—and there are already, I am told, orders that have been suspended—there are foreign owners ready to take up the berths. Does the Chancellor really want to endanger the British merchant fleet to the advantage of foreign fleets? I cannot believe it. Britain depends on her merchant fleet. The ravages of war have not yet been made good, in spite of what one hon. Member on the other side of the Committee said. The tramp fleet has still a long way to go before we get back to our pre-war state. If armaments are needed, are ships not armaments?

I will sum up. First, the Chancellor's Amendment as it stands is going to do nothing but sabotage the industry. Secondly, to alter the concession to the date when the order is placed, or will be placed, will seriously injure or damage the industry according to the date when the concession comes into force. To discontinue these allowances altogether, however hedged in they may be with safeguards, is to endanger not only the shipping industry, but Britain herself—Britain's superiority in peace and Britain's defence in war—and to do one more thing to break the chain that holds the Empire together. I think the Committee should consider very carefully before, in these times, they take that step.

I think I should start in the correct way by declaring that I have an interest in the matter we are discussing inasmuch as, in the past, I have been concerned with, and interested in, a shipbuilding yard. I hope, when this Bill has had its day, week or month, to be able to look into the yard again. Therefore, I must say that I have rather more than a nodding acquaintance with the shipbuilding industry.

The purpose of the abandonment of the initial allowances has been made abundantly clear not only this evening, but when the Chancellor made his Budget speech, and it is that there should be a curtailment of capital expenditure at the present time. I should like to contrast those words with the words of his pre- decessor, Sir Stafford Cripps, two years before, when he said that the Government were constantly stressing the need for higher productivity, and both sides of industry agreed that one important factor in this was more and better mechanisation, and when, later on, he stated that owing to a further rise in prices, he had decided to double the existing initial allowance.

I think it has been recognised—and every hon. Gentleman who has spoken so far to the Chancellor's Amendment has stated so—that ships are in a special category. They are virtually the fourth line of defence. Indeed, the Chancellor has recognised that by the Amendment we are considering, but, in my view it does not go far enough. His action must do one of two things. Either it must result in the cancellation of those orders with which the yards are very full—and in that case we shall be short of the most modern type of our fourth line of defence and we shall not have ships which in terms of productivity would have satisfied his predecessor—or, on the other hand, if it does not result in cancellation, then the Chancellor will not have achieved his purpose.

So whichever happens, there is bound to be either a disappointment in the quality of our ships, and consequently in the mechanisation of our fleet, or in his hope that he would curtail capital expenditure. Indeed, in the short term it will not affect the curtailment of capital expenditure because the sub-contracting work—all the components of the ships—for some time ahead has already been ordered and will in due course be delivered, and there will be full yards for a year or so ahead.

For an independent ship-owning concern the question of financing these expensive vessels is very acute. The initial allowance helped to solve this problem for some of the companies which wished to bring their fleets up to modern standards because, in spite of what was said by the hon. Gentleman the Member for Stoke-on-Trent, South (Mr. Ellis Smith) the British Mercantile Marine is not as modern as it was before the war. The 40 per cent. initial allowance, which was supported in general terms by the Millard Tucker Committee as being a method of dealing with this financial problem, was a very considerable factor in the calcula- tions of shipowners when placing their orders.

I should like to have a look at one or two problems arising from the actual wording of the Chancellor's Amendment. The Amendment talks, as the original Clause does, of the expenditure that is incurred. I would like to know from whoever is to reply when is expenditure incurred. No doubt in terms of Treasury intrepretation it is incurred when it is actually made, but to the ordinary lay mind it is when the contract for the ship has been placed and the undertaking has been given to make certain payments by instalments that the expenditure has been incurred. That point should be cleared up before we can properly understand what we are discussing. If it is when the actual payment takes place, there is nothing to prevent a shipowner from abandoning the normal system of payment by instalments and making a lump sum payment within the year to 5th April, and he can circumvent the wording of the Clause in such a way.

One case has come to my notice of the considerable confusion which has been caused by the abandoning of the initial allowance. Early in 1950 a certain company placed an order for one tanker, for delivery in 1953—and note the lapse of time that takes place in all this. At the beginning of 1951, a second order was placed for a tanker to be delivered early in 1954. For part of the cost of the second tanker the company had to double its capital, the intention being that the balance would be met by a loan, which it was estimated would be paid off in 2½ years. The company's estimates were based on and took into account the full effect of the initial allowance. The cancellation of that allowance has thrown the whole financial plan into confusion, the construction of neither tanker has yet begun, and the company has stated that its plans have been completely upset.

The industry is waiting intently on the result of this debate. At the moment companies can make no definite decisions. They know the Minister has certain concessions in mind. The Committee has learned today what sort of concessions they are. We believe they do not go far enough. It would be very helpful if we could have from the Government something to clear our minds.

I should like to give some illustrations on the observations by the hon. and gallant Member for Barkston Ash (Colonel Ropner) that shipping in this country is not a favoured industry. It is not being treated half as well by this Government as many foreign Governments treat their shipping industry. In Norway the excess value of ships on a 1938 basis plus 20 per cent. may be written down over five years, up to a maximum in any one year of half the profits for that year, and this allowance generally amounts to more than 40 per cent.

In Sweden ships may be written down practically by any amount without restriction. In Denmark allowances work out so that the whole ship may be written down in 12 years. United States shipowners are entitled to receive from the Government financial assistance to bring, the building costs of vessels down to the level of building costs in other countries. When these vessels are operating in the liner trade allowance is made, by subsidy, for the difference between United States working costs and the costs in other countries.

We had this initial allowance. It helped us a good bit. It is now being cancelled. That makes the situation all the worse. I want to ask the hon. Gentleman who, for the purposes of trade, is the trader in this matter. Is it the shipowner; and if so, is a sub-contractor who is supplying a shipbuilder with an engine, or lifeboats, or davits, or any other apparatus, precluded from the 40 per cent. allowances because they are not for the purposes of the trade? Will the concessions in the Amendment apply to all floating craft, to tugs, lighters and other floating appliances belonging to dock authorities? I imagine they will be, but dock authorities will be happy to know that that is the interpretation of the Government.

In supporting the Amendment to the Amendment, I hope we shall draw some further elucidation from the hon. Gentleman who is to reply that will show that something more worthwhile will be-granted than what has already been promised by the Government.

4.0 a.m.

I shall detain the Committee only briefly on a somewhat narrow point. I have no interest in any shipyard, I am sorry to say, but I saw at the start of the last war the appalling shortage of certain specialist types of ship, and then at the conclusion of the war, I saw resolutions come from all sides, from the Services and the politicians, asking that steps should be taken to subsidise the building of these types of ship so that that would never occur again. So far as I know, nothing was subsequently done, despite all those pious resolutions, as often happens when peace breaks out.

The effect of this Treasury Amendment will not only be that nothing is done, but that the very types of ships most required will be reduced, because these types are fast infantry-carrying ships which are expensive to build, take a long time to build and if they are to be used most effectively, should incorporate certain special fittings for rapid conversion. With expenses going up and allowances going down, the likelihood of people building these types unless given assistance by the Treasury seems to me to be practically nil.

My experience of the Treasury is that when they have any real power of fixing matters regarding defence and are not fought tooth and nail by the Service Ministers, defence is cut well below the safety mark. It has always been my opinion that, with the best will in the world, the Treasury have played a large part in causing two world wars. I maintain that opinion. Nobody wants to see that going on again, and therefore I say to the Economic Secretary, who is now paying attention—

The hon. and gallant Member must not say anything like that. I have been paying close attention to everything that has been said and it is wrong of him to suggest I was not listening. I was surprised that the hon. and gallant Gentleman should attack successive Chancellors in this rather personal way.

I withdraw unreservedly. No doubt the hon. Gentleman was paying full attention, but I know that at this time of the morning it is very easy for people not to do so.

The hon. Member seemed to pay particular attention when I made that remark about the Treasury, about which I am unrepentant. I may be wrong, but it has been a bee in my bonnet for a long time. I suggest that the hon. Gentleman should look into the question of these types of ship. They were known as L.S.I., and were large, fast passenger ships easily convertible for carrying troops. We are an island Power, very short of forces and very much needing mobility. It is the sea that confers mobility to a large number of troops. Once again we shall enter war with world-wide commitments. Once again, if we are not careful, we shall feel the appalling scarcity of such ships. A little foresight now, some concession now, and that difficulty will be overcome. If nothing is done now or next year or two we shall be short of this essential type of equipment. I do beg the hon. Gentleman to reconsider this matter.

I hope that the hon. Gentleman the Economic Secretary will pass on to his right hon. Friend the Chancellor of the Exchequer how seriously some of us feel about this matter. I think it is clear to us that the shipping industry is in a unique position, because the ships themselves are the tools of that industry, and there is nothing quite the same in any other industry. In order to build a ship it necessarily takes a long time to plan it, and a much longer time to construct it; it has to be built in one piece. In other trades persons can develop equipment and plant and add to it as they want. In the shipping industry one has to keep up to date, especially in the liner trade, and if there is any dropping behind traffic is lost. People insist on travelling in ships that are up-to-date, and shipowners have to be in a position of being able to keep their fleet up to date.

I can assure the Economic Secretary that it is impossible for shipowners to do that, with the tremendous burden of taxation which falls on them, or to maintain their fleets in that condition if the initial allowance is removed, I do beg the hon. Gentleman to realise that once this thing goes it means a great many British ships will be withdrawn from the builders. Foreign owners will occupy the slips and it will result in that additional tonnage taking the water so that by 1956 the British flag will be flown by far fewer vessels. I am convinced that the Treasury have not grasped that this business of shipbuilding, especially of the vast passenger liner is a complicated business and we are being overhauled by certain other countries, which, with the allowances they have, are able to build superior accommodation, not only for the passengers they get but for other purposes. There is the case of the Panama vessels. There is a minute country, which has developed an enormous mercantile marine and which is out to chase other ships off the seas.

This, of all times, is not the moment for the British to risk their fleet. Surely it is not only a question of the United Kingdom, but of the British Commonwealth as well. We are anxious to see British shipyards full of orders from shipowners and firms domiciled in the Commonwealth. They will only come to this country if we can maintain the efficiency of our shipyards, which are by far the most efficient in the world; otherwise, foreign owners would not be clamouring to have their ships built here, but there have been cases brought to my knowledge, that because of the threat of the withdrawal of the initial allowances, vacancies are likely to appear in some British yards.

Because the boards of shipping companies are so uncertain about the future they make their plans for many years but the tremendous weight of taxation which has come upon them, especially in this Budget, is bearing extremely hard on the industry. The situation is such—and I can assure the hon. Gentleman that he can get any amount of evidence—that there is a feeling of real anxiety. There is only one course, and that is to leave the shipping industry in possession of the initial allowances.

Did I understand the hon. Member to say that there were vacancies in British yards?

No. What I said was that there is such congestion now for building in British yards that the managers of the yards have to allocate berths well ahead. It may be that if a slip is occupied today one knows when the ship is to be launched and who will next occupy that berth. It may be a British ship. But if the owners become uncertain about it, the managers of the yard must go to the next person, who may be a foreign owner, and that would mean the occupation of that berth by a foreign owner.

I assure the hon. Gentleman that it is not only in regard to the actual hull. People seem to think that when one lays down the keel that is all that has to be done. It is necessary now for orders for some of the dead, auxiliary machinery which is scarce to be placed by the shipyard a long way ahead in expectation of an order. For instance, it is hard to get auxiliary diesel engines and a lot of electrical equipment in view of the demand for the re-armament programme. Therefore, anything which leads to uncertainty either for the boards of directors of shipping companies or for the managements and boards of shipbuilding berths at this juncture will mean a severe risk not only for the industry but for the future of this country.

I desire to add a few words in support of this Amendment from the point of view of the shipbuilders. My reason is that the part of the world which I represent is vitally concerned in that industry, which is possibly one of the largest centres of shipbuilding in the world. As I see it, one of the real dangers of the withdrawal of this allowance is that it may well cause a dislocation in the pattern of shipbuilding.

Anyone concerned in that industry—and we in Belfast have cause to know this—realises the importance of having a rhythmic flow of orders coming into the yards. It is not so important to have a tremendous number of orders at one time, some of which one cannot fulfil, and at another very few, as to have the rhythmic pattern which has prevailed over the past year or so in the industry. The withdrawal of this allowance may well have the effect of causing shipping companies to cancel orders if they can do so, and so throw out of gear the pattern of the shipbuilding of this country.

Would the hon. Gentleman allow me to put this question to him? A lot of argument has come from the other side of the Committee about shipbuilding being part of the rhythmic pattern. Why was not this dealt with three or four years ago, when there were practically no orders in the shipyards? [HON. MEMBERS: "Nonsense."] Oh, yes. [HON. MEMBERS: "No."] One hon. Gentleman opposite said order books were full now, but that they were not full a year ago. [HON. MEMBERS: "NO."] There were periods where important shipyards lacked orders because of the failure of the shipowners to give orders so as to keep up this rhythm of shipbuilding about which we have heard.

4.15 a.m.

The hon. and gallant Member may be familiar with ships but I cannot say that he seems familiar with shipbuilding. Nobody who knows anything about shipbuilding can support the statement that there were empty slips. There might have been two or three here and there but at the vast yards of Messrs. Harland and Wolff there has been no empty space since the end of the war for the simple reason that replacement has been going on to make good that which we lost during the war. So the hon. and gallant Member's point falls to the ground. But, when the replacement for the Merchant Navy is almost complete, it may well be now that shipping companies will hesitate to order when they know that these allowances are withdrawn.

There is another important aspect. As some hon. Members have pointed out, the building of a ship is a tremendous undertaking. It grows with the size of the ship ordered, and this is not the kind of industry where one says "Well, I think I will order a ship tomorrow." Ships laid down now have probably been planned and ordered some years ago when it was not even thought that these allowances would be withdrawn. The Government has recognised this difficulty to some extent and have made an endeavour to meet it by saying that in the case of ships under construction, the allowances will not be withdrawn.

Other hon. Members have pointed out that the Government should say how it is going to define "under construction." There, I think, the Chancellor will run into a great deal of difficulty. As the hon. Member who has just spoken pointed out, it very often happens that a great deal of work on parts of equipment and on the engines is done before even the keel is laid. Generally speaking, anybody ordering a ship has to wait for a vacant slip; but in a great yard like Harland and Wolff's the diesel engines or something else for the ship are started before work begins on the hull if there is no space. In such a case, who can say if that ship is "under construction"? There may be many important or expensive parts constructed although there is no appearance of a ship.

Then, let us remember that before any construction work at all can be done there has to be a tremendous lot of designing and drawing which is also very expensive. Is it to be said that when all these preliminary things have been carried out, although there is no keel on the slipway, that the vessel is "under construction"? I suggest that it would be very much better, instead of saying "under construction", to say "when the contract for the construction has been made". That would be a very much better yardstick.

The Economic Secretary to the Treasury has pointed out on several occasions in this debate that Amendments have been excellent and has said that he was much in favour of them and would be very willing to grant them; but then, in the final sentence he has said that owing to there-armament programme, and for one or two other reasons which I cannot now remember, it was impossible to make the concession sought. There is one thing that cannot be said about this Amendment, that it has no effect on the re-armament programme. There is practically no class of vessel or craft that cannot be used and is not used in war. From the yacht to the liner they all have their uses, and they are nearly always used as part of the defence programme. That argument certainly is not one that can be put forward.

Ships are in an entirely different category to an ordinary type of factory. Shipping is a trade in itself. It is very important to distinguish ships from any other form of plant to which allowances may apply, for ships are the centre of the whole industry. For that reason, if for no other reason, I think that this Amendment should be accepted.

There is one further point that has not been mentioned and that is the design of ships. The design of ships has changed more in the last six or seven years than ever before in the history of shipping, which is because of the continuous flow of new orders. If once that is interfered with, or anything is done to prevent or make it difficult for shipping companies to place orders for ships, not only will it be disastrous for those employed in the industry, but it will affect the design of the vessels. Shipping in this country should never be neglected, for it is indeed one of our greatest industries. In those circumstances, it is regrettable to find the Government attempting to remove these allowances from the industry. I hope that better counsels will prevail, and that the Chancellor will see his way to accept this Amendment.

As has happened on a number of occasions, I must start my speech by declaring an interest in shipping, and I apologise to the Committee for speaking so often on a subject with which I am very closely connected outside Parliament. The points made so far have been advanced with much strength, and I am not going over them again. The main arguments were most ably put by my right hon. Friend the Member for Ormskirk (Sir A. Salter), who made the major case for taking shipping out of this Clause altogether. However, there are still things that need saying, and I hope they will be listened to with care by hon. Members on the Treasury Bench, and particularly by the Chancellor of the Exchequer when he is considering the results of this debate between now and the Report stage.

The first thing that we must get absolutely clear is that the shipping industry is only too ready to bear its full and proper share of taxation. Initial allowances, in the long run, make no ultimate difference to what the Treasury receives, with one proviso—that the unit in question in its lifetime makes money. I cannot quickly turn up the quotation, but even the Chancellor himself, or one of the Treasury Ministers, said on the Floor of the House, that, after all, these initial allowances are nothing more than a tax-free loan. That, too, has been said on this side and it has been said outside the House. It is absolutely wrong. To certain types of firms with very big resources who can be reasonably certain the unit involved in the discussion is going to make money over its whole lifetime, it may be true.

I should like to refer to "tramps" with which I am connected. I remember very well a ship belonging to the firm with which I am associated and which was built in the 1925–26 period. It made money for a short time with only a 4 per cent. depreciation allowance, paid tax on relatively small profits over and above that, and then ran slap into the depression of the 'thirties and never in its lifetime made depreciation. Therefore, the Treasury actually got money to which, over the life-time of the ship, it was not entitled and there was no way of getting it back. Let us get rid of the idea that initial allowances are nothing more than a tax-free loan because they can be vastly more important than that to certain types of industry and to certain types of ships.

The basic issue is clear. The Chancellor himself really made our case in his Budget speech. Some of his speech has been quoted, and I should like to quote one part of it too. He said: The initial allowances after all were introduced at the end of the war as a means of stimulating re-equipment and modernisation. … And this is the important part. He added: That is, of course, a very desirable aim but in our present circumstances to stimulate capital expenditure in this way would, I am satisfied positive endanger the defence and export programmes too much."—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 842.] If that is applied to shipping it is entirely our argument upside down. What could do more serious damage not only to the defence programme but also to the export programme than if the British Merchant Marine does not progress as fast as it possibly can in this critical period? There can be no shadow of doubt what effect the suspension of initial allowances must have, and I do not want to exaggerate the case.

Other hon. Members have mentioned the question of cancellation of contracts. I believe there may well be cancellation of contracts, but I am not certain of it. But, quite apart from that, the whole mood which prevails, and which has prevailed for some time past, in the shipping industry of this country, must change. The decision to build these extremely expensive units is a matter of economic climate and mood to a very considerable extent. Sir John Anderson, immediately after the war, brought in initial allowances of 20 per cent. He was certainly not a Socialist. Only two years ago, Sir Stafford Cripps increased the allowances to 40 per cent. Obviously it must appear to the industry that there was no difference between political parties on this question. They were bound to assume that initial allowances would continue.

The Lord Privy Seal (Mr. Stokes) indicated dissent.

It is no good the Lord Privy Seal shaking his head. It is true that that is what happened. They assumed, in their basic thinking on new construction, that initial allowances would go on. One cannot run an industry so vital to the nation's fate in war and peace with constant changes in essential policy affecting its finances. The uncertainty since the Budget speech has been very damaging. Owners have not known whether they could go ahead or not. Indeed, they are awaiting the result of this debate, and they will not really know the position until the Finance Bill is on the Statute Book. That has done no good.

4.30 a.m.

I will leave the question of the background of the placing of orders for new tonnage and turn to two further important points. The hon. and gallant Member for Scotstoun (Colonel J. R. H. Hutchison) mentioned the question of taxation in other countries. That is an extremely important point, and it was a great difficulty for British shipowners before the war—before the initial allowances were introduced. That introduction did go some way to meet the advantage which shipowners of other nations had in the matter of taxation. Are we to lose it?

Another point is that there has been a serious recrudescence of what is known as flag discrimination. Other nations are discriminating against the use of British tonnage in a way which has not been seen for some time—certainly not since the 1918 war and possibly before that. It began to grow during the inter-war years and we got rid of it. It has become much worse again since 1945 so that we are fighting against not only taxation advantages which other nations have but also against a deliberate diversion by other nations of cargoes into ships under their own flags. There are many other difficulties, of course. We see the straight subsidies which are being given to foreign shipping. We are not asking for a subsidy in this country or anything like it; that is the last thing we want. If we are given a fair deal and fair taxation we can get on in the world, but we must not be in a worse position than our competitors from a taxation point of view.

Finally, without labouring the point, may I deal with shipbuilding? The hon. and gallant Member for Hull, East (Commander Pursey) made a statement which I think should be corrected because it might go out to the public—and the public ought to know what the true position is. Since the war it has not been possible for an owner wanting to build a ship of 400 feet and upwards to get delivery within a couple of years. At no point has a slip been available for putting down a new keel for a new order which had not been in the order books for some time past. The hon. and gallant Gentleman is right only up to this point—that for a short time about a year ago some of the yards building small ships up to 250 or 300 feet were running short of orders in their order books. But there has been no time at which one could place an order for a big ship and get delivery within less than two, three or four years. That may appear to strengthen the Government's case for taking this action. But of course they must realise that they are risking cancellation.

Let us look a little further ahead. Even if the Government insist on including shipping in this suspension of the initial allowances, that will not affect the position for the next two years when the whole weight of re-armament will be falling on the country. It cannot stop the ships which are on the stocks now, and the great majority which are on the stocks now will be there for a considerable time. The Government will get no advantage during that time. What they will be doing will be to jeopardise employment in the ship yards two, three, four or five years from now.

Let it be realised that all shipping—particularly tramp shipping—moves in a cycle and not all the efforts of the planners in Whitehall can stop that for years to come, because whatever they may be able to do in this country they cannot believe that they can influence what is to happen in an international market like this. I hope that the Economic Secretary will convey this information to the Chancellor, because I cannot believe that it is fully appreciated. There was a fall in freights about a year ago and the marginal ship, the old ship, was already being laid up. That was the ship which was less efficient and which could not trade at a profit. The result was that tramp owners in particular were waiting to see how the freight market was going to move, before deciding on their future building programmes.

We all regret the war in Korea and all that went with it, but it had a staggering effect on the freight market in the early autumn—with in addition, of course, the effect on the freight market of the handling of the import programme by Government Departments during last winter. We must mention that because it is one of the major factors in the very high rise in freights. No one likes the present high level of freights. However, if we maintain initial allowances on new building it will have the effect, three or four years from now, in constituencies like my own, which are very dependent on shipbuilding, of helping to maintain employment, because shipowners will feel that if they can get the initial allowance and, therefore, their ships written down while freights are good, and if money can be put to reserve a bit of a risk can be taken three, four or five years from now, when we must almost certainly go back to a low freight market always assuming that we avoid war.

Whatever the policy of liner and tanker companies may be, I assure the Chancellor that the policy of a tramp owner has got to be based on building his ship at a period when he hopes he can get some money in the bank to carry him through the depression which is inevitable within the next seven or eight years. That has been the experience through the whole history of shipping; there is an eight to ten year cycle.

Clearly, if the initial allowance can be maintained when freights are good, one can get a margin which will see one through the bad years. Without it, I am convinced that as soon as the excessive demand on world markets disappears with, as we hope, the disappearance of the threat of war, we are bound to slide fairly quickly back into the position where marginal shipping will again be laid up, and there will be no inducement whatever to an owner who has not a lot of money put away to go in for new building at a time when it will be essential to keep our shipyards going.

For these and other reasons, which I will not go into now, I strongly support the Amendment of the right hon. Member for Ormskirk, and I sincerely hope that we shall get some indication from the Chancellor that he will be sympathetic to it before the Bill goes through all its stages.

I must declare my interest in the Government's Amendment. It is a conflicting interest. As a lawyer, of course, I should be all for ambiguity, but as a legislator I have often been chided by His Majesty's judges about some of the legislation passed in the last six years, and I have been asked what it means. I feel that the phrase which has been criticised on the benches opposite is ambiguous. I refer to the phrase ships actually under construction. I do not want to develop the argument, but I merely express my view that it is an ambiguous phrase, and I think the Government might look into it again, not for the benefit of the lawyers but for the benefit of the Committee as legislators.

I think the Committee will appreciate that the fact that the Government have tabled the Amendment is an indication that we recognise shipping to be an exceptional case. The word "unique" has been used, and I should be prepared to accept that as a fair description of the shipping industry. Since this matter was first raised I have, without pretending to any expert knowledge about shipping, been doing my best to understand the essential character of the problem, and I have had the benefit of a discussion with representatives of the General Council of Shipping on the whole matter. I therefore felt that a very large amount of what was said by most hon. Members about the importance of shipping was something which could be accepted on all sides.

What bothered me was that almost everybody—although I would except to some degree the hon. Member for Renfrew, West (Mr. Maclay), and the hon. Member for Abingdon (Sir R. Glyn)—made a leap to another conclusion—the conclusion that the initial allowance ought to be maintained; that shipping is important and, therefore, the initial allowance ought to be maintained. Quite apart from the logic of that, I should have thought that it was precisely that gap in the argument which it was somebody's business to fill up.

The two hon. Members to whom I have referred were the only people who, to any extent, tried to fill the gap. The right hon. Gentleman who opened the discussion burked the whole question. He assumed what it was his duty to try to demonstrate. At no point did he ever come to grips with the problem, which was to show that, if the initial allowances are withdrawn, it is going to mean that the shipbuilding companies are going to be in a position where they will not be able to go on with the ships, they will not be able to fulfil the contracts that have been made, and so on.

The hon. Gentleman on the opposite benches who spoke last did, I think, indicate the character of the problem, and he did it not in any extreme way, as almost everybody else has done. He did it in the most moderate way, and in a way which I accept—that is to say, that the effect of the suspension of these allowances is not something to be thought of as washing out the whole of the contracts, but having a marginal effect in two spheres in particular, namely the small tanker and the small tramp. That seemed to me to be the gap in the right hon. Gentleman's answer. He asserted what I would like him to have demonstrated.

I did not say or suggest that the withdrawal of these allowances would result in cancellations of the contracts that have now been placed or the major part of those contracts. I did imply, and I thought it was common knowledge and recognised by the Government, that the tendency must be to diminish contracts and result in the cancellation of some of the contracts and, indeed, the placing of further contracts. If the initial allowances had no adverse effect of that kind, I do not know why the Government itself have proposed this limited and, I think, quite inadequate Amendment. If I had thought there would be any doubt about the adverse effect on the placing of contracts, I could have quoted. I do not know whether the Economic Secretary has seen the speech of Sir William Curry of the P. & O. reported in today's issue of "The Times." I can refer him, again, to the representative of a great tanker fleet.

I am glad to have the right hon. Gentleman's explanation. I am even more pleased to have some of the actual cases which have been given to me as a result of my inquiries into the matter, and I would not deny that at the margin, the withdrawal of the allowances, especially in the cases I have indicated, could have an effect. I cannot understand why the right hon. Gentleman should be so concerned about the placing of orders in the future. I think we all agree there are orders placed which are certainly going to take all our capacity for three or four years. If I understood what the hon. Member for Govan (Mr. J. N. Browne) was saying, the yards are full for years.

Provided there is no cancellation.

I am dealing with the hon. Gentleman's point that he wants freedom for further orders. I have admitted that, marginally, the withdrawal of the allowances would have an effect. But the gap which was not really filled up, and which I respectfully submit that it was his duty to fill up, is that I would have expected him to say, "This is the position of the industry; Here are its accumulated resources—these are the reserves which I expect the industry to be able to accumulate on the basis of present tax levels"—and then, making some reasonable allowance for borrowing, reach a conclusion about how much new shipping industry in fact can cover with its reserves.

4.45 a.m.

That is what I would have expected to happen. Certainly, no one has even begun to demonstrate that the effect of the withdrawal of the initial allowance would have a disastrous effect on the industry. I admit that it would have a marginal effect, but unless the industry is put under a strict inquiry as to its needs, or unless hon. Gentleman who speak for shipping and have a great knowledge of it, can demonstrate the real stress under which the industry is, then I must say I beg leave to express a certain view.

I did not say that it would have a disastrous effect on the shipping industry. I did say that it would tend to reduce the extent to which the British Merchant Marine is now being very fortunately increased. If the hon. Gentleman says that the yards are full for several years what does it matter? I would say what does it matter for his purpose, which is that of protecting the present re-armament programme, if it is only for that period that the initial allowances have that effect when he can always later, if the situation develops, and the Government no longer desire to see the mercantile fleet increased, withdraw the allowance?

That does not get away from the fact that the right hon. Gentleman presented only half a case and he drew an exaggerated conclusion on the basis of no evidence whatever. After all, would it be denied that at the present time shipping is booming, and that profits, on the whole, are high? Would it be denied that freight rates are higher now than they have been for a very long time in real terms and not just money terms? Those are factors which have to be taken into account.

The hon. Gentleman is not taking into calculation the remarks I made on this theme. He is trying to show that the effect of the cancellation or annulment of the initial allowance is not going to have much of an effect. If it does not, the whole of the Chancellor's purpose is defeated because he is trying to stop capital expenditure which the hon. Gentleman is trying to show will not be affected.

I am not trying to show anything of the kind. I am trying to show that most hon. Gentlemen opposite have presented half a case and that they have exaggerated it. I vastly prefer the case put by the hon. Member for Renfrew, West (Mr. Maclay), which I believe essentially to be the right one.

While I appreciate the polite remarks of the hon. Gentleman, I take a gloomy view of this Clause, and I do not want there to be any misunderstanding about that. I share the views of my hon. Friend, although I tried to fill up some of the obvious difficulties. This thing, over a period, can have serious consequences.

I entirely agree, and I am grateful to the hon. Gentleman for filling the gap. It would have been a pity if the case had not been stated during the whole course of the debate. The state of the industry, after all, is very different from the position when there were no initial allowances for shipping, and hon. Gentlemen opposite have the shortest of memories. They get indignant about changes when only a little while ago—within the memory of all of us—they might have reached a somewhat different conclusion.

One hon. Gentleman—I think the hon. and gallant Gentleman who sits for Scotstoun (Colonel Hutchison)—brought the Millard Tucker report into the argument. I think it will be agreed that it would be a great mistake to take a decision on the basis of that Committee's recommendation because the last thing it would be right for us to do now would be to accept the recommendation, as I said on an earlier Amendment.

This is the second time the hon. Gentleman has raised this point, without producing any argument to prove it. We have no evidence to show why he should know better than the Millard Tucker Committee, which has been considering this matter two years, whereas he has been considering it only about two weeks since he got his brief.