Economic Affairs

– in the House of Commons at 12:00 am on 12th February 1957.

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3.56 p.m.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I beg to move, That this House, realising that the policy of Her Majesty's Government has forced up prices and rents, endangered the maintenance of full employment and depleted the nation's gold and dollar reserves, calls upon Her Majesty's Ministers to formulate new and appropriate policies designed to rebuild our reserves, increase production and capital investment, assure full employment, stabilise prices and improve the position of old-age pensioners and others living on small fixed incomes. The House will observe that the Chancellor of the Exchequer is not here. I, for one, would have liked to congratulate him on his appointment and to sympathise with him on the legacy he has inherited from his predecessor. He is, of course. in Paris, and the President of the Board of Trade is with him. I am sure that we all regret this absence.

A year ago I promised the previous Chancellor, in response to an appeal he made to us, that we would not treat him as his party treated Sir Stafford Cripps. In view of that pledge I will not regale hon. Members with all the lectures that the right hon. Member for Woodford (Sir W. Churchill) used to give Sir Stafford Cripps on similar occasions, about his first duty being to the House of Commons.

Certainly, the treatment by the Government of recent debates—the very perfunctory speech we had from the Prime Minister in the economic debate in November, and the much greater enthusiasm the Government showed for debating the European common market—suggests that the Government attach much more importance to a proposal which will not be implemented for ten to seventeen years than to a discussion of the economic problems and the survival of this country in the next ten to seventeen months.

It is a year ago this week—it was, in fact, just two days after certain hon. Members scraped in for Taunton, Gains-borough and Hereford—that the then Chancellor of the Exchequer made a very grave statement on the economic situation, in the course of which he summarised the records of his predecessor the Lord Privy Seal in those imperishable words which by now are well known to the House, that inflation in 1955 had … held back our exports, swollen our imports, forced us into balance of payments deficit, helped to reduce our reserves by a quarter, and driven up our domestic price level."—[OFFICIAL REPORT, 17th February, 1956; Vol. 548, c. 2666–7.] That was what the late Chancellor said about the Lord Privy Seal. As the present Chancellor is not here to give us an equally frank verdict on his predecessor it falls to my lot to attempt one.

The Prime Minister was not, of course, Chancellor of the Exchequer for very long. We were told, on his selection as Prime Minister, that he was well fitted to be Prime Minister because he had held so many high offices of State. The trouble is that he has hardly held any of his recent ones long enough for us completely to find him out. In banking terms, the right hon. Gentleman has a very high velocity of circulation.

But twelve months at the Treasury is long enough for us to form a judgment, and perhaps it might help the House if I went over one or two of the salient facts. First, gold reserves. The former Chancellor said that under the Lord Privy Seal our gold reserves declined by a quarter. Under the present Prime Minister, when he was Chancellor, ignoring his borrowings, they fell over a third in a year. At the end of January, a year ago, the reserves were 2,149 million dollars. Today, they are 2,084 million dollars, 65 million dollars down; but, of course, in that year we had the special help of 177 million dollars from the former Chancellor's master stroke, when he sold the Trinidad Oil Company; and then he borrowed and placed in the reserves no less than 561 million dollars from the much-maligned International Monetary Fund, as well as 30 million dollars from the sale of United States Government bonds in November, making a total of special aid to the reserves of 768 million dollars in a year. Even then they fell by 65 million dollars.

It will, therefore, be clear to hon. Members that but for this special aid and special borrowing and the sale of the Trinidad Oil assets, the gold reserves today would be 1,316 million dollars, which is less than they were at the time of the 1949 devaluation and is a fall of nearly 40 per cent. over a year.

What about production? Under the right hon. Gentleman production remained completely stagnant, as it has been now for eighteen months. It was constant for so long that some observers feared that rigor mortis was beginning to set in. In the past two or three months, however, it has shown some movement—downwards; and it has been below that for the same period of 1955. With production booming all over the world, Britain, under Toryism, continues to lag behind.

Exports are up by 6 per cent. by volume over last year, but we are still a very long way behind our industrial rivals. I should like to remind the House of the figures for 1955 compared with those for 1950. Over that period, West Germany increased her exports by 158 per cent.; the Netherlands by 80 per cent.; France by 37 per cent.; Italy by 35 per cent.; and Britain under Toryism by 6 per cent.

I grant the right hon. Gentleman that imports were held fairly steady for the greater part of last year. At a price, At the price of stagnation in production. The country is being given the impression under the present Government that the only way in which exports and imports can be brought into anything like balance is by holding down production. We must ask them what happens if we get the long-awaited increase in production. Is there to be another upsurge of imports of raw materials and semi-manufactures, such as we had under the Lord Privy Seal in 1955, and another payments crisis?

Yesterday, we had the January trade figures, which I think the whole House will agree were very alarming. The trade gap of last month's visible trading between imports and exports rose to £1036 million in a single month. Those are the worst figures since July, 1955, when, as we know, there was a big pile-up of imports following the dock strikes of that year. They are the worst figures for eighteen months.

I know that no hon. Member would want to base any argument, particularly a gloomy one, on the figures for a single month, although since right hon. Gentlemen opposite have been getting very complacent about the gold and dollar figures for a single month in January, I hope they will realise that, taking the three months as a whole, November, December and January, the balance of our trade has worsened very considerably indeed.

What about capital investment? When he was Chancellor of the Exchequer the Prime Minister succeeded in this objective: he lowered the nation's capital investment. He set out to do it and he achieved it. United Nations figures show that in the second quarter of last year new industrial building authorisation fell by 52 per cent. in this country compared with the same period of the previous year, whereas in Western Germany the figures rose by 20 per cent. It was, I think, the Prime Minister himself who, at the N.A.T.O. conference in December, said that capital investment in this country was the lowest of all the N.A.T.O. countries. Is that another thing about which the Prime Minister is proud?

What about capital investment abroad? The Treasury Bulletin last week, referring to the closure of the Canal and of the pipeline and the economic effects of those events, said: … instead of the desired surplus of £300 to £350 million a year, the most realistic forecast at the moment is a rough balance in the twelve months to mid-1957. There we have the cost of Suez; instead of a surplus of £300 million we have just a rough balance in the twelve months.

I know that hon. Members opposite are trying to tell us that the cost-of-living index is stationary. Even if it is, it is about the only thing which is. In fact, it rose by 3½ per cent. over the year. If that lady in the Minister of Housing's constituency had gone shopping last Saturday morning, and if he had asked her what she thought of food prices, then what she said and what he said and what they both said would have been most instructive. It is true that some prices are falling, at any rate in certain shops, but in the main they are not the prices which mainly affect the least well-to-do families. There are falls in the prices of buttter, bacon, eggs and poultry. How much butter and poultry and how many eggs can the average old-age pensioner afford in this country—or how much bacon for that matter?

The prices of those goods which were in the Chancellor's control he forced up—bread, milk and council house rents. We say to him that he missed a very great chance, at a time when world prices are favourable, to bring real stability into the cost of living in this country. At the time of his announcement in December, when I said that we should support the Government in any appropriate measures to strengthen sterling, I suggested to him, I must admit not with very great hope, that the first appropriate measure would be to withdraw the Rent Bill. The Government are, however, pushing on with that,' and they must realise the effects on the cost of living and ultimately on the wage-price spiral of this decision.

Since we are still examining the former Chancellor's record, what about his Budget prospects? Last April he budgeted for the biggest-ever Budget surplus—£460 million. He then told us that this must be increased, and he said he proposed to fortify it. He said: With the full approval of my right hon. Friend the Prime Minister and of my colleagues, I can say that we are determined that this economy drive should bring us, over the whole field, savings amounting to not less than £100 million in this current year …"— [OFFICIAL REPORT, 17th April, 1956; Vol. 551. c. 883.] That would have raised his Budget surplus to £560 million in all.

The House will remember that in the Budget debate we on this side of the House were very dubious about the Chancellor's prospects. We were very doubtful whether he would succeed where, as he made it all too plain, he thought the Lord Privy Seal had failed.

In June we had the first slice of the economies, and in the debate which followed we showed that they were a complete "phoney," with the running-down of stocks, once-for-all savings and all the rest of it. We showed that such real decreases as could be shown were already outweighed by salary increases and by such increases as the German support costs.

Last week the speech of the Secretary of State for War on the Supplementary Estimates showed how right our suspicions were. He told us that the economies of the War Office were planned on the basis of slowing up the rate of delivery of certain military items, but that the manufacturers had let them down and delivered those items in the present financial year, so that the economies had disappeared. That is why I must throw a little doubt on what the Financial Secretary said this afternoon, that they had saved the whole £100 million and that if it had not been for the saving of the whole £100 million we should be even worse off than we are.

It is true, of course, that some savings were achieved by the running down of military stocks. That should not be too difficult as we can see from the Report of the Estimates Committee, issued last week. Apparently we have still in this country ten years' supply of blanco at the current rate of consumption; we have 347,000 chairs in the War Office in addition to those in use in military establishments—347,000 not in use. We have 7,000 heavy duty bicycles, bought for the Home Guard, no doubt, when the Prime Minister was Minister of Defence. Clearly, the military strategy in those days was based on middle-aged gentlemen riding round the country on heavy duty bicycles throwing chairs at the enemy.

Then, of course, we have enough aircraft spares to fight the last war all over again, provided that we can ensure that we stick to the types of aircraft that were used in the last war. This should have made economies not too difficult to achieve, but even with these aids to economy what has happened? The economy campaign has utterly failed. The £100 million cuts have given place to more than £100 million in the Supplementary Estimates. "Mac the Knife" has turned out to be a very blunt instrument. [An HON. MEMBER: "A boomerang."] I would not call him a "boomerang".

If we look at Government expenditure for the first ten months of this year we find that it has been running at about £337 million above the same period last year. The above-the-line position shows a worsening of £285 million. The former Chancellor of the Exchequer was planning for an increased surplus of about £63 million, but, instead of the surplus for which he was planning, there is now a worsening of about £285 million. Over the year as a whole it looks like being £300 million or £400 million. That is presumably what he means when he said in his Budget speech: It is easy to err—it is human to err; but I confess that I would rather err on the safe side. A misjudgment on the side of overoptimism might have the gravest results."—[OFFICIAL, REPORT, 17th April. 1956; Vol. 551. c. 873.] I know that the right hon. Gentleman will tell us that the worsening above-the-line on income account was offset by improvement below-the-line on capital account. But I think that there is a danger of the right hon. Gentleman misleading himself here. There have been very serious cuts in public capital expenditure, especially by local authorities, but the saving below-the-line has not been saving of real resources; in the main, it has been a diversion, as local authorities have been driven to borrow at expensive rates, in the mortgage market, from insurance companies, and so on. It has not been a saving in terms of real resources.

There we have the record of the former Chancellor of the Exchequer: gold reserves down by over one-third; production stagnant; exports up less than our trading rivals; imports temporarily held at the price of industrial production; capital investment the lowest in N.A.T.O.; a prospective balance of payments surplus utterly destroyed by Suez; a golden opportunity missed to stabilise the cost of living; and a Budget prospect which suggests the most monumental miscalculations. I think that compared with that the record even of the Lord Privy Seal was a shining example. The trouble is, as we warned the last Chancellor of the Exchequer a year ago that he tried to solve the economic problems of the country not by principles or radical solutions, but by gimmicks and gadgets and stunts. I have referred to the stunt of the £100 million cuts.

What of Premium Savings Bonds? In November there was a mad scramble, by Surtax payers in the main, and we had £46 million invested in the bonds. In December, even including all the Christmas presents which, I am sure, hon. Members opposite gave so lavishly to their relatives, it was only £6 million. For the last full week of January, before the usual end-month up-turn, it was only £400,000: yet the administrative cost of this is running at 30,000 a week and, on top of this, we have the high tax-free interest percentage which is awarded. So if we are getting, as the Financial Secretary said, some very useful savings by these means we are certainly paying a very high price for getting them.

What is the economic position today? During the debate on the Gracious Speech, on 12th November, we debated the economic situation then. I gave what I thought were some fairly serious warnings about the economic effects of Suez. We had no information from the Government. The then Chancellor hardly took the trouble to reply at all, and the Minister of Supply, now the Paymaster-General, thought that I was too gloomy. But it soon became clear from the very-grave statement of the then Chancellor, on 4th December, that my forecasts had not been too gloomy at all; if anything, they had been rather on the rosy side. In fact, we lost 313 million dollars from our gold and dollar reserves in a single month. In December, it was a little better. In the five months we had lost 869 million dollars—there again we have the price of Suez.

There was talk of devaluation in the air and it was as well that we frankly faced it. The House will agree that if we had been forced into devaluation by all that was going on it would have been a tragedy not only for Britain, not only, indeed, for the sterling area, but for at least the half of the world that does its trade in sterling. I must repeat our view—and I am sure that it is the view of hon. Members in all parts of the House; and it must be repeated with all possible emphasis—that the £ is not overvalued: weaknesses in our trading position arise from quite other factors.

The former Chancellor mobilised these hidden reserves, especially the International Monetary Fund, and he was right to do that. We think—and I know that some hon. Members opposite think—that his appeal for the waiver of the Washington loan was a much more dubious procedure. So we had the 561 million dollars from the International Monetary Fund and we had an agreement with the Export-Import Bank for the loan of 500 million dollars and we had the right to make further drawings, and we had the sale of securities. This was enough to stop all talk of immediate devaluation. The bear speculators who had been very active ran for cover. The £ recovered. For a moment it just touched parity because the speculative tide had turned the other way.

I am sure that the House will agree that this is no ground at all for complacency, such as we saw in the speech of the new Chancellor to the United States Chamber of Commerce in January. I think that the position was well summed up by the Manchester Guardian soon after the Prime Minister's statement of 4th December, when it said: The Chancellor talked about 'measures' he was taking to save sterling. He has done nothing of the kind. He has merely been saved by an institution hitherto regarded as an enemy. He still has to adjust his financial policy to the realities of our economic position which have been shown up by the Suez affair … it would be too tragic if the opportunity were missed and the support fund was used up because the Government lacked the courage to draw conclusions. These words are still as true today, two months afterwards, as they were when they were written.

The former Chancellor threw everything in. He pawned the silver; he pledged the family heirlooms; and by this means he stopped the run on sterling. But he cannot do it twice. The tragedy is that these national treasures had to go to pay for the follies of Suez, when they should have been kept as a reserve against a possible worsening of the world's economic climate which has been very favourable for some years.

I am not saying that in the disastrous position we were in he was wrong to pledge these hidden reserves. Of course he had to do it. He was in the position of a family man who has had a wild gamble and lost, and who can only avoid having his house and belongings sold over his head by throwing in the savings he was putting aside for his old age. Obviously, such a man has no choice. Where he went wrong was his reckless gamble, and the same is true of the Chancellor and the Government.

But even though the right hon. Gentleman did this, even though there has been this improvement in the rate of the £, there is certainly nothing in the foreign exchange position now to justify any complacency. In January, our gold and dollar reserves went down by another 33 million dollars—in what should have been the best period of the year. January is usually favourable. And this was at a time when sterling was being helped by a sharp reaction against the November-December speculation and the tide was coming in as far as it had gone out.

This was at a time when the rise in the sterling area surplus was favourable. For instance, Australia had a surplus of £100 million in the second half of last year, compared with a deficit of £27 million in the same period in 1955. All these things were helping the £. We were helped, too, by large sales of Russian gold. It is not the first time that this Government have been kept afloat with Red gold. I think it was Mr. Khrushchev who said, last April, that he would be a Conservative. I am sure that it will be agreed that there is no ground for any complacency.

Let us face the facts. The Chancellor avoided devalution by a once-for-all operation. We are living on borrowed time and, because it is borrowed, time is not on our side. Everything depends on using the time we have—perhaps a year, perhaps less—to put the country on a firm economic basis; to give us freedom from the crises that have still been dogging us nearly twelve years after the war and in the easiest world conditions we have known for a generation.

What does this mean? It means two things. It means, first, that we must not dissipate the resources we have borrowed either on sops to consumption and easier living—as in the Lord Privy Seal's Election Budget—or on economic frivolities such as were shown during that same period by the inessential building and expansion of totally inessential industries that was going on. Under the rule of right hon. Gentlemen opposite we have had available to us both increased production, such as it was, and a windfall in the terms of trade, yet nearly all of it has been thrown into consumption and far too little has gone to investment.

The second thing which we must do is to use this year to begin to restore the reserves and to build up our capital investment. That is why our Motion calls for … new and appropriate policies designed to rebuild our reserves, increase production and capital investment, assure full employment, stabilise prices and improve the position of old-age pensioners … Do these priorities need any arguing? I think that the need for rebuilding our reserves is the obvious No. 1 priority. I have given the figures of increased production. The Chancellor recently said, of course, that since 1948 productivity had increased in Britain more than it had in the United States. He said that here there had been a bigger increase since 1938 than in any other European country. He forgot to point out that this happened mainly under a Labour Government. Under a Labour Government, production rose by an average of 6·9 per cent. per annum; under the Conservatives, it rose by an average of 3·4 per cent. per annum —less than one half.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

No, I know what the hon. Member will ask. He will ask whether it is not a fact that we started from a very low basic figure.

Photo of Sir David Price Sir David Price , Eastleigh

No. I wanted to ask the right hon. Gentleman to clarify his distinction between production and productivity. My right hon. Friend dealt with productivity, but the right hon. Gentleman is giving us production figures.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I was giving the production figures, yes, but the productivity figures show exactly the same thing. Productivity rose nearly twice as fast under the Labour Government as under Conservative Administration.

I hope that the Government will tell us what prospects there are for stopping this stagnation in production, with the very serious oil position affecting industry, but I do not think that there is any need to argue that objective any more. We all agree that we need more production.

The need for capital investment as well is accepted, but what about full employment? Is there complete unanimity in the House on the need for maintaining full employment? Over the past year the numbers of unemployed have increased by 80,000. That was up to December. On top of that, another 50,000 people have gone out of employment altogether. That is a worsening in employment of about 130,000.

We have not yet the figures for January, though I imagine that the Minister of Labour now has those figures. I hope that he will tell us frankly what they are, because there are a lot of rumours, which our own observation will confirm, that in January unemployment has shown an alarming increase over the December figures.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Yes, though it is difficult to get statistics of that. As I say, I hope that the Minister of Labour will give us those figures.

If the Chancellor were here, and not in Paris, I would ask him whether he was satisfied; if this increase in unemployment has gone as far as he wants it to. Does he want it to go further? We have every right to know this. Many of us saw the Chancellor stand aside when Lancashire was plunged into depression. We heard him on the car industry last year. He frankly admitted then that short-time working was, in part at least, the result of deliberate Government policy.

In the Budget debate he used some very ominous words. Referring to unemployment and short-time working, he said: … there is no case whatsoever for dropping or mitigating the measures which we have introduced. It is our belief that they are beginning to work, and we intend that they should do so. If men are to change from one job to another there must at some stage be some redundancy somewhere, and we should not be shocked at our own success in this aspect of economic policy."—[OFFICIAL REPORT, 18th April, 1956; Vol. 551, c. 1045.] "We should not be shocked"—he sounded positively delighted. Is he satisfied with the success that he has had in achieving redundancies? Does he think of what it means in terms of the thousands of families affected? Is that what he means by the "Opportunity State"? I hope that the Ministers will tell the House—

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

Does the right hon. Gentleman really think that the last few minutes of his speech contribute anything to helping the people of the country at this time, and especially to helping the motor industry at a moment in its history when cool heads are required? The sort of thing that he is now saying can have only the opposite effect.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I should like to think, Mr. Speaker, that any words of mine could help the motor car industry in its present plight. The only thing that can help the industry in its present plight is action by the Government, and that we have not had. Over a period of years we have warned the Government of the effects of their improvidence in allowing the motor car industry so lightly to lose its export markets.

Another of the objectives called for in our Motion is to … stabilise prices and improve the position of old-age pensioners … That; surely, needs no arguing here. The old-age pensioners, who had an increase in April, 1955, have since had nothing. They are the forgotten men and women of this Administration. Yet the Lord Privy Seal, at the Tory Party Conference at Bournemouth, in October. 1955, said: It will be, and must be, the first aim of our Government to look after those on fixed incomes. What has the right hon Gentleman done for them since? What have the Government done for the old-age pensioners since that time? There has been no increase in the basic pension; there has been an increase of a measly 2s. 6d. in National Assistance. Since then, all we have had is the prescription charge—the meanest blow that even this Government have levelled at the old-age pensioners—to save £25 million. That does look like being one of the very few economies of the last Chancellor that will stick.

Here we have the big difference between the parties. The Tory attitude is that when things are tough everyone must take a step down the ladder, as in the famous Will Dyson cartoon. We, on this side, say that the harder things are, the tougher they get, the greater the need to help the old, the sick and those in greatest need. We therefore call for new policies to stabilise prices, and a quick and ready response to the needs of old-age pensioners.

When we ask for new and appropriate policies to do all these things, we accept as the Opposition, as the alternative Government, an obligation to put forward constructive alternatives. But first, of course, we must ask: what is the Government's objective? Are they aiming at expansion or at the grim restriction of the credit squeeze and stagnating production? Do they want higher production, or are they scared that if we get higher production once again there will be a new import crisis? Have they a policy for export?

We remember the success of the export drive under Sir Stafford Cripps, when Britain led Europe and did not lag behind it as it has done for the past few years. It meant, of course, control and priorities, but the Government's attitude is a rather general sort of control. By blunt, not selective, working of the credit squeeze they hope that if they squeeze industry tightly enough, somehow, somewhere, something will be squeezed out for export. They are treating British industry as if it were a tube of toothpaste.

We say that they should get back to the export drive. They should call industries together and give them targets and see that they are achieved. They should control, if necessary, the amount of materials sold on the home market, and certainly control scarce imports which cause problems for the country when there is a boom in the home market. This means selective controls. The issue between the parties is not between controls and no controls. We have controls today under the credit squeeze, only they are operated by the unfortunate bank managers.

Secondly, we say that we must use all available weapons to stimulate capital investment, not merely to expand its volume but to see that it expands in the industries where national interest requires it—in exports, in capital goods, and in basic industries, and not in the expanding industries that we have had for the last few years, advertising, soft drinks and petrol distribution.

Having said that, we must say what weapons must be used. First, there is the Budget. The Chancellor should be preparing his next Budget. Last year's calculations went badly wrong and all the Government's pledges in the last two Elections to reduce Government expenditure have, of course, been utterly falsified. Government expenditure from 1950 to 1955, we are told by the Treasury today—excluding payments out of the National Insurance Fund—has increased by £1,046 million a year, an increase of 30 per cent. The Government were elected on their pledges to cut out waste in Government expenditure. The President of the Board of Trade was telling the country how they were going to cut Government expenditure by £700 million and that no one would feel a thing.

The Chancellor of the Exchequer is framing his Estimates. He is facing a big rise in Government expenditure, and not only due to Suez. There are rumours that he will make slashing cuts in the social services, especially in the Health Service, and that he is going to introduce hospital charges. We must warn him very strongly against any policies of that kind. We are told that defence cuts are coming and that there is a fresh outlook in the matter of defence.

In one respect, perhaps, the Government are learning at long last and at heavy cost. The Prime Minister, we know, had a very expensive education—Eton and Suez. It cost the country £300 million or £400 million, but it is a small consolation to set against his expensive education that the Government have learned that we can no longer go it alone and that lavish spending does not of itself give efficient defence, and that there can be no military strength if the economic basis of the nation is weak.

What will be done with the savings achieved from defence? The first priority must be to strengthen capital investment. Is it Government policy that capital investment should go up or go down? We have asked that of them many times. In 1954, we had the investment allowances and the Lord Privy Seal's call to "Invest in Success". Then, when investment rose, we had panic cuts in essential investment and, a year ago, a suspension of the investment allowances. Now, capital investment is falling. Do the Government want it to go on falling, or do they want it to rise again? The Minister of State, Board of Trade, when he was Economic Secretary, had some very pertinent questions from us on this subject. We pressed him to say whether he wanted capital investment to go up or go down. His years of forensic experience enabled him to dodge the question, but in the debate on 20th December he committed himself. He used these words: … we wish to advance capital investment in industry, but we wish to advance it in a discriminating way and in those sectors which favour the country's balance of payments position."—[OFFICIAL REPORT. 20th December, 1956; Vol. 562, c. 1598.] We agree, but what does that mean? It means controls. It means a selective policy, restoring investment allowances, with a positive bias in favour of essential investment.

The difference between the two parties seems to be that under the Conservatives the idea is that by a broad credit squeeze and the lurchings of the Bank Rate the whole economy is either pushed forward or held back. It is all either full-brake or full-throttle and no use of the steering wheel. We say that we should use all the weapons available—the Budget, monetary policy, physical controls, public industries and purposive public spending, to hold back the inessential so that we can give the green light to the essential. Exports, capital goods, atomic energy, the road programme, oil tankers, and the rest need to be expanded. All these should be pressed forward positively while holding back ruthlessly if necessary on less essential industries.

This means controls, but, of course, the Government have so far refused to use them. We have had a free for all in which the Chancellor said that anybody who wanted to build petrol stations should be free to do so. We asked him to hold them back. I hope that he is pleased with all his petrol stations today. There we have the difference between the two parties, the blunt, global control of the party opposite, hitting essential and inessential alike, and the selective purposive control that we advocate, holding back the inessential to clear the lines for the essential priority programme on which the fibre of the country depends.

I have stressed the rôle of the public sector which is much more amenable to Government policy than is the private sector. One of our arguments for public ownership is that the private-enterprise steel industry planned its capacity on far too cautious an estimate of what was required. I must refer to one part of the public sector which is facing the danger of heavy redundancies, that is the Royal ordance factories. We rejoice in the prospect of arms cuts, but do these things always mean a danger of unemployment? Must we always underline the doctrine that private-enterprise Toryism can achieve full employment only when we are at war, preparing for a war or recovering from a war?

The Tory attitude towards the Royal Ordnance factories, where there are 40,000 workers, is to dispose of them to private enterprise, or, if they cannot do that, close them down. The Minister said that there were no plans for their changing over to the manufacture of civil goods on a large scale. Why on earth not? We say, "Use them, on a basis of full employment, to make the essential tools of reconstruction, the investment goods which are needed at home and abroad."

Some years ago, my hon. Friend the Member for Oldham, West (Mr. Hale) and some of my hon. Friends produced a pamphlet called "Tanks into Tractors". This is the opportunity for the Government to follow this policy now. They should turn over the Royal Ordnance factories and any redundant aircraft factories, as we did, to make the munitions of peace, to make good the deficiencies in our essential industries, and to pour out investment goods for the Commonwealth and the under-developed areas of the world. We say to the Government that if they do this the nation can reap a dividend beyond all money and all price. These are the positive policies we should have been following, instead of the sterilities of Suez.

New and appropriate policies are needed in the world market to develop Commonwealth trade by bulk buying and long-term contracts. We need to look to East-West trade too, in particular by ending the senseless boycott on trade with China. We need new and appropriate policies—to introduce fair shares, and more positive policies for the social services, education—especially technical education. We need fair shares in our tax system, too, by ending the system of fiscal privilege on the lines we have advocated from these benches before, so that taxpayers are equal before the law, so that by widening the tax base, we can build a fairer and more orderly structure of taxes upon it.

These are some of the new and appropriate policies we call for, and we must ask what hope is there for them in this sterile and self-satisfied Government? All we have had from the Government so far is a series of pompous platitudes and slogans. In place of the Welfare State they seek to create, they tell us, the "Opportunity State." The first reaction of many of our fellow-countrymen to this was to take the opportunity to emigrate. Denied an Election, they are voting with their feet.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

The right hon. Gentleman's party did it last time. You complained of that. That is what Nye Bevan said.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I will give the hon. Member our understanding of what this "Opportunity State" is, because we have had no clear account from the Government. The "Opportunity State" is very much like the Prime Minister's Premium Savings Bonds scheme—a few get the big prizes, rather more get smaller prizes and the rest of the community are lucky to hold on to what they came in with. And, too, like the Premium Savings Bonds scheme, it was specially designed to appeal to the Surtax payers. That seems to be the "Opportunity State."

Apart from stunts of that kind, we must ask whether this Government can give the lead that is required. In the debate on 12th November, I said: The Government have not only lost the right to govern … they have forfeited the power to govern. …"—[OFFICIAL REPORT, 12th November, 1956; Vol. 370, c. 589.] —if only because they have wantonly thrown away the co-operation of the trade union movement in economic policy that has been the great asset of every Government in this country since the war. That is as true today, after the Government changes, as it was in November.

Since the new Government was formed its members have been busy, with the willing aid of large sections of the Press, putting across a gigantic confidence trick. The suggestion is that everything that has been bad and wrong and harmful in the past few years can be quietly and tacitly laid at the doors of those Ministers who have gone, and that all that is good will emerge from the words and the actions of the right hon. Gentleman and his reshuffled colleagues.

We have pressed in vain for a statement of policy. It is true that the Prime Minister told us that his defence policy will be one of trial and error, but has not that policy cost enough already? He was more forthcoming in his speech to his constituents. The right hon. Gentleman promised them power, authority and a real sense of inspiration. [An HON. MEMBER: "That is Charlie Hill."] No, this is the Prime Minister. He went on to say: It was not going to be at all easy, but there was something to be said for buying shares at the bottom of the market. The Prime Minister has the endearing habit of always proclaiming what a mess he has inherited from whatever colleague he has just succeeded.

Then we had this positive lead from the Prime Minister: If things should improve, the party and the Government would get the credit. But if they got worse, well then we are done in anyway. There, Sir, is "leadership and inspiration" for you. Only last week we read in the Press that the right hon. Gentleman addressed the 1922 Committee on their annual works outing to the Savoy. He had more oratorical pearls to cast before his supporters. Let us take this one. We read this in the Daily Express:On Suez, Mr. Macmillan urged the Tory back benchers to adopt his own policy of wait-and-see. There we have it—a firm and masterly policy of decisively waiting upon events. Neither in international affairs nor in economic affairs can this country continue to wait upon events. Living, as I have said, on borrowed time, we have to use those borrowings of money and of time to work as we have never worked before to restore our economic strength. In our view, for over five years we have been wasting our substance in economic frivolities at home and a sterile imperialism abroad. Let us hope that this debate will begin the task of bringing forth those new and appropriate policies which alone can save this nation, and enable it once again to give to the world the lead it seeks—and, so far, seeks in vain.

4.46 p.m.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

The right hon. Gentleman the Member for Huyton (Mr. H. Wilson) started his speech by a reference to the actions of my right hon. Friend the Chancellor of the Exchequer. My right hon. Friend asked me to apologise for his absence. As the House knows, the present meeting of O.E.E.C. is a very important one, and it would have been wrong of my right hon. Friend not to attend it. Incidentally, if this debate had not come off, I should have been accompanying him to Paris. My loss was offset, at any rate partially, by hearing what was, I thought, a very competent and entertaining speech from the right hon. Gentleman.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

Well, it had information of a kind in it.

It is rather unusual to have an economic debate at this time of year because it is so near Budget time, when the Treasury is necessarily in a state of gestation and very nervous indeed about anything premature happening.

I will start by saying a word about the background against which this debate is being held. The policy of restraint which we are now pursuing is the policy we have pursued for nearly two years, under both my right hon. Friend the Leader of the House and under the present Prime Minister. The reason they pursued that policy, as the right hon. Gentleman rightly said, was that we were running into difficulties over our balance of payments. There was very strong pressure in the labour market, we were short of coal and of steel, and both consumption and investment were rising rapidly at the same time. The pace had got too hot and, therefore, restraint had to be imposed.

I want to emphasise once again—and here I agree most strongly with what the right hon. Gentleman said—that the balance of payments is the most important consideration of all. Measures were taken, and these, of course, included the Bank rate, the credit squeeze, the more active use of the Capital Issues Committee, restrictions on hire-purchase, higher company taxation, higher indirect taxation, and so forth.

This debate and Motion deal mostly with the consequences of that policy, and I will attempt to answer all the points, or practically all, made by the right hon. Gentleman. However, there is one aspect of the policy itself on which I will say a word or two, because it has been so much in the news in these last few days. I refer to the monetary policy. We had the Bank Rate reduction last week and a funding issue announced yesterday evening. Monetary policy is not a very rewarding subject on which to speak, and I will not detain the House long, but I hope hon. Members will bear with me because there are one or two things worth saying about it.

Treasury Ministers at this Box have often said that our monetary policy must be flexible. It is a very popular bromide. The recent change in the Bank Rate has, I hope, corrected two common misconceptions. The first is that a change in Bank Rate must necessarily be a signal for a change in policy, and the second is that Bank Rate is the only method of monetary control. Of course, it is possible to have Bank Rate used as a signal, and I would say that the increase to 5½ per cent.—the near-crisis rate of 5½ per cent.—last year was a signal, and was intended to be a signal.

On the second point, the change in Bank Rate may be only a means to the more efficient use of the monetary weapon. The Leader of the Opposition, when my right hon. Friend announced the change in Bank Rate in this House last Thursday, asked how it could be thought that a lowering of Bank Rate would lead to tighter monetary control. As my right hon. Friend very correctly said, the rate is not the only thing that matters. There are the open market operations as well.

As the House knows, before we changed the Bank Rate, the Treasury Bill rate had gone down to 4½ per cent. and, therefore, the 5½ per cent. Bank Rate was ineffective. There were three courses open. First, we could have done nothing and gone on with an ineffective Bank Rate. Secondly, we could have made the Bank Rate effective by putting up the Bill rate again. This would have resulted in a fall of long-dated Government securities and we should have brought to an end the very satisfactory amount of funding which we have been able to carry out over the last few weeks and months. The third course was to reduce the Bank Rate, make it effective, and continue the active conditions in the gilt-edged market which have been of such benefit in reducing the liquidity ratio of the banks and in reducing the volume of Treasury Bills. It was the third course which was chosen by the Bank, and actually it was arrived at after con- sultation and after approval by my right hon. Friend.

I think it is necessary to realise how important this Government funding policy is. The Prime Minister, in his Budget speech when he was Chancellor of the Exchequer, laid it down that its purpose was that Government borrowing should be successfully absorbed by the public during the year; that is, it should draw in real savings and not depend on inflationary finance. This is particularly vital, and I would draw the attention of the House to it, because Government borrowing covers the raising of capital for all the nationalised industries, which do not finance themselves to any large extent by internal savings, as, of course, is done in private industry. I am not criticising, but merely stating the fact.

On the last full figures available for 1955, the fixed capital formation by the public corporations, including the nationalised industries, amounted to £575 million, and the amount of internal savings to set against that sum was only £187 million. This poses a fairly formidable problem at a time when so many investors, both private and institutional, are tending to put larger proportions of their funds into equities. The fact is that the Government is forced to borrow and should borrow on long-term a large sum every year, and that is why I have said that this funding is so necessary. Of course, it is not only Government funding that we can use, because there is the very valuable co-operation of the National Savings movement, but funding is vital.

Therefore, it is appropriate that at this moment a new Funding Loan has been announced of £300 million of Treasury 3½ per cent. stock, maturing in 2004—which is some time on. We believe that the measures we have taken in reducing Bank Rate will enable an active and profitable gilt-edged market to continue, and that we shall make progress in reducing the liquidity of the banks.

I shall not speculate about future interest rates. I think it would be highly inappropriate to do so, but I would end this passage on the monetary situation by quoting one remark made by my right hon. Friend when he announced the Bank Rate change. He said: … we intend to continue to make full use of interest rates to discourage spending and encourage savings."—[OFFICIAL REPORT, 7th February, 1957; Vol. 564, c. 606.]

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Before my right hon. Friend leaves that point, may I ask him this question, which I think is a fair one to him and an important one for the country. He has said that Bank Rate was reduced because the Bill rate had fallen so far and that in order to make Bank Rate effective it had to be brought down to the level to which the Bill rate had fallen. Is it fair to reason from that, without asking him to make any forecast or promise, that it will be general policy that if the Bill rate continues to fall substantially the Bank Rate will continue to follow?

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

I think my hon. Friend would be very unwise to draw any of these conclusions. The fact of the matter is that the Bill rate is not outside the realm of Government policy.

What I was about to talk about was our foreign exchange position. The most important reason for the squeeze was to help our foreign exchange position. I thought the right hon. Member for Huyton spoke very well indeed on our foreign exchange position. It is obviously vital for us to maintain that and to fortify our reserves. We are a great trading nation, and if we are to have stability and progress at home it is absolutely vital that we should have a stable medium of exchange. Not only is it vital internally, and not only are we a great trading nation, but we are also a great centre of finance, a great banking centre, and we hold balances for many countries all over the world, particularly for the Commonwealth. That reason is sufficient of itself to make us extremely sensitive to any threat to the strength of sterling.

What we want to have in order to obtain a sound position is not only a proper balance on our current trade, but a sufficient surplus, not only to cover long-term lending abroad, but also to build up our reserves or to repay our debts. A current surplus by itself is not sufficient. As the House is very well aware, the reserves of this country are now and have been ever since the war relatively small, compared with the structure of trade which they have to support. The purpose of our task is to build up these reserves. The purpose of the squeeze was to do that, and a great deal of progress has been made since 1955.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

As the figures for the first half of last year show, progress was made. Exports rose, imports remained stable and we were able to pay off a certain amount of debt. We have not got the full figures for the second half of the year yet, but I do not think there is very much doubt that our trading position remained basically sound. This, of course, is the difficult time of the year, and there were the beginnings of difficulty over oil during that period, but basically the trading position remained sound.

What we had to face in the second part of the year was a banking crisis caused by the events in the Middle East. We got over that, as the right hon. Gentleman said, by mobilising our reserves and putting them in the shop window, and we are very grateful indeed for the cooperation we had from both the International Monetary Fund and the United States of America in doing so. The effect of that was to put us on an even keel again.

However, the point—it is a very important one—is that we should not have weathered that storm so easily if our trading position had not been basically sound. I think it would have been impossible to face a commercial crisis and a banking crisis simultaneously. Fortunately, owing to the steps that had been taken, we were able to weather the storm.

The present Prime Minister said on 4th December that the best forecast he could make was that we should be in balance for the year ending 30th June. Now—two months later—we calculate that our position will be rather better than that. It is too early to make precise forecasts, but we think that we shall end with a small, but by no means unsubstantial, surplus rather than all square.

As I have said, we have built up the reserves and we have weathered the crisis. What we now have to do is to rebuild and earn a sufficient surplus not only to cover our trading balance and our loans abroad but to build up a stronger liquid position in the centre here.

The right hon. Gentleman mentioned the balance of trade figures for January. I entirely agree that they are not good. They are caused partially by the dislocations following the closing of the Canal and the various consequences to shipping following from that. In one respect his figures were not quite right. He said that if one averaged the last three months one would notice that there had been a considerable deterioration. I do not think that is true. If one compares the figures for the last three months with the figures for the preceding ten months, one sees that in the last three months both imports and exports were up about 2 per cent., and the gap in the last three months was £53 million whereas in the previous ten months it was £52 million. Consequently, there is no very great difference there. I think it is too early to suppose that this indicates any change in the trend.

Photo of Mr Donald Chapman Mr Donald Chapman , Birmingham, Northfield

If, as we expect, the import figures continue to rise in February and March after the backlog arising from the delay, will not later import figures be shown to be much higher? Is the right hon. Gentleman allowing in his present calculation for the fact that he has several months of low imports and only one of high imports? Surely, if he takes the figures for three months hence, when he has several months with high imports, the picture will look different.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

Naturally, these matters have been taken into account in making the calculations. The hon. Gentleman must wait and see how they turn out.

There are plenty of difficulties ahead, but there is no doubt that basically our trading position is better. The right hon. Gentleman said that it might be true that the basic trading position is better but that this has been purchased at the cost of lagging production and lagging investment. The right hon. Gentleman made that case strongly. I want now to try to answer his point.

The right hon. Gentleman talked about rigor mortis in the production index. The stability of the production index does not mean that everything is staying exactly as it was previously. The stability masks a number of changes. We know, for instance, that there has been a considerable fall in motor vehicle production. There has been a fall in the manufacture of motor accessories. There has been a fall in the production of certain consumer durable goods. On the other hand, there has been expansion in other industries. There has, on the whole, been expansion in the investment industries. There has been some recent expansion in textiles. There are still many industries under pressure. Steel is very short indeed, and we could well do with more of it. We are also short of many kinds of skilled men, such as technicians and draftsmen. I think it would be worth while to give the House one or two figures to illustrate what I mean.

I would again make the point that simply to say that production is static can be very misleading. The index of production is an aggregate composed of a lot of different parts, some expanding, some static and some contracting. The object of production is not to produce the largest possible quantity of things; it is to produce the kind of things that are needed. The best evidence of this is that we have been producing more for export.

Let us look at the internal changes. We all know that the vehicle industry has been the chief sufferer this year, and for the first ten months of 1956 its index of production was about 161 compared with 171 for the same period in 1955. In building and contracting, on the other hand, there was a very substantial increase between the same periods, from 114 to 122. We had fewer cars and lorries but more factories and office buildings, which is not altogether undesirable.

In the engineering, shipbuilding and electrical group there was a fall in total from 151 to 148, but this conceals an increase in output for home industry and for export, while there was a fall in the output of consumer durable goods. The chemical and allied trade group rose from 176 to 183, and textiles and clothing rose a little from 116 to 118. Therefore, it is perhaps a little inaccurate to describe this as rigor mortis. What has happened is that some very necessary adjustments have been made.

The export demand for our goods is still very good, and it would be the greatest possible mistake if we were to start stimulating home demand before we had satisfied export demand. As the right hon. Gentleman said, if we want to increase production here at home, we have to have more imports, and if we are to have more imports, we have to pay for them by exports. Therefore, I think we can say that it is most misleading simply to describe the stability of the production index as stagnation.

That brings me to the question of investment, on which the right hon. Gentleman spoke with great fire. It is easy to talk nonsense about investment. Hon. Gentlemen opposite should reflect on the fact that investment in this country is at the highest point in our history. It is estimated that investment in 1956 was no less than one-third higher than in 1951 when hon. Gentlemen opposite were in power. Investment as a proportion of the gross national product has been increasing steadily for a number of years. Fixed investment as a proportion of the gross national product was 14 per cent. in 1951 and 16 per cent. in 1956, and those figures can be compared with only 12 per cent. in 1938.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Since the right hon. Gentleman has just said that we must look not at the overall picture but at the distribution, is it not a fact that the biggest single increase in investment since 1951 has been in the motor car industry? Has he not been telling us that that is one of those which he wants to contract?

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

It may possibly have occurred to the right hon. Gentleman that from time to time there are fluctuations in trade. One would have to be a very remarkable prophet to get all the answers right and, judged by the record of hon. Members opposite when in power, they are among the worst prophets ever known.

The increase in physical terms was very rapid. In 1954 it was 9 per cent., and in 1955 it was 8 per cent. It got too rapid and measures were taken to slow down the increase. We do not yet have full figures for 1956, but in the first nine months of 1956 investment was 3 per cent. higher than in the previous year. The point I want to make is that investment has been increasing all the time and is in fact still increasing. There is no question of it having been decreased, nor do we see any reason whatever to suppose that investment will decrease next year. As the House knows, we now get returns from a number of private industries in order to check their progress. Those returns indicate that there is not likely to be either a large increase or a large decrease in private capital formation next year.

Photo of Mr Donald Chapman Mr Donald Chapman , Birmingham, Northfield

How does the right hon. Gentleman square that with what is in the Treasury Bulletin for Industry, which says that the rate of increase is expected to flatten out in 1957? It goes further and says that factory provision by area in the first nine months of 1956 was one-quarter lower than a year earlier. How will he get expanding investment with that sort of thing happening?

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

I have just said that it flattened out. I said that our researches in private industry show that there is no strong reason to suppose that in total there will be a big variation either way. There will be some decrease in housing, but all that will be more than compensated by increased capital expenditure on certain basic services and basic industries, for example, the building of power stations, including the starting of some atomic power stations, and the great re-equipment scheme for the railways which is just beginning to get under way.

We see no reason at all to suppose that there will be a decrease in investment next year. In fact, such signs as we have go to indicate that it is much more likely that there will be a slight increase in total investment. When talking about investment, it is worth remembering that if one tries to invest more than one's savings one gets into inflationary trouble again. Many of the capital goods industries are working near the limit of their capacity. There is, therefore, also a physical limit to the amount of investment which can be done.

That brings me to the topic of unemployment. My right hon. Friend the Minister of Labour will, of course, be dealing fully with this when he comes to wind up the debate, but I thought it would be only fair to the House—and he also thought so—if I gave the latest unemployment figures now so that they can be used, if anyone wishes to use them, in the subsequent debate. It is clear that the restrictions on supplies of oil and petrol were beginning to affect employment by the end of November. In the previous two months, unemployment had been increasing at about the usual seasonal rate and unfilled vacancies had been falling at rather more than the usual seasonal rate. From November to December, however, a time of the year when there is usually little change in the level of either, unemployment rose by 32,000 and vacancies fell by 21,000. Short-time working, which had fallen in the second half of the year, increased considerably, particularly in the motor vehicle industry.

My right hon. Friend the Minister of Labour said in the debate on 20th December that he expected some temporary increase in unemployment. In all the circumstances, it seemed inevitable. The figures which we now have show that the increase has, in fact, taken place. On 14th January, there were 383,000 registered unemployed, of whom 343,000 were wholly unemployed. That represents an increase of 75,000 in the number wholly unemployed over the previous month. Outstanding vacancies fell in the same period by 24,000 to a total of 255,000.

In considering these figures, it should be borne in mind that this is a time of the year when, for seasonal reasons, a substantial increase in unemployment of the order of 50,000 is to be expected. This year's increase is bigger than in previous years, but the January total is only slightly more than it was in the years 1949. 1950 and 1952, and is less than it was in 1947 and 1953. It is only 30,000 more than the average for the last five years, and the rate of unemployment is still only 1 8 per cent.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

What was the corresponding rate of increase between December and January of last winter?

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

I have given the average figure of 50,000. My right hon. Friend does not recollect the figure. We will let the right hon. Gentleman know.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

Is it not a fact that in the last two months, December and January, unemployment increased by 156,000?

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

It would be better if I left this subject to my right hon. Friend. He will deal with it. It is his Ministry and I do not have all these figures in my head. I am very sorry.

Having dealt with that, I should like to turn to the future, about which the right hon. Member for Huyton had many things to say. He talked about new and appropriate policies. The word "new" should be marked, because I should like to consider what his policies were. With these policies he wanted us to do a great many things, rebuild the reserves, increase investment, secure full employment, stabilise prices, and improve the lot of the old-age pensioners and those living on fixed incomes. Nothing could be more desirable than all those objectives, but, as the right hon. Gentleman knows very well indeed, in the short run they are conflicting.

For example, if we had an immediate and large increase in investment at home it would be prejudicial to our reserves. We could not both increase our reserves and have large new investment simultaneously. We cannot have everything at the same time. The question is to strike a balance. As the Prime Minister said in the Budget debate, we cannot afford to run our economy flat out with more jobs than men to fill them, easy profits at home and rising costs. To attempt to do what was implied by the right hon. Gentleman, to have our cake and eat it, is bound to result in a condition where we try to run our economy flat out and get into a complete mess. As I said, we have to strike a balance.

It is not an easy problem to solve. It is fair to say that no country in the free world has succeeded in having full employment—by that I mean employment at the sort of level I have just announced—without a constant threat and danger of inflation. As the right hon. Gentleman remembers very well, hon. Members opposite did not altogether succeed in solving the problem themselves. During the last year in which they were in, office, with all the controls in the world, including import controls, with food rationing and with bulk purchase and with exhortation—the right hon. Gentleman is very keen on exhortation—and austerity, prices went up far quicker than they have ever done under the Conservative Government and gold went pouring out. So we can all agree that there are certain difficulties in striking the balance perfectly correctly.

Photo of Mr John Cronin Mr John Cronin , Loughborough

Surely, in fairness to the House, the right hon. Gentleman should give the whole picture. In those days world prices were rising; they are now falling.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

Prices go up and down. I am saying that, with all these aids, the party opposite did not find it very easy to strike the correct balance. It is not a very easy problem.

The right hon. Gentleman once again rammed Western Germany down our throats. It is quite true that Western Germany has made a most remarkable recovery. She has been assisted by the fact that she has spent less than we have upon defence. The point is that the twin pillars of the German economic recovery have been no physical controls and very high money rates, and brilliant success has been achieved. It compares very favourably with what has been happening in Eastern Germany, whose economy is subject to all the controls in the world, but which appears to be approaching something like disaster. All I can say is that the methods by which Western Germany has achieved her success have been very different from those advocated by right hon. Gentlemen opposite.

The Motion refers to "new and appropriate policies". What we had from the right hon. Gentleman was a list of all the things his party did when it was in office—and they all failed. There was not a single new or appropriate idea among those he put forward. If we went back to those ideas they would fail again. All that the right hon. Gentleman is offering us is a return to the treadmill. I believe that our policies are appropriate and are working, because they are basically sound.

The credit squeeze and all that goes with it is unpleasant, unpopular and politically damaging, whereas the cures for too much disinflation, if it were to occur, would be simple and extremely pleasant. I should like to repeat some of the words which the right hon. Member quoted from the Prime Minister's Budget speech, when he said: … I would rather err on the safe side. A misjudgment on the side of over-optimism might have the gravest results."—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 873.] He went on to point out that if we have too much disinflation, the cures are pleasant, easy and satisfying. We abandon the squeeze and lower the rate of taxation, both direct and indirect, and so forth. But the fatal thing would be to relax too soon. To do that would be to gamble with the future of our country and the employment of our people. We all want expansion, and if ever there was an expansionist it is my right hon. Friend the Chancellor of the Exchequer, but we cannot go faster than we can afford. To carry on with our policy may well be unpopular and unpleasant, but however unpopular and unpleasant it is, we intend to do our duty and carry on.

The Motion moved by the right hon Gentleman was a political exercise of a very familiar type. I ask the House to reject it and to accept the Amendment standing in the names of my right hon. Friends and myself, which reaffirms and supports the policy of Her Majesty's Government.

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: affirms its confidence in the economic policies of Her Majesty's Government and its support for all necessary measures designed to deal with the economic problems facing the country".

5.24 p.m.

Photo of Mr Desmond Donnelly Mr Desmond Donnelly , Pembrokeshire

There were really three Economic Secretaries to the Treasury speaking this afternoon. First, we had the right hon. Gentleman reading us lectures on monetary policy. That, I felt, was part of the correspondence course which the right hon. Gentleman is now in the process of receiving. [An HON. MEMBER: "It is his subject."] I am most interested to hear that it is his subject, because, if so, I feel that it must have gone a little rusty. I was specially interested in his remarks about the Bank Rate and the Bill rate, and to know how the Bank Rate came down with the Bill rate. When his hon. Friend the Member for Louth (Mr. Osborne) asked the logical question, the right hon. Gentleman said that it did not follow that the Bank Rate would follow the Bill rate in future. If that is his subject, I hope that he has some better subjects in future.

The second Economic Secretary showed himself when the right hon. Gentleman was without a correspondence course and was seeking to give an answer to my right hon. Friend the Member for Huyton (Mr. H. Wilson). Then, finally, we had the Economic Secretary talking on the platform in his propagandist days, and using some of the old stuff which—if he does not mind my saying so—was below the level needed in any consideration of the problems facing us.

It is important, in looking at the very grave economic situation which is facing us, to consider it in its historical perspective. If we look back for thirty or forty years, we will see that during that time our economic position has shown a catastrophic decline. If we consider our economic and political position in 1918 and compare it with the situation today, we can appreciate that seldom in the history of any great people has there been a more rapid decline. There was an agricultural decline; the Sankey Commission's proposals in regard to the coal industry were shelved; the mining industry was dismantled, and coal miners left the pits; British industry languished and our skills declined. Those are years the British nation can never replace which we are having to pay for now. In those years the world passed us by.

Then, after all our efforts and our wealth had been expended in the Second World War and steps were taken to try to recapitalise our industrial society—when Sir Stafford Cripps was at the Treasury—no effort was spared by hon. Members opposite to denigrate his attempts to achieve this at a time when it was essential to do so. Ever since the Conservative Party have been in office there has been a consistent air of champagne complacency about the descriptions by right hon. Gentlemen opposite of our economic situation.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The port and the pheasant.

Photo of Mr Desmond Donnelly Mr Desmond Donnelly , Pembrokeshire

Yes, as my right hon. Friend says, the port and the pheasant. There has been an air of unreality. The Lord Privy Seal boasts about the possibility of doubling our standard of living in twenty-five years. That is a relative term. The Americans are doubling it in eighteen or nineteen years. Even the French are doubling it in fifteen years. The Russians are doing so in eight or nine years, and Western Germany in seven or eight. While the Lord Privy Seal and the Government Front Bench have been asking us to admire ourselves in the shaving mirror, the world has been passing us by.

When we consider the historical perspective, the position is far more grave than any of us has attempted to evaluate in the House up to now. I urge the Minister of Labour to address himself to that point. The real position today has been acutely pointed by the Suez crisis, particularly because it has drawn attention to the degree to which our economy depends upon the fuel reserves of the Middle East, and how narrow is the balance between disaster and success for the British nation in the next ten or fifteen years.

After having inherited a preponderance of power in the last thirty or forty years, the Conservative Party has brought us to the situation where the British Empire as we knew it is now dead. The fact is that the British Tory Party has killed it. [HON. MEMBERS: "No."] Hon. Members may not like it, but they have to learn the contempt in which they will be held by history in the future. The real point is that we are now at the end of an epoch. Things will never be quite the same again.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Surely, the hon. Gentleman is not being fair to himself or to his knowledge of history. He surely does not deny that nationalism throughout the world would in any case have grown in the last thirty years, and that, because of that, the shape of the old British Empire had to change and that it had nothing to do with the party in power. The hon. Gentleman is not denying. I am sure, that nationalism was an essential development in the second half of the nineteenth century.

Photo of Mr Desmond Donnelly Mr Desmond Donnelly , Pembrokeshire

I am much obliged to the hon. Gentleman for saying what we on this side of the House have often said in the past about India and Burma and the freedom of those countries. What I meant to say—and I ant sorry if I did not make myself clear—was that the economic influence of this country has declined so substantially that the old British imperial and economic power is now dead. Right hon. Gentlemen opposite have presided over its decline. We are now at the end of an epoch which, as I said, means that things are never going to be quite the same again.

In effect, we are seeing the death of the ruling class as it used to be. We are seeing almost the last Etonian administration that we are likely to see in this country unless it is an Etonian administration of descendants of the hard-faced men, as the hon. and gallant Member for Arundel and Shoreham (Captain Kerby) described them. I am not, like Malcolm Muggeridge, going to say that it perished on the beach at Golden Eye. It died because of death duties introduced by William Harcourt and an incredible series of political ineptitudes culminating in the Suez situation.

The second thing that has happened is that not only has the old ruling class died but the old working class is dissolved. People no longer regard themselves as members of the working class as they used to do. They are losing their veneration for what is virtually the moth-eaten squirearchy and are feeling a much greater sense of power. They expect a much greater return for their endeavours.

I believe that when historians come to look back, these changes will be evaluated as of equal importance as the ending of the feudal system and with effects no less far-reaching and profound. We have to realise that much of the apparent frustration and lethargy which appear to afflict our society at the moment arise from the fact that we are at the end of one epoch and have not yet started on the next, and that the people who are in the old society feel that they are in a rut. That is why they are seeking to emigrate. I think that the desire to emigrate and the restlessness that exists is a hopeful and helpful sign, because it shows that people are not going to be satisfied with the old rut. As I see it, there is hope in these stirrings.

The real question at the moment, in view of these profound social and political changes which are going on, is to what kind of society are we going to change in twenty or thirty years' time. Are we going to be another political and social democracy like Sweden? Are we to go snoring our way to Sweden with Heals furniture and Medici prints for the whole British nation? Or, alternatively, are we to cherish, like the Prime Minister, some illusions of mothball grandeur and to turn the nation into a taxidermist's shop window. Or is there some other function which we can fulfil in the economic society of the world? Can we make any other contribution?

These are the questions which, I think, make it essential for us to look far beyond the right hon. Gentleman's remarks this afternoon. It is essential for us to have people who can look over the top of our present difficulties. Our charge against this Administration is that it is still in the rut, is still thinking of the old epoch and cannot see beyond it.

I do not say that it is necessary for us to emigrate to get out of that rut. If I were in the Chancellor's shoes I would borrow an idea from Canada without emigrating to do so. Very recently there was an account in the Financial Times of the preliminary report of a body called the Gordon Royal Commission. That Commission was set up to look at the Canadian economy and to see where it is likely to be in twenty years' time and to report back to the Canadian Government. The Gordon Royal Commission has produced its first Report, which shows how it thinks things may be going.

We want something like that Commission in this country, because so many of our leaders are so busy going from one appointment to another that none of them seems to have time to think, and it is essential that someone should do some long-term thinking. The kind of questions that we should address to such a Royal Commission would be, first of all, what is likely to be the shape of our economy in the future and to what extent can we mould it. It may be that we cannot mould it very much, that events have gone too far or that it may be very difficult to do so. If that is the case, then let us look ahead and try to see how things are likely to be, so that we can make the best of them. I think that is a defeatist philosophy. If we can mould the future, how far can we mould it and what are likely to be the ways in which it can be done?

There are three facets to any society and to any Governmental approach. The first is the defence problem; the second is the political shape of the society, and the third is the economic shape of the society. If we save on defence we can expand somewhere else, but we have to look at the juxtaposition of all these three aspects of society to see where we are likely to go in the next twenty or thirty years. In particular, we need to assess the proportions of our people that we want to see engaged in defence, in industry, in education, in technology, in research and in the various aspects of Government.

The second question that we should address to any Royal Commission that might be set up is what external and political economic developments are likely to take place, the sort of thing about which the hon. Member for Louth spoke. What is going to be the possible economic and political development in Africa or Asia? What is likely to happen in Europe as well, and what is going to be our relationship to these areas and how are they going to effect us?

The third question is what technological advances are likely to take place—and not only the likely but the possible? And how these are going to affect our economy.

The fourth question we have to address our minds to is how we are going to get the new capital that is absolutely essential to us in order to finance these technological advances of the future.

There are only three sources of new capital. One is personal saving, the second is industrial saving, and the third is public saving. We have all to adopt a new attitude towards capital. Capital is a necessity, not a term of abuse. Capitalism, of course, is another thing, but we have all got to have capital. Personal savings, obviously, have their limitation. especially owing to the limited room for manœuvre available with our fiscal position as it is now. Industrial savings involve larger undistributed profits, and the Government must address their mind to seeing how these industrial savings are used to the best advantage in the national interest.

The third source is public savings. There was a very interesting article by Professor Arthur Lewis in the September issue of Socialist Commentary called "Public Saving versus Private Saving." I commend that article to the Economic Secretary in his future researches tonight, because it gives some idea of the possible use of public resources to expand the vital private industrial production and also to finance the nationalised industries' production as well.

These are the sort of things to which we must address our minds, but, ultimately, there is only one way in which we can increase our capital and that is by saying that in the short run we may have to do without so that in the long run we shall be better off. We must have the courage to say this constantly. There can be no argument about it. It is a question of priorities. As my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) once said, the religion of Socialism is expressed in the language of priorities. That also has to be the religion of the Government Front Benches of the future, otherwise this country will find many of its resources frittered away yet further.

The final thing to which this Government must address themselves—I say this Government because, in my view, the transitory time is limited and room for manœuvre is very limited—is whether our existing institutions—financial institutions, governmental institutions, Civil Service institutions—are adequate for the degree of transitory change now taking place. These are the sort of problems which my right hon. Friend meant when he was talking about the need for new policies for the future. We have heard from the Economic Secretary some good jokes and some little information, but little else. What we require from the Minister of Labour and National Service, when he speaks at the end of the debate, is a sense of purpose and direction. We want to know where the Government are going.

I do not believe that the difficulties are so insurmountable and society in such a rut that we cannot get out of it. But I say to right hon. Gentlemen opposite—this is a feeling which goes far beyond party politics—that there is no evidence in the country that they have any clear idea of how we are to get out of this situation and what people have to do. People want to know what they have to do so that they may give of their best. I heartily endorse what my right hon. Friend had to say.

5.42 p.m.

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

I would say to the hon. Member for Pembroke (Mr. Donnelly) that what people have to do is to earn their own living and that the best thing the Government can do is to allow them to do that with as little restriction as possible. The less we have of exhortation by this Government, or any other, the better. But I do not wish at the start of my speech to create the impression that I am in disagreement with what has been said. I cannot remember any economic debate in which I found myself more in agreement with speakers from both Front Benches. We are getting along, I agree —perhaps the right hon. Gentlemen on both Front Benches are at last learning the value of sound Liberal doctrine.

I agreed with the right hon. Member for Huyton (Mr. H. Wilson) until about 4.30, and by that time I thought he had given a most entertaining and extremely accurate review of the past, without recourse to any of those figures which are apt to mislead and which, I am afraid, the right hon. Gentleman sometimes uses. It was a fair and extremely interesting review of the past. But, as was pointed out by the Economic Secretary, the right hon. Gentleman then sprang upon us the old, "corny" fallacy of Socialist selective controls which have been tried in the past and proved failures. I have a reference in my notes to the fact that in ten years, under Socialist and Tory Governments, Britain has staggered from one economic crisis to another. I was glad to notice that confirmed by the right hon. Member for Huyton. If I remember his words correctly, he said that we must take these steps which he recommended to free us from the crises which have been dogging us ever since the war. It is time that an end was put to this.

The House knows why we have had these crises and what is the answer. No one has yet been prepared to face it. As soon as someone starts to take serious steps to deal with the situation someone else looks at the unemployment figures and says, "This will lead to great unemployment, and we know we must not have more than 200,000 unemployed"—or 300,000, or whatever is the favourite figure of the speaker. That time is past. I do not pretend to know at what figure the economy is stabilised, whether it is at 300,000 unemployed or 400,000 or even more; or, if we became skilful in the handling of the economy for the first time since the war, whether it might be achieved at an even lower figure. It seems to me that it would be well to leave that out of the argument for the time being or, at any rate, to put it lower down in the scale.

Above all, it is important to stop inflation. This is the constant theme that prices are going up—it is in the Labour Party Amendment—that the situation is deplorable; that prices must not he allowed to go up, and that we cannot hold them until we have stopped inflation. I do not know whether we have actually stopped inflation yet or not. There are indications that we have gone some way towards doing so. But I think that the note issue must be a signal, for it is about £120 million higher than a year ago. Nevertheless, if we assume that we are somewhere near holding inflation now, it is obvious that we have to go through a transitional period where, in fact, we kill inflation for good, and great benefits will be obtained for the people of this country when that is done.

Most observers would agree that over the last twelve months the Government have practically halted inflation, not only by the use of monetary weapons, by the Bank Rate, but also by two or three more direct controls of a financial nature; the directives to the clearing banks against lending, the alterations regarding hire purchase and the directions to the Capital Issues Committee.

These have reduced the ability of people to get hold of the extra purchasing power still in the economy. It has been isolated in the banks, but as yet the bank deposits have not been reduced. I was interested when the Economic Secretary talked about recent funding activities. There may have been such activities through the open market operations of the Bank of England, but in fact the credit base is no smaller now than it was a year ago. Therefore, the chief job of the Government in the next twelve months is to reduce that credit base probably by £500 million. Then, without this extra purchasing power, these other financial directives may be done away with one by one. Interference with bank lending will no longer be necessary once the banks have not the surplus to lend. The same applies to hire-purchase restrictions in relation to cars and other things. They could be relaxed as the credit is mopped up by funding operations, and the same goes for those most objectionable controls of the Capital Issues Committee.

I was interested when the Economic Secretary, referring to funding operations, said that this type of thing, credit and monetary matters, was his subject. He will be busy this year. There is about £900 million of Government securities maturing this year which will have to be replaced. There is to be an overall deficit on the Budget which must be offset by long-term lending. There is also the Government funding of about £500 million of bank deposits. So this will be a considerable operation which I do not imagine can be done in less than a year.

This is going to be a year of transition. I suggest that what the Government have to do is to make up their mind that that is going to happen and that it is worth while, even if production stays as it is in a so-called stagnant condition—I do not agree with the use of that word —certainly the index of production figures are unlikely to go up if the Government pursue a policy of transition for this year. By the end of the year we shall have taken out of the economy any elements which would create inflation. I think that then the country would be ready for another spurt ahead in production based on a genuine increase of production and not on uneconomic increases due to excessive overtime, working on Sundays often at very high rates in a very uneconomical manner.

I do not take the view that we have any reason to worry about the size of our investment programme. Probably this year it will be slightly larger than it was last year, and last year, as Dr. Barna showed in a recent paper to the Royal Statistical Society, the gross capital formation increased in 1955 by 5 per cent., which he reckoned was the largest this century. People can prove so many things by figures, and I certainly am not in a position to question that, but, if it is so, it does not seem to me that at this moment we have any particular reason to be concerned about our capital investment programme.

So much for monetary policy. But what is the main object of all this? Here I entirely agree with the speeches made from the two Front Benches. The main object of all this must be to build up the balance of payments. We put everything in to back the £ last December. This position must be retrieved, and must be retrieved this year. I agree that we should have a target of something like £500 million for balance of payments. That overrides anything else we can afford in our home market.

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

The hon. Member says, "Just like that?" Do we suggest that we cannot achieve this, that we are unable in a general sense to guide the economy in this way? I suggest that it can be done entirely by carrying out the processes I have indicated, and that we have to retain home consumption at something like its present level whilst more goods are sold abroad. Whether they are motor cars, generating sets, or anything else does not seem to me to be a matter of moment for the Government.

Photo of Mr Victor Collins Mr Victor Collins , Shoreditch and Finsbury

The hon. Member has indicated very clearly how this extra £500 million could be mopped up and then said that inflation could be disposed of, but he seemed to think that a £500 million surplus would be automatically earned. I should like to hear his views on how exports are to be increased.

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

If we mop up inflation in the home market so that people cannot buy goods, as there is still plenty of demand abroad those goods will be bought abroad. If the hon. Member were to say that there was a depression in the world outside and that people did not want to buy our goods, the problem would be quite different, but that problem does not exist; the world is crying out for our goods. Provided they are not drawn away to the home market, there should be no difficulty in getting the extra £200 million or £300 million required.

The second part of the policy must he in the Budget. Much as I should like to be able to recommend large cuts in taxation and so on, we have to face the fact that, if the policy is to act as a whole, any cuts in taxation must come only it there can be equivalent cuts in expenditure. Can that be? Basically, that would mean changes of policy. It would mean, for instance, changes of policy in regard to defence, about which we shall know later. Whether they can be of any substantial nature this year. I certainly am not in a position to say.

In the last few years the whole pressure has been for the Civil Estimates to go up. Are the Government to make any attempt to hold them at last year's level, or is it to be last year's original level plus the increase in Estimates we have had and something else added for next year? If that is the outlook, we must recognise that it is fairly black. We must recognise that some parts of the Civil Estimates— like education, if the building programme for new schools is to go on—are bound to rise, but there can be no hope of taxation reductions if the Civil Estimates as a whole are not going to be held at something like their present level. The Government have rather limited themselves on agriculture. They might have saved something there, but they have limited themselves by subscribing to a policy which is going to give high guarantees with very slight possible reductions every year. The main cut could only possibly be on defence and, perhaps, something on interest rates.

There is a general feeling that because the Budget figure is so large it is a little unrealistic to talk about cuts in administration, and that as we could only get such small amounts they are not really worth going for. That really seems a policy of despair. I would hope that changes would be made in policy to allow for substantial cuts. Whether that is done or not, in no way should it deter the Government from continuing something they have started, in a small way, I admit, in a much more determined way—making cuts in administrative expenditure. For instance, the Ministry of Agriculture has some 17,000 civil servants. That is about six times the pre-war number. The Board of Trade has 7.000-odd, which is nearly, but not quite, double the previous number. The Inland Revenue has about 50,000 civil servants, which is double the pre-war figure.

Photo of Mr Douglas Houghton Mr Douglas Houghton , Sowerby

In giving those figures, with which we are so familiar and with the conventional grounds of argument behind which we are so familiar, does the hon. Member take into full account the difference between the function and size of the undertakings of Government Departments today compared with before the war? What virtue is there in comparing the case as it is now with that before the war, when there was a vastly different governmental machine, and now, when there has been a wide extension of administrative activities?

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

The hon. Member probably does not think there is any point in doing that. He is entitled to that point of view, but personally I think there is point in the comparison. In a business, when saying what one is going to do this year it is very helpful to say what one did last year, in order to see why one should continue to do that this year, and to know why one did not do it in previous years. The fact remains that a whole lot of these Ministries were extended during the war. A whole lot of new policies were formed, and some of those policies have been continued with the idea that they are necessary. I dispute that necessity, as I have done on many occasions. Some of the policies are quite unnecessary.

Take the case of the Inland Revenue. A great burden was taken off the Inland Revenue by P.A.Y.E. It has cost every firm in the land many hundreds of pounds to collect tax for the Inland Revenue but, in spite of that, the Inland Revenue services have been doubled since pre-war. No doubt there are very good reasons for that. They have also been cut since the war ended. Most of these Departments are considerably less than they were seven or eight years ago. Cuts have been made. I would only say that strenuous efforts should be made to see whether further cuts can be made. If they can, a lot of other things will follow.

For example, in Manchester, as the hon. Member probably knows, a great new building is being put up at the moment only some hundred yards from Salford station. I understand that it is for the Inland Revenue and is to cost something like £4 million. I cannot see the need for that kind of thing. At the moment the staff is housed somewhere, and if it is crowded it would be far better to reduce the staff. If that cannot happen without taxation being cut, all right. I would cut that, too. It is a question of approach to the matter. If we stay here and say that large numbers of civil servants are a fine thing and that we want them to stay in their offices, we shall make no progress whatever.

Photo of Mr William Williams Mr William Williams , Manchester Openshaw

Is the hon. Member aware that there is another large building not far from the Inland Revenue building and that it is being erected for the Post Office. Would he argue that the Post Office workers should be quite happy with the old building and with the conditions under which they are working now?

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

I should love to be able to answer that question, but I do not know to what building the hon. Member is referring.

Photo of Mr William Williams Mr William Williams , Manchester Openshaw

Both the buildings are in Manchester.

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

Inflation can be controlled largely along the lines on which the Government have started and which, as indicated by the Economic Secretary, it appears that the Government intend to pursue. The economy must, during that process and by the end of this year, be further stimulated by cuts in direct taxation. That can only be soundly done if, before that, there have been cuts in Government expenditure. It is to that end that Her Majesty's Government should now direct their attention.

6.1 p.m.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

The House has listened to speeches from the hon. Members for Pembroke (Mr. Donnelly) and Bolton, West (Mr. Holt) which illustrate two distinctive approaches to the economic problems of the present day. I thought that the hon. Member for Pembroke was rather below his usual form. The only serious contribution that he made was to suggest a Commission such as the Gordon Royal Commission of Canada or the Paley Commission in the United States to peer ahead into the next quarter of a century.

I do not think there is an awful lot to be gained for the United Kingdom from enterprises of that kind. If anybody had started to peer even five years ahead in 1952 to determine, for instance, what the motor industry was going to be like, he might have arrived at conclusions which would now be quite useless to anybody. Our future cannot be charted like the future of nations that have within their boundaries nearly all the resources that they require for their development. Neither can it be said that a nation which has expanded so far as we have can plot its course in the same way as can young and expanding nations. There is not much to be gained from that point of view.

There was a conflict of view between the two hon. Members on how the economy should be run. The hon. Member for Pembroke said that we should have more detailed control of how things were to go, whereas the hon. Member for Bolton, West said that we should rely on sound Liberal doctrine and have no controls at all. He thought that what the Government had done was satisfactory but that in twelve months they should throw the whole lot overboard and change their policy.

I hope that we are not going to listen to the views of the hon. Member for Bolton, West. I want a free-enterprise society, but I want a viable free-enterprise society. I want to get away from the constant fear of a crisis round the corner. We shall not do that by harking back to Liberal laissez-faire doctrines on the one hand or by swallowing the nonsense of Socialism on the other. We shall get somewhere near where we want to go if we learn the lessons of the postwar era. There are lessons to be learned from it. The period of the last twelve months has not been without its merits in relation to our society.

I do not share the despair of the hon. Member for Pembroke. I do not think that we are a decadent society on the verge of a precipice. I do not think that our external position is as hopeless as he thinks it to be. We have made changes. Last year particularly has shown the way to control the economy in a manner which ought to be more carefully examined by this House and more carefully appreciated by people outside. It was a tremendous misfortune that we had the Suez affair.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I am not going to debate Suez tonight, but it is true that the economic picture was disturbed by the affair in the Middle East.

Last year was one of exceptional achievement in this country. It is no use the right hon. Member for Battersea, North (Mr. Jay) shaking his head. There were factors inherent in last year's economy which had a real lesson for us in the post-war era. We have done many things since the end of the war, more than many people realise, but we have always been faced with the bogy of rising prices. How to obtain higher production and the other desirable things consistent with maintaining stability of prices is the prime problem which this economy has to solve.

Last year we came nearer to finding the answer to that problem than at any time since the end of the war. We certainly had an expansion of exports, a remarkable expansion. We had a constant level of imports, something which we had been striving for. We had increased reserves for a good deal of the year, despite a later reduction of sterling balances. Investment was rising quite sharply for a while. There was an increase in factory building in one part of the year. Moreover, we had—we must have had—a rate of personal saving higher than at any period since the end of the war.

We achieved these things in 1956. We stabilised prices at the same time over a greater part of the year. We ought not to neglect the lessons which we can learn from that performance. How did we manage to do all that in 1956 and fail to do it in almost every previous year since the end of the war? We did it because, for the first time, we applied measures which were designed to control credit, not in order to attach to it a lot of physical controls, but in order to control the volume of credit and public consumption.

In addition to these effective controls we brought about a good deal of redeployment within particular industries. There is no doubt that in 1956 we saw a change from some of the frivolous and less necessary goods to goods absolutely necessary for our life overseas, in terms of export trade. We saw a real change in that direction. We must not and we cannot neglect the lesson that is to be learned from the results of 1956, which I say was the most important year in Britain's economic history.

Let me deal for a moment with what has been said about physical and monetary controls. I do not really care a tinker's cuss what the controls are. If physical controls are necessary for the well-being of British economy I believe in having them, but if we can get our results without recourse to detailed physical controls that is a very desirable thing to do.

We have seen that in 1956 we succeeded in getting control of the British economy for the first time without recourse to physical controls, but—we ought to be very clear about this—there were some drastic controls in existence. A C.I.C. limit of £10,000 is a formidable affair. If one is talking about controlling the economy, a weapon of that kind is about the most decisive that one can have. The hire-purchase restrictions were serious and cut the activities of many firms materially. Certainly, the credit restrictions bore very heavily upon the community.

What we have really got are physical financial controls. We are not relying upon automatic processes which are laid down by the outworn doctrines of the hon. Member for Bolton, West. We are relying on physical financial controls.

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

Is the hon. Gentleman now leading up to the idea that Conservative Governments should maintain something like the financial control of the Capital Issues Committee upon borrowing which is as low as £10,000? Is this new Conservative doctrine or merely crisis doctrine?

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

What I am saying is that the security of our economy is more important than any doctrinaire opinion. I am not prepared to say at what point of time or in what circumstances we should relax the physical financial controls that we have on the economy. All I say is that no risk can be taken with our economy, because, having put most of the goods in the shop window, and some of them in pawn, we cannot afford further mistakes of any kind.

I said that we had learned something. I think we have learned something of a negative character, and that is that interest rates are not what they were cracked up to be by the pundits. Generals are not the only people who try to fight the current war with the weapons and ideas of previous wars. I am sure that many economists, bankers and others really believed that the interest rate was a potent factor in controlling the economy. It is a potent factor if one is prepared to go up to a really effective rate, perhaps 10 per cent. I have no doubt that a 10 per cent, rate would cut a lot of activity, but we should also impose on the country an intolerable burden in respect of not only internal funds but external ones.

However, there is no doubt at all that in an expansionist economy a businessman looking at interest rates is not deterred by one between 5 and 6 per cent. Therefore, we must say that the classic concept of the interest rate does not apply in present conditions, and I hope we shall proceed to a moderating of the rate while at the same time maintaining the restrictions upon credit.

Some hon. Gentlemen opposite have said that production was very good in 1946—they cannot deny it—but that we did not raise production that year. That is something to be regretted, of course. However, if one lets the economy get out of hand so that the sum total of demands is greater than one can meet by one's resources, one has to make some hiatus in production in order to get into a position where one can go ahead again. It is no good hon. Gentlemen asking for more of this, that and the other and imagining that we can have a great increase in consumption, investment and export and get away with it. We just cannot do it.

Consequently, the lesson that we have learned is that if we are to have the sort of increase in exports that we need, we must have a regulation of the economy, and restriction of domestic consumption is one of the most important methods. There are one or two things that the Government ought to do, and they have already indicated that they are going to do them.

One is to reduce defence expenditure. I hope there will be no weakening upon that. I know that an eminent gentleman has come over to tell us that we ought not to reduce our expenditure very much, but the fact is that we are spending nearly 9 per cent. of our national income on defence, whereas the average Western European nation spends about 4 per cent. We cannot afford a rate of military expenditure of 9 per cent.

I hope also that in the next few months we shall concentrate upon increasing the rate of investment, and in saying that I mean that it has to be done at the expense of consumption. Neither party should tell the country that easier times are coming for this nation and that everybody will be able to enjoy a larger share than previously. We must of necessity increase our rate of investment. On that depends not only our security but the security of those who come after us.

Today the industrial balance is a very severe one. By its very technique, industry demands an exceptional level of investment. On the whole, our investment, though growing, has not yet been enough. We must urge upon people the need even to sacrifice to obtain the level of investment necessary to preserve our future. I am prepared to stand up to the doctrinaire, whether he be the hon. Member for Bolton, West or one of my hon. Friends, because if we make any mistakes at this juncture the economy of the country will be in jeopardy.

There is perhaps too much disparaging talk about what we have done. Perhaps the inter-war years were the nadir of the British economy. Since the war our achievements have been really worth while. In face of very considerable difficulties we have produced many goods and improved the equipment of our industries. The Chancellor has said that, although our population is about the same as that of Western Germany, we produce half as much wealth here. Nevertheless, we are not so much behind as people imagine.

We have the great asset of having the finest collection of skilled workers in the world, and in many instances we have very fine equipment. Although our motor industry is in an unfortunate situation, where else in the whole of Europe can we find an engineering set-up as good as the British Motor Corporation? There is none as good as it.

Photo of Mr Donald Chapman Mr Donald Chapman , Birmingham, Northfield

Is not the hon. Gentleman being rather extravagant in his claims?

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I have a close interest in the motor industry. If the hon. Gentleman knows of a better engineering set-up —I am not talking about design, and certainly not about body design—than the B.M.C., I shall be interested to know where it is.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

If our motor engineering set-up is so much finer than any in the rest of the world, why do we require a 33⅓ per cent. duty to keep out imports?

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

I always took the view that it was not very necessary for us to have a 33⅓ per cent. duty on motor imports.

I have no fear about the future of this country. We have still a great Commonwealth; we enjoy a great deal of good will; and we can play a prominent part in the European common market. We are not down as a nation. We are not a second-rate nation, because no longer is the world judging a nation by the size of its army—armies are largely at a discount under modern conditions. But we must be a nation which has a sound economy.

One does not necessarily need the largest army in the world to lead the world, but one does need a sound economy. One cannot be a leader and a beggar at the same time. Therefore, I hope that we shall—I make this appeal to my right hon. Friends on the Front Bench—stand firm upon the principle that, however unpopular it might be in the next few months or so to deny reliefs which would increase consumption, there should be that denial. We should focus our attention upon improving investment in this country and through it the ultimate security of the nation. I think that if we were to attempt in these circumstances to win popularity by any inducements, we should be doing so at the risk of our economy.

I feel sure that my right hon. Friend the Chancellor of the Exchequer will be mindful of this fact that in the next twelve months we can, by means of controls, achieve the results which were obtained in 1956. I urge the House to realise that 1956 had some very potent lessons for the community. I believe that it showed the way in which we could control the economy and get the changes and the progress that we desired without increasing price levels. That is the battle against inflation, and I think that we can win it in that way.

6.23 p.m.

Photo of Mr John Parker Mr John Parker , Dagenham

I should like to say something about the industrial problems affecting my own constituency in south-east Essex and then something about the motor car industry as a whole.

First as regards the Dagenham area, the motor car industry, as hon. Members will realise, is suffering from being in a depressed state at present following the Suez crisis. I do not want to go into details about the industrial troubles at the present time, but I should like to make this point because it goes rather further than the immediate trouble. In that area we are suffering from being dominated by one very large firm, the Ford combine, and its power and influence is so great in the area that it produces a. reaction not merely among its own employees but also among the population in the area.

There is a feeling that it is unhealthy to have too many eggs in one basket and to have one industry and one firm in that industry too dominant in the area. It is obvious that not only the ordinary workers in the area but also the other firms in the area feel that that large combine is not particularly co-operative or helpful in relation to other industries now trying to solve the general industrial problems of the district.

The main criticism of the firm and its outlook is that, being of American origin, it has not really got used to British conditions. It looks on things too much from the American point of view. The town of Dagenham has felt that that firm has not been co-operative with the town council in working out plans for dealing with the problems of the area, whether we are dealing with industrial expansion, which of course the firm is going in for in a big way, or whether we are dealing with the social problems that arise from that particular industry—the housing problem, the transport problem of getting workers to and from their work, and so on.

We have had scarcely any co-operation from the firm. In many American towns a particular large firm largely runs the town. We do not want that in Dagenham, and there is a feeling that there is too much of that in the attitude of the Ford firm. There is a general feeling that individuals are just cogs in the machine, and that no attempt is made to treat individuals as real, live men and women but to think of them as just industrial units. In the long run, the ordinary Englishman resents being treated as a cog. He wants to be treated as a human being and he wants to have a reasoned case put to him when asked to do something, and not be dictated to. That applies not only to employees of the firm but to people in the area as a whole.

I hope that, arising out of these present troubles and difficulties, there will be a revision of outlook in the firm in its approach to the problems of the area, as well as to the problems affecting its own employees. I do not want to say more on that, except to say that, with regard to the expansion programme being carried through by the Ford company at the present time, I raised on the Adjournment on 7th December, 1954, when this programme was first announced, the question of possible difficulties that might arise in Dagenham through the carrying out of that programme.

I reflected the views of many people locally in pressing on the Government that they should give a lead to that firm and suggest that not all the expansion and employment which it wanted to go in for should take place in that area but that it should be spread. The firm ultimately limited its expansion in Dagenham. New developments have taken place at Woolwich Arsenal, Basildon, Aveley, Doncaster, Southampton and elsewhere.

After a good deal of discussion, the firm said that as a result of the big development programme which it was carrying out there would not be an appreciable difference in the number of people employed in the area and that it would at any rate keep employment roughly stable in the district. That was the firm's argument, and I think that on the whole it was a sensible decision to which it came. Following those decisions, the firm began to specialise in producing particular products at the different factories under its control. For example, it is intended that the whole of the manufacture of commercial vehicles shall be moved to Southampton, and that the Ford set-up in Dagenham shall be mainly concerned with producing passenger vehicles.

That may well be advantageous from an economic point of view with regard to the lay-out of the different factories belonging to the firm, but from our point of view in Dagenham there are social problems likely to arise from that kind of planning. People working in the industry feel that the passenger side is more likely to be liable to depression and to boom than possibly the commercial side, and therefore that they may well be in the years to come more susceptible to unemployment in the district than if they had a much bigger variety of products produced in that factory.

That is the sort of problem which ought to be looked at by the Government and the firm itself when considering how it should plan its production in future. I should like, therefore, to suggest that there should be greater variety of produc- tion in a big works employing several thousand people than there appears to be allowed for in Ford's planning for the immediate future.

Other industries in that area have their problems. With this very big expansion of the motor industry it has proved impossible for other industries to expand because of lack of labour. Many small firms have had to go elsewhere for that reason. We have the big chemical works of Messrs. May and Baker but because of this lack of labour that firm's big new expansion is taking place in Norwich. A firm making telephone cables is in the same position; it has not till now been able to get labour for expansion in the district.

I make this immediate suggestion to the Government. They should adopt a more flexible policy in regard to Development Areas. In Dagenham there is at present a good deal of unemployment or short-time working, and we should like the district to have the advantages of being considered as a Development Area. I understand that the Government are considering the abolition of the whole idea of Development Areas. I hope that they will not pursue that idea.

There is a strong case for keeping in being that machinery and employing it as necessary in districts where there is an increase in unemployment. Other places, originally classified as Development Areas, have had such an increase in employment that their problem scarcely exists. Areas like that should no longer rank as Development Areas and should be removed from the list. As I say, the machinery should be made flexible. Such a procedure would mean that, at the present time, the telephone cable company, for example, would be able to have the advantage of quoting for Government contracts on the same terms as others in Development Areas.

I should like to turn from the position in south Essex, and consider the motor car industry generally.

Photo of Mr John Jones Mr John Jones , Rotherham

As one who is vitally interested in the question of good relationships between labour and employers, I have followed my hon. Friend's argument very carefully. It seems that this huge combine is not cooperative with the local authority, and does not treat its workpeople as being other than mere numbers. Despite that, he says that other firms cannot get labour in the district, so it would seem that this combine does attract the labour. Is that the position?

Photo of Mr John Parker Mr John Parker , Dagenham

When there has been good employment, earnings there have been high. Despite that, however, there is still the feeling that the employees are treated merely as numbers. That feeling is the more striking because in the past the earnings there have been high.

How do the Government see the future development of the motor car industry as a whole? In the last few days the Vauxhall firm has announced a big development scheme which will enormously increase its production. All the other big motor combines have either announced similar schemes or are well advanced with them. When all these development schemes are completed, and all the big firms are putting their cars on the market, do the Government see a market here and overseas for all that production? If all these schemes are carried through, I imagine that neither at present nor in the immediate year or two ahead will there be a market for their products.

If that is so, it will mean that, as a result of these large firms competing with each other, there will have been an enormous waste of capital resources which might have been used for other important industries. This seems to be a case in which there should be some Government control of capital expenditure in the industry. There should be some kind of national plan. The Government should take the lead in sitting down with these firms and working out what are the likely markets here and overseas and ensuring that there is some relationship between the likely markets and the car production. So far, nothing on those lines seems to have been done at all.

That means, as I see the position, that all the big firms will experience a series of slumps and booms successively. In Dagenham we were lucky in that, in the summer, when the motor industry in Coventry and Birmingham was hard hit, we had full employment, because the Ford company had produced a number of new models which met the needs of both the home and the overseas market. Those models sold very well.

The coming of the Suez crisis hit Dagenham, of course, but when the petrol shortage is over there will no doubt be a revival of some of those sales. Recently we have seen Morris and some of the other firms producing smaller models which are selling well, in contrast with the Dagenham products. I believe that even if the Suez crisis had not occurred there would have been, in the months ahead, an unemployment problem even in Dagenham. Other firms would have been producing new models which would have cut into the sales of the Dagenham firm and, even in Ford's, there would have been some kind of a slump.

The Ford firm denies that. It thinks that it can so organise production that it will always have the right models coming along at the right time. No doubt the other big firms take the same view, but sooner or later there will be a slump affecting particular works and particular employees unless the problems of the industry as a whole and its production programme as a whole are looked at to try to see that production bears some relationship to possible home and overseas markets. It is for the Government to get the firms together to plan their future production.

I think that it will be very difficult to keep up a steady volume of sales overseas. Of this, I can give an interesting example. I went to the Dagenham works with a delegation from the Sudan. The leader was a very able man. He said to the Ford management, "I find that at the moment the imports of your firm's products into the Sudan amount to over £ 1 million a year. We should like to see a factory opened in the Sudan in the next year or two where the components can be assembled, and in five years' time you could have a factory producing for our growing consumption. We should like you to put up half the capital and we will put up the other half. Will you send someone to us to talk it over?"

That is the sort of thing that is happening, and which will happen in many of our markets, both in the Commonwealth and overseas. It means that the export market for cars will always be a rather difficult one, in which one cannot plan for a lot of years ahead, and in which one cannot imagine an enormous future expansion. It means also that the industry's products will have to vary in order to meet the requirements of the various markets, and when new production is set up in a particular country we shall find the market there disappearing, and will need to replace it by another.

At present there seems to be a number of markets which could be tackled rather more adequately. My right hon. Friend the Member for Huyton (Mr. H. Wilson) mentioned exports to China. I think that it is true that there and in many of the backward countries, in South America, in Spain, in the Far East, there are markets that can be developed for tractors, commercial vehicles, cars like Land Rovers and so on, and I do not think that there we are getting as big a share of those markets as we might. In the Middle East, there certainly ought to be more activity, with Government backing, to try at least to exchange oil for cars. That is another important area where a market has not been developed as much as it should have been.

As to the United States and Canada, we continually receive reports in Dagenham about the great success of the Volkswagen in American markets, mainly because it is easy to buy spares and have servicing done in that country. I suggest that the main British exporters to the American and Canadian markets should get together to try to set up a sales organisation of a better kind than that which they run individually at the moment, and particularly to see that spares are available for all the main British makes right through Canada and the United States. The Government should take the lead in trying to get the firms together either to set up a joint organisation or at least to work together. The important thing is to have a servicing organisation and spares always easily available for all makes of British cars sold in Canada and the United States.

During the petrol shortage, at all events, there seems to be a strong case for removing Purchase Tax in the home market, because unless there is a certain size of home market it is difficult for firms to push sales of their cars overseas. I do not ask for a permanent removal but a temporary one, perhaps tied up with the petrol-rationing system.

This is an industry in which there is great competition between the big combines. Some hon. Members opposite, from a doctrinaire point of view, may think that that is a good thing. I do not. It seems to me that great resources are being lost, and that we may have many sections of workers going through a period of boom conditions at one time and of depressed conditions at another. Many other industries, such as cotton and rayon manufacture, have experienced over-capitalisation at one time and have suffered for it afterwards. It would be a great tragedy if the motor car industry had over-capitalisation and were handicapped afterwards as a result in attaining a reasonable expansion at home or overseas. It is, therefore, the duty of the Government to give a lead to the industry and, if necessary, to exercise control over it to see that it does not make the mistakes that other industries have made in the past.

6.45 p.m.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

It would be my great pleasure to congratulate the hon. Member for Dagenham (Mr. Parker) on his speech if it had been in any way accurate, but of course the majority of the things that he said were absolutely inaccurate. He painted a picture of the Ford Motor Company as almost a new arrival in the district and as an American concern that did not understand our ways. That is quite wrong. The company has been here since 1931, and that cannot be considered as yesterday.

The hon. Member said that the conditions in which the employees of Ford's work are not good at all. That is quite stupid. The conditions are splendid. If he would take the trouble to obtain a copy of their weekly magazine from the workers in his constituency who are employed there he would find pages and pages of photographs of people who have just retired after 25 years' service and more. Apparently they have been very happy there, otherwise I can think of no reason why they should have stayed there. The point which the hon. Member for Rotherham (Mr. Jack Jones) made, which may have passed over the head of the hon. Member for Dagenham, was to the effect that many people wish to get into those works of which the hon. Member for Dagenham seems to think so little.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

My hon. Friend the Member for Dagenham (Mr. Parker) did not say all that.

Photo of Mr John Parker Mr John Parker , Dagenham

Can the hon. Member for Hornchurch (Mr. Lagden) explain why there have been so many disputes at Briggs in the last few years and so much discontent among the workers there?

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

I am obliged to the hon. Member for making that point. I had intended to refer to it.

This debate, instigated by the Opposition, may be of some use if it is a sincere attempt to improve our economic position, if an assurance can be obtained from the Government that industry will receive assistance to increase and enlarge, and if it ensures that the trade unions will know that they have the Government behind them if they now intend to be masters in their own house. They are not at the moment.

We have learned in the House in the last few days that the Government are giving very careful consideration to what can be done in connection with Purchase Tax and the embargo on foreign trade. The hon. Member for Dagenham referred to the possibility of markets in China. Workers at Ford's never lose an opportunity to bring that to the notice of those who represent them. I think that we would all agree that, as soon as possible, the embargo should be removed and that trade should flow to this country. We must be careful to see that it does not escape this country and go to others.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

The trade unions today are in greater danger than they have ever been. The danger is that their authority is likely to slip away from them if they allow the hot-heads and the shop stewards, who are in no way interested in the trade union movement itself, to take control. At Briggs, which is part of the Ford motor organisation at Dagenham, there is an above-the-average unfortunate collection of shop stewards who are practically Communists.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

People used to say that about us.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

It is a fact that those shop stewards have been leading the men out on unofficial strike after unofficial strike. They have not had the backing of the unions in the majority of the strikes that they have engineered, and I regret to say that there are people in high places, who ought to know better, who have not only encouraged them but have given them help in these strikes. It makes it extremely difficult for the honest trade union leader to negotiate with a large firm if he knows that the negotiations and agreements at which he arrives will not be honoured because of the influence of those who are not authorised officials of the union. That is a very serious matter indeed. The trade unions realise that there will be a complete breakdown of their authority if they allow that state of affairs to continue.

Hon. Members:

Nonsense.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

if hon. Members will take a little time off to talk to trade unionists and the heads of the trade union movement they will refrain from saying "Nonsense."

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

No, I will not give way for the moment.

I should like to quote a few figures to the hon. Member for Dagenham, who apparently knows so little about his own constituency and the works situated therein.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

No, I am not giving way for the moment.

Photo of Mr Charles Grey Mr Charles Grey , City of Durham

The hon. Member said that before.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

In 1931, Ford's had 3.368 employees, in 1939 it had 8,000, in 1946, 15,000, in 1953, 21,910 and in 1956, 24,305. They are honest, hard-working men. Those 24.305 men employed at Dagenham wish to continue in employment, they wish to negotiate with their employers through the trade union, and the majority of them do not wish to be brought out continually on unofficial strikes by the shop stewards who only have their own axe to grind.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

Why did they come out then?

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

That is a question which I had hoped would be asked. I will tell hon. Gentlemen opposite one thing which no doubt will bring a roar of laughter from the ignorant. The reason why they come out is that such is the state of affairs in Briggs that it is extremely dangerous not to come out when they ring the bell. It is extremely dangerous to go back if they think a man has not supported the shop stewards. [HON. MEMBERS: "Rubbish."] If anyone opposite says "Rubbish" again, I will give a fact.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

Within the last few months the workers in a certain department in those motor works refused to come out. The power was cut off elsewhere in the works and there were very nearly serious accidents as a result.

Photo of Mr Charles Grey Mr Charles Grey , City of Durham

On a point of order, Mr. Speaker. The hon. Gentleman is making some serious charges. Can we ask, through you, that he should prove those charges and give the names?

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

That is not a point of order. I should hate to have the onus put upon me of securing proof of every statement which I hear in this House. A certain amount has been said by the hon. Member for Dagenham (Mr. Parker) and this appears to be the other side of the question. I think the House should listen to both sides.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

Thank you, Mr. Speaker.

If the hon. Member for Dagenham is in any doubt, I recommend him to make inquiries from his constituents who work there, when he will find that what I have said is accurate.

Photo of Mr John Parker Mr John Parker , Dagenham

They take a very different view.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

There is one more fact concerning the Ford motor works to which I will refer. The value of the shipments of cars, vans, tractors and parts to North America last year reached 20 million dollars. Is the argument that this firm is being too successful? Is the argument that it is making too many dollars for us? Or is the argument the one which we have heard when the hon. Member for Dagenham stands up at the town meeting, where he is not so shy, and where he says, "We do not want this highly successful firm here; we want it nationalised. We want the whole motor trade nationalised." Is that the argument? If so, why did he not use it? Or does the hon. Gentleman realise that nationalisation elsewhere is no advertisement—

Photo of Mr John Parker Mr John Parker , Dagenham

Is the hon. Gentleman aware that Renault in France and the Volkswagen in Germany are both nationalised, and that both are very successful in selling in the foreign market?

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

I thought that the present argument concerned the Ford motor works at Dagenham, and I should have thought that the highly successful figures, and the high wages which the constituents of the hon. Gentleman have been drawing from that organisation, would have been a sufficient answer to him; certainly it is for me.

The hon. Gentleman is not doing his constituents a good turn by continually attacking, and endeavouring to have an attack made against, that firm in his constituency. One of two things might happen. The firm might easily decide to close the works there and transfer it to Cork—

Photo of Mr John Parker Mr John Parker , Dagenham

After spending £65 million?

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

Yes, that could easily happen. Then the hon. Member for Dagenham could stand on what used to be marshes before this factory was built there, and he could look around and say, "This is what I have achieved on behalf of my constituents in Dagenham". All I ask him to do is not to achieve that for the people of Hornchurch, which is my constituency. I can tell him firsthand that the people who work in Ford's motor works are satisfied, by and large. They only want to be allowed to earn their living in a peaceful manner, in happiness with their neighbours and with the management.

Photo of Mr John Parker Mr John Parker , Dagenham

Before the hon. Gentleman sits down, does he really believe that there would have been all these strikes in the last few years if there was a really good management in Briggs works? Does he really believe that people would continually come out unless they were dissatisfied?

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

Not only do I believe that, but I would go a step further. If, as a result of the outcome of the present disturbances, there were an inquiry, and if the management got rid of a handful of agitators, there would be peace there in the future, as there might have been in the past.

6.56 p.m.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

I do not intend to enter this private row for long, Sir, but I would assure the hon. Member for Hornchurch (Mr. Lagden) that if he believes that 20,000 people in a plant of that type can be led by the nose by a few agitators, he is revealing that he has no knowledge of workshop organisation. I came straight to this House from being the convenor and chairman of the works committee of one of the biggest engineering works in Britain, and my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) had the same background before he came here. I can say without any doubt that where there is intelligent management, able and prepared to meet the employees in a reasonable and proper way, there can never be the record of strikes that there has been in Briggs and Ford's in the last few years. It is doing no service to the cause of peace in industry in Britain to suggest that, on the one hand, irresponsible people are trying to foment disputes while, on the other hand, a blameless management is trying to get a proper basis of cooperation. It does not work that way.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

So that is the hon. Gentleman finished.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

The right hon. Gentleman the Economic Secretary to the Treasury gave us some figures of employment in opening the debate for the Government, and we are grateful to the Minister of Labour for putting those figures before us at the earliest possible moment in the debate. They reveal a serious worsening of the situation. As the Economic Secretary pointed out, in December unemployment was running at 297,000 which showed an increase of 81,000 over the year. Incidentally, in an intervention I think I said it was in two months, but it was in the twelve months ending December, 1956.

We have since heard that unemployment has risen from 297,000 in December last to 383,000 as at 14th January. Also vacancies dropped to 279,000 in December, which was a reduction of over 100,000 in the twelve months prior to that date. Vacancies are now down to 255,000. If the Minister of Labour can tell us when he speaks later how many people are on part-time work, we shall be grateful.

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

The Minister of Labour and National Service (Mr. Iain Macleod) indicated assent.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

Those figures represent a marked deterioration over a twelve-month period, and they cannot be viewed complacently by the Government or by any hon. Member of this House.

I am not convinced that Suez has made all that difference by itself. I have tried to show that prior to Suez there had been a marked deterioration, and that whether the Suez situation had occurred or not we would have been faced with a very difficult position. None of us can estimate what the figures would have been, but obviously we would have been faced with a difficult situation.

When one can hear the Economic Secretary informing us that the base of Britain's economic position is quite sound, against a background of that type and with current figures of a £103 million deficit in the balance of payments position, one really wonders whether the right hon. Gentleman is living in a sort of Alice in Wonderland conception of what this nation in fact requires.

I believe that the Suez crisis itself was not a major contributor to that deficit. I think that rather it is the fact that Government policy—and, of course, Suez itself was Government policy, but that was their foreign policy, and I am referring to internal policy—the Government's own internal policy has had a very great deal to do with bringing about this serious situation. Indeed, when one thinks of the background of international policy in this conception, if it were not for the fact that the Government's action in Suez was so very dangerous, I would almost begin to believe that the Government had come to the Shakespearean remedy for our domestic ills represented by the quotation— Let us busy their giddy minds with foreign quarrels. While we have been so concerned about the issues of Suez, much needed criticism and much needed thought which this House should have given to these matters has not in fact been given to them.

As I see it, the industrial policy of the Government stands upon two points—the deliberate increasing of the cost of living and an attempt to stabilise wages at the same time. Quite candidly, no Government can get away with that one for long. Again, the Economic Secretary was so complacent about productive standards. It is the fact, I believe, that we have now completed our fifth consecutive year in which our share of world trade has diminished. It is the fact that our competitors are now actually increasing their productivity while ours is now actually falling. No matter from which side of the House we speak, none of us can really believe that there is a healthy economic background to a position of that sort.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Surely, the hon. Gentleman will agree that as other parts of the world are industrialised, which is a natural expectation and development, so the proportion of world trade enjoyed by this country must automatically fall, and that brings no blame on the Government for the time being?

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

The hon. Member, who takes these matters very seriously, must answer the point that very great industrial nations, such as the United States and Germany, are not losing their share of world trade, but are in fact vastly increasing it, and that it is they who are increasing their share of world trade which previously came to us. I know the point which the hon. Member makes. Coming from Lancashire with a cotton industry background, one knows that the hon. Gentleman is right in pointing out that, when we see established great textile industries in countries which previously were our customers, we could not hope to get as much trade as before. But, in the general picture I am pointing out, it is the fact that our principal competitors are taking from us that which previously was our share of world trade, and, therefore, there can be no real health in our economy while that position continues to obtain.

I believe that one of the reasons for the fall in production about which I have been speaking is that the Government have never yet thought out the problem of how to get workers into the right type of industry. There has been no attempt to encourage vital industries to expand in what I would describe as the proper places. We were at one time promised a three yearly survey of the operation of the Distribution of Industry Act, and the previous President of the Board of Trade, who is now at the Exchequer, never really attempted to do that.

We have seen during the last few years that the control of industrial building has gone. Industrial building has been going up in precisely the wrong places. Some of my hon. Friends who represent Wales were yesterday discussing this serious position as it affects Wales, and North-West Wales was mentioned. When I had something to do with the distribution of industry policy, I realised the background of what happened once we got rid of industrial building control.

Firms with parent factories in the London area or in other big cities did not like the idea of having small factories in a Development Area. They agreed to go there, because we would not allow them to expand in the parent factory area. The moment we get rid of control of industrial building, they begin to bring back their work from the Development Areas into the parent factory, and they will enlarge that factory, creating unemployment and part-time working in the Development Area. I should have thought that the lesson of the mal-distribution of labour which we now see is one of the principal reasons why we should go back to the control of industrial building.

As I see the pattern now emerging, we are experiencing heavy shortages of skilled and indeed other workers in some areas where the vacancy lists have become bigger, with increasing unemployment and part-time working in other areas, with no alternative employment in those areas. This emerges in the statistics of the Ministry of Labour every month now.

When we have tried to point out this type of thing, we have had what I would look upon as the theory of the total numbers employed against the number of vacancies, which is the theory which we have had for so long. When the present Leader of the House was Chancellor of the Exchequer, it almost seemed to him that so long as there was a large number of vacancies he was afraid of it. He said it alarmed him very much. I get very alarmed when the situation is the reverse of that, when there are far more unemployed than we have vacancies for. We have in fact reached the point where-by what I believe is the negation of the planning of productivity has been achieved. It is this business of believing that if we have 30,000 vacancies and 25,000 unemployed we are all right and there is nothing to worry about. That has now been proved to be completely inadequate in the conditions in which we are living.

Again, the Economic Secretary was telling us that there has been a movement of workers into some very desirable industries. Well, has there been so very much movement into the right type of industry? Whatever we think of the motor car industry, which is a huge exporter, it has lost about 47,000 people in the last year or two. When we look at what has happened, we find that some of the industries which have expanded more rapidly than others are not the type of industry on which we must depend for our livelihood. For instance, the food and drink industries have gained more workers than coal, iron and steel, engineering and shipbuilding combined. Is that a good thing? Can that possibly be defended as the successful culmination of the Government's policy in this direction?

Let us look at engineering. I know that there was an increase of over 7,000 people in engineering, but in the iron foundries, which are the genesis of so much of engineering products, they have lost over 6,000 workers, and, therefore, there has not been a proper redistribution in the way that the Economic Secretary was suggesting. Let us take iron and steel, which is surely an industry upon which everything now depends in its capacity to give us the raw materials upon which so much of our manufacturing industry depends. It is true that this industry has had an expansion of 6,800. My hon. Friend the Member for Rotherham (Mr. Jack Jones) is more conversant with the details of this industry than I am, but I am saying that if we are serious in wanting vastly to expand our production, that kind of thing will not improve the case at all. Therefore, I suggest that the whole basis on which the Government have conducted their policies with regard to manpower has been shown to be erroneous and ill-founded.

I wonder whether the right hon. Gentleman can tell us anything about the reduction in overtime working in manufacturing industries. It should not be thought that I am an advocate of overtime, especially continuous overtime, for I am not. I deplore some of the tendencies in that direction that one sees, perhaps among younger trade unionists. Nevertheless, while we are trying to assess the causes of decreasing productivity and precisely what returns we are getting from one industry compared with another, it would be useful if the Minister could give us an indication of the number of hours overtime worked in 1955 compared with 1956.

I do not believe that the real effects of unemployment in the car industry have yet been correlated to our economic problems. The initial strike at the Austin works some time ago was a new departure. It was caused by a declaration of redundancy. Prior to that time there had been a gentleman's agreement between employers and trade unions that where there was a slackening off there would be no declaration of redundancy but part-time work, four days a week or whatever it was, would be instituted. That suited the employers because they did not believe that the recession would be long drawn out and did not want to dispense with their trained staff. It also suited the trade unions to have part-time work instead of unemployment.

The real break came when at the Austin works men were dismissed instead of being put on a part-time basis. The men were dismissed for one reason, because the employers had introduced an automatic tractor line, which meant that the firm would never again require the services of those found to be redundant. I believe that to be the background to the change which has occurred in the car industry.

Until we have a proper assessment of the size of car industry necessary for our requirements and the population which can be employed within it, I do not believe we shall obtain an answer to the problems which Ford and the other car manufacturers now face. There is a basis of insecurity. There is the question of whether one will be the next to be slung on the scrap heap while buying a house at a 6 per cent. interest rate and so on. It is a problem which the Government must face. Some of us have on many occasions asked the Government to try to assess the size of car industry that we need. So far the Government have refused to face the issue.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

Perhaps my hon. Friend would take two minutes to point the exact parallel with the cotton trade, because for years we have been asking the Government what kind of cotton trade they want, how big they want it to be, and what they want the people who leave it to do.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

HANSARD contains the record of the many fights which my hon. Friend and other hon. Members representing the Lancashire cotton industry have put up in the House on that issue.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

This is a very important point. I agree that the feeling of insecurity on the part of the workers is the cause of half our industrial troubles. The hon. Gentleman is asking the Government to fix the size of the motor industry that we shall require in future, just as the hon. Member for Nelson and Colne (Mr. S. Silverman) wants the Government to fix the size of the textile industry. But how can any Government fix the size of an industry when most of its goods are exported and the industry is, thus, subject to violent, inevitable fluctuations according to the growing competition of newly industrialised nations?

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

The size of an industry can be determined in large measure, as the hon. Member for Cheadle (Mr. Shepherd) said, by the capital investment programme which the Government permit it. The motor industry still has a huge capital development programme. I do not know whether it proposes to go ahead with it. Those in it will be the greatest gamblers in the world if they do so now. Apparently there is still no leadership given by the Government as to whether the industry can safely go ahead with its vast development programme. Nevertheless, that is the way one can determine the size of an industry if one requires to do so.

I have previously said that Henry Ford's line production methods brought greater immobility to the worker than existed in the period when skilled men produced motor cars as a whole. Production line employees are specialists in a certain job. It is true that they obtain high wages. The alternative to assembly work in the motor industry is the old, safe and lowest paid industries of all. In using the word "safe" I refer to the industries which in pre-war days could provide 51 weeks' work a year, though in return the men received very low wages. Nevertheless, men sometimes deliberately chose a low but regular wage.

For a long time until recently most of our industries were safe, and there was no particular reason for men to take the bad conditions in the old, safe industries. Now, however, the only alternative the Government can give the men is to go from one of the higher paid industries to one of the very lowest paid industries. There again we are getting the background of unrest and insecurity. Dr. Bronowski made practically the same point in Reynolds News recently with regard to the white-collared workers whose jobs are now threatened by automation. In a great degree, they are more immobile than most other types of workers. The Government must take that type of thing into consideration, and, until they do so, they will not get industrial harmony in the way we desire.

Since the war this nation has spent vast sums of money in training workers for certain types of work. Merely to force them to take any type of job which happens to be offered to them at the employment exchange is to waste practically the whole of the money which the country has laid out in training them to do certain types of work.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Would the hon. Gentleman direct the workers?

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

I should have thought that from that point of view alone a Conservative Government, of all Governments, should decide that it was not good enough, first, to expend the national income in that way, and, secondly, to allow it to go down the drain. Much good training is being dissipated, and the nation is not getting a proper return for its money.

Just now I mentioned the Distribution of Industry Act. I hope the Minister will look at this point. The Development Areas themselves are shining examples of the success of the policy of the distribution of industry. One can say, broadly, that the policy is that of taking jobs to workers and not workers to jobs. I believe we must expand and enlarge that theory. I appreciate that one can say that there may be only 2 per cent. unemployment in Birmingham, 'Coventry or elsewhere and, therefore, that there is no need for any special arrangements. That would be a very short-sighted policy.

I hope that we shall try to give to certain types of employers who have the type of industry which would fit in to Birmingham, Coventry and other towns, the more favoured terms to go there which we give to employers who go into Development Areas. I should refuse those advantages to industries which we do not want to go into those areas. By that method we would not merely solve the problem of today of a few hundred thousand unemployed, but begin to set the pattern of industry which will stand for years and do very well in the years to come.

I have one or two questions about the oil position. I believe that the House has been treated rather scurvily in this matter. Many weeks ago some of us suggested that it would be a good idea to have a priority scheme, especially for fuel oils for various industries. Since then we have had hints that the supplies of fuel oil are by no means as high as consumption and that therefore our reserves are going. We have been told that there will be no alteration until the end of March.

During the coming weeks much of our fuel oil may well be used by industries which do not need as much as they are now getting. When we come to the end of March it may be that there will have been such a reduction in our stocks that the really key industries of Britain may not be able to run at the levels required. If that happens, unemployment running into millions and not hundreds of thousands may come about. I therefore again ask the Government, in the period before the end of March, to make a reassessment to see whether the fuel oil now being used could not be better conserved against the day when we may have to make some more drastic cuts in those key industries upon which we depend so heavily.

I believe that we now have the situation in which labour unrest in general is very serious. I said earlier that a policy which depends upon trying to raise the cost of living and stabilising wages cannot continue very long. When, as I think, the Government accepted the dictates of the Employers' Confederation and forced the nationalised industries into a position where they could not increase their prices, they were obviously doing so to make sure that the nationalised boards could not pay wage increases. Once that sort of position obtains, what the Government are doing is trying to break down the very principles upon which collective security revolves.

I have tried in letters to The Times and other newspapers to get answers to certain questions. In a letter to The Times on 9th July last year, I said: Collective bargaining has been built up on the premise that each side has the power to respond to a convincing and adequate argument presented by the other party to the existing agreements within a given industry. To take the sort of action which is deliberately designed to preclude managements from paying increases is to ensure that there is no point in negotiating. … In the event of a wage claim being turned down because of the ban on price rises, against which body does the trade union concerned proceed? … In the event of an official strike taking place in one of these industries, will it be construed as political action against the Government? We are getting very near to that position. The Government are interfering with the basis upon which agreements have been reached, while at the same time provoking industrial workers into requiring higher wages because of the increased cost of living which we are now seeing.

I believe that in industry we are now in a serious position. I hope that even now the Government will see that very much of what has been said about strikes can be traced to the policies for which they are responsible. I believe that that is one of the reasons why we have a somewhat defensive attitude in the thinking of the trade unions now as distinct from the attitude which many of us would like to see them able to take. There is precious little hope for a Government who pursue policies as represented by the present Rent Bill, while believing that we can have industrial peace.

I believe that the workers, including their official leadership, are in increasing measure being faced with the alternatives of a supine surrender to a squalid endeavour to re-create a past that is dead, or a fight for a future for the nation and for themselves. That they are placed in that position is the greatest indictment against the Government which one can ever level.

7.25 p.m.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

I want to devote the time available to me to one aspect of our economic problem which has been exercising a good deal of my attention during recent months and which is of the utmost importance to the whole of our national economy. I refer to the plight of that section of our community which is usually referred to as the middle classes, and I use that phrase in its widest interpretation to include the two categories to which the Opposition Motion today referred—pensioners and those living on small fixed incomes.

I do not feel the need to devote very much time to proving the existence of this problem, as it has already been admitted by no less a personage than my right hon. Friend the Prime Minister, who in a speech last year—I think that it was the speech which he made in Leeds, in June—said: The Government has undeniably done well by the nation as a whole. There is, however, a growing campaign which argues that they have dealt less kindly with the middle classes. There is no doubt about the relative deterioration in the position of the middle classes, and as a Conservative I feel strongly about this. I know that many of them are much worse off than before the war. I know too that they have seen the prosperity of the wage earner increase rapidly. Not long ago the Conservative publication, the Weekly Newsletter, said that the middle classes had good reason to feel that they had not obtained their proportionate share of increased prosperity. I know from my own experience that that feeling is very widespread, and in my view it is fully justified by the evidence.

The middle classes are far too diverse to be covered adequately in one short speech, so I will limit my comments to two small categories, and I shall use two groups of figures which are so graphic as to go a very long way towards proving my general submission. I am indebted to the Economist for the first group of figures, quoted rather more than a year ago, in January last year. I have taken the precaution of bringing them up to date.

They show that a chief executive officer in the Civil Service in 1939 started at a salary of £900 per annum. Today, as a result of continuous inflation and increasing taxation, he would need about £3,200 per annum to be as well off. In fact, he receives about £1,635. I have asked a Question, due for answer on Thursday, which will confirm the exact figures, but I do not think that I am far out. In other words, his standard of living has been slashed by 50 per cent. Is there anybody in this Chamber who will seek to defend that? I think not.

An assistant medical officer in the school health service in 1939 commenced at £500 per annum. In order to be as well off today he would have to earn about £1,500 a year. In fact, he receives two-thirds of that amount. His standard of living has been slashed by one-third. How is that to be defended?

In answer to a Question which I put to him last Thursday the Financial Secretary to the Treasury gave me some figures in respect of a higher executive officer. In 1939, such an officer's commencing salary was £550 per annum. Today he would need £1,733 to have an equivalent salary, and he gets £1,055. His standard of living has been cut by about 40 per cent.

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

I am very interested in the case which the hon. Member is putting, but it would be rather a pity if he were not fully accurate about it. Does not he think that in making these comparisons he should take into consideration the fact that he is dealing with a class which is receiving benefit from many of the national welfare schemes—for instance, the free Health Service? Has he made any computation of what that is worth in lieu of salary?

Photo of Mr Henry Price Mr Henry Price , Lewisham West

The figures that I have quoted from the Economist take that factor into account. They allowed, I think, a figure of 7 per cent. in respect of it. I am open to question upon that, and my memory may be wrong, but the factor is certainly taken into account in those calculations. The hon. Member can find them in the Economist of 21st and 28th January of last year. They are in two extremely interesting tables.

The figures which I have quoted are not exceptional; they apply to every grade of the Civil Service and to local government officers, in varying degrees. Not long ago the teachers were in open revolt because they applied to them.

For the other set of figures I am indebted to the Prime Minister who, speaking in his constituency last September, revealed that over the past five years the industrial worker had received increases of 45 per cent, in his income in order to compensate him for a 25 per cent. increase in the cost of living. He was thus better off by 20 per cent. net. In the same speech the Prime Minister quoted two examples, one of a widow living upon an annuity of £300 per annum and another of an elderly couple with an investment income of £600 per annum who, as a result of tax concessions from this Government, were left with a net spendable income, after taxation, of 11 per cent. more.

My right hon. Friend forgot to mention that that widow and this elderly couple have had to face the same 25 per cent. increase in the cost of living as everybody else, so that they are really worse off by 14 per cent. net. That represents 15s. a week for the widow and 30s. for the elderly couple.

Incidentally, during the same five-year period doctors in the National Health Service have had no increase at all, although they have had to face the same 25 per cent. increase in the cost of living, and dentists have merely had restored to them a previous cut of 10 per cent. Even our own junior Ministers have had nothing at all.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

The hon. Gentleman is wrong about that. Two years ago they had a 28·8 per cent. increase. Junior Ministers have received nothing, although they were given a clear promise.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

The hon. Member was interrupted by me, and what he said in reply may have been my fault, but I am sure that he does not wish to convey the impression that Members of Parliament are 28·8 per cent. better off than they were in 1939. Some people may think that that was what he meant.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

No. For this part of my argument I am comparing the last five years, during which time there has been an increase of 25 per cent. in the cost of living.

The middle classes concerned in industry have fared a little better, but I have been unable to find any section of the middle classes which has had even a 25 per cent. increase. I have been unable to find a single section which has not been made poorer during the last five years as a result of the increased cost of living.

My comparison, therefore, shows the industrial worker becoming steadily more prosperous—to which I do not object—and the middle classes becoming steadily poorer—to which I object very strongly. This is Socialistic egalitarianism under a Conservative Administration. It is not what the electorate voted for five years ago, and it is not what they will vote for at the next Election.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

My hon. Friend will know that the total amount of increased consumption available per head of the population since 1938 is 7 per cent. Bearing in mind the existing defence needs, how does he propose to give the workers what he feels to be their due and, at the same time, maintain the former standard of living of the middle classes? I believe that such a standard is unmaintainable at present.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

I shall come to that point towards the end of my remarks.

Many people—of whom my hon. Friend appears to be one—say "This is inevitable; there is little or nothing that we can do about it". That is not my view. Not only do I regard that as not inevitable, but as unjust, unfair and, what is more, highly undesirable, if not dangerous, in the national interest.

I want to deal, first, with the unfairness of the position. Reference has been made to the increases in productivity achieved under different Administrations since the end of the war. I would refer hon. Members to an article appearing in the Daily Telegraph last year, written by a very eminent trade union leader.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

He was Mr. J. Crawford, President of the National Union of Boot and Shoe Operatives.

I apologise for the fact that it is rather a long quotation, but it is rather important to my case. He said: Despite occasional instances of resistance to new equipment and techniques, those with great experience in industrial and human relations agree that the physical and mental approach of the worker to the job is constant. The variables are the machinery and equipment provided and the standard of management itself, which too often fails to use modern techniques In no other way can we explain the fact of our annual production increase. The alternative is to believe that year by year workers are producing that little bit more by their own extra effort. In fact, the same physical and mental effort as before is producing, sometimes with better equipment, often without, but with modern tools of management, very substantial improvements in productivity. In other words, that increase in productivity is due in no way at all to extra physical or mental effort on the part of the industrial worker, but entirely to improved techniques, better management, modern machinery, etc., all provided by middle-class brains. Yet the statistics prove that the rewards have been distributed in exactly the opposite direction. I should not think that any hon. Members opposite would quarrel with me about that part of my argument.

According to the broadsheet being distributed by the Socialist candidate in the North Lewisham by-election, the following phrase is part of the constitution of the Labour Party. To secure for the producers by hand or by brain, the full fruits of their industry. That is what I am asking for.

Photo of Mr Herbert Butler Mr Herbert Butler , Hackney Central

Good luck to the hon. Member.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

I now want to turn to the question of the undesirable nature of the trend to which I have been referring. I believe it is undesirable for two reasons. In the first place, it is undesirable in a healthy democracy, and, secondly, it is undesirable in a nation such as ours which is facing the technical and scientific era that is opening up before the whole world. I will deal, first, with the question of a healthy democracy and will quote in aid no less a person than the Pope himself who, speaking to the International Institute of Middle Classes in Rome this year, said: It has been found that the countries where the middle classes were too small and too weak were exposed to the gravest and most violent political excesses. I believe that to be true. A strong and thriving middle class is essential to a healthy democracy. But, even more important, at any rate in the minds of some people, is the fact that it is the section of the community that produces the kind of brains that this country is going to need more and more in the months and years ahead.

My right hon. Friend the Economic Secretary to the Treasury referred to that matter in his speech today. The previous Minister of Education announced an ambitious plan, the aim of which was to provide the scientific and technical brains which we are going to need. But how can we provide them when the families which produce this type of brains are being more and more depressed? [HON. MEMBERS: "Nonsense."] I have here a letter from a constituent of mine whose son is at the moment following a technical course at a very well-known educational institution. It is not a public school as quoted by the Evening Standard a short while ago, but the Polytechnic. Although this is only one letter, I do not think that the problem is confined to this one case at all. The letter says: My son has a friend at the Poly, who has the makings of a gifted scientist, but every so often he has to absent himself from lectures in order to try and earn a little money towards his keep. There are others who cannot even afford to buy themselves a midday meal. I think you will agree this is a sad state of affairs. Many students last term had to give up owing to lack of funds, and it really does seem a loss to the community, quite apart from the disappointment to the boy concerned. I suggest that this is an important national problem. [HON. MEMBERS: "Hear hear."] It is almost entirely a middle-class problem. The country needs more and more scientists and technicians, and we must have them if we are to hold our own in this new scientific world which is developing around us. The Government must see to it that the parents who are willing to make sacrifices in order that their sons can play their part in this field are not so burdened—[HON. MEMBERS: "Hear, hear."] If hon. Members opposite cheer me too much, I shall have to stop saying these things—that the sacrifices are impossible to bear. What is more, the Government must see that when the boys themselves have completed their course of instruction they receive rewards which match their endeavours. That is why I say that this process is unfair, unjust and undesirable.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Will not the hon. Gentleman also stress the fact that it is terribly wasteful from the national point of view that we should sacrifice in order to train technicians and then proceed to tax them so heavily that they go to America and Canada in order to be able to keep more of the money which they earn, because that is why they leave this country?

Photo of Mr Henry Price Mr Henry Price , Lewisham West

I am grateful to my hon. Friend for his support, but I will not weary the House with a repetition of the argument.

Photo of Mr David Llewellyn Mr David Llewellyn , Cardiff North

Would the hon. Gentleman also bear in mind that the type of brains to which he refers comes from all classes of the community?

Photo of Mr Henry Price Mr Henry Price , Lewisham West

It is true that they come from all classes of the community, but they come in far greater numbers from that section of the community which is usually referred to as the middle classes.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

If all this is true, why is it that in the Lewisham by-election the hon. Gentleman himself is being trundled round the division and very much used by the Conservative Party to show what a democratic party it is because, it says, he does not come from middle-class origins?

Photo of Mr Henry Price Mr Henry Price , Lewisham West

It is perfectly true that I do not come from middle-class origins, but, unlike hon. Members opposite, that does not blind me to the difficulties of that section of the community from which I do not come. I have no prejudice.

To get back to the theme of my speech, I believe that the Government are well aware of the nature of these problems, although I have been mystified by the replies which they have so far given when questioned about them. The replies fall into two categories. First, the Government say, "We must defeat inflation. That is our first duty." Secondly, they say, "We cannot do anything which would appear to favour one class as against another. We are a national party."

I will deal first with the inflation argument. I entirely agree that the Government's first task must be to cure inflation, but I hope it will not be overlooked that that is of equal benefit to everyone. It does nothing to redress the balance. It does nothing to give back to those sections of the community to which I have referred the standard of living which they have lost over the past eighteen years. It still leaves that problem untouched.

I now come to the argument about the Conservative Party being a national party and not being able even to appear to favour one class as against another. If that is so, how are we to explain the figures which I have quoted? Is it not obvious from those figures that that is exactly what has been happening over the past five years? We have been favouring the industrial worker as against the other sections of the community. The middle classes are now saying to the Government, "We do not want favouritism; all we are asking for is equal treatment. The industrial workers have had a 45 per cent. increase over the last five years to counterbalance a 25 per cent. increase in the cost of living. Give us a 45 per cent. increase and we shall be perfectly happy."

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

Does not the hon. Gentleman's argument rest on the quite unjustifiable assumption that all this began in perfect equality and justice, and that the movement has been one from justice towards injustice because the shares have altered in the way in which he says? But does not the argument disappear altogether when we realise that this began not in equality, but with what one might call the working classes getting far less than their share of the communal cake? That balance could only be redressed by giving other people less.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Or by having a bigger cake.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

That is exactly my point.

All this to which I have been referring does not sound very much like the sort of Conservatism in which I believe and which I expected to get from this Government, and, indeed, which I still hope to get from them.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

Even after five years?

Photo of Mr Henry Price Mr Henry Price , Lewisham West

Yes, even after five years.

We believe in house ownership, yet one result of the Government's policy has been to make house ownership more expensive and more difficult. I believe it would be more in keeping with Conservative philosophy if, instead of paying £1,500 to £3,000 in subsidies spread over sixty years in order to enable a man with a reasonable income to have the doubtful privilege of being a local authority tenant all his life, we gave him £250 or 10 per cent. of the purchase price in order to enable him to purchase the house for himself. That, I believe, is the proper approach for a Conservative Government.

We believe in private enterprise and especially in the small businessman. But it is precisely that poor devil who is feeling most the credit squeeze. We call for greater productivity, yet we do nothing about restrictive practices which hold down productivity and force up prices in every sector of industry against the rest of the community. We have tackled restrictive practices on the part of the producer, but we shy like a frightened horse every time anyone suggests some action against restrictive practices on the part of the trade unions.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

The hon. Gentleman should look at a speech which I made in this House last April, where he will find plenty of examples. I will quote only one. In a television programme put on by a friend of the hon. Gentleman not so long ago—

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

Is the hon. Gentleman sure he was a friend of mine? Let us hear who he is.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

He is a member of the same party—

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

That is not good enough. Let us hear who he is.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

It was a television programme in which he was investigating restrictive practices in industry—

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

Then he is no friend of mine.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

In that programme he was dealing with demarcation disputes.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

The hon. Member should withdraw what he said. It was no friend of mine.

Photo of Mr Henry Price Mr Henry Price , Lewisham West

The hon. Gentleman is only taking up the time of the next speaker.

In that programme he was dealing with demarcation disputes, particularly the one at Cammell Laird. The representative of the employers—I do not know his name—was asked to estimate the loss in production resulting from these demarcation disputes. His reply staggered even me. He said it was 33· per cent. I should have settled for 10 per cent. I believe it would be possible to increase productivity by 10 per cent. throughout industry today with the machinery and equipment we have, if only we settle down to the job—and I do not put all the blame on one side of industry.

When that is done, we can begin to give their fair return to the people about whom I have been speaking. If this country is to win back its pre-war prosperity we must recreate—

Photo of Mr Henry Price Mr Henry Price , Lewisham West

I am grateful to the right hon. Gentleman. I have used that phrase so often that I used it without thinking. I meant to say our proper place in the world—I hope that hon. Gentlemen opposite will agree on that. If we are to win back our proper place in the world, we must create an economy in which success is encouraged and rewarded and not frustrated by suspicion and jealousy.

The country needs extra productivity, and we must reward those who produce it. The country needs a greater volume of exports, and we must reward those who achieve that. Only in that way will it be possible to give to the middle classes that to which they are entitled, along with everyone else—their fair share of the national wealth.

7.54 p.m.

Photo of Mr Donald Chapman Mr Donald Chapman , Birmingham, Northfield

The hon. Member for Lewisham, West (Mr. H. A. Price) must forgive me if I do not follow him. I would merely join with his hon. Friend the Member for Cheadle (Mr. Shepherd) in saying that most of us, in the final analysis, if we look back would be certain that it was quite impossible to maintain middle-class standards if we were going to have a re-distribution of income which the injustices of pre-war years forced on to all our consciences. Although the hon. Gentleman will do very well at the head of his Middle Class Alliance, I am afraid that he will not get a great deal of support in this House.

I mention the hon. Member for Cheadle because, not for the first time, I am indebted to him for some of the things he said, in an intervention as well as in his speech. The hon. Gentleman was right about what we must look for in the future of our economy and about the great danger of letting up, as we might call it, that may face us in about six months' time. I will come to that in a moment.

I am sure the Economic Secretary was right too when he said that today's debate is mainly about the need to maintain a proper surplus in our balance of payments. This debate is interesting because we are now having an inquest on the attempt by this Government, by their own methods during the last two years, to obtain that surplus. That is the interesting historical function of this debate, an inquest on the attempt to pull into shape this surpreme factor in our economic life.

The Government can claim that they have had some successes. I am not afraid to list some of them. The Government might say that by next June there will be an overall balance in our balance of payments. It would be true for them to claim that exports are up 6 per cent. in volume. I do not think the value matters so much, but they are up in volume by 6 per cent. In the dollar area they are up by 25 per cent., and that is not an inconsiderable achievement.

It would also be fair to say that imports have been curbed and that on the whole the total cost of imports has been fairly steady compared with the previous year. We have had a year of steadier prices. Consumption has been held fairly steady. In the last quarter of last year it was held for the first time since I can remember for some years. One thing which has not been noted as widely as it ought is the fact that in the last quarter of last year we began to get something which we have wanted for a long time, a fall in industrial profits. Per £ invested in industry profits were falling in the latter part of last year. This is not an inconsiderable achievement in securing disinflation.

Having been as fair as I can in summing-up some of the successes of this Government, I wish now to look at the other side of the picture and list some of the failures which must be put against the successes. First there is the fact that all this has taken from eighteen months to two years to bring about. The whole process has been extremely slow. Indeed, had the crisis of eighteen months ago been bigger than it was, we should never have weathered it by these methods, so slow are they in operation.

We have a very shaky balance. We are nowhere near the £350 million surplus in our balance of payments that this Govern- ment, and I think my right hon. Friends as well, would agree is our only possible objective for the coming years. So it is not very much to have brought forth after all this travail, all this insecurity, all this feeling of fear which has been created in the community, and the disruption of our industrial life. It is a shaky balance, when what we want is a very substantial surplus. Let us not be too complacent, or even satisfied, with the level of exports which has been registered.

We have been told that dollar exports are up by 25 per cent. but has it been noticed that this has been achieved at a time when everyone's dollar exports are up by that figure, and that the North American Continent is going through a period of inflation, a period of boom, in which everyone's goods are being sucked in? So we can claim no laurels for our achievement in the dollar market in the last 12 months, because we have done only what everyone else has been doing. It is not the result of some superb effort on our part.

If we look at our world trade in metal manufactures, we find that world trading has been going up much faster than our own exports. After all, these are the goods on which we depend more than anything else for our livelihood. I should not like to feel satisfied that just because they are going up, they are going up as fast as they ought to do.

Let us look at the import figures. It is true that they have been held. I have given that on the credit side as I was trying to be as fair as I could be, but the January figures, which have just been released, are very disheartening. I say to the right hon. Gentleman who is to reply that it is not so much that they might go up now that the Suez crisis is passing a little and some of the held-up imports come in. The fact is that our economy in imports has been largely maintained because of economies in stocks and someone soon will start stock-building all over again. There is no certainty that we shall be able to hold the import position. My feeling is that imports are going up substantially because we cannot live on stocks much longer.

On the debit side, we should look at what has been happening to the movement of industrial workers. My hon. Friend the Member for Newton (Mr. Lee) mentioned his doubts about distribution of labour. We were told that in the motor car industry, to which I make only passing reference tonight, the transfer was in order that workers could be shuttled from the making of motor cars into the exporting industries. I ask the right hon. Gentleman to tell us in what way that has happened. I have no evidence of it whatever.

The right hon. Gentleman gave some figures to the House some time ago about what happened to 1,400 workers for whom he found jobs when they left the British Motor Corporation. We found that of those workers 220 went into building and contracting, 67 to the railways, 65 to other transport, 101 to the postal services, 86 into distribution and 82 into public administration and other services plus 55 others. Something like 50 per cent., at the very least, of those went into totally unproductive work that is, in terms of exports. They certainly did not go into the sort of job the Minister of Labour destined them for when he began the squeeze. He told us that they would be all in exporting industries within a matter of months, but soon the figures showed that they did not go into those industries at all. A large number went into home services, some of which needed manning up, but certainly the whole object of the operation never came to fruition.

We should look at what we are paying for this in the employment figures. In the Midlands it is definitely the case that any more sackings can only mean an increase in the pool of unemployment. The jobs which are left vacant will be for those with the rarer skills and they will he vacant for many years because of certain gaps in the skills of our people. Jobs are now well below the number of men waiting to fill them.

Those things on the debit side are even less important than the two things to which my right hon. Friend the Member for Huyton (Mr. H. Wilson) referred in the opening of the debate. There is, first, the question of production. My right hon. Friend was quite right in pointing to the fact that production as a whole is stagnating. I did not think it was an adequate answer for the Economic Secretary to say that it is expanding in some particular industries. The reason I did not think that adequate is this. We can all get a surplus in our balance of payments, as we have always agreed, if we deflate to the sort of level at which we will get that surplus. When we reach that point the problem comes of how to get the upward swing to start again without creating inflation all over again.

We are concerned about the general level of production because until that begins to rise as a whole we shall have no chance of allowing increased consumption and investment or anything else in our community. We shall be stuck with a surplus, but at a much lower level of activity in the community.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

Does the hon. Member seriously tell the House that he thinks the redistribution of labour which has taken place—the obvious and also the not so obvious redistribution—has been against or for the public interest?

Photo of Mr Donald Chapman Mr Donald Chapman , Birmingham, Northfield

I take the point very well. I am not saying that it is against the public interest, but this was supposed to be a purposive reshifting of our labour into the export trades, yet nothing of that kind occurred. The Government slashed and cut, and squeezed, but with this result and the figures bear me out very substantially.

Lastly, investment is expected to level out in 1957. As the hon. Member for Cheadle said, no one can be satisfied with the level of investment we have now, but the hon. Member ought to be even more worried about the fact that everyone accepts that it is going actually to decline compared with 1956, or at least to level out in 1957.

To sum up, on one side we have a surplus in our balance of payments and certain things which are useful in that respect, but when we look at the other side of the picture we see that we are paying the price of achieving the balance by a lower level with no real hope for the future for expanding production and the very grave danger of stagnating investment. What are the lessons we can learn about this? I ask the right hon. Gentleman what his reflections are and how we are to get on once the Suez crisis is over and we are back to the normalcy which the Government were trying to create by the credit squeeze.

How are we to maintain the disinflation we have achieved? Pressures are now being put up throughout the economy. Every manufacturer is demanding that as soon as the oil crisis is over and we are through the misadventure of Suez we should get back to a reduction of the credit squeeze, that we must reduce the Bank rate and that all that has to be behind us so that we can begin to let up. I believe that is very dangerous. I believe with my right hon. Friend the Member for Huyton that we cannot allow that to happen. I want to know how the Government are to prevent it once they have accepted that it ought not to happen.

As the hon. Member for Cheadle said, interest rates are not so effective in the long run. The monetary weapon is useful for the short term as a danger signal for holding something back when it has got out of hand, but not as something permanent, not only to keep us on the present level in our balance of payments but to help us towards a £350 million surplus. How are we to carry on once the mood in the country is that we ought to begin to let up? I predict that in the final quarter of this year every manufacturer will be clamouring—as they are already beginning to clamour—for tax cuts, which is the only sort of incentive to investment they know. They will clamour for relaxation of the credit squeeze, the withdrawal of directives to bank managers and all those things.

In my view we cannot maintain those things beyond the danger period, we cannot have them as a permanent system, yet how are we to be able to stop using them? So far the measures taken by the Government are only producing a precarious balance, yet we have to go on to a £350 million surplus. If we once begin to relax we shall be in danger of inflation reappearing and the balance of payments again getting out of hand. Then we shall have to start tightening up on credit all over again.

We must know, for a start, what we can have as a permanency in these matters as opposed to the temporary measures of the last two years. I have a feeling that these measures will not be effective any longer once it is felt, in the latter part of this year, that the immediate crisis is passed and that there ought to be some let up. How are we to achieve that? If the Government give way, as I believe they will, how can we keep up the export drive on the Government's present policy? How can we prevent an exporter saying, "The Government have let up on the home front. I will allow more of my goods to go into the home market because it is much easier to sell them there without having all this sweat in the export trade."

How are we to do it? The question must be answered, because if the Government cannot do it we shall be in a permanent period of monetary control and credit squeeze. We must have a compromise between the methods of my Government in their day and the methods of the present Government. There has to be a compromise between the pure monetary control of the present Government and the physical controls that we had in the previous Administration. Only in that way shall we move towards anything that will be like permanency.

What exactly do we mean by that? I do not mean that we are back to steel rationing and to making everybody apply for a building licence to put an extra bedroom on the house. I am not going to be sidetracked into all the political rubbish of electioneering about what we mean by rationing. I am sure that it does not involve that, although it means several things. It first of all means that the Government must have a sense of purpose in what they do and an interest in what happens in particular industries.

The Government have to say, as Sir Stafford Cripps did in his time, "We think it is for the good of the country that such and such an industry should expand by so much." We must make estimates. Of course they will go wrong, as did the Chancellor's estimate of the Budget surplus this year, but at least they will be coherent and we shall be trying to move towards something with a sense of purpose. Then we can help to get labour into those industries instead of doing what the right hon. Gentleman has done, cut first and hope for the best as to where the people will go.

We have to have a certain control over building and in the export trade a certain exhortation procedure that my right hon. Friend has mentioned. We must get manufacturers together and tell them, "If we once begin to relax the credit squeeze you must not allow your goods to come on the home market. We believe from our investigations that you can expand your exports in such and such an area by roughly so much. We believe that you must set yourselves a target of that extra percentage." In other words, when this period of emergency is over we must try to marry some relaxation of the credit squeeze—which there must be because industry and the population as a whole will not stand it forever—with the sort of physical controls and exhortations of the kind that Sir Stafford Cripps tried to carry out.

Once this period of Suez crisis is over we must try to get, as a major feature of our longer-term policy, a greater level of savings in general and a higher level of investment. I do not see and I am sure other hon. Members do not, how we can get a higher level of investment unless we get a much higher level of saving. If once we let up the credit squeeze, any tendency to increase consumption must be diverted into increased savings. That is vital for our economy but how are we to do it?

I do not know. It is a problem that faces every Chancellor of the Exchequer. I will say three things. One thing we must do is to extend, as far below into the ranks of society as possible, superannuation schemes such as now apply to the middle class and better-off people. Superannuation must become as soon as possible an accepted practice so that we do not just have retirement pensions. granted by the State, of a minimum amount. There must be a universal superannuation scheme. I do not say that one scheme should apply to everybody but that there should be superannuation schemes covering every member of the community That will be one of the greatest aids to personal savings and a means of moving towards industrial re-equipment through investment of those savings.

Secondly—I am not sure how we can do this because it is one of the greatest problems of all—we have to encourage an even greater emphasis on home purchase. One of the best forms of saving up is to buy your own home. I do not know how we can do it, on the Government's present policy. If we have penal rates of interest, home purchase is not attractive. I do not know how we can do it, but we must find some way of insulating the building societies against high rates of interest and of helping the home purchaser to save his money. He must have every encouragement to buy his own home.

The one other point on saving I do not expect will be universally popular. My right hon. Friend the Member for Huyton is not very fond of the Prime Minister because of the gimmicks that the right hon. Gentleman, when Chancellor, put into his last Budget, and particularly the Premium Bonds. I have no love for Premium Bonds at all. The failure of the Premium Bond is not because of its basic idea but because of the fainthearted way it was done. I would like something much more thoroughgoing in the way of channelling into investment some of the money that goes into gambling every year.

I will be quite blunt about it. I would like to see some form of national lottery attached to the savings movement. It may sound like heresy to Non-conformists, but we shall not get out of our future problems by mere orthodoxy. We want one or two bold men to have a go at channelling into savings some of the money now frittered away in other directions.

When all is said and done, and looking at the post-Suez era, when all the clamour to reduce the credit squeeze begins and the Government begin to give the concessions that we all have to fight to resist, we must keep down consumption, increase savings and keep the investment rate up. The Government will not do any of these things, and particularly will not do anything in getting peoples energies and enthusiasm behind them, unless they have a sense of purpose in what they are doing in the economy and unless they say to people, "We have a sensible plan in what we are trying to do. We are trying to get certain industries to expand; and we shall prevent people squandering wealth on things, because wealth gives them the right to have things that the rest of the people are restrained from having." I refer to building of petrol stations, reconstruction of public houses and other inessential forms of activity in the community.

If we go into the post-Suez era wanting a sense of restraint and of harnessing energy and enthusiasm to a very difficult period of restraint in consumption, these things will be done only if the Government adopt a compromise between their methods and our methods. That will give a sense of purpose to the economy and a feeling in the ordinary people which does not apply when those who have the riches can always have what they want while the rest have to practise restraint. Our only hope of survival is for the two parties to meet to that extent in trying to plan the salvation of our economy.

8.20 p.m.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

The hon. Member for Northfield (Mr. Chapman) made a most interesting plea for a bipartisan economic policy for the country. I think we should wish to examine that rather carefully, but at any rate he has done the service to the debate of bringing it back to the real issue, which is that of the overseas trade gap, from the North Lewisham by-election, upon which it seemed to be in danger of foundering.

I was very interested to hear him confirm what my hon. Friend the Member for Cheadle (Mr. Shepherd) said—and both are right—that the object of Government policy must for a long time be the restraint of consumption and the stimulation of savings. Indeed. I thought all the hon. Member's suggestions very good. but I did not think it was quite fair on his part, nor on the part of the hon. Member for Pembroke (Mr. Donnelly), to suggest that the Government, in the latter's phrase, were in a rut, and in the hon. Member for Northfield's phrase, had no sense of purpose in this matter; because in the last two or three weeks the Government, in their White Paper on a European Free Trade Area, have given a tremendous lead and initiative which has received very little attention in the debate and which, whether hon. Members like it or not, will put in a completely different perspective all the troubles which have been worrying us for the last four hours.

For example, various palliatives have been used to deal with the trade gap in previous years. Sometimes it narrows, sometimes it widens. Sometimes people try to dismiss it by saying that our problems are only marginal, as if by using that phrase they mean "trivial". Nevertheless, marginal or not, it has been with us, for better or worse, for much too long. That being so, it seems to me irrelevant for some hon. Members to say that it is not as bad as hon. Members opposite suggest, and vice versa. Of course it is bad, and it is wrong to draw any hope from monthly figures which may look a little less bad than those of the previous month.

What I should like to know from the Government is how they think this permanent emergency which afflicts us will be affected by the United Kingdom joining a free trade area in Europe; because I regard the conjunction of those two items as a key to our economic future. I am a supporter of economic union with Europe, although many of my constituents in the cotton trade in Lancashire have grave fears about it. What they are frightened of is the fact that there will not be equality of burden upon them and their European competitors. It will be no good in the future for us to compare our tax burdens with those we have endured or will have to endure in the future. That is a comparison which should no longer be made. The tax burden on the firms and individuals in this country should no longer be compared with what happened in 1953–54 or 1954–55 but should be compared with what their competitors and their colleagues in Europe have to bear.

I have noticed recently that in higher economic circles there is a dangerous attempt to get away from comparing the tax burden with that of previous years because the comparison is rather odious and shows that the reduction in the tax burden has not been as great as many of us had hoped to see. The fashionable comparison now made is that between the relative burden of the taxes expressed as a percentage of the gross national product. That, of course, masks the fact that there has been very little reduction, not in real terms but in monetary terms; and I do not like that fact being masked, because masking it accepts almost as an axiom that the currency depreciates, and it is only by making the comparisons with the monetary figures of previous years that we see the full measure of the depreciation.

Even so, I think none of those comparisons will be the right comparison for the future. The comparisons which we shall have to make are those with our European competitors; how much tax does a Frenchman or a German or an Italian have to bear? It is only if there is some equality in this burden that we can hope to enter and to win this great struggle for the markets of Europe. That brings great point to the desire of all my hon. Friends to see, even in these difficult times, another determined effort made to reduce the taxation on industry in this country, which I believe to be still heavier than that anywhere else in the world.

Not only shall we have competition in the reduction of taxation in the European market but we shall also, even more strongly, have what we have already had to a lesser extent—competition in what I might describe as economic aggression. That is not a very nice phrase, but it describes what the world outside is very much like. I very much fear that although on social and moral grounds the character which is regarded in this country as the most admirable—and probably in many ways rightly—is the character which does not push and shove and believes in fair shares, that is unfortunately not the sort of character which is economically aggressive in its dealings in foreign markets.

I do not know the answer to this dilemma. We cannot breed a race of two-faced men—men who are kind and gentle at home but who go out with the determination to do down the other fellow, which is not necessarily based on financial gain but which is an aspect of character, when they get abroad. Unfortunately, living as we do in an island which is not self-supporting, we cannot afford to encourage or to breed the sort of character which otherwise one might admire.

I should like to know how we as a nation are to overcome that problem. I beg hon. Members not to take this in a light spirit, because I believe it is a very real social and psychological problem. The sort of people who beat us in the markets of the world are no doubt very disagreeable and very unworthy, but they beat us because they have the aggressive spirit. If we discourage that sort of character because of our ethical beliefs, then, despite all the credit squeezes and all our self-denial, I do not see how we shall ever get the markets which we must have.

Photo of Mr Arthur Moyle Mr Arthur Moyle , Oldbury and Halesowen

I have been following the hon. Gentleman's argument with very great interest, and I am most grateful to him for giving way. I wish he would clear up one point: where does he want the aggression—in the individual or in the goods?

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

I do not think we can separate the two. If one goes abroad and sees the different ways by which people sell their goods, one finds that, although our goods are often better, they are not in fact pushed because the process of pushing is a very ungentlemanly, disagreeable one and one which, except in the very highest quality of salesmanship, we are not very good at. I do not know what the answer is. It may be said that it would be folly and disreputable to alter our ideals in order to get our markets. Unfortunately, we live in a world the nature of which has been predisposed by our forefathers, in which we, more than anyone else, cannot afford to force our ideas, our ideals, or our methods upon the foreigner because we are more dependent on the foreigner than he is on us.

I say that because I know that hon. Members may well feel that forcefulness in people's lives is somehow wrong, that one should never jump the queue but should always wait one's turn. Those are characteristics we all admire, but it is very difficult to reconcile them with breeding a race of salesmen such as is always being encouraged in speech both inside and outside the House of Commons.

After that digression, may I return to discuss what was said by the hon. Gentleman the Member for Northfield? He suggested, though not quite so strongly as did his hon. Friend the Member for Newton (Mr. Lee), but with, I think, the same spirit, that more could be done if the Government would plan the future of various industries and, in the words of the hon. Member for Nelson and Colne (Mr. S. Silverman), which he never tires of repeating, tell the industry—in his case, usually the cotton industry—what sort of size they want it to be. We had an interesting interchange at that point, because when the hon. Member for Newton was asked how he knew or how anybody could know what size an industry could or should be, he replied that of course one could do it; it could be done by using the weapon of capital limitation.

Of course, one can take even more weapons if one likes, but however many weapons one takes, however many powers one takes, they do not give one the answer. One can take as many weapons as one likes, but one does not know the size of the piece of wood one is to cut with them. I am strongly of opinion that the Government are less likely to know than anybody else.

Photo of Mr Donald Chapman Mr Donald Chapman , Birmingham, Northfield

This is an argument we have had across the Floor of the Chamber for a long time, and it is about time it came to something like a conclusion. If I may say so, the hon. Member for Darwen (Mr. Fletcher-Cooke) ought really to face this fact, that there are many indications which a Government can adopt. They can give to the motor car industry some advice about what level of consumption of motor cars they think can be allowed having regard to our road programme, and what people are likely to buy if the standard of living goes up. The Government can generally give some very good idea of what the future level of home consumption could be. Then, in the export market, they could look to our competitors in the world, relating their performance to our performance, and make some recommendations. The motor car manufacturers will do none of that, because the industry is so competitive. Those are some of the ways open to the Government to give an indication of size.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

I suppose they could give their forecast by some means or other, which I cannot at the moment imagine, of the sort of purchasing power or amount of purchasing power which people in these islands were likely to possess in two or three years' time, though how any Government could know how public taste or the way the public will spend its money is going to shift I do not know. How on earth any Government are to be expected also to know how public taste and public laws in Brazil, Australia, Sweden, and all the other places, are going to fluctuate in two or three years' time, I just cannot imagine; and I believe that any such indication they might try to give would be a fraud on the motor car industry.

I really do ask the hon. Member for Northfield to believe that I most sincerely feel that any such indication would be positively misleading because it would almost inevitably be wrong, so many and so complicated are the factors which would bear upon it. The same considerations apply to other industries not so closely involved in the export business. If by being purposive the hon. Gentleman means that, then we cannot agree with him in his otherwise very sincere plea for a bipartisan economic policy.

We cannot go as far as was hinted at by the hon. Gentleman the Member for Newton either, who said that the Government were not getting the workers into the right places. He coupled that, unintentionally I am sure, but significantly as a subconscious association, with a desire for the reimposition of building controls. The conjunction of the idea of building controls with getting workers into the right places struck one as sinister. I am sure the hon. Gentleman did not mean it so, but, if he were here, I should like to ask him an important question on this topic.

I see that the hon. Member for Newton has just taken his place in the Chamber, so perhaps I might put my question to him. In what way does he think that one can get the workers into the right places, which we all want? As I see it, it can be done in one of two ways: first of all, by directing them, which I am sure he does not want, or, secondly, by a wages policy by which the Government purposely and specifically attract workers into a particular industry. That would amount to interfering with the method of collective bargaining, and that is just what, in a later part of his speech the hon. Member said he particularly disliked and particularly blamed the Government for doing in regard to the nationalised industries. If he could explain any third method of getting the workers into what he regards as the right places, he would be doing us a very great service.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

I did not, as a matter of fact, discuss the need for a wages policy. I believe that there is a great need for it, but I did not discuss it today. What I was saying on the question of the workers being in the right places was that I believed we had reached the point when we must deliberately take the type of work required by certain workers to them. I did not mean that we should direct labour or force labour to go into other parts of the country. I believe that, having created a body of workers with certain training and skill, it is our job to ensure that industry is moved into proximity with them.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

I understand that we should design our economy around whatever skill there happens to be in it, and that not only should the over-all pattern of our economy be, as it were, tailored for that purpose but that, geographically speaking, it should be shifted to the places where these particular workers happen to be. But, that, again, suffers from the vice of looking upon this country as self-supporting. There would be a great deal to be said for that if we were not going to be in hot or even hotter competition than ever before with other countries which do not believe in that. Undoubtedly, that is uneconomic, although possibly socially desirable, when we are in competition with countries which are placing their factories where it is most economic in regard to ports and raw material, irrespective of where the workers are. They, of course, are siting their factories not to suit the skill of the men who happen to be there but to make the products that the man overseas really wants.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

We are now siting our factories and important industries because of raw materials, allocation and supplies and railways. Surely once we get rid of industrial control, as in the building industry, we have no chance of doing that.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

They are being sited by the people who are building them according to what those people, hoping to make a profit out them, think are the most economical places. Sociologically that may be undesirable, but from the point of view of the cheapness of the products in a competitive world it has its advantages.

In conclusion, I think these cold winds from Europe which are going to blow upon us all, and must blow upon us all. will involve a radical alteration even within the context of the questions that will be asked, not to mention the answers, I think that that gives us an opportunity of getting away from this terrible trade gap which dogs us year after year in one way or another, although, in its turn, it may produce another sort of gap which will require completely different thinking and completely different treatment.

8.40 p.m.

Photo of Mr Iorwerth Thomas Mr Iorwerth Thomas , Rhondda West

I have no desire to follow the argument advanced by the hon. Member for Darwen (Mr. Fletcher-Cooke), but I should like to make this comment. He seemed to enumerate the difficulties and the very serious consequences which would result from any effort made by the Government to bring about limitations of capital development and investment in industry. I do not see how he can advance that argument, particularly in the light of the experience which we have had in analysing the operation of very large monopolies in this country which are exercising their freedom and their right to determine the size of their industry both for the purposes of internal trade and particularly in regard to exports. The difficulties are not, therefore, insurmountable. We could learn a great deal from the past practices of the monopolies.

My first point concerns the Development Areas. We are all well aware of the very great achievements that have resulted from the planned economy flowing from the operation of the Distribution of Industry Act, which transformed depressed areas and special areas into Development Areas, and planned their industries in a way which has been very much welcomed by their communities.

I realise that there is a desire in all parts of the House to remedy the present economic position. We have today heard lengthy arguments by those best qualified to speak. They have adopted quite a tutorial and professorial approach to these matters. When discussing deflation or inflation, I think that everyone will agree that those parts of the economy likely to be most affected by stresses and strains are the industries located in the Development Areas. What steps are the Government prepared to take to mitigate and minimise the effects of their policy of deflation?

The name of the Rhondda is, of course, synonymous with depressed areas, special areas and the rest and, in the main, what applies to the Rhondda would apply to all our Development Areas. In the Rhondda there are fears of the possibility of a retrogression to what we call the bad old days. For example, one very large factory in the Rhondda had at one time 1,000 employees. As a result of the operation of the credit squeeze and of the Government's present financial policy it has now only 300 personnel.

In that factory there is floor space available for all the original trained labour, but that trained labour has now been scattered. Some of the men have found employment in factories ten and twelve miles away, but the situation now is that the neighbouring factories and trading estates cannot absorb any more men. That has occurred in the very heart of a Development Area. What steps are the Government taking to see that that available floor space and trained labour are used to the best advantage of our economy?

I have a second example of the effect upon the Development Areas of the monetary policy of the Government. Some industries and industrialists in the Development Areas who have their own financial resources are able to proceed with a policy of capital investment by drawing upon their own private resources and thus have freedom to build and to extend their factories. At the same time, a substantial number of industrialists in the Development Areas who are housed in Government-financed factories are prevented from expanding by the monetary policy of the Government. They have to apply to the Board of Trade before they can expand their industries, but because of the credit squeeze the Board of Trade has rejected applications.

The industrialists in Government-financed factories therefore suffer an injustice in comparison with those who have been able to establish their factories from their own financial resources. That is an aspect to which the Government should give serious consideration. In my constituency, application has been made for the extension of an existing Government-financed factory, which would mean the employment of more than 400 additional people, 90 of whom would be men, but again we have seen the effect of the unfair, unbalanced and unjust operation of the Government's restrictive policy in the financing of factories.

There is another serious difficulty, which applies not only in the Development Area, but throughout the Principality. We all boast and are proud that the contribution of Wales to the nation's steel production is of the magnitude of 28 or 29 per cent., and a further expansion of the steel industry in Wales is envisaged at a capital cost involving hundreds of millions of pounds. The irony of the situation is that although Wales is producing such great quantities of steel, there are industries, both in South Wales and in the Principality as a whole, the expansion of which has been curbed by the lack of steel. This matter has been receiving the attention of many varied organisations in the Principality for many years. The Welsh Board of Industry, an organisation representing all the industrialists in Wales, has from time to time made representations imploring the Government to bring their influence to bear upon the steel makers in Wales to provide a section rolling mill in South Wales.

I have in my possession a document which shows that there are twelve well-established steel users in Wales who have not been able to accept contracts and to expand, and who have had to create redundancy and have lost their skilled operatives because they have been unable to obtain the proper quality and quantity of steel. Why should that state of affairs have existed for so many years? If the President of the Board of Trade made inquiries and took their opinion and advice, those industrialists would impress upon his mind the necessity for the establishment of a section rolling mill in South Wales.

It is true that at present the shortage of this steel has been considerably eased by the crisis in the motor car industry. The quantities of steel which are now available in the market are due not to any foresight on the part of the Government or even on the part of the steel makers but simply to the economic accident that the motor car industry has been experiencing a recession for quite a time now.

There are in my constituency steel users who recently had to dismiss 150 men because they could not obtain steel. There were plenty of contracts available but they would not accept them because they had not the steel. They have had to complete their existing contracts by purchasing the necessary quality and quantities of steel from the Continent and paying for it as much as £20 to £30 in excess of the home market price. It is a very serious state of affairs, when one considers the steel potential in the country, that steel users have to go to the Continent and increase the importation of steel at that increased cost in order to carry out their existing contracts.

Whilst the Government are wrestling with inflation, I urge them to bear in mind that the Development Areas of the country are vulnerable to the slightest change in the economy. They are the first to feel the cold breeze of any economic storm that comes along. They are so sensitive to the stresses and strains on our economy that there is a possibility of a great deal of unemployment being created.

I trust, therefore, that the Minister will give the three points which I have dealt with his serious consideration. I hope that he will be able to reassure the Development Areas in particular that they will receive the Government's constant care, and that they shall not suffer the indignities of the past but even in this slight economic recession can look to the strong arm of the Government to protect their interests.

8.54 p.m.

Photo of Sir David Price Sir David Price , Eastleigh

In the very short time available to me I cannot take up all the arguments which have been deployed on the other side of the House, Basically, the argument of the right hon. Member for Huyton (Mr. H. Wilson) was rather like that of the famous American comedian, Will Rogers, who said. I do not make jokes. I just watch the Government and report the facts. That seems to me the burden of the argument from the other side of the House.

On the external side of our economy—and I have no time to do more than touch upon the external aspect—we did rather well on exports last year. There was a 10 per cent, increase in value and a 6 per cent. increase in volume. We saw a satisfactory change in the pattern of commodities. We saw a considerable increase in engineering products from 37£6 per cent. of all manufactured exports in 1953 to 40£5 per cent. in 1956. Textiles declined relatively from 12£6 per cent. in 1953 to 9£4 per cent. last year, although wool held its own. Thus the long-term trend towards exports of high, rather than low, conversion margin products continued. That trend is essential to a country with few indigenous raw materials. Equally we saw considerable improvements in the relative importance of the areas to which our exports were going. There was a 25 per cent. increase in dollar exports.

However, the crisis which we met last autumn was mainly a crisis of confidence. It was not a crisis based on basic trading conditions. I calculate that the gold and dollar reserves between the end of July and the end of December fell by 845 million dollars when adjusted for special credit and payments. We have to look rather deeper for the causes of that crisis because those causes remain. I hope that when my right hon. Friend replies to the debate he will be able to confirm that the crisis arose, above all, from movement on capital account. As I understand it, India drew £150 million of her sterling balances which she had intended to draw upon over the whole of her second five-year plan. Japan reduced her balance from £130 million to £20 million, and China, which seems to operate like the famous mythical Swiss bankers, moved £100 million out of the country. There was also a parallel movement out of sterling by the Arab countries. That may have been a backwash of Suez; I do not know. These figures alone would account for the considerable drain on our short-term reserves.

I emphasise that our gold and dollar reserves are only our short-term reserves. One has to look at the whole balance sheet of our assets and our liabilities. The real problem is the future of the sterling balances. I hope, therefore, that in the next few months we will get from the Government an idea of their general intention towards the sterling balances. Obviously, as bankers for the Commonwealth, it is a good thing to have reasonably high sterling balances. However, it is a bad thing to have large sterling balances if they are going to be drawn on suddenly, and so put great and unpredicted pressure upon our current gold and dollar reserves and therefore upon sterling, requiring large-scale official support to maintain the parity of the pound.

When one remembers that we have given independence to Ghana and that the problem of Malaya will be coming up, the question of the sterling balances becomes urgent politically, if not economically, so I hope that we shall get an indication from the Government of how they intend to deal with it.

Our total balance sheet, according to an economic study which I made last year, revealed—if my figures are correct, and I do not think they have been challenged—that whereas before the war every man, woman and child in this country was owed £75 from abroad, a year ago each one of us owed £59 abroad. Such is our changing position. Time does not allow me to develop the basis of my figures further.

I ask all my right hon. Friends on the Treasury Bench to consider a review of monetary policy and the monetary techniques. I am in favour of the monetary form of managing the economy, but what is evident from recent experience is that the really important matter is to control the total aggregate of liquidity, and not merely short-term interest rates. As I have said, time forbids me from entering on all the arguments about monetary policy that I had prepared— perhaps they will be reserved for an article in some learned, but obscure, journal.

I conclude by saying that I agree entirely with the necessity for establishing priorities in our economic objectives. The first priority must be to improve our external balance of payments and to build up our external reserves. I suggest that our priorities at home must be twofold. We must have more savings and more investment. It is no use having investment without saving. Savings come first. We must also give "a bit of lolly" to the people who produce the wealth. I am not referring only to the group mentioned by my hon. Friend the Member for Lewisham, West (Mr. H. A. Price), but to all the people who actually produce the wealth.

I know that my right hon. Friends have not had a chance, since going to the Treasury, to work out the details of their reappraisal of defence and the changes in the structure of Government expenditure. [An HON. MEMBER: "They did."] Not the present Treasury Ministers. Therefore, I know that it would be too much to expect great things in April this year. I should like to feel that their Budget is going to be rather like a trailer to a great epic, like one of Sam Goldwyn's "trailers," because all good "trailers" have this characteristic. They give you a little bit of the punch which two weeks later you get in very much greater detail when the main feature is shown. I hope that my right hon. Friend will allow us in his Budget to linger for a moment in the lush embraces of tax reduction, although we may have to wait until April, 1958, for the economies which will make art honest woman of her.

9.0 p.m.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I make no complaint about the absence of the Chancellor of the Exchequer and the President of the Board of Trade from this debate. I fully accept the explanation of this Government that two, if not three, Ministers are now required to represent us at O.E.E.C. whereas one was quite enough under the Labour Government.

Our charge against the Government in this debate is quite simple. Under their economic policy in the last two years, the cost of living and unemployment have gone up, and production and the gold reserves have gone down. I should have thought that that is exactly the opposite of what economic policy was intended to achieve.

The Economic Secretary to the Treasury this afternoon made the rather surprising statement that progress had been made in building the reserves since 1955. The reserve today is actually £240 million less than it was in January, 1955. To be perfectly fair to present Ministers, while the present Lord Privy Seal was Chancellor we lost £300 million worth of gold. While the present Prime Minister was Chancellor, not counting in the £200 million borrowed in December, we lost over £200 million in thirteen months. While the new Chancellor of the Exchequer was at the Board of Trade, and admittedly that was five years, we lost £500 million worth of gold from the reserve. And during the few months when the present Minister of State, Board of Trade, was in the Treasury—and he held the record for the speed of losses—we actually lost, again not counting the borrowed dollars, £250 million worth in that short period. I do not know whether those exploits were what the Tory Party election manifesto of 1955 was predicting when it said: The future beckons this generation with a golden finger. I expect the present Ministers to do better. Indeed, if they do not, we shall have no gold left at all at the end of six months.

In view of the bromide—I use the Economic Secretary's own word—with which he referred to the question of the reserve today, I do in alt seriousness ask the House to face the gravity of the gold reserve situation, which, after all, is absolutely cardinal if we as a nation are to regain our independence and our influence. I wish to put these brief points to the House.

First of all, and I think the hon. Member for Eastleigh (Mr. D. Price) would agree, that the reserve is fantastically too low for the volume of sterling area trade, even if we count in the £200 million "mobilised," in the Economic Secretary's phrase, but in plain English, borrowed, from the International Monetary Fund. Secondly, if we do not count in these borrowed dollars which we have to repay, the reserve today is just about at the lowest point it has touched since the war, and far lower than it was in December, 1945. Thirdly, for the next few months, of course, we have to go on paying dollars for oil. Ministers keep on talking as if the only factor relevant to the movement of the reserve was the United Kingdom balance of payments, and that if we got a surplus there, which goodness knows is desirable, the reserve could automatically be expected to rise.

However, quite apart from the question of the sterling balances, we cannot build up the reserve even with a surplus on the United Kingdom balance of payments, so long as we are having to pay for a large part of our oil supplies in dollars. I thought the Economic Secretary was telling us only half the story today when he said he thought that the United Kingdom balance of payments was in a much sounder position. Do not let us forget either that by the time the Suez Canal is cleared—let us hope that that will be by May—the sterling area will again be entering its normal summer period of strain.

Why has the reserve fallen so low in the last few years? The present position is partly, as we know, the consequence of the Suez disaster. But the real reason is that over those years there has never been any Government policy for building it up. Priority has always been given by Ministers in the present Government and the previous Government to doctrinaire irrelevancies, such as the getting rid of controls, and electioneering pressure to give tax concessions to friends of the Tory Party.

Is there really any new policy now? I do not think we heard any from the Economic Secretary this afternoon. I know that the Prime Minister said in his constituency that he felt exhilarated by the present situation, but I do not find a ½ per cent. reduction in the Bank rate, with an explanation by the Chancellor that it does not mean anything, particularly exhilarating as a policy.

Let us examine the reduction in the Bank rate. In February a year ago, when the reserve stood at £789 million, the present Prime Minister came along, as Chancellor, with what was supposed to be a bold, stern stroke and raised the Bank rate by 1 per cent. He then protested his determination to build up the reserve, using the same solemn language with which he had promised us £100 million economies in Budget expenditure. But last week, when the reserve was far lower than last February, even if one includes the borrowed dollars, the new Chancellor lowers the Bank rate. We really cannot complain if the public is more mystified and puzzled about the country's real economic situation than it has been for a long time.

I hope, and suspect that the real reason for the reduction in the Bank rate last week is that the Chancellor has at last realised, or his advisers have, two disastrous effects, which my hon. Friends and I have long been pointing out, of our relying on the Bank rate almost alone for checking the loss of reserves.

Those effects are, first, the colossal expense of a 5 per cent. Treasury bill rate to both the Budget and the balance of payments. Secondly, and most important of all, there is the fact that dear money corrects the balance of payments only by stopping the rise in production. Consequently, by that policy one is forced into the dilemma that one can only square one's balance of payments by cutting down production.

Let us first look at the debt interest. Does the House realise that by 31st December in this Budget year the Government have already spent £570 million on debt interest and management, or £65 million more than in the previous year, and that total debt interest spending this year will be close on £700 million, which, incidentally, is seven times the whole Exchequer contribution to the National Insurance Fund? It is not only the Welfare State which is keeping Government expenditure and taxation high. I am not greatly encouraged to learn this morning that the Government are now funding £240 million of Government debt for 50 years at 4½ per cent.

Secondly, the most disastrous feature of the Government's economic policy in the last eighteen months has been the deliberate damping down of production to check imports. The present Minister of State, Board of Trade, candidly admitted to me in reply to a Question on 5th December that some fall in production was a necessary consequence of the measures taken to restrain home demand. So the Government admit quite clearly that they sought to reduce production to restrain home demand. I agreed with much of what was said this afternoon by the hon. Member for Cheadle (Mr. Shepherd). But I do not think that he faced the fact that such small hopeful signs as he enumerated in the story of 1956 were bought at the price of an actual fall in total production. Everybody knew that those advantages could be gained at that price.

Photo of Mr Derek Walker-Smith Mr Derek Walker-Smith , Hertfordshire East

The right hon. Gentleman will recall that in fact I made the same point as was made by my right hon. Friend the Economic Secretary earlier today; that is to say, the overall figures for production masked a great deal of change within them whereby the production of consumer products had fallen and that for capital goods had, on the whole, increased.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Yes, and it is no better a point now than when the right hon. and learned Gentleman made it before Christmas.

The facts are that in all the last four months of last year, total production was lower than in the corresponding months of 1955. In the last quarter of 1956, production was 2 per cent, down and in December it was more than 2 per cent. down. We cannot solve our economic problems, let alone double the standard of living in 25 years, by producing less and less. It is not good enough for the Minister of State or the Economic Secretary solemnly to protest that production of some things went up and that of some things went down. The Economic Secretary knows as well as I, even if the Minister of State does not, that an economy is not functioning properly unless both a rise in total production, and changes within the total, take place at the same time.

Of course, it is true that if one refuses to exercise virtually any physical controls and operates solely or mainly by the Bank rate, one dare not have full production, because one would not be able to pay for the extra imports. If one will not use the steering wheel for theological reasons, of course one has to keep jamming on the brake. The only reason why the Government have lowered the Bank rate merely by ½ per cent. is that the Chancellor himself knows that on present policy we cannot pay for the imports which are required for full production and full employment.

This seems to me the new restrictionism. One slows down the whole economy because one has a theoretical dislike of a little more restraint and selectivity. If the hon. Member for Louth (Mr. Osborne) does not believe me, let him read the first leader in the Economist this week. The Economist points out, quite fairly, that we lost £750 million worth of potential production last year as a result of the Government's deliberate deflation. It argues the issue, quite fairly, between the expansionists, who want full production first and foremost, with enough import restraint and selection to make it possible, and the restrictionists, who want to hold back production and employment to the level at which any more physical controls can be avoided. That is the real issue.

Hon. Members on this side of the House are on the side of expansion. The right policy is to aim at the highest possible production and exports and accept the minimum of restraint necessary to make that possible. This stagnation policy, which the Economic Secretary politely called a policy of restraint of the last two years, is disastrous defeatism.

If there were time I could quote any number of figures to show that in the last few years Britain's record, in the volume of exports, investment and production, compares lamentably with that of almost any other similar industrial nation. I will quote only two facts. It is quite true that, at the cost which I have mentioned, our exports rose in volume by 6 per cent. in 1956. But in that year they were still less than 20 per cent. above the 1950 level, and that is a smaller rise than has occurred in any other industrial nation in Europe.

Secondly, we are now forgoing total possible production to the extent of about £1,000 million a year, which we should have if the annual rise in our production was the same as it was before 1951, and the same as is being achieved in other countries. What could not we do with an extra £1,000 million, or even the £750 million which the Economist says that we should have had last year?

As the hon. Member for Cheadle said, we have done a lot of investment since the war but I think that he will agree that, as a proportion of our national income, it is woefully small compared with the situation in most other great industrial nations. This stagnation policy has a deplorable effect upon productivity. Deflation is the enemy of productivity. Again, according to the Economist, labour costs per unit of output rose faster than ever last year, as a result of the Government's deliberate deflation.

What is the use of asking a redundant motor worker, or even his luckier pal on a four-day week, to listen to a lecture on productivity? Deflation and short time have destroyed much of the good work done since the war. They tend to bring back the urge for security at all costs, and cause restrictive practices on both sides of industry.

What should the Government do in these circumstances in encouraging productivity? First and foremost, they should forsake devaluation and stagnation and go all out for expansion again. Over and above that, however, I should like to put one or two concrete suggestions to the Minister. I suggest that in the April Budget—I think that we shall have it in April, as usual, although we can never be sure with this Government—priority in concessions should be given to restoring the investment allowance, if possible upon a selective basis. We really must expand investment this time. We must not start a spending spree, as we did under the Lord Privy Seal's régime.

If the Chancellor is to take the advice of the hon. Member for Lewisham, West (Mr. H. A. Price) and do something to help the skilled executive and professional workers, I suggest that he looks at the scheme advocated in the Minority Report of the Royal Commission on Taxation of Profits and Income, for combining a better children's allowance with a variation in the £2,000 limit for Surtax. I hope that the Treasury will think that point over.

I hope that the Chancellor will also prepare a plan now to see that cuts in defence expenditure are made so as to release labour where it is needed and not to cause unemployment. I am sure that the Minister of Labour knows that that was done with great success both during the war and afterwards. I hope that he is in consultation with the other economic Ministers and will see that the cuts which are made are not just reckless and haphazard ones which will merely increase unemployment.

Next, the President of the Board of Trade should do something positive to increase our proportion of Commonwealth tobacco imports to save dollars. This point has been continuously raised in the House, and it is not good enough for the President, as he did in answering a Question last week, simply to say, feebly, that tobacco imports are on open general licence, implying that he cannot do any more about it. He must know that a huge proportion of our tobacco imports are bought by the Imperial Tobacco Company, and that for ten years before 1951, anyway, the proportion was agreed year by year between the tobacco companies, the Treasury and the Board of Trade. By that means we brought the dollar proportion steadily down.

It is extraordinary that the Government go on wasting dollars in this way on dollar tobacco and yet borrow 560 million dollars from the International Monetary Fund. And in order to get these dollars—they never told us this—they were compelled to give pledges to the Fund about British credit and fiscal policies such as had never been given since the war. If the Minister denies that, I can read out statements by the Chairman of the International Monetary Fund in which he says that that has been done. [HON. MEMBERS: "Read it out".] Very well. The Chairman of the Fund, after the loan had been granted, said: The United Kingdom Government has announced that it will follow fiscal, credit and other policies designed to strengthen the economy both internally and externally.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Surely the right hon. Gentleman does not object to that?

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

The Chairman then went on to say: For this reason the Fund has approved a transaction of this magnitude. This means that before the loan was granted some assurances about our fiscal policy must have been given to the International Monetary Fund.

Photo of Mr Derek Walker-Smith Mr Derek Walker-Smith , Hertfordshire East

Is it not obvious that that passage is taken from the statement of 4th December made in this House by the then Chancellor of the Exchequer?

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

No. If the Minister of State looks at it he will see that the discussions must have taken place before 4th December because it was on that date that the loan was announced.

Next, the Government really ought now to end the embargo on British exports to China. I hope that the Minister will note that the hon. Member for Horn-church (Mr. Lagden), who I am sure is no Communist, supports this point of view. The Korean armistice was signed as long ago as July, 1953, and it really is imbecile to be continuing this embargo in 1957.

Finally, and this in my view is among the most urgent tasks confronting the Government today, the Government must this winter radically relieve the present deplorable plight of the old-age pensioners in this country. [HON. MEMBERS: "Hear, hear."] It really is a scandal and a blot on our society that 4 million or 5 million old people should now be actually worse off than when they first got the 26s. pension in 1946. They are now getting 40s. and it would need 41s. to 43s., according to which index one uses, to give them even the purchasing power of the 26s. in 1946.

Last December there were 1,079,000 old people in receipt of National Assistance. By now even that figure must have risen still further. It is surely intolerable that in Britain in 1957 nearly 1¼ million old people should be suffering a means test. I do not believe that a mere restoration of the 1946 purchasing power is good enough today, eleven years after the end of the war.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Will the right hon. Gentleman remind himself and his hon. Friends that this is exactly what the right hon. Member for Ebbw Vale (Mr. Bevan) said on 24th April, 1951, about his own colleagues? He said that after they had had five years of planning they had completely failed and had let down the old-age pensioners by giving them a miserable shilling or two with one hand and taking it away with the other.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

The hon. Gentleman should know that during the period of the Labour Government after 1945 the old-age pension was trebled from 10s. to 30s. But I believe that very soon we shall have to reorganise drastically our whole pension system so as to get rid of the present class distinction between a niggardly State pension on the one hand and lavish private pensions on the other. People now want a decent pension in their old age, with self-respect and without conditions. In other countries they are getting it, and I believe that people in this country are willing to pay a contribution in order to get it.

The Labour Party, which has long been studying the fundamentals of this problem, will soon lay its long-term plan before the country for ending this pension discrimination. Meanwhile some important improvement has to be made this winter in a State pension which is becoming a disgrace to the country. In our considered view such an increase should not merely give the pensioners what they have lost since 1946, but should add a generous share over and above that out of the increased national income of the past eleven years which they themselves by their efforts have helped to make possible. I urge the Government to announce such an increase as that tonight, and I promise the support of every hon. Member on this side of the House in making it law with the greatest possible speed.

9.27 p.m.

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

For the second time in a little over a month I find myself—I apologise to the House for it—acting as a stand-in during an economic debate. This time both the Chancellor of the Exchequer and the President of the Board of Trade are abroad, and I find myself again voyaging in these strange seas.

Probably the safest place to begin is where I left off last time. If the House will forgive me, I will take up a couple of points from the speech I made immediately before Christmas when we had the last economic debate. I think I should say that, in the main, I intend to deal with the problems relating to home and social policy which have been raised in many speeches, although there were a number of speeches which dealt very well with the problems of overseas trade and the balance of payments. I hope, in particular that my hon. Friend the Member for Eastleigh (Mr. D. Price) will send me a copy of the obscure journal in which he threatened to extend the remarks which he had to cut short tonight.

In the debate before Christmas, when we were discussing the deployment of manpower which is an essential part of our economic policy—this is relevant both to today's debate and to the debate to be held tomorrow—I told the House that, whatever might be the final decision about National Service, I thought that one might move quickly in relation to hardship. As the House knows, the Regulations have been virtually unchanged since 1939, that is, the Regulations which govern the issue of postponement certificates. But I have today laid amending Regulations before the House.

As hon. Members know very well, because it is a frequent subject in their postbags, the most difficult cases generally arise not in connection with the initial application but on application for renewal. Under the old Regulations the certificate could be granted only for six months. Under the new Regulations I am extending that maximum to two years for an initial application and one year for the subsequent ones and also laying down, where it is not reasonable to make alternative arrangements, that the period granted should be related to the probable duration of the circumstances of hardship. I think it also important that we should change the Regulations that may have been appropriate in the past in relation to business hardship. Previously postponement could only be granted to enable other arrangements to be made for the carrying on or disposal of a business. I do not think we should go on with that provision in present circumstances, and I am amending that Regulation.

There are a number of changes in connection with domestic hardship. I shall not go through those now, but I should inform the House that I have sent special instructions to all my officers to say that all those cases are to be considered with the fullest sympathy. I have emphasised again to them the importance I attach to the most human approach to what is a very human problem that affects many of our constituents.

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

Will the right hon. Gentleman say whether those Regulations are in the Vote Office?

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

I think the hon. Member will find that they are now in the Vote Office. I think and hope that these changes will get rid of many of the cases which have caused all of us much anxiety and will reduce the amount of correspondence between hon. Members and myself, which is something we can all bear with fortitude.

I should like to come straight away to the problems of the motor car industry, which have been a recurring theme in economic debates ever since I became Minister of Labour. I do not suggest there is any connection. [Laughter.] I started thinking half way through that sentence whether I could substitute another end to it, but I could not think of another in time. As the House knows, all through 1956 there was a serious problem of short time working in the motor car and motor accessories industries. Although it recovered a considerable amount in the autumn, it rose again sharply when petrol rationing was imposed, or when it was imminent. At the end of December it ran something like 80,000. I have been asked for the figures. The latest figure I have is that throughout the first part of January it was about 60,000, and the most recent indication—only a day or so old, on 8,th February—is that the figure has fallen to about 50,000. As the House knows, with Vauxhall and Jaguar there has been some welcome return to full-time working, but these figures are very unpredictable because the units in the industry are so large that a single change in a component can alter the whole balance of the figures.

I was pressed by the hon. Member for Dagenham (Mr. Parker) to give further help to the motor vehicle industry. The House will remember that in the debate just before Christmas, to which I have referred, I announced relaxations of the hire-purchase restrictions. Those were rather scornfully greeted by hon. Members who thought they would have very little effect on the situation, but as a matter of fact the sales of new private cars bought on hire purchase in January were 70 per cent. more than in December, although still rather less than in previous months, and those of used cars were 140 per cent. more and above the figures for earlier months. The sales of commercial vehicles were up by about 60 per cent. I am bound to say that I did not think the reaction would be quite so swift, but it is unquestionably true that the concession has been of very real value to the industry.

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

We are now pressed to go further and, as the hon. Member for West Ham, North (Mr. Lewis) says, the most popular solution would be a cut in Purchase Tax. It was suggested that it should be a temporary affair linked to petrol rationing, but if hon. Members reflect they will see that a proposition like that would be a very difficult one to support. The President of the Board of Trade has said that the Government do not contemplate a further concession in this matter, but it is a question mainly for the Chancellor of the Exchequer to consider in his annual review of taxation.

For my part—I know that many hon. Members have a more close knowledge of the motor car industry than I have I do not think that it really is the Purchase Tax element which is the main difficulty the industry is having at present. Indeed, I think that most of the difficulties that they are facing are caused by restrictions on the supply of fuel and the inevitable anxieties that those restrictions must cause in people's minds. Those difficulties will disappear with the removal of the restrictions.

The part of the Opposition Motion that concerns me most and also causes me most concern is the suggestion that we have endangered the maintenance of full employment, and that new policies are required in order to assure it. I shall use as few figures as I can. The latest figures were given by my right hon. Friend this afternoon. It is important to realise, as I have reminded the House, that January is normally a seasonal peak of unemployment. I say "normally" quite deliberately, because I have been most anxious about this matter for some time. I shall not assert that this January will be a seasonal peak because the position is too fluid for one to make as confident a prophecy as that. When I spoke in the House on 20th December, I said: As for the future, I do not doubt that there will be some temporary increases in unemployment, and more particularly probably in short-time, as a result of these difficulties. The position of the motor car industry gives very real cause for anxiety."—[OFFICIAL REPORT, 20th December, 1956; Vol. 562, c. 1528.] There can be no complacency about this. I gave firm warning to the House then, but it is only fair to say that the position now is substantially better than I thought it would be or than I predicted to the House it would be. The right hon. Member for Huyton (Mr. H. Wilson) talked about the numbers who had left civil employment in the last year. I do not know whether he used the same figure, but I have the actual figure, which is that those in civil employment fell last year by 64,000. In the three years prior to 1956, that number had grown by almost 1 million and the drop last year was no more than 64,000.

The hon. Member for Northfield (Mr. Chapman) made a speech—a good Tory speech, a lot of it. I will not say that I agreed with it. That would be going too far. I disagreed with it less than with any other speech I have heard him make. Either he is coming on or I am. I thought the arguments of my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) about the mobility of labour were both unanswered and unanswerable. I will not go into the details of the matter, but it is true that there has been an important shift in the last year. It was not as much as one would like, I am prepared to concede, or planned exactly in the detailed way that the Opposition like to think, although I believe wrongly, one can plan these matters.

I will give one example. In 1955, the coal mining industry lost 5,000 men. In 1956 it gained 3,500. That is a very remarkable and important change from the point of view of this country. I do not say for one second that people went straight from jobs, say with B.M.C., into the coal mining industry, yet the slackening of labour demand in many industries where it had been fierce obviously contributed to that result.

The hon. Member for Newton (Mr. Lee) said—this is an important point—that the new figures which were announced this afternoon were not wholly caused by what we may briefly call, as a sort of shorthand, "Suez" or by the different restrictions that have arisen from it. I am sure he is right. All the reports I get from my regional controllers tell me that he is right. As my hon. Friend the Member for Cheadle (Mr. Shepherd) said in an excellent speech, many of these figures are the result of Government policy—the credit policy and other policies—working over the year.

The hon. Member for Newton asked whether I would give the short-time figures, and very quickly I will give the main figures to the House. I get them specially at very short intervals, and these are for 8th February. In all, there were 125,000 on short-time. Of that 125,000, around 50,000 were in the car and accessories industries. Included in that 125,000 were about 10,000 in other industries where short-time is directly attributed to fuel restrictions of one sort or another.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

How short is short time?

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

The definition of short time for the purpose of the returns is any time less than that which the man normally works in his normal week, whatever that may be.

The hon. Member for Newton also made an important point, which he has pursued on many occasions, about priorities in fuel oil allocations. With a fuel cut as small as it is at the moment, it would be most burdensome and quite wrong to try to establish an elaborate system of priorities. An overall cut of 10 per cent. is clearly not only the simplest but, I am sure, the best way of doing it. Naturally, as a matter of ordinary prudence for the future, the sort of examination for which he was asking has taken place.

I want to try to give the whole picture, and I would say that these figures of unemployment, at 383,000, which is 1·8 per cent., might well have been worse, particularly in the building industry, if we had not been rather fortunate with the weather in January, at any rate until the last few days. However we look at these figures—and I have tried to make every qualification—surely a figure of 1·8 per cent. at what is normally the seasonal peak is full employment by any conceivable standard, and it certainly does not merit the extravagant censure which is implied in the Motion. Indeed, our record in preserving full employment over the years has been noticeably better than that of the party opposite.

The right hon. Member for Huyton asked whether we were getting apart now in what we think about full employment. That is an important matter. I should like to reply, "I hope not and I do not think so." If the right hon. Gentleman would like me to do so, I will declare again that to this Government full employment remains one of the first objectives of home and social policy. But one has always to say that full employment is not a gift of Governments; it is something which has to be earned, and which can be earned only by industries and can be achieved only if our basic position is sound.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

No one doubts the right hon. Gentleman's sincerity when he makes a statement of that kind. The reason I expressed a doubt this afternoon was the statement made by the present Chancellor of the Exchequer, then President of the Board of Trade, in the Budget debate on 18th April last year. I wondered whether the right hon. Gentleman's statement extended to the Chancellor of the Exchequer, because the latter's views sounded very dubious to those of us on this side of the House who heard what he said.

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

I am certain that what I have said would be subscribed to by every member of the Government.

I should like to turn to what is said in the Motion about prices and to say a word, if I may, about the much-maligned Retail Prices Index. Of course, we all know that nobody ever believes the Index unless it happens to be soaring upwards, and of course it is true that it is much easier to find families whose spending differs from the average than to find those whose spending conforms to it. In addition, we have had something like ten years or more now of general, steady pressure on prices, and it is inevitable, as we all know, that people remember the prices, food prices in particular, which go up and never remember or take any notice of those which go down. [An HON. MEMBER: "Will the right hon. Gentleman tell us of some which have come down?"] The hon. Member for Bristol, South (Mr. Wilkins) will know the well known ballad: The farmer's daughter hath soft brown hair;(Butter and eggs and a pound of cheese) … If he cares to ask the farmer's daughter or his own wife, he will be told that butter and eggs and a pound of cheese have all come down.

Photo of Mr William Wilkins Mr William Wilkins , Bristol South

I did not say anything of the sort. All I said was that the Tory Party did not say this in 1951.

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

It is important to establish, as far as one can, the accuracy of the Index. The wages of 3 million people in this country are linked to it in one way or another, and it is a vital element in all, or nearly all, wage claims and discussions. I therefore feel that it ought to be recorded that every month something like 125,000 separate price quotations are taken and used, 90,000 of those being for food. No country in the world, I believe, has so up-to-date or so accurate a measure of the changes in retail prices as we have in this country.

May I give just two illustrations of that? The first one is something of a variation on the theme of the "lady who went shopping." I will tell the House what this says. On 23rd January, the News Chronicle printed an article showing a long shopping list taken from an impeccable source no doubt, the London Co-operative Society, to show how much prices have gone up over the year, as against the claims made for the accuracy of the index. What, apparently, did not occur to the News Chronicle, which is strange, was to work out the percentage increase in the price of the goods in the very basket it presented to its readers in this article. It presented a basket of goods costing in all £8 16s. 6d., and showed that the total price had gone up by 4s. 11½d. over the past year. That is 2·8 per cent., and an exact justification, from an independent source, of the accuracy of the Index.

There was a good deal of scoffing in the House when my right hon. Friend the Chancellor and I, and other members of the Government, gave the estimates of what the increases in petrol prices, direct and indirect, would be as a result of the Suez restrictions. But the recently published figures in the Ministry of Labour Gazette show quite clearly that those prophecies were accurate. They are not, of course, our prophecies there is machinery for carrying out these investigations.

I can, therefore, base my claim against this Motion on prices and on the Retail Prices Index. I do it in these words. In 1956, the Retail Prices Index went up 3 points. I wish it had been less. But what I am entitled to point out, particularly since this is a Motion of censure, is that only in 1953 was there a better result than that, and in no single year under the Socialists did prices rise less than they did last year.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

What about world prices?

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

I should like to take up now what has been said by both the opening speaker and the last speaker about old-age pensioners. This is something to which direct reference is made in the Motion.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Since the right hon. Gentleman has made that assertion, is he aware that in the Statistical Digest, published by the Government, despite the fact that world prices were rising in the years to which he referred, the Index figures for 1948, 1949 and 1950 were 108, 111 and 114, respectively?

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

If the right hon. Gentleman likes to look into the Index of Retail Prices, he will find that the year in which the Socialists got nearest to our figures was in 1950, and even in that year the percentage increase was higher than in last year. I assure the right hon. Gentleman that I am right in that.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Yes, but does the right hon. Member, in view of what he has said, deny that these are the figures in the Statistical Digest for 1948, 1949 and 1950 —the monthly averages—108, 111 and 114?

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

Of course I do not, but the monthly averages are not the rise in the cost over the year, which is the figure I have been giving. [Interruption.] If the right hon. Gentleman will accept my challenge and put a Question down to me on this figure, he will find that I am right.

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

I have given the right hon. Gentleman the answer.

In relation to old-age pensioners, the position is that the present rates—I hope that the House will allow me to develop this point, because it is a most important one—were established in April, 1955. Since then, prices have risen by 8 per cent. It is perfectly true, as the right hon. Gentleman said, that the pension is slightly lower in value now than it was in 1946, but it is substantially higher than it was in 1948 when the social service schemes came in, and substantially higher than it was in October, 1951, when the Opposition were in office and were defeated at the Election. These rates were raised in April, 1955, which is less than two years ago, and there has been an 8 per cent. rise since then. The Socialist Government raised the pensions—only for some pensioners—in 1951, five years after the previous increase, after a 28 per cent. rise.

If the right hon. Gentleman the Member for Huyton says that the pensioners are "forgotten men" under the Tory Government, what term would the right hon. Gentleman use for their experience under the Socialist Government? I will give the right hon. Gentleman a word, if he likes to use it, although it is stronger than I would use myself, but it is from an article by the hon. Member for Coventry, East (Mr. Crossman) in the Sunday Pictorial of 7th November, 1954: Whilst prices, profits and wages all soared under the Labour Government, the standard of living of our old people went down and they were cheated even of the modest slice of the national cake which they had been promised. That term "cheated" has been used by a Member of his own party about the conduct of his own Government in relation to their treatment of old-age pensioners. I say that I myself think that it is too strong a term. [Laughter.] Yes, I do. I think both sides of the House would dearly like to give the best possible treatment they can to old-age pensioners. There is nothing between us on that, but our record here, as in prices, is incomparably better than that of the Opposition.

From the names that head it, I take it that this is a Motion of censure—

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

I am sorry, but I have only a few minutes left.

As I say, it is a Motion of censure. We have had a very good debate, really, in spite of the Motion that had been put on the Order Paper because, if this is a Motion of censure—and I suppose it is —I must say that, like the weather in the Thames Estuary last week, it is the windiest and wettest since records have been kept.

We are to have another Motion of censure tomorrow—

Hon. Members:

Lewisham.

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

After that, we are to have a respite for a day or two from this sham—this "Lewi-sham"—fighting. The Opposition has had five years—six years come Michaelmas—of opposition. They should be settling down to it nicely by now.

We on this side had expected a real announcement of policy. Here is it, …new and appropriate policies.…" We were very excited when the right hon. Gentleman the Member for Huyton said that he accepted the obligation and intended to tell us what those policies were. He did not of course. He gave us, not policies but slogans. And that is not surprising, because, of course, there is no policy. Mind, there is always going to be a policy. It has always been trailed. There is always jam tomorrow. But there is no policy at the present time. It is only a short time ago that everybody knew what Socialist policy was. Now nobody knows. That is a very remarkable achievement in only a few months for the Leader of the Opposition.

I hope that the right hon. Gentleman reads Tribune—I am sure that he does. There was a very good article in it last week which shows him clearly to have no claim to an alternative Government; that his party has utterly failed to make an appeal either to the electorate or to the youth of this country. It is an ageing party, without purpose and without policy. This Motion now before the House is not a Motion of censure. It is not even a peg on which to hang an argument. It is a very nice piece of political sky-writing, and I suggest that with our votes we rub it out.

Question put, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 249. Noes 312.

Division No. 57.]AYES[9.59 p.m.
Ainsley, J. W.Gordon Walker, Rt. Hon. P. C.Mitchison, G. R.
Allaun, Frank (Salford, E.)Greenwood, AnthonyMonslow, W.
Allen, Arthur (Bosworth)Grenfell, Rt. Hon. D. R.Moody, A. S.
Allen, Scholefield (Crewe)Grey, C. F.Morris, Percy (Swansea, W.)
Awbery, S. S.Griffiths, William (Exchange)Mort, D. L.
Baoon, Miss AliceHale, LeslieMoss, R.
Baird, J.Hall, Rt. Hn. Glenvil (Colne Valley)Moyle, A.
Balfour, A.Hamilton, W. W.Mulley, F. W.
Bellenger, Rt. Hon. F. J.Hannan, W.Neal, Harold (Bolsover)
Bence, C. R. (Dunbartonshire, E.)Harrison, J. (Nottingham, N.)Noel-Baker, Francis (Swindon)
Benn, Hn. Wedgwood (Bristol, S.E.)Hayman, F. H.Noel-Baker, Rt. Hon. P. (Derby, S.)
Benson, G.Henderson, Rt. Hn. A. (Rwly Regis)O'Brien, Sir Thomas
Beswick, FrankHewitson, Capt. M.Oliver, G. H.
Bevan, Rt. Hon. A. (Ebbw Vale)Hobson, C. R.Oram, A. E.
Blackburn, F.Holman, P.Orbach, M.
Blenkinsop, A.Holmes, HoraceOswald, T.
Blyton, W. R.Houghton, DouglasOwen, W. J.
Boardman, H.Howell, Charles (Perry Barr)Padley, W. E.
Bottomley, Rt. Hon. A. G.Howell, Denis (All Saints)Paling, Rt. Hon. W. (Dearne Valley)
Bowden, H. W. (Leicester, S.W.)Hoy, J. H.Palmer, A. M. F.
Bowles, F. G.Hubbard, T. F.Pannell, Charles (Leeds, W.)
Boyd, T. C.Hughes, Cledwyn (Anglesey)Pargiter, G. A.
Braddock, Mrs. ElizabethHughes, Emrys (S. Ayrshire)Parker, J.
Brockway, A. F.Hughes, Hector (Aberdeen, N.)Parkin, B. T.
Broughton, Dr. A. D. D.Hunter, A. E.Paton, John
Brown, Rt. Hon. George (Belper)Hynd, H. (Accrington)Peart, T. F.
Brown, Thomas (Ince)Hynd, J. B. (Attercliffe)Pentland, N.
Burke, W. A.Irvine, A. J. (Edge Hill)Plummer, Sir Leslie
Burton, Miss F. E.Irving, Sydney (Dartford)Price, J. T. (Westhoughton)
Butler, Herbert (Haokney, C.)Isaacs, Rt. Hon. G. A.Price, Philips (Gloucestershire, W.)
Butler, Mrs. Joyce (Wood Green)Janner, B.Probert, A. R.
Callaghan, L. J.Jay, Rt. Hon, D. P. T.Prootor, W. T.
Carmichael, J.Jeger, George (Goole)Pryde, D. J.
Champion, A. J.Jeger, Mrs. Lena (Holbn & St. Pncs, S.)Pursey, Cmdr. H.
Chapman, W. D.
Chetwynd, G. R.Jenkins, Roy (Stechford)Randall, H. E.
Clunie, J.Johnson, James (Rugby)Rankin, John
Coldrlok, W.Jones, Rt. Hon. A. Creech(Wakefield)Redhead, E. C.
Collick P. H. (Birkenhead)Jones, David (The Hartlepools)Reeves, J.
Collins,V. J. (Shoreditch & Finsbury)Jones, Elwyn (W. Ham, S.)Reid, William
Corbet, Mrs. FredaJones, Jack (Rotherham)Rhodes, H.
Cove, W. G.Jones, T. W. (Merioneth)Roberts, Albert (Normanton)
Craddock, George (Bradford, S.)Kenyon, C.Roberts, Goronwy (Caernarvon)
Cronin, J. D.Key, Rt. Hon. C. W.Robinson, Kenneth (St. Pancras, N.)
Crossman, R. H. S.King, Dr. H. M.Rogers, George (Kensington, N.)
Cullen, Mrs. A.Lawson, G. M.Ross, William
Daines, P.Ledger, R. J.Royle, C.
Dalton, Rt. Hon. H.Lee, Frederick (Newton)Shawcross, Rt. Hon. Sir Hartley
Darling, George (Hillsborough)Lee, Miss Jennie (Cannock)Shinwell, Rt. Hon. E.
Davies, Ernest (Enfield, E.)Lever, Harold (Cheetham)Short, E. W.
Davies, Harold (Leek)Lever, Leslie (Ardwiek)Shurmer, P. L. E.
Davies, Stephen (Merthyr)Lewis, ArthurSilverman, Julius (Aston)
de Freltas, GeoffreyLindgren, G. S.Silverman, Sydney (Nelson)
Delargy, H. J.Lipton, MarcusSimmons, C. J. (Brierley Hill)
Dodds, N. N.Logan, D. G.Skeffington, A. M.
Donnelly, D. L.Mabon, Dr. J. DicksonSmith, Ellis (Stoke, S.)
Dugdale, Rt. Hn. John (W.Brmwoh)MacColl, J. E.Snow, J. W.
Dye, S.McGhee, H. G.Sorensen, R. W.
Ede, Rt. Hon. J. C.McGovern, J.Soskice, Rt. Hon. Sir Frank
Edelman, M.Mclnnes, J.Sparks, J. A.
Edwards, Rt. Hon. John (Brighouse)McKay, John (Wallsend)Steele, T.
Edwards, Rt. Hon. Ness (Caerphilly)McLeavy, FrankStewart, Michael (Fulham)
Edwards, Robert (Bilston)MacMillan, M. K. (Western Isles)Stones, W. (Consett)
Edwards, W. J. (Stepney)MacPherson, Malcolm (Stirling)Straohey, Rt. Hon. J.
Evans, Albert (Islington, S.W.)Mahon, SimonStrauss, Rt. Hon. George (Vauxhall)
Evans, Edward (Lowestoft)Malnwaring, W. H.Stross, Dr. Barnett (Stoke-on-Trent, C.)
Fernyhough, E.Mallalieu, E. L. (Brigg)Summerskill, Rt. Hon. E.
Fienburgh, W.Mallalieu, J. P. W. (Huddersfd, E.)Swingler, S. T.
Finch, H. J.Marquand, Rt. Hon. H. A.Sylvester, G. O.
Fletoher, EricMason, RoyTaylor, Bernard (Mansfield)
Forman, J. C.Mayhew, C. P.Taylor, John (West Lothian)
Fraser, Thomas (Hamilton)Mellish, R. J.Thomas, George (Cardiff)
Caitskell, Rt. Hon. H. T. N.Messer, Sir F.Thomas, Jorwerth (Rhondda, W.)
Gibson, C. W.Mikardo, IanThomson, George (Dundee, E.)
Thornton, E.West, D. G.Willis, Eustace (Edinburgh, E.)
Timmons, J.Wheeldon, W. E.Wilson, Rt. Hon. Harold (Huyton)
Tomney, F.White, Mrs. Eirene (E. Flint)Winterbottom, Richard
Turner-Samuels, M.Wigg, GeorgeWoodburn, Rt. Hon. A.
Ungoed-Thomas, Sir LynnWilcock, Group Capt. C. A. B.Yates, V. (Ladywood)
Usborne, H. C.Wilkins, W. A.Younger, Rt. Hon. K.
Viant, S. P.Willey, FrederickZilliacus, K.
Warbey, W. N.Williams, David (Neath)
Weitzman, D.Williams, Ronald (Wigan)TELLERS FOR THE AYES:
Wells, Peroy (Faversham)Williams, W. R. (Openshaw)Mr. Popplewell and Mr. Pearson.
Wells, William (Walsall, N.)Williams, W. T. (Barons Court)
NOES
Agnew, Sir PeterDodds-Parker, A. D.Hurd, A. R.
Aitken, W. T.Donaldson, Cmdr. C. E. McA.Hutchison, Sir James (Scotstoun)
Allan, R. A. (Paddington, S.)Doughty, C. J. A.Hyde, Montgomery
Alport, C. J. M.Drayson, G. B.Hylton-Foster, Rt. Hon. Sir Harry
Amery, Julian (Preston, N.)du Cann, E. D. L.Iremonger, T. L.
Amory, Rt. Hn. Heathcoat (Tiverton)Dugdale, Rt. Hn. Sir T. (Riohmond)Irvine, Bryant Codman (Rye)
Anstruther-Gray, Major Sir WilliamDuncan, Capt. J. A. L.Jenkins, Robert (Dulwich)
Arbuthnot, JohnDuthie, W. S.Jennings, J. C. (Burton)
Armstrong, C. W.Eden, J. B. (Bournemouth, West)Jennings, Sir Roland (Hallam)
Ashton, H.Emmet, Hon. Mrs. EvelynJohnson, Dr. Donald (Carlisle)
Astor, Hon. J. J.Errington, Sir EricJohnson, Eric (Blackley)
Atkins, H. E.Erroll, F. J.Johnson, Howard (Kemptown)
Baldook, Lt.-Cmdr. J. M.Farey-Jones, F. W.Jones, Rt. Hon. Aubrey (Hall Green)
Baldwin, A. E.Fell, A.Joseph, Sir Keith
Balniel, LordFinlay, GraemeKaberry, D.
Barber, AnthonyFisher, NigelKeegan, D.
Barlow, Sir JohnFietcher-Cooke, C.Kerby, Capt. H. B.
Barter, JohnFort, R.Kerr, H. W.
Baiter, Sir BeverleyFoster, JohnKimball, M.
Beamish, Maj. TuftonFraser, Hon. Hugh (Stone)Kirk, P. M.
Bell, Philip (Bolton, E.)Fraser, Sir Ian (M'cmbe & Lonsdale)Lagden, G. W.
Bell, Ronald (Bucks, S.)Freeth, DenzilLambert, Hon. G.
Bennett, F. M. (Torquay)Galbraith, Hon. T. G. D.Lambton, Viscount
Bennett, Dr. ReginaldGarner-Evans, E. H.Lancaster, Col. C. G.
Bevins, J. R. (Toxteth)Gibson-Watt, D.Langford-Holt, J. A.
Bidgood, J. C.Clover, D.Leather, E. H. C.
Biggs-Oavison, J. A.Godber, J. B.Leavey, J. A.
Birch, Rt. Hon. NigelGomme-Dunoan, Col. Sir AlanLeburn, W. G.
Bishop, F. P.Gough, C. F. H.Legge-Bourke, Maj. E. A. H.
Black, C. W.Gower, H. R.Legh, Hon. Peter (Petersfield)
Body, R. F.Graham, Sir FergusLennox-Boyd, Rt. Hon. A. T.
Boothby, Sir RobertGrant, W. (Woodside)Lindsay, Hon. James (Devon, N.)
Bossom, Sir AlfredGrant-Ferris, Wg Cdr. R. (Nantwich)Linstead, Sir H. N.
Bowen, E. R. (Cardigan)Green, A.Llewellyn, D. T.
Boyd-Carpenter, Rt. Hon. J. A.Cresham Cooke, R.Lloyd, Maj. sir Guy (Renfrew, E.)
Boyle, Sir EdwardGrimston, Sir Robert (Westbury)Lloyd, Rt. Hon. Selwyn (Wirral)
Braine, B. R.Grosvenor, Lt.-Col. R. G.Longden, Gilbert
Braithwaite, Sir Albert (Harrow, W.)Hall, John (Wycombe)Low, Rt. Hon. A. R. W.
Bromley-Davenport, Lt.-Col. W. H.Hare, Rt. Hon. J. H.Lucas. Sir Jocelyn (Portsmouth, S.)
Brooke, Rt. Hon. HenryHarris, Frederic (Croydon, N.W.)Luoas, P. B. (Brentford & Chiswick)
Brooman-White, R. C.Harris, Reader (Heston)Lucas-Tooth, Sir Hugh
Browne, J. Nixon (Craigton)Harrison, A. B. C. (Maldon)McAdden, S. J.
Bryan, P.Harrison, Col. J. H. (Eye)Macdonald, Sir Peter
Bullus, Wing Commander E. E.Harvey, Air Cdre. A. V. (Macolesfd)Mackeson, Brig. Sir Harry
Burden, F. F. A.Harvey, Ian (Harrow, E.)McKibbin, A. J.
Butcher, Sir HerbertHarvey, John (Walthamstow. E.)Mackie, J. H. (Galloway)
Butler, Rt. Hn. R. A. (SaffronWalden)Harvie-Watt, Sir GeorgeMcLaughlin, Mrs. P.
Campbell, Sir DavidHeald, Rt. Hon. Sir LionelMaclay, Rt. Hon. John
Carr, RobertHenderson, John (Cathcart)Maclean, Fitzroy (Lancaster)
Cary, Sir RobertHesketh, R. F.McLean, Neil (Inverness)
Channon, Sir HenryHicks-Beach, Maj. W. W.Macleod, Rt. Hn. lain (Enfield, W.)
Chichester-Clark, R.Hill, Rt. Hon. Charles (Luton)MacLeod, John (Ross & Cromarty)
Clarke, Brig. Terence (Portsmth, W.)Hill, Mrs. E. (Wythenshawe)Macmillan, Rt.Hn, Harold (Bromley)
Cole, NormanHill, John (S. Norfolk)Macmillan, Maurice (Hatifax)
Conant, Maj. Sir RogerHinchingbrooke, ViscountMacpherson, Niall (Dumfries)
Cooper, A. E.Holland-Martin, C. J.Maddan, Martin
Cooper-Key, E. M.Holt, A. F.Maitland, Cdr. J. F. W. (Horncastle)
Cordeaux, Lt.-Col. J. K.Hope, Lord JohnMaitland, Hon. Patrick (Lanark)
Corfield, Capt. F. V.Manningham-Bulier, Rt. Hn. Sir R.
Craddock, Beresford (Spelthorne)Hornby, R. P.Markham, Major Sir Frank
Crosthwaite-Eyre, Col. O. E.Hornsby-Smith, Miss M. P.Marlowe, A. A. H.
Crouch, R. F.
Crowder, Sir John (Finchley)Horobin, Sir IanMarples, Rt. Hon. A. E.
Crowder, Petre (Ruislip — Northwood)Horsbrugh, Rt. Hon. Dame FlorenceMarshall, Douglas
Cunningham, KnoxHoward, Gerald (Cambridgeshire)Mathew, R.
Currie, G. B. H.Howard, Hon. Greville (St. Ives)Maude, Angus
Dance, J. C. G.Howard, John (Test)Maudling, Rt. Hon. R.
Davidson, ViscountessHudson, W. R. A. (Hull, N.)Mawby, R. L.
D'Avigdor-Goldsmid, Sir HenryHughes Hallett, Vice-Admiral J.Medlicott, Sir Frank
Deedes, W. F.Hughes-Young, M. H. C.Milligan, Rt. Hon. W. R.
Digby, Simon WingfieldHulbert, Sir NormanMolson, Rt. Hon. Hugh
Morrison, John (Salisbury)Ridsdale, J. E.Thomas, Leslie (Canterbury)
Mott-Radclyfte, Sir CharlesRippon, A. G. F.Thomas, P. J. M. (Conway)
Nabarro, C. D. N.Roberts, Sir Peter (Heeley)Thompson, Kenneth (Walton)
Nairn, D. L. S.Robertson, Sir DavidThompson, Lt. -Cdr. R. (Croydon, S.)
Neave, AireyRobinson, Sir Roland (Blackpool, S.)Thornton-Kemsley, C. N.
Nicholls, HarmarRobson-Brown, W.Tiley, A. (Bradford, W.)
Nicholson, Godfrey (Farnham)Rodgers, John (SevenoakS)Tilney, John (Wavertree)
Nicolson, N. (B'n'm'th, E. & Chr'ch)Roper, Sir HaroldTurner, H. F. L.
Nugent, C. R. H.Ropner, col. Sir LeonardTurton, Rt. Hon. R. H.
O'Neill, Hn. Phelim(Co. Antrim, N.)Russell, R. S.Tweedsmuir, Lady
Ormsby-Gore, Rt. Hon. W. D.Sandys, Rt. Hon. D.Vane, W. M. F.
Orr, Capt. L. P. S.Schofield, Lt. -Col. W.Vaughan-Morgan, J. K.
Orr-Ewing, Charles Ian (Hendon, N.)Scott-Milter, Cmdr. R.Viokers, Miss J. H.
Orr-Ewing, Sir Ian (Weston-S-Mare)Sharpies, R. C.Vosper, Rt. Hon. D. F.
Osborne, C.Shepherd, WilliamWade, D. W.
Page, R. G.Simon, J. E. S. (Middlesbrough, W.)Wakefield, Edward (Derbyshire, W.)
Pannell, N. A. (Kirkdale)Smyth, Brig. Sir John (Norwood)Wakefield, Sir Wavell (St. M'lebone)
Partridge, E.Soames, Capt. C.Walker-Smith, Rt. Hon. D. C.
Peyton, J. W. W.Spearman, Sir AlexanderWall, Major Patrick
Pickthorn, K. W. M.Speir, R. M.Ward, Rt. Hon. C. R. (Worcester)
Pike, Miss MervynSpens, Rt. Hn. Sir P. (Kens'gt'n, S.)Ward, Dame Irene (Tynemouth)
Pilkington, Capt. R. A.Stevens, GeoffreyWaterhouse, Capt. Rt. Hon. C.
Pitman, I. J.Steward, Harold (Stockport, S.)Watkinson, Rt. Hon. Harold
Pitt, Miss E. M.Steward, Sir William (Woolwich, W.)Webbe, Sir H.
Pott, H. P.Stewart, Henderson (Fife, E.)Whitelaw. W. S. I. (Penrith & Border)
Powell, J. EnochStoddart-Scott, Col. M.Williams, Paul (Sunderland, S.)
Price, David (Eastleigh)Storey, S.Williams, R. Dudley (Exeter)
Prior-Palmer, Brig. O. L.Stuart, Rt. Hon. James (Moray)Wills, C. (Bridgwater)
Profumo, J. D.Studholme, Sir HenryWilson, Geoffrey (Truro)
Ramsden, J. E.Summers, Sir SpenoerWood, Hon. R.
Rawlinson, PeterSumner, W. D. M. (Orpington)Woollam, John Victor
Redmayne, M.Taylor, Sir Charles (Eastbourne)Yates, William (The Wrekin)
Rees-Davies, W. R.Taylor, William (Bradford, N.)
Remnant, Hon. P.Teeling, W.TELLERS FOR THE NOES:
Renton, D. L. M.Temple, J. M.Mr. Heath and Mr. Oakshott.

Question put, That the proposed words be there added:—

The House divided: Ayes 309, Noes 249.

Division No. 58.]AYES[10.11 p.m.
Agnew, Sir PeterBullus, Wing Commander E. E.Fell, A.
Altken, W. T.Burden, F. F. A.Finlay, Graeme
Allan, R. A. (Paddington, S.)Butcher, Sir HerbertFisher, Nigel
Alport, C. J. M.Butler, Rt.Hn. R. A. (Saffron Walden)Fletcher-Cooke, C.
Amery, Julian (Preston, N.)Campbell, Sir DavidFort, R.
Amory, Rt. Hn. Heathcoat (Tiverton)Carr, RobertFoster, John
Anstruther-Gray, Major Sir WilliamCary, Sir RobertFraser, Hon. Hugh (Stone)
Arbuthnot, JohnChannon, Sir HenryFraser, Sir Ian (M'cmbe & Lonsdale)
Armstrong, C. W.Chichester-Clark, R.Freeth, Denzil
Ashton, H.Clarke, Brig. Terence (Portsmth, W.)Galbraith, Hon. T. G. D.
Astor, Hon. J. J.Cole, NormanGarner-Evans, E. H.
Atkins, H. E.Conant, Maj. Sir RogerGeorge, J. C. (Pollock)
Baldock, Lt.-Cmdr. J. M.Cooper, A. E.Gibson-Watt, D.
Baldwin, A. E.Cooper-Key, E. M.Glover, D.
Balniel, LordCordeaux, Lt.-Col. J. K.Godber, J. B.
Barber, AnthonyCorfield, Capt. F. V.Gomme-Duncan, Col. Sir Alan
Barter, JohnCraddock, Beresford (Spelthorne)Cough, C. F. H.
Baxter, Sir BeverleyCrosthwaite-Eyre, Col. O. E.Gower, H. R.
Beamish, Mai. TuftonCrouch, R. F.Graham, Sir Fergus
Bell, Philip (Bolton, E.)Crowder, Sir John (Finchley)Grant, W. (Woodside)
Bell, Ronald (Bucks, S.)Crowder, Petre (Ruislip—Northwood)Grant-Ferris, Wg. Cdr. R.(Nantwich)
Bennett, F. M. (Torquay)Cunningham, KnoxGreen, A.
Bennett, Dr. ReginaldCurrie, G. B. H.Gresham Cooke, R.
Bevins, J. R. (Toxteth)Dance, J. C. G.Grimston, Sir Robert (Westbury)
Bidgood, J. C.Daildson, viscountessCrosvenor, Lt.-Col. R. G.
Biggs-Davison, J. A.D'Avigdor-Coldsmid, Sir HenryHall, John (Wycombe)
Birch, Rt. Hon. NigelDeedes, W. F.Hare, Rt. Hon. J. H.
Bishop, F. P.Digby, Simon WingfieldHarris, Frederic (Croydon. N. W.)
Black, C. W.Dodds-Parker, A. D.Harris, Reader (Heston)
Body, R. F.Donaldson, Cmdr. C. E. McA.Harrison, A. B. C. (Maldon)
Boothby, Sir RobertDoughty, C. J. A.Harrison, Col. J. H. (Eye)
Bossom, Sir AlfredDrayton, G. B.Harvey, Air Cdre. A. V. (Macclesfd)
Boyd-Carpenter, Rt. Hon. J. A.du Cann, E. D. L.Harvey, Ian (Harrow, E.)
Boyle, Sir EdwardDugdale, Rt. Hn. Sir T. (Richmond)Harvey, John (Walthamstow, E.)
Braine, B. R.Duncan, Capt. J. A. L.Harvie-Watt, Sir George
Braithwaite, Sir Albert (Harrow, W.)Duthie, W. S.Heald, Rt. Hon. Sir Lionel
Bromley-Davenport, Lt.-Col. W. H.Eden, J. B. (Bournemouth, West)Henderson, John (Cathcart)
Brooke, Rt. Hon. HenryEmmet, Hon. Mrs. EvelynHesketh, R. F.
Brooman-White, R. C.Errington, Sir EricHicks-Beach, Maj. W. W.
Browne, J. Nixon (Craigton)Erroll, F. J.Hill, Rt. Hon. Charles (Luton)
Bryan, P.Farey-Jones, F. WHill, Mrs. E. (Wythenshawe)
Hill, John (S. Norfolk)Maclean, Fitzroy (Lancaster)Rodgers, John (Sevenoaks)
Hinchingbrooke, ViscountMcLean, Neil (Inverness)Roper, Sir Harold
Holland-Martin, C. J.Macleod, Rt. Hn. lain (Enfield, W)Ropner, Col. Sir Leonard
Hope, Lord JohnMacLeod, John (Ross & Cromarty)Russell, R. S.
Hornby, R. P.Macmlllan, Rt. Hn. Harold(Bromley)Sandys, Rt. Hon. D.
Hornsby-Smith, Miss M. P.Macmillan, Maurice (Halifax)Schofleld, Lt.-Col. W.
Horobin, Sir IanMacpherson, Niall (Dumfries)Scott-Miller, Cmdr. R.
Horsbrugh, Rt. Hon. Dame FlorenceMaddan, MartinSharpies, R. C.
Howard, Gerald (Cambridgeshire)Maltland, Cdr. J. F. W. (Horncastle)Shepherd, William
Howard, Hon. Greville (St. Ives)Maltland, Hon. Patrick (Lanark)Simon, J. E. S. (Middlesbrough, W.)
Howard, John (Test)Manningham-Buller, Rt. Hn. Sir RSmyth, Brig. Sir John (Norwood)
Hudson, W. R. A. (Hull, N.)Markham, Major Sir FrankSoames, Capt. C.
Hughes Hallet, Vise-Admiral J.Marlowe, A. A. H.Spearman, Sir Alexander
Hughes-Young, M. H. C.Marples, Rt. Hon. A. E.Speir, R. M.
Hulbert, Sir NormanMarshall, DouglasSpens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Hurd, A. R.Mathew, R.Stevens, Geoffrey
Hutchison, Sir James (Scotstoun)Maude, AngusSteward, Harold (Stockport, S.)
Hyde, MontgomeryMaudling, Rt. Hon. R.Steward, Sir William (W'lwich, W.)
Hylton-Foster, Sir H. B. H.Mawby, R. L.Stewart, Henderson (Fife, E.)
Iremonger, T. L.Medlicott, Sir FrankStoddart-Scott, Col. M.
Irvine, Bryant Godman (Rye)Milligan, Rt. Hon. W. R.Storey, S.
Jenkins, Robert (Dulwich)Molson, Rt. Hon. HughStuart, Rt. Hon. James (Moray)
Jennings, J. C. (Burton)Morrison, John (Salisbury)Studholme, Sir Henry
Jennings, Sir Roland (Hallam)Mott-Radclyffe, Sir CharlesSummers, Sir Spencer
Johnson, Dr. Donald (Carlisle)Nabarro, G. D. N.Sumner, W. D. M. (Orpington)
Johnson, Erie (Blackley)Nairn, D. L. S.Taylor, Sir Charles (Eastbourne)
Johnson, Howard (Kemptown)Neave, AireyTaylor, William (Bradford, N.)
Jones, Rt. Hon. Aubrey (Hall Green)Nioholls, HarmarTeeling, W.
Joseph, Sir KeithNicholson, Godfrey (Farnham)Temple, J. M.
Kaberry, D.Nicolson, N, (B'n'm'th, E. & Chr'ch)Thomas, Leslie (Canterbury)
Keegan, D.Nugent, C. R. H.Thomas, P. J. M. (Conway)
Kerby, Capt. H. B.O'Neill, Hn. Phelim (Co. Antrim, N.)Thompson, Kenneth (Walton)
Kerr, H. W.Ormsby-Gore, Rt. Hon. W. D.Thompson, Lt.-Cdr.R.(Croydon, S.)
Kimball, M.Orr, Capt. L. P. S.Thornton-Kemsley, C. N.
Kirk, P. M.Orr-Ewing, Charles Ian (Hendon, N.)Tiley, A. (Bradford, W.)
Lagden, G. W.Orr-Ewing, Sir Ian (Weston-S-Mare)Tilney, John (Wavertree)
Lambert, Hon. G.Osborne, C.Turner, H. F. L.
Lambton, ViscountPage, R. G.Turton, Rt. Hon. H.
Lancaster, Col. C. G.Pannell, N. A. (Kirkdale)Tweedsmuir, Lady
Langford-Holt, J. A.Partridge, E.Vane, W. M. F.
Leather, E. H. C.Peyton, J. W. W.Vaughan-Morgan, J. K.
Leavey, J. A.Pickthorn, K. W. M.Vickers, Miss J. H.
Leburn, W. G.Pike, Miss MervynVosper, Rt. Hon. D. F.
Legge-Bourke, Maj. E. A. H.Pilkington, Capt. R. A.Wakefield, Edward (Derbyshire, W.)
Legh, Hon. Peter (Petersffeld)Pitman, I. J.Wakefield, Sir Wavell (S. M'lebone)
Lennox-Boyd, Rt. Hon. A. T.Pitt, Miss E. M.Walker-Smith, Rt. Hon. D. C.
Wall, Major Patrick
Lindsay, Hon. James (Devon, N.)Pott, H. P.Ward, Rt. Hon. G. R. (Worcester)
Linstead, Sir H. N.Powell, J. EnochWard, Dame Irene (Tynemouth)
Llewellyn, D. T.Price, David (Eastleigh)Waterhouse, Capt. Rt. Hon. C.
Lloyd, Maj. Sir Guy (Renfrew, E.)Prior-Palmer, Brig. O. L.Watkinson, Rt. Hon. Harold
Lloyd, Rt. Hon. Selwyn (Wirral)Profumo, J. D.Webbe, Sir H.
Longden, GilbertRamsden, J. E.Whitelaw, W. S. I. (Penrith & Border)
Low, Rt. Hon. A. R. W.Rawlinson, PeterWilliams, Paul (Sunderland, S.)
Lucas, Sir Jocelyn (Portsmouth, S.)Redmayne, M.Williams, R. Dudley (Exeter)
Lucas, P. B. (Brentford & Chiswick)Rees-Davies, W. R.Wills, G. (Bridgwater)
Lucas-Tooth, Sir HughRemnant, Hon. P.Wilson, Geoffrey (Truro)
McAdden, S. J.Ronton, D. L. M.Wood, Hon. R.
Macdonald, Sir PeterRidsdale, J. E.Woollam, John Victor
Mackeson, Brig. Sir HarryRippon, A. G. F.Yates, William (The Wrekin)
McKibbin, A. J.Roberts, Sir Peter (Heeley)
Mackie, J. H. (Galloway)Robertson, Sir DavidTELLERS FOR THE AYES:
McLaughlin, Mrs. P.Robinson, Sir Roland (Blackpool, S.)Mr. Heath and Mr. Oaksbott
Maclay, Rt. Hon. JohnRobson-Brown, W.
NOES
Ainsley, J. W.Boardman, H.Chapman, W. D.
Allaun, Frank (Salford, E.)Bottomley, Rt. Hon. A. G.Chetwynd, G. R.
Allen, Arthur (Bosworth)Bowden, H. W. (Leicester, S.W.)Clunie, J.
Allen, Scholefield (Crewe)Bowles, F. G.Coldrick, W.
Awbery, S. S.Boyd, T. C.Collick, P. H. (Birkenhead)
Bacon, Miss AliceBraddock, Mrs. ElizabethCollins, V. J. (Shoreditch & Finsnury)
Baird, J.Brockway, A. F.Corbet, Mrs. Freda
Balfour, A.Broughton, Dr. A. D. D.Cove, W. G.
Bellenger, Rt. Hon. F. J.Brown, Rt. Hon. George (Belper)Craddock, George (Bradford, S.)
Bence, C. R. (Dunbartonshire, E.)Brown, Thomas (Ince)Cronin, J. D.
Benn, Hn. Wedgwood (Bristol, S.E.)Burke, W. A.Crossman, R. H. S.
Benson, G.Burton, Miss P. E.Cullen, Mrs. A.
Beswick, FrankButler, Herbert (Hackney, C.)Dalnes, P.
Bevan, Rt. Hon. A. (Ebbw Vale)Butler, Mrs. Joyce (Wood Green)Dalton, Rt. Hon. H.
Blackburn, F.Callaghan, L. A.Darling, George (Hillsborough)
Blenkinsop, A.Carmiohael, J.Davies, Ernest (Enfield, E.)
Blyton, W. R.Chamnlon. A. J.Davies, Harold (Leek)
Davies, Stephen (Merthyr)Lawson, G. M.Reid, William
de Freitas, GeoffreyLedger, R. J.Rhodes, H.
Delargy, H. J.Lee, Frederlok (Newton)Roberts, Albert (Normanton)
Dodds, N. N.Lee, Miss Jennie (Cannook)Roberts, Goronwy (Caernarvon)
Donnelly, D. L.Lever, Harold (Cheetham)Robinson, Kenneth (St. Pancras, N.)
Dugdale, Rt. Hn. John (W. Brmwch)Lever, Leslie (Ardwick)Rogers, George (Kensington, N.)
Dye, S.Lewis, ArthurRoss, William
Ede, Rt. Hon. J. C.Llndgren, G. S.Royle, C.
Edelman, M.Lipton, MarcusShawcross, Rt. Hon. Sir Hartley
Edwards, Rt. Hon. John (Brighouse)Logan, D. G.Shlnwell, Rt. Hon. E.
Edwards, Rt. Hon. Ness (Caerphilly)Mabon, Dr. J. DicksonShort, E. W.
Edwards, Robert (Bilston)MacColl, J. E.Shurmer, P. L. E.
Edwards, W. J. (Stepney)MoGhee, H. G.Silverman, Julius (Aston)
Evani, Albert (Islington, S.W.)MoGovern, J.Silverman, Sydney (Nelson)
Evans, Edward (Lowestoft)Molnnes, J.Simmons, C. J. (Brierley Hill)
Femyhough, E.McKay, John (Wallsend)Skeffington, A. M.
Fienburgh, W.McLeavy, FrankSmith, Ellis (Stoke, S.)
Finch, H. J.MacMillan, M. K. (Western Isles)Snow, J. W.
Fletcher, EricMaoPherson, Malcolm (Stirling)Sorensen, R. W.
Forman, J. C.Mahon, SimonSoskice, Rt. Hon. Sir Frank
Fraser, Thomas (Hamilton)Mainwaring, W. H.Sparks, J. A.
Gaitskell, Rt. Hon. H. T. N.Mallalieu, E. L. (Brigg)Steele, T.
Gibson, C. W.Mallalleu, J. P W. (Huddersfd. E.)Stewart, Michael (Fulham)
Gordon Walker, Rt. Hon. P. C.Marquand, Rt. Hon. H. A.Stones, W. (Consett)
Greenwood, AnthonyMason, RoyStrachey, Rt. Hon. J.
Grenfell, Rt. Hon. D. R.Mayhew, C. P.Strauss, Rt. Hon. George (Vauxhall)
Grey, C. F.Mellish, R. J.Stross, Dr. Barnett (Stoke-on-Trent,C.)
Griffiths, William (Exchange)Messer, Sir F.Summerskill, Rt. Hon. E.
Hale, LeslieMikardo, IanSwingler, S. T.
Hall, Rt. Hn. Glenvil (Colne Valley)Mltohison, G. R.Sylvester, G. O.
Hamilton, W. W.Monsiow, W.Taylor, Bernard (Mansfield)
Hartnan, W.Moody, A. S.Taylor, John (West Lothian)
Harrison, J. (Nottingham, N.)Morris, Percy (Swansea, W.)Thomas, George (Cardiff)
Hayman, F. H.Mort, D. L.Thomas, Iorwerth (Rhondda, W.)
Henderson, Rt. Hn. A. (Rwly Regis)Moss, R.Thomson, George (Dundee, E.)
Hewitson, Capt. M.Moyle, A.Thornton, E.
Hobson, C. R.Mulley, F. W.Timmons, J.
Holman, P.Neal, Harold (Bolsover)Tomney, F.
Holmes, HoraceNoel-Baker, Francis (Swindon)Turner-Samuels, M.
Houghton, DouglasNoel-Baker, Rt. Hon. P. (Derby, S.)Ungoed-Thomas, Sir Lynn
Howell, Charles (Perry Barr)O'Brien, Sir ThomasUsborne, H. C.
Howell, Denis (All Saints)Oliver, C. H.Viant, S. P.
Hoy, J. H.Oram, A. E.Warbey, W. N.
Hubbard, T. F.Orbach, M.Weitzman, D.
Hughes, Cledwyn (Anglesey)Oswald, T.Weils, Percy (Faversham)
Hughes, Emrys (S. Ayrshire)Owen, W. J.Wells, William (Walsall, N.)
Hughes, Hector (Aberdeen, N.)Padley, W. E.West, D. C.
Hunter, A. E.Paling, Rt. Hon. W. (Dearne Valley)Wheeldon, W. E.
Hynd, H. (Accrington)Palmer, A. M. F.White, Mrs. Eirene (E. Flint)
Hynd, J. B. (Attercliffe)Pannell, Charles (Leeds, W.)Wlgg, George
Irvine, A. J. (Edge Hill)Pargiter, G. A.Wiloock, Group Capt. C. A. B.
Irving, Sydney (Dartford)Parker, J.Wilklns, W. A.
Isaacs, Rt. Hon. G. A.Parkin, B. T.Willey, Frederick
Janner, B.Paton, JohnWilliams, David (Neath)
Jay, Rt. Hon. D. P. T.Peart, T. F.Williams, Ronald (Wigan)
Jeger, George (Goole)Pentland, N.Williams, W. R. (Openshaw)
Jeger, Mrs. Lena (Holbn & St. Pncs. S.)Plummer, sir LeslieWilliams, W. T. (Barons Court)
Jenkins, Roy (Stechford)Price, J. T. (Westhoughton)Willis, Eustace (Edinburgh, E.)
Johnson, James (Rugby)Price, Philips, (Gloucestershire, W.)Wilson, Rt. Hon. Harold (Huyton)
Jones, Rt. Hon. A. Creech (Wakefield)Probert, A. R.Winterbottom, Richard
Jones, David (The Hartlepools)Proctor, W. T.Woodburn, Rt. Hon. A.
Jones, Elwyn (W. Ham. S.)Pryde, D. J.Yates, V. (Ladywood).
Jones, Jack (Rotherham)Pursey, Cmdr. H.Younger, Rt. Hon. K.
Jones, T. W. (Merioneth)Randall, H. E.Zilliaous, K.
Kenyon, C.Rankin, John
Key, Rt. Hon. C. W.Redhead, E. C.TELLERS FOR THE NOES:
King, Dr. H. M.Reeves, J.Mr. Popplewell and Mr. Pearson.

Main Question, as amended, put and agreed to.

Resolved,That this House affirms its confidence in the economic policies of Her Majesty's Government and its support for all necessary measures designed to deal with the economic problems facing the country.