If my measures are of help to the heavy engineering industry, and possibly to shipping and shipbuilding, I believe that that help will be reflected in Northern Ireland. As for the building of advance factories, this is the responsibility of the Government of Northern Ireland rather than of my right hon. Friends and myself. Therefore, I cannot announce measures of that kind in this context.

I have been dealing with the immediate position and the measures that I propose to take to give a new stimulus to economic expansion. I believe that in this way we can launch a new policy of expansion. The next and very important problem will be to maintain this rate of expansion. There will be three problems facing us— first, the overseas position; secondly, the danger of inflation and, thirdly, the sheer physical limitation of our resources.

There are two main factors in our overseas position. We must have an adequate international payments system, and we need concerted action by the main industrial countries. I am not satisfied that the existing system, even with the very important recent improvements, is fully adequate to provide the necessary finance for world trade expansion without undue strain upon the reserve currencies. I thought it was a good time, when the reserve currencies are strong, and the international market is remarkably stable— as the Cuban crisis shows— to turn attention to this problem. I put forward in Washington the idea of a mutual currency account, as one suggestion. We would have been naive to expect an immediate acceptance to such a suggestion, because bankers— even international bankers— are fairly conservative people. But we are not wedded to any special form or plan in this field, and I am satisfied with the response that our ideas have so far received. In our discussions with our friends we are pressing on with these ideas, and with any other ideas aimed at the same purpose.

Then there is need for certain policies by the main investing countries. Mr. Per Jacobsson, of the International Monetary Fund, referred to this recently. In modern conditions no one country alone can carry the burden of modern expansion. It is more difficult for any one country to expand if other main industrial countries are contracting. It is desirable that we should all work together to expand as best we can, though some can expand at one time more than others. I think that at the forthcoming meeting of O.E.C.D. in Paris at the end of the month, with the position of sterling, the improvement in the balance of payments and these new measures to expand our economy, we shall be in a strong position to discuss with our colleagues in O.E.C.D. and to urge upon them the importance of direct co-operation in the commercial world and in the expansion of world trade.

The second danger to which I must refer is the danger of inflation. As we have seen in the past, expansion can often turn into inflation, with the result that we are forced back on policies of restraint in order to protect the position of our currency. To avoid this, two things are necessary. The first is careful control by the Government of the total volume of demand. This is exceedingly difficult in a democracy, and particularly difficult when we are trying 'to work at 98 per cent. plus of our capacity. In a free country, who can really predict how much of their incomes people will be saving in six months' time? Yet that may have a great influence on the level of industrial production. We must face the fact that in a free society it is difficult to make this prediction within the margins of error which are allowable at a 98 per cent. capacity level.

The other thing which we have to recognise— recent experience has shown this need— is that now the danger of inflation comes from an excessive rise in personal incomes as a whole. This also was referred to by Mr. Per Jacobsson in his recent speech. Hence the importance attached by the Government to the National Incomes Commission as an integral part of our policy of an expanding economy. I believe that the N.E.D.C will help greatly with the problem of a steadily expanding demand, and that the N.I.C. is an essential complement of N.E.D.C. in that it will apply to individual cases the general principles which will be discussed at N.E.D.C. Individual application is essential. We cannot get our general policy working unless it operates in individual cases.

The N.E.D.C. report— this subject was referred to by the Leader of the Opposition the other day— shows clearly the importance of limiting incomes to a proper relationship with the rise in productivity if we are to have the rate of expansion at which we are aiming. If the average is to be preserved there must be exceptions, but those exceptions must remain exceptions. I think this is the real key to the problem of an incomes policy. If we are to have a general rate of increase, some people are entitled to more and to be treated as exceptional cases. But, if the exception is to set the average, the whole policy is undermined.

The Government cannot decree the level of wages in all industries. Nor can we leave it to the parties themselves. They are rightly concerned with the interests of the people whom they represent. Hence the need for impartiality which it is the purpose of the National Incomes Commission to provide. The purpose of N.I.C. is not to keep down incomes and wages. Its terms of reference are being published this afternoon in a white paper and they show clearly that the Commission will not be concerned solely with wages and salaries. In the references made to it, the Council will be concerned also with such things as dividends policy, profit margins and so forth, and with the general level of profits in line with the undertakings which have been given by the Government. As I see it, the purpose of the incomes policy is not negative but positive; not to keep incomes down but to ensure that the rise is as fast as the economy can stand. In real terms incomes cannot rise any faster. I hope that the Commission— its composition and terms of reference are being published today— will enable us to avoid the blind application of a crude average to incomes and help us to ensure that incomes and wages are based on merit and not solely on the brute strength of a monopoly either of capital or labour. I regard the National Incomes Commission as an essential and integral part of the whole policy of expansion on which we are now embarking.

Finally, we must recognise the limitations imposed by the physical capacity of the country and particularly the limitations on our manpower. As I said earlier, we cannot as can some countries, draw on reserves of manpower or secure people easily from overseas—