Economic Situation

– in the House of Commons at 12:00 am on 14th November 1963.

Alert me about debates like this

2.45 p.m.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

My right hon. Friend the Prime Minister has already spoken of the three responsibilities now gathered together in this Department—the modernisation of industry, the expansion of trade, and regional development. They have been brought together because we believe that they belong together. I think that it has emerged clearly in the debate that the whole House is agreed on the need for a determined drive for the modernisation of Britain. The difference between us lies in how this is to be brought about.

To me, one thing is quite apparent—that the key to the modernisation of Britain is to be found in the further modernisation of British industry. In some cases it may require mechanisation, in others the introduction of automatic process control, in others the use of computer management. I will come to them later on. But these developments are essential if we are to reach our targets and fulfil our plans at home and if we are to reap the fruits of competitiveness in markets abroad.

A rate of growth of the economy of 4 per cent., discussed in the debate yesterday, requires a steady and continu- ing increase in exports of 5 per cent. This can only be achieved by a combination of improved industrial efficiency and dynamic salesmanship. It can only be maintained by our costs remaining thoroughly competitive.

In an expanding economy this requires a more even distribution of economic activity throughout the country. This is the only way to obtain consistent expansion without congestion, without shortages, without inflation and without the waste of unused resources, and it is this point which leads to the policy for a comprehensive regional development for central Scotland and north-east England which is explained in the two White Papers being published today.

Photo of Mr William Ross Mr William Ross , Kilmarnock

It has dawned on them at last.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

It is because of this that I naturally wish to concentrate much of my speech on this aspect of Government policy. But there is another reason. There are some—there will always be some—who will say that the emphasis of both parties on modernisation is but another aspect of a voracious appetite for affluence. I suggest that we might use a term such as this with certain caution, because many of our countrymen are not thinking in terms which others use with the word "affluence".

Affluence for the sake of affluence is abhorrent to most people. As a means of raising the quality of the standard of life it should surely be a purpose of policy, however, and this is particularly demonstrated in those areas about which Iwant to talk this afternoon. It is one of the major objectives of the policy of regional development which we are now presenting.

Therefore, what we are seeking from improvements in industrial efficiency, from expanded exports and from regional development is not simply a greater contribution to economic advance, important though that is. The background to it—and this is particularly evident in the White Papers—is an improvement of all our standards, and these themselves will contribute to our economic developments. We are, therefore, determined to increase the pace of modernisation, to work vigorously for an expansion of trade and to press ahead with urgency the policies and plans for regional development which are being unfolded today. These are the three main priorities with which I am concerned. But there are also the other normal functions of the Board of Trade about which I want to say one thing before I come on to these priorities in detail.

Among those Measures not listed in the Queen's Speech, we shall be introducing a Bill during this Session to amend the Hire Purchase Acts. This will be an important part of our policy of extending consumer protection. It is the second item for giving effect to the recommendations of the Molony Committee on consumer protection.

As the House knows, we set up the Consumer Council in April of this year, and it is now meeting regularly under the chairmanship of Baroness Elliot of Harwood. The Hire Purchase Bill is intended to deal with those questions where we know action is immediately necessary, but more fundamental questions are involved in this whole matter. We are now studying these in the Department and, while we are doing so, we shall welcome the views of the finance houses, or any other bodies concerned, about these deeper problems which will not be immediately dealt with in the Bill which we shall soon be presenting.

Let me now say a few words about the modernisation of industry. At this moment we have a very good basis for a further advance. During the third quarter of 1963, the index of manufacturing production was running well ahead of any previous levels. Where there have been innovation and investment in the latest equipment, they are proving their worth. The motor industry is breaking all records. The September output was more than 25 per cent, above that of any previous September. The chemical industry has invested heavily in new capacity. Its output during the summer was nearly 10 per cent, above that of the summer of 1962.

These, of course, are the new industries, but this expansion need not be confined to the new industries. There is also scope in the older. In coal mining, for example, after very long and heavy investment in mechanisation, the concentration of manpower at the more economic pits has brought a rise in productivity. In the first ten months of this year, coal output was about 5 per cent, more than two years ago, although the labour force was 8 per cent, lower. This is with very heavy investment in mechanisation and closing down of the older pits.

We can look confidently in general to further increases in production. Order books generally are rising strongly, including those of the engineering industry. From 1958 to 1962, investment in manufacturing industry in real terms was 25 per cent, higher than in the previous five years. There are sure signs that investment in the private sector is beginning to rise again, and the pace is expected to increase over the next 12 months.

How are we to bring about the increased rate of modernisation and the use of mechanisation and the process of automation and other devices? I do not suggest that there is any easy way of doing this. In his speeches, the Leader of the Opposition has never suggested any specific ways in which this could be brought about. It is not something which can be imposed from the outside. It depends ultimately on industry itself and on the individuals running industry.

But I believe that the advance can come most rapidly by partnership between industry and Government in these matters. Industry must provide its own initiative and we should not take action which would weaken it. The Government's contribution should be to encourage the innovators by their economic policies. The financial arrangements for encouraging new investment in this country today, as a result of the actions of my right hon. Friend the Chancellor of the Exchequer and his predecessors, will match those of anywhere in Europe. The pressure of competition should be used to encourage the innovators and those who are prepared to face change. But we must also recognise in the House as a whole that in many modern industries an increase in the size of firms is an essential condition of advance in this technological age.

Secondly, the Government must see that the basic structure of the country is right and that it is spread geographically right across the country. This means education, transport, communications and power, and in all these the House knows of the plans which the Government have evolved.

An interesting piece of research has recently been carried out in the United States which suggests that of the growth of American output from 1957 to 1962, 10 per cent, was due to increased capital, 35 per cent, to research and development, and 40 per cent, to education. It may well be that some of those figures are speculative, but they certainly demonstrate that any investment in education is an investment in growth and an increase in wealth. That is why, as the Chancellor of the Exchequer demonstrated yesterday, the proportion of the gross national product spent on education in this country under the present Government has risen to a level higher than ever before.

The third action of Government in this process must be to stimulate and help industryin its advance to automation. I say quite frankly that it means that we shall constantly look for weaknesses in the machinery of modernisation and consider how to fill the gaps and how to stimulate others to do so. This will mean constant consultation with industry to decide where the line should be drawn between the Government's task and industry's own responsibilities. I have begun consultations with industry in order that we may discuss this now.

Let us take as an example this question of automation about which we have heard a great deal, as we have about the advances which it promises. Many of our firms, the very large firms, have already gone a long way in the use of automatic production lines and automatic process control, and in the use of computersin the planning functions of management. Some of these are in the most advanced forms. Some are contributing to further advances. But in the middle ranges there are many firms who could use these processes but who are not doing so. What is lacking here?

The first thing is that they are often not aware that their own processes can be adapted to use these methods. That, fundamentally, is the problem. Certainly in many cases they could use the less sophisticated forms. The second

problem is that they oftenfind it difficult to measure the economic advantages which could be gained from the adoption of these technological processes. They can find people who can advise them whether their processes can be adapted and, if so, how, but what is more difficult is for them to find out in advance the economic balance of advantage and disadvantage in so doing.

We are now examining whether there is a gap here and, if so, how it can be filled. One possibility might be to organise pilot schemes in which Government and industry would collaborate to see how this sort of experience would be provided. Another means would be to create a centre where knowledge and experience of this kind could be brought together so as to give firms who wish it comprehensive advice. There are various other possibilities which are emerging in discussions. We shall consult industry fully before we reach decisions as to how best we can help. What we cannot do is to intervene to plan people into automation; but we can guide and stimulate.

In exactly the same way, in scientific research and development the ultimate initiative must come from industry. The Government's contribution to civil research trebled from 1956 to 1962, but the Government cannot provide a substitute for eagerness to invent and to exploit. It must originate in industry itself.

There has recently been a description of the research in depth employed by a great Continental firm. It made a great impact. There are firms in this country which are spending on exactly the same scale, but they, too, are large firms. Here, again, it may be that the improvement of research and development in British industry will require changes in structure in industry and increases in the size of firms to be able to meet these requirements. If so, this is a development which we should not resist.

There are many other things in which industry could join together in order to examine common problems and share experiences. In this country this is not carried on to anything like the extent to which it is carried on in North America and many European countries. and therefore I hope that it, too, can be encouraged.

I was delighted when a number of groups took the initiative to ask Lord Franks to advise on the establishment of a business school. Another valuable contribution is that of the Centre for Inter-Firm Comparisons which is dealing largely with firms in the middle range. It addresses itself to the question of how the average firm can be brought nearer to the standard of the best. Unfortunately even these facilities are not fully used, and so in the last analysis what can be done in this field must depend not only on equipment, but on the attitudes of those in industry themselves.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

I am grateful to the right hon. Gentleman for what he has said. Has he made any inquiry as to how the British machine tool industry will participate in this development? Are we going to buy the new automated machines from abroad, or are we going to produce them ourselves?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The British machine tool industry is very much in my mind, both from the point of view of the matter to which the hon. Gentleman referred, which is naturally important, and from the way in which the industry as a whole can contribute to the sort of thing I have been describing this afternoon, and I am glad that the hon. Gentleman raised this matter. It depends on the attitude which industry takes to these points. I hope that managements will be alert and professional in their outlook, looking ahead five years in product design, techniques, training their workers, and in assessing their markets. We shall do our utmost to assist in this process.

The second priority was that of trade and I should like to say something about our prospects. Our export prospects as a whole are encouraging. Exports in the third quarter of 1963 were nearly £350 million a month—9 per cent, more than in the second half of 1962. Imports are growing too. In the third quarter they were 4 per cent, above the second quarter, and 10 per cent, above the beginning of the year. Imports of industrial materials are rising very quickly.

Over the last decade the total value of British exports increased by about half. Exports of machinery doubled, and were nearly one-third of our exports by 1962. Exports of chemicals nearly doubled; so did non-ferrous metals and miscellaneous manufactured goods. Road vehicles and aircraft exports grew faster than average. In fact, the striking thing is that these groups accounted for almost all the total growth in exports, and this reflects the increasingly important part played in world trade by manufactured goods and by the industries which are growing fast.

In the short time which I have been in this office I have been looking at die pattern of world trade and of our own trade, and there are one or two points which I should like to put before the House. Out of the total exports of the world, nearly three-quarters come from the industrial countries. This emphasises the great gap between the developed parts of the world and the under-developed countries, and the importance of the G.A.T.T. negotiations and the United Nations trade conference. Trade between industrial countries themselves alone accounts for half of all world trade, and two-thirds of this is in manufactures, so that one-third of all world trade is an exchange of manufactured goods between the industrial countries.

What is our position set in this background looking at the long-term pattern of trade? The first thing is that our exports to the markets of Western Europe taken together now play the biggest part in our trade—36 per cent. in 1962. Our exports to the Common Market countries are 20 per cent, of our total and are still increasing, yet these themselves are less than 6 per cent, of the Common Market's total imports. There is therefore room for growth here if we continue the present energetic development of this market.

Exports to Commonwealth countries are still of great importance. They represent one-third of our trade in 1962, and one-fifth of all their imports. Yet, despite the big rise in the imports of the overseas Commonwealth, our own exports to them have failed to rise. This is indeed the point which I think the right hon. Member for Huyton (Mr. H. Wilson) wants to debate at length later. I want to mention only one or two points today. Comparing the period 1960–62 with 1955–57, imports into Commonwealth countries rose by £1,000 million. Yet our share of this was only £40 million. This is the point which presents us with one of the major questions of the developing pattern of world trade in this period of history.

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

Who has been largely responsible for it?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

If the hon. Gentleman bears with me, I shall analyse the reason for it.

Exports to the United States represent 9 per cent, of our trade, and they have been growing at the rate of 9 per cent, a year. There is one further point of interest. Over the last ten years the area in which our exports have been growing fastest—although they take only a small percentage of the total—about 3 per cent.—is the Soviet bloc where the rate of immediate development is very fast—nearly 20 per cent, a year.

I have given these particular patterns to demonstrate, first, the importance of the industrial markets of the world in which we set the context of trade; secondly, the fact that much depends on our trade in Europe; thirdly, the problem of Commonwealth trade, and, fourthly, the growth of trade with the Soviet bloc. They also emphasise the importance of the Kennedy Round negotiations which, as the House knows, are not only tariff negotiations, but trade negotiations of a general kind.

Now may I emphasise one or two points of the action that we have taken. First, in E.F.T.A. we have taken the initiative and at the end of this year we shall be more than half-way to free trade with E.F.T.A. Three more years will see the industrial tariffs disappear. Our trade with Common Market countries so far has grown nearly as fast as their trade with each other, and one has to take account of the fact that their own manufactured tariffs are nearly half-way towards removal, and tariffs are coming up externally steadily against us. The increase in trade has been in part due to the greatly increasing prosperity of the Market itself. It has also been due to the fact that there are specialised goods which we produce and continue to sell, despite the tariffs. The success is also due to the immense efforts made by our exporters, and the plain fact is that the negotiations, although unsuccessful, focused the attention of exporters on the European market to a very great degree.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

This is undoubtedly the case. If the hon. Gentleman talks to anybody in his constituency who exports, he will know that this is the case. What is necessary is that these efforts, which were redoubled after the failure of the negotiations—large firms very often joined together to help their position—should be reinforced.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Does not the right hon. Gentleman see the obverse of this point? Is is not a fact that these efforts in Europe—and they have been fine efforts—have been marked by a corresponding reluctance on the part of many exporters to try to see if they can sell in the Commonwealth? Has the right hon. Gentleman seen the adverse criticisms of the head of the Snowy River Development Scheme in Australia about British exporters not even trying to get Australian markets, and does not the right hon. Gentleman acknowledge that our exporters, and indeed Commonwealth and certain other sources of supply, have been discouraged by the fact that not merely during the Common Market negotiations, but over the last six or seven years, this Government seem to have turned their back on the development of Commonwealth trade?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The right hon. Gentleman's last statement is completely wrong. The question which I have been asking myself is this:is this due to any question of the framework of trade for which the Government can be responsible, or is it due to the efforts which individual business men and firms must make to gain markets in the Commonwealth? Is it due to the fact that they have not got the resources to make these efforts in the Commonwealth area? These are the relevant questions to which we should address our minds.

There is one further point which I want to make. Two-thirds of our trade and of the trade of all Commonwealth countries is outside the Commonwealth. Hon. Members say that the position has been damaged since negotiations began. But at the Montreal conference of the Commonwealth it was evident that because of this distribution of their own trade Commonwealth countries were interested above all in multilateral trading arrangements and the improvement of such trading arrangements, and that is perfectly justifiable on the scale of trade being carried on.

I said earlier that the imports of Commonwealth countries have increased by £1,000 million and that we have had very little of this extra trade. We know that the Commonwealth countries would not welcome proposals for more extensive and exclusive trading arrangements among the members, and we know that there are reasons for the decline in our share. Restrictions on dollar imports which formerly ensured us a large share of the Commonwealth market have disappeared. New sources of supply have been opened up to the Commonwealth, and we take a smaller proportion of their export trade than we used to because our market is already fully supplied and they have found outlets in the other growing markets of the world. But we should be able to obtain part of their increased imports.

The question is: why cannot we do so? Basically, it means that greater enterprise has to be shown by firms if they are to gain these markets. It is true that the effort which was concentrated in Europe because they saw it as a great industrial market, compared with which the developed part of the Commonwealth is small, meant a diversion of effort from other markets. The question is: how many firms have the resources to mount and sustain a major sales campaign in more than one area of the world where there is scope for increasing exports? That is a fundamental question.

It is striking that 50 per cent, of our export trade today is carried out by only 200 firms. It is, therefore, a relevant question to ask how many have the resources to carry out in Europe major sales campaigns of the kind carried out formerly in the Commonwealth market after the war and in the United States in recent years, and to maintain them at the same time. Rather than suggest, as the right hon. Gentleman has, that this is a neglect of a particular market, I believe that what we should do is to urge our firms to increase and expand their sales organisations, in modern terms, in order to be able to hold more than one major market at a time. It is the responsibility of the firms themselvesto enlarge their sales organisations and also to recognise that we may see a change in the structure of firms, and an increase in the size of many of them, if they are to support a sales organisation of the type which we want to hold these markets. That is a fundamental question in our approach to the whole industrial structure. If amalgamations are necessary for this purpose we should not be afraid of them.

Lastly, I want to say something about trade with the countries of the Soviet bloc. We can discuss in detail the question of Commonwealth trade. I have dealt with it only in broad outline today, but we can discuss in detail the action that we are already taking to deal with this problem.

Photo of Miss Peggy Herbison Miss Peggy Herbison , Lanarkshire North

Will the right hon. Gentleman examine as soon as possible the effectiveness or otherwise of those in our High Commission Offices whose duty it is to look after trade?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Yes, I will certainly do that. When I was at the Foreign Office I went into this question very carefully with my right hon. Friend the present Prime Minister, because the Foreign Office has interests in other countries, just as the Commonwealth Relations Office and the Board of Trade have in Commonwealth countries. If there are any examples where, in the hon. Lady's view, action was not taken, or there were omissions, I will gladly have them examined at once, because our only desire is to make this machinery as effective as possible, and to gain the markets of the Commonwealth countries.

I want to say a word about trade with the Soviet bloc. Although not large, it has increased at a striking rate. Imports have risen from £102 million in 1958 to £158 million in 1962. I am looking forward to welcoming the Soviet Minister of Foreign Trade here early next year to discuss a new trade agreement. During the next few months we shall also be having annual discussions with some other Eastern European countries about the volume of trade. Because we value this trade we want to have as few restrictions as practicable, and these countries have told us that the present system of detailed annual quotas seems to them to be unduly limiting. They have suggested that trade could be increased if a more flexible system were introduced for the control of imports, and I am prepared to look at this question very carefully.

We believe that there is room for greater opportunities for trade with these countries of eastern Europe—trade both ways—providing their prices are not disruptive and that trade is possible in the goods that our people want to buy. All the Board of Trade services which are available to exporters apply to our trade with the bloc. Equally, all the facilities of the Export Credits Guarantee Department, including financial guarantees, are available for business with the bloc as for business with other markets.

One part of my own responsibilities, as I have explained to the House, is for regional development. The primary objective of regional development is to promote the growth and well-being of—and I emphasise this—the country as a whole. I feel that we shall have a considerable amount of debate not only in this House, but in the country, as a result of the two White Papers of a regional character which are being published this afternoon. It is important that from the outset of the argument we should recognise that the purpose is not limited to helping particular regions, but to helping the growth and well-being of the country as a whole.

It can do that by relieving present congestion and preparing to meet the demands which a growing population will make on this country, in terms of communications, employment, and so on. Like most advanced industrial countries, we have the problem of regional imbalance. The forces which brought it about are very powerful, as Governments of all colours have found in these last years.

Some people may still argue that these forces should be left to operate unchecked. We may hear that point of view expressed, but I feel that few would argue it. What is important is that the measures used to control these forces should be ones which will promote and not impede national growth and efficiency. That must be the criterion by which we judge the actions that we take. Some people see regional development primarily in social terms. I want to be frank here: for this reason they do not think it appropriate that regional development should be in the hands of a Minister at the Board of Trade.

I think that they are wrong. The real life of a region is bound to rest upon its economy. In our view, therefore, it is right that the responsibility for regional development should rest with a Minister who is concerned with industrial efficiency, with technological change, and with the general processes of economic growth.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

We said that a long time ago.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The hon. Member is very far-seeing and very wise. Not everybody holds the same view. I add straight away, to those who have expressed this view in public, that in exercising my responsibilities as Secretary of State I do not intend to take a view which is limited to economic matters. I am as anxious as anybody to develop to the full all the amenities of a region and to make the fullest use of all the skill and energy available in doing so.

The approach of both pre-war and post-war Governments to this problem has been to seek to deal with problems of unemployment in particular places through policies for the distribution of industry. These policies have recently had two main points; first, a limitation on expansion, and, secondly, inducements to go to particular places. The conception we are now putting forward is a wider one based on the development of a region as a whole and its development in all its aspects.

The appointment of a Minister with positive responsibility for regional development carries forward the work which has recently been done by the Government. It follows the Lord President's appointment as Minister with responsibility for the North-East, and I should like to express, since I have now come into contact with this work, my admiration for the enthusiasm, flair and immense value of the work that has been devoted to this project by my noble Friend.

What we are building on now in these two White Papers is not only the Lord President's investigations and Report, but also the work in Scotland under the direction of my right hon. Friend the Secretary of State for Scotland, the planning studies initiated by my right hon. Friend the Minister of Housing and Local Government and the work done by the Toothill Committee and the National Economic Development Council. The two White Papers will be available in the Vote Office in a few minutes.

Photo of Mr Arthur Bottomley Mr Arthur Bottomley , Middlesbrough East

Will the right hon. Gentleman explain why, after twelve months of professed intensive Government effort, unemployment in the North-East is today running at the rate of 5.6 per cent.—over 7,000 people under the age of 18 unemployed and over 2,000 who left school last summer still unable to get jobs?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The right hon. Gentleman knows only too well that I have already dealt with what I said are the powerful forces working in this region. What we are doing is endeavouring to get to the root cause of the trouble and to deal with it. [Hon. Members: "Oh."]I gather from the unrest on the benches opposite that the Opposition dislike the constructive work that is now being done. However, the House will want time to consider in detail and to weigh the proposals that are now being put forward. I have no doubt that my right hon. Friend the Leader of the House will arrange for early debates on this matter. I wish to draw attention to some of the main features and to set them in the context of the themes which are common to both White Papers.

Photo of Mr William Ross Mr William Ross , Kilmarnock

Which have not yet been published.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

But I am entitled to explain them, and I intend to do so. The themes which run through the White Papers are, first, the theme of growth, secondly, of modernisation, thirdly, of continuity of development, and fourthly, of partnership. I will consider first the question of the approach to growth. In both regions the emphasis is on the promotion of growth. Our aim will be to provide a steady rise in the level of economic activity to a point where further growth will be self-generating and will provide the basis for a sustained rise in employment.

We have, therefore, adopted the concept of growth places. The application of the concept of places of growth is different in the two regions. This is because the growth places have been chosen, after detailed study, as the places which have the best prospects of generating faster growth in the region. In central Scotland there will be a series of growth areas which, of course, includes the four Scottish new towns, spreading across the central belt from Glenrothes in the east to Dumbarton in the west. Each growth area is situated so as to fall within the influence of either Glasgow or Edinburgh. When the modernised communicating network is complete, people will be within easy travelling distance of these cities and there will thus also be modern links with the South.

In the North-East there will be a single growth zone. This will be roughly the area formed by Tyneside and Tees-side and that part of County Durham which lies to the east of the Great North Road. It is, therefore, a quadrilateral-This covers only a small part of the region, but it takes in the main existing centres of population and activity. Within this growth zone the two main conurbations of Tees-side and Tyneside and the Darlington-Aycliffe area will be regarded as centres of expansion.

The second main theme of the two White Papers is the modernisation of the whole life of the region. I am sure that in the minds of many hon. Members will be a number of detailed questions as I go along, but I can assure them that they will be able to read all about these important matters in the White Papers.

Photo of Mr Eustace Willis Mr Eustace Willis , Edinburgh East

This is terrible, disgraceful.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Perhaps I may be allowed to continue.

Photo of Mr Ernest Popplewell Mr Ernest Popplewell , Newcastle upon Tyne West

The right hon. Gentleman has defined an area to the east of the Great North Road. Does it mean that north-west Durham is to be left out and that Cumberland, Westmorland, and so on, will not be included in the proposals?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Perhaps the hon. Member will consult the map which is provided.

Several Hon. Members:

Several Hon. Members rose

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I must continue. It means that the area which has been taken into the zone of growth is the area I have defined. I have defined it as the area of growth. Naturally, the areas which are at the moment development districts and which are not included in this area of growth will retain their present facilities regarding Government investment and so on.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

They are being changed.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

They are not being changed from the present position. They will go on receiving their present facilities so long as these are justified by present legislation. However, they do not come into the growth zone, the purposes of which I have been trying to explain.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Can we get this clear? Will some facilities and assistance from the Government go only to these new selected growth areas and not to the present development districts?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The facilities will be in the form of the basic public investment of the Government in the areas to make conditions attractive for industry to go to the growth zone. The inducements to enterprise which already exist will be combined with a wide range of measures to makeeach region a more efficient and better place in which to live and work. These measures will be deployed and co-ordinated on a regional basis in deliberate support of the basic growth policy which I have described. Better communications, more and better housing, urban renewal, a raising of standards in the whole environment—a bettering of the whole quality of life—are essential features of the programme for both regions.

It may assist hon. Members if I give some figures affecting the two regions. For central Scotland, for example, the road programme for the next five-year period will be increased from £83 million to £101 million. The annual rate of new house building will be stepped up from 23,000 to at least 30,000 in the next few years, and higher still thereafter.

The four existing new towns—East Kilbride, Cumbernauld, Livingston and Glenrothes—will be expanded substantially beyond the original targets, and more quickly. Two additional industrial estates are being developed by the Board of Trade at Bellshill and Donibristle, and a big new drive will be made on rehabilitation and renewal in the old industrial areas such as north Lanarkshire and central Fife.

In the north-east of England similar action will be taken. The road programme will be extended from £58 million to £108 million; the combined public and private housing programme will be raised from 18,000 to 25,000 annually; the target size of Aycliffe new town will be more than doubled; a further new town will be built at Washington for between 70,000 and 80,000 people; the investment programme will be stepped up substantially in town centre redevelopment work, especially on Tyneside and Teesside——

Photo of Mr William Ross Mr William Ross , Kilmarnock

On a point of order, Mr. Speaker. If the right hon. Gentleman is describing the White Paper, would it not be wise to adjourn the debate until we have seen it?

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

I do not observe that it is a point of order for the Chair.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The White Paper will be published—

Photo of Mr Thomas Fraser Mr Thomas Fraser , Hamilton

On a point of order, Mr. Speaker. I should like your guidance. If the right hon, Gentleman is, in fact, describing the White Paper, is it not a matter for the Chair to protect hon. Members by ensuring that they have the White Paper in their possession at this time?

Photo of Mr Paul Williams Mr Paul Williams , Sunderland South

Is it not the position, Mr. Speaker, that the Government are announcing their plans and views on economic policy, and that at a sub sequent stage there will be a debate on the White Paper?

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

I think that the two points are related. I think the true position is that the Minister said that he is to lay this document—or, rather, have it made, available to hon. Members, do not think that that prevents him from being able to refer to it now.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Further to the point of order, Mr. Speaker. It is a matter of common knowledge that this White Paper was ready yesterday—and, indeed was expected to be laid yesterday. It has obviously been deferred so that the right hon. Gentleman can make his speech first. Every question put to him is greeted by the answer, "You had better study the White Paper", which is making nonsense of the debate. In view of the Government's deliberate holding-back of the White Paper—I gather that it has arrived in the Vote Office a moment ago; I have just been to find out—would it not be more convenient for the House, in view of the way the Government have treated it, if the House were to adjourn for an hour so that hon. Members could read the White Paper, and then debate it with some knowledge of what the right hon. Gentleman is saying?

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

The right hon. Gentleman addresses me, he says, on a point of order. I think that his quarrel is with the Government, and nothing to do with the Chair.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The right hon. Gentleman the Leader of the Opposition is quite wrong—

Photo of Mr William Ross Mr William Ross , Kilmarnock

On a point of order, Mr. Speaker. Are there not certain restrictions on any Government spokesman in the references to be made to a paper that has not been laid on the Table, and not available to the House?

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

I would desire to remind the House of what is our rule about this. What I am quoting from is the Manual of Procedure, in the 1959 Edition, paragraph 168: If a Minister of the Crown quotes in the House a despatch or other state paper which has not been presented to the House, he ought to lay it on the Table. But that is precisely what I understand the position to be. The Minister says that he is to do that. I do not think that this gives rise to any point of order for the Chair.

I hope that the House will not mind my reminding hon. Members that I have daily to sit with the personal anguish of knowing that many hon. Members will not get into the debate, and that I am always grateful if we can get on.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I have not, in fact, been quoting from the White Paper, but summarising certain points. I have tried to help the House by emphasising the themes that run through it. The right hon. Gentleman the Leader of the Opposition is quite wrong in saying that this White Paper was to be published yesterday. It was announced ten days ago that it would be published today. It was due to be published at half-past three, and I told the House so when I began to speak.

The right hon. Gentleman made a great point in his speech on Tuesday that what he wanted was honestly to debate policies. Would he not find it for the convenience of the House if I explained the policies to him and to his colleagues? He can then, as my right hon. and learned Friend the Leader of the House has already said, have every opportunity to debate the White Papers when there has been time for consideration of them.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Since the House wants to debate these policies intelligently, will the right hon. Gentleman tell us why this White Paper was not laid before he started his speech? Will he confirm or deny that it had been printed yesterday? Or is he telling us that it was only printed and bound this morning?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The right hon. Gentleman knows the procedure full well; that the Government fix the time for the White Paper which it believes is a reasonable time. When this time was fixed we had no idea that the debate today was to be an economic debate, nor had we any idea that I was to speak, apart from proposing, in the usual way, to make a statement at the beginning of Business which would have contained this material which the right hon. Gentleman would have found in the White Paper.

Photo of Mr George Brown Mr George Brown , Belper

In other words, "The next election must be the only thing in our mind".

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Let the people of the two regions judge these policies. They can also judge for themselves the attitude of the Opposition.

Perhaps I might now return to the third theme which runs through the White Paper. The third theme is that not only of modernisation and growth, but of continuity, and there is a firm Government commitment to a sustained effort for many years to come in these regions. These are stubborn problems which we have to face, and the policies are based on a long-term concept. This assurance is required to give confidence to the local authorities, to the construction industries, to firms considering expansion, to workers still not convinced of the need for skilled training, and to all men and women worried about the future of these regions. The commitments made to modernisation should give them this confidence in ample measure.

The important assurance to which I would draw the attention of the House is that the White Papers make it clear that the Scottish growth areas and the North-East growth zone will not be removed from the list of development districts until there is strong evidence of a general and sustained improvement in employment in the region as a whole—

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The hon. Member should be a little careful in making that sort of remark about an assurance that is as firm about a whole growth area as is this in the White Papers.

The fourth theme of the White Papers is partnership—partnership between Government Departments, between Government Departments and local authorities, between central and local government, and between local authorities and all the other interests in the regions. It is not just a matter of official policies and programmes. It is a question of the task being one for the local people in the regions, working together. The business community has an obvious part to play. The universities and technical institutions and research bodies will also be putting their ideas and "know-how" into the pool of regional thinking and planning. The voluntary organisations have their task of helping to make fuller opportunities for people in these areas which are undergoing rapid economic and social change.

There is also the work of the Scottish Council and the North-East Development Council. The Government have decided, after the report by Messrs. S. H. Benson on publicity arrangements for areas of high unemployment, to offer Exchequer assistance to the Scottish Council and the North-East Development Council for building up their promotional activities. We believe that given help of this kind they can do even more valuable work.

The trade unions have a key part to play in these regions. Building requires new methods and new skills. Not only for the additional public investment required—though that will founder if men are not forthcoming with new techniques able to get a big rise in constructional output. It is also a question of showing industrialists that these regions can offer people able to take on the kinds of work that growth industries need. The Government will do all they can to get training facilities extended and I am sure that the trade unions and their members will ensure that this expansion has fruitful results.

These, then, are the four main themes of the White Paper—growth, modernisation, continuity and partnership. They all depend in their different ways on a substantial and sustained increase in the two regions' public service investment. Therefore, they rely on a material increase in the output of the two regions' construction industries. If we are to avoid delayed completions and rising costs this means the full use of modern methods and the full acceptance of the need for increased industrial training. My right hon. Friend the Minister of Public Building and Works and Newcastle University together have arranged a conference for 10th January into ways of speeding me greater use of industrialised methods of building and I look forward to useful results from this.

Already as a result of decisions taken during the last twelve months or so the current year's investment in both regions is expected to be materially higher than in earlier years. In central Scotland the 1963–64 figure is likely to be as much as £130 million, or 30 per cent, up on last year. In the North-East it will probably be about £80 million, or 45 per cent, up on last year, and for 1965–66 the figures are likely to be respectively £140 million and £90 million. This will mean that for some years ahead these regions will get about the sams relatively high proportions as in 1964–65 of a steadily expanding national public investment total.

Much of this investment will be by local authorities, but, of course, a considerable part of the cost will fall on the central Government, whether through the normal grant and subsidy arrangements or through the fact that some of the work, for example on motorways, trunk roads and new towns, is 100 per cent. Exchequer financed. The 85 per cent, grant for the clearance of derelict areas is being continued. These two regions, with about 13 per cent, of the population of Great Britain, will be getting by next year, as a result of deliberate Government policy, up to 18 per cent, of Great Britain's total public service investment. The White Papers mean that they are likely to go on enjoying this favourable treatment for some years to come.

This is because, in the Government's view, central Scotland and north-east England are at present suffering from structural and historical weaknesses which do not apply on quite the same scale in other parts of the country. I accept that this is bound to mean that some other regions will receive proportionately less. It is justified not only by the needs of the regions I have mentioned, but also because it will enable an increased growth in the economy of the country as a whole, which is for the benefit of all regions.

Photo of Mr Jo Grimond Mr Jo Grimond , Orkney and Shetland

Naturally, I am grateful to the right hon. Gentleman for including these at this late stage, but when he says that certain of these regions are suffering more than others this is not true. The parts of Scotland which suffer most heavily from unemployment and depopulation are the Highlands and the Borders. The Prime Minister must be well aware of this. Wales is not mentioned, nor south-west England. Are we to take it that there are no proposals for these other regions which have certainly suffered as heavily?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

If the right hon. Gentleman will allow me to finish my speech, he will hear what I have to say about the other regions. I can also deal with the point that the Government are said to have done so little for these areas.

These are long-term plans, but under the Local Employment Acts, since April, 1960, total assistance of nearly £93 million has been offered by the Board of Trade. Of this sum, £45 million have gone to 160 projects in Central Scotland to provide 36,000 jobs and £15 million have gone to 110 projects in the North-East to provide over 17,000 jobs. [Interruption.] The right hon. Member for Huyton will recall that I said that there are fundamental forces working against every effort made by Governments to induce industries to go to these areas. He must recall that in his own time at the Board of Trade he was not offering anything like the inducements which the present Government are offering. He must also recognise that there are similar forces at work, though not to such a great extent, in world economic affairs.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

What I recognise is that we brought full employment to these areas. What the right hon. Gentleman is still not telling the House is that in the four years after an election in which the Government pledged themselves to solve the problems of these areas, unemployment has risen sharply both in Scotland and on the North-East Coast.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I have given the figures for action taken under the 1960 Act, and which was taken directly after we came into power. I now give the figures for action taken since the 1963 Act was passed. We have received at the Board of Trade 1,002 applications and of these 300 have been for central Scotland and 300 for the North-East. Of the 1,002, we have so far approved in principle or otherwise dealt with, 633, as a result of special machinery which we have created, and these applications are being dealt with now at a very fast rate indeed. This is what the present Government have done to deal with these problems.

Finally, I should like to say something about the organisation required for regional development. My responsibilities cover Great Britain, but where Scotland is concerned my right hon. Friend the Secretary of State for Scotland is responsible for devising the details of the plans and policy and seeing that they are implemented. My responsibility is that of fitting the regional plans and developments into the regional developments as a whole, though of course in the Board of Trade we have responsibility for industrial policy in Scotland. There is no direct responsibility for Northern Ireland, but we have close liaison with the Northern Ireland Government on industrial development policy and I have assured the Minister of Commerce that that will be extended to include general matters of regional development in future.

My task in the North-East will be to see that the plan is implemented. To assist in this work of co-ordination, I have set up a group of officials drawn from the half-dozen Departments mainly concerned, in particular Housing, Labour and Transport. They will help in implementing the programme for the North-East, but they will also advise over the general field of regional development. Within the North-East there will be periodical conferences of all the regional officers. Those will be under the chairmanship of the head of the new "Regional Development Division" which I have now set up in the Board of Trade. The first regional meeting of this kind will be held next week.

The rÔle of local authorities in the North-East will also be of the highest importance. I have agreed with my right hon. Friend the Minister of Housing and Local Government that his regional officer, in addition to his departmental duties, will be responsible to me for coordinating day-by-day those elements in the regional development programme which involve local authority functions. This machinery should enable us to secure the implementation of the proposals as well as to keep them under review and adapt them as the circumstances of the region require.

We must keep flexibility as well as a sense of urgency in their implementation. But, of course, central Scotland and the North-East are not the end of the story. The Gracious Speech makes it plain that we intend to bring forward plans appropriate to other regions some of whose problems, though different from those of central Scotland and the North-East, are nevertheless pressing.

Work on a study of land use and employment problems in the South-East is well advanced under the direction of my right hon. Friend the Minister of Housing and Local Government. The problem here is how to cope with actual and prospective growth and to relieve congestion without impairing the national efficiency.

There are also studies in the Northwest and the Midlands. These have so far been concerned principally with land use. We shall now carry them forward in the wider context of this general policy for regional development. There is also a study in hand for Wales, though I honestly cannot deal in detail with these studies today. I have paid a quick visit to the North-East and to Scotland—

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

What about the south-west of England?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

A deputation from the south-west of England has been to see me and discussed this matter, but there is no work in hand at the moment for the south-west region. [Hon. Members: "Why not?"] Because we are maintaining priorities and we have not yet reached that of the South-West. This I have undertaken to discuss with the South-West as soon as possible in the New Year.

Photo of Mr Frank Hayman Mr Frank Hayman , Falmouth and Camborne

Could the right hon. Gentleman define a little more clearly what he means by "as soon as possible"?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I said "as soon as possible in the New Year". They have already discussed the questions with me and I am now examining the points which they raised.

Photo of Mr Harold Finch Mr Harold Finch , Bedwellty

May I remind the right hon. Gentleman that there is considerable unemployment in the valleys in Wales?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I said that a study has already been started in Wales by my right hon. Friend the Minister of Housing and Local Government. This will be fitted into the context of general regional development under this new arrangement. In outlining this arrangement to the House, I emphasised the economic aspects of these regional development plans. But I do not want the House to think that it is only with the economic aspects that we are concerned. I hope that the other aspects of housing, schools, hospitals, increased help for the Arts Council, and so on, will show that we have a wider aim still than the economic aim.

To help these regions to develop over the years there can be no quick, easy solution to this problem—to develop over the years into places where, instead of there being a tendency to migrate, people will be able to live near their work, and where industrialists will want to go with their families, to take their firms and businesses and carry on there permanently.

That must be the object of long-term policy. We believe that we have the opportunity to do this with the proposals in the two White Papers, and I commend them to the House.

3.54 p.m.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

We fully recognise that in the course of this Session the Government are going to try to extract the maximum electoral advantages from everything that is in their hat, but we do not see why they should put us under the disadvantage of not seeing the White Papers that they intend to discuss before they are announced in the House. This really is shabbiness carried to an extremity. No one can pretend that documents of this magnitude were not printed, known about, parcelled up and ready for distribution. There is no reason at all why the Government should not have given us the opportunity of seeing these documents so that some comments could have been made about the announcements that the Minister has made this afternoon. This is carrying electioneering too far. We have had another example of electioneering today. Although many items have been covered in the Queen's Speech, there is no announcement about the Hire-Purchase Bill. The Government could find room to say all sorts of things about protecting the breeders of new and rarified plants. One would have thought it was just as important to mention the matter of hire purchase, if the housewife is to be protected against these hire-purchase people who go from door to door; we call them "tally-men" in South Wales. Why was this not mentioned in the Gracious Speech? [An. Hon. Member: "They forgot it."]No, I do not think they forgot it. I do not think they intended to do it. They have had a change of mind overnight, and I will tell my hon. Friends why I think they have had a change of mind.

In the last Session in the other place Lord Peddie, a very distinguished co-operator, brought a Bill forward. He was asked to withdraw it on the ground that the Government would bring forward their own Measure. Yesterday he said, through the usual channels, that he was not going to be put off again. He said that he would bring forward his own Bill, whether they liked it or not. My hon. Friends who are co-operators in this House, and who have followed this matter of hire purchase month after month and year after year, placed a Motion on the Order Paper. The Government could see that they were going to get into trouble over this; so, Lord Peddie having made his speech in the House of Lords and having made it clear that he intends to come forward with the Hire-Purchase Bill, we are promised a Bill today, although it was not worth mentioning in the Gracious Speech.

I am almost willing to make this bet with my hon. Friends. The Government may announce the Measure, but it is a long way between announcing it and seeing it on the Statute Book. Is the President of the Board of Trade saying that this Measure will be put on the Statute Book before the election? Is that what he is saying?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

indicated assent.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I accept his undertaking. The Hire-Purchase Bill will be put on the Statute Book before there is a General Election. I am grateful for having extracted that undertaking from the right hon. Gentleman. It only goes to show that if we shove this Government in their present state of electioneering jitters, they will give almost anything. I advise my hon. Friends to keep it up. We have about six months before Father Christmas forecloses, and then we shall be back to the same dreary old round again. [Laughter.] I am glad to give hon. Members opposite a little comfort in allowing them to think that they might possibly win the General Election.

There was no mention of Wales at all. Apparently there are to be developments in the Highlands and Islands. There are references—well-deserved—to the North, to Scotland and other parts, but there is no reference in the Gracious Speech to Wales at all. Why is this? We have a Minister for Welsh Affairs but he has not been here today. He has not been seen very much during the whole course of the debate, and he has failed to secure any reference to the problems of Wales in the course of the Gracious Speech. This confirms the need, especially in a Tory Government, of a Secretary of State for Wales. It is not so necessary in a Labour Government because, thank goodness, there are a great many Labour Members from South Wales and North Wales who are actively prosecuting the case for Wales. We know that Wales is singularly unrepresented in the Tory Party and the consequence is that they need a Secretary of State. We are committed to this, and there will be a Secretary of State in the next Labour Government.

Let us take one or two of these Welsh problems. I hope my hon. Friends representing other parts of the country willallow me to discuss Wales for five minutes, in order that we may know what the problems are. Let us take the question of leasehold. This was the last opportunity the Government had to put right this grievance that is felt very strongly in the valleys, cities and towns of South Wales. The Government are opposed to the enfranchisement of the leaseholder both in Wales and England. They have failed to take any steps at all during their twelve years of life to enfranchise the freeholders, and I wish to say nowwhat we have said before, that we intend to introduce a Measure to deal with this problem. I hope and believe that the next Queen's Speech will contain proposals for legislation from a Labour Government. I do not believe that this Government will introduce one first. They have had opportunity after opportunity, but this is too much for them to swallow. The Minister has said more than once that he believes that the present system is right.

There is the question of apprenticeships and unemployment. We shall hear a lot about them in connection with other areas in the country. But in Wales today there are still nearly 29,000 men and women and young people who are out of work; and there are only 7,100 vacancies for jobs. The Local Employment Act has revealed many weaknesses in its application in South Wales as in many other areas. Unemployment black spots are treated on too narrow a basis. We need much wider areas on the development area lines if we are to be enabled to deal with this problem.

In the valleys there are people who have to travel 10 or 20 miles to work. We need planning on a broader and a regional basis. Apprenticeships in both South Wales and North Wales are far too few. We depend mainly on the nationalised industries in this respect and they have done a first-class job. There are also, of course, some private industrialists who have done the same thing and South Wales Switchgear may be taken as a notable example. But young men in South Wales still have to leave home and come to England—they come from many walks of life and from many trades—if they wish to train as apprentices. This is something which is deeply resented. More opportunities are needed.

I wish now to refer to transport. The Prime Minister told us that if a line has to be closed in the Highlands, adequate alternative transport must be provided somehow. [Hon. Members: "Somehow."]Does that pledge apply also to Wales? If so, by whom is it to be provided—[Hon. Members: "Someone."]—and at whose expense, and when? At the moment we have nothing but closures in central Wales where it has been said that a desert is being created. We have exactly the same problem as exists in parts of the Highlands. I wish to ask the Prime Minister whether he will give us an assurance that the pledge he made about the Highlands will also apply to central Wales. [Hon. Members: "Answer."] I am ready to give way to the Prime Minister, very ready to give way.

Photo of Mr George Brown Mr George Brown , Belper

At least the right hon. Gentleman could say "Somehow".

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

Notice will be taken that the Prime Minister is not so forthcoming about central Wales as he was about the Highlands of Scotland. Of course, the same problem exists in parts of England.

In North Wales today there are areas where unemployment is heavy and districts are not scheduled. I know of no growth point which has been scheduled in Wales. In the quick introduction which the Minister gave us I heard nothing about any growth point, or zone of growth, in Wales, despite the great difficulties which exist in North Wales.

There is one further issue on which I wish to express a point of view on behalf of my lion. Friends. I refer to the future of the Welsh University. There is great dispute about the University of Wales and in some cases more heat than light is being generated. The real test which we have to apply is that the future of the students should not be imperilled in the quarrels about the administration of the university. If there is no agreement in Wales on this question, it may be that there ought to be a public inquiry, which could take many forms because legislation will be needed before we can alter the constitution of the University of Wales, and also bring into play the pledge of the Labour Party that the colleges of advanced technology will become universities in their own right.

I turn more particularly to the problems of Scotland and the North, including the North-East. We can measure the success of the Government's record over the last twelve years by the level of unemployment. The Local Employment Act came into force in April, 1960, when the unemployment figure in Scotland was 65,000. As a result of this Act and everything that has flown from it unemployment has increased, and in October of this year the figure was 88,000. These are the figures which the Minister was unwilling to give. I give them for him. Unemployment in Scotland has increased during the three-and- a-half years of the operation of the Local Employment Act.

At the time when the Act came into operation there were 37,000 people out of work in the North. The last count showed that there were 56,000 out of work. I am not surprised that the Prime Minister, to use his own words, has asked the Secretary of State to "tackle it afresh", if this is the measure of the record on which the Government stand. The Chancellor of the Exchequer was President of the Board of Trade during part of this time. He introduced the legislation and resisted Amendments moved by my hon. Friends. He told us that the idea of development districts was the correct notion for trying to overcome these unemployment black spots, and he concluded his introductory speech by saying that the Measure would add success in this field to the many that the Government have had in other fields."—[Official Report, 9th November, 1959; Vol. 613. c. 48.] As a result of this success the Prime Minister has asked the Secretary of State to tackle it afresh and try to deal with the consequences of his own success.

Of course, we all know what has happened, but it seemed to come as a blinding light this afternoon to the Secretary of State. There has been this continuing drift to the Midlands and to the South of workers from the North and from Scotland, following the decline of the traditional industries. These figures have been known and told many times. They have been repeated from this side of the House. Mr. Chetwynd said about the North the other day that there are still over 12,000 young people who are leaving to come South. In Scotland there is a move to the South, and in the Northwest, Mr. Allen, Director of the Lancashire Merseyside Industrial Association said yesterday that 124,000 have moved to the South. This causes deep and bitter resentment in these areas. In some ways I regret—although I am sure that the Secretary of State will do his best—that we have not a Minister for these areas who comes from the areas.

Photo of Mr William Ross Mr William Ross , Kilmarnock

We will give them one.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I believe that there is a lot to be said for having someone who lives and has his constituency and roots in these areas to deal with these problems. Only a person who comes from the areas can understand how deep is the resentment which exists about the movement of young people away from their own regions because they cannot find work.

The basic weakness over the last twelve years has been the failure of the Government to plan and their readiness and willingness to drift. Now we are told that we are to have growth points The Cairncross Committee recommended this for Scotland ten years ago. It has taken a decade for this idea to sink in.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The Prime Minister was then Minister of State for Scotland.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

My right hon. Friend reminds me that, of course, the present Prime Minister was then Minister of State for Scotland. He should have got on with it ten years ago. Now we are told that we are to have a large-scale area in the North-West—[Hon. Members: "The North-East."]—yes, the North-East—I will come to the Northwest in a minute—a large area in the North-East. What is the difference between this and the development area concept that the Government destroyed when they were returned to power in 1951? They are doing exactly the same thing, namely, recreating large units for development purposes, such as were destroyed because at that time the Government said they were wrong. But they are leaving out substantial areas.

I have only just had an opportunity to make a brief examination of this and I see that the whole of west Durham, one of the most vitally weakened areas as a result of the decline in the mining industry, is excluded. Areas like Crook are outside. I know that my hon. Friends will have a great many questions to put to the Secretary of State about the way these boundaries have been drawn, but, so far as I can make out, we are to have three types of area.

There is to be the basic area where help is given now, the development district where we shall have some type of assistance, and a third tier superimposed where we shall have a growth zone with a particular form of public investment, which we have not yet been able quite to comprehend from what the Minister told us. Is this the concept? Are we now breaking up these powers to have three different groups and types of area out of which this expenditure is to be met?

I ask a question about Scotland. Looking quickly at the map, I see that a number of areas in central Scotland are included, but some are left out which I should have thought qualified just as much as those which are in. Is Dundee included in these new growth points or not? That is an area where there is a substantial traditional industry and substantial unemployment. I ask the right hon. Gentleman, is Dundee in?

Photo of Mr George Brown Mr George Brown , Belper

It is out. If they do not tell us. we shall tell them.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

Here is a clear case of an isolated industrial area which is on the end of a whole industrial complex and which depends on a traditional industry which has been in considerable difficulties. We find that this area is not to be included for the purpose of special Governmental assistance. We note what the Government have said.

The Secretary of State referred to the Toothill Report. I quote what the Toot-hill Report said three years ago: It is clearly not possible to institute full-scale regional planning with production programmes for each industry except within the framework of a national plan; and this Britain does not have. The whole lesson which must be drawn by hon. Members and the country as a whole is that these areas will not finally prosper until, as Toothill says, regional planning is invested within the framework of a national plan which must be created.

My right hon. Friend the Member for Battersea, North (Mr. Jay) will have much more to say about this, and a number of my hon. Friend will wish to do so if they are able to catch your eye, Mr. Speaker, later in the debate.

I turn to the question of the programme and extra costs over the next five years which the Government have undertaken and the commitments which are proposed to be made on our resources. I list some of them. The Chancellor said yesterday that he would give us some figures, but he gave precious few, as we found when we looked carefully at the report of his speech this morning.

He gave a figure for roads of £360 million which he said would increase to £475 million at constant prices, but that is not the figure which a number of newspapers were consecutively using on 29th October, the day that the Minister of Transport announced his latest instalment of the programme. The figure then used was £690 million. Maybe the newspapers dreamed it up, but it is very odd that they should all have had the same answer to the same dream. I can only assume that it came from Governmental sources. It is important that the Chancellor should reconcile these figures, so that we may know whether we are talking about a £475 million or a £690 million programme.

The only other figure he gave in monetary terms was for education. He said that was £370 million at constant prices. No allowance was made for any increase in prices. Maybe it is about right; it is impossible for me to say. These are the only figures he gave in terms of money yesterday. Would he think it fair to put hospitals at £300 million? What about the cost of the additional housing when he puts that up to 400,000? Would it be fair over a five-year period to say that there should be about £500 million extra? What about the schools programme, £120 million extra for that? What about the B.B.C. second channel, plus colour television, plus the transfer from 405 to 625? How much is to be put in for that? I have seen astronomical figures quoted.

As he wants to take us into his thinking, would he tell us what the cost of the TSR2 will be? Will it be £500 million? I have seen suggestions of £1,000 million and £400 million. Let us put it at £500 million.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

Over 15 years, is that so? Is this the way in which the Government's defence programme is created? We are now to have a weapon which apparently will not be finished for 15 years, which is designed to fit in between the rundown of the V-bombers and the run-up of Polaris. When is Polaris to be finished? I presume that we shall have it at the turn of the century at this rate.

Photo of Mr Roger Cooke Mr Roger Cooke , Twickenham

The hon. Member has been quoting astronomical figures. I was referring to the moment when the first pound was spent on the planning of the aeroplane to the time when it comes finally into production.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I am glad to have this reinforcement of my request for a White Paper which does not just contain two figures spoken out of the corner of the Chancellor's mouth but which gives an accurate assessment.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I am considering the publication of a White Paper on the lines which the hon. Member suggests. I think it a very good idea, but I repeat what I said yesterday. Would he then publish figures for his proposals?

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I have not finished yet. I have a rather long speech to make and I will make it in my own time.

What about Concord? Would 1,400 million dollars be about right on present estimates? For a new aircraft carrier we are told £60 million will be needed. What is the figure for Polaris? It seems to vary from day to day according to which Minister is speaking.

There is another transfer payment which is going to cause some bother to the Chancellor when he is constructing his Budget. That is the obligation he has undertaken in respect of local authorities. He is undertaking a responsibility in respect of local authorities that they will be able to raise money through the Public Works Loan Board. This obligation in monetary terms will require him in his Budget to raise at least £200 million as a minimum or £500 million as a maximum. Of course it will. Why in the Financial Statement every year do we have below the line figures? Of course this is a transfer payment. Everyone recognises that it is a transfer payment, but it will affect the nature of his Budget, or does he say that it will make no difference whether they raise the money on the market or from the Treasury under the aegis of the Public Works Loan Board?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

It will make no difference whatever to the use of resources, and it is on the use of resources that the Budget is based.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I did not say resources. I particularised, I was quite categoric and talked about transfer payments. I fully understand that it will be a responsibility which the Chancellor will have to carry on the Budget, and he knows it. He says that it will be a good idea to publish a White Paper.

Photo of Mr George Brown Mr George Brown , Belper

He said it may be a good idea, but he is only considering it.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

This is not a very revolutionary thought. I raised the question on 24th January, 1962. I asked the Chief Secretary whether we could have a White Paper setting out all these liabilities and commitments. It was in the debate on the Plowden Report. I think that the House would be interested to know what was the Chief Secretary's reply. He is now the Home Secretary. He said: I can tell the House that our minds are not set against publishing at any rate some of the results of the long-term surveys". In words which presage the Prime Minister, he said, Our aim will be to give the House and the country as much information as we reasonably can. … I attach enormous importance to creating the widest possible understanding of the realities about public expenditure."—[Official Report, 24th January, 1962; Vol. 652, c. 229–30.] If we are told twenty months later that the new revolutionary concept for growth has resulted in the Chancellor still thinking about whether he can publish a survey, I have not much confidence in his capacity to carry out the rest of it.

How will they pay for this? There is a difference between the Prime Minister's speech and the Chancellor's speech. The Prime Minister says that in order to pay for it we shall need an overall increase in national productivity by 4 per cent, or 4 per cent, plus and then we can embrace all the programmes. What does the Chancellor say? I am with the Chancellor about this. He said yesterday that the growth rate needs a 3.2 per cent, yearly increase in productivity. The Prime Minister tells us that it needs a 4 per cent, growth rate in productivity. These are very substantial figures and very substantial differences.

I ask the Prime Minister what the reconciliation is. If we measured this in terms of the gross national product, it would be a very substantial difference running into many millions of pounds. Is there a reconciliation or is it that the Prime Minister, like some of his predecessors, is finding it a little difficult to get these concepts wholly clear and to understand the difference between productivity and production?

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

At the moment I am dealing with a simple arithmetical difference between the Prime Minister and the Chancellor, and if either of them cares to correct it I shall be delighted to hear him. I doubt whether they can correct it. I believe that there has been a confusion in the Prime Minister's mind between what he called overall national productivity and the expansion rate of production. There is a close relationship between the two. We can have a substantial increase in production without a corresponding increase in productivity for a short time. Conversely, as we have had in this country, we can have a latent increase in productivity waiting to be absorbed while we have very little increase in production. I tell the Prime Minister that there is a difference between the two. I think that the Prime Minister and the Leader of the House share many characteristics; they are both extremely likeable persons. But one characteristic which neither of them has is the ability to understand the difference between productivity and production. The Chancellor does, thank heaven.

We are going through a period of rapidly expanding production, and it is rapidly expanding because it follows a long period of stagnation. This is the classical situation in which one expects to get an increase in productivity. If we did not get it now, we never should. It is being achieved during an upswing in what the economists call—and I apologise for using the jargon—the degree of capacity utilisation. It is rising at 3 per cent, per annum, the Chancellor said. All we need, he said, is 3.2 per cent, per annum. If the Prime Minister will allow me, I will adopt the Chancellor's figure, which I think is right.

But what the Chancellor did not say was why he thinks that it will continue to rise at a rate of 3 per cent, a year or, as he hoped, 3.2 per cent, a year in order to fulfil this programme. Look at the record. We have had upswings before. They usually follow a period of stagnation and they usually precede an election. We had it in 1953–54 and in 1958–59. O.E.C.D., of which the Chancellor is a distinguished member, has told us what the increase in productivity has been over the last decade. The organisation tells us on page 28 of its annual Report, In the United Kingdom, taking the ten years from 1950 to 1960, the increase in productivity was 2 per cent. The Chancellor says that it is rising at 3 per cent, and that there is no reason why we should not get 3.2 per cent., but O.E.D.C. says that between 1955 and I960 it went up not by 2 per cent, but by 2.3 per cent. This was an advance, and it was accounted for by the increase in productivity which we got in the 1958–59 period following the terrible period of stagnation which we had earlier.

Now I come to the period of 1960–70, because the Chancellor owes the House an explanation here. I assume that he gave these figures to O.E.C.D. Anyway, O.E.C.D. says that he did. This is what I infer from the notes at the foot of the table. They show the increase expected in productivity in the United Kingdom from 1960 to 1970 not at 3.2 per cent., not even at 3 per cent., but at 2.8 per cent—and this can make all the difference between success and failure. It is a difference of many hundreds of millions of pounds in the decade.

I take it that these figures were supplied by the Treasury. We know that they have altered them and pushed up the rate, but I remind the Chancellor that when his predecessor published the White Paper on "Incomes policy—the next step", which was to be the bible For the trade unions, except that they thought that it came from Beelzebub, he said, "You are to proceed on the basis that the increase in productivity will be 2 to 2½ per cent. per annum." Was it a confidence trick on the trade unions then or is it a confidence trick on the people of the country now?

The Chancellor knows that he has absolutely no reason at all to rely on the increase in productivity which has been taking place for the last twelve months. He cannot rely on that for the whole period of carrying out his programme, and that is why I refer to these promises as confetti promises. What will happen when the economy hits the ceiling? Bottlenecks will appear. Obviously there will be a shortage of skilled workers, as there was on previous occasions. It is beginning now in certain areas, but over many other areas many skilled workers are still looking for jobs. When the economy reaches that point, plant is used to capacity and there is difficulty with stocks. The Chancellor knows that the odds are that the rate of increase of productivity will slow down again once we get to that point at which he is aiming for the next twelve months. He has no foundation for believing that a Tory Government will sustain a growth rate of 3.2 per cent, per annum.

His answer is that he hopes that sterling will not be an embarrassment. So do I. I believe that the defences which have been shorn up over the last twelve months by arrangements between the central bankers will be of assistance to a British Government during this period, but they are no substitute for long-term liquidity arrangements, and I hope that that aim will be pursued. The Chancellor hopes for a national incomes policy, and he is to consider publishing his White Paper. I shall have more to say later about an incomes policy. But these plans are no more than hopes. They have no backing from the past as far as the Tory Government are concerned. There is nothing in the past record of a Tory Government which could ensure that they carry out, or even that they have a reasonable hope of carrying out, these plans within a measurable distance of time.

Let us transfer what the Chancellor has said into terms of an individual family. They live in a terraced house in a small town—the house occupied by the householder and his family, a mythical character who rejoices in the name of Dawdling. One day Mr. Dawdling comes home, looks around, and says, "My word, this is a shabby-looking place, almost fit to be a museum. It has an outside toilet and no upstairs bathroom. Look at the furniture. Let us modernise the place. No. let us do something better, move out into the country, build a detached house, and get some new furniture: I am tired of going to Blackpool for my holiday. We will go abroad next year. I will not cycle to work any more. Let us get a new car" The family look at him in amazement and ask, "What has happened? We have not been able to afford these all these years. How shall we afford them now?" He replies, "I have had a bit of a bonus over the last few months." But, they say, "You will not be able to pay for it". He replies, "We can get a building society loan on a house. We can go to one of the discount houses for the car. We can get the furniture on hire purchase." They say, "But how are you going to meet all the payments?" He says, "I am filling in the football pool coupons every week, am I not?" His name would not be "Mr. Dawdling" for very much longer. It would be "Reckless Reggie".

The Chancellor knows that he is gambling with the future by accepting these figures in the vain hope that he can win a General Election. What is needed is a long-term growth of productivity—that is, in our capacity and efficiency of production. That is why we shall focus attention on Tuesday on some of the truths that seemed to come as a blinding light to the Secretary of State for Industry and Trade straight back from Brussels this afternoon, namely, on the development of science, research and education. These are the real methods by which to secure the long-term increase in productivity which is needed if we are to fulfil the plans that the Government have laid down.

What are some of these things? There will have to be the more efficient use of materials; the absorption of synthetic materials into the industrial system, and the absorption of new methods of control and selection and production. This means more than new machinery. Automation means more than new machinery. There will have to be the purposive allocation of resources by improving through technical and other education, the capacity, understanding and knowledge of the individual. There will have to be improvements in management technique. There is a need for research and development to be adequate.

These are the ways in which we shall get a long-term 3.2 per cent, increase in productivity which will enable us to fulfil the programmes that the Government have suddenly thrust on the country. It will not be done by vainly hoping that sterling will be strong enough for a sufficient time to enable us to scramble through. There must be a drastic reconstruction of the industrial and scientific base of the country. That is why the Labour Party has put down a full debate for Tuesday which I hope will enable us to focus attention on these essential means—the only means by which we can secure a 3.2 per cent, increase in productivity, or a 4 per cent, increase in expansion every year.

But Ministers are confident and buoyant. That is the depressing feature of the present situation. I find it frightening to see their buoyancy at present. These are some of the things they have said: There is a large building programme for the expansion of the universities, particularly in the teaching of science and technology … They have said that they would present— details of an ambitious five-year plan to improve and develop secondary schools… More and better teachers; more and better school buildings …".—[Official Report, 28th October, 1958; Vol. 594, c. 33.] They have said this also: the prospect before us is encouraging. Industrial production has been rising rapidly during the year. Exports have been doing well…. Anyone who went to the Motor Show will have seen the particularly buoyant feeling right through that great industry.. employment has risen … there has been a fall in unemployment …".—Official Report, 27th October, 1959; Vol. 612, c. 72–3.] This is all true—and it was all said in 1958. My hon. Friend the Member for Bristol, South (Mr. Wilkins), who had a Sunday school upbringing, reminds me of the Moody and Sankey revivalist who used to sing— Tell me the old, old story. One of the verses ran— Tell me the story simply. As to a little child.

Photo of Mr William Wilkins Mr William Wilkins , Bristol South

"That I can take it in."

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I hope that we shall not be taken in this time. A few months later the present Leader of the House, who was then the Chancellor of the Exchequer, came to the House in sackcloth and ashes and told us, in the early months of the following year, that our economy was moving into a phase of excessive pressure of demand. So he raised the Bank Rate, restricted hire purchase, and called for special deposits from the banks. Again he was like John the Baptist presaging the Prime Minister. He said that we must face the facts. So in that July he told the people the truth. Then we had a Bank Rate of 7 per cent.; we had a Customs and Excise regulator of 10 per cent.; he cut back the school building programme; he controlled lending by the insurance companies and by the banks. I do not know why the insurance companies are now putting out these great advertisements about being free to invest in their depositors' interests. The then Chancellor of the Exchequer was the person who controlled them. He got money out of them for the Export Credits Department. He knows all this.

Then, above all, came the pay pause, which bit very deeply into the minds of millions of workers because of its gross and total unfairness. Hon. Members opposite will never be forgiven for the way in which they tampered with the processes of collective bargaining without any agreement, interfered with arbitration, and visited hardship and unfairness upon tens of thousands of public servants and others.

I fear that this boom has started in the same way as the last one started and, given a Tory Government, it will finish in the same way when the General Election is over. We shall have all the old weaknesses. They will begin to show themselves again. There will be the bunching of investment. Public investment is now going up. The right hon. Gentleman told us this afternoon that private investment is now moving forward, but there will be a bunching in about twelve months' time. There will be stock building. It has already started. It is bound to have an effect on our balance of payments in the next twelve months. There will be bottlenecks in the construction industry. I draw attention to how the construction industry has moved over the last four or five years. The increase in non-house building has been four times as great as the increase in house building in the construction industry. The Government control, directly or indirectly, through various forces, about 60 per cent, of the output of the construction Industry. If the Chancellor of the Exchequer or the Secretary of State for Industry and Trade, or whoever is responsible, sees this bunching taking place, are they ready to take any steps through priorities or planning to ensure that the construction industry does not become a bottleneck in the fulfilment of their plans? When I hear what they are ready to do in that direction, I shall begin to take this present attempt at these new plans seriously.

The next phase we shall move to is higher prices. We are already being told about higher prices which are arising from Government policy imposed upon the nationalised industries. The Government have insisted that the nationalised industries shall increase their prices in order to meet certain financial expectations that the Government want. This will have its consequential effect on pensioners, public servants and the rest. At a later stage wages will outstrip productivity. We shall go through exactly the same phase—we are already beginning to—as we went through last time. Then all the programmes will be cancelled. This is the record of past Tory Governments, and neither the Chancellor of the Exchequer nor the Secretary of State for Industry and Trade has said anything at all during the course of this debate which differentiates what the Government are doing this time from what they did last time.

I come now to the question of an incomes policy, because this is crucial. As the Chancellor of the Exchequer said yesterday, the concept of a fair incomes policy in the midst of national planning was accepted by the Labour Party at its conference at Scarborough, after a very full debate; but it must be equitable and it must take place in a period of rising production. These things are vital. If the Chancellor of the Exchequer wants an incomes policy that will be generally acceptable, he must tax capital gains; he must avoid all the untaxed profits which at present, because they are not narrowly construed as income, escape their proper share of taxation; and he must show that he is being fair and equitable in what he is doing.

Let me give one example. It is only one of many that I could give, but I select this one. Estate Duty is a clear case where avoidance is taking place to the tune of millions of £s. [Hon. Members: "Hundreds of millions."] Let us say "millions". I will give one short example. I will not carry the House through all the processes. Perhaps it would not be right to do so, because I do not want to advertise this overmuch. I will therefore give merely the bare bones of the scheme. An elderly man who has not long to live can, in exchange for a few signatures with an insurance company, pretty well halve his Estate Duty.

I will give the practical example of an estate of £200,000 on which the duty would be £110,000. By an arrangement with a life assurance company the actual duty is reduced from £110,000 to £42,000, and the £68,000 saved is shared almost equally between the insurance company for drawing up the policy and the beneficiaries of die poor man on his death bed for putting three or four signatures on three or four sheets of paper. It is as simple as that, and it can be done under various Acts which I do not propose to quote now but which must be well known to the Chancellor.

In fairness, I must say that a number of insurance companies will not touch these policies and will not have anything to do with them; but there are a number of insurance companies which are making a very good deal out of policies of that kind. The Revenue is losing, by this simple device, a very great deal of money. It is not people who have £50,000 or £20,000 who are doing it. It is people in the £200,000 or £500,000 class who are contracting such policies in order to escape their liabilities.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

Cheating the law.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

It is not cheating the law; it is an evasion of what the law undoubtedly intends, but it is not cheating—at least, not within the terms which the lawyers understand, although I imagine that a railway worker who is now claiming an increase in pay might well feel that it was cheating in the ethical sense.

The Prime Minister tried to impale me on the wealth tax. I suppose that he will, at least, agree that there is no doubt that the tax system is causing a great deal of concern. There is the incidence of taxation on companies and on individuals. There is evasion and avoidance, of which I have given only one example out of the many which could be given. There is the effect of the Purchase Tax on industry. There is the deeply unsatisfactory position of the householder who pays rates and of local government finance which has to be raised through the rating system. There is the general question of what passes as and is, in fact, income but which is not so regarded for taxation purposes but becomes capital and escapes taxation.

There is need for widespread reform of our taxation system. I am not the first to say this. It was said two years ago by the right hon. and learned Gentleman who is now Leader of the House. When he went to the Treasury, he told us two or three years ago that he intended to undertake the reform of the taxation system. He found difficulties in his way. We have heard nothing at all about it from the present Chancellor. The whole subject has died, as far as any public discussion or any proposals are concerned. We have seen no results of the review which the Leader of the House told us then he was undertaking.

It is against this background that I speak, and it is against this background that I insist that the whole concept of taxation, whether it be local taxation, national taxation, Income Tax, Surtax, Purchase Tax, tax on capital or tax on income, needs reassessment and reexamination. I have the Leader of the House as my ally in saying it.

But the Prime Minister, two days ago, asked me—this is the plain man speaking— … what on earth is the relevance, when one is trying to stimulate expansion, enterprise and thrift, of his tax on capital …?"—[Official Report, 12th November, 1963; Vol. 684, col. 43.] I suggest that he asks the Chancellor of the Exchequer. Let them have a little conversation. I did not produce this document, "Conditions Favourable to Faster Growth" prepared by the National Economic Development Council. The Chancellor of the Exchequer is chairman of that body. In paragraph 170, this is what is said: A wealth tax in one form or another exists in a good many countries. For example, a net personal wealth tax has been in operation in Sweden for many years. Now I come to the sentence which bears on the question, "What on earth is the relevance of this to expansion?". The paragraph goes on: The introduction of a wealth tax here would be a controversial step"— I do not deny that— but it may have a useful role in any major review of taxation related to a programme for growth".

Hon. Members:

Answer.

Photo of Sir Alec Douglas-Home Sir Alec Douglas-Home , Kinross and West Perthshire

The hon. Gentleman says that it is controversial—that is admitted—and it may have relation to growth. I would like to hear him say how his proposed tax has a relation to growth.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I suggest that at the next Cabinet meeting there be put on the agenda two items: one, a definition of productivity and production; two, how a wealth tax might influence growth, in conjunction with a general review of the tax system. The right hon. Gentleman might ask the Minister of Labour about it; he also sits on the N.E.D.C. and is responsible for this publication. He might ask the Secretary of State for Industry and Trade, who also is a member. Let him ask them what they think of these economic concepts.

I am all in favour of straight talking—[HON. MEMBERS: "ANSWER."] I am dealing with the Prime Minister at the moment. I am in favour of straight talking, but, if one wishes to go in for straight talking, one had better be sure of one's facts before one starts. One should know what one is talking about and, before throwing out challenges, one should be sure of one's ground.

Photo of Sir Alec Douglas-Home Sir Alec Douglas-Home , Kinross and West Perthshire

The hon. Gentleman has not told us what his proposal is All I was asking him to do was to explain his own tax on capital.

Hon. Members:

Answer.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I quite realise that the Prime Minister would much prefer to discuss our programme, which is relevant, rather than the Queen's Speech, which is not. I say this to him: I do not think that the people of this country are as silly as he seems to imagine. What we need is a review of all the systems for raising revenue, including local rates, from top to bottom. That is what we want, and nothing should be excluded from that review. Certainly, if there were a Labour Government, I would hope that such a review would be undertaken, and I believe that it could bring relief to a great many ratepayers if we were to reassess some of the artificial distinctions which now exist and which ought not to be brought into play. If I am asked what the details are, I reply, "Elect a Labour Government. Let us make the review. Let us get at the books and see what is in them." [Hon. Members: "Oh."]There has been a good deal of cooking going on in the last few months, with the rate of productivity increased from 2.3 per cent, to 3 3 per cent, without any manifestation of alteration in the objective facts.

There ought to be, there must be—I hope that no one will be frightened of it—a complete review of the taxation system of this country from top to bottom. [Hon. Members: "Answer the question."] Let some of those people who have been dodging a good deal of tax liabilities during the past few years face their liabilities at last.

The man on P.A.Y.E. has to pay on every penny of overtime. There is not a penny which goes untaxed for him. There is a great deal of wealth in this country which evades or avoids or dodges our tax system. If I am challenged on that, I will go on for a long time giving more and more details. [Hon. Members: "Answer the question."] I know that the Prime Minister has got a lot more reading to do. We hope that he will take N.E.D.C. in his stride, or, at least, that he will try. Then, when we have these challenges, we shall, perhaps, know that they are based on more secure foundations.

What does the country need if we are to have the 4 per cent, growth rate, to which we have been committed for a long time but to which the Government just seem to be waking up? What it needs, above all, is planning. Choices must be made. I take the construction industry as a typical example. We must ensure that there are social priorities as well as economic priorities. We shall not be able to meet the demands inherent in modernising Britain until we have created a national plan which will match our resources to our programme. There are no signs of this at present. There are no signs in the Gracious Speech that the Government are yet ready to grapple with the problems which must be faced if we are to undo the consequences of the last twelve years and if this museum piece is to become a modern and up-to-date country ready to face the 1960s. It is because the Gracious Speech contains no reference to and Ministers have no plans for fundamentally dealing with this situation that we believe that the Government should go to the country at the earliest opportunity.

4.50 p.m.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

The hon. Member for Cardiff, South-East (Mr. Callaghan) began his speech with a complaint that there has been too much electioneering. I think that during the whole of his speech he was indulging in excessive electioneering. However, he made one mistake. He has been making speeches in the country in favour of a new tax, a wealth tax. Are we to understand that he has now withdrawn the suggestion which he made in the country and that he is now merely thinking of revising the whole taxation system? I hope that when he addresses the House on another occasion he will answer that question.

As I see it, in the fourth year of a Parliament we are bound to have a certain amount of electioneering in the Gracious Speech. This is unavoidable, but, I personally think, regrettable. There is one subject on which I think it very unfortunate that there should be electioneering, and that is the distribution of industry and the reconstruction of the North-East Coast and Scotland I think that in the area which I know, the North-East, all the inhabitants, whatever their party affiliation, have been heartened by the appointment of my right hon. Friend the President of the Board of Trade to his new duties to look after regional development in the area.

Equally, I think that all of us, whatever our party affiliation, will welcome the announcements which my right hon. Friend has made in connection with the White Paper published today. We are in a certain difficulty here, because until I came into the Chamber I had no knowledge of what was contained in it. However, as one who was born near Tees-side and whose constituency borders on it, I think that I can say that we are all concerned about the demoralisation which has resulted from the maldistribution of industry, with many people, especially young people, out of work, and all of us want to put the matter right.

My right hon. Friend the Prime Minister said on Tuesday: … if we are to have an efficient nation we must have an efficient transport system"— I have always taken the view that this is one of the keys to what is wrong with the North-East Coast— and that goes for both rail and road or the combination between rail and road."—[Official Report, 12th November, 1963; Vol. 684, c. 41.1 I think that my right hon. Friend left out the thing which to the North-East Coast is most important of all, and that is air transport. Unless we have a good modern airport for national and international flight in the North-East we will not attract industries to the area.

I have had a quick look at the recommendations in the White Paper. I notice that the Government propose to make a large grant for the improvement of the Wolsington Airport, near Newcastle. That will be very valuable to Newcastle but of very little value to Tees-side. Tees-side requires the Middleton St. George aerodrome, which is now used by the Royal Air Force.

I am glad that the White Paper suggests, in rather guarded tones, that local authorities might be given the opportunity of taking over this aerodrome. I beg the Government to remember that if they ask a fancy price for this R.A.F. aerodrome it will be very difficult for local authorities, which have grave financial burdens to bear because of their own employment difficulties, to take over the aerodrome and provide the required number of inter-continental, national and executive flights. I beg the Government to remember that it would be a very gracious gift if they gave the North-East Middleton St. George aerodrome fully equipped for local air services.

I wish to say only this about the railways. The North-East Coast has fairly good rail communications, but it does not make sense, at the same time as we are trying to improve the rail communications in the area, to close down one of the commuter services, namely, the line between Middlesbrough and Whitby, where a great many people live today and will live in the near future. Many parts of the line are very difficult of access in winter. I realise that there can be recourse to the transport users' consultative committee and that my right lion. Friend the Prime Minister gave a clear undertaking that in England and Scotland alternative means of transport must be offered. However, I ask the Government to bear in mind that the North-East must not merely have its direct links. It must also have adequate commuter services if it is to regain its prosperity.

My main concern is with road communications. I know, because my constituency lies in the approach to it, that the Minister is improving the road from Stockton northwards. I believe that the road from the Great North Road to Stockton is the most dangerous road in the country. It bears a very heavy traffic burden. Not a week passes without an accident happening on the road, especially where it goes through my constituency, and frequently they are fatal accidents. I have been asked by my constituents to press on the Government the need to make the road from the Great North Road to the North-East safe and efficient at an early date, because prosperity will never come to the North-East again unless that road is made into a double carriage way.

We have talked about facilities. We must remember that the North-East has depended, and will always depend, on the prosperity of shipping and shipbuilding. Unless the Government fight for British shipping, which is now being attacked by flag discrimination and the very unfair practice of the Americans in protecting their own shipping so that their exports are carried in American ships, we can have no great hope for the revival of shipping and shipbuilding in this country.

Today's debate rests on trade, and I wished to speak today because, as far as I know, this is the first Gracious Speech for five years which has had this direct reference to trade and Commonwealth trade: My Government will continue to attach great importance to the maintenance and development of commerce between Commonwealth countries.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

Certainly.

I listened with attention to what my right hon. Friend the President of the Board of Trade said about our share of Commonwealth trade. We are apt to forget in this House that the Commonwealth is still our best customer. Even in 1962, when there was great anxiety in the Commonwealth about what would be the effect of the Brussels negotiations, we exported to the Commonwealth £1,220 million worth of goods whereas to the Common Market countries we exported only £780 million worth of goods. There are tremendous possibilities of expanding Commonwealth trade if we set our minds to it.

This country is, of course, a world trader. We must encourage our trade with Europe, with America and with all countries. We have a certain priority with the Commonwealth, but it has been lacking in recent years. Comparing figures of Commonwealth trade for the last five years, I find that imports into the Commonwealth from all countries other than Britain have increased by £1,780 million during that period, and yet our exports to the Commonwealth increased by only £13 million. This means that in the battle for the expanding market of the Commonwealth, we have been singularly unsuccessful.

During the same period, American imports to the Commonwealth increased by £508 million. Japanese and German imports also have increased very largely. We have to remember that these other countries always face the difficulty of a higher tariff barrier than we do. Australia has preferences on 80 per cent, of her imports, averaging 10 per cent., and yet those other countries have been able to overleap that preference. I ask the Government what are their plans for improving this Commonwealth trade, on which they have laid such marked stress in the Queen's Speech, a fact about which I am pleased.

Some people say that the reason why our Commonwealth trade is declining is that British agriculture has been doing so well and expanding and, therefore, we no longer need the produce of the Commonwealth. I have taken the trouble to refer to the position during the last six years. Taking the four main categories of food imports which compete most closely with British agriculture—cereals, meat, dairy produce and fruit—our imports in these categories during the last six years from foreign countries have increased by £153½ million, whereas our imports from Commonwealth countries during the same period have declined in value by £15½ million.

Two lessons are to be drawn from this. It destroys a fallacy which is at the back of the minds of many people who would like to help the Commonwealth, but consider that this is an inescapable transition which is bound to happen with the expansion of British agriculture. In fact, however, whilst our agriculture has expanded, so has our capacity of consumption. We could have increased our imports from the Commonwealth in those four categories by the same amount as foreign countries were able to do. It may well be that in negotiations or, perhaps, for other reasons, we have preferred the foreign to the Commonwealth food.

I turn now to the ways in which we could tackle this situation. My right hon. Friend the Secretary of State for Industry and Trade explained in his speech how much attention had been focussed on our trade with Europe and what great results have flowed from it. I do not quarrel with the attention which any right hon. Friend has paid to Europe, but could not similar attention be paid to Commonwealth trade?

I have the greatest admirataion for my right hon. Friend, who has done magnificent work in Europe, but let us consider the position last year. We gave grants to four trade missions from Europe, but we gave grants from the Board of Trade to only one trade mis- sion from the Commonwealth. Why could not we have given equal grants to the Commonwealth as to Europe?

Sir William McFadzean is doing a splendid job with his Export Council for Europe, just as Lord Rootes is doing in his Western Hemisphere Exports Council. Why is it, however, that Britain, with all her traditional history and close sentiment, does not have an export council for the Commonwealth? This is not, as I discovered somebody saying at a seaside resort, a matter for the Commonwealth. This is primarily a matter for British industry and the British Government. Surely, we should start as soon as possible, under a leading industrial figure, an export council for the Commonwealth.

I am sure that the whole House is delighted that the ecomonic survey which my right hon. Friend the Chancellor of the Exchequer suggested at the Commonwealth Economic Committee has been so well taken up by all members of the Commonwealth—a sort of Paley Report. We must, however, go a good deal further than that. My right hon. Friend the Lord Privy Seal has suggested a Commonwealth Economic Development Council. Just as we have a National Economic Development Council, which is succeeding, so, too, with the agreement of the Commonwealth, surely we could have a development council formed by the Commonwealth countries to advise on the development of the Commonwealth.

In last week's newspapers, I was delighted to see my right hon. Friend the Minister of Public Building and Works suggesting that we should look again at the possibilities of a Commonwealth development bank and Commonwealth development association. He went even further and spoke about a Commonwealth university. It is high time that we re-examined these different ways of getting more trade and more links between this country and the Commonwealth.

Let us, however, face the fact that until we look at the whole of our trading position and the international agreements under which trading is conducted, we can have no real hope of any great expansion of trade. In other words, under the General Agreement on Tariffs and Trade, our trading arrangements with the Commonwealth are bound, whereas free trade areas or common markets have complete freedom to trade as they will.

The time has come, or is coming very soon, when we must have another look at the international agreements dealing with trade. The time is approaching when we shall get to the conclusion of the Kennedy Round. I hope very much that we get success there, because it would be in the interests both of Britain and of the Commonwealth for the Kennedy Round to succeed. I have, however, very grave doubts. I believe that the negotiations on the Kennedy Round in May will be a repetition of the negotiations at Brussels. I would ask the Government to tell the House quite frankly what are our plans if there is failure over the Kennedy Round, because if there is a failure, it means that under the present method of trading arrangements the G.A.T.T. has got to be revised in order to deal with the new methods and systems of the present world bloc trading and those Common Market and free trade areas.

I believe that the time is approaching, if it has not already arrived, when we ought to be thinking in terms of mutual tariff reductions. I think that that is the best way of dealing with a world divided into blocs and trading systems. That would involve a revision of the G.A.T.T., but not its disappearance. It would mean that the G.A.T.T. would be authorising different countries bilaterally to make agreements for mutual tariff revisions—countries or groups of countries. When we bear in mind that the year before last about 100 bilateral agreements were made, it is quite clear that we want to have another look at the G.A.T.T. because those conventions were made by countries which were signatories of the G.A.T.T.

The next and last point I want to talk about on this revival of Commonwealth trade is the need to secure more commodity agreements, starting off with the Commonwealth commodity agreement and extending that to other countries which are willing to join. That would be a valuable forerunner of world commodity agreements. I say that because I believe that the American Government are usually disinclined to go in for world commodity agreements. I believe.

therefore, that we must take the initiative. I do not want anyone to misinterpret what I say. I should be very happy if we could get a world commodity agreement straight away, but I do not think that we shall have great success in that direction unless we prepare the way by Commonwealth commodity agreements.

Equally, of course, we must take our part in sponsoring our own plans for the disposal of Commonwealth surpluses to the under-developed areas of the world. It is quite true that I.F.A.P. has started its pilot scheme. It is very valuable. We have sent 40,000 tons of our own barley to the hungry in the Middle East. But the test for the world will be how quickly we can develop these schemes for bringing relief to the hungry, under-developed nations.

I think that the great difficulty from which this country has suffered and from which it is still suffering is that we are the bridge between the highly industrialised countries of Europe and the underdeveloped countries. This has been a period when the rich countries are becoming richer and the poor countries are becoming poorer. Therefore, for that reason, we have found that our exports to the poorer countries have not increased as fast as they should have done. In my view, it shows that to a certain extent we have failed to discharge our responsibility on that bridge.

I believe that we must now make a great effort, as a nation, to try to solve this problem of the rich and the poor countries. I do not believe that this is merely to be done by aid. I believe that trade is far more important than aid. Dean Acheson said that Britain had lost her Empire but had not yet found her r61e. That, I believe, to be our role and our future, and for that all of us may have to make great sacrifices in the coming years.

5.15 p.m.

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby

May I begin by saying how very strongly I agree with the closing remarks made by the right hon. Member for Thirsk and Malton (Mr. Turton)? It is one of the most ironic and tragic facts about the world today that, as he said, the rich nations are becoming richer and the poor nations poorer. This is what Marx said would happen within countries, but it has not happened in most democratic countries; the two extremes have tended to draw close together towards the middle. But it has happened as between countries.

I entirely agree with the right hon. Gentleman that this poses for Britain, in particular, the major moral problem facing us over the next few years. I am very glad he said that if we are to solve the problem it may involve sacrifices. It cannot be solved merely by expressing nice sentiments. It means sacrifices of goods which would otherwise be enjoyed by the British consumer.

I agree with what the right hon. Gentleman said about commodity agreements—possibly Commonwealth ones initially, preferably world ones. I am certain that relations between ourselves and Europe and between Europe and the Commonwealth and between the trading blocs generally cannot be solved until much wider commodity agreements come into existence. One of the good things which came out of the E.E.C. negotiations was the demonstration of how essential this was if these questions were going to be settled.

I am sorry that the Secretary of State has had to leave the Chamber as I wanted to say one or two things about him. I think the right hon. Gentleman did an excellent job in the Brussels negotiations, and I am delighted that he has taken on this new job, though I do not think that he will have time to take much part in it. I want to comment on one or two things which he said. I think that the regional imbalance in Britain is the most serious of our internal problems, and I hope that his new measures will contribute something towards solving it. I am very doubtful, however, concerning what he said about the co-ordination of these measures.

One of the major troubles over recent years has been that there has been too little co-operation between housing, the siting of new towns, the location of industry, and transport. These matters have been divided between four different Ministries whose separate efforts have been wholly inadequate, and I do not think that the inter-departmental committee about which the right hon. Gentleman spoke this afternoon sounds a powerful enough body to introduce the co-ordination which is so necessary.

I must say that a striking feature of the Secretary of State's speech, and as far as one has been able to glance at them of the two White Papers, is that they represent a frightful condemnation of the Secretary of State's predecessor at at the Board of Trade. They represent a confession that a completely new policy is needed. They represent a major reversal of the whole basis of the Local Employment Act, 1960. Moreover, the growth-point theory when first advocated from these benches was not received with any enthusiasm by the Government. I think the fact that this new policy has had to be adopted shows what a failure the previous Board of Trade activities were.

I want to turn to the speech of the right hon. Gentleman the Chancellor of the Exchequer. He gave us a very agreeable knock-about speech yesterday when what the House wanted to hear was a more serious speech analysing the promises now coming from the Government. Before I come to the central point which my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) advanced as to what these promises amount to, I want to make one or two particular remarks about the Chancellor's speech. The first is this, which may have gone unnoticed in the rumbustious language in which he made his speech. As compared with the Prime Minister's speech the day before and the recent announcements in the Press, the Chancellor's speech represented a great scaling down of the prospects in front of us if we have to endure a Tory Government for some years ahead. In the Prime Minister's speech, what was stressed was the enormous prospective growth in public investment, and, indeed, this is what has been stressed in most Government speeches in the last few weeks. We know the figures from the recent White Paper on public investment and that we are to get an increase in the years from 1962 to 1965 of 7 per cent, in the first year, 20 per cent, in the second year, and 7 per cent, in the third year, and all this, we were warned by the Chancellor, and by others, would mean a very heavy burden on our resources. Indeed it would, 7 per cent, and 20 per cent, and 7 per cent, in three successive years. But then, when we came to the Chancellor yesterday, all these figures had got mysteriously scaled down, because the figures for total public expenditure, yesterday he said, would amount to an increase of only 4 per cent, a year between now and 1967.

There is a very considerable difference between an increase of 7 per cent., 20 per cent., and 7 per cent, in public investment over the next three years and a figure of 4 per cent, for the increase in the total public spending, and what we should like to know, and what has not become clear from the Chancellor's speech at all, is what items in current Government spending are going to be so far below 4 per cent, that die public investment programme can be so far above. Something, clearly, is going to be scaled down, but it was not clear from the Chancellor's speech what it was.

My other preliminary comment is this. Clearly, when next April comes, the Government are going to take great credit for not introducing a pre-election Budget. Both the Prime Minister and the Chancellor have said that we cannot look forward to early or substantial reductions of taxation. One can already see the Chancellor coming down here on April—whatever date it will be—next year preening himself on his moral virtue in giving away no substantial concessions—some sweetenings to some carefully selected groups, no doubt—but no major concessions, and showing how virtuous he is. One does not want to be over-cynical, but the fact, of course, is that we had the pre-election Budget this last April as a precaution against an election this autumn.

Another point I should like to make about the Budget to which we look forward next April, in which there will be no large concessions, is that its relative severity will have nothing whatsoever to do with these ambitious schemes of social spending of which we have been hearing recently, nothing to do with increases in education spending or housing spending or social spending generally. If we look at the increases in spending which have created the situation in which the Chancellor would make no concessions next April, they have contained practically no element of this large increase in the social spend- ing of which we have been hearing. These are still pie in the sky, and it is other spending which has led us to the situation where we have these warnings on tax reductions.

I come to the major question dealt with by my hon. Friend the Member for Cardiff, South-East. How can the Government pay for these lavish promises which are now pouring out in such abundance? Everybody would agree on one thing. They can be paid for provided, and only provided, we get this famous 4 per cent, growth. But the question is, what prospect would we have under a Conservative Government of getting this 4 per cent, growth? What indications are there in the speeches which have been made or in the Queen's Speech that we are going to get 4 per cent, growth?

One must say, as my hon. Friend said, that there are no obvious indications. Under this Government which have been in power for a period of twelve years the average rate of growth has been 2½ per cent., and there is no obvious reason why this Government should suddenly be able to galvanise the economy into a 4 per cent, growth rate. These years were favourable years. World conditions were exceptionally favourable. There was a vast increase in world trade. We in Britain have had an enormous improvement in our terms of trade. Many other countries in a situation similar to ours had faster rates of growth. Yet on average, over twelve years, we had this exceptionally slow rate of growth of 2½ per cent. We now have the same men in the Cabinet and on the Treasury Bench. The Prime Minister, the Leader of the House, the present Chancellor have all been in the Cabinet during the whole of that time, and there is no apparent reason whatsoever why this same group of people, pursuing the same policies, should suddenly galvanise the economy into much more rapid growth.

The Chancellor dealt, or attempted to deal, with this yesterday by saying that, whatever may have been the record over the last twelve years, productivity had now reached the point where we were in sight of the 4 per cent, target. He said, as my hon. Friend recalled, that the productivity rise had increased to nearly 3 per cent, a year and had only to be pushed up a little more and then we should be on the target. However, the fact is, as my hon. Friend pointed out, that productivity is going up rapidly now because we are in a classic—almost a textbook—boom where capacity is being more fully utilised, hence costs going down and productivity going up. There is nothing surprising about it in the slightest. It happened in 1953 to 1955 and again in 1958 to 1959. But on both previous occasions after the boom period with its rapid increase of productivity, we ran into a crisis followed by a classic Tory deflation, when productivity fell back again. Who can say that this is not going to happen again? What fundamentally has changed?

The Chancellor, at this point, took refuge in the N.E.D.C. Report and quoted paragraph 152 which suggested that there had been some underlying improvement in productivity. He found this sufficient for great optimism for the future. But the paragraph goes on to say that this is not something which can be relied upon for an automatic and dramatic improvement in our situation.

The plain fact is that unless we get some fundamental change in the economic policy pursued during the last twelve years we are not going to get a dramatic change from 2½ to 4 per cent, growth. I will set out what I believe must be done if we are to achieve 4 per cent, growth.

The first thing we shall have to do is to effect a permanent improvement in the balance of payments. The basic reason for our failure as a nation to grow as other nations have grown in the last few years is that every time we have a boom it ends in a balance of payments crisis. This is the fundamental cause of the stop-go policy, and that stop-go policy is the fundamental cause of our slow growth rate. So unless the Government can convince us that they have effected a permanent improvement in the balance of payment situation we have no reason to expect a 4 per cent, growth.

At present the balance of payments position is comparatively favourable. Exports, as the Secretary of State said this afternoon, are comparatively buoyant. There has been some improvement in our competitive position, an improvement due largely to the inequitable pay pause of the late Chancellor, which kept British wages down, as, of course, it was fundamentally intended to do, below the increase in wages in other countries. So for the moment, as a result of this, our balance of payments position is, as I said, comparatively favourable. But what the Chancellor has not made clear at all is what he expects to happen in the next six months or in twelve months. Will there be a large spurt in imports? And if we do get one, will it end in the same crisis we have had time after time in the last twelve years?

I personally do not believe, despite the fairly rosy picture at the moment, that the Government have produced any major fundamental change in our balance of payments situation, and I believe they have not because they have not operated on what is the crux of the whole matter, which is the capital account.

Here I follow interesting series of articles by Mr. Conan in the Westminster Bank Review on the subject. Although, like America, we have had over the years a surplus on current account our gold reserves have not gone up equivalently—just as the American reserves did not. On the contrary, they tend to go down. So the surplus in the current balance is more than offset by a deficit in the capital account.

Faced with this situation, I am certain the Government must produce a long-term policy for the capital account. The United States has done so in the measures announced by President Kennedy last July, including the controversial, but, I think, absolutely right and necessary, interest equalisation tax. Until this Government have produced a policy for the capital account comparable to that produced by the President last July, they cannot claim that there has been any permanent improvement in the balance of payments, and there is no reason at all, therefore, to believe that we shall not once again next year follow the same old dreary cycle that we have had before—balance of payments crisis, cuts, and deflation at the end of the boom. This No. 1 pre-condition of 4 per cent, growth has not been fulfilled.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Would the hon. Gentleman not agree that the policy that both sides of the House have in mind of increasing aid to overseas countries would in fact make the problem far harder, and that the way we could help them would be to lend them more capital which in itself has the effect of making it even more difficult?

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby

No one has suggested either in this country or in the United States that the improvement in the capital account should be made at the expense of aid—very far from it. The export of private capital is the crux of the matter, certainly not aid to the under-developed areas.

The second pre-condition if we want to get 4 per cent, growth is that we must have some increase in the amount which we invest in this country. The Chancellor, in his very complacent speech yesterday, pointed out that our ratio of investment to National Income had gone up since 1951 from 14½ per cent, to 18½per cent. I should hope so too! In 1951, we were spending 11 per cent, of the national income on defence—a fact consistently forgotten by this Government; we are now spending only 7 per cent. In other words, in this period of 12 years, we have saved on defence 4 per cent, of the national income, and it would have been a scandal if that had not gone into investment. So the fact that we have had some improvement is not surprising at all. It would have been incredible if we had not.

But most people, I think, on both sides of the House, still take the view that our investment as a proportion of the national income is too low. It is lower than it is in most other comparable countries. Private manufacturing investment, which the Chancellor did not mention yesterday, is almost certainly lower now that it was two years ago; he did not mention the fact that there had been a two-year period of almost total stagnation in private manufacturing investment. Most people would agree that although investment is no panacea there has to be some increase in the proportion which it bears to the national income as a whole.

Of course, we shall have an investment boom next spring—this is accepted by everybody—but it will be superimposed on an economy which is already running very flat out and the most likely result is that it will push us into a balance of payments crisis and the whole thing will be cut back again. The point that I want to make, and I fell very strongly about this, is that the Government have shown no signs whatsoever that they have a long-term policy, first, for keeping investment steady and secondly for raising it permanently as a proportion of income. So in my view, No. 2 pre-condition of 4 per cent, growth is not fulfilled under this Government, and there is no sign that it will be.

The No. 3 pre-condition, much referred to yesterday from the Government's Front Bench, is more spending on education. I agree profoundly with what the Secretary of State said this afternoon, that if one could relate rapid growth with any one single factor in different countries it would probably be education more than any other. I think his figures were highly suggestive that of the various reasons for the growth of production over a certain period in the United States, education was the most important single reason.

The Chancellor yesterday took great credit for telling us that the proportion of income which we are spending on education in this country had gone up from 3 per cent, to 4 per cent, and would go up to 5 per cent, before the end of this Parliament. I would hope so, too. There has been an enormous bulge in the birth rate in the years of which he was speaking, and therefore a huge increase in the child population, and if that proportion had not increased in the way that he described it, we would be giving less education to every child in the country than we were 12 years ago. The Chancellor always makes the wrong kind of speech. When he ought to make a serious speech he makes a knockabout speech. When at the Tory Party conference he ought to have made a real electioneering speech he confined himself to solemn platitudes.

Despite the higher proportion of educational spending, nobody in the country is satisfied with the educational position. I personally think that the Newsom Report is fundamentally more important than the Robbins Report. I think that the picture that emerges from the Newsom Report of slum schools in particular and the handicap suffered by those children in terms of reading ability at a given age, is appalling.

At any rate we have to increase the amount that we spend on education to a much higher level than it is now in this country. Of course, here we are faced with Government promises. The question is how far we believe these. E cannot believe it of this Government which 18 months ago cut the programme of the University Grants Committee to such an extent that for the next three years a smaller proportion of children of 17 who are willing and able to go to the universities will be able to do so than two years ago. It is a fantastic situation when we consider it. It comes out in the section in the Robbins Report on the bulge. This is one sentence which I should like to repeat, because it is such a damning condemnation of the Government, that a smaller proportion of people with the ability to get into the universities and who want to get in, will be able to do so in the immediate future than in the immediate past, as a consequence of the cuts made by the Government and defended by the Home Secretary in a disgraceful speech 18 months ago.

The last pre-condition—and I will be brief because there are other hon. Members who want to speak—is that the Government really should believe in planning and indulge in planning. Here I should like to pay very strong tribute to what N.E.D.C. has done in the first period of its life. I believe that it has forced the Government and also management and trade unions to face up to a lot of unpalatable facts, and I think that its whole psychological propaganda effect has been entirely to the good. It has even forced the Government, although not the Prime Minister, to face up to the question of a wealth tax. I should like to add one word to what my hon. Friend said about the wealth tax.

The facts are perfectly plain. The N.E.D.C. Report, which my hon. Friend quoted, considers a wealth tax on the Swedish model. My hon. Friend, I think rightly—and I have supported this for years—suggested that the Labour Party should also consider a wealth tax. roughly on the Swedish model. There is not the slightest doubt about what we have in mind. I refer hon. Members opposite not only to the speeches made by my hon. Friend but even to a book which I wrote and to an article in the Bankers Magazine about six months ago by Mr. Michael Stewart. These are the facts for everyone to see.

But despite the existence of N.E.D.C. and its excellent, although in the Prime Minister's case imperfect, attempts to educate the Government, the fact is that we still do not have anything like effective planning in this country. We have no little N.E.D.C.S able to play a highly constructive part in prodding individual industries in their efforts. And even big N.E.D.C. is so under-staffed that it is not capable of making the really detailed long-term projections which the French and Japanese planners have been making.

Until we get a much larger N.E.D.C. there will be no effective planning. I have serious doubts as to whether the Government take N.E.D.C. seriously. I am interested to know whether the Government consulted N.E.D.C. about the present plans for increased public expenditure. I find it impossible to believe that N.E.D.C. could conceivably approve of this bunching of new plans and promises just in the pre-election period.

I am, therefore, quite unconvinced that any of the essential pre-conditions of a 4 per cent, growth rate are currently being fulfilled by the Government or would be by a Tory Government which succeeded them.

It is said that somehow the Opposition are cynical and over-sceptical when we refuse to believe that the Tories can now galvanise the economy into quicker growth and when we refuse to believe that they will suddenly become enthusiasts for much more higher education, much more public housing and so on. Why is this regarded as so cynical and sceptical? I am not one of the most extreme partisan politicians on these benches, but I find it quite impossible to convince myself that the Government, which have had a 12-year period of exceptionally favourable world opportunities, will suddenly change their spots. I do not believe that they are all evil villains but I do not think that they will behave in a very different way in the next decade from how they have in the previous ten years.

This is not only my view. I think that the country will turn from the Government's promises and talk about modernisation, and will show its total disbelief by turning to new men pledged to new measures.

5.40 p.m.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

First, I should like to say how glad I am to see my hon. Friend the Member for Halifax (Mr. Maurice Macmilian), who will probably reply to the debate, sitting on the Government Front Bench. Many of us on this side of the House, and probably many on the other side of the House also, felt for a long time that that was where he should be. We are all very glad to see him there now.

The hon. Member for Grimsby (Mr. Crosland) made, as usual, a very enjoyable, constructive and easy-to-listen-to speech, and I shall touch on many of the points that he made as I go along. I was grateful to hear his tribute to N.E.D.C, which I seem to remember was greeted with considerable scepticism when it was set up. I thought that the only time the hon. Gentleman really let his argument down was when he tried to make out that the likelihood of having lo bring in a very austere Budget next April was some diabolical and subtle electioneering trick on the part of the Tories. If we had had a "giveaway" Budget next April, would this have been correct? We cannot be accused of getting it wrong whichever way we do it. This insistence on trying to make electioneering points can be carried too far.

I should like briefly to deal with the point made by the right hon. Gentleman the Leader of the Opposition on Tuesday, when he said: If— the Socialist plan had been adopted, then … instead of the long stagnation which followed … we could have had a gross national product this year £3,000 million higher than we have."—[Official Report, 12th November, 1963; Vol. 684, c. 24] As to this idea that somehow, through incompetence or lack of will, the Government have failed to allow vast sums to fructify in the pockets of the people, which would have put our dreams within reach, it is hard to be told this and then to be told that our estimates of future growth and prosperity are all nonsense and cannot possibly be expected to mature. The right hon. Gentleman cannot have it both ways. Either he could have made more money over the past few years, or we will not be able to do so in the future. But the argument cannot be used against us both ways.

The truth is that it is impossible to see how any Government could have got round the economic crises which have arisen in the past, and in particular the one in 1961 when the balance of payments went to such a position that no plan or action either before or after could have got us out of it. The Tories do not like "stop"; they like "go". The Tories have never thought of "stop"as a policy which we could employ. It is not good for anything. It is not good for unemployment, which we hate just as much as does the party opposite. It is not even good for the Stock Exchange. If it is thought that the Tory thinking is geared to the Stock Exchange, it surely cannot be said that "stop" is good for share prices.

The real reason was that in 1961 we allowed our costs, productivity and incomes to rise to a state where we were uncompetitive in the world at large, and we could in no sense have continued until we had stopped and waited and let the other countries which are our competitors catch up with us. What has happened is that over the last few years the prices and costs of the countries which are ourcompetitors have risen to the extent that we are now thoroughly competitive.

As far as I can see—this is the answer to the hon. Member for Grimsby—provided that we keep ahead in terms of competitiveness with all our competitors, there will be no reason for further balance of payments crises to arise in the future, and we should be able to maintain the expansion.

It is interesting to remember that nearly all the speeches in the economic part of the debate on the Address last year dealt with the question of exports and how to get more exports, and yet this year that subject has hardly been mentioned, because the export performance of this country is certainly satisfactory, even if one could not describe it as extremely good. I think that we can draw some credit from this. I pay tribute to my right hon. and learned Friend the Leader of the House, who laid the foundations which made this possible. On him fell the extremely unpleasant and difficult task of stopping the rise in our costs until our competitiveness caught up and became level with that of our competitors. This has been ably developed and expanded by the present Chancellor of the Exchequer and used very cleverly to bring us to a state where we are still selling, and selling well against our competitors.

I turn now to the question of the large increase in public investment. I do not think that anybody, looking at the figures, could deny that it will be a very heavy increase indeed—an increase in public service investment of 55 per cent, and an increase in nationalised industry investment of 75 per cent, over the next nine years in real terms. That is a very heavy increase indeed.

As the Chancellor said, total public expenditure is expected to go up by about 4 per cent, per annum over the foreseeable future. He said that it is necessary to match that by a similar increase in the growth rate. I suppose that those who think of it as a spending spree will refer to this also, to quote words used a year or two ago, as "public affluence amid private squalor". That is surely the complaint that I remember, turned round the other way.

There is something rather bogus about right hon. and hon. Gentlemen opposite dressing up as the guardians of the pound, as watchful people trying to keep an eye on Government expenditure and trying to make sure that we do not overreach ourselves with all our programmes. Their role is certainly very different from what it was a year ago.

The essential question is: can we afford this great increase in public expenditure? Of course we can afford it. We can afford a good deal more if we wish. But it is quite evident that if we do not achieve the growth rate which is necessary, there will have to be sacrifices in some other sector of the economy, and it is obvious that whichever party happens to be governing the country in the years to come no public programme stands to yield a very great saving if it is to be cut. There is no sector that I can see where a large cut can be made in the future. So it will inevitably be personal, private expenditure which will be cut, because that is the only thing which any Government in the future can cut. That means more taxes.

I think it fair to say that that is what happened under the Labour Government. The programme of public investment and public expenditure rose faster than the gross national product, and therefore, the rate of taxation had to be increased, and the standard of living actually went down in those six years. This might easily happen again. Indeed, it would happen again if the country did not achieve that 4 per cent, growth rate which is so necessary.

I emphasise that this programme is what the people want. This is shown by the overwhelming response to Robbins and to other major proposals for increases in education and other expenditure. The Government's programme has been welcomed by people in all walks of life and it is right that they should have it. But it is also fair to point out that the consequences, if we cannot maintain a growth rate of 4 per cent., will inevitably be that tax rates at some stage will have to go up.

As has been said, and, I think, generally accepted, an incomes policy is the only real guarantee that we can achieve all this because, if our level of prices starts to rise to become too near or even higher than the price levels of our competitors, the only thing to do in the short term is to hold our incomes at a certain level until we can again safely expand. Therefore, there will be tremendous strain upon any incomes policy which is in action.

The hon. Member for Cardiff, South-East (Mr. Callaghan) said that the pay pause bit deep into the minds of people and that it was a grossly unfair and inequitable action. I want to examine that statement a little. I notice that since before the war, in real terms, discounting the change in the value of money, wages have gone up by 79 per cent, and dividends only 8 per cent. This makes one wonder whether it was unfair to restrict the increases some wage-earners were to get while, at the same time, profits and dividends in many cases were actually falling.

We had our debates at the time, for feeling was very strong and it is fair that these issues should be the subject of party politics. But, in retrospect, I cannot really accept that the pay pause was all that unfair. I agree that the tax system is ripe for reform in many directions. There are evasions I would like to see stopped. But that does not mean to say that it could be done overnight, and I think that the hon. Member will find that he has a very big job ahead of him if he thinks that this can be put right in a year or two by any Labour Government that might have a chance to have a go at it.

It is a very difficult problem and all parties should co-operate to solve it. But it does not affect the question of whether the pay pause of two years ago was fair or unfair. I would, therefore, like to see the details of the Labour Party's incomes policy. We have heard so much about it that we would like to have details of the wealth tax. That, also, is important. But far more important are the details of their incomes policy. How would right hon. and hon. Members opposite, when there was pressure on our balance of payments, hold down incomes and restrict the normal machinery which might throw up bigger incomes than the economy could bear at a particular moment? Would they not have to have recourse to the same methods my right hon. and learned Friend the present Leader of the House had to use when he was Chancellor of the Exchequer-methods which were amply justified and, indeed, would be amply justified if used by a Labour Government in similar circumstances? I would like to hear what ideas they have, which they have not told us about, on how they would cut back income increases which go beyond our capacity to pay at the time they occur.

There is one group of incomes one must refer to at this time. It seems very odd that increasing efficiency in industry is always thought to mean, and has always meant, increasing incomes for all those who work in it, whether workers, managers or shareholders. But increasing efficiency in farming has not had that result. I will prove that with figures.

I understand that over the last ten years the gross national income has risen by 78 per cent., the cost of living by 28 per cent., but that farm incomes in total have only gone up by about 17 per cent. That shows that the farmers, who have increased their productivity year by year, have not even kept up with the cost of living.

This point has been made already in the debate and it seems to me that the Government must consider this problem seriously for the future, because it is ceasing to be equitable that levels of income that no one said ten years ago were too high are being eroded to this extent. We will need to examine very closely how we can increase farm incomes in times to come because of this very unfair comparison with industrial income. I think it odd that the party opposite has never made this point. Here are people who are going down year by year much faster than any other section of the population. I am surprised that we do not hear more about it from the party opposite.

My final point is about the very large investment being planned, both in the public and private sectors. It is essential to make certain that what we invest is well and correctly invested. I think there is a tendency in British industry, and in many of the structures the Government now build, to over-design to an unnecessary extent. I think that in many of the things we are making we tend to allow too great a margin of design; we tend to overdo it to a considerable extent.

In my profession—civil engineering—I have seen lately too many examples of where perhaps 10 or 20 per cent, could have been saved on the cost of a structure simply because we were building altogether too strongly. I think we have to get competition into design as well as in other aspects of national life. I am certain that in building roads and motorways in particular large amounts of money are being spent which could be saved. If we cut 10 or 20 per cent, off the programme in this way we could afford to do a great deal more. These are big figures that we are talking about. I hope that the Government will think carefully how we can introduce more competition into the design of many of our structures, so that we can at least ensure that we are getting full value for money. I welcome the Gracious Speech and I hope that all it contains may be enacted soon.

5.58 p.m.

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

Today we listened to the Secretary of State making a reasoned case in support of a new policy which, provided that it is carried out, means a complete reversal of Government policy of the past 12 years. Providing that they really mean business, then, to a very great extent, they will meet with a certain amount of support in the country But my doubts lie in the fact that they have undermined the confidence of the country in their intentions, as my hon. Friend the Member for Grimsby (Mr. Crosland) indicated.

The Secretary of State for Industry, Trade and Regional Development said that the Government were to embark on a policy of the modernisation of Britain, which included British industry. He said that this was to be based on increased mechanisation and computer management, leading to a process of automation.

If this is to be consistent and in harmony with mid-twentieth century scientific ideas, the machinery of local and national government must be capable of translating those ideas into reality. Unfortunately, we have already lost 12 years.

He went on to make what I thought was a change from the years of retreat from planning. Those of us who had become downhearted and discouraged by the retreat from planning—and this applies not only to one political party—and who had spent the best part of our lives in large-scale industry of the kind to which the right hon. Gentleman paid tribute and who have always known that Britain could hold its own in the modern world only by this kind of policy, have long argued that our people needed to be far better educated and the machinery of government modernised.

He went on to say that there would be work on an increased scale towards mechanisation and an expansion of trade and that it was about time that there was if we were to maintain our standard of living. I, for one, hope to live to see the day when it will be greatly increased and not only maintained. To bring that about we have to have a larger share of world trade. It is in our heavy industries, which are responsible for manufacturing the products which find markets abroad, that the credit lies for maintaining the strength of this country.

He rightly paid tribute to the breaking of all records by the motor car industry. I welcomed his observations, but I wondered whether we were not putting too many of our eggs in one basket. Ought we not to be planning for even higher figures? He—I ought not to say "he"; I believe in maintaining standards in the House of Commons, for we profit greatly by doing so; I ought to say, "The right hon. Gentleman"—the right hon. Gentleman said that he intended to apply this policy in his new position. He reminded me of my close association with giants like Sir Stafford Cripps and Sir Kingsley Wood and of how they worked almost night and day and undermined their health. Any Minister in a modern Government who is doing his job properly must have regard to his health. I intend to say something later about this subject, because I have seen too many from both sides of the House and in the Civil Service paying dearly for working too hard.

The right hon. Gentleman spoke of the need for continuity of growth. I wondered whether that included continuity of employment, for I speak for the workers. I was delighted when my hon. Friend the Member for Grimsby said that the Newsom Report should be implemented before anything else. My own daughter is among those teachers teaching classes of 40 or 50. The result is that the teachers are overworking and cannot do justice to their pupils. If one child gets measles or influenza, they all do. Conditions of that kind are almost indescribable.

I welcome the new outlook towards education and it will have my wholehearted support—and I include the prodigious increase in expenditure. I hope that all the universities, especially the professors, will remember the sources of all the wealth and will remember where their incomes come from and the importance of the exports upon which we all depend.

This week, the House of Commons has made a great contribution towards the restoration of realistic politics in this country. We were drifting towards the personification of politics and I dreaded that. I had seen it develop in other countries and it is only a matter of degree. The main issues of life are sidetracked, as are the fundamental differences which should be reflected in the two political parties. The Smart Alecs of the Press, aided by similar types in "Panorama" and "Gallery", were encouraging the trend of this attitude. I am pleased that the House has reversed that trend and that now, as the result of the selection of the Prime Minister and the capacity and experience of my right hon. Friend, the trend has been completely changed in the elected House of Commons. Perhaps I regard this more seriously than most hon. Members because in Stoke-on-Trent 32 years ago it fell to my lot to deliver a mighty blow against the growth of Fascism in this country and to keep out of the House a man leading that growth, a man who had had all of life's benefits.l Last night, as I was lying in bed thinking of what to say today, I recalled a friend of mine who was one of the most respected of hon. Members, Mr. Tom Johnston. He wrote a book, Our Noble Families. This morning I went to the Library, but I was courteously told that there was no copy there, nor anywhere else in London. I went to my Scottish friends and I was supplied with a copy of The Scottish Miner. On page 2 of that book there are extracts from Tom Johnston's book and from the speeches of the Prime Minister. In this, the last Session of this Parliament, I welcome speeches by the Prime Minister and by my right hon. Friend the Leader of the Opposition. The Prime Minister issued a challenge to this side, and we should accept that challenge without any equivocation. We should welcome it, for reasons that I shall indicate later. I was pleased with the observation made by my right hon. Friend the Leader of the Opposition in reply to that challenge. He said, "We will play the ball and not the man." That has cleared the air and cleared the road, and we now know where we stand. We have two men—the Prime Minister and the Leader of the Opposition—representing parties which are fundamentally opposed. At last, after a great deal of vacillation in this House, the issues have become clear without there having been an introduction of personalities. We know where we stand and we can proceed to examine the various policies, and the issues with which we are faced.

In my view, based on experience, we need a new look both at Government machinery and at our economic situation. One of the Amendments on the Order Paper to my mind represents a constructive road forward. It reads: But humbly regret that the Gracious Speech contains no proposals for a comprehensive economic policy that would enable our manufacturing industry to increase the volume of output, reduce the prices of exports, reduce the costs of raw materials and overhead charges, and obtain a greater percentage of world trade; and that no proposals are made regarding the urgent need for a Ministry of Production and Economic Planning. In my view, that is the constructive road forward which we urgently require if this country is to hold its own in the world.

I very much regret that although the Labour Government had a good record in 1945 and 1946 it made two or three mistakes. I found, when I was involved in accepting responsibility for construction, that if one made a mistake it was better to admit it as soon as possible and then make amends. In my view, one of the mistakes that we made was to terminate the functioning of the British Commercial Trading Corporation, which had done such a good job in the world, and the other was to terminate the functioning of the Ministry of Production and to merge it with the Board of Trade. Our economic situation is such that to burden the Board of Trade with all the responsibilities outlined by the President this afternoon is in my view a fundamental mistake. Two Ministries are required.

I do not join with some Members who have suggested that we should have a number of new Ministries, but on this issue we urgently require a Ministry of Production and Economic Planning, in addition to the Board of Trade. We have arrived at a situation in which powerful and well organised private interests are exerting more pressure and exercising more control than in any other industrial country, and we shall find it increasingly difficult to hold our own in the world if this policy is not completely reversed.

A number of Government Departments have issued excellent publications—some weekly, some monthly and some quarterly. I have before me some excellent publications of the Central Office of Information, dealing with the growth of investment, the need for action with growth, and trade expansion. The Board of Trade has produced some of the finest statistical information in the world. We have the Statistical Digest and the Board of Trade Report, and the Journal is improving each month. We also have a number of publications from the Economic Division of the Treasury, including the confidential quarterly bulletin on the economic situation. There are also private publications published by the banks and a number of large industrial establishments. All these provide an excellent background for setting forth the kind of information which is required by a Ministry of Production and Economic Planning of the type that I am advocating.

I welcome the announcement that our exports have been rising, but in my view they have not risen nearly enough, considering our increasing responsibilities. I have before me an excellent report published by Barclays Bank, dealing with the situation in Japan, and pointing out that Japan has made great headway because it has applied, in a greater degree, the kind of policy that I am advocating.

Since the Government, at the most, have only 10 months to carry on, it is permissible to envisage a situation in which there will be a Labour Government. When we become the Government I hope that we shall show that we mean business and that we are determined to translate into concrete realities the theoretical ideas which we ventilate in the House, thus making a great contribution towards solving the economic difficulties which Britain faces.

It was in 1944 that the Trades Union Congress first advocated a policy of 400 planning, with the setting up of a National Economic Ministry and the adoption of a policy of planning—the merging of the Ministry of Production with a Ministry of that kind and also the organising of an investment board. In my innocence I thought that we meant what we said. I had a number of documents in drawers, which I brought out time after time in order to put forward constructive policies. I worked night and day to translate into legislative proposals what we had said for years and years on these matters. Little did I realise that a man who is now in another place was, according to the Financial Times, taking steps to see that the ideas that we were putting forward were not translated into reality. I hope that this time we shall be on our guard against that kind of thing.

I take second place to no one in my regard and respect for our civil servants. Those with whom I was associated would have worked night and day to assist me, and I would not be a party to uttering a word of criticism against them. But never let it be forgotten that five Permanent Secretaries used to meet at lunch every Friday—and some of us know what went on at those lunches, with the collaboration of the person who is now in another place.

I hope that when we become the Government all our young men who are given office will learn the lessons of the past and will be on their guard, and will remember that although we all respect the conscientiousness of civil servants there are always certain types who are not prepared to sink their individualities and ideas for the welfare of the country and in support of the elected Government.

I wish to refer to one or two matters which have appeared in the Press and which have given me some concern. According to today's Guardian, some discussion is to take place, first of all behind the scenes and then between representatives of the Government and Mr. George Ball, the American Under-Secretary of State, who is now touring Europe, on some economic problems. According to the report, the West Germans exported to the Soviet bloc last year goods worth 717 million dollars while Britain's exports to that bloc totalled 310 million dollars. It appears that the West Germans exported to the Soviet Union alone nearly 210 million dollars' worth of goods while Britain's exports were valued at only 117 million dollars. The Guardian also contains a leading article in which some excellent observations are made about these exports. It says that if a Labour Government were to come into power in Britain they would probably want to do more to stimulate East-West trade than is at present being done. The leading articles states: Some countries, notably, France, Italy, and Japan, are showing more initiative than we are …". I have with me the report of some British manufacturers who recently toured the Soviet Union and other Eastern bloc countries. They advocate a great increase in the amount of trade being done between Britain and the Soviet bloc. They point to the trading potential that exists.

In addition to the Confederation of Shipbuilding and Engineering Unions, the union which I represent is extremely disturbed about the number of ships that are being ordered from abroad. I wish to make it clear that we do not take a narrow view towards this. We are prepared to make all the necessary allowances, but, despite this, something must be wrong when, for instance, the British Petroleum Company—in which, I understand, the Government hold a big percentage of shares—has ordered ships to be bought abroad. Is this so and, if it is, may we have an explanation?

In an effort to ascertain the facts we have asked for a searching inquiry to be held so that, when armed with the facts, we in the unions may help to share the responsibility for preventing orders from going abroad. We are prepared to consider constructive proposals to avoid our losing orders, but we want the facts so that we may act with a full understanding of what is happening.

Mr. Cyril Thompson, chairman of a large shipbuilding organisation on the North-East Coast, is reported to have said recently at the launching of a ship: … serious competition is now being faced from Japan … It is a country with a much lower standard of living, and, consequently, lower production costs, not only for the ship itself, but also for the steel and machinery and, in fact, nearly everything that goes into it. Obviously we have no intention or desire to try to meet this competition by lowering our standard of living. Equally obviously, this competition must be met even if it means some form of protection. The trade unions are willing to accept their share of the responsibility for dealing with this sort of competition so long as the facts warrant action being taken. It is mainly because of this that we are asking for a searching inquiry to be held.

In this connection, several questions need answering. Is it true, for instance, that present steel prices represent a fair cost to British shipbuilders? Is it a fact that British steel sheet can be bought cheaper on the Continent of Europe than in this country? Are Continental ships' plates quoted at prices well below those prevailing here? Is the price of the equipment needed for our ships fair? Why are we not exporting more steel and, consequently, lowering our prices? Why do we not have a greater share of the world's exports of steel? I ask these questions on behalf of my constituents. I am optimistic about the future, so long as we can approach the second half of the twentieth century and the problems that face us in the spirit that cur forefathers faced their problems; with knowledge of the need to modernise our industry, the machinery of government, and to make all these improvements consistent with the modernisation that takes place.

6.25 p.m.

Photo of Mrs Judith Hart Mrs Judith Hart , Lanark

My hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) always has a great deal to tell the House which is thoroughly apposite to the points under discussion. He always manages to electrify us with some of his information and today has been no exception. However, I know that he will forgive me if I do not closely follow his remarks, but turn immediately to the Scottish side of the question we are discussing today.

I am glad to see the Under-Secretary of State for Scotland and the Parliamentary Secretary to the Board of Trade in their places, because I have things to say which are of relevance to them both. Three hours ago we were presented with a White Paper. One might have expected it to take one more than three hours to gain an understanding of such a document and of the immense constructive steps we were told the Government proposed to take to solve the problems of Scotland. This is not so.

The reason is that the document is so full of platitudes and proposals with which we are already familiar that, in part, it merely represents a gathering together of plans which have already been on the stocks for some time. Where the White Paper makes new proposals we find another category of suggestions but, alas, we are equally accustomed to these in that they, too, have been contained in previous documents, from Cairncross to Toothill, issued in Scotland. I will, therefore, base my remarks on my reading of the White Paper in this short time.

What the White Paper has to say and, more particularly, what it does not say, is of great relevance to my constituency because I was in Scotland yesterday in the village of Forth where a pit closure was announced by the N.C.B. I discussed this matter with the Parliamentary Secretary to the Board of Trade at the beginning of this year and have been drawing his attention to the forthcoming closure for some time. He will remember the somewhat acid tone of the recent letters I have been sending him. He can take it from me that there are 350 men who, on 29th November, will have no jobs in the village of Forth.

The test of this White Paper and of the Government's policy towards all the unemployed workers of Scotland is to be judged by what it offers for people like my 350 constituents in the village of Forth. What is it likely to offer them? Nothing, unfortunately, because they do not happen to come neatly into one of the growth points which the Government draw so nicely on their map. They are, geographically, some distance from the north Lanarkshire growth area which the Government envisages. In terms of travelling, they are impossibly remote from that area, at least in terms of the kind of travelling opportunities that exist in the area now. They are also distant from the Livingstone growth area.

The first question that comes to mind about the White Paper is to what extent the Government are deliberately and unequivocably writing off parts of Scotland which do not happen to fit into their neatly defined growth areas. I urge hon. Members to study the map and the whole acreage covered by the little dots that now represent development areas. We see how distant many of these areas are from the identified growth points. We are dependent on what the White Paper has to say about the extent to which these development areas, not included in the growth areas, are to continue to get assistance from the Government—or, indeed, are to begin to get some assistance by way of the provision of new jobs.

What has the White Paper to say about it? On page 27 it reassures us, as the Minister himself did this afternoon, by saying: … by forming focal points of especially vigorous economic development, particular growth areas will help to create a favourable climate of growth in the wider catchment areas associated with them. The Minister stressed that there will continue to be the same measures of assistance for development districts as exist at the moment, but what does it mean in the context of the level of growth we have now, or the level of economic growth the Government envisage, somewhat optimistically, during the next year—if they continue in office? I want here to quote a sentence in a letter from the Parliamentary Secretary to the Board of Trade—and this is why I am so glad he is here—written to me on 8th October, on the question of the need for provision of new industries to serve this village of Forth, in my constituency, which is representative of so many villages in Scotland. The Parliamentary Secretary wrote: … there is only a limited amount of steerable industry …" This is the crucial point that must concern us in any consideration of policy for regional development in the country as a whole. The extent to which the Government are likely to succeed in building up economic growth, even in limited areas of the country, will depend on the amount of industry at their disposal that they can hope to attract to the area. What will be the position for the development districts outside the growth areas within a context of "a limited amount of steer-able industry?"

It seems to me that the White Paper makes a fundamental error, one which we expect from this Government. It is an error they cannot avoid making, implicit in their own philosophy of economic development and their attitude towards the freedom of private industry to do as it wishes. All this is implicit in what is in the White Paper, which has not anywhere in it any commitment whatever to provide the number of new jobs necessary for Scotland.

It is true they go a little further than before. They try, for the first time, to calculate the number of new jobs that ought to be provided. For them, that is, indeed, revolutionary thinking, because when, only in July, we debated the Scottish economy, the Secretary of State for Scotland refused to admit the desirability of trying to calculate an employment target. Still rejecting Toothill, he said that one could not possibly either calculate a target or commit oneself to meet it, nor would it be desirable to do so.

In the White Paper, the Government begin to make an assessment of the number of new jobs needed, though I cannot agree with the total they arrived at. The Secretary of State for Scotland will, no doubt, have seen—as, perhaps, the Parliamentary Secretary to the Board of Trade has—a P.E.P. pamphlet on "A Development Plan for Scotland", with which I have the honour to be a little associated, in that a group of people we gathered together, of whom I was one, were partly responsible for the thinking behind it.

I do not want to go deeply into the differences of opinion on the employment target between the two, but it is a difference of 50,000 new jobs. There is also a difference in the time scale, in that we believe that it is necessary to have 150,000 jobs by 1969, whereas the White Paper calculates 100,000 by 1971. The difference lies partly in the longer time scale which the Government envisage and partly in our own much more stringent requirement of frictional unemployment. We believe that we should allow only between 1.5 per cent, and 2 per cent, for frictional unemployment.

Leaving that aside, let us consider what the Government say about the ways by which they propose to meet even this figure of 100,000 new jobs by 1971. I hope that one of the Ministers will correct me if I am wrong—my reading on the White Paper has, of necessity, had to be hurried—but nowhere in the White Paper can I find a commitment to meet that target of 100,000 new jobs. Nowhere do the Government say, as we on this side say, and as my right hon. Friend the Leader of the Opposition said in Glasgow, in September, that they will "tailor the measures to suit the need" and see that the employment target is met.

That is the crucial aspect of the whole problem. So long as one recognises that one is uncommitted to meet the employment target, for so long does one avoid the implications of commitment. The implications of commitment are that one has to be prepared to produce, by various means, the level of economic growth that alone can provide the right kind of economic content. The Government are certainly not prepared to take the measures we on this side think must be taken if the N.E.D.C. figure of 5 per cent, is to be reached.

Further, one must accept that if one cannot succeed by all those measures of improving the infrastructure that we long ago recognised—providing better houses and better roads, and providing attractive amenities—and by those measures of assistance to private industry used by the Board of Trade—in inducing enough private industry into the development areas and the growth points to meet the target of new jobs, it must be a public responsibility to see that the new jobs are provided by public enterprise.

That is the crucial difference, and it makes nonsense of the Government's policy, and makes our policy the only realistic one if one accepts commitment to the number of jobs calculated to be necessary. The people of Scotland do not need to be told this. They know perfectly well that to say how many jobs are needed without committing oneself to doing whatever is necessary to meet the target is just so much electioneering nonsense.

I should like the Government to consider another rather different aspect of the implications of their policy on growth areas. For example, let me ask them about the increase in the size of the new towns in Scotland which is proposed in the White Paper. One of the new towns is, of course, in my constituency. As hon. Members will recognise, mine is a constituency of tremendous contrast. Yesterday, I had two engagements there. One was to attend a meeting to consider the Forth pit closure. The other, at the other end of the constituency, was to attend the opening of the new research reactor at East Kilbride. There, one is surrounded by the success story of Scotland—as it is—and I absolutely agree that new towns are infinitely the best way of providing the kind of environment that is likely to be most successful in attracting new industry.

That is so, of course, but, if that is the truth, the implication is that the Government should be prepared to create more new towns in more areas in Scotland so that they can multiply the number of probable growth points there to meet the needs of the villages that are at present being left out in the cold.

When the Government propose, as they do, very considerably to increase the size of the East Kilbride population, do they fully understand the social and planning implications of what they are doing? East Kilbride was first begun with a target population of 45,000. That went to 55,000, and is now up to about 75,000. From the White Paper, I assume, although the figure is nowhere clearly stated, that the population will grow to over 100,000. One cannot plan a new town on that kind of basis. What is to happen when the population reaches a figure of over 100,000 when the original planning of the structure of the town, the master plan of the town, was based on a population of only half that number?

If we are to build a town of over 100,000 population, we must plan a city centre. We have to plan for the right kind of facilities of all kinds—sewerage, roads and the rest. In terms of modern planning requirements, one cannot suddenly change one's mind in midstream, because one cannot go back to the beginning. That is the truth about the creation of new towns.

Of course, it is cheaper to extend the size of existing new towns and ask the population to put up with the social disadavantages that will result. It is cheaper than to start more new towns, because it is the original expenditure of the capital needed to lay down the basic structure of the town that costs a great deal of money. This is what the Government are not prepared to undertake. The whole policy, indeed, is nothing but a collection of words strung together.

I should like the House to consider East Kilbride and the north Lanarkshire growth area which is proposed in the White Paper. North Lanarkshire desperately needs to undertake a great deal of urban redevelopment. This is well-known. This is one of the areas where the results of nineteenth century industrialism are all too clear today. A great deal of money needs to be spent on pulling down the old buildings and erecting new ones to make it an attractive area.

One of the problems of redevelopment is that there will have to be an overspill of population from north Lanarkshire to other parts of the county. Have the Government recognised this? They know about it because the Lanarkshire planning authorities have indicated this probability to the Scottish Office. There is no indication of it in the White Paper.

I would suggest that in my part of Scotland the ideal way of meeting the requirements, first of those villages and small towns which are in the present development areas and which have little hope of attracting new industry in the context of what will clearly be a Board of Trade emphasis on growth areas, and meeting, at the same time, the needs of overspill in a population which will spill over from north Lanarkshire to southern Lanarkshire as redevelopment takes place and meeting the social problems of East Kilbride if it is asked to expand beyond reasonable limits, is by accepting die suggestion for another new town in south Lanarkshire. This has been proposed by the county to the Scottish Office, and of course, it is the answer but it is too expensive, and this is why the Government do not put it forward.

May I turn now to another point? When the Government succeed in inducing a new industry into some of these areas in Scotland it is relevant for the public to consider what kind of industry it is and how it uses public money spent on encouraging it to go there. The White Paper quotes the success story of East Kilbride in statistical terras. It points out that by now 8,000 new jobs have been created there. But 10 per cent, of those jobs disappeared overnight last week when 800 workers were told that there would be no jobs for them as a result of the closure of the Holyrood factory in East Kilbride. This has important implications for the whole future policy of the Board of Trade in. relation to new industry.

Most hon. Members will not know the background. In a few words I will try to summarise it. I know that the hon. Lady the Member for Renfrew, East (Miss Harvie Anderson) knows a good deal of the background of the knitwear industry. We have discussed it together in the past, though not necessarily from the same point of view. She will know that three years ago the Holyrood knitwear firm was spread out in several factories in west Scotland. It decided to concentrate production in one factory in East Kilbride, and one other, and it moved into a new factory in East Kilbride which cost £500,000.

One would like to know how much of that £500,000 represented a Government subsidy to the firm. At the time when it concentrated its production in East Kilbride the firm was taken over by Thomas Tilling, a London-based finance holding company. It was Tillings which over theyears found the difficulties becoming greater and greater until last week it announced the closure. When it made the announcement of the closure—and this is why so many trade unionists in Scotland and those of us who are concerned with the success of attracting industry to Scotland are worried—the chairman said: Success in this venture depended upon ability to recruit adequate qualified management and to train and develop an efficient labour force. Unhappily, events have now shown that despite the most persistent efforts we have not been able to meet these two requirements satisfactorily. The implication of this statement was that management in the west of Scotland and the level of efficiency of labour there fell below the standard required in modern industry.

This we could not accept or believe, and we could not believe that the firm meant it in that way or would have made such an unqualified statement. The Provost of East Kilbride and I therefore met the management this week and discussed the reason for the statement and for the closure of the factory. I want to put it on record that Tillings assured us that the firm intended no reflection on the level of efficiency of management or workers in the west of Scotland. It said that its particular difficulties arose from the impossibility of obtaining technical management from within other sections of the knitwear industry for its own factory in East Kilbride.

These difficulties, in their turn, arose from the fact that only a tiny proportion of the industries under the control of Tillings were involved in knitwear. In other words, the firm did not have a pool of skilled technical management and workers at its disposal from which it could draw to start off the new factory. There was also the fact that the takeover itself—as so often happens—had been accompanied by a number of departures from key management positions in Holyrood, including one or two highly qualified technical people.

Photo of Miss Betty Harvie Anderson Miss Betty Harvie Anderson , Renfrewshire East

We both have a common interest that there should be continued employment in this industry, but it is true to say that the facts lying behind this difficulty was that there was here a concentration of several small works and it was not possible to bring in workers who had already been trained. The company therefore tried to push up output to meet large orders before it had time to train its labour force. This is no reflection on the workers but it is a fact that the firm was trying to put out a substantial output suddenly from employees who hitherto had not possessed this skill.

Photo of Mrs Judith Hart Mrs Judith Hart , Lanark

I completely agree with the hon. Lady. But I do make some severe criticism of Tillings and some rather less severe criticism of the Board of Trade. The criticism is that Tillings does not seem to have recognised that a finance company operating from London, which is essentially a holding company, cannot carry out a new enterprise in new areas unless it follows what has been: stablished by economists as being the essential correct way of doing it. I discovered, for example, on Monday, to my great astonishment, that the kind of thing which economists have established for the last ten years as being a prerequisite for any firm which knows what it is doing when it moves into a new area has not been familiar to Tillings at all. Hon. Members will know of the Luttrell studies on industrial movement. Luttrell has carried out over the last ten years a series of case studies, where one factory moves from one place to another or where a parent factory sets up a branch factory.

The conclusions drawn from these studies have, I think, been generally accepted nationally. The conclusions enumerate certain prerequisites for success. One of these is effective and detailed pre-planning. This was not successfully carried out at Holyrood in that too much was attempted too quickly without enough of the right technical resources. Secondly, there is the prerequisite of having a nucleus of highly trained management. This, again, Tillings did not have, because it had lost some of its best people and did not have available a pool from which to draw replacements. It did not have any other part of the hosiery industry attached to them.

Thirdly, and most important of all, the desirability of having a pool of highly-skilled supervisory and shop floor workers to train the new recruits. Of course, they suffered from the fact that they were concentrating in one area and losing some of their former workers. Knitwear is the kind of trade in which a new recruit has to be taught by an experienced hand who knows the tricks of the trade. It is not possible to take short cuts. To me, it is inconceivable that public money should go to a company of this kind which fails to meet its social obligations to the extent of neglecting this kind of economic fact of life. I ask the Board of Trade to consider what ought to be done in the future to prevent this kind of thing happening again.

Under the Government's policy of growth, in what they are attempting to do in the White Paper for central Scotland, this kind of problem might well occur again. There may be a firm which is hoping to set up in Scotland. It may have been attracted to a new town or even one of the development districts, and it may not have experience in the line of country in which it wishes to operate. What does the Board of Trade do? Does it sit back and watch the firm make mistakes? Does it sit back and watch it build up the hopes of the population and then shatter them by allowing the kind of thing to happen which occurred in East Kilbride last week? Is it to watch the waste of public money when a firm does not do things in the proper way?

I recognise that the Board of Trade cannot preach to new firms what they should do, but I think that there is a halfway point. The President of the Board of Trade should ask his staff to assemble the kind of information that is now available on the basis of economic research into the right and the wrong way of doing things, and it should tactfully offer this information to industrialists who are about to embark on setting up a new factory or a branch factory. This would enable the country to be more certain that public money was being used for the public good in the best possible way. I hope the Government will consider this suggestion.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I am grateful to the hon. Lady for giving way. When I heard about this incident to which she has referred I immediately invited the deputy chairman of Tillings, with some of his co-directors and others concerned with hosiery and knitwear, to see me about it the next day. Naturally, I was concerned. I do not think that the hon. Lady would like to be misunderstood when she said that it was "closed overnight". This is a programme which has been phased. The firm is also discussing with the representatives of those working there the redundancy payment scheme and so on. In that respect the firm is carrying out its social obligations, and rightly so.

On the question of the Board of Trade approach, I was not present when this happened, but the Board of Trade makes serious inquiries into all these aspects of a firm's life. This is one of the reasons why the B.O.T.A.C. procedure takes a certain amount of time, and hon. Members are always pressing, rightly, that the time should be reduced. This we are trying to do. I am sure that hon. Members would protest equally strongly if they understood that we said "no" to a firm of thestanding of Tillings, with its financial resources, if that firm wanted to take a factory in an area such as this. The fact is that this firm had experience of running a business of this kind successfully in another part of the country. A considerable number of workers have been trained in these skills, and this must be a powerful inducement to another firm of this kind to go there. We are using all our efforts to bring this about.

Photo of Mrs Judith Hart Mrs Judith Hart , Lanark

I am glad to hear it. I accept that the development corporation and the Board of Trade will be doing all they can to find a new tenant for the factory. What I mean by an overnight closure is that there was no previous consultation with the trade unions. I agree that redundancy payments have been worked out. Unfortunately, the firm could not agree that a system of phased redundancy would be a wise procedure. As a result, there was a later development this week. The firm wrote to other firms in the new town asking them not to take on its workers because there was still some work to be completed. This, naturally, aroused a good deal of resentment among the rest of the firms in the new town. To expect workers faced with this sort of insecurity not to look for a new job is inconceivable.

I do not suggest that the Board of Trade should refuse an application from a firm of Tillings standard. Of course they should accept it. What I do suggest is that when the Board of Trade accepts applications from firms of this kind, which are financial holding companies rather than companies actually involved in industrial production, and gives them all the assistance possible, the Board of Trade should not assume that such firms know all that there is to be learned about the best way of going about things. Some sections of industry in this country may well be highly knowledgable and experienced in how to do things well, but it is a reflection of the failure of this country to achieve an effective rate of growth in the last twelve months that some firms do not yet know the way to success.

When the Board of Trade accepts an application and offers public money to assist new industry in Scotland, I ask the Board of Trade to be as generous as possible and also to offer the firm all possible assistance in going about the job in the best way, without assuming that the firm already knows the best methods of doing so. I am putting forward a positive suggestion.

My constituency, of which I have spoken so much tonight, although I think that what I have said has general applications, used to be represented by the Prime Minister. If the President of the Board of Trade has any doubt about the relevance of what I have been saying—in so far as the villages of southern Lanarkshire are gaining nothing at all and stand to lose a great deal as a result of this White Paper on central Scotland—he should ask his right hon. Friend the Prime Minister for his view about the needs of southern Lanarkshire and areas like it. These are the villages in the moors where the shooting of pheasants goes on above ground while mining is carried out underneath.

The Prime Minister and his friends shoot their pheasants over the top of the Lord Dunglass and the Lady Mary pits in my constituency, named after members of his family. I have been down the Lady Mary pit. It is a very different kind of life down there, one with which the Prime Minister believes he is familiar. In fact, in this mining village, near the moors where the Prime Minister shoots with his friends, the Prime Minister did not dare speak when he was fighting his second election campaign in south Lanark.

I ask that the Government, in the remaining short months of their life, will consider very seriously making yet another death-bed repentance and will recognise that while success in growth points is desirable, the salvation of areas lying outside the growth points is socially of equal importance.

6.59 p.m.

Photo of Sir Harwood Harrison Sir Harwood Harrison , Eye

I had not originally intended to speak in the debate on the Gracious Speech. However, I was very struck by some remarks made today by my right hon. Friend the Secretary of State for Industry and Trade. Having spent some years under his leadership in the Whips' Office, it may be of some help to the House if I make a few personal remarks about my experience in firms I am connected with in the export trade. I thought that my right hon. Friend outlined very clearly the Government's responsibility over our trade generally, particularly in regard to exports. It is not the job of the Government to sell the goods. As my right hon. Friend so rightly said, it is their job to see whether there are any difficulties or obstructions which prevent our exporters selling their goods.

My right hon. Friend rightly said that 200 British firms do 50 per cent, of the export business. There is not much that the bigger firms can be taught about how to sell their goods in the export market. They are experts at it. I am connected with a small private engineering firm. It has not a great deal of capital. It employs about 400 people. In 1948, 95 per cent, of the goods the firm produced went to the export market. We did not get any particular thanks for that from the Board of Trade. Now only about 70 per cent, of its production goes to the export trade and it has to make up that lost business in the home market. We have agents throughout the whole world and receive reports from them.

One thing which hinders the export trade is the political scene in different countries. I suggest that one reason why we have not made so much progress with exports to the Commonwealth recently as we have with exports to Europe is the changing political pattern of the Commonwealth. We no longer have, under the Commonwealth Relations Office or the Colonial Office, the say we used to have under the Dominion Office about what a country's import policy should be. Nowadays we are selling in what are to all intents and purposes foreign countries. It is noticeable that, when countries gain their independence, whether or not they become republics, they often place steep embargoes on imports of British goods. Since independence the whole of India has been denied as a market for my firm's goods, because we cannot get quotas to import our goods into India. We lost a very good market in Ceylon and another in Ghana. In addition, there are political upheavals in countries such as Iraq and the Congo which

formerly took many of our light engineering goods.

Here I must pay tribute to the very great help our firm has received from the Foreign Office representative in the Congo since there has been a little more stability there. He has helped us to obtain licences to import our goods into the Congo again. I suggest that the Government should carefully consider the political situation in these countries, as I know that they do when making tradetreaties with them, with a view to seeing whether they will take a wider range of goods, especially countries which were formerly within the Commonwealth. Immediately a country gains independence it seems that it has a bias for some years against British goods or anything British. Ultimately, after five or ten years, it wants our goods again.

I have met many of our trade representatives overseas. On the whole, they do valuable work in promoting the sale of British goods. I wonder whether saying "Buy British"is quite enough. I wonder whether they ought not to recommend a potential customer to buy the goods of a named firm. I appreciate that this would be a big departure from the present practice. The 200 firms to which my right hon. Friend referred are amongst the finest firms in the country. We know that their goods are of high quality. Would it not be possible for our trade representatives abroad to name the goods of such firms, if they have a certificate from the Board of Trade, and recommend their purchase to enquirers? If our representatives abroad were to say, "Buy a Morris car", or "Buy Dunlop tyres. They are the best", this would be much more effective than saying, "Buy British". Further, could not information about inquiries and requirements for a particular product be sent direct to the firm in Britain making the product? It is not always particularly easy for a firm to know immediately whether its products are required in America, Africa or in Asia.

In my part of the country—Ipswich and East Suffolk—an export group has been formed. Those with knowledge will help smaller firms which have not any knowledge of exporting. Seventy firms were represented at the first meeting last week. I have not yet had time to write to my right hon. Friend about this, but these firms are anxious that he should visit them in the new year, after they have had two or three more meetings. The Board of Trade's policy of giving impetus to such provincial groups in which one firm helps another instead of being in deadly competition with each other is absolutely right. The Board of Trade should be congratulated for having started this project.

I turn to the question of automation in industry. When the phrase "industry" or "automation in industry"is used, one always thinks of factories. I am of the opinion that our factories have gone in for automation in a big way, particularly the larger factories. I am thinking of the large amount they have invested per man employed. Medium and smaller sized firms cannot do so much. I am not so worried about automation in factories, because it is already taking place and management is alive to the need for it.

I believe that much more can be done by way of automation in offices and in distribution. This is where the cost of articles to the consumer could be brought down. With the exception of some of the bigger banks, for example, I do not think that enough larger offices have gone in for automation. Manpower is still being wasted. By using more electrical appliances the number of clerks and typists could be reduced, thus effecting a saving. When my right hon. Friend makes speeches about the need for automation in industry, may I suggest that he turns his attention to offices and the distribution side, where a very large number of people are employed? No one seems to bother much about how they are employed or whether their jobs are really vital or necessary.

In the distribution trade we are moving towards the era of supermarkets where people helpthemselves and where there are fewer assistants in the shops. As a whole, we in this country still like a great deal of service from people in shops or by way of delivery of the goods we buy. I am horrified at the number of shopkeepers who are still prepared to deliver goods such as bread, milk, groceries and greengrocery.

I cannot think that this is other than wasteful.] look forward to the time when we will not need a daily delivery of milk. I must admit, however, that if I say this in my constituency I am almost howled down. Then I tell them that I live in a small flat in London and that I buy a pint of milk on Monday and put it in the refrigerator. It keeps perfectly all right and lasts me for the four breakfasts that I am here for in London in the week.

It must be extravagant to have a daily delivery of milk all over the country as we do now. Could it be cut down, perhaps, to a delivery on alternate days? The refrigerator is not, I think, a luxury any longer, and I hope that we shall very soon, with the great expansion of electricity supply, have a situation in which there will be a refrigerator in every house.

I am using the example of milk deliveries to illustrate what I mean. If we could cut down the number of such deliveries, the price of milk could either go up to the producer—which my farmers would like very much—or it could go down for the consumer. Although the cost of living has recently been fairly stable, it does, inevitably, keep rising over the years. Here, on the distribution side, a great deal more could be done to reduce costs and reduce our use of manpower and womanpower. There are too many people engaged in chasing about after orders and delivering goods. I suggest this as a field of research for one section of my right hon. Friend's-Department.

These few remarks have been rather disjointed. I was not really expecting to make a speech at this stage, and I have given examples from my personal experience. It is a good thing sometimes to speak a little unexpectedly—perhaps one's friends ask one to come in and speak—and, by using illustrations taken from personal experience, one can, I think, touch on matters which are of more importance to the ordinary person than one does sometimes in preparing a long thesis which one may or may not, in the end, be able to deliver.

The export market is vital to us because all our social prosperity depends on our ability to sell. I congratulate the Government on the increased amount of sales for which they have been responsible. I congratulate those who run our factories, the men who work in them and the salesmen who go abroad to get our goods sold. On their work, and on their work alone, we depend for the expansion of all our social services.

I wish my right hon. Friend very well in the great responsibilities he now has not only for Scotland and the North-East, which are so important, but, as he has rightly said, for the whole of the country, places such as East Anglia and the farming districts just as much as anywhere else. The farming community, which is now employing less labour on the land but with greater productivity, is saving us a great deal in our balance of payments, and doing as much to help our country's economy as is industry generally.

7.13 p.m.

Photo of Mr Edward Milne Mr Edward Milne , Blyth

The hon. and gallant Member for Eye (Sir H. Harrison) will understand if I do not follow him very closely, although when he wandered into the realm of the distributive trades I was much tempted to do so. His economies in the use of milk at his London flat may be highly commendable in some circumstances, but I assure him that there are still very many old-age pensioners, whose welfare is not referred to in the Gracious Speech, for whom the price of a refrigerator would be an impossible burden. Already, of course, great strides in the use of automation and the acceleration of deliveries have been made in the distributive trades.

I wish to dwell on some of the problems of my own area to which reference is made not only in the Gracious Speech but in the White Papers on the North-East and Scotland which have been published today. Our debate on the Gracious Speech has already been referred to as the grand inquest of the nation. It is instructive to go back over the past 12 years and read extracts from previous Gracious Speeches, linking them with what was contained in the Speech delivered last Tuesday.

In last year's Gracious Speech, we were told: My Ministers will continue to promote efficient and sound expansion of the national economy, with a high and stable level of employment. In 1963, we have similar words: My Ministers are determined to maintain the expansion of the economy in all parts of the country based on a high and stable level of employment. With the comparison between those two Gracious Speeches in mind, I ask the House to consider what has been happening in one area where a high and stable level of employment was promised. I shall not, on this occasion, deal with unemployment among adults, save to say that, although it has been argued that the situation has improved, our unemployment figures in the North-East for this month as compared with last are considerably worse than they were at this time a year ago. I shall concentrate on the tragic situation of school leavers.

To refer to my own constituency first, in mid-October, 1962, we had 83 school leavers registered as unemployed. The figure is now 119, and six of them have been unemployed since Christmas last. In the North-East as a whole, at mid-October, 1961, there were 482 school leavers unemployed. By mid-October, 1962, the number had risen to 2,197, and on 14th October this year, when the White Paper on the North-East was almost certainly in the hands of the printers, the total for youth unemployment in the North-East had risen to 2,575.

If this were merely a case of deterioration in the situation just before the appointment of the Lord President of the Council as the "overlord"of the area, one might have excused the Government for having allowed things to slip before they could bring about an improvement. But we have had surveys of the North-East before. As far back as 1936, the Northern Industrial Group made a survey of our industrial facilities. A further survey was made in 1941, and another survey was made in 1949. We have had 12 years of Conservative Government since 1951, and there has been a rapid deterioration in the employment situation in the North-East, particularly since 1957.

The proposals in the White Paper issued today are no more than a follow-up of what we have already been promised. Previous legislation has been quite inadequate to deal with the problem. We are given all the platitudes about the way in which the problem has arisen. We are told about how the older industries are in decline. We are told of the number employed in coal mining as a percentage of total employed in the North-East as compared with the percentage in the rest of the country.

These are not facts which the Government could have discovered only 12 or six months ago. These things have been happening over the years, and intelligent observers should have been able to anticipate the trend and act accordingly. However, taking the White Paper as a whole, we are told that this is the solution to our problems.

I notice that the Prime Minister has returned to his place on the Front Bench. We are very glad to see him. May I therefore ask him whether the Government are convinced that unemployment will be halted and reduced by the policy outlined in the new White Paper? Will it halt pit closures in Northumberland until alternative employment is provided for the men to be displaced?

We are told that we are to have a modern transport system. Another section of the White Paper deals with this matter. Apparently, a modern transport system is to be provided "by all appropriate means", and then the White Paper goes on to outline some of those means. We see the new roads pattern in the opening of the Tyne tunnel. However, this does not go far enough because if we have expansion in the area it will create other bottlenecks.

My hon. Friends from Scotland will be dealing with the White Paper on Scotland, but I should like to make this comment in passing. Unless a modern road transport system links the north-east of England with the major cities of Scotland, we shall run into even greater difficulties than those we are trying so solve. We urge that a dual carriageway linking Newcastle and its environs with the Forth and Clyde area is absolutely imperative at the earliest possible moment, because it is obvious from the reports that we have had and the examinations which have been made that it is in these areas that the new industrial revolution will be hammered out in the 1960s, 1970s and 1980s. However, a modern transport system means not only new roads but making the best use of the existing methods at our disposal. We talk about modern roadways, yet the centres of our cities are congested by an increasing flow of traffic into them. My constituency is faced with the closure of its railway line which gives access not only to Newcastle but to other parts of the North-East. It links with the main line expresses from Newcastle to London and Newcastle to Edinburgh. This link is very important to areas little removed from the centres of population.

When a modern transport system is being considered, can some thought be given to a realistic fares policy for the railways? We often get the impression that the fares policy is designed to drive people off the railways rather than on to them. May I take, for example, the service between Scotland and Newcastle? During the weekend one can travel from Glasgow to Newcastle for £3, but if one boards the same train 50 miles further on, at Edinburgh, one is charged £3 2s. 6d. I can travel from Newcastle to Edinburgh at the weekend for about 50s., but if I want to go from Edinburgh to Newcastle the railways charge me £3 2s. 6d. Surely matters like this need examination.

I know that it is very dangerous to mention this sort of thing because the other week the people in a certain area in Britain were complaining about the rail fares. They were told that, because they had complained, instead of the fare being reduced to the lower level, they were in danger of having the fare increased.

A modern transport system also means the fullest use being made of our docks and harbours. We welcome the reference in the Gracious Speech to the implementation of the Rochdale Report. The port of Blyth is one of the largest, if not the largest, coal exporting ports in Europe. It ranks very close to Newcastle. On occasions it has surpassed Newcastle in the export of coal. The proverb refers to taking coals to Newcastle. In view of the total annual tonnage exported from our port, it is now a question of taking coals to Blyth. It is one of the most adaptable ports in Britain and is sited close to the new town of Cramlington, one of the growth points to which reference is made in the White Paper issued this afternoon.

May I touch on one other aspect of policy to which, I regret, there is no reference in the Gracious Speech. There is no mention of a fuel policy. Everyone agrees that there will be a tremendous increase in world demand for energy in the next 20 years. It will be necessary for all countries, including our own, to tap all sources of energy supply. Oil will possibly become harder to obtain and it may even become dearer. As has been mentioned in some of the European reports and reports about our own coal resources, countries with coal resources will count their blessings in the years ahead. This is why consideration of some sort of integrated fuel policy is urgently required. There is need to plan the fuel and power needs of the country for many years ahead. Now that the Minister of Power is in the Cabinet I hope that this will be done at the earliest possible moment. A closer link between the National Coal Board, the Gas and Electricity Councils and the Atomic Energy Authority is needed.

I do not want to take up too much time by going into the details of the Gracious Speech, but I recall that when I entered this House less than three years ago, in my maiden speech I had the temerity to ask the Government to tackle the immense problems which have been presented by the challenge of a new age. I pointed out that in tackling them they may have to turn their backs on some of their traditional policies, but turn their backs on them they must if we are to check the unhappy decay in our industrial areas. Many of the measures in the Gracious Speech have been repeated too often over the last twelve years for us to take any real notice of them or to attach any real importance to the legislation envisaged. A Government that could not act for the betterment of Britain in the last twelve years is not likely to act effectively in the few remaining months at their disposal.

7.30 p.m.

Photo of Commander Sir Douglas Marshall Commander Sir Douglas Marshall , Bodmin

Originally, I had no intention of taking part in this debate, primarily because nowadays—I think rightly—we make certain days available on which we dis- cuss specific subjects. Consequently, there is not much time to apply one's mind and thinking to many other matters which are contained in the Gracious Speech.

I hope that the hon. Member for Blyth (Mr. Milne) will forgive me if I do not follow him fully in the different matters which he has discussed concerning Scotland, because, although I have always had a great affection for that country, my mother being a Scot, I do not have the same knowledge as hon. Members who represent Scottish constituencies. I was, however, interested in twoof the points made by the hon. Member. The second was his picture of the last 12 years as if today, if anything, we were in a worse position than 12 years ago. That is a most astounding statement, especially to anyone who has had the opportunity of travelling thousands of miles abroad, which is quite good for one, because it enables one to look back into one's country and see the enormous progress which has been made here during that time. Apart from everything else, one considers the position of sterling and how it is buttressed. I am certain that in this respect the right hon. Member for Battersea, North (Mr. Jay) shares my view. This is a considerable advance over 12 years ago.

It is true that it is impossible to include everything in the Speech from the Throne, and the hon. Member for Blyth referred to the question of a fuel policy. I share the anxiety which he expressed. With the ever-increasing demand for power as countries in every direction raise their standard of living, the possible shortage of oil and the like is something of which we must take good notice. I ask my right hon. Friends on the Front Bench to apply their thinking between now and the Budget to the question of both petrol and diesel fuel, because I am given to understand that the shortage which is arising is in diesel fuel and not in petrol, due to the present rate at which oil is used in this country.

I was rather surprised that my right hon. Friend the Secretary of State for Industry and Trade appeared to be extremely modest in his approach and in answer to a question from an hon. Member opposite concerning the employment position in the South-West, because it was only a short time ago that he received a large deputation from that area. He spent a considerable time listening to the different points made by the delegation and promised that after about three months, when the Board of Trade would have had time to study the problem, he would send for them again and be delighted to discuss the matter further and see how the problem could be dealt with. That is the position at the moment in the South-West. All those who went to see my right hon. Friend were extremely pleased with their reception and look forward to him once more making himself available in the coming months to see what can be done concerning this problem.

The situation in the South-West is a difficult one and varies considerably according to the area concerned. It is not exactly of the same shape as the problem of central Scotland and northeast England, around which the major part of this debate has hinged. On the other hand, there is a likeness between great areas of Scotland and great areas of the South-West. They both have features of exceptional beauty, which no one at any time would deny, and this naturally brings a tourist trade to these areas.

The tourist trade demands certain features which are quite different to other forms of invisible export earnings and physical earnings in the way of production. The season does not cover the full 12 months of the year and although people are employed and have to be drawn upon for long periods of time, they cannot be employed permanently in the same occupation.

Again, there is a sincere desire among those who live in that type of area not to see their young people constantly going away to earn their living elsewhere. It is extremely easy to argue that all the distances in our country are small in comparison to those in the United States of America, Canada or elsewhere. Nevertheless, we do not want one particular area always to be getting a smaller population and, at the same time, to have the age of those who remain always increasing. Consequently there is a need, which is recognised by the Board of Trade—and this was why my right hon. Friend saw the delegation—for light industries to come into that type of area. It is only natural that I should be thinking very much of the area of Cornwall within the South-West, representing as I do one of the constituencies of Cornwall.

Another feature on which, I believe, my views are shared by a great number of people concerns higher education in Cornwall. We have adequate locations which could quickly be made use of for a university. I trust that when considering the implications of the Robbins Report, my right hon. Friend the Minister of Education and his right hon. Friend the Lord President will remember not only that we desire to have a university but that because of the pattern of Cornwall and the fact that so many people come in or go out at so many times, a site could rapidly be made available to house a university population. Some people may argue that it is out of place to discuss such a project for an area with a population of only about 300,000. It must, however, be realised that universities do not draw their people merely from their own area. Consequently, that is not an overwhelming argument against my suggestion.

My right hon. Friend the Secretary of State for Industry and Trade said this afternoon that money would be made available for the North-East Coast and central Scotland to advertise the advantages of erecting factories in those areas. I am rather hoping that when he applies his mind to the South-West, as he is going to do, he will also consider this point as well. After all, it was a Conservative Government which allowed the Tamar Bridge to be built, and the Tamar Bridge does mean that there is a connection between England and Cornwall which is extremely useful for the transport of goods.

Mr. A. Bourne-Arfon:

Built by a Darlington firm.

Photo of Commander Sir Douglas Marshall Commander Sir Douglas Marshall , Bodmin

That is splendid. We always feel that the English are first class at building and only too glad to register the fact.

These are the major points with regard to the question of unemployment in Cornwall, but at the same time I should just like to mention one or two other things. In the Budget of this year the Chancellor of the Exchequer, for the first time in the nearly 19 years I have been in this House, introduced legislation which was of real help to tin mining in Cornwall. This has been a considerable help and will be of considerable help, but I want to make this point as well.

It is helpful in this direction—where the operation of the mining in tin lies in the development area in Cornwall, but, of course, tin does not necessarily stick to a development area, and consequently it is essential for my right hon. Friend to apply his mind to seeing whether in the next Finance Bill there will be any opportunity of extending this facility for the search for minerals in this country, for metalliferous mining. As I have often said in this House, there were some measures which hon. Friends of mine and I put forward in 1945 and 1946 and which have been adopted in the United States, in Australia, in Canada, even in Eire, and it is sometimes a slightly mournful reflection that though we have certainly got a bite of the cherry, for which we are grateful, we have not got exactly all that we want.

Then again, in the Gracious Speech there is reference made to the discussions going on between the Minister of Agriculture and the N.F.U. and to the thinking of how to prevent imports from undermining the market. This is an extremely good thing because the type of area to which I have been referring is naturally primarily an agricultural area and therefore farming is its primary source of income. Also we have our fishing, and fishing is mentioned in the Gracious Speech. We know that certain matters are to come before the House for the protection of the horticultural industry, and this indeed gives me very great hope, because anyone who has anything to do with horticulture knows perfectly well two things, firstly, that some of the finest types of men are engaged in this industry, and, secondly, that it consists of a great number of what now are generally termed "small" people. Thirdly, they have had for a very considerable time a very tough time from time to time and, of course, there was very great anxiety during the period of the discussions on the Common Market as to what their future would be. I must say I feel relieved that that particular position has been removed. So altogether I should like to say that it seems to me that there is considerable matter contained within Her Majesty's Gracious Speech and that it is going to be of considerable benefit to this country of ours. It has been argued, quite naturally, by Her Majesty's Opposition—one finds this rather a strange argument to come from them—that this is an impossible programme to carry out. I have always felt that they are rather depressing about the future. I have always believed in my heart that an expansionist programme in this country of ours is possible and can be done, but it is no good suggesting that an expansionist programme can be carried out unless we prepare the ground to make that programme possible, unless we have our reserves to make our sterling effective against the whims and fancies of the outside world. Altogether, I have great hopes for the future of this country's carrying out the programme which has been, to my mind, so simply given at the Box by the Prime Minister.

7.46 p.m.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

It is a great pleasure to follow the hon. Member for Bodmin (Sir Douglas Marshall), because I think he has brought out the failure in the thinking of the Government in the two important statements which have been published today, and that is that they have been prepared in a regional framework and not in a national framework of planning. The hon. Member made important and telling points about his constituency. Would it not be a great deal better if each year this House were presented with reports, on the pattern, perhaps, of these, but covering every region in the country, and not only putting plans, but also measuring performance in the regions, measuring it against the targets set.

Photo of Commander Sir Douglas Marshall Commander Sir Douglas Marshall , Bodmin

Maybe I have misunderstood the point, but I rather understood from my right hon. Friend's speech that this was in fact his intention and that he had begun with these two regions.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

Let us hope that that interpretation proves to be correct.

I think that the report about the North-East will be received with quite genuine disappointment in the area. I say this from the simplest human feelings of the unemployed people in the North-East. It had been built up as bringing a prospect of jobs, as bringing a prospect of brighter times round the corner. I know the Government will say that it is a long-term view they have put in the document, but though it may not have been their intention to deceive the people of the North-East—and I do not think for one moment that it was—there will nevertheless be that sharp feeling of frustration in many homes in the North-East tonight.

It is a long-term programme; I accept that; but even in this respect it has the very great weakness which was pointed out by my hon. Friend the Member for Lanark (Mrs. Hart), and that is that it sets no targets. If we do not have a target, we always give only so much effort; but if we set ourselves a target, then, as we find greater difficulties in achieving it, so we put greater resources, new methods, new techniques, new ideas, new principles, new analyses, into the achievement of the target we have set ourselves. These are two quite different approaches. And this one by the Government, as is described somewhere in this document, is not to make a projection, still less proposals, but merely to adumbrate; that is, the contrast is between this approach and the challenge we put to the Lord President of the Council to reduce the level of unemployment in the North-East to the national average within a stated time. The party opposite accepted this challenge on housing. There must be some principle which prevents that party from accepting it on employment.

Accepting that this White Paper was no more than a long-term programme, accepting that it had not set itself targets, one would have hoped that it would have been at least an up-to-date report of the Government's plans. Yet there is no mention of Newsom in this Report. There is no mention of Robbins, and there is no consideration of the Industrial Training Bill. The basic facts of Newsom have been available in the Ministry of Education's published statistics for some years now, relating, for example, to the average age of school-leaving in the North-East. Also information is available, although not published, relating to the turnover of teachers in the North-East in comparison with other parts of the country. Had these been considered the slightly complacent paragraph dealing with schools merely in terms of building would not have appeared in this Report.

On Robbins, I cannot understand why the Scottish Report, Cmnd No. 2188, should contain references to the Robbins Report, whereas the North-East Report, Cmnd. No. 2206, the later one, does not contain any reference to the Robbins Report at all. I take it that this has something to do with the distractions between the completion of this Report and its publication and that in fact the arguments and implications of the Robbins Report for the North-East have yet to be considered.

The Report no more than refers to the existence of the Industrial Training Bill. It says that it holds out great hopes for the development of training in the country, but an examination of the Bill shows that it has no conception of the regional dimension, of regional economic problems at all. There is only one Clause which even vaguely could be interpreted as referring to the regional problem, and that states: The facilities for further education that may be provided by a local authority shall be deemed to include and always to have included facilities for vocational and industrial training. Otherwise, there is no mention of any local consideration at all in the planning of industrial training.

Industrial training boards, by their nature, are national boards, covering the whole of the industry of the country. Where the industry is localised, for example, the cotton industry, no doubt the board will have a local point of view, and, indeed, provision is made for this in the Bill. But where we have an industry, the obvious example is engineering, which covers the whole country, there is no provision in the Bill and no consideration in the Report of the North-East about what special measures may be needed to provide the skilled manpower for the new industries which we hope to bring into the area. There is reference to the North-East Training Council, but I think that the Minister of Labour does not need to be reminded of the arguments which we have had about the effectiveness and adequacy of this in recent months while unemployment among young people has reached the dizzy heights that it has today. What does this Report do? For the North-East, it interprets the concept of the growth area as one spanning the greater part of the area in which the population of the North-East live. Into this growth area, it brings two broad kinds of opportunity. The first is a measure of priority in public investment. It is very difficult to see just how this would work out. But I accept that we have to wait and see how this does work out in the approval of schemes for public expenditure in the area. It is not evident in the Report as it now stands that any greater priority has been given to expenditure in this area than would have been warranted apart from the concept of the growth area altogether. This does not seem to me to be a new provision.

The other aspect of the growth area is that it makes a whole area in the North-East sink or swim together. In other words, if one area is able to reduce its level of unemployment but the area next door is not able to do so and still has a high level of unemployment, then the lucky area is not de-scheduled. It can continue to attract new industry and workers from the neighbouring area. This is sensible—it is an advance, and I certainly welcome it. But it depends on the interpretation of the sentence in the White Paper that the growth area will not be removed from the provision of the Local Employment Act "in the absence of strong evidence of a general and sustained improvement in employment in the region as a whole."

What is this "strong evidence" of sustained improvement in employment? That is what we have had in the North-East, I suspect, in the eyes of the Government from the war up till about 1959 when our troubles in the North-East began. The reason for the apparently high level of economic activity in the North-East then was a very large construction programme, largely in industry, but also in social investment of some kinds like housing. When this fell off after 1959, all the resources employed, both in the construction industry in the North-East and in heavy steel fabrication for other parts of the country, were knocked on the head, and we were in the difficulty that we are in today. me government nave sought a way out of the difficulties in the North-East, very rightly in my view, by undertaking a large-scale construction programme. We shall have a great deal of our resources tied up in construction in the North-East for the next few years. I do not think that it will overload the industry by any means, but we shall get into the position eventually of having our level of unemployment reduced by construction which will lead, under the apparent interpretation of this vital sentence, to the descheduling of the whole growth area, which will in turn cause a drop in the level of construction, and we shall have unemployment back again.

Construction has to be done, but there has to be a phasing into new types of employment and of industrial activity which, if we do not begin to plan now, we shall not be able to plan when it comes to the tailing off of any construction programme on roads and so on. There is need for more thinking ahead about the longer term pattern of employment than we have in this Report, and it should be done now.

The Report contains one new announcement about roads affecting the southern part of the area, and this is very welcome, although we have expected it. The Report about Middlesbrough being the first area for consideration under the new Crowther Report and other reports on road traffic makes me a little uneasy, because this survey of traffic on Tees-side has been going on for some months, and if it is merely old wine in old wineskins that we are to get from the new road reports, they will not cope with the traffic situation of the country as it needs coping with today.

To return to this Report, it is an interesting document certainly, but it has the stamp of having been written in Whitehall by the technique of writing round to the Ministries and saying, "Dear Joe, What are you doing about the North-East?" and taking out paragraphs from different Ministry documents and putting them together. Obviously a fairly dusty reply came from the Ministry of Health— "We will get on with our job; do not bother us". The Ministry of Education has just lifted the appropriate part from its programme. Integration has not been carried out to the extent that we would have hoped.

I know that the introduction of a regional development group is a new effort in Whitehall and that it has stimulated and excited those engaged in it, but it needs to be carried a great deal further if it is really to get down to a regional point of view. I suggest that the Report—I hope it will become an Annual Report—should be written in Newcastle, in the new regional office of Government and from the point of view of the North-East itself.

There is a difference between the Scottish Report and the North-Eastern Report in this respect. Why should the Scottish Report rank an index and the North-East Report not? Why should the Scottish Report be conceived more as a single whole and the North-East Report more as a collection of snippets? Perhaps we have something to learn from the pioneering of the regional administration which has gone on in Scotland.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

My hon. Friend will, I am sure, recognise that the Scottish report is a very thin one. He need not cast any envious eyes towards Scotland.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

I hope that my hon. Friend will later develop that point more fully.

What should the Report have said? All it has done is to collect the proposals that the Government have made over the last few months and conduct a review, which is useful, but it does not meet the fundamental need of the situation, which is to provide work. How should this need have been met? There are three instruments for conducting a regional economic policy, and these have been used to various extents by the Government. The first is the provision of capital, the second is the provision of training of manpower, and the third is the provision of markets for industries in the region or setting up in the region which need them.

First, the provision of capital has been carried under the Local Employment Act just about as far as the Government can go, short of setting up public enterprises. If we now provide 25 per cent., it will not be long before we are up to a controlling interest in the firm. The Conservative Party has objections to going higher. We on this side of the House have not. That logical step on to mixed enterprise and public enterprise must surely come before we are able really to hold out the certainty, as we surely can, of full employment in those areas, quickly and permanently.

Secondly, the broad technique of providing manpower training is vitally necessary, but it is not enough. In, for instance, the building industry in the North-East there has been over the past year and is now no lack of skilled building craftsmen. We could have done more building than we have done. The trouble has been the lack of employment. In Northern Ireland there are highly skilled fitters and tool room men unemployed but no employers coming into the area to provide jobs for them. Therefore, training by itself is no sufficient to solve the regional problems.

As to the final point, the provision of markets must be something towards which Government thinking should turn now. This is accepted in principle already. The Government take pride in their shipbuilding scheme. I welcome very much the employment that this promises to bring to the North-East. But this conception of the provision of markets should not be made an emergency, fire brigade measure, which is bound to be inadequate. It should be taken systematically, looking at the area as a whole.

Why does the Report contain no consideration at all of actual types of firm and of production which might be established in the North-East? Even in the broadest terms, some consideration of this would have been helpful in guiding the thinking of not only the Board of Trade and of industrialists but also of local authorities as to whom they should approach, and also the local authorities themselves in considering what contracting procedures they should follow in the letting of the very major contracts which they are called upon to deal with.

I give the obvious example of prefabricated methods of building. As far as I know, the Government have given no consideration to the regional aspects of the problem. Clearly, the supply of labour, differing from one area to another, is highly relevant to the economics of conventional methods of building or more expensive prefabricated methods. There are areas, no doubt, such as Sheffield and Leeds, which can begin to tackle their housing problem only by prefabricated methods. Very well. In the North-East some authorities argue, understandably, that they do not see any difficulty in being able to meet their housing requirements by conventional methods within the sums which they can conceivably spend.

Surely it is up to the Minister of Public Building and Works to say, "Here is a clear location of industry problem. We will put the prefabricated building factories into the shipyards of Tees-side, Wearside and Tyneside and export to other parts of the country not only components for prefabricated buildings but also the vast range of equipment—plumbing, electrical goods and so on—which will have to come into the increased construction programme for the whole country in the years ahead".

I hope that this dimension of the provision of markets will be reviewed systematically by the Government on a regional basis by the time we are able to get a second round of reports, although one recognises that the Government will not be here to publish them, but they can at least start the good work and let the enthusiastic bunch of civil servants, who have done their best about this with inadequate terms of reference, get down to thinking of an industry-by-industry, product-by-product projection of demand and of employment in the region and look at the appropriate measures by which the Government can economically secure full employment at the earliest possible opportunity in the North-East, Scotland and Northern Ireland.

I am greatly disappointed that no hon. Members opposite have yet spoken about Northern Ireland. Perhaps they will do so. I propose to raise the subject on the Adjournment this evening, so I will not dwell on Northern Ireland at any greater length now.

8.8 p.m.

Photo of Mr Anthony Bourne-Arton Mr Anthony Bourne-Arton , Darlington

I apologise for not having been here at the beginning of the debate. I was prevented from being here by other Parliamentary duties, and so I apologise in advance in case anything I say has already been said.

I am particularly sorry that I did not hear the speech of my right hon. Friend the Secretary of State, but I should like to say how greatly I welcome the appointment and the choice of the right hon. Gentleman to fill it. I wish my right hon. Friend very well indeed.

The publication today of the document dealing with the North-East is most timely. Nothing has been waiting for its publication, but the time is now ripe for all of us in the region, and no doubt this applies also to those in other regions such as Scotland, to know what the thinking is for the longer-term development. Up to now nothing has been spoiling. We have with varying success in different parts made more or less good use of the tools which the Government have provided. In the North-East the sum total of the efforts of all of us has been that no less than £15 million of Government aid under the Local Employment Act has been offered and 17,000 new jobs thus created.

But it is an operation, as I have said previously, which cannot be undertaken by the Government alone. It is a matter of partnership, with Government assistance and direction, and a lead being given in the right place in the right way, and advantage being taken of all this by management, unions and local authorities. I want to say a little more about that later.

The hon. Member for Middlesbrough, West (Dr. Bray) says he believes that the region will find this White Paper deeply disappointing. He is entitled to make his forecast as I am entitled to make mine, but I believe that he will be proved wrong. I am not disappointed. One of the things I welcome most warmly in the approach of the White Paper is that it flatly contradicts the cry of "stinking fish" that we have heard too often in too many quarters—I am sorry to say, occasionally from the lips of hon. Members opposite.

That does not get any region anywhere. The White Paper, however, has got it right on the first page when it points out that the North-East is not a declining region but one which is transforming. It rightly accepts for the Government the duty to give special help in the adjustment which such a region must undertake in order to do two things—shorten the period of adjustment from one type of industry to another and ease the burdens and hardships which these periods of adjustment create.

It is because the White Paper is written in that spirit of denial—rightly so—that the North-East is declining and asserts what is true and plain to be seen by anyone travelling through the region—that it is transforming and adjusting itself to modern needs—that I believe that its approach is exactly right.

I do not know whether the hon. Member for Middlesbrough, West was disappointed by all the detailed provisions in the White Paper or even by the summary of them, but if he is disappointed—and he appeared to be less than enthusiastic about the provision for stop-listing—I am not. Those of us who have been able to travel around the country and study the working of the Local Employment Act know very well the difficulties and uncertainties which too-frequent changes in the designation of development districts entail. It is good and encouraging news, and will give confidence to industrial developers to know, that stop-listing will not come like a bolt from the blue and that places will not be removed from the list of development districts unless there is strong evidence of sustained improvement. I welcome that.

I for one am not disappointed with the undertaking to improve communications not only within the region but between the region and other parts of the country and, indeed, between the region, I would add, and other parts of the world. For that reason, I most warmly welcome the encouragement given to the strong activity which Darlington and other local authorities are making for the acquisition and development of the Royal Air Force station at Middleton St. George as an international airport. It is perfectly sited for the purpose. It already has runways of sufficient length. It is within three miles of Darlington, which has magnificent rail and road communications, and I can assure my right hon. Friend that when the White Paper talks about consideration by local authorities he will certainly have the wholehearted and enthusiastic co-operation of Darlington in that development.

Whatever the views of the hon. Member for Middlesbrough, West may be, I am not disappointed in the proposal for a very substantial enlargement of the new town of Aycliffe. I have several reasons for being delighted that it finds a place in the White Paper. The Town and Country Planning Association drew up a report on the North-East which we published in the spring when we strongly advocated this development. I have interesting good fortune to serve on the executive of the Association and had something to do with the preparation of the report, and I am delighted that the Government have agreed with it.

There is no competition here between my constituency interest six miles away and the development of Aycliffe. There is no jealousy between new and old. We have always approached this problem from the point of view that we were interested in the region. We were very strongly and deeply interested in southwest Durham and were, of course, overridingly interested in everything that went on within the borough boundary. But I am sure that it is right that Aycliffe should grow and certainly it will have all the assistance that Darlington can give it in its growth.

I am not disappointed that emphasis—and more emphasis even than before—is to be laid on the clearing of derelict sites. Of course it is right and proper, and all the most sensible local authorities have been doing it with Government encouragement for many months, even years, past. It not only stimulates industrial activity in the region but makes it the more apparent that the region is really a delightful place in which to work and live. I am not disappointed about that.

Neither am I disappointed in the proposals for industrial training both for school leavers and adults. Of course it is an essential part of the business facing a region which is not declining but transforming and readjusting.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

Would the hon. Gentleman consider the question of the scale of retraining? Is it really good enough to have retraining places totalling perhaps 100 in the whole of the southern part of the area when there are tens of thousands of unemployed there?

Mr. Boume-Arton:

Of course not. That is why I welcome the avowed intention to develop it very greatly over a considerable number of years. This is not transitory but something with which we are going to live for the rest of our lives, all being well.

Photo of Mr Anthony Bourne-Arton Mr Anthony Bourne-Arton , Darlington

No. The change of employment from one craft and trade to another. All being well, the boy entering into apprenticeship now is likely to change to another craft at least once during his working life. All being well, that will be the pattern.

This is where I would join issue with something said by the hon. Member for Blyth (Mr. Milne) who spoke about halting the closure of pits. To talk about halting the closures of pits or factories which can no longer earn their way totally misconceives the problem. This is not a halting operation that the Government are undertaking but an operation of conversion, and this I think is the difference at least between the hon. Member for Blyth and myself.

Another provision which causes me no disappointment at all is for the stimulation of productivity. I am not at all disappointed that in January there is to be a conference to speed up housing in the region. I am not disappointed about the encouragement of tourist facilities. It is about time that somebody realised that this is a place with enormous tourist attractions.

Nor am I disappointed to learn—I am sorry to say at second hand from my hon. Friend the Member for Bodmin (Sir Douglas Marshall)—that this afternoon my right hon. Friend talked about making money available to enable local authorities to advertise their wares. I do not know if my hon. Friend the Economic Secretary is wincing at that. I can reassure him and say that he need not bother about us. We did this out of our own pockets nine months ago, with enormous success. I can tell local authorities that if they advertise their wares rightly and have good wares to advertise, they will not find a better way in which to spend their ratepayers' money. I recommend them not to wait too long for money from the Treasury but to go ahead as we did. It pays very well.

Nor am I disappointed with the Government's statement that they will offer further financial assistance to the North-East Development Council. Under the inspired directorship of our late colleague, George Chetwynd, that Council has done a magnificent job, and I am not surprised or disappointed that he and his Council are to be further assisted.

Altogether, I welcome this document very much and so I think will those who sent me here. I have said before—I emphasise it, for it is vitally important, although not universally appreciated—that whatever this or any Government do in special areas with special problems of conversion, Governments by themselves cannot do it—and I do not care what party it is. It has to be a combined operation and has to be a partnership of Government and industry, both sides of industry. Industry has great difficulties to face, particularly with many historical prejudices on the union side to overcome. But it has to be not only Government and industry but, above all, the local authorities.

I am naturally prejudiced, but I think that my own local authority has set a fine example. I do not know that it would pay us for too many people too soon to copy our example. Perhaps there is still a certain element of competition in this district. That is why I welcome the concept and the assertion that the region is to be treated as a whole. In Darlington we have always advocated this, but that has not prevented us from setting out our stall, and we are half-way to having a greatsuccess story to tell.

We could not have done this without Government assistance. Nor would it have happened if the Government assistance had not been seized and applied with enormous energy and a good deal of courage and risk-taking with ratepayers' money and a good deal of expert business knowledge. I pay tribute to that council which is not at the moment, although it was only recently, controlled by the party to which I belong, and to its devoted officers. Finally, it would be ungrateful of me not to say that throughout these difficult and testing last few years in the North-East the whole region has been most admirably served by local officers of Government Ministries. It would be invidious to name any, but the skill and devotion and tireless pursuit of opportunity which those officers have shown makes me welcome the proposal that they should all now be housed in the same building in Newcastle where their zeal and enterprise can be cross-fertilised and where co-ordination will be even better.

This is a splendid Report. I apologise for talking entirely about the North-East and this document, but for an hon. Member from the North-East the mind can clearly have nothing else in it today.

8.25 p.m.

Photo of Mr John McCann Mr John McCann , Rochdale

I can imagine why the hon. Member for Darlington (Mr. Bourne-Arton) finds no fault with this White Paper, and why he is pleased. It appears that something is to be done for the area he represents. He tends to use modern nomenclature. "Slums" have become "areas of transformation". I can imagine with what glee the unemployed in the area will be waiting to see the magic wand of the Treasury complete the transformation scene.

I do not have such a welcome to offer the Gracious Speech, because nothing is being done for an area which will decline if nothing is done for it, the North-West. Today, the Secretary of State for Industry and Trade talked of modernisation as though it were a panacea for all our problems, as though industry had only to modernise and we would be "on our way". He argued that it was not the Government's job to tell industry what to do. I contend that it is the Government's job to create a climate in which industry will know what to do.

This has not been done for Lancashire and certainly not for the textile industry, which was once that county's mainstay. I will not weary the House with a recital of the troubles of that industry, because so much has been said about them, but the main trouble is not mentioned in the Gracious Speech. One sentence in the Gracious Speech leads me to expect that another industry may be facing the same danger. That is agriculture.

The Gracious Speech says that the Government will limit imports to prevent the undermining of the market. Some of us remember the wind of change speech by the right hon. Member for Bromley (Mr. H. Macmillan), when he implied that the Government were to limit textile imports to about the 1959 level, The same promise may be made for agriculture, but it has not been kept for textiles, where imports are now running at 54 million sq. yards above the 1959 figure. Some of us have been worried about imports from the Commonwealth. I remind the House that Lancashire is also in the Commonwealth and should be remembered when these things are being considered.

In addition, imports from the Commonwealth were being increased by imports from non-Commonwealth sources; from Eire, Italy, Portugal—with whom I am pleased to see that an agreement has almost been signed—and Spain. These imports amount to 40 per cent, of our domestic market, and they create tremendous trouble. Yarns imported from Portugal have increased by thirty times and cloth by 250 times since 1957. Many promises have been made but nothing has been done.

I want to set down briefly what the industry wants, and what it expects to see when a report for the North-West is produced. I hope that a Labour Government in the next Gracious Speech will try to do something about this, if it is not to late. We need a downward revision of existing quotas and the cancellation of the clause dealing with unused balances, because there is no confidence in an industry which has spent £8 million in modernising and which is now being priced out of existence because of the effect of unused balances. We want the implementation of the destruction clause in the G.A.T.T. long-term agreement, to deal mainly with imports from the E.F.T.A. countries and Portugal.

We want Government support for the conference now going on concerning categorisation. There is a danger that concentration on one type of import will ruin a section of the industry. We could be picked off piece by piece, until we had no industry left. We want the Commonwealth content qualification raised from 25 per cent, to at least 50 per cent., to give us an honest appraisal of what the goods contain, and we want concessions in the Ottawa Agreement. When the Ottawa Agreement was signed world conditions were far different than they are today. In the changing world of today we are faced with competition that we did not face in 1922. The cost of these concessions to the Commonwealth countries should be progressively reduced to bring them into line with present-day conditions.

We ask that anti-dumping legislation should be strengthened and pursued with greater vigour, because there is quite a lot going on in Commonwealth countries. A mill owner recently showed me a circular from India which promised Indian mills fixed rebates with different percentages for breaking into different markets. We have presented the Board of Trade with concrete evidence, but it has taken it so long to act upon it that the market has been virtually destroyed.

The 1960 agreement with Hong Kong, Pakistan and India runs out in 1965, and we are hoping that something will be done about this flow of goods, because the contraction in our industry has been catastrophic. Whereas, in 1951, it had nine-tenths of the home market and employed 313,000 men, today it has fewer than 159,000 men, and it has only two-thirds of the home market. This is the problem facing the industry today. We have a good case against other advanced countries who fail to take their share of low-cost imports. We cannot do that by legislation; it can be done only by way of appeal.

When America agrees to increase her average by 88 per cent, it seems a magnificent gesture, until we remember that she is taking only 2 per cent, of the home market, and that this increase will raise it to only just over 35 per cent. It is happening in the Common Market. Not one of those countries is taking 4 per cent, of the domestic market, whereas we are facing a heavy burden with 40 per cent. A local industrial correspondent recently made a significant remark about the Common Market. He said that textile managements on the Continent had more influence with their Governments than the textile managements and owners here have with our

Government. Some of us feel that the Government believe that the industry is expendable.

There is some recognition of our problem in the 1962 long-term G.A.T.T. agreement. In its reference to extending trade with the low-cost countries it exempted Britain. I ask the President of the Board of Trade whether it would not be possible, in the light of existing circumstances, to recall the G.A.T.T. Convention so that we can have another look at the 1962 long-term agreement. I believe that cotton has a tremendous part to play in the reviving industry of this country.

I want briefly to make four main points. First, we should ensure that other countries take a fair share of these low-cost imports, in order to give us some security and confidence in the future. Let us reopen the G.A.T.T. negotiations, and ask for a liberalisation of the 1962 Agreement to this end.

Secondly, let us appoint a cotton commission to regulate imports, and let it be staffed by the Board of Trade, the trade unions and the industry. Reverting to what the hon. Member for Darlington said, I have recently spoken to trade unionists and mill owners and I can state definitely that there is a tremendous spirit of co-operation within the industry. There is money ready to be invested in it once the security of markets is there. I feel that the Government could give us this security.

Thirdly, we want more planning in the industry, because it is rather unwieldy. The industry is prepared to face a review on N.E.D.C. lines, possibly to give us a growth of 4 per cent, per annum, but we must fix this industry's place in our future economy.

Fourthly, we could extend the time for grants, provided that applicants undertake approved integration schemes in their mills. We need a guaranteed percentage of the home market to encourage investment and reorganisation at home. This would make the industry more competitive and enable it to compete more successfully in home and foreign markets. The industry is prepared to see whether we could do with fewer men and more spindles, even in its present diminished state.

But time is not on our side. Action needs to be taken quickly. It must be bold, imaginative and create once and for all the impression that our textile industry is worth saving. These are the minimum requirements for the survival of the industry and I would have liked to have seen in the Gracious Speech some mention of our difficulties in Lancashire.

8.36p.m.

Photo of Mr Joseph Hiley Mr Joseph Hiley , Pudsey

I was hoping that an hon. Member representing Lancashire—which, when all is said and done, is the second most important county in the country—would have shown a little more enterprise and individuality than is shown by some hon. Members representing other parts of the country. I have often claimed that in Yorkshire and Lancashire we were prepared to do something ourselves and not constantly implore the aid of the Government or any outside body. Until we can recreate the spirit of enterprise which built up the great cotton, wool and textile industries, we shall not make the progress we need to make.

The human problem of unemployment is a very real one. We often talk about it, but I feel that I have little to add today to what already has been said, except that wherever we face this problem we must do all we can to mitigate its evils. The social assets of those areas in which there is unemployment must be used and it is in recognition of this that the Government are doing what they can to ensure that in these regions the social services that exist are used and that unemployment does not spread to other areas. Everything must be done, but nothing will be achieved if we work on the principle of merely digging holes just to fill them up again.

Today and on many previous occasions I have listened to hon. Members speaking as if all that was required was someone to build a factory in a depressed area, put in an electric motor, switch it on and all would be well. I happen to be one of those whose job it is to find the orders for the goods produced in such factories and it is not as easy as some people seem to think it is. To be honest, I do not think it is quite as easy as even the Government seem to believe. There is far more to be done than merely erecting a building and switching on some motors. In my constituency we have no real problems of finding work for our school leavers or for anyone else. Why is it that we enjoy this situation in Pudsey, as do many other constituencies in Yorkshire and Lancashire? There are changes in demand for the goods we produce. There have always been these changes, but we have managed to cope with each situation as it has arisen. We have not gone pleading to the Government to be got out of our difficulties. Some hon. Members seem to think that they are martyrs because they have sometimes suffered from unemployment.

I remember the time when I, too, was unemployed, although I must hasten to explain that I was not unemployed in the usual way. In 1929, the time of the second Socialist Government, I was trying to run a little mill, but we could not keep it going. The place was shut down, and I was unemployed, along with the other 15 or 20 people who were on our books. I would like to keep quiet about that episode. I am ashamed of the time when I was unemployed. I felt that there was something lacking on my part that I should find myself in that position.

A lot of public money is going into the so-called development districts, and it has to be provided by those other industries that have so far been able to continue in business, expand, and produce the affluent society. If that money is to continue to pour into those districts, it must be made abundantly clear that those areas receiving it have to pull their weight. It would be wrong, it would be wicked, if those who had the advantage of this money were not to pull their weight.

As my hon. Friend the Member for Darlington (Mr. Bourne-Arton) said, Governments cannot do everything, so I urge those who are to receive the advantage of this public expenditure to pull their socks up. If they do not, then in fifteen or twenty years' time, they will be back where they are now.

8.41 p.m.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

I thought that I had heard a very long while ago the last of the kind of sentiments expressed by the hon. Member for Pudsey (Mr. Hiley), but here we see the modern Tory who cannot keep his mouth shut. The hon. Member implies that the unemployed are themselves blameworthy, that it is their fault. Indeed, he said it in so many words—

Photo of Mr Joseph Hiley Mr Joseph Hiley , Pudsey

I did mean to say that the old phrase that a man is unemployed through no fault of his own is never entirely and completely true.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

That confirms what I was saying, and I am glad that the hon. Member has underlined it.

I was also interested to hear him say that his constituency has no problems at all—it must be the only one in the whole of Britain. My constituency is almost wholly covered by this new plan for Scotland. The Prime Minister and his Government presume to think that they have an election rallying cry in modernisation but, as my right hon. Friend the Member for Belper (Mr. G. Brown) said yesterday, by definition, one cannot modernise unless things are currently out of date.

This cry of modernisation would be very attractive and powerful if the Government were just assuming power. It would be even more attractive if we had a completely new team to carry it out, but we have not got a new team. We still have the same old dog-eared pack that has not even been shuffled. We have two jokers put into it—the Prime Minister and the Leader of the House

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

It is a very good card.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

—but no one would pretend that the Government have a more progressive look or that they have been strengthened by the substitution of the right hon. Gentleman the current Prime Minister for the father of the young fellow who has a job on his father's retirement. Nor could the Government claim to be modernised by the substitution of the right hon. and learned Gentleman the current Leader of the House for the right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod) and now. I believe, the editor of the Spectator.

For the current Prime Minister to go on television and claim to be left of centre seems to me to be the biggest joke since he has taken office. Far from that, I would say that he is right of outside right. One has only to look at his record right from Munich to Kinross to see that. I spent some time in the by-election in Kinross. I think that every hon. Member on this side of the House ought to spend a fortnight as part of his education in that constituency. Even by feudal standards it is out-of-date. No wonder the Prime Minister wanted to get there. He could have chosen Luton, twenty miles from London, but, no, he got Kinross. He issued an election address. I do not know why. Even Mr. Profumo could have won Kinross.

In his election address the Prime Minister stated his beliefs. He should always remember that it is the Tory Party of which he is Prime Minister and not the Unionist Party. It is only the Unionist Party in Scotland. He said: … only the Unionist Party could build a humane and progressive society …". I recall my youth. I was born and bred in the North-East, which is material for one of the White Papers issued today, and I now represent a Scottish constituency which is mentioned in the other White Paper. I remember the mass unemployment, for which my father was not responsible in any way and for which many thousands of other men were not in any way responsible. I remember the mass poverty which we suffered at the hands of the Conservative Government at that time. One shudders when one reads these words about Toryism meaning a humane and progressive society.

The Prime Minister also went into his record at the Scottish Office. These are his words in his election address: As the first Minister of State for Scotland I had the task of co-ordinating every aspect of Scottish life and administration …". This was a vital job which he held for four years. Lots of other people have held the same jobs for many more years, and what have been the results in Scotland? The brutal fact is that from 1951 to 1962 the monthly average of unemployment in Scotland has gone up from 53,000 to 83,000, and the average for the first nine months of this year is 109,000.

The Prime Minister talks about expansion in his election address. My goodness, the industrial production record in Scotland is very much worse than the very poor record of the United Kingdom as a whole—up 13 per cent, in the last ten years, or less than 1½per cent, per year, the worst record in Europe if not in the world. Then we are told that the theme is expansion and modernisation.

The Chancellor of the Exchequer was making the same claims yesterday. He has been making them for twelve years as well Countless attempts—and he has been in on them—have been made to solve these Scottish problems, and each one has been proclaimed with sounding brass and trumpets and heaven knows what. The 1960 Employment Act was described by the present Lord Eccles as a revolutionary attempt … to tackle unemployment with the methods of mobile warfare. Since then we have had a team, or perhaps I should say a shower, of Tory revolutionaries tackling this problem. We have had the current Chancellor of the Exchequer, the new Minister for the North-East and Scotland and all the other places, the present Minister of Defence, the President of the Board of Trade, the late and current Secretary of State for Scotland and all the underlings. They have all come and all gone.

Meanwhile, unemployment has increased unremittingly. All these fellows have put forward their programme for the solution of our problems, and the situation has become steadily worse, because till the last six months of office the Government have never been convinced on regional planning within an overall national plan. They are converted to the national plan and they are gradually getting round to the regional planning aspect.

The Toothill Report recommended regional development policies two years ago. We on these benches did not agree with a lot that was in Toothill, but if the Government had accepted that recommendation at that time, with the same speed as they accepted Robbins, at least we would have avoided two years of stagnation in many parts of Scotland. They accepted Robbins within 24 hours—a commitment of £3,500 million within 24 hours. I was the Chairman of the Sub-Committee of the Estimates Committee that considered the working of the Local Employment Act. We submitted our Report in April. It is now November and we have not yet had a reply. Our recommendations would not have cost anything. Six months have gone by and we have not had a reply. Yet within 24 hours the Government commit themselves to an expenditure of £3,500 million on the universities.

Can this have anything to do with an election? Does anyone really believe that these White Papers and this promise would have come out had we not been in an election year? Does anyone believe that we would have had them if the Prime Minister was quite determined that he was not going down in history as a second-class caretaker in No. 10 Downing Street? It is very difficult for people to believe.

Photo of Mr Sydney Allen Mr Sydney Allen , Crewe

Does my hon. Friend appreciate that we have this situation in England and Scotland, in spite of the fact that for more than 50 out of 63 years of the present century the Conservatives have been in office?

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

We on these benches are aware of that fact and we need not labour the point.

I want to get on to another point which the Prime Minister made in his election address and which is now currently made by the rest of his Government. He talked of taking active steps to ensure that Scotland shares to the full in the rising prosperity and full employment …. His constituency in Kinross and West Perthshire is predominantly a farming community. The minimum wage rate for male farm workers over 20 years of age is £9 a week. A shepherd has a minimum of £10 5s. 9d. and the minimum wage for grieves and stockmen is £10 Is. 6d. For a 53-hour week that is less than £10 take-home pay to keep a man, his wife and three or four youngsters. Horsemen and tractor men get £9 19s. 6d.

The Prime Minister never mentioned these men in his address. He mentioned the farmer, the housewife and the taxpayer, but never once the farm worker. For him and the Government to suggest that they are going to modernise, without at the same time saying that they are going to modernise for the purpose of increasing wealth and then to make sure that it is more equitably distributed, they might as well not start the exercise. The whole point of modernisation is to increase wealth and then to ensure that it is fairly distributed.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

I cannot give way; I have not the time. No one can say that this kind of wage is any tribute to the work of this Government.

In 1954 the National Institute of Economic and Social Research estimated that business expenses were running at about £500 million a year. My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) mentioned this point this afternoon. They must now be running at about £700 million per year. At one end of the scale there is the wage of £9 10s. a week for a worker in the most heavily subsidised industry in the country. At the other end of the scale there is the very high standard of living enjoyed in the City of London on business expense accounts and the enormous capital gains being made elsewhere in the country.

This nation is really two nations. It has become more so under this Government. At the Kinross by-election I quoted the example of the increase in land prices in the Fort William area as a result of public enterprise there. Land prices have risen tenfold because of the announcement of the pulp mill. These profits will go into the pockets of private landlords, who are merely sitting back and watching public enterprise develop the area. This is intolerable.

The Prime Minister did not mention Scottish housing in his election address, although he was contesting a Scottish seat. He took care to mention the 300,000 houses for the United Kingdom as a whole.

Photo of Mr William Ross Mr William Ross , Kilmarnock

Four hundred thousand.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

That was a later promise. The Prime Minister did not mention the Scottish figures, for the simple reason that for a number of years they have been steadily running down. The figures for local authority houses have been steadily running down since 1953. We have some of the worst slums in Europe, if not the worst. Many of them are in the Prime Minister's constituency. I canvassed in Kinross. From a car Kinross looks a highly respectable middle-class town, but behind the facade there are the most deplorable slums. I went into one house where I could touch the ceiling without extending my arm. There was a great gaping hole in the floor and another in the wall. In a similar house next door six people were living in one room with the same kind of conditions. The Prime Minister did not visit these houses. He does not know anything about them. It is significant also that the tuberculosis rate in Kinross is probably worse than that in Glasgow. This is largely due to these conditions. The Prime Minister should not say so much about modernisation unless he is prepared to start in his own constituency. He will have a full-time job on his hands if he starts in Kinross and West Perthshire.

We have heard praises resounding about the wonderful education expansion programmes, yet only yesterday the Fife County Council sent a letter to the Prime Minister protesting about the slashing of its school building programme to £300,000 next year. The White Paper on Scotland says that the infrastructure of Fife, including schools, is to be built up and modernised. Yet the Fife County Council is told that next year it will have £300,000 for the whole of its expenditure programme on education. That will be enough for only one school. The Government are so panic stricken at their electoral misfortunes that they are throwing housing out of the window. The people are seeing through it. In my view, no Government can sustain this programme without the kind of expansion which we have never had since the war. It really is an attempt at mass bribery. Everything is promised except green stamps, and we shall probably get round to them before the election. I think that a lot of hon. Members opposite find this quite deplorable. They feel that the bribery has gone too far.

We shall see what happens in the by-elections at Dundee, West and Dumfries. The people are not idiots. They are not prepared to be caught out a third time. The Government's record over twelve years more than counteracts the promises which they are now making. They may as well recognise that, attractive though their promises may appear, they will not be there to carry them out. They will not be able to turn on the next Government, a Labour Government, and say, "But your plans are much more modest than what we planned", because if a Government are over-committed, they cannot be expected to carry out all the extravagant promises made by a previous out-going Government.

I am convinced that most people know very well that these plans are extremely difficult to implement over a long period of years, let alone six months. The Government are trying to convince the people that everything will be wonderful in six months. In Fife, there are hundreds of boys and girls and hundreds of men and women who are now unemployed, and they will remain unemployed for a long time, in spite of these White Papers. In Scotland and in other parts of the country we are in for a very hard winter. The plans have come far too late for the Government to hope to convince people of the sincerity of their claims.

9.2 p.m.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Yesterday and today, we heard some very glowing claims about the state of the economy from both the Chancellor and the President of the Board of Trade, if I may still call him by that name. So far, the only thing which seems to have been modernised in actual fact is the name of the Board of Trade and the Minister there, and I am not sure that it is a great improvement. It is a little odd to hear from the right hon. Gentleman how splendid is the state of our economy when, less than a year ago, he was telling us that we faced a disastrous economic decline if we did not sign the Treaty of Rome at once and almost on any terms. But, even if we charitably leave aside the right hon. Gentleman's past, some of his boasts will ring hollow in many parts of the country today.

This October, there were 507,000 people unemployed in the United Kingdom, and in both Scotland and the North-East unemployment is higher now than it was a year ago. In Scotland, it was 3.9 per cent, in October, 1962, and it was 4.2 per cent., or over 90,000 people, this October. In the North-East, it was 4.3 per cent, a year ago, and it is 4.4 per cent, now, after eleven months of attention from the Lord President of the Council. Moreover, there are alarming reports of major redundancies in other parts of the country.

Of course, we are told that all this will be put right in the next few months, presumably, before next May. But, despite three Ministerial speeches in the debate, we still have not had an answer to this question: why, if an effective cure is suddenly to be applied in the next few months, has it not been applied during the past twelve years? If the Government know how to cure unemployment in the neglected areas, why is unemployment there higher now than it was twelve years ago?

I ask the right hon. Gentleman, whatever he calls himself, to note these figures in particular. The unemployment figure on the North-East Coast in June, 1951, was 1.8 per cent, compared with 4.4 per cent. In Scotland, in June, 1951, it was 20 per cent, compared with 4.2 per cent, now. Therefore, after twelve years of effort and four years of particularly laborious work by the present Prime Minister, as Minister of State at. the Scottish Office, the party opposite has succeeded in modernising unemployment in Scotland from 2.0 per cent, to 4.2 per cent, and on the North-East Coast from 1.8 per cent, to 4.4 per cent.

I ask the Government: if these measures announced today particularly and the vast increase in public expenditure which we are now promised, or tempted with, are right now, why were they not right last winter Last January, the figure of unemployment was 814,000. Why were not the increases in expenditure which are promised now made at that time? If the Government say that the economic situation is now much better, how can it be right to give much more stimulus at present than it was when unemployment stood at over 800,000 twelve months ago?

Why has our economy stagnated for twelve years and unemployment more than doubled in Scotland and on the North-East Coast? This is no dark economic mystery. The cause, of course, is the deliberate economic policy of the party opposite and, in particular, the abandonment of a distribution of industry policy, first, by Lord Eccles and, secondly, by the present Minister of Defence. On top of that there were the two savage deflations which we had, one from the present Minister of Defence in 1957 and the other from the present Leader of the House in 1961.

It was the present Leader of the House's contribution to modernisation in July, 1961, which carried unemployment over the 900,000 mark last winter and to over 6 per cent, on the North-East Coast and in Scotland. But he and the present Minister of Defence are still with us; they are still in the Government. Indeed, I gather that, if the Prime Minister allows him, the Leader of the House is to wind up the debate and to explain to us with all his usual mastery of detail why all his previous policies were wrong. If the Prime Minister is to speak again, I suppose that he will tell us what he was doing throughout his four years in the Scottish Office. Did he try to do anything about this problem?

As the Prime Minister has now plunged into what my right hon. Friend calls the process of de-Stalinisation, I should like to tell right hon. Members opposite a story which was being told in Moscow in 1956. In the previous December, the Russian Communist Party had been conducting its customary processes of consultation in the Kremlin—what they call there a meeting of the Central Committee of the Communist Party. When Mr. Khrushchev was denouncing in ferocious terms some of the worst atrocities of Stalin, somebody stood up in the hall, so it is said, and remarked, "But what were you doing in Stalin's Government at that time?".

May we be told what the Prime Minister was doing during the years when unemployment was rising in Scotland? Altogether, I am not surprised that Mr. Khrushchev said that he would be a Tory if he lived in this country.

I suppose that Mr. Khrushchev might have replied to that remark that he was accelerating from positions previously prepared. That is what the Prime Minister tells us the Government are now doing. The "positions previously prepared" were, presumably, the 6 per cent, unemployment of last winter prepared by the Leader of the House's deflation in 1961. I remember—because it has all happened three times now—the present Home Secretary saying amid the deflation of 1957–58 that the country was, to quote his words "well poised for recovery". Apparently, one knocks a man flat on the ground and then tells him that he is well poised for getting up from positions previously prepared.

Let us now look at the wonderful new distribution of industry policy which the Secretary of State for Industry and Trade has kindly allowed us to study since half-past three this afternoon. I tell him frankly that we shall have to discuss it in much more detail later, because we have not found it easy to read the whole of it while this debate was going on.

The most remarkable feature about this new deviation is that instead of the comprehensive development areas, which are what is really needed, the Government are now arbitrarily pitching out certain fragmented so-called growth areas which will be separate from the development districts and will omit large and important areas of country. In answer to a question from me, the right hon. Gentleman admitted that the new favoured areas—that is to say, the growth areas—will get special public investment.

These areas, however, exclude not merely the whole of Wales, the whole of Merseyside and the rest of Lancashire, West Cumberland and Barrow-in-Furness. They omit substantial under-employed areas and declining mining areas even in Scotland and the North-East coast. Dundee is left out. Dumfries is left out. So, believe it or not, are Greenock, Gourock, Port Glasgow, Kilmarnock, Ayr, Paisley, most of Glasgow and Clyde-side and the whole of the Highlands and Islands.

In the North-East, almost the whole of north-west and south-west Durham are left out, although, as has been well known since 1945, west Durham is the area where the coal industry is declining. The Government leave out Bishop Auckland, Consett, Stanley, Prudhoe, Tow Law, Crook and Willington, almost the whole of North Yorkshire and the whole of the Northumberland coalfield. Blyth, Ashington and Morpeth are all summarily excluded from the favoured areas.

This is an indefensible policy and one which cannot possibly be operated or maintained for long. The right policy is to schedule one comprehensive development area covering the whole industrial complex in the region. That policy is simple, workable and intelligible and has at least a chance of being effective. Until we return to it, I assure the right hon. Gentleman that there is not much hope of this problem being decisively solved.

It is almost equally incredible, after all the clamour we have heard in the Press in the last few weeks, that the Government are also making almost no change in the organisation. What they are doing is merely taking a timid step backwards halfway towards the system which operated in 1945 and afterwards. In Scotland, they are now calling a group what was previously called a committee. That, I suppose, is modernisation. In the North-East, they are moving into one building in Newcastle a few people who were previously working in another building in Newcastle.

The Government are making one other change. From 1945 to 1951, as, I hope, the right hon. Gentleman knows, there was a regional controller of the then Ministry of Town and Country Planning who attended meetings of officials in every regional capital to co-ordinate town planning with industrial development. The Government abolished those officials in every region as an economy after 1951. They are now reappointing one, but in one region only, in Newcastle. That is the reality of this vast administrative reorganisation with which we have been presented today and it comes after twelve years' thought by hon. Members opposite.

I welcome one thing, and that is the disappearance of Lord Hail sham and the planting of the whole of his responsibility firmly where it belongs, that is to say, on the Board of Trade, but I really do ask the Prime Minister—I am glad to see that he is now with us—why, if it; is right now, it was all wrong last winter? I hope that we shall have an answer.

I must tell the Secretary of State this, that if he really thinks that the idea of regional co-ordination is a new one he is simply ignorant of the whole history of this matter. Throughout the war—and after—there were effective co-ordinating committees of officials in all the regional capitals, not just Glasgow and Newcastle. Throughout the period of the Labour Government there was the official regional distribution of industry committee, in every regional capital, and it effected the coordinating work, under the Board of Trade chairmanship, with not merely Ministry of Labour and Ministry of Transport and Ministry of Supply and other representatives but also the Comptroller of the Ministry of Town and Country Planning, to whom I have just referred; and it met regularly every week.

Now we are told that a meeting will be held soon as a result of this wonderful revolution. In addition to that, in the development districts there were industrial estate companies which were the operative building and practical agents of the Board of Trade for carrying out the policy, and there were, as I suppose the right hon. Gentleman knows, corresponding official committees at headquarters under Board of Trade chairmanship, and, indeed, regional industrial committees, throughout the life of the Labour Government.

I should not have thought it necessary to say this, except, apparently, that the right hon. Gentleman is to tell the public that he is now doing something new, but the truth is that not merely all the legal powers necessary but the reorganisation needed for doing the job all existed in the years of the Labour Government, and when right hon. Gentlemen opposite took over, both in the regions and at headquarters. Strangely enough, as I have shown, at the end of the period unemployment had been reduced already in those regions very nearly to the national average.

What then happened? The Tory Government, in the years after 1951, broke all this up, refused to use their powers, and, sure enough, unemployment began to rise again. The regional organisation was practically dismantled. Take one example, the Board of Trade's offices in Swansea and Dundee were closed down. The industrial estate companies were turned into passive property-owning bodies which did not show the enterprise which they had shown before. Then we had a long series of reversals of policy, so that unemployment became as high, and in Scotland and in the North-East higher, than before. From 1955 to 1959 the Government's powers were simply not used at all. Then, just before the 1959 General Election, we had the promise of a local employment Act which was to put everything right. After the election, we found that all it really did was to re-enact the powers of the Distribution of Industry Act, 1945, with only one important change, introduced by the present Chancellor of the Exchequer, and that was that comprehensive development areas under the 1945 Act, covering, for instance, the whole of industrial Scotland and the whole of the North-East Coast, were replaced by a patchwork of small, separate districts. That was the great new idea, in 1959 and 1960, of the present Chancellor. Now we are told it was all wrong, as we said at the time, and we go back to another brilliant modern discovery of the larger areas!

The 1960 Act, with the help of the Leader of the House and his deflation, led us into grievous unemployment last winter, so we then had another Local Employment Bill last May, and the free depreciation allowances in the Budget. These were supposed last spring to have solved the problem once and for all, but now everything has changed again, and we return halfway, but in two regions only, to the system which was in force twelve years ago.

What a record this is of vacillation, ignorance and sheer muddle. Does anyone really believe, after this record, that when the election is over any effective action will be taken by the present Government? As the hon. Member for Uxbridge (Mr. Curran) said—I am sorry he is not with us—in his brilliant, if rather savage, attack on the Prime Minister, "It has all happened before."

I assure the Secretary of State that if he seriously means to end unemployment once and for all in these regions, it is not mainly new committees or new legislation that are needed, it is the will to do the job and fight the vested interests in the congested areas which are the real cause of this drift to the South. The Prime Minister says that he is spoiling for a fight, and he can have a fight on the over-expansion of employment in London if he really wants one. The cause of this drift to the South-East and the depopulation and unemployment in the North is not to be found in the North or in Scotland. The cause is the over-expansion of employment and, above all, office employment in the southeast corner of the country.

This cannot be controlled or cured by any sort of regional organisation in the northern regions. It can only be cured by resolute action at the centre, and we see no more sign of that now than we have seen for the last few years. We had this resolute control in the first few years after the war, and it is rather interesting to see what a dramatic effect that had on the figures. For two years after 1945, about 45 per cent, of new factory space built in the whole country was located in the then development areas. By 1961 and 1962that 45 per cent, had fallen to 15 per cent., and London and the south-east region were getting as high a proportion as the whole of the development areas. That is without counting office employment.

Even now, nothing serious has been done to check this excessive office building in the London region. If the Secretary for Industry and Trade is to speak again, I would ask him: what will he do—because this is what really matters in this issue—about the huge volume of planning consents for further office building in London which have been granted, but where building has not yet started? Will he consider cancelling them? If we do not do something about them, then nothing will come, or very little, of these efforts in the North, or the efforts of the Minister of Housing and Local Government, to relieve the appalling housing shortage in the London region at the present time.

Why have we heard nothing more about the plans for transferring more Government and private offices to the development districts? Why, for instance, should not the National Assistance Board headquarters go to Newcastle, when the Ministry of National Insurance is there already? Ministers have to realise—and I do not think that the Secretary for Industry and Trade sounded as if he understood this today—that this is not just a question of the North-East and Scotland, or the North-West, Merseyside, Barrow, west Cumberland, north-east Lancashire, and parts of Wales and Cornwall. A real distribution of industry policy should be directed to all the under-employed areas and not just to a few arbitrarily selected ones. At the moment, serious redundancies are reported in the steel and other industries, in Rotherham, Barrow and East Kilbride.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Can the Economic Secretary—I should like to welcome him; we have not seen him here previously in this job—tell us something about this? Is the Board of Trade, in its discharge of these responsibilities, talking to the firms which are threatening redundancies in these sensitive areas and trying to see whether a way can be found of avoiding discharges in the very areas where the Board of Trade is trying to build up employment?

The Minister's argument may be that all these little local difficulties will be swept away by the headlong expansion which is now beginning. But what guarantee have we that this expansion will go on more than a month or two after the General Election when the Prime Minister himself has told us that all his words and actions are now determined by his desire to win the election? We are delighted to have converted hon. Members opposite, after about ten years of persuasion from this side of the House, to at least a pretence in believing in expansion. But how many have we converted even to that? Last week, or the week before, the Prime Minister was ordering full steam ahead in Scotland, and about the same time the Chancellor was uttering cries of caution somewhere further south.

One wonders a little what the Minister of Defence and the ex-Minister of Health think about these vast spending plans, involving thousands of millions of pounds. Both of them resigned from the Government not long ago about a mere £50 million. I know that the ex-Minister of Health and the ex-Leader of the House have now gone the way of all flesh. One has lapsed into silence, and the other has lapsed into Fleet Street, or perhaps I should say Gower Street or even Lombard Street. But I wonder whether they will tell the House what their reasons were for refusing to serve in the Government? There does not seem to be a great deal of point in a man resigning on the ground of principle if he refuses to tell anybody what the principle was. Is the truth that these two right hon. Gentlemen know perfectly well that all this sudden talk of expansion is just one more attempted fraud on the public? That is what it is, and everybody knows that that is so. The reason is there anyway. Why should this attempt to expand without any planning whatever lead to any other result than it did in 1957 and 1961—violent crisis followed by deflation and stagnation?

I suppose that the Prime Minister's plan is to meet this situation somehow. This is how he told us he was going to solve the problems created by Dr. Beeching. What a poor opinion Ministers must have, after all, of the intelligence of the electorate if they think people can be fooled a third time by almost identical promises made in almost identical language.

Photo of Mr Sydney Allen Mr Sydney Allen , Crewe

And by the same men.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

It is not really very convincing when a gang of habitual criminals suddenly protest their total and simultaneous conversion. Nobody will be deceived. It will be remembered of the famous "Brides in the Bath" murderer that when he committed his first crime everybody said, "What a terrible tragedy that this young lady should be drowned three days after her wedding!", when it happened a second time they all said, "What a ghastly coincidence!", but the third time was once too often.

9.30 p.m.

The Economic Secretary to the Treasury (Mr. Maurice Macmilian):

It is a source of deep regret to me that the customary indulgence of the House to maiden speakers does not extend to those speaking from the Dispatch Box for the first time. It is, however, very appropriate that I should follow the right hon. Member for Battersea, North (Mr. Jay), because he is, so to speak, my Treasury ancestor. I think he was the first Economic Secretary, and I am, as far as I can tell, the tenth.

The right hon. Member for Battersea, North taunted my right hon. Friend with making rash promises and used as evidence my right hon. Friend's forecast of economic decline if the Rome Treaty should not be signed by Britain. But I think that the right hon. Gentleman must admit that it is a little early yet to judge of any long-term effects of what happened at Brussels, and that there is also very considerable difference between the results of a breakup in the way it actually happened and the probable results of our deliberate withdrawal or refusal to go on with the negotiations. I will not deny the gravity of the figures of unemployment which the right hon. Gentleman quoted, but he did quote comparisons from a period just after the war when there was a shipping boom and when our competitors overseas had not yet received the full complement of aid. Yet, when we quote the period in referring to rationing and other Socialist controls, we are told that that period was too near the war to pass a fair judgment on the Labour Government.

Photo of Mr John Hynd Mr John Hynd , Sheffield, Attercliffe

The hon. Gentleman refers to rationing, but is he not aware that rationing was introduced not by the Labour Government but by the Churchill Government?

Mr. Macmillan:

I was dealing with the reaction of the party opposite when we referred to the effusion of rationing, including the introduction of bread rationing.

The main line of attack in the debate seems rather inconsistent. First, we are accused of spending too little and too late and then of spending too much, and of being unable to manage it anyway. The right hon. Gentleman added to the confusion by saying that it was will power and not committees which would solve our problems. Yet he had spent a good proportion of his speech deploring the fact that the Tory Party had abolished a number of the committees on which he had relied.

We are accused of having debauched the people with prosperity and selfish materialism and now the social expenditure we propose is regarded as an election bribe. The hon. Member for Cardiff, South-East (Mr. Callaghan) said there had been no progress in the last 12 years. Those of less prejudiced judgment must admit that there has been great progress in the economic advance of the country. But I will admit that it has been uneven in both time and place, that we have had difficulties with the problem of what is called "stop-go" and that, in periods of increasing general prosperity, there have been areas such as the development districts and the regions covered by the new White Papers which have lagged behind.

The serious part of this debate is centred on those two problems, and on the purported disbelief of the Opposition both in the will and the ability of the Government to cope with them. I will deal first with the question of maintaining the rate of growth necessary to keep going the expansion of our public expenditure programme.

I think it is fair to say, as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) pointed out, that now that we have got ahead it is easier to stay ahead and that there is an underlying trend now not only in this country but in the world as a whole which is different in kind from that which obtained before 1961. Not only is our expansion now more steady, but there is a greater realisation everywhere that more positive steps are needed to keep it so.

Evidence of that can be seen in the passage in the United States of a Bill which enabled the Kennedy round of negotiations in the G.A.T.T. to start. It can be seen in the help which Common Market countries are now giving to those of their members who are suffering the great problems of inflation and other difficulties, notably, Italy. It can be seen in the wider acceptance of the view that problems of international liquidity require international agreements and international negotiations to solve them.

The hon. Member for Grimsby (Mr. Crosland) pointed out a fact which the right hon. Member for Battersea, North conveniently forgot when talking about deflation—that the balance of payment problem is the fundamental cause of the stop-go. It is a factor reflecting the conflict between our interests as a banker nation and as a trading country.

The hon. Member quoted the writings of Mr. Conant. As his publisher, I should be more familiar with them than I am. As far as I recollect from the writings to which the hon. Member was referring, Mr. Conant was referring mostly to the sterling area. I do not know whether hon. Members opposite would wish to stop the movement of capital to the sterling area. On the question of the way in which the movement of capital is complicating our balance of payments difficulties, quite apart from this point that a great deal of the movement to which Mr. Conant was referring is to the sterling area, there is a substantial aid element in a lot of our outflow of capital which no one would wish to remove. Private investment when it is in the developing countries frequently has at least an aid effect even if it cannot be classified directly as aid. Moreover, there is a real connection between our investment overseas and our rising exports.

There are already severe restrictions on private investment overseas. As I said, there is this heavy outflow to the rest of the sterling area, but outside the area the outflow of capital is still regulated by rules which were announced by the former Chancellor of the Exchequer in July, 1961, namely, that direct investment is allowed only where there is likely to be a clear and commensurate return on that investment in the short term. Portfolio investment outside the sterling area may not be financed from the reserves but only, as the hon. Member for Grimsby knows, through the switch dollar market. Therefore, it is not a reasonable charge that Government policy on capital outflow is exacerbating the balance of payments difficulties which we have to face.

I think that it was the hon. Member for Grimsby who also referred to his desire for something like the United States interest equalisation tax. I do not think that that was a very fortunate example for him to choose, because it is just that tax which has given the London money market the edge over New York in attracting investment to this country.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

What he said was that he thought that the United States Administration was right to impose the tax. Of course, he may have thought it would help the London money market.

Mr. Macmillan:

It is a nice point whether the hon. Member's right hon. Friend supported him because it was a good thing as a matter of fiscal policy or whether it was helping the London money market.

On the balance of payments side of our difficulties, we have evidence that the advance which we now experience will almost certainly not come up against the checks that occurred in the past. At present we are in a strong position to support a sustained expansion both of output and income. We have substantial gold and convertible currency resources of about £1,000 million. We have a standby credit with the International Monetary Fund of 1,000 million dollars, of which we can make use at short notice, and total drawing rights on that Fund of nearly 2,500 million dollars. In addition, we own dollar securities worth about another 1,000 million.

In dealing with the short-term and speculative attacks to which sterling is exposed, we now have the benefit of much closer co-operation with the central banks of other countries, which have provided us with substantial short-term assistance, and we have also entered into a swap agreement with the United States to the extent of 500 million dollars. Finally, we are engaged in discussions with the other major industrial countries on ways of improving and perhaps extending international liquidity arrangements. The right hon. Gentleman will know, from things that I have said before from the back benches, that this is not a point that I have ever neglected. I am sure that he will equally appreciate that the Government have it very much in mind.

It was the Chancellor of the Exchequer who took the initiative in this matter at the 1962 Annual Meeting of the International Monetary Fund. His proposals at that time did not meet with general acceptance, but there is evidence, which I am sure the right hon. Gentleman will admit, that my right hon. Friend's ideas are growing more popular on the international front, and in particular in the United States.

Perhaps this is the time to try to reassure my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) about the need for developing Commonwealth trade. My righthon. Friend the Secretary of State for Industry and Trade covered this point when he said that it was the Commonwealth which did not particularly want bilaterial arrangements in addition to the measures on which Her Majesty's Government are engaged in bringing about the general expansion of trade. It would not be proper for me, at the outset of negotiations in G.A.T.T. on the Kennedy Round, to say at this Box anything that might give the impression that the Government were expecting the failure of these negotiations. It is reasonable to ask my right hon. Friend to look at the Secretary of State's speech, in which I think he will find a number of his points covered, at least by implication.

I could here refer again to some of the difficulties that we face by quoting my hon. and gallant Friend the Member for Eye (Sir H. Harrison). I know from experience how difficult it is to persuade developing countries to accept our exports, rather than, as happens in some cases, to compete in third markets with their own domestic developing industries. This is a side of the problem in connection with which the hon. Member for Halifax can show great sympathy with the hon. Member for Rochdale (Mr. McCann).

At home, we have learned the lesson of the past, as some hon. Members have indicated in the course of this debate. We have achieved a better situation on costs, productivity and income and we have achieved a great measure of cooperation with the trade union movement as a whole. We also have a general acceptance throughout the country that an incomes policy is necessary.

The hon. Member for Cardiff, South-East was right when he said that an incomes policy had, if it was to be acceptable, to be fair and seen to be fair. I do not think that we would necessarily all equate fairness, to the extent that he does, with his views on economic and fiscal policy. We can certainly all agree that the reform of our taxation system and its modernisation and rationalisation in the context of other changes are necessary, and will continue to be necessary as the country develops. However, these are not the same things. Nor is it merely a question of the blocking of loopholes, for piecemeal efforts at penal taxation distort the argument.

The hon. Member for Cardiff, South-East quoted a loophole in Estate Duty. I have no detailed knowledge of the matter to which he was referring, but I have no doubt that he will communicate it in due course to the Financial Secretary to the Treasury. This was a loophole which, so far as I can judge, was open only to those who held their wealth in more or less liquid form. In referring to Estate Duty, he said nothing about the effect it now has on many small businesses in my constituency and in other places.

It was the same with his wealth tax. He ignored the problems and difficulties of valuation, the difference between Sweden and the United Kingdom and the complexity of introducing it now, at this time, rather than earlier, as Sweden did. He ignored the context of the structural changes to which the Secretary of State referred in his speech and he ignored the long term nature which this sort of action implies. He also ignored the fact that it was a disincentive to saving and investment.

Mr. Macmillan:

It has been said that this sort of tax more than compensates for the disincentive effect it has on savings by the sense of equity and justice which it produces. It was the late Sir Stafford Cripps who admitted fully and completely in April, 1948 the marked disincentive effect on savings which is a characteristic of taxation of this nature. He was, of course, referring to a once-for-all tax and was giving reasons why such a tax on capital should be once-for-all and not repeated.

The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) called today's speech of my right hon. Friend a reversal of 12 years of Tory policy. Other hon. Members opposite went further and regarded the White Paper as a reversal to the Labour Government's original plans. It is fair to say that this is not a reversal at all but a development of policy. This is not the first measure that has been taken, and it cannot be either said or implied that it is.

The hon. Lady the Member for Lanark (Mrs. Hart) and other hon. Members will forgive me if I do not answer detailed points which could well come up in the debate on the White Papers. I assure the hon. Member for Blyth (Mr. Milne) that it is not that we do not take most seriously the problem he detailed and its effects on the people, and I can assure the hon. Lady that we are not writing-off the development districts at all.

The Local Employment Act was introduced when conditions overall were improving but in special localities were lagging behind. It was designed to give help to these special localities exclusively on the basis of helping to relieve unemployment, and especially pockets in employment exchange districts. These provisions, as the Secretary of State said this afternoon, will continue unchanged, but the policy, again as the Secretary of State emphasised, goes much beyond even the economic field—

Photo of Mrs Judith Hart Mrs Judith Hart , Lanark

Can the hon. Gentleman tell me how it is that since the development districts in my constituency have gained nothing from the Local Employment Act, they are to expect more now?

Mr. Macmillan:

The hon. Lady is making a point that would come well in the debate on the White Papers.

I am afraid that I cannot answer the many points of similar detail that have been raised in the course of the debate, but even the economic points of the White Papers which the Secretary of State outlined are wider than the provisions of the Local Employment Act, and are designed to deal with the structural problem. As one hon. Member said, it is platitudinous, but it is none the less true, that it is a fall off in the demand for coal, shipbuilding and heavy engineering that has led to what has been called the mounting pressure against these areas.

I am no anti-planner, but I do view with some disquiet the prospect of the whole country divided into regions, each with its separate plans co-ordinated eventually into an overall national plan. It seems a conception rather unrealistic administratively, and rather irrelevant at the same time, for the problems are not the same, even in the same areas, at all times. We now give priority to central Scotland and north-east England, and I would remind the House that to have priorities means that someone comes first. It may be reasonable to criticise the order of the priorities; it is not reasonable to criticise them because they do not include everyone at once. But the Government are committed to similar action over Wales, and the Secretary of State mentioned the North-West problem, which is very largely one of land utilisation, and the South-East, which is, as it were, the reverse problem of what has been called the "Great Wen", involving a tendency to over-employment in London and the south-east area. I should like to reassure my hon. Friend the Member for Bodmin (Sir D. Marshall). As he himself said, the Secretary of State has seen the delegation to which he referred, and is now considering what its members said. He will see them again very soon indeed.

The type of regional development envisaged in the White Papers is not the only form of co-operation that is open to people—management, trade unions and local government—in the different areas of the country.

I have said that we have to have priorities. I give one example of an area, the West Riding of Yorkshire, which because of its comparative prosperity is clearly bound to be low in the queue of priorities for this sort of action. This is not to say that there is no need there or in Whitehall for thinking and, in the area, starting action. My hon.Friend the Member for Pudsey (Mr. Hiley) gave some idea how such action could be taken. The necessity is to take action not only to deal with current problems but, as far as people can be expected to help themselves in this field, to take action dealing with some of the problems which might affect them in the future.

Photo of Mr Stanley McMaster Mr Stanley McMaster , Belfast East

Before he leaves priorities, I hope that my hon. Friend will not forget that Northern Ireland still has the highest rate of unemployment in the United Kingdom.

Mr. Macmiilan:

The big and pressing problems of Northern Ireland are as much the concern of Her Majesty's Government as they are of the Northern Ireland Government and of the representatives of Northern Ireland who sit in this House.

The valid point has been made that the success of the special areas set out in the White Paper and of the action which the Government are taking depends not only upon action-taking in those areas but on the overall prosperity of the country. It is no good other parts of the country being jealous of the Midlands or of the motor car industry. Whether we like it or not, that industry is a major factor not only in our economy but in the economy of practically every major manufacturing country in Europe, and indeed of the United States. In approaching these problems, hon. and right hon. Members are right when they say that there must be a national view. I am not quite sure that they are right when they say that there must be a national plan, because I am never quite sure what they mean by that. The right hon. Member for Battersea, North gave examples of comprehensive planning by regional controllers throughout the country. I am not sure whether he was talking about the direction of the location of industry or the direction of industry. There is no quarrel about the overall view that our prosperity depends upon development not only in the special areas but in the country as a whole.

The programme contained in the Gracious Speech makes admittedly great demands on the resources of our country. Some of these demands in themselves would add to our resources. This is part of the answer to the hon. Member for Grimsby when he was talking about the difference between capital investment on private and on public account. Some of the spending on public account produces in itself an increase in resources leading to growth.

We believe that we have the resources and that we can achieve the desired rate of growth and the consequential increase in productivity. We believe this because of our capacity to invest in the private sector and the evidence that this investment is forthcoming. Furthermore, the effect of measures taken to prevent balance of payments difficulties limiting the rate of growth shows every sign of being successful here and in international negotiations. The Chancellor of the Exchequer has made it clear that our capacity to carry on with this expansion depends upon the success of our incomes policy and on not increasing the present level of demand unduly. Our optimism on this side of the House is more justified than the calculated and wishful-thinking pessimism of hon. and right hon. Members opposite.

Debate adjourned.—[Mr. F. Pearson.]

Debate to be resumed Tomorrow.