Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 25th May 1966.

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Mr. Hughes:

Fundamentally, Newport is known for its dock facilities. It grew up as a port when millions of tons of coal were being exported to many parts of the world. Nowadays, the industrial pattern and organisation of the area has considerably changed and my constituency tends to be increasingly reliant on the steel industry. It imports vast quantities of iron ore: although this is a valuable traffic, it would seem to be tempting fate to rely so exclusively on this one form of trade. We need a wide diversity of traffic so as to ensure the future prosperity of the area.

At the moment, we are anxiously awaiting the decision of the Minister of Transport on the future organisation and development of dock facilities in the Bristol Channel. In view of the tragic past industrial history of South Wales, any decision by the Minister to by-pass the area will bring back many old fears and anxieties.

The Government propose in the next few years to carry out a major reorganisation of the steel industry. I welcome this. On the border of my constituency lies the great steel plant of Llanwern. I believe that there is a need for a further major extension of the plant to spread its overheads and make it a more viable economic unit. When considering their reorganisation plan, I am sure that the Government will bear this suggestion in mind.

This is the Second Reading of the Finance Bill. One of its fascinating features is not what it contains, but rather what it does not contain. Before the Budget, the pundits were confidently predicting stiff taxation in the traditional pattern, but they were proved wrong. It is not proposed to increase Purchase Tax, car licences, beer or tobacco duties. Instead, one of its principal provisions is the Selective Employment Tax, which I welcome, though bearing in mind that it contains a number of anomalies which need to be ironed out. It is, however, a new way of raising taxes and a means of tilting the balance of the economy towards greater productivity. After all, the primary issue is how can we earn our living as a nation. In this sense, the new tax is a step in the right direction.

I also welcome the recent proposals of the Prime Minister for increasing productivity. To me, the real problem all along has not been that wages are too high, but that productivity is too low. There has been a tendency for many firms to rely on out-dated methods, failing to modernise simply because labour has been too cheap. Sir Maurice Laing, the President of the Confederation of British Industry, subscribes to the view that our basic economic difficulties stem from a lack of efficient use of manpower.

Speaking in London on 18th May this year at the annual meeting of the newly formed association of employers' and manufacturers' organisations, he is quoted as saying: Until we permanently solve the problem of using our manpower with the maximum practical degree of efficiency we shall stagger from balance of payments crisis to crisis. Compared with our principal trading rivals—Western Germany, France and Japan, wages in this country have not risen more. If, however, output per man hour had risen as much in this country as it has in Western Germany and Japan, our exports would be much more competitive in the world's markets. Is it a coincidence that in these countries, where hourly rates have risen most, output per man hour has also risen most?

I have always had the highest regard for the British worker, from the point of view both of skill and of effort put into a job. As I see it, the increased productivity which the nation so badly needs can come only from increased capital investment in industry. In other words, it will come by putting more horsepower at the elbow of the worker so that more can be produced with less effort.

In one of his more philosophical moods, the Minister of Labour has described the period in which we live as the "age of grab". He is also reliably reported as having come to the conclusion that the principal difficulty in industry is that of overtime working. Many of us have realised for some time that some employers rely on overtime as a form of temporary wage increase. When the order books are full, plenty of overtime is available, but when there is a slackening off in orders, overtime is cut to a bare minimum and, correspondingly, wage costs are, too.

I do not wish to place all the blame in this respect on the employers, however. Many work people are heavily in debt with mortgage repayments and payments on cars, televisions, washing machines and refrigerators. Far be it from me to deny ordinary people these useful amenities and labour-saving devices, but in many cases these articles are not being paid for through higher wages and increased productivity, but through systematic overtime working.

During the last 25 years, hours of work have hardly been reduced because industry has been organised in such a way that ordinary families cannot obtain a decent standard of living on a 40-hour week. There is a fundamental need for change and a reawakening in industry. It is the manufacturing sector of our economy on which we must concentrate and which we must make more efficient.

The principal provisions in the Bill and recent utterances of Government spokesmen gives me cause for hope that, at last, more emphasis is being placed upon increased productivity, to be obtained through a more efficient organisation of industry, and less on the more negative aspects of wage restraint. I trust that this trend will continue.