Skip to main content

Commons Chamber

Volume 526: debated on Monday 12 April 1954

The text on this page has been created from Hansard archive content, it may contain typographical errors.

House Of Commons

Monday, 12th April, 1954

The House met at Half past Two o'Clock


[Mr. SPEAKER in the Chair]

Private Business

Birkenhead Corporation Bill

As amended, considered; to be read the Third time.

Falmouth Docks Bill Lords

Read a Second time, and committed.

Oral Answers To Questions


Prices, Merthyr Tydfil And Exeter


asked the Minister of Fuel and Power the price per ton of domestic coal in Merthyr Tydfil and Exeter.

Railborne Group 4 coals, 106s. 7d. per ton and 141s. 8d. per ton respectively.

Is my right hon. Friend aware of the great hardship that is caused to old-age pensioners and others on small incomes by this disparity in price? As one of the principal products of Devonshire, namely, milk, is provided at a uniform price all over the country, why cannot we have the same where coal is concerned?

This is a question which is raised periodically in the districts remote from the coalfields, but, of course, coal weighs very much more than milk.

Is it not related to the fact that one is a private concern and the other is a State concern?

No, in fairness I do not think it is. This is something which has existed since the coal industry began.

Domestic Purchasing Restrictions (Relaxation)


asked the Minister of Fuel and Power whether he will make a further statement on the possibility of relaxing restrictions on the purchase of domestic coal during the summer months.

Yes, Sir. The maximum permitted quantities for the year will remain unchanged, but I am making a direction which will enable householders in the North to buy up to 30 cwt. during the summer as compared with 20 cwt. last summer. In the South, householders will be able to buy up to 34 cwt. as compared with 24 cwt. last summer.

Am I to understand the Minister as saying that the South is to have more than the North, or did he get it the wrong way round, because the North is colder? But apart from that, is my right hon. Friend aware that householders will be grateful to the miners, to the National Coal Board and to himself for this improvement?

It has always been the case that while the total permitted quantity is greater in the North, because it is colder there, the amount which householders in the South have been allowed to buy in the summer months has been larger because they are further from the coalfields and because there are greater transport difficulties in the winter.

Is there to be any price reduction in the coal supplies available in the summer months?

Prices, West Cornwall


asked the Minister of Fuel and Power the current prices of domestic coals sold by distributors in West Cornwall.

Is the Minister aware that this represents about £2 a ton more than the equivalent-priced coal in the North of England? Will he bear in mind that this morning I have received, from an old-age pensioner in my constituency, a letter stating that he finds it very difficult—as they all do—to buy any coal, and will he consider recommending the Coal Board to institute an even price for domestic coal throughout the country?

If the hon. Member's suggestion were adopted it would mean that there would have to be an increase in the price of coal—even for old-age pensioners—in the areas surrounding the coalfields and in many of those areas where the weather is colder and more coal is needed.

Is my right hon. Friend aware that the recent price increases may mean an increase of 2s. or 4s. a ton in certain grades of coal in places like West Cornwall? Will he urge the Minister of Transport and Civil Aviation to do something about tapering rail charges?

Fuel And Power

Power Stations, London (Sulphur Oxide Gases)


asked the Minister of Fuel and Power whether, in view of the amount of calcium sulphate which will be discharged into the River Thames from the gas-washing plants at Bankside and Battersea power stations when these are in full operation, what action he proposes to take to rid the flue gases of the other riverside power stations of harmful sulphur oxides.

I have nothing to add to the answers I gave the hon. Member on 5th April.

If these statements are correct, will the right hon. Gentleman give instructions that no more power stations are to be built within, say, 20 miles of London until a method of ridding the flue gases of these most dangerous substances is discovered?

I said last time that, in accordance with the general policy of generating more in the Midland coalfields, there would be a reduction in these particular stations.

Natural Gas (Surveys)


asked the Minister of Fuel and Power if he will make a statement on progress made in the search for natural gas in the United Kingdom.

An area totalling about 3,680 square miles in various parts of England and Scotland has been chosen for prospecting purposes. Geophysical surveys are being carried out in Yorkshire and Lincolnshire; a deep borehole is being drilled in Scotland, and it is hoped to start deep drilling in Sussex soon.

Is the right hon. Gentleman satisfied that in view of the great need to economise in the use of our coal resources in every direction, the gas industry is really pursuing this research with the vigour it deserves?

Yes, Sir, I think so, and I think that the gas industry deserves credit for starting up this work in association with the D'Arcy Exploration Company.

Will my right hon. Friend consider carrying out surveys in the Westminster area?

New Capital Investment


asked the Minister of Fuel and Power the total new capital investment of the nationalised coal, electricity and gas industries since vesting date in each case, and corresponding figures for the period prior to the outbreak of war in 1939.

In round figures, £240 million, £810 million and £205 million respectively. Corresponding figures of pre-war investment are not available for coal or gas. For electricity, the figure for the six years before 1939 was about £200 million—which would be equivalent to a figure perhaps three times as great in present day money.

Can my right hon. Friend say why it is that the increased investments in the coal mines resulted in no material increase in output last year?

That is rather a different and larger question, but I would point out that it takes up to 10 years to bring in a new pit, and about seven years to complete a major reconstruction.

Is the right hon. Gentleman aware that many experiments are taking place to find pit room for the men, which involves a delay in expenditure on the development of the coal field?

Is the right hon. Gentleman aware that, last year, there was an extra week's paid holiday, the Coronation Day holiday, and yet the output per man-shift went up?

Imported Timber (Monopolies Commission Recommendation)


asked the Minister of State, Board of Trade, as representing the Minister of Materials, if he will make a statement on the report of the Monopolies Commission on imported timber and as to the steps he is taking to deal with the Commissioner's report that the agreements and undertakings by traders to deal only with each other are contrary to the public interest.

Following discussions with my noble Friend the Minister of Materials, the constituent sections of the Timber Trade Federation of the United Kingdom have now decided to abrogate the agreements and undertakings by traders on the "Approved Lists" to deal only with each other—thus giving effect to the recommendation of the Monopolies Commission.

I am sure that most people will be glad to hear what the Minister has said and will hope that the arrangement will work effectively, but can he say whether he anticipates a reduction in the price of timber, in view of its importance, especially to the housing programme?

I am sure that the timber traders will have to make sure that they sell timber at competitive prices, because they have to get back the position which they lost, to some extent, to substitute materials. I have every hope that that fact will ensure that timber is sold at competitive prices.

United Nations

Neutral Supervisory Commission, North Korea


asked the Secretary of State for Foreign Affairs if he will make a statement on the work of the United Nations Neutral Supervisory Commission in North Korea.

The Neutral Nations Supervisory Commission, set up under the Armistice Agreement, is composed of representatives of Switzerland, Sweden, Czechoslovakia and Poland. Its main work is to ensure that the terms of the Armistice Agreement, particularly in respect of the import of military equipment and personnel, have been properly carried out.

I regret to say, however, that in North Korea the Commission and its subordinate teams have been gravely hampered by the attitude of the Communist command and by the behavour of the Czech and Polish members of the Commission.

Has my right hon. and learned Friend seen the report in the "Sunday Times" of 28th March, in which it was stated that Communists had been pouring planes, weapons and munitions into North Korea, in complete defiance of the Armistice Commission?

One of the difficulties with regard to such reports is that investigation facilities are usually denied. It takes a great deal of time to carry out any investigation, and by that time it is not always possible to find out the truth.

Disarmament Commission (British Representation)


asked the Secretary of State for Foreign Affairs who will represent Her Majesty's Government at the forthcoming meeting of the United Nations Disarmament Commission, and in the sub-committee which it is proposed to set up; and who will be the experts by whom this representative will be advised.

Her Majesty's Government were represented at the Disarmament Commission meeting on 9th April by their Permanent Representative on the Commission, Sir Pierson Dixon. Their representation on the sub-committee, which it is hoped the Commission will agree to set up, will have to depend to some extent on where and when the subcommittee decides to meet.

Will the Minister bear in mind the desirability of representing that, if possible, the sub-committee should sit in London, certainly in Europe, and not in America?

May we take it that the Government will be represented by a Minister and that he will have expert advice of the highest quality?

Will the right hon. and learned Gentleman say whether it is within the terms of this Commission to consider German disarmament?

Economic And Social Council (British Delegation)


asked the Secretary of State for Foreign Affairs who is to represent Her Majesty's Government at the meeting of the Economic and Social Council of the United Nations which has just begun.

The Delegation is being led by Sir Pierson Dixon, United Kingdom Permanent Representative to the United Nations. The first alternate is Sir Alec Randall, lately Her Majesty's Ambassador at Copenhagen, who served as United Kingdom Delegate to the Fifth Committee of the last General Assembly, and who was at one time adviser on League of Nations affairs in the Foreign Office.

World Assembly Of Youth (Financial Support)


asked the Secretary of State for Foreign Affairs whether he is aware of the risk of damage to British prestige involved in his decision to withdraw financial support from the World Assembly of Youth; and whether he will reconsider this decision.

much regret that, owing to the overriding need for economy in our public finances, Her Majesty's Government are unable, for the time being, to grant further financial support to the World Assembly of Youth.

Will my hon. Friend disregard the growls on this side from below the Gangway and agree that the comparatively small sum of £4,000 involved is but a drop in the ocean compared to the vast sums which are spent behind the Iron Curtain on propaganda among youth? Will he ask his right hon. Friend to make the strongest possible representations to the Chancellor of the Exchequer on this matter?

In making their decisions Her Majesty's Government have to disregard growls from all quarters of the House of Commons. It is disagreeble for us to have to do this, but Her Majesty's Government have to keep these matters under very strict review. It may be that only a small sum is involved, but these small sums do add up very quickly.

In view of the very important work which is done by the World Assembly of Youth in bringing democratic youth from all countries together, will the Government not reconsider their decision with regard to the expenditure of this trifling sum?

In the first place, it is for the British National Committee of the World Assembly of Youth to do a little more to make itself financially self-supporting. There are things it can do, and Her Majesty's Government will do everything in their power to assist in those matters.

Is my hon. Friend aware that the British contingent to this body has made a most valuable contribution to it in the past? As it is a non-Communist organisation, does not he think that it is important for us to be represented in it, in view of its influence in foreign countries?

I certainly do not deny that this body has done useful work, but it is equally true that Her Majesty's Government cannot give financial support to every conceivable existing organisation which does useful work.

Will not the hon. Gentleman pay more attention to the views of the rational Members of his own party and less to the irrational and irresponsible Members?

Opinions may differ in the House, but so far as I am concerned all Members of my party are rational.

In view of the interest which has been shown in this matter I propose to raise it on the Adjournment.

European Defence Community

German Participation (Ex-Nazis)

12 and 13.

asked the Secretary of State for Foreign Affairs (1) if he will give an assurance that Her Majesty's Government will not agree to, or support, German rearmament or their participation in the European Defence Community, until such time as the Bonn Government have removed from office Waldemar Kraft, Minister without Portfolio, and Emmanuel Preusker, Housing Minister, both of whom were in the blackshirted Allgemeine S.S. elite, which originated as Hitler's personal bodyguard, and Herr Theodor Oberlander, Minister for Expelled Persons, who joined the Nazis in 1933, receiving an honorary rank equivalent to that of captain in the Nazi Storm Troops and later became Reichsfuehrer of the Nazi organisation called the Federation of the German East;

(2) if he will give an assurance that Her Majesty's Government will oppose German rearmament or any contribution from Germany in the European Defence Community until such time as the West German Government dismiss from office Gerhard Schroeder, Interior Minister in Bonn, who joined the Nazi Party in 1933.

Am I to take it that the Foreign Office has no objection to these Nazis occupying high positions, and to the rearming of Germany being under the control of ex-Nazis who were top leaders of Hitler's Stormtroops? Is this matter receiving any attention from the Foreign Office?

The bon. Member may read anything he likes into my answer. The facts are that Herr Kraft and Herr Oberlander were both placed in the exonerated category by the denazification tribunal set up under allied legislation. It is untrue that Herr Preusker ever received a certificate of honour for anti-semitic practices. He was, in fact, able to produce evidence of assistance given by him to Jews during the Nazi régime. Dr. Schroeder was dismissed from the Nazi Party in 1941 for marrying a woman of Jewish origin, and was later connected with an anti-Nazi group.

Is the hon. Member aware that Herr Preusker, the Minister for Housing, is strongly in favour of making the German workers pay higher rents, and that in this respect he draws his inspiration not only from the Nazis but from Her Majesty's Government?

Is the hon. Member aware that the spirit of his answer to Question No. 13 is incorrect? Is he aware that high Nazi officials—military officers as well as diplomatic—are back in office in Western Germany, and that the tolerance of Her Majesty's Government in these affairs has resulted in splitting the Allied Powers into two?

The appointment of these Ministers and officials is a matter for the German Federal Government. Neither Her Majesty's present advisers nor the late Government saw fit to interfere in these matters, so far as I am aware. As to the officials to whom the hon. Lady refers, I do not know the names involved. I have answered the two Questions on the Order Paper. Those Ministers and, so far as I am aware, all other Ministers appointed have, if necessary, been passed through the requisite tests under the denazification procedure.

Are we to take it that the view of the Foreign Office is that under no circumstances should anyone who was a former Nazi hold a high and controlling position, particularly in the forthcoming German contingent to the European Army? Will the hon. Gentleman say, quite categorically, that Her Majesty's Government would view with great alarm the appointment of these former Nazis to high positions?

I think the Government's position and, indeed, the position of the House, regarding a revival of Nazism is very clear. The Government regard the best guarantee against a revival of Nazism the formation at the earliest possible moment of the European Defence Community.

Would the hon. Gentleman make representations to Russia to observe the same policy in East Germany about Nazis?

British Military Contribution


asked the Secretary of State for Foreign Affairs to which foreign Governments Her Majesty's Government's proposed military contribution to the European Defence Community has so far been communicated.

Her Majesty's Government have communicated their proposals for political and military association with the European Defence Community to the six European Defence Community Governments. The United States Government have been kept closely informed.

In that case, would the hon. Gentleman say when the House will have an opportunity of examining these proposals in full? Is he aware that there are many rumours in the European capitals, particularly Paris, about what the proposals contain, and that the effect of the combination of a little information and rumour is, as I have already said, having the tragic effect of splitting our allied front in two?

As my colleagues and I have repeatedly informed the House, a full statement will be made to the House directly the negotiations have been concluded. They have not been concluded so far, but I hope very much that they will be and that a statement will be made before Easter.

Is it reasonable to expect hon. Members to agree that, while all foreign Governments who are interested in this problem should be informed of Her Majesty's intended contribution, this House should not be so informed?

I really think the right hon. Gentleman should study this matter, and ought to have listened to the answer, a little more carefully. I said that the six E.D.C. Governments have been informed and that the United States Government have been kept closely informed. It will not, perhaps, escape the right hon. Gentleman's attention, though it appears to have done so, that the six Governments informed have been the six E.D.C. Governments with whom we have been negotiating and that it would have been a little difficult not to have informed them.

Is the hon. Gentleman not aware that this position is most unsatisfactory, because there is great division of opinion in France and it is extremely unlikely that E.D.C. will be ratified by the French unless this country gives full and specific military commitments to France which, so far as I know, this country is not prepared to give? Ought we not now to know what these proposals are before a final decision is taken?

Of course the House is entitled to know, and it will be informed directly negotiations are concluded. I do not think that the House will have very much longer to wait. I hope very much that a statement will be made before the Easter Recess.

Marshal Join


asked the Secretary of State for Foreign Affairs what representations he has received from the French Government or from the North Atlantic Treaty Organisation Council on the position of Marshal Juin as Commander of the Land Forces in Europe.

Does that mean that our representative on the Council has not asked for any instructions, or has made no comments about the position that is likely to arise?

What it means is that no representations have been received from the French Government as regards Marshal Juin. That is the answer to the Question on the Order Paper. As to the action of the British representative, he referred the matter to the Government directly the item was inscribed, and he voted for the motion of censure, which was made public, on the instructions of the Government.

Does that mean that Marshal Juin's position as Commander of the European Land Forces is likely to be questioned by the Government?

Our view was expressed in the motion of censure for which the British representative on the N.A.T.O. Council voted. Marshal Juin's future position is primarily a matter for the French Government, who appointed him to that position under N.A.T.O. in the first place.

Is not this another illustration that generals placed in such high commands as this should keep to their military job and not enter into political matters?


asked the Secretary of State for Foreign Affairs if the British representative on the North Atlantic Council concurred in the decision to censure Marshal Juin for his statements about the proposed European Defence Community; and whether this matter was referred to the Governments of the Treaty Powers before being placed on the Council's agenda.

The answer to the first part of the Question is, "Yes, Sir," and, to the second part, "No, Sir."

Since it is not the intention of the Government to join E.D.C. and the French Parliament has not yet ratified E.D.C. is it not undesirable, even indecent, that a British representative should criticise a French military commander for expressing a view on a subject that has not yet been decided in France?

The hon. Gentleman is not quite accurate in describing Marshal Juin in this connection as a French military commander. He is a N.A.T.O. commander. The policy of N.A.T.O. has been affirmed and reaffirmed at several meetings as to the need for the early entry into force of E.D.C. Marshal Juin's statement that was censured at the N.A.T.O. Council was clearly and completely at variance with this policy.

Am I not right in thinking that Marshal Juin favoured a German contribution to Western defence, but without the restrictions of E.D.C?

It is not clear precisely what Marshal Juin's alternative policy was, any more than it has been in any other criticism that I have ever heard of E.D.C.

Possible Alternatives (Three-Power Consultations)


asked the Secretary of State for Foreign Affairs what consultations he has had with the United States and French Governments regarding possible alternatives to the European Defence Community.

Is the hon. Member aware that the American High Commissioner has announced that he has gone to Washington to discuss possible alternatives to E.D.C? In view of the fact that the chances of France ratifying E.D.C. are now minimal, is it not very important that Her Majesty's Government should be a party to the suggestions which, apparently, are already being discussed between the American and the German sides?

No, Sir. First of all, I do not take such a gloomy view of the ratification prospects as does the hon. Member, who is very partisan in these matters and who hopes that E.D.C. will not go through. Her Majesty's Government, for their part, regard E.D.C. as the best method of getting a German contribution to defence under mutually-agreed conditions between the nations of Western Europe.

Have not the United Kingdom, French and American Governments agreed on the military and political steps to be taken to prevent a German national army being established if E.D.C. gets no further?

That is another question and it raises very important considerations. I would prefer to see it on the Order Paper.

What does the hon. Member mean by saying that he has never seen a proposal for an alternative to E.D.C.? Many alternatives have been put forward in the House, including those put forward by myself.


Anglo-Us Discussions

15 and 20.

asked the Secretary of State for Foreign Affairs (1) in view of the forthcoming Geneva Conference which is to discuss the Indo-China problem, the policy of Her Majesty's Government on this problem;

(2) whether his attention has been drawn to the official statement of the United States Government that consultations have been taking place with Her Majesty's Government and other Governments on the general situation confronting South-East Asia; and whether he will make a statement.


asked the Secretary of State for Foreign Affairs if he will make a statement on the recent conversations between Her Majesty's Ambassador in Washington and the United States Secretary of State concerning the policies of the Western Powers in South-East Asia.


asked the Secretary of State for Foreign Affairs what warning Her Majesty's Government have issued to the Government of China, either unilaterally or in association with the Governments of other countries, about retaliatory action in the event of Chinese support for campaigns in Indo-China, following the official proposal made to them by Mr. Dulles.


asked the Secretary of State for Foreign Affairs whether he will make a statement on Mr. Dulles' official proposal, made to this country, that there should be concerted action among the Western countries with regard to Indo-China.


asked the Secretary of State for Foreign Affairs the nature of the official representations received from the United States Government concerning international action in Indo-China; and what reply he has made.


asked the Secretary of State for Foreign Affairs what reply Her Majesty's Government has given or proposes to give to the official representations from the United States Government concerning united retaliatory action in Indo-China.


asked the Secretary of State for Foreign Affairs the matters on which he has consulted, or proposes to consult, Mr. John Foster Dulles during his visit to London.

As hon. Members will be aware, Mr. Dulles arrived in London yesterday to continue the discussions that have been going on for some weeks with both the United States and French Governments in preparation for the Geneva Conference. I am sure the House will not press me to say any more while my right hon. Friend is engaged in these important discussions with Mr. Dulles. My right hon. Friend will, of course, make a statement as soon as possible after these conversations have been concluded.

Cannot the Minister convey to Mr. Dulles that the wild statements being made from time to time in America before the negotiations take place are not serving the cause of democracy or Anglo-American understanding?

Will the Minister make it clear that we have not been a party to any arrangements by which there is a threat to the Chinese that, in the event of their doing something in the Indo-China campaign we shall join with the Americans in retaliating by wiping out enormous numbers of the Chinese people with the hydrogen bomb?

I have already said that my right hon. Friend is having discussions with Mr. Dulles about the preparations for the Geneva Conference. I do not think that it is in the public interest to make any further answer today.

May I take it that the Foreign Secretary will definitely make a full statement before the rising of the House on Thursday?

I certainly hope that that will come within the terms of the last sentence of my answer.

Will the right hon. and learned Gentleman make clear to Mr. Dulles the fact that he does not seem to understand that the issue in Indo-China is not a question of Communists versus the democratic West but nationalists who have been captured by the Communists because the French will not give their country independence?

I am quite sure that my right hon. Friend will discuss all aspects of this matter with Mr. Dulles.

Cannot the Minister give the House an assurance now that he will give no undertaking that British forces will be sent to Indo-China in any hypothetical circumstances?

I am certain that it would be wrong for me to make any statement with regard to discussions that are now in progress.

Cannot the Minister give us an assurance that it is the Government's policy to seek a negotiated settlement of the Korean and Indo-Chinese problems at the Geneva Conference and that their belief that it is possible to get a negotiated settlement will be made clear to Mr. Dulles?

That proposition is contained in the communiqué which was issued after the Berlin Conference.

Is not the important thing that no ultimatum should be given to China at the moment that might jeopardise the whole future, and the holding, of the Geneva Conference?

I shall certainly convey to my right hon. Friend all these expressions of opinion; but these discussions are now pending.

Cease-Fire (Ussr Proposal)


asked the Secretary of State for Foreign Affairs whether he will make a statement on the official proposal of the Union of Soviet Socialist Republics that there should be a cease-fire in Indo-China before the Geneva Conference.

No, Sir. Her Majesty's Government have received no such official proposal from the Soviet Government.

Do not Her Majesty's Government read the newspapers? Have they not observed that "Izvestia," which is an official organ of the Russian Government—no unofficial newspapers are allowed in Russia—has proposed a ceasefire in Indo-China? Will not the Government remember that when a cease-fire was proposed by the Russians for Korea, a cease-fire followed? Will they bear this very closely in mind in discussing the matter with Mr. Dulles and at the Geneva Conference, because if they think about it diligently and read the newspapers they might get somewhere?

The hon. Member's Question speaks of "the official proposal." We are not yet prepared to regard statements in newspapers as official proposals.

European Coal And Steel Community (British Association)


asked the Secretary of State for Foreign Affairs whether he has now completed the study and consultations made necessary by the Schuman Plan Assembly's invitation to negotiate a form of association; and whether he will make a statement.

Why do the Government take so many months to reply to questions put to them by Europeans when they react almost instantaneously to the American Government's questions?

I do not accept the implication of the hon. Member's supplementary. Apart from that, as I explained to the House at some length last week—and I do not want to repeat it all now—these proposals raise very important implications, and consultation is necessary with a very large section of the basic industries of this country, on both sides— both the employers and the unions. I do not think it is unreasonable or wrong that the Government should take some time in giving the fullest consideration to these very important matters. It took M. Monnet six months to put the proposals to us.

I accept the fact that it takes months to study these proposals, but the invitation has been before the Government for many months. Does the Minister not realise that our procrastination is handing the leadership of Europe to the Germans?

I do not know what the hon. Member means by "many months." The matter has been before us for three-and-a-half months.

Could the House be informed of these proposals when the hon. Member makes a statement to the House about the military proposals, before the Easter Recess?

No, Sir, but I hope we may be able to report some progress, at least, after Easter.

Basic Subsidised Foods (Price Changes)


asked the Minister of Food whether he will publish a list of price changes in basic subsidised foods authorised from October, 1951, to date.

I will circulate a list in the OFFICIAL REPORT.

Can the right hon. and gallant Gentleman say, very briefly, whether the price changes from October, 1951, to the present date are better than or worse than the price changes from 1945–51, which he has already circulated in the OFFICIAL REPORT?

DateAmountDateAmountNet Increase
Bread1¾b. loaf16 Mar., 19521½1½
Flour (plain)3 lb.16 Dec., 195117¾
16 Mar., 19523¾
5 Apr., 19533
Meat (carcase)1 lb.15 June, 195244
Bacon1 lb.30 Dec., 19511016 Aug., 195311½
5 Oct., 19527¾
Butter1 lb.5 Oct., 1952612
6 Sept., 19534
21 Feb., 19544
Margarine1 lb.5 Oct., 195224
6 Sept., 19532
Cooking fat and lard.1 lb.5 Oct., 195224
6 Sept., 19532
Sugar1 lb.5 Oct., 195211½
6 Sept., 1953½
Milk (liquid)1 pint1 Dec., 1951½1 May, 1953½1
1 July, 1952½1 Nov., 1953½
1 July, 1953½
1 Aug., 1953½
Cheese1 lb.30 Dec., 19511012
5 Oct., 19522
21 Feb., 19542
Tea1 lb.15 June, 19521010
Ware potatoes7 lb.1 Aug., 1952¾¾

Electric Wires And Cables (Monopolies Commission Recommendations)


asked the Minister of Supply if he is now in a position to state the date on which he will declare Her Majesty's Government's policy on the

I have not with me the list for 1945–51. The food index rose by about 95 per cent. in the last two years and by about 25 per cent. in the previous two years.

Did the Minister circulate a list of these prices in East Edinburgh?

Following is the information:

recommendations of the Monopolies Commission about the supply of electric wires and cables.

My right hon. Friend hopes to be in a position to make a statement shortly after the Easter Recess.

Is the hon. Member aware that he said that before the Christmas Recess and that the Minister also said it last November? May we have an assurance that this statement carries greater weight than the previous six statements in the last six months and that the statement to which he refers will be made shortly?

I can assure the hon. Member that neither my right hon. Friend nor I have ever said exactly this before. A few weeks ago my right hon. Friend explained to the hon. Member what are the difficulties about this matter. I am sure it is wise to spend the extra time so as to reach a really sensible conclusion.

Can the Minister say whether the Government have ever implemented any recommendations of the Monopolies Commission?

Pensions And National Insurance

Insurance Act (Quinquennial Review)


asked the Minister of Pensions and National Insurance if he will take steps to ensure that the first quinquennial review of the operation of the National Insurance Act shall be completed at the earliest possible date.

The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance
(Mr. R. H. Turton)

Yes, Sir. So far as lies within the power of my right hon. Friend.

Invalid Dependants (Death Grants)


asked the Minister of Pensions and National Insurance the approximate cost per year of making death grants payable on the deaths of invalid dependants who have paid no National Insurance contributions and in respect of whom, for reasons of age, no grant can be claimed on the insurance record of a parent.

While I appreciate that it may be difficult to get this information, may I ask whether the Minister is aware that the financial assistance for the death grants may be of particular value in cases of this kind where the funeral expenses are no lower, normally, but where there is a background of inability to earn and consequential financial hardship? Will he investigate the matter, with a view to making recommendations?

The National Insurance Act based the death grant benefit on the contributory principle. The hon. Member is suggesting that the contributory principle should be abolished. That would be contrary to the principle of the Act.

Can the Minister tell us whether the quinquennial review will take note of cases like this and of people such as widows, who are unable to get benefits at all under National Assistance?

The working of the death grants and widows' benefits will come within the quinquennial review.

Ministry Of Transport

Working Hours, London (Staggering)


asked the Minister of Transport and Civil Aviation if he will request the London and Home Counties Traffic Advisory Committee to inquire into the possibility of extending the staggering of working hours in the London Transport area and to report on its effect upon transport facilities and costs.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation
(Mr. Hugh Molson)

This is one of a number of proposals which my right hon. Friend is considering to relieve congestion in London.

Does the Parliamentary Secretary realise that travelling conditions in London at peak periods are becoming impossible and that unless some constructive action of this nature is taken we shall experience a continually increasing cost inevitably followed by higher fares?

It is because of this increasing congestion that my right hon. Friend has various proposals under consideration at present.

Will the Minister ask this Committee to give special consideration to the necessity for staggering the hours of people leaving work, especially in the Westminster and City areas where, if it were done, it would make a very great contribution towards speeding up the London traffic?

Committees were set up by the Minister of Transport in the Socialist Government, but they were wound up in November, 1949. We are considering what would be the best way of studying this very important matter of staggering working hours in London.

I cannot say, but it does not fall within the terms of reference of the London and Home Counties Traffic Advisory Committee to consider the cost.

Could we be told when we are to have the first instalment of the reduction in fares which Tory speakers have promised us?

Comet Aircraft (Loss)


asked the Minister of Transport and Civil Aviation if he will make a further statement on the loss of the Comet on the night of 8th April.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation
(Mr. John Profumo)

Since my right hon. Friend's statement last Friday search operations have established that the disaster occurred about 70 miles south of Naples. The bodies of five victims, a small amount of wreckage, some mail and various personal effects have been recovered. The depth of sea in the area is 520 fathoms so that there is, I regret, no possibility of salvage operations.

As the House will know, my right hon. Friend has withdrawn the United Kingdom Certificates of Airworthiness of Comet aircraft pending further detailed investigation into the causes of the recent disasters. Before taking this step he received the advice of the Air Registration Board and the Air Safety Board and discussed the matter with the Chairman of B.O.A.C.

It is clearly of vital importance that everything possible should be done to get to the bottom of these mysterious tragedies. A public inquiry will be held into this accident as well as the Elba accident. In addition, exhaustive investigations and tests will be carried out as a major national research project by the Ministry of Supply. The full resources of that Department have been made available for this purpose.

While thanking the Minister for that full reply, may I ask him whether he does not think that in view of the tremendous developments which have been made in jet aircraft these tragic happenings cannot be taken as altogether unexpected; and that the whole country will share the decision of the operators, the manufacturers and the Government to proceed with the intensification of these tests with a view to getting the Comet into operation once more? There must be no question whatsoever of abandoning the Comet.

Yes, Sir. I think it would be well not to miss this opportunity of taking our hats off to these V.I.P.s on whose courage and genius the future of this great British project now relies.

When considering the membership of the inquiry will my hon. Friend go into the question of whether it would not be desirable to call in Sir Frank Whittle as one of its members, in view of his great ability as a diagnostician of turbo-jet engine failures?

The public inquiry is one matter and the investigation which will be carried out by the Ministry of Supply is another matter. I think that what my hon. Friend has said will certainly be noted by the Minister of Supply.

In view of this strange series of accidents connected with Rome Airport, will the inquiry or investigations include some special attention to the security arrangements at Rome Airport?

That seems to be a matter for the inquiry when it is set up. I think the House would not expect me to prejudge the decisions to be taken on that occasion.

As one who has flown on both the Singapore and Cape Town routes, may I ask the Minister whether he is aware that the security arrangements on several points on both routes appear to be such that any competent sabotage organisation would be able to get through them?

The possibility of sabotage, of course, cannot be excluded, and this and all other possible causes will certainly be most fully investigated.

In view of the importance of salvaging, can my hon. Friend say whether Her Majesty's Government have sent their congratulations and thanks to their Lordships of the Royal Navy for the astonishingly good work done in the salvaging of the other Comet that crashed?

Yes, Sir, my right hon. Friend sent a personal message through the Admiralty to the Commander-in-Chief, Mediterranean Fleet, on the lines suggested by my hon. Friend, and I understand that the Commander-in-Chief very much regrets that he is not able to help with salvaging on this occasion.

Hostel, Euxton (Management)

The following Question stood upon the Order Paper:


To ask the Minister of Supply if, in view of the unsatisfactory manner in which the Highways Hostel, Euxton, is managed by the Young Men's Christian Association-Young Women's Christian Association Joint Committee, he will consider transferring the management to his department.

On a point of order. Surely, Mr. Speaker, the use of the epithet "unsatisfactory" prejudges the answer to this Question. Is it right that a Question should be framed in this way?

The Question does make a statement about the manner in which the hostel is managed. It is proper to do so. The hon. Member who put down the Question takes upon himself the responsibility for the truth of the allegation.

Anglo-Iranian Oil Negotiations (Resumption)

With your permission, Sir, I should like to make a statement about the resumption of oil negotiations with Persia.

A consortium of oil companies has now been provisionally formed and is about to discuss with the Persian Government the resumed operation of the oil industry in Persia.

The group is composed of the following companies: the Anglo-Iranian Oil Company, with a 40 per cent. share; five American companies, Standard Oil of New Jersey, Socony Vacuum, Standard Oil of California, Gulf Oil and Texas, with 40 per cent.; Shell, with 14 per cent; and the Compagnie Française des Pétroles, with 6 per cent.

The Persian Government have been informed of this, and have invited representatives' of the consortium to go to Teheran for discussions. Three representatives of the group have, therefore, left for Persia. They are Mr. Harden of Standard Oil of New Jersey, Mr. Snow, of the Anglo-Iranian Oil Company, and Mr. Loudon, of Shell.

Her Majesty's Government welcome this development. It is their policy to do all in their power to ensure the well-being and prosperity of Persia. I am sure that the House will share my hope that the negotiations will lead to a durable settlement satisfactory to all the parties concerned.

I am sure that the House will welcome the news which the Foreign Secretary has given, and we hope that it will work out well. It is better that these things should be settled in due course by friendly discussion than that they should have been sought to be settled by means of war and force. If we had sought to settle them by force this statement would not have been possible today. I can only say to the Foreign Secretary and to the House that we on this side all hope that these discussions, which, we gather, are somewhat promising, will result in success, and that our relations with Persia and the oil supply available from that country will, in consequence, be vastly improved.

Would my right hon. Friend bear in mind that, notwithstanding the composition of the consortium, the whole of the asset that was lost—the £350 million refinery at Abadan—was a British asset, and that in the course of any general settlement which may be negotiated will there be suitable contributory compensation by the other parties to the consortium to the British fixed assets vested in that refinery?

I must say that I would have thought that the House as a whole would have welcomed this arrangement in view of the past history and of the position only two years ago so far as Abadan itself was concerned. I would have thought that it would have been generally welcome on both sides of the House. I can assure the House that it has taken a very long and very delicate piece of negotiation to get it to this point. As regards the position of the companies, the other companies, in the event of agreement being reached, will be paying the Anglo-Iranian Oil Company for the interests they will acquire.

Of course, it was never in our mind at any time in the discussion that these arrangements could be come to without the other companies paying the Anglo-Iranian Oil Company for the share they would take in the consortium and the agreement to be reached. I am sorry that anyone could have conceivably thought that I, as Foreign Secretary, would have agreed to anything else. May I add this: The House should also bear in mind, if it will, that these other companies will be able to assist in the problem because they will be able to help in the disposal of the oil, which is one of the problems which has still to be resolved in the course of the discussions with the Iranian Government.

Will the right hon. Gentleman say whether the consortium is to be concerned with the production and the refining of the oil or simply with its marketing? If only the latter, can he explain exactly in what respect payment by this company can compensate the Anglo-Iranian Oil Company?

I quite understand the question and I assure the right hon. Gentleman that it has been very much in our minds in the discussions. But the actual negotiations with the Persian Government have not yet opened, and, as the right hon. Gentleman will understand, I would rather not comment in detail on that now beyond telling him that we have thought of those problems and they will be among the matters discussed. I very much want the negotiations to open in a very friendly atmosphere so far as Persia is concerned, and I am sure the whole House would wish that they should succeed, not only because big British oil interests are at stake—naturally, we care about those—but also because Persia's economy and stability is something which Britain cares for, too.

I share the right hon. Gentleman's views that there will be a satisfactory agreement, but will he deny the suggestion which was put about that one requirement for an agreement was that Her Majesty's Government should withdraw their holding in the Anglo-Iranian Company?

Never at any time were the Government asked to give up their holding in the company. Had we been asked, we would not have agreed, unless for some other reason we wanted to do so.

Will my right hon. Friend see that complete publicity is given to his statement about the other companies in the consortium compensating Anglo-Iranian for the assets? Although it is well known in Parliament that that is what is to happen, it is not well known in the country, and I think there is concern in the country that the other companies are getting something for nothing.

I do not know how anything could have been made known in the country until I made my statement this afternoon. I could not make it on Sunday because the House was not sitting, but I have taken the first opportunity of explaining exactly what the position is. I hope that if anybody has any doubt, my statement will clear it up. We have some way to travel before we get the agreement.

Was it not arranged by the Prime Minister about 1910 that the British Government should own rather more than half of the installations at Abadan, and is this an instalment of the Government's denationalisation programme to get far more than half of these installations now owned by international big business?

The hon. Member is, no doubt, referring to my right hon. Friend's foresight in a very early period of the life of Anglo-Iranian, when, I think, my right hon. Friend was at the Admiralty, when he suggested that the Government should take a share in it. That was a very farseeing action. I do not know exactly where the complaint lies.

New Member Sworn

Eustace George Willis, Esquire, for Edinburgh, East.

Orders Of The Day

Ways And Means

Considered in Committee [ Progress, 8th April].

[Sir CHARLES MACANDREW in the Chair]

Question again proposed,

Amendment Of Law

That it is expedient to amend the law with respect to the National Debt and the public revenue, and to make further provision in connection with finance, so, however, that this resolution shall not extend to giving any relief from purchase tax otherwise than by making the same provision for chargeable goods of whatever description or by reducing any of the several rates of the tax generally for all goods to which that rate applies.

Budget Proposals

3.26 p.m.

The weekend gap in this debate has been of value in giving hon. Members an opportunity to find out what their constituents say about the Budget. I do not think many will deny that the Budget came as a profound disappointment to the electorate and caused deep resentment amongst the old-age pensioners. There could hardly have been a more crushing condemnation of the Chancellor's Budget than the verdict of the electors in Edinburgh, East.

The Chancellor of the Exchequer cannot evade responsibility for creating the expectations whose disappointment has caused such a shock, from which his supporters are now suffering. I do not know whether the Minister of Works, when coining his famous slogan for the Budget,
"Treat 'em mean and make 'em keen",
realised that it would make many people keen to Vote against the Government. Not merely the Economic Survey, but the speeches of all three Treasury Ministers, have been ringing with optimism and reeking with complacency.

Sir Stafford Cripps, whether one thought his policy right or wrong, strove to tell the public the facts. But the present Chancellor of the Exchequer has spent too much time sedulously concocting a legend. The legend is simple: that everything is going very nicely, and it is all due to his being Chancellor. That is why, instead of hard economic arguments, we get so many incantations about lightening the ship, sailing out of slack water, confidence, flexibility, and all the rest of it.

Let me give just a few examples. The right hon. Gentleman has never made the public understand that the country has gained £600 million or more in the last two years from the improved terms of trade alone—an amount, incidentally, equal to the whole housing programme last year. He has obscured the fact that 1952 was a very bad year, in which employment and production fell for the first year since the war; that this was the reason for his Budget reliefs a year ago; that production has still only a little more than recovered to the 1951 level; and that exports and investment are still lagging, in spite of the very large reliefs in profits taxation given to stimulate them last year.

The Chancellor has never made clear that, despite all this good fortune, the gold reserve today is still much lower than in September, 1951, and has only been kept from dropping further in the last few months by heavy American military expenditure all over the world and by large consignments of Russian gold to this country. I do not know why the right hon. Gentleman is so coy about the Russian gold, because it is all made clear in the "Economist" this week, as he may have seen.

I was not being coy about the Russian gold, which I very much welcome. I was simply disputing the extraordinary inaccuracy of the right hon. Member's reference to the reserve.

We are glad to have the Chancellor's admission that the Russian gold is coming in and that he welcomes it. I do not think: the right hon. Gentleman would really deny that the reserve is still much lower than it was in September, 1951. I hope the Chancellor would agree with me that one reason the sterling area has stood up better to the present American recession than it did in 1949 is that very programme of deliberate but perhaps rather austere investment under Sir Stafford Cripps in oil refineries, electric power production and greater home food production, which are giving great assistance today. Indeed, to quote one figure, to illustrate the success of the United Kingdom dollar export drive, the total value of United Kingdom dollar earnings last year was more than four times as great as it was in 1946; and most of the rise actually occurred before 1952.

Perhaps the greatest fraud of all practised on the public is the Chancellor's continuous silence on the huge increase in Government expenditure since he took office. Many hon. Members opposite—I say this more in sorrow than in anger—have deceived themselves by their own propaganda into thinking that great economies could be made without changes in foreign or social policy. I sometimes find it rather disturbing that so few of the public today seem to understand or even care about the expenditure side of the Budget; and this is one of the few opportunities in the year when we can look at the whole picture.

Perhaps one reason for confusion is the muddle between the "above the line" and "below the line" expenditure; and I would personally like to suggest to the Chancellor that the time has come to go over to the "alternative classification," started in the time of the Labour Government which at least shows, first, current, and second, capital, expenditure. That might enable people to see more clearly what is really happening.

Let us look at the record. I have always been a close student of Churchillian economics. Therefore, I begin with that one of the two 1951 Election manifestos which was written by the Prime Minister and not by the Chancellor. It was headed "Conservative Faith," and very conveniently there is a copy of it in "The Times" book on the General Election which is with us all the time. That manifesto stated that the Labour Government had "spent more than £10 million a day, or £22,000 million in six years of office." But the present Chancellor of the Exchequer, on the same basis, is spending at the rate of £30,000 million in six years. The manifesto then says:
"No community living in a world of competing nations can possibly afford such frantic extravagances … A Conservative Government will cut out all unnecessary Government expenditure, simplify the administrative machine, and prune waste and extravagance in every Department."
So much for Conservative faith.

Now let us turn from these Churchillian fantasies and look at Conservative works as portrayed in the cold daylight of the Chancellor's White Paper. I take the conventional figure of expenditure above the line, and compare the actual figure of spending in the last year of Labour responsibility, 1950–51, and the Chancellor's estimate for the year now starting. The increase from that year of Labour's "frantic extravagance" is from £3,258 million to £4,523 million, a rise of £1,265 million, or, I think, just under 40 per cent.

Hon. Members opposite may very likely think that that rise is wholly due to defence, and that other expenditure has been cut down. But, out of that £1,265 million, only £778 million is due to defence, which leaves an increase of £487 million for other items. Of that, £92 million is due to the rise in the debt interest and another £352 million in the civil votes—from which I exclude Ministry of Supply defence items. Indeed, the rise is larger because the Exchequer contribution to the Insurance Fund was reduced in the interval. The increases on the civil side are mainly for education, health, National Assistance, and family allowances. We have always said that we believe those increases to be right and necessary. But what becomes of all the propaganda about "frantic extravagances"?

Let us ask ourselves soberly this afternoon what is the real reason for the total disappointment of Tory economy hopes, and what is the realistic Budget problem of the future. I suggest that there are four main reasons for the disappointment of those hopes. The first—and biggest single one—is the defence Programme, on which incidentally we had already embarked when the Prime Minister made all those orations about frenzied extravagances, and all the rest of it. The huge cost of defence is yet one more powerful argument, if one is needed in this Committee, to prove again that there can be no major relief to the Budget until we achieve agreed international disarmament.

I suppose that was what the Chancellor meant by his rather curious remark last Tuesday:
"During the coming year we must see to it that we obtain some definite relief from the defence burden."—[OFFICIAL REPORT, 6th April, 1954: Vol. 526, c. 208.]
According to HANSARD, the right hon. Gentleman said "During the coming year" and not "years" That is quite different language from the Defence White Paper and, indeed, the Service Ministers' speeches in the Defence debates. Does this mean—and we must press the Chancellor to answer this—a big change in policy? Or is it just another echo of the fierce wrangles now rending the Cabinet on every subject from teachers' pensions to the Prime Minister's indiscretions?

The second reason for the Chancellor's failure to fulfil his economic promise is that, as we have always argued, there never were examples of enormous administrative waste which could save hundreds of millions of pounds. To give one small example, if the Committee look at the Ministry of Food Estimates this year, the total estimate is for £256 million —which is perhaps not worth much, as the Chancellor was £162 million out last year. There is to be a cut this year of one-third in Ministry of Food salaries. If I read the estimate aright, it will presumably involve a major demobilisation of that Ministry, which will, of course, bring delight to the hon. Member for Kidderminster (Mr. Nabarro). But he has not probably realised that that major cut will save, according to the Estimates, £3½ million out of £260 million.

Let me assure the right hon. Gentleman that I am far from saying there are still no administrative economies to be made. Certainly there are. We have had disturbing examples in the reports of the Select Committee on Estimates of wasteful expenditure, for example, on Civil Defence. The Chancellor, to give a small example, might also look again at page 44 of the Ministry of Works Estimates for what are called "Diplomatic Residences and Offices Abroad." Do we really need to spend, in one year, £600,000 at Bahrein, £190,000 at Cairo, £400,000 in Rome and £1½ million in Delhi, to mention only a few on a long list? Even so, here again let us note that the potential savings are in hundreds of thousands and not in tens of millions, let alone hundreds of millions.

The third reason for the failure of the Chancellor is the simultaneous growth in these last years of the number both of children and old people as a proportion of our total population. That has been going on ever since the war. It is well known, though it was apparently overlooked not merely by the Prime Minister, when he made those speeches in 1950 and 1951, but also by the present Economic Secretary when he was helping to prepare them.

Fourthly is the discovery of the Chancellor, after two and a half years, that we were right all the time in telling him that the food subsidies could not be blithely cut, as a carefree act of Treasury policy, without far-reaching damage to our whole economy. What an amazing story is the Chancellor's record over the food subsidies. In his 1952 Budget he announced a cut in the then figure of £410 million by £160 million, and immediately raised other expenditure by £80 million as a counterweight to that saving. But in that year he spent well over £300 million. In last year's Budget he said firmly that the subsidies would be £220 million. Then the facts of life intervened again, and the Chancellor, swearing he would ne'er consent, consented to spend £325 million after all. This year he abandons all pretence of virtue, and £325 million it is to be.

By this abortive effort the cost of living has been levered up, industrial peace disturbed, our exports hampered, political pledges broken, and, at the end of the day, if we add the £80 million increase in 1952 to the present £325 million, no money saved. Nevertheless, I congratulate the right hon. Gentleman on having accepted our arguments after two and a half years.

We in the Labour Government always maintained that the subsidies were justified, for two powerful reasons, apart from the overriding motive of social justice. First, we realised that any sweeping cut would send up costs and damage the export trade. It is remarkable to remember that in his 1952 Budget statement, when he made the cut, the right hon. Gentleman said almost nothing about the problem of wages, prices and exports. Yet in this year's Survey we are told that if
"the prices of our exports generally were to be pushed up by a rise in internal costs, we should be taking a short cut to national bankruptcy."
There again, hon. Gentlemen opposite have learned a lot.

They try to argue sometimes that the cost of living, despite this queer subsidy policy, has been stable under the present Chancellor. In fact, the Official Index has risen by 10 per cent. But what matters, from the point of view of exports, is not the absolute movement in costs, but—what hon. Gentlemen opposite either forget or conceal—how they are moving relatively to those in our competitor countries. Our complaint is that living costs have been forced up here, at a time when world prices have been falling.

Some Ministers—including the Parliamentary Secretary to the Ministry of Pensions in a debate on Friday, 19th March,—have been trying to deny that we have been benefiting from falling world prices. Yet the Index of British Import Prices—and that is what matters—has fallen continuously since February, 1952, and is now lower by about 20 per cent.—worth about £600 million or £700 million of our import bill.

I think this cost-of-living story can best be told in this way, if the House will forgive a few more figures. In the two years, under the Labour Government, from the third quarter of 1949 to the third quarter of 1951, our import prices rose by 66 per cent. But the Retail Price Index rose only by 14 per cent. Under this Government, between the third quarter of 1951 and the last quarter of 1953, import prices fell by about 17 per cent. but the cost of living went up, not down, by a further 10 per cent.

Or compare our cost-of-living record with that of other countries. Since April, 1952, when the Chancellor first made his subsidy cut, living costs have risen here despite falling world prices. Over that same period, they have gone down in Germany, France, Canada and Belgium, according to the United Nations figures. They have remained stable in Holland; and the rise has been less than here in the United States, Switzerland, Sweden, Italy, Denmark and even in Argentina. That includes most of our main industrial competitors.

In the past year the Chancellor has achieved the astonishing feat of slightly raising the food subsidy figure, at a time when food import prices have been falling, and, according to his own Survey, leaving us with retail food prices averaging 5½per cent. above 1952. There, indeed, he has worked a miracle.

We also maintained subsidies because we always believed that they were essential for ensuring a high level of home food production against the uncertainties of world economic conditions. I see that Professor Austen Robinson, whose opinion I regard with respect, as I am sure the Chancellor will also, in the "Three Banks Review" for March has reaffirmed his view that a further one-third increase in home food output is a necessary insurance against the vagaries of world prices and food supplies.

What is likely to be the future of world prices? I must confess sometimes to feel-big that, in this matter of future world prices, as with the football pools, the small child sticking a pin in a bit of paper is as likely to get the right result as the economic Solomon in all his wisdom. [HON. MEMBERS: "Hear hear."] If the uncertainty is as great as that, as hon. Gentlemen opposite evidently agree it is, surely that is precisely the reason we ought to pay a substantial national insurance premium to preserve our own home food output?

For all those reasons, we ought to recognise honestly in the House that, until we can achieve real international disarmament, we must expect, like every progressive democracy, a pretty high level of public expenditure. It is partly the price of security against war and famine, and partly of that redistribution of in come and wealth, which makes the Welfare State possible, and which we, on this side of the Committee at any rate, are glad and proud to support. If so, it follows that huge cuts in direct taxation are not likely soon to be possible. The hon. Member for Spelthorne (Mr. Beresford Craddock) seems to be thoroughly realistic in his estimate of what we have to do. The hon. Gentleman more or less accepted this conclusion; and drew the moral that in order to maintain Defence and social services we must increase the wealth of the country—in other words, increase productivity—on which my right hon. Friend the Member for Blyth (Mr. Robens) will have something to say tonight—

The hon. Gentleman seemed to be more realistic than the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), who first talked about the hardship of the pensioners, and then went on to suggest that by some wonderful new machine of Treasury control somehow or other sweeping cuts could be made.

I believe that with the rise in production and national income some lightening of tax rates ought to be possible. But priority should go to reliefs for small Income Tax payers first, and exemption of necessities from Purchase Tax. Ideally, we should give reliefs in such a way as both to encourage saving, and to discourage dis-saving, if I may be allowed to use that word.

Here I should like to remark in passing to the Chancellor that we are glad that he did not rush hastily into accepting the Tucker Report recommendations on taxation and pensions. They raise far-reaching issues of social justice, and would cost a great deal in the end; and we all need some time to think them over before we make up our minds.

But if that is true, the Committee would be wise to accept the conclusion that a pretty high level of taxation on business profits will be necessary to our expanding economy. The last few years have shown the complete falsity of the traditional Tory argument—I think that many hon. Members opposite have now deserted it—that it was lack of money due to taxation which was holding up industrial investment. Nevertheless, I agree with what I take to be the view of hon. Members opposite that if the Exchequer is going to absorb large sums of money in revenue from business profits, it must use that revenue on an adequate scale for capital development as well as for current spending.

I see no reason why loans out of surpluses in the Budget should not be made available to private as well as to public industry for development. Indeed, if we go over to the "alternative classification" in the Budget, it might make that idea more practicable. That may be the secret of the development of some of our future Budgets. At least it would have the advantage both of encouraging industrial investment, and assisting a more democratic ownership of property, in which hon. Members opposite believe in theory and we believe in practice.

I should prefer that method of stimulating investment, as a first thought anyway, to the so-called investment allowances which the Chancellor is introducing this year. Certainly these investment allowances are better than doing nothing to stimulate investment. But I still doubt whether they are better than the 40 per cent. initial allowance would have been. The Chancellor's new scheme is a subsidy, or free gift, out of the taxpayers' money to private firms, equal to 9 or 10 per cent. of the value of the plant installed, whether the firm would have invested anyhow or not, and whether it can afford it or not.

I believe it is a good principle that, where public money is used to encourage capital development, it should be done by loan rather than by way of gift. In that way the new assets created remain in public hands. We followed that method with great success throughout the Development Area policy, so that all the factories built with public money are now publicly owned. I believe that that is preferable to the Chancellor's subsidy method.

If the Chancellor is arguing that there was no other means than this subsidy of inducing private industry to undertake this investment which is in the national interest, he is advancing the strongest argument for wider public ownership of British industry that we have heard for some time in this Committee. In any case, if the great difficulty is that private industry will not invest, why did the Chancellor not reduce the Bank rate? Why not at this stage have rather cheaper money? That method, through the lower debt interest, would save public money, and not increase expenditure, as will the investment allowances. What has become of the famous flexibility of monetary policy as circumstances change? Perhaps the Chancellor will tell us tonight why he did not draw that conclusion.

I should like to make one emphatic further appeal to the Chancellor. The truth is, of course, that the right hon. Gentleman has dissipated so much of last year's good fortune in bonuses for consumption by people not acutely in need that he has very little left to play with today. Nevertheless, judging by the speeches that we have heard in the last three days, I think that almost the whole Committee is willing and indeed anxious to vote him the money needed for adequate increases in old-age pensions, war pensions, insurance benefit rates. National Assistance and equal pay. In- deed, I believe that the Chancellor suggested on television the other night that he did not necessarily have to do this in the Budget but could do it later. If he is vacillating, we should like to push him on. We are fully ready to support, if necessary, the restoration of the profits taxation necessary to make those changes, out of the £340 million which the Chancellor has given in relief in direct taxation.

If it were open to us to put such a Motion on the Order Paper tonight, we should do so and support it in the Division Lobby. But though more votes were given to the Labour Party in the last Election than to the party opposite, and even more at Edinburgh, East last week, nevertheless, owing to the peculiar arithmetic of our electoral system, we happen to be sitting on this side of the Committee at the moment. Therefore, as we are unable to put such a Motion on the Order Paper today, I urge the Chancellor to search his conscience again, and do so himself. I can pledge him that, if he does, he will receive the unanimous support of everyone on this side of the Committee.

3.58 p.m.

It may be convenient to the Committee if I speak at this stage. This is the final day of the debate on the Budget and it may be appropriate if I say something about the commercial impact of these Budgetary proposals. The right hon. Member for Battersea, North (Mr. Jay) made a very agreeable speech. It seemed to me that "The Man in Whitehall" was beginning to acquire a certain modesty. He told us that the way in which he judged the future trend of world prices was the same as he did his football coupons, namely, by sticking a pin in the paper. We had always wondered how the Economic Surveys were prepared under the Socialist administration and now the secret is revealed.

The right hon. Gentleman must not rewrite my speech as much as that. What I said was that I have sometimes wondered whether that method was not as liable to get a correct result as any other.

So have we.

It seemed to me that the right hon. Gentleman's main theme was to read us a lecture on the evils of excessive Government expenditure, a lecture to which we listened with great sympathy and understanding. We fully appreciated it when he told us of the many difficulties that there are in the way of cutting back expenditure, but, of course, if the right hon. Gentleman wants us to spend less, the first step is to be sure that he does not urge us to spend more.

When one considers what the right hon. Gentleman and his right hon. and hon Friends propose—the tying of pensions to cost-of-living increases, the abolition of the National Health Service charges, and increasing food subsidies—taking the lowest figure from the "New Statesman and Nation," which in this connection might be regarded as a conservative estimate, the party opposite are on record as wishing to spend a further £600 million or so. It is a little difficult to regard the right hon. Gentleman very seriously if one remembers that his real proposals are not that we should cut back expenditure but that we should increase it by a large amount.

The criticism which he made, and which has been made by many hon. Members in this debate, is that this is a dull Budget. Speaking from a commercial point of view, I think that there are some solid virtues in a dull Budget. Dullness is only possible or defensible against the background of a stable financial situation and a sound economy. If anyone wants excitement in a Budget, then, of course, we could go back to the period of recurrent crises which preceded the time when this Administration took office.

Of course, if this country is in the middle of an inflation, one can have an exciting Budget. The revenue soars, prices soar, the overseas deficit soars, private savings fall, and in an endeavour to rectify the situation taxes are put up. But if at the present time Canada and the United Kingdom can manage on what can be called "carry-on" programmes, that is not a reflection on their Governments, but a tribute to the sound administration with which the countries are managed.

I know how much the right hon. Member for Leeds, South (Mr. Gaitskell) dislikes medical metaphors, but, if I may say so, the patient is no longer in a high fever or in the last stages of acute anæmia. He has got out of bed and is going to work in a bus or is going in a train to the office. It may be a dull and unexciting thing to do, but it is a very sensible and profitable thing to do, and one which I hope will continue for some time.

I had hoped this afternoon to speak shortly about one or two matters which particularly affect the Board of Trade. I do not propose to choose the easy ones. I want to say something about investment and something about exports. I am not arguing that there is no cloud in the economic sky, because there always will be cloud in the economic sky. Nor do I deny that good fortune, as well as good management, has played a part in our recovery. But I would say to the right hon. Gentlemen opposite that they should be a little careful about how they keep rubbing in the luck that dogs our footsteps, because if they are not careful we are going to be known as the lucky Government, and a lucky Government is going to be a popular Government in this country.

There is another thing about luck. There are two sides to this story. Falling import prices do not mean a rising demand abroad. While an alteration in the terms of trade certainly helps the Chancellor, it presents a very real problem to the President of the Board of Trade. We cannot have it both ways, and I think it worth while bearing that in mind.

Now, as to our situation, I do not propose to re-enter the statistical struggle which goes on in these debates; indeed, the precise figures are probably less important than the direction in which we are moving. It seems to me that, on all the evidence, we are moving in the right direction, perhaps not as fast as some of us would wish, but in the direction in which we want to move.

Production is moving up, and the increase is not simply due to the fact that there are more people at work, though there are—and good luck to them. The increase is due to the fact that they are producing more. Productivity is moving up. I hope that the right hon. Gentleman opposite is going to make some remarks upon this subject later in the debate. It is a subject which, I suppose, can be said to be primarily one for industry and the trade unions, but there are rôles which the Government can perform. I wish to say how much we all value the work of the British Productivity Council, under the very able chairmanship of Mr. Tom Williamson, in this field.

The index of wage rates has moved up faster than the index of retail prices. Real wages are therefore up and consumption is up. The gold and dollar reserves are up. They moved up each month in 1953, except in December, when we were paying back the loan. Exports have recovered progressively during the whole of 1953. All those things are moving up at the present time, and the fact that they are doing so means something very real in the standard of living and in the standard of human happiness of this country.

While these things have moved up, taxation has moved down. This year we shall get the full benefits of the tax reductions which were brought about last year. The additional benefit, on the basis of the 1953 Financial Statement, represents a fall of £90 million. If we add the £2 million for the Purchase Tax adjustments in January and the £4 million in this year's Budget, it means that over that period there has been a taxation reduction of the order of £100 million. With production, exports and productivity moving up, taxation has moved down. There are sensible people who see some connection between these two events.

Now I wish to take one or two of the difficult points, and to say, first of all, something about investment. I do not think that anyone could lay his hand on his heart and say that he is content with the level of investment in the private manufacturing field. If the level of total investment is up—which it is—that increase concealed a virtually static position in the private manufacturing field, and I think that most of us on both sides of the Committee have considerable doubts whether we are investing enough, that is, enough to meet the needs of an increasingly competitive world.

We are certainly investing far less per head than the United States of America, though on the figures—as far as I can assess them—it does not appear that we are investing much less than Germany. We are as a nation putting money into the public sector of industry. We are putting money into houses. I am not saying that is wrong; indeed, there are few things more important than the basic industries and homes for our workpeople. But I doubt whether we are putting enough in the private sector.

I do not think that anyone should be too dogmatic as to the reasons which determine a man either to invest or to wait before doing so. They are many and various, and different opinions can be held about them. It is true that many companies probably had enough liquid resources to invest, but not all had. The pattern cannot be applied over the whole field. I think it fair to say that one factor which must weigh somewhat in making a decision is what is the net reward and whether it is adequate to the risk that these people take. I think that in many cases the men who have asked themselves that question must have answered "No."

The right hon. Member for Bishop Auckland (Mr. Dalton) and the right hon. Member for Battersea, North referred to increases which they proposed in the Profits Tax. I am not debating the ethics of putting up the Profits Tax. All I say is that it is quite certain that such an increase would tend to make people invest less, not more, and would damage rather than augment the competitive strength of the country.

For those reasons, I must say, as President of the Board of Trade, that I welcome the growing effect of the tax reductions made last year which are coming into their full effect this year, and the additional aid provided by the investment allowances this year. These measures are concentrated in giving help where help is most needed, that is, in the encouragement of industrial investment.

Now a word on exports. There is one thing to remember about export figures, and I say this against some rather good March figures which I am going to mention in a moment. The absolute figure for exports is not worth very much. One can have a very high level of exports, but very little profit. A high level of exports brought about against a background of world inflation, of booming imports at high prices and recurring balance of payments crises, fosters precarious conditions in the export market. There may be an appearance of confi- dence, but it is a situation which can end in trouble, as it did when the Korean war boom fell away. Export crises and balance of payment crises were well on the way by the end of 1951. I am not here debating whose fault it was, or anything of that kind; I am merely stating the facts.

Firms' order books give a delayed action effect on exports, and in the first half of 1952 exports were still high, principally because there were still orders placed at the tail end of the current year and in the second half. Then events began to take effect. Orders fell away very steeply, as the Committee know. What we should recognise is that 1953 was a year of recovery. It started slowly. It was not as fast as we should have liked. It was not better than previous periods to the extent that we should have wished, but it was going in the right direction. Exports were actually going up during the whole of 1953, and perhaps, on the whole, rather faster towards the end of that year. But at the very end, and in January and February of this year, we began to feel something of the effect of what in the United States is called "readjustment."

I am glad to be able to say that our exports for March are well up on January and February. They are provisionally valued at £246 million—a higher rate than the fourth quarter of last year. With imports valued at £299 million and re-exports at £11½ million the excess of imports over exports on a trade basis was £41 million, well below that of the corresponding period of last year. Again, may I say that I do not wish to overstate the position, particularly on figures for a single month, but I think that we can say that we are moving in the right direction.

We must pay a tribute to the men who do the job, the directors, managers and salesmen, and all the workers in the industries concerned. Beneath all the statistics quoted may be discovered some very fine achievements. Our exports to North America, which in 1953 reached the record figure of £316 million, this month topped £24 million, which is 12 per cent. above the previous two months and equal to the first quarter of 1953. This was achieved despite all the difficulties in that market, and hon. Members who know of them will appreciate that fact. Not only should we pay tribute to the firms concerned, but also to Sir William Rootes and the Dollar Exports Council, who have done magnificent work in this field. New industries and old are sharing in this. Textiles have recovered from the situation which faced them in 1952. All our export industries have faced a much harder, tougher and more competitive world, but, on the evidence, I think that there is ground for the belief that we can live in it, and find success.

I do not propose to enlarge on the export services of the Board of Trade, except to say that some time ago a Select Committee of the House examined our export services. I am glad to say that the Committee found some kind words to say about them. They also said that we were hiding our light under a bushel, which is seldom said about a Government Department. We have been prompt to take their advice. My right hon. Friend the Minister of State, Board of Trade, has been in charge of the campaign to publicise these services. Thanks to his efforts, and to the renewed and increased interest of industries in this country in the export markets, the work both of our export services branch and commercial officers overseas has been considerably expanded in recent months.

I have been asked some questions about another Department for which I am responsible, the Export Credit Guarantees Department. As my right hon. Friend announced, that department has decided to develop its special bank guarantees. These guarantees are not necessarily designed to provide longer credit terms, but to meet the difficulties which extended credit terms place upon exporters of major capital goods, a point mentioned many times recently by informed writers. It transfers the burden of lending, after the goods have been accepted by the customer, from the exporter to the bank. We shall watch this development and decide whether any further adjustments are needed as it is brought into effect.

It is in respect of medium-term credit—it would be mainly in respect of capital goods.

Is the decision about whether this credit is to be made available the responsibility of the Export Credit Guarantees Department, or the banks, or who?

Of course, in principle, the decision on this matter of credit, as with all others, rests with my right hon. Friend the Chancellor of the Exchequer. But once the decision in principle has been taken, the individual decision about whether a particular case is appropriate for this type of guarantee must in the last resort rest on the department, on ordinary commercial considerations.

Will the right hon. Gentleman explain the reason for the difference between the 85 per cent. ratio in one case and the 90 per cent. in the other, which I gather has caused a great deal of concern to many who would otherwise welcome the proposal?

We shall certainly consider that to see how it develops, but there is something to be said for people other than the Government taking some part of the responsibility for judging the risk which is being undertaken. I think that there is some merit in having it shared between the Government and the private interests concerned. There is another point. In the development of this type of guarantee one does not know the amount of demand which might be put upon it and, as a result, the amount of credit which might be extended. If we go in for unlimited guarantees of this kind, there may be some danger of a too high development of credit overseas. But I am not being dogmatic about this. I think it a sensible way of starting this arrangement, and we shall have to watch it as it goes along.

In that connection, and in reply to one or two hon. Gentlemen who have spoken during the debate, may I remind the Committee that the Export Credit Guarantees Department is a commercial and not a charitable institution. It must be solvent. It must provide services without subsidy from public funds. On this basis I claim that it has pioneered major developments in international credit insurance as it exists today.

I said without subsidy, and I mean that. The kind of trading world we want is a fair field for trade and no favours. A number of hon. Members have referred to the advantages which some of our competitors receive from export subsidies, in one form and another, provided by their Governments. Some reference has been made to the German practice, which allows reductions from taxable profits of 7 per cent. of export turnover, half by remission and half by tax deferment. Then there is the French system, in which there are substantial remissions of social welfare charges geared to the export turnover. We take the view that these tax remissions—which are not granted to industry generally, are not merely relief for exported goods from taxation on internal consumption, but are related specifically to exports—are an unfair trading technique.

Our policy has been, instead of adopting such practices ourselves, to seek to get agreement to abolish them. I would add that the Federation of British Industries has made vigorous and praiseworthy efforts to the same end. It has so far secured agreement with the Council of European Industrial Federations, its opposite number overseas, to seek to persuade the respective Governments to keep a standstill agreement; that is to say, to persuade Governments who might be thinking of retaliating not to retaliate.

I have discussed this matter with the German Minister for Economic Affairs, and we agreed then that the stimulation of exports by artificial incentive schemes was undesirable. We agreed to try to secure their elimination on an international basis. All these efforts have not been without some results. The currency retention schemes, which were some of the worst, have generally disappeared. During the past 18 months there has been no significant extension of the existing incentive schemes, nor has there been an introduction of new methods. However, I must say that the situation is still far from satisfactory.

There is a real danger here to European trade. The stage might be set for a race between countries in providing exporters with ever bigger and bigger subsidies. If that race started, it would have a damaging effect on all concerned and the European economy in general. I can see the temptation for a country which is in balance of payments difficulties to adopt some of these artificial methods, though I think that the temptation should be resisted.

In the case of Germany, however, one would have thought that whatever devices were needed to rebuild her shattered economy—and the whole world has watched with admiration the way in which Germany has repaired her shattered economy—whatever artificial aids were needed for that purpose, Germany's economy as a whole is not in need of aid of this character. It is not an economy in need of crutches. We very much hope that they will get rid of them.

My hon. Friend the Economic Secretary to the Treasury referred in his speech to our willingness to repay part of the European Payments Union debt in order to help to readjust the Union's arrangements. He emphasised, I am sure the whole Committee would agree rightly, that creditors must play their part in these matters as well as debtors. In particular, he said that the creditors must help to secure a smooth working system. The kind of artificial aids to which I have been referring in our view clearly hamper the establishment of such a smooth working system as all of us would desire.

I have dealt with some aspects of the Budget which are of special importance and interest to the Board of Trade and to the country as a whole. In conclusion, I would say that, of course, the aims of our commercial policy remain constant— to get rid of inflation at home; to balance our accounts abroad; and to promote the maximum volume of world trade. I think that I can claim that we have made some appreciable advance towards all of them.

The constant theme of the debate, reiterated by the right hon. Gentleman the Member for Battersea, North, was that we should spend less, tax less, and leave more room—I do not think that he quite followed us in this—for initiative and enterprise. I have no quarrel with these aims, which must be vigorously pursued, but upon one thing I think we might all agree. Anything in the nature of a really substantial increase in public expenditure would be likely to be disastrous to the fortunes of the country at present. The right hon. Gentleman the Member for Dundee, West (Mr. Strachey) has left now, but I would say to him that anything in the nature of an attempt to impose rigid controls on foreign transactions, or the widespread reintroduction of import control, would strike a heavy blow at our economy at our most vulnerable point—our export trade. We therefore reject such suggestions, and I hope that the Committee will reject them and agree that we should concentrate on how to proceed further and, if we can, faster, on what I think all fair critics must now judge to be the right road.

Before the right hon. Gentleman sits down, will he clear up this matter of the Export Credit Guarantees Department? I asked him a question, but I did not want to disturb the tenor of his remarks by further questions, so I waited until now. The Chancellor emphasised that this was for major capital goods. I understood the President of the Board of Trade to say that it referred to any goods and that the applications would be judged on their merits. Which is it? Is it capital goods alone, or consumer goods?

It is the medium-term credit, which is the normal term of credit used for capital goods. It is not proposed that the Chancellor or I myself should vet the applications which come to the Export Credit Guarantees Department. Although the principle must be laid down by the Government, the actual decision whether any application is suitable for guarantee must be left to the Department.

The Chancellor clearly stated that this was for major capital goods exports. It is important to know precisely whether it is for that alone or whether it can cover a number of other fields.

It refers to the terms of credit and not to particular goods which are put under it. The decision on detail will be for the Export Credit Guarantees Department. To the best of my knowledge, that is the answer. If I find that I am wrong, I will let the right hon. Gentleman know.

4.27 p.m.

At the outset, I should like to thank the Chancellor for introducing his amendment covering the holding companies that were set up last year to avoid Income Tax. He was obliged to act, but, on the other hand, had he acted last year when we suggested our new Clause he would have saved several millions for the Treasury. However, he has done it now, and we are grateful for it.

I should like to follow the President of the Board of Trade on one or two matters. The first is the excuse he made for business enterprises not having invested as much as he and the Chancellor think they ought to have done. He advanced one or two reasons why they have not invested as much as was expected. One was that perhaps the return would not be high enough. I wonder when the Chancellor is ever likely to be able to look at an economy where the returns have been higher than they have been during the last 12 months.

The Chancellor made a most important statement in his Budget statement on the question of investment. That is the theme which I wish to pursue, because he knows as well as we all know that all his concessions and allowances last year—whether in terms of Income Tax or Excess Profits Levy, or whatever it may be—did not do the job which he said they would do. That means to say that we must re-think on this question of industrial investment in the private sector, because those steps which lead to a response in consumption do not work in the same way in the investment section. The two things do not run together.

The Treasury organ has played its familiar tunes for many years. We pull out the stop of the restriction of credit and bring materials and goods on to the market so that prices fall. We pull out the stop of Income Tax relief and mop up a bit of unemployment here and there. All these are familiar devices which we have seen during the last few years.

Where did the money go which was released last year? The Chancellor knows quite well where it went; unfortunately, too much went in increased dividends and bonus scrips. If ever there were a year when investment should have been made it was last year, because on the horizon we could see the necessity for improving our competitive ability. What did we do? Very little. It is no use the President of the Board of Trade excusing the private sector of industry for not having done what he thinks it ought to have done. The factors were there—the upward trend of profits, a betterment in the balance of payments, prices of raw materials going down and yet export prices being fairly well held. What more could the private sector want?

Can the right hon. Gentleman hold out any better prospects to induce private industry to invest next year? The investment still has to be done. If the right hon. Gentleman can hold out better prospects, he did not do so in the Budget, because many of the things which he advanced in the Budget were the very things which will deter the continuation of private investment in industry. The share index of the stock exchange reached its highest point since 1935, yet there was no response worth talking about.

I propose to make one or two suggestions which some Government or another —either this Government or one which will follow—in my opinion must take into account in the future. Last year the Budget reverted to the 20 per cent. initial allowance, with 10 per cent. on buildings. I want to make a few constructive comments on buildings. Under the old initial allowance, 10 per cent. was allowed as a deduction in the first year, plus 2 per cent. per annum for the next 45 years until the original cost had been completely written off.

Under the new proposal—this big new inducement to take up the slack—what does the Chancellor propose? We must bear in mind all the favourable events of last year which helped to induce industry to invest. This is all the right hon. Gentleman is giving to industry in terms of assistance; under the new proposals 10 per cent. will be allowed as a deduction in the first year, plus 2 per cent. per annum for 50 years, until the original cost has been completely written off.

I have gone into this matter very carefully, having taken the Chancellor's advice last year in carrying out investment in the small business which I control. In terms of investment next year, what do I find? I find that the new scheme gives no immediate incentive to erect new buildings at all. If it does, I shall be pleased to hear about it. There is no difference in the immediate relief, but there is an additional allowance of 2 per cent. in the 47th, 48th, 49th and 50th year of the life of the building. If that is not so, I should like right hon. Gentlemen opposite to correct me.

What on earth is the use of that to me? But let me follow that up and see where it leads me. I am not the only person in this position. There are many people with older plant and older buildings than mine who see that unless they are able to put in new plant they will drop out of competition. It is no use the President making excuses at the Box and saying that the return on their capital outlay was perhaps not sufficient to induce them to make this investment when what we have to look forward to is a hard uphill fight to maintain trade as we have it and to be able to sell our goods overseas in foreign markets at a reasonable price in competition with the Germans, the Japanese and anybody else.

It is my conviction that we can do it, but we cannot do it on the basis of pulling out these old organ stops in the Treasury. There must be a re-thinking. There are other factors this year which may deter people from investing. The United States recession may go deeper. Other hon. Members have been speaking of that and I do not want to follow them. I will leave it to hon. Members who know far more about it than I do.

In addition, competition in overseas markets may be keener. An upward trend in commodity prices is taking place. Without question, that is on the way, and it might develop further. Will the investment allowances provide the stimulus? If the initial allowances did not last year, then the new proposal will not do so this year. I do not know whether the President of the Board of Trade realises this, but many mills in Lancashire are closing down. Occasionally, in papers like the "Oldham Chronicle" and the "Manchester Guardian," we see reports of a company which has decided to liquidate its business whilst its assets are good, so that the shareholders will not have the long period of dripping attrition which took place when competition was severe between the wars. Companies have sold their mills by auction and distributed their reserves, and I do not blame them for doing it, but what do they say when explaining to their shareholders why they are doing it? They say that they are now too far behind in terms of buildings and plant ever to be able to compete again, and if anybody on the Front Bench opposite is interested, I will supply them with the names of the firms which have done it.

In my opinion, there is one very hopeful result that we may get out of all this. Hon. Members have probably read many times the reports published by the Anglo-American Productivity teams which have gone over to America. In practically every one of them, and I believe there are 67 altogether, they have stressed the difference between the amount of capital invested in manufacturing machinery and in buildings in America. In fact, most of them say that nowadays 75 per cent. of capital investment in America goes into machinery and 25 per cent. into buildings. I do not want to follow that up and give the reasons why it is so in America, because it would take too long, but I do want to ask how are we ever going to redress the balance. How are we going to get more machinery of the right sort into the right factories?

The reason why I have selected this aspect of buildings is this. We cannot put the right machinery into the factories because we shall never get the right machinery until we have the right factories. It may interest the Chancellor to know that, during the past year, some researches have been made into this question of the relation between machinery investment and building investment, and the President of the Board of Trade may remember that, last October, at Belle Vue, there was an international textile machinery exhibition.

I made it my business to go to the stands, particularly to those of the larger companies, and ask this question: "Does space play a big part in the design of your machines? Are you influenced by the space available to your customers?" The representatives of the largest organisations replied in this fashion: "Mr. Rhodes, put your hand out and feel it; this is a fine example. This is the best machine we have. But you do not think that we should have made a machine like this if we had not been precluded from making a better design on account of spacing considerations in the old cotton mills? Of course, it is of tremendous importance to us. We cannot design as we would wish."

Let no one run away with the idea that this is only a long-term aspect of this question. Unless we can tackle this job now and make some constructive steps towards doing it, there will be no long-term interest for our industries at all. It is now that we must act.

American engineers have been producing adaptable buildings. They are adaptable in the sense that they provide a large amount of space between obstructions, so that, when new machines are designed, they can be put in without being unduly restricted in size, and, in my opinion, that is one of the reasons for the success of American manufacturing industry. We must tackle the job here. Let the engineers get on with the job of designing the machines which they would like to design, but, first of all, let us give these men the chance to do that job by providing suitable buildings for them to go into.

One of our great manufacturing industries is the cotton textile industry, and, if the President of the Board of Trade noticed the papers this weekend, he will have seen that Mr. W. T. Winterbottom, a very knowledgeable man in cotton, and as good a cotton man as any in the world today, has been saying that he was looking forward to the time when the industry could get down to the provision of new cotton mills. He made the same remark at the annual meeting of the Master Cotton Spinners Federation. If it is necessary that new factories be provided in order that new machinery may be installed, is it likely that what we have got in this Budget will make the slightest difference?

I am asking the President of the Board of Trade and the Chancellor of the Exchequer to think this one over again in the next 12 months. If it did not succeed last year, it is not likely that it will succeed this year. What are the Government going to do? Are they going to let the industry rot in old buildings? They cannot do that. They will have to put in a new stop on the old organ and put in some new pipes as well. They cannot do it by old Treasury methods, but I will suggest a method by which they could do it.

They could establish a corporation similar in structure to the Industrial and Commercial Finance Corporation, whereby provision can be made for buildings to be supplied on an engineering basis. The old ideas have gone by the board, as American industry has proved. American engineers can produce buildings in seven different types, each applicable to a different type of industry. There is a certain type of building which is suitable for the textile industry, another type suitable for light engineering, another for chemicals and another for heavy engineering. It can be done.

If industry, with all the difficulties facing it today in getting decent prices, or even any margins at all, on some of the export trade, could look forward to a future in which it could get new factories on a low capital cost basis, built by engineers and financed by a corporation of the kind I have mentioned, which could let the factories to the manufacturers, it would make a vast difference. Industrialists do not really care whether they own the buildings or not. All they want is to be able to manufacture with a reasonable amount of security of tenure.

What they would not want is the basis which we have seen operating at Harlow, because if buildings are erected on a basis of £3 per square foot, a monkey is placed on the shoulders of industry of which it will never be rid. Industry cannot afford buildings at £3 per square foot capitalised at 5 per cent. For a factory of 10,000 square feet, it would mean a basis of £30 per week. That could not be done.

I therefore appeal to the Chancellor of the Exchequer and the President of the Board of Trade to give some real thought to this question. It is not a party matter at all, but one on which they could get a tremendous amount of support from industrialists, no matter to what party they belong. It could be done, I suppose, on the basis of industrial bonds, but no doubt the Chancellor knows the answer, and, as he is the all-powerful figure in the Government in modern times, I hope that he will, in the next 12 months, bend his mind to this problem.

4.50 p.m.

I desire to intervene for a few minutes on the subject of industrial investment, which is a most important matter. Reference was made to it by the right boa. Member for Battersea, North (Mr. Jay), who found it impossible to look forward to any decrease in the cost of social services and of defence, and said that we just had to bear it and do the best we could. I cannot accept that point of view.

I believe it is possible to increase immensely the productivity of this country and I can never join in disparagements of the British working man who, in normal circumstances, and especially when working for piece rates, is the best in the world. It is important to see that he gets the best tools, but for a variety of reasons he has not got them to the extent he ought to have them, at any rate in some industries. The urgency of this matter is not fully realised by hon. Gentlemen opposite or even by Treasury officials.

The right hon. Member for Bishop Auckland (Mr. Dalton) referred earlier in this debate to an Inland Revenue report on "Estate Duty and Family Businesses" in connection with the 45 per cent reduction, which I heartily welcome. If we wish to see entirely the wrong attitude towards new capital formation we should read that report, which prided itself on not breaking up businesses. We want increased productivity and want our businesses to go ahead, yet we levy upon them death duties, a form of taxation which requires them to give up some of their assets. That is not the way to get efficient industry or to make people wish to import new machines from America or Germany.

The right hon. Gentleman, as an ex-Chancellor of the Exchequer, quotes with approval this negative document. It was quite narrow in its scope, because it wanted to get certain statistics, and it got them, but its attitude to the family business was, "Let them sell some of their assets, or securities outside the business like an insurance policy that a man may have taken out for his wife." If we want people seriously to consider the formation of new capital we have to deal drastically with disincentives that exist at the present time.

I am following the argument of the hon. Gentleman very closely, and, up to a point, it is reasonable. How can he explain the obligation placed upon the proprietor of a business to sell part of his assets to meet death duties as affecting the equity capital in the business? The company still retains the same amount of capital. It is merely that other people hold it.

That is not so. The hon. Member is thinking of a big public company which may transfer 10,000 of its shares from one holder to another without affecting the assets of the business.

That is not the case with the family business which has to transfer one portion of its assets. What usually happens is that the widow has to get a manager or a son to carry on, and if she has to sell part of the assets of the business she diminishes the amount of capital, equity or otherwise, in the business, which then goes limping along for some years instead of acquiring new assets. Every business which is healthy and is helping us to move into the new world of higher productivity and higher standards of life, whether it is a small family business or a big business, must be enabled to acquire new assets which will make for greater productivity.

The right hon. Member for Bishop Auckland actually proposed to increase the tax on undistributed profits to increase its revenue by millions, and seemed to think that would make for investment in new capital.

My right hon. Friend proposed an increase in the tax on distributed, not undistributed, profits.

I have HANSARD here. It shows that the right hon. Gentleman proposed a lower rate of undistributed profits and proposed to increase the tax on both distributed and undistributed profits. There is no question about it.

The right hon. Member for Battersea, North, did very much the same sort of thing when he proposed to take money from businesses and give it back to them in the form of a loan. Can we imagine anything more inefficient? Think of the waste of time and energy in taking the money out and putting it back. That is not the way. We have to see that as far as possible we get rid of disincentives like high Surtax, and high death duties, which are absurdly high. They are so high at present that hundreds of accountants, solicitors and insurance companies are thinking out legal ways of avoiding them.

There are two entirely different attitudes in this debate towards the formation of new capital. One side is asserting that we want new capital and the other side is proposing to put on a series of disincentives to prevent us from getting it. The success of basic industries in forming new capital is compared with the position of the private enterprise industries. The nationalised industries have the use of Government credit and suffer no disincentives. They have cheap money. It is difficult to judge how far it was wise for the nation to put so much money into nationalised industries.

Basic industries have monopoly markets at home, but let us not forget what happened when the State tried to come in to do the job that private industry had done. Let us remember the groundnut scheme. There has not been a single reference on the other side of the Committee to the amount of money invested in the groundnut scheme. It is difficult to judge the comparative value of investment in the basic industries of this country and investment in national industry.

Although I know that the statistics have been compiled with every possible desire to be correct, I have very considerable doubt as to their value and how far they represent what is invested in private industry. If one has worked up a business and controls it oneself it is very difficult to say how much new capital is formed each year. There is depreciation. It is very rare today to replace the machine, the ship or any piece of plant after, say, 15 or 20 years' service with an exactly similar piece of plant. There is always some improvement. How far that has been reflected in the statistics I do not know—but I should like to know.

My final point is a matter which I have raised often, sometimes with a little success and sometimes without very much sympathy from either side of the House. I think that there should be a full inquiry into the effects of death duties as they are now administered. Sir Stafford Cripps, in part, realised the damage which was being done. As a result he set up the Gowers Committee, for which I shall always be grateful. Other Chancellors, in their Finance Bills, have made special provision for works of art, and so on. Now the present Chancellor of the Exchequer has had to breach the death duty position by considering family businesses. The whole of agriculture has had to have death duties modified for the same reason.

As time goes on I think we shall find that section after section of national productivity will be so adversely affected by death duties that something will have to be done about them, as something has had to be done about agriculture and small family businesses. No political prejudice should be allowed to prevent a full inquiry as to how death duties may be charged in a different manner. As it is now the moment a man who succeeds in building up a good business gets to middle age he has to think of the terrible death duties he is also building up. Let us not be hypocritical about fortunes. New companies cannot successfully be formed without its creators creating a fortune for themselves as well as for the community. That is a good and not a bad thing.

This is a matter to which all parties might give attention. It is not a question of evading any particular of duty. If an inquiry were held to put death duties on a sound basis, I think we should gain immensely by stopping methods of evasion. That would remove disincentives, and allow that minority which has the capacity, the genius and the character to create new businesses to go ahead with confidence, and to expand the businesses for which they are responsible to the very utmost for the benefit of themselves and of the whole nation.

5.4 p.m.

The President of the Board of Trade complained that this Budget has been described as dull and disappointing. It is far worse than that. It is a bad Budget. And it is a bad Budget because it is a carry-on Budget. It is carrying on the bad things done in the previous Budgets. In our discussions on the Budget last year I remember that the President said, in his charmingly naive way, that people ought not to talk about the Budget as an instrument to redistribute wealth.

I am sure, however, that the Chancellor of the Exchequer himself would agree that one of the purposes of a Budget is to redistribute wealth and, in fact, that course was followed in the two previous Budgets. The position this year was that those who were well off and who have had the advantage of the previous Budgets had had their appetite whetted and had expected more. They expected old-age pensioners, families with low incomes, women working and others to get more, too, but as a compensation for they themselves getting more.

Those who are less well off had had time to appreciate just what the Chancellor has been doing in the last two years and, of course, assumed that some adjustment would be made in their favour this year. All those expectations have been disappointed. In fact, when I heard the Chancellor of the Exchequer refer the matter to his conscience, I knew that all was lost. I prefer him to refer it to his cold, political judgment which, I am sure, has more warmth than his conscience, and I hope that he will be able to revise his judgment so as to enable those less well off, who have so far borne the full brunt of his policy, to benefit.

The Committee will perhaps not be surprised if I say a little about food, because that subject has been discussed during the last few days and a good deal of reference has been made to food consumption levels. It is quite clear—and I am much obliged to the Chancellor for setting this out so lucidly in the Economic Survey—that we ate much less in 1953 than in 1950. We ate less protein, less fat, fewer calories—by every test we ate much less. Let us take some instances from the Survey, and take that as a guide and not the Economic Secretary who, I am surprised, appears to be disclaiming any responsibility for it.

If the hon. Member will look at the Table mentioned above that, he will see that consumption of food is higher in 1953 than in the year before.

I can understand the apprehension of the hon. Gentleman, and I intend to deal with his point in due course. The Survey shows, in cold, indisputable terms that in 1953 we ate less dairy products, less meat—and "meat" is the comprehensive term, including increased supplies of bacon and pork—less poultry, game and fish, less eggs, less oil and fats, less potatoes, less pulses and nuts, less vegetables and less grain products. That was the record.

We ate more of three items only— sugar, fruit and tea. I will not say anything about sugar, except that we have been able to deration it rather later than we anticipated when we were in office, and I will not embarrass the Government by dealing in detail with the position regarding sugar arising from the stupidity and incompetence of their Administration.

We have had more tinned and bottled fruit this year than at any time since the war. That is a good thing—but what about fresh fruit imports? It is true that we had more this year than last, but we had less than in 1951, 1950—less even than in 1949. This year we have the new fruit and vegetable tariff policy. That will probably mean that we shall have less fruit consumption this year than last, so the Government will not claim much credit for the second item.

The hon. Member says that the new import policy means less fruit than before. Perhaps he will expand that, because previously we have had definite quotas beyond which we could not go, but there will be no such quotas in future.

I do not want to revive a previous debate in which the hon. Gentleman took part. It is arguable, and I believe that it will be shown that fruit imports and consumption will fall.

The third item is tea. In the previous Economic Survey we did not get an item for tea alone, but for tea, coffee and cocoa. If we look at the figures we can understand why it is now only tea. Imports of coffee have fallen very considerably. They are less than in 1951–1952 and even less than 1950 and 1949. On the average, tea now costs 2s. a lb. more than when this Government took office. It went up by 4d. a month ago, and it will go up a further 4d. next month. Why? According to the City Press,
"The tea pitch has been bright."
I am not surprised. If we look at the import figures, we find that in fact we imported less tea in 1953 than in 1952. Of course, we now have the very savage operation of the law of supply and demand, and this is very adversely affecting those classes of our community whom I mentioned when I began—the old age pensioners, those with large families, women workers and the others.

But let us deal with these figures in another way just to see what the present levels of food consumption are. The Minister of Food on 22nd March gave the House these figures. He said that the 1953 food consumption levels in terms of 1950—the last full year of Labour rule—showed that we had in 1953 90 per cent. as much cheese, 91 per cent. as many eggs, 96 per cent. as much flour, 97 per cent. as much mutton and lamb—in spite of all the ewe mutton that came over from Australia; and how much red meat?—78 per cent. of the beef and veal that we ate in 1950. The Minister of Food has said publicly, "But there is all the canned meat now." How much canned meat did we eat in 1953, compared with 1950? We ate 69 per cent. as much, and just over three-quarters as much butter.

The consumption of milk has fallen by 4 per cent., but the last two months' returns are very encouraging because they show that the fall has been arrested and the January and February milk consumption figures are holding their own against the corresponding figures 12 months ago. What have the Government therefore done?—because this is an appalling prospect for the Government. We had the price disincentive in the Farm Price Review. We had a cutting back of the milk subsidy by £16 million compared with the original Estimate and we have a price increase which is to come into effect later in the year, when the price of milk is to go up from 1st November by ½d. per pint. In other words, the arrest of that fall in consumption has shocked the Government into action to depress further the consumption of liquid milk in this country, showing, as I have previously argued, that they are deliberately following a restrictionist policy in the matter of food.

What do the Chancellor and his lieutenants say about all this? The Chancellor talks in passing "of the return of plenty." I ask him to consult his conscience about that. I have given the figures. His only passing reference was to a return of plenty. The Economic Secretary says, "You have got to look at the figures given in the table above which show the consumer expenditure on food, reducing it to the common 1948 market prices." As far as food consumption goes, the figures are undeniable. Less food has been consumed—and this is not only basic food. As I have said there is less coffee; canned meat imports are drastically down on the two previous years; supplies of unrationed cheese are substantially down on the years. In fact, if we take all the foodstuffs, basic and non-basic, the comparison is the same. By and large, there has been quite an appreciable fall in consumption in comparison with 1950.

The explanation of the Economic Secretary's intervention is this. Against these restricted supplies there has been a greater emphasis on luxury spending. I think that is a bad thing. In any case, the important figure to bear in mind is that last year we spent £843 million more on buying for ourselves less food than we ate in 1950. The Financial Secretary, to whom I apologise for not having heard him, must have been in a very jocular and buoyant mood. He must have been misled about the subject through not being present during the debate we had on butter and cheese prices. He followed the line then taken by the Parliamentary Secretary to the Ministry of Food but that was late at night, and I am sure that the House appreciated that the Parliamentary Secretary was in a jocular mood when he threw in the argument about the stocks of butter. We all knew that this was a most preposterous and ridiculous argument to put forward, but at that time of night it was regarded as a light and flippant case made because he knew that he had not any reply to the points that had been raised.

The Financial Secretary to the Treasury agreed that we had less in 1953 than in 1950, but dealt with stocks. He said that in 1950 we had less meat stocks than in 1953. This has nothing to do with the case. We all know that we had reduced stocks at the end of 1950. That was because we were not getting the meat from the Argentine. That is the time of the year when the Argentine meat comes in. But let us deal with the other commodities mentioned by the Financial Secretary. Why the hon. Gentleman referred to bacon and ham, I do not know, because I have always conceded that bacon and ham was an exception. Although we were eating less meat last year than in 1950, we were eating more bacon and ham, but for some reason the Financial Secretary came to the Committee and said that there were 45 per cent. more stocks of bacon and ham in 1953 than in 1950.

But what happened four weeks after the end of 1950? We put up the ration. We put it up by an ounce until May, 1951. Then we put the ration up by another ounce. That was a remarkable achievement, was it not, on these low stocks? It is about time that we stopped getting these misleading figures from the Ministry of Food and I am sorry for the Treasury in being misled in this way. It is a great pity that there are very few trade people left at the Ministry of Food, and that we have to rely upon civil servants who do not appreciate what stocks are, in terms that are generally understood by the trade.

Regarding cheese, the Financial Secretary said we finished 1950 with 52 per cent. less by way of stocks than we did in 1953. But what did we do in January, 1951? We increased the ration by an ounce again. Again this surely was a remarkable achievement against such a stock position.