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Orders Of The Day

Volume 656: debated on Monday 19 March 1962

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Considered in Committee.



Class Viii

Vote 3 Agricultural And Food Services


That a Supplementary sum, not exceeding £3,259,473, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1962, by the Ministry of Agriculture, Fisheries and Food, for grants, grants in aid and expenses in connection with agricultural and food services; including land drainage and rehabilitation of land damaged by flood and tempest; purchase, development and management of land, including land settlement and provision of smallholdings; services in connection with livestock, and compensation for slaughter of diseased animals; provision and operation of machinery; training and supplementary labour schemes; control of pests; education, research and advisory services; marketing; agricultural credits; horticulture; certain trading services; subscriptions to international organisations; and sundry other services including certain expenses in connection with civil defence.

Class Vii

Vote 9 Stationery And Printing


That a Supplementary sum, not exceeding £2,416,010. be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1962, for stationery, printing, paper, binding, and printed books for the public service; for the salaries and expenses of the Stationery Office; and for sundry miscellaneous services, including reports of parliamentary debates.

Class Iii

Vote 6 Carlisle State Management District


That a Supplementary sum, not exceeding £10, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1962, for the salaries and expenses of the Carlisle State Management District, including the cost of provision and management of licensed premises.

Vote 2 Inland Revenue


That a Supplementary sum, not exceeding £792,000, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1962, for the salaries and expenses of the Inland Revenue Department.



Motion made, and Question proposed,

That a sum, not exceeding £1,445,371,503, be granted to Her Majesty, on account, for or towards defraying the charges for the following Civil Departments and for the Ministry of Defence for the year ending on the 31st day of March, 1963. viz.:—

1.House of Lords89,000
2.House of Commons550,000
3.Treasury and Subordinate Departments1,500,000
4.Privy Council Office16,000
5.Post Office Ministers2,500
6.Customs and Excise6,900,000
7.Inland Revenue20,000,000
8.Exchequer and Audit Department260,000
9.Civil Service Commission225,000
10.Royal Commissions, etc170,000

1.Foreign Service9,800,000
2.Foreign Grants and Loans9,600,000
3.British Council1,300,000
4.Commonwealth Relations Office3,500,000
5.Commonwealth Grants and Loans5,115,000
6.Development and Welfare (Commonwealth Relations Office)125,000
7.Colonial Office3,100,000
8.Colonial Grants and Loans6,800,000
9.Development and Welfare (Colonial Office)7,600,000
10.Department of Technical Co-operation10,500,000
11.Commonwealth War Graves Commission395,000

1.Home Office2,220,000
2.Scottish Home Department582,000
3.Home Office (Civil Defence Services)3,600,000
4.Scottish Home Department (Civil Defence Services)240,000
5.Police, England and Wales21,678,000
6.Police, Scotland137,000
7.Prisons, England and Wales7,000,000
8.Prisons, Scotland655,000
9.Child Care, England and Wales1,491,000
10.Child Care, Scotland187,000
11.Supreme Court of Judicature, etc500
12.County Courts164,000
13.Legal Aid Fund1,000,000
14.Law Charges290,000
15.Law Charges and Courts of Law, Scotland166,000
16.Supreme Court of Judicature, etc., Northern Ireland30,000

1.Board of Trade2,153,000
2.Board of Trade (Promotion of Trade, Exports and Industrial Efficiency and Trading, &c., Services)3,062,000
3.Board of Trade (Promotion of Local Employment)18,742,000
4.Export Credits100
5.Export Credits (Special Guarantees, &c.,)100
6.Ministry of Labour8,075,000
7.Ministry of Aviation77,000,000
8.Ministry of Aviation (Purchasing (Repayment) Services)9,000,000
9.Civil Aerodromes and Air Navigational Services3,000,000
10.Ministry of Transport1,899,000
11.Roads, &c., England and Wales44,517,000
12.Roads, &c., Scotland5,000,000
13.Transport (Shipping and Special Services)340,000
14.A. Transport (British Transport Commission)50,000,000
15.Ministry of Power1,000,000

1.Ministry of Agriculture, Fisheries and Food7,700,000
2.Department of Agriculture and Fisheries for Scotland2,800,000
3.Ministry of Agriculture, Fisheries and Food (Agricultural Grants and Subsidies)42,000,000
4.Department of Agriculture and Fisheries for Scotland (Agricultural Grants and Subsidies)4,500,000
5.Ministry of Agriculture, Fisheries and Food (Agricultural Price Guarantees)66,000,000
6.Department of Agriculture and Fisheries for Scotland (Agricultural Price Guarantees)9,000,000

7.Ministry of Agriculture, Fisheries and Food (Agricultural and Food Services)5,000,000
8.Food (Strategic Reserves)800,000
9.Fishery Grants and Services2,200,000
10.Fisheries (Scotland) and Herring Industry950,000
11.Forestry Commission4,000,000

1.Ministry of Housing and Local Government4,000,000
2.Housing, England and Wales26,500,000
3.Housing, Scotland9,500,000
4.Genaral Grant to Local Revenues, England and Wales172,038,000
5.General Grant to Local Revenues, Scotland21,471,000
6.Rate Deficiency, &c., Grants to Local Revenues, England and Wales38,750,000
7.Equalisation and Transitional Grants to Local Revenues, Scotland6,264,000
8.Ministry of Education40,000,000
9.Scottish Education Department7,990,000
10.Ministry of Education (Teachers' Superannuation)100
11.Scottish Education Department (Teachers' Superannuation)100
12.Ministry of Health1,575,000
13.Department of Health, Scotland1,150,000
14.National Health Service (Hospitals, &c:, Services), England and Wales140,109,000
15.National Health Service (Executive Councils' Services), England and Wales56,968,000
16.Miscellaneous Health and Welfare Services, England and Wales13,650,000
17.National Health Service (Superannuation), England and Wales100
18.National Health Service, &c., Scotland26,000,000
19.National Health Service (Superannuation), Scotland100
20.Ministry of Pensions and National Insurance2,500,000
21.National Insurance70,000,000
22.Family Allowances49,500,000
23.National Assistance Board64,500,000
24.War Pensions38,250,000

1.Universities and Colleges, etc., Great Britain29,000,000
2.Office of the Minister for Science33,000
3.Atomic Energy40,000,000
4.Department of Scientific and Industrial Research6,000,000
5.Medical Research Council2,100,000
6.Agricultural Research Council2,165,000
7.Nature Conservancy200,000
8.Grants for Science120,000

1.British Museum370,000
2.British Museum (Natural History)200,000
3.Science Museum118,000
4.Victoria and Albert Museum195,000
5.Imperial War Museum21,670
6.London Museum18,000
7.National Gallery160,000
8.National Maritime Museum33,000
9.National Portrait Gallery16,000
10.Tate Gallery48,000
11.Wallace Collection16,000
12.Royal Scottish Museum46,000
13.National Galleries of Scotland43,000
14.National Library of Scotland40,333
15.National Museum of Antiquities of Scotland12,000
16.Grants for the Arts1,600,000

1.Ministry of Works2,452,000
2.Public Buildings, etc., United Kingdom11,460,000
3.Public Buildings Overseas1,439,000
4.Houses of Parliament Buildings125,000
5.Royal Palaces267,000
6.Royal Parks and Pleasure Gardens378,000
7.Historic Buildings and Ancient Monuments424,000
8.Rates on Government Property9,450,000
9.Stationery and Printing8,000,000
10.Central Office of Information1,850,000
11.Government Actuary21,000
12.Government Hospitality60,000
13.Civil Superannuation, etc.13,450,000
14.Post Office Superannuation etc100

1.Charity Commission78,000
2.Crown Estate Office56,000
3.Friendly Societies Registry41,000
4.Royal Mint100
5.National Debt Office100
6.Public Works Loan Commission100
7.Public Trustee100
8.Land Registry100
9.War Damage Commission100,000
10.Office of the Registrar of Restrictive Trading Agreements53,000
11.Ordnance Survey1,210,000
12.Public Record Office55,000
13.Scottish Record Office20,000
14.Registrar General's Office275,000
15.Registrar General's Office, Scotland35,000
16.Department of the Registers of Scotland100
17.National Savings Committee450,000

2.Carlisle State Management District100

3. State Management Districts, Scotland100
4.Pensions, etc. (India, Pakistan and Burma)2,760,000
5.Royal Irish Constabulary Pensions, etc.380,000
6.Irish Land Purchase Services585,000
7.Development Fund600,000
8.Secret Service2,400,000
9.Miscellaneous Expenses210,000
Total for Civil Estimates1,439,231,503
Total for Civil Estimates and Estimate for the Ministry of Defence1,445,371,503

Economic Situation

3.34 p.m.

When the Government run into heavy weather there are always traditional explanations. First, the Government say, "Our sources of information are not good enough. We must get closer to the people." Obviously, Ministers must frequent the Smoking Room more often. That is the first explanation when things go wrong.

The second is more fundamental, and tends to unite a party; that is, the Government say, "We are doing the right thing, but we have to pay the penalty for it. Everything will come right in the end. People do not understand yet, but they will later." That is the classical explanation which was advanced by the Leader of the House to comfort the Conservative Central Council, or whatever it calls itself, last week. "These are just flesh wounds, but we must pay the penalty for doing the right thing," is what the Government have said.

There is, however, a third explanation, and the Leader of the House might consider this one: that the Government are, in fact, paying the penalty for doing the wrong things. I must say that during the last decade I have rarely been more sure than I am today that the Government's economic and financial policies are wrong, ill-conceived and damaging to the interests of the people and the nation as a whole. Let us examine just what is their policy, starting last July with the Chancellor of the Exchequer's "little Budget," in which he told us that he had six aims.

The aims were to keep down wages, to keep down prices, to keep down Government expenditure, to expand exports, to expand Britain's industry and to balance our payments for imports and exports. What has been the result? The right hon. and learned Gentleman has kept down wages—but prices have gone up, new Government expenditure has exceeded the target, exports have remained stationary, industrial production has gone down and our payments are still unbalanced. One mark out of six; not a very good term's work.

The Chancellor has succeeded in keeping wages down—the most unpalatable part of the exercise—by setting aside established, freely negotiated wage agreements, mutilating the authority of the arbitration courts and by creating what I believe to be unparalleled bitterness among tens of hundreds of thousands of very loyal public servants. He has been unfair to them, admittedly unfair. The Chancellor himself said that he accepted that the burden did not bear equally. He has been unfair on the ground, well understood in Communist countries, that the end justifies the means. He said, "I must be unfair because I must achieve the other aims I have set myself." The only difference between the right hon. Gentleman and Communist countries is that most of the Communist countries usually attain their ends, whereas the Chancellor has failed to do so.

The retail prices index has increased by three points, from 114·6 to 117·5, since the Chancellor announced his measures in July, 1961, much faster than it went up in the same period a year ago. It has hit, first, and the worst, people on small incomes and pensions. They are the people who are paying for the Chancellor's blunders.

Secondly, as we all know, Government expenditure has exceeded the Chancellor's target. The right hon. Gentleman confessed to the House on 27th February that he had exceeded it by over £100 million. Exports—and these were the objects of the exercise—have remained stationary. During the first six months of 1961, before the Chancellor's "little Budget", they were £1,920 million and in the second six months—and remember, this was what the measures were all about—they had risen to £1,926 million.

We have had the results for the first two months for 1962 and if the present trend continues for the current six months—and I am not attempting to prophesy, but merely commenting on the basis of the trend—the total will be £1,890 million. Thus, exports are not merely stationary; they are, in fact, slightly turning down. They are as flat as a pancake.

Industrial expansion—this was the other object of the exercise—far from increasing, has declined. When the Chancellor's measures were announced the index of industrial production stood at 116, but it has gone steadily down until, in December, it stood at 112. New investment is declining. According to the Federation of British Industries' last survey, nearly 60 per cent. of firms are working below capacity, mainly because of a lack of orders. The steel industry is depressed. In my own constituency, a fortnight ago, I was in a large modern steelworks where only four blast furnaces out of six are working. I stood on the stage, and saw that only four of the open hearth furnaces out of seven were at work. Capacity is about 70 per cent. There is no unemployment. At least, we get over that; the men are kept standing there doing nothing. Unemployment generally, however, has substantially increased. It is very much up on what it was a year ago. So in all these aspects the Chancellor has failed.

Our balance of payments figures have not yet been published, though I suppose that they will be within a fortnight's time, but we can measure them on a trade basis—not on a balance of payments basis. On a trade basis, the last six months of 1961 showed no noticeable improvement over the first six months. Likewise, on a trade basis, January and February of this year show an adverse balance as big as it was a year ago. The Chancellor's policy, in short, based on the six objectives that he himself enumerated when he gave us his "little Budget", last July, has been a complete and total failure.

The only success that the Chancellor has had has been to keep down wages. That is the one major success to which he can point during the eight or nine months in which his policy has been in operation. He is like a doctor who said, "Take this medicine and it will do you good." We grimaced a lot, but we took the medicine: The trade unions, broadly, have taken the medicine that the Chancellor has dished out, and I think that it is true to say that, at any rate, so far, wage increases are not very much above the level that the Chancellor expected to get.

But having taken the medicine, we find that the patient has not recovered. We are still where we were. Maybe in the course of time we shall get better.

Maybe by the effluxion of time we shall get better. For one thing, I understand that according to those who study these things, world export trade is likely to improve by 8 to 9 per cent. this year, and it will be a very poor affair if we cannot scrape up an odd per cent. or two out of that. Then, I suppose, we shall be told that all the sufferings of the pay pause were justified. Nothing of the sort. We shall get better in spite of the medicine and not because of it.

Now about imports. I was a little suprised, reading back as I have been doing, that last July the Chancellor had nothing to say about imports. They have remained at a very high level since his measures. We are importing nearly as much today as we were before last July. Indeed, according to the Bank of England Bulletin, exports fell last quarter and imports rose. But one of the most noticeable features to which I would call attention is the startling rise in imports since 1959. Till I examined the figures I had not realised what had happened. From 1952 to 1959 there was a steady but fairly slow increase in imports every year. The average rate of increase was about £60 million. But in the last two years imports have risen at the rate of £400 million a year—an £800 million increase in two years.

This increase in imports in the last two years is more than, or as large as, the increase in the whole of the previous decade. I am astonished that the Chancellor had nothing to say about that when he introduced his "little Budget", last July. It has been brought about by several factors, among them being a relaxation in import controls that took place in 1958 and 1959. Much greater freedom was given for dollar imports in August and September, 1958, and again in May, 1959. Most of the remaining import quota restrictions were removed in November, 1959. My right hon. and hon. Friends made protests at that time about the effects of this indiscriminate purchasing spree, but the Government disregarded those criticisms.

Attempts are made to explain away the figures. It is said that the increase in imports would have taken place irrespective of whether this relaxation of import restrictions and freedom of dollar imports had been there or not. Whether or not this is true, the figures are there for all to see, and we can only draw the conclusion that if imports had remained at their 1959 level when they were running at a high level, and exports have pursued a slow and painful upward climb, the Chancellor would not have been faced by a balance of payments crisis last year, with all the attendant evil of the pay pause and constriction that we have had in industrial output.

The real position was that the Chancellor allowed us to bring in imports that he knew we were not in a position to pay for. We were living "on tick". This is the origin of "You have never had it so good." It is a synonym of the rake's progress. One can always live higher than one's income if one chooses to bring in things that one cannot pay for. But the reckoning day comes, and it came last July.

Let us look at some of these increases in imports. The biggest increase has been in finished manufactures. They have grown by 80 per cent. in four years, and are mainly in consumer goods, machinery and instruments. It is possible to argue, indeed, I will accept the argument, that imports of machinery and instruments may add directly to our efficiency on a long-term basis. We need the most efficient instruments and machinery that we can get. To a lesser extent, I suppose, it can be argued that in the long term unrestricted imports of consumer goods will benefit the nation, because we shall have the competition in design and all the rest of it that will get us up to date. All these are perfectly valid arguments and I would not dispute them.

However, the Prime Minister tells the Liverpool businessmen "Trust in God, but keep sterling firm". If keeping sterling firm is our first objective, I cannot but wonder at the infirmity of a Government who permit the unregulated importation of consumer goods and machinery which is bound of itself to endanger sterling The Prime Minister and Courtaulds between them seem to be taking over heaven at the moment. Oliver Cromwell said many things, quite apart from "Trust in God, but keep sterling firm." The other quotation that I looked up during the weekend was from his speech when he addressed Parliament in 1658. I imagine that he looked along the Front Bench when he said this, though I cannot swear to it. He said:
"I would rather have kept a flock of sheep than to have undertaken this Government."

Oliver Cromwell also said—and the hon. Gentleman might bear this in mind—

"I beseech you, in the bowels of Christ, think it possible you may be mistaken."

If I had thought that the hon. Gentleman was going to give us that quotation, I would not have given way. It is the one which occurs to anybody and I would have discarded it in favour of a better one.

I am obliged to the hon. Gentleman for underlining my criticism of the Government. I concede that they may be wrong. They are, in fact, all the time persisting in a policy of restrictionism. They are persisting in a policy which says that we cannot afford to have industrial expansion in this country until exports have risen. That is the whole basis of their case, is it not? I beseech them, in the words of the hon. Gentleman, to concede that they may be wrong. There is growing criticism of this approach of the Government.

As a result of this spending spree—for I can call it nothing else; this importation of £800 million extra in two years—the Government were put in the humiliating position last summer of having to go to the moneylenders. They got their loan from the International Monetary Fund—the largest borrowing, let it be said, made by this country internationally since the American loan of December, 1945. [An HON. MEMBER: "The loan that the Labour Government took."] Yes, that was the loan we took in December, 1945, when this country had been left flat on its back as a result of the cutting off of Lend-Lease, one of the great mistakes of the American Administration of that time. Let there be no doubt that, without that loan, this country would have been in an extremely parlous position.

That was not the purpose of this loan. Its purpose was to pay for the importation of Italian jeans and all the other consumer commodities which have been bedecking and adorning our shops during the last two years. The Government borrowed £535 million. I suppose that the President of the Board of Trade may want to claim credit soon for having paid back nearly half of it. He has not paid it back because our trade position is improving. He has paid it back because a Bank Rate of 6 per cent. and 7 per cent. attracts speculative hot money on a short-term basis to this country in a way which, in my view, is disastrous for us.

I do not understand what the Government are thinking about. What we have done now is to repay nearly half of that loan on the basis of this speculative money which can run away at the first signs of trouble as quickly as it came. Mr. Conin writing in the Bankers' Magazine—my reading has changed a great deal in recent months; I have reached the Financial Times, but the bowler hat still escapes me—estimates that
"the direct cost of a 6 per cent. to 7 per cent. Bank Rate may be of the order of £175 million per annum."
That is half as much as the total of our disastrous balance of payments deficit in 1960.

If I had been in the Government's position, I should not have repaid this loan to the I.M.F. It is a stable loan. We are not being pressed to repay it. It is at a reasonable rate of interest. Why do we repay this loan now purely in reliance on short-term hot money of the sort which has come into the country during the past few months?

Quite apart from the international effect, the evil effects which a high Bank Rate has in this country are well known—its evil effect upon development here, upon local authorities struggling with insuperably long waiting lists for houses and unable to get ahead and build, and so forth. The evils of a high Bank Rate of that kind are so great that I cannot believe that the Chancellor understands fully what he is doing when he follows the course he does today.

The Chancellor having let down the floodgates for this swelling tide of imports, a tide unprecedented since the war—the right hon. and learned Gentleman has sent me a note to say that he cannot be here at the start of the debate, but hopes to be here later—one might have thought that the Government would have made valiant efforts to lift our exports to a comparable level. Consistently, monotonously and lugubriously, the right hon. and learned Gentleman has told us that there are opportunities available for our exports better than ever before. He told us this a year ago. He told us so in July. We were told the same in speeches just before Christmas. I have no doubt that the President of the Board of Trade will tell us the same this afternoon.

As recently as last week, the Bank of England was writing the right hon. Gentleman's speech for him, telling him what he should say in this debate. I have read it all, so I do not have to wait. When will the increase start? When shall we see the increase in exports which is necessary to pay for this large and swelling volume of imports? There have been some improvements. I am sure that the President of the Board of Trade will tell us about the London Clearing Banks agreement to supply medium-term finance for the export of heavy capital equipment at a fixed rate of interest.

No doubt, we shall be told again about the British Insurance Association and the fact that it has agreed to make £100 million available for longer-term and medium-term finance at 6½ per cent. I welcome these measures. They are useful. But they are no better than applying ointment to a patient suffering from tuberculosis. We need far more than that if this country is to escape from the dilemma that it faces today.

The gap between imports and exports last year, on a trade basis, was £559 million. I emphasise that that is on a trade basis, not on a balance of payments basis. The trade basis is f.o.b. and the balance of payments is c.i.f.—or the other way round, though I think I am right. Other items must be set off against this figure before we can know the true deficit for the year, but on the basis of the trade gap last year there is no doubt—I have no hesitation in saying this—that if the nation is to pay its way this year we shall need an increase in exports of £500 million during 1962. Nothing less than that will be completely satisfactory. We shall get along with less, of course, but it will not be satisfactory. What are the prospects of such an increase? In advance of the right hon. Gentleman's answer, I will tell him. Hopeless—not a chance of reaching anywhere near such an increase as £500 million, given present Government policies and methods.

I turn to the league table of world exports, to see what the prospects are. I think that it was my right hon. Friend the Member for Huyton (Mr. H. Wilson) or, perhaps, my right hon. Friend the Leader of the Opposition—I am not sure—who introduced the device of the league table. At least, at that stage we were still in the first division. If we go on as we are now, we shall be like Accrington Stanley. I ask the Committee to consider the percentage increases, taking the years 1951–60. Japan comes out top with a 274 per cent. increase in her exports; West Germany, 198 per cent. increase; Italy, 167 per cent.; the Netherlands, 131 per cent.; Belgium, 77 per cent.; France, 75 per cent.; Sweden, 65 per cent.; Canada, 36 per cent.; and the United Kingdom, 23 per cent. In a decade, all we have been able to do is increase our exports by 23 per cent.

Am I being unduly pessimistic when I say that the prospects of our increasing our exports by £500 million this year are negligible? I may be unduly optimistic if I hope that we shall sustain our position, but, as there is to be an increase in world trade, I think that that may be possible even under this Government and with the support of the hon. Member for Carlton (Sir K. Pickthorn). But, with the present depressed state of industry, there is not a chance that we shall have the necessary increase.

We on this side, in company with many others, the Trades Union Congress and a growing number of industrialists and those who study these matters outside, take the view that a necessary condition of increasing exports is rising production at home. First, let us look at the exporting industries themselves to see how they are doing. There are wide variations between the performances of different industries. The National Institute's Economic Review produced last year a table of sixty industries which, between them, account for practically all our export trade. In the first group are put those industries where exports have risen faster than imports of the same product during the past four years.

There are only ten where exports have risen faster than imports. They include commercial vehicles, which I give as the best example, an industry which has increased exports by nearly £6 million in the period under review, while imports of commercial vehicles have risen by only £600,000. Exports have increased ten times as fast as imports.

A good record. If everyone did as well as that, the Government's troubles would be over. The largest list, however, includes industries where exports are rising more slowly than imports. This list includes machinery, both electrical and non-electrical, all chemicals, scientific precision instruments and smaller but important items like glass, glassware, photographic supplies and domestic refrigerators.

The third and fourth lists contain industries in which exports are flat or falling—metal manufactures, aircraft, railway vehicles, generators and mining machinery. In some cases, the volume of imports is nearly as big as or bigger than exports—for example, man-made fabrics, footwear, toys, motor-cycles, bearings, cameras and beer. Who would have thought that we should have imported more beer than we exported?

Most of the items in the third list are our traditional exports. Having been through this list very carefully, I would say that the wide variation in export performance by these industries justifies the Government in carrying out a comprehensive survey, industry by industry and firm by firm. They should ascertain the cause of the variation between these industries' export targets and their export achievements. I fear that it is unlikely that the Government will take such a step, but I should have thought that it was an elementary step to take if we want to know why exports are flagging.

The Institute of Directors' Export Committee undertook a survey early in 1961 of fifty-two of the smaller manufacturers in this country. Its conclusion was that in the overwhelming majority of cases the failure of the British manufacturer to increase or maintain his exports, or to get into the export market at all, is the result of his general attitude. Here, I quote from the survey:
"It is not that he cannot export, but simply that he does not want to".
The survey found that nearly a quarter of the firms interviewed had never exported, are not interested in exporting, or are merely paying lip-service to what they call an accepted political convention. It also found that, even when inquiries come direct from overseas, there is a tendency among some manufacturers to do nothing about them even when they are asked.

The hon. Member for Heston and Isleworth (Mr. R. Harris) is a director of a small firm of export merchants. A year ago, in the Sunday Times, he and his fellow directors provided an interesting list of export orders which had to be placed abroad because British firms refused to execute them. The list included railway track for the Middle East, trucks for a well-known Midlands firm and many other things. But even when the will to export exists—I speak only from knowledge of the firms on the industrial estate in my constituency—many small firms are incapable of creating their own sales organisation. It is impossible for them to do it. They have not a big enough machine to do the job.

I do not want what I have quoted from the survey of the Institute of Directors to be construed as a criticism by me of many of the smaller manufacturers. I believe that they can be brought into the net, but it will mean a number of unorthodox and unusual patterns of behaviour for them. It has been suggested, for example, that there is an obvious need to help small exporters by taking the burden of overseas sales and marketing off their shoulders, and that this could be done by encouraging companies to form co-operative selling organisations.

On a more grandiose scale, I have been attracted to the idea of a counterpart to the State trading co-operatives in some of the Iron Curtain countries. There is no reason why we should be beyond learning a lesson from them. From what I have seen of some of their activities, it seems to me that there is a case for bringing together the activities of a number of smaller firms incapable of acting on their own because of the smallness of their resources and welding and marrying their products to export possibilities overseas. I do not suggest that we should interfere with large firms which are doing well, but this smaller group of firms which are outside the export field provides a field for exploration and conclusion. There is obviously a need to create a better marketing organisation than exists.

I said that I did not want to interfere with large firms which are doing well, but I hope that no one will believe that all large firms are doing well. Some are not pulling their weight. Others, because of external influence, are having their markets destroyed. I would give as two illustrations of the latter Fords and Vauxhalls. The Ford Company especially, before it passed under the dominance of Detroit, was relying on the network in the United States which has been built-up for the other home Ford organisation and which has been denied to it since it was taken over. It has now started to build up another and independent network of its own. The same is true of Vauxhalls.

But the Volkswagen organisation, which built up, without relying on any American company, its own independent sales organisation, now has, according to my information, 612 exclusive agents in the United States. Contrast the number of cars which this firm is selling with the miserable performance of Fords in the United States market over the last couple of years. In 1960, Volkswagen sold 160,000 cars. Fords sold 23,000 cars. In that year, Volkswagen sales went up by 33 per cent. and Fords went down by 44 per cent. The damage has been done.

One of the consequences which I blame on the Government is their reluctance to interfere in the sale of Fords as they refused to interfere in the sale of Trinidad Oil, or to intervene in the possible amalgamation of I.C.I. and Courtaulds. Their philosophy will not allow them to take the national interest as their first criterion. Private enterprise, private profit and the interests of the shareholders must always come first. I tell the President of the Board of Trade that it is this against which the electors are now revolting.

Other steps could be taken to solve our problems. We could consider the possibility of limiting our dependence on such things as imported refined oil and imported iron ore. There has been a running battle between the steel boards and the steel companies in this country over the last few years about the amount of indigenous iron ore and limestone which should be used. I wonder whether the President of the Board of Trade has examined recently the refinery programmes of the big oil companies in this country. They are spending a great deal of money abroad. The Shell and B.P. organisations have a magnificent programme overseas. Can the right hon. Gentleman tell us whether he is satisfied that the refinery programme for this country will be sufficient to match our domestic needs over the next few years? Unless he can, I say that we are deliberately undermining our own balance of payments position.

If Shell and B.P. will not do this, then we should ensure that there is a refinery programme here to meet our domestic affairs. Does any hon. Member disagree with that? If he does, then he does not begin to understand the depth of the export-import problem which this country has to solve. I am told that massive refinery programmes are taking place in West Germany and Italy.

I will tell the noble Lord. If we do not have to import so much, we do not have to export so much. If we cannot get exports going, we might as well try to cut down on some of the unnecessary imports.

The Government could launch a powerful attack on restrictive practices, which limit exports. There is a number of these international cartels. Some of them are registered with the Board of Trade. I am told that many others are not registered with the Board of Trade. I wonder whether anyone, including the Government—I have not been able to discover this—knows the number of tacit understandings which exist between large-scale firms with international connections and ramifications not to export. Such agreements do exist, and there are examples of them. When we know of a small number of examples, we begin to wonder how many more there are.

I have never been convinced by the Treasury's argument that it cannot use taxation as a means to encourage firms to increase foreign sales. I have read the G.A.T.T. provisions many times—at least sometimes. I know that they forbid the application of subsidies to any export product. I have sent one scheme forward which has been rejected by the Treasury and by the Board of Trade. It was designed, not by me, but by the managing director of a large steel company. There are other schemes in existence and I believe, once again, that if the Government were fully seized of the importance of this matter they would design and devise, with all the skill of the Inland Revenue, a scheme to help exports by means of taxation.

Another bottleneck is the continuing shortage of skilled technicians and craftsmen. To hasten to a conclusion, I merely quote the words of Mr. A. J. Nicholas, Managing Director of South Wales Switchgear, a most successful exporter, who states:
"Our exports will depend almost entirely on the ability of those people in industry who are responsible for design and efficiency of production."
Whilst we are about it, let no one criticise the number of foreign students who come here to train and to work. We are building up, as far as our exports are concerned, long-term valuable investments with them when they come here.

In short, in my view Britain's external position is so bad that any possible solution should be considered, however unorthodox or unusual, if it is likely to help us to solve our problems. What is needed, above all, is the determination that a solution should be found.

I should like to give another quotation, because it comes at the root of my criticism of the Government, to which I have referred before. This is a quotation from the Financial Times of today:
"There is a touch of pathos about the way in which the British authorities go on pinning their faith to the notion that, if they cling long enough to restrictionist policies, the downward pressure exerted on home demand must produce the expansion in exports … It is pathetic not only because exports are … disconcertingly unresponsive to the treatment "—
as, I hope, I have shown this afternoon—
"but because past experiences suggest that the United Kingdom is the victim of one of the biggest of all economic fallacies."
The Chancellor's view is quite simple. He has expressed it many times. It is that if demand is held in check, industry will seek additional markets abroad. This is the whole kernel of the Government's approach. But experience in 1957 disproved that. Industry did not seek additional markets abroad. Exports did not rise after 1957. They did not rise until home demand started to go up again and expansion occurred again in this country. One might say that that was true then, but is not true now. Over the last eight months, however, it has been true again. Once again, exports have not responded to the check in home demand. Demand at home has been curtailed, production at home has fallen and there has been no expansion in exports.

What moral do the Government draw from this? Do they draw any moral at all, or do they still believe that they are right? Do they still believe, in the face of the evidence and of the growing criticism, that they must keep down and restrict demand—and, what is more, that they have to restrict production—before and until they get an increase in exports? If this is the Government's view, will they kindly explain to people like myself when exports will start to rise, because we have had eight months of this policy without any visible result of the principles to which they cling? The answer is much more likely to be found in promoting demand than in restricting it. That is the policy of the Labour Party. It is the policy of the Trades Union Congress.

To sum up, Tory freedom means Tory stagnation. There is no other answer to it. Hon. Members opposite shake their heads, but let them look at the figures over the last ten years. We get a little burst of expansion, a long burst of stagnation, a little burst of expansion—usually timed just before a General Election—and then another long period of stagnation. That is the pattern. We saw it all through the 1950s. We are seeing it once again. We cannot afford stagnation.

The Government have made a lot of promises for new schools, new roads, new hospitals, prison reform and the care of the old. Those are the commitments that the Government have promised to do, which, no doubt, we shall have to carry out in due course, but the commitments are so great that they will remain a pipedream until there is a substantial and continuous industrial expansion.

Let the Government ponder on these facts. During the 1950s, exports from the United States increased twice as fast as ours. French exports increased three times as fast. Germany and Japan increased their exports fifteen times as fast as Britain. France and Holland increased their production twice as fast as we did during the whole decade. In Italy and Germany, the increase in production was three times as fast, in Russia four times and in Japan seven times as fast.

It is long past the time when the Government should be stimulating growth in the economy once more. No doubt, there will be embarrassments about doing so. The balance of payments would be in jeopardy if the Government were to stimulate growth. Which, however, do the Government want most—do they want stagnation here and a firm balance of payments, or do they want growth and to handle the difficulties that would arise on balance of payments problems as they occur? I would choose the second. [HON. MEMBERS: "How?"] Really. There are many ways. Hon. Members opposite should read the Financial Times if they want to know how. There are numerous ways of handling this problem, but many of them are foreign to what hon. Members opposite would care to undertake.

Let me give one example, from the end of the article in the Financial Times today by "Lombard". It is a very good article and I hope never to hear the Financial Times sneered at by hon. Members opposite. It states—and I quote this as one illustration of what could be done—that a temporary embarrassment in the balance of payments if this country were growing could be overcome by a restriction in imports. Are hon. Members opposite ready to face that? What would they sooner see: stagnation and a wage pause, or a growth in Britain, a rise in the real value of wages, and overcome some of their ideological difficulties about such things as controls and planning? Which do they want?

I have no doubt that we need growth in British industry to be soundly based. The mud and blood approach, this Passchendaele approach to which the Prime Minister is so passionately attached, in which we flounder around in the mud, grinding ourselves further and further in and gaining no ground, will not succeed today. In my view, the time has long passed and is now overdue for new methods, a new approach and a new Government.

4.17 p.m.

It was intended that this should be a debate on the economic situation. On Thursday afternoon, the Leader of the Opposition said:

"it is our intention to concentrate especially on the failure of the Government's policy to expand exports."—[OFFICIAL REPORT, 15th March, 1962; Vol. 655, c. 1537.]
I have, therefore, thought a good deal about how best to address my remarks to the Committee, because, on the one hand, I should like to reply fully to what the hon. Member for Cardiff, South-East (Mr. Callaghan) has just said, but, on the other, I ought also to say a good deal about exports, so that if the remainder of the debate concentrates on exports the Committee will have heard my views. My right hon. Friend the Chief Secretary to the Treasury will wind up the debate. While I shall make some remarks about the general economic situation, my right hon. Friend will devote more of his speech to that subject than I will be doing and I will concentrate more, therefore, on the export situation.

The hon. Member for Cardiff, South-East referred particularly to the so-called "little Budget" of last July and listed various points which my right hon. and learned Friend the Chancellor had made. The hon. Member claimed that all had failed except one, namely, the pay pause. That is simply not true.

In the case of restoring confidence overseas in sterling, that part of the "little Budget" has been abundantly achieved. Confidence in sterling has been restored. At the end of July, the reserves stood at about £876 million and we had also contracted a short-term debt of about £300 million under the Basle arrangements; but by the end of February this year we had discharged the Basle debt of over £300 million, we had repaid £225 million of the I.M.F. drawing and, in spite of this, the reserves were £350 million higher than they had been at the end of July. Most important of all, the £ now stands at a premium in the exchanges.

The hon. Member also spoke of the very slow rate of investment. The volume of fixed investment, however, was easily a record in 1961. We have not got all the figures in yet, but we expect the actual expenditure to be about £4,500 million, that is, about 20 per cent. of the gross national product. There was an impressive allocation to investment. The proportion was about 18½ per cent. in 1960, as against, in 1951, only 14½ per cent. of the gross national product. So, during our ten years, we have succeeded in raising the proportion of our resources devoted to investment by as much as one-third, which represents a very substantial shift in our activities, and as our economy has grown considerably in this period it means that there has been a rise of about three-quarters in the volume of work done. Investment by manufacturing industries has risen at about the same rate.

To get the perspective of what we have done—and I am delighted that we have done it—to repay overseas debts, has my right hon. Friend any estimate of the figure of hot money which has come into this country? Did we use it to repay those debts? If it is an even greater amount than the amount we have paid up, it is not so good a bargain as my right hon. Friend seems to indicate.

I think that the phrase "hot money" is a pejorative term. What it means is liquid funds, which can be transferred as the owners of those liquid funds feel it is worth while moving into this country, because they think that Britain's economy is sound. That is why it is so important to have sound economic policies which will retain the confidence of overseas investors over the short, medium and long term in this country.

The hon. Member for Cardiff, South-East very modestly referred to the fact that he had done a lot of reading. I should like to be the first to congratulate him on the extent of the reading he has done and on making such an interesting speech this afternoon. I find these subjects complicated myself. I do not want to appear to lecture him about the difference between the trade gap and the balance of payments, but I would just say that there is a bit more reading for him to do. He referred to the monthly figures; but the trade figures represent the value of the movement of goods outwards from this island and inwards into this island, f.o.b. for the goods moving out, c.i.f. for the goods coming in. And there he will see the difference between the two.

The balance of payments is a different figure. I think that if the hon. Gentleman cares to look more closely at what he said he will see that he was not correct. It would be quite wrong to correlate the trade gap with the monthly figures of the gold and convertible currency reserves, which was just what he was attempting to do. The monthly figure includes many other movements in gold or convertible currencies than the trade figures would indicate.

We will look at the record. I think that that is what the hon. Member said, even though he did not appreciate it to be so.

I think that the right hon. Gentleman will agree that the trade gap and the balance of payments are much nearer to each other than they used to be in the old days when we had a very large invisible income. That invisible income has not been as great in recent years and, therefore, the two are much more closely correlated than they used to be.

The hon. Gentleman referred to imports, suggesting that we should not import quite so much, but I should like to ask him: is he really advocating a policy of import control? Because that is what it really comes down to. Is he really advocating a return to direct physical import control? If he is, I would ask him to have the courage to say so, because it would represent a very substantial change in Britain's trading policy in the world and would have very serious repercussions for our own export opportunities. Would the hon. Gentleman say?

The right hon. Gentleman and his colleagues are the Government today, and they have to stand the consequences. The criticism which has been constantly and continually made here is that they decontrolled too soon—too soon and too much. I stand by that criticism.

When a Labour Government are returned to power we shall have a whole range of policies and will alter the whole range of this particular problem. Hon. and right hon. Gentlemen need not worry about that. But this is typical of the Government's approach to this problem. [HON. MEMBERS: "Speech."] I was invited to interrupt, and we are in Committee. It is typical of the Government's whole approach. The nation is in one of its most serious positions—£500 million overdrawn on a trade basis. And what does the President of the Board of Trade hope to do? He wants to try to trap me into saying that the Labour Opposition want to impose controls—so that he can get a cheap political advantage and a few votes out of it. This is the typical approach by the Government.

I am very glad to hear what the views of the hon. Member for Cardiff, South-East are in this matter, because we, for our part, are quite determined not to revert to physical import control. As to whether we moved too soon or not, personally I think that we moved at just the right time, as soon as we were in a position to do so; and, of course, we must, as a great trading nation, have imports as well as exports.

I was very interested in what the hon. Gentleman had to say about his list of industries.

I must get on.

Some of our most important exporting industries also show considerable imports coming into this country. For example, we imported, in 1961, £315 million worth of machinery, including much of a highly specialised character for the motor and steel industries' expansion programme, but we exported in the same year no less than £1,075 million of machinery to all countries in the world.

The hon. Gentleman mentioned toys. In 1961, we exported £9 million worth of toys and we imported £5 million worth of foreign-made toys. We export a considerable quantity of toys. If we were to start imposing controls on imports from other countries they might impose restrictions on our exports of toys to them.

Looking at the Trade and Navigation Accounts, I see that we exported £8·7 million and imported £8·2 million worth of toys, but the point I was making was that that was in 1961, and that in 1957 our exports were three times as great as our imports, whereas today they are, according to the Trade and Navigation Accounts, the same. What I am asking is: why should it be that our exports are increasing at such a comparatively small rate when our imports are swelling in this way?

The hon. Gentleman says £8·7 million. I have rounded up the figure to the nearest whole number. I do that in both directions to avoid burdening the Committee with too many detailed figures.

Imports have gone up because we want to have a bigger and wider variety of goods in this country, because people like that variety, and I see no reason why they should be prevented from having the amusement and the benefit of imported toys if they wish to have them. That is why it is so important to maintain the level of exports, and to improve it, if we are to be able to continue to get imports of consumer goods without restriction in the future.

I want to turn to our exporting record in 1961, because the horn. Gentleman laid great stress on the fact that our exports have not been rising. He described the figure as being flat as a pancake and he suggested that we wore looking as bankrupt as Accrington Stanley—though I am not sure that his own team, Cardiff City, is doing very well. It is at the bottom of the First Division of the League at present and is likely to go into the Second Division before very long—not a very encouraging league table, as far as the horn. Gentleman is concerned.

It is true that, when allowances are made for seasonal and other influences, our total exports have been running flat for the last twelve months. But it would be quite wrong to describe 1961 as a period of stagnation in our export trade, for the reason that big movements were taking place within the total and in directions which hold out very real promise for the future. Our exports are made up, in roughly equal proportions, of sales to industrial countries and sales to primacy producers. These two groups of markets behaved very differently during 1961. Our exports to industrial countries rose sharply—a good movement—but our exports to primary producers fell equally sharply and the end-result of these two contrary movements was that our total exports changed very little.

Our exports to primary-producing countries have been falling, not because of any loss of competitive power on the part of British industry, but because their total imports have been severely curtailed. The decline in demand for primary commodities sharply reduced the incomes of these countries and the resulting balance of payments difficulties led many of them to take steps to check internal demand or to tighten import restrictions. That is one of the facts of 1961 which led to a reduction in exports to those countries.

I wonder whether the Committee fully realises what heavy falls in demand we had to face in some of our biggest markets last year. Monthly exports to Australia fell by about a quarter between the beginning and the middle of last year. The monthly rate of exports to New Zealand is now about two-thirds of what it was a year ago and there was a big drop in our exports to South Africa.

Could the right hon. Gentleman tell us whether we, in turn, as a result of these restrictions on our export markets, took steps to reduce the imports from those countries? If not, what is the logic of the right hon. Gentleman's argument that if we restrict imports two can play that game?

We did not think of restricting our own imports from those countries because we knew that their restrictions were imposed in the main for balance-of-payments reasons and also because we wanted the raw materials and foodstuffs which they were supplying to us. Therefore, it would not have helped us to restrict imports of such products, and it would have made the position of those countries even more difficult than it was.

Despite the reductions which I have mentioned, we were able to maintain our total exports at a level of 3½ per cent. higher than in 1960. In the first three months of 1961 our exports to North America were also falling, but the low point of the U.S. recession was reached in the spring of last year. The United States economy has been developing rapidly and the tide for our exports to North America has turned. These are now running at 10 per cent. higher than a year ago, and the increase in our exports to the United States since last spring has been over 25 per cent. There have been clear signs recently of a recovery in the export of our cars to both United States and Canada.

It is to Western Europe, another group of industrialised countries, that the growth of our exports has been impressive. They have been increasing strongly in the last three years and in certain respects they have been doing even better. In the middle of last year our exports to Western Europe exceeded £100 million a month for the first time. This rate has been maintained in every subsequent month. Five countries, West Germany, Sweden, the Netherlands, Italy and France, each bought well over £100 million worth of goods from us last year.

Surely this is not evidence of a stagnant economy such as the hon. Member for Cardiff, South-East mentioned. There were encouraging increases in our sales to other parts of the world. Exports to Argentina rose by 20 per cent., to Eastern Europe by more than one-third, and to Japan by one-half.

One industry for which the Board of Trade has general responsibility and which has been doing well year after year is the tourist industry. Last year was a record year for tourism. The total of our visitors from overseas rose by 9 per cent., compared with 1960, to over 1,800,000 people, and this figure includes nearly a half million from the United States and over 800,000 from Europe. It has been estimated that these visitors spent £205 million in Britain, and, in addition, there were their fare payments to British sea and air carriers, estimated by the British Travel and Holidays Association at a further £93 million.

This is a very steady and welcome increase in our tourist earnings. This does not appear in the trade figures, but it helps the balance of payments very substantially and I think it well worth while mentioning today as one of the factors which we should take into account.

Did we have a net gain on tourism? How much did we pay out?

We do not try to balance each industry bilaterally, but from memory I think that we paid out rather more than we received. I think that it was about £15 million more in 1961, but if we did not receive an income from tourism we would be in a much heavier deficit. This incoming tourism represents a very real help to our balance of payments. I am glad to say that because of the good work which the British Travel and Holidays Association is doing in encouraging more visitors to come to Britain, the Estimates, when they are published, will show the Government's proposal to increase the grant- in-aid to the Association for 1962–63 by one-third, to £1·4 million.

So much for 1961. I now want to turn to export prospects for 1962. In my belief, 1962 will be a year of great opportunity for our exporters. In sharp contrast to last year, all our main markets should be expanding. This has not happened since 1959, when we had a good year. At the end of that year exports were 12 per cent. higher than they were a year earlier.

The reason why I say that this will be a good year of opportunity is that the United States economy has come fast out of its recession, and expansion seems likely to continue, though at a reducing rate. In Western Europe the rate of expansion may well be higher this year than last, though, inevitably, there are some hesitations about the economies of individual countries. The continuing rapid rate of activity in industrial countries will benefit primary-producing countries which were doing badly last year. Indeed, it is already doing so. There is no reason to doubt that this will lead to a considerable growth in the export earnings of primary producers and consequently in their ability to import.

There is good ground for believing that the fall in our exports to primary producers is coming to an end. Indeed, it may already be over. There are some encouraging signs. The rate of fall in our exports to New Zealand has substantially moderated and there is some reason to believe that it may come to an end. Our sales to Australia have been rising since the autumn. Therefore, we may reasonably look forward to an improvement in our exports to the primary-producing countries. This is an improvement which should gather speed as the year moves on.

When the turning point will show itself I cannot say, but I would advise the hon. Member for Cardiff, South-East not to be downcast by the February figures. He should remember how difficult it is to recognise a turning point at the moment when it comes. The fluctuations which naturally occur from month to month make it harder to identify a change of trend at the precise time when it occurs. In my view, the seasonally adjusted figure for exports in February shows up quite well in comparison with the run of figures in recent months, provided that the abnormally large deliveries of ships which occurred in certain of those months are left out of account.

I stress "seasonally adjusted figure", because it is the most reliable guide. If the hon. Member for Cardiff, South-East, and I debate this matter again I hope that we shall both use that figure, because it smooths out distortions which arise from differences in the number of working days and other complicating factors in a comparison of one month with another.

I am grateful to the hon. Gentleman for telling me that.

I will not say that the turning point has come, but it may well be that when we come to look back over the figures in a few months' time we may see that the change in the trend began to show itself about the present time and that a period of expansion of exports was beginning.

I also want to make this point. Exports in any one month—since we are quite right in paying great attention to the monthly figures as they come out—include, in varying proportions, goods ordered many months ago, those ordered fairly recently, and those goods which can be taken out of stock and shipped within days of the order being placed. The February figures, therefore, relate largely to orders placed in 1961, and even before then.

The increasing export opportunities which I see for 1962, and which, I hope, will provide additional export orders for British manufacturers, will not begin to show in the monthly export figures until the orders are translated into shipments. Similarly, when there is a downward trend in world demand, this may be masked for some months while existing orders are fulfilled. We do not have complete information on the state of manufacturers' export order books, but where we receive such details, for example, in the engineering group of industries, export order books have grown encouragingly in the last three years and are now very full.

The Government can make it easier for British industry to grasp its opportunities by pursuing wise policies, but they cannot create these opportunities. The general run of our exports is sustained by the momentum of past sales. British industry makes a comprehensive range of goods, and is a known and acceptable source of supply throughout the world. Within fairly narrow limits, therefore, our rate of export in any given short period is governed by the level of world demand for manufactures. Government policies can make a rise in our exports rather bigger or a decline rather smaller than it otherwise would have been, but they cannot reverse a worldwide trend. What we can do is to create conditions here at home which can favour an expansion of exports.

This is what we have been trying to do, with, I believe, a fair measure of success. Our prices are broadly competitive with those of the other main industrial countries, and, whatever view hon. Members may take of the wage pause, there can be no doubt that it has done a great deal to ensure that our costs will not get out of line. If we can hold the advantage we have secured, by the development of a sound and lasting incomes policy, there should be a marked improvement in our relative position in the coming year.

I accept the contention of the hon. Gentleman that just to damp down home demand does not necessarily squeeze out more exports, but it does afford elbow room for those manufacturers who like to export and who may need additional capacity or additional supplies from component suppliers, to facilitate export orders. Manufacturers are now in a position to quote keener delivery dates than they have been able to offer in the past, and our engineering industry, to which we look for a large part of the rise in exports, should have a considerable advantage over some of its chief competitors in this respect in 1962.

Now I want to underline another important matter. The domestic economy, as a result of the policies we have been pursuing, is no longer subject to the strains and pressures of excess demand. There is a degree of elbow room which will enable exporters to expand production so as to meet increasing overseas demand. But do not let us forget that the margin of flexibility is still small. The fact that there is spare plant capacity in some industries is certainly not a true measure of the situation. The limiting factor today is a scarcity of skilled labour, which could easily hamper production and cause bottlenecks, if home demand were allowed to grow in advance of the rise in exports. We intend to ensure that in the expansion of the economy, which we foresee this year, production for export comes first.

I believe that most of our manufacturers are ready to take full advantage of the favourable circumstances at home and abroad which I have just pointed out. There is, in my view, no lack of enterprise in British industry today, and our industrialists have been far more adaptable than they are usually given credit for. I read the survey produced by the Institute of Directors with great interest, but it was based on a very small number of sample firms—52 Arms out of the 100,000 firms in Britain, which I do not regard as being necessarily properly representative. Still, it was a valuable indication of what, at any rate, 52 firms thought and felt.

I should like to give one example of the magnitude of our export effort in British industry—machinery. One of the most notable features of international activity in recent years has been the growth of world trade in machinery. This is a broad classification, which includes such diverse products as electric generators, office machinery, industrial trucks and the like. In 1961, our exports of machinery increased by 14 per cent., and they accounted for over £1,000 million, or 30 per cent. of our total exports. This means that about one-fifth of all the machinery exported in the world comes from Britain.

These figures show that the world increasingly wants machinery, and we are in a very good position from which to supply it, because of the range of products we offer and the skill and expertise we put into the design of our machines. We are, therefore, increasing our exports in the fields in which there is most room for expansion. What is particularly valuable is that not only do we send machinery all over the world, but some of our best markets are also the home markets of some of our principal competitors. Our exports of machinery to Germany have trebled in the past four years, and those to the United States have nearly doubled.

The important thing is that businessmen and industrialists should aim at exports, while the Government should create the conditions at home which favour an expansion of exports and work for a removal of trade barriers and restrictions, particularly in the field of tariffs and other restrictions. I have already informed the Committee of a major step which has recently been taken towards removing impediments to trade, namely, the agreement with the United States of America in the course of our tariff negotiations under G.A.T.T. which should bring substantial benefits to our exporters. Our trade in the products on which the United States has undertaken to reduce its duties in pursuance of this agreement, thereby helping our exporters, amounted to £73 million in 1959. A further £100 million worth of our export trade will benefit from the concessions which the United States is making to other countries, especially the European Economic Community.

There are many things which the Government can do here at home to help exporters, and the steps which have been taken over the last few years have improved the facilities very substantially. We have made a number of changes in the facilities offered by the Export Credits Guarantee Department. I will not burden the Committee with all the details but, taken together, they represent a substantial improvement. We have provided matching cover and part-period cover and also the new type of guarantee for capital goods, which the hon. Gentleman referred to, and which has been very useful for the firms which have applied for it. We are giving long-term financial guarantees which will result in a considerable measure of overseas orders.

I thought that the Committee would like to know what we have done under these new arrangements. We have under negotiation business worth £127 million for which guarantees have been approved in principle, and there have been preliminary inquiries relating to a further £300 million worth. We have not concentrated solely on capital goods. At the same time as we introduced the financial guarantees scheme, we also announced the introduction of a new type of guarantee for the small exporter. I call it colloquially the "Taste and try" policy, because it was intended to smooth the path of firms new to the export field who were prepared to sell their goods abroad.

This is surely the answer to the charge that small firms are not interested. Although the scheme has operated for only ten months, over 800 British exporters have taken out policies. We were also able to announce a reduction in premiums charged for E.C.G.D. cover which, over the whole field, amounted to a reduction of about 25 per cent. The Committee will, therefore, see that the E.C.G.D. facilities continue to grow satisfactorily. Our outstanding liabilities today amount to about £830 million on guarantees issued.

There is the problem of the cost of credit. Arrangements were announced in January by the banks and insurance companies under which, for capital goods exports for which a banker's or financial guarantee was available from E.C.G.D., money would be made available at fixed rates of interest where it was necessary to give credit for longer than three years.

Finally, a few days ago I announced a further improvement in the "Full Percentage Facility". I think that I can say confidently that our credit insurance facilities are as good as, or better than, those available in any other country in the world. Two years ago British businessmen were complaining about E.C.G.D., but now it is foreign businessmen who complain about the superiority of the service which we offer to our exporters.

I should like to tell the Committee about some of the services particularly organised by my Department. I do not want to take up too much of the Committee's time. May I, however, refer to the formidable programme of work which my hon. Friend the Minister of State has set himself in an endeavour to arouse the widest possible interest in exports all over the country. He is making a co-ordinated series of provincial visits in which he meets individual firms as well as groups of businessmen, and he talks over with them the practical difficulties of exporting as well as the opportunities in the markets of the world.

In this way we are able to keep in close and up-to-date touch with those who have exporting problems and who want to turn them into exporting opportunities.

That will be included in his programme. I paid a special visit to Manchester on 8th December.

The Board of Trade also assists in overseas fairs, and in the financial year ended March, 1962, we are providing for fairs and other promotions overseas to the value of £530,000. I do not believe that there are large numbers of smaller or medium-sized firms whose export potential has not been tapped. I know that everyone—large, medium and small—can always do more. Indeed, it is my theme that overseas markets must be the biggest stimulus to expansion. But, given the work which has been done in the last two years by Government Departments and other organisations, there can be few firms which have not heard of the importance of exports and of the help which is available to them.

Before I conclude I want to refer briefly to financial inducements. People often say to me, "If the Government want exports they must make it financially worth while for firms to export." I say that it is in a firm's own long-term interest to develop an export trade. Progressive firms must look to the world as their market, as the home market will not be a big enough field for their products. Successful exporting proves to a firm that it is competitive and has little or nothing to fear from a foreign invasion of our home market. Firms which will not or cannot see this may decline and they may ultimately die. The future for them is in their own hands.

Why should the public, through the Government, have to pay these people to do what is in their own best interests? To introduce financial inducements would reveal lack of confidence in our competitive power and selling ability. Therefore, I do not support schemes for special tax reliefs, or outright subsidies related to export performance, quite apart from the fact that these would be contrary to our international obligations. In this, I am supported by the committee of the F.B.I. which was specially set up to examine the whole problem. We have taken the lead in securing the international elimination of these spurious inducements, and a number of countries have terminated arrangements of this type. We should be the losers all round if we were to reverse engines now.

Will the right hon. Gentleman deal with the point which I made—that I believed that there was a need for an increase in exports of £500 million this year? Does he dispute that figure? If not, what are the prospects of our realising it?

I will not try to put a figure on the sort of increase in exports which may be achieved this year, nor would I suggest any figure which might be deemed to be desirable this year. I prefer to continue to work for an expansion of exports and to get as much as we can. There is nothing to be gained by naming a figure at this stage. The hon. Member cannot say that the figure which he gave is the one which ought to be achieved. It is just the figure which he chose to use.

The difference, the gap, between our visible trade in imports and exports last year was roughly £500 million. Surely there is some substance in suggesting that that is the figure at which we ought to aim and on which the Government ought to be focussing attention.

There are plenty of other things which enter into the balance of payments besides the visible trade gap.

I am confident that the opportunity will be taken by British firms. I have every hope that they will do so. Exporting must always be part of our way of life if our standard of living is to be maintained and, as I hope, improved. I believe that the majority of British firms realise this. They are, indeed, sustaining a notable export drive. The free enterprise system, backed by Conservative Government, is Britain's best guarantee for a prosperous future in a highly competitive world.

4.58 p.m.

Lord Hailsham, last week, referring to the leadership of the country, said that we should not lead it like the Duke of Plaza-Toro—from behind. Nor, said Lord Hailsham, should we lead it by bad English, or in language rich in platitudes. The President of the Board of Trade has given us the Board of Trade brief in good English, but I cannot acquit him of Lord Hailsham's charge of being rich in platitudes. It is similar to the sort of brief which I used to be asked to put over when I was at the Board of Trade. The Minister was altogether too perfunctory in his reply to the Opposition's case.

The most pungent remark reported in the Press last week was by the Prime Minister. He said that at home there were economic and industrial problems and that these were largely but not wholly under the Government's control, and that if they did anything wrong they had chiefly themselves to blame. I think that the Government can fairly be called to account, just as they were called to account by the country in the mid-election period just after the present Minister of Aviation had resigned as Chancellor of the Exchequer in 1958.

The present Minister of Aviation had a very good grip of the economy and of what needed to be done. It is significant that he resigned because the Government were proposing to spend an extra £50 million, but that the present Chancellor has not resigned although the Government are proposing to spend £180 million or £200 million more than estimated. One Minister resigned—the other has not.

Now, hon. Members opposite are seeing similarities in the present situation and that of 1958. They say, "Blackpool was our Torrington, Orpington was our Tonbridge." But how do the Government square the thousands of millions of pounds which have been poured into private investment over the last year or two with the fact that this investment is not fully employed now? That is the important question of the day. The steel industry is working to only 70 per cent. of capacity, while engineering as a whole is employed at only 80 to 85 per cent. of capacity. Again, everyone with knowledge realises the hidden unemployment there is. So productivity must have gone down, too. The evidence shows that the investment has not been used and is not being used now. Shareholders in a public company would be calling for the resignations of the chairman and of the managing director in such circumstances.

This is not just my evidence. The National Institute Economic Review for last month explained the figures of surplus capacity. It referred to surplus capacity in the vehicles and engineering industries and said:
"… the labour supply would not be adequate for these industries to reach full capacity—which would imply a 40 per cent. increase in output for the motor industry and 20 per cent. increase for engineering; to reach these figures they would need between them an additional 300 thousand workers."
Do the Government mean to say that they encouraged and spurred on investment in 1958 and 1959 to such an extent that we now have surplus capacity of this sort? Are they not ashamed that so much money has been put into these industries which is not being used? Despite all this investment, production was down in 1961. When the final figures come out, we may see that, in that year, exports may have held their own. How is it that at this juncture we have capacity which is not being used?

Either the Government were very badly out in their assessment of what kind of investment was needed, or else they wished to win an election and were not concerned about what kind of investment was made anywhere. Whilst I agree with my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) about the need to stimulate the economy, I deviate slightly from him when he said that we needed to expand. How and what are we to expand in? Are we to have another repetition of the 1958 fiasco? One of the principal writers in the Investors Chronicle, Mr. Harold Wincott, says that we cannot "do another Amory". Indeed we cannot.

We cannot afford two of these in one decade. That is why I believe that the Government unfairly won the last General Election. They did it with promises that they could not carry out. All may be fair, in love, war and politics, but the Government debased the standard of politics to an extent which has never been equalled in this century when they started a consumer goods boom, which meant that the course of the British economy for the last two and a half years has been misdirected in consequence.

I come now to the figures of investment in private industry in the last year. In the third quarter of 1961, investment in the private sector was down by 10 per cent. Do not the Government realise that when they set off an artificial boom, as in 1958, the average businessman, who has no equal in being bold at the height of a boom, invests because he is confident that what is needed is capacity? He certainly did so in 1958. In the last two years, the engineering industry has been busy on the orders mainly on the basis of the spur and dynamism generated in 1958 by the consumer goods boom. But the Government are now feeling the pinch, knowing very well that a mistake was made and are bewildered as to what to do next.

For several years I have been on the theme of the difference between one type of investment and another. Precious little notice has been taken. I have here, however, a publication called Trend, which is published by The Economist Intelligence Unit. This is the number for December, 1961, and it talks about the easing of the investment boom. It says:
"This is where the general trend towards over-capacity and falling profit margins in British industry is important. It is now clear that a large number of firms completely misinterpreted the economic outlook in 1959. Their confidence was excessive and they indulged in over-expansion. Examples can be found in motor and other consumer durable industries, in steel, chemicals, paper, some of the textile trades and elsewhere. It is the orders placed then which have been keeping the capital goods firms busy up to now. Now it is evident that it will take some years to provide a market for all the extra capacity created, and in the meantime the rate of return on the new capital will be very small."
Indeed, it will be very small. The article goes on:
"It may be some time, therefore, before industry is ready to undertake a new wave of expansion."
I contend that the Government had their priorities wrong in 1958. Soon after Lord Amory succeeded the right hon. Gentleman the Minister of Aviation as Chancellor of the Exchequer, the Bank Rate was 7 per cent. But after he resigned it was reduced to 5½ per cent. on 22nd May, to 5 per cent. on 19th June, to 4½ per cent. on 14th August and to 4 per cent. on 28th November, 1958. The next change did not occur until the middle of 1960, after the General Election was safely over.

Among the other inducements which were offered in that misbegotten expansion of 1958—and if it is repeated in the next eighteen months, God help this country—were the ending of hire-purchase restrictions on 3rd July, the banks taking up the hire-purchase racket in July and August and the introduction of personal loans by the banks in July and August, so that it was possible to go into a bank and borrow £300 without any guarantee. Was not that encouraging a spending spree of which we are now reaping the results? In the 1959 Budget, Income Tax was reduced. I hope that we do not have a repetition of those degrading methods of winning an election.

The whole economy was geared to an expansion of consumer durables, so much so that those making the machines to make consumer durables went to work with a will. That is why it is unfair, in the middle of a Parliament, suddenly to say that that expansion has gone far enough and that industries must begin to export. If, in 1958, a policy of encouraging the expansion of consumer durables was introduced, how can firms suddenly be expected to tool up for quite different goods for the export market? These things must be planned.

The President of the Board of Trade used words which sounded suspiciously as though they had been culled from a report published last month by the Federation of British Industries—the Forbes Report. He omitted to mention the most important factor, however, when he was dealing with aids to export. That Report said:
"It seems to us that the general economic policy of the Government is the biggest single factor bearing on the export situation. The agitation for special incentives to export would lose much of its force if trade in general could be carried on in a climate where the conduct of commerce was less subject to a high rate of taxation and especially in a form with an unfortunate and immediate impact on production costs (e.g. the recent duty on heavy oils)."
The Report goes on to deal with high interest rates and constant, disturbing alterations of policy towards the extent of capital investment and the level of home demand. That is common sense and is getting away from the old pattern which we used to expect from the F.B.I. There is sense and intelligence behind this Report. It also says:
"Each time the country runs into balance of payments difficulties action is taken on the now familiar lines of protecting the £ sterling by measures designed to restrict internal investment and consumption. These measures inevitably react to the detriment of exports by curtailing the necessary base of domestic trade and increasing the cost of exports."
We remember the arguments which were advanced in the middle of 1958, when it was said that home trade had to be increased so that exports could rise triumphantly over them. That did not happen and will not happen again for the same reason. When interest rates are constantly jumping, manufacturers do not know from one month to another what financial base they will have against which to plan their trade.

What can be done at this juncture is to give a chance to the new council, N.E.D.C., and to ask each industry to set up an investment committee. That would not be difficult. Most industries could make arrangements to do so. These committees would work in close conjunction with N.E.D.C. and could identify the type of investment needed. For instance, in a year like 1958 or 1962 no one would dream of thinking in terms of capacity investment in most industries. One would think in terms of discriminating investment for labour saving, automation and increase in quality. Such committees could give invaluable assistance to N.E.D.C.

One of the jobs which N.E.D.C. could do now would be to assess the surplus capacity in each industry before it is too late and before it is merged in the kind of backwash which politics leave in their wake. We would then know what kind of policies ought to be introduced and what the policies of 1958 have left behind them.

Whatever is done, whatever policy the Government follow, whatever sort of programme they put up to win the next General Election, I beg them not to do again what they did in 1958.

5.20 p.m.

The hon. Member for Cardiff, South-East (Mr. Callagham) is for expansion because he believes that it will help our export position. The hon. Member for Ashton-under-Lyne (Mr. Rhodes) is against expansion because he fears that it will win us the next General Election. There may, therefore, be some slight disagreement in the ranks of hon. Gentlemen opposite about this. Nevertheless, I welcome the suggestions for the National Economic Development Council. I am sure that this body has a great deal to contribute towards our export position, and I am sure that what the hon. Gentleman said will not have fallen on deaf ears.

All that I wish to do is to cite what I believe to be an important reason why our export position is not more favourable than it is. My right hon. Friend the President of the Board of Trade said that the Government could create the conditions for successful exporting but that they could not create the opportunities, and it is in this context that I wish to speak.

I believe that the difficulty lies in the dominance of British industry over the last 150 years. During all that time we supplied a vast quantity of manufactures to the world, and we came perhaps to believe that the basis of all sound business was manufacture and that distribution was non-productive and therefore less valuable. We neglected what is often called the marketing function. It is also true that during that long period manufacturing quality was on our side, but quality has become much more uniform today, and therefore in consequence much more effort is needed to sell.

We need to know more than we ever did before to enable us to sell abroad. We need to know the economic and social developments of the target countries. We need to know about the customers concerned, what they like, and why they like it, and it is only after the assiduous collection of all kinds of information that we can hope to answer the two questions which a manufacturer in this country needs to have answered more than any other—in what new markets can he sell his range of products, and what new products should he make for his current markets? Our manufacturers today are by no means always in a position to answer those questions, and I suggest that the reason is because industry has not given enough thought to organising itself to help them to do so.

Our export markets in the past have been largely traditional, and this has led us to think in institutional terms. We have not had to fight as most of our competitors have since the war, and cur long success over nearly two hundred years has inclined us to think that the engineer, as a type, is dominant. I am sure that we cannot afford to continue this attitude.

I should like to quote a few figures which are relevant. First, according to the Department of Scientific and Industrial Research, research and development as a proportion of the total value of manufacturing output in this country was 9 per cent. in 1958 and again in 1960. This is a respectable figure by world standards. Next, the proportion allotted to advertising and publicity against the total value of manufacturing output was 1·46 per cent., which compares not badly with 1·6 per cent. in the United States. It is true, unfortunately, that if this is applied pro rata to the total value of export trade it comes out at only 0·5 per cent., but nevertheless overall it is not bad.

This, however, is the point. The value of market research carried out both abroad and at home has been worked out at between £6 and £7 million a year, and this represents only 0·003 per cent. of the value of our total manufacturing output. The United States, for instance, spends 1½ times as much in proportion.

What does this mean in simple non-economic terms? It means surely this, that we spend a great deal of money in improving what we make. We also spend a sizeable sum of money in telling other people how good it is. But we spend very little money indeed on trying to find out who might want it when it is made, and if they do not want it, why not, and again if they do not want it, what they do want. To neglect this is to put the cart before the horse in modern export conditions.

It is no good regarding market research as an additional cost which may be skimped so far as possible. It is an essential integral part of the whole industrial financial and commercial machine. As manufacturing becomes more specialised and more complicated, so the need and importance for market research will rise. In the long term it will no longer be the manufacturer, or, if one likes, the engineer, who will necessarily dominate any business or industry. It will be the man who can say what the manufacturer ought to make, perhaps even how he should make it, where he should send it, how to sell it, and how to keep it selling. The man who will dominate will be the man who can answer such questions as, should the manufacturer export direct, or should he manufacture under licence, or should he invest in plant in the target country overseas?

These questions involve a mass of detailed information which only an expert in that field can obtain, and, as I think the hon. Member for Cardiff, South-East said, it is out of the question for the small or even the medium-sized firm in this country to be able to do this on its own. The man, the marketing expert if one likes, has to be a person of particular skills. He has to be a linguist, a salesman, a publicist, and a public relations man. He has even perhaps to be an industrial consultant and a designer. It is seldom that these skills are amassed together.

There has recently been a useful publication put out by Political and Economic Planning on this subject, and the figures that I quoted came from it, but I disagree with the conclusion, which is that more provision could be made for market research by the Board of Trade and by the Foreign Office in our missions overseas.

I do not think that this is practicable. I have served in more than one mission abroad, and I feel that an enormous amount of useful work is done by them. Much background information is available to businessmen when they visit a mission abroad, but it is not right to distort the function of foreign service representation into a sort of entreperennial outpost. Foreign service personnel are there to report dispassionately on what is happening in the country so that the Government may base their policy on that information. They can help businessmen, but they have neither the experience nor the incentive, nor necessarily the flair, to combine what they have to do with aggressive sales. It is not practical to expect them to do so, and I hope that we shall not ever think of disturbing their diplomatic function unduly to this end.

The hon. Gentleman has made a valuable point. What is needed now is not aggressive salesmanship, but the ability to understand that some of the things that one is trying to sell are not wanted, and some of the things that one is not trying to sell are. Why should not the commission and its representatives—and I gather that the hon. Gentleman has been one—point out to every British representative that it is no good trying to sell such-and-such a model; that the people want something different; that they want this kind of design; they do not want that kind?

The hon. Gentleman referred to the commission. I was talking about our missions abroad, in the sense of embassies, legations, and so on. This is really expecting them to do too much. They can know the answer in very general terms, but they surely cannot answer the individual British manufacturer's detailed questions on his own product range. It must involve a lot of research before anyone can come to a satisfactory answer on an individual basis like that. I think that the possibility of using our embassies in that connection is limited and will always remain so.

To follow on from that, can the trade associations and regional export councils, for instance bodies like the Dollar Export Council and the Export Council for Europe, do the job of market research for our industries satisfactorily? Again, in my submission, no. They have a vastly important task in co-ordinating, but they are again too large in scope and too impersonal to undertake the individual task of market research in sufficient detail.

I should like to place this ball where I believe it belongs—squarely in the court of industry, commerce and finance in this country. It is up to them. The Government are doing their best to create the conditions and, in my submission, they are doing well. Perhaps from time to time there is more that could be done, but broadly speaking that is the case. As the President of the Board of Trade said, the Government cannot create the opportunities. That is for business, and what business needs to do is to bring into being dynamic commercial enterprises, marketing companies, if you like to call them that. This is only a private idea, but to my mind it would meet the case and be possible to turn distribution as opposed to manufacturing into a profitable business on its own account. Others can do it, in Europe in particular, so can we, and the sooner we do so the sooner our export figures will take a substantial turn upwards, and then perhaps we shall also be spared some of the fly-blown and tired recommendations that we have had from the Opposition during the debate so far.

5.33 p.m.

It has been a very interesting debate so far. I was a little disappointed at the Minister's approach to the debate. I was glad that he departed from the temptation to score what might be called smart Alec political points and to say, "This is what you did, and this is what we did". Then there is all this business about physical controls. That has been the stock-in-trade of Ministers opposite for twelve to fourteen years, and nothing could be more nonsensical.

The Government are proposing to go into the Common Market and proudly proclaim that there will be no such thing as physical controls. If we go into the Common Market, we shall all be faced with the question of having quota arrangements. What are quota arrangements but physical controls? If the right hon. Gentleman takes into account foreign trade with the Commonwealth, when Australia or New Zealand or some of the other countries, to protect their balance of payments close down on certain things from this country, is that not a physical control? Is the right hon. Gentleman against these physical controls by the Commonwealth? If he had to protect this country, does not the Minister think that the Government would have to resort to physical controls? The use of these words loosely and without understanding or thinking about them is not a contribution to a debate of this kind. I was glad that the right hon. Gentleman got into a more factual and clearer exposition of the Government's policy.

I think that there is a danger of our getting lost in this business of hunting for exports. Exports are not a virtue in themselves. We export to pay for what we buy from abroad. The first thing that we are concerned about is what we want from other countries. If we decide that we want thing we have to make arrangements to pay for them. We can only pay for them by providing goods or services. One of the problems of balance of payments in recent years is that we used to pay for a great many imports by shipping services, economic services, insurance services and interest on past investments. A great deal of that has shrunk. Our shipping is not the only shipping in the world. A great part of that income has declined. Our interest income has been declining for a considerable time. I am not sure that the Government are not contributing to this because about two Budgets ago—my right hon. Friend will correct me if I am wrong—we gave an inducement to firms to leave their interest abroad and not bring it back to this country. Therefore the Government themselves contributed to a decrease in a very important part of our invisible income. These are points sometimes forgotten when comparing one year with another. The Government, as a matter of fact, are doing themselves an injustice by not realising that much of this money is permanently abroad and not coming into our calculations at all.

The hon. Member for Mid-Bedfordshire (Mr. Hastings) laid considerable stress on the question of advertising. Advertising, I agree, can be a very valuable asset and contribute to this country's trading, but it can also be a great danger. It depends on what is being advertised. For instance, look at the waste in which this country is engaged.

All that I did was to compare the figure spent on market research with the figure spent on advertising with exports, and that was to the detriment of the figure of market research.

I am very glad of that. The question of advertising is a fantastic one. The tobacco trade is spending £38 million a year persuading people to poison themselves. Is that to the national advantage? They are spending this on persuading people to commit suicide.

If the publicity against smoking were successful, has the right hon. Gentleman any suggestions to make whereby the Chancellor would get the revenue to replace what he lost on tobacco?

Obviously, the money is there. The point is that it is contributed unfairly by people who smoke. The people who do not smoke escape their proper share of taxation. It is very generous on the part of the smokers and drinkers to pay so much of our taxes, but it is a quite unfair method of taxation. The greater burden of taxation should be placed on the people who are best able to bear it. I suggest that Mr. Clore might contribute quite a little towards this.

The right hon. Gentleman suggested that advertising by the tobacco firms led people to suicide. Can he say how many people might commit suicide if they were deprived of the tranquillising effects of tobacco?

I would be willing that some people should commit suicide, but I do not think that we should induce young people, who have not started to live, to do so. I certainly think that it is a complete economic waste to persuade people to poison themselves, and pay thousands of people to manufacture the poison. We might as well spend millions of pounds on persuading people to take laudanum. I am told that that is quite an enjoyable drug to take. There is no reason why we should not dope people with laudanum in the same way as with cigarettes.

Advertising in itself is no virtue. It depends on whether it is serving a proper purpose. The difficulty about this country is that it cannot live within its own borders. It must import raw materials, food and a great many articles. There is a virtue in exchange. If we send something to another country which does not have it, and buy something from it that we have not got, that is a very wise and reasonable exchange.

If the Common Market arrangements develop and we start competing with European countries in the selling of cars, we shall be sending cars of practically the same type backwards and forwards across the Channel just as though we were taking in each other's washing. We shall be making no economic contribution to the welfare of Europe or ourselves. An Austin Cambridge here and a Simca in France would probably provide about the same kind of service to the person buying it. All that we should be doing would be to exchange a different kind of fashion. It may be an interesting and valuable experience, but exports of that kind are not necessarily a virtue.

Another important factor to bear in mind is that if we push exports too far, in the sense of fighting each other for exports, we shall have an economic war, which could conceivably be the road to physical war. General Foch once said that great areas of trade were cleared by a cannon shot. That was the method by which trade was increased in the past, but we do not want that kind of trade in the future. We must try to arrive at some world economic arrangement whereby each country exchanges with other countries goods which are to their mutual advantage. Under that system we cannot get into debt with other countries, and therefore we must export enough to pay for our imports.

But it is said that we must also invest in other countries. That means that we do not want to get into debt with them but insist on their getting into debt with us. Other countries are becoming less and less willing to do this. South America and Russia are terrified at the thought of being under any obligation to capitalist countries, and being subject to capitalist exploitation. Persuading people to accept capitalist investment has become a delicate operation in modern society, and it can be done only under certain conditions. If we fight to make people take more than they want the reaction of such countries as Australia, New Zealand and the Argentine is to impose a trade blockade in order to protect themselves against what we call our investments. Whether or not the Government like it, international trade in the future will have to be regulated by agreement among the nations. I admit that there has been some progress in that respect.

The question of exports concerns me very closely, because I represent part of Scotland, and Scotland depends to a great extent upon exports for its very existence. Unfortunately, Scotland has not been gifted with many natural resources. Our coal is practically gone. Our shipping and steel industries depended upon coal and, therefore, the basis of those great industries has largely disappeared. We are now largely dependent upon exports of whisky—which is a very valuable export for Britain as a whole—and woollen goods, which earn dollars for us.

And prevent many suicides.

The President of the Board of Trade made the curious statement that he did not believe in any special tax concessions or other concessions to our manufacturers for the purpose of stimulating exports. That is a very dangerous philosophy. The Government have given special tax concessions and other inducements to industry to go to Malta to produce its goods, and I can see no reason why the same concessions should not be given to North Wales, Scotland and Cornwall—or any other part of Britain where industry needs to be stimulated.

I suggest that the Government should carefully consider whether the policy which they have adopted, and which they claim has been so successful in Malta, could not be extended to areas of unemployment in Britain. I make a special plea for the Highlands. The President of the Board of Trade has been talking about private enterprise, but it has completely broken down in the Highlands. During my term of office, the Labour Government offered inducements for private enterprise to go to the Highlands, by creating a development area there. But private enterprise sees no possibility of making any profit there, whereas it sees the distinct possibility of making considerable losses. Nobody in his senses could expect a private firm to establish an industry in the Highlands and run at a loss. Therefore, if there is to be any stimulation of activity in that area we must give it a blood transfusion. In other words, we must create a hot-house at the beginning, so that delicate industries can have a chance of taking root. Once they have got going they themselves will create the necessary economic conditions in which they can thrive.

The Common Market might benefit Scotland to the extent that one of the ideas behind it is the planning and development of backward areas and the direction of industry to those areas in order to stimulate employment. It will be a sad day for us if we have to wait until we enter the Common Market before any real planning is done in an effort to maintain industry. It would be a great blow to Scotland if it were allowed to decay simply because the Government took no action to stop it. Scotland is losing 25,000 people each year through emigration. Many of our skilled men are emigrating, and every skilled man who goes leaves behind him half a dozen unskilled men without the key man to maintain them in industry. This is a most dangerous tendency, and the Government should do something to reverse it as soon as possible.

It is true that the Government have spent a good deal of money recently in persuading the B.M.C. and Rootes to go to Scotland. I also admit that some Scottish industrialists have let the Government down, inasmuch as they have not been prepared to back up the efforts of the Government by supplying components for the motor car firms. Some firms have had to come up from England to do this. I feel ashamed to confess this. It is a very sad commentary upon the private enterprise which the President of the Board of Trade says is filled with great enthusiasm. We do not mind enterprise if it is enterprising, but Scotland is suffering from the fact that it is not enterprising. It sits and waits for the Government to do something. If private enterprise will not do the job the Government must do it, rather than allow Scotland to collapse and decay.

The Government's policy of imposing general restrictions when they feel the £ is shaky is a disastrous one. When the Government increase the Bank Rate they put a brake on production not only in Oxford, the Midlands and London, where there is a scarcity of labour but in Scotland, North Wales and Cornwall, where there is a surplus. In other words, they make the position worse where it is already bad, without bringing any great benefit to anybody. That is why we complain about the lack of selectivity in the Government's actions.

This policy is a great steam hammer that crushes everything, good and bad, at the same time, and it will do little to cure our economic ills. The Government seem to be prepared to plan, to the extent of saying that they must either restrict consumption at home, in order to make exports possible, or cut down exports, with a resultant fall in domestic consumption. The Government have boasted about our great car exports. There would not have been any great car exports if a Labour Government had not exercised physical controls over the motor car industry.

The car industry was quite willing to sell all its cars at home—there would have been no difficulty about that—and not send one abroad. But the Labour Government said, "We have to buy your raw material abroad. If you want raw material you must make a contribution by exporting cars. You must plan your capacity in order to send a proportion of your cars abroad." With great reluctance, the motor car manufacturers agreed; they went abroad and opened up markets in Australia and the United States, and built up the basis of the great export industry which they now enjoy. That was done by physical controls; there was no other method at the time.

We are not anxious that the Government should interfere with every little private firm or industry and try to run its business. But the Government have enough persuasive powers to tell such industries what they want done. What we object to is that the Government do not seem to have any idea what they want industry to do. Industries are willing to be guided by the Government. When the Labour Party was in power it got co-operation from private enterprise because it knew what it wanted to do and the firms were prepared to cooperate about exports and so on. I admit that the motor car industry was a slight exception, because a great juicy market at home was lying open before it and it was reluctant to have to sell its goods abroad.

I hope the Government will get down to ascertaining the capacity of the country and plan for what it is to be used. There are industries in Scotland which are going to ruin for want of such planning. The coal industry does not seem to know where it is going and what is to happen to it. At the moment nobody seems to know what the future of the shipbuilding industry will be. Yet once someone discovers how to use atomic energy to drive a new type of ship, shipbuilding will again become a prosperous and developing industry. Indeed, there will not be the capacity to replace existing ships. One event of that kind will alter the whole complexion of the shipping industry.

What are the Government doing to stimulate the development of atomic energy for shipping, probably the one great step which could be taken to stimulate the shipbuilding industry? When the shipbuilding industry is stimulated, the unused capacity of the steel industry will immediately be required. In this respect the steel industry in Scotland is also suffering. These industries in turn affect a great number of other industries.

It is obvious that if the great exporting capacity of Scotland is not to be used, we must make it up by stimulating still more the South of England—where stimulation is not needed—so that goods may be sent from the South of England.

I have a very practical suggestion to make to the Government. I used to be with a firm having about 600 workers. That type of firm is ignored by the Government. Yet there are thousands of such firms. When I was at the Ministry of Supply there were 17,000 engineering firms in the country. It was impossible for the Ministry to deal with them all individually. What it did was to try to create parent firms to look after the small firms. It is still the Government's theory that such big firms as Armstrong Whitworth and Vickers are the only ones that matter.

A great many of the small firms—the Minister knows this very well; he was a director of one such firm, which he and I visited together—are very highly specialised. Although none is by itself a big exporter, taken together they represent a tremendous potential volume of export. The trouble about small firms is that they are afraid to export. How can a small firm—I have in mind one making mining machinery in Motherwell; Anderson and Boyse makes some of the finest machinery in the world—bear the cost of having agencies in every country in the world to which its machinery could go? It is also afraid of the exchange arrangements. It cannot risk laying out its capital and losing it if it makes a bad bargain.

There is also the woollen trade. The Scottish woollen trade is one of our highest dollar earners. In Hawick they earn more dollars per person than an any other part of the country. Some of the big firms in this trade, such as Braemars, Innes and Henderson, have publicity and agencies throughout the world. Some of the small firms in my constituency make equally beautiful woollen material but they find it very difficult to advertise, obtain markets abroad and export.

There is an interesting prospect if we enter the Common Market. If a dozen of the garments made by these firms—these are luxury goods—could be sold in each of the towns which will then be open to us, we should create a boom in the trades concerned. When we had the Scottish Industrial Exhibition—I do not know how true this story is but it illustrates the point—the Turks were tremendously taken by Shetland wool and wanted to buy a huge quantity, more than the Shetlands could produce in about ten years. Thus, demands for small quantities from a number of places could create a great demand for the products of highly specialised firms.

I have previously said, and I still feel, that the Board of Trade is far too aloof from such little firms. There ought to be an agency which could give such firms assurance—perhaps "insurance", too—about being able to obtain markets abroad. For instance, there might be an agency in the Argentine to make information about their prices and qualities available to people who might want to buy their materials.

I disagree slightly with something that was said just now. My experience is that some of the commercial and labour attachés at our embassies do a splendid job for us. When I was in Brazil the labour attaché there was the father confessor, guide and friend of the whole of the Brazilian Government. All the tradespeople in Brazil knew him. He was a very able person and gave advice on all sorts of matters. I agree, however, that some of our people wandering about the world are inclined to lose touch with what is going on in their own country, and while I believe that our commercial and labour attachés and embassies generally have done a great deal, I believe that they could do still more.

I should like the Government to decide what they want to do with this country's energy. The real trouble is that we have energy which is going to waste and can never be replaced. It is up to the Government to find a way to use our energy, and if necessary they should stimulate industry by a scheme such as that adopted in Malta. At the moment Scotland is crying out for Government planning. The danger is that without a Government planning Scotland may perish.

5.59 p.m.

I hope that the right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn) will not be too offended when I say that I am rather glad that he is not the Shadow Chancellor of the Exchequer. I much preferred the speech of the hon. Member for Cardiff, South-East (Mr. Callaghan). I was encouraged by his homework on the Financial Times, the Investor's Chronicle, and all the rest. If the hon. Gentleman keeps that standard up, he will become more and more converted to the real system of economics which we like to hear in the House of Commons. At any rate, I enjoyed his speech. We do not always agree, and I do not say that I agreed with everything he said today.

The right hon. Member for East Stirlingshire shook me to the core in one regard. He wants to turn Scotland into a hot-house. Some of us think that we have already got that situation in some of our debates. We should not like them to hot up any more.

I want to say sincerely that we can pay a very high tribute to the Board of Trade. Debates on trade matters are sometimes rather unrealistic. The idea prevails that the Government should do this, that and the other. This rather bores me. I have been an exporter. I had to learn the hard way. I started with nothing in that line, although I had a home-based business. We made mistakes. We had bad debts. We did not then have the help which is available today. We were only a small business. We were technical people. We received assistance from some organisations. The F.B.I. has been mentioned today. It is extraordinarily helpful in giving small firms a leg up and helping them to make a start. A firm going in for export business must, moreover, have a shipping clerk who knows something about it.

The House of Commons should not spend all its time urging the Government to do this, that or the other, because in the realm in which the Board of Trade can function it does a very good job. We have good assistance on credits. There are undoubtedly good assistants in our embassies. The standard now is infinitely higher than it was in the days when I was literally doing export business and touring the Continent. This is right and proper. However, the Government can do a great deal—they will like my speech a little less when I say this—to get the climate right. If the Government get the climate right—they help and have much success in some quarters, but not in all—exporters can go ahead. The majority of them are willing to go ahead if the conditions are right, but the conditions must be right for them to be competitive. Exporters cannot be entirely competitive on their own belt. It depends on how the economy is run.

At the beginning of his speech my right hon. Friend the President of the Board of Trade said that this was to be a debate on the economic situation. The Opposition have asked that we should concentrate on the export side. We have done that and will do so more later. It is an interesting topic because it is the alpha and omega of this country's existence. However, I want to talk about the economic side, because I am deeply concerned about this, as I have shown in the House of Commons on more than one occasion. I shall certainly show my concern today.

The last debate on this subject, in which I was not fortunate enough to participate, was on 18th December last. On the eve of the debate I wrote a rather Times-like letter to the Yorkshire Post, which was published on the day of the debate. This is always a risky thing to do, but it was not much of a risk on this occasion. I said:

"Will the Government give the nation some idea of what they really mean to do about our economic affairs? It is too much to expect what Lord Montgomery calls a 'master plan', but surely it is about time that more courage was shown on what is assumed to be their conviction."
I tell the hon. Member for Cardiff, South-East that it is not the policies of the Government which are wrong. It is the method by which they are applied and the lack of courage with which they have been pushed through. I know that the hon. Gentleman will not agree with me about this, but this is my opinion. My letter continued:
"The Pay Pause is a shocking example of this shortcoming. As a relatively short-term corrective for an economic situation which should have never occurred it was dead right. It was, however, never applied by the Government as it should have been."
This is one of my complaints against the Government. It has not been pushed through right across the board, as I should have liked to have seen it pushed through. No doubt legislation would have been necessary so that it could be applied right across the board. I include in this dividends, rents, and all the rest, so that there would have been an equal sacrifice, whether it was liked or not, right across the country. There might have been protests, but they would have been worth while. Much of the protesting which is now being done is not justified by what has been done.

I ended my letter with these words:
"Not for the first time has it appeared that the Government has been unwilling to give its Chancellor of the Exchequer the support he needs—this time we cannot afford another mistake."
Those right hon. and hon. Members who have knowledge of my attitude in this matter over the years will know exactly what I am referring to. We are—we might as well face up to it—paying for the Prime Minister's dismissal as Chancellor of the Exchequer of the present Minister of Aviation—"one of those little local difficulties", as my right hon. Friend called it. I was caught up in the slip-stream of that to no mean extent at the time, because I sent a telegram of congratulations to my right hon. Friend the Member for Monmouth (Mr. Thorneycroft), with a copy to Downing Street. It was rather touching on my part. They were very nice about it. The Prime Minister's statement that it was one of those little local difficulties was a somewhat unfortunate statement—one of those utterances which I did not think that any great man should have made. As I said in a supplementary question to the Prime Minister on 8th March, we have already had under Tory administration four ex-Chancellors of the Exchequer, all of whom have set out to do a job of work and in many respects have done magnificently, but they have all dismally failed in this matter of controlling expenditure.

I am indebted to the Daily Mail of 5th March for a summary of the statements made on this matter by the four ex-Chancellors of the Exchequer. There was, first, my right hon. Friend the Home Secretary. In 1952 he said:
"This country has taken on far too much at once. If this Budget is to fulfil its main function, it must further reduce Government expenditure."
In 1954 my right hon. Friend said:
"General considerations provide no excuse for not adopting a strict and sober attitude towards Government expenditure."
This was far too much for me. A few days later, in the debate on the Budget proposals, after saying that I regarded the increases in expenditure as a national tragedy, I said this:
"Much as respect and admire my right hon. Friend the Chancellor"—
that is, the present Home Secretary—
"it is no satisfaction to my hon. Friends or to the Government or to anyone else that he should come here and say, 'I am appalled by the Government's expenditure'. I"—
that is I, Mr. Hirst—
"cannot do anything about it I am a very humble back-bencher, but, by heaven, the Government must, and they must decide what is the best way of achieving that object and achieve it."—[OFFICIAL REPORT, 7th April, 1954; Vol. 526, c. 468–9.]
The result of that was a change of Chancellor. We then had the present Prime Minister. In 1956 he said:
"The Government have decided that a full review of expenditure should be put in hand at once.…"
As we all know, he set out to make an economy of £100 million. By robbing Peter to pay Paul in some ways it was done, but nonetheless in five years expenditure had risen by £1,200 million.

He was followed by another Chancellor, this time my right hon. Friend the Member for Monmouth. In 1957 he said:
"We have clipped and cut expenditure over a wide field."
That did not get him very far, as we all know, because in due course he was clipped himself. Then we had another Chancellor of the Exchequer, the present Lord Amory. In 1958, he said:
"The level of expenditure will continue to be held at an absolute minimum."
It just went up to about £5,000 million, so I do not know what the absolute minimum was. He lasted a little longer than most, but in due course we had another Chancellor, namely, the present one, who said in 1961:
"I am one of those who believe that there are savings to be made by administrative economies."
By this time expenditure had risen by another £900 million. In 1962, we know that there is an increase of £384 million.

To summarise this catalogue in a rather easier way, it means that in the last Tory administration before the 1959 General Election expenditure rose by £1,000 million. It also means that it is well on the way to going up by another £1,500 million in this administration. The hon. Member for Cardiff, South-East said that it has already risen by £800 million. That adds up to a prospective expenditure, both on central and local government before another year and a half has gone by, of nearly £9,000 million, or the best part of 45 per cent. of the gross national product. I cannot see how that sets an atmosphere in which we can have this thriving export trade.

I want to be absolutely fair. Our records show, and I say this with pleasure and pride, that during most of the Conservative rule, unlike that of the Labour Government, expenditure was kept in strong and steady relationship with the gross national product—until recently. Last year that was not the case, and it will no doubt not be the case this year. The result has been a hotting up of expenditure. Once the crust of the pause starts to break—and there are unhappy signs of that—it must whet the appetite of inflation.

A lot is being done administratively to control expenditure, but I do not think that that will be fully effective. In that sphere, the record is a sad one. It sometimes seems to indicate some measure of profligate policy, and of expediency in certain directions. That has had a damaging effect, perhaps permanently, on many fronts. When wage and salary levels leap ahead by hundreds of millions a year the inflationary tendency is increased. It is natural that the trade union bargainers should try to be one leap ahead, but it has a very bad effect on our economy. The fact that the charge on the nation has virtually doubled in recent years has been due partly to increased productivity, partly to increased production, but, partly also, to inflationary policies for which the Government must take some blame.

Hon. Members, perhaps more than most people, realise that policy rather than departmental performance controls expenditure, but there is room for a great deal of departmental improvement and organisation, and a great deal can be done in keeping the Departments in tune on their present work. I welcome that; I have asked for it in the House of Commons. I also welcome enormously the appointment of my right hon. Friend to the post of Chief Secretary to the Treasury. I am sure that he is a great asset, and that the appointment will mean a great improvement. I should not like my right hon. Friend to think that I felt otherwise.

At the same time, there is nothing new about the theme of policy controlling expenditure. My research into the subject did not take me back to Cromwell, but I did discover that in 1862 Disraeli said, "Expenditure depends on policy." He added that he was sorry that he had to keep on reminding the House of that fact. There can be savings—one has only to look at the Reports of the Estimates Committee to see what terrible things can happen—but not on the scale of the great canvas I am trying to paint.

The Government of the day—in other words, the Cabinet—are responsible for policy, and I am glad to get in first with what I am about to say. I do not always get in first; someone generally beats me to the post and asks, "What would you cut?" That is a good old phrase in this Committee and in the constituencies. It is a good old phrase that is used by the Whips in the corridors, and so on. I know—I have been through it all during the twelve years I have been a Member of Parliament.

To ask that is to beg the whole question. The challenge is not for back benchers on either side to say what they would cut. The challenge is to the Government so to order their affairs that expenditure is not so great a strain on our resources that it is damaging to the economy. That is not easy—there will be mistakes—but until now I have not seen any sign of such policy since I entered the House. Now, for the first time, I think that something is happening to inform the Cabinet, collectively, of the type of expenditure that present and projected policies will force on the Government. I do not think that they have been given that picture properly in the past.

No modern Chancellor, however good, can really fulfil this function unless and until he has the absolute support of the Cabinet and, with the great spending Departments represented in the Cabinet, he cannot have that absolute support unless there is leadership and determination in the Prime Minister to secure it. There, I appear to attack the Prime Minister. I do not attack him as a person; I attack him as I would any other Prime Minister. It was just as bad with the previous ones; none of them would grasp this nettle firmly, and make sure that the policy which I think that, in its heart of hearts the Committee and the country wants, was carried out. It will not be carried out until there is that support.

Fortune has sometimes favoured us in times of crisis. As most hon. Members will know, on these occasions I am never one to bluff, and I admit quite freely that on one or two occasions the Government have been very lucky. On one occasion, the terms of trade came greatly to their assistance—

Of course they did. The terms of trade came greatly to their assistance in the first major crisis and, to give the Government full credit, they took all possible advantage of it for the nation, and used it to the best of their ability. The fact remains that it was favourable fortune. The second occasion when fortune came to the Government's aid—although this may seem a funny thing to say—was when the American slump took a great deal of the froth off our economy without our having to court the political popularity of doing it for ourselves.

I am not quite sure what is supposed to come to their aid this time. I think that what my right hon. Friend the President of the Board of Trade said is quite correct; it is very difficult to sort out the wool from the cotton, so to speak, in the knitted garment he put forth today. I think that the only thing that can come to our aid is that, somehow, we may keep our costs so competitive that all the world wants our goods. That is an exaggeration to make the point. If the world does so, I shall be very grateful, but it is dangerous to go on with a policy of expediency hoping that someone will bail one out of one's difficulties. It is becoming more dangerous just now, because we have not the benefit of those "invisibles" that were such a great balancing factor in the old days.

It behoves nobody, however exalted, to gamble on events. Parliament must press for what the nation clearly demands, which is that events should be mastered, wise husbandry insisted on, and leadership given. The Tories have been returned to power on more than one occasion on some first-class policies but, at times, there have been inevitable slogans and banner lines. One was "Trust the People". If the Government had only done that earlier they would not have had anything like the difficulties they face in some quarters today.

I remember hearing my right hon. Friend the Member for Monmouth speaking in this Chamber, following his resignation as Chancellor in January, 1958. After referring to some of the things that interested him at that moment, he said:
"… for twelve years we have been attempting to do more than our resources could manage, and in the process we have been gravely weakening ourselves."
A little later on he said:
"Our basic problem … is that we should plan to spend less than we are planning to spend at the present time …"
My right hon. Friend finished what was a very moving speech with words that are very germane to our present position:
"I believe that there is an England which would prefer to face these facts and make the necessary decisions now."—[OFFICIAL REPORT, 23rd January, 1958; Vol. 580, c. 1295–7.]
That was said in January, 1958, and I respectfully suggest to the Government that if the people had then been faced with the facts, we should not have had anything like our present difficulties.

There was a second chance—the Government are very good, and a bit lucky. In July, 1961, the whole nation was ready and geared for what was necessary to put right the financial situation. We all know what happened. The people were not trusted. The thing was whittled down to a sort of pay pause which, to some extent, may have been effective but in this instance, as with credit controls, was awfully unfair. Had the people been trusted, had the policy been put right across the board, as I have said, there would not have been that feeling of unfairness, nor could there have been grounds for it. All, whether capitalist, wage earner, salary earner or anyone else would have been affected by it.

I hope that the Chancellor will see the red light this time. I know him to be a man of courage and I believe that he is sincere and will stand up and insist on a sound approach to these matters. I am sure that in all of this the Chancellor will have the help of the Chief Secretary. But if this trend is to continue—and I say this advisedly and as I see it—and the needs of the times demand that there must be a resignation, I trust that it will not be that of the present Chancellor of the Exchequer.

6.20 p.m.

I am sure that all hon. Members will agree with much of what the hon. Gentleman the Member for Shipley (Mr. Hirst) said. Although the hon. Gentleman went some way from the line most of us have been taking on the export position he was, of course, fully entitled to catalogue the broken promises that have been made by successive Tory Chancellors of the Exchequer. That catalogue is well worth recording and bearing in mind, for since 1950 every Tory Chancellor has made promises and all of them have been seen not to have been carried out.

The hon. Gentleman did not say that. On the facts of the information he gave as such a statement cannot be borne out.

The same can certainly be said of Labour Chancellors of the Exchequer. The Daily Mail article from which I quoted—and I did not start at the beginning of it—refers to Sir Stafford Cripps having said in 1950:

"'We must all agree that the present danger continues to be one of excessive spending or deficient saving.'"
The article also refers to what was said in 1951 by the present Leader of the Opposition. He said:
"'This is not a moment when we can afford to cast aside the restraints of the past few years … The expenditure side is a chilling prospect.'"

The hon. Member for Shipley spoke about cuts and we are bound to ask, for someone must, what cuts the Chancellor of the Exchequer can now make. Unfortunately, the hon. Member for Shipley did not answer that question. It is just as well that someone should say that expenditure, in total, is too much and that, when we get to the other kind of expenditure, one does not notice which item of it is being supported. I thought that the hon. Member for Shipley was going to be of enormous help by saying that the pay pause had been extremely unfair in its incidence and that it should have gone right across the board; that everyone should have been affected, capitalists, wage earners and the other categories he mentioned.

My memory may be at fault, but I do not recollect the hon. Member for Shipley voting against the Surtax benefits. My recollection is that he was strongly in favour and thought them of great virtue. It was those benefits, first, which set the pattern of the feeling of shocking unfairness in the incidence of the pay pause. That feeling will remain so and will always stand as examples of the utter stupidity of a Government who, when trying to solve the economic difficulties of the country, sat forth benefits which went to one category, but which could have been withdrawn from that category so as to make it clear that if there really was any necessity for such a pause it should have been on all hands.

I must return to the main question of exports, on which most of the speeches have been concentrated, and I shall deal with the subject in a completely nonpartisan manner. We all recognise that exports are vital to this country, whichever kind of politics we have or whichever category or class we may be in. It is not difficult to state the problem. It is, perhaps, less easy to provide the remedies. Exportability is the function of efficient production. If one has efficient production one has the means of exporting. But converting exportability into exports is an attitude of mind.

Bearing that in mind, we criticise the Government, first, because we have not got efficient production as a result of Government policies. Second, regarding the conversion of exportability into practical exports, for which we need an attitude of mind, we say, as has been said many times today, that not everyone is doing what he can; and I will add that the Government are certainly not doing what they can. Indeed, I bitterly regret having heard the President of the Board of Trade say, in effect, "We do not think that the Board of Trade can do any more to encourage exports." [HON. MEMBERS: "Oh."] That was the tone of what he said.

I realise that the right hon. Gentleman was making a speech from the Government Front Bench and that he carefully went out of his way to pick our individual figures which were beneficial and so avoided giving totals which would clearly have shown the difficulties. It is a difficult thing for a Minister who does not want to admit that we are in a shocking situation for comparable exports. This particularly applies to the present President of the Board of Trade who, prior to his appointment, went to considerable trouble, up and down the country, to address one trade after another and encourage them to pay more attention to exports.

As the hon. Member for Shipley said, the then Prime Minister was saying, in 1862, "I am sorry that this House does not yet realise that the volume of expenditure depends on policy." A statement like that cannot be made too often, but it is not sufficient for hon. Members to say it merely to one another. The thought behind that phrase must get right down into the day-to-day ordinary thinking of every businessman.

I have said this before, but it is worth repeating: there is an attitude of mind which needs, not correcting, but stimulating. I regret that the President of the Board of Trade turned down the ideas of his own offspring, the Institute of Directors, an organisation which he kept informed about these matters. That body published a report, admittedly from a small sample, which indicated that in many places businessmen do not export because they do not think sufficiently about it.

I have said many times before that, from my experience as a professional man, and this may be the experience of other of my professional colleagues, we are dealing with the ordinary British businessman who is thinking of his own business here and thinks naught about exports. But what about the refugee businessman who came to Britain between, say, 1935 and 1939, and started a firm here? He is doing all he can and thinks as much about exports as he does about other facets of his business. It is an automatic thought with him. Not only is he thinking about increasing his sales, his staff, his organisation, and materials, but also about exports, because that thought is automatically with him. It is just as automatic with him as is the thought of any ordinary businessman towards Income Tax and other transactions.

I appeal to the Government to continue the good work that the President of the Board of Trade was doing and that he said this afternoon he no longer will do. Unless this export thinking is driven home to everyone we shall never achieve a satisfactory level of exports. It is not true to suggest that the Government have no responsibility in this matter, although I agree that the prime responsibility lies with business itself. I appreciate that only the businessman is stimulated by what he is doing and by his drive to get on and that only he can know his business sufficiently well. But it takes a little more for him to understand that his own long-term interests lie in exports.

The businessman's own short-term interest is sales in this country. He can see that immediately. It is a bother to start exporting, but it is not a great bother. All that the man has to do is to talk to his bank manager. Many bank managers already have first-class export services available to their clients. Indeed, all that the man has to do is to write to the Board of Trade, who will give a very helpful answer. It has been suggested that the Board of Trade is not paying sufficient attention to the firm with 600 employees. That is not my experience. The Board of Trade gives the same sympathetic, considerate and helpful answer to such a firm as it does to a firm with 6,000 employees.

There is no reason why the average British businessman should not think about exports all the time. Unfortunately, not enough businessmen do so. An hon. Member opposite said that the British businessman was coming to the conclusion that things are as they are, that we have got to accept them, and that there is nothing to be done about the situation. But we cannot take that view. That is why the President of the Board of Trade is to be criticised on the tenor of his speech, which was one of complete complacency.

In 1946, I went with the President of the Board of Trade in a Parliamentary delegation to West Germany and saw Hamburg lying flat. Look at Hamburg today. Look at the trade figures for West Germany today. Let us remember that today West Germany is a more important industrial country than Great Britain. Her production is higher than Great Britain's. Her wages are higher. I am not criticising West Germany. I say "Good luck" to her businessmen.

But see what it means in terms of how she has gone ahead since 1945. In the years 1945 to 1951 our rate of progress was higher than the whole of Western Europe's. Therefore, all the loss has been since 1951. I am not making a party point, but I suggest that it is wrong for the President of the Board of Trade, with his responsibilities, to adopt a complacent attitude to our situation.

I am reminded of the story attributed to Ben Gurion, who, because of his balance of payments difficulties—and goodness knows, they must be enormous—received an economist who said, "There is a simple answer to all this. You must declare war on the United States. You lose, and as a result all your problems are at an end, as in Western Germany." "Oh, no", said Ben Gurion, "that would not work. We might win." Be that as it may, I hope that I have at all events made my own view clearly understood, that there is still a lack of sufficient comprehension of how necessary it is for exporting to be part of the normal thinking of every businessman and for the Government to give encouragement all the time.

It was good to hear the President of the Board of Trade say that we are not being priced out of our markets. This is such a ready generalisation which springs to the lips as soon as there is a fall in exports and every time there is a demand for increased wages—the threat of being priced out of our export markets. We are not being priced out of our exports, and we have not been during the whole of the last ten years. We have always been able to compete during this period, and it is essential that we should remain in a position to compete.

I come now to the underlying point. It is no use having a mind attuned to exports unless one has the ability to export goods at a competitive price. One will only have the ability to export goods at a competitive price if one has an efficiently functioning business or industry, and one will only have such efficiency if there exists the right economic climate, for which the Government have a large measure of responsibility.

I say simply as a generalisation, which will, no doubt, have its defects, that what the businessman wants to know more than anything else is where he stands, so that he can plan his production, whether it be on a high level or a moderately low level, but at all events he wants to know where he stands. He plans his production as a producer or distributor or whatever his function is. If he does not plan, he fails. What he cannot do is to attempt to have an efficient business when the Government say, one day, "Go ahead" and the next day, or six months later, they say, "Stop". That destroys every possibility, not only on the physical side but on the moral side, of the businessman having the determination to go on with the job. It takes the heart out of him, and there are many things in business to cope with which tend to take the heart out of him. He needs all the morale that he can muster.

The Government's continuation of this "Stop, go" attitude, as has happened several times in the last ten years, is the real cause of the businessman's lack of confidence in his planning ability and one of the major causes of his efficiency suffering. He must know where he stands and he must have more help from the Government. It is because the Government have been so lacking in that and have failed to keep on an even keel for any length of time that they are to be criticised for this partial failure in exports.

I summarise briefly what I have said. We need more efficient production. For that we need a regular, understandable, foreseeable economic situation. Given that, we need every possible Government encouragement to export. Perhaps I may talk to my own Front Bench now. One of the things we do not need is fiscal encouragement in exports. If I am right in saying that everybody should be thinking about exports, if it is in the long-term interests of businessmen, as I say it is, and if it also coincides with their patriotic duty, as I say it does, why should we attempt to single out certain businesses and say, "You have carried a special responsibility and a special burden by exporting. You shall have a special tax benefit"?

I had not intended to interrupt my hon. Friend, for whom I have a great admiration, but he said in the earlier part of his speech that a businessman hardly thought of any transaction without knowing the Income Tax consequences of that transaction. I suggest that is a contradiction of his present argument. If a businessman were sure of the advantages in terms of tax he would be more export conscious. This is a wicked world.

It is a wicked world, and that was a very relevant intervention, for which I am very grateful to my hon. Friend.

I now have to go back to my previous loose remark and explain its proper relevance. I was saying that every businessman should think about exporting as part of his day-to-day thinking. What I added was that every businessman already thought about the Income Tax aspects of his affairs. I did not say he should do. I said that I was of the opinion that he already did, and that, just as he did that, he should do the other.

It is, of course, possible for the Inland Revenue to produce a scheme. All the reasons that the Government have given for not producing a scheme have been bad. We have had them time and again in Finance Bill debates, and I have never been impressed by the reasons. However, I could never argue about this, because I am against fiscal inducements for doing what one should do when it is in one's own interests to do it without special fiscal measures. If, as I am suggesting, it is right that it is part of everyone's duty and to everyone's benefit if one is in business to think about the exporting side, it is wrong to try to single out some people in industry and commerce and say, "To you we shall give a special Income Tax inducement".

May I ask my hon. Friend whether he would extend that—I hope he would not—to—

The right hon. Gentleman has made one speech. There are a great many hon. Members who wish to take part in the debate, so I hope that he will be very brief in anything he now has to say.

6.40 p.m.

The increase in the export trade of this country came so much last year during the first quarter of the year, so I think that there is very great need to try to get a greater impetus into our export trade. I feel that the active participation of the smaller firms and businesses is one of the ways in which an advance can be made.

The Government have done a great deal with schemes designed to help industry, and certainly a scheme of lower interest rates for those engaged in the export of capital goods can play a great part. But many of those firms which have been helped are the larger ones with quite substantial resources, while many of the new skills and industries in this country are being built up by new men, and it is they who need this help with capital and low interest rates even more than that section of industry which the Government have already helped.

The greatest field apparently open to the new industries is probably the continent of Europe. Whereas these people have been trading in this country on credit terms of 30 days they will, I believe, when they go into the Continent, have to trade on a 90-day basis. Therefore, the normal help which businesses get from their bank managers, and so on, will need to be on a different basis if they are to undertake the extra work. If it was necessary and right to help the bigger businesses, surely it is even more necessary and right that help should be given to these new and smaller ones if they are in need of more money. It should be borne in mind that the credit squeeze works in a peculiar way. One thing which often happens is that some of the bigger firms, which are not too scrupulous about this, are taking longer to pay what they owe to smaller firms in whose hands they are to a large extent, and that underlines the need for some new help to the smaller firms and businesses.

It is essential also to have diversification in our exports. The right hon. Gentleman the Member for Clackmannan and East Stirlingshire (Mr. Woodburn) mentioned whisky exports and what a big part they play. It is also true that with a stroke of the pen they may be cut off by Government action. Therefore, diversification of, and getting as many people as possible into, the export trade is essential for this country.

I turn to another and a different industry which is an interest of mine, and that is farming. If we are to succeed with our exports we have got to be able to see not only to tomorrow or even to next year, but able to see what we are to be able to export two or three years ahead. I hope that my right hon. Friends will combine together to see that that industry and its exports are developed. It will need, for instance, co-operation between the Minister of Agriculture and the President of the Board of Trade. One thing they can do is to see that our abattoir system is efficient and up to the standard of abattoirs on the Continent so that we can send Aberdeen Angus beef and Black-faced lamb and Southdown mutton abroad.

There are other sections of our trade which could be improved—shellfish, for instance, which are already exported to the Continent; and, in the horticultural industry, I am certain that apples and cucumbers could play their part in our trade; and there are many other instances.

Another point I should like to stress is the location of industry. I am speaking not only as a Member representing a Scottish constituency. I do not ask for charity, or for anything which no one else is getting, but, on the other hand, we have seen in the past a great drift of industrial workers to the South, to England. In the county where I live we can see the chutes which were built for the export of coal from the Fife coalfield. We have in my county facilities in the way of docks and marshalling yards, we have new towns, and everything ready.

It is essential to have that direction of industry which I am sure my right hon. Friends are aware of if we are not to have a great and serious waste of labour and waste of transport and the upset which is caused through families moving away. I am sure that there are other parts with problems which can be compared with those of my county, but being one of its representatives I wish to speak particularly for it, and we need help to keep our skilled people and to develop the facilities we have.

In conclusion, I would put in a word for flexibility. My right hon. Friend the Secretary of State for Scotland, speaking in Edinburgh at the end of last week, said:
"We must recognise that developments in one district can benefit a much wider area. Few things are more likely to deter industrialists than evidence of local discord."
Today, only about seven or eight miles away from the Rothes Colliery, which has been closed down, a War Office factory is up for sale. It seemed to me that this was a site which very usefully might be made an advance factory, to help in this very depressing situation, but when I inquired about it I found out that it is in a different employment exchange district, and that, therefore, although the distance is only a few miles, nothing locally could be done about it.

If my right hon. Friend pleads with the local authorities for the loosening of these boundaries, I hope that my right hon. Friend the President of the Board of Trade will not be deaf to the same pleas.

6.46 p.m.

One of the great disadvantages which, I am sure, the hon. Gentleman the Member for Fife, East (Sir John Gilmour) will readily recognise, in speaking here in this Chamber, is that one does not see the faces of one's supporters or one's leaders and very often one cannot know what one's party is registering about what one is saying.

I could not help looking round, while the hon. Gentleman was speaking, at his English colleagues, as they also listened to him, and their faces appeared to say, "We hear so much here from Members who come from north of the Border." I realise that some hon. Members opposite must find it a tremendous trial of their patience to have to listen sometimes to what they would regard as parochial matters, though had they unemployment in their constituencies that would be a different matter and they would look at it differently.

The basic thing which we must recognise is the fact that the problem of unemployment in Scotland and the economy of Scotland are linked to the economy of England and that the economy of England has got to bound, has got to expand at a substantial rate, before the periphery—for let us face it, that is what Scotland is in terms of the United Kingdom—will get the benefit as well, albeit proportionately less of the expansion going on elsewhere in the industrial areas.

I think that in 1959, if my recollection serves me well, which was a year of boom, a year of go and stop, Scotland fractionally only prospered in comparison with United Kingdom economy. Of course, it is perfectly true that unless the economic policy of this country is prospering we in Scotland cannot expect to get the overflow. I do not accept this position as being at all a reasonable one, but I accept it as being the realistic one, and that is all we can do at present.

I think that the prospect for Scotland of the Common Market is rather different from the prospect of England. Here, in fact, Scotland is superior and has an argument for getting into the Common Market in order that she can expand her economy, for there she will be looking to a wider economy which will help our nation to rise to her rightful standard. I still believe in the old-fashioned dogma that every man has a right to a job and that no man should have to trek over half the globe to find a job.

I still believe that here if, in this little island, which, by all the arguments, ought not to have 50 million people in it, anyone who argues that this or that town is an unnatural town in that the workers should not be there but should be in the south-east corner of England or in the Midlands, is arguing against the existence of Great Britain. It is obvious that this tight little island should not be so organised that we should be talking in these dispassionate almost inhuman economic terms. The two things which we can do better here than almost anywhere is use our skill and our brains. These are the raw materials of this island. God has not decreed that this nation should have more brains than any other, but it is in the exploitation of our brains that in the past we have proved to be cleverer than others.

It is our skill and our brains that we must continue to exploit. The success of any party in trying to fight the battle for the survival of the country will be determined by how we do in these two respects. It will depend on how we as a nation train our people and exploit our brains. On that basis the present Government have a bad record. Hon. Members on both sides of the Committee know that we have no right because of doctrinaire prejudices to prevent the right action being taken.

We spend a great deal of money on research. The exploitation of research is important. There is to be a celebration in what I was about to describe as my constituency. It is the constituency of the Secretary of State for Scotland. I often perpetrate this error, because it is so badly represented. I am sorry if I offend the right hon. Gentleman, but his constituency which is next door to mine is, from an economic point of view, part of mine. We intend to celebrate there the launching of the "Comet" in 1812. That represented a remarkable change in the future of the lower reaches of the Clyde.

I looked up the old records and I could not find in them long pontifical arguments in Parliament, or in the locality, on whether building that ship would be an economic proposition. People did not ask, "Shall we wait until the Americans build an economically useful ship which might cross the Atlantic, or until the Germans or Norwegians build one?" By inventing that ship and getting it on the water and following it up with many other prototypes, Northern Ireland, the Tyne and the Clyde became great centres of shipbuilding, and by their brains the shipbuilders kept up the capacity of this country right up to the years after the war. But what a story can be told of the years after that.

We must exploit the invention of nuclear propelled vessels. This is where the Government have failed. Is there an hon. Member who does not realise that if we now had the income from our invisibles we should not be in our present predicament? It is often said that what we ought to do in shipbuilding is to persuade thet Government to subsidise the owners to scrap ships and build new ones. This is a kind of Ludditeism in reverse. I accept it. "Scrap and build "is the kind of policy which I should like to advocate, but it would be far better to advocate the building of new vessels propelled by new methods which we know will be revolutionary, although we do not yet know which of the nine proposed methods it would be best to adopt.

The country would be faced with a new industrial revolution in shipbuilding if it could exploit a new discovery in marine propulsion. All our shipbuilders, whether in the yards or in the boardroom, lament the Government's decision not to build a nuclear-propelled ship. Many of us on this side of the Committee have argued for it again and again and we have been joined recently by some hon. Members opposite. We want one such ship. Some of us want two. We do not deny that after they are launched they will lose millions of pounds, but it will be bread cast upon the waters and it will repay us many times over to be first in this race.

The Government, however, relegate this matter to the dark passages of the Atomic Energy Commission and it is left to the backroom boys to discover how a nuclear ship can be built which from the moment it sails is profit-making. We are missing this great historic opportunity by looking at the profit and loss account of a particular year. This is the almost old-fashioned attitude adopted on the benches opposite towards Government accounts. We must spend to make, and we must spend if we are to carry the country forward.

As a doctor, I know of one discovery on which I hope to do some research of a modest kind. It is not at all connected with exports, but it is being used by other doctors in this and in other countries. It is a pill created by research workers of the Medical Research Council, but this pill, produced by British brains, cannot be manufactured by British companies for doctrinaire reasons because the Government will not allow public discoveries to be publicly exploited. There is no mechanism so far by which a Government company could be created to exploit Government discoveries. If we spend money to employ men on research, in their patriotic endeavour, we ought to be willing to find means of manufacturing the products of their research.

This is an interesting point. How is it that the pill cannot be manufactured by a private manufacturer under a royalty arrangement?

The fact is that we, as a nation, have made this discovery and that the nation will continue through its many research agencies to make more discoveries. Although the Government do not spend a great deal on research, the more they spend the more this paradox will continue. This matter has had to be handed over to a foreign company because the Medical Research Council is not allowed to produce for sale. If the responsible Minister does not know this, it is time that he informed himself of the facts. Agencies which are entirely owned or partly financed by the Government have not the right to produce what they discover. This is a shame. If the nation discovers these things it ought to make them. Is it doctrinaire prejudice on the Conservative side—I hope not on the Liberal side—that will not allow this? We on the Labour benches advocate it.

Why, for example, should it not be possible for us to establish our own National Health Service drug research centre to try to discover new drugs and then manufacture them for our own use? This would cut Health Service costs—a point which should appeal to the hon. Member for Shipley. This would allow the country to go into the export markets, with a publicly-owned pharmaceutical industry selling its products abroad.

I had understood, before I became a Member of Parliament, that Parliamentary procedure was based on the idea that we agreed on more things than we disagreed upon. If that is so, we should apply commonsense remedies to situations of this kind.

I have made millions and millions of pills in my time, as perhaps the hon. Gentleman knows, and with very small margins. I have no reason to believe that nationalised pills would be cheaper.

It is true that one cannot plan discoveries and that many of the investigations produced some side-effects which themselves were more important than the original exercise. My point is that if we make any of these discoveries in Government laboratories or in research stations, we should be willing to exploit them through public concerns or public ownership. I see nothing wrong with that.

After all, taking the atomic energy industry, which is founded on that principle, hon. Gentlemen opposite did not vote against it when it was nationalised, for the reason that there was no vested interest in it, and because the capital demands for creating such an industry was far beyond the ability of the private market to face.

Hon. Gentlemen opposite must dispossess themselves of their prejudice against public enterprise. There is no reason why public and private enterprise should not flourish together. I appeal to hon. Members opposite to realise that this is the one way to which the Government will have to turn if we are to play our full part in the use of our skill to secure the survival of this nation.

When we turn away from research to the question of exploiting our skill, here the story is not at all good. We do not have many retraining facilities at this moment. President Kennedy has just sent one of his long series of messages to Congress—to the most harassed Congress in this regard which there has ever been—and he asks for a Bill for the retraining of men. In this country we have a very modest programme, but we ought to do much more. Those of us who live in or represent constituencies in which, for one reason or another, there is a contraction in local industry know how very important it is to try to save the skills of men who are in those industries and who may lose their jobs.

Many of these men are experts in particular fields. I have a constituency in which the craftsmen go back for generations in the story of their skill in producing ships. I also have a very important factory in which the skill of the men employed is confined to that particular industry, and which cannot find an equivalent in name in any other kind of industry.

I am speaking about International Business Machines, in which the training is of a peculiar kind, unique to that firm. In that case, of course, it is reasonable for the employer to take men who are redundant elsewhere and to train them, because this is not the same kind of skill, but something entirely different. I find that if men go to this new American plant, with all its up-to-date equipment and its specialised type of production, they want young men of under forty, in the first place, and, in the second, men who are not skilled.

An unskilled man is not an unintelligent man. American industry does accept that. It makes the unskilled men into partly skilled men and apply them to these semi-skilled processes. But what of the highly skilled man who had served five years apprenticeship, and had stuck loyally to his own industry through all the vicissitudes of trade cycles, and so on?

I believe that the Minister of Labour, who was here a short time ago, but is not now in his place, will have to take a new look at this problem, and decide whether the Ministry is fitted to carry out the great conversion of an unskilled man in one trade to a skilled man in another—the trades of the future. This is something that needs to be looked at. It has not been done already, partly because the Ministry is afraid of the reaction from the trade unionists, and the trade unions want to know that their men are not to be made redundant. They want to know what the future may hold for them, and what trades they would have to turn to if they were to leave their present industries. This is a problem which the Government have not touched at all, but without this skilled labour this country cannot maintain its strong position in the world.

There are the technical colleges—

My hon. Friend the Member for Kilmarnock (Mr. Ross) has been asking for a technical college for Kilmarnock for the last twelve years. I understand that some progress has been made, for no doubt another promise has been given. For my part, I and many of my hon. Friends have been trying to get such a college for our own constituencies.

These are not the frills of education, as some people have stupidly called them. They are the essential training of our skilled labour. While it is true that, with the bulge, we have managed to get into apprenticeships more girls and boys than ever before, nevertheless the quality of our training and the amount of our training is by no means adequate. We have had the declaration of the Chancellor of the Exchequer that he intends to give a 3 per cent. pay rise to university teachers, who are now protesting that they cannot stay in university life, but will have to leave for well-rewarded positions in industry.

I have no doubt that these university teachers, particularly science and maths graduates, will get good positions and be very useful to industry, but what about the universities and the colleges? Shall we denude them of the trainers, and, therefore, have poorer training or have to cut down the numbers? This is a very short-sighted policy.

These two matters are, above all, the things upon which the survival of this nation depends. Are we to use our "know-how" in our productive processes, and thereby keep our skilled labour, which is just as skilled as or perhaps more skilled than that in other countries? As far as I can see, from what the Government have said, there is not the will, the determination or the urgency to do it. The speech which we have had today from the President of the Board of Trade was appalling. One would think that we were over the crisis and that all was well.

When I was a young medical student, going to political meetings in various parts of Scotland, I used to hear hon. Members opposite saying that we were a bankrupt nation. In 1951 we had about £1,100 million in the gold and dollar reserves, and they said that we were bankrupt because of this and because our export trade was bad. It is true that we were fighting a war then, and the present Government may have had a little bit of luck, but we had some bad luck over the Korean war. We were told then by the Tories that we were bankrupt, and we have been told today that we cannot have a Labour Government again, because they would bankrupt the country. We still get this backwash, but the extraordinary thing today is that our gold and dollar reserves are about two-thirds of what they were when we were in office, and our export performance, as we have heard today, is no matter for congratulation—just breaking even.

We are fighting for our survival, and the Government are too complacent. They are themselves responsible for the complacency in the country with slogans like, "You've never had it so good". They have taught the nation to be fat and slack. It is only another Government who have the right to say to the people "Wake up and save the country; we will lead you. Follow us, and the country will be saved."

7.9 p.m.

The hon. Member for Greenock (Dr. Dickson Mabon) talked about his various constituents and others, and people who said that the country was bankrupt under a Labour Government. I think that it would be fair to say, in regard to the gold and dollar reserves, that they were disappearing at the rate of £2 million per day. Had the Labour Party continued in office, there is no question about it that we should have been bankrupt.

It would be worth while, for the sake of truthfulness, if the hon. Gentleman had a look at the lowest point to which the gold and dollar reserves fell in 1951, when he will see that they were higher then than they are at the present time.

That is not the point I am trying to make. Despite the fact that the reserves then may have been higher, they were running away at the rate of £2 million per day, and it is quite obvious that, within a few months, the reserves of the Labour Government, despite the Canadian and American loans, would have disappeared.

One of the points on which I agreed with the hon. Gentleman was that in which he said mat we should employ the brains of the country. I am firmly of the opinion that one of the reasons why we do not adequately exploit them is that taxation since 1945 has been rather regressive. I welcome the decrease that there has been in taxation generally since 1951. We have decreased taxation, but, even so, taxation is still too high in the sense that we are exploiting the brains of the country.

I think that the second part of the hon. Member's speech was a bitter pill to swallow—but I will not carry on with that.

One of the things which have emerged from the debate is that all of us are rather concerned about our export position. Exports today are good, or better than they were, but not good enough. I should have thought that we should look at some of the reasons for the shortfall in our export performance. One is the industrialisation of other countries since the end of the war, particularly Germany and Japan. I thought that the hon. Member for Gloucester (Mr. Diamond) was a little unfair in not drawing attention to the fact that since the war West Germany has been re-equipped with factories, production lines and so on and has started not only without an archaic taxation system but with new factories, new production lines and so on. West Germany's export performance is extremely good for a new nation emerging after the war.

One of the reasons for the lack of increase in exports is the high consumer demand and expenditure at home. The hon. Member for Cardiff, South-East (Mr. Callaghan) was rather concerned about increased imports. Obviously, one of the reasons for them is that consumer expenditure today is so high. It was unfair of him to suggest that over the last decade we have had a stagnant economy. I was rather sorry that the hon. Gentleman would not allow other hon. Members to interrupt him. I cannot see how we could have had a stagnant economy over the last few years when the standard of living of all in the country has improved. Indeed, the standard of living generally has more than doubled over the last ten years—a record of which the Conservative Party can be proud.

Our exports have in the past fallen short also because of our credit terms and delivery terms, and the last factor is the apparent lack of success in the exhortation given to exporters.

The industrialisation of other countries, including Germany and Japan, is beyond our control, and we can do nothing whatsoever about it. But I suggest that we can do something about our consumer demand at home. I should like the Government to do something more positive in restricting consumer demand at home, not by physical control but by giving the potential spender some fiscal incentive to save his money. During the last Budget debate it was advocated—I myself advocated it—that the Government should make savings easier. I hope that in the next Budget in a few weeks' time something will be said about Save-As-You-Earn.

It is true to say that the small saver—I am talking only about the small saver—should have every incentive to save. After all, we give some fiscal incentive. I do not agree with the hon. Member for Gloucester when he says that it is wrong to give fiscal inventives. I cannot remember the Opposition voting against a fiscal incentive for small savers in the Post Office—the disregarding of the first £15 of interest for tax purposes. I think that the Government could go further in their effort to help small savers. For instance, there is Stamp Duty. If a £15 exemption can be given for Post Office savings, why can it not be given for other types of savings? I hope that such things will be very carefully considered by the Chancellor of the Exchequer in his Budget.

In the context of the Budget, if there is a capital gains tax, in whatever form it comes—I presume it will come—I hope that the Chancellor will exempt the small saver from any extra impost of taxation. I sincerely believe that the small saver can save our whole economy. If we can cut down consumer expenditure not by physical methods, not by restriction, but by giving a fiscal incentive, it will not only cut down consumer demand but make very much more money available for investment.

I turn now to credit for exporters. I agree with those who have paid tribute to the Board of Trade for the recent announcement about the E.C.G.D. arrangements. I agree with my hon. Friend the Member for Shipley (Mr. Hirst) when he says that the Government cannot do everything for exporters. Of course they cannot. It would be foolish of any Government to guarantee all exports. Obviously, bad exports are no use whatsoever to us. But through the E.C.G.D. the Board of Trade does a very good job. It provides a very good service if industrialists are prepared to use it. It does not matter a scrap—I know this from experience in my own constituency—whether a firm has 600 employees, 60 or 6,000; the Board of Trade treats everybody alike and gives a very good service with information about markets and so on.

However, the Board of Trade might look into the question of our commercial attachés. My experience is that attachés do a first-class job, but as happens with anyone in Government service, particularly overseas, there are always changes caused by postings. I understand that the average time that a commercial attaché stays in one post is between two and three years. This is far too short a period to enable anyone to get the feeling of a market in a country and make contacts and be able to advise Britons what markets are available to them. Although I accept that commercial attachés generally do a good job, at the root of the problem is this business of posting, because it does not enable them to do as good a job as they could otherwise do.

I should have thought that there was no reason why—I trust that this is not too revolutionary—our embassies should not enlist local British businessmen abroad to become commercial attachés. When a career diplomat is going from one country to another, nobody can tell him that he must stay in a certain country for five or ten years, but if we drew from the business world there for our commercial attachés that might overcome the problem.

One of the most difficult factors about exports is delivery dates. Everyone realises how difficult it is to break into an export market. There is a tremendous amount of work to be done, as my hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings) has said. There is market research to be done. We have to find out what the foreigners want and then make goods of that sort, and they have to be made competitively before one gets the order. One of the most difficult things over the past ten or fifteen years has been that our delivery dates have not been as good as they might have been. Because of slack in the economy, in most industries delivery dates are fairly good. But it does our export drive untold damage—not for the immediate order but later—when goods are not delivered in time because of an unofficial strike at the docks or somewhere else.

I should have thought that union leaders would welcome some way in which they could deal with unofficial strike leaders, who only cut at the root of the export drive and at the root of the responsibilities of trade union officials. I should have thought that the unions themselves would want to do something. If they do not do it, then, at some time, somebody has to do something about unofficial strikes. Quite obviously, unofficial strikes must always act against official union leaders.

I come now to the question of exhortations to exporters. As I have said before, exports are jolly hard to get. If an industrialist has an easy market at home—and there are many such markets—why should he bother to export? It is all very well giving exhortations to patriotism in war time, asking people to export and to do many other things, but conditions are different in peace time. I cannot see why the Government do not look at the rest of the report of the Federation of British Industries, of which my right hon. Friend was kind enough to read part when he spoke about fiscal incentives to exporters.

My right hon. Friend said that the F.B.I. report had stated that the F.B.I. was against the introduction of fiscal incentives to exporters. That is absolutely correct, but, dealing with home policy, the report's first recommendation is:
"H.M. Government should make an urgent study of the fiscal system with the object of determining whether the export effort should be assisted by changes in the present pattern of distribution of taxation and in the type and scope of indirect taxes, having due regard to the question of the harmonisation of the U.K. tax system with those of the Common Market countries."
The F.B.I. is not there coming out dead against fiscal incentives. It would be more realistic to realise that the F.B.I. recognises that fiscal incentives might work.

Japan gives direct subsidies to exporters. West Germany has the turnover tax, which means that West German exporters get an advantage. We always play the game according to any agreement we may sign, but we should be more militant about this. Whilst we want harmonisation of trade and to keep in with G.A.T.T. and the other agreements we have signed, if some people are gaining advantages, as Japan and West Germany are doing, why should not we, a nation of some 50 million people, producing only half of the food we need and depending on exports probably more than any other major country, take advantage of the fiscal system?

I believe that the Treasury could work out some method. Our exports total about £4,000 million a year. The turnover tax is merely a repayment of Income Tax. If we gave a 1 per cent. rebate of Income Tax on the turnover in exports, that would cost only £40 million a year.

We are a highly industrialised nation. We have full employment and the "know-how". Somehow, we must get back to the position where we do not have to keep changing our policy year after year because of the balance of payments. There is no reason for despondency if we can reduce home demand without introducing restrictions such as physical controls, if we can improve market research through our commercial attachés or in other ways, and if we can devise fiscal incentives. There is, indeed, every reason to look forward to increasing exports, despite what may happen in the Common Market.

I agree again with my hon. Friend the Member for Shipley, who said "trust the people." An unambiguous message should be given to the nation, putting the facts before it. It has so often been said that we must export or die. If such a message were given, I am sure that the people would realise the importance of exporting.

7.25 p.m.

I am glad to follow the hon. Member for Nottingham, South (Mr. W. Clark). I presume that it was just a slip of the tongue when he said that our standard of living had gone up 100 per cent. in the last ten years. I have never before heard any figure like that mentioned, even by the most enthusiastic Conservative propagandist. Even the cost of living has not gone up as much as that—although it has gone up a great deal. I think that the standard of living has probably gone up 40 to 50 per cent., but not more.

The hon. Gentleman suggested that the way in which the Chancellor could get out of his difficulties was by cutting down consumer demand. Must we approach the problem in that way, when so large a proportion of our industry is under-producing at the moment, when machines are stopped and plant is idle? Is the only way out of the difficulty to have further restrictions and control on consumer expenditure? If that is so, it is a complete abandonment of leadership by the Government and an extremely pessimistic way of looking at our problems.

Surely the answer is what the Government themselves are beginning to realise, that we must increase production, that we must get all the plant and investment poured into industry in the last few years going at the maximum speed to produce more goods. By all means see that this is not suddenly mopped up by a great increase in consumer demand for the home market, but do not let us start by cutting the present consumer demand.

The President of the Board of Trade referred to what he said was the very good showing of the mechanical engineering industry. He said that our exports from this industry were now 20 per cent. of the machinery exports of the world. He apparently considered this to be a very good figure and something remarkable. But I must point out to him something of which I am sure he is well aware. Again, there is this wretched argument that people can put a case by quoting the right figures. But British export trade ten years ago, when the Conservatives came into power, was 25 per cent. of the world's export trade. It is now down to 15·5 per cent.

If our leading exporting industry has actually 20 per cent. of the world trade in its products, that is no remarkable achievement. It shows merely that it has not done as badly as some of our other industries. Even that picture, of course, is slightly unfair. It is inevitable, with the revival of Germany and Japan and the increased industrialisation all over the world, that our exports should be a lower proportion of the total export trade of the world than ten years ago. I do not want to make any special point about the figures except to say that the President of the Board of Trade has no cause to be particularly pleased about the fact that British exports of machinery represent 20 per cent. of the world's exports of machinery. We are glad that it is no worse.

It is all a question of balance. If we do not have a favourable balance of trade, we are in a mess. There are several ways of tackling the problem, but I am sure that we shall not tackle it by expedients and palliatives. We must go for the root of the trouble, and I am sure that that is the competitive ability of the whole of British industry. Several things have been said about fiscal incentives for exports. The hon. Member for Gloucester (Mr. Diamond) said that it was not only their patriotic duty but it was in the interests of the firms themselves that they should export.

I come from an area in which the dominant industry used to export goods all over the world in large quantities. I can assure hon. Members that once one's product starts to be out-priced, one can be as clever a salesman as one likes, but one will not sell the product. That is the position of the cotton trade as a whole and it has been the cause of its gradual reduction to its present comparatively small size.

If there is an article for sale at the right price, it can be sold and the firm concerned need not even have its own sales organisation. There are exporting merchants in London and Manchester and other ports who are delighted to look after overseas sales, if the product is for sale at the right price. Apart from their excellent Board of Trade information services, which are very helpful, the main thing that the Government have to do is to frame policies to help British industry to be as competitive as possible. They also have to improve the quality of competition itself.

Making British industry more competitive is a question of costs, and in the last twelve months the Government have done two things which have put up costs in British industry. One has been their Bank Rate policy. Not only has a high Bank Rate increased the burden on the balance of payments, because of the high interest which has had to be paid for the hot money coming into the country, but it has increased costs to industry. One has only to look at bank statements to see that John Summers has had to go to the market to get £7½ million debentures because it is borrowing £4 million or £5 million from the bank at a terriffic rate of interest. All that is increasing the cost to industry. The Government have to get Bank Rate down and down quickly. Although they have reduced it, it is still too high.

The second and most damaging thing which the Government have done has been to increase fuel tax. I agree that the Government have to find the income to meet their expenditure and that it may be argued that it does not matter how they get it, because in the end the cost is borne by productive industry. But that is not really true. When a tax like the fuel tax is increased, it has an immediate and direct effect on costs for almost every industry in the country. This tax has been a great burden to the steel industry, for instance.

The Government must also be logical with their fuel policy, and the British coal industry has to face the consequences of that policy. It is absurd to expect the steel industry, now running at about 70 per cent. capacity, to be able to compete in the Common Market, or any other part of the world, while carrying the burden of a fuel tax on the one hand and being prevented from buying fuel from other sources in the cheapest market on the other.

If the quality of competition between firms is improved, the result will be to reduce the costs of firms, some of which will be competing in export markets. When is the President of the Board of Trade going to tell us what he intends to do about the Report of the Registrar of Restrictive Practices? We have had all this trouble about the proposed I.C.I.-Courtaulds merger and the country is now anxiously waiting to hear what the Government's policy will be. In spite of all its activities, much of the object of the work of the Restrictive Trade Practices Court has been undermined by what is called "price leadership". The President of the Board of Trade has a committee which is studying retail price maintenance and we are anxiously awaiting its report and the Government's decision on it.

What does the right hon. Gentleman intend to do about monopolies themselves? The last time I spoke on this subject I suggested that the Government should lay it down that no firm should be allowed to produce more than one-third of the products in any range of products and that any firm which, as a result of mergers or other factors, did so would have to submit itself to the Monopolies Commission and make out a case for being allowed to continue its monopoly or near-monopoly.

For instance, there might be some technical reasons for allowing such a monopoly to continue. It might be a small specialist business with a small number of products used over a wide range of industry, the machinery for making the products being so large in comparison that all the requirements of British industry could be met from one plant. That might be a case for saying that the interest of the public would best be served by allowing the monopoly to continue. I am not doctrinaire about competition and I do not want to end a state of affairs like that.

But in the vast majority of cases competition brings entirely beneficial results and even in the exceptional cases there should be provision whereby such a firm would have to be "in the dock" regularly, possibly every five years. It would be examined by a small part of the staff of the Monopolies Commission and would have to show that it was behaving in the public interest and complying with any conditions which the Monopolies Commission might have laid down previously. If the Government followed the Report of the Registrar and took action to deal with price leadership and resale price maintenance and amended the Section in the Act which was opposed by the Liberal Party when the Bill was before the. House, and also set up the Monopolies Commission with appropriate legislation to deal with monopolies, I think that they would bring about radical improvement.

My last point concerns the scarcity of skilled labour. The National Institute's Economic Review for February says:
"In addition, the potential increase in the labour force in 1962 will be a big one, because of the school-leaving 'bulge'; and net immigration is currently adding some 100,000 additional employees a year …"
Whether they are immigrants or school-leavers, these people have to be trained. What are the Government doing about this? We have had several debates about the training of apprentices, and so far the Government have given no financial incentive to enable this to be done. I do not believe that there will be a large increase in the facilities for training apprentices during the school-leaving bulge unless the Government provide some financial incentive.

A number of large firms make careful plans to provide their own apprentices, but a number of the smaller firms are not set up to do this. They do not require enough apprentices to make it worth their while setting up an apprentice training school, so unless the big firms provide more apprentices than they themselves require, not enough apprentices are trained.

If the larger firms are expected to do this job themselves, they should be given a financial incentive which would be some recompense for the extra expenditure they incur. I have suggested before, and I repeat now, that the Government should give a 150 per cent. tax allowance for an approved apprenticeship scheme run by firms.

At the moment if a firm spends £10,000 on running an apprenticeship school, that sum is regarded as an expense of the firm and tax on profits is arrived at after it has been allowed for. My suggestion of a 150 per cent. tax allowance would mean that an extra £5,000 could be added to the expenses of that firm before arriving at the figure on which tax would be assessed, so the firm would get a bonus of £5,000 for running an apprenticeship scheme. It may be necessary to provide this bonus only during the period of the bulge, but I am sure that it is necessary for the Government to give some financial incentive now to increase the facilities for training apprentices.

7.44 p.m.

I listened with great interest to the speech of the hon. Member for Bolton, West (Mr. Holt), but I do not intend to follow him. After recent events, I almost expected what one might call a Dispatch Box speech. We did not get it. We got the same series of quite good ideas strung together, and we are still as much in the dark as we ever were about the policy of the Liberal Party.

The hon. Gentleman cannot possibly mean that. I did not make the kind of speech he thought I was expected to make, but I did offer some constructive suggestions, and I should be glad if he would have the courtesy to acknowledge them.

Some of the hon. Gentleman's ideas were excellent, but they did not form a policy, and I merely remarked that the hon. Gentleman did not make a Dispatch Box speech. I had looked forward to hearing the figure of British exports as a percentage of world trade when the leader of the last Liberal Government spoke from the Dispatch Box, but I think that the good ideas were probably more appropriate.

Not a small part of the real exports from this country arise out of the aid that we give under-developed territories, and time and again hon. Members on both sides of the Committee have spoken with pride of the level of this aid. I think that we give this aid with purer motives than most countries in the world give aid. We are on occasions suspicious that when some of the bigger countries of the world give aid to underdeveloped countries their motives are far from pure, but I think that we ought to take a great deal of care to ensure that the purity of our motives does not cover up a certain amount of woolly thinking and inefficiency.

Giving aid to under-developed countries for altruistic reasons should not preclude us from expecting a certain amount of assistance for our exports. I am not suggesting that we should give aid which is completely tied to the purchase of British goods, but there are ways in which we could make it easier for exporters to sell their goods.

I have here a letter from one exporting firm. The writer says that he would like to tell me
"the difficulties we are encountering in obtaining E.C.G.D. cover for large orders, particularly for locomotives for Nigeria, because we are told that the United Kingdom Government has not yet decided how much and what type of aid, whether loans or contractor credits, shall be given to Nigeria towards her £625 million, 5-year development budget which is due to be put through some time in the middle of this year. The Americans have, of course, already offered £80 million towards this. We have apparently offered nothing, and while the matter is being considered we are finding ourselves at a very real disadvantage in our preliminary discussions with the Nigerian Railway Corporation."
We inevitably must give some aid to Nigeria for her five-year development plan. It strikes me that much the best way to give this aid would be to inform the Nigerians of approximately the amount of money they can expect from this country over the period. This information would be of assistance to them in drafting their proposals. At the moment they have no idea how much aid they are likely to receive. By not providing this information, we are also causing our exporters a great deal of trouble, because the E.C.G.D. is unable to tell them what sort of assistance they are likely to get when they go to sell locomotives to Nigeria. The Treasury has not said what level of aid we are likely to give Nigeria, or even what form it will take. The details need not be accurate. Even if the promise were couched in general terms, exporters who had things to sell in Nigeria would be in a better position.

The Americans have announced aid of £80 million. They have a branch of their A.I.D. Department in Lagos, and an American locomotive firm has moved in and is already able to negotiate with the Nigerian Railway Corporation—on a firm basis. This is one of the small ways in which we are doing our exporters down, and I ask my hon. Friend the Economic Secretary to the Treasury to look into this matter to see whether in future we can announce a definite figure of aid so that our exporters can benefit from this knowledge.

The second case that I want to put forward is that, although we pride ourselves upon knowing better how to give good gifts to the under-developed territories than most other nations because of our historical experience of this problem, there is one form of aid which this country, to my knowledge, has never given. That is the sort of aid that international bodies such as F.A.O. give quite frequently. It is to carry out the survey of an engineering or economic project at their own expense for an underdeveloped country. We do not have to look far to find that this is being done elsewhere.

Only a year or so ago, the German Government had a full engineering survey carried out by a Hamburg firm of consultants of a dam site in Sierra Leone. About five years ago, a similar survey was made by F.A.O. of the Rufiji basin in Tanganyika. Recently a German firm carried out a survey for the modernisation of the electricity grid in Ghana, and I am told that the same thing is being done by a German firm for the electricity grid in Cyprus. Inevitably German firms surveying and reporting on an electricity grid for an under-developed country report and recommend the use of German equipment. They are Germans accustomed to German equipment and they will almost certainly recommend German equipment. It seems likely that if the work of rebuilding the electricity grid in Ghana comes up, well over half the equipment used will be German, whereas the old grid was built almost entirely of British equipment. This may equally well apply in Cyprus.

On the dam site in Sierra Leone the electrical equipment, being based on plans put forward by German consultants, is very likely to be German. Yet we never give this form of aid. I feel that it would be a very great benefit not only to ourselves but to exporters and to the new country. A new country facing all its problems has far too many good ideas but not enough knowledge. Someone who can come along, carry out a survey and give expert advice about what can be done in that country is giving it very great assistance indeed.

This question has been taken up with the Board of Trade and the Department of Technical Co-operation. There seems to be some doubt about whose baby it is. Is it the baby of the Department of Technical Co-operation or of the Board of Trade? Everyone thinks it a good idea, but no one seems to have the money to do it. I ask my hon. Friend to look into this matter to see if it cannot be clearly decided whether this sort of aid should be granted and whether it should come from the Department of technical Co-operation or the Board of Trade.

The actual cost of doing this would not be particularly high. A survey by British consultants costing £25,000, £30,000 or £50,000 might well lead to British exports of £50 million or even a £100 million. If we calculated less than 1 per cent. as the cost of such surveys leading to British exports, we should not be very far wrong. That strikes me as being quite a good bargain, and it is also an extremely good bargain for the people to whom we give the service.

There also seems to be a certain lack of drive among British engineering consultants. There are only a few of them geared to do large international consultant work. Some of them seem to be busy enough as it is and not looking for new work. I think that if they were given a push and the Government gave a certain amount of money they could well do more of this work, add quite considerably to British exports and be of a great deal of assistance to the under-developed countries of the world.

These are the two points that I wanted particularly to make, because I think that they are relevant particularly in West Africa at present. Competition there between the nations to export and grant aid is very intense. We must use up-to-date methods. The Government should look into this question.

There is one other point arising out of the debate. When the hon. Member for Cardiff, South-East (Mr. Callaghan) was speaking, it was mentioned that we should put controls on imports and that our balance of payments was getting a good deal worse because we were importing so much, not because our exports were getting worse. There is a point here which hon. Members opposite always strike me as failing to appreciate. It is that giving a consumer a really wide choice of products goes a considerable way to raising the general standard of living. I do not mean by this merely that it is good fun going round the shops and choosing from Danish, German and French tea sets as well as from British ones. If a really wide range of products is available the chances of every consumer getting exactly the product he wants are considerably higher. I am sure that the hon. Gentleman will appreciate that point. This is not just marginal. The thing which I remember best about the period of the war and just afterwards is the dreary drabness which existed when people all had to buy the same things. The giving of choice adds considerably to our standard of living.

I fully accept all that the hon. Member says on this, but if this leads directly, as it has done in this case, to a balance of payments crisis and a pay pause, we have to ask ourselves whether the removal of all these restrictions was in fact justified.

The hon. Gentleman's argument would have been valid if the restrictions would have avoided the necessity of the pay pause or the balance of payments crisis. I am not sure that they would.

I think that the accusations made by hon. Members opposite about our failure to increase the standard of living in this country are based on figures, and the more I have to do with figures the more doubtful I become about them. Anyone who was in this country in 1950, who had gone away and who came back again in the present year would tell us that the index of improvements in the standard of living in this country is complete nonsense. The increase in choice which the consumer has got and the improvements in particular products are so great that the standard has risen very considerably indeed—probably twice what the index shows.

7.59 p.m.

I enjoyed the speech delivered by the hon. Member for Antrim, North (Mr. H. Clark), especially his argument for exporting more to the under-developed nations. It would be much more healthy if we tapped the potential of a market of 660 million people within our Commonwealth. If we acted wisely in this matter there is no doubt that our future markets would be assured.

Hon. Members opposite have said that there ought to be a curb in consumer demand. I have heard that argument ever since my childhood days. A different technique used to be adopted in this matter. Consumer demand was controlled by means of low wages. Hon. Members on this side of the Committee have never seen any evidence of hon. Members opposite applying to themselves the art of curbing their spending power. Generally speaking, they have done very well down the decades. The ordinary working man has a right to a fair share of the benefits of our production, by being able to purchase a sufficient proportion of consumer goods.

Attention has been drawn to the fact that we must increase our exports. But that is the problem of the industrialists. We must ask whether they are pulling their weight in this matter. Have they developed the right techniques in order to sell their goods abroad? Has the steel industry done so, for example? The Chairman of the British Iron and Steel Federation recently confessed that the industry had neglected the training of men to sell its goods abroad.

I was interested in the speech made by the hon. Member for Bolton, West (Mr. Holt). I was glad to hear what he said about a technical education. A great deal can be said for his argument that we ought to encourage industry to develop apprenticeship schemes. But I take a far more extreme view of this problem. At present, our system of technical and technological education is chaotic. It is not based upon sound principles. In the past, industry provided the means for technical education. It was because of industry that we had the earlier science, art and technical schools.

At present, however, industry is not providing the kind of education which measures up to our needs. On more than one occasion I have said that technical education should no longer be geared to industry, but should be raised to a higher plane, as in the case of teaching of medicine and science. Our future depends upon the number of potential engineers we can produce quickly. Our present method of going about this is chaotic.

The position in Wales is most unsatisfactory. Last year we had a report that a considerable number of young people had shown by their examination results that if given the opportunity they would qualify, for a graduateship at the Institute of Chemistry, but that only seven of that number had entered the College of Advanced Technology at Cardiff. There is wastage here and wastage there. It is a grim and unsatisfactory picture. The time has arrived for us to put technical education upon a sound basis.

We have debate after debate on the economic situation, in which we hear the same arguments put forward. We should now tell the nation that we are reaping the harvest of ten years of Tory rule. The essence of the problem is that our industry has lacked direction at the centre. During that time no attempt has been made by the Government to carry out a policy of localisation of industry to the national advantage. That will be the main theme of my speech.

Hon. Members on this side of the Committee have always advocated the need for a definite pattern of industrial localisation, if we are to reap the maximum benefits for the nation. When the party opposite came to power in 1951 it was not asked to start from scratch. It was not asked to launch upon a new experiment, or to break out in an unexplored field. It was left with an inheritance of industrial planning. The Distribution of Industry Act has been in operation for six years, and the industrial pattern in Britain was already taking form. Areas in South Wales and, to a lesser extent, in the Wrexham district, were evolving towards a new industrial pattern.

But the Government never believed in carrying on that process from where the Labour Government left off. From 1951 onwards they were determined to make the Distribution of Industry Act, 1945, null and void. They have adopted a doctrinaire attitude in the matter. Whenever hon. Members on this side have suggested a measure of planning smug smiles have appeared on the faces of hon. Members opposite. So we have arrived at the position when affluence in certain parts of the country has been mistaken for a general advance, while at the same time persistent poverty in many areas has been hidden by the national averages. Average figures are being poured out. We have average wages and average incomes. By this method the real circumstances of many of our people are hidden.

We are told that major danger is inflation. I do not deny that inflation is a serious danger, but the Government have acted upon a very narrow definition of the term. It can foe summed up in a few words. They say that it is caused by the wages-prices spiral, and that the crux of the problem is wages. They argue that if they can relieve the pressure of wages the problem of inflation can be solved. They suggest that the maximum increase in wages should be 2½ per cent.—which is 5s. in £10, just the price of a packet of cigarettes a week. That sort of thing will not help to conquer inflation. Their definition of inflation is too simple and too narrow. It has provided a popular get-out, but it is not the economic answer.

Lack of planning in the distribution of industry has been a far more potent source in bringing about inflation, or the threat of inflation, than the so-called pressure of wages. A better distribution of industry would relieve some of the pressure of the wages-prices spiral. Assuming that it is correct to diagnose the wages-prices spiral as the greatest threat of inflation, it cannot be denied that the Government's lack of any policy for the distribution of industry has been a factor in producing wages pressure.

We have two types of industrial region in Britain. One is the old industrial type, based upon coalfields, broadly north of the geographical Exe and Tees line. North and west of that line lie the traditional industrial areas. Those are the old industrial areas. Next, we have a new industrial belt flanking an axis between Manchester and London. If the boundaries of this area are drawn, strange to say, the shape of the area assumes the form of a coffin lid. Industrialists look upon this area as a coffin. If anyone wants to take an industry into this area they say that he is "going into the coffin."

Those are the two areas, but the significant fact is that the old industrial areas are declining while the new industrial region is being choked with industry. The discrepancy between the economic pressures of the old areas and the economic pressures of the new industrial region is a most potent factor in the production of the situation known as inflation. That discrepancy is a very potent factor in the creation of an inflationary situation.

Why is this? Simply because it is a wasteful system. Let me show what I mean. The congestion of industry in this new belt at the expense of the old is wasteful, in the first place, of social capital. The production of social capital, though desirable, is nevertheless inflationary. The building of houses, schools, churches, chapels and community centres, though necessary, is, from an economic point of view, inflationary.

As industry ploughs into the new region, this social capital has to be found—and rightly; I do not say that it should not be found. But this does not help in the inflationary situation. In the old areas the vast social capital already exists, yet it is going to waste. Because of the Government's lack of planning the country has to find new social capital in the new areas while it witnesses a decline of the social capital in the old areas. From that point of view the policy is mistaken.

The second factor is a direct result of the unequal distribution of industry. Let us take the position in the Midlands in 1960–61. If we assume the unemployment figure to be 100, there were 220 vacancies in 1960 and 290 vacancies in 1961. In other words, in the Midlands in 1961, there were three vacancies for each unemployed. There was full employment, indeed overfull employment, a shortage of labour and a very heavy labour pressure.

Let us turn to the old industrial areas of the north-east of England. During the same period the number of vacancies per 100 was 26. In other words, there was one vacancy for approximately four persons. There is thus a marked discrepancy between the two areas in unemployment and vacancies. In the congested area there are more vacancies than there are employees and in the old areas there are more employees than there are vacancies. The national average, published by the Ministry of Labour, hides this fact.

Here is the source of our troubles. We do not get to grips with the problem as long as we think in terms of national averages either of unemployment or of vacancies. Within the so-called "coffin" there is full and overfull employment. I see that my hon. Friend the Member for Merioneth (Mr. T. W. Jones) is leaving the Chamber. It is pleasant to see a brother leave. I have heard of devils leaving, but never of brothers leaving; but we will leave it at that.

In the "coffin", firms do not know where to turn for labour. They compete for labour, and those able to offer higher rates are able to recruit from other firms. There is competition not only within the area, but outside it. I am told that there are advertisements in Aberdeen for people to go to work in the Midlands, in the "coffin" of all places, and similar advertisements in Plymouth and Portsmouth. It is known that skilled men have left Aberdeen to do unskilled work in the Midlands because unskilled work in the "coffin" is better paid than is skilled work in Aberdeen, the granite city. Skilled men have left Newcastle to work in Oxford.

It would have been far less inflationary if work had been provided for these people in Aberdeen and Newcastle; it would have been sounder socially and economically if work had been made available where their labour and skill and the social capital is already available. Why should families have to pull up their roots and move elsewhere? Why cannot we take industry to where these people live? That would be a step in the right direction towards solving the problem of inflation.

This lack of industrial planning and migration from the old to the new industrial areas has proceeded and is still proceeding. When people have moved into the Midlands we have the strange paradox of overspill. It does not make sense for people to be attracted into the Midlands and for there to be overspill, as a result, because of the freedom of movement of industry. They are attracted into areas which are already overcrowded. This has an effect upon the market and upon the exports about which we have heard so much.

Here is a congested area, a congested home market on the very doorstep of productive industry. Firms will sell readily to these markets. Why should they seek markets abroad when there is a market on their doorstep? Purchase Tax and other regulations have had little or no effect in a region of affluence resulting from full and overfull employment.

I have little more to say. It would have been far better for us had there been a better synchronisation between the different localities. There should not be over-employment in one place and under-employment in another place. The answer is planning from the centre to get an equal distribution of industry, which would strengthen the community, instead of having to uplift men and their families by the roots, which is damaging to the social life of the community.

8.19 p.m.

During his speech the hon. Member for Wrexham (Mr. Idwal Jones) referred to the present state of affairs as being "grim and unsatisfactory". I rejoiced, as I feel other hon. Members rejoiced, that his looks belied his words. He did not look grim. Indeed, from the way in which he addressed his absent colleagues he seemed to be in a happy mood.

The hon. Member referred to the tragedy of old capital not being replaced and properly used. This is a tragedy of industrialisation. It is one which we meet in its various shapes in any industrial plant where capital machinery, seemingly in good order, is discarded because there is no further industrial requirement for its products.

The only thing in the hon. Gentleman's speech to which I take exception was his reference to the west Midland conurbation as a "coffin". As I have the honour and the pleasure to represent a constituency in this area, I assure him that it is indeed a very lively "coffin", and that there are very few nails in it yet. However, far from it being easy to introduce new industry into the "coffin", thank to the energies of my right hon. Friend the President of the Board of Trade it is almost impossible to obtain an industrial development certificate in the area. All the pressures of the Board of Trade are directed towards putting new industry elsewhere than in this so-called coffin. Therefore, the hon. Gentleman should take courage from my misfortunes.

This has been a remarkable debate. It is one which, to my way of thinking, might have taken place at any time during the last seventy-five years, because in 1886 the United States production of steel became greater than ours for the first time. Since then, as a nation, we have not been very good at exporting. This position was covered up for many years by our immense financial predominance, which meant that, where we furnished the capital for new activities in other countries, we automatically got the orders for plant and equipment, the shipping freights which swelled our invisible earnings, the insurance premiums, and all the other matters which went with a very high level of capital investment abroad.

However, as an exporting nation we have never been much good. It is remarkable how much we have learned about exporting in the last fifteen years. Trade is very much a matter of habit. We have not grown up with the habit of exporting. The hon. Member for Gloucester (Mr. Diamond) made the rather interesting comparison of the British businessman with the refugee from Central Europe—in particular, from Germany—who set up business here in the 1930s and who immediately thought about exports.

This is a line of thought which British business men did not greatly consider in the 1930s. We did not have balance of payment crises, because we were buoyed up by our invisible exports, but our visible exports were not very much good. They were, in fact, almost a monopoly of the big firms. The big firms had the clerical skill and the "know-how" to go in for exports, but the smaller firms did not bother. It is only in recent years that we have had to think very hard indeed about our visible exports.

We have made very important progress in building up our exports when we consider the difficulties we are up against to start with. However, we must face the fact that our invisible exports have crumbled. As a source of revenue they have disappeared. Oil, which was a major contributor, no longer makes any positive contribution to our earnings. Our investments in mines and other forms of development in far-away countries have not produced the returns which they were confidently expected to bring in some years ago. Our traditional earnings abroad have dried up. At the same time, our earnings from freight and insurance have been greatly reduced.

Our insurance companies do as much foreign business as they ever did. They are intensely export-minded, but they now get their foreign business on competitive terms, and not as part of a package deal, as they used to when we provided the capital. Our insurance earnings abroad are not disclosed to us, but I feel that they would be disclosed to us if they were important. I suspect that they do not make any very important contribution to our balance of payments.

The same may be said about freights. We have been backward in not acting on behalf of our shipping companies in the same way as the Americans have acted on behalf of theirs and insisting that, when we are sending goods abroad by way of gift or loan, they shall be carried British bottoms. The Americans, who have a far less efficient mercantile marine than we have, have insisted on this. This flag discrimination, as it is called, operates only to our disadvantage. I cannot see why in this day and age we should not adopt this policy.

In this very interesting debate I particularly welcomed the contribution of the hon. Member for Ashton-under-Lyne (Mr. Rhodes). He got away from the Monthly Digest of Statistics, a document which haunts most of our economic debates. The hon. Gentleman spoke in real terms about what is going on in industry at present. We must face the fact that a moderate-sized industry has never been geared for exports. It is starting to think about them now, but it would be ridiculous to think that initiative taken last July will reap any visible benefits in February this year.

The hon. Member for Cardiff, South-East (Mr. Callaghan), who has been so assiduous in his attendance here that I wish to pay him a compliment, but has now wisely withdrawn, was rather naive in arguing that we should be seeing in February the results of actions taken last July. In July, we cleared the decks for the development of exports, but if we see the results of this before next July I, for one, will be much surprised, and so, I am sure, will be the hon. Member for Ashton-under-Lyne.

There are some things we can get out of our heads when talking about exports. The first is the question of credit. I have spent a good deal of time studying this question. I am satisfied that no export from this country is frustrated purely on a credit basis—that is to say, where the borrower is creditworthy. He can get his credit, and on very reasonable terms. I have searched for examples in other countries. I started a good many months ago, when it was always argued that discriminatory rates of interest were always applied to exports. My researches which have been conducted by people in other countries as well as here, have failed to bring any cases to light, which suggests that this is not a valid argument.

If a small firm such as the hon. Gentleman is describing has to pay for its credit and insure its credit, might not this go beyond the profit which the firm will make in a competitive market abroad?

I am obliged to the right hon. Gentleman. Surely the competitor abroad is placed in exactly the same position. He, too, has to borrow the money and insure the risk. I am satisfied, both as to borrowing money and as to insuring the risk, that the facilities provided in this country are as good as those provided in any other country. I therefore do not think that it is on credit terms that our export drive has failed.

I was very glad to hear it said on more than one occasion that our prices are right. They are. We are not pricing ourselves out of export markets, but, to some extent, we are uninterested in exporting. And we are to some extent uninterested in exporting because we have for years been totally uninterested in it. The interest is now growing, and I think that this is one case where the President of the Board of Trade should try a little harder with his colleagues.

I believe that as an initial step we should think of fiscal advantages for exporting. We have stayed long enough on the basis that any action we take will immediately give rise to contra-action in another country. The German gets very considerable fiscal advantages from exporting. I do not argue that we should introduce the cumbersome method of a turnover tax such as Germany has solely in order to relieve exporters of it, but I am certain from my knowledge of German trade that this is a real attraction and incentive to exporting, and we cannot simply dismiss it as being simply not worthy of our regard.

Our export effort is so fragile. It does not permeate our industry at all. It is undertaken by a limited number of firms which have the necessary machinery for it, but my general understanding is that the smaller firm is not prepared to try it, and would only like to come under the umbrella of the larger firm. If the larger firm is really trying, the smaller firm gets carried along with it, but if the larger firm does not have the fiscal incentive it will not go in for it, nor will the smaller one, and we shall all be the poorer for it.

The hon. Member for Cardiff, South-East said that as a result of the policies last July we had a great deal of hot money coming into the country. I want to say here and now that in the United Kingdom we run a world bank. We run the only bank in the world which gives depositors interest on current account, and as long as people are satisfied of the credit-worthiness of the bank—and I think that our July measures satisfied them of that—they are pleased to send their money here.

We get good use from that money. We talk about credits for exports. Where do we get the credits we make available for export except, in some measure, by using the money that comes here from other nations who regard this as a convenient way of keeping their spare cash? I stress that, because hot money is constantly talked of as being a total disadvantage to us whereas, in my opinion, the availability of the London market to firms all over the world is a positive advantage to London, a gainer of funds to London and, in the long run, an advantage to the country.

I cannot believe that any sensible person, looking at the world as it is today and appreciating the need there is for us to develop our exports, can really believe that the right way of increasing exports is vastly to stimulate our internal activities. How any sane person can think that defeats me, and, in this instance, I would hark back once more to the words of the hon. Member for Ashton-under-Lyne. He was absolutely on the mark when he condemned the stimulation of our internal market here.

I am quite certain that the way to get our activities into the export markets is by getting the internal market balanced on a reasonable footing, and ready to take advantages of the expansion in international trade we see in front of us in the coming year.

8.35 p.m.

I thought that the President of the Board of Trade made an extraordinarily complacent speech. He could hardly find anything wrong with the situation. He was particularly complacent about the problem of the small firms in relation to the export effort. He told us that the Export Credits Guarantee Department is doing a great deal to help them, and that is perfectly true. Indeed, the main thing that the right hon. Gentleman found to boast of here was the successful operation of this public enterprise in our export effort.

Apart from that, the President of the Board of Trade said that he did not think that there was very much more that the small firms could do. Surely, that is quite contrary to almost all the evidence. The hon. Member for Mid-Bedfordshire (Mr. Hastings) was very much more realistic about this. The President of the Board of Trade must know very well the oft-quoted and remarkable figure that something like 40 firms out of 100,000 in this country—which was the right hon. Gentleman's figure—are responsible for as much as 30 per cent. of our total exports. Those, of course, are mainly the larger firms, and there are clearly tens of thousands of small firms which are scarcely exporting at all; largely for the very understandable reason that they have not the knowledge, the resources, the personnel or, indeed, the market research.

After years of orthodox persuasion and exhortation of the small firms—a policy which has clearly failed—there is now surely a case for trying out some rather more unorthodox methods. I suggest that the right hon. Gentleman should seriously explore the possibility of some sort of co-operative exporting agency or marketing company to mobilise the smaller and medium-sized firms, perhaps on an industry-wide basis, and, in some cases, actually do the selling abroad by supplying the expertise, the knowledge and the market research and all the rest. If industries individually were not willing to do this with their own resources, the Government could well sponsor some such organisation as that. It would be no more Government interference in industry than are the operations of the Export Credits Guarantee Department of which the President of the Board of Trade was so rightly proud this afternoon.

The right hon. Gentleman seemed to make practically no effort, apart from a rather perfunctory reference to greater confidence in sterling, of which I shall say something, to argue that the Chancellor's measures of last July had succeeded. That was quite understandable, because not only have those measures failed to achieve their objectives but they have done so at a terrible cost. In his speech in July, the Chancellor said:
"… we should maintain investment in productive industry with a view to the long-term growth of the economy."—[OFFICIAL REPORT, 25th July, 1961; Vol. 645, c. 220.]
That was the objective. But, as a result of those measures, the economy has not grown in the last eight months. Indeed, it has shrunk. Investment has not gone up but down. Capital investment by industry in the last quarter of 1961 actually fell by 10 per cent. Industrial production, having laboriously climbed from 111 in January, 1960, and 112 in January, 1961, to 116 last July, fell precipitously after the Chancellor's new measures to 112 in December. That fall of nearly 4 per cent. in a few months was the most disastrously rapid fall in production we have had since the war. The index today stands at scarcely more than 2 per cent. higher than as long ago as December, 1959.

The other objective which the Chancellor gave in July was that his measures were designed to make us more competitive by keeping costs and prices down. The direct results of them has been to make us less competitive by forcing costs and prices up. The cost-of-living index has risen by three points between July and January, as my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) mentioned earlier, and it now stands 4½ per cent. higher than a year ago. That has happened as a result of what the Chancellor called a drive towards lower costs.

This further increase in living costs was largely the result of the Chancellor's own methods. With extraordinary folly he chose last July to restrain demand—not by higher direct taxation on distributed profits, which would not have affected prices—but by putting another £200 million on indirect taxation. The immediate statistical effect was to raise the cost of living by 1½ per cent., in addition to the rest of the rises. This was another part of the drive to lower costs.

The fall in production caused by the new deflation has also raised overhead costs throughout industry and has forced the price index up still further. We have had a fascinating example of this in the iron and steel industry in the last six months. By December, production in that industry had fallen to below 75 per cent. of capacity; and in January, the Chairman of South Durham Steel & Iron Company Ltd. complained that, at this low level, prices should be raised. The public Iron and Steel Board replied that if production remained below 90 per cent. capacity for long, prices would have to be raised; and, on 23rd February, they were raised by the sacred figure of 2½ per cent.

The Financial Times said then that for the types of steel where there was the greatest unused capacity there would be the greatest rise in price. There is no doubt that the rise in steel prices was due to the fall in produtcion and, in turn, that the fall in production was due to the July measures of the Chancellor, particularly the 7 per cent. Bank Rate. This general rise in prices caused by the Chancellor had another ironical effect. For it was partly responsible for the excess of £111 million over the right hon. Gentleman's target for Government expenditure.

By pushing up prices the right hon. and learned Gentleman pushed up the costs of the things the Government had to buy and, thereby, increased their expenditure. The other reason for the increase in his estimate was the rail deficit which was, in turn, partly caused by the situation in the iron and steel industry.

We have had all the inequity and bad blood of the pay pause, with strikes, dislocations in the Post Office and transport, and the rest of it; and the following, so far, are the economic achievements which were supposed to make the whole thing worth while: production down, costs up, prices up, investment down, exports stagnant, Government expenditure up and our balance of payments still in the red. That is the record up to date.

Yes, perhaps that is the only happy result. The serious result of the Chancellor's measures is that we are not merely slipping back as a nation but we are impoverishing ourselves. No one will suppose that the present unused capacity in our economy is not at least 5 per cent. I think it is a great deal higher. That means a loss of national income of £1,000 million a year and a loss of Budget revenue of nearly £300 million. That is what we are losing as a result of the Chancellor's restrictive measures. Despite that, we have the Chief Secretary to the Treasury scraping about and doing great damage to university education and all sorts of other things to save just a few million pounds.

Another rather sobering thought is that even though the rise in industrial production in Europe in 1961 slowed down, nevertheless, as a result of the decline in Britain since July, 1961, it appears to have been the first time in nearly 200 years in which the real standard of living in this country was not higher than Western Europe. I should have thought this to be a remarkable set of circumstances after ten years of Tory Government.

In reply to this, the Chancellor, who I gather is too modest to address us this evening, has only one idea, and this is the one platitude which the President of the Board of Trade spared us this afternoon. His one idea is that incomes must not be allowed to rise faster than production. One might think that he would try to achieve that by making production rise faster—but not at all. He tries to do it by stopping incomes rising at all. What he succeeds in doing is stopping production rising at all and leaving incomes rising a good deal faster than production. That is why prices have continued to rise in these last six months.

The Chancellor's basic illusion here is that he believes that a modern Government can somehow control the level of wages and salaries but cannot control the level of production. I believe that almost the reverse of that is true. I do not think that a Government can control the level of wages and salaries in a free society, but it can, by influencing the level of demand, largely control the level of production. If the Chancellor doubts that, I suggest that he asks himself what really has been the prime cause of the lamentably slow rate of growth of this country in the last ten years.

I think that only three explanations have been advanced. One is that British business has suddenly become lacking in initiative and enterprise; another is that we have somehow become a tired nation, and the third is that it has been due to successive deliberate restrictions on demand by the Government. I ask the Chancellor and the Chief Secretary, if the trouble were really due to some fundamental lack of enterprise or national weariness, why is it that the decline has occurred only after the restrictive Budget in the autumn of 1955, after the 7 per cent. Bank Rate and the credit squeeze in September, 1957, and after the new orgy of deflation last July? Production has fallen back and then stagnated only after these restrictive outbursts by the Government. It has gone ahead again as soon as demand has been released, as for instance in the spring of 1959. It is a most extraordinary coincidence, if stagnation was due to some mysterious, deep-seated cause, that it only coincided with the operation of these policies by the Government.

The obvious fact is that these repeated squeezes have been the cause of the near stagnation of our economy over the last seven years, which has now left us with a standard of living no higher than that in countries which lagged miles behind us ten years ago. Equally obviously, these repeated deflationary attacks on the economy have been due to the fact that the Government, having abandoned all other methods of control, including import control, could think and still can think of no other way of keeping the balance of payments in hand except by these restrictive measures.

The whole lesson of this whole dismal story is really as simple as that. It means that Conservative freedom in the conditions of the United Kingdom and the world today must mean stagnation. The Chancellor will not conjure himself magically out of that dilemma by having a planning council which produces a spendid paper plan which nobody is prepared to enforce. A plan without controls to work it is, at best, a pious hope and, at worst, it might be some sort of electoral dodge. I hope that the Chancellor does not intend to use the National Economic Development Council as a sort of cheap substitute for Colman Prentis and Varley.

Even if he does not—and I hope he is going to give us that assurance—I think that the present Chancellor's ideas of planning are nearly as alarming as the discarded ideas of Conservative freedom, because he has now taken as his target for this year a rise in the gross national product—I suppose it is that—of 2½ per cent. per year. Why only 2½ per cent.? This is really one of the most deplorable aspects of the Government's present deplorable policy. If the 2½ per cent.—I hope the Chief Secretary will tell us—is not the target for 1962, why is it that wages and salaries are supposed to be limited to this mystic figure? But if it is, then it would mean that production at the end of 1962 would be hardly higher, if at all, than before last July. What a target for growth that is to set before us. Both the United States and Japan last year advanced by nearly 10 per cent., and even France has a 5·5 per cent. target at the present time.

More remarkable still, the Chancellor went to O.E.C.D. last December and he pledged himself to an annual growth target—I think he will not deny this—over the next ten years of 4·2 per cent. a year. President Kennedy had proposed 4·6 a year. The Chancellor was so terrified by this audacity of the Americans that he rushed in a panic to Paris and got it whittled down to 4·2 per cent. It was, at any rate, one triumph for British diplomacy, I suppose. Then he came back here and told us at Question Time just before Christmas that he accepted this 4·2 per cent. as applying to us, and a few weeks later he publishes this White Paper in which he sets the glorious target of 2½ per cent. before the nation.

I do not know whether that is what Lord Hailsham calls leading the nation from behind, but I do really ask the Chief Secretary, can we be told tonight what on earth is the basis of this ludicrous 2½ per cent.? Is it proposed as simply a projection forward of the miserable record of the last seven years? This would certainly be a truly Tory method of planning. They slow down the economy to a snail's pace as a maximum for seven years and then adopt the pace actually recorded as the highest aspiration for the next seven years.

We say, however, that it really is time that this dismal chapter of stagnation was brought to an end. We really must decide to take rapid growth as our prime objective and to overcome the difficulties in growth rather than use our fear of the difficulties as the excuse for having no growth at all.

The President of the Board of Trade had so little to say himself this afternoon that he fell back on asking us what we would do. I am very glad to tell him, in response to that question, one or two of the things we would do. First of all—and this is what I say the Government should do—stop deliberately pushing up living costs and therefore wage rates and export costs. The Government in the last year or two, while preaching the need for getting costs down and trying to impose their pay pause, have meanwhile themselves piled one unnecessary extra burden after another on costs. Raising indirect taxes, including, as one hon. Gentleman opposide said, fuel tax last summer was a hopeless blunder which automatically raised living costs and therefore wage rates and exports cost all along the line.

Certainly I was opposed to increases in indirect taxes last summer, and the Chancellor should know. He ought to get himself up to date.

Again the Chancellor and other Ministers must understand that if they restrain demand by taxes on profits they tend as a result to raise costs and prices, but if, as the Chancellor did last summer, they put on indirect taxes, they inevitably give another push to the wage-cost spiral.

Secondly, what folly it has been in these years to force up rents by deliberate legislation. Of course, this policy has raised living costs and lowered the value of money and generally hampered our export industries.

Then on top of all this the Government keep raising the Insurance contributions, which has undoubtedly further contributed to wage demands. Now it appears that in addition we are to have a rise in food prices, starting with milk as a first step. I have no doubt that this deliberate policy on the part of the Government of unloading the burden of direct taxation on to indirect taxes and other charges on wage and salary earners has been one of the factors pushing up industrial costs in recent years and one of the reasons why our share of world exports has been shrinking. If the Government are going to embark on a massive policy of raising food prices all along the line they will find that our share of world exports will decrease even more rapidly in the future.

If that is the case, why is it that in Germany the ratio of direct to indirect charges is much higher than it is here, and food prices are higher?

That may be one of the reasons why the boom in Germany is now falling off. [An HON. MEMBER: "That is a poor answer."] The hon. Member for Cheadle (Mr. Shepherd) knows very well that the Germans started with very low wages and a position of great advantage, and it still remains to be seen how Germany does over the next few years.

We suggest that the Government should abandon their reliance on the present extremely high interest rates, which are far above those of our export competitors and which are doing more and more damage to our balance of payments. If in every bout of restriction we have a rise in interest rates and in every temporary relaxation we have a cut in Surtax and taxation for those with the higher incomes it is not very surprising that investment is progressively starved and consumption tends to be progressively encouraged.

The one claim made by the President of the Board of Trade this afternoon for the success of the July measures was that confidence in the £ had been restored. I do not know who he thought had destroyed it. But, leaving that aside, what has really happened in the last eight months is that we have substituted for a low interest loan from the International Monetary Fund hot money which is costing us a greatly higher sum in interest rates and which of course can easily leave us at any moment. And the Bank Rate at over 5 per cent. costs the country about £150 million annually on the balance-of-payments. The Chancellor must realise that this is one of the main reasons why our surplus on invisible exports has disappeared in the last few years, and all this loss and damage has to be borne because the Government are unwilling to use any instrument or any form of control at all except interest rates.

The President of the Board of Trade also asked us what we on this side of the Committee would do and what controls we would use. I am quite willing to tell him one or two which in my opinion would be easily worth using if we could get expansion going in the country. The first control that I would use would be rent control. Effective control now of rents would certainly do something to check the upward spiral of prices which I should have thought we all wanted to prevent. It would also give some sense of fair play in the community without which we shall not have any sort of restraint on incomes.

The second is capital issues control. What possible sense was there in the Government getting rid of capital issues control at this stage when surely what we obviously need is not only more investment but investment of the right kind—more modernisation of British industry and not the building of skyscrapers in London and even in New York with British capital. Surely we need urgently, as several of my hon. Friends have said, effective control, and we still have not had it, over the growth of employment and particularly of office employment in London and in South-East England. The Government have, in the last year or two, allowed the distribution of employment again to get completely out of hand, with all the old evils of acute under-employmenit and unemployment, in Scotland of 4 per cent., and in the North and West, and acute congestion and housing shortage in the Midlands and the South-East

Quite apart from the social consequences, this means—and this is a point which I hope the Chancellor will grasp—that the point of inflation and labour shortage is repeatedly reached in South-East England and the Midlands, while there are tens of thousands of potential workers unemployed or under-employed in the North and West. Then, we have a general credit squeeze all round, regardless of whether the labour or the capacity were available in those areas.

The need now is—and I hope the Government understand it—to get at least the same control over new office building, as we have for new factory building. I do not believe that that will be achieved until the local authorities are somehow relieved of the present intolerable burden of the compensation which they have to bear if they refuse planning permission. If the Government want to find a simple, practical and immediate way of achieving that result, while the compensation difficulties are ironed out—and I agree that they are extremely complex—I will tell them one way to do it. Why not reintroduce building licences in all regions except Scotland, Northern, North-Western, Wales and South-Western? That would be perfectly practicable, and would go a very long way to try to solve the problem. I should be prepared to do it.

Finally, a sense of equity somehow has to be restored if the export effort is not to be continually hampered by this cost-push spiral. I do not think we shall get a sense of equity very easily restored after the last few years. The very least that will be needed will be the cancellation of last summer's taxes on the cost of living, the cancellation of the Surtax cuts, the reintroduction of rent control and a really effective capital gains tax. Until the Chancellor does these things, until he withdraws his ridiculous target of 2½ per cent., I do not myself see any moral obligation on any body of workers to accept the target put forward.

Does anybody believe that the present Government will do, or indeed can do, any of the things that are necessary? Of course, we do not. We are much more likely to hear on Budget day that the sections of the Board of Trade and the Treasury dealing with the balance of payments, and, I suppose, the National Economic Development Council, have been taken out of these Departments, housed in Church House, and put under the control of the Home Secretary. Some things quite as remarkable as that have happened in the last few weeks.

It is not very surprising, in these circumstances, to find that Lord Hailsham cannot conceal his distaste for the spectacle of the present Government when he says that we shall not save the country by bad English written in platitudes. I am not sure whether he was referring to the speeches of the President of the Board of Trade, the Chancellor of the Exchequer, the Prime Minister or indeed all three. Indeed, I do not know, but until we take the electorate at its word, and get rid of this whole mass of inertia and complacency now before us, this country will have very little economic future or political future, either.

For these reasons, we shall divide the Committee this evening. I beg to move,
That a sum, not exceeding £1,445,370,503, be granted for the said Service.

9.5 p.m.

Taking up the last words of the right hon. Member for Battersea, North (Mr. Jay), there is certainly no economic future for this country if either the Liberal Party or the Labour Party get control of it.

My right hon. and learned Friend the Chancellor of the Exchequer has been sitting by me, and, by the comments that he has been whispering, which might have been overheard by some hon. Members, I can say that he is itching to take part in the debate himself. [HON. MEMBERS: "Then give way!"] My right hon. and learned Friend feels debarred from doing so three weeks before the Budget, as any Chancellor of the Exchequer in any Government would feel.

I myself realise that I must be a good boy and avoid speaking of any tax matters. Therefore, all I will say is that I have noted what was said on fiscal questions by my hon. Friend the Member for Nottingham, South (Mr. W. Clark), the hon. Member for Cardiff, South-East (Mr. Callaghan), the hon. Member for Bolton, West (Mr. Holt), and other hon. Members.

The whole purpose of the Government is to achieve sound and dynamic economic development—[HON. MEMBERS: "Oh."]—and that is what it will be seen that we have succeeded in doing. Year after year this country has been getting itself better equipped by the growth of private investment opening the way to higher productivity. I do not think that any hon. Member of the Opposition has dared to mention today that the fixed investment of manufacturing industry last year was about 20 per cent. higher than in 1960 and 40 per cent. higher than in 1959. Also, there is much higher productivity in agriculture now than there was ten years ago. I noted what my hon. Friend the Member for Fife, East (Sir J. Gilmour) said on that. All this has been backed by public investment in education, roads, and so forth, to the very limit of our resources.

Public investment expenditure at present is taking 7½ per cent. of the gross national product, private investment is taking a further 11½ per cent., and total expenditure of all sorts throughout the public sector is now estimated at 44 per cent. of the gross national product.

I listened with interest to what my hon. Friend the Member for Shipley (Mr. Hirst) said about that. I hope that he will read again the speech I made about control of public expenditure in the House on 24th January. I read what he was reported to have said in his own constituency on Saturday last. In view of his ardent desire for the Government to cut clown expenditure in all directions, I hope he does not take credit in his own constituency for the very much increased expenditure of the Government on education, agriculture and many other things which I myself believe are desirable for the national economy.

But it is a fallacy to imagine that a big further rise in production, as has been advocated by some hon. Members today, will by itself ensure us sound economic growth. Unless it is accompanied by corresponding expansion of exports, it will simply throw us back into balance of payments difficulties. Our problem differs from that of almost every other great industrial country in that we need to export to pay both for much of our food and for nearly all our industrial raw materials, apart from coal. For us, therefore, in direct contradiction to what the hon. Member for Cardiff, South-East said, growth of production must be led by growth of exports.

I was interested to hear the hon. Member suggest control of imports, taking his idea from an anonymous writer called "Lombard", in the Financial Times. To impose fresh control on imports is hardly the way to broaden export markets for British manufacturers. The hon. Gentleman quoted with alarm increases in imports in recent years, suggesting that this was due to an unwise liberalising policy by the Conservative Government. He told us that he was reading a lot of things he had not read before, and I can only suggest that he should continue and extend his reading because, if he does so, he will discover that, of the increase in imports between 1958 and 1960, much less than one quarter was in liberalised imports and the other three-quarters was due to the general rise in prosperity in this country, thanks to having a Conservative Government.

Indeed, the hon. Member's views on import policy appeared to be clean contrary to those of his right hon. Friend the Member for Battersea, North, who, in an article I read the other day, said that tariff cuts were needed. We must leave the Opposition to decide what their policy is, because, quite clearly, it is in confusion.

Despite the intense competition, we are today exporting 26 per cent. more goods than ten years ago. That is in volume without regard to increases in prices. But that is not yet good enough, and the whole House must recognise that it is not good enough. The Government certainly do. With the recovery of the former enemy countries, the United Kingdom share of world exports of manufactures has fallen from 22 per cent. to 16 per cent. and that is precisely what we all, collectively, have to correct.

All imports depend on efficiency. They are not achieved by Governments alone, nor by a magic wand. No country can achieve the export aims which it should have unless it can secure efficiency all down the line—in market research, in design, development, production and sales. But one cannot expect firms to be super-efficient abroad if demand is so high at home that they do not need to be efficient for the home market. That was the point which was put most sensibly by my hon. Friend the Member for Nottingham, South.

Competition at home as well as abroad just now is much tougher than it has been in the past, but a great deal of increased efficiency will follow from that sharper competition. The hon. Member for Cardiff, South-East said that the policy of the Labour Party is to promote home demand. The hon. Member for Ashton-under-Lyne (Mr. Rhodes) immediately refuted that by accusing the Conservative Government of having excessively promoted home demand. The two hon. Gentlemen must decide between them what their policy is.

It is common knowledge that some British firms have done remarkably well in selling their products abroad and that others have not. It is up to every firm producing goods capable of being exported to help the nation by a sales drive abroad. If it finds selling hard, it should go to the Board of Trade for all the advice and help it can get from there, and it should also overhaul its own management and marketing methods if it is being beaten on them.

The right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn) and the right hon. Member for Battersea, North alleged that the Government were not doing enough in connection with the smaller firms. The fact is that my right hon. Friend the Minister of State and his predecessor have written personally to more than 27,000 firms, which employ more than 25 people each, drawing attention to the services which are available to exporters. More than 7,000 of those have replied and experienced Board of Trade officials visit every one of those firms which seeks advice and seeks a visit. More than 1,500 firms are being visited every month by Board of Trade officials in connection with the export drive to discuss and help with their export problems, and there is no truth whatever in the allegation—and I think that the hon. Member for Gloucester (Mr. Diamond) confirmed this—that the Board of Trade neglects the smaller firms.

All but our best export businesses, large and small, have a great deal to learn about modern methods of studying markets and marketing techniques. It is no good depending on rule of thumb; it is no good depending on past history. I agree with my hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings), whom I should like to congratulate on an excellent speech, that this is something which must be tackled by industry and commerce themselves. It cannot be done just by the Government.

But we can never expect to sell goods in competition if the costs of those goods are too high. Our striking success in achieving full employment over most of the country since the war has led to overfull employment in some of the chief industrial centres. I know well that there are other parts of the country which are under-employed. I know the problems of Scotland and of the North-East Coast. The right hon. Member for East Stirlingshire will be glad to hear that there is more industrial building going on in Scotland at this moment under a Conservative Government than at almost any previous date since the war.

These conditions have produced a constant upward pressure on wages. One could see the danger signals. Wages and salaries in the first quarter of 1961 were up 9·8 per cent. on the year before and in the second quarter were up 8·6 per cent. That far outran the increase in production. The right hon. Member for Battersea, North said that he did not know who had shaken confidence in sterling. It was figures like that which were shaking confidence in sterling and showed the necessity for the pay pause and an incomes policy, because we could not hope to hit our export targets if costs went on rising like that.

In the third quarter of 1961, during which the Government's measures of general restraint, including the pay pause, started to take effect, the increase dropped to 6·9 per cent. I am fairly sure that it will have gone on dropping in the fourth quarter—we have not got the figures yet. I say that I am fairly sure because the increase in actual wage rates between the end of July, 1961, and the end of February, 1962, was little more than half that in the previous year, and most of those increases, of course, were commitments before the pause began.

Exactly in the same way, the rise in the retail price index, which has been mentioned by the Opposition, has flowed directly from the excessive rise in incomes relative to production, which my right hon. and learned Friend is determined to correct. By the measures of last July, the Government have put us into a much stronger competitive position this spring in relation to our competitors who have not acted as we have done.

Among our competitors on the Continent wages are going up rapidly. This is especially true of West Germany since the supply of refugee labour has been cut off. One after another these countries are coming up against the pressures that flow from what we have had these last ten years and they have not, that is to say, full employment, and no reserve of unused labour upon which to draw.

Thanks to Government policies, unpopular in themselves, but necessary, we now have the opportunity of a great upsurge in exports this year. There is no target of 2½ per cent. My right hon. and learned Friend has said clearly that we have it in our power to do better, but that depends on the country as a whole. It is up to the whole of British industry, and everybody who works in it at all levels, to turn opportunity into victory. If only we can sell the exports and get our balance of payments right, we can shake ourselves free from the quick need to put the brake on which has been forced on us from time to time by balance of payments difficulties and doubts about our competitive abilities.

We have, of course, to carry on our balance of payments a special burden because of our Armed Forces in Germany. They are there in fulfilment of our duty as a partner in N.A.T.O., but they will cost us in the coming year £73 million in foreign exchange—about 800 million deutschmarks—indeed, a bit more because of the rise in Service pay from 1st April.

My right hon. and learned Friend the Chancellor of the Exchequer told the House on 25th July last that we could not allow this strain on our balance of payments to continue, and that we had in accordance with our rights invited the N.A.T.O. Council to review the matter. The N.A.T.O. Council invited two independent experts to go into it, who reported back to N.A.T.O. that we were justified in our request. The N.A.T.O. Council thereupon agreed that consideration must be given to ways of assisting Britain to solve this special problem of hers, a problem which is not of her making.

Since then we have been negotiating with the Federal German Government under N.A.T.O. auspices, and as the House knows my right hon. Friend the Prime Minister discussed the problem with Dr. Adenauer in January. Dr. Adenauer offered to place arms orders in Britain that would amount to 400 million deutschmarks, or £36 million a year for two years. I was deputed to carry on the negotiations thereafter, and I twice visited Bonn. On my second visit the Federal German Government offered 500 million Deutschmarks, or £45 million a year in foreign exchange, made up of military purchases and certain other items.

I expressed appreciation, but I asked for more. [HON. MEMBERS: "Why?"] I am glad to tell the House that we have heard today that the Germans have agreed to meet my request and have undertaken to make payments in this country to the value of 600 million deutschmarks a year, about £54 million, in each of the next two years. It is also agreed that fresh discussions should be held before the end of the two years about the future.

This German offer represents about three-quarters of our foreign exchange outgoings on the British forces stationed in Germany. It will not, of course, be worth as much as that to us, because most of the goods we supply will include an element of imported raw materials which will enter into our balance of payments. This point was realised on both sides in our negotiations. Moreover, some part of the £54 million will almost certainly be made up of purchases which would have been made in any event.

Nevertheless, I believe that the Federal Government have come as far as they possibly can in present circumstances to meet us. They have their difficulties, too, though they are different from ours, and on behalf of Her Majesty's Government I should like to express appreciation of the great efforts which I know that Dr. Adenauer and his colleagues have made in this matter. Our difficulties have not been removed, but they have been substantially relieved. On the assumption that all the details can be settled satisfactorily, it will now be for ourselves and the Germans to report back to N.A.T.O. Any arrangements between us will, of course, have to be approved by the N.A.T.O. Council.

How much of the £54 million will be in respect of military orders for arms in this country, and of that proportion can the right hon. Gentleman say whether this will be firm or whether a discretion will be left to the Germans to refuse to purchase when they see the type and nature of arms being offered?

When will the payments start, and for how long will they continue?

This is a firm arrangement. The payments will start from now and will continue for a period of two years.

A number of hon. Members spoke in the debate, quite rightly, about the importance of the availability of skilled labour. If I do not refer to the fiscal aspects of that mentioned by one or two hon. Members, everyone will understand my difficulties there. But I can say straight away that the Government are fully aware that skilled labour is at the moment the principal bottleneck. My right hon. Friend the Minister of Labour has, in fact, been more active than any of his predecessors in trying to solve the very difficult problems that arise about apprenticeships and training so as to secure the enlargement of the supply of skilled labour.

A number of hon. Members asked what we were doing in the educational field. I wish that I had time to deal in full with the university situation, but I can say that whereas, as the time of the fall of the Labour Government, the country was devoting 3·2 per cent. of the gross national product to education, including the universities, under Conservative policies we are devoting 4·5 per cent. of a much larger gross national product. That is the answer to something that (the hon. Member for Greenock (Dr. Dickson Mabon) was alleging.

In conclusion, I say that no one can contract out of responsibility for building up British exports—employers, trade unions, designers, craftsmen, salesmen, merchants—no one. We can get the growth needed and we can get a still further advance in prosperity and standard of living, and not only in material standard of living, if only we can get the exports. The hon. Member for Cardiff, South-East said that Britain could learn from Germany, France and elsewhere on the ground that they had done so much better.

Division No. 129.]


[9.30 p.m.

Ainsley, WilliamBowden, Rt. Hn. H. W. (Leics, S. W.)Darling, George
Albu, AustenBowles, FrankDavies, Harold (Leek)
Allaun, Frank (Salford, E.)Boyden, JamesDavies, Ifor (Gower)
Allen, Scholefield (Crewe)Braddock, Mrs. E. M.Davies, S. O. (Merthyr)
Awbery, StanBrockway, A. FennerDeer, George
Bacon, Miss AliceBroughton, Dr. A. D. D.Delargy, Hugh
Baxter, William (Stirlingshire, W.)Butler, Herbert (Hackney, C.)Dempsey, James
Beaney, AlanCallaghan, JamesDiamond, John
Bellenger, Rt. Hon. F. J.Castle, Mrs. BarbaraDodds, Norman
Bennett, J. (Glasgow, Bridgeton)Cliffe, MichaelDonnelly, Desmond
Benson, Sir GeorgeCraddock, George (Bradford, S.)Dugdale, Rt. Hon. John
Blackburn, F.Cronin, JohnEde, Rt. Hon. C.
Blyton, WilliamCrosland, AnthonyEdwards, Walter (Stepney)
Boardman H.Cullen, Mrs. AliceEvans, Albert

I read an article the other day which said:

"The truth is, of course, that the spurt in Germany, France, Italy, Austria and Japan from 1952 to 1960 was the belated recovery from the war helped by United States aid of the devastated countries which had not shared in the quick recovery of the victorious ones. It is now slowing down. It will be seen a few years hence to have been a temporary statistical illusion."

That was written by the right hon. Member for Battersea, North, in the New Statesman on 24th November, 1961.

I am glad that we had a contribution from the hon. Member for Bolton, West, although he did not reveal solutions to all our problems, because his own leader, the right hon. Member for Orkney and Shetland (Mr. Grimond), writing in The Times of Saturday last, provided for us an interesting article on all that the Liberals would do, but did not include any mention whatever of exports or the balance of payments. It seemed to me typical of the Liberal Party in that it was evidently intended to be an important policy statement but ignored entirely what is the heart of Britain's economic task.

In these circumstances, I believe that it is under Conservative leadership that we shall get the export orders and deliver the goods.

It being half-past Nine o'clock, The CHAIRMAN proceeded, pursuant to Standing Order No. 16 ( Business of Supply), to put forthwith the Questions necessary to dispose of the Vote under consideration.

Question put, That a sum, not exceeding £1,445,370,503, be granted for the said Service:—

The Committee divided: Ayes 198, Noes 275.

Fernyhough, E.Lawson, GeorgeReid, William
Finch, HaroldLedger, RonReynolds, G. W.
Fitch, AlanLee, Miss Jennie (Cannock)Rhodes, H.
Fletcher, EricLever, L. M. (Ardwick)Roberts, Albert (Normanton)
Foot, Dingle (Ipswich)Lewis, Arthur (West Ham, N.)Roberts, Goronwy (Caernarvon)
Foot, Michael (Ebbw Vale)Lipton, MarcusRobertson, John (Paisley)
Forman, J. C.Loughlin, CharlesRobinson, Kenneth (St. Pancras, N.)
Fraser, Thomas (Hamilton)Mabon, Dr. J. DicksonRoss, William
Gaitskell, Rt. Hon. HughMacColl, JamesShinwell, Rt. Hon. E.
Galpern, Sir MyerMcKay, John (Wallsend)Silverman, Julius (Aston)
Ginsburg, DavidMackie, John (Enfield, East)Skeffington, Arthur
Gooch, E. G.McLeavy, FrankSlater, Mrs. Harriet (Stoke, N.)
Gordon Walker, Rt. Hon. P. C.MacPherson, Malcolm (Stirling)Slater, Joseph (Sedgefield)
Gourlay, HarryMallalieu, E. L. (Brigg)Small, William
Grey, CharlesMallalieu, J. P. W. (Huddersfield, E.)Smith, Ellis (Stoke, S.)
Griffiths, David (Rother Valley)Manuel, Archie C.Snow, Julian
Griffiths, Rt. Hon. James (Llanelly)Mapp, CharlesSorensen, R. W.
Grimond, Rt. Hon. J.Mason, RoySpriggs, Leslie
Gunter, RayMayhew, ChristopherSteele, Thomas
Hale, Leslie (Oldham, W.)Mellish, R. J.Stewart, Michael (Fulham)
Hall, Rt. Hn. Glenvil (Colne Valley)Mendelson, J. J.Strachey, Rt. Hon. John
Hamilton, William (West Fife)Millan, BruceStross, Dr. Barnett (Stoke-on-Trent, C.)
Hannan, WilliamMilne, EdwardSwain, Thomas
Hart, Mrs. JudithMitchison, G. R.Swingier, Stephen
Hayman, F. H.Monslow, WalterSymonds, J. B.
Healey, DenisMoody, A. S.Taverne, D.
Henderson, Rt. HnArthur (Rwly Regis)Morris, JohnTaylor, Bernard (Mansfield)
Herbison, Miss MargaretMoyle, ArthurThomas, George (Cardiff, W.)
Hill, J. (Midlothian)Mulley, FrederickThornton, Ernest
Hilton, A. V.Neal, HaroldUngoed-Thomas, Sir Lynn
Holman, PercyNoel-Baker, Rt. Hn. Philip (Derby, S.)Wade, Donald
Holt, ArthurOram, A. E.Warbey, William
Houghton, DouglasOswald, ThomasWatkins, Tudor
Howell, Denis (Small Heath)Owen, WillWeitzman, David
Hoy, James H.Paget, R. T.Wells, Percy (Faversham)
Hughes, Emrys (S. Ayrshire)Pannell, Charles (Leeds, W.)Wells, William (Walsall, N.)
Hughes, Hector (Aberdeen, N.)Parker, JohnWhitlock, William
Hunter, A. E.Parkin, B. T.Wilkins, W. A.
Hynd, H. (Accrington)Paton, JohnWilley, Frederick
Hynd, John (Attercliffe)Pavitt, LaurenceWilliams, D. J. (Neath)
Irvine, A. J. (Edge Hill)Pearson, Arthur (Pontypridd)Williams, LI. (Abertillery)
Janner, Sir BarnettPeart, FrederickWilliams, W. R. (Openshaw)
Jay, Rt. Hon. DouglasPentland, NormanWilliams, W. T. (Warrington)
Jenkins, Roy (Stechford)Plummer, Sir LeslieWillis, E. G. (Edinburgh, E.)
Johnson, Carol (Lewisham, S.)Popplewell, ErnestWilson, Rt. Hon. Harold (Huyton)
Jones, Rt. Hn. A. Creech (Wakefleld)Prentice, R. E.Winterbottom, R. E.
Jones, Dan (Burnley)Price, J. T. (Westhoughton)Woodburn, Rt. Hon. A.
Jones, Elwyn (West Ham, S.)Probert, ArthurWoof, Robert
Jones, J. Idwal (Wrexham)Proctor, W. T.Yates, Victor (Ladywood)
Jones, T. W. (Merioneth)Pursey, Cmdr. Harry
Kelley, RichardRandall, HarryTELLERS FOR THE AYES:
Kenyon, CliffordRankin, JohnMr. Charles A. Howell and
Key, Rt. Hon. C. W.Redhead, E. C.Mr. Irving.


Agnew, Sir PeterBromley-Davenport, Lt.-Col. SirWalterCritchley, Julian
Aitken, W. T.Brooke, Rt. Hon. HenryCrosthwaite-Eyre, Col. Sir Oliver
Allason, JamesBrooman-White, R.Crowder, F. P.
Arbuthnot, JohnBrown, Alan (Tottenham)Cunningham, Knox
Atkins, HumphreyBrowne, Percy (Torrington)Curran, Charles
Balniel, LordBryan, PaulCurrie, G. B. H.
Barber, AnthonyBuck, AntonyDalkeith, Earl of
Barter, JohnBullard, DenysDance, James
Batsford, BrianBullus, Wing Commander Ericd'Avrgdor-Goldsmid, Sir Henry
Baxter, Sir Beverley (Southgate)Burden, F. A.Deedes, W. F.
Beamish, Col. Sir TuftonButcher, Sir Herbertde Ferranti, Basil
Bell, RonaldCampbell, Sir David (Belfast, S.)Digby, Simon Wingfield
Bennett, F. M. (Torquay)Campbell, Cordon (Moray & Nairn)Donaldson, Cmdr. C. E. M.
Berkeley, HumphryCarr, Compton (Barons Court)Doughty, Charles
Bevins, Rt. Hon. ReginaldCarr, Robert (Mitcham)Drayson, G. B.
Bidgood, John C.Cary, Sir Robertdu Cann, Edward
Biffen, JohnChataway, ChristopherEccles, Rt. Hon. Sir David
Biggs-Davison, JohnClark, Henry (Antrim, N.)Eden, John
Bingham, R. M.Clark, William (Nottingham, S.)Elliot, Capt. Walter (Carshalton)
Birch, Rt. Hon. NigelClarke, Brig Terence (Portsmth, W.)Eillott, R. W. (Nwcastle-upon-Tyne, N.)
Bishop, F. P.Cole, NormanEmmet, Hon. Mrs. Evelyn
Black, Sir CyrilCollard, RichardErrington, Sir Eric
Bossom, CliveCooke, RobertErroll, Rt. Hon. F. J.
Bourne-Arton, A.Cooper, A. E.Farey-Jones, F. W.
Box, DonaldCooper-Key, Sir NeillFarr, John
Boyd-Carpenter, Rt. Hon. J.Corfield, F. V.Fell, Anthony
Boyle, Sir EdwardCostain, A. P.Fisher, Nigel
Braine, BernardCoulson, MichaelFletcher-Cooke, Charles
Brewis, JohnCourtney, Cdr. AnthonyForrest, George

Foster, JohnLeburn, GilmourRenton, David
Fritter, Ian (Plymouth, Sutton)Legge-Bourke, Sir HarryRidsdale, Julian
Freeth, DenzilLewis, Kenneth (Rutland)Roberts, Sir Peter (Heeley)
Calbraith, Hon. T. G. D.Lilley, F. J. P.Robson Brown, Sir William
Gammans, LadyLitchfield, Capt. JohnRopner, Cdr. Sir Leonard
Gardner, EdwardLloyd, Rt. Hon. Selwyn (Wirral)Royle, Anthony (Richmond, Surrey)
George, J. C. (Pollok)Longbottom, CharlesRussell, Ronald
Gilmour, Sir JohnLongden, GilbertSt. Clair, M.
Clover, Sir DouglasLoveys, Walter H.Scott-Hopkins, James
Glyn, Dr. Alan (Clapham)Lucas, Sir JocelynSeymour, Leslie
Glyn, Sir Richard (Dorset, N.)MacArthur, IanSharples, Richard
Goodhart, PhilipMcLaren, MartinShaw, M.
Goodhew, VictorMcLean, Neil (Inverness)Shepherd, William
Gough, FrederickMacleod, Rt. Hn. Iain (Enfield, W.)Skeet, T. H. H.
Cower, RaymondMcMaster, Stanley R.Smith, Dudley (Br'ntf'd & Chiswick)
Grant-Ferris, Wg. Cdr. R.Macmillan, Maurice (Halifax)Smithers, Peter
Green, AlanMaddan, MartinSmyth, Brig. Sir John (Norwood)
Gresham Cooke, R.Maginnis, John E.Soames, Rt. Hon. Christopher
Grosvenor, Lt.-Col. R. G.Maitland, Sir JohnSpearman, Sir Alexander
Gurden, HaroldManningham-Buller, Rt. Hn. Sir R.Stanley, Hon. Richard
Hall, John (Wycombe)Markham, Major Sir FrankStevens, Geoffrey
Hamilton, Michael (Wellingborough)Marshall, DouglasSteward, Harold (Stockport, S.)
Harris, Frederic (Croydon, N. W.)Marten, NeilStodart, J. A.
Harvey, Sir Arthur Vere (Macclesf'd)Mathew, Robert (Honiton)Stoddart-Scott, Col. Sir Malcolm
Harvey, John (Walthamstow, E.)Matthews, Gordon (Meriden)Studholme, Sir Henry
Harvie Anderson, MissMaudling, Rt. Hon. ReginaldTalbot, John E.
Hastings, StephenMawby, RayTaylor, Sir Charles (Eastbourne)
Hay, JohnMaydon, Lt.-Cmdr. S. L. C.Taylor, Edwin (Bolton, E.)
Heald, Rt. Hon. Sir LionelMills, StrattonTaylor, Frank (M'ch'st'r, Moss Side)
Heath, Rt. Hon. EdwardMontgomery, FergusTaylor, W. J. (Bradford, N.)
Henderson, John (Cathcart)More, Jasper (Ludlow)Teeling, Sir William
Hendry, ForbesMorrison, JohnTemple, John M.
Hicks Beach, Maj. W,Mott-Radclyffe, Sir CharlesThatcher, Mrs. Margaret
Hill, Mrs. Eveline (Wythenshawe)Nabarro, GeraldThomas, Leslie (Canterbury)
Hill, J. E. B. (S. Norfolk)Neave, AireyThomas, Peter (Conway)
Hirst, GeoffreyNicholson, Sir GodfreyThompson, Kenneth (Walton)
Hobson, Sir JohnNoble, MichaelThompson, Richard (Croydon, S.)
Hocking, Philip N.Nugent, Rt. Hon. Sir RichardThorneycroft, Rt. Hon. Peter
Holland, PhilipOakshott, Sir HendrieTilney, John (Wavertree)
Hollingworth, JohnOrr, Capt. L. P. S.Touche, Rt. Hon. Sir Gordon
Hopkins, AlanOsborn, John (Hallam)Turner, Colin
Hornby, R. P.Osborne, Sir Cyril (Louth)Turton, Rt. Hon. R. H.
Hornsby-Smith, Rt. Hon. Dame P.Page, Graham (Crosby)van Straubenzee, W. R.
Hughes Hallett, Vice-Admiral JohnPage, John (Harrow, West)Vosper, Rt. Hon. Dennis
Hughes-Young, MichaelPannell, Norman (Kirkdale)Wakefield, Sir Wavell (St. M'lebone)
Hulbert, Sir NormanPearson, Frank (Clitheroe)Walder, David
Hurd, Sir AnthonyPeel, JohnWalker, Peter
Hutchison, Michael ClarkPercival, IanWall, Patrick
Iremonger, T. L.Peyton, JohnWard, Dame Irene
Irvine, Bryant Godman (Rye)Pickthorn, Sir KennethWebster, David
Jackson, JohnPike, Miss MervynWells, John (Maidstone)
James, DavidPilkington, Sir RichardWhitelaw, William
Johnson, Dr. Donald (Carlisle)Pott, PercivallWilliams, Paul (Sunderland, S.)
Johnson, Eric (Blackley)Powell, Rt. Hon. J. EnochWills, Sir Gerald (Bridgwater)
Johnson Smith, GeoffreyPrice, David (Eastleigh)Wilson, Geoffrey (Truro)
Joseph, Sir KeithPrice, H. A. (Lewisham, W.)Wise, A. R.
Kerans, Cdr. J. S.Prior-Palmer, Brig. Sir OthoWolrige-Gordon, Patrick
Kerr, Sir HamiltonProfumo, Rt. Hon. JohnWoodhouse, C. M.
Kershaw, AnthonyProudfoot, WilfredWoodnutt, Mark
Kirk, PeterPym, FrancisWoollam, John
Kitson, TimothyQuennell, Miss J. M.
Lagden, GodfreyRamsden, JamesTELLERS FOR THE NOES:
Langford-Holt, Sir JohnRedmayne, Rt. Hon. MartinMr. Chichester-Clark and Mr. Finlay.
Leather, E. H. C.Rees, Hugh

Original Question put and agreed to.

The CHAIRMAN then proceeded forthwith to put severally the Questions, That the total amounts outstanding in such Estimates for the Navy and the Air Services for the coming financial year as have been put down on at least one previous day for consideration on an allotted day, and the total amounts of all outstanding Estimates supplementary to those of the current financial year as have been presented seven clear days and of the outstanding Excess Votes be granted for the Services defined in those

Estimates, Supplementary Estimates and Statements of Excess.


That a sum, not exceeding £142,167,000, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1963, for expenditure in respect of Navy Services, viz.:—

1.1. Pay, etc., of the Royal Navy and Royal Marines69,133,000
3.2. Victualling and Clothing for the Navy15,036,000

6.Scientific Services24,000,000
10.Works, Buildings, Machinery and Repairs at Home and Abroad21,230,000
11.Miscellaneous Effective Services12,767,900
14.Additional Married Quarters100

Question put and agreed to.


That a sum, not exceeding £409,880,000, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1963, for expenditure in respect of Air Services, viz.:—

1.Pay, etc., of the Air Force119,180,000
2.Reserve and Auxiliary Services679,900
7.Aircraft and Stores242,000,000
8.Works and Lands42,300,000
9.Miscellaneous Effective Services5,720,000
11.Additional Married Quarters100

Question put and agreed to


That a Supplementary sum, not exceeding £70,583,429, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1962, for expenditure in respect of the following Supplementary Estimates, viz.:—

1.House of Lords13,770
2.House of Commons28,995
3.Treasury and Subordinate Departments158,000
8.Civil Service Commission21,250
10.Exchequer and Audit Department4,000
11.Friendly Societies Registry10
12.Government Actuary10
15.National Debt Office10
17.Public Record Office10
18.Public Works Loan Commission10
19.Royal Commissions, etc.40,000

1.Foreign Service389,665
2.Foreign Office Grants and Services574,598
5.Commonwealth Services10
8.Colonial Services1,531,753

11.Commonwealth War Graves Commission47,635
12.Department of Technical Co-operation1,950,118

1.Home Office317,170
4.Prisons, England and Wales155,000
5.Child Care, England and Wales125,000
7.Supreme Court of Judicature, etc10
11.Public Trustee10
12.Law Charges8,000
13.Miscellaneous Legal Expenses4,500
17.Child Care, Scotland43,000
18.State Management Districts, Scotland10
19.Law Charges and Courts of Law, Scotland10
20.Department of the Registers of Scotland10
21Supreme Court of Judicature, etc., Northern Ireland10

1.Ministry of Education628,000
2.British Museum10
4.Imperial War Museum10
5.London Museum2,175
6.National Gallery50,700
7.Tate Gallery20,640
8.National Maritime Museum1,710
9.National Portrait Gallery1,100
10.Wallace Collection2,243
11.Grants for Science and the Arts33,000
12.Universities and Colleges, etc., Great Britain2,100,000

1.Ministry of Housing and Local Government50,010
2.Housing, England and Wales912,840
3.Exchequer Grants to Local Revenues, England and Wales15,322,000
4.Ministry of Health1,211,630
6.Medical Research Council47,500
10.National Health Service, Scotland250,000

1.Board of Trade377,200
4.Board of Trade (Promotion of Local Employment)3,989,500
8.Ministry of Labour230,000
9.Ministry of Aviation12,400,000
10.Civil Aviation10

1.Ministry of Works680,000
3.Public Buildings, etc., United Kingdom700,000
3B.Viscount Trenchard Memorial367
8.Rates on Government Property360,000
10.Central Office of Information425,000

1.Ministry of Agriculture, Fisheries and Food558,300
7.Agricultural Research Council32,000
10.Forestry Commission620,000
12.Fisheries (Scotland) and Herring Industry98,000

1.Ministry of Transport435,930
3.Transport (British Transport Commission)23,000,000
7.Office of the Minister for Science2,970

2.Ministry of Pensions and National Insurance263,000
1.Customs and Excise365,000

Question put and agreed to.


That a Supplementary sum, not exceeding £22,250,000, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1962, for expenditure, including a grant in aid, beyond the sum already provided in the grants for Air Services for the year.

Sums not exceeding
Supply GrantsAppropriations in Aid
1. Pay, &c., of the Air Force

Cr. 840,000

2. Reserve and Auxiliary Services

Cr. 70,000

3. Air Ministry400,000
4. Civilians at Outstations and the Meteorological Office2,750,000100,000
5. Movements700,000
6. Supplies50,000250,000
7. Aircraft and Stores17,200,000


8. Works and Lands750,000

*− 2,700,000

9. Miscellaneous Effective Services700,000

*− 800,000

10. Non-Effective Services610,000
11. Additional Married Quarters

*− 400,000

Total, Air (Supplementary), 1961–62 £22,250,000


* Deficit.

Question put and agreed to.


That a sum, not exceeding £24,359 8s. 9d., be granted to Her Majesty, to make good excesses on certain grants for Civil Services, for the year ended on the 31st day of March, 1961.

Class and VoteExcess Vote
Class II
2. Foreign Office Grants and Services
Subhead E.4.—Yugoslavia (Grant in Aid):
Excess Expenditure5,82654

Less—Net savings available on other subheads

Class X
4. National Insurance and Family Allowances
Subhead C—Family Allowances:
Excess Expenditure21,54316

Add—Deficiency on Subhead Z—

Appropriations in Aid2,80673
Total, Civil (Excesses)…£24,35989

Question put and agreed to.

Resolutions to be reported.

Report to be received Tomorrow: Committee to sit again Tomorrow.


Considered in Committee.



That towards making good the Supply granted to Her Majesty for the service of the year ended on the 31st day of March, 1961, the sum of £24,359 8s. 9d. be granted out of the Consolidated Fund of the United Kingdom.—[Sir E. Boyle.]


That towards making good the Supply granted to Her Majesty for the service of the year ending on the 31st day of March, 1962, the sum of £104,300,922 be granted out of the Consolidated Fund of the United Kingdom.—[Sir E. Boyle.]


That towards making good the Supply granted to Her Majesty for the service of the year ending on the 31st day of March, 1963, the sum of £2,248,018,703 be granted out of the Consolidated Fund of the United Kingdom.—[Sir E. Boyle.]

Resolutions to be reported.

Report to be read Tomorrow; Committee to sit again Tomorrow.


Read a Second time.

Bill committed to a Committee of the whole House.—[ Mr. Whitelaw.]

Committee Tomorrow.


Read a Second time.

Bill committed to a Committee of the whole House.—[ Mr. Whitelaw.]

Committee Tomorrow.

M4 Route, South Gloucestershire

Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Whitelaw.]

9.50 p.m.

As my hon. Friend the Parliamentary Secretary to the Ministry of Transport will be aware, this debate arises from the considerable controversy which has made itself felt in my constituency over the proposed routing of the M.4 between Tormarton—near the edge of the Cotswold escarpment—and Almondsbury, where a junction is to be provided with the M.5 running from Birmingham to Bristol.

I have had voluminous correspondence with my right hon. Friend the Minister of Transport and it is largely as a result of this that this debate has arisen. I regret that my right hon. Friend has not been able to attend in person to reply to the debate. I have, however, had a very courteous letter from him in explanation, which, of course, I fully accept. But I would emphasise that it is solely with my right hon. Friend that I am at odds and that I have no quarrel of any sort with my hon. Friend.

As my hon. Friend knows, the basic cause of the dispute is the pronounced sweep to the south which this proposed route takes after leaving Tormarton, to skirt the built-up area north of Bristol, and around Downend and Mangotsfield, before turning north again to Almondsbury. This is entirely in Gloucestershire and most of it is in my constituency. Since there appears to be a good alternative by a virtually straight route between these two places across open country, which would result in a saving of about 1¼ miles of motorway, it is not surprising that the merits of my right hon. Friend's proposals are not immediately apparent to myself or my constituents.

Regarding engineering requirements, I have made it clear throughout that I profess to no expertise whatever and that I am very willing to be convinced by my hon. Friend either that his proposals are the best available or that they have such advantages that they outweigh the apparent disadvantages. So far, however, my right hon. Friend has wholly failed to convince me on this matter.

Since I applied for this debate I understand that the Warmley Rural District Council has resolved formally to maintain its objection and, as a result, there will be a public inquiry which, of course, will be the proper forum at which to discuss the merits of the various alternative routes. All I will say for the present is that, as I understand it, the statutory provisions which are now contained in the Highways Act, 1959, require the Minister to invite and consider objections and representations on the publication of his scheme. My right hon. Friend is obliged to hold a public inquiry if the objectors include local authorities—for which purpose a parish council is not included—or, in other words, local authorities of the status of county districts and upwards.

Where this does not happen my right hon. Friend has the complete discretion in deciding whether or not to hold a public inquiry. No doubt, as a general proposition, county district councils are the proper bodies to decide whether their localities are sufficiently affected to justify a demand for a public inquiry. But it certainly does not follow—and I hope that my hon. Friend will bear this strongly in mind—that, if no county district or larger local authority formally objects, other objections or representants should be dismissed as irrelevant or without importance. In planning a motor route limitations of both gradient and curvature can have the effect of producing repercussions over a wide area if there are alterations. It certainly does not follow that, because the representatives of a particular village affected have been unable to gain sufficient support in the rural district council, that implies a decision on merits. A final decision of a rural district council in these circumstances may just as well depend on the fear of repercussions elsewhere which, by the nature of these things, are bound to be not very precise at this stage, as upon any contention that the objections of a village or parish council Whose views have not been supported are groundless.

Secondly, it inevitably happens at times, and it has happened in this case, that the proposed route traverses the boundary between two county districts, so that the inhabitants directly affected are inevitably less strongly represented in either of the county districts than they would be if they all lived in the same county district. If, therefore, these statutory provisions to which I have referred are to provide the safeguard which Parliament evidently intended them to provide in the interests of the public at large, then it is of the utmost importance that objections, even if they do not come from local authorities in this sense, should be considered seriously and as matters of importance.

I am bound to say that I have not formed the impression from this correspondence with the Minister that this has been the case, and this is not an impression which has been in any way shaken by re-reading this correspondence over the weekend in preparation for this debate. In particular, figures as to cost have been given without revealing, as has subsequently transpired, that there has in fact been no costing of alternative routes. Nor does it appear, in dismissing a suggestion for a shorter route on the ground that there would be an increased capital cost for bridging, that any consideration has been given to the saving in maintenance costs resulting from a much smaller total area of road surface.

One or two of my right hon. Friend's replies really appear so wide of the mark that it shakes one's confidence in the whole of the approach of the Ministry and its thoroughness in considering these matters. It was seriously suggested, for instance, that the addition of a mile and a half to the total distance from London to Bristol would encourage people to use the existing route from Chippenham to Bristol where they would leave the M.4. To anyone who knows the road from Chippenham to Bristol that is absolute nonsense.

Of course, it may well be that my right hon. Friend's failure to make a convincing case may not arise from the lack of merit of his case or from unwillingness. It may well arise purely from inability to make the case. Certainly some of the remarks in these letters make one wonder what they are trying to express. In one letter, for example, my right hon. Friend, apparently nettled by some of the comments of my constituents on some of his proposals, wrote as follows:
"At that stage I have your constituent's detailed arguments in support of my proposals. These were countered by somewhat abusive letters which scarcely even attempted to counter facts with facts."
I naturally replied that I was sorry he found it necessary to counter my constituent's arguments with abusive letters, but I am not sure that it was a reply that was very well appreciated.

Trivial as this incident, is I think it discloses a certain woolliness of thought that has run through the whole of this correspondence that can hardly add to one's confidence in the thoroughness of the Ministry in dealing with matters for which it is responsible.

There is a second aspect of this matter which, to my mind, is much more important than the purely technical and economic problems of road construction. This is the planning aspect. It is perfectly true to say that the route of this road has been shown on the Gloucestershire development plan since, I believe, 1953. It is also true to say that probably the majority of the houses in the neighbourhood have been built since then, and it may be said, therefore, that they were built or bought with knowledge. I took the view that the residents had no grounds for complaint, until I interviewed members of the committee which the residents concerned had set up, and then I had second thoughts.

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[ Mr. McLaren.]

It seemed to me at that stage that there was serious planning objections to this route. In the first plaice it does not seem on the face of it very sensible to go out of one's way to bring a major motorway into a built-up area, and this view was very forcefully confirmed in the subsequent inquiry into the amendments to the Gloucestershire development plan. The area planning officer, giving evidence, said that

"had the planning authorities known in the past what they now know about the M.1 they would not have routed the M.4 along its present line."
A similar statement was made by the county planning officer, though I am not absolutely certain that this was made actually at the inquiry or whether it was made publicly in some other context. However, it is his recorded view that the experience now available from the M.1 indicates that it would be unwise in the future to site residential development within 200 yards of a motorway. This is, of course, a figure which contrasts very strikingly with the matter of 50 to 100 ft. which are the distances between some of the houses affected in my constituency and the proposed route.

Of course, one could argue that the planning authorities were themselves at fault in allowing this to have happened, but even if that were so there is no possible argument in favour of perpetuating that fault by adhering to this route if another route which does not have these disadvantages is available. What those who blame the planning authorities are saying—and I think that my right hon. Friend and my hon. Friend are saying this—is that two wrongs make a right, that having once messed up the development plan one can go on and make it worse simply because somebody else is not prepared to look at the position as it now is, as opposed to what it was when they originally thought of this route. And, of course, it can be argued, as I know it is being argued, that if we offer land for building close to this motorway we should undoubtedly get somebody to build on it and somebody would buy the houses, just as we would get people to buy slum property, but it does not follow that it is in the public interest to build the houses and it certainly does not follow that it is the duty of a local planning authority to condone development of this nature.

However this may be, I suggest that some regard should be had to the expert views of planning officers, particularly of the status of a county planning officer. They undoubtedly have and must have a very considerable knowledge and experience of planning matters if they are to reach that position at all, and in this case both the county planning officer and the area planning officer have held their positions for a considerable number of years and must, therefore, have, added to their general knowledge, a particular knowledge of the locality, its peculiarities and its needs.

I find disturbing the cursory manner in which my right hon. Friend dismisses evidence of this nature. Writing to me on 2nd January of this year he stated:
"For example, the County Planning Officer is entitled to his views about reserving belts of road on each side of a motorway: his views are, however, not necessarily generally accepted."
To this I replied to the effect that although there might well be other people who held contrary views they were not likely, in my opinion, to carry much weight if they remained anonymous. Again, I had a reply from my right hon. Friend, this time dated 20th February:
"You twice quote the views of the County Planning Officer. So far as I am aware he merely advanced a personal opinion, which is not at all the same thing as publicly admitting conclusions drawn from experience. I do not accept his contention, nor do I regard it as authoritative, and I certainly do not feel any obligation to refute every chance remark an individual may make."
But I think that it should be noted that even if the county planning officer did not make this remark at the public inquiry when giving evidence, his deputy did, and to ignore planning evidence of this nature and calibre seems to me to raise very serious issues.

In a number of planning debates in the House and in discussions elsewhere I and a number of other hon. Members, notably my hon. Friend the Member for Ashford (Mr. Deedes), have repeatedly expressed a fear that the real threat to proper planning was lack of coordination and consultation between my right hon. Friend the Minister of Housing and Local Government, who is nominally responsible, and my right hon. Friends the Minister of Transport and the President of the Board of Trade who to a large extent determine the pattern of planning which the Minister of Housing and Local Government has to follow. What determines where people live is where they work—the location of industry—and though it may be said that new roads follow the existing location of industry to some extent, it can equally be said that the location of new industry follows the existing roads. As I said in the House the other night, to argue which comes first is like arguing about the chicken and the egg.

However that may be, what is abundantly clear is that we shall not have sound planning unless there is the closest consultation between these three Departments in particular, and perhaps to a less extent, with the Minister of Power. My right hon. Friend's attitude in this matter proves quite clearly that this consultation is not taking place. Although this is an Adjournment debate on a matter primarily of local importance, I hope that the wider issues will not be lost sight of and that it will be appreciated that this is further evidence of the urgent need of a permanent committee of the Cabinet to deal with matters of planning and to ensure that consultation and co-ordination take place, and to let it be seen by the public that they in fact take place.

At this point I want to refer to my right hon. Friend's representations or attitude towards the objections made to this route by the county district councils. There is no doubt whatever that a good deal of effort has been devoted to putting my right hon. Friend's case in the hope that these objections will be withdrawn and that consequently there will be no need to have a public inquiry. My right hon. Friend's explanation of this, which again I quote from a letter is:
"I am not trying to bully them"—
that is the county districts—
"but to explain the complete significance of my proposals."
I do not object to that, but I strongly object to my right hon. Friend's method of doing it.

After the Mangotsfield Urban District Council which, incidentally is not in my constituency, had decided, by the exercise of the chairman's casting vote, not to proceed with its objection, it was suggested by my right hon. Friend that a deputation from the Ministry of Transport should visit the Warmley Rural District Council with this object in view. The chairman of the Warmley Council immediately rang me up at my home in Gloucestershire and it was mutually agreed—I cannot remember who suggested it first—that I should attend.

My right hon. Friend's reaction, and again I quote from a letter, dated 9th February, was that he had:
"instructed his officials to tell the Council that there is no objection to your attendance provided that you will undertake to respect the confidential nature of the proceedings."
Although I am not normally very enamoured of any meeting of this sort being behind closed doors, to the exclusion of the Press or the public unless there are good reasons for it, I should probably have not been unduly concerned had it merely been a suggestion of a private meeting. The question of respecting confidence seems to me to have a quite different suggestion or implication, and I therefore wrote to my right hon. Friend seeking clarification. I wrote these words, which I think are important:
"Finally, I am not at all sure what you mean by 'respecting the confidential nature' of the proposed meeting … on the merits of the various routes proposed, I remain wholly open to conviction. If I am convinced that the Ministry's proposals are the best, but cannot express my convictions and the reasons for them outside the meeting, I certainly cannot fulfil my duties as an M.P., or be of any help to your Department. Similarly, if I am not convinced, I have every intention of continuing to give every support to my constituents, and I really cannot bind myself to an undertaking not to disclose the reasons why I am unconvinced. And, of course, I could not possibly undertake not to refer to the arguments put forward by your officials in any proceedings that may arise thereafter in the House. Such undertakings, in my view, are wholly inconsistent with the duties of a Member of Parliament. If you do not feel that in these circumstances the meeting can be held unless the R.D.C. withdraw their invitation to me … perhaps you will let me know as soon as possible."
Again, I got a letter which reminds me of those examination papers which one had when young when one thought one had written a magnificent essay, but which were found to have written across the bottom "Read the Question". I got a letter which did not advert to what I was asking at all. The reply was:
"I find it difficult to understand the position you are taking. If you are invited to a meeting which the parties concerned have agreed should be private, surely, you can respect that without any inconsistency."
The use of the word "private", I submit, is something quite different from the use of the word "confidential". What possible grounds can there be for such secrecy? It wholly escapes me, and I hope that my hon. Friend will be able to enlighten me.

This is a public matter which involves enormous sums of public money, and it is a matter of very considerable anxiety locally in my constituency. Members of a rural district council, just as much as Members of the House of Commons, have to carry their constituents with them, and that they should be precluded from using arguments in order to do so is, to my mind, contrary to the whole system of public administration which we have built up.

It is only two years ago that Parliament clearly indicated its dislike for this sort of thing by passing the Public Bodies (Admission to Meetings) Act, which was followed by a circular issued by my right hon. Friend the Minister of Housing and Local Government—Circular 21/61, dated 17th May, 1961—which clearly requested the local authorities—perhaps that is not a strong enough word; adjured local authorities—to regard this question of admission of the public as a matter of general implication, and that they should be excluded only when the reasons for doing so were overwhelming.

There are no possible reasons why in this case the public and the Press should have been excluded, and, moreover, the whole thing was so very silly. What happened was that the chairman of the rural district council, who is a better democrat than my right hon. Friend, explained quite clearly to the representatives of the Ministry that he was having none of this at all, and it was then mutually agreed that there was nothing secret or confidential about it. A statement was issued to the Press; indeed, I am not certain that members of the Press were not present. What I do know is that a verbatim report was taken, and that I was one of the first recipients of a copy.

The whole thing is absolutely futile, and I hope that my hon. Friend, if he cannot explain the idiosyncracies of my right hon. Friend—and I have a good deal of sympathy with him in that matter—will at least give me an assurance that this sort of thing will not happen again. I know that back-benchers are regarded by Government Departments as people of very little importance. In some respects they may be right, but we represent between 50,000 and 60,000 people who are important, and I for one do not intend to be fobbed off with nonsense of this description.

I want to say a word—I do not apologise to my hon. Friend the Parliamentary Secretary for going beyond time—not about the issues with regard to this public inquiry but about its procedure. On a number of occasions, I have in another capacity attended inquiries held on behalf of the Ministry of Transport. Almost invariably they start by a statement by the inspector, who is not one of the panel employed by the Ministry of Housing and Local Government that the representatives of the Ministry are there to answer technical questions but they are not to be cross-examined and they can refuse to answer any question which they choose. I have been to inquiries where we have witnessed the farce of counsel asking questions perhaps for twenty minutes on end with no reply at all until eventually the representative of the Minister gets bored and answers.

This may be, strictly legally, a public inquiry as supported by a decision of the Court of Appeal in 1939, but it is wholly contrary to Franks. I will not bore my hon. Friend at this late hour by reading it to him myself, but I would refer him to the Franks Report beginning at paragraph 314 which is headed "Evidence of Government Departments", and particularly to what is said in paragraphs 316 and 317. My hon. Friend will see that this is wholly contrary to the recommendation of the Franks Committee. Therefore, I ask him to give an assurance that in future public inquiries held on behalf of his Ministry will conform to Franks, and that this will apply especially to the inquiry in question.

I conclude by reminding my hon. Friend of the issues that emerge. First, there is the necessity for really seriously considering objections and representations, as long as they are not obviously frivolous, from ordinary people who are not necessarily local authorities. Otherwise, whatever the wording of the Act may be, its spirit is not being fulfilled—the spirit of the Parliamentary decision to provide and write into an Act safeguards for private persons in matters of this sort.

Secondly, there is the urgent necessity for securing proper consultation and cooperation in planning matters between my hon. Friend's Ministry, the Board of Trade and the Ministry of Housing and Local Government, and for ensuring that this co-operation is seen to be secured.

Thirdly, I hope that I shall have some assurance that the policy of the Government remains that which is laid down in the circular to which I have referred—that matters of this sort shall be discussed in public as a general rule and that public and Press will be excluded only when there are overwhelming reasons to that effect, and not the other way round, although I confess that, even if the policy was reversed, in this case the reasons for the presence of the Press and the public seem to be overwhelming.

Finally, there is the question of the conduct of public inquiries, in respect of which I again hope that I shall have an assurance that any future public inquiries conducted on behalf of the Ministry of Transport will be in accordance with Franks and that this will apply in particular to the public inquiry into the route of the M.4 as it affects my constituents.

10.19 p.m.

My hon. Friend the Member for Gloucestershire, South (Mr. Corfield) began what has proved to be quite a long speech by remarking on the absence of my right hon. Friend the Minister of Transport. But he went on to say that he understood why my right hon. Friend could not be present and acknowledged a letter from my right hon. Friend, which he described as courteous, apologising for his absence. It is worth putting on record that, in this letter, my right hon. Friend made the not unreasonable point that, with three Parliamentary Secretaries in his Department, it might possibly be expected and, indeed, accepted by hon. Members that occasionally the Minister might be excused from personal attendance at the Box.

This case bids fair to become a classic in the annals in the Ministry of Transport. If ever it were necessary to show the sort of frustrations and difficulties that we are up against in trying to get the motorway network built, this is that case. I want to describe as briefly as I can the history of this matter because, when we are criticised, as we often are, by hon. Members opposite, by my hon. Friends, by bodies outside like the R.A.C., the A.A., the Roads Campaign Council and others, for dragging our feet and being slow in getting on with building motorways; when it is said, as it often is, that, despite the passage of time and the expenditure of large sums of money, we still have only just under 150 miles of motorway and it will be another three or four years before we have the network completed, then, to balance the account one needs to take cognisance of the sort of experience which we have had in this case.

We are talking about the London-South Wales Motorway, which will run from London right down to the Severn Bridge and across into South Wales. The Severn Bridge is being built now, and should be ready by 1966. It will cost the taxpayer about £16 million. The section of the motorway with which my hon. Friend is concerned is about 11½ miles long. This section and the approach section of the motorway up to the bridge are timed to start in 1963 and to be completed in 1966 at the time that the bridge is finished.

It was as long ago as 1951 that knowledge of this particular section of the motorway first became public. In the development plan of 1951, this line was drawn and, thereafter, under the Statute, the line was protected. At Downend, the area to which my hon. Friend has referred, development for the building of houses was permitted by the county planning authority up to this line, which had been protected, and this building took place after 1953. One is entitled to assume that people who bought or acquired or built houses in this immediate vicinity, if they had made the normal researches that any prudent person would have done, would have discovered that a motorway was to be built at the end of their back gardens.

Part of this area is in the domain of the Mangotsfield Urban District Council and part in that of the Warmley Rural District Council, and the total section we are concerned with is 2½ miles. The motorway will run to the north of the housing development I have described. Part of it will be on an embankment above the level of the back gardens of these houses, and part of it in a cutting below the level of the back gardens, The nearest property is in three streets—Church Lane, Trident Close and Four Acre Crescent. The motorway there will be about 20 feet from the end of the gardens.

I emphasise that our plans do not provide for any acquisition of the houses or of their gardens. The local people claim—and they are very vociferous about it—that there will be substantial damage to their amenities. All I can say, with respect to them, is that this is something which they should have thought about when they bought their properties back in 1953 or subsequently. I should also add that my right hon. Friend's Landscape Advisory Committee, which is a very well qualified body, has examined these proposals and has concluded that no substantial damage to amenities will occur at all.

I would like to turn to the position of the local councils. As my hon. Friend has said, the Highways Act gives certain local authorities the power to lodge objections to a motorway scheme. In this case there are five—the Gloucestershire County Council, the Mangotsfield Urban District Council and the Thornbury, Sodbury and Warmley Rural District Councils. Only one of those councils has lodged an objection to the proposal. Gloucestershire is happy. We have heard that the Mangotsfield Urban District Council has not lodged an objection and two of the rural district councils are happy, but Warmley is not. On 30th November, only ten days before the objection period expired, Warmley Rural District Council told us that it had an objection.

The history is interesting. In 1951, Warmley approved the development plan for Gloucestershire in principle. In 1959, the Gloucestershire County Council circulated draft engineering details of the motorway. On 11th September, Warmley acknowledged them and made no comment. In 1960, the quinquennial review of the development plan took place and the maps attached to it were approved by the Warmley Rural District Council. In April, 1961, a public inquiry took place into the review of the development plan. Warmley offered no objection.

I cannot give way, for time is now too short.

In September, 1961, a draft scheme for the motorway was published and on 31st October we received a letter from Warmley Council saying that it had no objection. On 30th November, exactly a month later, and, as I have said, only ten days before the objection period expired, we had another letter from Warmley saying that it had an objection. Of course, we wanted to discuss that with the council and that was why we had the meeting to which my hon. Friend referred. We wanted to find out in a private meeting what were the reasons which, after this long history of no objection, suddenly made this council, which now has the power completely to block this scheme for a long time, make this extraordinary volte face and say that it had an objection.

We have now asked the council whether it really meant that it wanted to object and it has said that it did and confirmed it. So we have to have a public inquiry. Whatever we would like to do, and however fast we want to move, we have to have a public inquiry—

—simply because the council has lodged an objection and we are forced to it.

It is no good my hon. Friend saying in one breath that that is what Parliament has said if, at the same time, he and many others complain about the slow speed at which the motorways are built. We will have a public inquiry. My right hon. Friend will set up a public inquiry just as quickly as he can. He will ask the inspector to submit his report just as quickly as he can. He will acknowledge that report and come to a decision about it as quickly as he can. Warmley will have its public inquiry.

And the taxpayer will have to pay for it.

The taxpayer will have to pay for it. I am obliged to the hon. Member.

This is the sort of thing we have to put up with. If we do not get a public inquiry as quickly as we would like, there is an overwhelming risk that the Severn Bridge will be finished while the connecting roads will not be ready. I remind my hon. Friend and his constituents that when the time comes, and if it comes—

It is no good my hon. Friend saying that we should have started earlier. We started in 1951. It is now eleven years later and I do not know what more we could have done, or how much more quickly we could have moved.

I must warn my hon. Friend that I would not be surprised if many motorists, the R.A.C., the A.A. and many others in the Bristol area had something to say to the Warmley Rural District Council for slowing up this matter. I make it absolutely clear that my right hon. Friend is determined to do what he is statutorily bound to do—to hold a public inquiry. We shall give Warmley Council and the residents of Warmley every opportunity to put their case, but it is our clear intention that we want to get the motorway built.

We will go into all these matters at a public inquiry and I can assure my hon. Friend that all the points which he has raised will be fully and satisfactorily answered. I must warn him that the risk is that we will now be seriously delayed in carrying through this important and expensive scheme just because one rural district council, covering a couple of miles, feels that, after having agreed all the way through since 1951, it must now change its tune and have a public inquiry.

Public inquiries were never intended for this sort of thing. They were intended for major schemes such as that which we had in Leicestershire.

The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.