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Commons Chamber

Volume 656: debated on Monday 19 March 1962

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House Of Commons

Monday, 19th March, 1962

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Private Business

City Of London (Various Powers) Bill (By Order)

Second Reading deferred till Monday next.

Oral Answers To Questions


Ministry Of Labour Gazette


asked the Minister of Labour if, in view of the discontinuance of his Department's Annual Report, he will ensure that all matters normally covered in the reports will be reported on in detail in the Ministry of Labour Gazette during the year.

The main topics previously covered in the Annual Reports will most certainly be dealt with in the Ministry of Labour Gazette. I hope that it may occasionally be possible to add some additional material of interest.

What is the point of discontinuing the Annual Report? Surely the material is there? It is only a matter of editing and printing it, and this can hardly cost very much money. Surely the value of the Report is out of all proportion to what will be saved?

I do not agree. The Gazette comes out monthly, and the Report, as the hon. Gentleman said, was issued annually. I think, therefore, that this information will be more valuable if it is produced more frequently.



asked the Minister of Labour if he will take steps to limit the working hours of juveniles aged 15 to 16 years to 30 hours per week and of juveniles aged 16 to 18 years to 40 hours per week.

I have no evidence that the hours being worked by young people within existing restrictions are harmful, and I have therefore no plans for measures in this field.

If the right hon. Gentleman will not take action, will he do what so many of his colleagues do—cause an inquiry to be made? Will he have an inquiry made to see whether there is any causal connection between fatigue and juvenile industrial accidents?

I do not believe that there is much point in having an inquiry unless there is evidence for having one. If the hon. Gentleman or any hon. Member can produce any evidence for an inquiry, naturally I will consider it.

Surely the right hon. Gentleman has seen the information in the questionnaires returned by juvenile employment officers, that there is a strong connection between fatigue and accidents? As the right hon. Gentleman does not know the figures, why does not he try to find them out?

I think the evidence is that accidents are due more to inattention than to fatigue. These are two different things. I am sure that the answer is to instil safety-consciousness not only in young people, but in middle-aged and old people.

I do not dissent from what the right hon. Gentleman said about safety-consciousness, but would not be agree that in many cases the sudden change to long working hours from school hours can lead to exceptional fatigue towards the end of the working day or week? Because of the serious rise in industrial accidents among young people, will the right hon. Gentleman consider the point made by my hon. Friend?

I said that if there was evidence for it I would be prepared to consider going further, but I have some evidence that the first two hours of work are one of the peaks for accidents.

Lost Working Days


asked the Minister of Labour what was the toal number of days lost at work in shops and offices through tuberculosis and bronchitis from 1960 up to the latest convenient date; and what was the total number of fatal accidents in shops and offices for the same period.

I regret that this information is not available.

Is the hon. Gentleman aware that I, too, regret that he has not taken sufficient interest to find out what these figures are? Is he aware that the largest trade unions catering for this type of worker, the U.S.D.A.W., the Municipal and General Workers' Union, the Transport and General Workers' Union, the association of shipbuilding, engineering and draughtsmen trades unions and so on, are concerned about the health, safety and welfare of their workers? Will the Parliamentary Secretary take the initiative to do something about this, because the Government made what appeared to be a sincere promise to bring in new legislation to cover these points?

With respect, I think that most of that supplementary question did not arise from the information requested in the original Question. But, as the hon. Gentleman knows, a Bill to deal with safety, health and welfare in offices is promised for next Session, and I recommend that the hon. Gentleman should wait until that Bill arrives.

Engineering Industries


asked the Minister of Labour what action he proposes to take to deal with the worsening industrial relations in the engineering and allied industries which manufacture approximately 60 per cent. of United Kingdom exports.

In the great majority of firms in the engineering industry relations between managements and their employees are good.

Is the Minister aware that a national ballot is now being taken, following on the two days' stoppages which have already taken place? Does he agree that this industry is responsible for at least 60 per cent. of Britain's exports and that if a prolonged dispute took place it could have a very damaging effect on British economy? If he accepts these points, should he not take the initiative in order to prevent this taking place?

Of course, the hon. Gentleman is right in quite a lot of what he has said. It is true that the unions and employers are in dispute at national level about a wage claim, but as I said in my main Answer, I do not accept that relations between unions and firms in the industry are generally bad, which is the inference of the Question. I do not think that it would be useful for me to intervene in this dispute, although I am naturally watching what is happening with very great care.


asked the Minister of Labour what steps are to be taken to remedy the 50 years worsening relative position of wages of the most skilled men engaged in the engineering industry.

Wages in the engineering industry are settled by collective bargaining, as the hon. Member knows. The wages of workers in the engineering industry, like the wages of all workers, have gone up greatly during the period and I certainly do not think the relativities which were acceptable in 1910 are necessarily relevant to the 1960s.

Will the Minister convey to his officials who prepared that excellent statistical information which appeared in the OFFICIAL REPORT a few weeks ago in answer to a Question of mine my appreciation of the work that they must have put into it? Will the Minister now look at this statistical information in relation to the Question and then consider what action should be taken?

I much appreciate what the hon. Gentleman has said, which will encourage those responsible for producing all this information. Naturally, I am considering these matters, but I do not think that it would be fair if I gave the hon. Gentleman an impression which I did not feel. Things have changed and I do not think there is quite as unfair a disparity now as there was.

Family Expenditure Survey


asked the Minister of Labour whether the results of the Family Expenditure Survey have provided evidence of distinctive changes in the patterns of domestic spending; and what have been the recommendations of the Cost of Living Advisory Committee about the weighting system of the Index of Retail Prices in the light of the survey results.

The Report of the Cost of Living Advisory Committee which was published last Friday shows that the Survey has revealed some changes in the pattern of expenditure since the Household Expenditure Enquiry held in 1953. The Committee has recommended that, in order to keep the Index of Retail Prices as up-to-date as possible, the weighting pattern should be revised annually in January on the basis of information obtained from the Family Expenditure Survey over the three years ended in the previous June. I have accepted this and the other recommendations made by the Committee.

Is my right hon. Friend aware that this latest evidence of generally rising standards in real terms will be welcomed on all sides? May I ask him to reconsider further refinement? Would he consider asking his Advisory Committee to look at the tax content of this expenditure by families—indirect tax content, such as Purchase Tax and Excise—with a view to going on from there to consider whether the total contribution, tax-wise, of certain groups with certain incomes can be related to the receipt of State benefits which have measurable value?

As to the first part of the hon. Gentleman's supplementary question, it is true, and I think that we all welcome the fact, that living standards have very considerably improved in recent years. That is shown by the fact that the proportion spent on staple foods has gone down, and this has left more to be spent on items which perhaps in earlier days were considered luxuries but which today have become part of everyday life. As to the second part of the supplementary question, this involves very wide issues. Probably my right hon. Friend the Chancellor of the Exchequer and others of my colleagues would like to consider very carefully what the hon. Gentleman has said.

Will the Minister tell the House what are the objections and difficulties to publishing another set of figures which could be derived from the same sources but which would measure only the necessities of life? Would he not agree that the movement of prices of such necessities is apt to be blurred by the movement of a whole host of other things embraced in the present survey? As the majority of old-age pensioners can only be interested in necessities, would it not be fairer if we could see exactly what was their standard of life from time to time?

There is another Question on the Order Paper on which I should like to take up this point. I think my reply would be more relevant to that Question than to this one.

Independent Television (Dispute)


asked the Minister of Labour if he will now intervene in the dispute between the Independent Television Companies and the members of Equity.


asked the Minister of Labour whether he is aware that the dispute between Actors Equity and the Independent Television Companies has now been unresolved for five months; and whether he proposes to intervene to try to arrange a settlement.

My officers had informal talks with representatives of Equity, the Independent Television Companies Labour Relations Committee, and the Independent Television Authority in the early stages of this dispute. No request however for intervention by my Department has been made. I understand that discussions between the parties are in progress.

While I would not under any circumstances want to embarrass any talks going on at the moment, is the Minister aware that many actors and actresses are now experiencing tremendous hardship? I am told that there is an appalling deterioration in the programmes of I.T.V. at the moment. In fact, I understand that even "Coronation Street" has deteriorated in recent weeks. In view of all this, will the Minister give an assurance that if the present talks break down he will intervene with the purpose of helping the situation?

I am grateful to the hon. Gentleman for the way in which he phrased the first part of his supplementary question. I do not think that any of us would want to say anything now which might make settlement more difficult. As to any new situation that might arise, I do not want to prejudge the decision. I do not want to say anything that might damage the possibility of these talks ending successfully. On the other matter, I do not know whether I am using Parliamentary language, but I assume that both he and I are not quite such regular viewers of I.T.V. as some of our hon. Friends.

I can appreciate the difficulties of the Minister at this stage in making a statement, but will he bear in mind that in the event of the present talks not being fruitful of agreement it will become essential for the Minister to intervene and to ensure a complete settlement, particularly in view of the Independent Television Companies' representations to I.T.A.?

There is not much that I can add in reply to the hon. Gentleman's supplementary question to what I have already said to his hon. Friend the Member for Salford, East (Mr. Royle). I think the hon. Gentleman knows that it is not the normal practice to intervene unless we are asked to do so. Again, I do not want to prejudge the issue. I think that we had better wait to see how things go on.

Government Training Centres


asked the Minister of Labour how many classes for apprentices are now being provided at Government training centres; how many firms are participating; how many apprentices are attending.

There are 25 classes, with a membership of 287 apprentices coming from 175 firms.

Are not the figures still rather disappointing in that the number of apprentices attending, for example, has not even reached the original target figure of 300? In view of that and the immense amount of good that schemes of this kind can do, would the Minister not reconsider his decision to close two of these training centres and instead embark on a programme of expansion of these facilities?

No, Sir. I hope that the hon. Gentleman is not trying to imply that any of the economies that I have made have in any way affected our programme for first-year training of apprentices, because they have not. These classes were set up to demonstrate the advantages of full-time training in the first year of apprenticeship. I think that they are very successful. Although the figures of boys are 13 lower, the orginal target of twenty-five classes has been achieved.

Although the closing of the Government training centres at Kidbrooke and Long Eaton may not have reduced the number of classes, if they had stayed open could not the Minister have extended these classes? In view of the important report on manpower of the N.J.A.C. Working Party, does not this emphasise the need for a still higher standard of training and cannot the Minister enlarge the training which is carried out by G.T.C.s?

I think that the report to which the hon. Gentleman referred did not apply only to the training of apprentices. It also went into the whole question of the training of adults. I am studying the proposition whether or not my Ministry might supply facilities if employers were prepared to pay. This is a subject that we are discussing. On the general point, the whole concept of my Ministry's first-year training courses was to set an example to show people in various parts of the country how this could be done properly and the benefit which concentrated training could give. I think that this is carrying out the purpose.


asked the Minister of Labour how many classes are now being provided for apprentices at the Hilling-ton Government Training Centre; what kind of classes they are; how many firms are participating; and how many apprentices are attending.

There are two classes, both in engineering, with a membership of 24 apprentices coming from 15 firms. A third class in radio and electronic servicing is planned to open later in the year.

Are these not very low figures in view of the tremendous number of apprentices and potential apprentices in the Glasgow area? If, in the words of the Minister, these classes have been so successful, is not there a case for rapidly expanding them?

I can only repeat what my right hon. Friend has said. I have been to see them myself, as the hon. Member may know. These are intended as demonstration classes, and they are being increasingly successful. To change the concept to one of Government training instead of allowing the industry to do its own job in this field would be a very real change of policy.

Can the Minister indicate what percentage is attending out of the total number of apprentices who could attend if facilities were available for them? What steps does he intend taking in order that firms should be made to toe the line in the provision of facilities so that these centres could be made a success?

I cannot answer the first part of that supplementary question without notice. If I remember it aright, it had a hypothesis attached to it. As for the second part of the question, as the hon. Member knows, my right hon. Friend is paying great attention to the need for securing improvements in training for skill, including apprenticeships and also learnerships.

Young Persons, Northern Region


asked the Minister of Labour whether he is aware that at 12th February, 1962, 2,534 boys and 1,411 girls were out of work in the Northern Region; and, in view of the fact that this is almost double the total number of young people out of work in the Northern Region on 12th February, 1961, what action he intends to take to improve this position in the near future.

Yes, Sir. Unemployment among young people on 12th February was higher in all regions than a year ago. The difficulties are likely to be temporary and the Youth Employment Service is doing all it can to help the young people to find employment. Parts of the Northern Region are listed as development districts, and the Government will continue to encourage the expansion of employment opportunities in those areas.

Is the hon. Member aware that if effective action is not taken by the Government hundreds of these youngsters may have to leave their homes and go to other parts of the country in order to find jobs? Apart from the human aspect, this could be disastrous for the industrial future of the Northern Region. Therefore, what real action do the Government propose to take in the near future? We are tired of promises.

Twenty-eight per cent. of the insured employees in the Northern Region work in areas listed as development districts—so that some action has already been taken. It would be quite wrong to say that nothing is happening in that region. About 26,000 jobs are expected to accrue over the next four years.

Is the Minister aware that these figures, far from being temporary, are likely to increase in the next few years? Is he further aware that the manpower available in the mining industry is being reduced by 22,000 in the next three years owing to a curtailment of recruitment of young boys leaving school? How will the Minister deal with this problem if steps are not taken to bring in other industries?

To arouse fears ahead of the event is not necessarily doing very much good to the region in which the hon. Member is so deeply interested. It is necessary to regard the matter more factually. I understand that the Coal Board is not unhopeful of finding jobs for people who are affected by the closure of collieries. There is a growing diversity of industry in the area. Last year, 42 per cent. of the boys obtained apprenticeships in the region, and that compares favourably with the 38 per cent. for young people in the country as a whole.

Bread Prices (Cost Of Living)


asked the Minister of Labour how many times the price of bread has increased during the last six months; and to what extent this has contributed to the increase in the cost of living.

The prices of bread are not changed simultaneously throughout the country, and information is not available about the number of times individual retailers have changed their prices during the last six months. The increase in the price of bread between mid-July, 1961, and mid-January, 1962, accounted for about one-seventieth of a point in the "all-items" index.

Is the right hon. Gentleman aware that during the last six months bread has risen in price by 3 per cent.? Although this may seem a small percentage, it is a very real factor in the cost of living for old-age pensioners and people in the very low income groups. It is a very much more important factor than the bringing of transistors and motor cars into the cost of living index. Will not the right hon. Gentleman make some representation to the Ministries concerned in order to try to restrict these constant increases in the price of bread?

The hon. Lady should realise that the rise in the price of bread accounts for only 0·5 per cent. of the total rise in the cost of living during the last six months. That is borne out by the fact that living standards among the people, including the old people, have improved in recent years. The proportion of income spent on bread forms a smaller proportion of total expenditure than it used to.

Is it not true that there has been no increase in the price of wheat to the farmer during this period?

I am no longer Minister of Agriculture, although as a farmer I could comment on that.

Plean And Airth, Stirlingshire


asked the Minister of Labour what consultations he had with the National Coal Board regarding the effect on the future employment prospects of the area of the decision by the Board to suspend work on the sinking of a new pit between Plean and Airth in Stirlingshire; and what are the prospects of alternative employment being made available in the light of the recession in the coal industry in this area.

No precise estimate is available of the number of jobs which the new pit would have provided. Employment prospects in the area remain fairly good. I understand that the National Coal Board expects to be able to offer alternative employment to most of its employees who are likely to be displaced this year.

Is the Minister aware that there is a definite possibility of a number of pits closing down in this area in the not too distant future? The suspension of the sinking of this pit means that there is no possibility of future employment for miners in the area. Will the hon. Gentleman use his influence to get this work resumed so as to get down to the coking coal, which is the only coking coal in Scotland that we have at present? At present this coal is being imported from England to fill the needs of many of our basic industries. In view of the fact that local authorities have also provided a considerable number of houses for coal miners in the expectation that the sinking of this new pit would provide work, will the Minister use his influence to try to get the Minister of Power to influence the Coal Board to sink this pit immediately?

I am sure the hon. Member will appreciate that a technical judgment as to whether or not the sinking of a new pit should be proceeded with is hardly for me to make. It is for my right hon. Friend the Minister of Power to answer that question. I may be able to assure the hon. Member on one point. The Government are concentrating on areas of high and persistent unemployment, and this area is not so bad as some others. My right hon. Friend the President of the Board of Trade is keeping a very close watch on any pit closures in areas of this kind, and he will help to steer other industry there as it is needed.

Is the hon. Gentleman aware that we have been told about this close watch on the position in Scotland for a long time, but that many of these mining areas may become derelict as a result of pit closures? Is he aware that there are many areas in Scotland in respect of which we want some real initiative and planning directive from the Board of Trade to bring in alternative employment?

The reason why I suggest that he should do so is that there is already a fair amount of diversification of industry. It includes engineering, brewing and distilling, brickmaking, paper and printing, agriculture, construction and textiles. Therefore, his main point is already being met. This is not a question of the complete disruption of the locality because one pit has closed.

Is the Minister aware that these continuing closures and stoppages of mining in Scotland are having a bad effect? What they do is to reduce the total number of jobs available. That is the question to which the Minister should address his attention, in view of the fact that Scotland now has 85,000 unemployed. What we want from the Ministry is some positive action to provide new jobs in these areas.

I can tell the hon. Member—although he probably knows it—that a good deal of industry has already gone to Scotland. It is not a question of its being in the pipeline.

Some industry has already gone there. We are building up on that. I share with the hon. Member the hope that the real build-up will now go forward. I need mention only Bathgate and Ravenscraig.

On a point of order Owing to the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment.

Index Of Retail Prices (Old-Age Pensioners)


asked the Minister of Labour whether he will bring forward new proposals for a revision of the cost-of-living index, and include in it special provision for old-age pensioners.

As I informed my hon Friend the Member for Heywood and Royton (Mr. Leavey) a few moments ago, I have accepted the recommendations of the Cost-of-Living Advisory Committee for revision of the Index of Retail Prices. The Committee did not recommend any change in the group of households to be covered by the new Index.

Is my right hon. Friend aware that such things as roasting chicken and motor scooters are not very realistic when considering the cost of living of old-age pensioners? Does he not think that it would be a good thing to have a parallel index of necessities so that the position of old-age pensioners may be gauged more accurately?

We know that a substantial proportion of old-age pensioners live in households with younger people. That is a fact. To compile an index for those pensioners who live alone in households or with other pensioners would be misleading if it were to be regarded as applying to all pensioners. But in order to cover my hon. Friend's anxiety and that of the hon. Member for South-wark (Mr. Gunter), I should explain that we regularly collect, at the request of the National Assistance Board, statistics about changes in price levels which affect the pensioners' group. We publish these in considerable detail in the Ministry of Labour Gazette, and we shall continue to do so.

Does not the Minister agree that it would be wrong and cowardly to use the figures which will emerge from the new Index of Retail Prices as an argument against an increase in old-age pensions?

That is an entirely different point. I was asked whether my Ministry could or should produce figures in respect of old-age pensioners where they lived alone or with other pensioners, and without larger earnings going into the house, in order that proper care should be taken to give the National Assistance Board facts on the level of prices which most affect that group. That is not only being done for the National Assistance Board; the figures are also made available by publication in the Ministry of Labour Gazette.

Surely the right hon. Gentleman collects figures such as these for the use not only of his Department but of other Departments. How can the Ministry of Pensions and National Insurance, for instance, or any other people decide how much is fair and just for old people and people on low incomes or on National Assistance unless they know the true facts about the cost of living to these people? Is it not rather stupid in these days to say that because some old people live with relatives therefore they must not be counted as among the most needy?

The hon. Lady must not misinterpret what I said. Statistically it is not right to assume that all old-age pensioners do not live with younger people. Fortunately, many live with relatives, and more money is going into the household than their pensions. Statistically, therefore, it would be wrong to do as the hon. Lady suggests. What is right is that the National Assistance Board should have full information about the price levels affecting the pensioners' groups.

Is it not a fact that the pattern of spending of old people living alone is becoming further and further removed from the pattern of spending indicated by the cost-of-living index? Is it not a fact that those pensioners must spend a big proportion of their income on food and that they will not spend very much of it on motor scooters, sherry, jeans and other things which will be included in the cost-of-living index when it is reformed?

That is the precise reason for which my Ministry provides a special service for the National Assistance Board—in order that they may take it into account for the group of old-age pensioners to which the hon. Gentleman refers, where obviously less money is spent on transport costs and so on. That is the precise reason that full information is made available for those who need it.

Isle Of Sheppey


asked the Minister of Labour how many of the formerly un-established Admiralty employees have secured alternative employment on the Isle of Sheppey, since Her Majesty's Dockyard, Sheerness, was sold; and what is the number at present unemployed.

I regret that the information asked for in the first part of the Question is not available. Nine such persons are registered as unemployed at Sheerness Employment Exchange, out of about 1,000 made redundant by the closure.

Is the Minister aware that the unemployment figures for the whole of registered workers on the Isle of Sheppey is over 8 per cent.? Will he urge his right hon. Friend the President of the Board of Trade to implement the promise made that if the Associated Motor-Cycle factory did not come to the Isle of Sheppey he would re-schedule the Isle of Sheppey under the Local Employment Act?

I appreciate the concern over the level of unemployment in Sheppey. A number of industrial firms have taken buildings in the former dockyard and are now in occupation, and I understand that there are well over a thousand jobs in prospect from these firms and from the expansion of existing firms. The majority of jobs will be for males.

Is the Minister aware that we have been told that for the past two years and that the jobs have not materialised? Will he please do something about it?

I do not think that the hon. Member heard what I said. I said that I understand that a number of firms are now in occupation. Presumably they will be building up their labour force from now on.

Payment Of Wages Act, 1960


asked the Minister of Labour what consultations he is having, or intends to have, with the banks, and with the National Union of Bank Employees, on the operation of the Payment of Wages Act, 1960.

The banks have given me in confidence information about the payment of wages direct into bank accounts. This is being studied and I propose to consult the Trades Union Congress and other interested organisations very soon about the fixing of an appointed day authorising payment of wages by cheque. As the hon. Member knows, the National Union of Bank Employees is affiliated to the Trades Union Congress.

Will the Minister consider this matter with a view to consulting the National Union of Bank Employees directly, both because of the union's obvious concern in this matter and also because he could use this as an opportunity to give the banks themselves an example of consulting bona fide trade unions in banking?

I do not think that the hon. Member is right in saying that bank employees are universally represented by N.U.B.E. They are not. I said that N.U.B.E. is affiliated to the T.U.C. I am prepared to consider the views of any interested organisation. I am prepared to consider the views of N.U.B.E. or the Central Council of Banks Staffs Association in any representations which they care to put to me.

Industrial Accidents


asked the Minister of Labour what progress has been made in his campaign to reduce industrial accidents among young people.

I cannot assess the position until the detailed analysis of the statistics is completed later this year, when it will be published in the Annual Report of the Chief Inspector of Factories. Supervision, training and safety-minded-ness are much the most important factors. In all my recent approaches on accident prevention to the B.E.C. and T.U.C. and to particular industries I have laid stress on the special problems of young workers and my right hon. Friend the Minister of Education has again recently drawn the attention of local education authorities to the importance of safety-training.

I should like to thank the Minister for the interest which he is taking in this very important matter. To what extent is the use of cine-film being considered? Is the Minister not aware that this is probably the most fruitful approach which can be made to these young people?

I thank the hon. Member for what he says. I am prepared to consider the use of any method. Experts vary in their view of what is the best method of approach. Whether the cine-film has a particular advantage, as he says, would probably be a source of argument for other experts who think that other means are better, but I am prepared to consider all means to try to push this safety campaign so that people, especially young people, are made more safety-conscious.

Will the Minister bear in mind that most of these young people are completely immune from all forms of exhortation whereas they are impressed by cine-films?

I do not accept that young people are immune from good instruction either in schools or technical colleges. Our experience is the reverse.

Wages And Salaries (Cost Of Living Agreements)


asked the Minister of Labour in how many agreements between employers and trade unions wages and salaries are regulated by changes in the cost-of-living index.

Is my right hon. Friend able to say whether any new agreement has been brought into operation since the advocacy of the pay pause?

London Area


asked the Minister of Labour to what extent unemployment has increased in the London area compared with last year; and what action he is taking in the matter.

There were 55,041 registered unemployed on 12th February, 1962, compared with 44,007 on 13th February, 1961; my local officers are doing everything possible to find suitable employment for them.

This is a very substantial increase compared with last year, amounting to about 25 per cent. Although conditions may be even worse in other parts of the country, will the hon. Gentleman publicise these figures outside London to dispel the illusion that the streets of London are still paved with gold?

I see the point of the hon. Gentleman's supplementary question, but we must bear in mind that the percentage unemployment rate in the London area this February was only 1·2 per cent.

Gartcosh And Coatbridge

24 and 25.

asked the Minister of Labour (1) what alternative employment there is in the Gartcosh area for those men who have become unemployed as the result of the run-down of operations at Smith and McLean's steel works; and

(2) how many are now registered as unemployed at Coatbridge Employment Exchange; and what percentage of the insured population this number represents.

At 12th February, there were 1,644 workers registered as unemployed at Coatbridge Employment Exchange; in the North Lanarkshire travel-to-work group, which includes Coatbridge, the numbers unemployed at that date represented 6·2 per cent. of the insured population. There are few local vacancies immediately available for unemployed workers from Smith and McLean's Steel Works, but I understand that Messrs. Colvilles Limited will continue to give priority to these employees in recruiting for their new plant at Gartcosh.

Is the hon. Gentleman aware that a high unemployment rate of 6·2 per cent. is worrying those who are now leaving Smith and McLean's with no sign of any work? Is he also aware that only in 1957 Smith and McLean's employed 1,100 workers but today employ less than 200 and the steel rolling mills employ less than 300? Does he not realise that the Ministry of Labour and the Board of Trade need to do something serious? What are the prospects?

The prospects for the iron and steel industry, which I presume is what the hon. Lady referred to at the very end of her supplementary question, are very difficult for me accurately to assess. Perhaps she would like to table a Question to my right hon. Friend the Minister of Power. The Government have done a good deal in this matter, and I hope have shown their concern in a thoroughly practical way. The new cold reduction plant and the Ravens-craig strip mill are concrete evidence of this. It is in these newer steel producing processes that the workers from the older plants are being absorbed.

Is not the hon. Gentleman aware that these new steel production plants will not employ as many men as the old steel production plants? Is he also aware that I was not referring to what is happening in the steel industry, which is working at only 57 per cent. of its capacity in Scotland? I was asking what the Ministry of Labour, in conjunction with the Board of Trade, is doing to attract new industry to this area which has been so seriously hit. Further, would the Ministry of Labour, the Board of Trade and the Ministry of Fuel and Power, through the National Coal Board, get together to see if they can do something for this area which is so badly hit?

I understand that there are—I hope not to be laughed at for this—about 7,000 new jobs coming along in North Lanarkshire. I quite appreciate the concern felt by the hon. Lady and by her hon. Friends. [Interruption.] I hope that future prospects of the area will not be so lugubriously written off by those who express such interest in it. Of course the Government are concerned. A good deal of new industry has gone up to Scotland, and we hope to see more.

European Economic Community


asked the Lord Privy-Seal, in the light of the further Ministerial meeting he has held with the European Economic Community, whether he will now negotiate for protocols which shall not be subject to a time limit, to be added to the Treaty of Rome for the purpose of safeguarding the interests of Commonwealth and British agriculture.

The special arrangements for Commonwealth and British agriculture for which we have asked concern both the transitional and the Common Market periods under the Treaty of Rome.

Is my right hon. Friend aware of the deep concern caused in Commonwealth trade circles by the statement of Dr. Adenauer that in the event of our joining the Common Market our ties with the Commonwealth will have to be loosened and the statement of the French Minister of Agriculture that the safeguards my right hon. Friend is attempting to obtain for Commonwealth agricultural produce are a complete negation of the Common Market Treaty? In view of this, will my night hon. Friend now issue a categorical statement that the safeguards he is attempting to obtain will be of a nature which cannot be decreased or eliminated by future actions of the Common Market?

In order that the whole House may consider this question and answer in correct perspective, will the Lord Privy Seal consider inserting in the OFFICIAL REPORT the statement made by Dr. Adenauer to which the hon. Member for Worcester (Mr. Walker) has just referred.

I do not think that it would be in order to provide that material for the OFFICIAL REPORT and ask for it to be repeated. I understand that there are different versions of what Dr. Adenauer said. In any case the ones which I have seen reflect a misunderstanding of the nature of the Commonwealth.

Does not the Lord Privy Seal realise that his answer to the supplementary question asked by the hon. Member for Worcester (Mr. Walker) was not quite adequate? Is it not profoundly unsatisfactory when Heads of Governments and Ministers in other Governments who are parties to these negotiations make statements of this kind and Her Majesty's Government appear to be completely unwilling to say anything? Is not the right hon. Gentleman justified, regardless of the merits of the case, in making it plain that we cannot accept this kind of thing from Dr. Adenauer and the French Minister of Agriculture?

I think the right hon. Gentleman will realise that in negotiations it would be more helpful if public statements were not made, but I am not responsible for statements made by Heads of Government of by Ministers of other countries. I have stated the position in the negotiations of Her Majesty's Government, which is clearly stated in the Paris Statement, and I have again repeated it in answer to my hon. Friend's Question.

United Arab Republic (Ex-British Officials)


asked the Lord Privy Seal whether he has received a satisfactory reply from the United Arab Republic regarding tax deductions made by that Government from pensions of ex-British officials contrary to an agreement made in March, 1960; and if he will make certain that British ex-officials, all in the oldest category, do not suffer from default on the part of the United Arab Republic to honour an agreement.

I presume that my hon. Friend is referring to the Financial Agreement of 28th February, 1959. No formal reply to our Note of 26th March, 1960, has been received from the Government of the United Arab Republic, in spite of various reminders; but we know that, in fact, some pensioners have been receiving their pensions in full since September, 1961. Her Majesty's Government will continue to press the Government of the United Arab Republic for an answer.

Does not my hon. Friend think that it is right and proper that the Government should in the meanwhile pay the difference to these pensioners, many of whom are in their late eighties and nineties and feel any cut in their pensions very severely? Until such time as the Egyptian Government have honoured their agreement, should we not stand between these cuts and the pensioners?

I certainly agree with my hon. Friend when she talks about the age of these pensioners and the difficulties they are in. However, it appears that most of them have been receiving their pension in full since September, 1961. We hope that the Government of the United Arab Republic will give us a reply as soon as possible.

Will my hon. Friend press the Egyptian Government to refund the balance which is owing?



asked the Lord Privy Seal whether he will now state the policy of Her Majesty's Government in regard to the official proposal of the United States Government to the North Atlantic Treaty Organisation for an economic and strategic boycott against Cuba.


asked the Lord Privy Seal if he will instruct the United Kingdom representative at the North Atlantic Treaty Organisation to vote against the proposals that have been made to the Organisation to put a trade embargo on Cuba, as being inconsistent with the provisions of the United Nations Charter.


asked the Lord Privy Seal what decision has now been taken by Her Majesty's Government in relation to economic action against Cuba in concert with other North Atlantic Treaty Organisation powers, following the proposals to that effect submitted to the Organisation; and what study has been made of the application of the Charter of the United Nations to these proposals.

I have nothing to add to my hon. Friend's reply of 21st February to the hon. Members for Ash-field (Mr. Warbey). Willesden, West (Mr. Pavitt) and Southall (Mr. Pargiter).

Which said nothing at all. Will the hon. Gentleman say, first, by what right the N.A.T.O. Council discusses the affairs of a country which lies outside the area of the North Atlantic Treaty? [HON. MEMBERS: "Why not?"] I am asking the Minister a question. Secondly, is it now the case that the N.A.T.O. Council is having secret discussions, reaching secret decisions, and making secret recommendations to member Governments on matters like trade with Cuba which have nothing whatsoever to do with military security?

The hon. Gentleman said that the reply of my hon. Friend said nothing at all. The reply of my hon. Friend said that the proceedings in the North Atlantic Council and the instructions to our representative are confidential. That is the answer to all the questions asked by the hon. Gentleman.

Would the right hon. Gentleman tell us that he deprecates and discountenances this idea of a boycott? Does it not resemble the attitude of the child who goes into a huff because he does not like the way in which someone else does things? Does he not realise that we shall influence other nations—if we want to influence them—far more easily if we trade with them rather than if we try to isolate them, and send them to Coventry?

There is no alteration in our policy of trade with Cuba. As for the hon. Gentleman's suggestion that we should deprecate the action of the United States, I would suggest to him that the problem of Cuba concerns the United States and other members of the Organisation of American States much more closely than it does Britain, and we should not be justified in telling them how to order the affairs of the Western Hemisphere.

With respect, the hon. Gentleman has not answered my Question. Are the Government consulting their legal advisers on whether concerted economic action aimed at making a nation change its Government is or is not in accordance with the obligations of Articles 1 and 2 of the Charter?

With respect, my Question asks, in terms:

"… what study has been made of the application of the Charter of the United Nations to these proposals."

As far as I know, there is no specific prohibition of such action in the Charter.

Does the hon. Gentleman recall the persuasive argument of the Lord Privy Seal on the South Africa Bill last week, to the effect that economic sanctions of this kind invariably consolidate the régime against which they are used? Will he, perhaps, use the same persuasive argument in this case with the United States?

I certainly remember the arguments very forcibly put forward by my right hon. Friend, and I agreed with his speech.

United States (Cargo Preferences)


asked the Lord Privy Seal whether he is aware that the United States Government are applying their cargo preference legislation to cargoes financed out of the United States contribution to the United Nations Congo Fund; and what conditions Her Majesty's Government are applying to the British contribution.

Yes, Sir. I am aware that the United States Government attach certain conditions to their contributions to the United Nations Congo Fund. Her Majesty's Government have applied no conditions to their own contribution.

But if the Government of the United States cannot afford to make this contribution without strings like this, how can we? What representations have Her Majesty's Government made about it?

I think that our view on the matter is well known. Our view is that the transport of goods by ocean freight, especially when they form part of multilateral assistance, should be carried out on a free-market basis with a minimum of national preference.

It is bad enough that the United States should continue this pernicious evil of adopting preference legislation in relation to the cargoes out of its own financial arrangements, but is it not even worse when the money comes out of the United Nations Congo Fund to which the United States only makes a contribution, as we do? Is it not time that we really talked turkey to these people?

I think it is right to say that we did not, in fact, make a contribution in 1961 to the total—[HON. MEMBERS: "We did."]—but out of the total contribution to the United Nations Congo Fund two-thirds has been paid by the United States. The position is that if in future we were to make a contribution we should, according to the ruling made by the late Secretary-General, be able to attach conditions. Obviously, I cannot anticipate what Her Majesty's Government decision on that would be at the moment.

Would the Lord Privy Seal give an assurance that every opportunity will be taken of pointing out to the United States that this rampant flag discrimination goes right across the policy of trade liberalisation preached by the Government of the United States for every other trade?

Our views on this matter are well known to the United States authorities.

Is not the hon. Gentle man aware that even if we do make a contribution to the United Nations Congo Fund it has never been part of our policy, ever since we terminated the Navigation Acts very many years ago, to adopt preference legislation of this kind?

Anglo-Egyptian Agreement


asked the Lord Privy Seal if Her Majesty's Government are satisfied with the working of the Anglo-Egyptian Agreement; and if he will make a further statement on its implementation by the Egyptian Government.

Her Majesty's Government are in touch with the United Arab Republic Government about the Agreement and are considering ways and means of speeding up execution of those provisions that are still unfulfilled I hope that it may be possible before long to make a comprehensive statement to the House; but it would at present be premature to do so.

But is my hon. Friend aware that in the meantime there is great consternation in the minds of many people whose property is still in Egypt? Gould my hon. Friend possibly arrange, or try to arrange, for a firm such as Topliss and Harding to go there and find out what property is still there and in what condition it now is?

I am fully aware of the consternation and of the difficulties that have been caused to many people in regard to this matter. Our Ambassador in Cairo recently had an interview with President Nasser, and we are hoping that many of the difficulties will be resolved in the future. We shall make a statement as soon as we can.

But will my hon. Friend answer my Question: is it possible to get some inspection of the property in the near future?

Will my hon. Friend ask his right hon. Friend the Lord Privy Seal to take a firmer stand on these matters? Here we have the United States riding roughshod over something and President Nasser riding roughshod over something else. Is it not time that Britain stood up for herself?

I can assure my hon. Friend that my right hon. Friend the Lord Privy Seal has very recently taken a very firm stand in the matter.

East Germany (Leipzig Fair)


asked the Lord Privy Seal why the British representatives on the North Atlantic Treaty Organisation Council supported its recommendation to the Governments of the fifteen member-States to boycott the Leipzig Fair in Eastern Germany.


asked the Lord Privy Seal what was the nature of the advice he gave to the Members of Parliament who are attending the Leipzig Fair.

I would refer the hon. Gentlemen to the answer I gave to a Question by my hon. Friend the Member for Willesden, East (Mr. Skeet) on 19th February. As for the instructions given to the United Kingdom representative in the North Atlantic Council, these, together with the discussions in the Council, are, of course, confidential.

Is not the Lord Privy Seal aware that the N.A.T.O. Council made a recommendation to boycott the Leipzig Fair on the initiative of the West German Government? Is it really the Government's intention to let N.A.T.O. be the catspaw of policies that injure this country's trade, injure the prospects of peace, and make N.A.T.O. the accomplice, as in the case of Cuba, of Charter-breaking intervention in the internal affairs of a member-State?

I cannot accept the facts in the hon. Gentleman's supplementary question.

Is it not essential that this country should at some time take steps to break down the rigour of the cold war, and is not one of the means of breaking it down the freedom of individual Members of Parliament and British business men to trade with and pay visits to Iron Curtain countries? Will the Government look again at this policy of exhorting people not to have contact with East Germany, and will the Government invite the editors of the Sunday Telegraph and the Daily Telegraph into their deliberations?

If the noble Lord will reread the Answer I gave to my hon. Friend the Member for Willesden, East, he will see that I pointed out that very often visits of a bona fide nature made for trade and other purposes are exploited for political purposes, and Her Majesty's Government asked that these should be taken into consideration by those making decisions about visiting the Leipzig Fair.

Is the hon. Gentleman not aware that at the present time Courtaulds hope to get a £7 million contract from the Soviet Union? What is all this nonsense about trying to prevent trade when Courtaulds are likely to benefit from it?

If the hon. Gentleman, too, will read my Answer, he will see that its purpose is not to prevent trade but that it points out the possible consequences of personal contacts.

Fishing Vessel "Red Crusader" (Inquiry)


asked the Lord Privy Seal if he is yet in a position to make a detailed statement on the course and result of the international commission of inquiry into the "Red Crusader" incident which was due to begin on 21st November, 1961.

After both Governments had submitted written Memorials and Counter-Memorials to the Commission, an Oral Hearing was held in The Hague from 5th to 16th March. The Commission is now preparing its report.

Does the hon. Gentleman realise that at one stroke the Government have inflicted great injustice on Scottish industry and on the Scottish Bar by creating the unsatisfactory precedent of submitting this issue to an ad hoc and unsatisfactory tribunal unable to deal with it? Will he reconsider the whole matter upon a basis that will enable the parties to be properly represented at am appropriate tribunal by members of the Scottish Bar and before a tribunal from which there can be an appeal?

The hon. and learned Gentleman is most unfair when he refers to the Commission in such terms. The Commission of Inquiry consists of highly reputable and able people, and I am sure that, on reflection, the hon. and learned Member will be sorry that he referred to it in that way. The issues before the Commission have, in the first instance, involved questions of fact with possible implications for international law. I am told that no question of Scottish law arises, as the incidents in question took place off the Faroe Islands. The United Kingdom delegation included the Chief Inspector of Sea Fisheries for Scotland, who was available to give advice on the technical questions involved, so I would suggest that Scotland has in no way been prejudiced by the representations before the Commission.

In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment.

Business Of The House (Supply)


That this day Business other than the Business of Supply may be taken before Ten o'clock.—[Mr. Iain Macleod.]

Orders Of The Day



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.