ECONOMIC POLICY.

§ The Minister without Portfolio (Mr. Arthur Greenwood)

As I have not spoken for a relatively long period, perhaps I had better ask for the indulgence of the House as one who is making, as it were, a maiden speech. I never expected to get away for very long in this new Government without having to be paraded and to answer for myself and some of my colleagues. While the present Government was in process of formation, the war took a new and graver turn. Norway and Denmark were swallowed up, and then, one after another, Holland and Belgium were overrun, and a large portion of France fell into the hands of Hitler. France soon ceased to take part in the struggle, and large territories have fallen into the hands of the German dictator. At that time, the prospect of the danger of invasion was imminent, and, as we know, that danger is not yet past.

It was clear in the very early days of the present Government that a tremendous and growing burden rested on Britain. I do not think that the outlook to-day should daunt us. It is not for me to dwell upon the undoubted moral ascendancy of the Royal Air Force and of the Navy, and of the Army, when it was tried in very difficult circumstances, but, to achieve victory as swiftly as may be, these Forces must be adequately provided with the sinews of war and the people as a whole kept in good heart and in good condition. The Government have directed their energies to, among other things, strengthening the sinews of war. Britain will never be defeated because our fighting men falter, or because our people lose faith in our great purpose, but the struggle may be prolonged, and prodigious suffering be indicted before victory is achieved, unless 242 all the economic resources of the Commonwealth and of our Allies and friends are mobilised to the fullest possible extent.

From the earliest days it has been known that an army marches on its stomach. In modern warfare, mechanised units pound their way, fed by oil and petrol, and planes roar through the sky, fed by oil and petrol. Planes, tanks, guns and the munitions of war are very complex mechanism, calling for varied skill and for a large variety of materials drawn from the four quarters of the earth. The arena of war is widened by the increased range of both air and sea craft. War now has become total war, in which the term "non-combatant" ceases to have any meaning. War of this kind and of this complexity, involving whole populations, calls for economic organisation on a scale unknown in the past and, I am prepared to admit, not yet fully achieved in the present.

Before pursuing this problem, let us, in order to put ourselves in good heart, consider the economic position of the enemy. Hitler, in his latest speech, painted a rosy picture of his economic strength. He declared that Germany and Italy had at their disposal 200,000,000 people, from whom they could draw 130,000,000 for military man-power and about 70,000,000 to be engaged in productive work. He also told us that his total amount of supplies to the army and the air force, and for all services, was considerably greater than before his attack in the West. That, no doubt, is true, as, of course, it is true of this country; but we must look at the picture a little more closely. It is true that Hitler commands the West of Europe from the Arctic Circle to the Pyrenees, a vast coastline 2,000 miles in length. It is true that he has brought many millions of people under his sway, but we must not assume that this great stretch of coast is necessarily an overwhelming asset to Hitler. Nor must we assume that he has made millions of friends. Hitler rules over sullen people who may prove to be liabilities rather than assets. He may make serfs of them, and his Gestapo may browbeat and imprison them, but he will not get out of them the willing service which the people of this country are so fully giving to the national cause. He may rob them in order to feed his own people, but he cannot add starvation to 243 slavery without running the grave risk of revolution within his own territory.

Hitler is, in fact, beset by serious problems within his swollen boundaries, problems which will intensify and not diminish as the days go by. Hitler boasts that his food supplies are—I will use his own words—guaranteed for so long as the war lasts. Mr. Speaker, I wonder. I fancy that, as winter draws on, Hitler will not be happy at the conditions of famine to which his aggression and conquest have doomed considerable areas of his newly-seized territories. Multitudes of fleeing refugees have trampled down the growing corn of Western Europe. His tanks and planes have devastated much of the countryside in Western Europe. It is said, as I believe with truth, that his crops will not be very good this year. When this winter gives way to next spring he will, in my view, begin to feel the pinch of the food problem more seriously than in the situation which confronts him now. He will, of course, continue the making of war materials, but some of his chief industrial areas, as well as his aerodromes, have suffered very heavy punishment. Factories and works of all kinds, oil refineries and stores, railway junctions and marshalling yards, and docks and ships have been, are still being, and will continue to be, the targets for our deadly bombing planes, night by night and week by week, and more and more heavily, as our bombing strength increases.

Output vital to the enemy has, undoubtedly, been interfered with very seriously and it will be difficult, if not impossible, to repair the damage which has been done to productive enterprises, transport, lines of communication and valuable stores, for a considerable time to come. He will need to draw more and more on his resources. The more vigorously he prosecutes the war, the more rapidly his stores will disappear, and he will find it increasingly difficult to maintain his production to meet wastage and losses, notwithstanding his very highly-organised industrial system. It may be thought that with the Western ports of Europe at his full disposal, the enemy will be able to satisfy his present need for imports, but the British Navy, the Minisistry of Economic Warfare and the Ministry of Shipping, do not stand idly by. The Navy is ever vigilant, and my right 244 hon. Friends the Minister of Economic Warfare and the Minister of Shipping described in the House a few days ago, with what I thought was the full approval of the House, the measures which are being taken now to ensure that Hitler shall not draw sustenance from foreign sources. Not only Germany, but the territories which he now controls, will be unable to carry on trade on any scale with the outside world. The blockade operates over a wide area, which must become more and more impoverished, as its arteries are cut.

I have no doubt that Hitler has seized and will continue to seize all the food and materials he can from the territories he has overrun. He will ransack every cupboard, but once he has despoiled his victims, supplies will either cease or become, in future, much less plentiful. Hitler boasted in his speech that he possessed unlimited quantities of what he called the two most vital raw materials, coal and iron. I do not wish to pursue this problem in any detail. Iron, he possesses in great quantities, and he probably has no need to fear a shortage of aluminium, but his coal situation is different and his supplies henceforth will be seriously short. He may sit upon mountains of iron ore, but if he has not the coal whereby the iron ore can be smelted, it will not be of first-class military value to him. On balance, in a normal year, this country exports some 30,000,000 tons of coal to the Continent of Europe. None of that, henceforth, will fall into the hands of Germany. As regards oil, of the 20,000,000 tons of oil which are normally consumed throughout his territory per year, the enemy cannot hope either to produce or procure more than half. I give those two illustrations merely as pointers to the situation in which Hitler now finds himself economically. If and when the real pinch comes, as it will sooner or later, in a hundred different directions, it is more than doubtful whether the subdued peoples of Germany and other lands will be prepared or able to stand the strain.

Yet we must not for one single moment under-estimate the power arrayed against us, a power which has been built up, systematically, as a result of stupendous organised effort over the last six years and more. During the whole of that time Germany's mind and strength have been devoted to one purpose, the preparation of the strongest and most terrible 245 fighting force the world has ever seen. The enemy's economic system has been for some years on a war footing—a mighty engine, turning out planes, tanks, guns and all the paraphernalia of war on a gigantic scale. In spite of heavy losses, heavier perhaps than many people think, he still possesses great strength and we must remember that we have not yet felt the full brunt of his blow. We on our side, and I think this is agreed now in all quarters of the House, were not fully mobilised for war when it was forced upon us. It is no simple thing, except perhaps in a totalitarian State, to switch over from peace production to war work and we were at a disadvantage, in that it is only after nearly a year of war that we are capable of becoming as efficient for war purposes as the dictators. We are still—and this must be admitted—in process of changing over from a peace to a war economy. We have got now to make the best of our resources. All our resources must be directed to the national life and effort at those points necessary for the victorious conduct of the war and the maintenance of the national spirit. We intend to win and the Government do not intend to allow the limit of its prosecution of the war to be anything less than the whole of the resources of man-power, industrial capacity, finance and foreign assets at our disposal.

To achieve the maximum of effort we must plan our economic strategy with a view to the best co-ordination and co-operation of all the agencies concerned, and I would like to give the House an example showing how many sides of Government activity are touched by a single war problem. To-day the Government are the main importers of goods from overseas. To carry through this vast business we must have a definite programme and to make this programme we must strike a balance between a host of conflicting considerations. Suppose, for example, it is suggested that our imports of a certain commodity should be increased. Clearly, as the House will see, this is not a matter for the Department which happens to need the increased supplies. We have to ask whether shipping supplies are available, and that is a matter for the Ministry of Shipping. We have to ask whether foreign exchange is available, and that is a matter for the Treasury. We have to ask whether our supply of foreign exchange can be maintained. That is a matter which may 246 eventually depend on the amount we can export, which is the business of the Board of Trade. Moreover, the amount we can export depends partly on the amount of labour which we can spare from other purposes for the manufacture of exports.

Even then, the survey is not complete. We have also to take into account the possible effect of our purchases, which we are bringing into this country, upon the economic life of the exporting country. We have to ask whether by buying a little dearer somewhere else we could make things a little more difficult for the enemy and whether there are other political reasons why purchase in one country is more desirable than purchase in another. These are matters in which we must look to the Foreign Office and the Ministry of Economic Warfare for advice. To take account of all these considerations and see that they are properly weighed, one against the other, needs central organisation on the part of the State. We need an organisation which ensures that the different claims of the different Departments can be considered in an orderly way. We need an organisation whose business it is also to look ahead, to see how things are likely to develop in the future, an organisation which makes provision not merely against day-to-day contingencies as they continually arise, but against remoter problems which may develop as the war continues and as this new situation unfolds.

I have given an illustration of the need for the kind of organisation which we are now trying to build, and I should like now to say something about the way in which we are working. The Lord Privy Seal informed the House on 4th June of the new arrangements we had made for the consideration of particular economic problems and for the co-ordination of our economic effort. Each of the main groups of problems—the wider and more general economic problem, the production problem, the food question—is dealt with by a special committee, composed of members of the War Cabinet and the Ministers in charge of the Departments concerned. But we have introduced new and important changes in the previous organisation of the State. First, the Government appointed a small Committee consisting of the Lord President of the Council, the chairmen of the 247 Economic Committees, the Lord Privy Seal, the Chancellor of the Exchequer and myself. This Committee is expressly charged with the duty of concerting and directing the work of all Ministerial Committees dealing with economic problems.

This small central Committee represents, I think, a new experiment in the war-time system of government. It is in a position to survey the field as a whole. It regularly looks at the whole picture, measuring the progress made in various directions, taking account of the difficulties which have arisen or which we can see arising, and also having regard to our future needs. It is free to take up any economic problem where, in its judgment, there is particular need for the co-ordination of the activities of a number of Departments concerned in that problem. Secondly, there is the Economic Policy Committee, over which I preside and which concerns itself with the broader problem of economic war policy. [HON. MEMBERS: "Who are they?"] The Economic Policy Committee consists of members from all those Departments which are directly, and in some cases indirectly, interested in economic problems.

§ Mr. Buchanan (Glasgow, Gorbals)

Everybody in the Government?

§ Mr. Greenwood

Not necessarily. If the House wished, I could give the names of the members of the Committee, but not out of my head. Since the end of May the Committee has had to face the changed military situation and the need for the intensification of our war effort. It was that Committee which decided on the limitation of sales in the home market, both of unessential consumption goods and of machinery, with the object of releasing productive capacity for munitions work and for the export trade. It was that Committee which laid down the principles which should govern the maintenance of our export trade in those cases where there might be some clash with the needs of the munitions industry. More important, perhaps, the Committee has reviewed and revised our import programme for the next 12 months, having regard to these three considerations: the increased claims on our importing capacity which an intensification of arms output inevitably implies, the need for building up greater reserves of essential imports against the unknown, but per- 248 haps substantial, effect of intensified air attack on this country, and, thirdly, the closing to us of certain sources of supply in countries now occupied by the enemy. It has had to weigh the rival claims of our food import programmes with those of our raw material import programmes, and it is now considering the possible repercussion on the level of prices and on the cost of living of a diminished supply of goods for the home market at a time when incomes are being increased by the intensification of production. The Committee, in addition, has before it a number of problems, of which I would mention only one: the importance of maintaining our coal export trade and exploiting all the available overseas markets.

But then, as the war wore on, we were faced with another problem of far-reaching importance, and the Economic Policy Committee, on the suggestion of the Minister of Economic Warfare, set up a sub-committee, of which I am chairman, to study the problem of surpluses of production of all kinds created by the enlargement of the physical area of the economic blockade owing to German successes in the West of Europe and the entry of Italy into the war. To the producers overseas, whether in the British or Allied Empires or elsewhere, this closing of markets to them presented a very serious problem. If we cannot evolve a policy for dealing with their surpluses, those people may try, by backdoor methods such as are open to them, to bring those goods still to the assistance of Germany and German territory. We have already taken certain steps, as the House knows, to deal with this problem, but it is perfectly clear that one very important factor in the effectiveness of our economic war effort is to deal with this very serious problem of surplus overseas commodities in such a way as that they may be an advantage to us and of definite disadvantage to the enemy.

Questions have been asked on more than one occasion about the Production Council. The Production Council deals with the whole range of production problems, many of which are dealt with in the first instance by three interdepartmental committees to which I will refer in a moment. Outside these, labour questions necessarily loom important on the Production Council. The initiative in these labour problems rests with the 249 Minister of Labour, but the Production Council provides the opportunity for him to secure the co-operation of the Supply Departments. It is among the functions of the Minister of Labour to secure the most effective distribution of skilled labour and the training of additional workers to perform skilled or semiskilled services, and the question obviously is one which can only be satisfactorily settled when the needs of the various production Departments are known and when there is agreement as to the way in which this problem is to he tackled.

The Production Council has attached to it three inter-departmental committees. One deals with priorities and is under the chairmanship of my hon. and gallant Friend the Parliamentary Secretary to the Ministry of Aircraft Production. It will, I think, be agreed in all quarters of the House that it must be for the War Cabinet to take the fundamental decisions as to our defence needs. That in a sense determines the major priorities, and it must consequently decide in broad principle to what extent these major war requirements must have prior claims over the requirements of the home and foreign trade. It is the duty of my Production Council to implement those major decisions. During the past weeks defence requirements have stood paramount over all others, and I have a great measure of sympathy for the difficulties which my hon. and gallant Friend the Chairman of the Priority Committee has had to face in these recent weeks. The collapse of France greatly increased our difficulties. We had to give immediately clear priority to those essential weapons of war which would provide the maximum resistance to the enemy in the shortest space of time. There can be no doubt that this policy of rushing things through in the last three months—a policy which, perhaps, is not to he regarded as scientific—has resulted in a very substantial increase in vital supplies and the diversion of production into more important channels. The Production Council realises, however, with the vastly increased war programme, with the need for keeping in our minds the possibility of a long war and with the re-organisation of the area boards, to which I will refer, that these matters call for a re-examination of the priority system. I do not pretend that the priority system has worked as well as it should have 250 done, but having had in the national interest to make this great spurt for immediate war purposes, we are now considering further measures so as to ensure, as far as it is humanly possible, that material, plant and labour are effectively used to carry out the Government's production programme.

There is a second committee in the Works and Buildings Priority Committee under the chairmanship of the Parliamentary Secretary to the Ministry of Labour. During recent weeks the activities of this Committee have very substantially increased. At first it mainly dealt with problems concerning the demand for and the supply of building materials and labour, but the Production Council laid it down very clearly that all Government building contracts must be submitted for approval before they are let, and the whole of the Government's building programme should be reviewed in order that work might be concentrated on those jobs which could make a contribution to our war effort within the next few months. The more urgent work is still being pressed forward at the expense of work required at some later stage, but work which, if the war be prolonged, we shall have to complete at sonic time or another.

It became clear to us also that certain private enterprise building was interfering with the war effort, and the Production Council therefore decided, on the recommendation of the Chairman of the Works and Buildings Committee—[An HON. MEMBER: "Who is that?"] I have already said, my hon. Friend the Parliamentary Secretary to the Ministry of Labour. The Production Council therefore decided to establish a licensing system for all private buildings, and regulations regarding the establishment of this licensing system will be brought into operation very shortly. In recent weeks that Committee has had a new and complicating factor to face because of the vastly increased demand for materials for the War Office Emergency Defence Forces, while the extension of the Government's building programme and the demand for air-raid shelters created a new problem because of the reduction of brick stocks. Now, as a result of the work of this Committee, steps are being taken to ensure that brickmakers can increase their production at once through the release of the necessary labour from 251 the Armed Forces, and steps are being taken to ensure the utmost economy in the use of materials in defence works.

A more recently established interdepartmental committee is that dealing with area boards and industrial capacity, over which I invited the Parliamentary Secretary to the Ministry of Supply to preside. This committee is dealing with what I have always regarded as a vital problem, that of matching industrial capacity with our war requirements? It is a problem which I have stressed in this House both before and during the war when I sat on the benches opposite. I have always held that we must decentralise the search for plant, machinery and buildings to the areas where there could be people who knew. The area boards originally established—which met with very stern criticism from me when I spoke from the Box opposite—were not, in the view of the present Government, as active and as useful as they might have been. It was clear that insufficient use was being made of what was vital, of the local knowledge of industrialists and trade unionists in the various areas. It was decided, therefore, to set up this Industrial Capacity Committee to deal with the problem of marrying capacity to Supply needs, the pooling of machine tools, and the utilisation for war ends of declining trade.

The scope and authority of the area boards have been extended, and each of them reproduces the inter-departmental character of the main central committee. The previous boards, as the House will remember, consisted entirely of officials. The reconstituted boards consist each of 11 members, five being officials, representing the Departments concerned with with production, and six being representatives of industry. The 11 members form a joint committee, at least three of whom are trade unionists. The chairman and deputy-chairman of each of those committees are representative of industry, one of management and one of the organised workers. That brings to bear local knowledge and experience, which hitherto had not been mobilised, behind the search for capacity in this country, in order to promote the development of our war production. The boards will now assist the main contractors who are looking for subcontractors, using their special knowledge of the industrial capacity of the areas; 252 they will warn the Ministers concerned—this is a point of some importance—against overburdening the true capacity of any firm or plant by giving firms orders which they cannot fulfil in a reasonable time; and they will seek out latent capacity in other areas. In order to avoid as much correspondence as I can, might I say that manufacturers who have unused capacity should not write to me? I am merely delivering a message to the House; they should apply to their own area boards. People in the House with industrial experience know the difficulties we have had with the machine tool problem.

§ Mr. Stokes (Ipswich)

Will the right hon. Gentleman tell us when these area boards meet? Is it not the case that they have never met?

§ Mr. Greenwood

I am in some doubt whether that is correct. It may be so in the hon. Member's own area, but if he will put a question to the chairman of the committee, it will be answered. The machine-tool problem has been one of great concern. We have in recent weeks taken a census of our machine tools, and the area boards are now undertaking an inspection of all those tools with a view to getting them into appropriate use. They are now organising what plants are ready for them to organise in their areas, in order to deal rapidly with the situation which might arise out of the destruction of factories by air raids. Finally, the area boards will be called upon, in the unfortunate event of a breakdown of communications, to act as the body in charge of war production in their areas, working immediately under the regional commissioners and the regional defence organisations.

§ Mr. Buchanan

The right hon. Gentleman mentioned at the beginning of his speech the question of consultation with trade union opinion. Has any attempt ever been made to consult with trade union opinion locally?

§ Mr. Greenwood

I understand that the matter was discussed with the Trades Union Congress and the trade unions primarily concerned.

§ Mr. Buchanan

I come from a district which is by no means the least affected by these schemes, and our trade union people know nothing about them. These area boards have never met.

§ Mr. Greenwood

I am not so sure. In some areas they may not have met, but I have myself seen the chairmen and deputy-chairmen of some of them, and the personnel of some of them. I am quite sure that my hon. Friend has conducted his, negotiations for the setting up of these committees in the most orderly and proper way, and that the trade unions concerned have been consulted. It happens at times that the problem of unused capacity, factories, plant, machinery and so on, affects not merely an individual firm in a particular area but a whole trade, either because of shortage of raw materials or because of a reduction in the demand for the products of the industry. This problem is one for the Industrial Capacity Committee itself, which will, where any trade is hard hit, consult the representatives of the industry or industries concerned. The committee will do everything it can from now onwards to adapt the resources of the trades to direct war effort. Where that is impracticable, it will try to divert capacity to export purposes. In any event, we shall do everything possible to ensure that there is no idle plant and machinery in the country which can be used to the national advantage.

I should like to refer to another activity. Although it is not the responsibility of the Production Council, it is very closely and very importantly associated with our economic effort. I deal with it as the member of the War Cabinet charged with the oversight of our war purchases from North America. On 11th July I made a short statement in this House regarding the new organisation that we were setting up to deal with our purchases of arms and munitions from North America, following upon the dissolution of the Anglo-French organisation which had previously existed. I told the House that the Canadian Department of Munitions and Supply, under Mr. Howe, had undertaken to receive notice of our requirements direct from the Supply Departments concerned, and to arrange for the placing of these orders and the development of the productive capacity required, and that in New York the British Purchasing Commission, under Mr. Purvis, would remain to deal with the increased and increasing British purchases in the United States of America. Further, I told the House that in London a North America Supply Committee, served by a central organisation known 254 as the Central Office for North American Supplies, would consider general questions of policy and co-ordination arising from our enormous purchasing programme in the United States and Canada. I invited the Parliamentary Secretary to the Ministry of Shipping to become chairman of that committee. This new organisation has now been actively at work for some weeks, and I hope that I shall be able in the very near future to give a more complete account of its tangible achievements than is possible to-day.

§ Sir Adam Maitland (Faversham)

Has this Committee to deal also with purchases of aircraft?

§ Mr. Greenwood

It deals with the purchase of all kinds of war material. It was through the old Anglo-French Commission that the original orders for aircraft were placed.

§ Sir A. Maitland

I understood that it was to deal with purchases from America. Is the right hon. Gentleman responsible also, as a member of the War Cabinet, for purchases of aircraft, or is that still left with the Minister of Aircraft Production?

§ Mr. Greenwood

I explained that the Departments give their own orders direct, and the whole thing is co-ordinated by the central committee. The Ministry of Supply place their orders direct, the Ministry of Aircraft Production place their orders direct; but there is a co-ordinating body to see that we get the maximum of things that we want. I should like to say a few words about this organisation's work and its responsibility. It is obvious that since the occupation of the Low Countries and France has transferred resources to the enemy, and brought enemy aircraft nearer to our own factories, the need to supplement our own production by drawing on the vast and invulnerable capacity of North America has immensely increased. This task has not only become more important, but it has changed its character. The United States Government are now themselves engaged in a vast effort of national rearmament, and are organising American industry to that purpose. Therefore, while but a few months ago we were placing orders with American industry to supply the deficiencies in a combined Allied production, we now need to em- 255 bark on a much more extensive programme, which must be related to the American national defence preparations.

The House will readily understand the complexity of the questions involved. The task of the British Purchasing Commission in New York and of its director-general, Mr. Purvis, is, therefore, far greater than that of acting as a simple purchasing agent for this country and the Empire. It involves all sorts of economic and technical questions and constant communication with the United States Administration, not only on matters of detail but on general questions of requirements. At the same time, we need, both in New York and in London, to co-ordinate our requirements with those of the Dominions and India and our Allies. We are taking steps now to ensure that Mr. Purvis is given the additional technical personnel and the requisite authority which he will need for his increased and vitally important task.

§ Mr. Kenneth Lindsay (Kilmarnock)

Is this Committee responsible also for purchases from, say, Australia, or only for purchases from the United States?

§ Mr. Greenwood

Its title explains its scope; it is responsible only for purchases from the North American countries, they being our two most important potential providers of war material. The director-general is to be further aided now by a series of technical commissions of experts who have had practical experience, such as the United States have not yet had, of the production and operation of different types of armaments. We are at the same time, of course, co-operating with the Canadian Government in securing the fullest possible use and development of productive capacity in Canada. In the vast economic effort which underlies all modern military action, we happily do not need to think of this island as matched alone against the Continent of Europe, for behind our own resources are the resources of another Continent, and the resources of this great Continent of North America are both beyond the reach of enemy assault and, thanks to our Navy, accessible to ourselves.

Now I come to a very short review of the main principles of the policy that we are pursuing. Parliament in the early days of this Administration gave the 256 Government wide and far-reaching powers over lives and property in this country, and they will not shrink from using those powers as circumstances require. A vast number of factories and other industrial establishments have already come under direct State control. Land badly cultivated has been taken out of the hands of farmers, labour has been called upon for great sacrifices, and the whole economic system of the country, with its many ramifications, is being adapted, perhaps not to the complete satisfaction of everybody or of myself, to the fulfilment of the nation's needs, and nothing will be allowed to stand in the way of our achievement of the war purpose. Our object now is one not easy to achieve. Our object is a Britain completely mobilised economically in the public service devoted to national needs and regardless of selfish interests.

How have we been trying to carry out our policy? Let me take the question of consumption first. It is necessary, if the war is to be conducted efficiently and properly, that the consumption of the people shall be safeguarded and that every endeavour shall be made to avoid unnecessary hardship. We all know that since the outbreak of war there has been a rise in retail prices. That was inevitable because of factors quite outside our control, such as the curtailment of supplies from overseas, increased difficulties and risks of transport, fall in the value of sterling abroad and so on. But an effort has been made to reduce the burden, which would otherwise have been considerably greater, and it is interesting that, although the cost of living has risen, the cost of living has risen less than prices in general. It is our object that the prices of the necessities of the people shall, as far as possible, be kept down, and we are spending, as the House knows, very considerable sums of money in order to do this, and those efforts to anchor down the prices of essential commodities will be continued. It is the policy of the Government, by the maintenance of supplies, and, if necessary, by rationing, to restrict the movements of prices to a minimum. It is our purpose, too, to make special provision for those members of the community who are most hit by the rise in prices of essential commodities, and, as the House knows—to give one very important example—we 257 have recently set up a scheme whereby free and cheap milk is available for mothers and children in poorer districts—a scheme which, I understand, is being made of increasing use as it becomes more widely known. Community feeding is being extended as widely as possible at canteens for industrial workers, and we feel that in these ways, whatever restrictions may become necessary in the future, we shall ensure and maintain unimpaired the health of the nation.

While we have tried, and so far with success, to ensure the adequate supply of the necessaries of life, at the same time we have deliberately taken steps to secure that non-essential consumption is restricted. Resources which were available for maintaining and increasing the war output ought not to be diverted to unnecessary consumption. There are two ways in which we may restrict unnecessary consumption. On the one hand, we can do it by financial measures, by increasing taxation and encouraging savings, and, on the other hand, we can do it by direct limitation of consumption and prohibition of unnecessary imports. Both these methods have their uses, and both of them, as the House knows, are being employed. The President of the Board of Trade has taken steps by Orders restricting consumption so as to release labour and productive resources for the ma king of munitions and for export. The transference has taken place, and I hope it will take place, quickly and smoothly, though there may be dislocations in the process. The recent Budget has relieved us of some of our non-essential purchasing power—I gather, in the view of the House, not sufficient—and the Chancellor of the Exchequer has made it clear in the most cheerful terms, and, I gather, with the general approval of the House, that those who can be further impoverished will be further impoverished in the future, so that their unnecessary expenditure may be diverted to making resources vital for the war effort.

I have referred to the import policy, and I do not want to elaborate this point, but the general strategic position now has made the import problem a good deal more complex. There are two limiting factors which govern the policy of imports. On the one hand, the capacity of the ships and the ports, and, on the other hand, the supplies of foreign ex- 258 change and foreign assets. We have to take account of the kind of imports it is physically possible for us to bring into this country, and we have to take account of the resources out of which we can pay for what we buy. As regards our foreign resources, it is clear that we need to proceed with a little care. I am myself not for hoarding them like a miser, but, after all, our supply of foreign assets is not unlimited. We have taken steps to increase exports, and we shall do everything we can properly do in this direction, but, in present circumstances, it is clear that the possibilities of increased exports from this country are not too glowing. It is important that we should use our foreign exchange as far as we can for the purchase of aeroplanes, munitions and so on from abroad. Although our need for skilled labour in the war industries is very great, it is necessary for us to retain some of this labour in the production of commodities for export, in order that our supplies of foreign exchange may be maintained. Therefore, people who are employed in the export services are playing their part in the productive system just as fully and helpfully as if they were engaged on direct war production. But, of course, we need, as the House will see, to reduce to a minimum the amount that we buy from abroad, to reduce it just to the limits of the things that we need for essential consumption over here and for productive services.

It is true that at the moment our shipping position is not too bad. Port capacity has not been very seriously impaired, but we are hound to recognise that our ports and our shipping are bound to be among the main objects of the attack of the enemy. It follows, therefore, that, in the short run, while the position is good for us, it is prudent for the country to import as much as we can of those foodstuffs and materials as can readily he stored, not in order to increase consumption, but in order to build up stocks against the day when our capacity to import may not be as great. Our policy, therefore, has a double aspect. In the short run, we are trying to increase our stocks, and very considerable progress has been made in this direction. If the enemy hopes that he can starve us out, he is very greatly mistaken. The starvation of the people of this country is impossible. Nothing can be more emphatic 259 than that. Looking ahead, however, it may he necessary to reduce the rate of intake of things into this country. Even if we were sure of unlimited help from sympathetic peoples abroad, it would be perilous for us, and for our long-term import programme, to include commodities which are not indispensable to national efficiency. I hope that when people reflect on the limitations with which they have to put up, and the further limitations which may come to them before very long as the result of this policy, they will remember that these limitations have been imposed on our imports in order that we may conserve the wherewithal to buy aeroplanes and tanks with which to defend our homes. We control the ships, the ports and the imports that reach us, and these controls are exercised with one aim in view—the use of our sea-borne trade for the national cause and the public good.

§ Mr. Stokes

Why do you not control the money, and then you would be all right?

§ Mr. Greenwood

I am dealing with things and not with counters. Therefore, let me just briefly turn to the problem of production. No one in the House will expect me to give exact details of the great increases in military production which have taken place in recent weeks, but I can assure the House that very great strides have been made in speeding up the production of aircraft. Only a few weeks ago the Minister of Supply was able to give the House some striking indications of the progress which is being made in the production of Army equipment—progress, I may say, which is much more marked to-day. The actual deliveries of aircraft and aero engines has very rapidly increased. The output of some of the most vital things like antiaircraft guns, anti-tank guns, Bren guns and tanks, and so on, is mounting, and as the days go by this upward movement is not merely increasing, but is actually gaining momentum. And we intend to continue. We have every reason to hope that from week to week in the months that lie ahead the volume of output of our factories and foundries will attain greater and greater proportions, and, indeed, proportions larger than the output ever obtained before.

260 Two things are necessary in order to increase our war output. On the one hand, as I have already tried to indicate, we must reintroduce for war purposes more and more of the productive capacity of the factories and workshops of the country. On the other hand, we must see that labour is available to use it, and to increase the volume of productive capacity available it is necessary that we should eliminate unnecessary production. The Board of Trade, with its orders restricting consumption and the use of machinery, is following out this policy. We are also taking steps to see that the necessary capital construction is damped down in order that resources may be available for war purposes. Systematic steps are now being taken to compile a complete census of works and machinery which will enable us to put our finger on any factory available for war purposes and to direct that appropriate work shall be given to it. Complaints have been made in the past concerning the working of the contract system and the failure to use the capacity of small firms and we hope, through the machinery I have already described, to remedy any shortcomings in this direction.

As to the supply of labour, in the past few months there has been a great increase in the number of workers employed on Government work. There has been an enormous increase in output, and this increase has been brought about partly by bringing more people in, partly by the transfer of labour from one purpose to another, and partly by increased hours. But this process obviously has its limitations; the numbers of unemployed who are readily available will, one assumes, very shortly diminish, and the numbers which can be transferred from production for civilian purposes will grow smaller as time goes on. The recent increases in hours of labour show the great response of the workers to the special emergency which existed after the loss of equipment by the British Expeditionary Force in the Battle of France. Clearly, however, that process cannot continue indefinitely, and already it is becoming necessary to take steps to guard against the undue exhaustion of very willing workers. In the future, if we have to carry out the plans made, we shall need more and more to recruit the armaments industry by training and by dilution, and steps are being taken to bring this about. The 261 training schemes of the Ministry of Labour are being extended, and arrangements are being made for a large increase in training facilities within the actual works themselves. Without prejudice to the resumption of normal arrangements in peace-time, trade unions have agreed, with great willingness, to waive certain claims of rights which might have been made an obstacle to the training of people for tasks of various skill.

I am afraid I have detained the House much too long, but this vast and very complex effort in the economic field on which we are engaged is merely one facet of the problem, and no man can possibly know them all. What is essential is that we should have an economic policy commensurate with the task facing us and a policy which, with the co-operation of the various Departments, can be effectively carried out. I have only one concern, and that is to use such powers of sweet reasonableness as I possess—and these powers are more obvious in office than in opposition—to secure the maximum cooperation and see that the Government's policy is implemented and fully carried out.

I would like to take this opportunity, the first, to thank the many Ministers who have co-operated with me in my various activities and who, in the interests of the larger national policy, have very willingly made adjustments in their own programmes in order to conform to the general plan. If the House asks me whether I am satisfied with our economic progress, I will give a perfectly straight answer. When I was a member of the Opposition, with other Members far more distinguished than I, our capacity for satisfaction was not very marked. I never knew myself to be satisfied with any Government when I was in opposition, and having been bred in dissatisfaction, so to speak, I will not pretend that I am satisfied to-day, nor shall I be satisfied so long as I hold my present office. Satisfaction can come only with perfection, and, alas, we are not a perfect people. But great strides have been made and greater strides will be made. We have stubborn but not insurmountable difficulties to meet. There are shortages of materials, bottlenecks in the matter of machine tools, labour shortages, and in the direction of output of supplies I am prepared to admit that they are far from what we would like. We must recognise 262 the possible difficulties arising from the bombing of factories, foundries, docks and shipyards, the mining of ports, and the sinking of ships, but even then there is no real cause for dismay. I feel certain that economically we shall go on from strength to strength.

The monstrous German Reich is already largely beleaguered. It has only limited external supplies on which it can draw, but we can stretch across the seas, where the treasures of the world lie, and bring them to our shores. We can be sure of the active help of the free peoples, and we can look forward to ever-increasing supplies from the New World to reinforce our own ever-growing efforts. The desire of all those who with me are engaged on the economic front is to bring the greatest possible power to the aid of the Fighting Services, not for the destruction of the conquered and suppressed peoples, but for the final liberty which will assure to them the victory that we are determined shall be for ever ours.

§ Mr. Shinwell (Seaham)

My right hon. Friend has left me with a very difficult task. The atmosphere is far from inspiring, and I doubt whether I can grip the House into a state of high excitement. But I observed that my right hon. Friend did inform us of his own dissatisfaction with the existing position. If that is so, he would hardly expect me to express satisfaction with the statement to which we have just listened. With the best will in the world, and despite my considerable affection for my right hon. Friend, I am unable to offer congratulations to the Government on the presentation of what they are pleased to describe as their economic policy. Indeed, the statement we have just heard hardly does justice to the Government's own achievements. Of course, there have been improvements since this Government was formed, in production and in organisation and the like, but we would have wished to have heard rather more in detail what the Government have accomplished. My initial criticism of the speech of my right hon. Friend is that it contained no conception whatever of a coherent plan. At any rate, I failed to detect evidence which would justify me in making an observation of a contrary character. We heard a great deal about co-ordination, programmes and committees, and we heard 263 the right hon. Gentleman say that we must plan our economic strategy, that we must have programmes and the right balance as between this essential and that. It is all very well, but it is hardly adequate for the purpose of winning the war against a ruthless and well organised enemy, and that is the consideration which must present itself to the mind of every hon. Member.

Let me, first of all, dispose of one element in the case just presented to the House. My right hon. Friend devoted considerable time, as I understood him, to minimising the resources and potentialities of the enemy. It is true that in a few words he said we must not under-estimate the powers of the enemy, but preceding this observation he tried to demonstrate that we need not be in any way dismayed by the resources or potentialities of the enemy confronting us. He indulged in much speculation on that head, and I only want to say to my right hon. Friend and to hon. Members that we have heard all that before. We have heard it not only for several months, but for several years. We were told over and over again in this House that the resources of the enemy were by no means as vast as some hon. Members suggested. The resources of the enemy may have been exaggerated, but I am not concerned with speculation, but with results, and the results since the beginning of this war hardly justify us in minimising the advantages the enemy possesses or in underestimating his resource or capabilities. I prefer to proceed on the assumption that the enemy is strongly organised. It is disastrous, speaking from a personal standpoint, to regard an opponent as being of no importance. Never underestimate an opponent. I regret that my right hon. Friend should have indulged in those roving speculations, which, in my judgment, are completely irrelevant to the issues and the situation which now confront us.

I invite attention to the facts of the situation, and I do so by propounding a few questions. First of all, what is the aim of the Government in the sphere of economic policy? I suppose they have a definite objective in the military sphere, but it is equally important in the field of economic policy to know what the goal is. I wonder whether the Government have attempted a survey of our econo- 264 mic potential. There have been committees and inquiries and a perambulation by experts, but has there been an exhaustive survey of our economic possibilities, and is that not vital in the present situation? Let us assume a war of two or three years' duration. I think my right hon. Friend will agree in that estimate. Have the Government estimated our needs in aircraft production, in guns and other munitions, in labour, in raw material and in exports? Moreover, is there a definite allocation as between actual war essentials and exports and the needs of the civilian population? These are all essential ingredients of the survey which appears to me to be so essential. Furthermore, have the Government estimated how many factories are required for the production of war essentials and, in particular, what surplus of factories is available in the event of heavy air bombardment and destruction? We must budget for all the dreadful possibilities which are inherent in air warfare. We have heard nothing of that.

I am glad to see the Minister of Labour. This is the first opportunity I have had of publicly congratulating him on his high appointment and on his many achievements. I should like to ask what actual provision has been made for training. My right hon. Friend told us the other day that we had now 28,000 trainees, and I think he said, either in the House or elsewhere, that he envisaged the possibility of 40,000 persons being trained in the course of this year. It is estimated on the most reliable authority that 780,000 men and women are undergoing training in Germany. The Minister of Labour agrees. Then what nonsense is this, how futile, how childish in comparison.

I leave the Minister of Labour for the moment, and I return to the Minister without Portfolio. I should like to know about priorities—I mean in home material, in labour and in tools. Of course, there are priority committees, but their operations are not based on any definite plans or related to the division between production for war essentials and exports.

§ Mr. Greenwood

Of course they are.

§ Mr. Shinwell

If so, we might have heard something about it in that long speech. The discussion so far has been conducted on friendly lines. The Minister without Portfolio still remains my right 265 hon. Friend. I do not want to covert him into a right hon. Gentleman. All these points that I have mentioned are vital elements in the plan. Let us appreciate the facts. Our resources are not fully employed. That much is clear. Labour is idle, factories are not adequately utilised, men are being dismissed, many workers are under-employed, miners are working three and four shifts a week, and no effort is made to divert this labour to other industries. Large numbers of people are being evacuated from Defence areas and have nothing to do. Sundry undertakings are closed down as a result of Government action, but no compensation is paid to those affected. I want to underline those points. Let us consider the position of under-employed factories and labour. I do not vouch for the authenticity of the statement to which I am about to refer, but I have received a communication which was sent to the Prime Minister, in which we are informed that 350 men, most of them with long experience in the engineering and aircraft industries, were sacked without notice last week-end from Castle Bromwich aircraft factory. The writer adds: Imagine the thoughts of those 350 men, with wives and families, as they listened to the drivel over the radio appealing for more men for the aircraft industry. I understand that that is not the only factory in that situation. I have heard the same of Morris's works at Oxford. I have heard the same about Ford's works at Dagenham. I could furnish many details, but it is not my purpose to deal with details. May I ask what is the position as regards the output of steel and the organisation of our resources in that regard? May I invite attention to the peculiar position of certain steel firms, as the result of which I am informed—others can speak with greater authority on the subject than I can—that Ebbw Vale is far from fully employed? I do not want to introduce that controversial topic in which Sir William Firth has been involved, but it calls for some inquiry. There I leave it.

Let me underline another point to which I have made reference. Miners are on slack time in my own division and in many others. It is not so long since we talked about miners producing 20,000,000 tons more coal, and there was talk about utilising the services of Belgian and other miners. Now our own men cannot obtain 266 work. I have had pathetic appeals from men asking that they might be allowed to join the Army or be diverted into other industries.

§ The Minister of Labour (Mr. Ernest Bevin)

I offered the Mines Department to withdraw the Order entirely and to raise the age of reservation, but the Mines Department pressed me to give them another month before I took that step, and I acceded to their request, thinking that they knew their business.

§ Mr. Shinwell

That is an explanation, but it is no justification for the present situation.

§ Mr. Bevin

I do not think the Minister of Labour or the Minister of Mines can be held responsible for the loss of markets on the Continent.

§ Mr. Shinwell

I appreciate that as fully as my right hon. Friend. It is a subject with which I am slightly acquainted. I was about to make certain suggestions in that connection.

§ The Secretary for Mines (Mr. David Grenfell)

Does my hon. Friend propose to raise the age of reservation in the mining industry?

§ Mr. Shinwell

Surely I am not being called upon as a member of the Labour party on this side—I cannot say the Opposition side—to deal in detail with all the matters which ought to be the concern of the Government themselves. I am going to deal with something much more important. After all, surely it is better, instead of allowing miners to remain unemployed, for the Government to build up huge stocks of coal. [Interruption.] There has been talk about the building-up of stocks of coal, but these huge stocks, as far as we can see, have not been built up, and in my view it is impossible to build them up unless the Government are prepared adequately to finance those responsible for their building up; and it is not even sufficient to build them up and dump them in this country. In my view, we ought to build up stocks and dump them in Northern Ireland and in our Colonies, and utilise ships which otherwise go out in ballast, but the whole thing has to be organised. If you cannot build up stocks of coal and employ idle miners in some way, you have to divert these able artisans—for 267 such they are—into useful war essential industries.

There has been an increase in unemployment. I do not know whether that is attributable to what has happened on the Continent, and I do not really care what the excuse may be. I am not blaming the Minister of Labour—far from it—but before that increase in unemployment we had 700,000 unemployed, although many were unemployable. A remarkable thing is that a large number of girls are being rendered unemployed simply because of the change in Government policy. That was inevitable. If, as the result of direct Government policy, people are thrown out of work, the question of unemployment pay does not arise at all. These people ought to be paid approximately their full wages. I am not so sure that in war-time we ought not to abolish unemployment benefit altogether. The Government should be charged with the responsibility of finding people work, as they could if we had a plan, and, if we cannot, then pay them approximately full wages.

I want to direct the attention of the House to a consideration which I think is of some consequence. The President of the Board of Trade has developed the policy of curtailment of consumption, and, as an inevitable corollary, curtailment of production. As a result people are thrown out of work. To throw somebody out of work does not of itself contribute to the war effort. Indeed, as far as I am concerned, I would allow cinemas to go on and the luxury trades to continue, unless it could be demonstrated to me that their existence militated against the war effort; for they might as well be working as doing nothing. Large numbers of small business undertakings have been thrown out of gear in precisely the same way. It would be far better to allow them to continue than to do nothing. On the other hand, if, as a result of throwing people out of work, it were possible to transfer them to the production of more essential articles, that would be a contribution to the war effort. To do that needs a plan; it needs a clear picture of what is wanted from the point of view of objective and organisation.

There are further considerations to which I invite the attention of hon. 268 Members. There may be a curtailment of the operation of the distributive trades as a result of a change in Government policy. If so, it would be much easier to recruit their machinery and labour for the war effort if financial aid was promised to recreate those trades after the war. They must have some kind of assurance. It would be easier to evacuate the Defence Areas without misunderstanding, confusion, and resentment, if they were financed. The Government are simply taking people out of the Defence Areas and putting them anywhere; their businesses are going down and down, and their incomes diminishing almost to nothing. What do the Government offer them? A local moratorium—which means little or nothing in the circumstances. Therefore, if it is in the national interest to bring certain trades to an end, do so, but do not allow the people concerned to suffer. Our resources must be pooled. My hon. Friend below the Gangway, in speaking on the Budget the other day, made a very interesting proposition with which I am wholeheartedly in agreement. He gave as an illustration a firm with which he was associated where a variety of interests were brought together and co-ordinated, and no doubt there was some measure of compensation provided and a measure of absorption of people who might otherwise have been redundant and have been thrown on to the streets. Similar action is required in the aircraft industry, the munitions industry and the textile industry; and all that would make a contribution to the war effort. There should be a complete pooling of our resources; our production should be concentrated in the most efficient units, and those discarded must either be absorbed or compensated.

I turn now to another aspect of the problem. Little change has occurred in our living conditions. There is plenty to eat and drink. That is very satisfactory. No doubt, in comparison with what is happening in other countries—it may be in enemy countries—our position can be regarded as highly satisfactory. But we must look ahead. It may be that the present adequacy of our supplies can be regarded as evidence of huge stocks, but how long will they continue? I put it to my right hon. Friend the Minister without Portfolio that it is wise to plan 269 on the worst and not on the most optimistic assumptions. I will fortify what I am now saying by dealing with a matter on which I have frequently spoken in the House—namely, the shipping position. I agree that the German claims about our shipping losses are grossly exaggerated. Nevertheless, we must not minimise the effect of air and submarine attack on shipping. Our losses have been huge, and it is idle to minimise them. I will not furnish any details, but they are known to me, as they are known to the Government. They are sometimes alarming and depressing. It is true that much tonnage has accrued to us—neutral tonnage, Norwegian, Dutch, Danish and French vessels—but, on the other hand, the replacement of lost shipping is very slow. I do not see a representative of the Admiralty present, and I do not complain of that. We have not been able this year to replace lost tonnage, and we are a long way from fulfilling our programme. That I know and deplore. There are other reasons why we cannot rely entirely upon the neutrals. There are difficulties about the seamen.

Our shipping position makes it essential that we should invite the attention of the Government and the country to the need for a drastic conservation of our supplies. In my judgment, the need is extended rationing. In saying that, I am in excellent company. I took a refresher course last week by reading the speeches of Members of the Government. I do not want to indulge in the debating tactics that are customary in the House in peace time. I read speeches by Members of the Government in which they asked, and persisted in asking for an iron ration. I noted, in particular, that the hon. Member who is now Parliamentary Secretary to the Ministry of Food was as keen as mustard on an iron ration. But the other day he spoke about there being no need for extending rationing this year. There seems to be a change of mind on the part of hon. Members when they cross the Floor of the House. [interruption.] All that I can say is that if, when they cross the Floor, they gain more knowledge, they ought not to conceal it; and perhaps we might be given a little more knowledge on these matters this afternoon. Extended rationing would cut out needless imports and conserve shipping. Something more is wanted. I will deal now with a point that was raised by my 270 right hon. Friend the Minister without Portfolio. Something must be done about improving docks and harbours. I do not mean the larger ones; I mean particularly those on the West Coast, and we ought to employ as fully as we can the Western Highlands for this purpose. More important still is the need for prohibiting entirely the production of certain classes Of goods.

Is our export position satisfactory? We should not compare our export position now with the position last year—a favourite device of certain people—but should consider what our needs may be in the future. The position is a little better than it was last year, but that does not matter, for comparisons are fruitless. Let hon. Members consider what our needs may be in the future, and note what we are doing. We forbid consumption by various devices. We curtail the production of some goods—for example, textiles—but we do not assist exports. I am satisfied that my hon. Friends who are associated with the textile industry will bear me out in that contention. The textile industry has not benefited to any degree, and certainly not in any large measure, as a result of the curtailment of production for home consumption. The only purpose of curtailing production and consumption is either to assist the production of essentials or to make goods available for export. I put it to the President of the Board of Trade that we cannot expect a large export trade unless we finance manufacturers and create export companies, but first, we must estimate what goods can be made available for export, and allocate raw materials and labour for that purpose.

The export trade is suffering from the absence of clear decisions. That is due to the absence of a plan. My right hon. Friend the Minister without Portfolio, in speaking about committees, forgot to mention the Stamp Committee. We were told that the function of the Stamp Committee was to plan, to map out, to present a clear picture of what was required. If that is not the function of the Stamp Committee, who is responsible for the preparation of plans and policy? My right hon. Friend spoke about committees, and explained the four-decker structure of the committees. First of all, there are several committees dealing with problems or groups of problems.

271 Secondly, there is a committee, for which my right hon. Friend is responsible, charged with the direction of the other committees. Thirdly, there is the Economic Policy Committee, over which my right hon. Friend presides; and fourthly, there is the Production Council, which, according to my right hon. Friend, deals with a whole range of problems, and the duty of that council is to implement the plans and decisions. I understood that my right hon. Friend's chief function was to smooth out difficulties. If there is a difficulty at the Ministry of Supply, the Ministry of Labour, or the Board of Trade, they go to my right hon. Friend, as chairman of the Production Council, and he smoothes out the difficulties, acting as a kind of arbitrator. There was a well-known comedian on the wireless who talked about bungers-up of ratholes. My right hon. Friend is a smoother-out of Departmental difficulties. What I want to see is a planner-out of Government economic policy.

Are the Government exercising the powers which they have? We have heard a great deal about the Government's extraordinary powers, and the Lord Privy Seal said that they had taken power to assume possession of all property. Where have they taken possession of property? They have taken over some factories, but those factories would have been taken over in any event. They have to be taken over. There was recently a case in the courts, with which I cannot deal now because it is sub judice, but clearly something is wrong with the Regulations of the Ministry of Supply, and the learned judge would not allow the Ministry to proceed, at any rate for the time being. That seems to show that the powers of the Government are far from being ample. Where land has been taken, as my hon. Friend the Member for Ipswich (Mr. Stokes) has said over and over again, excessive prices have been paid. Arms manufacturers are still in possession of factories and earning high profits, but the most important thing is that they are financed by Government capital. They retain their factories and still earn profits, but they are financed by Government capital; whereas small traders who have lost all have no compensation, and manufacturers who have been displaced are left to look after themselves.

272 The Government do not seem to realise the magnitude of the problem. Consider what the enemy have accomplished. We must make an effort to exceed their production, but we cannot do it—and here I come to what is regarded as being fundamental by hon. Members on this side, for I speak not only for myself in this respect, but for all hon. Members on this side who belong to the Labour party, and I hope hon. Members of the Labour party in all parts of the House—unless we organise on a collective scale, pooling our resources and utilising them without regard for private interests, but being willing to take measures to absorb everybody and everything into the common effort. Individualist competition must be replaced either as a result of undergoing considerable modifications or as a result of a full-blooded system of collectivist production. We cannot rely too much upon the United States of America, as I was glad to hear my right hon. Friend observe. She may be embroiled in war with Japan, and, if so, she will be bound to produce for herself. We have heard of difficulties which do not make us feel too optimistic. It is better that we should assume that we must rely on ourselves, and organise accordingly.

I have attempted to go no further than to state the principles. We must win this war, and win it in the shortest possible time. This calls for the utmost efficiency, not so much in the form of slogans, although they have their place, but in organisation and planning, and above all—and to this I attach considerable importance—the people of this country must be told what we are up against, and asked to steel themselves for the struggle. It is better to do this and endure hardships now, than to experience greater suffering in the future.

§ Sir George Schuster (Walsall)

As I listened to the right hon. Gentleman the Minister without Portfolio I felt that to a certain extent he disarmed criticism at the end of his speech by giving us a very satisfactory account of what his aims were, and by telling us quite definitely that he was not himself yet satisfied with the progress that had been made. But, though he did disarm criticism to that extent, I feel that his account of the machinery of government by which he was proposing to fulfil his aims was far from convincing. In fairness, it must be 273 said that it is too early yet to judge whether that machinery will be successful or not, because it must be tested by results, and I do not think the present Government have been in power long enough for us to know what the results of their policy will be. But the question which I asked myself as I listened to the right hon. Gentleman was, Where is the vital spark in this whole organisation which is to give us the production that we need? Production is the one word we must concentrate upon, and to it we must give all our thoughts. It was only in the last passage of the right hon. Gentleman's speech that he mentioned the word "production." He told us about all sorts of organisations for getting over difficulties, but when he came to the question of production, he had only a very few words to say about it.

I am very seriously perturbed in my own mind whether, in this whole complex machinery which has been set up and in the course which the Government are now following—and I must apologise to the House, because I have stated this before—we are not in a great danger of half measures and falling between two stools. In the last war we did, after many mistakes, achieve an immense productive effort. It was seriously criticised afterwards, because, no doubt, one of the main driving forces of that effort was the search for private profit. Everyone says now that we cannot have that again, and we set about making all sorts of regulations and controls. But, if you remove the incentive of private profit, which is and has been in the industrial system of this country, however much some of us may regret it, the motive force which has made the wheels go round, you run the risk of not maintaining the vitality of your productive forces, and then you have to replace it with something else. If the Government—perhaps quite rightly—decide that that essential motive power shall no longer be the profit motive, then they take upon themselves a very heavy responsibility to replace it with something else. I feel grave doubts as to whether they are yet in a position to fulfil that responsibility.

§ Mr. MacLaren (Burslem)

What has Hitler done?

§ Sir G. Schuster

Hitler, in his own way, has succeeded.

§ Mr. MacLaren

What did he do?

§ Sir G. Schuster

The hon. Member for Burslem (Mr. MacLaren) knows quite well what he did, and I am not to be led into a discussion on what Hitler has done, because I want to concentrate upon our own problems and our own affairs. The present Government have made the position even more difficult than it was before, because they have imposed an Excess Profits Tax at the rate of 100 per cent. That again may be perfectly right, but it still further increases the Government's responsibility to provide the organisation and plans and driving force for getting our productive effort going. I could give the House many examples of small businesses where expansion of productive capacity, which ought to be of great value to the country, is not undertaken, simply because it cannot be financed, and because the present Excess Profits Tax provisions make it impossible to raise the money. It is not a question of bad faith or lack of patriotism or undue greed. It is simply that according to our present system you cannot work and carry on business unless there is a reasonable chance of making profits. If you have an Excess Profits Tax at the rate of 100 per cent., and there is a question of increasing your business, the position is really one of "Heads I lose, tails you win," and on that basis all natural expansion of business must collapse.

I am not necessarily quarrelling with the whole basis on which this policy rests, but I do say that it puts on the Government a heavy responsibility to prepare some alternative system which will give motive power to our productive machine. How can that be done? I am not speaking now so much about very large undertakings, because they have always been in close contact with the Government and with their own immense resources, combined with Government capital aid they have no doubt been expanding fairly satisfactorily. But a very large proportion of our industrial output in this country depends upon our small concerns, and it is there that I see the danger of a lack of vitality owing to the present half measures. If we are to continue on this basis, I am inclined to agree with the hon. Member for Seaham (Mr. Shinwell), that we must go much further 275 and allow the Government to direct the whole of our industrial effort and reach a stage, which I have indeed, myself, advocated, where over every door of every business there shall be posted a label, saying in clear language, "This business for the duration of the war is being conducted on Government account." At any rate, if we continue on the present basis of half measures, we run the grave risk of not mobilising our full productive forces.

Now the question arises, if the Government have to undertake an ambitious programme of that kind, carrying on their shoulders the whole responsibility of the industrial effort of this country, how are they to become effective for that purpose? I have already stated that what we have heard this afternoon about a long series of committees is a very unconvincing answer to that question. I could not help thinking, as the right hon. Gentleman was speaking, what he would have said from the Opposition Bench in answer to a similar speech. It may be that behind all this unconvincing exterior there is some driving force which is ensuring the right result in spite of what appear to be discouraging impediments; but we have yet to see the results to convince us that that is the case. I have a strong feeling that committees are very unsuitable bodies for framing operation orders, and it is operation orders that we want.

I venture to put to the House three steps which could usefully be taken. The first necessity is a central directing authority. That, of course, is a problem over which we have all been racking our brains during the past 11 months of war, and there have been many Debates on the subject. If that directing authority is to work effectively, it must be something which in some way fits in with our existing system of departmental responsibility, and one of my chief apprehensions about these various committees is that they may sap the strength of departmental responsibility. One wonders who advises the chairmen of the committees. Do they receive advice from the recognised departmental advisers, or have they some private advisers of their own? Is there not a great danger that decisions will be taken without full consultation with all the Departments? Have there not been cases where decisions have been taken in the last few months which have 276 been subsequently rapidly reversed? I believe that we should have done better if we had attempted to build more on our existing machine. I venture to put an idea before the House which I have mentioned before. If we examine our existing governmental machine, we find that there are one Department and one Minister who have had a right to keep a check on the business of every Department, and they are the Treasury and the Chancellor of the Exchequer. I believe it would have been much better to build up the organ of co-ordination on the existing structure of the Treasury and the Chancellor of the Exchequer, and to en-large the scope of Treasury responsibility to cover economic considerations as well as purely financial considerations. I know I shall be told that the Treasury is tarred with the brush of public suspicion, and that its officials are mainly trained for the purpose of finding good reasons for not spending money. But I think that suspicion is unfair to the Treasury and that it is most dangerous to allow it to become a reality.

§ Mr. Quibell (Brigg)

It is a reality.

§ Sir G. Schuster

The idea that the function of the Treasury is merely to protect the till is, I suggest, out of date. It may have been a proper and adequate conception of its peace-time role, when the economic machine was driven by the ordinary forces of competitive industry and all that the Government had to do was to regulate in a minor way. But, in war-time, one passes into quite a different necessity, and I further believe that that necessity will survive this period of war and will always be with us. I think, therefore, that the Treasury should be built up to a higher level and a broader conception of what is required for financial and economic policy. In almost every country now Governments are moving towards the necessity of having a Minister of Economic Policy. I do not see how one can have a Minister of Economic Policy who has not as part of his responsibility the Budget of the country. Therefore, it would be much safer to build up the Treasury on a higher and wider conception of what financial policy should be than to say that the Treasury is merely concerned with seeing that the money bags are kept full and that we are going to keep it under. That is a dan- 277 gerous line to take, because the Treasury, as a result of its history, has an enormous power and prestige in this country. It should not be kept under and condemned to use its power and prestige merely for that narrow purpose. I am for that reason somewhat concerned that the Chancellor of the Exchequer is no longer a member of the War Cabinet. I am not talking in terms of personalities. I should be very glad to see the right hon. Gentleman himself as Chancellor of the Exchequer if he is to exercise the responsibilities which he now has to exercise.

I want to pass from the question of centrally directed authority to the second thing which seems to me to be the great need. That is, that there should be in every Department a greater provision for leisure, for forethought and the exercise of thought among the higher officials. At present hardly one of the higher officials has time to do anything but get through the daily routine. The sub-committee of the Committee on National Expenditure of which I was chairman which examined the Ministry of Food and reported on it two months ago dealt at some length with the necessity of having a department of forethought in the Ministry of Food. I feel strongly that measures on those lines are required. If in each Department there were set aside officials of high standing who had time to detach themselves from the daily routine and think of the secondary reactions and the more distant consequences of their policy, and if the officials in each Department who were charged with that function had an opportunity to get together, we should out of their conferences have a chance of getting a co-ordinated policy which would be formulated in a safer way because it would be formulated by people who were in direct contact with their own departmental work. The third practical direction, though in a humbler sphere, where there is room for improvement is in some better central organisation for the collection of statistics, intelligence and information, to which the Government could turn for digested factual reports on matters of current interest, not merely in home affairs, but also such matters, for example, as an exact account of how in Germany they have dealt with certain problems up to date. A Department of that kind would be of great value.

278 But we are, of course, concerned not merely with organisation in the abstract, but with the actual problems with which the country is faced. Of these, I want to mention four. First, our supreme object now must be the maximum production for war purposes, and I would ask the right hon. Gentleman whether he can say that the existing industrial capacity has been fully tapped for war work. Can he say not only that nonessential production has been cut out, but that the energy released has been turned into war work? I think that he would find it very difficult to give a satisfactory answer to that question yet. A second question of vital importance is whether, subject to the needs of war production, we are keeping our place in the economy of the world.

We have recently had interesting reports of the Pan-American Congress. The discussion, the background to it, and the conclusions which it reached show in rather a vivid way that we, with our Commonwealth and the overseas possessions of our Allies linked with us, stand between two clearly distinguished groups—the American countries on the one side, and the Totalitarian States on the other. I would like to know whether we are doing all that we can to see that we ourselves are linked up with those American countries. I fully appreciate the immense difficulties of the problem, but it seems to me that the objective at which we should aim is that we, together with them, should endeavour to build up a satisfactory economic régime which could continue for the period of the war, three, four or five years if necessary. which could give the inhabitants of those countries a satisfactory basis for life, and which could deny all that is needed to our enemies. Are we facing that immensely important problem? That is a question to which I would like an answer. The third problem that needs tackling is the relation between wages and service pay. The right hon. Gentleman said nothing about that. Lastly, there is the problem of the transfer of labour, for example, from the distributive trades to the productive trades.

I have mentioned four problems, all of which require proper handling if we are to produce that war effort which is needed. The problems are different; some require constructive thinking, some political courage and some good 279 diplomacy, but none of them are possible unless the team which is responsible for governmental work is working together with the courage which comes from successful achievement. Apart from that, however good the Government organisation is, we must rely on the driving force of outside energies as well. The task is to harness all that energy into the service of the State. I have an open mind about how that is to be done. I was glad to hear what the right hon. Gentleman said about his appreciation of the value of taking advantage of local experience and ideas and of decentralisation. I had indeed listened with great appreciation to the speech which he made in the early days of the war on that subject. But I am now asking myself what has been done, and I was sorry that he gave us so unconvincing an answer to the simple question whether the area committees have actually started to function.

Above all, if we are giving up private profit as the dominating motive we must have a system which harnesses all our energies in the service of the State, which treats everybody fairly and gives everybody a fair chance. I am waiting for a sign that the Government are ready to face that problem. My memory goes back to two days soon after this Government was formed. We heard on one day a statement from the Lord Privy Seal couched in very brave words, which led us to suppose that the Government really were going to face this problem and harness all property, all resources, everything in the service of the State. On the next day I came into the House and found a Debate proceeding on the Bill for the limitation of dividends. It is true that that Bill was given up and that, so far as it went, it was a harmless Measure. It was difficult, however, to reconcile the atmosphere of the first day and the atmosphere of the second. I want to see the Government carrying on in the atmosphere of the first day. I have been pleading for good organisation and for union of thought and action. But, above all, I plead for the courage to say that half measures are past.

§ Mr. Horabin (Cornwall, Northern)

Like the hon. Member for Walsall (Sir G. Schuster), I was rather discouraged by the Minister's speech, because it seemed 280 to me that no coherent economic policy came out of it. The organisation which it took him so long to describe seemed to me so intricate that I am not surprised that there is no coherent policy behind it at all. The Minister told us that one of the main objects of economic policy, apart from supplying our Armed Forces with the munitions they require, is to keep the people of this country in good heart. I suggest that the Government have failed badly in that respect. When war broke out and ever since, every Member of the House has desired to see one thing—equality of sacrifice. It is true, of course, that everyone is bearing heavier taxation and that all classes of the community are paying their contributions towards the war. It is also true that the black-coated workers, the professional classes, the boarding-house keepers and people who are primarily engaged in peace-time industries are being very nearly ruined. These people are, in fact, paying for the war. I must apologise to the House, but I am afraid I cannot go on. I have been in bed for two days, and my nerves are shattered.

§ Mr. Tomlinson (Farnworth)

I am sorry that the hon. Member, in developing his argument, found himself unable to continue, and I shall be quite willing, when he is able to resume, to give way to him if the House desires. When the hon. Member for Walsall (Sir G. Schuster) was speaking, I found myself in profound agreement with one thing he said. That is, that we are in danger of falling between two stools. When the Lord Privy Seal brought forward the Measure which gave the right to the Government to conscript all we had in order to win the war, the spirit in the House was the spirit in the country, and it is the spirit that we desire to see behind the Government in order to achieve the object we have in view. The hon. Member suggested that when by taxing excess profits 100 per cent. the Government had taken away the profit motive in industry, they did not substitute something in its place. I think he is right, but I would point out that the powers of the Government have been used in one direction and that the people upon whom they have been used have responded in the spirit in which everybody expected they would. 281 I had a letter the other day from a young man engaged in the retail side of the wireless industry. For a worker, he was occupying an exceptionally good post, in which he was earning £4 10s. a week. That sum may not be much to Members of this House, but it is a good wage for a working man. In addition, he was leaving home at seven in the morning and returning home by half-past four or live o'clock in the afternoon. He was needed, and by an order of the Government he was transferred from that job to another one at £3 10s. a week, and in addition had to leave home an hour earlier and did not get back until three hours later in the evening, and travelling expenses cost him 1s. 8d. a day. He wrote to me saying that if it was in the interests of the nation, he was quite willing to do it, but he pointed to what was taking place all around him and was in direct contradistinction to the effort he was called upon to make. That is a simple illustration of how we may be giving a fillip to one part of our effort at the expense of another.

I am interested in the cotton industry—from the workers' side, not from the standpoint of people who are not, perhaps, desirous of giving of their best because profit-making is no longer so good—and during the last six weeks I have had some unpleasant jobs. I have had to attempt to explain anomaly after anomaly which has arisen in the industry. In some cases workers have been called upon to work double time, or to work overtime, while the next mill has been short of work. I have attempted to explain this anomaly and to keep the people satisfied with working too long hours, and I have done it because I felt it was in the interest of the national effort, and because I thought that we were developing an economic plan, but what has taken place to-day convinces me that no definite economic plan has been thought out.

I do not claim to be an economist, and I do not want to speak in high falutin' language about these economic problems. They are simple so far as this industry is concerned, and the economics of the situation are simple. If I am told that the home trade must be restricted in order that industrial effort can be transferred to another section I understand the position, and if we were taking people out of one section of the cotton industry and 282 placing them elsewhere I should have no complaint to make; but if we take people out of the cotton industry by restricting home consumption and then put them on the unemployment register, I say that is not following out a policy but is only fooling about. That is not control, but what we in Lancashire call "mucking about." Our people do not understand it, and I cannot explain it to them. I came here this afternoon thinking to get an explanation from the Government, but we have not had one, and the reason is, as the hon. Member for Walsall said, that we are attempting to reconcile irreconcilables and are falling between two stools. In my judgment we cannot have private interests and the national interests taking first place at one and the same time; where the two interests do not coincide somebody has got to back down. We are attempting to reconcile the individual interests of private owners with the national interest, and where they do not run tandem, do not coincide, we let things get into a muddle before deciding what to do.

I believe that the cotton industry has some contribution to make to our export trade. If it has not, I fail to see what industry can make a contribution. We began on that assumption some months ago, and I was not only interested, but enthusiastic. I spoke of it all over Lancashire, and thought there was an opportunity for the industry to "get a move on." What has happened? First, a Cotton Controller was appointed, but his duties would seem to clash, because he could not do all that he ought to do for the export trade while at the same time giving the necessary attention to the interests of the Ministry of Supply, to whom he is partly responsible. So there has been a division of effort. Even after all these months we do not know what the position is. Frankly, I see no plan which will carry us from one stage to the other.

I know that there has been some control and that under the Ministry of Supply wonderful work is being done for war purposes. In the making of cloth for the barrage balloons and other purposes people are working overtime and under very bad conditions, working longer hours than anyone ought to be called upon to work in a summer like this. Anyone who has worked in a mill knows what sacrifices these people are making. One section of 283 our workers are doing that and realise that they are doing a job that is of vital importance to the country. Another section were told two or three months ago that all their labour would be required in order that the export trade might receive the fillip it needs. Some of them were engaged on home production. Just as they had got nicely working we received information that because of economic policy the home trade was to be cut down to 25 per cent. The effect upon the industry was disastrous. Orders for scores of millions of yards of cloth which had