DEBATE ON THE ADDRESS

§ Mr. R. A. Butler (Saffron Walden)

We are now starting upon the general Debate on the Address following the important speeches that were made yesterday. I understand that the idea is that this Debate today shall open with a general approach first of all to the question of foreign affairs and then to the effect of the foreign situation and of rearmament upon home front problems. It would be most unsuitable if reference were not made further from this side of the House to the observations which were made by the Prime Minister yesterday on the foreign situation.

While I shall not devote very long to this part of my remarks, because there are other and perhaps more controversial matters with which I want to deal, I think it is appropriate that we should, at the opening, welcome the Prime Minister's references to the recent alterations, under the Acheson plan, in the operation of forces of the United Nations. As Mr. Acheson said, The obligation of all members to take action to maintain or restore peace does not disappear because of a veto. This new machinery which has been set up will, I think, be more effective in enabling the Security Council to exert powers of enforcement.

The situation cannot be said to be easier than it has been. Mr. Marshall himself, whose return to the Ministry of 165 Defence we all welcome, used these very striking words: The struggle may only have begun. The actual collective forces of the North Atlantic States may not be enough to deter aggression in our North Atlantic area and definitely is not enough to resist attack without serious and critical initial losses. The gap in military strength we must now close as quickly as possible. We are glad that it is to this task and to the task of organising the United Nations machinery in such a way that it can be effective that His Majesty's representatives on the American continent and in the Foreign Office here are now devoting attention.

We naturally trust that the fighting in Korea will come to a speedy finish and we agree with the Prime Minister that there must be no delay on the part of the United Nations in assisting that country to achieve its unification. If the Under-Secretary of State is to reply, we shall be obliged if he will give us more information about the fund, to which the Prime Minister referred, for relief in Korea after the victory has been gained, and we should like to have further information on what the final political and international set-up is likely to be in that part of the world.

But there are, perhaps, matters of even wider importance than these. We noticed in the speeches made by the representatives of His Majesty's Government and in the tone of the Gracious Speech yesterday that there was a general feeling that the avoidance of war was our main objective. So far, so good, for no sane man or woman would desire any more noble objective; but it seems to us that something more positive is needed than the mere avoidance of war. We seem to remember from our international and national history that an approach based solely on the avoidance of war is not necessarily crowned with the success which it should have, and we therefore say that there is a vital need today for an increased British leadership in world affairs. We are not satisfied, for example, that in their attitude to Europe His Majesty's Government have taken a sufficient lead. We have noticed criticisms by M. Spaak, the prominent Socialist, in an address at Chatham House on Monday last in which he said that the crisis of Europe in 1950 was due to the fact that the hopes of 1949 in Europe had been disappointed by the British attitude.

166 The need of Europe was stated at Zurich by my right hon. Friend the Member for Woodford (Mr. Churchill), and I should like to say that the impression given by the Lord President and the Prime Minister that the Government are unable to give Parliamentary time to take the Strasbourg resolutions in this House is a further indication of a lukewarmness towards this European venture on the part of His Majesty's Government, and I sincerely ask the right hon. Gentleman and the Prime Minister to reconsider the matter. It really would be undignified if we had to tell Europe that it is only due to the fact that the Opposition are ready to give part of their precious time on a Supply Day to this matter that these questions can be seriously considered in this House.

§ The Lord President of the Council (Mr. Herbert Morrison)

The point which the Prime Minister made was that the Leader of the Opposition, taking it on his own initiative at Strasbourg, indicated that there was time at the disposal of the Opposition and that they would utilise that time for this purpose. [HON. MEMBERS: "No."] I think it is so. If that is so, it would not be right for it to be one thing in Strasbourg and another thing at Westminster.

§ Mr. Churchill (Woodford)

What I said was that if the Government would not give the time, we would do so.

§ Mr. Morrison

We will look it up.

§ Mr. Butler

While the right hon. Gentleman is looking up this mtter, the validity of my point remains, namely, that time for the consideration of the Strasbourg resolutions should have been given by His Majesty's Government and not conceded out of their own time by His Majesty's Opposition, and I trust that the right hon. Gentleman will give a little more attention to that matter. M. Spaak went a little further and said that there was in Europe an instinctive mistrust of Britain and in Britain an instinctive mistrust of the Continent. He went on to say that there was nothing to stop an integration of Europe in companionship with the bringing together of the British Commonwealth and Empire. I believe that to be the case, and I ask His Majesty's Government to consider the early calling together of the representatives of the Dominions so that 167 the matter of bringing together the problems of the Commonwealth and of Europe may be brought nearer to completion.

Mr. Marshall's words, serious as they are, draw attention to the intense burden and urgency of rearmament. The Prime Minister made one very important statement in this connection when he said that a reconsideration was going on about the whole question of American aid. It would be most unwise for any injudicious or badly-thought-out sentiments to be expressed from this side of the House on this important issue, and I should simply like to say, on behalf of my right hon. and hon. Friends, that, realising the big difference that there is now in the position of our reserves, realising the improvement that there is in that respect at any rate, though not in others, in our economic position, there would be great moral advantage in being able to proceed into a new department of our relations with America.

It is perhaps appropriate in our new Chamber to express our gratitude to Congress for the manner in which they have voted this aid in the past. Perhaps it is not too much to suggest that it might be possible, by one of those arrangements which are the result of careful statesmanship and more careful negotiation, to merge into the aid which it may well be both desirable and necessary to receive from America for the arms programme the remaining features of the aid which we have already received.

Before leaving the foreign situation, I should like to refer to the events in South-East Asia. We have thought that hitherto insufficient reference has been made to the deterioration, as we consider it, of the position in Malaya. Some of our hon. Members have returned from Malaya, together with hon. Members from the other side, and the reports which we have received from them and from Indo-China indicate that the situation is by no means yet in hand, as it should be, and we hope to have time during the discussion of the Address to consider the position in South-East Asia. There seems to be something psychologically wrong in our handling of the races of South-East Asia, as there is still something psychologically wrong in our handling of the new Communist China under Mao-tse-Tung.

168 At the Labour Party Conference, the Foreign Secretary referred to China as a great pacifist nation, but we have waited now for the best part of a year for any sign of reciprocity after the recognition which we granted to the new régime. We consider that our advice given at that time and since that recognition of the new régime in China should have marched hand in hand with similar steps taken by the Great British Dominions and by the United States of America would have been the wiser course, and nothing that has occurred since has made us in any way alter our opinion on that matter.

Now there is a new phenomenon in the Far East, and that is that Chinese forces are reported to be invading Tibet. The importance of Tibet strategically to India and Pakistan is well known to any of us who have had relations with that part of the world, and I hope that this event will shake into a sense of reality the Governments of India and Pakistan and will bring the whole front of India, Pakistan, the United States of America and Great Britain into a closer line of defence than it has been in the past.

I should like to say at this stage that I trust the British Foreign Secretary will in no way lose touch with what I regard as the sensitive, although not always correct, approach of Pandit Nehru to world problems. It would be a tragedy if the paths of the new India and of Great Britain were not identical in these great problems, not only of China but also of South-East Asia. Therefore, let us hope that the result of this recent development will be that these nations are brought more closely together, and that we use the wisdom of Pandit Nehru in our own domestic Imperial councils. Those are all the questions on foreign affairs to which I wish to pay attention at the opening of my remarks.

Coming to the impact of the foreign situation and the re-armament programme upon the home front, the first great truth that emerges about the home front is that it is possible that increasing productivity may enable us to bear many of the great burdens that the re-armament programme will impose. I recently attended the Colchester Oyster Feast where, in the presence of a number of hon. and right hon. Gentlemen opposite and of a few oysters, I listened to the right hon. Gentleman the Foreign Secretary make a singularly impressive speech on those lines. 169 The Father of the House, and others who were there, could testify to the sincerity of the right hon. Gentleman in referring to the necessary strength we must have to create peace, and also in saying that if productivity increases at home in industry and agriculture, we may go some way towards paying for this great burden.

If we all accept in the spirit of that Feast the truth of such a remark, we should now turn our attention to the manner in which productivity in this country must be encouraged because unless we encourage productivity the only alternative methods of financing our new programme are increased burdens, increased taxation, increased suffering and increased difficulty for our economy. I said just now that there was evidence of the improvement in our economy. It is a somewhat sinister fact that the main improvement in our economy derives from the rise in world commodity prices, particularly in South-East Asia, where we are at present engaged in such trouble in fighting the vanguard of Communism. Unless we win that victory, how can we be sure that these very commodities which are assuring part of our recovery will be available for that recovery?

Further, if we examine our economy alone without regard to the tin and rubber of Malaya, to the wool of Australia, or to the jute of India, we find that we are still facing immense difficulties in our island economy as apart from the economy of the sterling area as a whole. We are facing mounting costs; we are facing increased wage demands; we are facing the thawing of the wage freeze associated with the name of the late Chancellor of the Exchequer; and we are facing a mounting inflation and not a risk of inflation, as it is referred to in the Gracious Speech. There is also at the same time a distinct need, if we are to maintain our economy and to maintain our exports, to moderate Government expenditure and to face the problem of inflation in a much more dramatic manner than the Prime Minister did yesterday, with his little story about the railway train.

In face of these problems, the Government should encourage enterprise where-ever it is found, because that is the only way to improve productivity—to give incentive wherever possible and to con- 170 trol first and foremost its own excessive interference and its own expenditure. If there are to be controls, the Government must give a lead by showing some power to control themselves and their own expenditure. What is wanted, as "The Times" leading article said today, is public economy and private efficiency. In face of these needs to encourage productivity, the Gracious Speech is most disturbing because it gives a clear indication that the Government propose to rely on permanent physical controls and an intensified planned economy to achieve results such as full employment and the avoidance of inflation, which we think can far better be achieved in the ways I have already indicated.

It is the determination of the Opposition to maintain a policy of full employment, and, as anyone who read the recent report of the Trades Union Congress on this matter will realise, the present policies for full employment are based on the White Paper produced in 1944 under the Premiership of the present Leader of the Opposition, a paper which several right hon. Gentlemen here on both sides produced together. Our aim is to defend full employment and to ensure that the resources of the community are used to the best advantage and to avoid inflation. Of course, there must be some controls in our general economy. We have already stated that. In the course of the speech I am making, I shall indicate certain aspects of control which are necessary at the present time and may be for some, we hope, short time ahead.

We indicated our willingness in this direction in the Debate which took place on 23rd October on the question of the Supplies and Services Act, and the statement made by my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) at that date gives an indication of our policy in this respect. He said: … we cannot hold ourselves responsible for taking any action which, on the one hand, would possibly injure rearmament, and, on the other hand, bring about complete administrative chaos … in directions in which we are still convinced that it is necessary to carry on with some controls."—[OFFICIAL REPORT, 23rd October, 1950; Vol. 478, c. 2523.] That indicates the bona fides of the Opposition in regard to controls and to our general attitude towards the Supplies 171 and Services Act. But the Government are now asking in the Gracious Speech that they should be given powers to regulate production, distribution and consumption and to control prices on a permanent basis but subject to Parliamentary safeguards. This follows, as far as we can see, the general line of the Lord President of the Council in speaking to the Socialist Party Conference at Blackpool on 8th June, 1949, where he said: The Executive and Government have no intention that the Supplies and Services Act shall come to art end. It is an essential basis for the organisation of economic planning and control, and therefore we shall place a revised and permanent version of that Act on the Statute Book if we are returned to power. There was a little playing down, a little muting of this view at the last election, and only side references to it in the Debate in this House on 23rd October. But with the Gracious Speech we have now got back to the naked view of the Socialist Party as expressed at Blackpool in June. 1949, that Labour proposes to rivet on our economy a permanent system of controls to ensure the permanence of the Socialist conception of handling our economy at home. We regard that design to rivet the Socialist system on the country as rot only extremely dangerous but extremely undesirable, for reasons which I shall give. My right hon. Friend the Leader of the Opposition stated our view at Blackpool in May of this year, when he said that we should oppose the permanent extension of the Act and insist on the continuation of it only on a year-to-year basis, in order to attract and retain full Parliamentary control. That is our policy, and that is the answer to the Lord President when he appears to think that we are ready to see all the powers under discussion transferred from the sphere of Parliament to that of the Executive.

Let me give some examples of our very sincere objections to this course. We made clear, when we took part in the Debate of 23rd October, that many of the controls that had to be renewed or else rejected in toto we considered to be unnecessary or objectionable, or both. Let me, however, take two major examples to indicate the strong objection which we have to the course the Government are now taking.

We have always regarded it as unwarrantable that the Government should 172 propose to make permanent Regulation 58A, the power to direct labour in peacetime. This may sound a very general remark, but if we examine this Regulation in detail—there are plenty of Regulations in this volume which hon. and right hon. Gentlemen ought to examine—we see that it gives literally tyrannous powers to the Executive over the individual. It says, for example—and I am quoting a paragraph from it which my hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), has already indicated to the House—that: The Minister of Labour and National Service … or any National Service Officer may direct any person in Great Britain to perform such services in the United Kingdom or in any British ship not being a Dominion ship as may he specified by or described in the direction, being services which that person is, in the opinion of the Minister or Officer, (capable of performing. Those seem to us to be powers which it would be absolutely wrong for this Parliament or any other, if we are to preserve the spirit of Parliamentary government, to hand over in permanence to the Executive.

If the Government think that they are going to push forward a power like that into the sphere of the Executive and retain it only subject to Parliamentary safeguards, which, we are convinced, will be illusory, they will be in for the biggest fight of their lives in this Parliament; and we shall be inspired by that spirit which inspired our ancestors, namely, the retention of individual liberty and the power of Parliament over the Executive. This is a perfectly sincere difference o opinion. If hon. and right hon. Gentlemen opposite think that they are going to rivet these powers of the Executive over the individual, they will find that they are very much mistaken when these matters are put clearly before the country.

I have endeavoured to be fair to the Government and, in particular, have consulted the first notable speech made by the new Chancellor of the Exchequer in the Debate of 23rd October. In this connection—and in passing, as we are in the midst of controversy—I should like simply to say that we on this side all recognise the loss the country has sustained by losing the abilities of the former Chancellor of the Exchequer. We trust that he may return in due course, as, indeed, he has informed me 173 personally that he hopes he will, to his usual health. Leaving that matter on one side and coming back to the controversies we are discussing, the new Chancellor of the Exchequer said on 23rd October: I could not honestly and conscientiously say that within the next 12 months it is quite out of the question that we should need to make orders under this regulation."—[OFFICIAL REPOR I, 23rd October, 1950; Vol. 478, c. 2594.] And we have not had, either from the Lord President or from the new Chancellor, any disavowal of the fact that it seems likely that this Regulation will be carried forward into permanent legislation by the Government under the powers which they seek through the terms of the Gracious Speech.

Let me take another example. We object equally strongly, although this matter affects corporations and institutions more than it does individuals, to the intensely wide terms of Regulation 55, which is, perhaps, the most notorious of all these Regulations. Under it the Government may regulate or prohibit by Statutory Instrument the production, treatment, keeping, storage, movement, transport, distribution, disposal, acquisition, use or consumption of articles of any description for the purpose of ensuring that the whole resources of the community are used in any manner which they think fit.

We definitely regard that Regulation as not being suitable for carrying forward out of the sphere of Parliament into the sphere of the Executive so that they may make orders. We realise that the cat has been let out of the bag by the secretary of the Labour Party, Mr. Morgan Phillips, at a Press conference on 19th August, when he stated that the Socialist policy of starting up public enterprises to compete with private enterprises could be effected under the powers given by Defence Regulation 55. We see that the aim of the Government is to take powers by this permanent legislation to take what Socialist action against private enterprise they think fit at any time.

The Lord President may say that he does not seek to take these powers at any time, and perhaps he or the Government may treat us later in this Debate with a little more candour than they have in the past, because when the Supplies 174 and Services (Extended Services) Act, 1947, was going through Parliament, the Lord President refused to tell Parliament what the Government intended to do with these powers. He used this language: … we are not going to be cross-examined in advance on what exactly we are going to do with the powers when we get them. There is no legitimate case for doing so, none whatever."—[OFFICIAL REPORT, 8th August, 1947; Vol. 441, c. 1798.] If it still is the case today that we have to go outside to a Press conference and find from the secretary to the Labour Party what the Government have in mind in using Regulation 55 when it is permanently enshrined, all I can say is that the Lord President is treating Parliament with contempt. It may be seen, therefore, that we are handling here something which may be described as a matter of first-class principle, and no I doubt further speakers in this Debate and during the next few months, when the Government bring forward their proposal and explain it to us, will go into it more closely.

I want to say this to the Lord President. I have never read this book before and, to do him justice, because he is not sympathetic with Fascism himself, I very much doubt whether he has read it. I was provided with it today. It is entitled, "Fascism," by Sir Oswald Mosley, "100 Questions Asked and Answered." My attention was drawn to Question 17—"How will you use parliamentary power?" The answer is this: The first Act of a Fascist majority will be to confer on Fascist Government the power to act by Order, subject to the right of Parliament at any time to dismiss the Government by vote of censure if it abuses that power. That is the Reichstag method of governing. [Interruption.] It is the Reichstag method, whatever hon. Members opposite may say; and however sincere they may be in their personal objections to Fascism, it is leading precisely in that direction and it is something which we on this side are not going to have, and we are going to put up a fight if the method of governing this country is to be by Order.

§ Mr. H. Morrison

The pro-Hitler Tories.

§ Mr. Butler

The Government may say that they will introduce these powers subject to Parliamentary safeguards. Let us just examine what these Parliamentary safeguards may be. What is meant? Do the Government mean to use the procedure of the negative Resolution? If so, we regard that as a quite inadequate method of safeguarding the liberties of Parliament and the Private Member. If Parliament is to remain alive and itself in control, the reserve powers must vest in Parliament and not in the Executive.

I said just now that there would be some controls—of which I shall give some examples, because we must all contribute what we can to this Debate—which we would consider necessary to retain for certain vital reasons. It may be necessary, at any rate under an Administration of the sort of competence we have now, to consider powers to control scarce materials or provisions for some little time ahead. It may be necessary, for example, to simplify the present method of controlling prices which, I understand, is done by at least three Acts of Parliament and one Defence Regulation.

It may be necessary to have powers of that sort, but we say that if such powers are necessary, as in the case of scarce materials and provisions, then just exactly the necessary powers to deal with these matters should be taken by the Government under specific annual Acts and these should be made renewable by annual Addresses in which Parliament takes the initiative, as was done during the war with the Emergency Powers (Defence) Act. That is a constructive proposal for dealing with the absolute powers which are necessary, and we think it far better than using the Expiring Laws Continuance Act method because that Act, with its Schedule, is very often most unsatisfactory and does not encourage or elicit the best form of Parliamentary comment.

We think the Government's present proposals, as hitherto explained to us, are wrong economically because they will not encourage the productive spirit, they are sinister constitutionally, they are designed in the interests of the Socialists retaining power and not in the national interest, they are on a par with the action taken to centralise control by the recent Act in connection with iron and steel and in the 176 smaller, but equally obnoxious, venture in regard to sugar.

But perhaps the most sinister aspect of these powers which the Government desire to take is the obvious sense of despair which is evident in the Government's outlook by their desire, for example, to continue in permanent legislation all their requisitioning powers and all the totality of the restrictive licensing system for building. It is quite clear that the Government not only accept scarcity but also are unable to face up to the necessary urge to break loose from some of these controls and some of these restrictive systems. Are the Government never going to be in a position to build enough houses to restore those that have been requisitioned, or to ease or remove the restrictive licensing system?

We are in no doubt that we must make a great drive for increasing the number of houses to be built. At present as we see the social effort in this country we see it dissipated by trying to do everything at once, instead of concentrating on certain priorities. The new towns, the health centres we have not seen or hardly seen, the effort to try to do everything at once in education without concentrating on the priorities, all these are examples of the need for laying down priorities and deciding what can be done properly first.

The Gracious Speech says that His Majesty's Government: will maintain the essentials of their social policy. May we ask the Government to explain what they regard as the first essentials and to give us a description of what they regard as inessential? We are quite clear. We consider that social, and indeed economic, reasons make it essential to give first priority to the policy of housing, and an opportunity will arise later in the Debate on the Address for the matter to be considered in more detail than I can do it today.

I think the Government are underestimating, whether they like it or not, the urge of popular opinion which is behind our target of 300,000 houses per year. They under-estimate the urge of this opinion, but perhaps they have not felt it in the country. I am convinced that hon. Members have felt this urge in their constituencies. Some of us M.P.s who hold what I call "surgeries" and meet 177 our constituents at weekends, know that today by far the greatest pressure from the public upon us, whose duty it is to keep in touch with the public, is on the question of the production or more houses for the people—[An HON. MEMBER: "Which people?"]—and we of the Opposition are not prepared to allow things to go on on the static and unimaginative level which the Minister of Health appears to have adopted. He may be a dynamic speaker, or a "dynamic sweeper" according to the description of the Prime Minister, but he is certainly not a strong administrative worker in the cause of housing. We are willing to challenge him and take him on at any time on this matter.

I feel that when the House reflects, as it must do, upon the stories of broken family life, of juvenile delinquency and the increase, for example, of tuberculosis in Scotland, we must associate it with the housing difficulties in Scotland. In a place like Salford there are 10,000 out of 50,000 houses condemned as unfit, and in a city like Birmingham there are 30,000 houses in the central area scheduled for demolition. His Majesty's Government have had five years and more and there is definitely an urge on the part of the public, with which we are going to associate ourselves in the honourable attempt to achieve our target.

Our efforts are referred to by the Lord President of the Council as "tawdry promises." I have such a collection of tawdry and worse promises here that I could detain the House for an indefinite period this afternoon. It always seems to me that Cambridge, the town with which my family are particularly closely associated, has a sort of giddy effect upon His Majesty's Ministers. Take the statement, for example, made on 12th October, 1946, by the then Parliamentary Secretary to the Ministry of Health, who later became Minister of Works and who should have been in the game a bit. He said: Six million houses are needed in the next 10 years. To get that figure we shall have to build 600,000 a year, but I believe that by temporaries, pre-fabs and things of that sort"— whatever that may mean— we shall be able to do it. I should like to ask the Lord President of the Council whether that is a tawdry promise. Then, as in my catalogue I have 178 several spicy observations by the Minister of Health, I will pick out one. He said, for example, again at Cambridge, this time on 24th April, 1948, two years later and after the great slumps of 1947: By the next General Election the back of the housing programme will have been broken. Those statements have been made and many can be added. For example, the Secretary of State for War, who is sitting on the Government Front Bench, said: A Labour Government is the only one which will get you that house. That was in his Election Address at Dundee. The Secretary of State for Foreign Affairs said: I believe we could build four or five million houses and knock down any amount of wretched slums and rebuild our country in very quick time. What about these promises? The fact is that we are basing ourselves on a scheme, which, as I say, can be discussed in more detail during the Debate on the Address, that aims conscientiously towards the social objective we have accepted. We further regard this housing programme as a contribution towards economic recovery. We find endless examples of that. In the Ministry of Labour Annual Report for 1949, for example, it is stated that the number of farm workers has declined because of the shortage of houses in rural areas and the Minister of Fuel and Power, in a coal production statement on 25th October, said that housing still remained a difficulty. It certainly is a social and production difficulty at the present time.

I should like to make one reference to leasehold reform. We have been asked about our view. We are inclined to agree with the Government that there is no easy solution of this complicated problem. We should like to ask what final plans the Government are making. In "Let Us Win Through Together," the Government said that the law of leasehold would be reformed. So far as I can see they are merely imposing a moratorium. We believe that there is need to do three things. First, there is the necessity to extend the protection of the Rent Restriction Acts to ground lessees in occupation of their premises within the rateable value limits of those Acts upon the expiry of the leases. Secondly, we think that greater security should be given to tenants 179 of business premises; and, thirdly, we think that amendment and consolidation of the law in regard to landlord and tenant is necessary, particularly in regard to repairs and improvement. We shall await the detailed plans of the Government and, if they are not satisfactory, we shall attempt to include further provisions by way of amendment and advice.

§ The Minister of Health (Mr. Bevan)

Will the right hon. Gentleman favour the House with an elucidation of the term "consolidation of the law relating to landlord and tenant"? Does it mean increased rents?

§ Mr. Butler

No. The right hon. Gentleman should not try to trap me into an injudicious statement. I mean precisely what is stated in the majority Report of the Leasehold Committee in regard to proposals for repairs and improvements, and if the right hon. Gentleman will read the majority Report he will see what they say.

§ Mr. Bevan

"Consolidation" is a term usually used for the purpose of bringing together several Acts of Parliament into one Act of Parliament. "Consolidation" is not used for an amendment of an existing Statute.

§ Mr. Butler

I have asked the right hon. Gentleman to examine the source of my observation and I hope he will do so indeed, I am sure he is aware of it already.

I will conclude by saying that the great issue before us in this Gracious Speech is whether we move towards greater independence of, and opportunity for, the individual, or towards the straitjacket of imposed Socialism. The hon. Gentleman the Member for Rugby (Mr. J. Johnson) yesterday made reference to one of my predecessors at the Ministry of Education, Mr. H. A. L. Fisher, and this is how Mr. Fisher described the problem before us: How can the spread of servitude, by whatever benefits it may have been accomplished, be a matter for congratulation? A healthy man needs no narcotics. Only when the moral spine of a people is broken may plaster-of-paris become a necessary evil. The back of the British nation, even after five years of Socialism, is not broken, and we are awaiting our chance to restore the nation's morale and confidence.

§ Mr. Paget (Northampton)

I am glad I caught your eye, Mr. Speaker, because I want to say something about foreign affairs, but I cannot resist making some observations, in answer to the right hon. Gentleman, on the question of building and of the target, programme, minimum programme, or whatever they call it, which was produced and imposed on right hon. Gentlemen opposite by the Blackpool conference. I would concede immediately that it is quite possible for private enterprise to build 300,000 houses in a year provided the Government creates the conditions in which that private enterprise can operate. Indeed, it has been done in the past. It was done in the 1930's, in the 1890's and in the 1850's.

I would ask this question of right hon. Gentlemen and the party opposite: Is it their intention to recreate the economic circumstances in which private enterprise was able to build 300,000 houses in the 1930's? Surely that is a question to which we are entitled to have an answer. Are they prepared to re-create those economic circumstances? I will give way to anybody who cares to answer that question. Let us consider for a moment what those economic circumstances were. In the first place, there was cruel deflation, as a result of which there was mass unemployment followed by a heavy reduction in wages. At that point interest rates were reduced, but confidence in industrial investment had been destroyed. That channelled private investments into houses. Nobody would invest in anything but bricks and mortar.

Those are the conditions which bring about a capitalistic building boom. Not only in the 1930's were those conditions created, but also in the 1890's and after the "hungry forties." The conditions for a private enterprise building boom are the aftermath of a massive slump.

§ Sir Ian Fraser (Morecambe and Lonsdale)

The hon. and learned Gentleman asked someone to interrupt him on this question, and I propose to do so. Surely in the four years before the war, when we were building 300,000 houses by private enterprise, we were in a state of mild inflation. [HON. MEMBERS: "Oh."] Yes we were, and there was falling unemployment. We were not in a state of slump but were emerging from it.

§ Mr. Paget

I do not think the hon. Gentleman followed what I said. When a building boom is created, first, there is a slump which is brought about by high interest rates. That slump results in very great unemployment and cuts wages down. Then interest rates come down but as confidence in industrial investment has been destroyed cheap money goes into bricks and mortar. The building boom occurs as an aftermath—of slump. May I quote two figures—I hate statistics—to illustrate that—in 1937, which was the height of the pre-war building boom, house building represented 60 per cent. of the total investment of the country, public and private? Today, it represents 19 per cent. That is the difference in the situation.

Private enterprise does not build working-class houses in boom conditions or in conditions of full employment. Perhaps I might just conclude this by quoting Mr. Taft, the well-known American. He said that the one field where private enterprise failed was building. Mr. Taft was a great supporter of private enterprise. It has failed completely in boom conditions, because in competition for the services of the building industry commercial and luxury interests can always outbid those who need dwellings. Thus, private enterprise, left to itself, never, in circumstances of full employment, builds working-class dwellings. Again, I would ask the Opposition: Do they intend to recreate the economic circumstances in which alone private enterprise can function? If not let us hear no more about their achievement in building 380,000 houses a year before the war, because it is utterly irrelevant.

§ Mr. Henry Strauss (Norwich, South)

May I ask the hon. and learned Gentleman a question, because I wish to follow his argument? Would he explain what circumstances the present Minister of Transport had in mind when, in his election address in 1945, he said that the Socialist Government would build four million houses in less than 10 years? That is a better average than 400,000 a year. What conditions did he have in mind?

§ Mr. Paget

I really cannot answer for everything which has been said in election addresses. The hon. and learned Gentleman's leader promised half a 182 million steel houses. There are many silly things which have been said in the election addresses of hon. Members opposite. It is an irrelevant interruption and an interruption below the level of the hon. and learned Gentleman. I would suggest to him, frankly, that this is a serious argument which merits serious consideration.

If hon. Members opposite do not propose to revert to the economic circumstances which created there three building booms do they propose to build 300,000 houses within the framework of a planned economy of full employment? If they do, there is one drawback to an economy of full employment. One cannot get something for nothing. Under the old system one could. There was an unemployed pool, and, if that pool was brought into operation, substantially one did get something for nothing. Under a policy of full employment we cannot get something for nothing. What are they going to do about that? If we are to have 100,000 more houses, of what are we to have less? What is the answer? We have not been told. Are we to have less capital investment programme? Are we to have fewer armaments? Where are we to have less?

§ Mr. Gerald Williams (Tonbridge)

Less Socialism!

§ Mr. Paget

Surely someone will tell us. Are we to have fewer consumer goods?

§ Mr. Baker (Norfolk, South)

We get that anyway.

§ Mr. Paget

If we are to have fewer consumer goods I would have thought it probable that prices would be even higher—and they tell us prices are going to come down. Are we to follow the suggestion of the right hon. Member for Woodford (Mr. Churchill) and have less National Health Service wigs? Does the right hon. Gentleman imagine we are going to build thatched cottages? If not, why would less wigs mean more houses?

§ Mr. Nigel Birch (Flint, West)

Does not the argument of the hon. and learned Gentleman boil down to this, that under Socialism there never will be any more houses at all?

§ Mr. Paget

I am arguing at the moment that we have put forward a programme. 183 When we have put forward programmes we have complied with them—[HON. MEMBERS: "Oh."]—the party opposite is trying to delude the electorate—[HON. MEMBERS: "Why?"] They have put forward a blatantly fraudulent prospectus—[HON. MEMBERS: "No."] I am asking them to substantiate their prospectus, and tell us what they intend to do. It is not merely a question of money, it is a question of skilled labour. Builders are fully employed—[HON. MEMBERS: No."] Well, obviously in some places there are a few building operatives out of employment. But I think that the hon. Member for Scarborough and Whitby (Mr. Spearman) would certainly tell his colleague two benches behind him that there was over-full employment in the building industry. There is not enough unemployment in the building industry today to get fluidity and adjustment. We have about as full employment in the building industry as is conceivably possible in an industry of that nature.

Since the builders are fully employed, how are they to build more houses? Do hon. Members opposite suggest that the existing building operatives can be made more productive? Do they say that? A good many of them have said it, but do any of them say it now? Can they tell us how the building operatives are to be made more productive? Is it to be more stick or more carrot?

§ Mr. Osborne (Louth)

The hon. and learned Member asks how shall we get more production from the same number of building operatives? The answer is, by paying men to do the job, by cutting down taxation, and, instead of penalising men by P.A.Y.E., paying them extra for overtime.

§ Mr. Paget

Do I understand hon. Members present today are going to suggest that the operatives should be given more stick? If that is so, I am sure the operatives would like to know about it.

§ Mr. Osborne

Would the hon. and learned Member deal with my point?

§ Mr. Paget

Are they to have more carrot, more incentive—[HON. MEMBERS: "Yes."]—in the form of bonus production schemes? Is that the suggestion? Because, of course, they are already in existence, both in public works depart- 184 ments and with private builders. Most of the building is being done with private builders. Are hon. Members opposite proposing to control private builders by the imposition of new bonus schemes? What are they going to do, in practice, to get these incentives operating? Are they simply going to raise the wages? If so, how much will it cost?

There is another question. If hon. Members opposite have no suggestions, and I can get none out of them, as to how they are proposing to make building operatives more productive, can they make the building owners, the master builders, more productive? I think there is a way to do that, and here I will make a constructive suggestion—[HON. MEMBERS: "Hear, hear."] I have been asking some questions about a singularly unconstructive suggestion from hon. Members on the other side of the House. Now I will tell hon. Members opposite something about this, because we have some ideas in Northampton. There, we started a public works department to build houses by direct labour. It was started by a Socialist council with a good deal of criticism from the other side and then the other side won the Northampton Council. To their credit, be it said, they appointed an ex-builder. Councillor Ward, to be chairman of that public works department. He put his heart and soul into the work and has made an admirable job of it; let us give all credit to him for it.

What is the result of that public works department? We there have public enterprise in competition, on level terms, with private enterprise tendering for the houses, and the increase in production by private builders has been simply remarkable. Before that they took a housing contract and used it for spare time work between more profitable jobbing. Now the public works department keeps them up to scratch, and I would recommend that as an experiment which ought to be tried more widely. Something of the same sort is being suggested in the Gracious Speech with regard to sugar. There, public enterprise, in competition with private enterprise, provides a yardstick by which one can judge private enterprise and public enterprise. That competition would be extremely healthy, and it should be introduced.

If hon. Members opposite have no suggestions about how to get more houses 185 with the existing building force—and they have produced none—do they propose to make changes within the building programme? Are we to have more houses at the expense of fewer schools, hospitals and factories? Is that where the saving is to be made? We ought to be told. Of course, that is not a real alternative. The kind of labour required for the hospital type of building is different. The two kinds are not really interchangeable; and there is also the question of the mobility of labour.

Again, is the building force to be increased? How would they do that? Would they do it in the traditional manner by creating unemployment elsewhere? If so, how would they do that? Would it be by prohibitive regulation, or what? Would they, on the other hand, resort to direction of labour? Would they direct people into the building industry; or would they offer higher wages to induce people to join the industry? The payment of higher wages to attract people to the industry is expensive, because is raises the prices of the houses which one would get anyway as well as the prices of the additional houses. What would be the cost of the additional wages necessary to attract the extra men to build another 100,000 houses? Has any hon. Member opposite, before bringing forward this demagogic suggestion, even considered that? We have not heard a word about it.

If more labour is introduced at this point it will be dilutee labour composed of people who have not served their apprenticeship. Labour of that kind is not very productive but, usually, it is most expensive. That would mean an enormously expensive programme.

§ Mr. H. Strauss

The hon. and learned Member talks about this proposal of 300,000 houses a year with the existing labour force as a demagogic promise made by the Tory Party. Does he realise that Mr. Coppock, in a recent statement, has said that it is possible, and does the hon. and learned Gentleman say that Mr. Coppock knows nothing about it?

§ Mr. Paget

The hon. and learned Gentleman should not quote remarks like that entirely out of context.

Do hon. Members opposite say that they will get these houses with the existing labour force? If so, will they tell us how?

§ Mr. Baker

Will the hon. and learned Gentleman tell us if he has thought about limiting restrictive practices within the building labour force which is available today?

§ Mr. Paget

That is extremely interesting. Is that the proposal?

§ Mr. Baker

Yes.

§ Mr. Paget

What are these restrictive practices? Will the hon. Gentleman tell us that? Will he show where they occur, and will he tell us by what means the Tory Party propose to impose new regulations upon the unions? It would be most interesting to know that.

§ Mr. Baker

We propose to have bricklayers willing to lay more than 300 bricks a day, and many of them are willing. We propose to co-operate with people like Mr. Coppock in getting the 300,000 houses which the people need.

§ Mr. Paget

Will the hon. Gentleman tell me what regulation of any union limits bricklayers to 300 bricks a day? Where does this piece of newspaper fiction come from? If bricklayers refuse to lay more than that number in any instance how will he deal with the matter? What is the stick that will prevent it? All this vague newspaper stuff—

§ Mr. Baker

It is not a stick: it is an incentive which should be brought about. It is fear of unemployment which makes men want to limit production. The Conservative long-term full employment policy will ensure that that does not happen.

§ Mr. Paget

Fear of unemployment—is that the stick On the question of incentives, what is there to prevent any private builder giving any incentive he wishes? Nothing. All this is hypocritical nonsense.

Before putting forward this proposal, did the Conservative Party consider the housing requirements of the country? Will they be satisfied when there is one house for five people.

§ Brigadier Clarke (Portsmouth, West)

It would be a great improvement.

§ Mr. Paget

Is that enough? Do they know how many houses there are per head in this country? Would they be satisfied if there was one house to every four people?

§ Mr. Nigel Davies (Epping)

A house for every family.

§ Mr. Paget

It may be said that they would be satisfied with one house for every separate family, but how would they define a family? Would it be a married couple with a child, or where there is no child would they think it reasonable to accommodate an aged parent, or a brother or someone like that? Perhaps they would be satisfied with a figure of one house for, say, three and a half people. I wonder whether hon. Members opposite have even considered the question of how many houses are needed. In fact, at present there is one separate dwelling to every 3.4 people. That is roughly the figure. It is the highest in the world.

The problem is primarily one of distribution. I should like to quote from my own constituency an example of how that has arisen. In 1906, Northampton occupied about a quarter of its present area and it had three-quarters of its present population. Then it had less than one house to six people; now it has one house to three people. In 1906 there was no housing problem in Northampton. In every street there were boards offering houses to let. Landlords offered houses rent free for one month to tempt tenants into them. [HON. MEMBERS: "Those were the days."] Indeed, those were the days. Those were the days when poverty cured the housing problem. Those were the days when two or three families occupied one house because they could not afford separate dwellings. Now we have a different state of affairs.

I could tell hon. Members how they could cure the housing problem. If they repealed the Rent Restriction Acts, if they let rents go sky high in the present shortage, we would very soon find vacant houses. I think that certainly everybody on this side of the House agrees that that cure would be very much worse than the disease At present rent restriction has made occupation a vested interest. The result is that houses simply are not vacated. The legislation of the last few years has enabled people to afford not to take lodgers. All hon. Members have had experience of this sort of thing, and they know how impossible it is to get lodgings, particularly if there are children. Now, people can afford to do without taking 188 lodgers, and the result is that an enormous number of houses today are occupied by single people. That is the basic problem that we are up against.

We have built well in Northampton, but our housing list is worse today than it was in 1945, and by this I do not mean that it is merely longer because of people who would like a house but do not really need it; I mean that we have more families who are separated because of housing difficulties, and more families living in seriously overcrowded conditions. There are more of them now than there were in 1945, because the progressive maldistribution of housing is proceeding at a greater rate than the building of houses. That is the serious question which we are facing, and, before bringing forward this demagogic programme, hon. Members opposite should consider the guts of the problem and how to deal with it.

I want to make this proposal, which, I think, is highly necessary, to the Minister. It is that the management of rent restricted houses ought to be placed in the hands of the local authorities. If they had the letting of these houses, if they had the control of the rents of these houses, so that they could adjust them according to circumstances, we could then, through that management, gradually, but not immediately, get the redistribution of houses which is the error at the very bottom of our present difficulties. I would very seriously commend that suggestion to my right hon. Friend the Minister.

I am afraid I have been very much diverted from the speech I started to make, and I now simply want to say one or two things quietly on the question of defence.

§ Mr. Profumo (Stratford)

I am much obliged to the hon. and learned Gentleman for giving way. The hon. and learned Gentleman asked us what was the big problem before us in regard to housing. May I say that if his speech, as I believe it does, represents the views of hon. and right hon. Gentlemen opposite, the biggest trouble is that the Labour Party is satisfied with the present speed of building houses and is not prepared to increase it. If that is the view of the Minister of Health himself, will he please tell us?

§ Mr. Paget

That is not the question at all. Of course we are not satisfied; of 189 course we would like more. I have been asking questions of the Opposition on how they would get more.

If I may, in five minutes, put a point which seems to me to be of overwhelming importance, it is about the security of our western frontiers in Germany. The Government have at last come round to the view that these frontiers are indefensible without German participation. I welcome that view very much indeed, but I would make it quite clear that that participation can only be on a divisional level and must be as a part of a combined army of the Atlantic Powers, and not as an independent police force, because we cannot get two armies under separate command operating in the same area, as the hon. Member for Coventry, East (Mr. Crossman), suggested in a recent debate. That is a thoroughly impracticable suggestion.

I would say that the basic reason why it is necessary to have a German contribution is a question of morale rather than the question of manpower. We are limited by the arms we have available. I do not think there would be any overwhelming difficulty in providing from Europe the numbers of troops necessary to bear these arms, but it is no more use giving the arms to people who have not got morale than it was giving arms to Chiang-kai-Shek. If we are to have an effective army we must have people who have a sense of personal superiority to the enemy whom they are to meet. They must have the feeling that they can beat the other fellow.

I am afraid that the situation in Europe today is such that that sense exists only in Germany. Only in Germany do we find people who have real confidence that they can win, confidence that they can beat the Russians. When they met the Russians on anything like equal terms, even on terms of three to one against on a limited field, they found that they could beat those Russians. Unless we can bring that feeling into the army of Western Europe, that army will be no good.

We must also realise that it will not be an easy matter to get that German contribution. A lot of people are saying, "Shall we allow the Germans to do this or shall we not; that is the question?" Believe me, it is not the question. It will be a matter of the utmost difficulty to persuade the Germans to come into the 190 armed defence of Europe, and this has certainly been my experience when I was there. Our anti-militarist policy has been more effective than a lot of hon. Members realise. The Germans are saying, "You have taught us that our fathers, brothers or sons who served in the army of the Fatherland were criminals. When you are asking us to come back and do it again, you are asking quite a lot." Fear of the Russians may be sufficient to bring it about, though it is not an easy matter.

It certainly is not a contribution which we are likely to get unless we can offer the Germans at least equal, and at least equally honourable, terms, and we should also remember that it is essential that we should get that sort of German who has the spirit of an honourable soldier. It is no use just getting the "scallywags." One of the conditions for getting the right sort of German into our defence forces is that we should stop treating the Germans who once served in the army as criminals.

There are at present people like Kesselring, Manstein and other commanders in prison. I saw a newspaper article the other day which was headed. "What sort of a people do they think we are?" It went on to ask if we imagined that they were going to serve as comrades with the men who are now imprisoning their most honoured commanders. We will never get the honourable type of man to serve on these sort of terms. I always regarded war criminal trials as unjust, because I think it is unjust for the victors to sit in judgment upon the vanquished, but in the case of the German military commanders not only were we being unjust, we were being untrue. We were seeking to establish things which were basically untrue.

Our experience of the German Army when we met it—I put the S.S. aside, as they were not in the German Army—was that they fought as decent soldiers. We got a lot of Russian propaganda to the effect that they fought like savages in the East. I examined one campaign in the East in very great detail, and, frankly, my conclusion was that the German Army had shown great discipline and a good deal of restraint in conditions of guerilla warfare of appalling hardship and against a very savage enemy. The trial of Manstein, if it did nothing else, did a very great deal to vindicate the German 191 Army. Manstein identified himself with his army and defended that army, and was acquitted of everything save very trifling charges.

We have got to set those men free if we are to get a contribution from Germany, and I would suggest to the Government that we should hand over those prisoners in Germany to the German Government. After all, if we are to treat the Germans as democrats and as people with whom we want to get along, then it is only reasonable that we should do that. They will not let the Nazis out—do not let us be deluded about that—but they will let out those people whose conviction does not carry moral sanction in Germany. I think it is highly essential that that should be done.

§ Mr. Nigel Davies (Epping)

I do not propose to be diverted to the same degree as the hon. and learned Member for Northampton (Mr. Paget) or to follow his points in detail, but I do agree with him when he says that part of the present trouble is due to maldistribution and to the effect of the Rent Restriction Acts as they now operate. At the same time, I very much doubt whether it is a problem which the local authorities could tackle. I should have thought they had quite enough on their plate already and that it is a problem to be dealt with by legislation in this House. I believe that by raising rents in certain cases, not, perhaps, in the proportion of the degree of inflation which we have had since the war, but in some lesser proportion, we should ease the situation.

I think we all agree that the main problem which has to be faced in this country today is that of meeting the cost of the re-armament programme which is to be imposed upon us.

§ Mr. Paget

It is not merely a question of raising rents: that will not do any good at all. What must be done is to manage the re-letting of houses.

§ Mr. Davies

The hon. and learned Gentleman himself gave an example of one person only occupying a house. I also know of cases where houses are not used to the full—there are one or two with which I am concerned—because the 192 rents are kept at a level which is very low indeed. Legislation could, possibly, provide some tribunal on which local authorities could have a say, but I challenge the capability of local authorities to deal with the problem in toto.

Surely, the problem which we have to face is that of paying for re-armament and dealing with the general world inflation that has been engendered by rearmament in the free world. The Gracious Speech mentioned the sacrifices which must obviously be made. There is, of course, a natural tendency on all sides to express the hope that at least part of the cost can be met out of increased productivity. The problem is how to get that increased productivity. Of course, hon. Members opposite will say, "Since the war we have already achieved a 30 or 40 per cent. rise in productivity. We are doing very nicely, and if we can only continue like that it will be all right." Though we may have done this, I would point out that since before the war the United States and Canada have achieved a 100 per cent. increase in productivity.

§ Mr. Michael Foot (Plymouth, Devonport)

If the hon. Member consults the last report of the E.C.A. Commission he will see it stated that the increase in productivity in this country since 1946 is greater than that achieved in the United States.

§ Mr. Davies

I was talking about the increase since before the war; I was taking 1938, which is the standard usually taken in these matters. For instance, since 1938 the United States have doubled their steel production. That being so, there is surely tremendous scope for us to achieve similar increases. It is said that our production is being hampered by war damage to factories, but I cannot find any evidence to support that view. As far as I can remember, we tended before the war to compare our standard of living and production with the Transatlantic countries and not with the European countries as is done today. That seems to be a post-war development under Socialism.

I would point out in passing that the increase which has taken place has been notably in private enterprise and not in the nationalised industries. The increases gained are, to some extent, limited in 193 value by the fact that they exclude transport and some other services. An important point to remember is that whatever rise may have taken place, the present world shortage of raw materials will probably result in the reduction of productivity in certain directions unless we are very careful. For instance, the Ministry of Supply has now reduced supplies of zinc users to 90 per cent. of last year's amount. We cannot pretend that we can make the same number of goods with nine-tenths of the material we had last year. There will also be a number of shortages and bottlenecks in many industries which will make it difficult to maintain the present production, let alone increase it as we must.

I believe that the very last way to deal with the problem, if it can possibly be avoided, is by further controls. My experience is that where the allocation of a raw material depends on the decision, if not the whim, of an official, it makes for a great deal of uncertainty in planning regular production. Although it has its weaknesses, I, frankly, would prefer the use of the price mechanism so that at least the raw materials can be obtained at a price, people can know that they are going to get them and workers will not stand idle simply because a certain raw material runs out.

I wish to make the following suggestions for increasing productivity. First of all, we must foster a greater degree of competition between private industry and nationalised industry. In some ways it is, perhaps, more difficult to do this than it would have been a year ago when a buyers' market was beginning to make itself manifest. But the problem still remains, and it is a fact that the tendency has grown up throughout many years, and has consolidated itself in this country, for trade associations, where no Government price is fixed, to fix their own prices and impose them. That leads to high prices and high costs of production. It is also true, of course, that these costs of production, which are often checked by Government Departments, can be elaborately justified. But as soon as the spur of competition is reduced, as soon as firms are protected from competition, costs will tend to rise, or not fall, as they would under the keen spur of competition. I suggest that one way of getting a higher productivity and lower costs is to pro- 194 hibit the fixing of prices by trade associations, as it is prohibited in some countries.

Another point that I must mention is that it does seem illogical, at a time when all are appealing for higher productivity, that everybody should read in the local newspapers that, in certain cases, trade unionists have been fined by the trade unions for exceeding their quota or for doing more than they were supposed to do. Surely something can be done about that. The next point concerns incentives, about which it is easy to generalise but not so easy to talk in detail. Much has been said about incentives for workers in the building and other industries. We certainly need more, and where they have been introduced they have been successful.

I should like to say something about incentives for higher grades, particularly for the highest salaried grades, because it is no use pretending that developments in industry, the formation of new industries, and the difference between industries in one country and another do not depend as much as anything on the few leading brains. I do not believe they do it entirely for money, but, no doubt, here again money is a great, if not a main, spur, and present incentives are just not adequate to induce people of the widest capacity to go into or to stay in industry in this country.

I do not wish to anticipate the Chancellor's next Budget, but I suggest that it is necessary that a radical step should be taken. I would go so far as to say that we should halve the Surtax on earned income, or something of that nature. If we must have nationalised boards surely it would pay the country, in order to get the best men at the top, to pay them a net income of two or three times what they are getting at the moment. I am aware that among hon. Members opposite and the Trades Union Congress there has been a lot of quibbling about that, but I do not see how they can deny that if we want the best men we must pay for them.

§ Mr. Ivor Owen Thomas (The Wrekin)

Is it not a fact that the general position taken up by hon. Members opposite and by their party, with regard to the payment of members of the boards of nationalised industries, is that they are being paid too much already?

§ Mr. Davies

I was certainly not aware of that. I am far more aware of the criticism that the nationalised industries are working at a loss. We pay men more in private industry.

To get higher productivity and cheaper production we must push forward with creating and integrating a European market. Together with the Commonwealth countries, which I am sure will join in with us, and with which we are closely linked by trade, we should try to create a market of the size and on the scale of that of the United States. Thereby, we should have a production line of the same size, which would make a big difference, particularly in things such as automobiles. I know great progress has been made in cutting down the quota system. I believe much has now to be done in respect of tariffs to create that very market. At the same time we should be helping the political integration of Europe.

The last point I wish to make in this respect is partly political. It affects production but I think that many hon. Members on both sides will disagree with it. I believe that, in the circumstances, both to protect the security of our country and to get maximum production, we should ban the Communist Party. After all, they are saboteurs of production who have been very successful in certain cases. We are having a cold war which breaks out in certain areas into a shooting war. They are enemies in this way, and we should be entitled to treat leading and active Communists as enemies. We should be entitled to find out what they know and then, by all means, let them work.

I know it is argued that if we ban the Communists, as our Commonwealth friends in Australia and South Africa have done, we shall drive them underground. But surely where are they if they are not underground at the moment? Where were Dr. Fuchs and Mr. Pontecorvo if they were not underground? Surely, if we went to it, we could find out from Communists a bit more about other Communists, and uncover the whole iceberg, of which only a small portion shows at the moment. If we were to do this, and thereby remove certain subversive elements, about which one notable trade union leader in particular has complained, it would be easier to hope for a greater degree of cohesion 196 and fewer unofficial strikes. I fail to see where collective bargaining leads if we get contracts which employers are bound to keep but which can be evaded against the advice of trade union leaders. If Communist influence is eliminated, surely the unions, just as the employers, should be liable for the carrying out of a contract.

However much we may increase production, and whatever methods we may employ, there will be a gap if we are to pay for rearmament. The old remedy of every Socialist Chancellor, of course, is to increase taxation. Not only will that be disastrous for production, by the diminution of incentives, but it does not seem that, nowadays, it has a corresponding effect in reducing inflation. If taxation is increased to a fantastic level, people will save less and will cash their savings to meet taxation and, thereby, we shall not secure the same degree of disinflation.

To meet the problem it is necessary to indulge in economy now, because inflation has already started on an appreciable rise again. It has been continuous, the curve has shot up, and we need to do things now if we are to avoid not merely gradual but runaway inflation with disastrous effects upon every home in the country. To meet unexpected emergency, and if we are to pay for rearmament, I believe there may be ways in which the wings of the Welfare State will have to be clipped back. There are things we just cannot afford.

First of all, surely, the food subsidies can be cut. The Socialists have cut them down already. If we are to pay for the arms to prevent another war, we cannot realistically pretend we can go on paying £400 million a year to keep food prices at some level theoretically related to what they were before the last war. Again, when the Health Services were laid before Parliament, it was originally estimated that they would cost a net £150 million. They are now running at £400 million. I frankly question whether that is an expenditure, however desirable, which can be borne in the circumstances, given this new burden of rearmament. I should have thought that the Minister of Health could be more than content if he were to spend twice the sum originally budgeted for, that is to say if it were £300 million and not £400 million.

197 We know that the wage freeze has ceased to be a reality. I think it should be frankly admitted that wages are bound to rise.

§ Mr. Foot

And salaries.

§ Mr. Davies

And salaries, of course. Provided we get the productivity, I do not believe that increased wages will do any harm, and I do not believe they have ever done any harm. The only people who need protection, as has been said many times, are those with small fixed incomes, such as old age pensioners for whom special provision is needed. Those are a few points relating to increased productivity and reduced expenditure, which are the only two methods by which we can face the situation realistically.

I have one further point to make on a slightly different subject. We all know that however great our own efforts and sacrifices, we cannot alone contribute enough to stem the tide of aggression. Surely our greatest contribution to the solution of the problem is the example which we set, the sacrifice we make and the influence which we exercise. By our sacrifice we can influence the countries of Europe to act likewise. Our influence, which is or should be pivotal between the United States on the one hand and Europe on the other, should be the chief influence in achieving that greater degree of unity which is necessary to peace.

The German Chancellor said a few days ago that Russia—and Communism—can only be stopped if it is faced with what is virtually one Power. I am sure that is true. It is the only way by which we can provide for an effective and secure German contribution to the defence of the West. Why should we leave it to France to produce a sudden and striking initiative? Why should we leave it to the United States to prod and urge? Has not the time come for a greater initiative from this country? I believe that in the long run, whatever may be the temporary expedient, the world can only be saved from further wars and civilisation from absolute extinction, if we go further than the present alliances and pacts and have virtually one government which goes even further than the United Nations organisation.

If we are not willing, as it appears that we are not at the moment, to go all out in integrating Europe, apart from a few 198 measures of a limited nature, surely we should propose something else. We should form a lasting and permanent association between our Commonwealth and the United States, one of the express purposes of which would be to further a similar integration in Europe. We should propose a formal association, and formal organs would be set up to ensure not merely co-ordinated but united defences and a united single foreign policy. Some degree of economic integration should follow, but that would take much longer to work out.

If two such groups could be formed—on the one hand, let us say, the Anglo-Saxons or the British Commonwealth and the United States, and Europe on the other hand—which would be closely connected within the framework of the Atlantic Pact, then, surely, before long they could join together and form what would be the basis of one world government. Only such a government transcending all the present pacts and associations which have been formed to meet the present emergency, can save us in the long run from war and disaster.

§ Mr. Keenan