ECONOMIC SITUATION

§ Mr. Herbert Morrison (Lewisham, South)

I beg to move, at the end of the Question, to add: But humbly regret that while the Gracious Speech demonstrates the determination of the Government to introduce confusion into basic industries which were in process of being integrated and developed in the nation's interest, it discloses no positive and effective proposals for dealing with the serious economic position of the country which is evidenced by the decline in production and exports, growing unemployment and short-time working and increased cost of living; and this House has no confidence in Your Majesty's present advisers whose policies threaten a return to the social conditions of the inter-war years. The debate starting today and continuing tomorrow will deal largely with economic matters concerning the economic Ministers and, above all, the Chancellor of the Exchequer who, so to speak, is the co-ordinating Minister between the various economic Departmental Ministers. I am sure that the whole House understands the absence of the Chancellor of the Exchequer and we should all like to express our sympathy with him on the death of his very distinguished father. No doubt the Chancellor will be here tomorrow. We shall be pleased to see him.

Our primary anxiety and complaint about the Gracious Speech is that it shows no signs, as far as we can see and subject to what Ministers may say, of the 597 Government having a coherent, progressive, economic policy. I think that there is one thing above all that the British people desire irrespective of party—I am talking about the masses of the people—and that is the desire to get a decent living with reasonable security and without the fear of slumps, mass unemployment and destitution.

But they want that not merely for today and tomorrow: they want to feel that that is a permanent condition of our social and economic life. I do not think that the people are too much concerned as to the particular fashion or means by which that is to be achieved. They have no preconceived doctrinal or dogmatic ideas in their mind, but they have an ambition to be able to get a decent living, in return for which they are willing to work. They want that to be a condition of affairs which has a reasonable stability and permanence about it.

I submit that it is certainly our business today to engage in the perfectly proper and legitimate clash of party opinions and political differences. That is what the House of Commons is for. If we were all to agree and merely to echo each other, this would be a dull place, and the nation and everybody else would be disappointed. So it is proper and right that the clashes of principle and opinion which exist between the two great parties in the State should find expression. Nevertheless, I venture to add that I think that there is an equal duty to seek to examine the facts as fairly as we can and for all of us in all parts of the House to try to urge constructive and objective policies which are calculated to help our country in achieving economic progress and security.

Therefore, my own speech will be, I hope, largely devoted to that, though it will have something to say—a fair amount to say—as it ought, about the shortcomings, as we see them, of the Government. But when the party battle is done—and the party battle must take place—it is nevertheless the duty of all of us to remember that the collective well-being of our country comes first, that it ought to be the first consideration in our minds.

Two things are expected by the nation from Her Majesty's Government. The first is that they should have a coherent policy to deal with the short-term situation, and the second is that they should 598 have an ambitious and well-conceived plan to build up the economic resources of our country. Looking at the short-run problem, or problems, with which we are faced, let me say straight away that we welcome the improvement in the gold reserve position, though I am sure that everybody will agree that there is room for further improvement.

I always thought when we were in office that there was a tendency on the part of the Opposition at that time rather to get a kick out of the misfortunes of the country; that if there were troubles and if economic difficulties arose there was an inclination to cheer and to jeer and to laugh about it, probably on the basis, "Well, that will hurt the Labour Government and do the Tories a bit of good." I do not take that view, and my hon. Friends do not take that view. If the country is in trouble, we are sorry about it, and if the country is doing a bit better in some respects, we are glad about it. That, I think, is the duty of everybody irrespective of party.

Therefore, I am glad that there has been some improvement in the gold reserve position. It is, I think, due to five main influences. First, there is some change in the terms of trade which has benefited us to the tune of about £200 million this year; that is to say, the average level of import prices has fallen somewhat, and that has helped us, together with some increase in export prices. I do not think that the Government would claim particular direct executive credit for that, it is a change in world conditions, just as in earlier years we suffered from conditions the other way round, partly as a consequence of the outbreak of hostilities in Korea.

Secondly, there is some recovery in invisibles. Thirdly, United States aid is some help to us. Fourthly, our exports to the non-sterling area, and especially to the dollar area, have not fallen as much as they have in other areas; but there are falls in exports that ought to give us pause and must give us some cause for anxiety.

Fifthly, there have been import cuts made by administrative action, through economic controls by the Government. That has also assisted in this situation. And despite the fact that there was from time to time great denunciation of economic controls and planning as a 599 philosophy and instrument of Government, I think that the present Ministers quickly learned when they came into office to say, "Thank goodness the Labour Government left us the power of economic control and some degree of economic planning."

All these import cuts are presumably the result of direct Government action. Nevertheless, there is a limit to the amount of that medicine which the nation can take. It has resulted in some diminution of the variety of food available to the people, despite promises at the election that there should be a greater variety of food. Imports cannot be cut beyond a certain point. It must not be assumed that the remedy of cutting imports by order is one which can be carried on without limit, partly because there is a limit and partly because it might have a bad effect on the health of the people and on the economy of the nation.

As to United States aid, this is always a matter of some uncertainty. It has been a matter of uncertainty under the existing United States Administration and it will be a matter of uncertainty under the new United States Administration. Therefore, no British Government can assume that the level of United States aid at any point is a certainty as to continuance in the future. We must keep that in mind.

Moreover, we cannot assume a continuance of the improvement of the terms of trade. Therefore, I would warn the House and would warn Ministers that it is never wise to engage in excessive rejoicing about short-period improvement. It is liable to be dangerous. We had some periods of improvement during our term of office and some periods when things were not so good. The tendency, of course, was for us to rejoice about the short periods of improvement and for the Opposition perhaps to rejoice a little about the other things.

The truth is that if we are talking serious economic business, we had better not rejoice unduly about short periods of improvement. We had better assume, for it is wise and sensible to do so, that it may not last, and therefore we should make every conceivable preparation for that possibility and build up against less fortunate times. A small change in world conditions could lead to a worsening in 600 the terms of trade, or the conditions of our export trade could bring about a new balance of payment crisis quite easily, a crisis which might come out of the blue. I am sorry to say, and I think everybody will agree with me, that we are not free from these troubles yet. I wish we were, and I am sure that we all wish that we were.

There is a new difficulty about exports. We took the view, as a Labour Government, that if our economy was to be dealt with in the circumstances which were obtaining, we had to economise in imports. We had also to restrain the home demand so that more could go for export. This was not an easy operation. It meant that we had to say to the British public, "We are going to stop deliberately the import of things which you badly want. You cannot have them." We had to say further, "We are going to export things that you would very much like to have, but which we must export for economic reasons." And we explained those reasons.

This was not an easy thing to do. It was open to considerable political misrepresentation. In a way we had to hurt our own people for the sake of their general and ultimate good. That is the test of Government; it is the test of statesmanship. So long as it is explained, it is right to hurt people for the time being in order to protect and preserve their ultimate good.

This problem of exports and imports is really a very simple one. We have to export for the sake of employment and for other reasons—certainly in order to develop our standard of employment. [An HON. MEMBER: "To live."] An hon. Member interrupted to say that we must export to live. We must export to live, because we have to import. We have to import in part to fill our stomachs, because we are not yet growing enough food to feed ourselves. But we also need to import materials to go into the stomachs of our factories, as it were. Without those imports we cannot go on, and economically cannot stand up. But if we are to import we must pay for our imports by exports, because the foreigners need to be paid. Those really are the reasons why a prosperous and developing export trade is absolutely vital to our well-being.

601 There are some signs that it may be difficult to export. The non-dollar countries are tending, again by administrative action I think, to cut their own imports from us. We have had that experience with Australia and in other countries outside the Commonwealth. Moreover, we must contemplate increased competition in the export field—developing competition from countries that are improving their economic and productive efficiency. Certainly we must look forward to an increasingly competitive condition of affairs in the export trade.

Under the Labour Government we were on the whole increasing our exports, but it is the case today that, as a whole, exports are not increasing. They are tending at the best to stand still. Some exports are going down. Unless we fight very very hard for our export markets, which means an increasing efficiency and productivity in our home industrial production, we may well find our exports going down to disastrous levels.

So again it is not merely a matter of the exports diminishing. It is a matter that, without the exports, we cannot import, and without the imports we cannot live as adequately as we ought to do. There are no signs at the moment of a surplus essential to our safety and one which will enable us to play our part in the development of the backward regions of the world. We cannot play that part adequately unless we have a surplus in the balance of trade which enables us to make the necessary investments so as to carry through the necessary assistance.

I come now to production. Here again, there are signs which give us some cause for anxiety, if not for alarm. In 1949 production went up by 6 per cent. on 1948. In 1950 production went up by 7½ per cent. on 1949. In 1951—a politically mixed year—it was up by 3 per cent. on 1950, noticeably not so good. [Interruption.] I am only mentioning that it was a mixture politically in order to be fair, because we were in office during a material part of the year, though not the whole year. Hon. Members opposite should not be so niggling, because I am only mentioning the point in order to be fair to hon. Members opposite.

In 1952, however, we are 3 per cent. down on the first nine months of 1951, and that is a positive turn to the bad. 602 We have a relative decline in exports. We have a fall in textile production, and a steel shortage which has contributed to this rather serious state of affairs. Therefore, it is the case that production was going up; the increase then diminished in rate, and this year it has reached a point of positive decrease. What will happen in the immediate months ahead, I do not know. Production may conceivably improve or it may go up and down, but at any rate in none of these figures is there any ground for complacency. Our production needs to go up by more dramatic figures than any of them, and certainly any positive decline in production is an exceedingly serious state of affairs.

I would point out that the Government's own Economic Survey, at page 45, paragraph 115, states: The Government hopes that the increase in production, which was halted early last year, will be resumed in 1952, and that as a result national output in the financial year 1952–53 will be about £250 million greater than in 1951–52 at the prices ruling in the latter year—not a very large increase to set against the additional claims on resources. There was what the Government describe as a relatively modest increase in production. But the fact for the first nine months is an actual and positive decrease in production. That is a serious state of affairs. It is a regrettable development, and moreover it must be remembered that it is a development which follows the Chancellor's Budget which he himself described as a Budget calculated with a main eye to improving production. It has not done it, and if anything, the figures indicate the reverse consequence.

We ourselves thought that it was really a most unwise policy to cut the food subsidies, which was bound to create a noticeable increase in the cost of food—an increase which people notice very much, especially the housewives, and which was bound to stimulate demands on the part of the trade unions for wages increases, for which they really could not be blamed. They had tried to be restrained. They had promised the Government that they would not treat them in any way worse than they had the Labour Government because they were a different Government, and I do not think they have.

603 But if the cost of food noticeably increases, and especially if it noticeably increases as a result of direct Government action, it is inevitable that there is pressure on the wives of working men, perhaps first of all, then from the working men on their trade union branches, and then on their trade union leaders. They cannot help it. The thing is bound to happen. When, as a consequence, we get disturbing wages movements we further upset the whole economic apple-cart.

We did not accept the view that the Budget was calculated to improve production. The Chancellor, the Government and their supporters said that it would. The facts have indicated that we were right and that the Chancellor was wrong. Whatever view is taken about present production prospects, it is not yet certain that we shall have the pick-up in production which the Government have counted on. Indeed, we have had the reverse in the first nine months. The Government plans are, to put it modestly, running seriously behind their schedule, and that is very bad and very serious for the general economic well-being of the country.

This, of course, is a Government which does not believe in economic planning as a matter of principle. I am sure they will admit this; if they do not, I hope they will say so. Let the Minister of Labour tell me if I am wrong. Of course, I admit that he is a little bit above the party battle. In fact, when he goes home at night he probably wonders why he is a Minister at all. I am sure we understand that and sympathise with him. But I wish he would tell us whether the Government believe in economic planning and controls or not.

My own assumption, in the absence of anything to the contrary, is that the Government do not believe in them, and that they are contrary to their philosophy. They do not like them, and in so far as they are using these things it is only because they cannot help it, and it is with a sense of regret and apology that they do so. Therefore, as soon as ever they can give up economic planning and controls, as soon as ever they can revert to a state of affairs where things are allowed to rip, they will do so. That is, in part, the justification of that part of our 604 Amendment in which we say that there is cause for apprehension that we may go back to the chaotic conditions of the 1920's and 1930's.

The Government do not believe in planning, and in so far as they are engaging in it, it is a concession for the time being. There are rumours of the intention of the Government and the Bank of England to make the £ convertible. I wish the Minister or perhaps the Chancellor tomorrow could consider whether either of them could give us an assurance that it is not the intention of the Government to make the £ convertible, or, if they do intend to make the £ convertible, say why they propose to do so, and how.

Our view is that making the £ convertible would involve going back to the inter-war years, namely, balancing our trade at a lower level of economic activity than before, for then we could only balance our trade if the Government were to pursue deflationary policies at home. Indeed, the choice for the Government is between full employment, in which case it must accept economic planning and controls, or convertibility, in which case we must expect the consequences of the deflationary policies as in the interwar years. The choice is between the use of physical controls over imports and their replacement by a decrease in purchasing power.

The other proposition is that there should be cuts in expenditure, marching with convertibility—and the consequences of that are reaction and a return to the conditions of the inter-war years. It is interesting to note that at the Scarborough Conference of the Conservative Party a decision was reached which was officially supported by the platform and which meant that the wild men of the Conservative Party had thrown over what was said by the Chancellor of the Exchequer in his speech at that Conference. A resolution was passed which said: That in the opinion of this Conference public expenditure has increased, is increasing and ought to be drastically diminished, —language which, I have the impression, was borrowed from the Liberals of earlier years in another connection. This resolution was passed with acclamation and with the approval of the platform—[HON. MEMBERS: "Hear, hear."] Its mention its being received with acclamation here, 605 and that confirms the view that there is great back-bench pressure on the Chancellor of the Exchequer to live up to that resolution. But before that resolution was passed the Chancellor, at the Scarborough Conference, said something else. He said: I am not in favour of a Geddes Axe … if you have got to have big economies you can only get them by big changes of policy. But the hon. Member for Solihull (Mr. M. Lindsay) said, at the Conference—

§ Mr. Martin Lindsay (Solihull)

; I was not at the Conference.

§ Mr. Morrison

If he did not say it at the Conference, he said it somewhere else. I am sorry he was not there. He said it according to my information, and he will tell me if I am wrong. I do not think that I am. What he said was: There is not the slightest doubt that we have got to have a new Geddes Axe. A new Geddes Axe is essential to Great Britain's ultimate survival. I intend to do everything I can when Parliament goes back to get the Government to accept this suggestion. Speeches in a similar vein were made by the hon. Member for Dover (Mr. Arbuthnot) and by the right hon. Gentleman—a former Conservative Minister—the Member for Haltemprice (Mr. Law).

§ Mr. Richard Law (Hull, Haltemprice)

I did not mention the Geddes Axe.

§ Mr. Morrison

I did not say that the right hon. Member did. I said he made a speech "in a similar vein." Here is a cleavage. Mention of an axe is always relevant to a cleavage. There is a cleavage between the Chancellor of the Exchequer, who says, "Gentlemen, go easy, I am not having any Geddes Axe," and those who say that a heavier line of economy and cuts is desirable, together with the severe-sounding resolution. We really ought to know from the Minister of Labour or the Chancellor of the Exchequer—I do not mind which—what is the Government's intention. Are they going to make aggressive cuts in public expenditure or are they going to make reasonable and proper economies in the ordinary way?

I am not against reasonable economies. There is a duty on all Governments to be careful and economical in public expenditure—as we were. It is necessary that Chancellors of the Exchequer, in framing their Budgets, should know upon what 606 estimates they are framing the Budgets; but there is a distinction between proper economical administration and the prevention of waste, on the one hand, and major cuts which involve major changes in policy, calculated to make the ordinary people suffer extremely under those cuts, on the other hand.

If we take the economies of the Geddes Axe type—those of the 1920's and 1930's—they were economies which were calculated to damage the standard of life of the people. Remember that if the Government slaughter the social services, if they slaughter social security benefits—if they overdo that kind of thing—not only does that damage the benefits received from them by the people, but it can damage full employment itself by affecting purchasing power. That, in fact, is what was done in the inter-war period.

§ Sir Herbert Williams (Croydon, East)

Will the right hon. Gentleman give an example?

§ Mr. Morrison

I have given the relevant quotations from the Chancellor of the Exchequer, who spoke with moderation—we were glad that he said what he did—and I am contrasting that with what back-benchers said and with what the Conference said and, let it be remembered, that has been extensively cheered by the benches opposite this afternoon. Therefore we are entitled to assume that what is wanted by the general run of back-benchers opposite is a major assault upon public expenditure, involving material differences in social policy which will damage the standard of life and the well-being of the people.

§ Sir H. Williams

The right hon. Gentleman referred to what happened during the inter-war years. I asked him to give an example of what he meant.

§ Hon. Members

Jarrow.

§ Mr. Morrison

The hon. Member can look up a number of things. He can look up the Geddes Report and the action that followed it.

§ Mr. Ivor Owen Thomas (The Wrekin)

Public assistance.

§ Mr. Morrison

I am much obliged for my hon. Friend's help but I wish he would let me get on. The hon. Member can look up that Report and the action which preceded and followed the election 607 in 1931—and he can look up the industrial policy which was based upon a so-called rationalisation, which meant a deliberate diminution of the field of employment. Surely no one needs to be educated about the misery of the interwar years.

Looking at our long-term problems, it is perfectly clear that we need a plan to increase exports. Sooner or later the terms of trade may start to move against us. Moreover, there may be a resumption of world raw material buying by America on an extensive scale, which may cause prices to go up. It must be remembered that the trend of world population is a problem in itself. World population is going up by 1.25 per cent. per annum, whereas world agricultural production is increasing only by 0.3 per cent. per annum, and that is calculated to increase world food prices.

I think the House will agree that an increase in home agricultural production is vital. It must go up, and we ought to know from the Government what positive action they are taking to give us a noticeable increase. We ourselves launched a programme which materially increased home agricultural production. Undoubtedly our position is better than it was before the war, but home agricultural production needs to go up still more.

We must import and we must pay for those imports by exports which are adequately competitive. We must also engage in a re-deployment of resources, both of equipment—physical, productive resources—and of manpower. We need a better and a more modern industry. We need a proper survey of import and export possibilities. We should concentrate on exporting goods with a high exportable content and discourage the export of goods the import content of which is very high.

All this may mean expanding certain industries and contracting others. I want to ask what plans the Government have in this direction. It appears to us that the plans are very few indeed and, moreover, some of their policies run counter to these needs, for Ministers are not encouraging new plant and new machinery. Great care is needed in all this, because we want re-deployment of our resources but we do not wish it to 608 come about with a consequence of large-scale unemployment.

If we are to achieve this re-deployment, we require a high degree of co-operation by capital, management, and labour, and in this connection I urge that none of us must forget the need for the development of a high degree of social morale. It is not enough to pass Acts of Parliament or Regulations. We have to get the understanding and the willing co-operation of the people if these things are to be done well, and we have to achieve a willingness to give as well as to take. There is a great need for the Government to take into account the human factor.

Out of those considerations and upon that basis we can achieve a unity of the nation for social advance. But if we seek to get the right social morale, we shall not get it if the Government pursue their de-nationalisation policies which they outline in the Queen's Speech. They are not good and are calculated to create social upset and great controversy.

We ought to be building more factories, but we are not. For the first six months of 1952, we started only half the number of new factories by comparison with those started in the same period of 1951. The factory building programme should not have been cut. It is impairing our industrial and economic efficiency, and the factory building programme should not have been held up. We ought to know how quickly it will be restored and expanded.

It may be said that the building of factories has been cut in order that the houses may be built. I know the great need of houses; I have every reason to know it, representing such a constituency as I do. I would only say, in passing, that where the houses are built is also important, because they can have economic significance. They can help industry forward or they can have no effect at all. I submit this to the Government; they must take into account the relative importance of the building operations for houses, factories, schools, hospitals and so on, and if, being landed with that resolution about 300,000 houses at the earlier Conservative Conference, they have set aside these other considerations. I think they are wrong.

We want all the houses we can reasonably have, but it is no good artificially depressing, and in an economically 609 damaging sense depressing, the factory building programme if that in turn will damage our economic prospects. After all, it is not enough for people to live in nice houses if they have not a job. I wonder whether the Government have carefully considered the priorities in this matter, or whether they are merely being actuated by political considerations in the allocation of resources to the building industry.

I come to the question of steel. We have not enough steel, and the shortage is damaging us in our economic activities, in our export trade and in our internal production. We should aim at producing more steel; but some people in the industry are undoubtedly conservative and are afraid of overdoing it. The more steel there is, obviously the stronger is the economy and the easier it is for the Government to influence the trend of economic events.

In the 20's and the 30's there was pessimism and defeatism in the steel industry—a persistent fear of producing too much. This expressed itself in various parts of the country, and I well remember the late J. H. Thomas, who was Lord Privy Seal, in charge of unemployment— poor man—and the advice which he persistently received, and I am afraid to some extent accepted, from the steel masters and others—that what was necessary was to diminish the units of production, to rationalise what remained, and then we should have a more efficient but a smaller steel industry.

We do not believe that is right. We think that philosophy is wrong. The consequence of that advice, when it was applied, was a closing down of quite a number of steel undertakings in various parts of the country, with consequent suffering to the human beings who depended for their well-being upon that industry either directly or indirectly. We think such a thing is wrong and we therefore say that steel is basic.

That is why we nationalised the industry—because it is basic and because the industry had been too cautious. We believed that under nationalisation we could be less cautious and that we should have more power of moving about and improving the physical efficiency of the industry than was possible under private industry, with its conflicting, separate ownerships. I ask hon. Members to judge the de-nationalisation of steel by 610 one critical test: will it produce the extra steel we need? I do not think it will.

According to the Prime Minister, we are producing extra steel—an extra 500,000 tons this year; and he anticipated that it would increase still more. That is under nationalisation—but it is still not enough. In 1937 the United States produced 50.37 million tons of crude steel, and by 1951 that figure had risen to 93.87 million tons—nearly double. The Union of Soviet Socialist Republics in 1937 produced 17.54 million tons and by 1951 produced 30.8 million tons—getting on for double. West Germany in 1937 produced 15.37 million tons and in 1951, having had to start from scratch after the Second World War, produced 13.29 million tons.

I come to the United Kingdom, and I wish I could tell a better story. In the United Kingdom the increase was only from 12.98 million tons in 1937 to 15.64 million in 1951. It will be seen that that increase is noticeably less than that of the United States or the Union of Soviet Socialist Republics, and, as far as I can tell, it is noticeably less than that of Germany, though Germany started from scratch. And yet this industry is vital to our home needs and to exports, and I say, nationalisation or no nationalisation —and there is no evidence that nationalisation has injured the industry; on the contrary, such evidence as exists is that nationalisation has helped the steel industry—these figures are not good enough.

But now the Government contemplate a long-drawn-out, painful process of denationalisation, in which the British iron and steel industry will pass through a long period of uncertainty, of division, of splitting up—all because of pleasing the doctrinaire madness of the wild men of the Conservative Party. We need a plan for steel, and if the plan is to be real we must have common ownership of the industry of some sort. We cannot have private ownership because it cannot be trusted, and it cannot provide the capital, anyway—and that is going to be one of the troubles the Government will face with their Iron and Steel Bill. I am inclined to think we ought to aim at producing 25 million tons annually within the next 10 years; and even so we shall only be doubling our pre-war output.

611 Coal is no less important. It is vital to our economic well-being and security. It affects production at home. It affects our exports. The Government say that the stocks at home are satisfactory, and I think that that is broadly true, but it is partly the result of low productivity in industry and the good weather, so that the slackness of the industries catered for by the President of the Board of Trade, or their relative decline, has assisted the Minister of Fuel and Power in building up his fuel stocks.

We have got to take a broad view if we are to have a healthy economy, and again I think we have to aim high. In increasing our coal production, we must have proper technicians and proper administrators; the industry must be well organised; the miners must be properly treated—and here again is the element of social morale, which is absolutely vital to the progress of the mining industry.

Moreover, we really must try to have economy in the use of coal, whether crude coal or coal used as electricity or gas. We are not doing enough. If by economy in use, technical improvements, a large Increase of production we can get exports of coals, that will be a great blessing to our balance of payments and will involve a great improvement of our economic situation.

Consequently, I think the Government should say more about the Ridley Report and of what they are doing about it. It seems to me that they have passed the responsibility to the National Coal Board, but there is really a lot the Government themselves could do about economy in the use of fuel and power. Moreover, they ought to face the need in all these matters for priorities for machinery, plant, and so on, on which, I think, there is a tendency on the part of Ministers to diminish the field of investment to such an extent that the efficiency of British industry is not being taken care of in the proper way. I urge that there should be improvement in that respect.

We are a wasteful country in the use of coal. "The Observer" on 31st August asked this question—and it is a very relevant question: How is it that in Britain the annual consumption per head is 10 billion calories, when highly industrialised Belgium and Luxembourg can get along with eight billion"— 612 this is dealing with the motive power consumed in various countries of Europe— Western Germany, Sweden and Norway with six billion; France, the Netherlands and Denmark with five billion; while the average for Europe as a whole, excluding the Soviet Union, is four billion? We must pay for improvements if we must. It would be worth our while and would be worth doing.

The Gracious Speech in respect of all these matters seems to me to be irrelevant. As against all these most serious economic problems that call for inspiring leadership and action, what do we get in the Gracious Speech from the Throne? We get a few generalisations; we get some promises of minor legislation, including a further standstill in leasehold reform—and I hope we are going to know presently what are the Government's proposals on that problem for some time; and we add to that two major Bills—two major Bills to undo something, two economically disturbing and important Bills—they are important—for the de-nationalisation of two industries.

These Bills are going to be the great Bills of the Session. There are no other great Bills for the Session. The two great Bills of the Session are going to be undoing Bills, negative Bills, destroying Bills, Bills calculated to cause chaos in two great industries, Bills which are calculated not to make any contribution to our economic recovery but rather to do the reverse. And these will be the great Bills of the Session.

Moreover, there is to be administrative action to stimulate competition against the Airways Corporations. The Airways Corporations have been doing very well, as have others of the nationalised industries, and why ever the Government want to stimulate competition against the Airways Corporations, beyond what already exists, I really do not know. I do hope that the Minister does not encourage the Corporations to conduct themselves—to put their charges or facilities up or down, as the case may be—in order to assist private competition, because that would be very, very bad, and moreover it would involve the production of more aircraft here for that purpose rather than for export.

These policies are not only irrelevant; they are positively mischievous. Ministers 613 are saying that already the cost of living is going down. I am not sure. I do not meet many people who admit it. The figures are there. Food prices are certainly high. The argument is that other prices are down. But the seconder of the Motion for the Address in reply to the Gracious Speech, the hon. Member for Lewisham, West (Mr. H. A. Price), speaking at Eynsford on 29th October, was reported in our local paper as having said—and notice how this shows that the general opinion finds its way even into the mind of a Conservative Member of Parliament: There was, however, one fly in the ointment. The increased cost of food particularly hurt the housewives. They were poorer today, whereas the men were better off. Then, mentioning the latest Income Tax reliefs, he continued: Gentlemen, I ask you to play the game and give your wives a rise. After all, when you got married you agreed to share burdens. I have given my wife a rise of £3 a month. I congratulate "Mrs. hon. Member for Lewisham, West" on having a considerate husband. But this really does not sound like a decrease in the cost of living. And be it remembered, it comes from the seconder of the Motion for the Address in reply to the Gracious Speech.

There is a lack of economic drive and leadership on the part of the Government and there is a lack of recognition of public responsibility. There is this back-bench campaign for cuts which means something of a major threat to the people, with the consequences I indicated earlier on. There is unemployment and short-time working. There is serious unemployment in the docks, as my hon. Friends from those constituencies know.

Whilst it is tempting to the capitalist system and those who believe in it at home to have unemployment, it really would be a social disgrace if it should break out again on a large scale. [HON. MEMBERS: "Oh!"] I am not making any specific charges, but of course it is tempting to capitalism and the capitalists to feel that if they had a noticeable amount of unemployment they could keep labour down and keep the trade unions down more than they otherwise could. Of course that is so, and of course it is the case that in the inter-war years employers deliberately took advantage of the unemployment to keep workpeople down, and so on, and we cannot exclude 614 that possible consideration from our minds.

Anyway, there is a possible slump, and there is a possible world slump. One does not know, but there is a new Government in the United States, with whom it is the duty of all of us to maintain good relations—all of us; but they may have different policies, and there might be economic difficulties there. I therefore want to know from the Government whether they have instructed their officers, economists, economic planners, and so on, to prepare against all these possibilities so that action could be rapidly taken. I see no signs at the moment, but I would hope that the Government would be capable of doing it.

These are the economic difficulties and parts of the economic situation as we see them. The problem will be dealt with further by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) tomorrow; but we ask the Government to tell us what they are doing, what their economic policy is, long-term and short-term, and what preparations they are making against slumps or unemployment of all sorts.

Our British people are a good lot of people; they will follow and they will help forward good policies that are properly explained. But they must feel that they know what the Government are up to, and they must feel and believe that the Government will deal justly by the masses of the people. They do not know where the Government are going; they do not know what Government economic policy is; they do not know what the Government preparations are, and I ask that in the course of these days the House of Commons shall be told and the country shall know.

§ The Minister of Labour (Sir Walter Monckton)

In the course of his observations the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison), I think in a semi-jocular fashion, said that I must often ask myself why I am a Minister. I would only add that if I were at a moment's notice to proceed to answer on behalf of my right hon. Friend the Chancellor of the Exchequer some of the questions which the right hon. Gentleman put to me about convertibility, the difficulties of controls, and so forth, I think the question would 615 be, "How soon shall I cease to be a Minister?" However, I have no intention of digressing from the Amendment which has been moved by dealing with that matter, even with that hope before me.

With a great deal of what the right hon. Gentleman said I have got no quarrel, but a great deal of it, in my respectful submission, did very little to substantiate the terms of the Amendment which was being moved. It is all very well to discuss the steel de-nationalisation Bill and the Transport Bill, but unless they are, in the view of this House, calculated to create greater efficiency and to work towards our economic recovery, they should be rejected when they are being dealt with. But, as it stands at present, I do not conceive it my duty on this Amendment to debate those Measures.

As to the question of factories, there is a word I shall want to say later, but I would just point out that it is by no means right to think that this Government, in dealing with housing policy, has omitted to take into account the importance of houses for workers near their work. One of the things we certainly have tried to do is to put houses for miners near their work in the mines, and to put houses near the worker's industry.

§ Mr. Charles Pannell (Leeds, West)

Following us.

§ Sir W. Monckton

A thing is no worse if someone else has done it before. But I am not complaining at that. It is suggested that we have not got this in mind, and I am pointing out that we have.

I think I should have very little quarrel with the right hon. Gentleman in his approach to this matter. I do not think anyone doubts now that the country was in a serious economic condition when we took office, because of the very difficulties which the right hon. Gentleman explained—the balance of payments, the shortage of gold and dollar reserves, and so forth. Well, the drain on our reserves has been stemmed. The negative part of our task has been done, largely, as the right hon. Gentleman himself said, by a reduction in imports. Everyone agrees that that cannot be carried beyond a certain stage, but I understood him to approve of the steps which we have so far undertaken.

616 The positive task is that which now lies before us, the stimulation of our production and of our export trade so that—again I think I am paraphrasing what the right hon. Gentleman said—by our sales abroad we can pay for the food and raw materials which we cannot fully produce at home. Nobody, on either side of the House, ought to be in any doubt about the difficulties of that task, or the necessity of facing up to it squarely.

Having in mind the terms of the Amendment, I say that we make no contribution whatever to a solution of this problem if we exaggerate the seriousness of the position or destroy confidence in our ability to overcome it. The Amendment speaks of the serious economic position of the country which is evidenced by the decline in production and exports, growing unemployment and short-time working and increased cost of living, and then goes on to speak of the policies of Her Majesty's present advisers as threatening a return to the social conditions of the interwar years. I venture to submit that there was very little which fell from the right hon. Gentleman to support so serious an allegation as that.

I should like to consider the matter a little more closely and examine the facts upon which these criticisms can be based, particularly in those spheres of Governmental work which fall within my own Department. I start with unemployment. That is a matter which I am sure hon. Members on both sides will do me the justice of thinking that I am anxious about and trying to do my best to meet. I would only say that anyone who examined the size and protion of unemployment which now exists and the order of the figures involved would not be inclined to exaggerate. They would see that there was a problem in different localities and in different trades which has got to be faced.

The total figure of unemployment in the middle of October was just under 400,000. That is, of course, an increase on the exceptionally low figure of 264,000 in October, 1951. But the figure of 398,000 in October is not so markedly different from the 304,000 in October, 1950, still less from the 333,000 odd in mid-January, 1951, so that it is not the 617 case that we have had a sudden and serious increase in the figures of unemployment.

The House will know that the figures of unemployment generally go up in the second part of the year; but this year, between July and October, the increase is only 4,000 compared with 78,000 in 1951 and an average increase of 40,000 in the three previous years. The conclusion that it has not grown so fast as in other years is good in itself, but it must be realised that the reason for it is largely the improvement in September and October in employment in the textile industry. In September, employment in the textile trades went up by 11,000, and the improvement has been maintained in October. The recession in those trades earlier this year, due, as I think, to world events, was the substantial reason why we did not get the ordinary seasonal diminution in unemployment in the first part of the year.

I think it is very important, if I may submit this to the House, that we should keep a sense of balance and proportion in dealing with these facts and figures. I have said that the October figure is just under 400,000, and no doubt it would be very dangerous to try to forecast for months ahead. I shall be both disappointed and surprised if by the end of this year the figure reaches 500,000. That, I would point out to the House, would be only half the figure of one million which the right hon. Gentleman the Member for Blyth (Mr. Robens), on 3rd March this year, anticipated as the figure likely to be reached by that time. If my forecast should turn out to be nearer right than his, I know that the right hon. Gentleman will be the first to rejoice.

§ Mr. R. J. Mellish (Bermondsey)

The figure which the right hon. and learned Gentleman has given now and earlier of the actual number of unemployed and the estimate of unemployment which he thinks may exist at the end of the year will include, I think he will agree, a lot of unemployed in general, for example, dock-workers.

§ Sir W. Monckton

I am comparing like with like. I am dealing with the unemployment figure at the end of this year, and we are both, I think, taking the unemployment figures which are set out in the Ministry of Labour returns.

§ Mr. Mellish

Not seasonal.

§ Sir W. Monckton

Seasonal figures would not be shown in the right hon. Gentleman's figure of one million any more than in the 500,000 figure which I have given.

I want to point out that the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), in March, 1951, notified the Secretary-General of the United Nations that the Government had decided to express the full employment standard of the United Kingdom as a level of unemployment of 3 per cent. at the seasonal peak.

§ Mr. Hugh Gaitskell (Leeds, South)

I am sure that the right hon. and learned Gentleman would wish to go on to point out that that was in no sense an ideal but, on the contrary, was the maximum figure before which energetic action of all kinds, including Budget deficits, public works and everything else, should be undertaken, not only by this Government but by all sorts of other Governments as well.

§ Sir W. Monckton

The right hon. Gentleman is quite right. I was trying to give, I think fairly, what he expressed as the standard of full employment. What he said is quite true, and I think that he went further, and said: The figure of 3 per cent. represents the maximum number of persons registered as unemployed on a given day in any month of the year, expressed as a percentage of the total number of employees."—[OFFICIAL REPORT, 22nd March, 1951; Vol. 485, c. 320.] He will forgive me if I do not read on, but I acknowledge in this passage that there is an explanation that steps would be taken, if we got to those figures, to try to stem the tide.

What I am pointing out at the moment is not whether the right hon. Gentleman quite rightly or prudently hedged his definition about, but that he said that we were dealing with a figure of the order of 3 per cent., and, if I am right in the forecast I gave of the probable increase at the end of this year, we shall be well within the figure of 3 per cent., which in that connotation may be of some importance.

§ Mr. Gaitskell

I am sure that the right hon. and learned Gentleman would also wish to explain to the House exactly how 619 the whole question of an unemployment standard came to arise. It was, of course, a proposal which came from the Economic and Social Council of the United Nations, and what really was involved was the possibility of a major depression and the point at which one began to take action. So far as I know—and I think that the House will agree with me—my right hon. Friend is not suggesting that there is a major depression, but that does not mean that it is at all satisfactory to have a figure as high as 3 per cent.

§ Sir W. Monckton

The first thing I would say is that if it is not suggested that we are facing a major depression, the Amendment seems even more difficult to justify.

There is a passage which I think in fairness—and the right hon. Gentleman knows that I wish to be that—I ought to have read. He said: The Government has therefore decided to make a small allowance for the factors mentioned in paragraph 2 above and to express the full employment standard of the United Kingdom as a level of unemployment of 3 per cent. at the seasonal peak."—[OFFICIAL REPORT, 22nd March, 1951; Vol. 485, c. 320.] I am not quarrelling as to whether it is 3 per cent., with a little give and take. I only want to get the order of figures in which I am dealing. If the figure reaches 500,000 by the end of this year, we shall still be within the figure of 3 per cent. It is interesting, therefore, to look, in the light of that figure, at what is the position in regard to some of the trades in difficulties. Textile unemployment in October was nearly 5 per cent., but outside textiles, even in other industries which were having trouble, no percentage as high as that has been reached. The percentage in the case of paper and board is 3.7; building and contracting, 2.8; china and earthenware, 2.5; furniture and upholstery, 2.0; wireless apparatus, 1.5; and motor vehicles, 1.0. I am not suggesting that we want to press this too far. All I say is that we must not exaggerate the figure of unemployment which is with us, or which faces us in the immediate future, so that we shall destroy that very morale for which the right hon. Gentleman pleaded.

620 Another point which, I think, an hon. Member had in mind, was about short-time. It may well be said that the unemployment picture is incomplete, and I should agree with that, if we did not refer to short-time working in the manufacturing industries. These figures began to rise in March, 1951, and they reached almost 70,000 by September, 1951, but by May of this year they reached the high level of 304,000 workers affected. That was mainly owing to the recession in textiles and clothing, but, here again, the House will be glad to know that there is an improvement. In August the figure of 304,000 workers had dropped to 182,000 workers affected by short-time, and there is every indication that when the next quarterly figures are available they will once again show a further substantial reduction.

There is another side of that picture at which one ought to look, because there is some sort of relationship. Over-time working has been on the whole steady. In September, 1951, 1,277,000 workers were working nearly 10 million hours over-time. In August of this year, 1,129,000 workers were working nearly 9 million hours over-time. That is the latest figure which I have. I have been trying to explain that I do not find in the figures when we examine them, so far as my Department is concerned, any justification for such strong terms as are included in the Amendment. There are trades and localities, like the textile trade in Lancashire and Yorkshire this year, where special difficulties are likely to be encountered.

At this stage, I should like to say something about the position in regard to those docks where the cuts in our imports and the corresponding reduction, of which the right hon. Gentleman spoke, in relation to our exports in certain directions, have reduced the work in loading and unloading ships. It is a matter which I know from hon. Members on both sides in causing anxiety to a number of them. Before I give the figures, I should like quite shortly to say that one ought to bear in mind both the objects and the working of the National Dock Labour Scheme in order to appreciate the significance of the figures.

The objects of the scheme are to ensure greater regularity of employment for dock workers and to secure that an adequate 621 number of dock workers is available for the efficient performance of dock work. Under the scheme, the National Dock Labour Board is responsible, and it consults the local boards in the ports for determining and keeping under review the size of the register of dock workers. In doing this task, they are primarily guided by the need to have available, at such times as it may be required, an adequate dock labour force to ensure the rapid and economic turn-round of the vessels which are being handled in or out, and a speedy transit of goods through the ports.

As everyone knows, however, there are fluctuations in port work, and therefore there has to be a certain amount of surplus labour available to deal with peaks of employment. It is in this connection that we have some figures. During the six months from April to September, 1951, when there was a very high level of dock employment, as the right hon. Member for Blyth will remember, there was an average of nearly 5,000 dock workers, or 9.1 per cent., surplus to requirements. The corresponding figure over the same period this year was 12,000, representing 15.3, as against 9.1 per cent., of the register. In 1950, which was a less peculiar year than 1951, it was 12.5 per cent.

The position is that the cost of operating the scheme is borne by payments made by registered employers to the National Board by way of a levy based on percentage of gross wages. In 1950, the levy was 13½ per cent. Last year, it was 11 per cent. This year, in May, it went back to 13½ per cent. It was raised in August to 16½ per cent., and again in October to 22½ per cent. If it is a question of imposing a levy of over 25 per cent. of gross wages, the Board have to report to the Minister and must bear in mind his observations when they make their decision.

But there is some improvement in the position in the last month. If I may give the present numbers of registered dock workers surplus to requirements: in the period ended 7th October, 1952, it had reached the figure of 17,200 odd, which represented a percentage of the register of 22 per cent. By 1st November, it had dropped to 15,000, or a percentage of 19.4 of the register. In other words, it had fallen by 2,000 or 2.6 per cent.

622 Hon. Members may know that, under the scheme, continuous employment is available to all registered dock workers who prove attendance. The surplus workers are those who prove attendance but for whom, on the date in question, no work is available. They remain in the employment of the Dock Labour Board and are not, therefore, to be described as unemployed. They receive for each half day 5s., with a guaranteed minimum weekly wage of £4 8s.

I mention these facts because it is against that background of the scheme and its working that the problem which now faces the National Dock Labour Board has to be seen. It is for them to decide on the future size of the register, which is now running at 2,000 less than the average of the peak year of 1951 but 2,600 higher than in 1950. The Board recognise, as I do, that there is uneasiness on the subject of what should be the number of surplus workers in comparison with the number available. We are in consultation, and have been for some time, on the problem, but I cannot decide it for the Board. It is really their decision when the time comes.

§ Mr. Alfred Robens (Blyth)

To complete the statistical figures, is the right hon. and learned Gentleman in a position to say how many dockers have left the scheme in the last few months?

§ Sir W. Monckton

I think that the figure is ascertainable. I will give it to the right hon. Gentleman before I close or will send it to him.

I have said something about unemployment and short-time working and the particular problem of the docks, and if we are examining the position and the facts and figures we ought to look at these matters. There is also referred to in the Amendment the problem of the cost of living. It is true that the Interim Index of Retail Prices has risen during the year that we have been in office, but I should like to point out two things.

First, it has risen by different amounts in every year since 1947. Second, in spite of the serious cut in food subsidies, the rise has been less in our year of office than in the preceding 12 months. The figure from September, 1950, to September, 1951, was 14 points; and from September, 1951, to September, 1952, eight points. That case, therefore, is abundantly made.

623 I have been saying something about facts and figures on those subjects which are the present concern of the Department in which I serve, but I do not want to seem to overlook the factors of the drop in production and in exports, to which the right hon. Member for Lewisham, South has drawn attention. They were discussed in the House last week by my right hon. Friend the President of the Board of Trade, and they will, no doubt, be referred to again by my right hon. Friend the Chancellor of the Exchequer.

Since the war, during the six years of office of the previous Administration, we were in a sellers' market. Just as the right hon. Gentleman hoped we would not take credit for the advantage in the terms of trade, I trust that he will not want to take advantage of the fact that there was a sellers' market as a matter of credit to his Government. At any rate, in such a market, by and large, whatever we could produce for the export market, that market was ready and willing to absorb. But now we are in a world buyers' market and our industry now has to struggle to sell.

That change, the fact that we now have to meet fierce competition from Germany and Japan, to which the right hon. Gentleman drew attention, the shortage of materials and the difficulties of the textile trade, have all had their effect both upon our export trade and, indirectly, upon production. Apart from this, hon. Members will know that from time to time production is inevitably interfered with by scientific developments, which continuously take place. This means that there is an interference with production, both for export and for re-armament. There has to be change, and while that change is on trouble is caused. There has been a lot of this sort of development in the last two years.

I would say this about production and the export trade. Just as, in the case of unemployment, we said that our difficulties were likely to be found in particular trades and places, so the decline in production and exports, to which attention has been called, must not be exaggerated. It is selective rather than general.

From the viewpoint of output, for instance, there are encouraging signs, as 624 no doubt my right hon. Friend the Chancellor of the Exchequer will say, in the steel industry, in engineering, in shipbuilding, in the electrical goods groups of trades, and in coal. Indeed, the picture varies in different industries, but nobody. I hope, would be so bold as to deny that in these directions we are facing a new challenge to our skill, our ingenuity and our salesmanship.

The way to meet that challenge lies in strengthening our competitive position by higher productivity and lower costs. I have found support for this doctrine on all sides of the House during our year of office, and not least from trade union leaders. What it means is that we must try to enable industry, as the right hon. Gentleman suggested, to modernise and expand its plant, machinery, and so forth. It means also that we must successfully tackle the problem of human relations in industry. That is not a matter for legislation.

What we need today is to encourage the mutual confidence which is being surely developed between work-people and employers. I have tried in this sphere constantly to do my best to stimulate joint consultation and the spread of works information. I am sure the more workpeople are kept fully informed by the management about the business and the prospects of the undertaking in which they are engaged, the more there will grow up a feeling of common purpose and of confidence.

In this sphere of the increase of productivity, I am delighted at the establishment last week of the British Productivity Council. The members represent the British Employers Confederation, the F.B.I., the Trades Union Congress, the Association of British Chambers of Commerce, the National Union of Manufacturers and the Nationalised Industries. My hon. Friend the Member for Edgbaston (Sir P. Bennett), whose wisdom and experience have throughout my term of office always been at my disposal, is the chairman. Mr. Lincoln Evans, the distinguished chairman of the T.U.C. Economic Committee, is vice-chairman. Under their guidance the Council will take over the remaining work of the Anglo-American Productivity Council, and its aim will be to encourage the active interest of industry in the pursuit of higher productivity, and give to it all the possible help in its independent activities.

625 It is the first time in this country that we have had a body of this kind tackling the real job of the future, the raising of productivity, and it is a subject surely in line with the policy described in the Gracious Speech, where it was said: My Ministers will encourage all engaged in agriculture, mining and industry to co-operate in increasing productive efficiency and thus to produce at lower cost the goods needed at home and by the export trades. I should like to conclude by saying that I do not believe that such evidence as has been produced here about the drop in production, the difficulties of the export trade, or the figures of unemployment and short-time, justify the terms of this Amendment. A return to the conditions of the inter-war years would be much more probable if we did not fairly and squarely tackle the problem of inflation. Then we might find imports increasing beyond what we could afford to buy and competition at home for goods which ought to be exported. It is only by failing in our resolution in this regard, and by failure to win the battle of the balance of payments, that we should have to face again not only a shortage of food but mass unemployment due to the shortage of raw materials which we should then no longer be able to buy.

I am not underestimating the toughness of the year that is coming. I am sure that it is going to be tough. I am confident that we shall pull through, and like the right hon. Gentleman in an important passage in his speech, I feel that we are all in this together. In the last analysis we shall overcome our troubles, not by measures but by men. During the last few anxious months hon. Members will have constantly seen, and not on one side of industry only, nor only on one side of this House, a readiness to subordinate sectional interests to the needs of the nation as a whole. I should like to pay my tribute to the leaders of industry and of the trade unions, to the broad mass of workpeople and employers throughout the country who have set us an example of readiness to sacrifice in the public service and to face difficulties with responsibility and restraint.

I am constantly buoyed up in what I can assure the House is always a heavy and burdensome task by the feeling that what we really have behind us when we speak in this way is the thrust and the urge of all men and women of good 626 will throughout industry who long as earnestly as we do—and no one can long more earnestly—for victory over these economic troubles, not for this party or for that, but for us all. It is in that hope that I think we can go forward in a spirit, not of gloom, but of steady determination.

§ Mr. H. Morrison

Before the right hon. and learned Gentleman sits down, I do not want to be unduly aggressive about it, but has he got nothing to announce of positive Government action, except perhaps the composition of the Productivity Committee, which, as a matter of fact, we appointed and which was rather spurned at the time? Has he no announcement to make about Government action on these economic matters?

§ Sir W. Monckton

I am quite prepared to answer that question. I much prefer, however, that an announcement of that sort should be made with the authority of my right hon. Friend the Chancellor of the Exchequer, under whom I am a very humble Minister.

§ Mr. G. M. Thomson (Dundee, East)

I feel keenly conscious of how much I shall require the traditional indulgence of this House for a new speaker, rising as I do after two Front Bench speakers. The by-election in Dundee that brought me here now seems a long distance away, because the Recess has intervened and our minds are very much more preoccupied with more recent elections, like that of Wycombe and in the United States of America.

If I may, I should like to discuss very shortly some of the economic implications for Her Majesty's Government of last week's Presidential Election in America. In passing, I should like to say that the wide reaction to the election in America showed the growth in this country of our consciousness of world citizenship. I was fascinated by the number of people who said how passionately interested they were in what was going on in these elections, and I think it was well summed up by a cartoon in one of the newspapers, which showed a couple of Americans standing among the skyscrapers of an American city, and one saying to the other, "Say, buddy, have you heard the result in High Wycombe?"

627 This consciousness that the election results in America are just as important to our economic welfare in many ways as elections are on this side of the Atlantic is very necessary, and I greatly regret that the Gracious Speech contains no signs in its economic proposals that it has taken any cognisance of the impact that the American elections are likely to make on our economy. Nobody can foretell what changes the results will have within the United States of America, but it is very necessary, as my right hon. Friend the Member for Lewisham, South (Mr. H. Morrison) said, that the Government economic adviser should be working very hard indeed looking to the future and laying plans for possible economic developments on the other side of the Atlantic.

From my observations in America during recent months, I should like to say it does not seem to me that the American vote is a vote against the economic policies associated with the New Deal and the Fair Deal in America. I found there were a very large number of people there who, like hon. and right hon. Gentlemen opposite, seemed very much under the influence of the myth of uncontrolled private enterprise, but whenever the Government showed any signs of interfering with agricultural planning and of putting the citizens of America at the mercy of the free play of the laws of supply and demand, in that particular sector of the economy, they showed signs of violent panic.

I think the vote for General Eisenhower was much more because of his offer to go to Korea. My general impression was that everywhere in America there was a very desperate desire for peace in Korea, and many millions of ordinary, decent peaceable American citizens felt throughout the Korean war that they did not fully understand the nature of the United Nations action, that they understood even less why their sons should continue to stay there, for the consciousness of world citizenship, which I have just been talking about, is only painfully breaking upon them.

These people lived for generations in the middle of a country which was immersed in its own affairs and which was fairly remote from the troubles of the rest of the world. In these circumstances they feel acutely that there 628 ought somehow or other to be some sort of magic process to bring peace in Korea and their own soldiers back home. I found that some of them were inclined to think that a magic shortcut might be a military knockout blow against China. I did all I could at that time to emphasise to them that I thought many people in this country had different points of view and would feel that that short cut was much more likely to be a short cut to world war than to world peace.

In this Election, the American citizens have felt that perhaps General Eisenhower offers that sort of short cut. I hope sincerely—I say this without irony at all, though I think it is much more difficult than it was presented to be in the American Election—that General Eisenhower is successful in his expedition to Korea. I hope also that Her Majesty's Government are laying diplomatic plans in the event of his failure to produce immediate peace in Korea, and that they will bring their influence to bear to prevent any sort of drastic military extension of the war through feelings of frustration and disillusionment in America.

I hope, also, that Her Majesty's Government are looking to the future and are laying economic plans in case President Eisenhower, as he will then be, or the United Nations as a collective body, are able to bring peace in Korea. All over the world people want a settlement of the fighting there, and while a settlement would push further back the final horror of a third world war, it would also mean that the countries of the West would face the danger of a world slump unless economic steps were taken to prevent it.

When that happens, the big question that will face American citizens and the citizens of this country, linked, as we are so closely to America, will be whether the Fair Deal and New Deal policies of successive American Administrations have become sufficiently accepted as the ordinary techniques of American economic practice to be put into operation by a Republican Administration.

I do not think that the American vote was a vote against those economic techniques but, because of the complexities of the American political system, there is now an Administration in America which is very critical of New Deal economic 629 policies. It is the important duty of Her Majesty's Government, of which no evidence is given in the course of the Gracious Speech, to take all possible steps to safeguard the economy of this country against that sort of development in the United States of America.

This means that we shall require within this country to seek as high a degree of economic independence as we can get. I do not believe that we can insulate ourselves from the American economy, but we should do the best we can. That means that a Government in this country must seek the highest degree of economic planning with the other countries of the Commonwealth. I trust that the coming Commonwealth conference will show that the present Government are more successful in that sphere of economic planning than was the case following their last Commonwealth Conference.

It also means that we must face major changes in this country in the pattern of our economic activities. We must face a really imaginative attempt to apply scientific methods of using resources and towards saving our scarce materials. All these things imply that we need a Government which will do more economic planning and not less, and that will engage in more public control and not less. It means that Britain today needs a Government, if we are to ensure her economic solvency, that will engage in more Socialism rather than less.

Now I would like to turn to the impact that the economic developments that we face today are making on the constituency which I now have the honour to represent. It would not be fitting if I were to deal with the economic problems of Dundee without mentioning my predecessor in this seat. He will always be associated in Dundee, particularly during his term of office in the Board of Trade, with the work of building up in the constituency one of the most successful industrial estates in the country. Dundee is a fairly good example of the kind of city and community for which the Distribution of Industry Act was designed.

This city has depended mainly upon the jute industry and was deplorably and tragically depressed in the years between the wars when up to one-third of Dundee's workers were unemployed. We had a large female labour force because women were cheaper, and we had the 630 situation in Dundee of the menfolk staying at home, looking after the children, boiling the tea and preparing the meals while the women did the work. During the by-election in Dundee we found that these memories of unemployment were very easily stirred.

I noticed that the newspapers devoted a great deal of space, as they are entitled to do, to telling us the significance of the High Wycombe by-election because it showed a swing of 0.37 per cent. towards the party opposite. I did not notice that the newspapers devoted very much space to the Dundee by-election, which showed a swing of 7.39 per cent. to the party on this side of the House. One of the main reasons for the size of that swing was the fact that we had very severe local unemployment in Dundee. It rose to over 9,000 in the month of June, with as many more people on part-time work.

The Minister of Labour has been mentioning a definition of full employment, or, rather, the percentage of unemployment al which drastic action is necessary. I think that was the way he was putting it—but that was, I am sure the way in which my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) meant it to be implied—and he mentioned 3 per cent. At that period in Dundee we had 10 per cent. of unemployment. During the last eight months we have never dropped beneath 3 per cent. The situation in Dundee has improved since the peak in the summer, but it is still very serious indeed.

There is now very great anxiety in the city, and in many other areas in the country, at the recent announcement by the President of the Board of Trade that he would consider de-scheduling certain Development Areas. In Dundee, we welcome his announcement that other areas of the country are to receive the same sort of benefits as we have been receiving, but we feel very strongly that there is no case at the moment for de-scheduling our own area. I would certainly ask that the President of the Board of Trade, if he is to speak later in the debate, gives us an assurance that no such action in Dundee is intended in present circumstances.

There would be a catastrophic situation in the City of Dundee today if Development Area techniques were not working there. We have depended mainly 631 on the jute industry, but the labour force in that industry has dropped from about 30,000 before the war to about 18,000 today. As far as I can foresee the level of employment in the jute industry is likely to settle finally at about 15,000. Development Area techniques have helped to fill that gap at the moment, and we have been working, in Dundee, to have the ban lifted that at present exists on the coming of new industries into the city. We feel, because of the present situation, that it is time that new industries came to the city.

But now the situation has worsened still further. We are having in the face of the economic policies of Her Majesty's Government the withdrawal of two of the factories on our industrial estate to their English headquarters. Now we are working urgently to try to find replacements for these factories. It should be astonishing that in those circumstances we are at the moment worried lest the development area facilities be withdrawn from this part of Scotland.

The real economic problems we are facing are those of unemployment and of falling production and exports. When a community faces these problems it is the Development Areas that are the hardest hit. I do not feel that at present any case can be made out for de-scheduling any of the Development Areas. The Gracious Speech mentioned economies in Government expenditure. I hope that Her Majesty's Government will not make those at the expense of the Development Areas. The money that is spent by the Government in creating employment under present circumstances is the most essential of national investments, and to stop spending that money now in the interests of saving Government expenditure would be a betrayal of all the hard-won achievements of the British people since the end of the war.

§ Mr. Richard Law (Hull, Haltemprice)

I have had the honour of serving this House for more than 20 years and yet this is the first time I have had the privilege—and having experienced it I can say also the pleasure—of being able to follow an hon. Member making his maiden speech. Sometimes I have dreaded what I would say if, finding myself in that position by some chance 632 I did not feel that the traditional compliments were merited.

Happily, on this occasion, any such qualm has entirely passed from my mind. I congratulate the hon. Member for Dundee, East (Mr. Thomson) most warmly on his speech. If I may say so, it was lucid, reflective, agreeably non-controversial and, when it verged on controversy, it was done so agreeably that one almost accepted what the hon. Member was saying. Indeed, when he said he thought that economic planning had been a good thing, I almost believed that it might be, which shows what a tremendous impression his speech made upon me.

I was particularly interested by the reflections of the hon. Member upon the growing political consciousness of people throughout the world. It so happened that I had an example of that in my post this morning in a letter from Prague, from Czechoslovakia. My correspondent asked his housemaid what she thought of the result of the American Presidential Election. She said she was very disappointed. She realised that General Eisenhower was a very good man, but that until the last moment—and I quote her exact words—"she had hoped that Mr. Churchill would be elected." So I think we may say that there is some political consciousness even on the other side of the Iron Curtain and I congratulate the hon. Member most warmly and I hope we shall hear from him often in the future.

I am in such a congratulatory mood that I almost feel like congratulating the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison) for the speech with which he opened the debate. Anything further removed from the incisive, condemnatory and almost vitriolic terms of the Amendment he was moving it would be difficult to imagine. The right hon. Gentleman had better watch out because he reminded me a little of the right hon. Gentleman the Member for what was then Hackney, South, who served in the great Coalition. His appeals for national unity may get him into trouble with some of the more violent sections of opinion behind him.

§ Mr. H. Morrison

Is the right hon. Gentleman aware that I resisted firmly the desires and the wishes of the Prime Minister to continue that Coalition beyond its allotted span?

§ Mr. Law

I think the right hon. Gentleman was very unwise. The Coalition did a great deal better than the Government which succeeded it.

There was one noticeable feature of the right hon. Gentleman's speech today—indeed, it has been characteristic of speeches of hon. and right hon. Members opposite in the main debate as well—and that was that any outside observer listening to the speech would not have suspected for a moment that the right hon. Gentleman and his hon. Friends had any shred of responsibility for the difficulties in which the country finds itself today. Of course, they have great responsibility. For six years they were the Government of this country. For five of those six years they had power absolute and untrammelled, so that they could apply any remedy they liked to the evils they inherited. What was the result?

The result was that when they abandoned office they had done nothing seriously to deal with the fundamental economic problems with which they were faced when they took office. [HON. MEMBERS: "Oh."] That is a plain fact which I have no hesitation in stating categorically, and it really is non-sense—

§ Mr. Emrys Hughes (South Ayrshire)

What about mining?

§ Mr. Law

—for right hon. and hon. Gentlemen opposite to come to the House now and pretend that if production was high and employment was high in the five or six years following the war that was due to the sagacity of the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) and his predecessors, and that if production is less high now and employment very slightly less high now, that is due to the mistaken policies of my right hon. Friend who is now Chancellor of the Exchequer.

The plain fact of the matter is that when right hon. Gentlemen opposite were in office, the tide was with them. Now that my right hon. Friends are sitting on the Treasury Bench, the tide is against them. It is no use hon. Gentlemen opposite coming to the House and standing up like a string of inverted Canutes and saying that they are responsible for the tide when it is flooding and we are responsible for the tide when it is on the ebb. That is absolute nonsense.

§ Mr. G. R. Mitchison (Kettering)

I wonder if the right hon. Gentleman would explain to us why the tide flowed so very differently after the 1914–18 war from its flow after the last war?

§ Mr. Law

A possible explanation is that the conditions were entirely different. Nobody would deny that the tide was favourable immediately after, and for four or five years after the war. The tide turned just before the General Election of last year. That was why right hon. Gentlemen opposite abandoned their task, they knew the tide had turned. We cannot influence the tide but we can make the best use of it, whether the tide is adverse or favourable.

I ask the House to consider for a moment just what this Government have done in unfavourable conditions. It is not unfair or an exaggeration to say that my right hon. Friend the Chancellor of the Exchequer with great patience and skill, and using such luck as came his way, as he was entitled to do, has wrought a change in our position compared with a year ago which is almost miraculous. Our external payments are in balance. A year ago nobody would have dared prophesy such a thing, and when, in his Budget speech, my right hon. Friend made that prophecy he was jeered and mocked by the Opposition. Sterling is rising on the exchanges instead of moving steadily downwards. We have been given what a year ago none of us would have thought possible—a breathing space. The Chancellor of the Exchequer has given us what we perhaps need more than anything else at this juncture in our affairs—time.

I am not sure that time is not the main thing that he has given us. He has conducted an emergency operation with great skill as a surgeon, and with comparatively little pain to the patient. The patient still breathes and lives, but as yet he has no guarantee of recovery. As the right hon. Gentleman the Member for Lewisham, South pointed out, exports are going down and markets are becoming more difficult, and if it were not for the fact that we have successfully got through the immediate crisis an impartial observer might be forgiven for thinking that recovery was as far away as ever.

There is no real indication yet that the British economic system has the spring 635 and resilience which will enable it to survive the buffetings it will certainly encounter in the next few years of difficult markets and increasing competition. I do not believe that our national economy can have the necessary resilience and spring unless we do something to remove from the shoulders of the weary industrial giant something of the load of high taxation and heavy Government expenditure which is bearing down upon him now.

It seems to me that the attitude of the whole House—and, for reasons that I may develop, particularly that of the Government side of the House—towards Government expenditure is very extraordinary. I am now about to say something which may give the right hon. Gentleman the Member for Lewisham, South an opportunity of pointing out a cleavage in the Tory Party, to which he was referring in his speech. Let me assure him that, at any rate, there are no competitors for the deputy leadership. There is no cleavage in the Conservative Party, but there are legitimate differences of opinion on this and other matters. After all, if there was not room for differences of opinion on these economic problems they would have been solved years ago, because we should all have agreed on the right method.

What seems to be extraordinary about our attitude towards public expenditure is that hon. Members on both sides of the House, and certainly some right hon. Gentlemen opposite, will admit that when 40 to 45 per cent. of the national income is taken in taxation the proportion is far too high. On this side of the House, at any rate, we know that it is public expenditure at this rate and the burden of taxation of this weight which makes recovery impossible. I believe we all know that, and yet some of us seem to have agreed that there is really nothing much to be done about it; administrative economies may be all right, but apparently any real reduction in expenditure is quite unthinkable.

My right hon. Friend the Chancellor of the Exchequer may have been right when he said at the Scarborough Conference that, in his opinion, big economies were impossible. But if he is right, then I tell him that economic recovery is impossible. In my judgment, there is no future for this country and no future for the British people with taxation at the 636 present level or anything like the present level, and unless we can lift a substantial part of this burden, and unless we can do it fairly quickly, it is very easy to see what will happen to our country. We shall drift from one balance of payments crisis to another, and each will be resolved, or apparently resolved, at a lower level of consumption and production, until we attain our final equilibrium with the standard of life, and, I dare say, the political institutions as well, of a People's Democracy, like the Soviet Union or the Chinese People's Republic. That is not really an exaggeration.

If hon. Members on both sides of the House examine our position today, wherever they see a weakness in it they will find that it is due to too much Government expenditure or to too heavy a load of taxation which is a result of that expenditure. I shall not traverse the whole field, for it would take too long, but I should like the House to look at two aspects of our affairs in illustration of what I am saying.

§ Mr. A. Woodburn (Clackmannan and East Stirlingshire)

The right hon. Gentleman, who is at a very interesting part of his speech, seems to think that the Chancellor of the Exchequer is wrong in what he has suggested. It might be interesting if the right hon. Gentleman would suggest the directions in which he would make great savings.

§ Mr. Law

It might be interesting, but what I am about to say is even more interesting.

The right hon. Gentleman the Member for Lewisham, South pointed out, perfectly fairly, that there were very great difficulties to come in the export markets. The post-war demand has dried up, we have competition from Germany and Japan which we did not have during the period of office of the Labour Government, and we may now very reasonably ask ourselves where we shall find the markets for our exports and what kind of exports we shall be able to persuade those markets to take. In the days of the export drive, for five or six years after the war, textiles and motor vehicles did very well. I think there is still a great future for textiles, but, clearly, the reemergence of Japan has made a great difference. I doubt very much whether there is the same great future for the export of motor vehicles.

637 I should say that a good hope in exports would be capital goods; that is still a good bet. This country is good at anything which is custom-made," as the Americans say. But I am not sure that the greatest opportunity does not lie in the field of new inventions. We have seen what we have done with jet engines, for example. I believe that this is a fair reflection to which I should like hon. Members to address their minds for a moment. If we look at the whole range of scientific achievement we find that on the peaks or in the stratosphere there is nearly always an Englishman, or more probably a Scotsman, but, at any rate, someone from Great Britain, and he is probably there alone.

But when we get down to the lower slopes where scientific discoveries are applied to commerce, production, raising the standard of life, and so on, we find that it is an American, a German or a Japanese who is there and the Britisher is no longer present. I think we would find case after case where an invention that has great commercial and industrial value is invented in this country but developed somewhere else.

I believe that to be a very significant fact of our post-war trading development and the reason for it is clear. The reason is that with taxation at its present level it is better to take a royalty without risk than to go into manufacture on a "Heads you win, tails I lose," basis which is what one has to do under the system of taxation that obtains in this country. I am not saying that taxation kills British ingenuity or British inventiveness. It does not, but it does destroy all opportunity of getting any advantage from British ingenuity and British inventiveness.

That is one aspect of taxation problems and here is another. Why is it that production per head is so much higher in the United States than it is here? It is not just British laziness; I think we are lazy people—[HON. MEMBERS: "Oh."]—but we are not as lazy as all that.