Sir Oswald Mosley: In the earlier stages of this debate to-day, to which I will return with the leave of the Committee, we have had from the Prime Minister an exposition of Government policy, and also some of the customary exchanges of debate from two great masters of that art. I do not propose to indulge in any form of dialectics, because I believe the purpose which this Committee desires can best be served if, as directly as possible, I proceed to the actual facts of the great administrative and economic issues which are involved.
The Prime Minister, in his speech, pointed out a fact which none can deny, that world conditions have been vastly aggravated since the arrival in power of the present Government, and that no one can suggest that the Government are responsible for those conditions. None can deny that fact, but this I do submit, that the more serious the situation the greater the necessity for action by Government. We must, above all, beware, as the world situation degenerates, that we do not make that situation an excuse for doing less rather than a spur for doing more. That is the only comment on the general situation which I would permit myself before coming to the actual issues involved. General surveys of unemployment I have always distrusted, because they are liable to degenerate into generalities which lead us nowhere.
If we are to discuss this matter with any relation to realities, we must master the actual, hard details of the administrative problem, and to that problem I desire immediately to proceed. The first issue between the Government and myself arises in the purely administrative sphere of the machinery to be employed in dealing with the problem. I submit to the Committee that, if anyone starts in any business or enterprise, his first consideration must be the creation of a machine by which that business can be conducted; and, when a Government comes into power to deal with unemployment, its first business is the creation of an efficient and effective machine. That machine, in my view, does not to-day exist, and I will say why.
Under the late Government, the Ministry of Labour, with the assistance of various Cabinet Committees, was, as I understand, responsible for unemployment, and the staff of that office dealt both with the unemployment insurance aspect of the problem and with the provision of work and the reorganisation of industry. The only difference in the administrative procedure under the present Government is that the officials who were dealing with the constructive works side of the problem have been moved from the Ministry of Labour to the Treasury, and I have been joined by a small staff gathered from other Departments. The actual central administrative machine is now as follows. An interdepartmental committee composed of the permanent chiefs of all Departments meets at irregular intervals under the chairmanship of the Lord Privy Seal. That is the main machine to secure co-ordination and liaison in the whole great attack upon unemployment.
That committee has met nine times since the inception of the Government, and only twice during the present year. To the first two meetings of that committee, I and other advisory unemployment Ministers were not invited, and at those first two meetings every major decision on policy and administration was taken. I am not here to make any complaints, but to analyse the facts, and I suggest that a machine of that nature could not possibly grapple with the problem.
What was the result? The result was that all initiative tended to come from the Department, instead of from Ministers. I am not here to attack, and I certainly should not dream of making any attack upon, the Civil Service. My admiration for the Civil Service has vastly increased since I have been in office. But to achieve a policy of this nature it is absolutely necessary that the whole initiative and drive should rest in the hands of the Government themselves. The machine which I suggested it is impossible to describe it in great detail on this occasion - was a central organisation armed with an adequate research and economic advisory department on the one hand, linked to an executive machine composed of some 12 higher officials on the other, operating under the direct control of the Prime Minister and the head of the Civil Service himself, and driving out from that central organisation the energy and initiative of the Government through every Department which had to deal with the problem. It is impossible really to expound such a scheme to the House in detail unless it is seen in the graph form in which I submitted it.
It is admittedly a complex organisation. I was told that to carry such an organisation into effect would mean a revolution in the machinery of government. My only comment is this. The machinery which I suggested may be right or may be wrong after a very short administrative experience, it was probably wrong- but this I do suggest, that to grapple with this problem it is necessary to have a revolution in the machinery of government. After all, it was done in the War; there were revolutions in the machinery of government one after the other, until the machine was devised and created by which the job could be done. Unless we treat the unemployment problem as a lesser problem, which I believe to be a fallacious view, we have to have a change in the machinery of government by which we can get that central drive and organisation by which alone this problem can be surmounted.
That is all that I have to say for the moment upon machinery. May I now proceed to the nature of the problem which confronts us? I have always tried in the House, when speaking from the Treasury Bench, to divide the problem into two essential parts, the long-term reconstruction of the industries of this country, and the short-term programme to bridge the gulf before the fruition of the long-term programme. I think we can all agree, whatever our views upon the permanent reconstruction of Britain, that it cannot be done in five minutes. It will be a matter of three years at least, and possibly five years, before you can arrive by long-term measures at an appreciable effect upon the unemployment figures. If that view be agreed to, it is evidently necessary, in addition, to have a short-term programme to deal with unemployment in the interval, which should at the same time contribute to the economic advantage of the country. I will come later to that short-term programme, and to an analysis in detail of the figures which the Prime Minister supplied to the House; but first of all may I address myself to the fundamental problem the long-term problem in the solution of which the Government and this House must decide the permanent economic basis of this country in the immediate future.
The Government throughout have pinned their hopes to rationalisation. For my part, I have always made it perfectly clear that, in my view, rationalisation was necessary and inevitable. It has to come in the modern world. Industries which do not rationalise simply go under. It is agreed among most people that rationalisation is necessary, but do not let us proceed, from our view that rationalisation is necessary, to the easy belief that rationalisation in itself will cure the unemployment problem.
It is held, and it was submitted again this afternoon, that although at first rationalisation displaces labour, very soon it so expands the market open to the industry that the labour displaced is absorbed, and more labour in addition, with the result that ultimately the unemployment problem is solved. The only criterion that we can apply to that belief is the evidence which exists in connection with trades which have already rationalised. I have been at some pains to examine the facts in trades which have at any rate partially rationalised, and I think we can take, as a criterion of a rationalised trade, those trades which, in a relatively short space of time, have greatly increased their production for a profitable market. I applied this criterion to trades of that character four big groups of trades and I found, between 1924 and 1929, an average increase in production of over 20 per cent, but an average decline in the insured workers in those trades of over 4 per cent. Over five years you have that immense increase in production a very great achievement and over the same long period a steady decline in the employment in those trades, which were ever increasing their efficiency and expanding their markets. It would appear, therefore, on the evidence which exists, that rationalisation in itself is at any rate no short and easy cut to the solution of the unemployment problem.
There is a further point. The whole emphasis in this matter of rationalisation is thrown by the Government on the export trade. I do not know if that fact will be challenged. The Lord Privy Seal put it very well on the 25th February, when he said: "The problem, difficult in some respects is boiled down to the simple proposition, how can the Government help our export trade." There are many other quotations of Government spokesmen to the same effect. I think it is beyond challenge that the Government believe that by the expansion of export trade through rationalisation our troubles are to be overcome. May we apply the evidence I have just adduced to the expansion of the export trade? The theory is that, if we can restore our export trade, by rationalisation, to its previous position in the markets of the world, we shall absorb our present unemployed. To win back our previous proportion of the export trade of the world means an increase of some £200,000,000 a year in our export trade or 25 per cent of its present value. Supposing that is achieved by rationalisation, and that the same thing happens in the rationalisation of the export trade that has occurred in industries which have already been rationalised, to achieve that increase of 25 per cent in our present volume of export trade would, if the same proportions hold good, mean an actual decrease of 5 per cent in the men employed in those trades.
Let us set aside all existing evidence, and let us, in examining this problem, take a hypothesis altogether favourable fantastically favourable to the theory of the Government. Suppose that in the next four years we can expand our export trade by £200,000,000 a year, not by a rationalisation process which displaces labour, but by an ordinary expansion of world markets which takes more workers on the existing basis. We should, in that event, to achieve that increase of £200,000,000, employ, on the normal basis of production per head at the present time, something like 900,000 additional people. But during the next four years some 1,000,000 persons will be added to the working population, so that at the end of the process we should be back exactly where we began.
I submit that this hope of recovering our position through an expansion of export trade is an illusion, and a dangerous illusion; and the sooner the fallacy is realised, the quicker can we devote ourselves to a search for the real remedy. There are innumerable factors beyond those which I have mentioned, militating against any increase of our export trade to that extent. There is the industrialisation of other countries for their own home markets; there is the industrialisation of countries which had no industries at all a few years ago. Take the position of our cotton trade on the Indian market. That market averaged for many years, I believe, according to the figures of the International Labour Office, about 5,600,000,000 yards of cotton a year. That was originally our exclusive market, but today India herself produces 1,000,000,000 yards, while Japan, which formerly only had one five-hundredth part of that Indian market, to-day has one-fifth. The intensified competition all over the world is making more and more illusory the belief that we can again build up in the world that unique position which we occupied many years ago.
I should be interested to hear if these figures and calculations can be challenged. If they cannot be challenged, we have to face a shift in the whole basis of the economic life of this country. I believe, and have always urged, that it is to the home market that we must look for the solution of our troubles. [Hon. Members: " Hear, hear."] I may come to a rather different conclusion from Hon. Members opposite, but let us march together thus far. If our export trade on its pre-war basis is really no longer possible, we have to turn to the home market. We must always, of course, export sufficient to buy our essential foodstuffs and raw materials, but we need not export enough to build up a favourable trade balance for foreign investment of £100,000,0000 a year, or to pay for the import of the so many manufactured luxury articles as to-day come into the country. We have to get away from the belief that the only criterion of British prosperity is how many goods we can send abroad for foreigners to consume.
But whatever may be said for or against the recovery of the swollen export trade that we had before the War, the fact remains that it is most exceedingly difficult ever to restore that condition again, and facts have to be faced if we are to find any outlet for our present production. How can the home market be developed? Hon. Members opposite reply "Tariffs". They remind us, rightly, that Mr. Cobden is dead, but it is very often forgotten that the opponents of Mr. Cobden are dead as well. I believe both laissezfaire and Protection are utterly irrelevant to the modern world. After all, what are the facts we have to face? We have to face fluctuations in the price level of basic commodities greater than we dreamt of before the War, for a variety of reasons, partly monetary, but still more, the emergence of great producers' organisations which have turned the struggle into a battle of giants in place of the day-to-day struggles of small merchants before the War. We have the struggle of these great organisations and in the event of the collapse of one of these great organisations in the struggle you have a downward rush in prices, or, in the event of their combination, you have an upward surge in prices which would frustrate and baffle any tariff wall that the wit of man could devise. Tariffs lead to the same fluctuations at higher price levels, while the organised and subsidised dumping that we are likely to meet in the not too distant future can go over, or under, if the nation doing it so desires, or if the producers' organisations desire, any tariff barrier that was ever invented.
I do not want tonight to re-open that old controversy. I believe we can leave it to the ghosts of Cobden and his opponents to continue the discussions of long ago in whatever Elysian fields they frequent. We should get down to thrashing out the merits of the problem to meet the facts of the age in which we live. I have been driven more and more to the conclusion that the system of an import control board, long adopted as the policy of this party in the sphere of agriculture, and wheat in particular, is the only means by which the facts of the modern situation can be met, and many are daily coming to that conclusion.
I have been astonished to find, during my period of office, big business men, whose association was altogether with the party opposite, saying that that policy was the only way to meet the agricultural situation. Some of them have advanced the claim that by that policy a price of some 10s. a quarter above the present world price could be given to the English farmer without any increase in the price of bread, and probably a decrease, owing to the savings that could be effected. I had an estimate put to me that 500,000 men could thereby be put on the land. I believe that to be an exaggeration, but I am confident that a good many could be put on the land. It would lead directly to the rationalisation of trades like milling and baking, diverting all the energies of those engaged in those trades from speculation in wheat to the efficiency of their own industrial processes, and by those economies, and economies in freight and insurance, which we can deal with in other and more detailed debates, I believe the basis of a great agricultural policy can be laid.
I want now to suggest that that policy of controlled imports can and should be extended to other trades, for this reason, that if we are to build up a home market, it must be agreed that this nation must to some extent be insulated from the electric shocks of present world conditions. You cannot build a higher civilisation and a standard of life which can absorb the great force of modern production if you are subject to price fluctuations from the rest of the world which dislocate your industry at every turn, and to the sport of competition from virtually slave conditions in other countries. What prospects have we, except the home market, of absorbing modern production?
I have had put up to me so often the theory of the classical economists, which is held by many senior statesmen on all sides, that these things have all happened before. Men's labour has been replaced by machinery, only to be absorbed again later by an expansion of the market. That greater production was absorbed by the gradual raising of wages, by the shortening of hours, and, above all, by an expansion of the overseas market. I once heard it said, " Negroes did not ride bicycles when we were young. They ride bicycles now, and that has given employment." That theory is still held, that sooner or later world recovery will come and our rationalised industries will take advantage of it and so expand our home and overseas market and the problem will be solved. Apart from the effects of rationalisation, which I have already endeavoured to describe, we have to consider this great fact, that since the War there has been a tremendous spring of scientific invention. All through the last century it is true that these things happened, but they happened gradually. You had an adjustment of production to consumption over a long period of time, albeit with considerable suffering to the working class and considerable dislocation of industry. Now you have this tremendous leap forward in a few years in your productive capacity which has absolutely upset the industrial equilibrium of the world and demands entirely different measures to deal with it.
A great scientist said to me only a few months ago, "In the last 30 years the scientific and industrial capacity of the world has increased more than it did in the previous 300 years," and rather unkindly he went on to add, "The only minds that have not registered that change are those of the politicians." We have in some respects to plead guilty to that charge, because many still believe that gradual automatic processes, as before the War, are going to absorb the great flood of goods which the modern scientific and industrial machine is throwing on to the markets of the world. That aspect of the problem that we have to consider could be elaborated indefinitely, but I have to pass to other subjects. I only suggest at this stage that there is, in the analysis which I have presented, and which many others have presented, some ground for disbelief in the current view that is now so widely accepted, and if there is any force in this analysis or in these arguments, the attempt to deal with unemployment by an intensification of the export trade is doomed to failure, and the belief that it can be done is a dangerous delusion which diverts the mind of the country from the problems which should be really considered and the things that really matter. But there is no machine of Government to-day thinking out and analysing these things. I had the advantage of very able and devoted civil servants preparing figures and facts for me but I have only been one Minister with a very small staff.
These things should be the subject of consideration and research by the most powerful economic machine that the country can devise. That is the point of my request at the beginning of my speech for a Government machine for governmental thinking. We have all done our thinking in our various political parties. Governments, officially at any rate, have never done any thinking. It is very difficult to analyse and get at the facts of the modern situation unless you have at your disposal the information and the research which Government Departments alone can supply. That is why it is so essential to have at the centre of things machinery that can undertake that work. What machine today is undertaking the great work of re-organising industry? Not the Government at all, but the banks. It is the Governor of the Bank of England who is doing this work. I admit at once that, in any effort of the Government in present conditions, the co-operation of the banks is very necessary and that efforts should be made to secure it, as the Lord Privy Seal has tried to do, but co-operation between the Government and the banks is a very different thing from abdication by the Government in favour of the banks, and we are perilously near that point.
But, putting aside all questions of general principle and facing purely the practical matter, I make this submission, that the banking machinery of this country is not equipped for the task of re-organising our industrial markets. On the purely practical point, if it was the banking system of Germany, you might say " Yes", because an entirely different practice has been followed by those banks. They have been industrial banks, always interwoven with industry, discovering and promoting new enterprise, putting their skilled, industrial directors on the boards of these new concerns, partners in their losses and in their successes. A vast industrial experience lies behind the German banks. Where is a similar experience in the banking system of this country, which has always repudiated any such conception as something immoral in financial doctrine? What is more, there is this danger. Our banking system has backed many losers. It is committed up to the hilt to many bad debts. As was powerfully brought out in the Balfour Report, industry has often been handicapped, not so much by the strictness of the banks as by ill-timed generosity in the promotion and the bolstering up of inefficiency.
Have we not to be very careful that this new banking enterprise is not an effort to salvage existing commitments rather than to re-organise the industrial life of the country. In all these facts there is a case for the Government taking a more effective control of the situation. The first duty of the Government is, after all, to govern. The worst thing that can happen to a Government is to assume responsibility without control. After all, the impression has been created in the country that in some way or other the Government is promoting the system and is responsible for the activity of these banking efforts, but effective control is absolutely lacking. Liaison and co-ordination do not exist except in the person of the Lord Privy Seal, and ceaseless as his activities are and hard as he works, no one man can in his own reason act in co-ordination between all these diverse and great activities. Unless you are setting out on an enterprise which means nothing less than the re-organisation of the whole basis of the industrial life of the country, you must have a system. You must, in a word, have a machine, and that machine has not even been created.
I must now pass from the long-term side of the programme to the short-term side, and I will be as brief as possible. The Prime Minister this evening described the programme of the Government by which he hoped to provide immediate employment, and he said that that programme now amounted to £103,000,000. When he was asked how many years that programme was spread over he had not the information and could not say, in particular, how many years the £37,000,000 road programme was spread over. As I have been concerned with the details of this programme, possibly I may supply him with the information. The road programme is spread over five years. Its annual amount scarcely exceeds, if at all, the programme of the late Conservative Government. This is one of our major matters of dispute. The only difference is that instead of a one-year programme this Government have a five years' programme, and an undertaking was given that if in any one year the revenue of the Road Fund was exceeded, the Treasury would arrange for a carry over by some means which has not been specified. But the actual dimensions of the programme per annum remain scarcely, if at all, in excess of the programme of the Conservative Government, and if that is challenged, then I shall challenge the publication of correspondence between the Minister of Transport and myself relative to my Memorandum, the publication of the Memorandum itself and detailed analyses of the figure which the Minister has never yet answered.
I want, if I can, to avoid controversy, but if any of my figures are challenged my figures are not my own I shall certainly challenge the publication of the official documents involved in order that the House itself may judge who is correct. That £100,000,000 programme as a whole is averaged over much the same period. It is impossible to say with absolute certainty how many years the rest of the programme is averaged over, but it is a great many, and I myself believe it to be not less than a five-year programme as a whole. That means an expenditure of some £20,000,000 a year which, on the current computation, would only provide employment on the average for some 80,000 people a year. It is true that that programme will rise to a peak and then decline, and that it is not a steady average, but I very much doubt whether many men in excess of 100,000 will ever be employed by that programme. I very much doubt it, and I would like to see the Lord Privy Seal prove here in detail with facts and figures I should be delighted if he could that many more than 100,000 will ever be employed by the programme he is now adopting. I should like to see a detailed analysis in a White Paper, if it can be shown, which I doubt. That, as far as I can analyse it, is the programme of the Government. The greatest increase in that programme is an increase in Unemployment Grants Committee work from some £6,000,000 in the last two years of the late Government to a sum of £30,000,000 under the present Government, a very great increase, which was achieved by big administrative changes which we only got through after a very hard fight. That is the biggest single increase in the programme of the Government.
May I proceed to advance very briefly the proposals which I submitted to the Government in their broad outline. I claimed that a programme could be adopted at a very small cost, as a budgetary charge I will deal with the charge laterwhich would in a relatively short space of time provide work for at least 700,000 to 800,000 people. It was made up in the following way. The emergency retirement pensions plan would provide normal employment for some 280,000; the School Bill, which I am happy to know the Government are carrying through, should result in providing employment for some 150,000; while in constructive works, which I will later describe, I proposed the employment of some 300,000 per annum. I will go through the figures of these three proposals in very swift detail. The retirement pensions plan was an emergency measure offering to industrial workers at present over the age of 60 £1 week pension, and 10s. a week for the wife, if the man is married, on the condition that within a specified and short time they retire finally from industry. The whole life of the scheme actuarially was only 15 years. I did in addition suggest that if the Government at that time desired another and a permanent scheme giving a pension at 65 might be provided, in respect of which, of course, no charge would fall for some five years.
Let me today deal with the emergency scheme to meet unemployment, with the facts and figures of that scheme and that alone, because the permanent scheme would be a matter for subsequent decision. The emergency scheme suggested a pension of £1 a week for a man and 10s. for the wife. The cost of it in the first year was £21,600,000 falling to some £10,000,000 at the end of five years, and it would be negligible at the end of 15 years. The direct economies to the Exchequer resulting from the reaction of the finance of that scheme upon the last additional contribution of the Exchequer to the Unemployment Insurance Fund, reduced the charge from £21,500,000 to £13,000,000. There was an offset in economies in the contribution of the Government to the Unemployment Insurance Fund of some £8,500,000 if the retirement pension scheme was carried, so that the net cost to the Exchequer was £13,000,000 in the first year, and there were other less substantial economies in the Poor Law and other factors of that nature.
I went further and suggested that it would be right and proper in the case of an emergency scheme of this nature to average the cost of the scheme over the effective life of the scheme. If the cost be averaged over the 15 years of the scheme the cost averages £11,000,000 per annum, and in the first year in which the scheme was introduced you would have a cost to the Exchequer of £11,000,000 and an offset in economy to the Government's latest additional contribution to the Unemployment Insurance Fund of £8,500,000, so that the net extra burden to the Exchequer in the first year amounted to not more than £2,500,000 if the averaging expedient were adopted. This is held to be a very immoral suggestion because it might be necessary to borrow in the first few years. But what is borrowed in the first few years is repaid in the later years and the whole duration of the plan is only 15 years, while it should be unnecessary to borrow at all if the ascending charges of the Budget can be set against the descending charges of the scheme, a very normal transaction, I understand, in balancing a Budget. Anyhow, I claim that if that averaging expedient be adopted the net cost to the Exchequer in the first year need not exceed £2,500,000.
Sir Herbert Samuel: Does this only apply to people who are 60 now?
Sir Oswald Mosley: Yes. If those figures are challenged, then I shall challenge the publication of the retirement pensions report and the correspondence between the Government Actuary and myself on those figures. They are not my figures. I have claimed that 280,000 people could be set in normal employment by means of this retirement pensions scheme, and I should have mentioned, to be quite clear on all the figures, that those liable to the scheme, that is, those who would be offered the pension, numbered 677,000, that those who were estimated would accept amounted to 390,000, and that the replacements of those who accepted amounted to 280,000, so that by means of that scheme we should put 280,000 to work. The only figure which I have given which is my own figure is the 280,000 who would be set to work. The official estimate was 230,000. My figure was 280,000 for very detailed reasons which I could not possibly enter under half an hour's exposition. But every other figure which I have given is not of my own calculation. The first item in the emergency programme was the retirement pensions scheme at a cost of £2,500,000. The next item was the raising of the school age, which is estimated to cost £4,500,000. I will not enter into the details of that scheme. It was outside my Department and it is to be discussed tomorrow, and other Ministers and the House as a whole are just as familiar with them.
Let me proceed to the question of the finance of the large constructive works schemes. I suggest that, apart from slum clearance and land drainage, with which I will only deal briefly in a few moments, a £100,000,000 programme of the Unemployment Grants Committee should be concentrated into three years, and a £100,000,000 road programme should be concentrated into the same period. I will come to the administration and the method of handling the programme in a few moments. I will now deal with the finance. The extra £70,000,000 for Unemployment Grants Committee schemes, would, on a more generous basis of grant than that which prevails at present, be an Exchequer charge of about £3,000,000 a year. As for the road scheme, the necessary loan would be raised on the revenue of the Road Fund and no extra Exchequer charge would be incurred at all. Is it so wrong in days of depression to raise a loan on the revenue of the Road Fund for the provision of an emergency programme which in days of prosperity is repaid by a Sinking Fund from the Road Fund? There is nothing novel in the principle. Already the local authorities for the most part borrow large sums to meet their share of local expenditure. Why should not the State do the same in days of depression and repay in days of prosperity? That was the finance and the total finance of the emergency scheme: £2,500,000 for retirement pensions, £4,500,000 for raising the school age and £3,000,000 for the Unemployment Grants Committee, and the raising of the loan for roads carried on the Road Fund. The whole proposal was a budgetary charge of £10,000,000, a £10,000,000 programme by which I believe some 700,000 to 800,000 people could be set to work on emergency measures.
That is a modest and a limited programme devised for the situation with which we are met. Fantastic rumours were circulated as to its cost, but it is a very limited and moderate programme designed to meet the actual facts of the situation with which we are faced. Of course, everybody must admit that the limits of taxation are very easily reached after several years of deflation. We all know that with such a situation the limits of taxation are easily reached, and that when you reach a certain point flight from the pound and disaster may ensue, but if that £10,000,000 programme had to be set against other charges which we have incurred, and are incurring, and if the number thereby to be set to work exceed 700,000, who would choose between that programme and the other charges? As long ago as last September I begged the Cabinet to make up its mind how much it was prepared to spend on unemployment, how much money it could find, and then allocate the money available according to the best objects which we could discover. As it is, no such system has ever been adopted. Departments have come crowding along, jostling each other with their schemes, and, like bookmakers on the race course, the man who can push the hardest, make the most noise and get through the turnstile first, gets away with the money. It is absolutely necessary to make up our minds in advance in any national reconstruction, what our resources are and how they are to be allocated.
Now I come to the actual administrative machinery of these big work plans. I have made the claim that £200,000,000 could be spent, and usefully spent, in Unemployment Grants Committee work, and roads alone, leaving for the moment slums and land drainage. To arrive at an understanding of the administrative machinery which I suggested, it is necessary for me briefly to analyse the relative breakdown of the present machine. We have greatly increased the output of the Unemployment Grants Committee's scheme by the modification of transferred conditions, and practically by that alone. I believe that the present Unemployment Grants Committee schemes could be trebled if we did away with transfer altogether. What happens? In order to maintain transfer you cannot give proper terms to the hard-hit areas of industry. Brighton or a seaside resort today can get more favourable financial terms from the Unemployment Grants Committee than the hardest hit mining area in South Wales, and, as a result, those areas, those depressed areas, cannot go ahead with schemes at all. They are burdened with rates, and even if they were prepared to raise fresh money the Ministry of Health would forbid them on financial grounds. Not only the depressed areas, but other areas with over 10 per cent of unemployment get much less favourable financial terms, and they simply cannot go ahead with their schemes because they cannot put up the enormous share of the cost which falls upon them, while at the same time prosperous areas, with little or no unemployment, can get far more favourable financial terms, the details of which I described in the House of Commons last November.
What is the official defence of this? The defence is that these areas with under 10 per cent of unemployment have to accept transfer from other areas. To make them do that they have to be given a premium in the shape of more favourable financial terms, otherwise transfer will appear as an obligation imposed rather than an obligation accepted in return for a reward. Therefore if the transfer system is kept, the hard-hit areas are bound to get less favourable financial terms than the more prosperous areas. The result of that is that your schemes are hit in both ways. The depressed areas, the hard-hit areas cannot go ahead because the financial assistance is not good enough, and the prosperous areas will not go ahead because with any unemployment of their own they will not take transferred labour from other districts. Therefore, you catch it both ways. You are hit in every direction and your work is broken up and frustrated. What is the defence of all this? We are told that the hard-hit areas are economically dead, that they are finished, and that the only plan is to move the labour out from them. It may be true that those areas will never employ as many people as they did before, but it is a fallacy and overstatement to say that they are dead. Because less people will be employed in South Wales than before, is no reason for allowing its unclassified roads to fall to pieces or to deprive it of the ordinary amenities of financial assistance from the Exchequer which Brighton, Eastbourne or Worthing can obtain from the Exchequer. It is a most extraordinary doctrine.
Another way in which the Unemployment Grants Committee plans are held up is that the whole concentration is on works of magnitude, great wealthy corporations carrying out vast water schemes, and things of that kind. That is where you get delay and the necessity for Parliamentary powers. If you gave to all the small places more favourable financial terms, spreading your assistance all over Britain and letting them carry out schemes which they can do within their own boundaries, without Parliamentary powers of any kind, then not only would you enormously increase the aggregate of your schemes but you would diffuse and spread your relief all over Britain into every constituency and every town. Therefore, I suggested that transfer should be done away with as far as the Unemployment Grants Committee work was concerned, that the financial terms should be uniform throughout, and that in the depressed areas 100 per cent grants should be made by the State. We have to face realities. In the depressed areas they cannot put up a penny. Either the work will not be done or the State must pay for it. If the State does not like to make a 100 per cent grant to the local authorities in those areas, then let the State either do the work itself, employing the local authority as the contractor, or employ an actual contractor, if it must.
It is no good deluding ourselves that any formulas will get us round the depressed area problem. I was told to announce from that Box, in November, that a formula would be discovered to deal with South Wales. I made that announcement, in accordance with my instructions, but we failed absolutely with the Ministry of Health and the Treasury. They are still hunting for a formula, and they will never find it until they face the reality that a 100 per cent grant, and that alone, will get a move on in these areas. With these methods and the abolition of transfer I sincerely believe that the increase in work schemes which I have described could be achieved. With regard to transfer, we want, if we can, to draw men from the depressed areas to other parts of the country if and when useful jobs can be found for them and not to draw them away just to put men out of jobs in those areas.
The only way to secure the transfer of labour is by national schemes, in which the State either does the work itself or puts up such a large proportion of money that it can impose its own terms. There are only three ways in which that can be done slum clearance, land drainage and the roads. On slum clearance and land drainage I made this submission. They were right outside my Department, but I asked the Government whether they would consider a more direct intervention on the part of the State, with a view to short-circuiting the local delays. I believe that in such schemes something approximating to a mobile labour corps, under decent conditions of labour and wages, of course, could have been employed to deal with that problem. I make that submission for what it is worth, and proceed to the roads.
The road programme, as I have said, does not annually exceed the programme of the late Government. If you ask me: "have you got the latest, the final engineering plans to build £100,000,000 worth of roads in this country?" I say, "No", and I say that it would be a great waste of time if any Department had worked out those plans before we knew if we could go ahead with them or not. I could not do it. My staff, one very able and devoted Treasury official, could not do it. The Ministry of Transport would not do it. I think they properly would not do it until they had settled in principle with the Treasury whether they could go ahead to that limit of money, if they were permitted to do it. If I am asked, "Can you define the administrative methods and procedure by which, in your belief, that achievement can be carried through?" "I reply, " Yes", and I will go on to describe that administrative method and procedure, very briefly.
Our central difficulty in building roads quickly is the relationship of the State and the local authorities. On the one hand, you cannot ride rough-shod, and no one wants to ride rough-shod over the local authorities. On the other hand, the work has to be done. I am one of those who believe that the great main roads of this country should be national concerns, and that it is as much an anachronism to leave these roads in local hands as it would be to leave the railways in local hands. I admit that that raises a large controversy, but I try always to face reality and a practical situation, and I believe you can get round that difficulty and get agreement quickly in this way leave the question of the nationalised roads until you settle the major question later, when you have to face the whole transport equilibrium of this country, as we have not begun to do. What matters in the building of roads quickly in relation to this problem is not the construction of the roads but the maintenance of the roads. Let the State construct and hand over to the local authority for subsequent maintenance. The local authorities would be something more than human or less than human if they objected very strongly to having their work done for them. This principle has been employed before, and in many cases the local authorities would do the work for you if your grant was anything approaching 100 per cent or of such generous terms as to make a really tempting offer.
If you made it clear that this machinery was emergency machinery and formed no part of the permanent relationship between the State and the local authorities, then I believe that, without upsetting the existing relationship, you would get through that emergency programme on the basis of the State constructing and the local authority maintaining, until your whole system was decided upon. But before you launch out on any such programme you have to make up your mind, in broad outline, what the permanent transport equilibrium of this country is to be. On every turn when we want to build roads we are told that it will damage the railways. What is to be the relationship between railway, road and canal in the future? No research, no thinking beyond the Commission which has been sitting for long, and is to report later is going on in this country; no examination by Government; not faced up to by Government, and so at every turn your road programme and your immediate unemployment programme is thwarted because it is said any great development of the roads will injure the railways.
That matter has to be decided. Further, we have to face this fact, that to get things done quickly the State has to put up a large share of the cost. If you put up more generous terms under Unemployment Grants Committee work, and road work for the emergency programme, and give the local authorities a now-or-never position, and say to them, "Here is your chance to get jobs done which are necessary to do. This is not the permanent problem of unemployment. We are merely bridging the gulf before the fruition of our long-term measures. Directly our permanent reconstruction is achieved this emergency programme will come to an end, at the end of three years or more, and you local authorities will have missed your chance; you will not for ever be getting assistance from the State to do your job." In those circumstances, you would get every local authority coming forward with schemes, if you face them with a "now-or-never" position and urge them forward with machinery of Government, which must be rather similar to the machine of the right Hon. Member for Carnarvon Boroughs (Mr. Lloyd George) under the National Health Insurance Act, when I believe he had machinery going into every constituency and to every local authority, explaining it and gingering up the locality. Such a machine is needed in this work, because nothing is so astonishing as the ignorance of many local authorities, and even their paid officials, as to the conditions offered by the Government. Have your emergency programme, have your now-or-never position, and then, with a great drive of Government machinery behind it, you will easily treble the work of the Unemployment Grants Committee programme.
I am coming now to my conclusion. I am sorry to have detained the committee so long, but it is amazingly difficult to cover such a vast field as this in a short time. We have to face up to this fact, that if men are to be employed on any large scale, that employment has to be paid for either by the State or by local authorities. There is a tremendous struggle, an incessant struggle, going on in every Government department to get every penny they can off the taxpayer and on to the ratepayer. What holds up these plans for months is the struggle for these pennies, these minor details. What does it matter? What is the use of shifting the burden from the tax-payer to the ratepayer? What is the use of lifting the burden from the right shoulder to the left? It is the same man who has to carry it, and the economic fact is this, as the Colwyn and every other authoritative inquiry upon the economic side has said, that the burden on the ratepayer is more onerous upon industry than the burden upon the taxpayer. If this burden has to be carried, need we struggle and waste time in deciding whether it is to be carried by the taxpayer or by the rate-payer?
Further, it must be remembered that to set many men working for a year costs a great deal of money. It costs £1,000,000 to employ 4,000 men at work for a year, and £100,000,000 to employ 400,000 men for a year. Therefore, if you are going to do this work on any large scale large sums of money will have to be raised by the State or local authorities to carry it out. How is it to be raised, out of revenue or out of loan? £100,000,000 out of revenue! Who will suggest it in the present situation? It is 2s. on the Income Tax. It must be raised by loan. If the principle of a big loan is turned down then this kind of work must come to an end. It has been suggested that I advocated the raising of large loans and spending the money afterwards on any programme we could find. Nobody would be so mad as to suggest anything of the kind. This money, under a three years programme, would be raised as and when required to pay for that programme over a period of three years. It is not a question of raising £100,000,000 right away. It would be spread over at least three years, or even longer as there is always a big lag between the work and payment.
If this loan cannot be raised then unemployment, as an emergency and immediate problem, cannot be dealt with. If we are told that we cannot have the money let us confess defeat honourably and honestly; let us run up the white flag of surrender if we cannot have the money to pay for unemployment. If we are to deal with unemployment then the money, by revenue or by loan, has to be found. I advocate the method of a loan, and in my programme the amount which would fall upon the Exchequer would be the small charge of £10,000,000 a year. I have no doubt that we shall hear from the right Hon. Member for Epping (Mr. Churchill) in answer to this latter part of my case, what he has so often described as the Treasury view: the view that any money loans raised by the Government must be taken from other industrial activities and will put out of employment as many men as are put in employment. The right Hon. Gentleman in powerful expositions has often put forward that case. How far is that case supported by the present Government? I should like to have the views of the Chancellor of the Exchequer, for every argument with which I have been met seems to support that case. I admit that there is some force in that view in a period of acute deflation. If you are pursuing a deflation policy, restricting the whole basis of credit, there is some force in what is known as the Treasury view, that it is difficult to raise large loans for such purposes as this.
The Financial Times on 14th April said: "The policy of deflation is apparently proceeding apace." And it went on to observe that it was no use having a low bank rate if the whole basis of credit was restricted and charged the Chancellor of the Exchequer in his action in regard to Treasury Bills with a large share of the responsibility. I am not going into that subject on this occasion because there will be other opportunities for doing so, but I agree that if you are pursuing a policy of deflation you are lending force to the Treasury view. Given, however, a financial policy of stabilisation, that Treasury point of view cannot hold water. It would mean that every single new enterprise is going to put as many men out of employment as it will employ. That is a complete absurdity if you pursue that argument to its logical conclusion. If it is true it means that nothing can ever be done by the Government or by Parliament. It means that no Government has any function or any purpose; it is a policy of complete surrender. It has been said rather curiously, in view of the modesty of my programme, that it is the policy of the "red flag." I might reply that what is known as the Treasury view is the policy of the "white" flag. It is a policy of surrender, of negation, by which any policy can be frustrated and blocked in this country.
Hanging all over that policy is the great conception of conversion. There are two ways of achieving conversion. One through the inherent financial strength of your position, leading to a strengthening of Government credit. The other is by the simple process of deflation to make all industrial investments unprofitable, and drive your investor into Government Securities because he has no other profitable outlet. But there may be another effect of that policy; that the money goes abroad, and then you get the logical effect of that policy suggested by the President of the Board of Trade as the only means of solving our industrial problems, when he said on the 14th May: "During the last fortnight alone £16,000,000 of new capital has been authorised or raised for overseas investment, and so I trust the process will continue." Why? Why is it so right and proper and desirable that capital should go overseas to equip factories to compete against us. to build roads and railways in the Argentine or in Timbuctoo, to provide employment for people in those countries while it is supposed to shake the whole basis of our financial strength if anyone dares to suggest the raising of money by the Government of this country to provide employment for the people of this country? If those views are passed without examination or challenge the position of this country is serious indeed.
In conclusion let me say that the situation which faces us is, of course, very serious. Everybody knows that; and perhaps those who have been in office for a short time know it even better. It is not, I confidently believe, irreparable, but I feel this from the depths of my being, that the days of muddling through are over, that this time we cannot muddle through. This nation has to be mobilised and rallied for a tremendous effort, and who can do that except the Government of the day? If that effort is not made we may soon come to crisis, to a real crisis. I do not fear that so much, for this reason, that in a crisis this nation is always at its best. These people know how to handle a crisis, it cools their heads and steels their nerves. What I fear much more than a sudden crisis is a long, slow, crumbling through the years until we sink to the level of a Spain, a gradual paralysis beneath which all the vigour and energy of this country will succumb.
That is a far more dangerous thing, and far more likely to happen unless some effort is made. If the effort is made how relatively easily can disaster be averted. You have in this country resources, skilled craftsmen among the workers, design and technique among the technicians, unknown and unequalled in any other country in the world. What a fantastic assumption it is that a nation which within the lifetime of everyone has put forth efforts of energy and vigour unequalled in the history of the world, should succumb before an economic situation such as the present. If the situation is to be overcome, if the great powers of this country are to be rallied and mobilised for a great national effort, then the Government and Parliament must give a lead. I beg the Government tonight to give the vital forces of this country the chance that they await. I beg Parliament to give that lead.
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