Back Cover

Title: British speeches of the day
Full Citation
Permanent Link: http://ufdc.ufl.edu/UF00076217/00033
 Material Information
Title: British speeches of the day
Physical Description: 5 v. : ; 23 cm.
Language: English
Creator: British Information Services
Publisher: British Information Services,
British Information Services
Place of Publication: New York
Publication Date: November 1945
Frequency: monthly
Subject: World War, 1939-1945 -- Periodicals   ( lcsh )
Politics and government -- Periodicals -- Great Britain -- 1945-   ( lcsh )
Foreign relations -- Periodicals -- Great Britain   ( lcsh )
Genre: federal government publication   ( marcgt )
periodical   ( marcgt )
Dates or Sequential Designation: Began with Mar. 1943.
Dates or Sequential Designation: -v. 5, no. 5 (June 1947).
General Note: At head of title: British Information Services, an agency of the British government.
General Note: Description based on: Vol. 4, no. 1 (Feb. 1946); title from cover.
 Record Information
Bibliographic ID: UF00076217
Volume ID: VID00033
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 01412079
lccn - 45006482

Table of Contents
        Main 1
        Main 2
        Page 543
        Page 544
        Page 545
        Page 546
        Page 547
        Page 548
        Page 549
        Page 550
        Page 551
        Page 552
        Page 553
        Page 554
        Page 555
        Page 556
        Page 557
        Page 558
        Page 559
        Page 560
        Page 561
        Page 562
        Page 563
        Page 564
        Page 565
        Page 566
        Page 567
        Page 568
        Page 569
        Page 570
        Page 571
        Page 572
        Page 573
        Page 574
        Page 575
        Page 576
        Page 577
        Page 578
        Page 579
        Page 580
        Page 581
        Page 582
        Page 583
        Page 584
        Page 585
        Page 586
        Page 587
        Page 588
        Page 589
        Page 590
        Page 591
        Page 592
        Page 593
        Page 594
        Page 595
        Page 596
        Page 597
        Page 598
        Page 599
        Page 600
        Page 601
        Page 602
        Page 603
        Page 604
        Page 605
        Page 606
        Page 607
        Page 608
        Page 609
        Page 610
        Page 611
        Page 612
        Page 613
        Page 614
        Page 615
        Page 616
        Page 617
        Page 618
        Page 619
        Page 620
        Page 621
        Page 622
        Page 623
        Page 624
        Page 625
        Page 626
        Page 627
        Page 628
        Page 629
        Page 630
        Page 631
        Page 632
        Page 633
        Page 634
        Page 635
        Page 636
        Page 637
        Page 638
        Page 639
        Page 640
        Page 641
    Back Cover
        Page 642
        Page 643
Full Text




Page f'

Ernest Bevin. October 9, 1945 ....................... .\ ... 543
James Chuter Ede; Oliver Lyttelton. October 9, 1945.... .... .; 147
James Griffiths. October 10, 1945........................ ...... 557
R. S. Hudson; Aneurin Bevan. October 17, 1945................ 567
Winston Churchill; George Isaacs. October 22, 1945............. 581
Hugh Dalton, October 23,,.1945................................ 598
Hugh Dalton; Sir John Anderson. October 29, 1945............ 611
George HalL October 10, 1945...... ..... 620
George Hall. October 31, 1945...... 5..... 621
Ernest Bevin. October 26, 1945 ............ ...,........... 622
Captain Blackburn; Herbert Morrison. October 30, 1945........ 629

Vol. III, No. 11

November 1945

NEW YORK 20 . .. 30 ROCKEFELLER PLAZA . . Circle 6-5100
WASHINGTON 5, D. C. . 1336 NEW YORK AVENUE, N.W. . Executive 8525
SAN FRANCISCO 8 . 391 SUTTER STREET . . . Sutter 6634


House of Commons, October 9, 1945

Bevin): I desire to make a statement on the work of the Council of Foreign
Ministers. I have refrained since the close of the Council from making any public
statement until the House met. The Conference opened on September 11th. Hav-
ing studied the terms of reference of the Council which were laid down in the
Protocol of the Berlin Conference, I thought it right to submit to my colleagues at
the opening meeting a suggestion as to procedure. I suggested that it would be
inconvenient if some of the members of the Council had to be excluded from some
of the meetings. It would be even more inconvenient, I said, if some members had
to be asked to leave a particular meeting while some of the items on the agenda
were discussed. I felt that the business of the Conference could be much more
easily arranged if it could be agreed that all five members could take part in all
discussions, even though on matters relating to the peace settlements.the power to
take decisions in the Council was confined to members whose Governments had
signed, or were deemed to have signed, the relevant terms of surrender.

Initial Agreement
Mr. Byrnes, the Secretary of State of the United States, took the same view as
I did, and Mr. Molotov said that he agreed with my proposal if, as he understood
it, it meant that all five members of the Council should attend all meetings, and,
if they desired, participate in the discussions, but that decisions should be taken
only by the delegations representing the Governments which were, or by the Coun-
cil's terms of reference were deemed to be, signatories of the relevant terms of
All being agreed on this interpretation of the Berlin Protocol, the proposal
which I had made was adopted without dissent. I am sure that when we passed
this resolution at our opening meeting we believed that we had faithfully inter-
preted the understanding reached by the signatories of the Protocol. In accord-
ance with this resolution the Council held 16 plenary meetings during ten days
of hard work, and had made much progress, not only on general questions but on
treaty questions as well. We had practically reached agreement on the draft of a
treaty with Finland, and had made provision for the reference of this question to
the Deputies. We had made considerable progress on the draft treaty with Italy.
We had considered and satisfactorily disposed of several aspects of this treaty.
For example, in the difficult question of the Italian-Yugoslav frontier, the Coun-
cil agreed to hear the views of the Governments of Yugoslavia and Italy as well
as of Australia, South Africa and New Zealand. After these hearings, the Council
instructed their Deputies to report on a line which left a minimum population
under alien rule.
The Deputies were also asked to report on an international regime for the port
of Trieste. The cession of the Dodecanese to Greece was proposed but no final
settlement was reached. On the question of the disposal of the Italian colonies,
the United States delegation put forward a proposal which His Majesty's Gov-
ernment instructed me to support, since they felt that this was a wise and a far-
seeing proposal which would avoid friction between the Great Powers in these
areas, and would give a chance for a great experiment in international co-operation.
The American proposal provided for the placing of these Italian territories under a
collective trusteeship by the United Nations Organization as a whole. It was
[ 543

British Speechel of the Day

agreed after discussion that this question of trusteeship for the Italian colonies
should be referred to the Deputies, who would make the widest possible use of
the American proposals, and take into account also the alternative proposal of a
single State trusteeship. Thus on this difficult matter -we had, despite divergent
views, reached a general agreement as to the basis upon which it should be further

Disagreement on Rumania and Bulgaria
To continue with my account of the work on the peace treaties done in the
early part of the Conference, we had made a start on the draft treaties for
Rumania and Bulgaria. There were before the Council proposals by the Soviet,
British and United States delegations. We took the Soviet proposals as a basis
and several points raised in the British proposals were disposed of. We then
proceeded to discuss the United States proposals regarding the draft peace treaty
with Rumania. These United States proposals brought up the whole question of
the recognition of the Government of Rumania, since it has been made dear in
them that the United States Government, while ready to discuss a draft, would not
negotiate a peace treaty with Rumania until a broadly representative government
had been established in that country. Much the same issue came up in connection
with the draft treaty for Bulgaria. Since on this subject there was a great diver-
gence of view, I proposed, in the hope of easing the difficulties of the position, that
an independent inquiry should be made into conditions in these two countries.

Mr. Molotov's Dissent
I have said enough to show some of the difficulties of the negotiations in which
we were engaged, and also the substantial progress that had been made in our
discussions during the first ten days of the Council's meetings. I was therefore
surprised when Mr. Molotov told Mr. Byrnes and myself on the morning of
September 22nd that we had all violated the Berlin Agreement, and that he
could not agree to continue discussions on the peace treaties under the procedure
on which we had been working for ten days. I said to Mr. Molotov that I did not
agree that the Berlin Agreement prevented us from working in the way in which
Swe had been. And I pointed out to him that we had all agreed at our opening
meeting that this was the way in which we intended to work. For the next few
days Mr. Byrnes and I went over the arguments many times with Mr. Molotov,
but could come to no agreement. Mr. Molotov held that the Berlin Agreement
should be interpreted in one way and Mr. Byrnes and I held that it should be
interpreted in another, the way in which it had been interpreted when the Council
passed its resolution of September llth. Throughout these discussions I was con-
cerned to urge the wider interpretation which would have given an opportunity
to the Dominions and other Governments who had made material contributions to
the defeat of the Axis, to express their views at the peace settlement. Since the
three Foreign Secretaries could not agree on the interpretation of the Agreement
we decided to refer to the three Heads of Governments. President Truman and
Mr. Attlee endorsed the views which Mr. Byrnes and I had expressed; Marshal
Stalin endorsed the view which Mr. Molotov had expressed; so we were no nearer
an agreement.

What the Berlin Agreement Says
I. must now say a word about the Berlin Agreement. It lays down very dearly
that the immediate important task of the Council is to draw up peace treaties with
Italy, Rumania, Bulgaria, Hungary, and Finland. It lays down that members other
than the signatories of the terms of surrender will be invited to participate when

The Council of Foreign Ministers

matters directly concerning thqm are under discussion. I ought to explain that in
accepting the invitation to join the Council the French Government had represented
that it was perforce interested in all settlements in Europe. The Berlin Agreement
also lays down that the Council may adapt its procedure to the particular problem
under consideration, and we think that all the members of the Council, including
the Soviet, agreed that that was what we were to do when the resolution of Sep-
tember 11th was drawn up. In fact, it was the representative of China who presided
over the Council on the day when it was decided to invite certain Governments to
send representatives to discuss the question of Trieste, and it was the representative
of China in whose name the invitations were sent out. He happened to be the
chairman for that particular session. So, on September 11th, and for ten days
afterwards, Mr. Molotov seemed to agree with us, and we never thought otherwise.
He told us later that his new attitude was taken up on instructions from his Gov-
ernment. If we had given effect to the interpretation on which the Soviet Delega-
tion insisted it would have meant that in discussing the Balkan Treaties we should
have had to say in effect to the representatives of France and China, "Now you
must leave the room while we are discussing these matters." And when we came
to the Finnish Treaty we should have had to invite the United States to withdraw
as well. Such a request by some of the Powers to their partners would obviously
have created international difficulties which the United States and British Delega-
tions did not feel they should be called upon to face. How could it, moreover,
have been reconciled with the Charter of the United Nations Organization, which
lays upon the five Powers as permanent members of the Security Council a special
responsibility to maintain the peace of the world?

Mr. Molotov's Proposals
As we could not reach agreement on the interpretation of the Berlin document
and as the general questions on the agenda had become exhausted the time came
when we had to see whether we could at least agree on what had already been
discussed. But when it came to the point we ran up against the same difficulty.
Mr. Molotov proposed that instead of one Protocol recording the Council's de-
cisions there should be four separate Protocols: one on general questions which
would be signed by all five members of the Council; the second on the Italian
Peace Treaty, which would be signed by the representatives of the United King-
dom, the Soviet Union, the United States and France; the third dealing with
Bulgaria, Hungary and Rumania, which would be signed by the United Kingdom,
the Soviet Union and the United States; and the fourth dealing with Finland,
which would be signed by the United Kingdom and the Soviet Unioh. After some
discussion we agreed to Mr. Molotov's proposal, but he then maintained that
before he would sign any of the Protocols the Council must strike out from its
record the decision taken on September 11th. This no one else was prepared to do.
This would in effect not have given a true record of our procedure. We proposed,
however, that a passage should be inserted in the Protocol making it clear that Mr.
Molotov had on September 22nd stated that the resolution of September 11th had
in the view of his Government been a breach of the Berlin Agreement.

Further Attempts to Reach Agreement
Mr. Byrnes and I did our best to persuade Mr. Molotov that the terms of
reference of the Council were wide enough to admit of a common sense interpre-
tation. Mr. Byrnes attempted to find a way out of the difficulties by proposing that
a conference should be called for the purpose of submitting the peace treaties
when drawn up. To this conference all the five Powers would be invited, together
with other States which had contributed materially to the defeat of the Axis. But

British Speeches of the Day

the Soviet representative maintained that only the three signatories of the Berlin
Agreement could discuss or pronounce upon this proposal.
As the House is aware, the conference broke up on Tuesday, October 2nd.
On Sunday night Mr. Molotov had said that he could not sign any of the Protocols
if his point could not be accepted. On the suggestion of the Chinese Foreign
Minister, the conference was that night,extended to the Tuesday. For my part
I spent Monday until the meeting of the Council late that night in consultation
with my colleagues and made every effort to try and find a way out of our diffi-
culties. But it was clear that there was little hope of any accommodation. It seemed
to me, as to Mr. Byrnes, that the difference of view with the Soviet Delegation,
technical though it might appear to be, in reality involved a big question of
principle-to what extent' are the Big Three to exclude other nations from the
discussion of matters of grave concern to them? This principle, I felt, it was
incumbent on me to defend.
Other Matters Discussed
I know the disappointment that is felt in the House and throughout the world
at the breakdown of the first meeting of this Council, which was set up to deal not
only with peace treaties but also with other matters. Many matters other than
the preparation of the peace treaties were discussed, even if not settled, at the
meetings of the Council. There was, for instance, the question of the inland
European waterways, which are so important when it comes to getting the trans-
port system of Europe started again and the people fed. We failed to settle it.
Reparations and other problems of Germany were also discussed. There was the
question of the Government of Austria and the feeding of the people in that un-
happy country. On the latter and several other matters progress was made. A
return to normal and happy conditions in Europe, to which the peace treaties must
be the first step, is what the world is waiting for. This temporary breakdown will,
I hope, lead to the further discussion of these matters on the basis of what is best
for permanent peace, because I am sure that that is what the whole world wants.
Perhaps when we met in London in September we were a little too close to two
great victories for us to be able to reach immediate agreement. For the future I
can say with confidence that, given time, and if we all continue to apply patience
and an understanding of each other's difficulties we shall overcome present diver-
gencies and any others which may reveal themselves. For our part we shall cer-
tainly work in the same spirit of co-operation with which the countries united to
pursue the war against our enemies.

An Exchange of Letters
I should, in conclusion, like to read a message which Mr. Molotov sent to me
on leaving this country and the reply which I sent to him. From Mr. Molotov:
"On leaving the borders of our Ally Great Britain I beg to transmit to the
British Government my thanks for the warm welcome given to me and to those
accompanying me. I express confidence that, the war against our common
enemies having been victoriously concluded, our future collaboration in the in-
terests of the peoples of Great Britain and the Soviet Union. and of the
strengthening of peace throughout the world will continue, having overcome
the temporary difficulties encountered on the way, and that we shall jointly
endeavor successfully to achieve this great end."
I replied to Mr. Molotov as follows:
"I was very pleased to receive your kind message sent on the occasion of
your departure from this country after the Foreign Secretaries Conference. I
share your confidence in our future collaboration in the interest of the peoples

Supplies and Services (Transitional Powers) Bill 547

of the Soviet Union and Great Britain and for the strengthening of peace
throughout the world. We may, as you say, encounter difficulties on the way,
but the cause we serve is so compelling that no trouble must remain unmastered
in the pursuit of this high aim. Mankind throughout the world wants peace,
economic recovery and a rising standard of life. The fulfillment of this must
be ourprime purpose."
[House of Commons Debates]

House of Commons, October 9, 1945

James Chuter Ede): I want to make it quite clear at the outset that the Govern-
ment intend to retain only those wartime powers which are desirable in the public
I want now to give the House some idea of the progress that has been made
in the reduction of these wartime regulations. On May 8th-V-E Day-there
were in existence 342 Defence (General) Regulations and 345 other Regulations,
making a total of 687, and it will be within the recollection of those Members
now present who were Members of the last House that on the next day my right
hon. Friend the Lord President of the Council came down to the House and an-
nounced the withdrawal of 84 of the general Regulations and 95 others, making
a total of 179. One further Defence Regulation was revoked on May 28th, the
day on which the Coalition Government went out of office and the "Caretaker"
Government came in. There has been no further revocation since, until September
28th when at a Privy Council held at Holyrood House an Order in Council was
made abolishing 39 further general Regulations and 11 other Regulations. Since
May 9th one new Defence Regulation and two others have been made, so that
the present position is: after the revo;ations on September 28th there remain 219
general Regulations and 241 others, a total of 460, making a total reduction of
227-113 general Regulations and 114 others-all of which have been revoked
either at the instance of my right hon. Friend the Lord President of the Council
or myself, and not one due to any activities on the part of the Caretaker Govern-
ment. So that as far as this matter is concerned I think my right hon. Friend the
Lord President and myself can claim that we are genuinely endeavoring to live
up to the promises that my right hon. Friend made during the wartime when he
alluded to the need for dispensing with such of these Regulations as were no
longer desirable.

The Political and Legal Case for the Bill
There are, I think, two distinct cases for this Bill. There is the political and
legal case and there is the economic case. I want to deal first with the political
and legal case which is concerned with certain wartime powers affecting our in-
dustrial, financial and commercial activities, which powers must be retained during
the transition period if we are to avoid falling into chaos. The Emergency Powers
(Defence) Act, 1939, was passed through all its stages in both Houses on August

British Speeches of the Day

24, 1939, the day on which the House was recalled suddenly from its vacation
to deal with the international situation that had arisen, and by 10:19 p.m. that
night the Measure had been passed. This Act enabled the Government to make
Regulations for securing firstly the public safety, secondly the defense of the
Realm, thirdly the maintenance of public order, fourthly the efficient prosecution
of 'any war in which His Majesty might be engaged, and fifthly maintaining
services essential to the life of the community. It will be observed that all those
purposes were closely associated with the war on which we were then embarking,
and in the very grimmest days of 1940 a further Emergency Powers Act enabled
the Government to make Regulations requiring persons to place themselves, their
services and their property at the disposal of His Majesty for the purposes of the
SAct of 1939.
These very wide powers were granted by Parliament when the country was in
dire peril from external aggression. The purposes for which various powers for
the economic control were granted in 1939 are not those fqr which they will be
required in the transitional aqd reconstruction period which kve are now entering,
and we accept the view that express Parliamentary powers must be secured for
the continued exercise of economic powers for other than purely war purposes.
This was recognized by the Coalition Government when it introduced a Bill which
was ordered to be printed on May 10, 1945, the day after the first revocation of
a substantial number of the wartime Orders. . .
LIEUT. COLONEL DOWER (Conservative)- Before the right hon. Gentle-
man continues, I think it is only fair to inform the House that the Bill was not
the same as the Bill the Second Reading of which he is now moving.
MR. EDE: I shall deal with that point in a few minutes. The main construc-
tion of the Bill was the same. . As soon as the Caretaker Government was
formed, the Bill was dropped. .
There is undoubtedly a feeling that the Bill in its present form goes a great
deal beyond what the original Bill did. As a matter of fact, there are only two
important changes.. The first is the introduction of the present Clause 2 and the
second is the lengthening of the period of the Bill's duration from two years
to five.
LIEUT. COLONEL DOWER: There is another important difference. It will
apply to services whether essential to the life of the nation or not.
MR. EDE: . The Government have had to consider the position that
was created by the last Government when they dropped the Bill and limited the
further duration of the Emergency Powers (Defence) Acts to a period of six
months from August 24th last. Those Acts will now expire on February 24th
next. We have decided that we will not ask the House to continue them beyond
that date. On February 24 those Acts will come to an end. We propose to move
an Amendment on the Committee stage of this Bill to extend Clause I to cover
demobilization and resettlement, and the disposal of surplus material, matters
which could have been dealt with by continuation of the original Emergency
Powers Acts, but with which we clearly must now have powers to deal. This
appears to be the appropriate Bill to deal with them. Thirdly, we propose to in-
troduce as soon as possible an Emergency Powers (Transitional Provisions) Bill,
designed to keep alive for a limited period after February next such residue of
those powers as will still be necessary in the transitional period bute which would
otherwise lapse on February 24th next.' We must therefore have this Bill to re-
place our powers which would have been continued in certain circumstances, under
a contribution of the Emergency Powers (Defence) Acts. We drop those Acts
and for those purposes we are substituting this Measure.

Supplies and Services (Transitional Powers) Bill

The Economic Case
Now I come to the economic case for the Bill. I would have hoped that there
might have been general agreement that the Government must retain and use,
during the transitional period, a number of economic powers granted to their
predecessors during the war. This was pointed out in the White Paper on Em-
ployment Policy, Command Paper 6527, in paragraph 17, in which the Coalition
Government said:
"It cannot be expected that the public, after years of wartime restrictions,
will find these proposals altogether palatable; and the Government have
no intention of maintaining wartime restrictions for restriction's sake. But
they are resolved that, so long as supplies are abnormally short, the most
urgent needs shall be met first. Without some of the existing controls
this could not be achieved; prices would rise and the limited supplies
would go, not to those whose need was the greatest, but to those able to
pay the highest price. The Government are confident that the public
will continue to give, for as long as is necessary, the same wholehearted
support to the policy of 'fair shares' that it has given in wartime."
That was the declaration to which members of all parties in the House at
that time gave their assent and that remains the policy of His Majesty's Govern-
ment on this. matter. In Chapter II of that White Paper, issued with the consent
of all parties in the Coalition, reference was made to the danger of an inflation-
ary boom bringing with it social injustice and economic dislocation. In dealing
with the danger that, in the transitional period, the production of unessential
goods might interfere with the production of essentials, the White Paper pointed
out, in paragraph 19:
"It is not yet possible to forecast the length of the transition period dur-
ing which the prevailing tendency will be for demand to outrun supply.
The need to maintain large armed forces may prolong this period con-
That, we hope, is no longer a serious consideration, with the ending of the
Japanese war. That part of the paragraph dearly envisaged the period between
the ending of the European and of the Japanese war, but the paragraph continues:
"Although the most pressing shortages may disappear and the most vexa-
tious controls be relaxed, our main problem for a considerable time to
come may be, not to avert mass unemployment, but to secure with a limited
labor force an adequate production of the goods needed to improve our
standard of living and to increase our exports. The immediate difficulties
for our external trade will be serious. We may be struggling to restore
our exports while we are still at war with Japan and liable to provide
help for the liberated territories."
While, again, the first of those problems does not confront us now, I imagine
that most of us find that the second is at least as large as, and probably even
larger than, we expected it to be. The paragraph ended:
"We shall, therefore, be compelled during this period to regulate imports
and to manage our exchange resources with great care."

Food and Clothes Rationing Must Continue
That is the economic case, in its general terms. Now I desire, as I am sure
the House would wish me to do, to particularize with regard to the economic
controls that we desire to continue. . First of all there are clothing, foot-
wear and textiles. There is no hope that supplies can be increased rapidly enough

550 British Speeches of the Day
to dispense with rationing for some time. To assure fair sharing, rationing must
continue. This is based on the Emergency Powers which lapse on February 24th.
Therefore, we must get some powers to deal with that aspect of our problem.
Conditions can be improved up to the point where restrictions will finally be re-
moved, and, as supplies increase, rations will be augmented by reducing the points
values of goods coming in larger quantities into the market. The ration will be
augmented by reducing the points values of particular goods, by taking certain
items off the ration and increasing the number of coupons. Exactly the same
considerations apply to furniture and fuel.

Building Materials
Secondly, the demands on the building industry, I think it will be generally
conceded, exceed the supply many times over. While this state of affairs exists,
there is a danger that prices of building materials will rocket into the economic
stratosphere and that essential work on building houses, schools, factories and
hospitals will be neglected in favor of luxury work undertaken by those with
long purses. We must, in dealing with the housing question, which I am quite
sure every Member of the House regards as the first of our domestic problems,
be armed with the powers necessary to control the supply of the building materials
which will be required. It will be necessary to maintain strict regulation of build-
ing work, under some re-enactment of Defence Regulation 56A, and of the prices
of building materials and components under Defence Regulation 55.

Regulated Agriculture
Thirdly, while world shortages exist and the present exchange position re-
mains, we shall be compelled to maintain agricultural production at the very
highest possible level. This can be done only by the continued use of about a
dozen Defence Regulations which come within the provisions of the Bill. The
House would probably like me to give some indication of the Regulations we
have in mind. They are: 61 (1) (agricultural land not to be used for other pur-
poses without the Minister's permission) ; 62 (power to direct with respect to the
use of agricultural land and to evict bad tenants); 62A (power of local authority
to cultivate land and to let land for allotments) ; 62B (suspension of restrictions
on keeping pigs, hens and rabbits)-and anyone connected with local govern-
ment knows that, if that particular Defence Regulation went, we might have
some over-efficient sanitary inspectors who would make the keeping of those
very valuable adjuncts to the food supply of the nation extremely difficult; 62C
(facilities for drainage work); 63 (destruction of game and pests); 64 (de-
struction of birds injurious to fisheries); and 65A (suspension of prohibition
on the sale of freshwater fish during the close season).

Price Control
Fourthly, and most important of all, because of world shortages and our ex-
change position, inflation must be avoided. . The immediate removal of
economic controls would make an inflationary movement immediate and certain.
We have, therefore, taken special powers in the Bill to provide for more effective
and comprehensive price control. It was laid down by my predecessor in office,
in Debates in the last Parliament, that any continuation of this power under any
such Bill as this must involve a greater measure of Parliamentary control. We
have accepted that principle in framing this Measure. We propose that Parliament
shall have a greater measure of control over the use of the powers granted than
has been given under the Emergency Powers Act. ..

Supplies and Services (Transitional Powers) Bill 551

A Five-Year Period
Now we come to one of the contentious parts of the Bill, the duration of the
Measure. The original Bill was for two years.
We contend that it would be wrong of the House to make the country think
that by the end of two years we shall have ceased to need the powers in this Bill
to deal with the inflationary tendencies of the market and the shortages of supplies
and materials that will be at our command. . Food, materials and essential
supplies will still be short. In some spheres we shall still be engaged in getting a
war-distorted economy into its peacetime shape. We feel that by putting a period
of five years into the Bill we are giving the country an assurance that we realize
the difficulties with which they will be faced, and that we are determined that
while shortages last and economic difficulties confront us the utmost efforts will
be made by the Government to ensure that fair dealing as between one citizen
and another shall still be secured by the State.

The Clauses: (1) Supplies and Services
The House might perhaps desire that I should briefly run through the Clauses
of the Bill. Clause I enables any of the Regulations in Parts III and IV of the
General Regulations and any of the special Defence Regulations mentioned in
the First Schedule to be kept in being during the transition period and utilized
to control and regulate supplies and services for the purposes, first, of securing
fair prices and a sufficiency of those essential to the well-being of the community
or their equitable distribution; second, of facilitating the readjustment of industry
and commerce to the requirements of the community in time of peace; and, third,
of assisting the relief of suffering and the restoration of distribution of essential
supplies and services in any part of His Majesty's Dominions or in foreign coun-
tries that are in grave distress as the result of war.
On the Committee stage I propose to move a drafting Amendment in the first
of the purposes I have recited to make it clear that the policy of securing a
sufficiency of supplies and services essential to the well-being of the community
can be applied whether or not in any individual case it is associated with price
control. There are a number of supplies and services,in which the distribution
of the element in scarce supply is dealt with independently of price control. There
are certain special Defence Regulations mentioned in the First Schedule, but I
do not think I need enumerate them. If any point arises on them they will be
dealt with by my right hon. Friend the Lord President when he replies.
The sudden ending of the Japanese war and the fact that the Emergency
Powers Defence Act goes out in February mean that a certain amount of work in
connection with demobilization, reinstatement and the disposal of Government
surpluses, which otherwise might have been effected under the Emergency Powers
Defence Act if it had been extended for a year instead of six months, will have
to be carried out under this Bill. We propose making a further Amendment to
make this clear among the purposes set out in Clause I. In that way we feel that-
we shall be justified in allowing the Emergency Powers Act to'lapse.

(2) Price Control; Restrictive Practices
Clause 2 enables these Defence Regulations to be made under the Emergency
Powers Defence Act for controlling prices of goods or charges to be made for
services. This is the other important innovation in the Bill as compared, with
the Bill introduced by the Coalition Government. The Goods and Services Price
Control Act enabled maximum prices and charges to be fixed only for manufac-
turers or for types of traders as a class. This involves enforcing uniformity in
the type of products as in the utility schemes or resorting to control by means of

British Speeches of the Day

cost-plus and standstills, to which there are many objections. What is now re-
quired, as the range and variety of production increases with the transfer of in-
dustry to peacetime production, is power to differentiate price control according
to type and quality by fixing maximum prices for particular products and pa'r-
ticular businesses.
I want to say a word about restrictive practices. . Here again we ad-
here to the statement that was made in paragraph 54 of the Coalition Govern-
ment's White Paper, that combines and agreements, both national and inter-
national, by which manufacturers have sought to control prices and output, to
divide markets and to fix conditions of sale,
"do not necessarily operate against the public interest; but the power to
do so is there."
It has not been found possible to include a Bill on the subject of restrictive
practices in the legislation of the present Session. Therefore, the Government
include these powers in this Bill and intend to use them, particularly their powers
of price control, to prevent anti-social practices such as charging excess prices,
whether for materials or finished goods. Fresh Regulations for the purposes of
this Clause can only be made while the Emergency Powers Defence Act remains
in force, that is to say, between the passing of this Bill and February 26th next;
but any Regulations which have been made before the Act expires can be retained
in force under the provisions of this Bill.

The Other Clauses
Clause 3 contains the necessary power to revoke or vary any regulation which
has been dealt with under Clause I. Clause 4 provides for extending Parliamentary
control by negative resolution. Clause 5 makes it clear that the machinery pro-
visions in the Emergency Powers (Defence) Acts will apply to the Defence
Regulations brought under the Bill even after the expiry of those Acts, and that
the Bill can be extended to the Colonies. Clause 6 extends the powers of the
Ministry of Supply under the Ministry of Supply Act, 1939, to acquire, produce
or dispose of "articles required for the public service." Those powers are at
present limited to articles required by Government Departments or "for the needs
of the community in the event of war," and the Clause extends them to supplies
which the Minister considers it necessary to procure or control for the purposes
which are set out in Clause I. Clause 8 provides for the expiry of the Act after
five years, unless its operation is continued after an Address has been presented
by each House of Parliament praying for its continuance for a further year .

The Bill's Application to Northern Ireland
It will be noticed that this Bill applies throughout the'whole of the United
Kingdom, that is to say, to England, Wales, Scotland and Northern Ireland. I
have been in communication with the Government of Northern Ireland and I
desire to make a brief statement which, I think, will correctly set out the relation-
ship between this Government and that of Northern Ireland on the issues raised
by this Bill. The Bill applies to Northern Ireland, and I should explain that
while certain of the purposes covered by Clause 1, Sub-section 1, may relate to
matters falling within the legislative powers of Northern Ireland, those purposes
cannot easily be dissociated from other purposes which relate to matters reserved
to the Parliament of the United Kingdom. The Bill accordingly applies to North-
ern Ireland as an integral part of the United Kingdom, and so far as the pro-
posed power of control may affect services within the powers of the Parliament
of Northern Ireland, it is only put forward as an emergency measure arising out
of the exceptional conditions in the transition from war to peace, and in the

Supplies and Services (Transitional Powers) Bill 553

exercise of such power there will be full consultation with the Northern Ireland
I commend this Bill to the House and I desire to give hon. Members, in no
matter what part of the House they may sit, this assurance, that as the powers can
and should be dispensed with, they will be given up. We have no desire for
control for control's sake any more than has any other Member of the
House .
RT. HON. OLIVER LYTTELTON (Conservative): . Of course the right
hon. Gentleman was perfectly correct in saying, in a very nice and humorous way,
that in the main the provisions of this Bill-and I must emphasize the words "in
the main"-were agreed by the the Coalition Government Ministers. The Bill
differs, however, in rather more than one or two respects from the original
Measure, and those respects, and the very wide scope of the Bill, require discussion
and explanation ..

The Circumstances of the Bill
I must now turn to the three main respects in which this Bill differs from that
which was agreed by the Coalition Ministers, or, on the other hand, in which
its provisions seem to us to be so wide as to require special comment. The three
differences are, broadly, the circumstances, the scope, and the duration of the
Bill. First of all, in regard to its circumstances, which the Home Secretary very
wisely rather glossed over. When this Measure was discussed in the Coalition
Government we were still at war with Japan, and, if my memory serves, for the
purposes of planning the length of the Japanese war was estimated as about
eighteen months to two years after the end of the German war. I think that point
is an important one for the House to remember, for two reasons. It partly shows
the fallibility of national forecasts and national planning, but it also means that
the life of the Bill was intended to be .broadly the same as the estimated end of the
Japanese war, or perhaps, if I am not strictly accurate, not more than six months
after the end of the Japanese war. At the risk of getting a little out of sequence
in dealing with the Bill, I would point out that this estimated end of the Japanese
war has a broad significance when we look at Clause 6, in which the Minister of
Supply is empowered to produce or dispose of articles required for the public
service wherever he considers it necessary or expedient to do so. This gives, for a
period of five years and with no relation to war needs, unlimited power of State
trading to the Minister of Supply, power to set up industries with the taxpayers'
money in order to compete with the people who pay the taxes. The Clause, which
was desirable during the continuance of actual war, appears to me to be wholly
inapplicable to, the circumstances of peace, and the Government will have to make
a very strong case to justify the Clause in its present form.

The Scope of the Bill
I turn to the second point, the scope of the Bill. . .
The Government inherited a Bill from the Coalition Government and that Bill
contained Clause I, which was quite precise about the objects for which these powers
were sought and for which they were to be used. To compress the Clause, they
were to secure a sufficiency at fair prices, to facilitate the readjustment of industry
and commerce, and the relief of suffering at home and abroad. I think the House
will recall how comprehensive are the powers which can be taken under Defence
Regulations under the aegis of the Emergency Powers (Defence) Act. Under it,
for example, the Executive may authorize
"the taking possession or control, on behalf of His Majesty, of any property
or undertaking; the acquisition, on behalf of His Majesty, of any property other

British Speeches of the Day

than land; and authorize the entering and search of any premises, and provide
for amending any enactment, for suspending the operation of any enactment,
and for applying any enactment with or without modification."
Moreover, under the Act of 1940 persons were required to place themselves, or
might be required to place themselves, their property and services at the disposal of
His Majesty. Those are extraordinary powers taken for purposes of war.
MR. EDE: I gathered the right hon. Gentleman said we had extended Clause
I, but Clause I of the present Bill is exactly the same, word for word, as Clause I
of the old Bill.
MR. LYTTELTON: The right hon. Gentleman misheard me. I am well aware
that Clause I is exactly the same. My remarks have relation to Clause 2. Those
extraordinary powers were taken for purposes of war. I am discussing what are
the powers which Clause I now gives. We are asked to leave those powers at the
disposal of the Government during a period of peace. It is at this moment that
we begin to realize why this is a Home Office Bill. Simply because the Home
Secretary spends so large a part of his time dealing with police, prisons and
penitentiaries, and my right hon. Friend the Lord President of the Council has
had so long and successful an experience in this type of administration, they really
must not think that those are the sovereign remedies for all ills, and particularly
for industrial ills. The Coalition Government recognized that for a very short
period after the end of the Japanese war, these comprehensive powers might be
necessary, and consequently the present Government inherited Clause I.
But they were determined to go a bit better than the best, and obviously they
would not like it to be thought that they had slavishly followed the policy of
their predecessors; so they brought in Clause 2, which widens to an almost limitless
extent the. scope of the Defence Regulatiors. And what an extraordinary term
"Defence Regulation" is when we are at peace and when the defenses which this
House ought to be thinking about are chiefly the defense of the personal liberty of
the subject and defense against incursions by the Executive into the rights of dis-
cussion and control by the House. In Clause 2 very wide powers have been taken,
and I am still not quite clear, even after the explanations of the Home Secretary,
what is the object of these limitless powers. It appears to me that Clause 2, dis-
carding the jargon of Parliamentary Bills, which is a substitute for the King's
English, seems to say, in common parlance,. "Clause I is really only pulling your
leg"; because in this Clause 2 the Government seek powers-and here I come
to the Bill-
"whether or not such Regulations are necessary or expedient for the purposes
specified in the said Sub-Section (I)."
This singularly unfortunate Clause is the first one which the present Government
offer to an astonished House. They ingenuously say, in spite of all that the Home
Secretary has done to try to remove this impression, "We here wish to take power
to control for control's sake." If hon. Members will examine the Clause they
will see that I have not exaggerated in any way in so describing it. Turning back
to Clause I, may I remind the House-and this is an industrial point-what hap-
pened, and what can happen now, under Regulation No. 55, which I believe is
still in force. It gives the Government powers to regulate or prohibit
"the production, treatment, keeping, storage, movement, transport, distribution,
disposal, acquisition, use or consumption of articles of any descriptionn;
and as if this were not comprehensive enough, the authorities may also provide
"for any incidental, and supplementary matters for which the competent
authority thinks it expedient for the purpose of the order to provide."

Supplies and Services (Transitional Powers) Bill 555

Application of the Powers Differs in Peace and War
Those words hardly look to me like a drive to expand our trade. On the sub-
ject of these very wide powers, it is necessary to do more than generalize. I want
to do more than state how restrictive they are. I want to give some practical
examples of how these powers will work out when applied to our peacetime
trade and industry, and to contrast how widely different they are when they are
applied in peacetime from their effect in wartime. In my opinion, based on a
wide experience of this matter, it is quite impossible for a central government
authority in peacetime to allocate materials upon any other system than rough-
and-ready guessing, and these rough-and-ready guesses are very apt to defeat the
objects which prompt them.
In wartime the allocations of raw material to most producers is not on the
basis of rough-and-ready guesses, for the reason that the Government itself is the
buyer of an immense range of products and services. When the Government
allocates such and such a tonnage of steel for the manufacture of 25 pounders, it is
not a guess because the Government is the buyer of 25 pounders, knows how many
it wants and what the date of delivery should be. The Government can allocate
cotton for the manufacture of Service dress, but it can only guess at what alloca-
tion is appropriate for ladies' cotton dresses for export, and it has to guess even
at the expansion of the home demand. In short, the nature, scope and timing of
demand in peacetime is no longer capable of those nice calculations,which right
hon. Gentlemen and I were making a short time ago during the war.
At this time we all recognize that an expansion of our export trade is one of
the first national objectives, but our ability to export depends upon a number of
things. One of them is the price at which we can offer to sell abroad. That price
must be competitive, and as a general rule prices for export are not competitive
unless the home market is, so to speak, behind the export and absorbs a large
part of the manufacturing costs and overhead expenses. Therefore, the apparently
beautiful and snow-like simplicity of trying to increase exports by the Government
saying, "You shall not have materials for this production for the home market, but
only for export," is smudged and blurred and utterly destroyed by this simple fact;
because, without allocations for the home trade market, prices for the export trade
will not be competitive.

The Effect on Exporters
I want to tell the House also how these things will work out in peacetime 4s
seen from a little less idealistic angle. For example, the Government say to ex-
porters, "You must show us evidence of your intention to export the finished
product before we will allot to you raw material which we are denying to others."
Is that sensible? It seems tb me to be quite sensible; but unfortunately, the foreign
customer who is going to import goods says something very much of the same
kind. He says, "Show me the actual goods. I have not seen them for six years.
Have they.kept up with the times? Give me assurances of the moment when you
are going to produce them, and then I will give you an indication, though not a
firm one, of how much I will take and what prices I can give." This is no
fanciful illustration. If hon. Members want confirmation they can get it in- the
export trade. How many times in the experience of exporters does it happen that
raw materials cannot be obtained unless evidence of export is given, and how often
is it that the export cannot be made unless evidence that the raw materials are
forthcoming can be given to thd buyer? Some people call this particular situation
a dilemma, others call it a vicious circle, and others call it a bottle-neck; but believe
me, exporters are accustomed to use rather more forcible phrases about it. At
the best, and even supposing that the Government reached the right decision or

British Speeches of the Day

the right guess, they must inevitably take an unconscionable time in doing so.
They cannot guess lightly or frivolously, they must weigh the evidence, collate
the documents, scrutinize the evidence of the witnesses, marshal the whole business
and open a drumfire of minutes and memoranda; otherwise it incurs, and generally
rightly incurs, a charge of wasting precious materials or being unfair to one
applicant as against another.
Time and tide wait for no man, not even His Majesty's Government, and we
know the immense time that these things take. Unfortunately, this instance is
greatly over-simplified and pre-supposes that the exporter has only to deal with
one Government Department, but it is rarely so. Even to make an export it is
necessary to obtain a building permit from the Ministry of Works, and the
Ministry of Works wants to know whether the Ministry of Supply is going to
grant the raw material before it grants a building permit. Then an engineer has
to be sent abroad to clinch the deal and must have a priority passage from the
Ministry of War Transport, and spend a little more foreign currency than he is
allowed and must have permission from the Treasury. The Treasury wishes to
know whether the Ministry of War Transport is going to give priority transport,
and the Ministry of Works, if it has to give a building permit, will want to know
if the Ministry of Supply has given a permit for the raw material to be issued.
All this is graced by the dignified name of "National Planning . ."
MR. ERIC FLETCHER (Labour): May I inquire of the right hon. Gentle-
man whether all these reasons he is giving are reasons why he is supporting the
Second Reading of the Bill.

The Measure is to Last Too Long
MR. LYTTELTON: I am sorry that the hon. Gentleman has not followed the
argument. The argument is, that for a very short time we must accept these evils
but I am trying to show that they are evils. Therefore, it is an argument which
supports my contention that, instead of' building them into a Measure to last
five years, they should be built into a Measure which lasts for one or two years.
There is another important aspect of the matter on which I must touch-these
Regulations. Part IV of the Defence Regulations runs to 120 closely-printed
pages and requires an army of officials to frame them, to follow them up and
to enforce them. Every trading and manufacturing concern in this country, doing
a substantial business, has to keep a highly-paid staff to watch the Government
Regulations, and has to be in constant consultation with lawyers, greatly to the
benefit of the legal profession, to follow whether they are keeping within the
law, and to keep up with the flow of Regulations which pour from the Govern-
ment machine. All these things mean costs, and all these costs undermine to some
extent our ability to regain our export trade.
My final point on the scope of the Bill-and the Home Secretary has not
dealt with this--concerns Clause 5. In this Clause the new temporary powers for
the acquisition of land which has been affected by Government use or damaged
by the Government are extended from two years after the end of the war to a
minimum period of seven years in all. This may be an oversight but, if it is not,
it extends for a period of seven years the uncertainty under which both the owner
of the property and the industrialist now labor. The Requisitioned Land and
War Works Act was passed this very year by the Coalition Government and the
Act has a life of two years. The decision of thepresent Government is to pro-
long this to seven years apparently and once again to face the fact, as they will
have done, and will probably do in other matters, that they cannot hope to solve
these problems as quickly as their predecessors. It is no good the Home Secretary
denying this charge. Here we have it again-two years in the original Bill, and

National Insurance (Industrial Injuries) Bill 557

now seven years. Moreover, if my memory serves me, a member of the Labour
Party at the time of the passing of the Bill, suggested extending the war period.

Why Not One or Two Years?
I turn to the third of my three points-and in many ways the others lead up
to this-which is the duration of the Measure. I have dealt with the altered cir-
cumstances and the wide and limitless powers which are sought. Now I come
to the last. It has been extended to five years. I see no justification-and the
Home Secretary made the most frightful defense of the five years I have ever
heard-for it. I should have thought now that the Japanese war is over, we
should have looked to a curtailment of the original two years. The original
Measure was only expected to be in force about six months at the very most
after the end of the Japanese war. Surely, the statesmanlike thing to do would
be to take one or two years, and come back to the House for further powers if
the Government could satisfy the House that the circumstances demanded a pro-
longation of this most unfortunate and unpopular Act.
I must also remark, with due deference to the Home Secretary, how in-
felicitous it is for the Government to point out that there can be no return to
liberty or plenty for five years, because that happens to be just the maximum
life of this Government. Will not a handle be given to the cynical to say that
the Socialist Government do not see a return to liberty and plenty until they have
been defeated? On seeing the five years' period myself I was tempted to say,
"Was Herbert also among the prophets?" We think that this Bill is not neces-
sary, that the powers it takes are a dangerous restriction of the liberty of the
subject and a cluttering impediment to business in normal times, and we con-
sider the period of five years is far too long and shows a defeatist attitude on
the part of the Government. We would not like it to be said that the only suc-
cessful part of the building program of the Government lay in their ability to
build prisons and penitentiaries for industry, and we urge very strongly that
these prisons and penitentiaries should be of a temporary, and not of a permanent
[House of Commons Debates]

/ House of Commons, October 10, 1945
House will already know the main purpose of the Bill. It is to make compensa-
tion for industrial injuries a part of this country's social services. We want if
we can to dispel the cloud of bitter feeling which has gathered round the subject
of workmen's compensation, and to make these injuries a matter for settlement
on the basis of fixed benefits to be paid for a fixed premium. .
The scheme is based on insurance against risk and not on liability for com-
I should like now to run briefly over the scope of the Bill, to explain how it
is to be financed, what benefits will be given, what machinery will be used for
settling claims and what will be done for a few special classes of people. First

British Speeches of the Day

as to the scope, as to who is to be covered by this scheme. By and large all per-
sons employed in Great Britain under any contract of service or apprenticeship
will be insurable without any income limit. In addition certain people not neces-
sarily covered by contract of service are being brought in: for example, members
of lifeboat crews who work under the Royal National Lifeboat Institution;
employers of any local or public authority; people such as taxi drivers who ply
vehicles for hire under a contract of bailment; and members of certain rescue and
fire parties in mines and works. In two types of case employment outside Great
Britain is covered by this scheme. Seamen, including licensed and apprentice pilots
and other persons employed for the purpose of the vessel or of the cargo or of pas-
sengers carried, on British and British-owned ships, and civilian airmen employed
on British aircraft are covered. I am very glad to be able to tell the House that in
this Bill every effort is being made to meet the special needs of seamen.

Exceptions to the General Rule
Certain classes of employment are or may be excepted from the general rule.
If there is any doubt as to whether or not the work is insurable, application can
be made for a ruling on the question, and any question of law arising in connec-
tion with that ruling Is subject to appeal to the High Court.
I may say here that, although under the Bill as it stands only seamen and air-
men will be able to obtain benefits for injuries suffered outside Great Britain,
provision is made for reciprocity agreements to be entered into with Northern Ire-
land and with any Dominion or Colony or foreign country which has a scheme
giving similar benefits, and it is hoped therefore that the territorial extent of the
insurance under the scheme will grow as time goes on. ..

The Kind of Accidents Insured Against
Now I will deal with the very vexed question of what type of accident is to be
covered by the scheme. As hon. Members will know already, we have adopted
in the Bill the words of the existing Workmen's Compensation Acts: "accidents
which arise out of and in the course of the employment."
This is a familiar, I might say all too familiar, phrase, for many of my hon.
Friends. We have looked at many alternative phrases which have been suggested
to us as substitutes for those familiar words, but I am bound to say that, after full
consideration, we have decided. that it is better to retain the words we have already
in the Acts. Not the least of our reasons for doing so was the fact that the phrase
has been fully examined and interpreted by the courts, and its meaning is now, I
think, reasonably clear and certain.
SI want to point out one change of importance in the scheme as compared with
the present Acts. One of the main criticisms of the phrase was that the onus of
proof has always rested on the worker. That has been met to some extent, I think
to an important extent, by the addition of a proviso that, for the purposes of the
Act, an accident arising in the course of an insured person's employment shall be
deemed, in the absence of evidence to the contrary, also to have arisen out of that
employment. The onus of proving that the accident arose in the course of the
employment remains on the claimant to benefit, but if it did not arise out of the
employment the onus of proving that will rest not on the worker but on the insur-
ance officer. Where the evidence is inconclusive, as it so often is in fatal cases,
the benefit of the doubt will go to the claimant. Perhaps I can best explain the
effect of these proposals by citing one or two actual cases showing what has hap-
pened under the existing scheme and what would happen under the proviso. The
first is from the coal mines, as indeed so many of these cases are. A collier died
of a seizure during working hours. The majority of the doctors said that his

National Insurance (Industrial Injuries) Bill

arteries were in a very diseased condition and there was no evidence that the
attack came upon him when he was incurring a strain while doing his work. His
dependents failed to establish their claim to compensation, because, although there
was no doubt that the accident happened in the course of the employment, there
was nothing to show that it arose out of it. Under the Bill, benefit would have
been paid.
Another case concerned a ship's fireman, who one night slept on deck, as he had
permission to do. He was some distance from the side of the .ship, but at the
edge of the deck there was a three-foot space between the upper rail and the deck.
His body was later found in the water with a cut over one eye. The county court
judge, from the facts proved before him, drew the inference that the man met his
death by accident by going overboard in some manner unknown, and that the acci-
dent arose in the course of his employment; but he held that the dependents
had failed to discharge their burden of proving that the accident arose out of the
employment and they therefore failed to recover compensation. Under the Bill,
benefit would have been paid in this case .

Accidents Due to Misconduct
Let me here say a word about accidents which are due to a workman's mis-
conduct. Under the Workmen's Compensation Acts, compensation is not payable
where an accident is
"attributable to the serious and willful misconduct of the workman,"
unless the injury results in, death or in serious and permanent disablement. This
provision recognized that compensation could not be withheld when the results
of the accident were serious, and penalties are imposed in cases where the result
is slight or temporary. We thought there was great difficulty in repeating this
provision in our Contributory Insurance scheme, and, looking to the fact that
before benefit becomes payable under this scheme it must still be shown that the
accident arose out of and in the course of employment, we decided to drop the
provision. I am sure that this removes a provision which, although it may seem
justified by some kind of logic, was a source of considerable irritation in practice,
and the change will, I am sure, be welcomed. A somewhat similar easement is
made in regard to injuries which result from an action performed in contravention
of statutory or other orders. These will not be regarded as out of scope so long
as the act was done for the purposes of, and in connection with, the employer's
trade or business, provided that the accident is such that it would have been re-
garded as arising out of and in the course of employment, if it had not resulted
from a breach of orders to the workmen. Under the Acts, the injuries would have
been compensated only where they resulted in serious and permanent disablement.
We shall now cover that case.

Accidents While Traveling to Work
Another type of case in which there has been some improvement in the plan
outlined in the White Paper is that of the worker injured in an accident which
occurs while he is traveling to or from his place of work, in transport provided
by or on behalf of the employer. In the past, such cases have been admitted to
compensation only where there was a contractual obligation on the part of the
worker to use the transport provided, but under the Bill a man injured in such an
accident will be covered, provided that the vehicle in which he was traveling was
not being operated as part of a public transport service. If it is part of a public
service, the risk run by the worker is no greater than the risk run by the general
public using the same service, and there is no reason why, if there is an accident,
there should be different rates of benefit paid to different passengers according to

British Speeches of the Day

the reasons why they are using the vehicle. Special provision is made to cover
people injured in meeting real or supposed emergencies on their employers' prem-
ises. Accidents occurring at such times will be deemed to arise out of and in the
course of the employment.

Industrial Diseases, Etc.
I have said that the Bill applies to injuries caused by accidents, but it may
also, by Regulation, be extended to cover persons suffering from prescribed indus-
trial diseases and also from prescribed injuries not caused by accident but which
are directly attributable to a person's employment. The Bill here repeats in sub-
stance existing provisions in the Workmen's Compensation Acts, but in doing
so it gives the Minister rather more power than exists at the present time to adapt
the provisions of the scheme in these special cases.

What the Bill Does Not Do
Now perhaps I might be permitted to say a word about what the Bill does not
do. It does not abolish the right of a man to claim damages at common law in
S respect of injuries caused, by the negligence of his employer. The House will be
aware that a Departmental Committee on Alternative Remedies is engaged in
examining this question and, in the circumstances, I do not think I can anticipate
their Report by saying anything further on the subject today. I want, if I may,
to refer here to what are known as past cases. Everyone familiar with the work-
ing of the Workmen's Compensation Acts knows the anomalies and the heart-
burnings that arise, and that have arisen in the past, when amending Measures
have been introduced into Parliament and brought into operation. We find men
in the same village and in the same street receiving different treatment and differ-
ent payment for the same kind of injury, merely because one man was dealt with
under the old legislation and the other under the new.

The Application of the Bill to Past Cases
The hardest cases of all have been the pre-1924 cases, men whose compensa-
tion was, and is still, payable under the Acts in force before the present principal
Act was passed in 1925. For reasons which I have no doubt were found to be
weighty, they have been left outside the advantages of the various amending Acts
within the last 20 years. This Bill does something, and I believe I can claim it
is something substantial, for the worst of all these past cases, including, let me
emphasize, the pre-1924 ,cases. Any man drawing a weekly payment by way of
compensation on or after the appointed day on which this scheme comes into
operation who is unable to work and could qualify for unemployability supple-
ment, as defined in the Bill, will be given that supplement, payable from the
Industrial Injuries Fund, of 1 per week, in addition to whatever he is getting
under the existing Acts.
May I mention one other thing about it? They will continue to get this 1
a week in addition to their weekly payment even if, after the appointed day,
they should commute that weekly payment for a lump sum. I am sorry I cannot
see how we can do anything at this stage for those who have commuted their
weekly payments already. I am particularly sorry, too, that, so far, we have not
been able to bring within the scope and within the benefits of the scheme all
past cases, whether they are unemployable or not. Personally, I am most anxious
to do so, for the reasons I have already indicated. Both the Trades Union Con-
gress and the employers' representatives have approached me with requests that
past cases should be admitted to the benefits of the new scheme. There are
difficulties in the way, but they are not insurmountable. Without going into

National Insurance (Industrial Injuries), Bill 561

them at all, I am sure the House will appreciate this fact, that the Fund could
not accept what is an existing liability on employers unless an adequate payment
was made into the Fund in redemption of the employers' liability. I have, how-
ever, said to the employers' organizations that if they care to submit to me a
scheme of which the Government can approve, I shall be only too willing and
anxious to give it sympathetic consideration. There the matter rests, but I hope
only for the moment, and I give my undertaking to the House that this is a
matter which I am personally very anxious to bring to a successful conclusion,
if I possibly can.

What Benefits the Bill Provides
Now we come to the benefits provided in this scheme and Bill. It is in the
method of assessing and the determination of the amount of benefits that the
Bill marks a fundamental departure from the present Workmen's Compensation
Acts. It is, I appreciate very fully, a radical change, and will be far-reaching in
its implications, yet I am absolutely convinced that it is a desirable change. The
essential difference between this scheme and the Workmen's Compensation Acts
is, that benefits will be related solely to the degree of disability suffered and
will not be related to loss of earning power. We all know the heartburnings
that have been caused by the provisions of the Workmen's Compensation Acts
whereby compensation fluctuates with every rise or fall in earnings and how,
indeed, no compensation is payable however severe the injury, if the injured man
is later able, or indeed is held to be able, to earn as much as he did in the job
in which he suffered the injury. My hon. Friends will know, as I do, how diffi-
cult it is to explain to the worker how it comes about that his partial compensa-
tion has been reduced, not because he is earning more-indeed he may not be
earning at all-but because his notional income has increased. We know how
this provision causes men to be reluctant to undertake training for new occupa-
tions, even though this training would be of great help towards the mental and
physical rehabilitation of the disabled men.

Proposed Changes in the Bill
It is, I think, true to say that the basic principles of this scheme have been
accepted in all quarters without serious objection, but representations on a num-
ber of points have been received. Certain of them have been reinforced very
strongly since the Bill was published in its present form. While the Govern-
ment are satisfied that the Bill as it stands marks a considerable advance over
the original proposals, they nevertheless have been impressed by the strong repre-
sentations made to them on two aspects, namely, as to the basic rates of disable-
ment and, secondly, as to the position under the Bill of certain types of partial
disability cases.
It has been urged very strongly that the rate of 40s. proposed is inadequate.
In respect to partial disability cases, stress has been laid on the fact that the
Bill makes no provision for dealing with the case which has become commonly
known as the "odd lot" case. Typical of the cases in which it has been urged
that further provision should be made is that of the miner who loses four fingers
of his right hand, or the train driver who loses an eye, or the compositor who
loses an index finger. While those injuries would only justify a low or moderate
percentage under the new method of assessment of disablement, their effect might
be to prevent the man ever returning to his pre-accident occupation.
The Government, therefore, feel justified in proposing changes in the Bill
to meet the representations received on these two points. They propose that the
basic rate for injury benefit and for 100 per cent disablement shall be 45s. instead

British Speeches of the Day

of 40s. They also propose to -give the worker the right to claim an addition of 25
per cent to his medical board assessment, provided it is not thereby raised, above
'the 100 per cent rate, if he can show to the satisfaction of a local appeal tribunal
that by reason of his injury he is no longer able to follow his previous occupation,
and cannot be so retrained as to enable him to follow an occupation of an equiva-
lent standard. . When we reach the Committee stage I will move Amend-
ments on both points.

The Cost of the Benefits
Naturally, these Amendments to the scheme affect the finance of the Govern-
ment proposals. It was originally estimated when the White Paper on Social
Insurance was published in September, 1944, that the cost of the benefits would
be of the order of 20,000,000 a year, and that a further 3,000,000 ought to
be allowed for administration. To produce this sum a'weekly contribution was
proposed of 6d. for men and 4d. for women, divided equally between employer
and worker. As a consequence of improvements made later, it was found neces-
sary to add one penny to the employer's share of the weekly contribution on the
understanding, as stated in the White Paper, that at the first suitable opportunity
equality of contribution between employer and worker would be restored. The
further improvements now proposed necessitate increasing the weekly contribution
by a further penny, and the Government feel bound to honor the undertaking
given then and to equalize contributions once more under this scheme.

Injury and Disability Benefits
If I may turn to the benefits in some detail, I will deal first with the two
which are payable in non-fatal cases, which are described as injury benefit and
disablement benefit. Injury benefit is designed to cover the initial period of in-
capacity due to the injury. It is payable after three waiting days. Many of my
hon. Friends, I know, would like to see the waiting days abolished, but I can at
least point to the fact that, as compared with the early edition of the Bill, or
with the Workmen's Compensation Acts, we have reduced the waiting period
by making the day of the accident in every case count as the first of the three
waiting days. In that way we have reduced the effective waiting days to two.
Injury benefit lasts for six months from the date of the accident, unless the injured
man has recovered sufficiently to be able to work before that time and asks to
be assessed for pension. The benefit rate as now proposed is 45s. a week for a
single man or woman. I will deal with dependents in a moment.
Where at the end of the injury benefit period the injured man is still suffer-
ing from disablement which is likely to be permanent, or is substantial, he will
be assessed for pension. This will be awarded in proportion to the degree of
his disablement; in other words, in proportion to his loss of health, strength and
power to enjoy life, and it will be awarded irrespective of his earnings or his
notional earnings. The disabilities which will be regarded as attracting a pension
of 100 per cent are left to be prescribed. The whole industrial injuries scheme
has been framed with the war pensions scheme in mind, and we shall, in making
the Regulations, be influenced by the schedule of assessment used by the Ministry
of Pensions. I want to emphasize one thing, however, because of some anxiety
which I know exists on this point, which I fully understand. We shall not be
bound by the Ministry of Pensions schedule, but shall vary it if need be. The
Regulations which I shall make will be submitted to the Industrial Injuries Advisory
Council, to which I shall refer later. After that, they will lie on the table for 40
days, so that our proposals will be open to public examination and to the complete
control of this House before they become effective. ..

National Insurance (Industrial Injuries) Bill

Benefits for the Virtually Vnemployable
There are some extra benefits provided for the very severe cases. If a man
is rendered virtually unemployable by his injury and is likely to remain so, he
can ask for an additional allowance of 1 a week. He will be regarded as
virtually unemployable if he is unable, as a result of his injury, to earn more
than 52 a year. An additional allowance of up to 1 a week may be paid if
constant attendance is required. This will be paid even if the necessary care is
given by the injured worker's wife. In other words, it will not be necessary to
prove that somebody from outside is coming in. The wife herself can get the
1 per week. If a pensioner has to enter hospital for further treatment on account
of his injury, he will, so long as he is in hospital, receive pension at the full 100
per cent rate, irrespective of his normal assessment. There will, however, be a
reduction of 10s. a week in respect of home savings and the constant attendance
allowance will cease for that period.

Provision for Dependents
With regard to the provision for dependents, the Bill provides for an allow-
ance of 16s. a week to be paid in respect of one adult -dependent, so long as the
man is receiving injury benefit. This would normally be payable in respect of
his wife, or, in the case of a woman, in respect of her invalid husband. Where
there is no wife it could be paid to some other prescribed relative, or, where
appropriate, to a woman taking care of the injured man's children. This allow-
ance would not be payable if the dependent's earnings were more than a pre-
scribed amount. The amount mentioned in the White Paper was 20s. a week.
In addition, there will be an allowance of 7s. 6d. a week for the first child in
the injured man's family. The other children will be covered by the Family Allow-
ances Act. Dependent's allowance will not be payable when a man is drawing
his pension, except in two cases: first, where an unemployability supplement is
being paid; and, second, where the pensioner is receiving approved treatment in
hospital. In the general run of cases, the pensioner will have his earnings in
addition to his pension. If, on the other hand, he is sick or unemployed, he will
receive the dependent's allowances attached to his sickness 'or unemployment
Before I leave the subject of benefits, I would draw the attention of the
House to the proposals set out in the Explanatory Memorandum for the payment
of sickness benefit to an industrial pensioner. Today, a man cannot draw sick-
ness benefit and workman's compensation for the same injury; and the original
White Paper followed the same lines. For reasons set out in the Explanatory
Memorandum, we have decided to modify this proposal. Under our scheme a
pensioner who is unfit for work will be entitled to sickness benefit, even when
his unfitness is due to his injury, subject only to this, that if his pension is at
the 100 per cent rate, sickness benefit will be at half rate until he has paid 10
contributions since the date of his accident. If the pension is less than 100 per
cent, he will get the full rate of sickness benefit from the beginning, so long as
that does not give him more than a man with 100 per cent pension would get.
What I have said so far refers to the ordinary adult workers, men and women.
I would note that the benefit rates are on an equality for both men and women.

Under Eighteen
I would like to say a word about the provision for young people under 18.
There are special provisions covering them, and if there is a change which I
welcome and of which I am proud it is the provision for youth in this Bill.
I know from my own experience of boys and youths injured at 16 or 17, left with

British Speeches of the Day

a compensation rate based on their earnings, having to wait until they are 21
before they can claim a review, and having to claim a review within six months
or forfeit their claim forever. Here we are making a new provision. Half-rate
contributions will be payable by those over school-leaving age; benefit will be
half the adult rates. If a young person in receipt of benefit reaches 18, he will
have his benefit increased to the full adult rate. If a youth under 18 has de-
pendents, he will be given the full adult rate for himself and full dependent's
benefit for those dependent upon him. He will not be asked to pay the full
rate of contribution until he is 18 in any circumstances. Children under school-
leaving age who are employed part-time-and they still are, whatever we may
say-will be regarded as covered by this scheme, but no contributions will be
required from or in respect of them. Injury benefit will be paid for them when
they meet with accidents at reduced rates until school-leaving age is reached. Then
it will be half rate until the age of 18, and thereafter at the full rate. Disable-
ment benefit is not reduced for children under school-leaving age.

Fatal Cases
I come to. the provisions made for benefit in fatal cases. Here we have got
right away from the idea of lump sum payment of compensation. The drawback
of the system of lump-sum compensation in fatal cases is well illustrated in a
case which occurred at the beginning of the war. A widow whose husband was
fatally injured at his work had seven children ranging in age from two weeks
to 13 years. She received 600, the maximum under the then Act, which was
paid into court. Within a year she had to send six of her children into a Dr.
Barnardo's Home. Under this new scheme she would have received 30s. a
week for herself until all the children had reached school-leaving age, 7s. 6d.
for the eldest child and 5s.-under the Family Allowances Acts-for each of the
others. For the first two years after her husband's death she would, therefore,
have received a total of 3.7s.6d. a week, and though this amount would have
grown less as the children reached .school-leaving age, that family would not
have had to split up, and I think it is obvious that the total amount received
under our Bill would have been far in excess -of the lump sum payment in that
case. The pension for a widow who does not have the'care of a child is 20s. a
week unless at the time of her husband's death she is over 50 years of age or is
incapable to work,' in which case she will receive 30s. A widow's pension is not
payable to a widow whose marriage took place after the accident-and this is
the point about which we shall no doubt hear more when we go upstairs-
unless her husband has an unemployability supplement.

Now I come to the provision for parents. A pension will also be awarded
to one or both parents of a man if they were living with and were wholly or
mainly maintained by him at the time of his death, or would then have been
maintained except for the accident from which death resulted. If they were
maintained by him but not living with him, a pension will be paid to the father,
if he is incapable of work, and to the mother if she is either herself incapable
of work or is living with a husband who is incapable of work. The pension will
be 15s. a week for any period during which the parents are living together and
in other cases 20s. a week each. If neither a widow nor a parent is entitled
to a pension one other prescribed relative is entitled to pension. Such relative
must have been maintained by the deceased and must have been living with him,
being incapable of self-support. A parent or relative who does not fulfill these
conditions and, therefore, qualify for a weekly pension will be given an allow-
ance for 30 weeks at the rate of 36s. a week and a woman who is looking after

National Insurance (Industrial Injuries) Bill 565

a man's child before his death and continues to do so after his death may get
an allowance of 20s. a week so long as she continues to do so.

How Claims Will Be Decided
I will not trouble the House with too many details of the conditions for the
receipt of these pensions and allowances at this stage. We can examine them in
detail when we get to the Committee stage. But I would like to say a word as
to the way in which claims will be decided. This will be a State system of in-
surance. In the first instance, therefore, claims will be decided by officers ap-
pointed by me to be insurance officers. It is, however, a public service, and the
public served must have a right to see for themselves that justice is done in in-
dividual cases. Independent local appeal tribunals will, therefore, be set up con-
sisting of one representative each of employers and workers under an independent
chairman. They will hear and decide appeals from the insurance officers' de-

Lastly, there will be a right of final appeal to a commissioner who will be a
legal expert appointed not by me but by His Majesty. The commissioner will be
assisted by deputy-commissioners, and there is provision that cases which involve
points of law of special difficulty will be decided by a tribunal of three instead
of by one commissioner or deputy-commissioner. Similarly, in cases which in-
volve difficult questions of fact the commissioner or one of his deputies may
ask the assistance of persons with specialized knowledge of industry who may
sit with hint as assessors. Assessments for pension will be made by medical
boards consisting of at least two registered medical practitioners, though there
is a provision for minor cases in which the disability is likely to last only a short
time for them to be dealt with by a single doctor if the claimant agrees. There
will be special medical appeal tribunals- to deal with cases in which the injured
man disputes his assessment, and cases of doubt arising under this scheme in
regard to children's allowances will be dealt with under the appeal machinery
provided already in the Family Allowance Act.

Research into Industrial Accident and Disease
I must refer to one or two other provisions of the Bill. There is a provision
for financial assistance to be given to persons engaged on research into the causes
and prevention of industrial accident and disease, and indeed for the Minister
himself to employ persons to carry out such research. The accident rate in this
country is still appalling. For years I have lived at the other end, and now I
live at the Ministerial end of these problems; I have seen them from both ends,
and I am desperately anxious for something to be done. I have the unenviable
record of representing a constituency which has the highest number of silicotic
men ip this country and I am, therefore, glad that the Bill contains this pro-
vision to help research into the cause and prevention of accidents and particularly
of industrial diseases.

Training for Those Injured in Industry
The primary responsibility for the training of injured men for employment
has been laid upon the Minister of Labour and National Service by the Dis-
abled Persons (Employment) Act of 1944. Provision has, however, been made
in this Bill for a grant to be made out of the Industrial Injuries Fund, if neces-
sary, in order to ensure that persons injured in industrial accidents have the full
facilities for training and for sheltered employment provided under that Act.

British Speeches of the Day

There is also provision-and I am glad that it is made, it is a change from the
last Bill-enabling me, out of the Fund, to provide a supply of artificial limbs
and other appliances to pensioners, either free or at reduced cost. I still have
boyhood memories of buying a 3d. raffle ticket to provide a peg-leg for a miner.

The Administration of the Scheme
The administration of this scheme will, subject to the approval of Parliament,
fall upon my Department and I would like to say a word about that. I shall
have a small central headquarters staff here in London, an executive headquarters
staff in Newcastle-upon-Tyne, and local offices in all important centers throughout
the country engaged on the day-to-day administration of the scheme. But before
the stage is reached at which my local officers can handle cases-and afterwards
too-I shall need the advice of industry, both of employers and workers, on
framing the details of the scheme and embodying them in Regulations. For this
purpose there is to be appointed an Industrial Injuries Advisory Council to
which I shall ask representative employers and workers' organizations to nominate
members. I shall look forward to the advice at every stage in the administration
of this scheme of men drawn from industry and who have experience of industry,
who have seen in their own life how industry works.

How the Scheme is Superior to the Old System
In speaking of the benefits of this scheme I have inevitably almost entirely
dealt with the cash payments to be made. But to the injured man that is not
the first nor the most important thing. The most important thin is for him
that he be fitted for a new life, and that is where the old system failed most
completely. If I may quote Sir William Beveridge, he said in his Report that
in the 45 years of its existence the present system of dealing with the results of
industrial accidents and disease had contributed little or nothing to the most
important purpose of all, the purpose which should have come first and actually
came last in that scheme, namely the restoration of the injured employee to the
greatest possible degree of production and earning as soon as possible. If all
this scheme did was to provide cash benefits, however adequate, I would not ask
the House to approve it. If, having assessed the injury and awarded the pension,
we said to the worker "Good-bye, go off, we have finished with you," I would
not ask the House to give this Bill a Second Reading. I know, from my own
experience as a worker and as a trade union officer, the tragedy of the "Compo"
man. In my own village as in all industrial villages there are pathetic cases of
the casualties of industry being left to limp their way through life.
I commend this Bill and the scheme it introduces to the House not only
because of its cash benefits but because it is the foundation upon which a great
constructive human service can be built, to restore the injured workman to his
old job, or, if that is not possible, to train him for a new job, or if that is im-
possible, to care for him and for his dependents. ..
[House of Commons Debates]


The Housing Shortage


House of Commons, October 17, 1945


RT. HON. R. S. HUDSON (Conservative): Before I turn to the wider aspect
I want to spend a moment or two on the particular part of the problem in which
I am particularly interested, namely, rural housing. This has been the subject of
more than one Report by the Hobhouse Committee, and in their last Report, the
Hobhouse Committee say that they
."fear that the less sensational though no less urgent claim of the rural areas
may once again be pushed into the background."
There have been signs recently that this fear may be well-founded, and I am
not sure that hon. Members in different parts of this House, and indeed the public
at large, fully realize how desperate is the rural housing situation, and not only
how desperate it is, but how vastly more important it is today, not only to the indi-
viduals living in the country-that human issue about which the right hon. Gentle-
man the Member for Wakefield spoke-but for the nation at large, if this nation is
to continue to be reasonably fed. Perhaps the House will forgive me if I dwell
for a moment on this matter. Before the war, it was estimated that, in urban areas,
one person in four was living in a house that had been built within the last 20
years. The situation in the rural areas is tr less satisfactory and it is probable
that the proportion did not rise as high as one in 10. The low standard of accom-
modation in the country was, undoubtedly, one of the contributory factors of the
then drift from the country into the towns, and, although to the nation at large
that might have seemed in those days a matter of comparatively small importance,
except in so far as it contributed to increasing the problem of unemployment in
the towns, I believe the nation today cannot view a recurrence of that drift with
complacency if, as I say, at the same time it desires to continue to be fed.
I think it is common ground on all sides of the House, and in all parts of the
country now, that during many years to coine we shall have to maintain the pro-
duction of food at home at something approaching the global to*al which we have
achieved in recent years. If there was any doubt at all in the minds of anyone
as to whether that was so or not, the events of the last few weeks, the compara-
tively short interruption or disturbance of the regular flow of supplies through the
ports, and the prospect of our maintaining our existing rationing are sufficient to
convince anyone, if they doubt it, of the truth of what I have just said. In the
last days of the Cbalition Government estimates were made by the Ministries of
Agriculture and Food from which it was clear that, if this level of production was
to be maintained, a substantial increase of manpower over pre-war figures in agri-
culture was essential. During the war we have secured that increase of manpower
by prisoners-Italian and German-by members of the Women's Land Army
and by volunteers in harvest camps. Clearly, those sources are bound steadily to
diminish and eventually to dry up and we shall then be confined to our own re-
sources. In order to obtain the manpower, we shall have to rely upon attracing
into the industry substantial numbers of new workers-I hope ex-Servicemen.
But no intake of new workers will be of any avail unless living conditions in the
countryside are sufficiently improved to induce existing workers to continue to
remain in the country, once the effects of the present standstill under the Essential
Work Order is removed.

British Speeches of the Day

The Housing (Rural Workers) Act
In my view, therefore-and I think it is the view of most people who have
made any study of it-two things are necessary. In the first place, we have to
build a very large number of new houses. My own guess, based on a considerable
study at the Ministry of Agriculture, is that we require a minimum of 300,000
new houses in the countryside, of which we require at least 100,000 in the first
two or three years in order to provide the accommodation for that new intake.
But it is idle to believe that there is any possibility in any time that matters of
re-housing in new houses the whole of the existing workers in agriculture, let
alone the tens of thousands of workers in rural areas in the ancillary industries
to agriculture. Therefore, the second essential-the first being the provision of
new houses-is reconditioning on a very considerable scale as a partner to new
It will be rightly understood, therefore, with what feelings of consternation
we on this side of the House heard of the decision of the Government to drop the
renewal of the Housing (Rural Workers) Act. This action was defended on
several grounds. It was stated, I think by the Lord Privy Seal, that the Act had
been a dead letter. I should be the first to admit that the Act, in England, during
many years, had not been made as much use of as many of us would have liked.
It had, certainly, been made much more. use of in Scotland, but the extent to which
it was being made use of was steadily increasing in the last years before the war,
and whereas, 10 years after it had been introduced, about 1,000 cottages were
being reconditioned, that number had been more than doubled by 1938. If we look
into this, we find that the Hobhouse Committee threw a very interesting light on
many of the reasons why this Act had not been taken advantage of as much as we
should have liked.
That Committee attributed, to a large extent, to the local authorities the re-
sponsibility for failure to bring the conditions of using the Act permanently to the
notice of the persons concerned. They said, further, that, in many cases, local
authorities had adopted an attitude that it was a dole to private landlords which
they were reluctant to encourage. But the Hobhouse Committee at the same time
pointed out that this was based upon complete misapprehension. The Act was
specifically designed, not to benefit the individual landlord, but to ensure that the
whole of the benefits accrued to the occupier of the cottage. In any case, the Bill
which my right hon. and learned Friend the Member for North Croydon (Mr.
Willink) introduced in the Summer was specifically designed, together with a
number of administrative acts which he had made, to make the new Bill, when it
became an Act, workable.
The second reason which was given for dropping the Bill, was that it would
divert building labor from building new cottages. Again, I do not believe that
there is any substantial foundation for that belief. I am not suggesting for a
moment that we should confine all our activities to reconditioning. Recondition-
ing, as the Hobhouse Committee pointed out, ought to proceed in partnership
with new building. That Committee pointed out that conditions in different parts
of the country varied radically--conditions of availability of labor, and conditions
Sof the necessity for new cottages-because, in some cases, the emphasis had to be
on new cottages, and, in others, on reconditioning. put one of the great advan-
tages of reconditioning, over new house building, as I see it, is that it does enable
the small local contractor, with a few building operatives, to make the maximum
contribution, which he probably could not make if asked to tender for a local
authority scheme of 10, 12 or 15 houses. Above all, it has the great advantage
that it can be put into operation forthwith without waiting for the delays inherent,
however good the administration is, in purchasing land, providing roads and

The Housing Shortage 569

sewers and so forth before you can start building any new cottages. In other
words, you can get reconditioning going on a substantial scale, while you are get-
ting ready to start your housing scheme.

The Effect of Dropping the'Act
I am very much afraid that the real reason for the action of the Government
was: a dislike on the part of the Minister of Health and many of his friend for
anything that savored of helping private enterprise. [An HON MEMBER: "Land-
lords."] I am glad that the hon. Member agrees that my diagnosis is correct.
That brings me to the first of the questions which I would like to put. I would
like to know, and I am sure large numbers of hon. Members on this side of the
House and of people in the country would like to know, whether the right hon.
Gentleman the Minister of Health consulted his right hon. Friend the Minister of
Agriculture before he made this announcement. We should be very interested to
know that. I do not know whether the right hon. Gentleman the Minister of
Health would like to give me an answer now, because, if so, I should be very
glad to give way for him. Those of us who have been in previous Parliaments
wIll agree that the right hon. Gentleman was not always so coy when sitting on
these benches. However, as the Minister of Health does not seem anxious to
answer, perhaps his right hon. Friend who used to be my Under-Secretary will
tell me? Did he agree to this? I think the House can draw its own conclusions.
After all, the answer is "Yes" or "No." I am willing to give way, but neither of
the right hon. Gentlemen will answer that question, and I think we are entitled to
assume that the answer is "No." That is the first example we have come across of
carrying out the plans for national planning about which we have heard so much.
Be that as it may, the effect of the right hon. Gentleman's action is twofold.
In the first place, it is going to jeopardize the food supply of this country, because
if you do not provide the houses for the new intake and do not make it possible
to improve the existing houses sufficiently to maintain existing workers in the
industry, you are not going to have the increased supplies' of food, and above all,
of milk, which the Minister of Agriculture and the Minister of Food are so in-
sistently demanding. The second effect is to condemn thousands, or tens of thou-
sands, of agricultural workers up and down the country to continue to live in
houses built long before the present standards of amenity were settled. You are
going to condemn thousands of young men and women coming back from the
Services to living conditions far below what they need have been, and for far
longer than is-necessary. I hope, that, despite what has been said, the Govern-
ment will review their decision, and that the Minister will announce today a
revival of the reconditioning drive alongside the drive for new houses.
In that hope, I would like to make a practical suggestion. I would suggest
that rural builders and contractors should be asked, forthwith, for a list of men
who used to be in their employ and who are now in the Forces, and that instruc-
tions should be issued for the release in Class B forthwith of these men, on the
condition that they return to their previous employment. It is important, if
we are to get the full benefit of this proposal that the small local contractor
should not be compelled to drop all his agricultural work and all his work on
private cottages. I am sorry to see, in one or two instances that have been brought
to my notice, these instructions have, in fact, been issued, and have been made a
condition of getting the men back. I hope the Minister of Labour will look into
this point and see that the necessary instructions are issued. Very urgent as is the
need for new cottages in the countryside, and the reconditioning of existing ones,
it is equally important, and I am sure the Minister of Agriculture will agree, that we
should make available a certain amount of local labor to make a start on the over-

British Speeches of the Day

taking of arrears of maintenance and'repair of farm buildings, if we are to get the
increased food and safe and dean milk which we all believe is so important.

Wh4t Limits the Housing Program?
So much for rural housing. Now let me turn to the general questions, to which
we hope the Minister will reply. Last Spring, the Coalition Government announced
a housing program of 500,000 houses built or building in the first two years after
V-E Day, of which 300,000 were to be permanent. The right hon. Gentleman the
Member of Wakefield, in one of the speeches, which he made here, described that
program as "chicken-feed." Certainly, we, one this-side of the House, and I think
the public at large, expected that, with the sudden ending of the Japanese war,
the Government would be able substantially to improve on that program, and
possibly, instead of chicken-feed, produce a lusty cockerel. We shall expect him
to tell us what the new target is, and, in particular, how many houses he expects
to have completed by March, 1946, and, still more important, by March, 1947.
Houses cannot Be built without land, materials and labor. There are some
signs recently that the right hon. Gentleman may be going to try to ride by on
the excuse that the land is not available. He will, no doubt, tell us what his new
powers for local authorities are. When he comes to speak, I hope he will be able
to say whether or not it is a fact'that, as long ago as last March, local authorities
actually owned land sufficient for 300,000 houses and were in process of acquiring
land for another 350,000 houses, and that, as far as the central Government, were
concerned, clearance had been given for the acquisition of land for an additional
900,000 houses. It is very difficult for us, at all events, to believe that, if these
figures are correct, as I believe them to be, land is, at the moment, the limiting
factor. It may be, in isolated cases, but, taking the country as a whole, over the
next two years, and looking at the global figures, that is not the bottle-neck. Is the
Minister satisfied with the present output of building materials? If not, is labor the
chief bottle-neck? If it is labor, we shall be very glad to know what steps he is
taking, with the Minister of Labour, to direct more labor into the building mate-
rial industry. So far as the building industry itself is concerned, the Coalition
Government announced their intention of expanding it from 350,000 to 800,000 in
the 12 months after V-E Day. We shall be glad to know what the new target is.
There are two sources of labor-one the Forces and the other industry, especially
munitions industry. I will not weary the House with long quotations from
speeches by the Lord Privy Seal, but, if the right hon. Gentleman were here, he
would no doubt remember that, last June, he claimed that there was a very large
number indeed of men in the munitions industry who could be released and who
could be quite quickly and easily trained for house building. It will be interest-
ing to know whether his colleagues now in power entertain the same views, and,
if they do, what measures they propose to take for implementing his claim. We
should also like to know the number of releases to date in Class A and Class B,
and the target set for Class B. The last figure I was given, in answer to a Ques-
tion about releases, was 4,000, which seems to be a pretty disappointing figure,
and we shall be glad to know whether the Government have any plans for expe-
diting releases.

Price Control
Then we come to the important question of price control. The right hon.
Gentleman the Leader of the House will remember promising the country in a
broadcast that we would get homes for the people at prices that people could pay
and without bleeding the taxpayer to pay unduly high subsidies. We shall be glad
to hear from the right hon. Gentleman what steps he proposes to take to com-

The Housing Shortage. 571

bine those two admirable objects. We have heard rumors of tenders being re-
ceived at very high prices for houses. We have have heard rumors that the right
hon. Gentleman has refused to accept those tenders. We shall be glad to know
what steps he proposes to take to fill the gap, and to deal with the provision
of houses that would otherwise have been built. We should also like to know
what he proposes to do about controlling the price of building materials. Impor-
tant elements in the price of building materials are coal and wages. Do the Gov-
ernment propose to take steps to maintain the price of coal or to prevent a rise in
the price of coal and in the wage levels? If they do not, do they propose to
allow the price of building materials to rise proportionately? Failing that, we
should like to know whether they propose to adopt the only other alternative we
know of, which is to give a subsidy to the building material industry; and how
does he reconcile it with the promise made by the Leader of the House?

Prefabricated Houses
Then we should like to know what are the latest views of the Government
about prefabricated houses. Again, in the Debate in June, the Lord Privy Seal ex-
pressed the view that he had a great belief in prefabrication, allied to traditional
building. We wonder whether the Government still believe that, or whether they
have changed their views? We have heard rumors that they have sent a circular
to local authorities asking whether they prefer prefabrication to traditional build-
ing methods. It is pretty clear that if you put the question that way, local authori-
ties will answer that they prefer traditional building methods. Are the Govern-
ment going to rely on replies from that circular to justify closing down the
prefabricated program to small proportions? Then we shall be glad to know
what the future of Swedish houses is to be. The former Secretary of State for
Scotland, Mr. Thomas Johnston, and I were very interested in this matter. We
pinned very high hopes on it. We hoped, at one time, to get as many as 50,000
prefabricated timber houses in two years, which would have gone a very long way
indeed to solving some of the problems of new houses in rural areas and also in
Scotland. To our great regret, in the end we only got 5,000 houses from Sweden
as an experiment. There were difficulties in the way, difficulties of the supply of
timber and of exchange, but we should be glad to know whether the Government
are doing anything about them, and whether they are trying to overcome those
difficulties because, dearly, prefabricated houses of that type, of a very good design
and permanent, would be an immense contribution to the problem.
Before we went out of office, we were making preparations to send experts,
and also the necessary machinery, over to Germany with a view to cutting German
timber and using German labor on the spot for prefabrication of components for
wooden houses. When I was in Germany in July, between the date of the Elec-
tion and the announcement of the result, we were talking to members of the Con-
trol Commission out there in terms of delivery of these wooden houses starting
next April. We would be glad to hear what is the present position. The reports
I have received fill me with gloom. To the best of my knowledge, no machinery
and no men have been sent and no start has been made.
chanan): Could the right hon. Gentleman oblige us with the source of- his in-
formation ?
MR. HUDSON: It is in a letter from the Ministry of Supply dated the 26th
September. The last paragraph reads:
"However, the small team of experts now in Germany have gone there
to plan the operation."

572 British Speeches of the Day

I think I am entitled to say that I am disappointed to find in October that a
small team of experts has gone to "plan the operation" when, last Jt ly, we were
going to get the thing thoroughly under way. We shall be glad to know when the
Government anticipate getting the delivery of these houses, if they do . .
We would like to have some report on the progress of Londor war dam-
age repairs. I do not think it is an exaggeration to say that the people of
London are becoming exasperated at the delays and I venture to think that the
taxpayers of this country will be exasperated when they see the bill. In our view,
you will never get the thing going really quickly and reasonably and economically,
unless you abolish the system of cost-plus and until you try to get specific contracts
by contractors to do the job.
That brings me to the question of labor output, for it is not merely a
question of the supply of labor if you are going to build houses. Of equal
importance is the output of labor. Before the break-up of the Coalition we were, I
understand, in negotiation with the trades unions with a view to securing the adop-
tion of an effective system of payment by results, which would have given the men
concerned a definite incentive to higher output. I do not know what has hap-
pened since. We shall be very glad if the right hon. Gentleman, when he comes to
make his statement, will tell us what progress, if any, has been made in these

The Role of Private Enterprise
I now come to the crucial question-or at all events the question which in
our view is crucial-what r6le the -Government intend private enterprise to play
in housing. We believe it has an essential part. We shall be glad to know
whether the Government agree. We believe it is essential that the private owner
should make a start, even if only in a small way, in order to re-establish his
organization. That was the unanimous advice of a Committee containing not
only Conservatives but also Socialists and Members representative of local au-
thorities. Let me remind the House that at the outbreak of war there were belong-
ihg to private developers in this country. 31,000 acres in the course of active de-
velopment, with roads and sewers. Surely much the quickest way to get houses go-
ing again would be to see that those private builders should be encouraged to make
a start? I hope the Government agree. If they do not, do they intend there shall
be no appreciable output of houses built by private owners either for sale or
letting? We want to warn the Government, in all seriousness, of our view,
which is, quite definitely, that if they intend to rely on local authority activity
absorbing all the building labor in towns and villages throughout the country,
then we shall very soon find ourselves in this paradoxical and appalling condition
of having millions of people wanting houses and substantial unemployment in
the building industry.

Housing in Scotland
I do not know whether the right hon. Gentleman the Minister of Health will
deal with Scottish housing, or whether the Joint Under-Secretary of State for
Scotland will reply. I hope we shall be told what the Government propose to do
in Scotland, and I would like to remind the hon. Gentleman-although I do not
suppose he needs reminding-of a Report by a Committee presided over by the
present S6cretary of State. He will remember that that report pointed out that
local authorities had been more active and relatively more successful in building
houses in Scotland than they had in England, but, at the peak of the house
building activity before the war-taking local authority building and private build-
ing in Scotland-they never achieved more than 17,200 houses a year. Before

The Housing Shortage

the war, that Committee said there was a shortage of 300,000 houses. I under-
stand they believe that the present shortage has risen to 500,000 houses. The
difference between 17,200 houses a year and 500,000 houses is a pretty grim out-
look, and we should be interested to hear what proposals the Government have to
deal with this because, as far as we can see, it will mean trebling the best pre-
war output of houses every year' in Scotland in order to achieve a solution in any
time that matters. The hon. Gentleman the Joint Under-Secretary of State for
Scotland, for whom we all have the greatest admiration and sympathy, said
in answer to a written Question, I think, that he hoped to achieve a rate of 30,000
houses a year. But 30,000 houses a year, although much better than 17,200, means
that to erect 500,000 houses will take 16 years. I do not know what hon. Members
representing Scottish seats feel, but I think that, to condemn the people, of Scot-
land to wait 16 years before the existing shortage has been overcome, will not
please them very much. ...
THE MINISTER OF HEALTH (Rt. Hon. Aneurin Bevan): I am grateful to
the Opposition for having moved this Motion this afternoon in order to give me
an opportunity of making a statement about the housing policy of the Government.
At the same time, I would like to congratulate the Opposition upon their courage
and public spirit, because, obviously, only a very grave concern for the public weal
could have inspired them to put down a Motion on a subject so embarrassing to
themselves. I look forward to an increase in this spirit; indeed, I was so grateful
to them for thrs state of mind that I said to my right hon. Friend the Minister of
Works that we ought to help them by providing them with a White Paper on the
temporary housing program. I did not think they ought to be burdened with a
long list of figures in which they would be showing their achievements in this
field, so I thought that we ourselves would save them the trouble.

Past Neglect
My hon. Friends on this side, who have read this White Paper, will be able to
assess the speech of the right hon. Gentleman the Member for Southport (Mr.
Hudson) at its proper value. Furthermore, I think hon. and right hon. Gentle-
men opposite should remember this: that we could have sustained the malice of
the enemy and repaired the injuries inflicted by him upon our cities if we had
not, at the same time, had to bear the consequence of 25 years' neglect by their
party. One would have thought, listening to the speech of the right hon. Gen-
tleman opposite, that the housing problem is a direct consequence of the war;
but the fact is that we on this side, who have been the victims of it, know
that the housing problem for the lower-income groups in this country has not
been solved since the industrial revolution. There is no need for the right hon.
Gentleman to impress upon me the need for building houses. I have experienced,
in my own personal home life, the consequences of having to live in over-crowded
houses as a direct consequence of neglect by Governments of the day.
We are now burdened, at the end of a war, not only with complications aris-
ing out of that war, not only with having to build houses destroyed by the enemy,
but with the colossal task of having to repair that neglect. There are, as Mem-
bers know, more than 4,000,000 houses in this country over 80 years of age.
What is even more bitter to reflect upon is that, for very many years, we had
millions of workers and unemployed who could have built houses. Therefore,
I am almost driven into my customary Opposition mood when I have to listen to
speeches such as we have heard from the right hon. Gentleman on this subject.
It is a matter which they ought to evade as much as possible. We made certain
promises at the Election, and we are going to establish a new fashion in govern-
ment because we are going to keep them. .

British Speeches of the Day

Responsibility for Housing Policy
Some questions have been asked about the organization for housing. There
has been some criticism that we have not carried out the exact letter of the
promise to establish a Ministry for Housing. But I propose to show that we have, in
practice, fulfilled the substance of our promise and have concentrated responsibility
for housing in one Ministry, which was the substance of what we promised. What
was the complaint before? It was that local authorities had to go to too many
different Departments in matters of housing policy. That has been changed. The
responsibility for housing design, for the housing program and for over-all hous-
ing policy, rests clearly with the Ministry of Health and, for Scotland, with the
Scottish Office. Quite frankly, it would be impossible to extend the frontiers of
housing policy beyond that. If I attempted to discharge the functions of the
Minister of Works, who is responsible for buildings other than houses, if I
attempted to discharge the responsibility of the Minister of Supply, who is respon-
sible for. providing materials and equipment for the Armed Forces, as well as
for houses, I should be concentrating under one head far more functions than
any one man could discharge. Moreover, those are executive functions, and the
Ministry of Supply and the Ministry of Works stand in the relationship of sup-
pliers to the Ministry of Health. I lay down, with the Secretary of State for
Scotland, the using program, housing design and housing policy, and the
Ministry of Works and the Ministry of Supply provide us with the equipment
and materials necessary for carrying out the work. That is an arrangement which
strictly follows function. ...
I have no complaint whatever either about the powers or the design of the
instrument that the Government has put into my hands. If I fail, I shall fail
because of lack of personal qualities, and not because the instrument itself is defi-
cient. It may easily be that I shall fail; I am not underestimating the nature of
the task I have to perform, but I do hope that Members in all parts of the House
will not insist upon following, to the extent of pedantry, this argument about a
Ministry of Housing, which merely upsets things at the moment. [HoN. MEM-
BERS: "Oh."] I will say why. It is not political. ....
Everybody knows that it would be very difficult to carve out from the Ministry
of Health that section which is responsible for housing alone. It would be a
major departmental operation, and the consequence would be to delay housing
for many months. ...

Broad Outlines of the Government's Policy
Before the war the housing problems of the middle classes were, roughly,
solved. The higher-income groups had their houses; the lower-income groups
had not. Speculative builders, supported enthusiastically, and even voraciously,
by money-lending organizations, solved the problem of the higher-income
groups in the matter of housing. We propose to start at the other end. We
propose to start to solve, first, the housing difficulties of the lower-income
groups. In other words, we propose to lay the main emphasis of our program
upon building houses to let. That means that we shall ask local authorities to be
the main instruments for the housing program. If there are other agencies
ready to build houses to let I am prepared to welcome them. [An HON. MEMBER:
"The same grants ?" We will consider each scheme on its merits. It is, never-
theless, a principle of the first importance that the local authorities must be
looked to as the organizations and source for the building of the main bulk
of the housing program. The local authorities are admirably suited for this purpose.
Each year before the war about 260,000 houses were built by private enterprise

The Housing Shortage

alone, for sale, while the local authorities were confined largely to slum clearance
schemes. They built about 50,000 houses a year under those schemes, and about
10,000 other houses without subsidy. I would like to ask the House to consider
the grave civic damage caused by allowing local authorities to build houses for
only the lower-income groups and private speculators to build houses for the higher
income groups. What is the result? You have unbalanced communities. You
have colonies of low-income people, living in houses provided by the local au-
thorities, and you have the higher-income groups living in their own colonies.
This segregation of the different income groups is a wholly evil thing, from a
civilized point of view. It is condemned by anyone who has paid the slightest
attention to civics and eugenics. It is a monstrous infliction upon the essential
psychological and biological oneness of the community.
The local authorities had to produce what I call twilight villages. I call the
attention of the House to this, however: when hon. Members go about the country
they see that the housing schemes built by the local authorities were, on the whole,
aesthetically of a far higher standard than the houses built by private enterprise.
You only have to look at the fretful fronts stretching along the great roads leading
from London-belonging to what I think one cynic called the "marzipan period"
-to see the monstrous crimes committed against aesthetics by a long list of private
speculators in house building.

A More Balanced Composition
I think the House would like to know where our minds are moving in this
matter. One of the consequences of this segregation was to create an insistence on
uniformity. It is very difficult for architects responsible for the layout of muni-
cipal housing schemes to devise their houses in varied architectural compositions
if they are all to be houses for the same type of people, and the same size of
houses. The architectural composition to which we could look with delight must
have much more variety in design, and, therefore, I am going to encourage the
housing authorities in their layouts to make provision for building some houses
also for the higher-income groups at higher rents. After all, you know, a man
wants three houses in his lifetime: one when he gets married, one when the
family is growing up, and one when he is old; but very few of us can afford
three: very few of us can afford one. It therefore seems to me to be a perfectly
proper conception that the local authorities should have more diversified designs
in their housing schemes.
I should like to take this opportunity of saying, now that the local authorities
are organizing their schemes, that I hope that all age-groups will be found
hospitality in their schemes, and that they will not be segregated. I hope that the
old people will not be asked to live in colonies of their own-after all, they do
not want to look out of their windows on endless processions of the funerals of
their friends; they also want to look at processions of perambulators. Unfortu-
nately, in the past, many of these community units have inflicted on the old people
an outrage, compelling them all the while to live among themselves. The full life
should see the unfolding of a inulti-colored panorama before the eyes of every
citizen every day. Therefore, I hope that local authorities will arrange their
schemes in this fashion.
As I have said, the main emphasis, in the housing program, will be on the
local authorities. I am fully aware there are certain forms of building organiza-
tions that. may not be available for the public building program. The local
authorities are, therefore, allowed to license private buildings for sale up to
a limit of 1,200 in the provinces, and 1,300 in London. I want to make it
perfectly clear thatthese licenses are for the purpose of supplementing the main

British Speeches of the Day

housing program, and not for diverting building labor and materials that would
otherwise flow into the public housing program. If local authorities exercise these
licensing powers too generously, and are too tardy in their own housing schemes,
then I shall suspend the power to issue these licenses for this purpose, because I
want to emphasize again that the purpose of this licensing system is to provide
us with a flexible instrument for providing houses in addition to the main stream
of houses that will come from the local authorities.
Prevention of Speculation
I shall be asking Parliament very shortly to approve certain provisions to pre-
vent these houses so built from being re-sold speculatively. There will be a limit
of four years, by which time, I hope, the housing stringency will have been re-
moved-that is a liberal estimate-and there will be no danger of these houses
being speculated in at the expense of the buyers. I should like to point out to
the House that the Ministry of Health take a very serious view of this necessity
of using their housing powers generously and widely, because we have just sent to
the local authorities asking them, when considering their tenants, to have regard
to tie needs oft he applicant, no matter to what class or caste in the community
he belongs.
The Claims of Agriculture
We shall, of course, need certain assistance from the House. The right hon.
Gentleman the Member for Southport said that the 16cal authorities had plenty
of land for their immediate requirements. He even said that they had land for
900,000 houses, I believe, which had been cleared. What the right hon. Gentle-
man did not say was that it had been cleared with the Ministry of Agriculture.
It has not been cleared in the sense that local authorities can now build houses on
it. Obviously, the Ministry of Agriculture has to be consulted in this matter of
taking agricultural land. We have lost very good agricultural land during the
war, and we do not want to lose any more unneessarily; and therefore, when
people talk about controls and delays in housing sanctions, they must bear in mind
that the Ministry of Agriculture is perfectly entitled to make these observations
as to whether a piece of land ought to be retained for agricultural purposes or
alienated for housing purposes. What is true of agriculture is also true of plan-
ning. The Ministry of Town and Country Planning is entitled to say that these
houses ought to go into a particular place for good-planning purposes. Therefore,
when hon. Members read in the Press that housing schemes are being held up
because of all sorts of controls that have to be operated, they must remember that
many of these controls are absolutely essential if we are to avoid the mistakes of
the Governments in the inter-war years.
Discouragement of Borrowing
I should like, if I may, to warn hon. Members against one aspect of this mat-
ter. There is a great deal of money available in this country for investing in house-
building, and it is politically very influential. The local authorities can borrow
money at the moment at 31/8 per cent from the Public Works Loan Board. The *
rate of interest at which money is loaned by other agencies is higher than that,
and there will be great pressure upon hon. Members in all parts of the House to
let lose this hoarded-up pile of money on the' housing shortage. The conflict
will be-and I warn hon. Members of it-between public housing on the one hand
and the moneylender on the other. Many of these agencies that started off as
building societies are now nothing but moneylending societies. I do not propose,
so long as I am Minister of Health, to let loose this vast mass of accumulated
money on a scarcity market, and to encourage people to acquire mortgages that
will be gravestones around their necks. Therefore, I say to the returning soldiers

The Housing Shortage

who are feeling the housing shortage acutely at the present time: Do not, if you
can possibly avoid it, act hastily. Do not acquire mortgages at these high housing
prices, but postpone buying until later.
It is not that we ourselves are against people owning their own houses. I am
going to' ask the House, almost immediately, to raise the limits under which
local authorities can lend money under the Small Dwellings Acquisition Act.
There is no desire on our part to prevent people owning their own houses. So long
as the ownership of the houses is an extension and expression of the personality
of the owner, it is an excellent thing; but if the ownership of the houses is a
denial of somebody else's personality, it is a social affront. [HoN. MEMBERS:
"What 'does that mean?") Well, I will put it in more precise language. If hon.
and right hon. Gentlemen will go through London at the present time, they will
see a large number of houses that canhot be used as flats or dwellings because the
landlords have covenants in the leases preventing such use. In other words, it
is the landlord's personality that is protruding itself over the tenants. Although
it is perfectly true that the local authorities have land on which to build large
numbers of houses, there are large numbers of local authorities who have not got
the land.

Land to be Acquired by Ministerial Order
The Leader of the Opposition, when he was Prime Minister, made a speech
in March, 1944-and I regret very much that he is not here, and the reason why
he is not here, and in my own person I can sympathize with that reason. I am
bound to refer to what he said, because it is on the records, and he is a very im-
portant witness. He said that this business of housing was going to be treated
as a military operation. I entirely agree with him. If you wanted land for an
airfield during the war, you did not have protracted negotiations with the landlord.
We are going to have no protracted negotiations with the landlord for getting
houses. It is a form of control we are going to remove. We are going to ask
the House to approve a Bill by which land for all public purposes, including
housing, will be acquired by all those agencies which have powers of compul-
sory purchase under Act of Parliament, by the same processes that land is now
being acquired for temporary accommodation. That is to say, a notice will be
served on the land itself for a prescribed period of time, during which the inter-
ested parties may make representations and the local authority will then, if the
Minister has approved, enter on the land and use it while negotiations about its
price can go on. We propose to do that by Ministerial order and not by Pro-
visional Order. If it is agreed, as it is agreed by the House, that land is needed
for public purposes, there is no logic in those purposes being frustrated or held
up because protracted negotiations have to go on with the owners of the land.
It is much better that we should enter upon the land at once, and then the land-
lord can be compensated in accordance with the usual values. This caused a
little controversy last year. I am expecting that the new-found enthusiasm for
housing on the other side of the House will enable us to receive these powers
without any considerable difficulty.
The right. hon. and learned Gentleman spoke of the Housing (Rural workers)
Acts. I am astonished at this argument-though I ought not to be after 18 years
in the House. Was it not a fact that the overwhelming majority of houses built
in rural areas before the war were built for urban dwellers and for well-to-do
people. The fact is that although the rural population fell from 20 per cent of
the total population in 1919 to 17 per cent in 1938, rural housing, although it
should have been practically 20 per cent of the total housing, was only 13 per cent,
because the rural district councils were often not permitted to build houses, or
were not stimulated to build them. Most of those houses that were reconditioned

British Speeches of the Day

were tied cottages. We want to build houses for the agricultural workers in
which they are free people. We shall use the Rural District Councils, and I have
already had plenty of assurances that they are only too anxious to be used, to build
houses for their people.
A Better Housing (Rural Workers) Act
The reason why we do not want at this stage to re-enact the Housing (Rural
Workers) Acts is because we want to know first how the demobilized building
workers will dispose themselves over the country before attracting them into a
form of building which would give us no additional houses. I am not against the
Housing (Rural Workers) Acts. Indeed, later, on I hope I will give hon. and
right hon. Gentlemen a better Act. [An HON. MEMBER: "How much later?"]
It is necessary for hon. Members to realize first that there are in the various locali-
ties little dots of building workers-and hon. Members opposite know that the
shortage of building workers in the country is acute--engaged in all kinds of
operations. A man comes from the Army; he immediately attaches himself to
those who are working, and so these little clots of workers grow; if they are en-
gaged on reconditioning, the local authorities will have no workers to build their
own new houses.
I want first to canalize all the available rural labor into the building of new
houses. Later on, when we can see how the problem develops, I hope to come to
Parliament to ask for an Act to enable cottages to be reconditioned.
In any case many of these cottages which have been reconditioned ought to
be preserved. Many of them have great architectural value. It would be a disaster
if they fell into ruin. Their facade, their exteriors, are often quite charming and
ought to be preserved. The interiors, of course, have to be brought up to date.
I assure hon. Members opposite that I have no prejudice in this matter. All I
want is for labor to go first to the best places in the immediate emergency. Hon.
Members should bear in mind that the most expensive kind of labor is repair
labor, and it uses that. sort of labor which is most highly skilled, whereas we
want that skilled labor to go into new house building and to train other workers
alongside it. If that building labor is allowed to go into all kinds of complicated
repair work where apprentices are not with it, there will not be the building force
that we need to do our job.
Building Materials
I have been asked a question about building materials and components. We
have made one decision of the utmost importance in this regard. We have decided
to keep in being the Ministry of Supply, and the Ministry of Supply will be used
by me to provide housing materials and components. We shall be placing orders
through the Ministry of Supply, and the Royal Ordnance Factories which we are
retaining will be used if necessary to supplement the output of private industry.
Furthermore, I hope hon. Members will appreciate that there are some industries
producing building materials which are extremely unattractive to the workers in
them; they do not want to go there. Therefore, I have to consider, with the
Minister of Labour, how these industries can bring up their standards to levels
which will attract workers to them. We may have to use powers of direction, but
it is not a good Socialist doctrine to use powers of direction because industries have
too low a standard for workers to go into them. So we shall first raise the stan-
dards in those industries. Then, if the results are deficient, we shall have to
consider the better mobilization of the labor available.
I will not hide from the House the fact that I have very great anxieties in this.
We shall need an additional 130,000 workers in industries producing housing
materials and components. Here, I can confess with the utmost candor that the

The Housing Shortage

whole House and the whole nation are mastered by the rate of demobilization.
But the whole House has accepted the broad outlines of the demobilization
scheme; no one wants to disturb it in any vital particular. It has been explained
to the Forces, it has been accepted by the Forces, and any grave departure from it
at the moment would cause a great unrest. Therefore, we are caught up in it,
and I shall not know, and the rest of the House will not know, how this
demobilized labor will dispose itself over industry until it comes out of the Army
in full spate. We ought to know that by the end of the year, and by then we can
see whether our industries producing housing components and materials are filling
up to expectations and needs. It is too early to make any decision about it and I
intend to make no estimates at all as to what will happen. All I am hoping is
that the building workers, when they are released from the Forces, especially those
workers making building materials, will realize how important it is to get going
in those industries to provide the houses which we so badly need. Furthermore,
local authorities have been held up because of lack of technical staff, and it would
have been very much easier if hon. and right hon. Gentlemen opposite had insisted
upon their release earlier. . Earlier this year, even after the cessation of the
Coalition Government, there was no proper insistence on the release of these men
from the Forces. Now they are coming out in larger numbers.

Houses Will Have to be Shared This Winter
There is one further matter on which I must ask the House to bear with me;
that is, the emergency winter conditions. There is a very acute housing shortage,
which will be gravely increased by the returning soldiers, and it will cause great
suffering this winter. Nothing which anyone can do at the moment in the way of
new house building will ease .it very much. What we have to do is to make as
much use as we can of available accommodation. I shall therefore look, first,
to all persons with spare accommodation in their homes, to make that accommo-
dation available to those who need it. I believe I shall be helped in that on all
sides of the House. There is no greater source of domestic vicissitude than two
women having to share the same kitchen-or two men for that matter. Never-
theless, this winter we have to bite on the iron. We have to meet it with what
we have, and I, therefore, hope that everyone who has accommodation to spare
will make it available. I wish to rely upon voluntary effort, and our people are
always generous in these matters. If the facts are brought home to them, they will
respond. But if there are people so anti-social, who have accommodation grossly
in excess of their reasonable requirements and refuse to make it available in this
way, it will be necessary to arm the local authorities with powers to requisition.
I hope the powers of requisitioning will not need to be used except in very excep-
tional circumstances. Nevertheless, it has always been found that voluntary appeals
of this sort are more useful if they are supported by some sanction in the back-
ground-as far in the background as possible, I hope.
At the same time the local housing authorities will be empowered to do certain
work, in houses where householders allow it to be done, in the way of providing
sinks and cookers so as to try and make, as far as possible, two separate house-
holds. There are limits to this, because there are limits to the number of cookers
available, but we shall do our best to try and help local authorities to get them.
Of course, I would have liked to make the conversions on a larger scale, but con-
versions are always the sort of work that holds up new building. Elaborate con-
versions are impossible. In order that this may be facilitated the Government
will waive the protection of the Rents Acts in these cases, and also enable house-
holders to set aside any covenants which may prohibit them from letting apart-
ments. There is a further category with which we propose to deal; that is the
category of residences that are in danger of being converted into offices and other

British Speeches of the Day

business premises. I am going to make a Regulation that will require anybody
who is inclined to do so, first to have the permission of the local authority before
the conversion takes place. My attention has been brought to a large number of
instances in which we are losing residential property because of this conversion.
That Regulation will be made as soon as possible.

Before I sit down I would like to say one word on the subject of prefabrication.
Prefabrication has been exaggerated by almost everybody. There are systems of
prefabrication or semi-prefabrication which are desirable. I have today sent to
local authorities a circular telling them of the systems of prefabrication which have
been approved. I came to the conclusion that the period of experiment alone
ought now to end and that we should reach some firm decisions. So we have
reached decisions, first about concrete types and second about types which contain
steel frames. The right hon. Gentleman said the local authorities were being
asked if they wanted prefabricated houses or traditional houses. That is not
quite the position. The position is that local authorities have been asked to decide
what forms of prefabrication they prefer. Once we know from them how many
houses that amounts to in every particular system of prefabrication, we can then
negotiate for the prefabricated portions with the people who produce them and,
I hope, thereby get reductions in prices.
There are other projects about which I would like to tell the House, but I do
not want to raise expectations because they may not be fulfilled. We have ap-
proved of a pressed steel house-although we were somewhat dismayed by the
experience of the Portal bungalow-which is now going on to the drawing boards.
It is a very good house, a beautifully designed two-story house, and I am hoping
that at some time it will come forward, but every hon..Member knows very well
that factories have to be tooled up and it takes time, and I am making no promises
as to when they will be forthcoming.

Houses, Not Programs
I now want to come to the main point which was made, namely, as to the
program. I want to tell hon. Members with the utmost frankness that I have in-
quired into the basis of the figures that have been quoted by hon. Members opposite.
I can find no basis at all for their estimates-no solid basis whatsoever. It is true
that they may have said that if they get a building force of a certain amount, we
should then have one house for every building worker, and they may have based
their figures upon that, but who in these days is going to predict the output of
building workers when certain types of building workers are in very short supply?
I tell the House, bluntly and frankly, that I am not going to do any of that crystal
gazing. We have had too many programs. It is time we had houses. All the
programs have come from hon. Gentlemen opposite. We, on this side of the
House, have committed ourselves to no figures. It would be comparatively easy
for me to state figures in excess of those that have been stated by hon. Gentlemen
opposite. It would be demagogic. It would be as demagogic as those figures
were. The fact is that if at this moment we attempted to say that, by a certain
date, we will be building a certain number of houses, that statement would rest
upon no firm basis of veracity; in fact, it would be as unveracious as the tempo-
rary housing program of hon. Gentlemen opposite. All I can promise is this: I
will treat the House with the utmost.candor. I will give monthly detailed progress
reports starting at the beginning of the new year, so that the House can see what
progress is being made. [An HON. MEMBER: "But not now."] If the hon.
Gentleman will put down a Question on the Order Paper he can have the exact
figures, but I do not want to weary the House by reading them out now.



When the materials and labor have been provided to the local authorities, we
will provide the local authorities with housing targets, but it would be foolish
for any Minister of Health to give a target to local authorities unless labor and
materials were ready for use, because all they would say would be that the Minister
was passing the buck. When we have provided the materials and labor, the
local authorities must be stimulated to reach certain definite figures of produc-
tion. We shall do that. Furthermore, there are instances where the local authori-
ties' own efforts will have to be supplemented by other forms of building organiza-
tion. As a general rule, the labor force in the building industry distributes itself
over the country in accordance with the needs of the building industry itself, but
there are certain instances now-for example, blitzed cities, and places where
there are new factories going up, and especially in the rural areas where there is
an acute shortage of labor-where some other agency will have to be found to
supplement and reinforce the efforts of the local authority. The Government are
going to do that very shortly. It is useless for us to give precise particulars now
because we are governed in the immediate few months by the over-all resources of
labor, which is consequent upon the fact that there are in the Forces large numbers
of people who will shortly be coming home. [An HON. MEMBER: "What sort
of agencies?"] Agencies like flying building squads of the Ministry of Works,
corporations and associations-all kinds of agencies of that sort. But I do not
want local authorities to get the impression that if they do not build houses we
will build houses for them. Otherwise, some of them are likely to fall down on
their jobs. . .

The Problem Can be Solved
In conclusion I would say this: I believe that this housing problem can be
solved. I believe we are going to solve it and I believe the job is going to be
done. As I said, I am not going to tie myself to figures because if you tie yourself
to figures you become the victim of importunities by undesirable elements. I
would explain who those undesirable elements are; they are those building con-
tractors who want to hold the public up to racketeering prices, and if they know
the Minister has committed himself to a certain number of houses, in a particular
time, they will use that as a lever against him. I want the support of the House
to resist tenders where those tenders are too high. I want to bring down housing
costs. The building program at the end of the last war was ruined by high
housing costs. I, therefore, ask for the co-operation of the House in bringing
down costs, and one of the instruments of that co-operation is not to ask the Gov-
ernment to tie themselves to precise ceiling figures for the housing program, but
to let us do the job as best we can. As I say, I believe it can be done.
[House of Commons Debates]

House of Commons, October 22, 1945
THE LEADER OF THE OPPOSITION (Rt. Hon. Winston Churchill): We
have asked for this Debate upon demobilization, because demobilization is the
foundation upon which, at this moment, everything else stands, and also, because
tardy, inadequate demobilization is the fountainhead of all our domestic diffi-
culties. Whatever view may be taken of Socialism or free enterprise, surely it is

British Speeches of the Day

common ground between us all, that we should get all the great wheels and
the little wheels of life and industry in this country turning as soon as possible.
For this we need the men. Without the men, and also the women, now held in
the Services, there can be no speedy revival. The woeful shortage of consumer
goods will continue. The Government will be afraid to allow people to spend
their savings, for fear of undue rise in prices. Scarcity will be used as justification
for controls, and controls will become the fatal means of prolonging scarcity. Get
all the great wheels turning, and all the little cog-wheels too! Let them rotate and
revolve, spin and hum, and we shall have taken a long step forward towards our
deliverance. In order to get them turning, we must bring the men home, and
set the men free.

Bring the Men Home
I am disquieted at the slo_ rate of demobilization. I would have been ashamed
to be responsible for the earliest declarations of His Majesty's Government on this
subject. Even now that these have been markedly improved, I have no hesitation
in saying that they fall far below what is both possible and necessary. His
Majesty's Ministers have had an enormous windfall in the sudden end of the
Japanese war, and of the cessation of fighting and slaughter throughout the
world. There are no more enemies to conquer; no more fronts to hold. [HON.
MEMBERS: "Oh."] I mean of course in a military sphere. All our foreign foes
have been beaten down into unconditional surrender. Now is the time to bring
home the men who have conquered, and bring them back to their families and
productive work. There is, we are assured, no lack of productive work. There is,
at this time, no fear of large-scale unemployment. Every industry is clamoring for
men. Everywhere are useful and fruitful tasks to be performed. I'am sure that the
restrictions and controls which would prevent men from getting work, and which
would hobble and fetter the life energies of the nation, will be swept away once
the men are back, and the whole great series of wheels will begin to turn. Do
not let us be deterred by the fear of shortage of houses. Use billeting wherever
necessary to the full; take the land for houses, if you need it-I say if you need
it-as readily as you would have taken it for a gun site in 1940-41. Do whatever
.is needful and humanly possible to bring the men home and get things started
I would not go so far in urging the Government to these extreme efforts-I
know their difficulties-if I were not prepared myself to run the risk of trying
to make a positive contribution to our problems. There is some risk in a Mem-
ber of the Opposition making a positive proposal, or set of proposals. I have
no longer the power to "press the button" and obtain the exact information on
any point. Still I have a general knowledge of our national life problem as a
whole, particularly on its military side. For what it is worth, however, I am
prepared, in good will and in good faith, to offer some definite suggestion to His
Majesty's Government. We are told that the return of the troops and the mem-
bers of the other Services is delayed or regulated by three conditions-first, our
commitments-such is the term that is used-that is the military necessities;
second, transportation; and thirl, the execution of the Bevin Coalition Govern-
ment demobilization plan.

Strengths of the Forces: The Navy
I will deal with these three. 'First of all, commitments. This is a most dan-
gerous ground for anyone not possessed of the latest information to venture upon.
Nevertheless, I shall try.my best, and, if the estimates which I make are shown
to be erroneous, I shall be very ready to be convinced by the responsible state-


ments of Ministers. I am going to submit to the House what I think should be
the strength of the United Kingdom Armed Forces, which we should aim to reach
with all possible speed. A year later these strengths could be reconsidered in closer
relation to our long-term plan. Itake the Navy first. On existing plans, allowing for
intake, on December 31st of this year, the strength of the Navy would be 665,000,
of whom 55,000 are women, so that the Navy would even retain 448,000 at the end
of June, 1946. I am astounded that strth figures should be accepted by His Majesty's
Government. I know no reason why Vote A of the Navy should exceed the figure at
which it stood in the Estimates of 1939, namely, 133,000. We had a fine Navy
at the outbreak of war. I was sent to the Admiralty, at a few hours' notice, on
September 3, 1939, and that is what I found, relatively, to the Forces of other
countries against whom we were at that time matched, or likely to be matched.
I have yet to hear any argument which justifies our planning to maintain, or main-
taining, at the present time-unless it be in connection with the Fleet Air Arm-
a larger naval force in personnel than we had at the beginning of the late war.
I remember that at the height of the Nelson period, in the war against
Napoleon, we reached a Vote A of 148,000, and that, oddly enough, was the
figure that I was responsible for reaching in August, 1914. Let us take, as a work-
ing figure, 150,000. ff there is some entirely new case to be unfolded because
of new commitments, which I have not heard of, the Government should lay that
case before the House. On the whole, although I think we should not be too
precipitate in judging these matters, it would seem that new conditions might, at
any rate in respect of very large vessels, tell the other way. But, failing some
entirely new situation, of which only the Government can be aware, definite orders
should be given to discharge all men surplus to the 150,000, and to make sure
that the enormously swollen shore establishments are reduced equally with those
afloat. I hazard the guess that at this time there are nearly as many men of the
Navy ashore as afloat. I should have thought that no great length of time would
be needed for this operation, provided orders were given now, and enforced with
real authority. At the same time, while this operation is going on, every oppor-
tunity should be given to men entitled to release, to stay on if they volunteer. If
there were so many volunteers that the number was exceeded, I think we should
face that.
Here I will make a digression. It seems most urgent, and, indeed, vital, that
the Government should put forward their proposals, in outline at any rate, for
the permanent scale at which all three of our Armed Services are to be main-
tained, let-us say, in the next 10 years. Men and women in all the three Forces
ought to know, now, the conditions under which they can continue in the Services,
or can transfer from "hostilities only" to longer or full-time engagements. I am-
inclined to agree with a remark which I saw attributed to the Minister of Labour
and National Service the other day, to the effect that there is not the same universal
general desire to leave the Services now, which was encountered after the first great
THE MINISTER OF LABOUR (Rt. Hon. George Isaacs): Would the right
hon. Gentleman permit me to explain that that was a section of a statement which
I made at Birmingham, and which was reported in the Birmingham newspaper,
but the preceding sentence, which was of importance, was omitted from the Press
statement ?
MR. CHURCHILL: I am sorry-I thought we were making a link of agree-
ment. It seems to me that there is a large number of people in the Services who
wish to continue voluntarily, and we all think that is a very good thing. After
all, though this war has been terrible in many ways, we have not had the awful
slaughter of the last war, or the hideous grind of the trenches. There has been

British Speeches of the Day

movement and drama, and I can quite see that there may be some who would
prefer to continue in the profession of arms. I think that if they were offered
suitable terms, they would give a further period, voluntarily, of service abroad.
But at present I am assured that no plan has been made, and no commanding officer
in any of the Services knows how to answer the inquiries which are made of him.
So while affirming'and enforcing the principle of national service-of which I
trust we are to hear from His Majesty's Government-it should surely be our
policy to encourage the largest number of men to stay of their own free will. We
ought to be very reluctant at this juncture to turn off any trained man who wishes
to continue under arms. This digression applies to all three Services, but, returning
to the 'Navy, apart from what I have said about volunteers, I submit that the
figure should come down at once, as speedily and as quickly as possible to 150,000
men on Vote A.

I come now to the Royal Air Force. I do not know what the Government's
policy is about our Air Force. It may be that what I am going to suggest is more
than they have in mind. I consider that the permanent Royal Air Force must be
maintained on a very large scale, and in magnificent quality, with the very latest
machines, and that they should become the prime factor in our island and Imperial
defense. I may say I had thought that 150 to 200 combatant squadrons, with the
necessary training establishments, and, of course, with the large auxiliary reserves
which can be developed, should be our staple. This would involve about 4,000
machines under constant construction, the auxiliary forces being additional. If
you have 100 men on the ground for every machine in the air you are making
an allowance which, in my opinion, is grossly extravagant and capable of im-
mense revision by competent administration. However, to be on the safe side, I
would take that figure. It would seem to me that the personnel for the RAF should
be 400,000, as compared with 150,000 for the Royal Navy, and that it should
now be brought down to that figure. The present plan for the Air Force con-
templates 819,000 men and women being retained up to December 31st, and as
many as 699,000-I might almost have called it 700,000-being held as late as
June 30, 1946.
I yield to none in my desire to see preserved this splendid weapon of the
Royal Air Force, upon which our safety and our freedom depend, but, for this
great purpose, it is all the more necessary to get the life of the nation working
again, and not to squander our remaining treasure in keeping a large number of
men in the Royal Air Force-who are not really wanted either for immediate
needs, or fbr the permanent organization-and to keep them lolling about at
great cost to the public and vexation to themselves. I submit to the Ministers
whom I see opposite, that they should fix the figure of the permanent Air Force
organization and then cut down to that with the utmost speed. This also implies
decisions being taken about airfields whichaare now being held and guarded, on
a full war-time scale, by such large numbers of men.

The Army
I have dealt with the Navy-or rather, I have touched on the Navy. because
one could speak for very long periods on these points-and the Royal Air Force.
Now I come to the most difficult subject of all, the Army, and if I were to burden
the House with all the reasoning which led to my present computation, [ should,
Mr. Speaker, far outrun the limits of your patience and, no doubt, of my own
voice. For the occupation of Germany and the Low Countries a ration strength
of 400,000 men should be the.maximum. I say ration strength because all calcu-
lations in divisions are misleading. There is no need for general organization


in divisional formations, or for such divisions as are maintained to possess the
characteristics and the armaments of divisions entering a line of battle in the heat
of the struggle against the former German Army in its prime. It is a different
task that they have to do, and different organizations are required to meet it.
Mobile brigades, military police, armored car and light tank units, sedentary forces
for particular garrison duties-such are the methods to which military thought
should be guided by political authority.
The task of holding Germany down will not be a hard one; it will be much
more difficult to hold her up. The weight of administration must be thrown upon
the Germans. They must be made to bear the burden. We cannot have all our
best officers, scientists and engineers organizing them, when we, ourselves, have
need of those men's services. But I will not expatiate on this point. I say 400,000
ration strength--one half teeth, the other half tail-properly organized, with per-
haps half of them fighting men and men for rearward service, and also for garri-
son work, would be sufficient. It may well be, also, that apart from this force,
training establishments from Great Britain should be set up in Germany, where the
young troops would learn their profession on soil which their fathers and elder
brothers have at once conquered and liberated. I understand that the United States
are keeping about 350,000 troops in Germany, of which, again broadly speaking,
one-half are fighting men and one-half administrative services.
In view of all the dangers that there are in North-Eastern Italy, in view of our
obligations in Greece and all the difficulties developing in Palestine and the Middle
East, I would hazard the figure of another 400,000 ration strength which would be
required, at any rate, I think, until the end of 1946, and probably longer, in the
Mediterranean theater. In Palestine, above all, gendarmerie and brigade groups
should supersede divisional formations with all their cumbrous apparatus. I
would add to these figures, as a margin for War Office establishments in this island
and India, as well as fortress garrisons outside the Mediterranean, another 200,000
men, making a total for the Army, in the period which lies immediately before us,
of 1,000,000 men. I must emphasize that this 1,000,000 strength is a ration
strength of United Kingdom soldiers, and does not take auxiliary or native soldiers
into account. I may say that I came to this conclusion before I saw the figures of
the 'late Government's plan which the Minister of Labour put forward, I think,
on the 2nd of this month. I find that by June 30, 1946, His Majesty's Govern-
ment propose to reduce the Army to 1,156,900 men. There is certainly not much
between us on that figure. I would not quarrel about it.

Present Strength of the Army Too Great
The question however remains, When is this total to be reached? Why should
time be wasted in reaching that total? This is the vital point. Any unnecessary
men kept by compulsion with the Colors hamper our .revival here, and waste
the money we shall need to maintain our Armed Forces in the years that are to
come. Under the present plan, by December 31st there will still be 2,343,000 men
and women in the Army, of whom 130,000 will be women. Considering that that
will be nearly eight months after the German war ended, I say that the number
is far too many. I am told that January and February are months when releases
from the Army flag notably. In what way should we be harmed, if the Govern-
ment total of 1,156,900 men aimed at for June 30, 1946, were, by good and ener-
getic administration, reached by the end of March? Should we not be very much
better off? I urge that this new target should be at once declared, namely, to
reach the June figure three months earlier. If we add 1,000,000 United Kingdom
ration strength for the Army to 400,000 for the Royal Air Force and 150,000 for
the Royal Navy, we have a total ration strength of 1,550,000 men, which, I sub-
mit to the House, if organized with due economy and contrivance, should suffice

British Speeches of the Day

for our needs in the immediate future, and should give time for the long-term
policy to be shaped in closer detail.

2,225,000 Are Now Redundant
Now if we take this figure as a working basis, let us subtract it from the total
numbers which will be retained under arms at December 31st by the latest scheme
of the Government. I understand that if the whole of their present program is
carried out, they will have 3,842,000 men and women in the Forces at that date.
There are, therefore, potentially more than 2,225,000 men who are redundant and
surplus, in my view, and who should not be retained in the Services more than
one moment longer than is necessary to bring them home, or set them free, if
they are here already. These 2,225,000 men who are redundant are unemployed.
We publish the unemployment figures each week and rejoice that they are small,
but they are an inaccurate return while there is this great pocket, this 2,225,000,
unemployed. To have 2,225,000 unemployed, and unemployed under the most
wasteful and expensive conditions to the State, and in many cases irritating to
the men themselves, is intolerable.
The majority of these men are outside the United Kingdom. Nothing is more
costly than holding the dumbbell at arm's length. Every day counts. Even in
June, 1946, eight months from now, and 13 months after the end of the war
with Germany, the Government propose, with intake, to hold 2,408,000 persons
in uniform in the three Services. I contend that the target to be aimed at should
be 1,550,000 and that this smaller figure should be reached earlier. The maintenance
of immense numbers of redundant forces overseas, and held here in this island,
not only brings ruin to the Exchequer but also makes inroads upon our shipping
for the feeding of the Forces overseas. These inroads are of a grievous character,
and the most solid justification is needed to defend them. I regard the speedy
repatriation and release of these 2,225,000 men as a supreme task which lies before
His Majesty's Government at the present time.
I must, however, make one very serious reservation. In my calculations and
estimates I have definitely excluded the possibility of a major war in the next few
years. If His Majesty's Government consider that this is wrong, then it would
not be a case of demobilization at all but of remobilization, because what has
taken place and is going on has already woefully impaired the immediate fighting
efficiency of the enormous Forces we still retain. I believe, however, it may be
common ground that this possibility of a major war may rightly be excluded, and
that we have an interlude of grace in which mankind may be able to make better
arrangements for this tortured world than we have hitherto achieved. Still I make
that' reservation.

The Question of Transportation
I shall no doubt be told that there is no transport, and that all our transporta-
tion both by sea and air is fully occupied on the existing proposals. So far as sea
transportation is concerned, I do not believe it. When I recall to mind the im-
mense magnitude of the supply fleets which were provided and prepared for the
Japanese struggle in 1945 and 1946, and the fact that we are relieved of at least
three-quarters, if not four-fifths, of the burden of maintaining an aggressive war
at the other end of the world, it is incredible that there should not be now enough
tonnage available, and that we should not be able to have an incomparably higher
scale of transportation than any envisaged in the days 'when the Bevin scheme
was framed,1when we contemplated a prolonged war with Japan.
We on this side are well acquainted with the position as it stood when the
last Government resigned. While transportation is certainly tight, it cannot be


considered the first limiting factor. The releases of troops from abroad have been
more restricted than the transportation to move them. In proof of this I have
been told-I am willing to learn if I have been wrongly told-that we are carry-
ing, or about to carry, a considerable number of French troops about the world,
tb Dakar or Indo-China or elsewhere, which, according to earlier plans were not to
be moved by us until after June 30, 1946, but that they are now being taken earlier
because British military and Air Force releases have not come up to the forecasted
schedule. I am quite willing to be told that this is wrong, but let us be told if it
is wrong. I do not wish to blame the Government. I know their difficulties. I
have no doubt that they are doing their best, but if these facts are true they afe
very painful and they ought to be grappled with.

Other Suggestions
There are various suggestions of a minor character, but cumulatively of some
notable consequence, to make about speeding up transportation by more ingenuity
in the employment of the merchant vessels now engaged on troop movement. For
instance, would it not be possible to bring into service the laid-up escort carriers
with skeleton crews? Each of these would carry some 1,500 troops. Why should
not the Medloc movement, that is the Mediterranean line of communications
movement, which is well below the former planned target, not be doubled? For
this purpose, and in order to secure the immediate release of more men from India
and the Middle East, it may be necessary to expand the staging camps in Egypt.
Surely this should not be delayed another moment? Again, is it not possible to
make greater use of the trans-Canada route to bring home our people from the
Pacific that way round? If we could do this we should use to the full on their
return voyage, at least, the British ships now engaged on repatriating Canadian
and American personnel from Europe. Together these measures would even now
secure a substantial increase in the movement of troops in the first three months
of next year. If these measures had been taken earlier that increase could have
been gained on these figures by the end of this year. Surely even now not a moment
should be lost in bringing into play these potentialities? There is also the Navy,
which could move, with its own resources, some 6,000 men monthly-their own
men from the Pacific fleet to Vancouver.
We are doing so.
MR. CHURCHILL: That shows that we are not in dispute in the matter, but
we have not heard about it. The right hon. Gentleman may indeed "do good by
stealth," but he must not be vexed when he "blushes to find it fame." Are these
men now being transported across Canada by the same rolling stock which is
being used to take in the opposite direction the Canadian troops who have arrived
in Halifax from Europe? These Navy men from the Pacific could then embark
for home in ships which carry home to Canada Canadian troops. Has that been
arranged? These 6,000 Naval ratings per month could then be brought home
earlier than the plan, even under the present rules. This would entail the release
of a much larger corresponding number of the same age and service groups who
are kept waiting for their release, and an appreciable acceleration would be brought
about. These are points which I give only as instances. No doubt there are many
others which should be studied with attention by His Majesty's Government. If
they are already approved, it would give us great pleasure to hear that fact and
credit the administration with it in the later stages of the Debate. We should be
glad also of further information of the mass movement by air from remote areas,
which seems to be of the greatest value and importance.

British Speeches of the Day

The Troops in Europe
But, after all, the great bulk of the troops and air ground personnel are over
here at home, or only across the Channel in Europe. Sea transport does not enter
into their return to any great extent. Ships of all kinds-well we know it--can
carry troops either way across the Channel. No ships at all are needed for those
who are now in this country. In the Debate on the Address I asked for the num-
bers of men in the various depots. They have not been given. There is no reason
why they should not be given. They ought to be given. We request that they
should now be given. Until we have the official figures I cannot, of course, speak
with up-to-date accuracy, but I do not expect the assumption on which I am
basing my argument will be very far astray.
I believe there are at least 400,000 more men than are needed for any useful
purpose in what used to be !called the 21st Army Group in Germany and in the
Low Countries. That is not including the British Army in Italy or Austria, with
which I am not dealing at this moment. Is it not true that there are here at home
over a million men, the great majority of whom are absolutely redundant? Is it'
not true that there are something like, or over, a million men here at home? We
expect to know. All these men, so much needed in civil life, are being kept out
of the national economic and industrial recovery, not because of any military com-
mitments, nor for any want of transportation, but simply because their turn comes
later than that of a far smaller number of men who cannot for a considerable time
be brought home from the East and the Far East. This raises grave problems of
which I am well aware, but we must ask: Is it sensible, is it necessary, and can it
on that basis be defended?
The Bevin Demobilization Plan
This brings me to the third and last part of this argument. It is a part with
which I am deeply familiar, namely the Bevin demobilization plan. No one, I
think, except its author, has more right to speak about it than I, for I was Secre-
tary of State for War and Air during the whole demobilization period after the
last war, and well I know the perils and difficulties which beset that process. I
have left on record in my book "The Aftermath" the complexities and shocking
misfortunes in which we were involved in those days by the Addison scheme of
demobilization, which was felt by the fighting troops and those who had been
out longest to be most unfair, and which was sprung upon them in a manner which
gave it the least chance of favorable acceptance. I have, therefore, always been a
strong supporterbf the Bevin scheme. One must always try to carry the confidence
and sense of loyalty and fair play of the troops. It must, however, be stated and
remembered that this scheme was based on the assumption that the Japanese war
would continue on a great scale for at least 18 months after a German surrender,
and perhaps longer, and that large new armies would have to be sent to the Far
East, going away from home at the end of this long struggle in Europe, while the
process of turning over to peace conditions was in full swing through the country
and through a very large part of the Armed Forces.
That problem we have, thank God, been saved. It is not the situation with
which we are now confronted. We have a different scene, and a different prob-
lem. We must do justice to the case as it stands and to the facts as they are. I
am sure it was right to frame this Bevin scheme and to make it our foundation
and the first floor of our demobilization. Nevertheless, I am inclined to think
that Army opinion as a whole, convinced of the fairness of the intentions of the
late and present Governments towards them, will be prepared to accept further
considerable modifications in that scheme. Tidiness is a virtue, symmetry is often
a constituent of beauty, but it would be a mistake to insist pedantically upon a
rigid application of the Bevin scheme in the changed circumstances of today.


Let us take an extreme example. If, for instance, 100 men have to be kept
idle in England, because 10 men higher up on the list cannot yet be brought home
from Hongkong, or Rangoon, or Calcutta, and cannot yet be placed in a category
which entitles them to be brought home from these places, everyone would admit
that that would be pushing a good principle to absurdity. I would rather address
myself to the 10 men and, by substantial additions to their pay or bonus or leave
on release, and by special care for their future employment or otherwise, make up
to them any disappointments which they may feel, not because they are not return-
ing as soon as possible but because others lower down on the list have got out
before them.
I am sure-and I do not speak without thought or some knowledge-that if
the whole position were explained to the Army, and if substantial compensation
were forthcoming to those kept longer than their time, with a proper proportion
of compassionate cases, the men would understand and would accept the position.
After all, does a Briton say to himself, "I am unfortunate; I cannot get home but
I can bear it, because I know that 10 or 20 other men are being made unfortunate
too, on my account"? That seems to me a sour and morose form of comfort.
Might not a man prefer substantial compensation for himself instead of mis-
fortunes needlessly inflicted upon others which can do him no possible good?
Suppose every man was given double pay for every day that he was kept beyond
his proper priority, that would be a small cost to the State compared with the
enormous waste of keeping hundreds and hundreds of thousands of men out of
productive work.
MR. EVELYN WALKIDEN (Labour): Is the right hon. Gentleman seriously
preaching the Dukes plan-the Trades Union Congress speech suggesting com-
pensation be given to the men in Burma if they stay out there a little longer? It
was a speech by Charles Dukes at the T.U.C. which has been the subject of much
correspondence in the'various journals in the Far East.
MR. CHURCHILL: I thought I was preaching my own plan.
MR. WALKDEN: This is rather important. Is the right hon. Gentleman aware
that what he is now preaching has been condemned bell, book and candle by the
men in Burma and that they have vigorously attacked it in correspondence to
Members on both sides of this House?
MR. CHURCHILL: However that may be, I am saying what I think is in the
interest of the State.
MR. WALKDEN: The right hon. Gentleman should ask the men in Burma

Heartburnings Cannot Be Avoided
MR. CHURCHILL: With considerable responsibility and after much heart
searching, I am making a positive contribution to this Debate. It can be knocked
about from all quarters, but I hope to see at any rate a foundation for thought and
discussion on a matter in which we cannot afford to rest in a half-paralysed dead-
lock. Supposing every man were given double pay for every day he was kept
beyond his proper priority, that would be a small burden on the State compared
with the enormous waste such as is going on now. Certainly a great effort should
be made to solve this problem. If it makes possible a far larger rate of releases,
the general rejoicing will sweep away many invidious reflections.
We are told that very large numbers of men here at home must be kept under
arms because the men abroad would think it unfair that they should have the ad-

590 British Speeches of the Day

vantage of gaining employment before them. But nothing we can do will prevent
men at home, who have the opportunity of moving about this country when on
leave and furlough, from having an advantage in finding employment over men
who are still kept beyond the oceans. Why should this difficulty be based only
upon the uniformed men at home? Over 1,500,000 munition workers have been
released from their wartime jobs. Only 50,000 of these, I understand, are to be
used for the intake. They are being absorbed, I trust, rapidly in peacetime industry.
Are not these munition workers having an advantage over men kept abroad and
over the men kept in uniform at home? Are not they getting the first pick of the
jobs in peacetime industry? Whatever we do, there must be heartburnings, but
these heartburnings are more likely to be eased by paying substantial compensa-
tion to the sufferers than by inflicting suffering on larger numbers, so that large
numbers can be brought home where they can find their own feet when they arrive.
I am well aware that in paragraph 5 of his recent paper the Minister of Labour
and National Service has stated that once the release of a group has become due, the
men in that group are let go at once and not kept with the Colors until the men
abroad have been found transportation and have been brought to this country.
That was a very reasonable concession, but it departs from the principle of abso-
lutely equal treatment as between men abroad and men at home. Men in the same
group may get out several months earlier merely because they are serving at home.
We have been driven from the position of absolute abstract justice with reason
and good sense, and surely, having departed from the principle with good reason
and with good results, we should not exclude from our minds a further advance.

Women in the Services
Now I come to the women. I have never admitted that the principles of the
Bevin scheme of priority of release in accordance with age and length of service
need necessarily be applied to the women in the three fighting Services. Whatever
men in group A might feel about other men with less service being released before
them, or the order of priority being broken to their relative disadvantage, they do
not feel the same about women. The women do not compete with the men in the
same way or to the same degree. Besides, the innate chivalry of British soldiers
will not dwell long upon nice calculations of relative age and length of service as
between men and women. If it can be proved that a woman is necessary for some
indispensable task connected with our commitments or our demobilization, let her
be kept until the due time for her release arrives. More especially is this true if it
can be shown that in any particular instance a woman is replacing a man higher
up the scale who can be released as a result of her retention.
But I am not speaking of this class. I am speaking of the very large numbers
of young women in the three Services who have been kept doing nothing, fooling
around with every kind of futile, fanciful task, to their own annoyance and at
wasteful expense to the State. Every woman who is not irreplaceable in her present
Service job, except by a man of higher category, should be released on giving a
month's notice. The other day it was decided to keep a considerable number of
officers longer in Germany than their class A group qualifications warranted. The
reason was that the strength of the battalions had become so great that very large
numbers of men were exceeding the proportion of officers, and, as the men could
nbt under the present arrangements be demobilized, there were not the proper
number of officers.
Well, this was done, and they were delayed. I understand-perhaps I am
wrongly informed-that it was thought necessary to hold their opposite numbers
here at home, who are a much greater number, beyond their time. After all, the
officers who are kept are kept because there is vital work for them to do while


similar officers, whose release is retarded at home, are kept without useful work.
There is a great difference between being kept to do something, and being kept to
do nothing. As for the women, many of them want to stay, but surely those who
have nothing to 'do, and are not wanted for any purpose under the sun, should be
set free now.

No Party Matter
I earnestly hope that the Government will give unprejudiced attention to the
suggestions I have ventured to make. They are put forward in no spirit of con-
troversy but in the general interest. If .we do not get this country going again
pretty soon, if we do not get the great wheels turning, we may lose forever our
rightful place in the post-war economic world and we may involve our finances
in dire and irretrievable confusion. It is no party matter, but one in which the
House as a whole should make its opinion felt in a way that will override all
hesitations and obstacles which are found in the path. In order to bring us all
together, I will end this practical discourse in a philosophic vein. The inherent
vice of capitalism is the unequal sharing of blessings. The inherent virtue of
Socialism is the equal sharing of .miseries. In the present case, where an over-
whelming majority of Service men and women would gain the blessings, can we
not unite on the broad democratic principle of "The greatest good of the greatest
number" ?

A Mischievous Speech
MR. ISAACS: In reference to the peroration of the right hon. Gentleman, in
which he said he wanted to end a practical discourse in a philosophic vein, and to
what he previously said about making a number of new suggestions, I hope to
show that none of his suggestions is new to the Government and that they have
all been considered. Even his peroration is a bit stale and outworn. The right hon.
Gentleman opened by referring to "Let's get the wheels turning," but with great
respect I would suggest that the Government have endeavored to get the wheels
turning and that. what we have to consider now is whether the best way to keep
them turning is by giving them a push behind or by putting something down in
the front of them. With great respect I would like to say to the right hon. Gen-
tleman that I think his speech was most irresponsible and mischievous. I was just
wondering whether it was intended to get the men out of the Services or to get the
men out of temper with the present' Government. I am sure that the right hon.
Gentleman cannot have read as many letters from men in the Services as some
of us have read or he would realize that some of the suggestions that he made
are suggestions that would be most unacceptable td them. He mentioned encourag-
ing the men to stay in the Services. This Government desire to create a scheme
whereby the country will have an Armed Service in its protection that will be based
upon the desire of men to enter a career and not based upon men who cannot find
jobs and are forced into the Army. That will be the line of policy which the Gov-
ernment will follow in endeavoring to get the Forces maintained on a permanent
The right hon. Gentleman also mentioned the question of the number of men
to be retained in the various theatres of war at the end of the war. I am not a
tactician or so skilled in tactics myself as to be able to criticize the figures that are
given to the Government by their skilled advisers, but we still have the same con-
fidence in those skilled advisers as had the right hon. Gentleman when they were
advising him some time back. Therefore, we must take some heed of what they
say. The right hon. Gentleman mentioned that the Forces in Germany are hanging
about and doing nothing and that-

British Speeches of the Day

MR. CHURCHILL: I said that thereiwere 400,000 who were redundant.
MR. ISAACS: I was coming to the point where I think the right hon. Gentle-
man made a reference that is worthy of more careful examination. It was that if
we have a great number of men in Germany or on the Continent who are redundant
and not fully occupied, then it might be necessary to keep them there for military
commitments and other contingencies: and that it might be a good thing to look
into the question of establishing training centers there, as well as at home, so that
those men might have an opportunity of being equipped or re-equipped to come
back to their industrial life. That matter is under consideration, but it will now
be pushed on.
Transportation Questions Answered
The right hon. Gentleman said something about transport, and I would like
to deal with some of the points which he raised, putting the case as the Govern-
ment see it. He asked why there was a shortage and said that he did not believe
it. He made some reference to the movement of French troops which, so far as
I am aware, is news to the Government. He mentioned aircraft carriers; aircraft
carriers are being used for the transport of troops. He mentioned the Canadian
overland route and asked why we did not consider that. We have considered it
and it has not only been considered, it is being used. Foremost priority is being
given to prisoners of war so that those who have suffered so much might be brought
home in advance of demobilized soldiers and those who are still living under the
pledge of the Government that they should have leave. That source is being used
and, if at all possible, it will be extended. Further, the Navy itself is helping con-
siderably in bringing home demobilized soldiers and people on leave. The Navy
has other plans, such as converting vessels to make them more useful for troop
transport and thereby expediting the return of the men.
Bevin Scheme Is Best As it Stands
The right hon. Gentleman referred to the Bevin Scheme and further modifica-
tions of it. Any modification that can be carried out in that scheme that will not
destroy the fair basis upon which it is working will be introduced. We know only
too well that the fellows abroad are very anxious that we shall not play about with
the scheme and that they shall get their chance to return equally with others. I
would like particularly to refer to one point mentioned by the right hon. Gentle-
man and that is that there are, so far as the Army abroad are concerned, arrange-
ments that if a certain group is to be released within a certain time and by a cer-
tain day, the Army arranges with Commands overseas that those men due to be
released on that date are selected, sorted out and dispatched home to Britain with
the intention of their being home at the time that the other men in the group are
released. So from that point of view an effort is made to prevent the retaining
of men abroad or at home so that other men come out at the same time.
Another point in the right hon. Gentleman's speech to which I should like to
refer is Service women. It sounds so easy to say, "Let all the women come out
who want to come out." In the women's Services there are grades of jobs. There
are nice, cushy clean ones; some are hard, and one or two are fairly dirty. We
understand that some women are quite willing to remain in the Forces, but it is
fair to say that those who want to remain are those who have the clean, cushy jobs.
Those who do not want to remain are those who have the dirty jobs. The same
kind of thing happens elsewhere, but someone has to do the dirty work in the
Army as well as in industry. If we agreed to release those who are doing the dirty
work, as soon as any others got on to the dirty work they would want to come


out, and the thing would go on until there would be nobody left. We are'con-
vioced that the scheme as it stands is the best possible. I think we are all agreed
that there must be an orderly.system of release, understood by the Forces and ac-
ceptable to them as fair. So far as we understand, by direct contact, by communica-
tions and correspondence, by visits of officials and Members of the House to the
Forces, there is a recognition of some of the drawbacks of the scheme but that it
is better to suffer those drawbacks than to abolish or to completely change the
scheme. We have stated recently, in the statement issued, that it is necessary to
maintain military forces adequate to meet our national commitments.

Confidence in the Method Adopted
The Government have another aim, in addition to those specified by the right
hon. Gentleman, in desiring to release as many as possible from the Forces. We are
anxious to save the State money by moving men out of the Forces and we are
particularly anxious to get the wheels of industry turning so that we can find work
for our men, goods for our people and overseas trade; but the factor that the right
hon. Gentleman did not mention is that we want to get the men out in, fairness
to themselves. We want them all to return to their homes and families and we
want to get them out of the disciplined and ordered life, back to the life of free-
dom. I am quite satisfied with the way in which we propose to do it, which was
a way accepted by the right hon. Gentleman, who himself said, "If there is any-
body, other than the present Foreign Secretary, who is responsible for the present
demobilization scheme it is myself." We give him the credit for his idea, and
we are going to stick to it.
MR. CHURCHILL: Irrespective of any modifications?
MR. ISAACS: No. There have already been one or two modifications which
I hope to explain in a moment. If we can make them without upsetting the basis
of the scheme, it will be done. That is the main thing.
The Chiefs of Staffs, in a very rapid survey, completed an examination of
their military requirements, and they brought the figure down to 2,250,000 by
the end of June next year. I would make it clear that it is not the intention of
the Government to say that that is where demobilization ceases. This survey goes
on and as soon as we have anything definite, in the light of military circumstances
and difficulties all over the world, about the number of persons to be kept, the
number will be brought down to that new figure.
MR. CHURCHILL: Can the right hon. Gentleman give us the distribution of
the 2,250,000 men that the Chiefs of Staffs have recommended, among the various
theatres? How many at home? How many in Europe, the Mediterranean theatre,
in India and in the Far East? There is no reason why we should not have the
MR. ISAACS: I am not in a position to give those figures, but the right hon.
Gentleman's request has been noted and will be considered. There are still one
or two little problems knocking about in the world which might make it difficult
to give all those details. It is my duty as Minister of Labour to deal with the
demobilized people as they become demobilized, and I wish mainly to address my-
self to that part of the story.

The Demands on Transportation
The actual rate of release depends mainly on transport, but the Government
have said, "Never mind what the transport problem is; get out the maximunr num-
bers of men and make the transport to suit the men, and not the men to suit the

British Speeches of the Day

transport." Every naval ship coming home is filled to capacity with men due to
return; fighting ships are being used to convey personnel, and aircraft carriers are
bringing home prisoners of war. A number of ships are being converted for
drooping purposes. In addition to the demands upon transport for implementing
the release scheme, transport is required for the repatriation of ex-prisoners of
war, the repatriation of men whose overseas tour has expired, and the repatriation
of Dominion and Colonial Forces. We are a long way behind in giving men their
leave, and the pledge in regard to that must be kept. We have to provide transport,
too, for moves of occupational forces, drafting of replacements, moves of Allied
forces for occupational duties in the Far East, and for the repatriation of civilians
and other civilian movements. All these cause a great demand on transport, and
we are happy to be able to say that, through the cb-operation of the United States
of America, we now have the use of the Queen Elizabeth, the Aquitania and other
ships, which have been placed at our disposal to help us get demobilization hur-
ried forward.
LIEUT.-COLONEL SIR THOMAS MOORE (Conservative): What does "placed
at our disposal" mean? Are not these British ships?
MR. ISAACS: Of course they are, but I thought hon. Gentlemen knew that
there was a contract of some sort between ourselves and America by which they
had the use of these ships.
MR. STEPHEN (Independent Labour Party): We have never been told.
MR. ISAACS: Will hon. Members accept it from me that there was that con-
tract, which was .made some time ago when troops were being carried in the op-
posite direction? The American Government have now agreed to surrender those
ships, in spite of the contract, to enable this movement of troops to go ahead.

The Numbers Released to September 30th
The rate of relief is already being accelerated. The total number of men and
women returned from the Forces between June 18th and September 30th was
431,309, of whom 361,279 were demobilized in Classes A and B. There was an
appreciable increase in Class B releases during September, when 9,651 men and
women were released, making a total of 17,946 since Class B releases began. In
the last two weeks of September, 54,000 were released under Class A, and 5,550
under Class B, which was over 10 per cent. I mention these figures because the
releases under Class B are vitally important if we are to proceed with the primary
work of reconstruction, houses and so on. The Class B arrangement was not very
acceptable to the troops in the beginning, but the modifications which have been
made have apparently made it more acceptable, and the releases are beginning to
come in on the basis of the figures anticipated. We are faced with the problem
that many of the men who accept release under Class B are in far distant countries,
and it takes a little time to get them back. .

Class B Releases
The method of choosing Class B releases is as follows. On the industrial side
we are bringing out the men in building and civil engineering and ancillary in-
dustries, underground'coal mines, cotton, food, wool, draughtsmen, gas, pottery
and electricity. Under essential services, we are bringing out school teachers, uni-
versity students, candidates for Colonial Service, theological students, university
teachers, and miscellaneous classes to the number of 2,250. The industrial groups
for women in Class B are wool textiles, laundries, cotton, boots and shoes, clothing,
cigarettes, flax and jute. The essential services are hospital cooks, telephone and


telegraph operators, and 600 in the miscellaneous groups. Added to these two
groups are 10,000 men and women specialists. This gives us a target for Class B
.releases of 148,000. That target can be revised and increased as we see the flow
of people under Class A. It is fairly evident that the only way to get the full re-
sumption of industry is to get out as many men under Class A as possible, and it
is the Government's aim to do that having in mind our military commitments.

The Program for Releasing Women
The provisional program for the release of women is 321,000 by next June,
and 162,000 by the end of this year. The Government will be glad to see more
women released, but.,they are satisfied that the figures cannot at present be in--
creased. In addition to the fact I mentioned about various grades and jobs, many
women in'he Forces are doing work comparable to that of men, and an increase
in the numbers of women released would keep back a similar number.of men if we
are to keep to our main target. For that reason, they are treated as near as possible
on an equality with men and brought out under the same kind of scheme.
MR. CHURCHILL: What about the ones who have nothing to do?
MR. ISAACS: There might be some-
MR. CHURCHILL: A great number.
MR. ISAACS: I have not made any personal investigations, and I can only
accept the assurance of those who are doing the job that in the change-over there
may be times when people have nothing to do, but every attempt is being made
to utilize them. May I assure the House definitely that the Government will not
keep in the Forces anybody if it is possible to get them out? If we can get them
out, they will come out. Nobody is being kept in the Forces out of sheer cussedness.

The Release of Students
Students who are eligible for release in Class B are: (1) University arts
students of scholarship standard selected by their universities who are in age and
service groups 1 to 49, to the total of 3,000. (2) Science students selected by their
universities as being either (a) students of 1st class or high 2nd class honors
standard selected as research students or three-year students, or (b) other students
of high promise who were called up before the end of their normal deferment
and before they had had the opportunity of taking an honors degree. They must
be in age and service groups 1 to 49. (3) Medical, dental and veterinary students
recommended by their universities or the appropriate schools, who either (a) gave
up their reservation to join the Forces, or (b) joined the Forces before the present
conditions of reservation were in operation, but would have been reserved if they
had been in force. Their groups will be 1 to 49. (4) Theological students with
three years' service in the Forces, nominated by their Church authorities, up to a
total of 1,500.

Those Released Under Block Arrangements
There has been some misunderstanding about block releases. Those released
under block arrangements are building operatives, women for clothing, etc., in
accordance with the lists I have read. I want to make clear topeople in the Forces
that, subject to any exceptional requirements of national reconstruction, these people
will be placed in employment near their homes if reconstruction employment is
available there, and with their old employers if they have suitable vacancies and
work of the kind for which they have been released. School-teachers released under
the block arrangements are given freedom to choose their own posts within the

British Speeches of the Day

teaching profession. Nominated releases are men who are nominated for release
to a particular employer, and they are instructed by the Service authorities to report
to that employer. In this connection, I would like to state publicly the need for
more careful identification and location. We find that there are frequent delays
in dealing with applications by employers for their men owing to incorrect details
being supplied. A wrong number or initial, or the wrong letters of the Service in
which the man is serving, are frequently incorrectly supplied. If, for example, a
man is in the R.A.C. and the application states that he is in the R.A., it creates
delay. We are anxious that people who nominate persons for release should be
careful to give full particulars.
A number of questions have been asked from time to time about the means of
getting people out of the Services. I am pleased to inform the House that arrange-
ments have been made-to issue a pamphlet setting out the typical questions on de-
mobilization which have been put to me and Service Ministers from time to time,
in the hope that it will provide a ready source of information and will enable
Members to answer their correspondents.

Advice on Resettlement
Demobilization is not just a question of getting the men out of the Forces,
important as that is. It is a question of helping them when they come out. The
Government, through, the Ministry of Labour, have carried out a scheme which
was established by the Coalition Government for setting up resettlement advice
bureaus in the various Ministry of Labour areas. The advice that is available to
ex-Servicemen now is of considerable extent and is proving of great value and
assistance. Advice is given on reinstatement in civil employment. On that point,
I should like to say how cordial is the co-operation of employers in operating Re-
instatement in Civil Employment Act. There are very few cases of complaints of
employers trying to evade their obligations, but there are very many instances of
their willing assistance. Advice is given on interrupted apprenticeship, vocational
training, professional careers, resettlement grants, overseas settlement, disabled
persons national insurance, pensions and unemployment assistance, on which we
hope no one will want advice.
The resettlement advice offices are staffed by people, carefully selected and
trained, who are fully competent to do their job. Judging from reports, they are
giving advice of a friendly and welcome character. If a discharged soldier goes
to a resettlement advice office and they are unable to.give the information he wants,
he is not fobbed off with a reference to somebody else. The office gets into com-
munication with another department and makes an appointment for the soldier
and gives him a note of introduction. Therefore, when we are unable to give
him advice, we pass him to the section that can give it.
We are happy to know that this re-settlement advice is not exclusively for
what one might term industrial soldiers, the ordinary rank and file in industry.
A number of organizations have offered to advise on special types of problems arid
I am most grateful for their assistance. Ex-Servicemen wishing to re-start or buy
businesses on their own account can be referred to lawyers, accountants and
valuers who give their advice free of charge when the applicant cannot afford
to pay. Individuals of goodwill and standing, with long experience of business
life, are also advising inquirers on these and similar matters. Then we have a
further extension of the service to advice on professional careers, and this also is
working very satisfactorily. In many areas with which I have made contact there is
very satisfactory evidence that employers of labor are co-operating with the Minis-
try in its endeavor to see that men, who on entering into the Forces showed thaf
they had brains and ability to absorb knowledge, are trained to take business


careers in a number of industries. Some of us who have had something to do with
the organization after the last war of trying to find jobs for ex-officers of the
Army will, I am sure, be glad to know that this is a service undertaken by the
Government and not left to odds and ends of organizations. I am quite sure it will
be done satisfactorily.

They Are Not Going To Be Left To Rust
I would like to say a word or two about the position as the Government see it.
First of all, personally, as Minister of Labour and National Service, I' welcome
the co-operation of the other Departments in endeavoring to work this demobiliza-
tion scheme, especially the efforts put out by the Ministry of War Transport, who
were told that they had to do this transport job although they would have
nothing to say about the size of the job. I have every confidence that they can
do what has been asked, and if we find that transport can do better than has
already been asked, we shall not hesitate to ask the Services to speed up de-
mobilization even further, if only to utilize transport to its maximum capacity. Men
and women have been taken from their homes and from their normal lives, they
have given valuable services to the nation, and the best service we can do for them
now is torestore them to their homes and families at the earliest possible moment.
That, I can assure the House, is our aim. Industries have suffered and we must
help them to recover, and by so doing we shall help the nation. I can assure the
right hon. Gentleman that all these factors have been in mind.
I would like to remind the right hon. Gentleman of something which some of
us in this House will remember as long as life is with us. It was in the dark
days of 1940, I am not sure whether our men were then out of Dunkirk, or whether
they were still there, but those of us who were here on that occasion can remember
the gloom in which the House met and our sense of disappointment and dismay at
being left alone to fight the world. Then we heard a clarion voice, which said:
"We shall fight on the beaches, we shall fight on the landing grounds,
we shall fight in the fields and in the streets, we shall fight in the hills."-
[OFFICIAL REPORT, 4th June, 1940; Vol. 361, c. 796.]
The right hon. Gentleman then gave courage, and hope, and confidence to all
of us and to the nation. The men we are speaking of today responded to that
call. They went into the Forces believing that they were doing it to save their
country, and it would ill become any of us now to say to them, "We called you
from the hills and streets in the days when the country needed you, and now you
have done your fighting you can rust until we want you home again." That
is not going to be done. We shall try to bring these people back, and to serve
them, in the spirit that was aroused in the nation by the right hon. Gentleman's
words on that occasion. If I may refer to another statement which the right hon.
Gentleman made, and perhaps, extend it a little-after the battle he said something
which I will change into the following: "Never in the history of the world did
so many do so much in so great a cause"-the cause of freedom. And that means
not only those who went into the Forces but those who stopped at home and did
long hours of arduous work to enable the Forces to have the things necessary to
keep the fight going. They have also lives to live; we have the country to carry
on-when I say "we" I mean not only the Government but this House-and
we have to face the necessity of letting the people of the world see that it is our
intention not to maintain an unnecessarily large armed force, having now won the
fight for freedom, which we have presumed to be a fight to end war. It is the
intention of the Government, and in that I am sure we shall have the cordial
co-operation and goodwill of all parties, to restore that freedom as rapidly as pos-
sible. That intention will be pursued with unremitting vigor.

British Speeches of the Day

Finally I would say that whilst the Government, whether they wanted to or
not, could not shirk the criticism that comes its way, I do beg that that criticism
will be based upon a knowledge of the facts and not upon surmises; that the
words uttered here will be words of encouragement to-our serving men and
women to believe that the country is thinking of them, and not words that will
offend and create disappointment.
[House of Common. Debates]

House of Commons, October 23, 1945

Since my predecessor made his Budget statement last April, great changes have
occurred. The British people have celebrated first VE-Day and then VJ-Day.
They have also elected .a new Parliament. It is in this changed world that I open
today a supplementary or interim Budget. This is the third time within the last
six years that a Chancellor of the Exchequer has found it necessary to do this. In
September, 1939, Lord Simon had to revise his Budget of the previous April to
take account of the outbreak of the world war. In July, 1940, after the formation
of the all-party Government under the leadership of the right hon. Gentleman
the Member for Woodford (Mr. Churchill)-a Government whose name and
whose luster will forever shine forth from the pages of our history-following
this event, and the immediate sharp impetus this new Government gave to the
war effort, the late Sir Kingsley Wood introduced a supplementary Budget which
further stepped up the wartime increase in taxation. I present a supplementary
Budget this Autumn, on the morrow of great victories. Yet my task, in some
respects, is harder than those of my predecessors.
In the war years, menaced as we were by the most powerful and brutal enemy
that this country has ever had to face in all her long history, all sections of the
nation played their full part. The burdens borne by the general body of the tax-
payers were light indeed compared with burdens of another sort which fell, in
battle and in blitz, upon our fighting men on all fronts, by land and sea and air,
,upon our merchant seamen and upon great numbers of civilians in this country.
Yet measured by the standards of pre-war taxation these burdens of wartime
taxation were indeed heavy, and they were most patiently and most patriotically
borne by all. Now, as we turn the first page of a new chapter, there is a most
widespread and natural desire for tax reduction. There is likewise a desire, not
less widespread nor less natural, for increased expenditure upon the social ser-
vices--upon housing, health and education and many other social objects. Over
the years immediately ahead, within the five-year lifetime of this Parliament, I
hope we shall be able to go far to satisfy both these desires. Towards these ends
His Majesty's Government, with the support, I hope, and the encouragement of
this House of Commons, will shape their policy and make their five-year plan.'
We are now in a transition period, marked by many special, though I hope
transitory, dangers. In particular we must all be resolute against inflation; we
must increase the production of the peacetime goods as rapidly as possible, and we
must be prepared to hold back purchasing power until it is safe to release it, until
there are enough goods to buy. It is a contrast from the old pre-war situation. In

The Interim Budget

the old days, in those ignominious years, as many of us deemed them, between the
two- wars, our purchasing power often fell short of our productive power. Be-
cause men had not enough money to buy each other's products, those who made
those products were thrown into unemployment, and the products were not
*made. Deficiency of purchasing power, particularly among the poorest and
among those whose needs were greatest, led to deficiency of production, and hence
to ever-increasing poverty and unemployment. Those were the days of deflation
and defeatism.

National Savings Movement
But today we have moved on. Today the situation is in many respects the
exact reverse. The danger now is lest too much money should run after too few
goods. Hence, if I may here interpolate, the great importance of the National
Savings Movement. I would wish to pay my tribute here, not for the first time,
to all those who have contributed and are still contributing to the success of the
National Savings Movement, to the 600,000 voluntary workers in that movement
all over the country, and to those who have led and organized this movement and
inspired it through difficult years ....
Today, and for some years to come, it remains an imperative duty on each of
us, whatever the size of our income, whatever our occupation, to save all that we
can and lend it to the Government. I would add that price controls are also
essential. Strong price controls must be retained and enforced, and, if need be,
must be strengthened and extended. Our aim is that purchasing power and pro-
ductive power should always march in step. Otherwise we shall fall into one or
other of the twin evils of deflation or inflation.

Cost of Living
This leads me to speak for a moment or two about the cost of living. I have
decided to hold the present cost of living steady until further notice, even if this
means an increase in the necessary Exchequer subsidies. But I would add that
I am making inquiries whether we cannot hold the cost of living steady at a lower
cost in total subsidies, whether we cannot here and there discover economies in
the administration of these subsidies as they are now operated.
On the main point of holding the cost of living steady, there can be no ques-
tion-I am sure that my predecessor will agree with this, because he handled this
policy for several years-that this policy of keeping down the prices of the basic
necessaries of life, which was begun in 1941 and continued until now, lhas
achieved a remarkable measure of success in stabilizing the level of costs and
prices over a wide range of the ordinary person's current expenditure. This has
helped to engender an almost unconscious sense of stability in people's minds,
which was no small asset to the country during the strenuous and anxious days of the
war. People's minds were not haunted this time, as they were in the last war,
with the fear that prices would go sky high odt of control, and by the fear that all
the articles in their everyday expenditure would go on constantly rising and con-
stantly outstripping the resources of their slender incomes. That fear has been
banished by this policy, pursued by the Coalition Government since 1941, and it
has been of great advantage to our people, both actually and in its psychological
effect upon their minds.

There has been very little variation in most prices of the necessaries of life
in the last four years. That has been a great boon to all pensioners and to all
other persons living upon fixed, and especially upon small fixed money incomes.

British Speeches of the Day

It should not be underestimated in current discussion on future policy. These
subsidies, operated in the way I am describing, have been and are still a .nost
timely grant-in-aid to every household budget in the land. They might indeed
be described as a heavy load of indirect taxation in reverse, because that is what
they are. But this policy has not only kept down the prices of the foodstuffs and'
the other goods which have been subsidized by the Exchequer. It has also
helped to restrain any disproportionate increase in wage rates which, if it had
occurred, might have disturbed the whole balance of our economic life, and might
have sudked us into the fatal whirlpool of inflation.

Wage Rates
Here I wish to pay a tribute to" the steadiness and good sense which the trade
unions and their leaders have shown during the war in this regard, and also to the
great value of the voluntary joint machinery of wage negotiations and industrial
negotiations generally in all the principal industries. Wage rates, as figures show,
have climbed steadily all the time, and that has been right; yet there has been no
break-away rise, no uncontrolled rise such as we might easily have seen had it not
been for this continuing co-operation between the Government-in this case the
Coalition Government-and the trade unions, both recognizing that the common
interest was best served by this joint effort of the two parties to keep prices and
wages on an even keel.

Price Stabilization
So much for the past. Looking to the near future, in this transitional period I
believe that this policy of price stabilization will be even more important than it
has been during the war. In the uncertain conditions which are inevitable during
the period of switch-over from war to peace economy, when there will be big
shifts of employment from one industry to another, I have decided that we must
hold to this policy even more firmly than was contemplated by my predecessor. He,
announced in his Budget Speech of 1944, and repeated in his Budget Speech last
April, that the ceiling of 30 per cent above pre-war, which had previously been
maintained, was to be raised to 35 per cent above pre-war, and he indicated that
he expected a rise towards this higher figure to take place during the present year.
This has already happened. During the summer the cost-of-living index rose at
one time to 331/2 per cent.above the pre-war level. It has since fallen, and now
stands at about 31 per cent. My intention is that for the next year at least, and
until further notice, we should seek to hold the index where it is now, and that we
should not allow it to vary from the present level by more than an insignificant
amount. Whatever may have been thought right a year ago under the Coalition
Government, in this reconversion period we should, in my view, keep a firmer
grip than even before on the cost of living.
I should like to give the Committee a few actual examples of the effect of this
policy on particular prices. Bread, mow costing 9d. for a 411. loaf, would, with-
out subsidy cost Is. Id. Potatoes, now costing 81/4d. for 71b., would, without
subsidy, cost lid. Eggs, now 2s. dozen [Laughter] would, without subsidy, cost
3s. 6d. Home-killed meat, without subsidy, would rise, on the average, by 4d. a
lb. These are illustrations of the way in which prices are being held down by
this policy below the prices which otherwise would prevail, with widely dis-
tributed social advantage. But having said this, I must emphasize that no one
should underestimate the cost which this policy will throw upon the national
finances. Last year, the cost-of-living subsidies were costing the Exchequer about
200,000,000 a year. This figure has already risen by a formidable amount. It
was already running at the rate of 250,000,000 a year before Lend-Lease was

The Interim Budget 601

Lend-Lease Termination
We cannot yet indicate with any precision the increase of cost which we must
expect as a result of the termination of Lend-Lease. It will depend, to some ex-
tent, on how far and how quickly we can switch our sources of supply to non-
dollar markets; but it is already clear that the increase in the cost of subsidies
due to this cause alone-the cessation of Lend-Lease-will not be less than
50,000,000 a year. I must ask the Committee, therefore, seriously to face the
fact that whereas in earlier years we have been concerned with a figure which was
creeping up towards 200,000,000 a year, the figure we must now reckon with is
at least 300,000,000 a year; and I must add that the actual figure may prove to
be considerably higher, especially if the decision which I have just announced to
hold prices substantially at their present level has to be carried out in face of still
rising costs.
So much for the cost of living. I have referred to the sudden ending of Lend-
Lease, which has, of course, created for us a serious immediate problem in rela-
tion to our balance of trade. As the Committee know, talks have for some time
been proceeding at Washington between representatives of the United Kingdom
and the United States Governments. Not everything written in the Press on the
subject of these talks should be believed. None the less, they have not yet reached
even a provisional conclusion, and I do not propose to make any further statement
on them today, though I should mention them in this context. But I can tell the
Committee-and the Committee will desire to know this-that with regard to all
the matters under discussion at Washington we are keeping, and shall keep, in
close touch with the Dominions and with the Government of India. Meanwhile,
pending a settlement at Washington, it is more than ever urgent to stimulate
British exports and, on the other side of the balance sheet, to restrict, to the mini-
mum necessary to assure our essential supplies of food and raw materials, imports,
especially those which must be paid for with dollars. Whatever the outcome of
the Washington talks we must make all possible efforts, the most vigorous efforts,
the most imaginative efforts of which private enterprise shall be proved capable,
to re-establish as quickly as we can the balance of our external trade. Until this
is done we shall not, in truth, be the masters of our own economic and financial
destiny. For this reason we must do this great job soon, and recover equilibrium
as rapidly as may be.

Interest Rates
I should like now to deal with two questions of general financial policy. The
first is the question of interest rates. In the Debate on the Address on August
21st, I said that I was exploring future possibilities in the field of cheaper
money and lower interest rates. I had in mind the possibility of reducing not only
the debt charge in the Budget, for that is of great importance, but also the cost
of borrowing by industry and by public bodies, including local authorities. There
is no sense, or so it seems to me-I hope no high authority will differ from me-
in paying more than we must for the loan of money; and I have endeavored to do
my utmost to bring these rates down. I shall say a word in detail in a moment.
The problem differs accordingly as we are dealing with short-term or long-term
borrowing, and I have begun by concentrating my attention and my efforts on
the short-term rates. On the present volume of the 'Floating Debt, composed,
as the Committee will realize, of Treasury Bills, Treasury Deposit Receipts and
Ways and Means Advances, the annual interest charge to the Exchequer is
66,000,000 a year, or was so running till last Friday. A good deal of this repre-
sents interest paid on funds held by Government Departments; but none the less
there is a net gain to the public finances from any substantial saving on that
interest-charge. I have discussed this question with the G6vernor of the Bank

British Speeches of the Day

of England, and he has discussed it with the Chairmen of the Clearing Banks; and,
as a result, I am glad to say that, as the Committee will already know, adjustments
in short-term interest rates have now been made-they were made last week and
have been announced-which have reduced the rate on Treasury Bills from about
1 per cent to about 1/2 per cent, and the rate on Treasury Deposit Receipts from
11/8 per cent to 5/8 per cent-a reduction of 1/2 per cent in each case. This change,
which has been made with the co-operation of the Bank of England and the Clear-
ing Banks, and was announced last Friday, will mean a saving to the Exchequer
for interest, on the present volume of Floating Debt, of some 32,000,000 a year
out of the total of 66,000,000. In other words, we shall nearly cut the charge
in half.
After this-as I think-hopeful beginning with short-term rates, I shall now
turn my attention, in consultation with my advisers, to the possibility of securing
lower middle-term and long-term interest rates; but I shall do nothing here to
hinder-indeed, on the contrary, I hope that what I am saying now will assist
rather than hinder-the success of the National Savings Thanksgiving Weeks which
are being held until the end of November in various parts of the country. Our
present tap issues will run on during that time; the terms will not be changed.
Thereafter, when I feel my hands free, when the Thanksgiving Campaign is over,
the terms of lending may become less attractive; and this reflection should dispose
any person who is in doubt what to do with his money, with his "liquid resources"
as they are sometimes called-speaking in a financial sense, of course-to lend
these to the Treasury without imprudent delay.
It is perhaps unnecessary for me to add that if the Government should at any
time decide to reduce the interest on new issues, such reduction would not affect the
terms of existing loans, made before the date of the change. That applies not only
to the market issues-"tap" issues, as we sometimes call them, again speaking in a
financial sense-but to Savings Certificates and to Defence Bonds, and also to
deposits in the Post Office Savings Bank.

1945-46 Forecast of Out-turn
I should like to pass to a few statistical particulars and give the Committee some
Budget figures, starting with such forecasts as we can make of the out-turn of the
current year, 1945-46. My predecessor's Estimate last April put the total revenue
for the year at 3,265,000,000 and expenditure at 5,565,000,000, leaving a deficit,
to be covered by borrowing, of 2,300,000,000. The expenditure total included
4,500,000,000 for Votes of Credit, that figure, as my predecessor explained,
being, ifi view of the uncertainties of the situation, a very round and approximate
sum. So far as can be foreseen at present, the yield of the various items of revenue
will conform roughly to the Estimates. The estimating was well done, as it gen-
erally is, by the experts of the Inland Revenue and the Customs. They did their
sums and made their imaginative hypotheses very efficiently, and it appears 'that
the yield will conform roughly to the Estimates.

Votes of Credit
On the expenditure side, the main uncertainty lies with the Vote of Credit
figure. I have received from the spending Departments estimates which sug-
gest that the total issues out of the Vote of Credit during the year will come to a
sum of about 4,500,000,000. There is a probable saving of some 200,000,000
on the Defence and Supply Departments; but this is outweighed by the cost of
supplies which were formerly provided under Lend-Lease and which now have to
be paid for, and also by credits for the financing of Anglo-French trade, which
we must all desire to get moving again, under the Financial Agreement signed last

The Interim Budget

March. These estimates must, of course, be very tentative, because we are only
,half way through the financial year, and much may change in the next few months.
As regards the expenditure of the Service and Supply Departments, we must
remember that the faster we demobilize, as is desired on the other side of the
House not less than on this-this is an arithmetical point--the more we shall have
to pay within this financial year by way of lump sum gratutities and Service credits.
I am only making the simple point that the total expenditure chargeable to the
Service and Supply, Departments will to this extent be temporarily inflated, and
quite rightly. But this has a bearing upon the out-turn of the expenditure of this
financial year. It is a mere point of accountancy-meaningless symbols, almost;
but none the less it is the duty of the Chancellor of the Exchequer to draw atten-
tion to them.
There is also a question of interest to war contractors, some of whom may be
listening to me now. The closing down of war contracts, due to the sudden out-
break of peace, involves compensation payments to these contractors. These
terminal payments also, like the lump sum gratuities to the fighting men, will
be large in relation to the current costs saved over the rest of this financial year
by reason of reductions in uniformed personnel and the cancellation of contracts.
With' the co-operation of my colleagues in charge of the Service and Supply
Departments, I am doing all I can to. hurry down their expenditure as speedily
as is possible. But when we judge the total charges made in respect of those
Departments, the considerations that I have just mentioned have their place as
regards this year.
Turning to the Civil Supply Services, supplementary votes already granted or
to be asked for will probably mean an excess. on the Budget estimates of some
20,000,000 under a variety of heads. In short, to sum the whole thing up, it looks
as though the final deficit for 1945-46 will not be very far off the original estimate
of my predecessor, balancing the various considerations that I have mentioned one
against the other.
Looking forward to the next financial year, the Committee will not expect me,
six months before the normal time, to say much about the prospects. A great
deal will depend in 1946-47 upon the size of the Defence expenditure, and this in
turn will depend upon decisions of policy which will have to be taken over the
next 18 months. They have not yet been taken and cannot be taken yet; but, as
I have already announced to the Committee in the discussion on the Vote of
Credit, after March next the Defence expenditure will be borne once more upon
the ordinary Estimates and no longer upon Votes of Credit. After six years' relaxa-
tion of Parliamentary and Treasury controls-as was inevitable in time of war,
because it was more important to win the war than to save money-the healthy
discipline of those controls will be reimposed from the beginning of the next finan-
cial year; and I am sure that hon. Members in all parts of the House will co-oper-
ate in making these controls a reality.

Civil Expenditure
Turning to civil expenditure, next year will be the first full year of peace and
also the first full year of office of His Majesty's present Government; and, this
being so, the Committee may take for granted that next year there will be in-
creased expenditure, both to extend the Social Services, and to carry out a num-
ber of other constructive tasks. Family allowances will begin to be paid next year
under the Act passed at the end of the period of the late Government, and in-
creased old age pensions and other improved benefits will also begin to be paid
under the legislation which my right hon. Friend the Minister of National Insur-
ance is now preparing. There will also be increased expenditure on housing and

British Speeches of the Day

on education, both of which have necessarily fallen into great arrears by reason of
the war; and there will be expenditure, in another field, on Colonial Development
and Welfare. To do all these things and to do them well, as part of a coherent
plan, steadily accomplished stage by stage during the lifetime of this Parliament-
such- shall be our aim, our pledge, and our pride. We shall do these things.
Let no one expect-and no sensible person will expect-that we shall be able
next year to present a fully balanced Budget. Next year we shall substantially
narrow, although we shall not wholly close, the gap between expenditure and
revenue. The Committee may recollect that after the last war the Budget was
not balanced until the year 1920-21, and even then the surplus was more than
accounted for by receipts from the sale of war stores. It was not a genuine sur-
plus. The first genuine surplus did not come after the last war until two years
later, 1922-23. If we follow that precedent we shall have our first real surplus
in 1949-50. But, of course, we shall see. So far, however, as the general ideas
governing this matter are concerned, I would submit to the Committee that, once
we are through this transitional and exceptional period of the next few years,
we should aim at balancing the Budget, not necessarily each year, but over a
period of years, deliberately planning Budget surpluses when trade is firmly good
and equally deliberately planning Budget deficits when trade is bad or when it is
threatening to go bad; but balancing, over a period, surpluses against deficits.
From the point of view of the public accounts, an old teacher of mine used to
say "there is no special sanctity in the period in which the earth revolves around
the sun." In recent years thought on this subject has moved very far from its
old orthodox bearings, as indeed was recognized by the late Government and
their advisers in the famous White Paper on employment policy issued dnder the
late Government, which, I have no doubt, all Members of the Committee. includ-
ing the newly elected Members, have carefully read and deeply studied. If not,
they should do so. It was a very interesting and well written document, as such
documents go.

Level of Taxation
It is against this general background that I have had to consider the present
level of taxation and the extent to which I can offer the taxpayer any relief from
his burden. In this connection I must begin by reminding the Committee that,
Sas I announced last August shortly after taking up my present office, no further
installments of the War Damage Contribution will be levied. This recognition
that the last V-bomb had fallen, even though claims for war damage might still
come in, even though the last claim had not yet been filed, seemed to me to justify,
by way of giving a psychological fillip, to those concerned, the determination and
finality of this series of War Damage Contributions. They have now ceased, and
reliefs to an amount of some 40,000,000 a year have, therefore, already been
granted to a very large number of taxpayers who were previously paying this

Inland Revenue
Now I desire to turn to the general field of the Inland Revenue. In addition
to the legislation needed to give effect to certain proposals which I will mention in
a moment, the Finance Bill will contain other proposals which are a legacy from
the first Finance Bill of this year; and the Resolutions which I shall table have
been framed accordingly. Some of these are important. For example, one relates
to the Legislation necessary to ratify the Double Taxation Agreement, which has
been made between this country and the United States.

( The Interim Budget 605

I will now, if I may, reveal to the Committee a number of changes which I pro-
pose to make in the Income Tax and in the Surtax. None of these, however, will
take effect before the next Financial year, and for this reason I must rhention here
a point of procedure.

Income Tax Changes
The existing practice of the House is that Income Tax and Surtax, being
annual taxes, are founded 6n Resolutions passed in this Committee at the begin-
ning of the year to which they apply. I must therefore ask the Committee to pass
a Resolution, which will be tabled in the next day or two, authorizing me to in-
clude in the coming Finance Bill the changes which I am now going to indicate,
and which will take effect as from April next. They will be announced now, so
that all concerned will realize, as I think it is advantageous and in the general
interest that they should, the plan according to which we are working.
I propose first to stop, at the end of this financial year, the creation of new
post-war credits for Income Tax payers. Second, I propose to raise some of the
Income Tax allowances. Third, I propose to reduce the Standard Rate of tax; and,
fourth, I propose to increase the Surtax.
The Income Tax post-war credit dates from 1941. Part of each year's Income
Tax has been treated, in effect, as a forced loan from the taxpayer-a very brutal
operation! The total amount of post-war credits accumulated up to the end of last
March was some 575,000,000. It is estimated that the present year will add
another 225,000,000 to this, and make a round total, up to the end of next
March, of 800,000,000. I propose that no new post-war credits should thereafter
be created, that is, after the end of this financial year, at the end of next March.
The repayment of the credits already created, either in whole or in part, cannot
as yet be safely undertaken, until the supply of goods is increased and the risk
of inflation is correspondingly diminished or lifted. So much for the post-war
I propose, in the second place, an increase in the personal allowances to in-
dividuals. The institution of the post-war credit coincided in 1941 with a reduc-
tion of those allowances and it would, therefore, seem natural to make some
comparable increase in them now that no new post-war credits are to be created after
the end of this financial year. But, quite apart from this, I am anxious to increase
these allowances on merits, regardless of the post-war credit arrangement, as one
of the first acts of tax relief for which I shall be responsible. The Income Tax has
pressed hardly in the last few years upon many people with small incomes, whether
small earnings or small rentier incomes, many of whom never paid the tax before.
There is plenty of evidence to show that it has depressed morale, reduced incentive,
and has, in the aggregate, diminished production. To this extent it has been a
bad tax, which must be judged, in the field I am now speaking of, as, on balance,
undesirable in relation to its effect upon productive activity.

Personal Allowances
I therefore propose, as from the beginning of the next financial year, to raise
the personal allowance for single persons from 80 to 110 a year, and for mar-
ried couples from 140 to 180 a year, and to raise the exemption limit from 110
to 120 a years This will bring all these allowances back, not merely to where
they stood in 1941, when the post-war credits were instituted, but to the pre-war
level, and it will wholly relieve from Income Tax at least 2,000,000 persons who
are now liable. It will also, of course, partly relieve, through increasing their
tax-free margin, all those who remain liable.

606 British Speeches of the Day

Following this increase in allowances, in the case of earned incomes-invest-
ment incomes would show a rather lower figure-no single person next year will
have to pay Income Tax unless his income exceeds 2 7s. a week. No married
couple without children will pay Income Tax next year unless their income exceeds
3 17s. a week; no married couple with one child unless.their income exceeds
4 18s. a week; no married couple with three children unless their income exceeds
7 Is. a week; and no married couple with five children unless their income
exceeds 9 3s. a week.

Standard Rate of Tax
I turn to the standard rate of Income Tax. I have reached the conclusion that
10s. in the , falling as it does, subject of course to the allowances I have been
speaking of, on all Income Tax payers from the richest to the poorest, is too
high a rate to be carried over into peacetime. I propose, therefore, as from the
beginning of next financial year, the first complete year of peace, to reduce the
standard rate by Is., from 10s. to 9s. in the . But if I were to do this and no
more, I should be treating the larger Income Tax payers too favorably, relatively
to the smaller, since a reduction in the standard of one-tenth, which is what I
propose, would relieve every Income Tax payer of one-tenth of his present liability.
This would mean much larger reliefs for the big man than for the small.
Therefore, I propose two further changes. First, I propose a new graduation
of the standard rate designed to make a further reduction of tax on the lower
level of taxable income. At present the first 165 of taxable income pays 6s. 6d.
in the , which is about two-thirds of the standard rate. The rest pays 10s. I pro-
pose that in future the first 50 shall pay only at one-third of the standard rate,
and the next 75 at only two-thirds of the standard rate. This means that next year
the first 50 of taxable income, after allowances have been deducted, will pay
at 3s. in the , the next 75 of taxable income will pay at 6s. in the , and the
remainder will pay at 9s. in the .

Finally, I propose to raise the Surtax scale, so as to recover from the richer
taxpayers the part of the standard rate relief, which otherwise would give them
too much compared with the rest of the community. One of our great achieve-
ments on the Home Front during the war, with the aid of a series of war Budgets,
has been a notable advance towards economic and social equality. Everybody has
recognized that in wartime this was right. If it was right for wartime, it is not
wrong for peace. We must not give ground now, when the men who won the
war are coming home. On the contrary, we must make a further advance towards
greater equality.
The Surtax is levied on a rising scale on successive slices of income above
2,000 a year, starting at a rate of 2s. in the applying to the first 500 slice, and
reaching a maximum rate of 9s. 6d. which is charged on all income in excess of
20,000 a year. .
The present scale of Surtax is very ragged and uneven, and I have taken this
opportunity to smooth it out and make it better looking, as well as to give it a
certain elevation, from 2,500 onwards, to a new maximum rate of 10s. 6d., as
against the present 9s. 6d., on all incomes in excess of 20,000. The details of
this new scale will be found in the Financial Statement which will be available in
the Vote Office when I have finished. The Committee will observe, if they study
the figures, that the new scale in effect takes back, on slices of income in excess
of 12,000 a year, the whole of the relief given by the shilling fall in the standard
rate. On slices of income above 2,500, 3d. out of the Is. is taken back; on slices

The Interim Budget

above 5,000 a year, a further 3d., making 6d., is taken back; on slices above
6,000, a further 3d., making 9d.; and on slices above 12,000 the full Is. is
taken back. Between 6,000 and 15,000 the increases are irregular, owing to the
irregularity of the present scale.
There are some 125,000 Surtax payers, of whom nearly 100,000 have incomes
of 5,000 a year or less. The remaining 25,000 have incomes of 5,000 a year
or more. My proposal substantially affects only the bigger people, who are rela-
tively few in number, and, it would not be denied, have an exceptional capacity to
pay. This increase of the Surtax scale is linked with the reduction in the standard
rate, and so will come into force in the charge for the year 1946-47. The Surtax
is an installment of the Income Tax collected in the year following the year for
which it is charged. Surtax falling to be collected in 1946-47 will be the Surtax
charged for 1945-46. The increased Surtax which I propose for 1946-47 will be
collected in 1947-48. As regards the Surtax for 1945-46, for which the standard
rate of Income Tax is still 10s., the existing scale of Surtax continues unincreased.
The total effect of this series of changes in Income Tax and Surtax is shown in
the tables in great detail in the Financial Statement. In these Tables the present
rates of tax for a number of specimen incomes are compared with the rates pro-
posed. It will be seen, from a study of the Tables of effective rates of tax, that
my proposals operate to steepen the slope of graduation. The rates on the lower
incomes are reduced more than those on the middle incomes, while rates on the
highest incomes are reduced least of all. In other words my proposals make the
tax more sharply progressive than before.

Effect of Changes on Revenue
The effect on the revenue is as follows. The changes in the Income Tax, as dis-
tinct from the Surtax, will result in an annual loss of revenue of 322,000,000
gross, as against the annual avoidance of a future liability for new post-war credits
amounting to 225,000,000 a year. Of this loss, the lifting of the personal allow-
ances will be responsible for 160,000,000 a year gross. The standard rate reduc-
tion will be responsible for 120,000,000 a year gross, and the change in the
graduation of the standard rate for 42,000,000 gross. If you subtract the avoid-
ance of liability on account of the creation of new post-war credits amounting to
225,000,000, from the annual loss of revenue which I have indicated of
322,000,000, it leaves an effective loss of revenue of 97,000,000.
But the new Surtax scale will bring in some 7,000,000 a year extra and, there-
fore, the effective loss on Income Tax and Surtax together is reduced to 90,000,000.
These figures of loss and gain of revenue have been struck at present levels of in-
come, but I hope the encouragement given by these general reliefs from tax will
lead to intensified production-particularly by Surtax payers-and, therefore, to
more abundant revenue. The changes in the Income Tax, both as regards allow-
ances and standard rates, will come into force for the year 1946-47 beginning
April 6th next. The coding of all the taxpayers coming under P.A.Y.E. will be
reviewed in the coming months so as to ensure that their P.A.Y.E. deductions
next year will accord with the new allowances. Employers will have the new Tax
Tables in good time before the first pay day of next year.

Appointed Day
There is another Income Tax matter which I might conveniently mention here,
as it is of special interest, I think, to industry. I propose that the "appointed
day" for the purposes of the Income Tax Act, 1945, and Part IV of the Finance
Act, 1944, shall be fixed at April 6th next. This is legislation introduced by my
predecessor which provides for allowances for Income Tax purposes in respect of

British Speeches of the Day

various kinds of capital expenditure by productive industry, including-most im-
portant-expenditure upon research, which we wish to encourage. We have not
had enough of it and we want to have more. This scheme of allowances was
agreed in the latter part of the last Parliament with a view to helping industrial
re-equipment. I am sure there will be general agreement that this should be
brought into operation without delay, and I have therefore fixed the appointed day
for April 6th next.

Capital Development
I have one final word on Income Tax. The reduction of the standard rate by
Is. benefits companies as well as individuals; but I hope that the resulting increase
in the net profits of companies will be spent on new and up-to-date plant and
will not go straight into the shareholders' pockets. We cannot afford that now.
In the national interest, capital development must stand in front of high dividends,
particularly in the critical next years when we have to convert and modernize at
high speed so large a part of our industrial outfit, much of which is badly out-
moded. Also, we must get cracking on exports without hesitation or delay. These
provisions are designed to facilitate and accelerate that effort, and I hope full ad-
advantage will be taken of them by those who will be entitled to claim the allow-
ances. I am sure that all the boldest and most far-sighted industrial leaders will
entirely agree that this is an urgent matter, and that we shall have their full co-
operation. I must, however, watch carefully how these first tax reliefs are used by
those who receive them, in regard to dividend policy and so on; and I must be
guided to some extent in my future consideration of further changes of taxation
by the response of industry and of taxpayers generally to this first step downwards
from the high levels of wartime taxation . .

Excess Profits Tax
E.P.T., at the rate of 100 per cent, is the perfect tax for a short war, but as the
war period lengthens, and still more as we enter upon the post-war period, it be-
comes less and less satisfactory in its general character and incidence. The rate of
standard profit in relation to which the excess for taxation purposes is calculated
is based on a certain year, and as the date of that standard profit recedes, the tax
becomes less and less equitable as between different businesses, and in particular,
falls with increasing and unjust severity, as the years go by, upon businesses with
a low standard. Moreover, once the standard profit has been earned, this tax
encourages extravagant and wasteful outlay, and even downright dishonesty, since
if this expenditure were not incurred it would be the Treasury and not the owners
of the business who would take the money. Under those conditions this tax works
against incentive and against efficiency.
These considerations apply particularly to E.P.T. at 100 per cent, but they
apply in some marked degree to this type of tax even at lower rates; and I have
carefully considered whether I could not now repeal the E.P.T. altogether and
substitute for it a new tax on profits which would bring in substantially, if not
precisely, equal revenue. I have considered in particular whether it would not
be better to substitute for E.P.T. a flat-rate tax on all profits, irrespective of
whether or not they were in excess of the profits of some standard year. Such a
tax has considerable attractions at first sight, but is open to objections-some of
them serious-one of which is that if such a tax were levied at a rate high enough
to bring in nearly as much revenue as the E.P.T. for which it would be substi-
tuted, it would fall very heavily on businesses which are not now subject to E.P.T.
at all but could not for that reason be exempted from the new substitute tax. I
have therefore decided to retain E.P.T. for the present, but to reduce the rate as
from January 1st next to 60 per cent. The present rate is nominally 100 per cent,

The Interim Budget

but is in reality 80 per cent, since a refund of 20 per cent of all the tax paid has
been provided for in pervious Finance Acts. It is in fact a tax of 80 per cent that
we are dialing with, and I propose to reduce it to 60 per cent. I shall, however,
continue to study the possibility between now and next April of alternatives to the
Excess Profits Tax. Meanwhile, I am leaving the National Defence Contribution
The Committee will, I am sure, appreciate that E.P.T. is a deduction for In-
come Tax purposes and therefore-this is a very encouraging thought to any
Chancellor of the Exchequer-against any loss of Revenue due to lowering the rate
of E.P.T., there is a gain of roughly one-half of this amount under the head of
Income Tax. For every of E.P.T. revenue relinquished by lowering the rate
of tax, 9s. will come back in increased Income Tax receipts, and a bit more in
It is nevertheless difficult to estimate with precision the cost to the Revenue of
reducing the rate to 60 per cent. For the current year the 100 per cent E.P.T. and
the National Defence Contribution were estimated by my predecessor--and I judge
'the estimate to be fulfilling itself with considerable exactitude-to yield on war
levels profits of 500,000,000, of which about 475,000,000 was E.P.T. and the
rest National Defence Contribution. One-fifth of this 475,000,000 ranks for
refund, so that the net yield, at war levels, of the 80 per cent rate is about 380,-
000,000. That is'at full war levels of profit in connection with war production.
The change-over to peacetime conditions, which is now being accomplished, will
mean a loss of Revenue from E.P.T. in any case, because the large war contracts,
which have been one of the chief sources of excess profits hitherto, are, of course,
tailing off, while expenditure on reconversion falls, under the present law, to be
deducted in the calculation of excess profits. -The best estimate I can make,
with the aid of my advisers, is that the continuance of the 80 per cent rate of
E.P.T. would produce about 250,000,000. On that basis, the reduction of the
rate to 60 per cent, taken by itself, costs something of the order of 60,000,000,
and since about half of this reappears in Income Tax under the fortunate arrange-
ment I have already referred to, the net cost to the Exchequer is of the order of
30,000,000 a year. The reduction in the rate that I propose will not mate-
rially affect E.P.T. yield in the coming year, since the tax charged for any year, is
not assessed and collected until the following year. Therefore, the yield of E.P.T.
during 1946-47 will largely consist of tax chargeable at the war rate for the pres-
ent year, and not at the 60 per cent rate chargeable for next year. We shall there-
fore have no immediate sharp fall in receipts from this tax.

The reduction of the rate to 60 per cent, as from January 1st next, enables
me to set in motion the repayment of the 20 per cent refund under Section 28 of
the Finance Act, 1941. I intend to speed up this repayment as much as I can. The
total amount of these refunds, due for the lifetime of the 100 per cent rate, is
about 450,000,000. But these refunds also, being repayments of E.P.T., are liable
to Income Tax, so that the net refund from the Exchequer will not be much more
than half this sum.
It is provided under the relevant Sections of the Finance Acts, 1941 and 1942,
that these refunds are to. be paid at such date as Parliament may determine, and
subject to such conditions as Parliament may fix. Arrangements will be necessary
to ensure that they are used for the purposes for which they were intended, namely
for the development and re-equipment of industry and are not-and here I quote
the words of a Section of an Act of Parliament passed under the Coalition Gov-

British Speeches of the Day

"distributed for the benefit of shareholders, whether by the payment of divi-
dends, by the issue of bonus shares or debentures, or by any other means
That was the language of the Coalition Government in wartime. We accept it
now, and we are going to give it back to them. The machinery to police this
arrangement may not be altogether simple, but it is being worked out; and I pro-
Spose that the Commissioners of Inland Revenue should be empowered to make
,interim payments, pending a final settlement of E.P.T. liabilities. The Finance
Bill will contain conditions which will govern the payment to ensure that the
money is not misused. It must be ploughed back into the business and not scat-
tered to the winds of heaven. These refunds will provide a net sum of about
250,000,000, which should be spent over the next few years in re-equipping
British industry, and in installing new machines for old-in many industries a
necessary and long overdue process.

Deficiency Payments
I now turned to the so-called "deficiency payments" under the present law.
The law provides that any concern which has paid any Excess Profits Tax in any
year is entitled to reclaim this from the Treasury, in whole or in part, if in any
subsequent year its profits fall below the standard, thus showing a deficiency. A
similar provision operating in the years after the last war greatly reduced the net
yield of the Excess Profits Duty of that time, and, indeed, in some years more
than offset the yield of the Duty to the Treasury. The Excess Profits Duty, in
certain years after the last war, showed a minus yield to the Treasury; the defici-
ency payments more than ate up the payments due under the assessment. This is
not a procedure which should be repeated. It might even pay a concern delib-
erately to sell at a loss in order to be able to undercut its competitors by attracting
a deficiency payment, under this provision of the law, from public funds. I,
therefore, propose to set a term to these deficiency payments and to provide that
nothing more shall be payable under this head in respect of any accounting period
after December 31, 1946.

Purchase Tax
The Committee will have observed that all the principal taxation changes which
I have mentioned so far will not come into force until next year. But there is
one relief which I propose should take effect forthwith, and this lies in the field
of the Purchase Tax. I propose to abolish the Purchase Tax completely over
a certain range of articles of special importance in connection with the housing
program. I propose to free from the tax a list of articles-it is not a long list
in the aggregate-which perhaps I might read to the Committee: coal and coke
stoves, grates and fireplaces; gas and electric fires; radiators and convectors; oil
heaters; coal and coke ranges; gas, electric and oil stoves; boiling rings, grillers
and hot plates; independent domestic boilers; geysers, immersion heaters and
similar water heaters; wash boilers and coppers, and finally, for summer time, re-
frigerators. All these articles are now taxed at 331/3 per cent of their wholesale value.
[Interruption.] Did some hon. Member mention furniture? I must carry my
hon. Friend's memory back to the brave days of the Coalition Government, when I
was President of the Board of Trade and when the right hon. Gentleman the
Member for the Scottish Universities (Sir. J. Anderson) was Chancellor of the
Exchequer, and we arranged between us to clear utility furniture from the Purchase
Tax altogether. No other furniture may legally be made even now. Therefore,
there is no need for me to intervene on furniture in this connection. [An HON.
MEMBER: "There is no furniture."] There is just a little. In regard to the list
of articles which I enumerated, I shall propose a Resolution to enable the new


Bank of England Bill 611

exemption to come into operation, as regards goods delivered by registered traders,
from tomorrow. I estimate that this abatement of the Purchase Tax will entail a
loss of about 1,000,000 in the current financial year and 10,000,000 in 1946-47.
All these articles are price controlled goods under the Goods and Services (Price
Control) Acts and the remission of tax will, therefore, be passed on to the pur-
chaser, with legal sanction behind it.

Tax Remission: Inflation Danger
I fear I have addressed the Committee at great length, and I must apologize for
taking so large an amount of time. But I would like to make one or two general
observations in conclusion. I have gone slow, deliberately and of set purpose.
I have gone slow in tax remissions for the moment, quite deliberately, because
there is an inflationary risk in any reduction of taxation, either now or in the
near future. Every reduction of taxation sets free purchasing power to run about
the world and chase scarce goods. It is a danger. That is why, except for these
concessions of Purchase Tax, I have postponed the operation of all my principal
tax remissions until the beginning of next year. Next April we shall all see the
picture much more clearly than any of us can see it now, including the best
crystal gazers of today. We shall be able to see it with the naked eye next
April. We shall then be able to see the progress that has been made with recon-
version and shall be able to judge the prospects of trade and production revenue
and expenditure. I may then be able, next April, to make some further proposals
to the Committee regarding changes, of one sort or another, in taxation.
Meanwhile, I have selected for announcement now such tax remissions, to
operate next year, as will, in my judgment, give the greatest incentive to the
greatest number. That has been my purpose. If I have judged rightly in this,
the inflationary risk involved in these tax remissions is at its lowest, and it is worth
taking for the sake of giving increased stimulus to economic activity generally.
Intensified production and a greater abundance of goods is our best counter to in-
flation. It is also essential, as I have already urged, that all expenditure which
has no national or social justification should be stubbornly forced down; and
also that saving out of income by all sections of our people should flow on in full
tide of unabated endeavor. This is an interim Budget, framed within three
months of this Government's taking office. It is the first of a series which, I hope,
will clearly exhibit an ever-developing and expanding plan, for a fuller national
life, as we move forward together, Session by Session, through what I hope and
believe will be an historic Parliament.
\ [House of Commons Debates]

House of Commons, October 29, 1945

Bill . contains only five Clauses and three Schedules; but I believe it does
the job which we intend to do. Clause 1 of the Bill provides for the transfer to
the Treasury of "the whole of the existing capital stock of the Bank of England,"
and for the issue of Government stock to stockholders in exchange for their hold-
ings. I will say more in a moment about the details. All that Clause 1 provides
for is an exchange of pieces of paper. Clause 2 provides that, on an appointed

612 British Speeches of the Day

day, the Governor, Deputy-Governor and Directors shall vacate their offices, and
that, on that same day, avoiding any gap or discontinuity, His Majesty shall appoint
a Governor, Deputy-Governor and a new Court of Directors, reduced, for purposes
of practical convenience, from 24 to 16 in number. Twenty-four seems rather
large. I will again comment further, in a moment, on this Clause; but I think it
may be convenient if I first run over the Clauses in outline. Clause 3 contains
consequential provisions which are not of the first importance. Clause 4 provides:
"The Treasury may from time to time give such directions to the Bank as,
after consultation with the Governor of the Bank, they think necessary in the
public interest"
but that-
"Subject to any such directions, the affairs of the Bank shall be managed
by the court of directors in accordance with such provisions (if any) in that
behalf as may be contained in any Charter of the Bank for the time being in
force and any bye-laws made thereunder."
We do not intend any day-to-day interference by the Government or the Treas-
ury with the ordinary work of the Bank. On the contrary, we intend to leave that
ordinary daily work, much of it of great importance, with confidence to the Direc-
tors and to their efficient and well-trained staff.
Clause 4, Sub-section (3) provides-and I gather there is some controversy
about this-that
"The Bank may, if they think it necessary in the public interest, request
information from and make recommendations to bankers, and may, if so
authorized by the Treasury, issue directions to any banker for the purpose of
securing that effect is given to any such request or recommendation."
I will say-a word or two about this Clause in due course.
The Anomaly of the Bank
That, apart from details in the Schedules, is the whole thing. I think it is
enough. Some people may think it is a bit too much. The Bank of England is
an institution with a long and very interesting history, dating back to 1694, as
we read. It has passed through many phases and vicissitudes, and has, over the
years, over the generations, and over the centuries, steadily extended from its first
beginnings both its functions and its responsibilities. It has been mixed up, from
time to time, in a great number of controversies, which some of us are still young
enough to remember; but, in spite of that-it does no one harm to be mixed up in
controversies-the Bank of England has long held a high place, and a deservedly
high place, both in the esteem of financial circles in this country and in the wide
world outside this little island. I make that statement sincerely, believing it to be
important that, at this moment, that should be said, lest there should be misunder-
standing of the purposes behind this Bill.
Yet, with the passage of time, and with the changes that history has brought
about in our economic and financial structure and in our ways of thought, the Bank
of England has become, in some respects, a strange anachronism. There is a
standard book . by Sir Cecil Kisch, on Central Banks. . .The author,
in the edition of 1932-and the date is of interest-points out that of all the Cen-
tral Banks in the pre-war world only two out of the whole number were not, at that
time, in greater or less degree, State institutions. The two exceptions were the
Bank of England and the German Reichsbank. We know what happened to the
Reichsbank. Is it not, indeed, a strange anomaly that, in this modern world, the
Bank of England should still be, in law, a private institution, owned by a rather
miscellaneous body of private stockholders who elect, from year to year--anybody
who happens to have bought 500 or more of this stock gets that right-the Gov-

Bank of England Bill

ernor and the Deputy-Governor of this most central banking institution? It is a
great tribute to British common sense and to our capacity for the successful prac-
tical working of theoretically indefensible arrangements that the Bank of England
has, in its present constitutional form, survived so long.

The Precedent of Other Banks
The right hon. Gentleman the Member for Woodford (Mr. Churchill) in the
Debate on the Address said:
"The National ownership of the Bank of England does not, in my opin-
ion, raise any matter of principle. . There are important examples in
the United States and in our Dominions of central banking institutions. .. ."
Owned and controlled by the State. That is quite true. We often hear of the
need for a united Empire policy, and this Government will, in due course, give
many examples of our devotion to that end. Let us begin this afternoon, and
have a united Empire policy on the organization of Central Banks. In Canada,
Australia and New Zealand the Central Bank is wholly State-owned and State-
controlled. In South Africa, the Government of the Union appoints the Governor
and the Deputy-Governor of the Central Bank, and also appoints three other
Directors out of a total board of eleven-not quite a majority, but nearly. Under
the South African Bank's constitution, although the capital of the Bank is still
nominally and legally held by private stockholders, there are many controls im-
posed by law on the Bank's activities. The South African Central Bank is thus
substantially State-controlled, and those in Australia and New Zealand are alto-
gether State-controlled and State-owned. Therefore, we may claim that this little
Bill, which I present this afternoon, brings the Old Country into line with the young
democratic Dominions beyond the sea, which is at it should be in this and other
matters later to be unfolded.

The Bill Legalizes the Actual Situation
There are two different lines of argument, reinforcing each other, but distinct,
which may be used in support of this Bill. The first is that this Bill, in effect,
brings the law into relation with the facts as they have gradually evolved over the
years. It brings the antiquated and out-moded constitution of the past into a form
which fits the practical realities of the present. That is one line of argument; we
make the law fit the facts. The second line of argument is even more important.
It is that by this Bill we ensure a smooth and efficient growth of our financial and
banking system, in order to meet the new needs of the future. This Government
have a mandate, an emphatic mandate for a five-year plan of economic develop-
ment . to lay the foundations of an economic plan for this country, and
a new social order. That is,what this great Labour majority is here for, and this
Bill is one of the foundations.
I have said that, in one aspect, this Bill only legalizes an actual situation.
The relations between the Bank of England and the Treasury have long been
close, confidential, even intimate; and so they must continue. But this relationship
has, until now, been factual rather than legal; and His Majesty's Government feel
-and the British people feel-that the time has now come when these two parties,
the Old Man of the Treasury and the Old Lady of Threadneedle Street, should be
legally married. We should not like to think that there was any danger of their
living in sin.

The Present Governor to Stay
I have already paid my tribute in this House to the present Governor of the
Bank, Lord Catto, and I have told the House that, to my great satisfaction, he has

British Speeches of the Day

expressed his willingness to continue to serve as Governor under the new dis-
pensation which this Bill will inaugurate. Lord Catto commands the confidence
both of His Majesty's Government and of all thoughtful and knowledgeable per-
sons in the City of London; and I count myself most fortunate in being able to rely
on the loyal co-operation, on the ripe experience, and on the unfailing public
spirit of this remarkable and distinguished man. He and the Bank have, in par-
ticular, rendered very conspicuous national service during the war; and I thank
him for it.

The Clauses: (1) Transfer of Stock
I turn now to deal with some of those Clauses in more detail. Clause 1 con-
cerns the terms of transfer of the stock. The terms of transfer of the Bank's stock
-what are commonly called "terms of compensation"-are, in my view, on the
one hand, fair to the shareholders, and, on the other hand, undoubtedly a good bar-
bargain for the State. I desire to emphasize that, though these terms of compen-
sation, for reasons which I will give in a moment, are fair and appropriate in this
Particular case, they are not to be regarded as a precedent for any subsequent
measure of nationalization. The terms of compensation must vary from one in-
stance to another, according to the merits of each case.
From the financial point of view, the Bank of England is by far the best of all
the propositions which we intend to nationalize in this country. Some of the others
are a bit depreciated; they show marks of private unenterprise. Not so the Bank
of England. "Safe as the Bank of England" is still an apt phrase, which means
what it says. The Bank's affairs have been most prudently managed for many
years. It has set a fine example, which others would have done well to follow a
little more closely, by steadily strengthening its position and by putting to reserve
each year a considerable part of its earnings. The Bank stock is a gilt-edged
security, a trustee security. It has changed hands, over a long period now, at a
price very close to that of comparable British Government securities, such as Local
Loans Stock. The Bank of England stock has maintained an unchanged dividend
of 12 per cent over the past 23 years, since 1922. This Bill, therefore, provides
that the stockholders shall receive a suitable quantity of a new 3 per cent Govern-
ment Stock, so as to assure to them the same income as they get now, at least
until the year 1966, when the Treasury will have the right to redeem this new stock
at par. To have offered terms less favorable than these would, in my view, have
been unfair to the stockholders, of whom there are some 17,000. The Bank stock
is fairly widely distributed; 10,000 out of the 17,000 stockholders hold less than
500 of Bank stock. The average holding of all the 17,000 is 850. On the other
hand, to have offered better terms than these would, in my view, have been unfair
to the community.
I have heard it argued that the stockholders should have received, in addition
to the continuance of their present incomes, some share in what is called the
"equity" or, less happily, "breakdown value" of the Bank. The Bank is not going
to be broken down; it is going to be built up. This claim to a share in the 'equity"
cannot be sustained. The fact that the Bank has accumulated large reserves, and
is the owner of a number of good buildings on valuable sites in different parts of
the country, must be taken to have been reflected for a considerable period in the
market value of the stock. Lord Norman himself, in a broadcast as long ago as
1939, when Governor of the Bank, said:
"In theory, the dividend paid on Bank Stock can vary, just like that paid
by any other company; but our proprietors have come to realize that serv-
ice, and not a larger dividend, is the first consideration. In fact, the divi-
dend has been unchanged for many years."

Bank of England Bill

A famous historian, Sir John Clapham of Cambridge, says in his History of the
Bank of England, a standard work of its kind, published last year:
"The Bank has ceased to think of raising the dividend on its stock, which
the market values as a very secure debenture."
I do not believe that any impartial body of arbitrators, or any court, would sustain
the claim of the stockholders to better terms than are provided in this Bill.
Under Clause 1 (4) the Bank will pay to the Treasury each year, in lieu of
dividends hitherto paid on the Bank stock, the sum of 1,746,360. That is equal
to the amount of the dividends hitherto paid for the last 22 years on an unchang-
ing quantity of Bank stock; and it will, in future, be paid over by the Bank to
the Treasury in place of being paid out to the shareholders. This sum which I
have mentioned may be varied up or down by agreement between the Treasury
and the Bank of England, from time to time. So much for the terms of compensation.

(2) Appointment of Governors and Directors
I turn now to Clause 2. As to the mode of selection of the new governing
body of the Bank, the present mode of election of the Governor, the Deputy-
Governor and the Court is, to put it mildly, a little odd. They are elected, for a
year at a time, by an Annual General Meeting of the shareholders, every stock-
holder who owns 500 or more nominal of the Bank stock being entitled to wield
one vote. I have made inquiries, and I have ascertained that attendance at these
meetings is not large. At the last half-yearly meeting, held some weeks ago--at
a moment, one would have thought, of some interest to the stockholders, since
it was immediately after the Government had announced their intention to
nationalize tle Bank, although the terms of the Bill had not yet been published-
there was a record attendance of stockholders to hear an address by the Governor
on the future of the Bank. The attendance was about 100 per cent. above the av-
erage. According to The Times about a dozen stockholders were present. I do not
conceal from you, Mr. Speaker, or from the House, that His Majesty's Government
have been deeply concerned to prevent, by the provisions of this Bill, any un-
fortunate slip-up in the future, consequent upon the large-scale abstention from
these meetings of those entitled to attend. It would be quite easy for a relatively
small number of stockholders, having concerted their plans beforehand, to present
themselves at one of these meetings and vote out of office the Governor, Deputy-
some prearranged ticket of entirely undesirable persons. That is quite possible
under the present law. .. .
For the future I propose, on behalf of the Government, that the Governor,
the Deputy-Governor and the Directors, the latter being reduced, for practical
convenience, from 24 to 16, making 18 with the Governor and the Deputy-Gov-
ernor, should be appointed by the Crown. This will unquestionably enhance the
prestige of those so appointed as compared with the present not very dignified
method of their selection. It is, moreover, provided in the Bill that of the 16 there
shall be an annual renewal of four each year. .
Appointment by the-Crown means appointment by His Majesty on the advice
of Ministers. It would be possible, and indeed it would no doubt become regular
under the new constitution we are devising, for periodical debates to take place,
as they cannot take-place now while the Bank is nominally private, upon the gen-
eral policy of the Bank and monetary and credit policy generally, in which debates
Ministers would be responsible on all the larger issues. The Minister most naturally
responsible would be the Chancellor of the Exchequer.
As I have said, out of the 16 Directors, four will retire annually. They will
be eligible for reappointment. We propose that the Governor and the Deputy-

British Speeches of the Day

Governor should have a five-year term, likewise being eligible for reappointment.
By this plan we 'shall be able constantly to reinforce old experience with new
blood. I wish to make it clear that it is not intended that there should be repre-
sentation of any sectional interest whatever on the Court. No one will be entitled
to say, "I speak on behalf of this, that or the other section of the community." We
shall advise His Majesty to place upon the court persons of suitable and varied-
I emphasize "varied"-ability and knowledge, and we shall seek in particular so
to compose the Court as adequately to reflect industrial as well as financial expe-
rience. It has "often been said that finance should be the servant of industry and
the nation. It has not always been so in the past; we shall seek so to compose the
Court of the Bank that it shall be more nearly so in future.
As to the age of the Directors, there is an unwritten rule, I am told, which
operated in peacetime, that no Director of the Bank should be over 70 years of
age. In wartime this limit has, quite naturally, in some cases been exceeded; but,
in- future, I consider that this.rule should be generally followed, which means that,
normally, no person over 66 will either be appointed or be reappointed for a
four-year term.

(4) Treasury Control; the Bank's Power Over Other Banks
I come now to Clause 4. Sub-section (1) of this Clause makes plain that in
the last resort, as between the Treasury and the Bank of England, the Treasury
has got to have the last word, after due consultation with the Governor of the Bank,
in any case of disagreement. This is only bringing the law into relation with the
facts. I shall be very much surprised if it proves necessary, save in very exceptional
and' unusual cases, for the Treasury to use the power given to it under Clause 4,
Sub-section (1), of issuing directions to the Bank; but the power is there, if
need be.
Clause 4, Sub-section (3),is a very simple and straightforward provision. It
is designed to give effect to the mandate which the Government received from the
country to ensure
"that the operations of the other banks are harmonized with industrial
This provision is, deliberately, very broadly drawn, but it is also very carefully
worded. It makes it plain, I hope, that it is on the initiative of the Bank of Eng-
land itself and by the Bank of England, although with the authority of the Treasury
behind it, if desired by the Bank, that directions, if ever necessary, will be served
by the Bank of England upon the other Banks. The Bank of England is the initiat-
ing force, in the operation of this Sub-section. It is easy for theorists to pick holes
in this or in any similar provision, or to conjure up fanciful dangers from the
depths of their own imaginations; but we British people have a habit-this is part
of our greatness-of working sensibly together within the framework of the law,
which we interpret reasonably. I do not myself anticipate that in practice it will
often be necessary for the Bank of England to use the power given under this Sub-
section, to issue directions; but I am sure it is necessary for this power to be there.
In the last resort, if ever we get there-we do not get there so often as theorists
expect or as melodramatists of the extreme Left or extreme Right imagine-in the
last resort, as a matter of principle, if there be a serious case of conflict or challenge,
the Bank of England must be the master and the leader of the clearing banks. We
British do not normally push things to these extremities of doctrine; but there is
the statement of principle.
I was very glad to read in the Press, on the day following the publication of
this Bill and following a meeting at which the Governor of the Bank of England,

Bank of England Bill

at my request and with my authority, saw the chairmen of the clearing banks and
explained the provisions of the Bill to them, that Mr. Colin Campbell, the chair-
man of the National Provincial Bank-the highly respected "elder statesman" of
the bank chairmen, if I may so describe him-said:
"Having read this Bill, I think the good relations which have always
existed between the Treasury, the Bank of England and the Joint Stock
Banks are likely to continue."
I pay more heed to this responsible statement than to some of the hysterical fore-
bodings of partisans in or out of the House..

The Bank Not Empowered to Learn Private Information
I understand there is some apprehension in some quarters lest the provisions
of Clause 4, Sub-section (3), should be used in order to compel the clearing banks
to reveal through the Bank of England to the Treasury the private affairs of their
clients or depositors. I do not know whether any hon. Member feels apprehension
about that-apparently not-but it has been hinted outside, and I am..anxious to
deal with it. I can say at once that this apprehension is completely unfounded. It
need rob no one of his sleep. The Government have no intention of using this
provision in that way. If it were a case of tax evasion or other illegal action, we
have other powers, under other Statutes, sufficient, I hope, to deal with that. And
if not, those other Statutes, through which the Inland Revenue operates, must be
strengthened. But this is not the Bill for that purpose. This Bill is not aimed at
forcing disclosure of any confidential or private information in order to deal with
those-and there are some of them-who may be trying to "dodge the column"
of honest citizens. If we want more powers to deal with that sort of person, we
shall take them under other Statutes. To make this plain, I should be prepared,
when the Bill is being considered in Committee, to propose an Amendment cover-
ing this particular point, in order to lay at rest any fears that may have been
aroused on this subject. But having said this, having offered this concession in a
spirit of conciliation, I hope the Opposition, now that this misapprehension has
been removed, will support the Second Reading of the Bill. I hope they will; if
not, we will take a vote and then see who will win. But the general, and delib-
erately wide, powers conferred upon the Bank of England, with the authority of
the Treasury behind it, contained in this Clause, are, in the view of the Govern-
ment, essential in order to assure the successful working of our Five-Year
Plan. ...
RT. HON. SIR JOHN ANDERSON (National): Rarely in the history of Par-
liament can a Measure of first-class importance--and this is a Measure of first-
class importance-have been commended to the House in a speech more devoid
of argument directed to the substance and merit of the general proposition which
was being put to the House. After listening to the right hon. Gentleman, I am
confirmed in the opinion at which I had already arrived, that this is an unfortunate
and quite unsatisfactory Bill. Let us realize clearly-and I am bound to say that
the right hon. Gentleman helped us very much in that direction-what is happen-
ing. It is surely this. In response to some ideological urge, a relationship, molded
by long tradition, is being replaced by formal enactment. We are surely entitled
to ask why, in view of the very satisfactory working, to which the right hon. Gen-
tleman bore witness, of the existing arrangements-and I entirely agree with what
he said on that point-all this should be necessary.

An Enormity
If anyone were to propose to replace the unwritten Constitution of this coun-
try by a series of precise legislative formulae, everyone would cry out in horror

617 '

British Speeches of the Day

Yet that is exactly what the right.hon. Gentleman and his friends are doing here
over a small part of the field. Even assuming-as I am prepared to do-a desire
to put practically the whole of the existing system behind a slightly different
facade, that is, as I think the right hon. Gentleman would be bound to admit, not
an easy task, and he must expect criticism on that score, of particular provisions in
the Bill, which, I think, show that the task has not been successfully accomplished.
But general criticisms of this kind do not lay bare the full enormity-I would
even use that word--of what is being done. There is, as my right hon. Friend the
Member for Woodford (Mr. Churchill) said when the Government's policy id this
matter was first announced, nothing out of the way in bringing a central bank
under public ownership. The right hon. Gentleman made a great deal of play
with that in the course of his speech, but surely, it must be recognized that this
is no ordinary central bank. We are dealing with an institution of a quite unique
character, not merely a national institution. The Bank of England has an inter-
national status not shared by any other central bank. It is, for example, the chosen
instrument-if that is not an unfortunate expression-for the management of the
sterling currency. Sterling is not merely the affair of this country. It is an inter-
national currency, in a sense in which no other currency in the world could be so
described. I should certainly have thought that Ministers were anxious to preserve
the essential features of the sterling area, and even to bring about expansions of
that area, and that they would have thought twice before undertaking this drastic
operation upon the nerve centre of the whole monetary system.

The Fear of Ideological Pride
Have the Government considered that aspect? Of course, other countries using
sterling need only use it as long as it suits them. Their confidence, warranted by
long experience of the existing institution, is not likely to be increased by the
thought that a Government over which they have no control, a Government whose
interests may differ from their own, may be going to start interfering. I do not
believe that the Government really have any intention of doing that, but I think
I have indicated some very good reasons to reinforce what the right hon. Gentle-
man himself has already said why they should not do so. I can see that if they
do not interfere, no great harm may be done by this, in my judgment, wholly
unnecessary Bill. In fact, everything is going to depend on the spirit in which this
Bill will be worked. But I do beg the right hon. Gentleman to let no ideological
motive, no ideological pride, if I may put it like that, stand in the way of giving
the fullest reassurance to this House, to the country, and to all the other countries
which have hitherto collaborated with us in monetary and financial matters.

The Staff and Organization
Now I come to some of the details of the Bill. The right hon. Gentleman told
us nothing about what he might have in mind about the staff and the organization of
the Bank. It may be-I hope it is so-that he contemplates leaving these matters,
as they have been, in the hands of the directors, but I am sure that he will be
alive to the possible embarrassments that might result from the existence of a large
organization, throughout which standards different from those to which we are
accustomed in the Public Departments obtain. It is quite conceivable that, in the
course of time, such a difference, which I think myself is inevitable, may be a
source of inconvenience, or even embarrassment. I have no criticism whatever to
offer of the basis of compensation for stockholders proposed in this Bill, and I
agree with what the right hon. Gentleman said about it not being proper to regard
this as a precedent for other cases. Such a matter has, in my judgment, to be de-
termined in relation to the facts of a particular case. I welcome the provision for

Bank of England Bill

the appointment of the Governor, Deputy-Governor and directors for a fixed term
in each case. I think that will make for stability, continuity and confidence.

Clause 4
I come now to Clause 4, which, in my opinion, is unquestionably the part of
the Bill most likely to create controversy, and the wording of Clause 4, in my view,
illustrates very well what I said a moment ago about the difficulty of drafting a
Measure of this character, which is designed, as the right hon. Gentleman said, to
bring the law into line with the facts, because the facts are really somewhat com-
plicated and this Bill, as the right hon. Gentleman said, as far as its wording is
concerned, is a very simple Bill. The right hon. Gentleman was good enough,
when he was dealing with the provisions of Clause 4 (3), to. give us some re-
assurance on the question of disclosure of facts with regard to individual accounts,
and he offered to consider in Committee some suitable Amendment, if it is desired
to have the matter put beyond all possibility of doubt. I am not at all sure at the
moment whether it will be possible to devise an Amendment on this point which
is not open to objection from some point of view or another, but we must see.
However, that is not by any means the only point on which I-and I am' speaking
personally here-would desire reassurance in regard to Clause 4.
I am sure the right hon. Gentleman will realize that it is not simply a question
of what the present Government might wish to do if and when this Bill becomes
law. What we want to be sure about is what powers are lurking behind the very
wide wording of Clause 4. Does the Clause, for example, enable the Government
to interfere, through the Bank, in the matter of the fluidity ratio which governs
banking policy-the ratio between liquid resources and total deposits? Would it
be possible, in the view of the right hon. Gentleman, for the Government to
intervene effectively, through their power under Clause 4 (1), to give directions
to the Court, and, under Clause 4 (3), to confirm by directions a recommendation
from the Court? If, in the view of the right hon. Gentleman's advisers, the Bill
is wide enough to cover such interference, I would certainly desire to see safe-
guarding words inserted.
Then there is another question of great importance. The directors of joint
stock banks 'occupy a position of trusteeship for their shareholders and also for
their depositors. How can powers which the Government propose to take under
Clause 4 (3) be reconciled with the maintenance of that necessary position of
trusteeship? On that point, may I say, in reply to some rather flippant observa-
tions which the right hon. Gentleman made at the end of his speech, that I have
never heard of directors of a bank using their position in order to influence the
policy of the bank in accordance with any particular party view? It is an un-
warranted suggestion, and such a course, in my view, would certainly involve a
breach of trust.
I put these points in all seriousness to the right hon. Gentleman. I hope the
Government speaker who winds up this Debate will be able to supplement the
assurances that the right hon. Gentleman gave, by dealing with the further points
which I have just brought to his notice, and, for my part, my attitude, when we
come to the end of the day, will depend upon the assurances so given.
[House of Commons Debates]

British Speeches of the Day

House of Commons, October 10, 1945

His Majesty's Government have given careful consideration to the future of
Malaya and the need to promote the sense of unity and common citizenship which
will develop the country's strength and capacity in due course for self-government
within the British Commonwealth. Our policy will call for a constitutional union
of Malaya and for. the institution of a Malayan citizenship which will give equal
citizenship rights to those who can claim Malaya to be their homeland. For these
purposes fresh agreements will need to be arranged with the Malay State Rulers,
and fresh constitutional measures for the Straits Settlement. I should make it clear
that the British character and British citizenship attaching to all the present Settle-
ments will not be affected by the constitutional measures we have in mind.
The Malayan Union will consist of the nine States in the Malay Peninsula
and of the two British Settlements of Penang and Malacca. The Settlement of
Singapore at this stage requires separate constitutional treatment and in view of
its special economic'and other interests provision will be made for it to be con-
stituted as a separate Colony. His Majesty's Government are, however, well
aware of the many ties between Singapore and the mainland, and that these ties
may well work towards ultimate union. This will be a matter for the Govern-
ments of the Malayan Union and Singapore to consider in due course.
The peoples of the Settlement of Penang (with Province Wellesley) and
Malacca will lose none of their rights as British citizens, and it is as British
Settlements, with their own appropriate institutions of local government no less
than those in the States, that Penang and Malacca will form part of the Malayan
Union. His Majesty's Government have carefully considered the new constitu-
tional measures necessary for the political, economic and social advancement of
Malaya, and have decided that fresh Agreements with the several Malay Rulers
need first to be arranged which will enable His Majesty to possess and exercise
full jurisdiction in the Malay States. Sir Harold MacMichael has accordingly been
appointed to visit Malaya as a Special Representative of His Majesty's Government
to arrange Agreements with the Rulers for this purpose. When His Majesty
possesses jurisdiction, it is intended by Order in Council to constitute the Malayan
There will also be created a Malayan Union citizenship, for which the qualifica-
tions will be birth in Malaya or a suitable period of residence. They will be
citizens of Malaya, with all the rights and obligations which that term implies.
No one must rely upon past privilege, or regard Malaya simply as a source of
material wealth. While it is to the advantage of all the world and not only
Malaya that the production of her mineral and agricultural resources should be
restored and developed by industry and research, it is right that the Malayan people
should be assured of their full share in the rewards of their industry and should
be able to feel the country's wealth reflected in their own standard of life.
[House of Commons Debates]

Ceylon's New Constitution

House of Commons, October 31, 1945

Mr. Speaker, with your permission and the permission of the House, I ask to be
allowed to make a short statement on the proposed constitutional changes in Ceylon.
I am presenting to the House this afternoon a White Paper embodying a state-
ment of policy by His Majesty's Government on Constitutional Reform in Ceylon,
which indicates the conclusions which His Majesty's Government have reached on
the recommendations made in the Report of the Commission which visited Ceylon
under the chairmanship of Lord Soulbury. The main decisions reached by His
Majesty's Government are stated id paragraph 10 of the White Pager, copies of
which Members will be able to obtain at the Vote Office at five o'clock. This
paragraph reads as follows:
"His Majesty's Government are in sympathy with the desire of the
people of Ceylon to advance towards Dominion status and they are anxious
to co-operate with them to that end. With this in mind His Majesty's
Government have reached the conclusion that a Constitution on the gen-
eral lines proposed by the Soulbury Commission (which also conforms in
broad outline, save as regards the Second Chamber, with the constitutional
scheme put forward by the Ceylon Ministers themselves) will provide a
workable basis fdr constitutional progress in Ceylon.
Experience of the working of Parliamentary institutions in the British
Commonwealth has shown that advance to Dominion status has been
effected by modification of existing Constitutions and by the establishment
of conventions which have grown up in actual practice.
Legislation such as the Statute of Westminster has been the recognition
of constitutional advances already achieved rather than the instrument by
which they were secured. It is, therefore, the hope of His Majesty's Gov-
ernment, that the new Constitution will be accepted by the people of Ceylon
with a determination so to work it that in a comparatively short space of
time such Dominion status will be evolved. The actual length of time
occupied by this evolutionary process must depend upon the experience
gained under the new Constitution by the people of Ceylon."
As I have indicated, His Majesty's Government have decided to offer the
people of Ceylon a Constitution on the general lines proposed by the Soulbury
Commission, with some modifications which are indicated in the White Paper,
and are anxious that Ceylon should continue to advance towards Dominion status.
His Majesty's Government propose, therefore, to press forward to the achievement
of that objective guided by the practical experience which the Constitution now
offered will afford.
[House of Commons Debates]

622 British Speeches of the Day


House of Commons, October 26, 1945


Bevin): There are two kinds of hunger in Europe today. One is physical hunger,
but I sometimes think, from the information which reaches me, that the awful
black-out over Europe is creating in that great territory a spiritual hunger which
is more devastating even than physical hunger. If every country could get free
Parliaments and free expression without dictatorship or orders, and if people
could express themselves freely on these vexed problems, we might make a better
world for the future than we have experienced in the last 25 years.
The problem we are facing today is not a problem exclusively confined to this
war. It is realy the culmination of nearly a 30 years' war, for we have not only
had the refugee problem, the displaced persons problem, the hunger problem and
the denial of freedom since and during this war, but it went on in varying de-
grees pretty well all over Europe from 1914 till now. Some of the most terrible
cases we have to face are due to the setting of people against people for reasons
of military hierarchy or strategy between the two wars and during this war. I
do not think there is anything worse in the world or more criminal than for
statesmen to achieve their objects by stirring up racial hatreds and setting people
against each other in various parts of the world. It is said that we want to outlaw
war. I would in public first try to outlaw that as well if it were possible, because,
however military leaders may desire this, let the people live their own lives what-
ever their nationality, and in the main the ordinary folk will live happily together.
They never attack one another unless they are set about one another for some
ulterior motive, for reasons of strategy or something of that character. Even now
that is the doctrine which I think will have to be accepted if we are finally tb settle
Europe on peaceable terms.
The Government, like every Member of the House and the country, are only
too keenly aware of the situation facing Europe today. Some six weeks ago it
seemed to me, from the reports that I received, that, unless some definite steps
were taken and every means at our disposal were utilized, we were in danger of
a terrible epidemic in Europe this winter. I pointed out at that time, both to other
countries and to my colleagues, that, while the Channel could be used to stop
Germans, it cannot stop germs. You cannot limit the devastation of an epidemic
by a frontier or a strategic post. Having regard to the terrible epidemic of 1918,
which, incidentally, killed more people than we lost in the war, hunger and
privation may bring a further terrific human loss more devastating even than the
atomic bomb. The House needs to realize how difficult it is to damp down and
get control of all the things that occurred in leading up to and during the war and
the human prejudices that have been accentuated thereby. This has a great bearing
upon Poland, Czechoslovakia and the Eastern countries in their great desire to
turn the Germans out. I should not like sweeping generalizations to be made; I
think they are dangerous. Let it be remembered that many of those people who
have been driven back into Germany proper today were people who were taken
by Hitler and put on the farms of the Poles and others. This is not a beginning.
This is a development of what has already occurred, and when these people come
back into their territories they naturally want their homes and their lands back.

Starvation in Europe

A Sense of Proportion
You have also a democratic country like Czechoslovakia was, and, I hope, will
be again, which did its best under great provocation to settle as between Czechs,
Slovaks and Sudeten Germans. As one who has known the international move-
ment for 35 years and has met them in the trade unions and everywhere else, I
ask Members to believe me when I say that, if left alone, there is not ,s much
difference between these three peoples as there is between Scotsmen, Welshmen
and Englishmen. If they are left alone economically -and not stirred up, they
always live together in perfect harmony. Then Henlein came along with all the
stooges and agents of Hitler and broke up what was a great effort to create and
build up a democratic State.
I do not think we need be too hard on Poland or Czechoslovakia. I am never
tired of reminding this House and the country how long it has taken to build this
State of ours. It has not been done in a minute. Poland was under bondage for
150 years, divided and cut up, and yet she preserved her nationality and culture
in an amazing manner. Czechoslovakia, dominated by Austro-Hungary, had only
21 years to build a State, and no one can examine that 21 years without being
filled with admiration at what they achieved. Then Hitler came along and used
this minority crowd for ulterior motives. He destroyed their work, invaded their
country and did everything of the most devastating kind. I cannot get out of my
head that if somebody did that to me, that i# I had helped to create an organiza-
tion of that character and my life's work was broken up, I could not feel very
affectionate when the victory turned the other way. We really want to keep a
sense of proportion in dealing with this terrible problem.
MR. SYDNEY SILVERMAN (Labour): Of course, not all the Germans in
Sudetenland took Henlein's side.

Revenge and Anarchy
MR. BEVIN: I am asking my hon. Friends to keep a sense of proportion. If
one had to handle a strike, as I have had to do, and found blacklegs coming in, it
was not easy to forgive them for a considerable time. That never takes place in
the law, so my hon. Friend has never had the experience.
It is quite true that revenge is sometimes as indiscriminate in its effects as
the action for which it is taken, but there is this difference-one is the letting
loose of an uncontrollable passion, the other is deliberate, organized and directed
o a given objective. In order to keep a right sense of proportion I would ask the
House to remember that we have never had it here. All the countries of Europe
have had their Governmental machines completely destroyed. They have been
overrun twice. I would ask hon. Members to imagine what this country would be
like if it had been invaded by two armies, and the whole machinery of the Govern-
ment had been entirely destroyed. Could we expect a new and improvised organ-
ism, brought into' being in six months, to handle the situation to perfection?
Really, it is asking the impossible.
I submit another consideration. For months, in the Coalition Government, we
studied objectively the kind of situation we should have to face at the end of the
war. We thought at one time that there might possibly be some form of central
government left in Germany, something on which we could get a grip, and which
would form a basis. But as the war went on, it became obvious to us all that the
Hitler regime intended, if it could not win, to leave Europe in a state of complete
anarchy. We had to alter our plans accordingly, and devise a system which would
take the place of a nonexistent organization. Such a state of-affairs is hardly ever
found even in a native country. There is always the head-man, or some form of

British Speeches of the Day

organism. Germany, however, was left in a state of complete anarchy, the leaders
gone, and the whole machine broken down.

Zones and Spheres of Influence
It may be said that we were wrong to develop zones. Looking back, I think it
would probably have been better if we had not done so, but there are very grave
political considerations which I do not wish to introduce into this Debate except
to say this: in the middle of a war you cannot eradicate confusion and all the
rest of it unless you draw some line where your armies are going to stop. It is
more easy to enter into a fight than to stop it, and it is the question of how, when
and where you will stop it that is always the great difficulty, especially under the
conditions I have mentioned with 70,000,000 people in a state of anarchy. I long
for the day when all nations will put their trust in a world organization, because I
do not think that frontiers and spheres of influence are as important as they used
to be, in view of the development of science. I do not believe that the transfer
of territory means so much in security. But there it is-nations which have been
attacked look for security, and that search has a great bearing on their attitude of
mind. The only way in which a situation like this can be resolved, is to allow the
smoke of war to drift gradually away, to let fear die down, and confidence and
co-operation take its place. I am not unhopeful that, in spite of differences, that
will develop before long. ,

Germany's Lost Power of Decision
There is another matter of which I would remind the House, and that is that
we spent six years inflicting the maximum damage on Germany. However hard
the last war was, it was fought along certain lines, and behind those lines on either
side there was not very much damage. Factories and the rest were left. But in
aerial war we inflicted the maximum possible damage almost to the uttermost
village where a works was to be found throughout that great territory. So, we
face not only complete anarchy, but the damage done to German capacity, and
however optimistic we may be, it is impossible for a nation like that to recover
overnight. Another thing that has handicapped us is that, owing to the destruction
of all freedom in Germany, it did not matter what we told them; they did not
heed our warnings. We dropped thousands of leaflets pointing out what the food
situation would be if they prolonged the war, but they had no means of expressing
themselves. Not only had they no means of expressing themselves, but a nation
which has lived under a dictatorship for 20 or even 10 years almost entirely loses
the use of its reason. That has been our experience in dealing with these countries;
they have no sense of judgment, because so long as there is a dictator at the top
giving all decisions, the power of decision is lost lower down. I think that one
of the greatest tributes to democracy is that it retains the power of responsibility
and decision. The problem is very serious in Germany and in the neighboring
countries including Austria, and the Motion on the Paper calls upon His
Majesty's Government to do a number of things ....

Anything we can do, by ourselves, in this matter, more than we are already
doing, is very limited. I mentioned just now the fear of an epidemic, and I would
ask my right hon. Friend, who spoke first, to appreciate that we have to build a
defense. We are searching the quartermaster's stores, we are doing everything we
can with vitamins and everything else to try to build, as it were, a cordon
sanitaire by feeding the people in this area as much as we can. But resistance in
our own country, with a few ounces of fat per week, is pretty low, and we have

Starvation in Europe

to balance that resistance in our own country against what we do overseas. The
Government are trying to keep a balanced ration, which my right hon. Friend the
Minister of Food will deal with later, and the two things must, from the foreign
policy point of view, be kept very carefully balanced.
The shortages in Europe are due, in part, to the failure of exporting countries
to make a maximum contribution to the needs of the world. Additional supplies,
on a scale sufficient to bring any widespread relief, must be organized on an
international basis, with the co-operation, in particular, of the exporting countries.
We must look to them to make a much bigger contribution. For instance, I
should like to see much less wheat being fed to livestock in North America and
more maize and other foodstuffs shipped from South America. Here the difficulty
arises of a great political difference with regard to the Argentine. My information
is that the Argentine is now burning maize for fuel because they cannot get any
oil. If we could put the heavy oil and fuel into the Argentine, take the maize
from the Argentine for the United' States, Canada and ourselves, and then divert
wheat to the people of Europe, it would be a perfectly commonsense thing to do.
But politics intervene, and that is one of the troubles that I cannot deal with this
morning. I have tried to do my best in my own field to get over that difficulty,
because I am satisfied that the demands made by Field-Marshal Montgomery,
General Eisenhower and others for wheat must be met, if we are to avoid a worse
disaster this year. But the wheat must come from the territories which have it;
there is no other way.

Contributions to UNRRA
I have been asked about UNRRA. This is an interesting moment, and I have
to be very careful what I say, because Congress is now debating whether it will
give another 450,000,000 to UNRRA. It that vote is not carried, UNRRA will
be broken, and the situation which we shall face in a few weeks' time will be
disastrous. I can only hope that our friends in the United States will agree to
make that contribution. Difficult as our own financial situation is-and it is diffi-
cult-we readily agreed to pay our 1 per cent. of our national income, if America
did the same. That additional grant will help us considerably to tide over the
winter. If anything I say from this Box today will help our American friends
to make up their minds, I think it will be the fact that, with that grant, UNRRA
will be able to get on with its work. It has been said that UNRRA came in with
great trumpets. That is the misfortune of having a Press conference at the birth.
You do not know how the infant will grow up. It is the custom now when any-
thing is organized to open with a great Press conference, and things are painted
in too lurid colors. ....

UNRRA's Efficiency
The difficulties of UNRRA were inevitable-the difficulty of bringing a new
organization into so many countries, the difficulty of getting personnel, the claims
for experts over such a wide field, all made the building up of UNRRA extremely
difficult. But let me say that I regard the evolution of UNRRA in the last two
months as most remarkable from the point of view of its efficiency. The change
in personnel, the opportunity with the end of the war to release certain military
officers and organizers, and thus to give UNRRA a better start, has been of great
advantage. But while we have done that we have had to bring Austria and Italy
and the Ukraine into the ambit of UNRRA's responsibilities, so that while
UNRRA will be growing in strength and efficiency, given the necessary money,
the responsibilities which UNRRA is undertaking are growing as well.

British Speeches of the Day

Transfers of Population
I have already described the transfers of population due to the first invasion by
Hitler. Now I come to the transfers-due to the defeat of Hitler. When I reached
Potsdam I was faced with this situation that from the Neisse to the Oder almost
the whole area had been very nearly cleared. It was a vacuum. Between the east-
ern and western Neisse the people had gone out ahead of the advancing armies.
There were coal mines there and you had to get them to work. I would not agree
.to final frontiers, but it was obvious that the right thing to do administratively
was to put this area in the Polish zone. That gave them the Oder for their trans-
port, and gave them a chance to get their economy going; for it must be remem-
bered that owing to the adoption of the Curzon Line between 2,000,000 and
3,000,000 Poles have been given the option to move from the east of the Curzon
Line back into the new Poland, and, so far as transport will allow, large numbers
of them are moving west into the new Poland. Then we took steps to prevent
the drive that was going on from both Czechoslovakia and from Poland into
Germany by a decision that there should be a hold-up, but the evidence at the
moment is that some of the Germans are drifting back into the Polish zone, and
east of Stettin there is a tendency for those who went out to come back-in slight

Slave Labor and Displaced Germans
But that is not the only thing. There were millions of people in Germany
and the East, who had been brought there as slave labor, who were displaced
persons. The House will appreciate the position better in terms of figures, as far
as we can get them. Something like 4,000,000 Germans have left Poland--that is.
East Prussia, the new Poland and down to Stettin. Czechoslovakia, Hungary and
other countries added large numbers. It is impossible to give a correct estimate,
but as far as we can say there would be another 4,000,000 to 4,500,000, making.
about 9,000,000. Then there were the 2,500,000 moving into Poland. Then there'
were the 3,000,000 Czechoslovakian Sudeten Germans being moved into Austria.
So there were anything from 14,000,000 to 15,000,000 people all moving at
once, some one way and-some the other, and there were 10,000,000 displaced
persons-the forced labor people-to move out of Germany back to Italy. France
and elsewhere. At a rough estimate we have had to handle in that territory since
the war ended not far short of 20,000,000 to 25,000,000 people.
EARL WINTERTON (Conservative): Can the right hon. Gentleman tell us
how many of these are what I would call unwilling migrants-I do not think he
subdivided the figures-the people who have been compelled to move, like the
Sudeten Germans?
MR. BEVIN: I have not the figures. We cannot get statistics which are at all
accurate from that part of Europe. Then there is another problem. I do not
know how many Germans have gone from Germany to work in Russia. Nobody
knows-only the Russians. The people coming into the western zone are, in the
overwhelming majority, women and children, with no men. That is another
terrific problem. I cannot reduce it to a nice statistical formula, because I have
not the figures and I cannot get them.
I have tried to the best of my ability to see the problem as a whole. Just
imagine 60 per cent of the population of these islands being suddenly turned out
of their homes and drifting somewhere else, and not all going one way. That is
the picture. When I was going to the airport to leave Berlin I saw as many
refugees coming out of Berlin as were going in. It was a pathetic sight-the
stream of perambulators and small vehicles of one kind or another, and the people

Starvation in Europe

were nearly all women and children, with very few men at all. One could not
help saying, "My God, this is the price of stupidity and war!" It was the most
awful sight one could see. It is a problem which it is almost beyond human
capacity to solve quickly, and all I can say is that we will do our best.

.Waterways and Food Distribution
What have we tried to do? At the Council of Foreign Ministers the American
Government raised the question of the waterways of Europe. I say frankly that
if we can get strategy and spheres of influence out of the picture nothing could do
so much towards rehabilitating Europe as the setting up of the Commissions for
the Oder, the Rhine, the Elbe and the Danube. America was quite willing to
set to work the drags and all the other machinery which she possessed to try to
clear these rivers and to get things going again. That would be a humanitarian
thing to do, and I believe that if it is done it will not endanger Russia by one
iota-or any other country. But there is that to be considered, and we must not
forget it; and therefore things are left to the military commands, with the result
that parts of the rivers are cleared and parts are not, and parts are used and other
parts are not used at all. There are fertilizers in one place and other areas where
the harvest will be bad because they cannot get those fertilizers. It is a question
of the distribution of what is now available in Europe if only transport can be got
to work. I make this most earnest appeal to my colleagues among all the Allies:
"Whatever we may have to settle about our future relationships let us use every
economic resource we have to stop the ordinary man or woman, who is not a party
to this quarrel at all, from suffering and going on to starvation."
Then I raised the question of the Danube Basin. In the old days the Danube
Basin fed Austria and all the territory around. The only way in which you can
feed Europe properly is for the eastern and middle parts, which can produce a
surplus of food, to feed the industrial areas. Now all the areas are deficiency
areas, due to war having mobilized men and to armies living off the country.
In certain countries in the East there are great armies living off the country and
there is no surplus of food which can be sent to other places. I thought it would
be a good thing if the Allied Control Councils in the Danube Basin were got
together to consider what could be done and to ascertain whether there was a
surplus;of food in any areas. I knew that much could not be got for this winter,
but we have to think of the following winter, when things may be much worse on
account of growing physical deterioration decreasing the powers of resistance of
people. Another good harvest might recover the position. In Yugoslavia food
production is limited because, for some reason or other which I cannot see, they'
are maintaining an army of 400,000 to 600,000 men. It would be better if the
men of.that army were back at home growing food for next year. We are not
going to attack Yugoslavia. Really we are not going to attack. ...

No, we have not got it in our minds to attack anybody, and the sooner those
fears can be got out of the way the better it will be. But you do not make things
any better by force. If anybody tries to force me to do anything, I fight. If any-
body asks me to do something, I try to see whether I can help them. I think that is
the right human approach to all these problems. The question of coal has been
raised. I ask the House to appreciate what has happened. The transport serving
the mines was in a state of devastation and had to be put right. The mines them-
selves were all right. If one looks at the increase in coal production in the Ruhr,
it is remarkable. As a result of the efforts that have been made there, production
has risen from 1,200,000 tons of hard coal in June to nearly 3,000,000 tons in
September, and output per man-shift has gone up 73 per cent in the same period.

628 British Speeches of the Day

Considering the low diet and the fact that only about 136,000 men are employed
-about half the normal number-I think that is a really remarkable achievement.
I have no doubt that with more appliances and more help much more can be done.
SIR A. SALTER (Independent): The right hon. Gentleman will realize, of
course, that the.same mines probably produced at the rate of over 100,000,000 tons
a year ago, and only a relatively short time ago seven or eight times the figure he
has now given. It is still a very small proportion of the capacity of the undamaged
MR. BEVIN: That is true, but on the other hand, it must be remembered that
at that time, when the mines were under the German regime, most, tremendous
efforts were made to keep up coal production. The miners were given special food,
even if other people went without, and transport was stolen from practically every
country in Europe in order to keep those mines fully employed. Now that there
has been this terrible devastation of transport and so on, it will be realized that we
suffer a great handicap. There is no coal available in Germany for domestic
cooking or heating-none at all. The greatest job we have at the moment is to
keep the schools, institutions, and such industries as there are, going. That will
be the great problem for this winter.

The Clearing of the Rhine
I c6uld talk to the House all day, because the story is so vast, but I want to
return to the question of the waterways. As far as the Rhine is concerned, we
have done our best. It was entirely unnavigable, but it has been cleared by the
efforts of the British and American authorities in recent weeks. We have set up,
and there is working from Duisburg a very splendid Committee of British,
American and French military representatives, assisted by Belgian and Dutch rep-
resentatives. We are hoping that the clearing of the Rhine will facilitate in
that part of Germany at least much freer distribution and help the coalmines as
well. We have established a new European Central Inland Transport Organization
and they are conferring with this Committee. There are very great difficulties in
making the organization work. As I have said, there was this great opposition in
regard to the waterways.

Motor Transport
Reference has been made to the question of giving more incentive goods. The
trouble is that whatever goods one decides to give, there has to be the coal to
process them, and therefore there is a vicious circle. If you give something in that
direction, you use up coal. There is no equitable balance of distribution through-
out the area today. With regard to the release of military stores, as far as UNRRA
is concerned, practically the only lorries that were available in the liberated terri-
tories were UNRRA lorries. We have recently released to UNRRA everything
we possibly could in the form of lorries in order to get it going, but lorries are
only a very small thing compared with railways and waterways. They are helpful,
but they do not solve the problem. There is also another vicious circle; directly
you get the lorries you are held up for petrol. There is not the fuel for them.
You are blocked every way you turn in trying to get this thing working.

Control of Germany's Economic Power
With regard to organization, which I am glad my right hon. Friend did not
press too much, I really think we have enough organizations. The other day a
colleague of mine came tq,me with a problem and argued it with very great elo-
quence and persuasion; I had to confess to him that I did not have the solution.

Atomic Energy

so that I thought he had better go back and propose an organization. Whenever you
cannot find a solution, the thing to do is to set up a committee or organization. I
think we have enough organizations. What is really needed is an acceptance of
certain fundamental principles. Are we going to try the economic approach, for
the redevelopment of the world with less fear that we have hitherto had ? Let us
always remember one thing. When*we talk about a unified Germany, that is a
nightmare to France, and there is reason for it. Three times in 100 years that
great arsenal of the Ruhr has been turned to destructive purposes and we have
paid the price. I reserved my position at Potsdam on the question of the Ruhr
and the Rhine. I do not believe in giving a warlike race like Germany, uncon-
trolled by anybody else, another 'arsenal of that character. I do not want to .ruin
their peaceful industry, ,but I am entitled, as long as I hold this office, to say to
the people that I want a reasonable insurance policy. If a fellow has shot at me
three times, I do not see why the devil I should give him a better pistol to use
on the fourth occasion. Therefore, when it comes to this enormous economic
power, I think there ought to be, not so much territorial changes, as an interna-
tional control of this kind of thing, which cannot be entrusted to one people. It
is a very vital matter. I make no final pronouncement, but I want to make my
position cear. I feel that some steps must be taken which will secure the devel-
opment of the standard of life of the people and the use of their skill and ability,
but not allow that great economic power to become part of another war machine
in the way that has happened hitherto.

Faith in the Rehabilitation of Europe
Therefore, on the organization side, if ultimately we can get certain funda-
mentals accepted, making for the re-creation of the life of the common people and
the obliteration of the past from their minds and so give them a real chance, if
only thd nations can approach the matter without a sense of fear and that terrible
feeling of insecurity, I believe that, with the will behind the organization we have,
we can very quickly rehabilitate Europe on peaceful lines which will be of benefit
to.all of us. Let us remember that, although so much of the wealth of the world
has been destroyed, the creative capacity of the world is so great that we can,
quicker than at any other period in history, re-create wealth and standards notwith-
standing all the devastation there has been, if only the statesmen can be left free,
without fear of one another, to devote their energy to creative work.
[House of Commons Debates]

House of Commons, October 30, 1945

CAPTAIN BLACKBURN (Labour): Every hon. Member of this House must
be deeply conscious of his responsibility in helping to guide our policy on atomic
energy, not only for the benefit of our own people, but for the benefit of all peoples
all over the world. Every hon. Member must also pray that the visit of the Prime
Minister will be crowned with success. Responsibility on our part is, however, de-
pendent upon knowledge of the essential facts. A close examination of the Smyth
Report and the White Paper, together with consultations with some British
scientists, convinced me that there is need for far greater information before this
House and the public, than is at present available.

British Speeches of the Day

It is apparent from these reports that the right hon. Gentleman the Member for
Woodford (Mr. Churchill) and the late and greatly beloved President of the
United States came together, in deadly secrecy, to an agreement in Quebec in Sep-
tember, 1943, on this subject of atomic energy. It is also apparent that the terms
of this agreement left the development of the peacetime use of atomic energy by
this country very much to the discretion of the President of the United States.
While fully agreeing with the necessity for secrecy while the war was on, and while
in no way desiring to criticize the circumstances in which this agreement was con-
cluded, I would ask the right hon. Gentleman the Prime Minister to bring this
agreement into the light of day at the earliest possible moment, so that we may
decide whether it should be ratified for the future or not.
Assuming that this agreement is modified during the discussions now about to
proceed, it would be unnecessary for anything further to be said, but it is vitally
important that, at the earliest possible moment, we should know in this country
that we can go ahead, in conjunction with other nations in the world, to develop
atomic energy for the proper purposes for which Lord Rutherford and British and
American scientists desired it to be developed-for the benefit of all mankind, and
also to lighten the load of drudgery upon the working men and women of this
world. There seems to be much confusion today as to whether or not our British .
scientists are in full possession of the so-called secret of the atomic bomb.

British Scientists Have All the Secrets
Contrary to what President Truman may have led some people to suppose, our
scientists are, in fact, in possession of every detail of manufacture, every scientific
secret-in short, the whole technical "know-how" as to the production of the atomic
bomb made from Uranium 235, which killed 125,000 people when it was dropped
at Hiroshima. In actual fact, the politicians are not able to speak with full
authority upon this subject. American scientists have exchanged more scientific
information with British scientists about what is happening in the State of Wash-
ington than President Truman supposes, and unless a progressive attitude is
adopted, in place of our present attitude, I believe that the scientists both of
Britain and America might themselves take independent action, and for my own
part I would not blame them for so doing.

The "Sacred Trust"
What then is happening today in the United States of America? Only a tiny
fraction of the enormous expenditure of capital, materials and labor is being de-
voted to the peacetime uses of atomic energy. Well over 90 per. cent of the effort
goes to producing bigger and better bombs for an undefined purpose. I am per-
fectly certain that the President of the United States is absolutely sincere when he
says that he regards the atomic bomb as a sacred trust, although I am aware that
the peoples of the Far East and other peoples in this world find it a little difficult
to reconcile his phraseology with the fact that we dropped first one atom bomb
on Hiroshima without any previous warning, and, after that, dropped another
one without any warning of any kind when it was obvious that the war against
Japan was about to be over. I say that, not as a pacifist, but on the ground that
we should recognize in what circumstances we come before the world, and in what
circumstances we are stating our point of view today. Let us not imagine that we
come as lily-white angels before the world, because we do not.
President Truman regards this as a sacred trust. Why then does he not con-
centrate on the cheap production of power through the release of atomic energy,
in which case in a comparatively few years men would no longer have to go down
into the belly of the earth to hew coal, oil could be out-dated, gigantic schemes of

Atomic Energy

irrigation could make the desert blossom like the rose. Moreover, there is a tre-
mendous medical side to the release of atomic energy. By it a radio-active species
of every chemical element can be prepared which would be of inestimable value
in medicine, both for the purposes of research, for diagnosis and for therapy. If,
by building bombs instead of by ending men's drudgery and by solving the secrets
of nature, the President thinks that he is discharging a sacred trust, then he must
be mistaking Lucifer for the Almighty.
SIR PATRICK HANNON (Conservative): No, no.
CAPTAIN BLACKBURN: The hon. Gentleraan has quite rightly said "No, no."
I am quite sure that the President is animated by the highest possible motives. I
have the greatest possible affection for the American people and I remember
everything they have done.
SIR P. HANNON: I said, "No, no," because I do not think it is within any
precedent of this House, to make a comparison between the President of the United
States and the Almighty.

Russian Feelings
CAPTAIN BLACKBURN: The story becomes even more anxious when one in-
quires what firms are, in fact, managing plants on behalf of the American War
Department that are now producing bigger and better bombs. Their names are
indeed "names of fear, unpleasing to a Russian ear." The enormous factories in
the State of Washington are managed by the firm of Dupont which, as is well
known, had agreements with Imperial Chemical Industries of this country and
with I. G. Farben-industrie of Germany, agreements which provided for their re-
vival after the war and which are quite reasonably regarded, in Russian quarters,
as having been part of an encirclement policy directed against them. I am per-
fectly certain that every Member of this House and every reasonable Amercan
Congressman has not the slightest desire in any circumstances to say anything or
to do anything which would involve us in conflict with the Soviet Union, but I
am still making the point that we in this country holding, as we do hold today,
the moral leadership of the world, must stand out before the peoples of the world,
and must ourselves indicate quite clearly-and contrary to the impression now
prevailing-that if, on the one hand, we are prepared as candid friends to tell the
truth to Soviet Russia, we are prepared, also as candid friends, to tell the truth
to the United States of America.

Progressive Opinion and Reaction
These interests which are now predominating against. the wishes of the
scientists, and of progressive opinion in the United States, as well as in this
country, reek with the stale odor of reaction. We should disassociate ourselves at
the earliest possible moment from these interests. We should associate ourselves
with progressive opinion, and with the scientists who are unanimous that, at the
earliest possible moment, we must get back to the peacetime exchange of scien-
tific information so that, instead of behaving like insane men-wasting the whole
of our substance upon the desire to kill one another-unless we can solve the
great problem of utilizing the information we have wrested from nature for the
benefit of all human beings and not for their destruction. There is one fact of
cardinal importance about the release of atomic energy: it should be in the
possession of us all. It is quite impossible to exploit the peacetime usage of
nuclear energy without being at the same time in the position to manufacture
bombs. The release of atomic energy from uranium produces plutonium. The
release of atomic energy from thorium produces uranium 233. Either uranium
233 or plutonium is the material from which atomic bombs are made.

British Speeches of the Day

So if we are pnot to turn our backs on the greatest scientific discovery of all
times, which should be an instrument for the liberation of mankind, we must
know that everywhere these inventions are being used, there is also the possi-
bility of creating atomic bombs. The river of knowledge, like the majestic Oxus,
"a foiled circuitous wanderer," is bound ultimately to reach the sea. It might
wind back on itself, but it could never be dammed and it could never be stopped.
It is bound to go on. Nothing in the world, nothing politicians can do, will stop
men everywhere from continuing to find out truths that are released by splitting
the atom, and further scientific inventions now being discovered. The process is
bound to go on. Nothing can stop it. We must decide, in consultation with our
great Allies, how these scientific discoveries can be utilized for the benefit of man-
kind, and how they can be prevented from destroying the world.

International Research and Control
Faced with these facts, I suggest that His Majesty's Government should imme-
diately and openly urge internationalization of research and production in relation
to atomic energy, and the calling of a conference of scientists, as well as states-
men, tO recommend to the United Nations the best system of international control
of atomic energy which can be devised.
The subject of international control of atomic energy is perhaps the main
subject which confronts us today. There is no time to go into detail here, but
there is, in fact,'an instrument which detects the release of radio-active materials.
This instrument can be, and has been, put on an aeroplane, and by facing down-
wards it is able to detect all factories so far in use for the release of atomic energy.
I am well aware that it is a simple matter to invent a device, or manufac-
ture factories, in such a way that the scientific instrument to which I have re-
ferred will be unable to detect them. But if we get the benefit of all the scientists
of the world and their knowledge, labor and experience and concentrate on the
vital task, in the interests of all humanity, of finding out how this invention can be
controlled, there is no reason to suppose that they will completely fail. If we can
succeed in persuading the nations of the world to agree to a system whereby you
can have scientists exchange information with scientists of other nations, you are
going to know all about the scientists who know most about the release of atomic
energy, and you may be able to go further, and get a situation in which we are
enabled to have a man "poking about" in all these factories. The mere fact that
there will be a man entitled to "poke about" in factories will have a colossal
psychological effect upon every country.
It is the result of what I say that we ask the Prime Minister, quite openly,
to abandon the doctrine of continuity of foreign policy; to abandon, altogether,
the need for the kind of secret diplomacy we have had in the past; to abandon
utterly, and reject utterly, the doctrine of the balance of power. I cannot believe,
for one moment, that the right hon. Gentleman the Prime Minister or the Leader
of the House accepts for one moment these conceptions of an outworn age.

A Matter for All Mankind
I cannot conclude without some reference to the main matter which must be
in our minds. Our gallant Russian allies have fought with us during this war, and
they have withstood what the right hon. Member for Woodford (Mr. Churchill)
once called the equivalent of the total German armed strength. They have
marched from the streets of shattered Stalingrad to the center of Berlin itself.
Are you going to allow a situation in which the Russians will be prevented
from restoring their ravaged cities more quickly, or helped to increase the health
of their own nation, because you will not give them, in peacetime, secrets of

Atomic Energy

atomic energy, which would assist them to perform these necessary and vital
tasks? This great alliance between the Soviet Union, U.S.A. and Britain is the
hope of the world today. If that hope perishes, there is little that we ourselves,
or our children, or our children's children, if there be such, can look forward to. In
conclusion, I would say this: This is a matter not for one country alone. It is
a matter for all mankind. It is a matter which affects us in our own most intimate
arrangements; it affects us in all our family concerns, because assuming we fail
to solve this, then it is of no use for us to be responsible for our children's edu-
cation. We cannot even think for 10 or 20 years ahead and know that our plans
are solid plans, and capable of fulfillment.
We must think of this on the highest possible level. This country has always
held in the past, or rather for a long period, the moral leadership of the world.
I ask the Government to make sure that we continue to hold the moral leadership
of the world, that we speak for men everywhere to see that this discovery is used
for peacetime purposes and not for wartime purposes. I would ask my right
hon. Friend the Prime Minister, when he travels over to the United States, to re-
member the words that may well be of high significance today, words which
breathe the spirit of men, the essential desire for goodness that lies in all our
hearts, the desire for world unity which is there in Soviet Russia, in the United
States and all over India and China, just as it is in our hearts, and bring that to
fruition. I mean the last words written by Emily Bronti:
"There is not room for death,
Nor atom that His might could render void:
Thou-THOU art being and breath,
And what THOU art can never be destroyed."

The hon. Members who have raised this very important and vital subject may
be sure that the observations which my hon. Friend on this side and the right
hon. Gentleman on the other side below the Gangway have made, will be re-
ported to the Prime Minister and that he will keep them in mind together with
the many observations that have been made elsewhere about this startling and,
in many respects, disturbing, though also, by virtue of its economic possibilities,
encouraging discovery. These are, however, only possibilities so far. We cannot
yet be sure about them. The certainty is that here is a highly explosive weapon, a
new factor, not only in the art of war, if the art of war is to continue, and if you
can call that sort of thing an art, but in international politics and in the organiza-
tion of international peace. All the disturbing considerations to which many
people have drawn attention will certainly be kept in mind by my right ho4.
Friend the Prime Minister in the forthcoming conversations which he is to have
in the United States of America. ....

The United States and British Contributions
It is the case that our own fortunes in this matter are bound up with those of
the United States of America. Our work on the subject has been in the closest
possible consultation with the United States, as was made clear by my hon. Friend
in his opening observations, and also by the Leader of the Opposition, after the
first atomic bomb had been dropped upon Japan. From the beginning this coun-
try has made an extremely important contribution to research on the subject of
atomic energy, and our scientists, as well as the scientists of the United States, have
played a very great part in the development of this vast and significant discovery.
But the war and its stresses made 'many other demands upon our economy.
Throughout the course of the war we were, of course, subject to bombing at-

British Speeches of the Day

tacks by the enemy. Consequently, it was agreed that, as the United States had
space and vast resources and was at a safe distance from the enemy, it was desir-
able that the physical work involved should take place in the United States.
The United States made an enormous contribution, but that must not lead us
to underestimate the contribution which British scientific knowledge made. In-
deed there was, I think, a wise division of resources, energy and research, which
went to the large-scale realization of the project. We gave all the help we could
by the contribution of first-class scientific ability.

Sir John Anderson's Advisory Committee
Now that the war is over, it is naturally the intention and desire of His
Majesty's Government to make plans for the development of the process in this
country. We must know all we can about it, certainly in so far as there are potential
economic uses for atomic energy of value to our country. To my mind it is unde-
sirable that Britain should be behind in knowledge of the subject and its poten-
tialities. Therefore, His Majesty's Government considered, as did our predecessors,
what was the best way in which to handle this matter. The first step taken by this
Government was to set up a strong and highly competent Advisory Committee
under the chairmanship of the right hon. Member for the Scottish Universities
(Sir J. Anderson).
I think the House, irrespective of party, would agree that, in view of his general
qualifications, the choice of the right hon. Gentleman was an admirable one for the
Chairman of the Advisory Committee. He has great administrative knowledge
and he has considerable scientific knowledge. He has mixed with scientific people,
which in itself is important, because if one is to work with scientists it is a good
thing to understand them, just as, if you wish to work with politicians, it is as
well to understand them. I think it was an excellent choice, and it was good
that he was able to take on the position. I should like to assure my hon. Friend
who opened the discussion that the Advisory Committee includes a number of
eminent scientists. . It not only includes scientists. It also includes repre-
sentatives of the various State Departments by having on the Committee senior
officers concerned with the administrative aspects. Altogether, I think, we have a
Committee which is high-powered and competent, and which I can assure the
House already has given most valuable advice to His Majesty's Government.

Best Not to Rush
It is perfectly clear that the policy cannot afford to be dealt with by the
Government in a cursory way. It cannot be dealt with at a low level. It must be
dealt with at the higher level of Governmental consideration. Its foreign policy
aspects and its military potentialities are really terrific, as we all know, and I
freely confess, as everybody else does, and as is obvious from the speeches of
my hon. Friend and the right hon. Gentleman, that it is giving us all a very
bad headache. This discovery, which exceeds anything hitherto in destructive
power, is one that presents us with some first-class problems of international or-
ganization, world politics, foreign policy, and security organization, and if we are
not able to make up our minds as to the way out of it in five minutes, I do not
think anybody can blame us. It is better to think carefully and with purpose, as
I think everybody is trying to do about it, to arrive at the right solution as to
how to handle it, than it is to rush into things and possibly make errors. ...
Either we have to think out policies and ways whereby this new inven-
tion, instead of being what it can very well become, a most dangerous menace
to the security of every nation on the earth and, indeed, possibly a menace
even to an international security organization itself, can be linked up with for-

Atomic Energy

eign policy, and with the organization of security, or we must take some steps
whereby nobody is likely to use it. It is easier to say that than to do it. It is
easier to proclaim the desiderata than the means and ways by which they shall
be done. I can only say that the whole problem has the attention of His
Majesty's Government at the very highest level in its policy aspects. The Ministry
of Supply are dealing with it as a physical problem of supply and production. The
policy of it is being dealt with at the very highest level of Government, and it will
remain there. Let us hope that we shall be able to make a helpful contribution
and observations about it. In any case, it was inevitable that the first discussions
must start between this country and tle United States, and everybody agrees, I
think, that it is a good thing that the Prime Minister is to have a man to man
talk with the President of the United States in the hope that wisdom and en-
lightenment and helpful policies will come out of those discussions.

Prophecies About Industrial Energy Too Optimistic
The Government intend to maintain a high standard in fundamental research.
The Government have just announced their intention of setting up a special
research establishment to serve this purpose in conjunction with the work done
by our friends in the United States. The establishment will cover all aspects of the
use of atomic energy. We shall, therefore, be as much concerned with the peace-
ful industrial use of the process as we shall with its military possibilities.
There are difficulties in making use of atomic energy as a source of power, and
it is desirable that the difficulties should not be underestimated. We may well
succeed, but there have been some rather optimistic prophecies about it on both
sides of the Atlantic Ocean. As far as I know, no one with authoritative knowl-
edge on this subject has any doubt that these difficulties will be overcome in the
course of time. But statements such as those which have appeared in certain
quarters that atomic power will be used for various forms of transport within the
next two years are, I am advised, almost certainly much too optimistic. The best
expert view is that they will take at least ten years to develop the process fully.

CAPTAIN BLACKBURN: For transport only, not power?

MR. MORRISON: That may be so, or of course the estimates may be all
wrong; but I think we should possibly be building false hopes if we think de-
velopments will be as quick as some optimistic prophets have suggested. Our
program of research and large-scale development in this whole field needs the most
careful planning, and we are making that careful planning. Our scientific man-
power is limited, and it is essential to see that we make the best possible use of it
and distribute our efforts wisely between the competing claims. Anybody who is at
the heart of Government, or who has been there, knows the stress there is upon
scientific resources, which the Government has mobilized very fully during the war.
I hope the Government will continue to take a high interest in science and scien-
tists. As a matter of fact one of our problems is that we have been driving them
so hard, and using them so hard, that there is some danger of the supply becoming
somewhat difficult. So the question of the supply of scientists has also got to be
considered as we go along, and all these matters are being most carefully dealt
We shall wish also to ensure that our programs are wisely planned in relation
to the work being carried on in the other countries in association with whom we are
now working, that is to say, the United States and the Dominion of Canada,
which has also been closely associated with the development of atomic energy.
. .We shall certainly not forget the welfare of the world in this matter; we
certainly shall not forget the relationship of this new development to the inter-

British Speeches of the Day

national structure and to foreign policy, but it is desirable that we should all make
our contribution, and that we should all give the matter most careful and construc-
tive thought in order that what may be a great menace to the whole future of
civilization and of mankind may become instead a guardian of the peace of man-
kind and a promoter of the economic'progress and advancement of the world.
MAJOR UNGOED-THOMAS (Labour): May I just ask the right hon. Gentle-
man one question before he sits down: Is he in a position to say that the con-
versations with the President of the United States will not be limited to the
scientific method of releasing atomic energy, but will also include disclosure of
the industrial method of producing the atomic bomb?
MR. MORRISON: I think my hon. Friend can take it that the discussions-
I have no precise agenda, and I do not know that any actually exists-will be
full and comprehensive . .
[House of Commons Debates]

The first hour of every sitting day in the House of Commons is devoted to
answering questions which Members of Parliament put to Ministers. A
selection from some of the questions asked during October, 1945, is
included below, together with the Ministers' answers. ,

Mr. W. S. Morrison (Conservative) asked the Prime Minister what steps
are being taken to develop research on the use of atomic energy in this country.
The Prime Minister (Mr. Attlee): In accordance with a recommendation
which has been received from the Advisory Committee on Atomic Energy of which
the right hon. Gentleman the Member of the Scottish Universities (Sir J. Ander-
son) is the Chairman, the Government have decided to set up a research and
experimental establishment covering all aspects of the use of atomic energy. Ac-
commodation is being provided for the establishment at Harwell airfield near
Didcot. I am advised that the danger to surrounding areas from the experimental
station, is negligible. It has further been decided that in view of the importance
of this work to the Service Departments, responsibility for research on this subject
which has hitherto rested with the Department of Scientific and Industrial Research
should be transferred to the Ministry of Supply. The Tube Alloys Directorate
(which is the name by which the technical organization dealing with these matters
has hitherto been known) will accordingly become a part of that Ministry. The
Department of Scientific and Industrial Research will, however, be represented
both on the Advisory Committee and on some of its technical sub-committees.
Mr. Morrison: Can the right hon. Gentleman say what financial assistance,
it is proposed to give to this research?
The Prime Minister: The cost will have to fall upon the Government.
Mr. Blackburn (Labour): Is the right hon. Gentleman aware that research
in relation to atomic energy is inseparable from production and that really effective

Question Time in the House of Commons

research would involve production on a scale involving an expenditure of at least
30,000,000 or 40,000,000?
The Prime Minister: I am very fully advised on these matters by the Ad-
visory Committee.
Mr. Maxton (Independent Labour Party): Does this change of control to a
Department more closely associated with the Services indicate that the Govern-
ment are more concerned about the weapon value of atomic energy rather than its
production value?
The Prime Minister: No, not at all. It can hardly have escaped the hon.
Gentleman's notice that the Ministry of Supply is also engaged on civilian produc-
tion. It is a mistake to suggest that it is entirely concerned with weapons.
Mr. Boothby (Conservative): Will the right hon. Gentleman consider mak-
ing the report of the Advisory Committee available to Members of this House?
The Prime Minister: No, Sir. I could not accept that.
Sir Frank Sanderson (Conservative): Arising from the original reply, is it
proposed that the Ministry of Supply shall remain a permanent department?
The Prime Minister: Yes, Sir.
[October 29, 1945]

Mr. Peter Freeman (Labour) asked the Chancellor of the Exchequer
whether he will give. the nearest approximate estimate of the cost of the World
War 1939-45, to this country and to each of the other countries concerned.
The Chancellor of the Exchequer (Mr. Dalton): The cost of the war
is a phrase which may bear many different meanings. Some of these are incapable
of being measured in money. The total issues for war expenditure in the United
Kingdom out of the Vote of Credit and Defence Votes in the six years from
September 3, 1939, to September 2, 1945, was 25,000,000,000. I have, as yet, no
similar estimates for other countries.
[October 16, 1945)

Mr. Martin (Labour) asked the Secretary of State for Foreign Affairs to
what extent His Majesty's Government is committed to support at the Peace Con-
ference the existing provisional frontier between Poland and Germany; and
whether this support is in any way contingent on the adoption by Poland and other
eastern European States of a social and economic policy which is calculated to
promote both the welfare of the inhabitants of those regions and the peaceful
economic development of Europe as a whole.
The Secretary of State for Foreign Affairs (Mr. Bevin): His
Majesty's Government are in no way committed to support the existing provisional
arrangements at the Peace Conference. As regards the second part of the
Question, the policies followed by the Polish authorities in the territories now
placed under their temporary administration will certainly influence the attitude
which His Majesty's Government will adopt in any eventual discussion of a final
territorial settlement in these regions.
[October 10, 1945)

British Speeches of the Day

Mr. Callaghan (Labour) asked the Prime Minister whether he will make
a statement on British policy in Indonesia and give what information he can about
the present course of events.
The Prime Minister (Mr. Attlee): Upon the Japanese collapse we were
suddenly faced with the task over a very wide area and in various territories simul-
taneously, of disarming the Japanese forces, releasing Allied prisoners of war and
internees and helping to restore normal conditions. With available resources of
manpower and shipping strained in this way, problems such as have arisen in Java
present particular difficulty. There, as indeed throughout the whole area of South-
East Asia Command, it was necessary in the first instance to place responsibility
on the Japanese forces for the maintenance of law and order outside key areas.
But in Java we found that, outside Batavia, control had in fact been largely re-
linquished by the Japanese to an Indonesian independence movement. While we
have had to take account of the existence of this movement we must be careful
about acceptirrg its claims at their face value. It has been sponsored by the
Japanese for two or three years and during this time the people of the territory
have been cut off from all outside developments.
Meanwhile, as the House is no doubt aware, Her Majesty the Queen of the
Netherlands issued in December, 1942, a very liberal statement promising a large
degree of self-government to all Dutch overseas territories. The Lieutenant
Governor-General, who is now on the spot, has been authorized to discuss with
the local Indonesian leaders how it is intended to apply these promised reforms
in the case of Java.
I need hardly say that His Majesty's Government do not desire to be unneces-
sarily involved in the administration or in the political affairs of non-British terri-
tories and their object is to withdraw British troops as soon as circumstances per-
mit. Meanwhile not only have we a strong moral obligation towards our Dutch
Allies as the sovereign Power until they are in a position to resume control; but
also the maintenance of law and order is essential to the fulfillment of the military
tasks which arise out of the termination of the war with Japan and in particular
to the safety of the several thousand Dutch nationals interned in the interior of
the country.
I can assure the House that the whole of this delicate problem is engaging the
most careful attention of His Majesty's Government and that they are in.close and
constant consultation both with the Netherlands Government and with Admiral
Mountbatten about the measures to.be taken.
[October 17. 1945]

Mr. Tiffany (Labour) asked the Secretary of State for Foreign Affairs how
many Greeks are still detained in camps in North Africa and Eritrea; when they
will be repatriated to Greece; and will he give an assurance that they will in the
meantime be granted the unrestricted right to receive letters, parcels of food and
medicine and. proper medical and dental treatment.
The Secretary of State for Foreign Affairs (Mr. Bevin): There are
1,850 Greeks detained in North Africa and Eritrea as a result of mutinies in the
Greek forces in 1944, of whom 1,200 are military and 650 naval personnel. About.
1,500 naval internees have recently been repatriated, and it is hoped that the
remaining 650 will have returned to Greece by the ehd of this month. No
definite date can be given for the repatriation of the 1,200 military internees, but

Question Time in the House of Commons

the Greek Government have been asked to release naval vessels for this purpose,
since other transport is not available. As regards the last part of the Question,
there are no restrictions on incoming letters and parcels other than the normal
security censorship and a search for means of escape. As a result of the recent
publicity suggesting that medical treatment is inadequate, the internees are being
sent large quantities of medicines. These parcels must be examined, since they"
often include dangerous drugs. I am assured that the British and Greek authori-
ties are satisfied that the medical and dental facilities for the internees are fully
adequate. .
[October 24, 1945]

Captain Gammans (Conservative) asked the Secretary of State for the Colo-
nies the number of European British civilians who were interned in Singapore and
Malaya by the Japanese, and the total casualties suffered by them.
The Secretary of State for the Colonies (Mr. George Hall): Accord-
ing to present information, 3,044 British civilians from the U.K., Eire, Australia,
New Zealand and South Africa captured in all parts of Malaya were interned in
the only known civilian camp at Singapore. Of these, 183 died in the course of
[October 31, 1945]

Mr. Eden (Conservative) asked the Secretary of State for Foreign Affairs
whether he has any statement to make about the withdrawal of Allied troops
from Persia.
The Secretary of State for Foreign Affairs (Mr. Bevin): I am in-
debted to the right hon. Member for giving me the opportunity of informing the
House on the subject. The House will remember that the question of Persia was
discussed at Potsdam, and that an arrangement was made for the immediate with-
drawal of Allied forces from Tehran. The British withdrawal under this arrange-
ment has now been almost completed, and M. Molotov has assured me that the
decision regarding the withdrawal of troops from Tehran has been put into effect
from the Soviet side. It was also agreed at Potsdam that the question of further
stages in the withdrawal of Allied troops from Persia should be discussed at the
first meeting of the Council of Foreign Ministers. Since Potsdam, of course, the
position has been changed by the ending of the Japanese war, which automatically
brings into effect the provision of the Anglo-Soviet-Persian treaty that British
and Soviet troops will complete their withdrawal from Persia within six months
of the end of hostilities.
But since the question was on the agenda of the Council I thought it as well
to make His Majesty's Government's views on the matter quite clear, and I there-
fore wrote the following letter to M. Molotov:
"Since it was decided at Potsdam that the. question of further stages in
the withdrawal of Allied troops from Persia should be placed on the agenda
of the Council of Foreign Ministers the situation has been changed by the
ending of the Japanese war. Our two Governments will now be complet-
ing the withdrawal of their forces from Persia by 2nd March, 1946, six

British Speeches of the Day

months after the signing of the Japanese Instrument of Surrender and, as
far as the end of our withdrawal is concerned, all that we need do is to ask
the Council to take note of the 2nd March, 1946, as the date fixed.
It seems to me, however, that since our respective forces in Persia
have completed the war-time tasks for which they were sent to Persia,
our Governments might well see if they could not do something to satisfy
the Persian Government's natural desire to see as much of its territory as
possible freed as soon as possible from the presence of foreign forces.
I therefore propose to suggest, when the question comes up at the
Council Of Foreign Ministers, that our two Governments shall .agree that
by the middle of December, 1945, their respective forces shall be with-
drawn from the whole of Persia except that British forces may remain until
the 2nd March, 1946, in the southern oil area to the south of, and includ-
ing, Andimishk, and that Soviet forces may remain until the 2nd March,
1946, in Azarbaijan. I should propose excepting from this arrangement the
minimum administrative staffs necessary for disposing of military installa-
tions; these staffs could remain where there are such installations until they
had arranged for their disposal; they would, of course, be withdrawn like
our other forces by the 2nd March, 1946. I have thought it well to let
you know in advance of my intention to put forward this proposal, when
the matter comes up at the Council of Foreign Ministers."

To this M. Molotov replied in the following letter:
"Thank you for informing me in your letter of 19th September of the
British Government's attitude on the question of the withdrawal of British
and Soviet troops from Iran. I must in turn inform you that the decision
of the Berlin Three Power Conference regarding the withdrawal of troops
from Teheran has already been put into effect from the Soviet side. As
regards the complete withdrawal of Soviet troops from Iran, the Soviet
Government, as you are aware, take the view that this withdrawal of troops
should be effected within the period laid down in the Anglo-Soviet-Iranian
Treaty. If necessary, the plan for the final withdrawal of Soviet and British
troops from Iran could be discussed between us towards the end of the said
period. The Soviet Government, accordingly, see no need for this question
to be discussed in the Council of Foreign Ministers."
As a result of this exchange of letters which underlined the intention of both
British and Soviet Governments to stand by their treaty obligations to Persia, when
the question came up before the Council on September 22nd M. Molotov and I
informed the Council that the exchange of letters had taken place. The Council
took note of the fact that letters on this matter had been exchanged between us
and agreed that in view of this there was no necessity for the question of the with-
drawal of troops from Iran to be discussed, and that the item should therefore
be removed from the Agenda of the Conference.
In a further letter I wrote to M. Molotov as follows:
"I am glad that we have reached so cordial understanding on the ques-
tion of the withdrawal of Allied troops from Persia, about which I wrote
to you on September 19th and you replied on September 20th. I am sorry
that owing to a doubt in the translation, there was some misunderstanding
about the intention of your letter. The difference in language certainly
creates problems for us.*
There was a misunderstanding owing to the Russian text of M. Molotov's first letter being
translated to read "on the expiry," whereas the correct translation was "towards the end."

University of Florida Home Page
© 2004 - 2010 University of Florida George A. Smathers Libraries.
All rights reserved.

Acceptable Use, Copyright, and Disclaimer Statement
Last updated October 10, 2010 - - mvs