§ Brought up, and read the First time.91
§ Captain BOURNE
I beg to move, "That the Clause be read a Second time."
I wish to apologise to the House for the form in which this Clause appears, but I found it almost impossible to draft a Clause which would be in Order and, at the same time, intelligible. The effect would be to reduce the Stamp Duty on cheques from 2d. to 1d. I have brought the Clause forward because I feel that this question has been stimulated this year by the proposed act of the Midland Bank in introducing stampless cheques in the form of receipts for amounts under £2. I understand the question is to come before the Courts but, as the matter has been brought into publicity, it is only fair that we should have some statement from the Government as to their intentions, and I have put down the Clause for that purpose. There is one respect in which, it seems to me, conditions have altered considerably since 1918, when the duty was increased. Since then we have gone back to the gold currency, and one effect of that has been that the total amount of currency notes now in circulation is reduced by something like £40,000,000.
One effect of basing your currency on gold, and at the same time reducing the amount of currency, is to cause a depression in prices, and there is a certain gap between the drop in prices and the adjustment of industry to the new conditions which operates as a hardship on producers, and more especially on the great industry of agriculture. I believe the use of small cheques would increase the amount of currency in circulation, because I believe a great deal of unnecessary currency is now withdrawn from the banks in order to pay very small bills, because people have a prejudice against writing a cheque with a twopenny stamp for an amount under £2, and anything that would help to give us a greater volume of currency would be an advantage. I know my right hon. Friend cannot accept the Clause, but I should like to ask whether he could not consult with the banks between now and next year, and see if it might not be possible to introduce a penny cheque on amounts under £2.
§ Mr. CHURCHILL
Alexander the Great said the people of Asia were slaves because they could not pronounce the word "No," but the Government on this occasion must be careful not to display such a lamentable disability. The cost of this Clause would amount to £1,500,000 in a full year, and that is not a figure that I can possibly contemplate if the Budget of next year is to be balanced. Everyone would like to see the Cheque Tax and other taxes reduced, but the circumstances of the time do not permit us to think of such an indulgence. Every tax is a burden, and only the hard conditions of the times in which we live have forced the evil upon us. I should very much like to reduce the Stamp Duty on cheques from 2d. to 1d. I have examined with interest a proposal to reduce the Stamp Duty on cheques for amounts under £2 to 1d., but there is no doubt it would be very expensive. Calculations which have been called for show that, although there might be an increase in the use of the penny cheque, that would by no means compensate for the diminution in the yield of the cheque on which 2d. was charged, and a loss of, I think, £500,000 a year would be the least we could expect if we were to have two kinds of cheques, one for 2d. and the other, under £2, for 1d.
There is also the argument about the inconvenience of double cheque books and so on, but I do not attach much importance to that, because if anyone had a right to write a cheque with a penny stamp upon it and chose, for the matter of convenience, to write it in his cheque book which contained only 2d. stamps, that would not be a matter which the Inland Revenue would be called upon to deplore. But the argument against all these reductions is that we have not got the money, and that is the argument, and the only one, on which I rest. I am told it is a mistake in dialectics ever to use more arguments in support of a proposal than are necessary to prove it conclusively, and I therefore confine myself solely and entirely to the argument that, desirable as it is to reduce all taxes, and especially desirable as it may be in present circumstances to reduce the duty on cheques, all such schemes are, at present, equally beyond my powers.
§ Mr. W. GRAHAM
The hon. and gallant Gentleman has raised a question 93 which must be of very great interest to Members in all parts of the House irrespective of our political views, and while, of course, to-day we expect no other answer from the Chancellor of the Exchequer, I very much hope that further inquiries will be made into this question during the coming year. Various financial authorities, and large numbers of people who are not connected with finance at all, have urged that there are many gains in the public interest to be derived from a much wider use of the cheque. Of course the use of the cheque has expanded enormously within recent times, but the practical importance of this question turns not merely upon the additional security of this form of monetary transaction, but also upon such economy as we can achieve with the gold currency, if ever this country sees a gold currency again, or even in the note issue—the £1 and 10s. notes upon which we so largely depend. First of all there is the question of security in this wider distribution of the use of the cheque, and, secondly, there is this question of economy to the State itself, which is one of the factors the Chancellor of the Exchequer must take into account. I have heard it argued in recent times that even if this cost £1,500,000 there might be very substantial gains in other directions, but in so far as there has been evidence at all on the part of the Mint and other authorities before the Public Accounts Committee, and under any other forms of investigation, no very definite result has emerged. Looking to the fact that this is a question in which the whole country is interested, I think the right hon. Gentleman might very well hold out a rather more practical hope to-day, and accordingly if the Financial Secretary has any additional information to give us as to what form an inquiry might take we shall be very glad to have it.
There is, of course, a case on the other side. Large numbers of people say that we have much to gain by the additional Security of this form of transaction. I have also heard it argued that the use of the cheque contributes to a certain prodigality of expenditure, but I do not attach very much importance to that class of argument, because everything turns upon security and upon possible economy to the State. I should be very glad indeed if the Financial Secretary would 94 tell us about the form of inquiry which must almost immediately be made into this question, because I do not see how we are going to approach the consideration not only of gold currency, but perhaps of the fusion of the Bank of England note issue and the currency note issue, without looking to very much wider problems, of which this extended use of the cheque by a diminution of the duty on it is one that must be regarded as important.
§ Question, "That the Clause be read a Second time," put, and negatived.
In view of the assurance given me by my right hon. Friend that it will be time in next year's Budget to consider this matter, and in view of the fact that the Government will consider it, I do not propose to move the new Clause standing on the Order Paper in the names of my hon. and gallant Friend the Member for Rye (Sir G. Courthope) and myself—("Continuance of s. 28 (Amendment as to allowance for repairs) of The Finance Act, 1923)."
§ Sir HENRY CAUTLEY
Will the Chancellor of the Exchequer explain how it will be in time for the next Budget? I will move the Clause so that we may have his explanation on record.
§ Mr. DEPUTY-SPEAKER
It is out of order to debate the question without any question before the House.
§ Mr. DEPUTY-SPEAKER
I am afraid the hon. and learned Gentleman cannot move it without giving notice.