HC Deb 05 June 1934 vol 290 cc802-20

Motion made, and Question proposed, ' That the Clause stand part of the Bill."

5.52 p.m.


We on these benches cannot allow this Clause to pass without repeating a protest which has been made on previous occasions in these Debates. We do so for several reasons. Tax relief is always welcomed by any section of the community which benefits from it, and it is welcomed most by those who benefit most, and there is no doubt that a certain number of people in this country will gladly welcome what the Chancellor of the Exchequer proposes to do through the instrumentality of this Clause. We have been informed that the relief to be given under the Clause will amount to about £20,500,000 this year and to £24,000,000 in a full year. It is unfortunate that when the National Government do anything which can be described as a good deed they do it in the wrong way. That is probably due to the unfortunate history of the entire political combination which we know as the National Government. The Chancellor of the Exchequer had benefits to confer as the result of the Budget surplus and undoubtedly he is, through this Clause, conferring some of those benefits upon a section of the community which could well have afforded to bear for much longer period the sacrifice which they were called upon to bear. A lot of other people have had to bear sacrifices and the section of the community who will primarily benefit from this Clause are those who could well have afforded to make some further contribution to the necessities of the State.

It has already been pointed out more than once from these benches that the way in which the Chancellor of the Exchequer is dealing with the Income Tax in this Finance Bill has the result of giving relief to those who need it least and leaving out of account those who need it most. My hon. Friend the Member for East Fulham (Mr. Wilmot). in figures which he has given to the House, has made that point clear, and I do not wish to weary the Committee on this occasion by quoting further figures. I want rather to revert to a statement made on the Second Reading of the Bill by the Financial Secretary to the Treasury. The hon. Gentleman, who always makes interesting speeches, was attempting on that occasion to controvert certain arguments advanced from these benches in regard to the contentions put forward by supporters of the Government in justification of this reduction in the standard rate of Income Tax. The argument of Government supporters has been, in the main. that this reduction in the standard rate of tax will be a stimulus to industry and that the relief given to this section of the community will result in more money being available for industrial development. In reply to that argument we contended that a better stimulus would have been given to trade had the Chancellor of the Exchequer used his surplus to extend consuming power among large numbers of the people in quite other directions from what is here proposed.

The Financial Secretary to the Treasury in reply to our argument gave us a disquisition on the savers and the spenders. He made a very interesting statement in the course of which be asked who were the savers and who were the spenders, and he quoted figures to show that the working classes as he called them had in the last three years saved considerable sums. He argued that there was no force in the contention that if more money went into the pockets of the working classes they would necessarily spend more and in spending more would stimulate production and contribute to some sort of trade revival. He contended that they saved just as much as the other people did and that, consequently, there was little force in our argument. I do not wish to deny the hon. Gentleman's facts, but I ask him why do the working classes save where they are able to do so? The section of the working class to which the hon. Gentleman referred save because of the general insecurity of the economic system in which we are living. They save because the system is so insecure that they want, as far as they can do so, to make provision for the future. What of the other class who are to get the major benefit from this Income Tax relief? Already many of them have far greater incomes than they can possibly spend in any way which will win them pleasure or advantage. They do not save because of the economic insecurity of the system. They save willy nilly. They must do so. They cannot spend all their incomes in ways which will give them satisfaction and pleasure. The motives for the saving in the one case are entirely different from the motives in the other case.

We feel that if the Chancellor of the Exchequer had used his surplus in other ways of giving Income Tax relief for instance—and I would stress that fact—instead of in the way of reducing the standard rate of tax, he would have done something far more calculated to stimulate trade and industry than the method which is being pursued. Many arguments could be brought forward to show how that £20,000,000 could have been used in other ways far more beneficial to the community than in giving it to this particular stratum of Income Tax payers. Consequently, we want again to make our protest against the way in which the Chancellor has given this Income Tax reduction and to reassert our contention, which we have made all along, and which no arguments I have heard from the other side have convinced me is wrong, that had this money been used in other ways, which we have indicated, it would have been an effective stimulus to trade and industry. We shall not go into the Lobby against the Clause, but we do want to make our protest against the method which the Chancellor has employed to deal with this matter.

6.1 p.m.


The merit and equity of having restored the position of the standard rate of Income Tax to the pre-1931 rate and of having used the available surplus for a restoration of the allowances will form the subject of a discussion on a new Clause which appears later on the Paper. It is not necessary, therefore, to weary the Committee with a recital of the case for that obvious piece of justice. In dealing with this Clause which remits the extra contribution called for from Income Tax payers on the standard rate, I feel that the Committee should once again consider the whole justice of the arrangement. Surely it cannot be contended that there is any justice in restoring to what is admittedly the most well-paid section of the community 100 per cent. of the contributions they made in 1931, while not only are allowances not restored, but the sacrifices in reductions of pay of the various classes of Government and other servants are restored only by one half.

It would be reasonable to ask that the first restoration which should come out of the surplus should be the restoration of wages and salaries. If it be argued, as it was by the Financial Secretary, that this is a gesture rather than a payment which is made to create an immense psychological effect and to cause a great revival in trade due to a renewed flowing of confidence, I feel that that revival would be achieved far more swiftly had the Government applied the increased revenues in the restoration and the enlargement of the direct work which is waiting to be done and which would have the immediate effect of taking people who are unemployed off the public charge and putting them on to the pay roll. We are still suffering from the drastic economies which were made in 1931 at the expense of housing, slum clearance and all kinds of public work carried on by grants from the Exchequer through the local authorities. In that direction, I submit that a more direct revival of useful enterprise and a more direct effect upon the unemployment figures would have been secured by an enlargement of the Exchequer contributions in those directions rather than by a reduction in the standard rate of tax.

6.5 p.m.


In spite of what hon. Members opposite say, it is an undoubted fact that those engaged in industry look upon the reduction of the standard rate as the only method of reduction of Income Tax which is of definite benefit to the industry. It is because it is a gesture and also a definite relief from taxation on the money that is put to reserves. That alone is a definite relief to industry. Hon. Members have also forgotten that besides public servants who have had cuts there are large numbers of clerks, foremen and other black-coated workers who are subject to these allowances who had cuts made by their employers. If these businesses prosper again, the cuts are in very many cases put back. I know in my personal experience of many cases where they have been put back to the extent of a half and the whole. In that way the relief of taxation and the encouragement of business is doing more for the black-coated workers than the small relief on the small amount of Income Tax that they pay. It is better for a man to get a substantial return of salary than a substantial relief on his Income Tax allowances. A great many more people will benefit by the present proposal than if the allowances had been dealt with.

6.8 p.m.


I keenly share the anxiety which has been expressed above the Gangway as to the lack of balance which this Clause introduces into the Budget. I am bound to regard a reduction of Income Tax in itself as a good thing, if it is in correct balance with all the rest of the financial provisions that are made. I cannot help remembering the cry of equality of sacrifice which was made at a certain time, which I used myself and genuinely meant, and I think equality of sacrifice definitely carries with it equality of restoration. I do not necessarily mean restoration to each individual in the same proportion in which it was taken from him. We also have to take into account the weight with which the burden fell upon different people in the light of their different economic circumstances. I cannot help feeling that this reduction in the Income Tax coming at this time does not encourage the people as a whole to think that equality of sacrifice is being preserved.

I agree with the hon. Member who spoke last that there may be in some respects an encouragement of industry by a reduction of Income Tax, and I think he put the right point when he called attention to reserves. I think on that point there is something to be said. With regard to the standard rate as a whole, I cannot see that more purchasing power in the hands of Income Tax payers stimulates industry more than purchasing power in the hands of anybody else. The hon. Member could make a reasonable case in regard to reserves, and if some special proposition is put forward in regard to reserves, if that were what we were discussing, it would seriously merit the attention of the Committee. That is not the proposal which is embodied in this Clause, which is a general reduction of the standard rate. I think that on the principle of taking first things first, attention might have been given to a great many other matters which really have a prior claim before this relief, which I admit to be good in itself, was granted to this particular class. If it were to be granted, I agree that it would have been better done if there had been some consideration of the special allowances and exemptions. That would show that the Government in making this restoration, even within the limits of the Income Tax, were considering first those people who had the greatest burden to bear. I cannot help regarding this particular proposal, when taking into account all the other matters which arose out of the financial crisis, and viewing it as a whole, as an instance in which the Budget is unbalanced in the vital sense of not considering first those whose interests are greatest.

6.10 p.m.


I should have been glad if we could have had a word from the Financial Secretary at this point. I hope he does not consider that the last word has been said on this matter. I gather from his features that he is eagerly awaiting an opportunity of enlightening us as to the reasons why this Clause is included in the Bill. Before he does so I might be allowed to say a word or two on behalf of the Opposition. We on this side take exception to what is implied in the Finance Bill. Anybody who in interested in the relation of direct and indirect taxation will know that I am. speaking the bare truth when I say that when Labour Governments have been in office the tendency has been to decrease the proportion of indirect taxation and to increase the proportion of direct taxation. I would further hazard this proposition, and I do not think anyone will controvert it, that the tendency during the lifetime of this Government and of previous Conservative Governments was to decrease the proportion of direct taxation and to increase the proportion of indirect taxation. I have not the figures, but I do not think the Financial Secretary will deny this. He himself in the figures which he gave when he last spoke on this subject admitted that there had been some degree of affecting the balance in the direction I indicated, namely, in favour of the direct taxpayer as against the indirect.

We naturally cannot carry our opposition to this Clause to a Division, because, obviously, the money has to be found. We admit that the King's Government must be maintained, and that can only be done if adequate resources are at our disposal. The point of issue between us is as to how the necessary money is to be found. It was an old principle, certainly among Governments of the Gladstonian days, that the old proportion of fifty-fifty as between direct and indirect taxation was the correct proportion, but I am not sure it is the proportion which is acceptable to the present Government. Judging from their tendency, we shall speedily arrive at a situation where the proportion will be so out of balance that the indirect taxpayer will be very heavily burdened. If we agree with the proposition, as we all must, that the money has to be found, we must fix a principle as to the basis on which taxation is to be levied. We submit with confidence that there is only one principle which can be accepted by anyone in relation to taxation, namely, ability to pay.

We take no special joy in imposing taxation for the purposes of imposing it. That would be stupid. But as long as hundreds of millions of pounds have to be found, we have to determine who is to bear the major proportion of that burden. It is because there is an alleviation of the burden of those who are better able to bear the burden that we object to this Clause. The hon. Member for the Ecclesall Division of Sheffield (Sir S. Roberts) was apparently undecided on which leg to stand, but he must make up his mind as to which is the more desirable method of adding to the purchasing power of the people. I admit that a certain number of black-coated workers will benefit from this proposal, though I think he will agree that the number who will so benefit will not be substantially large, because the effect of the allowances, coupled with the low rate of remuneration of the great mass of the black-coated workers keeps them below the Income Tax limit.


The hon. Member has missed the point I was trying to make, which was that a restoration of prosperity in industry would lead to a removal of the cuts made in the salaries of black-coated workers. With industry more prosperous through the general reduction of taxation, it could afford to remove those cuts, and, therefore, indirectly, the black-coated workers would receive benefits in the way of increased salaries.


I do not at all controvert that general proposition but that is not the fundamental issue between the hon. Member and myself. I am concerning myself simply with the incidence of this particular reduction of Income Tax. Those black-coated workers whose incomes are above the exemption limit will benefit by this reduction of taxation, and that is valuable to them, but it is only valuable to them in so far as it enables them to have increased purchasing power. If that principle is conceded in respect of the limited number who will gain benefit under the Government's proposal, surely it is an excellent principle to apply over a much larger area. The issue between the Chancellor of the Exchequer and ourselvs on this point is as to which is the better way of using the £20,500,000 available for the remission of direct taxation. My hon. Friend the Member for East Fulham, (Mr. Wilmot) developed very fully, and I think very adequately, the proposition that instead of giving a reduction of 6d. in the £ to every direct taxpayer it would be much better, even from the standpoint of creating trade, to restore the allowances, because in that way we should cover a much larger number of individual people. The person who benefits by the Income Tax allowances is the person who has a family depending upon him, and the bigger the number of persons depending upon him the greater the volume of the needs to be supplied. If, therefore, that individual has more money to spend through a restoration of the allowances, he is to that extent in a much better position to help to recreate the demand for goods by satisfying the wants of his own family.

I wish to put forward another proposition on this question of the benefit to trade. I have said earlier in these debates that in returning certain direct taxation to direct taxpayers we must necessarily benefit trade to some degree, but there is no absolute assurance that this £30,000,000 will go into reserves, because certain traders may already be in possession of such an amount of wealth that they may not feel called upon to put the money back into the business, and they will be free to spend it as they will. If I may take an extreme illustration, a person who has £20 or £50 or £100 restored to him under this proposal may spend it at Monte Carlo, or elsewhere, or may spend it on the Derby to-morrow. He may spend it entirely uselessly—that is the point I make; but the person with a limited income, and with a family dependent upon him, cannot afford to indulge in extravagances of that sort, and is bound to have regard first to the calls of his family.

The need of the country at this moment is not so much the opportunity to put more money back into certain types of industry. Suppose that out of this £20,000,000 £2,000,000 went to cotton owners in Lancashire. I very much doubt whether the restoration of that £2,000,000 to the owners of cotton mills in Lancashire would create any more trade or business in Lancashire. Lancashire is suffering not from the lack of money but the lack of orders, and that lack of demand arises because those who would normally be consumers have not the power to purchase. If there were a sudden accession of prosperity to my part of the country, for instance, that would, by consequence, create prosperity in Lancashire; but the restoration of £2,000,000 to certain possessors of income in Lancashire does not of necessity recreate trade in that county. What is wanted is a more widespread measure of purchasing power.

I suggest to the Chancellor, in all seriousness, that a far better way of stimulating trade and, in the long run, of bringing benefit even to the direct taxpayers, would be to use that £20,000,000 in stimulating public developments in various parts of the country. In that way he would give wages to more people and thereby would create a larger number of customers, who, in satisfying their wants, would add to the demands upon the factories of our country. The division between the right hon. Gentleman and ourselves this afternoon is not that we are anxious, out of some sense of bitterness, to keep the Income Tax at a high rate; rather, the difference between us arises over the question of which is the better way of utilising this sum of money, £20,500,000 this year and £24,000,000 next year, in the conditions in which the country finds itself. From the standpoint of the nation as a whole and of the nation's trade, from the more limited standpoint, even, of the well-being of the direct taxpayer himself I submit that in the long run it would be a far better thing to spend the available money upon some form of public works rather than to hazard it upon the hope that individual people will return it to the industries in which they happen to be interested. That is the fundamental difference between us, and we challenge the increasing tendency, for which the Government have been responsible ever since they took office, to add to the burdens of the indirect taxpayers, that is, the poor, and lighten the burdens of those better able to bear the weight of taxation.

6.27 p.m.


The hon. Gentleman rose for the purpose of inviting me to make another speech. I do not know whether that is because he is anxious to hear my voice, or whether he is acting upon the principle that what I say three times is true; but I am only too ready to respond to his invitation. As always, the hon. Gentleman has managed to cover a vast territory of argument within a small space of time. We are, however, not concerned here with any generalities; we are discussing a brief, concise, clear Clause in the Finance Bill reducing the Income Tax by 6d. in the £, and that is the only difference before the Committee. The hon. Gentleman has endeavoured to define the issue between us by saying that we are not distributing our surplus in the best possible way. He might have given us some credit for having a surplus at all. We only have that surplus as the harvest of our prudent finance and of the self-restraint of the British people.


On a point of Order. Is it in order to discuss the Budget surplus on this Clause?


I quite appreciate that the subject is irksome to the hon. and learned Gentleman. Having that surplus, it became necessary for us to determine the principles upon which we should distribute it. The hon. Gentleman, like those who have preceded him on the opposite side of the Committee, has made it clear that the Opposition would have operated upon principles different from our own, and would have used this surplus for redistributing the national income. We, however, conceived ourselves as being bound in honour to distribute the surplus in a certain way. The principles we selected were these: first, that those people had the first claim upon this surplus who had contributed to it by the sacrifices which they made in 1931. The second principle was that the money should be divided in roughly the same proportion as that in which it was given by the various classes who made the sacrifices. Accordingly, as we had a limited sum to dispose of, the direct taxpayers, who contributed nearly £58,000,000, are to have restored to them, in the shape of this reduction in direct taxation, £24,000,000 in the year. Those who suffered cuts in salaries to the extent of £11,000,000, are to receive back £5,500,000. We conceived ourselves hound in honour to make the distribution in that way.

I do not dispute that there is much substance in the argument which the hon. Member for East Fulham (Mr. Wilmot) constantly places before us, namely, that when you make a restoration to direct taxpayers and you have the alternatives of reducing the standard rate of tax and placing back the Income Tax allowances, you might give greater benefit to some people by restoring the allowances. There is room for a legitimate difference of opinion upon that point. Psychologically there can be no question that a reduction in the standard rate of tax has a greater effect. It brings a benefit to every direct taxpayer in the country, and it brings a benefit to every industry puting money to reserve. We made the choice, and we made it upon what we conceived to be a balance of advantage. If those who suffered in respect of allowances in 1931 have to defer their hopes of restoration for another brief space of time—or for a longer space of time—they have the consolation of knowing that even under the allowances as they exist, the smaller incomes escape tax altogether.

I pointed out to the hon. Member for East Fulham that a married man with less than £400 a year and three children pays virtually no tax, so generous is our system of allowances at the present day; when he has £400 a year and those family responsibilities, he does not pay Income Tax at 4s. 6d. or 5s. in the £ upon his income; the effective rate upon his income is 2½d. in the £. Our allowances are upon a most generous scale—£50 for the first child, £40 for each of the other children and allowances in respect of insurance policies, and other allowances. If the hopes of those who have suffered in respect of allowances have to be deferred, they have the conolation of knowing that we have taken a step of general benefit and advantage. I do not know what the hon. Gentleman means when he says that we ought to have used this money in some way which would have restored work to the unemployed. The course which we have pursued has had that result, and had it in the most astonishing manner, and seeing that there are so many more people in work as a result of our policy, we are entitled to expect the praise, however reluctant, of hon. Gentlemen opposite. I realise that the hon. Member for Mansfield (Mr. O. Brown) merely desired, as he said, to make a protest, which he did with remarkable courtesy. If it still be the duty of an Opposition to oppose, I can only congratulate the hon. Gentleman, and those who sit next to him on those benches, on the resourcefulness which they show, which is not in the least to be measured by their exiguous numbers.

6.35 p.m.


The Financial Secretary to the Treasury says that the Government were bound in honour—to everybody except the unemployed—in the distribution of this surplus. The means test was evolved during the crisis of 1931 in order, we were told at that time, to meet the situation which was upon us. The unemployed who have suffered through the means test have suffered more than any other section. There is injustice to the Income Tax payers in this proposal, because, if the principle of equality of restoration were to apply it is obvious, as has been said by the hon. Member for East Fulham (Mr. Wilmot), that the people who were most affected by the abatement of the allowances (had first claim. I recall a figure given in reply to a question in this House—if I do not remember it aright, I am perfectly ready to be corrected—in which it was stated that the unemployed had suffered from the means test to the extent of £21,000,000 per annum. How many of those millions, taken from them by the harsh measures of the means test, are being restored by this Budget? It is estimated that they will receive about £3,500,000 out of the surplus of £29,000,000, while the direct taxpayers are given, in relief of the standard rate of Income Tax, £21,000,000. The relatively small section of Income Tax payers who are to benefit to that extent did not make sacrifices as great as others, because they had more income in their pockets, even after their Income Tax had been increased, than had the other section. The cuts imposed upon the unemployed did not affect luxuries or savings but the very means by which they lived and the very necessaries of life. The first thing that the Government should have done was to meet in full, as a matter of justice and fairness, the claims of those who had suffered worst and to distribute most of the surplus among the unemployed rather than among the direct taxpayers. I protest that this is a most unjust way of distributing the surplus.

I controvert the other thesis put forward by the Financial Secretary. I have said before that he is extremely clever in defending his Government. We are delighted to hear him, and we are extremely interested in what he says, but there is no proof that the relief of the Income Tax payers in this manner has resulted in a revival of trade as the hon. Gentleman seemed to claim this afternoon. I want the Government to consider whether it is not sound policy to say at the moment that, far from helping trade and causing a revival by giving an impetus to trade, the very savings that this is meant to provide will create dangers in the economic situation of the country. I think it can be established that oversaving was one of the causes of the crisis through which we have been passing; money or purchasing power has been heaped up by individuals who, when they get it, cannot spend it. Anyone who has read the classic case put up by Mr. J. M. Keynes in that well-known book "The Economic Consequences of the Peace" will agree that we are not suffering through lack of means for investment. There is not an hon. Member here who will honestly maintain that we are in our present state, and that we have passed through our industrial difficulties, because there were not means for investment. There are ample means, but where are the places in which to invest? You are giving money to people who normally invest, and the Government's plea is that they are giving it in relief of the standard rate rather than in relief of allowances because that will provide money for investments, and will create confidence.

I should have thought that it would be far truer to say that money heaped upon money with no place for investment creates distrust and unsettlement rather than confidence. There is a lack of opportunity to invest, and one of the reasons for that is obviously the lack of purchasing power, which affects the production of goods which modern society has the power to produce. I charge the Government with doing a wasteful and thoroughly uneconomic action. It is waste to pile up money in the banks, and to pile up means of investment without the opportunity to invest. It cannot fructify, and there is no result from it except depression, apathy and distrust. If the Government were to follow a sound economic policy, let alone a fair one, in relation to the sacrifices imposed during the crisis, if, instead of giving money to people who cannot spend it, and who form the section of the community who usually make savings, they were to look at purchasing power, at the spenders—if they looked all round the problem free from bias, free from political pressure, and free from the pressure of those who see profits and profits only—they would have given this money to the unemployed.

I believe that that would have been far better than spending it in public works and making capital aggregations again in that way. The unemployed would then buy the things necessary for them to live. In view of the policy of economic nationalism which is being pursued by the Government, now that they have given up the idea of expanding international trade, and the home market is looming so large, purchasing power is even more important than ever inside this nation. It is of prime importance now that we should see to it that the people in our limited home market have the power to purchase the goods which are produced here. We object to this reduction because, as I have said, it is not just, it has no relation to what happened during the crisis, and it is unsound from an economic point of view.

6.48 p.m.


I expected the Financial Secretary to use some new argument in justification of the reduction of Income Tax, but, instead of that, he contented himself with merely repeating the arguments he used when the Budget was first introduced. The discussion of a Clause like this weeks after the introduction of the Budget has this advantage, that, when the Budget was introduced, this reduction was made because the Press had led the Government to believe that it would be popular to reduce the Income Tax by 6d. The Chancellor of the Exchequer took that advice and did it. The House believed, when the reduction was first made, that it was a popular step on the part of the Government. Now, weeks afterwards, we are able to judge whether it has been popular or not. During the interval we have been able to learn that it has not been a popular step, that the country has not agreed with it, that there has not been a single by-election that has helped the Government because of this reduction of Income Tax. Therefore, I should have liked the Financial Secretary to use some new argument rather than that which he used when the Budget was first introduced. That argument was that this reduction of Income Tax will be a stimulus to trade.

I have been led to believe for a long time that one of the troubles of this country was the huge amount of money that was lying idle in the banks. If there is an abundance of money lying idle in the banks, there can be no justification for reducing the Income Tax in order to stimulate trade. I suggest that this £20,000,000 could have been better used for the purpose of starting new industries in this country. That is the crying need in this country to-day. It is no use depending on private enterprise to start new industries. Those of us who come from distressed areas have lost hope in private enterprise starting new industries.

If there is no prospect of private enterprise starting new industries, it is the duty of the Government, when they have the opportunity, to use whatever money they have in order to start those new industries. Here was a golden opportunity for the Government, with a surplus of £20,000,000 this year, and the expectation of a surplus of £24,000,000 next year, to start new industries in some of the distressed areas. Last year we were told that the Government had a surplus of £30,000,000, and this year there is a surplus of £20,000,000, but that money has not been used to meet the great need of this country to-day. If private enterprise will not start new industries, the House of Commons has to face that fact sooner or later, and it is the duty of the Government, whichever party is in power, to start these new industries. This would have been a splendid opportunity for them to do so, and thereby find employment for men who at present have no prospect of finding employment.

Again, those new Income Tax payers who were called upon in 1931 to pay Income Tax for the first time, had a far greater claim to consideration on this occasion than the standard Income Tax payers had, and the Government should have considered those new Income Ta; payers, who have really been penalised, before they considered reducing the standard rate of Income Tax. Then the Chancellor of the Exchequer should have considered that the Government" owed something to the unemployed who have lost their medical benefit because the Government refused to find £750,000 a year, and who at the end of 1935 will lose their old age pension rights at 65. Another thing that the Chancellor of the Exchequer should have done, if he did not utilise this £20,000,000 for starting new industries, was to abolish the means test. The unemployed who come under the means test had in my opinion a far greater claim on the consideration of the Government and of the Chancellor of the Exchequer than the rich Income Tax payers had. What we complain about is the mistaken way in which this £20,000,000 is being utilised. I consider, first, that the Chancellor of the Exchequer would have been better advised to start new industries, or, failing that—


Surely, the hon. Member is aware that £20,000,000 is exactly the amount that is being and has been spent by private enterprise in the development of new industries in his own constituency?


That is news to me. I confess that up to this moment I was not aware that any money had been spent in my constituency—


At Billingham.


Billingham is not in my constituency. Failing the starting of new industries, the Chancellor of the Exchequer should have considered the unemployed who have lost their medical benefit, and then the unemployed who suffer under the means test. In my opinion these courses would have been much better than relieving the rich Income Tax payer.

6.57 p.m.


The Financial Secretary, in his reply, mentioned that it was the duty of the Opposition to oppose, and he excused us on that ground. Surely, we could not oppose on a better thing than this distribution of a surplus of over £20,000,000 to a section of the people whom we regard as being in less immediate need than other people are. Anyone who has followed the broadcasting that takes place weekly, and especially that which took place during the last week-end, will recognise the dire need of many of our people. The position of one woman and her family, which was stated last week, is a crying shame and should not be allowed to continue, and that is typical of thousands of other similar households. To-night, although one knows that it is almost futile to object, we feel that we should not be doing our duty to our people to allow this reduction of Income Tax to a particular section of people, when the relief might be better given in other directions. The hon. Member for Farnham (Sir A. M. Samuel), who on occasions of this character generally has something to say about high finance, has had nothing to say on this matter to-night. I assume that he is quite satisfied to let sleeping dogs lie, but I would have liked him to use some argument that if it did not go into industry then it should be devoted to some better purpose. To my mind, no better use could be made of it than if the people who got it were in need of it: but giving this back will only mean that the banking accounts of the fairly rich people will be increased. We have arrived at a time when we realise that money lying idle is of no use to a community; the real value of money lies in its circulation. Our argument is that this money could be used better if the people who received relief spent it on useful articles, either on food or clothing, for the benefit of the community, instead of giving it to people who will not make good use of it.

To-night I would feel somewhat lacking in my duty if I had allowed this Clause to pass without protest. It is the biggest and most vital Clause in the Finance Bill. I know that later on we shall be dealing with other matters, but they will be academic by comparison. While we have so many people suffering from want, we cannot sit quietly by and allow money to be handed back to people who have no need of it. One argument used in support of this reduction is that some pledge was given that the increase would be redeemed. I am bound to admit that this does hold good to a certain extent, but only if we put back all the cuts. I claim, therefore, that until we fulfil that pledge of restoring all the cuts, we have no need to do what we are doing to-night. I know we cannot fight the Clause and cannot vote against it, but we should be lacking in our duty to our people if we did not protest.