HC Deb 19 June 1935 vol 303 cc423-33

6.23 p.m.


I beg to move, in page 15, line 20, to leave out from "tax," to "shall," in line 22, and to insert "as personal allowance."

I have two other Amendments to this Clause both of which are consequential and, therefore, it might be convenient if I discuss them altogether, and in the event of it being necessary to take a vote to take it on the second Amendment, which is the main Amendment and proposes to restore the personal allowance to the figure at which it stood in 1931.


Only the two first Amendments of the hon. and learned Member are to be called, and the hon. and learned Member can discuss them together. He cannot discuss the third Amendment which is not to be called.


The Amendment I am now moving is introductory to the second, which is to leave out £170 and insert £225, in order to bring the personal allowance back to the pre-1931 Budget figure. In his Budget speech the Chancellor claimed a great deal of credit for the substantial help he was giving in this Bill to the smaller taxpayers and quoted Lord Snowden to the effect that the first relief should be given to those who suffered most severely in 1931. After all these preliminaries the Chancellor of the Exchequer is now making only a very small concession. I do not know why the third Amendment in my name, to substitute £135 for £100, has been ruled out of order, because it deals with the case of a single man.


It is not selected.


The result of all this is that the Chancellor of the Exchequer has made a very small concession indeed in respect of the personal allowance. I have gone to some little trouble to get some comparative figures. The true comparison is between the position prior to October, 1931, and the position under the present proposals. Prior to 1931 a married couple without children with an income of £250 a year suffered an additional imposition of £6 5s. In his Budget the Chancellor of the Exchequer proposes to give him relief to the extent of £2 7s. 6d. In the case of a married couple without children and an income of £400, additional taxation of £10 8s. 4d. was imposed in 1931, and the Chancellor of the Exchequer now gives him relief to the extent of £5 12s. 6d.—only one-half. In the case of a married couple without children and an income of £500, additional taxation of £21 9s. 2d. was imposed in 1931, and the extent of the relief he gets under the present Bill is £5 1s. 3d.—one-quarter. That is not giving substantial help to this class of taxpayer; it is not giving relief to those who suffered most severely in 1931. This particular class of the community had heavier burdens placed upon them in 1931 than almost any other class except the very poor, and they have borne these heavier burdens for a longer time because they did not benefit in the reduction in the standard rate of tax.

In his Budget speech the Chancellor claimed that he was endeavouring to correct the position. He gave relief by a reduction in the standard rate last year, and is now proposing to give relief, which he agreed was more important, to the smaller taxpayer by means of the personal allowance. But I would point out that whereas last year the Chancellor of the Exchequer gave relief to the extent of £24,000,000 in a full year, he only gave relief this year to this particular class to the extent of £10,000,000, or rather less than half. In our view there can be no more necessary course to take than to put the personal allowance of this particular class of taxpayer back to the pre-1931 level. Merely to increase the married people's allowance from £150 to £170 does not in any way meet the position.

6.31 p.m.


I am interested to note that the hon. and gallant Member for South-East Leeds (Major Milner), speaking on behalf of his party, considers that the claims of this particular kind of Income Tax payer are entirely paramount, and apparently are to be preferred to those of the indirect taxpayer. I have never pretended for one moment that the concessions I was able to make in this Budget would put back the allowances on Income Tax to where they were before the Budget of 1931. What I have said is that I felt that the time had come when the taxpayers who were then so hard hit by the reduction of the allowances should have their turn, that I desired to give back what I could offer to the smaller taxpayer; and as far as I know what I proposed met with general approval throughout the country. It is true that I have not gone the whole way back to the former allowances, but when I tell the Committee that the proposal of this Amendment, even taking into account the fact that the first £135 of income is now taxed at only 1s. 6d. instead of 2s. 3d., would cost no less than £9,000,000 in a full year, the Committee will see how absolutely impossible it is for me to consider anything of the kind.

6.33 p.m.


I suppose that the right hon. Gentleman thought he had a good point or else he would not have made it when he said that we apparently preferred the small Income Tax payer to those who bear indirect taxation. The right hon. Gentleman must know very well that on all occasions, including today, we constantly put forward the argument that we believe taxation should be borne, as long as you have the present system, by those who are best able to bear the load. The indirect taxpayer is the least able, on the whole, to bear the load. When one is dealing with the problem of Income Tax, by which so much of the finances of the country are raised to-day, one has to examine, within the ambit of the Income Tax itself, how fairly the load is distributed, and it is no argument to say, as apparently the Chancellor now says, that the indirect taxation is too heavy and ought to be taken off in order to allow the indirect taxpayers relief, rather than this small class of taxpayer. That apparently is the argument which he is now putting forward. When he puts it forward in his next Budget we shall be delighted to give him our support.

What I should have been interested to hear the Chancellor say was whether he intends as a matter of principle to go back to the 1931 scale as regards the allowances to the lower grades of Income Tax payers. He announced two or three years ago that his object in his Budget would be to put back progressively the different scales of people who had suffered as a result of the cuts in 1931. Here is a category which suffered very severely indeed by those cuts; and if his principle is to go back, does he intend to give these people the benefit of these remissions as soon as he can afford it? I shall be as interested as my hon. Friend the Member for Huddersfield (Mr. Mabane), who is trying to find out whether 4s. will be the standard rate next year, to know whether there is a chance, instead of the standard rate being 4s. next year, of our getting back the personal allowance which was in force before 1931, or whether it is the intention of the Chancellor to rearrange the burden as between Income Tax payers so that as now a larger proportion is borne by the poorer people.

It is quite true that it is difficult for the Chancellor suddenly to produce £9,000,000 out of his bag like a rabbit out of a hat. The right hon. Gentleman has been called a "movie star," but no one has accused him yet of being a conjurer, except perhaps in his own soliloquy when he said, "What, another surplus," as if it had indeed come out of a hat. We do not expect that, but we should like a declaration as to whether it is his intention, if he remains in charge of the finances of the country, to work back to the standard of Income Tax, the standards of burden which had been worked up to in the year 1931, or whether he contemplates restabilising the Income Tax system on the basis of the greater charge which now falls upon the poorer and the lesser proportionate charge which falls upon the richer people.

6.38 p.m.


In last year's Budget, and again this year, I urged the claims of this particular class of taxpayer on the consideration of the Chancellor of the Exchequer and of Parliament. This Amendment and the speech of the Chancellor to-day show quite clearly how far we are from restoring the pre-1931 position, so far as this class is concerned. It was the general opinion in the country that with the revival of prosperity which the country has experienced during the last year or two it had been possible to restore practically the whole of the cuts that were made under the pressure of the extreme financial necessity in 1931, and so far as cuts in wages and salaries are concerned that has been done, and so far as cuts in employment allowances are concerned it has been done. But here, with regard to the taxation of these smaller Income Tax payers, that has most certainly not been done. We pointed that out during the earlier stage of this Budget. Now the Chancellor has declared that even to carry out this one proposal would cost no less than £9,000,000; that is to say we are at least £9,000,000 short of the restoration, so far as the married people who are at the bottom of the Income Tax scale are concerned.

I think the Committee and the country should know that, and that we are still some distance away from the complete relief of the taxpayers at the bottom end of the scale, who are an extremely numerous class and a most deserving class and feel the weight of taxation much more than those in the higher ranks of the scale. When the Chancellor himself and leis colleagues continually impress upon the country how prosperous we are and how nearly completely the position has been restored, let it be remembered that this is an instance which shows that that is not so, and that there are still additional burdens placed upon the taxpayer which have not yet been relieved. I do not say that the precise scales that existed before 1931 were necessarily right and for all time. It may be that they are capable of adjustment in order to secure in some detailed particulars greater equity, and I am not now pleading for a simple restoration at every point of the scale of 1931. That may have to be the subject of consideration. But I do urge that, if not this year, at all events next year, further attention should be paid to this particular point, and that at the earliest opportunity the necessary action should be taken to relieve from the burdens imposed by the extreme pressure of the financial situation the large body of taxpayers concerned.

6.43 p.m.


I wish to support the Amendment. I wish also, if I can, to bring the Chancellor's mind back to his speech of 15th April last. He then said: I realised quite well at the time that that proposal conferred a greater benefit upon the large taxpayer than upon the small, because of course to the small Income Tax payer the most important thing is the level of his personal allowances and reliefs. When I heard the Chancellor make that statement I thought, "Well, there is something to follow later." In the same speech the Chancellor said that he proposed raising the Income Tax level for allowance from £150 to £170. I thought that that was a little bit of something. But later in the same speech the Chancellor said: I am, therefore, proposing to clean the slate, and to make a full restoration from let July, the same date as that on which the corresponding change was made last year.—[OFFICIAL REPORT, 15th April 1935; cols 1633 and 1636, Vol. 300.] But that is only cleaning the slate for certain purposes. It does not clean the slate for the people on whose behalf we are pleading. I see the Chancellor is smiling. I thought from that speech that he wished to put these people back to the £225 allowance, as they were before the economy cut was made. The hon. Member for Huddersfield (Mr. Mabane) has been pleading for the Income Tax payer who pays the standard rate, and for a reduction from 4s. 6d. to 4s. in the £. We are pleading for people who need a reduction in their taxes far more than the 4s. 6d. man. If the Chancellor has cleaned the slate as far as the salary cuts are concerned, he has not done so as far as the poorer Income Tax payer is concerned. He has raised it by £20, but in 1931 he reduced it by £75, namely, from £225 to £150.

I am told that we are ruling out the single man in this discussion and I am sorry for it, but I must point out that the £170 to the married man means that if that man is earning £3 5s. 6d. a week he comes under tax because £170 works out at £3 5s. 4½d. per week. On any wages above that a man begins to be taxed although he already has to pay as much in indirect taxation as the man who has the 4s. 6d. in the £ Income Tax. Indeed I am not sure whether the man with the £3 5s. 6d. a week is not paying more in indirect taxation than the man with the 4s. 6d. in the £ Income Tax, because he has to buy things which are, in one sense, more heavily taxed. I am sorry that the Chancellor replied before the speech of the right hon. Gentleman the Member for Darwen (Sir H. Samuel). I do not imagine that my pleading for something from the rich man's table would count for very much, but I wish the right hon. Gentleman had waited a little longer before throwing up his arms in despair and telling us that this concession would cost £9,000,000. I hope that the right hon. Gentleman even yet will reconsider his decision and make some further allowance to these people who are the hardest-hit of all, to people such as the man and wife with rent of from 10s. to 14s. a week to pay and other family commitments. If the right hon. Gentleman is going to clean the slate, let him begin with the people at the bottom before he cleans the slate for the people at the top, and I ask him to consider raising this limit from £170 to £225.

6.48 p.m.


We realise that it would be almost impossible for the Chancellor to accept this Amendment, especially as it would cost £9,000,000, but we had hoped, indeed I think we had expected, that the right hon. Gentleman would take this opportunity of indicating that it was his intention to restore, as soon as possible, the Income Tax allowances to the level at which they stood before the second Budget of 1931. If he gave that undertaking now and carried it out he would be doing no more than implementing the promises which he very clearly implied at an earlier period. The promise that the standard rate of tax would be restored at the earliest opportunity to the pre-1931 level was carried out, and when that was done people were given clearly to understand that as soon as possible the small Income Tax payers'

allowances would be restored. It was a bitter disappointment when the Budget was unfolded this year and people found that only a very little distance in that direction had been travelled. When I remind the Committee that the £500 a year family which, in 1930, paid a tax of £3 19s. now pays a tax of £6 they will realise how little the Chancellor has done in the matter of restoration to the small Income Tax payer, though he has restored the standard rate which mostly affects the large Income Tax payers.

I appeal to the right hon. Gentleman again to give some indication that it is proposed at the earliest opportunity to make good what I and many others thought was the promise made last year. He tells us with great delight and much self-satisfaction, both in the House of Commons and on the screen that the Government have restored 80 per cent. of our prosperity, that the Budget has been balanced and that our finances have been put in good order. [HON. MEMBERS: "Hear, hear."] Yes, but we have learned to-day at whose expense it has been done. We know that, as to £9,000,000, it has come out of the pockets of the small Income Tax payers and out of the slender margin which is left to these people, after rent, insurance, and other occupational and family commitments have been met. It is the little man—"Henry Dubb," as he is sometimes called—who has had to pay. He is the fellow who has balanced the Budget and it is well that he should understand it. While the well-to-do have been placed virtually in the same position as they were in before 1931, the major contribution to the present financial position has been made by those who can least afford to pay.

Amendment negatived.


I beg to move, in page 15, line 22, to leave out "one hundred and seventy," and to insert "two hundred and twenty-five."

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 248; Noes, 61.

Division No. 239.] AYES. [6.55 p.m.
Agnew, Lieut.-Com. P. G. Apsley, Lord Balley, Eric Alfred George
Albery, Irving James Aske, Sir Robert William Baillie, Sir Adrian W. M.
Amery, Rt. Hon. Leopold C. M. S. Astbury, Lieut.-Com. Frederick Wolfe Baldwin, Rt. Hon. Stanley
Anstruther-Gray, W. J. Atholl, Duchess of Balniel, Lord
Barclay-Harvey, C. M. Heneage, Lieut.-Colonel Arthur P. Procter, Major Henry Adam
Beaumont, M. W. (Bucks., Aylesbury) Herbert, Capt. S. (Abbey Division) Pybus, Sir John
Beaumont, Hon. R. E. B. (Portsm'th, C.) Hills, Major Rt. Hon. John Waller Ralkes, Henry V. A. M.
Benn, Sir Arthur Shirley Holdsworth, Herbert Ramsay, T. B. W. (Western Isles)
Birchall, Major Sir John Dearman Hore-Bellsha, Rt. Hon. Leslie Ramsbotham, Herwald
Bilndell, James Hornby, Frank Ramsden, Sir Eugene
Boulton, W. W. Horsbrugh, Florence Reid, David D. (County Down)
Brass, Captain Sir William Howard, Tom Forrest Remer, John R.
Broadbent, Colonel John Hudson, Capt. A. U. M.(Hackney, N.) Roberts, Sir Samuel (Ecclesall)
Brocklebank, C. E. R. Hudson, Robert Spear (Southport) Ropner, Colonel L.
Brown, Col. D. C. (N'th'l'd, Hexham) Hume, Sir George Hopwood Rosbotham, Sir Thomas
Brown, Brig.-Gen. H. C. (Berks., Newb'y) Inskip, Rt. Hon. Sir Thomas W. H. Ross Taylor, Walter (Woodbridge)
Browne, Captain A. C. Jackson, Sir Henry (Wandsworth, C.) Ruggles-Brise, Colonel Sir Edward
Burghley, Lord James, Wing.-Com. A. W. H. Runge, Norah Cecil
Burnett, John George Jamieson, Rt. Hon. Douglas Russell, Albert (Kirkcaldy)
Campbell, Sir Edward Taswell (Brmly) Jennings, Roland Russell, Alexander West (Tynemouth)
Caporn, Arthur Cecil Jones, Sir G. W. H. (Stoke New'gton) Russell, Hamer Field (Shef'ld, B'tside)
Carver, Major William H. Jones, Henry Haydn (Merioneth) Russell, R. J. (Eddisbury)
Cayzer, Maj. Sir H. R. (Prtsmth., S.) Jones, Lewis (Swansea, West) Rutherford, Sir John Hugo (Liverp'l)
Cazalet, Thelma (Islington, E.) Kerr, Hamilton W. Salmon, Sir Isidore
Chamberlain, Rt. Hon. N. (Edgbaston) Kimball, Lawrence Salt, Edward W.
Chapman, Col. R.(Houghton-le-Spring) Kirkpatrick, William M. Samuel, Sir Arthur Michael (F'nham)
Chapman, Sir Samuel (Edinburgh, S.) Lamb, Sir Joseph Quinton Samuel, M. R. A. (W'ds'wth, Putney).
Chorlton, Alan Ernest Leofric Law, Sir Alfred Sandys, Duncan
Clayton, Sir Christopher Law, Richard K. (Hull, S. W.) Shaw, Captain William T. (Forfar)
Cobb, Sir Cyril Leech, Dr. J. W. Shepperson, Sir Ernest W.
Cochrane, Commander Hon. A. D. Lees-Jones, John Simmonds, Oliver Edwin
Colville, Lieut.-Colonel J. Leighton, Major B. E. P. Simon, Rt. Hon. Sir John
Cooper, A. Duff Lennox-Boyd, A. T. Sinclair, Col. T. (Queen's Unv., Belfast)
Cooper, T. M. (Edinburgh, W.) Lewis, Oswald Smiles, Lieut.-Col. Sir Walter D.
Craddock, Sir Reginald Henry Lindsay, Kenneth (Kilmarnock) Smith, Louis W. (Sheffield, Hallam)
Cranborne, Viscount Lindsay, Noel Ker Smith, Sir Robert (Ab'd'n & K'dine, C.)
Craven-Ellis, William Lister, Rt. Hon. Sir Philip Cunliffe- Somerville, Annesley A. (Windsor)
Crookshank, Capt. H. C. (Gainsb'ro) Lockwood, John C. (Hackney, C.) Somerville, D. G. (Willesden, East)
Croom-Johnson, R. P. Loder, Captain J. de Vere Sotheron-Estcourt, Captain T. E.
Cross, R. H. Loftus, Pierce C. Southby, Commander Archibald R. J.
Crossley, A. C. Lovat-Fraser, James Alexander Spencer, Captain Richard A.
Cruddas, Lieut.-Colonel Bernard Lumley, Captain Lawrence R. Spens, William Patrick
Dalkeith, Earl of Mabane, William Stanley, Rt. Hon. Lord (Fylde)
Davidson, Rt. Hon. Sir John McConnell, Sir Joseph Stanley, Rt. Hon. Oliver (W'morland)
Davison, Sir William Henry McCorquodale, M. S. Stewart, J. Henderson (Fife, E.)
Denman, Hon. R. D. MacDonald, Rt. Han. J. R. (Seaham) Stones, James
Denville, Alfred MacDonald, Rt. Hon. M. (Bassetlaw) Stourton, Hon. John J.
Doran, Edward Macdonald, Sir Murdoch (Inverness) Strickland, Captain W. F.
Dower, Captain A. V. G. McEwen, Captain J. H. F. Stuart, Hon. J. (Moray and Nairn)
Drewe, Cedric McKie, John Hamilton Stuart, Lord C. Crichton-
Dugdale, Captain Thomas Lionel Maclay, Hon. Joseph Paton Sueter, Rear-Admiral Sir Murray F.
Eady, George H. McLean, Dr. W. H. (Tradeston) Sugden, Sir Wilfrid Hart
Eastwood, John Francis Macmillan, Maurice Harold Templeton, William P.
Elliot, Rt. Hon. Walter Macpherson, Rt. Hon. Sir Ian Thomas, James P. L. (Hereford)
Ellis, Sir R. Geoffrey Maitland, Adam Thomson, Sir James D. W.
Elmley, Viscount Manningham-Buller, Lt.-Col. Sir M. Thompson, Sir Luke
Emrys-Evans, P. V. Margesson, Capt. Rt. Hon. H. D. R. Titchfield, Major the Marquess of
Entwistle, Cyril Fullard Martin, Thomas B. Touche, Gordon Cosmo
Essenhigh, Reginald Clare Mason, David M. (Edinburgh, E.) Tryon, Rt. Hon. George Clement
Flelden, Edward Brocklehurst Mason, Col. Glyn K. (Croydon, N.) Turton, Robert Hugh
Ford, Sir Patrick J. Mayhew, Lieut.-Colonel John Wallace, Captain D. E. (Hornsey)
Fraser, Captain Sir Ian Mellor, Sir J. S. P. Ward, Lt.-Col. Sir A. L. (Hull)
Fremantle, Sir Francis Mills, Sir Frederick (Leyton, E.) Ward, Irene Mary Bewick (Wallsend)
Fuller, Captain A. G. Mitchell, Harold P. (Br'tf'd & Chisw'k) Ward, Sarah Adelaide (Cannock)
Ganzoni, Sir John Mitchell, Sir W. Lane (Streatham) Waterhouse, Captain Charles
Gibson, Charles Granville Molson, A. Hugh Elsdale Watt, Major George Steven H.
Gillett, Sir George Masterman Morris-Jones, Dr. J. H. (Denbigh) Wayland, Sir William A.
Gledhill, Gilbert Morrison, G. A. (Scottish Univer'ties) Wedderburn, Henry James Scrymgeour-
Glossop, C. W. H. Moss, Captain H. J. Wells, Sydney Richard
Gluckstein, Louis Halle Munro, Patrick Williams, Charles (Devon, Torquay)
Grattan-Doyle, Sir Nicholas Nation, Brigadier-General J. J. H. Williams, Herbert G. (Croydon, S.)
Graves, Marjorle O'Connor, Terence James Wills, Wilfrid D.
Gretton, Colonel Rt. Hon. John O'Neill, Rt. Hon. Sir Hugh Wilson, Lt.-Col. Sir Arnold (Hertf'd)
Grigg, Sir Edward Ormsby-Gore, Rt. Hon. William G. A. Windsor-Clive, Lieut.-Colonel George
Gunston, Captain D. W. Orr Ewing, I. L. Winterton, Rt. Hon. Earl
Guy, J. C. Morrison Patrick, Colin M. Wise, Alfred R.
Hacking, Rt. Hon. Douglas H. Peake, Osbert Withers, Sir John James
Hamilton, Sir George (Ilford) Pearson, William G. Wolmer, Rt. Hon. Viscount
Hannon, Patrick Joseph Henry Penny, Sir George Womersley, Sir Walter
Harbord, Arthur Percy, Lord Eustace Wragg, Herbert
Haslam, Henry (Horncastle) Petherick, M.
Headlam, Lieut.-Col. Sir Cuthbert Peto, Sir Basil E. (Devon, Barnstaple) TELLERS FOR THE AYES.
Hellgers, Captain F. F. A. Pickthorn, K. W. M. Captain Sir George Bowyer and
Henderson, Sir Vivian L. (Chelmsford) Pownall, Sir Assheton Major Davies.
Adams, D. M. (Poplar, south) Banfield, John William Cleary, J. J.
Addison, Rt. Hon. Dr. Christopher Bevan, Aneurin (Ebbw Vale) Cove, William G.
Attlee, Rt. Hon. Clement R. Buchanan, George Cripps, Sir Stafford
Daggar, George Jones, J. J. (West Ham, Silvertown) Rea, Sir Walter
Davies, David L. (Pontypridd) Jones, Morgan (Caerphilly) Roberts, Aled (Wrexham)
Dobbie, William Kirkwood, David Salter, Dr. Alfred
Edwards, Sir Charles Lansbury, Rt. Hon. George Samuel, Rt. Hon. Sir H. (Darwen)
Evans, Capt. Ernest (Welsh Univ.) Leonard, William Sinclair, Maj. Rt. Hn. Sir A. (C'thness)
Foot, Isaac (Cornwall, Bodmin) Llewellyn-Jones, Frederick Smith, Tom (Normanton)
Gardner, Benjamin Walter Logan, David Gilbert Strauss, G. R. (Lambeth, North)
George, Major G. Lloyd (Pembroke) Lunn, William Thorne, William James
George, Megan A. Lloyd (Anglesea) Macdonald, Gordon (Ince) Tinker, John Joseph
Graham, D. M. (Lanark, Hamilton) McEntee, Valentine L. West, F. R.
Greenwood, Rt. Hon. Arthur Maclean, Neil (Glasgow, Govan) White, Henry Graham
Grenfell, David Rees (Glamorgan) Mainwaring, William Henry Williams, Edward John (Ogmore)
Griffith, F. Kingsley (Middlesbro', W.) Mallalieu, Edward Lancelot Williams, Thomas (York, Don Valley)
Griffiths, George A. (Yorks, W. Riding) Mander, Geoffrey le M. Wilmot, John
Groves, Thomas E. Wood, Sir Murdoch McKenzie (Banff)
Grundy, Thomas W. Milner, Major James
Hamilton, Sir R. W.(Orkney & Zetl'nd) Owen, Major Goronwy TELLERS FOR THE NOES.
Harris, Sir Percy Pickering, Ernest H. Mr. John and Mr. Paling.
Jenkins, Sir William Rathbone, Eleanor

Clause ordered to stand part of the Bill.