HC Deb 23 April 1940 vol 360 cc111-20

Motion made, and Question proposed, That it is expedient to amend the law relating to the National Debt, Customs and Inland Revenue (including Excise) and to make further provision in connection with Finance.

6.55 p.m.

Mr. Tinker

I want to speak on the Financial Statement, and I suppose I am in order now. One would have thought that on an occasion when we have to deal with a Financial Statement which has never been equalled there would have been a far better attendance in the Committee. When we are faced with vast expenditure like this it is advisable for the Committee to give full consideration to it. The Chancellor remarked that the citizens of this country would be prepared to meet any cost that the war entailed if they were satisfied that it was wise expenditure. I agree with that, but many of us are not sure that much of this money is being wisely spent. I want my remarks to go home to the Financial Secretary, so that he may find out whether I am right in my contention. Owing to the war emergency certain things have had to be done hurriedly. While hitherto we were able to send out for contract tenders, we are not now able to do that. Certain works are put into the hands of large firms without any stipulation as to the total cost. Consequently, many of these firms, from evidence that I have, are not spending money wisely. I have had information from workmen on munition works and factories that have been put up with Government help of vast waste and of material that ought to be of use to the State and looked after properly being cast on one side. We are told that people who are doing these jobs are paid on the total expenditure. That is to say, if they spend £10,000 they get so much per cent. on that amount. The more they spend the more they get, so that the greater the cost of a job the greater the amount of money that goes to the people doing the work.

When things like this are going on it cannot be expected that the citizens of the country will feel satisfied that they are getting the best value for money; and when we have the Financial Statement before us the people who are called upon to bear the cost, whether by indirect taxation or by direct taxation, have a right to know how it comes about that money can be thrown away in this way. They are complaining to Members of Parliament that it is not right and fair that they should be called upon to pay an extra penny a pint on beer, extra on their tobacco and other extra taxes when they see the colossal waste that is taking place in munition works. If the Chancellor's words mean anything at all, I hope that he will pay close attention to the subject and not allow waste to continue under a system by which contractors are paid so much on the money spent. It may be argued that we have a costings staff watching the expenditure, and that may be, in a sense, a safeguard, but I am led to believe that it is not so very effective. We talk about the citizens being willing to bear the cost, but we must satisfy them that the money is being spent wisely, because if they are they will pay with greater heart.

A second fundamental point arising from the Financial Statement concerns the National Debt. The Chancellor said it amounted to nearly £9,000,000,000. Has anybody calculated what that means? I have done so roughly, and I find that with our population of 45,000,000, everyone has to bear a burden of £200. Every citizen has to help to pay the interest on that £9,000,000,000, which represents borrowed money. The time has come when something different must be tried. The only way of dealing with the situation is by taking the wealth from where it is. It must be in this country. If we can find money whenever it is wanted it must be in the hands of certain people. They lend it to the State, and the State pays interest on it. Every citizen, rich or poor, has to pay his quota. The rich, by getting their interest get more than they have to pay. The poor, who have no money invested, have to meet all the extra charges all the time. The Chancellor has to find £1,400,000,000 by borrowing. The time has come when the House of Commons must realise the position we are getting into. I have here some figures showing disparities in the distribution of wealth. In the "Manchester Guardian" yesterday there was a list of 10 wills. The largest estate was £143,000. The total of the 10 was £384,000, giving an average of £38,400. In the same paper to-day there is a list of seven wills. One person left £197,000, another £190,000. The average of the seven was £65,000. Those people in their lifetime lent money to the State and got interest on that money. The National Debt grows bigger and bigger and every citizen has to bear that extra burden. The time has come when the mounting burden will have to be arrested.

There are two other points which emerge from the Financial Statement. I hope that whoever has to deal with affairs after the war will note what is happening under this Budget. Twelve months ago many of us on these benches, and others on the benches opposite, put forward a claim that old age pensioners should have a flat-rate increase in pension. The Budget then was £900,000,000. We were told that it was impossible to find the money. Everyone agreed that the old people deserved an increase, but it was said that, the extra £40,000,000 or £50,000,000 could not be found. To-day, by added taxation, we are finding £1,200,000,000, and are borrowing another £1,400,000,000, proving that when the occasion requires it money can be found. When the war is over and social legislation is required to put the country into a proper condition, I want those Members of Parliament who may be here not to be deterred by statements that the money cannot be found. The present Budget is a lesson to everybody that the wealth is there and can be found.

I do not want my remarks to be taken as suggesting that I am not in favour of the prosecution of the war. I want the war to be carried through successfully, and I want the money to be found, but while we are conscripting life for the war I claim that we ought to conscript wealth also. It is not right and fair that the ordinary citizen should have a heavy burden to bear. The rich are not being dealt with as they ought to be. The poor are bearing the biggest burden, and Parliament ought to make a greater protest against this state of affairs. Having said that I have finished, but I hope that when the next Financial Statement is made it will include something more drastic than the present one.

7.7 p.m.

Mr. Lipson (Cheltenham)

The hon. Member for Leigh(Mr. Tinker) always speaks with such sincerity that I am sure the Committee will give very careful consideration to his observations, but though I frequently agree with him I feel that he has chosen rather an odd time to suggest that the rich are not bearing their full share of the burden of taxation.

The Chancellor of the Exchequer has well deserved the compliments which have been paid to him for the lucidity of his Budget statement. Probably there is no man in the country better able to state a case than the Chancellor of the Exchequer, and I think it is remarkable that in these days, when people do not like listening to long speeches, the Committee followed him with undiminished interest for over two hours—in fact, he was so effective that I did not realise that he had spoken so long. It is a remarkable tribute to his powers of stating a case interestingly and clearly. I think, too, that though the Chancellor of the Exchequer has a difficult task in war time he has, in one respect, an easier one, because the country is determined to win the war and is quite willing to bear any burden which may be necessary to that end. It seems to me that in war time it is the Chancellor's responsibility to see that the economic resources of the nation are not unduly dissipated.

We started this war with great economic advantages over our enemy, and it is the Chancellor's duty to see that we take full advantage of that situation. What the country would like to be assured of is that in his Budget to-day the Chancellor has taken a sufficiently long view. It is not only his duty to provide the money which is required this year for the war and for essential services but to bear in mind that in all probability this will be a long war. In any case he must be prepared to face a possibility of that kind. He has also to bear in mind the problems which will arise after the war, and his financial policy ought, therefore, to be one that will leave this country in a position to meet the problems which it will have to deal with after the war. It would be rather a poor kind of victory which left us financially so weak as to be unable also to win the peace.

The actual proposals of the Chancellor bear very heavily on all classes of the community, but there is evidence that a great deal of wasteful private expenditure is still going on, and if his latest taxation will put an end to the sort of abuse which goes on at bottle parties and at places of that kind, it will have a very salutary effect.

Mr. G. Griffiths

Who goes to these bottle parties?

Mr. Lipson

It is very disturbing, when you are calling upon people of small means to make financial sacrifices, to find that apparently some people are still able foolishly to throw a great deal of money away. The country would be more willing to accept some of the imposts if they felt that all sources of taxation which bore less heavily on ordinary people had first been used. Reference was made by the Chancellor of the Exchequer to the taxation of cosmetics, and he dismissed taxation of that kind on the ground that it would bring in a comparatively small revenue. I wonder whether he had in mind the psychological effect of omitting that source of revenue while imposing an increase in postage and other services which affect very much the lives of ordinary people.

I regret that in his search for revenue my right hon. Friend did not try to see whether money could be raised by a betting tax. It has been estimated that something like £20,000,000 could be raised in that way. Before postage increases were introduced, the possibility of a tax of that kind should have been considered. Many people are doubtful whether horse-racing and greyhound racing ought to continue at all in this country during war—I do not know whether these pursuits are still allowed in Germany during the war—but, if they are, they ought to be made to bear additional taxation in time of war. Any opposition that might be raised to taxation of this kind in time of peace would not be so serious in war time.

Mr. Benjamin Smith (Rotherhithe)

Has the hon. Gentleman not lost sight of the fact that we are fighting Germany for freedom? If all the things imposed on Germany are imposed here what will be the ultimate distinction between the two countries?

Mr. Lipson

If the hon. Gentleman had listened to me—

Mr. Smith

I have—

Mr. Lipson

—he would know that I was not saving that horseracing and grey bound racing should be prohibited. I said that some people might consider that to be necessary. I suggested that, in time of war, it was a more legitimate form of additional taxation than postage and some of the other forms of taxation that have been imposed. It is rather difficult to discuss the proposed Purchase Tax because we have not all the details before us; but a general tax on all purchases, excluding food, drink and the articles mentioned by the Chancellor of the Exchequer, might still press very heavily on the great mass of the people. A tax of this kind is unfair in its incidence and might have serious effects on the cost of living. The principal object, surely, of the Chancellor is to prevent inflation. One has to ask oneself whether any Budget proposal is likely to have an effect of that kind.

Perhaps the most interesting part of the Chancellor's speech, and in some respects the most important, was what he had to say about deferred pay. Many of the arguments that he used against compulsory deferred pay were similar to those which were used against the introduction of compulsory military service. If you say to a man that you are going to conscript him to fight and he has to make all the sacrifices that that involves—and that has been done with surprisingly little opposition in this country—I cannot see why it should be wrong to say to those who stay behind: "The State requires that what you are earning in excess of a reasonable standard shall not be taken in taxation but shall be at the disposal of the State for the time being, and will be available for you when the war is over."

Mr. Woodburn

Would the hon. Gentleman also agree that, before that stage is reached, it would be desirable to say to people who are drawing unearned income in increasing quantities that they should cease to do so?

Mr. Lipson

The hon. Gentleman is trying to draw a different issue into the matter. I am concerned with the fact that a great many people are earning more money during the war than they did before the war. The suggestion is that it is in their interests, as well as in the interests of the State, that that money should not be spent now. If it is spent during the war we shall have inflation, and those who are earning the money will be deprived of the real advantages of their increased earning, whereas, if their spending is postponed, those disadvantages will not accrue. At the end of the war there will be available, for the individuals and for the nation as a whole, a very big amount of money, which ought to be spent. That matter is of very real importance in these days. I can well conceive that, on some future Budget occasion, the Chancellor of the Exchequer will reverse many of the arguments which the Chancellor used to-day against a scheme of deferred pay. It seems possible at present for his plan to prevent inflation to be made ineffective by those who are foolish and thoughtless and who live for the moment, desiring to spend their money simply because they have it. Therefore, more consideration will have to be given to this question.

Another advantage of the deferred pay proposal is that it carries with it the great reform of family allowances, and that, I submit, is one of the most practical ways of dealing with any increase in the cost of living. Therefore, I am doubtful whether the alternative proposal on which the Chancellor is relying will have the same advantages that can be claimed for the deferred pay scheme. The scheme of deferred pay is the most effective means of checking inflation. It will leave available for the nation at the end of the war a considerable amount of spending power. It will make possible also the introduction of family allowances.

So far as the sales tax is concerned, I hope it will be limited to luxury articles; I think it is possible for a scheme to be worked out on those lines. If we are to rely entirely on voluntary savings, I welcome the proposal which the Chancellor has made, that in applying the means test to anybody who is unemployed after the war, no regard should be taken of the first £375. If you are to have voluntary national saving, you must give it the best possible chance of success. I have evidence from my own constituency that the fear that this might be taken into account in applying the means test after the war was having a deterring effect on National Savings. I should have preferred that the Chancellor should have viewed sympathetically a scheme of deferred pay. I do not believe that a scheme of compulsory deferred pay would necessarily kill the voluntary savings any more than conscription has killed voluntary enlistment. We know that since the introduction of conscription over 300,000 men have volunteered for the Army and a great many more men would like to go into the Army as volunteers if it were possible for them to get in. I believe that in the same way it is possible to work a system of deferred pay and carry on with the National Savings Movement as well. Although I may have been critical of some of the Chancellor's proposals, I would join with other Members of the Committee in expressing my appreciation of the courage with which he has tackled in the main the very big financial problem for which he is responsible. Although this is a grim Budget, the country will face up to it because it is determined to pay whatever price it may be called upon to pay to win the war.

7.25 p.m.

Sir Robert Tasker (Holborn)

When the Chancellor announced his Budget, I assumed that it was the duty of every hon. Member to make suggestions in order that money might be raised to help diminish the large deficit of some £1,400,000,000. There are one or two things which occurred to me which might be worthy of his consideration. In New Zealand they ask patriotic rich men to lend to their Government money free of interest during the war, resulting in a contribution of £1,000,000. That has not been tried here. Is it not worth while inviting rich people to do the same here, considering they are taxed to the extent of 17s. in the £. It might be worth while for them to forego the remaining 3s. and offer to lend their money to the Government for nothing. I did make some calculation, but I refrain from putting it to the Committee because I do not pose as a financial expert.

We are hearing on all hands how essential it is to practise economy. To my mind the first place to practise economy is in this House of Commons. As elected representatives we might set a good example to the electorate. It is not to be supposed that what I am going to say will be regarded with favour in certain quarters of the House, but since there is a war on, why not reduce the pay of Members of Parliament from £600 a year to £400? I personally would go much further than that; I would advocate during the war the abolition altogether of the payment of Members of Parliament. I would also abolish for the time being the tax of £12 a year for improvident Members. If only £200 a year was knocked off the pay of Members of Parliament, £120,000 per year would be saved. There is another direction in which economy might be practised, and here I would appeal to the right hon. Gentleman who is representing the Chancellor of the Exchequer. I refer to the simplification of Income Tax forms. A tremendous waste of paper and a terrific waste of energy are involved when trying to follow them. Let me confess that the Income Tax forms are not understood by me. They are so involved that business people send them to chartered accountants to try and make the best job of it. That is not the fault of the Inland Revenue officials; it is the fault of this House of Commons. However well balanced the Budget may be, hon. Members seek concessions, and when a concession is given it leads to all sorts of complications. With regard to Surtax, I wonder whether it has ever been realised what it means. Here is a document of eight pages which have to be filled up, and here are another eight pages of notes for guidance in regard to the statement which you have to furnish. It is so bewildering that I think the Treasury might address themselves very seriously to the trying business of simplifying the form.

We are faced with a crisis in the building industry. In February there were more than 250,000 men unemployed. But that is only half the story. The figures relate to people who are in what is termed the building trade. The building industry is twice as numerous, because the ancillary trades do as much work, and occupy as much labour, as the men in what are known as the building trade. The 250,000 really means 500,000. There is no lack of material, except in one direction, and that is wood. It is not lack of labour. The labour is there and the material is there. Yet we are draining the Treasury to keep the unemployed from starvation. It seems to me that one of the root evils of unemployment is this absurd restriction on locomotion, this ridiculous control of petrol, because you are depriving the most important trade in the country of the means of transport. Hon. Members have explained from time to time that the miners are willing to work but coal is rationed. The same thing is happening in the building industry; it is being wrecked. Someone ought to be responsible, and someone is responsible. The inertia of the Minister is only a screen for inefficiency. It appears to me that the Treasury might consider the effect on the finances of the nation of providing public assistance and the substitution of work.

Reference has been made to the taxation of betting. If one suggested that there should be Government lotteries, one would be met with a good deal of hypocrisy, but are we not always engaged in a kind of lottery? Do we not ballot for Bills and for seats in the public galleries? If it is not wrong to ballot for seats and Bills, what is there wrong in having a public lottery? Is it not resorting to an old method of obtaining money? Exemption of payment of Income Tax by building and co-operative societies should no longer be permitted. No one is allowed to spend more than £375 for 500 War Savings Certificates. Why should we not make the maximum 1,000? It would surely bring a certain amount of money to the Government. So many people are afraid to assume responsibility. They are afraid to say anything which appears to criticise the Treasury. Surely we are only doing our duty in putting these proposals forward. If they are rejected, well and good. I put these suggestions forward for what they are worth. Those who are not permitted to serve their country on the sea, in the air, or on the land want to do what they can to help the country financially. My contribution is to that end. Combatants and non-combatants in this country are resolved to surmount the scene of conflict in triumph.

Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[Mr. Munro.]

Committee report Progress; to sit again To-morrow.

The remaining Orders were read, and postponed.