HC Deb 23 April 1940 vol 360 cc88-97


5.48 p.m.

Motion made, and Question proposed,

"That, as from the twenty-fourth day of April, nineteen hundred and forty, the duty of excise charged in respect of beer under Section one of the Finance (No. 2) Act, 1939, shall be charged at the following increased rates:

£ s. d.
For every 36 gallons of worts of a specific gravity of 1,027 degrees or less 3 5 0
For every 36 gallons of worts of a specific gravity exceeding 1,027 degrees—
For the first 1,027 degrees 3 5 0
For every additional degree in excess of 1,027 degrees 0 2 6

and so in proportion for any less number of gallons;

and, in the case of beer in respect of which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty at the foregoing increased rates has been paid, the excise drawback allowed under that Section shall be allowed at the following increased rates:

£ s. d.
For every 36 gallons of beer or an original gravity of 1,027 degrees or less 3 5 2
For every 36 gallons of beer of an original gravity exceeding 1,027 degrees—
For the first 1,027 degrees 3 5 2
For every additional degree in excess of 1,027 degrees 0 2 6

and so in proportion for any less number of gallons; Provided that as respects beer of an original gravity of less than 1,027 degrees, the amount of drawback allowable shall not exceed by more than two pence for every 36 gallons the amount of duty which is shown as aforesaid to have been paid. And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."—[Sir J. Simon.]

The Chairman

Before the Debate proceeds, I think it may be relevant to remind the Committee of a slight change in procedure adopted on the last Budget. As a great many Members may not remember it or the reasons for it, it may be well on this occasion if I read a few lines from the statement which I made on the War Budget of last September: In accordance with the usual course I have put the First Resolution from the Chair. Thereupon, all the Budget proposals are open for debate, but the exact terms of the Budget Resolutions cannot be known or be in possession of hon. Members until they have been put from the Chair. There have been complaints in the past that some inconvenience has resulted. I, therefore, suggest to the Committee that, if they approve, I should, at the conclusion of the speeches of the Leaders of the two Oppositions, put from the Chair all the Budget Resolutions and that the Committee should pass them with the exception of the last one, which will be left open in the usual way in order to keep the Debate open. I understand that that meets with the approval of the Government and the Leader of the Opposition, and if the Committee generally approves I shall be glad to adopt that course."—[Official Report, 27th September, 1939; col. 1381, Vol. 351.] I understand that meets with the views of the Government and the Opposition, and I hope the Committee will take that course.

Mr. Tinker (Leigh)

Would it not be as well to put the Resolutions straight away rather than have any speeches at all? It is rather unfair for the ordinary Member to have two leading speeches and then wait until the rest are put.

The Chairman

We considered that alternative most carefully both in last September and on this occasion, and all those with whom I have conferred on the subject thought it would not be so convenient to put all the Resolutions immediately after the Chancellor's speech. I hope the hon. Member will be satisfied with the knowledge that the two courses were both considered. The proposal does not in the least interfere with hon. Members' rights to speak; they have more scope after all the Resolutions but one have been passed. Another point to be considered is that this is done partly to facilitate the opportunity of moving to report Progress when that is desired; it is not practicable to do this before all the Resolutions except the last have been passed.

5.53 p.m.

Mr. Attlee (Limehouse)

The right hon. Gentleman has introduced his Budget with his usual lucidity. He has had a great deal of ground to cover and he has had very formidable figures to face. I do not intend to speak at any length to-day, because, obviously, all these proposals need very careful consideration and a general balancing up of advantage and disadvantage. That really is all the balance we get in a Budget now. There is no balance of a Budget itself and that is why the atmosphere lacks something it used to have in the days before we had an unbalanced Budget. There is none of that nice consideration as to whether an odd £500,000 will just put the thing on its right side. The considerations before us to-day are the proportion of expenditure which is to be raised by taxation and the proportion to be raised by borrowing. Within the question of how much we shall raise by taxation there are considerations which are not strictly fiscal. Really a Budget to-day is an instrument for dealing with two things—one the allocation of purchasing power and the other the direction of purchasing power and, through that direction, a decision as to what should be produced.

It is under these considerations that I would look at the Chancellor's proposals. I think he was right in saying—and I hope everyone will have noticed what he said—that we have to face a change in the economy of the country. Far too many people think you can get back to the past. Things will never be the same after this war. The whole economy of the country will be changed and I would say to the right hon. Gentleman that he should not assume that the social structure of this country will be the same at the end of the war. I was interested in his words with regard to levies on war wealth. From this side we have always advocated a capital levy because we realise that what was needed at the end of the last war was far more redress in the unequal distribution of purchasing power among different classes of the community.

I turn to consideration of these proposals from the point of view of what will be effective in helping us to win the war, how we will raise all the money we need and how we will get the right things produced in the right quantities. The Chancellor of the Exchequer talked, quite rightly, of the need for avoiding inflation. None of us wishes to see inflation. He said that one of the ways of doing that was to prevent excessive expenditure. That is quite right. There is another side of it, too, and that is an increase of our production. I should have liked to have seen a little more concentration on that because we are not yet producing all we could. We are not using all our man-power. I am all for the work of the committee which has been set up to prevent waste but remember there is a major waste and a minor waste and, not uncommonly in this House, people have salved their thrifty souls by hitting at minor waste and allowing major waste to go by. I think there is a great deal of waste in our methods of contracting, a waste of labour, and, throughout, a good deal of waste which can only be checked by the efforts of the Ministers themselves in their Departments, and not by the influence of the Treasury from outside.

I would like to say one or two words about the proposed increased taxation. From my point of view the increases in Income Tax and Sur-tax are taxes on the right lines. They are effecting a better allocation of purchasing power. The taxes on beer, spirits, tobacco and matches are taxes on luxuries, and that is going in the right direction because that is the way in which we can restrict the waste of the nation's resources of unnecessary things. On the other hand, when we come to the increase in Post Office taxes, I think it is a more doubtful proposition. It will not bring in a great deal of money when you look at the huge amount of Budget expenditure and it will irritate a vast number of people. I doubt whether it is wise, when you are calling up for service, and when there is evacuation, with the result that people want to keep in touch with each other, that you should tax the simplest method of communication. I think that will require a great deal of consideration as to whether it is worth while. We have always to consider the psychology of the people in these things. Nothing irritates people more than having to fork out 1½d. instead of 1d. There is nothing sacrosanct about a penny post, but the additional halfpenny is irritating and the 2½d. will be even more irritating. I feel bound to say that I consider this is a tax which will require a great deal of examination. I am not persuaded that it is wise to put such a heavy tax on the ordinary letter and postcard.

I forego consideration in any detail of the sales tax. It is complicated. Prima facie it does not seem to fulfil any of the conditions which I should lay down for taxation. It does not make for a better distribution of wealth; it does not prevent luxuries, because it does not apply to luxury purchases any more than to essential purchases. In fact, it is not a really sound tax and is only a kind of handy way of getting a certain amount of money into the Exchequer. It will not assist the finances of the country, and I do not think it will meet the Chancellor of the Exchequer's aim, that is, to suppress luxury. I am glad that the Chancellor of the Exchequer has come down for voluntary savings as against compulsory savings, and I am also glad that he has met the point about the means test. That, again, is a psychological matter. I have had it from men who have devoted themselves to an examination of the question of savings, business men in the City, who do not hold any of the views which we do on these benches on the means test, but they assure me that in trying to get national savings nothing stands in the way so much as the means test. It is a psychological matter, but it also has a very practical effect as well. I was not clear as to whether the exemption was up to £375 or the full £500.

Sir J. Simon

The right hon. Member knows that £375 is what is paid for the maximum number of savings certificates which any individual may hold, and if alternative ways of saving were not treated in exactly the same way the Trustees Savings Banks or the Post Office Savings Bank would have ground of complaint. That is why I fixed £375 as being the amount of new money in all cases.

Mr. Attlee

Then, when there is £500 which has resulted from the £375 it would be an exempted amount? That is a matter for consideration. Then there is the final point in regard to dividends and the proposal of the Chancellor of the Exchequer seems to be on the right lines. I am pleased to find that the Chancellor of the Exchequer proposes to deal with the question of bonus shares. I hope that great care will be taken to see that the provisions are watertight, that no water gets through. We are suffering from an immense amount of watered capital, and unless the proposals are drastically applied then any restriction on dividends is illusory. The last words of the Chancellor of the Exchequer in which he pointed out that we were now getting control of imports and saying what should be the subjects of expenditure, were to the effect that in war-time we are approaching a planned economy.

Sir Herbert Williams (Croydon, South)


Mr. Attlee

The hon. Member does not realise that you can have a planned economy, such as the Fascist or the Nazi economy, which is a planned economy for war, and also a planned economy for the peace and prosperity of the people. We want to be quite clear what we are aiming at in our planned economy; what kind of society we want. We do not want a Nazi society, and, as far as we on these benches are concerned, we do not want to continue a society with great gulfs in it. We are quite sure that the most effective plan for winning this war would be to plan and build up more equality and justice.

6.6 p.m.

Sir Archibald Sinclair (Caithness and Sutherland)

The Chancellor of the Exchequer in his concluding sentences indicated that he thought he might be exposed to reproach for the length of his statement. There is no inclination in any part of the Committee to indulge in any such reproach. On the contrary, we are grateful to him for his clear and masterly exposition of the problem with which he is faced in opening his Budget this year. There is one small proposal to which I should like to refer because we on these benches have some parental responsibility for it, and that is the exemption from Death Duties, of the estates of merchant seamen and fishermen. We put a new Clause down to the Finance Bill in the autumn on this subject and we are grateful to the Chancellor of the Exchequer for the practical and sympathetic consideration he has given to the proposal.

The Leader of the Opposition has referred to the proposal to exempt war savings up to a total of £375 in the case of those who come under the means test of the Unemployment Assistance Board. I wonder whether the Chancellor of the Exchequer intends that concession to apply also to those people on public assistance, to those who come under the Poor Law. It may happen that a man who is under the Unemployment Assistance Board this week falls ill and is declared to be unemployable. He will then have to go to the public assistance committee. Indeed, a man who may be saving at the present time may fall on bad times or a member of his household may fall on bad times, and his war savings may come to be taken into account when calculating the amount of assistance which is due to the household from the public assistance committee. I would ask the Chancellor of the Exchequer to make it clear whether the exemption will apply to Poor Law cases as well.

We shall have to consider carefully the full scope of the proposals the Chancellor of the Exchequer has put before the Committee. Many of them are somewhat complicated and I do not wish to plunge into a discussion of them at the moment. I will only say this, that there is one form of criticism which we shall not make, and that is that they are too drastic. On the contrary, we feel that the right hon. Gentleman deserves the support of the Committee for the measure of sacrifice for which he is calling upon the taxpayer. Indeed at this stage I am not satisfied with the size of the target at which he is aiming; as he said, it is very vague and uncertain in its outline but is it as big as we ought to make it? It seems, to me that the task to which we should set our hands now is, first of all to raise the production of the country to the highest possible pitch, and then to concentrate as much as possible of it upon our war effort and with that object to limit consumption severely. The target of our expenditure in war-time must be the maximum which can be usefully spent on our war effort. Certain figures have been put before me by gentlemen who speak on these matters with undoubted authority; they have appeared in the "Economist" and I have no doubt that the Chancellor of the Exchequer is familiar with them. They show that in this year Germany, after a series of years in which her war expenditure has been much greater than our own, is actually spending £3,200,000,000 on war expenditure. I am assured that this figure represents only her war expenditure and that the war expenditure which is carried out by her Government and which in this country would have been carried out by private individuals has been deducted before that figure has been reached.

In the case of France you will find that the French people are making an even greater effort than that to which the Chancellor of the Exchequer is summoning the people of this country. In France 6,000,000 men were mobilised but about 1,500,000 have been sent back to their farms and industries. There are still over 4,000,000 men mobilised and it is very largely on old men and women and youths that the burden lies of maintaining the whole economic life of the country and also their war effort. Yet they were bearing till now a slightly heavier burden of taxation in proportion to revenue than the burden which we are carrying. The taxation in France on all ranges of incomes is higher and wages and salaries are lower and their hours of work are longer than in this country. I do not believe that the people of this country are content to be surpassed in the effort which they are making on behalf of the common cause by the people of France.

We shall also have to consider the economic foundation of this financial effort especially in regard to the great and, I am sorry to say, growing gap between the visible excess of imports over exports. Hon. Members will not have forgotten the speech delivered by Lord Stamp in another place a few months ago in which he said it was not so much the growth in the amount of our exports which we must watch but the growth in the difference between our visible imports and our exports. Since Lord Stamp delivered that warning that gap has continued to widen. In January, Lord Stamp referred to the worsening of the gap by 41 per cent., as compared with a year ago. To-day that gap is twice as big as it was then and that gives us some measure of the need for raising to the highest possible level the production of the country and, on the other hand, severely limiting its consumption. Nevertheless I say that the figures which the Chancellor of the Exchequer has given to the Committee are a clear and eloquent proof of the power and range of our resources; and the reception, the resigned, sometimes humorous but certainly determined reception which the Committee has given to his proposals testifies to the high spirit and firm purpose of a united Britain resolved on victory.

6.15 p.m.

Mr. Tinker

On a point of Order, Sir Albert. I understand that you are about to put the Resolutions from the Chair. I should be obliged if you would inform me under what Rule you can do that, thus preventing the Debate on the Chancellor's statement from proceeding. Two Members of the House have spoken, but ordinary back benchers are not given an opportunity of following them. I ask for a Ruling from the Chair on that point of Order.

The Temporary Chairman (Colonel Sir A. Lambert Ward)

In reply to the hon. Member, the Debate will not be in any way restricted by the fact that the Resolutions have been put from the Chair. Furthermore, this procedure has already been agreed to by the Committee.

Mr. Tinker

It has not been agreed to by the Committee, and I protest against it. There has been no Vote by the Committee. This procedure was followed last time, and it limits the rights of hon. Members. I protest against this differentiation in the status of Members of the House. It is a growing practice. I should like to have a definite Ruling from you which can be referred to again.

The Temporary Chairman

This form of procedure was suggested from the Chair by my predecessor, and it was agreed to by the Committee without a Division.

Mr. Tinker

It was not agreed to by the Committee and I protest against it.

Mr. A. Edwards (Middlesbrough, East)

Do I understand, Sir Albert, that this form of procedure was put to the Committee to-day and agreed to, in spite of what my hon. Friend has said?

The Temporary Chairman

Certainly, it was agreed to when my predecessor was in the Chair. He made a statement about this form of procedure, and it was agreed to by the Committee.

Mr. Tinker

It was not.

Sir H. Williams

I was present when this matter was raised by the Chairman, and I must agree with you, Sir Albert, that the Committee agreed, but I think it did so under a misapprehension. I think the Committee had not the slightest understanding, when it agreed, that the Debate would be interrupted for between half-an-hour and an hour while the Resolutions were being read. If that had been in the mind of the Committee, I do not think it would have agreed.

Mr. Tinker

I say that the Committee did not agree. I protested to the Chair. The Chairman called on the Leader of the Opposition without putting the Question from the Chair.

Question put, "That the First Resolution (Beer, Excise) be agreed to."

The Committee proceeded to a Division. Lieut.-Colonel Kerr and Mr. Munro were appointed Tellers for the Ayes; but there being no Members willing to act as Tellers for the Noes, The Temporary Chairman declared that the Ayes had it.

Motion made, and Question proposed,