Amendment made, in page 84, line 8, leave out from "sum" to the end of line 11, and insert:
as might be allowed in relation to the principal company under the provisions of Sub-section (2) of Section thirteen of the Finance (No. 2) Act, 1939."—[Sir K. Wood.]
§ Motion made, and Question proposed, "That the Bill be now read the Third time."
§ 5.33 P.m.
§ Mr. Pethick-Lawrence (Edinburgh, East)
I do not think we can, even in these days, allow the Third Reading of the Finance Bill of the year to pass sub silentio. I do not propose to take up a great amount of time in dealing with it. There is no doubt that the provisions of the Bill make very considerable inroads upon the resources of our people. When the Budget was introduced, and when the Second Reading of the Bill was being discussed in this House, the House showed unmistakably that, heavy as the burdens w ere which the Bill was imposing, they would be accepted, and so far from being considered too heavy the House realised that in their aggregate they were inadequate. If the House thought them to be inadequate at a time when the war was still in its quiescent stage and when our gallant Allies across the Channel were still in the full vigour of their military preparations, how much more are we forced to realise that they are inadequate to-day after the events of the last two months. Quite clearly, great as are the burdens which the Bill imposes on our people, it cannot be the last word with regard to the financial provisions of 1940–41. The Chancellor of the Exchequer has told us that that is the case. There must be grave sacrifices of a financial character made by the country. They are grave as imposed by the Bill, 206 and they will be graver still we fear when the Chancellor of the Exchequer gives us his whole mind with regard to the finances of the year. But, viewed from the point of view of the whole burden which the country is bearing, these financial sacrifices are tiny and almost insignificant. The country will bear them gladly, almost willingly, knowing that they are absolutely necessary for the tremendous task which is in front of us.
In the larger perspective of the immense sacrifices which have to be borne in all fields, there will be little opposition in this House or in the country to the financial sacrifices which must be imposed not on one but on all sections of the community; with this one exception, that additional burdens placed on the very poor, those who are already below the standard set by Sir John Orr, are burdens which will not benefit the country in any way. On the contrary, they would be injurious to the country, because they would lower the morale of our people. With that exception I believe it is the general feeling of the House that all sections of the community will bear these burdens in order to face the tremendous problem in front of us. The regard for which these sacrifices are being made is one which cannot be over-estimated. In the days gone by our forefathers secured for us a "pearl of great price," the freedom of our people and the liberty to act, to work, and even to think, in the way that they desired. That pearl of great price is in jeopardy to-day. We dare not allow it to be filched from us. It is not merely our own democratic institutions, not merely the lives of individuals who sit in this Chamber or who are our comrades and friends in the country; we stand for the integrity of this country, and the sacrifices we have to make are for that integrity and for the fundamental basis of human civilisation.
§ 5.40 p.m.
§ Mr. Graham White (Birkenhead, East)
If the importance of this Bill was measured by the length of time of the discussions in this House, it might be judged to be a Bill of small consequence. That is not the case. It imposes imposts of an irksome character and, in fact, is the most formidable instrument for the transfer of private means to the public Exchequer that has ever been passed in this House. The right hon. Member for 207 East Edinburgh (Mr. Pethick-Lawrence) has just said that when the Budget was introduced it was criticised, and justly criticised, as being a most inadequate measure of the nation's will to carry on the war and mobilise all our resources for the prosecution of the war. We know now that this Finance Bill is an interim Measure and must be followed by supplementary financial measures in the near future which will be related to the maximum effort the country or the Government is determined to make. There is one lesson which stands out from the way in which the Bill has been received in the House and in the country. It is this: that the most revolutionary financial proposals can now be accepted by the whole country, not only without opposition but even in a spirit of willing co-operation. It is now quite clear that the Government are not under the necessity in future of entering into any elaborate process of bargaining with regard to interest rates or the duration of loans. The duty of the Government now is to make up their minds what they think is necessary for the prosecution of the war and the satisfaction of the nation's needs and to come down to the House and explain them. On these terms, whatever may be the proposal, it will be accepted. I agree with the exception made by the right hon. Member. It would be futile to try and place burdens on those who are not able to face them, and we do not expect the Government to make any attempt of that kind.
I do not know whether there are any people who are under the belief that the march of events in recent weeks and the changes in the character of the war lead to any less vigorous need for watching the finances of the country. The changes in the character of the war and the locality in which it is to be fought may lead not to a diminution in the national expenditure and financial effort, but to a change in the direction of that effort and the way in which some of the money may have to be expended. If we have to remain, possibly for years, as a beleaguered fortress, we shall have to adapt our finances to that situation. We have not yet reached our maximum production or anything like it. If our national expenditure is running below what we anticipated, if it is running at a level which is less than our maximum effort and much 208 less than we are determined to make it, it is, nevertheless, a very heavy expenditure indeed in relation to the amount of consumable goods in this country which remain for the civil population. It is clear that there is now every need for every citizen to regard his own consumption in the most minute detail. Those who live in a beleaguered fortress cannot allow themselves any latitude in expenditure. I should not regard the provisions of the Bill as representing what is necessary to reduce individual consumption.
A question has been raised recently in the House with regard to joy riding, excursions, dog racing and the like. These are not matters which are to be decided entirely within the Clauses of this or any other Finance Bill. They are matters on which the conscience of each citizen should be brought into play, and each citizen should examine them in the light of what he considers to be his duty. There are at the present time some signs of a revolutionary nature in the financial make-up of the country. Some of those signs are very encouraging. I do not remember any Chancellor of the Exchequer in the past having been called upon to state clearly, for the convenience of prospective lenders, the terms on which they could lend money to the Government free of interest. I do not remember there having been any pronounced demand for facilities of that kind in connection with any other Budget. The right hon. Gentleman explained that the process by which such loans could be made was simple and easy and open to anybody who found himself in a position to enter into a transaction of that kind.
This leads me to say that I have observed that the voluntary savings method, as apart from the interest-free loans method, is making satisfactory progress; but from the point of view of avoiding the process of inflation which must follow inevitably from a reduction in the amount of consumable goods and from the great transfer of spending power which has taken place between some members of the community and others—the immense spending power, for example, which has been conferred upon members of the engineering industry—which, if it were to be let loose on the reduced volume of consumable goods, would speedily lead to an increasingly awkward situation, there is still scope for increased momentum and volume in the voluntary savings cam- 209 paign. That is one safeguard against inflation, but clearly, the situation is one that calls for the strictest personal discipline in expenditure and consumption by all those who have any money which they are free to spend above that necessary for the preservation of health and a normal standard of life.
I do not wish to trespass further on the time of the House, but those who can help the day-to-day finances of the country in the ways I have endeavoured to indicate will certainly be doing something to sustain the State and shorten the war. This island of ours is now an outpost of civilisation. Probably it is the remaining key in Europe which still maintains the possibility of the survival in Europe of any reasonable standard of good life. That is being realised not only throughout Europe, but the world over; and in these matters of finance, we must not fall short of our full duty at the present time.
§ 5.49 P.m.
§ Colonel Sir George Courthope (Rye)
There is one matter, which may seem a small one after the very lofty attitude of the speeches to which we have just listened, to which I must refer in order to put myself, and if I may say so, also my right hon. Friend the Chancellor of the Exchequer, right with the Forestry Commission, which I represent in the House, and with the representatives outside of the woodland owners of Great Britain. During the Second Reading Debate, I referred to the curious anomaly which had arisen with regard to the taxation of woodlands, and I pointed out that this was standing in the way of the easy and ready acquisition of standing timber in Great Britain for purposes of the war. From that point of view, I asked the Chancellor to consider the matter very carefully in order, not to remove a burden or relieve a hardship, but to clear away an obstacle to one item of the war effort. I will explain the nature of that anomaly.
As the law is at present, it happens that standing woodlands are capital for purposes of Death Duties and become liable to payment of those Duties when they are felled, and not when they pass at death. The timber that is felled is also liable to the Excess Profits Tax. It may well be that on an estate which would not normally sell any timber, but 210 which is now, for war purposes, asked to sell a great deal, the whole of the timber felled might appear to be liable to Excess Profits Tax as income and also liable to deferred Death Duties as capital. There is a number of cases where there is no doubt whatever that the liability to the Crown for taxation would be in excess of the total price which would be paid for the timber if it were acquired, either voluntarily or compulsorily, for purposes of the war. Obviously, that is a ludicrous position which has to be dealt with.
At the time of the Second Reading of this Bill, it appeared to the organisations representing woodland owners and to the Forestry Commission that this obstacle could not be removed without an Amendment being made to the Finance Bill. My object in speaking to-day is to say that this matter has been very carefully studied. The subject of the treatment of woodlands for purposes of the Excess Profits Tax is under careful examination by the Board of Inland Revenue, and I am absolutely satisfied that the matter is one that can be adequately dealt with by administration and without its being necessary to amend the law. Therefore, I want my friends outside to feel satisfied that the Chancellor of the Exchequer, the Board of Inland Revenue and I have not in any way neglected their interests by reason of the fact that the Finance Bill is being given a Third Reading today without having been amended in this respect.
§ 5.53 P.m.
§ Sir K. Wood
I should like to make a few remarks before the Bill is given a Third Reading. I confess that when I approached the Bill in the first instance, I was in doubt as to whether I ought to proceed with the whole of its Clauses, and I was also confronted with the fact that the situation had fundamentally changed between the Budget Statement of 23rd April and the date at the end of May when the Finance Bill was ready. However, I felt that a good deal of hard work had been involved in the Bill and that to jettison at any rate a considerable portion of the Bill would have meant the loss of a good deal of that careful and most useful work. In those circumstances, after consulting right hon. Gentlemen opposite and hon. Members in other parts of the House, I decided to proceed, because I was assured that facilities would 211 be given to expedite the passage of the Bill which would otherwise have been an onerous, long and difficult undertaking.
The Bill has now reached its Third Reading, and the only matters on which I desire to comment are those which relate to the Excess Profits Tax, which has received the greatest consideration from the Committee and the House. It is right to emphasise that it was proper that that examination should have been given, because with a tax of this kind, which nobody can claim to be scientific in its application, it is essential that the basis for the charge should be as equitable as the exigencies of the Revenue permit. Undoubtedly, with the very important change which we have made during the course of the progress of the Bill involving Excess Profits Tax at 100 per cent., it is obvious that hard and difficult cases cannot be avoided, and I am afraid they will be bound to occur, but I think that, with the assistance of hon. Members in all parts of the House, we have gone a long way to meet the representations that were made, both inside and outside the House, at any rate with regard to the hardest cases. I want to assure all those who are naturally interested in this tax, whether they be great concerns and industries or small ones, that we shall continue to watch the operation of the tax, and of course, there will be opportunities for amendment and discussion in subsequent Finance Bills.
I should like also to add a word to what was said by my right hon. and learned Friend the Solicitor-General this afternoon with regard to the Amendment which I withdrew, having regard to the representations that were made to me by hon. Members opposite. I must say that I feel there was a complete misapprehension of the whole position. The chief reason which actuated me in withdrawing the Amendment was the desire to maintain agreement and the belief that there was a misapprehension of the position. I have no doubt that, with the help of the Solicitor-General, we shall be able to explain matters sufficiently to hon. Members opposite, so that we shall be able to proceed, as I intended to proceed, in the next Finance Bill, to meet the very critical situation that arises as far as certain companies are concerned. If I had been aware that there was any misapprehension on this matter, I should 212 have been only too willing to meet hon. Members who were so concerned about this during this afternoon. The last thing I want to see at this hour is a division of opinion or any statements in the country concerning the provisions of this Bill which would be quite erroneous. It is only fair to say to the House that, in the case of those concerns, such as copper and coal, which are making great efforts at this time in the national interest, it is my intention to proceed.
I should like to make one or two remarks, as other hon. Members have done, about the future and about our taxation generally. There is only one thing on which I disagree with the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence). He referred to the present burdens of taxation as tiny. That is not how I would describe them.
§ Mr. Pethick-Lawrence
Perhaps I may correct the right hon. Gentleman as to what I said. I said that great as those burdens are and still heavier as they are expected to become, they are tiny in comparison with the terrific sacrifices that are being made in other directions.
§ Sir K. Wood
I entirely agree in that respect with the right hon. Gentleman. It is a fact that at this time taxation does weigh very heavily upon great masses of the community. That is why I indicated to the House, in the Second Reading Debate, that I felt there must be some time for a measure of adjustment before other taxation has to be faced. I wish to elaborate the matter further this evening by simply adding that a second Budget and a second Finance Bill must be regarded by this House and the country as inevitable. We have to face it together, as the right hon. Gentleman said, and, so far as I am concerned, we must see that all sections of the community shall bear their fair share of responsibility for the burdens which face us, without which, of course, victory cannot be achieved.
I was grateful to the hon. Member for East Birkenhead (Mr. White) for what he said in regard to the necessity which still exists, notwithstanding our very heavy commitments, for careful finance and watching, so far as we can, its operations. That should not be lost sight of, because, in the end, we may have to fall back on the weapon of finance much more than 213 people imagine at the present time. This is certainly not a moment to give up any methods of supervision which do not impose vexatious restrictions, or delay, or anything of that kind. I desire to thank the House for what has been said about my appeal, yesterday, for loans without interest. Already there has been considerable response in that connection, and I have received some of the most touching letters, during the last few days, from rich and poor alike, who have sent gifts at a time of crisis. Many organisations, as the hon. Member said, are also responding.
In asking the House to pass the Third Reading of this Bill, I would say that in this momentous struggle the chief function of finance is to serve the State. I feel that what is required must be, and will be, provided to the utmost limit of our resources, and that at the present time we must throw those resources into the scale against the enemy whatever the additional burdens involved may be. I agree with what has been said to-day, and I am sure it is weighing on the minds of everyone, that, after all, the sacrifice of money and property must be regarded as trifling compared with the sacrifice of life and limb which so many of our countrymen have been making and will have to be called upon to make.
§ Question, "That the Bill be now read the Third time," put, and agreed to.
§ Bill read the Third time, and passed.