HC Deb 14 April 1943 vol 388 cc1219-343

Question again proposed, That it is expedient to amend the law-relating to the National Debt and Public Revenue, and to make further provision in connection with Finance."—[Sir K. Wood.]

The Postmaster-General (Captain Crookshank)

It is very strange that for the first time in many years it has been necessary for a Minister not connected with the Treasury to intervene in a Budget discussion and that it should be my fate to be that Minister to-day. I promise the Committee I shall not be very long, because obviously hon. Members do not want to be disturbed from the general stream of our financial discussion, but as my right hon. Friend stated in his Budget speech that certain postal changes were proposed, I thought it most convenient to hon. Members if I made a statement now rather than published a White Paper or replied to a Private Notice Question—both of which methods have not the popularity that they used to have.

I start by saying that it is with very great regret, of course, that the Postmaster-General has to announce any alterations for the worse in the services which the Post Office renders to the public. Naturally, to do that is quite contrary to the policy, which has been so long adopted by my predecessors in office, of extending the services and finding ways and means for helping the public in the postal, telephonic or telegraphic line. My right hon. Friend, pointing out the reason for these alterations, said: The Government have reviewed the matter of man-power as it affects the Post Office and consider it is desirable that a further contribution should be made by that Department. These increases in charges,"— that is to say, the increases which are described in the White Paper— therefore, are proposed, not in the interests of the revenue, on which the effect is small, but to economise man-power by discouraging unnecessary use of the services in question."—[OFFICIAL REPORT, 12th April, 1943, cols. 962–3, Vol. 388.] It follows that any change in the services must have some reaction on the revenue, and it is for that reason that I now intervene in the Debate. First of all, then, I would say that the Post Office has already made a very large contribution to the war effort both by releasing men directly into the Services and secondarily in the form of work connected with the Defence services of this country. May I take the three branches and sets of changes which His Majesty's Government are proposing to make, first of all, in the postal services? This does not appear in the White Paper, and it is, therefore, the first time an announcement has been made. It is to this effect, that as soon as may be in the London area, where there are at present four deliveries, there will, in future, be only three. That applies to some 55 per cent. of the correspondence of London and deals with letters passing through what are called the head district areas of Central London. It may be convenient if I say that they are the E.C.I, 2, 3 and 4, W.C.1 and 2, W.1 and 2, E.1, N.1, N.W.1, S.E.1 and S.W.1 districts. This may be of some inconvenience to some members of the public, of course, but the delivery which it is proposed to abolish is the mid-day one. As for the provinces, where at present there are three deliveries being made, there will be only two in future. There are only two cities at present which have an unrestricted third delivery; they are Liverpool and Glasgow. Birmingham has a nearly complete third delivery. Those cities, therefore, will have only two deliveries in future. There again the delivery which it is proposed to abolish is the middle one. What effect this may have on the revenue cannot be precisely calculated; presumably it ought not to have very much, except as a result of the reduced man-power in the matter of salaries, wages, and so on. It is estimated that the actual release of man-power and woman-power by these and other changes will be 5,000 full-time women and 2,000 full-time men, which is quite an appreciable contribution to be able to make at this stage of the war.

Two other changes of not anything like the same importance are proposed in the postal service. One is the abolition of the business reply service. Hon. and right hon. Gentlemen will know that this consists of envelopes and postcards which they generally get with charitable appeals and as a result of which they are supposed to send cheques and postal orders, and they do not have to put stamps on the envelopes, as the recipient pays. This service is carried out under licence. There were something like 40,000 licence holders before the war, but now the numbers has been decreased by something like 60 to 80 per cent. It is one of the luxuries we must unfortunately do without. The same thing applies to a service known as the postal forward parcel service. Probably this is better known to hon. Ladies than it is to hon. Gentlemen, because it is principally used for forwarding parcels to dyers and cleaners. I dare say that very few hon. Members have ever heard of it, and its discontinuance will not cause any great reaction.

Mr. Pethick-Lawrence (Edinburgh, East)

The right hon. and gallant Gentleman is not referring to the C.O.D. service?

Captain Cookshank

No. This is a very small service by which you send your dirty clothes to cleaners, and they pay the postage, and so on. I pass now to the telegraph changes. The new charges are given in the Financial Statement, but they cannot come into effect until the House passes the necessary legislation. The Government hope this may be done so that we may bring the changes into effect in the early Summer. Here the important change is the change of rate. The minimum charge for a telegram will rise from 9d. for nine words to 1s. for nine words. The last time a shilling was necessary for a telegram was when the rate was 1s. for 12 words, which existed up till 1935. The telegraph service has enormously increased during the war. I consider that a 20 per cent. increase in this particular service is an enormous increase. The figure has risen from just under 60,000,000 telegrams a year to over 70,000,000.

Sir Percy Harris (Bethnal Green, South-West)

Is not this largely the result of Service telegrams?

Captain Crookshank

That may be so. It remains a statistical fact that there is a 20 per cent. increase. Whether the traffic will be able to stand the increase in charges without diminishing, I do not know. The White Paper gives an estimate of what we think the improved income from the telephone and telegraph changes will be. Whether that estimate will be reached we cannot tell.

Mr. Benson (Chesterfield)

Does the increase in the traffic wipe out the loss?

Captain Crookshank

I cannot say offhand. We also propose to abolish the greetings telegram service. This is a service which, I think, hon. Gentlemen will be sorry to see go, because it has been very popular, but here again we are dealing with man-power questions, and in this field as in every other we have to cut down what may be considered luxuries. This service has more than doubled since the war. The figure of 4,000,000 per annum before the war has now increased to over 8,500,000.

Earl Winterton (Horsham and Worthing)

A point of some importance was raised by my hon. Friend the Member for Chesterfield (Mr. Benson). We have been given to understand by some of my right hon. and gallant Friend's predecessors that the telegraph service was a dying service. Is it not true that the main reason for the increase has been Service telegrams of various kinds? Could my right hon. and gallant Friend tell us at a future date whether that is so?

Captain Crookshank

Of course, I could give the information if I had notice of the question. I do not know offhand. Does by Noble Friend refer to telegrams from private soldiers to their relatives or from parents to private soldiers? Or does he mean the general service between the War Office and the Commands?

Sir P. Harris

Everybody knows that Service men going on leave send tens of thousands of telegrams to their relatives, and there are also the casualty telegrams. Will the right hon. and gallant Gentleman bear in mind the convenience of Service men going on leave? There are hundreds of thousands of telegrams from them.

Captain Crookshank

Of course, there are. There has been a 20 per cent. increase since the war. I am not sure that an analysis can be made in that form, but if it can be, it will be at the disposal of any hon. Member who likes to ask about it. As I have said, it is proposed to suspend the greetings telegrams for the rest of the war. It is also proposed to abolish a service which is not very much used—the night telegraph letter service. Before the war this involved a traffic of 650 a night, though in fact it has doubled itself to something like 1,300 a night now.

Mr. de Rothschild (Isle of Ely)

Is it proposed to abolish the night telegraph service to foreign countries and the Dominions?

Captain Crookshank

If the hon. Gentleman is referring to night cable letters, this has nothing to do with that. This is an internal service by which one telephones a telegraph letter or hands it in late at night at a post office and it is delivered the next morning as a letter. I think the hon. Gentleman was referring to the different rates at which cables are sent overseas, such as night letters, half-rate letters, and so on. It has nothing to do with that.

Mr. McEntee (Walthamstow, West)

With regard to the abolition of night telegrams, will this prevent telegrams from being sent at night in cases of accidents? These telegrams may be of extreme importance and even a matter of life and death.

Captain Crookshank

The hon. Gentleman is referring to telegrams. This is a night telegraph letter, which is a different thing. I am sorry we have to go into these small detailed points which refer to things with rather technical names. Unless one knows exactly what one is dealing with, one gets into confusion.

May I now take the third point, which relates to trunk telephone charges. Here again the White Paper has explained the figures. There has been an enormous increase in telephone trunk calls during the war. In daytime they have gone up 80 per cent. compared with the pre-war figure, and the night calls have gone up 35 per cent. The actual figures represented by these percentages may interest the Committee. Before the war the number of trunk calls per week was 528,000, and now the figure is 952,000 per week. These are tremendous figures [HON. MEMBERS: "The soldiers."]—It is not all due to the soldiers, because, in point of fact, 80 per cent. of the calls are what are technically known as non-private calls, that is, business and Government calls. The whole of the private telephoning covers only something like 20 per cent. The charges are going up as indicated in the White Paper, and the new charges which are proposed will come into effect on 1st May. As the figures are already in the hands of hon. Members, I do not think it necessary to go through them all, but generally speaking they represent a 50 per cent. addition to the pre-war charges, and the maximum rate is brought up, roughly, to what the maximum rate was in 1936, taking it by and large. At the same time we shall have to undertake, I hope with success, a campaign to induce the sparing use of the long-distance services. Already, as hon. Gentlemen know, there has been a drive to reduce the length of conversations because of the heavy load on the trunk lines.

The effect, on the financial side, of these changes in regard to the telephone and telegraph services is put at about £1,500,000 this year and at about £2,500,000 next year. Of course, as my right hon. Friend said, the object is not to try to affect revenue but to save man- power, and the more successful it is in saving man-power, the less advantage there will be to the revenue. On the other hand, the greater the revenue we get, the less we shall save in man-power. In this particular case and in this particular year and month of the war, our object is to save man-power, and therefore we hope that the new charges will act as a deterrent rather than otherwise. I repeat that it is with great reluctance that we have had to cut down these services. I hope that when hon. and right hon. Gentlemen are inconvenienced as a result of these changes they will bear in mind that it is some little contribution which they and their constituents are making towards the war effort. When they receive complaints from their constituents, as they well may, perhaps they will be good enough to remember the reason why these changes have been made and try to persuade their constituents that it is all being done in order to hasten the end of the war, by taking from the postal services, as we have had to take from so many other businesses, trades, and industries, the greatest possible number of men and women to help the war effort.

Mr. Austin Hopkinson (Mossley)

Is the Post Office taking any steps to endeavour to induce Government Departments not to flood the post with unnecessary correspondence?

Sir Alfred Beit (St. Pancras, South-East)

The Postmaster-General did not say anything about the saving to Government Departments which I understand is to be effected by an arrangement under which they will no longer have to pay for their telephone calls and as a result of which the surplus from the Post Office largely disappears from the national accounts.

Captain Crookshank

I was not dealing with the general discussion on the Budget Statement. It is true, as pointed out on page 12 of the White Paper, that there has been an alteration in accounting procedure as regards inter-departmental payments. That, again, has been done really in order to save man-power in connection with the preparation and settlement of these accounts. I am afraid that the picture with regard to the general surplus is somewhat different nowadays, because so much money is being taken from the Vote of Credit to finance certain of the Post Office services. If the Committee want me, on a more appropriate occasion, to go into that matter in detail, I shall be glad to do so, but actually the change in the accounting is being done to save man-power.

Mr. Denman (Leeds, Central)

Can the right hon. and gallant Gentleman give us an estimate of the saving of man-power effected on telephones and telegrams? He gave it for the postal service but not for the others, and such a figure would be helpful to us.

Captain Crookshank

I did give a figure for the saving effected by the reduction of the hours for the cheap telephone calls at night, but I am afraid it is not possible to make any guess at the result, right through, of the increase in the rates.

Mr. Higgs (Birmingham, West)

I should like to congratulate the Chancellor upon his successful Budget. As far as I can see, the right hon. Gentleman has received more compliments and fewer kicks than any other Chancellor who has presented a Budget since I have had the honour of sitting in this House. The Chancellor has but little power to enforce economy on the nation. He has to find the money that the various Services and Departments require. It is a fact that taxation restricts inflation, and if we got serious inflation, we would be likely to lose this war, and a defeat would be the greatest calamity that could overcome this country. The Chancellor is well aware of that fact, and the country realises it.

I would like to ask the Chancellor a question with regard to Surtax on private limited companies. Reading between the lines of his Budget speech, one realises that the Chancellor is well aware of the importance of financing industry after the war. Re-organisation will be of paramount importance, and it cannot be done without a certain amount of capital. Private limited companies are subject to Surtax under certain conditions, and those conditions are that, if a sufficient percentage of the profits has not, in the opinion of the Commissioners, been distributed to the shareholders, then the whole of the profits for that particular financial year can be subjected to Surtax. The possible reply is that no private limited companies have been assessed for Surtax in the past, but that does not affect my point. The fear is that these companies will be assessed for Surtax. Under normal conditions, when this provision became law I think there was every reason why it should have been made, but in those days the industry concerned could spend its profit on expansion. There were opportunities for doing so, and there were no restrictions. It was a just tax.

But now we are not in a position to buy additional plant, to put up additional buildings or even to carry out necessary repairs. We have to get permission to do this work. Certain firms, in consequence, are accumulating cash credits, and, as the law stands, because that money is in cash and is not being distributed, the Commissioners can assess those profits to Surtax. The result is that a business, in order to retain £6,000 or £7,000 in cash reserves, has to make a profit of something like £100,000. In my opinion there is no more arbitrary method of applying taxation than in this case. The decision is left entirely to file assessors and applies only to private limited companies. It does not apply to public companies, because the natural process in such cases is to distribute the profits, and those who receive them are assessed to Income Tax and Surtax. The private limited company is working under this disadvantage, that it may be accumulating its money assets to-day for the time when it has to change back to normal production, and the risk is that those assets will be taken from it. I hope the Chancellor will look into the matter and give it his favourable consideration and make a definite ruling, and not leave it in this arbitrary manner to the decision of the Commissioners. It is the most unsatisfactory tax that that particular section of industry has to contend with.

I compliment the Chancellor upon the items on which he has seen fit to collect additional taxation, but there are two or three others that I would bring to his notice. I think he already has power to assess medium-sized incomes, of the order of £2,000 down to £1,000 for Surtax. I am rather surprised that he did not take advantage of the power vested in him. Another matter which has been brought up on several occasions is displayed advertisements on hoardings and in the Press. We realise that he must have this additional revenue, and I do not see why that source cannot be taxed. Antiques also should come under his notice. He referred to the cost-of-living figures. The cost of living has been kept down to something of the order of 30 per cent. above pre-war, but his statement was rather confusing. I think the method of compiling these figures was originated in 1921 and somewhat modified in 1931. When the Chancellor refers to the cost of living, he should certainly take into account the limitation of quantities. In the cost-of-living figures are included sugar, meat, butter and so forth, the supplies of which are limited. It has altered the family budget considerably, and I doubt whether the figure of 30 per cent. is a real reflection of the cost of living. I doubt the wisdom of subsidising food prices at all—ultimately they have to reach their normal level—and whether the right thing to do, in order to ease the burden on such people as old age pensioners and so forth, is not to face the matter and increase their allowance pro rata rather than complicate matters by these sibsidies.

In his statement the Chancellor referred to repairs and renewals which have fallen due to be carried out but owing to the war cannot be carried out now, and said: The Inland Revenue authorities have agreed to dispense with that detailed investigation and to found the provisional allowance on the measure of the repairs and renewals which were carried out annually before the war. He cited the example of the lay-out of taxes and the restoration of units which may have been dispersed, and said he had agreed that similar treatment should be accorded in changing back from wartime to peace-time conditions, and he said: The return of industry from war production to peace production may involve the scrapping of buildings, plant and machinery which have been provided as part of the war effort. The law already provides relief both for Income Tax and for Excess Profits Tax."—[OFFICIAL REPORT, 12th April, 1943; col. 961, Vol. 388.] I should like to ask if the allowance for repairs and lay-out of factories is going to be free of Income Tax or if tax is going to be charged on it. He makes it clear in the last case but not in the other two cases. Then he makes provision for a fall in the value of stocks occurring after the war. This is a problem that is giving concern to many industrialists and manufacturers. For the reason that we are on war production and making goods which are not saleable to the ordinary public after the war, we are carrying stocks which will supply us for a period of six months, sometimes 12, and those stocks will not only depreciate in value but will become obsolete. I hope the Chancellor will also give favourable consideration to the elimination of the value of those stocks from future balance-sheets at the end of the war. It is obvious that he realises that our difficulties in the change-over from war to peace are going to be far greater than in our change-over from peace to war.

There are two ways of making ends meet. One is by increased taxation, and the other is by practising economy. This House realises the necessity of economy and appointed the Select Committee on National Expenditure immediately war broke out. That Committee has produced something like 50 Reports, but it is deplorable that there have been only two Debates on these Reports. The House appointed the Committee to show the nation that it is interested in economy, and it is to blame for not taking more interest in the Committee's findings. I am aware, of course, that the Departments reply to the questions asked by the Committee. The second Report this year refers to the Report on Royal Ordnance factories issued last year. I have spent a few moments going through that Report, and I find there were 23 recommendations——

The Deputy-Chairman

We cannot go into anything which affects the administration of the Royal Ordnance factories. That will have to be done on another occasion.

Mr. Higgs

I accept your Ruling. I want to congratulate the powers-that-be on maintaining the 2 per cent. Bank rate. It has been of considerable benefit to the nation, and when we compare the conditions of this war with those of the last, when the Bank rate varied from 6 to 10 per cent., we are undoubtedly showing our strength. Obviously the supply of money at the present moment is exceeding the demand. Coupled with that, there is a National Debt of £16,000,000,000. If you say it quickly, it does not sound much. We are paying interest on that figure, and if the war finished to-morrow, we should have to pay £500,000,000 per annum in interest alone. I believe that it can be done, for I still have faith in the nation. Our power of production is increasing, and our power to pay this interest will remain with us at the conclusion of the war.

I should like to refer to the remarks of the right hon. Gentleman the Member for Wakefield (Mr. Greenwood) on one or two occasions. He mentioned that £ s. d. were meaningless symbols. He repeated that in this House a few days ago, and it is a great pity that he did so.

Mr. Stokes (Ipswich)

If the hon. Member wishes to quote my right hon. Friend, will he quote him in full, because enough damage has been done already by a few words being taken out of the context of what he said?

Mr. Higgs

He said it in the House in order to emphasise what he had said outside, so that he should not be misunderstood, and I consider that he has caused great harm throughout the country by making the statement at all.

Mr. Stokes

The harm was done by the Prime Minister.

Mr. Higgs

If £ s. d. are to be meaningless symbols, what is to become of the savings of the community? They are a measure, a yardstick, and we must have £s. d.

Mr. John Wilmot (Kennington)

I am sure that the hon. Gentleman would not wish to misrepresent my right hon. Friend or to broadcast his statement in an incorrect form and, as he himself said, do great harm. The hon. Member will remember, I am sure, that the right hon. Gentleman said that if pounds, shillings and pence were divorced from the real things they represented, they would be meaningless symbols. With that I am sure the hon. Gentleman will agree.

Mr. David Grenfell (Gower)

Is it customary for an hon. Member to quote another Member without giving notice to the Member concerned? The right hon. Gentleman the Member for Wakefield should be given an opportunity to be here to put his own interpretation on his words.

Mr. R. J. Taylor (Morpeth) rose——

The Deputy-Chairman

We are carrying this matter too far. If the hon. Member will finish his quotation and carry on, it will be much more in the interests of allowing more Members to take part in the Debate.

Mr. Higgs

I accept your Ruling, but I should like to ask whether it is not customary to refer to Members' speeches when they are not in the Chamber.

I will conclude by making an appeal and a suggestion to the Chancellor. Could he not see his way to consider some method of simplifying the method of compiling accounts for taxation purposes? Every year legislation adds complications and causes greater difficulties and expense for industry. Cannot the Chancellor consider a simplification of the returns? He has done it for the workers' returns, but he has given no consideration to industry. If he would do this, I am convinced that it would benefit not only industry but the Exchequer as well.

Mr. Viant (Willesden, West)

We have had an announcement to-day by the Postmaster-General, but the Committee has not had sufficient time fully to appreciate it. It was unique that the right hon. and gallant Gentleman, as the ex-Financial Secretary, should have it fall to his lot as Postmaster-General to reverse what has hitherto been the policy of the Post Office and to cut down the services rather than to improve and develop them. As one who has been associated with that Department, I can appreciate that he did it with a considerable amount of reluctance. In spite of the announcement he has had to make, I am sure that the Committee will wish him all the best in his new office. The Post Office has made a not inconsiderable contribution to the war effort, and the men and women engaged in it are playing a great part in the national effort. We all appreciate what they did during the blitz in London, when we were able to see day by day the extraordinary services they were rendering under most exceptional conditions. We much regret that the services have to be cut down, but the Committee will appreciate that it is inevitable in present circumstances. The further contribution to the man-power and woman-power of the country of 2,000 men and 5,000 women is not an inconsiderable effort. I think there was a misapprehension in regard to night telegrams. If I understand the position, night telegrams will not be interfered with. It has been the practice for telegrams to be handed in at night to be delivered with the post in the morning, so that they have in effect become telegraph letters. That is in no way interfered with.

Captain Crookshank

It is the other way round; that is being interfered with.

Mr. Viant

Yes, interfered with in this sense, that a person will be able to hand in a telegram, and it will be delivered in the ordinary way, but its delivery as a letter next morning will no longer be possible. I want to refer to the cutting-down of postal deliveries. Here again it is extraordinary that the Postmaster-General should be taking this course, in view of the propaganda of the Department urging business people to take advantage of the mid-day post service. One of the difficulties of the Department was that the mid-day collection was invariably small, and the Department has endeavoured to persuade people to post their letters at mid-day and not leave them until the evening, when the Department was overwhelmed with a peak load. If we cut out the mid-day service——

Captain Crookshank

It is only the delivery.

Mr. Viant

If we cut out the mid-day delivery, it may have the effect of making the deliveries heavier in the morning and the evening. No doubt the present manpower will enable the Post Office to cope with that situation, and I agree that the mid-day service was the best one to be dispensed with if a cut had to be made. I am speaking only from my knowledge of the Department some years ago, but I cannot think that any considerable change has taken place in that regard. I feel rather perturbed about the cutting-out of the greetings telegrams, because they have been used very largely by the men in the Services. I think the Committee will feel rather apprehensive about that step, because we are reluctant to do anything that would restrict any advantages for those in the Services. The same argument can apply to the increase in the charges for cheap trunk telephone calls after 5.30 in the evening. I rather regret that change, because I know personally that although that service may have been used largely for social purposes, none the less it was also used and enjoyed by a very large number of men and women in the Services. I hope that further consideration may be given to that matter, because although I agree that efforts must be made to contribute to the man-power of the country, I know there has been a considerable demand for these cheap trunk calls. On the whole, I think that the Department has done its best to meet present-day requirements, and in present circumstances I think we have probably no alternative but to accept the austerity programme announced by the Postmaster-General. We accept it very reluctantly, and it is my sincere hope that he will have the privilege of reinstituting these services before much more water has passed under the bridges.

Sir Irving Albery (Gravesend)

I think this can be described as a stabilising Budget and that it well deserves that name. One of the great services which the Chancellor has rendered to this country since the war began has been that he has so managed our finances that we have been able, under extremely difficult circumstances, to secure a remarkable degree of stability, a thing it is by no means easy to achieve. If, before the war, anybody had been able to predict the astronomical figures which our finances would run into, he would scarcely have believed that we should have been able to accomplish what has in fact been achieved. I think the time has definitely come when in arranging the finances of the country we must not only have regard to the actual running of the war but pay even more attention to what the results will be when the war is over. I am one of those who see no reason why, within a comparatively short time after the end of the war, the world as a whole should not be even more prosperous than it was before the war began. It seems obvious that when all the energies which have had to be devoted, unfortunately, to making war are re-directed to the productions of peace, the peace-time production of the world should become larger than it ever was. But there is one point which must remain as a cause for great concern in this country, and that is that even if the production of the world shortly after a return to peace is greater than it was before, it does not follow that this country will be able to command for its use as large a proportion of that production as it had before the war. That is something which persons should always bear in mind when they attempt to judge to what extent it may be possible to improve—and in honesty I must say even to maintain—the standard of living of the people of this country.

Reference has already been made to a statement by the right hon. Member for Wakefield (Mr. Greenwood) on the opening day of this Debate. I had intended in any case to refer to it myself, and, what is more, I gave the right hon. Gentleman notice that I was going to do so. I propose to quote what he said: The Chancellor of the Exchequer, with a facility which I envy, juggled with hundreds and thousands of millions of pounds, and that only confirms my view that all these pounds, shillings and pence are meaningless symbols."—[OFFICIAL REPORT, 12th April, 1943; col. 983, Vol. 388.] I do not know what other speeches on those lines the right hon. Gentleman may have made, and I am not comparing that quotation with the context of some other speech. That statement was made in this House, and it was quoted in important daily papers, and I cannot but, say that in my view, in making that statement in this House, the right hon. Gentleman rendered a grave disservice to this country in time of crisis. There is no more difficult task before the Chancellor of the Exchequer than to maintain, as he has successfully maintained up to the present, confidence in our currency. I would say to the right hon. Member for Wakefield, if he were in his place, that possibly he may think that pounds, shillings and pence were less of a symbol and had a greater value when we were to some extent, at any rate, if not linked to the Gold Standard at any rate to gold. I would ask him to bear in mind that if that be so, then those symbols are not less important today when they are, in fact, linked to bread and to milk.

Mr. Grenfell

I wish to do justice to the right hon. Gentleman, who is not present. I am glad that notice had been given to him. I would like to say that really that sentence should not be quoted without going down six lines in the same column of the OFFICIAL REPORT, where the right hon. Gentleman relates it, if not to bread, to goods and commodities.

Sir I. Albery

I think this is an important point, which should be cleared up, and I will gladly give way to the hon. Gentleman if he wishes to quote anything which puts a different complexion upon that statement. I think it is in the national interest that it should be done when a Member of the House of the standing of the right hon. Member for Wakefield has made such a statement.

Mr. Grenfell

If it is a disservice to this country, it is the business of everybody to repair that disservice and not to exploit it. I do not say the hon. Member is doing so, but it might be exploited by others less careful of the country's interest. The right hon. Gentleman went on to say: Indeed, if I may say so, my right hon. Friend's speech, on which I congratulate him—particularly his remarkable analysis of the situation—really emphasised the fact that to-day goods and services matter more than anything else. On the next page he said: The balance-sheet, as my right hon. Friend quite rightly said, cannot be expressed in pounds, shillings and pence, but can only be expressed in services which are inestimable and incalculable."—[OFFICIAL REPORT, 12th April, 1043; cols. 983–4, Vol. 388.]

Sir I. Albery

I am glad that that should have been read out, for it may, and I hope it will, detract in the minds of some people from what was said at the beginning of the speech, and if it does, so much the better. On first consideration I do not know that it makes a very great deal of difference. It is still of the utmost importance that the people of this country should realise that the value of pounds, shillings and pence in purchasing power, in relation to goods and services, must be maintained, and that is what I wanted to bring out. The Government, as the Chancellor of the Exchequer has told us, will do everything in their power to maintain its value.

I want to make a very few remarks about some of the alterations which have been made in the Budget, and first I would like to touch upon the luxury taxes. The subject is not altogether unconnected with that which we have just been discussing. My right hon. Friend has put on a 100 per cent. luxury tax. That will not hit anybody, and so far as it goes it is all right, but I do not know that it will bring in a great deal of revenue I am not sure that it is wise, because I am not sure that there is not in it a certain influence towards inflation. It is certainly going to affect a great many articles, some of which, although luxuries, are in constant use by a great portion of the population. If the effect is going to be very high prices being paid for those articles, it will produce the impression that for so much pounds sterling you can buy only a small quantity of those goods, and that is an inflationary tendency. True, it will be caused by taxation and is not really inflation, but it will convey a general impression that the pound is not buying anything like as much as it did before, in those directions. For that reason this is the kind of taxation which can be pressed too far, and I very much doubt whether any real benefit results from it.

The Financial Secretary to the Treasury (Mr. Assheton)

I would remind the Committee that those taxes are one of the ways of stopping people from buying things, if prices are high.

Sir I. Albery

Most of the things which have been taxed were in difficult supply anyway. I do not want to be dogmatic about it. There is no doubt that the increase in the prices of beer and tobacco will still further aggravate hardship among certain classes of the population. I realise the Chancellor's difficulties, and I can only suppose that he has it in mind to mitigate those hardships in the near future by some improvement in the rates of pensions payable among the poorest of the community.

The next point I wish to touch upon is the Entertainments Duty. During the discussion on the Finance Bill last year I drew the attention of the Chancellor of the Exchequer to the nature of certain methods of evasion which were being used to evade the tax, and I offered him at that time what seemed a very simple plan by which the evasion could be overcome. It was that concerns which were allowed to produce entertainment free of tax should be allowed to do so on a yearly licence and that the renewal of the licence should be granted upon those concerns being able to show that they produced during the year entertainments which were of educational value to the public—rather a difficult thing to define sometimes. Secondly, they would have to show that they had done so without any profit motive. At the present moment this is not the case with many productions which are free of tax. I have never seen any reason to question the granting of the privilege of producing entertainments free of tax to such concerns as the Old Vic and Sadlers Wells because such associations have rendered service to the drama of this country and have been the school for many of our most distinguished artistes. Their encouragement is to be desired in every way; but this thing has been abused. Other people can quite easily form companies under the regulation by which they are allowed to produce entertainments free of tax. After all, if you have an empty theatre and you have already established a company which is allowed to produce entertainment free of tax, it is much more costly to keep your theatre empty than to put on a play, which may not produce much profit. You put on the play by a company whose productions are free of tax in a good theatre, and you pay yourself a good salary for managing it. Thus you get more profits than if you had put the play on as an ordinary commercial enterprise. That is one example

There is another entertainment which I hope to see, because I understand that it is well worth seeing. I understand also that it is free of tax. I am surprised to notice that the management are charging 12s. 6d. for the stalls, exactly the same price as an ordinary theatre charges from which it has to surrender the tax. The free-of-tax production does not surrender any tax, and it appears that they are putting the difference into their own pockets. I should not say "their own pockets." The production is supposed to be without profit. I would ask the Chancellor of the Exchequer to make inquiries and find out how the artistes are paid, whether by percentage of the takings or by definite salary. If it is by percentage of the takings, the artistes may be doing very much better than with an ordinary commercial enterprise. I understand that the Customs and Excise Department can give information about this matter, and I hope that the right hon. Gentleman will give this matter attention on an early occasion.

The last matter I wish to raise is not unrelated to the question of excess profits. Casually, not professionally, I have examined the accounts of a good many companies lately, some of them large concerns which are doing war work. The percentage of extra turnover during the war is not very large. They may be doing 20 per cent. larger turnover than they did before the war. On the other hand, I have examined the accounts of a lot of younger and smaller companies who are not only doing war work but have expanded six, seven or eight times in their turnover on account of the war. I find this difference: The larger concerns who have not increased their turnover very materially on account of the war probably had a good profit standard before the war, and they are piling up very substantial and desirable reserves which they mainly reinvest in Government funds and lend to the Chancellor of the Exchequer for the war.

When I look at the accounts of the other companies—and in a sense they are more truly representative of the kind of private enterprise one wants to encourage than the bigger ones who have already become administrative machines—they are the real, live people inside private industry. It has been possible for them to increase their turnover, but when I look into their accounts I find a very different picture. I find large bank loans, perhaps three or four times the size of their capital. I find large sums of money owing, in addition to the bank loans, and part of it owing on account of Excess Profits tax. I cannot help asking myself what the position of these more enterprising but smaller companies will be when the war is over. It looks very much to me that if a good many of these companies are to survive at all, they will survive only by being bought out by the bigger ones, who have not been so active during the war but have been able to accumulate reserves for use after the war. That is a matter to which I hope the Chancellor of the Exchequer will give his attention.

He may also be able to give his attention to another matter, and, if I may be a little more specific, he may be able to do something. I would ask him to look into the position as it was—I do not know what it is to-day—of the British Marc Company, which has been discussed in this House. There was a concern—and whatever investigations may have had to be made by the Public Accounts Committee were not because of any question about their war production or this company's efforts towards war production—whose war production was praised by everybody, but it owed a lot of money to the Government and to the banks. The chartered accountant who spoke for it said that its shares were not worth a penny piece, yet it was working hard for the Government during the war. That is an example of the kind of thing I have in mind. We have been discussing lately another concern called Short Bros. I do not know what the expert valuation of Short's shares would be today. There is some £3,000,000 of indebtedness against them, and if the war came to an end, I do not know what their shares would be worth. This is a good example, from which the Chancellor of the Exchequer will be able to see what kind of thing I have in mind.

Finally, as I have been fortunate enough to see the Chancellor of the Exchequer in his place in time for my concluding remarks, I would like to repeat before him that he has earned a great tribute from the country for the very able manner in which he has succeeded in stabilising and keeping sound the finances of this country during an extremely difficult period.

Mr. Tom Brown (Ince)

As a new Member, on Monday I had my first opportunity of listening to a Budget Statement. In the opening chapter of the very voluminous document, which I believe contained over 12,000 words, the statement made by the Chancellor of the Exchequer referred to the people of America and of Canada and in particular to their new manifestations of splendid co-operation in the common cause. He said it was magnificent in total and greathearted in manner, and he said that although the people of Canada were not very numerous—not so numerous as their neighbours—their action had been on a grand scale, and was the action of a nation conscious of its power and its place. As a very humble Member of this House with a large number of friends in America, and in Canada in particular, I heartily endorse the expressions of appreciation and gratitude made by the Chancellor of the Exchequer to our Canadian friends.

It appears to me that our Canadian friends, though few in number believe in that philosophy, which runs something like this: There is that scattereth, and yet in-creaseth; and there is that withholdeth more than is meet, but it tendeth to poverty. It is fundamentally true and an undeniable fact that the helping hand of benefice and generosity never goes unrewarded, and I hope that in the very near future the beneficent and generous hand of the Chancellor will be extended to our old age pensioners. May I also express the hope that the action of our Canadian friends in their generous and gracious contribution will receive its reward, despite the fact that we had in this House last night a most despicable and mischievous statement made by the hon. and gallant Member for St. Marylebone (Captain Cunningham-Reid), who tried to undermine in that speech the generosity and appreciation of our Canadian friends? But I can assure him of this, that so far as I am concerned, and so far as the friends I have in America, and particularly Canada, are concerned, speeches of that character are like water on a duck's back to our Canadian friends.

It is my purpose to draw the attention of the Chancellor very respectfully to those proposals of the Budget which in my opinion will hit the poorer sections of the community still harder than they have already been hit. The Chancellor has seen fit to increase indirect taxation, presumably on the score that so far as direct taxation is concerned, the saturation point has been reached. If my memory serves me aright, he made reference to the blending of direct taxation and indirect taxation. I am not quite so sure whether his blending of these two things will be palatable to the industrial workers of this country. It is now proposed by the Chancellor to increase the price of tobacco and alcoholic beverages, both of which apparently are officially regarded as luxuries. I do not want to give the impression to this Committee that I am speaking as one who takes beer. I have never tasted strong beer in my life, so I cannot be accused of objecting to that increase for myself. Whether it is a virtue or not is a matter of opinion, but no one will quarrel, in my view, with the idea that luxury expenditure should provide the rabbit for the Treasury hounds.

It is not a matter of major concern to me that certain opulent people should have to suffer the hardship of drinking more democratically, should have to call for humble beers instead of the wines and whiskies of other days. Nor, for that matter, am I perturbed at the prospect of the £5,000 a year man having to substitute cigarettes for the product of Havana. I am however much concerned about the effect of the new charges on the already less than meagre margin of luxury permitted to our old age pensioners, who now total well over 3,000,000. Even in this House, where there are still a few militant individualists who connect widespread and abject poverty with personal insufficiency, it would be extremely difficult to find anyone who would put up a case for depriving our old age pensioners of an occasional smoke, although they would probably be hard put to it to endure the close proximity of pipes charged with the cheapest type of tobacco. If you must increase indirect taxation of the kind we are discussing, and have discussed during the last two or three days, then what possible argument is there against placing the old age pensioner in a position to meet it? In other words, if you are to be laid open to the charge of penalising the most defenceless section of the community, why not take the bold, courageous and immediate step of increasing the basic pension rate payable to our old age pensioners?

These are days, everybody agrees, of almost fantastic and colossal financial estimates and expenditure. I remember when I went to school being staggered when I read in my history book that the National Debt had reached the alarming figure of £29,000,000. That was the figure before me in my school days. What is it to-day? But the life of the nation goes on, although an expenditure of £464,000,000 for civil purposes, of which the old age pensions charge is but a fraction, in a gross national expenditure of nearly £6,000,000,000, appears to some to be the surest sign of economic collapse and social disruption. More than once since I came into this House during the life and death struggle in which the nation is engaged, it has been urged on us by the Prime Minister and his colleagues that we must be realists. I now appeal to the Chancellor to take a realistic view of the terrible economic predicament of old age pensioners. I want to ask him this question: What justification can there be for a process which gives the old age pensioner something with one hand and takes it away with the other? It is true to say that this House through the medium of the Treasury conceded 2s. 6d. a week extra in supplementary pensions in 1940, yet the two Budgets that we have had since have taken away that amount which was given in supplementary pensions, to give the old age pensioner a few extra shillings——

The Deputy-Chairman

It has already been ruled this year and last year, I think, that we can refer to old age pensions, as the hon. Gentleman has done, but that we cannot go into them in very great detail or at very great length. That is why I allowed the hon. Member to go on for at any rate a considerable period.

Mr. Tinker

With respect, I think your Ruling, Mr. Williams, is very narrow. There has been a Budget Statement covering all phases of society, whatever they may be. Surely the old age pensioners have a claim to have their case put in the Committee after the Budget Statement has been made? I want, if I may respectfully, to challenge that Ruling to cut down the discussion on old age pensioners.

The Deputy-Chairman

Perhaps I might reply to that first. The Budget deals with taxation. The old age pensioner, when he draws his pension, is in an entirely different position. That is paying out money; it is administration. We are dealing here with direct and indirect taxation, not administration. That is why I think it is fair to make the illustration that there are people who can ill afford to pay a particular duty, but I do not think the illustration ought to be used to raise the question of old age pensions, which is an administrative act.

Mr. James Griffiths (Llanelly)

The Budget Statement is a statement by the Chancellor, first of all about the money he proposes to raise for the ensuing 12 months and the purposes to which he proposes to devote that money. Surely it is in Order to urge that the amount provided in the Budget for old age pensions as a contribution from the State is too little and ought to be increased and, in that way, old age pensions increased. I remember myself speaking in general Budget Debates in the past in which we have made complaint that the amounts for social services have been inadequate, and have pressed for them to be increased.

The Deputy-Chairman

Yes, as an illustration, but if we are to deal in the Budget with the administration of old age pensions, it is equally possible to deal with agriculture, the Army, the Navy, and every other form of service. That is why it was ruled—I think I am right in saying—last year, and has been continually, that an illustration can be given but that there must not be a Debate on the merits or otherwise of raising old age pensions.

Mr. George Griffiths (Hemsworth)

This is about the 12th Budget I have listened to. We have always been able to get in and put the point of view that the old age pensioners' allowance was too small, and have asked the Chancellor that there should be an increase between now and, say, the next Budget, and we have always been allowed to follow that line. I am amazed that to-day and yesterday, just because a Member mentions the pensions, if he is proceeding to say, "The old chap has not sufficient and he should have more," the Chairman of Ways and Means gets up and says he is out of Order. I think it is wrong.

The Deputy-Chairman

I would say that this is not the first year this has happened by any means. It was done last year. The making of a reference has been allowed. The hon. Gentleman who is speaking had made a pretty general reference to old age pensions, and I had not stopped him until it seemed as if it was going to become a really long speech on this subject and not a reference or an illustration.

Mr. S. O. Davies (Merthyr)

I may be able to catch your eye in the course of the Debate, Mr. Williams, in which case it was certainly my intention to make special reference to the increased taxation on tobacco and the effect of that on the last little comfort left to the old age pensioner. Would I not be in Order in dealing with that and elaborating it to my heart's content if I felt so disposed? We feel seriously on that isolated point in the Budget, that surely the old age pensioner has been robbed of the little comforts left to him, his pipe or his ounce of tobacco every week. Would you rule me out of Order if I wanted to express myself strongly on that particular point?

Mr. Ness Edwards (Caerphilly)

I have no desire to embarrass the Chair, but I would like to put this point. Yesterday one speech dealt wholly with the wasting assets of sand and gravel, of the capacity of that industry to pay a tax. The Chancellor of the Exchequer, in his Budget Statement, referred to what is to be done with a proportion of Excess Profits Tax for the purpose of enabling industry to transform itself from war to peace production. Surely the capacity of an important section of our community to pay the taxes which the Chancellor proposes to levy is a matter which ought to be allowed to be adequately discussed, especially in view of the fact that the effect of your Ruling, with all respect, Mr. Williams, makes it appear that in debate a preference is to be given to large vested interests?

The Deputy-Chairman

As far as the administration of a tax is concerned, as to whether that tax should be reduced or not is obviously a Budget matter. It is obviously perfectly fair to bring into the Budget Debate that with a tax at the present rate people have not the means of paying it. As far as the individual is concerned, it has always been the practice in the House to illustrate one's points that this or that individual is not able to bear this or that form of taxation, but to carry that illustration into a long, elaborate argument that you must increase his pension is where, I maintain, hon. Members are going wrong. Use it as an illustration that he is hard up and cannot pay the Tax, but not as a means of trying to get an increase in the pension. That is the point.

Mr. T. Brown

You found it necessary, Mr. Williams, to call me to Order when I was making my appeal to the Chancellor of the Exchequer on the question of the inadequacy of the old age pension to enable the pensioner to pay the increased tax on tobacco and beer. I will content myself with referring to the increased tax on beer. The Chancellor has deemed it advisable to increase the tax on beer. I wonder whether he visualises the condition of our men who are engaged in heavy industries, particularly miners, steel workers, railwaymen and transport workers. I speak from considerable experience, having spent 35 years underground in a deep, hot mine, and I know the effects on the constitution of working in deep, hot mines.

Mr. Tinker (Leigh)

On a point of Order. I wish the Chancellor could take a more serious view of this criticism. It may be that a man is smiling——

The Deputy-Chairman

I do not think that is a point of Order. After all, we are all allowed to smile occasionally.

Mr. Brown

It is said, rightly, that the smiling and beneficent face is an indication of generosity. I hope that we shall see some generosity to-day. I was referring to the hardship experienced by men in the mining and heavy steel industries, who have to bear the increased tax on their pint of beer. I want the Chancellor, before he decides to allow the tax to continue, to visualise the hardship which will be inflicted upon these men. In our pits in Lancashire and other parts of the North, where men have to work in temperatures of from 90 to no degrees, they do lose, during the seven and a half hours from the time when they leave the surface in the morning to the time when they are brought back to the surface in the afternoon, from seven to 13 pounds in weight as a result of the excessive perspiration. I ask the Chancellor to visualise the extraordinary expenditure which those men will have to meet when they try to retrieve their lost strength. Not only are they working in very high temperatures, but at present, owing to the highly intensified mechanisation of our pits, they are working in atmospheres loaded with dust, so much so that you cannot see your finger before you. That dust has its effect upon the man who has to swallow the drink. It is all very well for people to argue that these things could be met in the pits, during the working hours, but you cannot meet them. These men have to partake of beer in order that they may retrieve the strength they have lost through working under such conditions. I submit that it will be a hardship to the men working in deep, hot mines, who have to consume from six to eight pints of beer a day, to have to pay such a tax. I cannot let this occasion pass without referring to an experience of my own. The temperature brought about such an acute thirst one day that in order to save my life I was compelled to partake of water containing human blood.

I was particularly anxious to draw attention to the proposals in the Budget which will increase the burden of the poorer sections of the community still more. There are other ways of raising taxation than by imposing it upon the working people, and particularly upon the old age pensioners. I hope you will not call me to Order, Mr. Williams, because this matter is burning in my soul. That is the reason why I speak with the depth of feeling which I do. I feel almost ashamed of myself, as a citizen of this country, when I see our old age pensioners living in such abject, poverty-stricken conditions. I hope you will pardon my making this reference, but the time is long overdue when our old age pensioners should receive treatment commensurate with a decent standard of life.

Sir Stanley Reed (Aylesbury)

I should like to endorse what has fallen from my hon. Friend the Member for Ince (Mr. T. Brown), in his eloquent refutation of the degrading attack made yesterday upon our American Allies and Canadian fellow-subjects. But I think we may well leave that subject to the Minister of Information, with the reflection, however, that even barbed shafts sometimes fail to penetrate the hippopotamus's hide.

Mr. Stokes

On a point of Order. Is one hon. Member entitled to call another hon. Member a hippopotamus?

The Deputy-Chairman

I did not hear that remark.

Sir S. Reed

I would like to remind my hon. Friend the Member for Ipswich (Mr. Stokes) that we have a phrase in the West country, applicable to a man who is always excessively anxious to interrupt other people, that he has no lead in his breeches. I do not think my hon. Friend has any connection with the West country, but I might suggest that that aphorism might be equally applied in East Anglia. My right hon. Friend the Chancellor put in the forefront of his Budget the international aspect of our finance. Although occasional reference has been made to it, I very much doubt whether the House and the country appreciate all that we owe to the international action which has been taken in this war. I do not want the Financial Secretary to the Treasury to tell me that I am talking economic heresy when I say that internal debt is a comparatively easy thing to manage. It involves only the transfer of funds from one pocket to another within the corpus of the community. It does not go outside the community. But external debt can be a tremendous, and sometimes an overbearing, problem. An earlier Chancellor of the Exchequer, Mr. Bonar Law, who had grim recollections of the last war, bore testimony to that truism. When payment for international debt, or overseas debt, is not accepted in goods or services, and the debtor has no gold, it brings us to the doorway opening on to that very dismal land—repudiation. Although testimony has been borne once or twice in this discussion to all we owe to the United States, it may not always be realised that the astronomical figures in this Budget and the extraordinary smoothness with which our war Budgets have gone through have been in very large part due to the action of that country. Although it is true that under what I might call reverse Lend-Lease a greater balance is now being struck, there was no reverse Lend-Lease when Franklin Roosevelt launched this great proposal, and it was generously supported by the Legislature of the country which is now our Ally. Nor do I think we can sufficiently appreciate the magnificent generosity of the Government and people of Canada, which has been so tremendously important in smoothing the passage of our war finance.

While we have those two examples before us, I am quite confident that this Committee does not appreciate the revolutionary financial and economic change which has come over a country with which I am somewhat familiar: that is, India. At the end of the last war India emerged with a sterling balance in this country of about £108,000,000, but with an increased sterling debt. I think I am correct in saying that since this war broke out India has discharged or repatriated the whole of her sterling debt. That sum, which stood at £376,000,000 when the war broke out, has now been repatriated. Not only that, but she has accumulated in this country sterling balances amounting in the last figures I have to over £302,000,000 and it is rising. So in the war period, by virtue of the great expenditure which has taken place in India on behalf of this and the other united Governments, India has not only discharged the whole of her sterling debt, but has accumulated balances exceeding the total amount of British capital invested in India in various industries. In other words, India has passed in these three years from being a debtor country to being a creditor country. I was very loth yesterday to interrupt a speaker to whom we all listen with very great respect, the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence), but when he said that some part of our financial activity after the war might be directed to helping India to build roads, the fact is that the precise converse will be the case. It may well be a case of India lending us money to reconstruct our ruined and desolated cities rather than of our having to consider lending money for her own development. Some 15 years ago a very distinguished financial economist in India rather startled the country by saying that if she mobilised her own resources she would become a creditor country. That process has been expedited so remarkably that, financially, India will emerge from this war, in point of view of unproductive debt, the strongest country in the whole world. I simply mention these facts, in continuation of the remarks I made about Lend-Lease and Canada, to emphasis a point which I think has great importance at this juncture.

My right hon. Friend the Member for East Edinburgh and my hon. Friend the Member for East Birkenhead (Mr. Graham White) drew a rather glowing picture of what is going to be the state of this country after the war. They may be right. I hope they will be right and that I shall be proved to be entirely wrong. But when I find estimates that after the war this country will not be any worse off than it was before the war and that after the war the national wealth will continue to grow at the same rate as it did before the war, I ask myself on what possible foundation those estimates can be based.

Mr. J. Griffiths

On the foundation of productive capacity.

Sir S. Reed

Productive capacity is one force; but there are three factors in industry—capital, labour and demand. Active demand denotes capacity to pay for the commodities to satisfy that demand. It is to our capacity, after the war, to continue to pay for the commodities we have been used to import, after we have lost these overseas revenues, that I ask the Committee to give their serious attention.

Mr. J. Griffiths

Does the hon. Gentleman suggest that the capacity to buy cannot be increased with capacity to produce?

Sir S. Reed

I certainly suggest that to continue to buy overseas in order to maintain the standard demanded by the country itself can be very seriously impaired by the loss of the power issuing from the assets on which these purchases have been made in the past. It is to the loss of that purchasing power that I suggest inadequate study has been given. The Chancellor of the Exchequer gave us the astounding figure that before Lend-Lease came into operation we had expended £1,500,000,000 on war supplies and raw material in the United States of America. Perhaps the Financial Secretary, in replying to the Debate, will tell us precisely where this £1,500,000,000 came from? It is, I think, obvious that one result is the complete disappearance of our earning investments and in the loss of purchasing power in the United States which those investments embodied. The same general conditions apply, in greater or less degree, to Canada and to India. One of the great problems of India used to be the Home charges. They were about £40,000,000 a year, representing £40,000,000 of purchasing power. Those £40,000,000 now are reduced to a maximum of £8,000,000, so that £32,000,000 worth of purchasing power has been lost to this country to India. It used to be a great problem how to maintain the rupee at the old rate of 1s. 4d. In future, there will be the greatest difficulty in keeping it down to 1s. 6d. I only mention these points to illustrate the major issue.

I hope therefore my hon. Friends who say that everything is going to be roses, roses all the way, after the war are right. I believe with Marshal Smuts that you cannot expect a new heaven and a new earth after the most destructive war in history, and with the Minister of Aircraft Production in his call to austerity in our lives and conduct. They may well be more nearly correct than the belief of those who think that we have a primrose path right ahead of us, and who do not consider we should bear our lives with simplicity and austerity to meet the future with confidence, faith and success. I was brought up in the faith of the greatest economist of all times—Wilkins Micawber, Esq. Wilkins Micawber said: Annual income twenty pounds, annual expenditure nineteen, nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery. People are very fond of quoting Micawber, but they often forget that when he drew a bill—3, 6, or 9 months—he thought he had paid a debt. There are people asking the Chancellor of the Exchequer to draw bills, not for 3, 6 or 9 months, but for 20 years ahead without considering whether his successor can meet them on maturity. I hope they are right; I have the very gravest doubts as to whether they are right. For these reasons I ask hon. Friends to consider whether we should not look forward with confidence, faith and courage to a world of high thinking, plain living and hard work.

Mr. J. Griffiths

For all?

Sir S. Reed

For all without exception. The hon. Member for East Stirling (Mr. Woodburn) yesterday spoke very wise words as to the readjustments of income. We are ironing out social and economic injustices which have prevailed too long. The Chancellor of the Exchequer has gone a great way in that direction already and he will have to go much farther. All of us who think will welcome the fact that he has taken those steps. I can see no idle rich in the future. I can only see that some may be perhaps a little better off who have the merit of harder work or exceptional ability. There is nothing which need discourage us in this forecast; rather the contrary; so I trust we shall go forward with courage, hope, confidence and faith to a life of simple living and greater austerity; and that we shall draw from it an even greater happiness than in anticipating roseate conditions which cannot, in my belief, obtain under revolutionary changes which we know have been wrought by the years of war.

Mr. Thomas Fraser (Hamilton)

I rise with some little reluctance to make my first contribution to a Debate in this Assembly, and I do so not as an expert on economics and finance, but merely as a representative of the common man. If my few remarks should seem to be ill-constructed, and if I should falter a little, and even if some hon. Members should think my remarks to be even ill-conceived, I trust that they will bear with me in this my first attempt in this House.

I believe that most hon. Members will subscribe to the view in these times in the prosecution of total war that all should give all they can in the effort for victory. The test of this Budget is to see how far it accepts that principle. It would be unthinkable to allow each of us voluntarily to contribute our share of the financial responsibility of a modern war, just as it would be unthinkable to depend on everyone of us individually to contribute what we thought fit towards the gaining of our war victories, to our fighting personnel, and especially without reward in cash. It is given to the Minister of Labour and National Service to organise the manpower of this country for total war and to the Chancellor of the Exchequer so to organise the financial resources of the country as to ensure that we shall retain some sort of economic stability throughout this time of great stress. There is nothing to be gained in attempting to measure the success attending the efforts of these two Ministers in their difficult, and one might well say impossible, task of trying to distribute the burden of the war equally. What I understand to be the task of the Committee in this Debate is to try and appreciate how far former war Budgets have succeeded in sharing the financial responsibility of the war and whether the latest changes proposed do more evenly or less evenly share that responsibility.

I am definitely of opinion that the Chancellor of the Exchequer, by way of these changes, has less evenly shared the financial responsibility of the war. I understand fully that in the best interests of the country we should meet as much of our war expenses as is humanly possible out of taxation, in preference to meeting it by borrowing and thereby passing on the burden to posterity. Why the extra £100,000,000 or so the Chancellor of the Exchequer hopes to get in the next 12 months should be subscribed only by those who have a pipe or a drink or go to the cinema, and mainly because they do such things, is beyond my comprehension. This is not a smokers' war, a drinkers' war or a cinema-goers' war, and it will not be their victory. I understand that it is a people's war and that when we gain victory, as I trust we shall, it will be everybody's victory, it will be a people's victory. Let us then make it a people's war and share equally, as far as is humanly possible, the financial responsibility. Let the Chancellor of the Exchequer order each and all of us to pay in accordance with our ability to pay. Nobody would suggest that the increases in indirect taxation envisaged in the Budget accept that principle. The truth of the matter is, as other hon. Members have said, that the new increases will bear heavily on hundreds of thousands of already overburdened working men—those with low fixed incomes, and some with very low incomes which are not fixed. I think particularly of the old age pensioner. In view of what has already been said on behalf of that unfortunate section of the community, whose only crime is that they have survived the rigours of time, I do not propose to say any more. I would certainly have favoured an increase in direct taxation rather than the new indirect taxation to be imposed.

I should like to say a word about the reliefs the Chancellor of the Exchequer is giving to some Income Tax payers in the way of allowances. I know of a very hard case where the persons concerned will probably feel more aggrieved than ever at their apparent isolation in the new circumstances. I refer to the person whose physical disability requires the attention of a housekeeper. I have in mind the particular case of a man who had a serious accident as a boy, in which he lost an arm and a leg. In spite of his disability, this man has always been in employment, but I suppose that, probably because of his disability, he never married. Until a few years ago his aged mother kept house for him, and he had relief in respect of her, but when she died he had to bring in another person to look after him and to attend to his daily needs. The result is that he has found himself in a much worse position so far as Income Tax assessment is concerned. It is absolutely necessary for this man to have a housekeeper to look after him, but because he is not a widower his claim for housekeeper's allowance cannot be entertained. Surely it is within the ingenuity of the Chancellor's Department to amend the law whereby relief could be allowed in such a case as I have described, especially when it can be proved beyond any shadow of doubt that it is necessary to have a housekeeper because of physical disability.

A further point I would like to make is with reference to the Purchase Tax. It was with pleasure that I heard the Chancellor say in his Budget speech that he had decided to exempt utility textiles, at a cost of about £6,000,000 a year. I deeply regret, however, that there is still spending on super-luxuries, from which the Chancellor proposes to make good that loss. The Chancellor decided to make good his deficit by bring the tax on luxury articles up to 100 per cent., and some people will be foolish enough to believe that they are actually helping the war effort by spending on such articles. For my part, I deprecate the spending on such luxuries as fur coats. It should not be allowed to continue in these difficult times. Merely to tax such spending is a confession that irresponsible people have too much money with which to fool around, utilising, as they do, valuable labour that could far better be applied in other directions. I would forcibly abolish all such spending and compulsorily direct the money to the better interests of the community. I think I have probably said enough in my first contribution to this Assembly, and I trust that what I have said will be accepted as representing the view of a large section of the community and be treated with the consideration and respect it thereby deserves.

Major Oscar Guest (Camberwell, North-West)

It is my pleasant duty to compliment the maiden speech of the hon. Gentleman the Member for Hamilton (Mr. Fraser), and I am sure I am voicing the opinion of everybody when I say that the manner of his address and the meat of what he said interested us all.

I would like to add my meed of praise to the general approval shown on all sides of the Chancellor's war Budget. It is a truly remarkable achievement for him and the country that he should have been able to produce such a Budget in this, the fourth, year of war. The two figures he mentioned which struck me most were that we were paying 46 per cent. of our war expenditure and that the cost-of-living figure had not gone up since the beginning of the war by more than about 30 per cent. These are remarkable figures. One hon. Member rather doubted whether keeping the cost of living down was altogether wise and economically sound, but the vicious spiral of the rising cost of living and rising wages trying to keep up with it was a bugbear in the last war which has been successfully avoided in this war.

There are only two points to which I would like to call attention, as I do not profess to be an expert on finance. There are two large classes in this country who are now paying tax and who did not pay tax before the war. By far the larger are the weekly and hourly wage-earners. The question has been posed many times—and it was raised over a year ago in the Production Debate—as to why Income Tax cannot be related to the actual weekly earnings of the person concerned. At that time, I think, the Chancellor said that while he was sympathetic to the suggestion it was impossible to bring it about. I was glad therefore to hear him say in his Budget speech that consideration of the current earning basis of taxation had not been ruled out. That is very important for the war effort and for the situation that will arise in the post-war years. The Minister of Production told us a short while ago that considerable changes now in the munitions industry will be required, and in the readjustments and movements of labour which that will entail. We have already found that in the alterations which have been imposed. Labour has had to be moved, over-time periods have had to be changed and bonus rates have had to be re-fixed—and it should be remembered that bonuses form a very considerable proportion of a worker's earnings. If, during a certain period of alteration, a wage packet is not what it was, a worker suffers very hardly because he finds himself going home with an amount of money that does not meet the burdens he has to face.

It is hard on all classes of the community to be taxed on assessments for the previous year, but it is, of course, much harder on those who are not so well off. I do not think the Treasury could not solve the problem if they felt it vitally necessary. It is not for me to tell the Chancellor how he should do it, but if we are to have difficulty in the changeover from munitions production at the end of the war, the position will be much more serious. The difficulties which will face the country then will cause un-settlement in wage and salary conditions right through the country, and if there is to be this handicap of Income Tax based on previous earnings, the situation will be worsened. The classes which have accepted direct taxation have accepted it willingly, and I hope the Chancellor will make an early effort to see whether this taxation cannot be on the wage packet as it is received and adjustments made afterwards.

I now want to put in a plea for the small and medium-sized farmer. There is one commodity which is essential for the farmer, and that is capital, upon which the success or non-success of his farming rests. Capital is employed by the farmer on improvements, reconditioning, repairs to buildings, manuring, and improving the land. Though at present the farmer enjoys subsidies, it should be borne in mind that he has two disabilities. One is that he has a poor standard of pre-war profit, and the other is that he is eating into the capital of his land by over-cultivation for war purposes. I think some concession or assistance should be given in regard to the taxation of the farming community. I think we might take farming taxation as being based on the class of land, the acreage of the farm and a reasonable pre-war profit standard. The farmer is making as great an effort as the munition worker is making towards the prosecution of the war, and he will find himself in a poor position at the end of it if his burden of taxation cannot be eased to meet his capital needs. Those are the only two points I wanted to make. As I have said, I think our position after four years of war is remarkable and one about which our adversaries cannot be happy. Nevertheless, we shall have a difficult post-war situation to face, and I think the wage-earning classes and the farming community should be considered. The changeover to peace conditions must be done with the least difficulty and hardship to all concerned, and some assistance to the two classes of taxpayers I have mentioned might pave the way in that direction.

Mr. Stokes (Ipswich)

I want to open my few remarks and criticisms of the Chancellor's Budget by making, first of all, a reference to a point made in the speech of the hon. and gallant Member for North West Camberwell (Major O. Guest). That is the importance of arranging Income Tax so that it can be collected out of the pay week. Everybody connected with the industry knows the importance of this matter, and I agree that it cannot be beyond the wisdom of the officials of the Treasury to devise some such scheme. Even my own officials devised a suitable scheme, but the Government said it was out of order and contrary to the law. That being so, the best thing the Chancellor could do would be to amend the law so that this very desirable change can take place.

Almost every speech that has been made so far in this Debate has been in genuine appreciation of the Chancellor's Budget. I know that the right hon. Gentleman will not be surprised or take offence if I say that I do not propose to follow suit, for it seems to me that a Budget so universally commended must be bad. I have several points which I want to put to the Chancellor, and I am delighted to have the chance of speaking while he is in his place. In the first place, I think the method the Chancellor has adopted of raising the extra taxation will drive home to the ordinary working man the fact that it is he who ultimately pays all taxes. For that reason, regretful though I am that an extra penny a pint has been put on beer—I do not think it will make any difference to the amount consumed, nor does the Chancellor think it will—I hope that working people throughout the length and breadth of the land will take it to heart that they, and they alone, are the people who ultimately produce all taxation. I want also to add my word of support to what was said by my hon. Friend the Member for Leigh (Mr. Tinker) and others about old age pensions. It is regrettable that the Chancellor has not yet been able to provide something more for old age pensioners. It is an interesting and useful reflection that a tax of 1d. a pint on beer more than covers the supplementary pensions to old age pensioners. My recollection is that the supplementary pensions cost about £27,000,000 a year, whereas the Chancellor expects to raise £33,000,000 in a full year from the extra 1d. a pint on beer. I suggest to him that it would have been very acceptable to the country if at the same time as he put the 1d. on beer, he had increased the old age pensions, and said that it was in this way that he was getting the money to do it. I propose in the main to devote my remarks to various things that were said by my right hon. Friend the Chancellor in his Financial Statement. In the early part of his speech, referring to Lend-Lease, he said: It rests upon the principle that in a common war all shall give all they can to the common task. A little later he went on to quote something that was written by Robert Hamilton in 1814: No exertion can be too great, no pressure of increasing burthens is to be regarded, no dread of exhausting our resources entertained. I agree with my hon. Friend, but I hope that when he makes his winding up speech he will assure us that that attitude will not cease when the war ends. That attitude of mind and that approach, desirable in war-time, are doubly desirable in peace time for our economic security. In referring further to Lend-Lease, the Chancellor said: The American people have never put the dollar sign in the help that they have given us. That astonishes me, for they have. On hearing it, I came to the conclusion that my right hon. Friend does not read the newspapers as closely as he ought to do and is not as closely in touch with America as he ought to be. I have seen published in British newspapers, and in extracts from American newspapers, a complete dollar analysis of what the Americans have done. It was, for instance, published in the "Economist" on 20th March, and the figure for total Lend-Lease from 4th March, 1941, to 1st March, 1943, was shown as 9,630,000,000 dollars, of which 4,430,000,000 dollars came to Great Britain, 1,826,000,000 dollars to Russia, and about 2,900,000,000 dollars to Africa, the Middle East and the rest. I do not understand the reluctance of the Chancellor to put a figure to our Lend-Lease in the opposite direction. It would serve a most useful purpose in our relationships with our friends across the Atlantic that they should have some gauge of what we have done. My right hon. Friend went on to say that we have already spent about £150,000,000 in constructing aerodromes, barracks and the like for the benefit of American Forces here, and he gave the amount of our Lend-Lease to Russia as about £170,000,000. I am not clear whether he meant that goods to that amount had actually arrived in Russia or had been despatched to Russia; perhaps he will clear up that point when he replies to the Debate. There was a feeling at the back of my mind that perhaps the Lend-Lease to America was so much in excess of the figure to Russia that he did not want to disclose it. The point I wish to make is that it would serve a most useful purpose in our relations with America if it were generally known in America what we have supplied in Lend-Lease, I can see the difficulty there would be in measuring services, but America has put a figure to the equipment, etc., she has sent to us, and I cannot see there is any reason we should not do likewise, so that everybody may know what is the position. Later on in his speech, the Chancellor quoted an utterance of the Prime Minister that: We and the Americans would find ourselves greatly mixed up during the war, to which my right hon. Friend added: We are all liking and benefiting from the mixture, and we shall continue it."—[OFFICIAL REPORT, 12th April, 1943; cols. 937–942, Vol. 388.] I have two reflections to make on that remark. The first is that propinquity—I do not know whether that is the right word—leads to understanding; in other words, the closer you get to people, the better you are likely to know them, and the more likely you are to be able to live at peace with them. The other reflection, with which I think all my hon. Friends on this side will agree, is that it is Governments who make war and not peoples. I hope that attitude of mind may be developed so that we may mix freely with all the peoples of the world and see whether we cannot come to a better understanding as soon as ever possible. On the question of borrowing, the Chancellor made a remark which I found it difficult to follow. In talking about loans which had been raised in various parts of the world, he said: The rest we have to borrow from those countries who are making common cause with us and whom we are defending, and we are incurring a considerable obligation about repayment."—[OFFICIAL REPORT, 12th April, 1943; col. 942, Vol. 388.] Will my right hon. Friend clear up that point? Whom does he mean, how much have we borrowed from them, and how much has been lent to them in return? It may be that the figures are not considerable and not worth bothering about. With regard to war damage payments, although the Chancellor stated that the amount paid out had exceeded the premiums, he left us in the dark as to what the amount had been. Surely, there would be no difficulty or danger in making those figures public. I come now to a highly controversial point. The Chancellor referred to the extra compensation which is to be provided for wastage in the case of certain minerals, such as sand and gravel. It may be that under the system under which we live the Chancellor can argue that his proposals, when they are known in more detail, are quite equitable, but this seems to me to be a deplorable trend. The whole method of approach that has been tried in this war has been that nobody should make anything out of it, but it now appears that all the owners of raw materials are to be assured their profit return when the war is over. It is all very well for the Chancellor to make a not very pleasant face about it, but it is a fact. I quite understand that in the case of wasting machinery which is produced wealth there should be some measure of compensation for wear and tear, but I cannot understand why extra compensation should be provided for gravel and sand-pit owners who have not put the gravel and sand in the ground. It is quite beyond my comprehension why, because we have to take rather more gravel and sand from the pits in order to defend this island, they should receive extra compensation. If the Chancellor intends to follow that line, what he ought to do also is to assess what is the possible income that might have been earned by every soldier who is killed and assure to his mother, father, sweetheart or wife, whoever it may be, an adequate amount of compensation on the assumption of what the soldier would have earned if, instead of being killed, he had continued to live. It is the same old ugly business of vested interest and capital monopoly rearing their heads again. I am shocked and surprised that the Chancellor should gradually be allowing them to edge their way in again so as to let us down in the same way as we were let down after the last war. I turn now to another, and to me a more familiar, subject—the service of the debt after the war. The right hon. Gentleman said: Service of the debt after the war may be kept as low as possible and thus, among other things, greatly help then our plans for reconstruction and advancement."—[OFFICIAL REPORT, 12th April, 1943; col. 945, Vol. 388.] At this stage I would like to clear up a very mischievous remark that has been made about a statement made by my right hon. Friend the Member for Wakefield (Mr. Greenwood) when he referred a short time ago to pounds, shillings and pence becoming meaningless symbols. I thought that the Prime Minister had done enough damage to this country when he half-quoted my right hon. Friend over the wireless, but the matter has been taken up twice in the Debate to-day by hon. Members who are not now in the Chamber. I would like to put on record in this Debate what my right hon. Friend really said, because it seems to me to be a most mischievous thing to allow such a phrase to be taken out of its context and sent around the world as if my right hon. Friend and his supporters on this side were irresponsible, congenital idiots incapable of clearly appreciating what the real situation is. On 16th February, my right hon. Friend said: I do not believe that the way to national recovery and prosperity is through the dark, foetid channel of harsh restrictions and economy. There may be those who disagree with me in this, but pounds, shillings and pence have become quite meaningless symbols. The future of this country does not depend on the Bank of England and the 'Big Five.' At their best the banks are but the lubricant oiling the wheels of production. The future of this country and of the world depends not upon money-changing, book-keeping and accountancy, but upon what brains and brawn can produce out of the bowels of the earth."—[OFFICIAL REPORT, 16th February, 1943; col. 1623, Vol. 386.] I do not want to labour the point, but I think it was most mischievous that that should have been put out over the wireless in the way it was, and I regret that any hon. Member should see fit to take up the matter again in the same strain and misquote my right hon. Friend. The pith of the whole money matter is simply this, that the Chancellor is overpowered by the city interests. I do not believe my right hon. Friend the Chancellor really has a clear conception of what money is! I have raised this point with him again and again and urged upon him that he should encourage people to indulge in interest-free loans. There have been quite considerable interest-free loans, I believe amounting to £50,000,000, since the war started. There is no reason why they should not be encouraged, but the Chancellor will not encourage them. Why? Because it does not suit the banking interests, and the Chancellor is dictated to—behind the scenes, he may not admit it here—by them. I want to put to the Committee the whole question of the fallacy of paying interest on your own credit. I understand perfectly well what the position is when I go to anybody—say, to my hon. Friend the Member for Lowestoft (Mr. Loftus), because he certainly understands what I am getting at—and put the following proposition to him: "Here is a grand idea; here I am with the brains—assuming I have them—and here is my plan; I want £100,000 to carry it out. Will you lend it to me?" My hon. Friend looks at me and looks at the plan and if he thinks it is a good proposition he says: "Yes, but, you know, there is a risk here, and I must have some sort of premium; you must pay me 6 per cent." That is a position I understand. But when the Chancellor wants to fill the gap of £1,000,000,000 or £500,000,000, what does he do? He slips round, in effect, to the pundits and authorities in the City: he says, "I have taxed the people white. I have put all sorts of taxation on drink and amusements, and still there is this yawning chasm between what we call sound finance and the position as it is now. What are we to do?" They say, "What do yon want, Mr. Chancellor?" He replies, "I want £500,000,000." They ask, "What is your credit?" and the Chancellor replies, "The whole of England, the fixed assets, the goodwill of the people, their intentions and capabilities, and all the rest of it." What do the City say? They say. "Well, Mr. Chancellor, it seems to us that perhaps that credit is quite good and we will write you up in the book for £500,000,000." But there is a catch in it! "You must pay 2½ or 3 per cent. on it." Where in the name of all that is sensible is the reasonableness of paying interest, on your own credit? It is the people's credit the Chancellor borrows on, not the banks'. All that we do by our system, all that we allow the Chancellor to do, is to rob posterity for ever in order to keep the banks rich.

I come now to the question of bank-created money. I do not know what the figure is—the Chancellor did not deal with it—but as far as I can estimate it the banks have created something in the nature of £1,500,000,000 of new money since the war started. What really happens is that that is created in one way or another through deposit receipts and the rest of it, and sooner or later is converted into long-term loans by the banks. It only costs the banks a couple of nibs and a sheet of paper, but the people are going to pay interest amounting to £30,000,000 a year for ever by having money created for them. They are beginning to see through this humbug. When speaking in the country I do my best to explode this humbug of finance. If the right hon. Gentleman did likewise, we might find ourselves joining forces and touring the country together, but I do not think that is likely to happen. I should greatly enjoy a tour with him and seeing all the towns blazoned with posters—"Sir Kingsley Wood on the Humbug of Finance." It is no wonder, when you see how easy it is to make money this way, that you find the banks occupying the best sites and living in the best palaces all over the country as the result of graciously allowing people to borrow at interest on their own credit. It is astonishing, and it is quite time that it was blown sky high. I hope the right hon. Gentleman will take some steps which will ensure that we are not going to be kept under this evil money control when the war comes to an end. We have had four years of war, and he has not yet raised a finger to show that we mean to do what the people want, and that is to prevent them falling under the sway of finance again and to make certain that money is to be the servant and not the master of the people in future. I do not think he pays the attention that he ought to some of the things that his own colleagues in the Cabinet have said. The Minister of Labour in 1939, at the Transport Conference, said: We must ascertain what are the contributing factors in the present world situation and it will be found that possibly the biggest contributor is this country and not Germany, for one of the most potent causes of world disorder has been our dominant financial policy. This is what the Minister of Aircraft Production said on a memorable occasion in 1934 at Toronto: Perhaps the worst methods of all that are applied nowadays are the methods of financing Government expenditure. Let me take as an example the method of financing Government expenditure during the Great War in Britain. During that period, owing to the energy of the population, we manufactured something like £1,000,000,000 of commodities which we blew away in the destructive war. When we had financed the effort and finished destroying commodities we produced, any ordinary person would think that the community had finished with the question of production and consumption. But not at all. The community then found itself indebted to private individuals for the whole value of these commodities which it had itself produced—in fact for the permission to produce them. It had then forthright to pay tribute amounting to £200,000,000 or £300,000,000 a year to a people who had lent the community its own credit. That method, I believe, is one which must be got away from. We have had most regrettable and reactionary exhibitions from the Lord President of the Council and the Home Secretary as well as the Chancellor on this matter of orthodox finance in a recent Debate, and it is time that all three sat up and took notice and realised the truth. May I call their attention to a very wise statement made by the Prime Minister in "World Crisis"? I have quoted it before, but the Chancellor did not react. I hope it will go further this time. He was talking about the change that came over society at 11 o'clock on nth November, 1918, and we are going to be faced with exactly the same position when this war ends if it ends suddenly unless the right hon. Gentleman takes some action. This is what the Prime Minister wrote: A requisition for 500,000 houses would not have seemed more difficult to comply with than those we were in process of executing for 100,000 aeroplanes or 20,000 guns, but a new set of conditions began to rule from 11 o'clock onwards. The money cost which had never been considered by us to be a factor capable of limiting the supply of the armies, asserted a claim in priority from the moment the fighting stopped. Are we to have any change-over again like that? Are we once again to face the fact that while so far as the war effort goes, money does not count and must not stand in the way of the full and proper use of the available labour and raw material to produce the things we want, in peace money cost comes first? If he allows us to go back to the system that puts money first and does not allow us by an out-of-date financial system to make the best use of our natural resources when the war comes to an end, he is in for a very rough time from the people of the country. When we want to take idle raw material and use idle labour, and put the two together and do something useful, to say that it cannot be done because there is no money is as stupid as if I were to go to the ticket office at King's Cross and ask for a ticket for Scotland and saw a half-empty train in the station waiting to go to Edinburgh and was calmly told by the man in the ticket box, "I am very sorry, but you cannot go because we have run out of tickets." The hon. Member for Aylesbury (Sir S. Reed) told us that when the war is over we are all going to be so impoverished that we shall have to accept a lower standard of life. He shared the views of Field-Marshal Smuts and the Minister of Aircraft Production that we could not expect a new heaven and earth. I understand what he means, but I do not think he understood what he said. Surely the situation is that in war-time the power of producing all the things we want goes clean up through the roof, and to say that at the end of the war we are not going to be in a better position to produce goods is nonsense. We are going to be in a better position. What will stop us? Certainly the money machine, if the Chancellor lets it have its head. It is essential that he should take thought and action to see that, by the time the war is over we have taken such steps as will enable us to make the maximum use of our production capacity. If he wants to learn more about that, I would refer him to a leading article in "The Times" of 25th March. That is one of the obstructions—the money obstruction—but the rock-bottom obstruction is more important still, and that is the use of the land and raw materials. I do not think this situation has ever been better summed up than in the 10th point of that great letter on a just and lasting peace published in "The Times" of 21st December, 1940, and signed by all the Christian leaders of the country. I hope the right hon. Gentleman has read it. It said: It is essential that the natural resources of the earth should be used as God's gift to the whole human race. Not as God's gift to the British Empire or the United Nations or the Tory Party, but for the benefit of all mankind. I regret that the Chancellor has not seen fit to introduce into the Budget a thoroughgoing tax on site values. Now the cat is out of the bag, and he knows what he ought to do. He says he wants money. There is £500 millions a year waiting for him, all taken tax free by people in return for land ownership not for effort. Let me quote the Prime Minister on the subject. He was once a great supporter of the doctrine, and this is one of the things that he said about the land monopoly: He, the landlord, renders no service to the community, he contributes nothing to the general welfare, he contributes nothing even to the process from which his own enrichment is derived. It is monopoly which is the key note and, where monopoly prevails, the greater the injury to society the greater the reward of the monopoly will be. See how all this evil process strikes at every form of industrial activities. The municipality wishing for broader streets, better houses, more healthy, decent, scientifically planned towns is made to pay, and is made to pay in exact proportion, or to a very great extent in proportion, as it has exerted itself in the past to make improvements. The more it has improved the town the more it has increased the land value and the more it will have to pay for any land it may wish to acquire. It is not the individual I attack, it is the system. It is not the man who is bad, it is the law that is bad. The law is bad law as it stands, and it is time we changed it. I am not attacking the landlords but the law. May I quote from the present Lord Chancellor? He said in June, 1914: If you tax such a thing as boots, you make boots more expensive, because the more you tax boots the fewer boots will be produced, fewer people can afford to buy them and fewer people will be employed to make them. But if my friend thinks a minute he will see that you can tax land until you are black in the face but you can't make the land any less than it was before. That is as true to-day as it was then. I have always understood that the great idea in the Chancellor's mind when fixing taxation was to bear in mind four things. First of all, it should bear as lightly as possible upon production; secondly, it should be easily and cheaply collected; thirdly, it should be direct, so as to avoid evasion on the part of the payer and corruption on the part of the officials; fourthly, it should be fair. The Chancellor's method of raising taxes evades all those tenets. If you tax manufacturers, you check manufacturing; if you tax commerce, the effect is to restrict exchange; if you tax improvements, you stop improvements; and if you tax capital, you drive it away. But you can tax land till you are black in the face and it will still be there waiting for you to tax it, and you will take back to the community, for the use of the community, values which the community themselves have created, and that is what we want to see done. What could be fairer than that? The world is in a frightful mess and wants a lead. The right hon. Gentleman looks surprised, but he must be aware that there is a war on. Are we forever to have the feeling that poverty and war are inescapable and inevitable? I do not believe it for a moment. I believe there is a simple economic application of Christian teaching, or that teaching would never have been put over. The application must be simple and universal.

There are two things the Chancellor must do. The first is to restore to the people their infringed right to the use of the land and raw materials, and the second is to restore the sovereign right to the people of creating their own money and their own credit. There is talk in the air of Beveridge Reports, increased old age pensions, and the rest of it. All these things are palliatives, and none of them ought to be necessary in a properly organised society. By all means have them meanwhile, but unless we put the root cure in at the bottom we will never get rid of the scurf and scum that come out at the top as a result of the impurity in the blood stream of the body politic. Unless we put in the rock bottom cure, we are behaving like the would-be lunatic at the asylum. In order to test a new arrival for incarceration the authorities at the asylum, to make sure that he is really cracked, lead him into a bathroom where the bath is half full of water and the taps running full bore. The taps are both pouring out water like we pour out wealth, into the pockets of the landlords. The man is given a bucket and told to empty the bath. If he turns the taps off before he starts, they consider him to be curable!

Mr. Campbell (Antrim)

I am grateful to you, Sir Lambert, for allowing me to intervene in this Debate. I intend to be extremely brief, but before dealing with the two points I wish to raise I would like to make two remarks. First, I have been a. Member of the House for a very short time, and I confess that I have found the procedure, forms and usages of the House somewhat difficult to master, so that if I transgress in any way, I trust that you will attribute it to inexperience rather than to any malicious intent. Second, I do not intend to make any reply to the remarkable and extraordinary statements made by the hon. Member for West Belfast (Mr. J. Beattie) in the Debate yesterday, because the Chairman made clear on two occasions during that speech that he would not allow any reply to it so as to prevent the Debate descending to the level of a faction fight.

In that part of the Chancellor's speech reported in columns 959 to 962 of the OFFICIAL REPORT, the right hon. Gentleman used slightly different wording in regard to the various points he raised there. In regard to the expenses or losses that may be involved in changing back from war time to peace-time conditions, he said that this must be left over generally until after the war, but I think industry is entitled to an assurance…that steps will be taken. In the next paragraph, dealing with an example of that, he said: This will definitely be allowed now. In the next paragraph, on another example, he said: Expenses should be related to the Excess Profits Tax. Later on he said that in the case of sand and gravel: I propose in the Finance Bill to extend the relief to these cases also. But in the case of a fall in the value of stocks accruing after the war, all he said was: It may be necessary to consider the question."—[OFFICIAL REPORT, 12th April, 1943; cols. 959 to 962, Vol. 388.] I do not know whether those words were intended to mean that the right hon. Gentleman is not giving any guarantee that the question will be raised, or whether it was merely an accident that the wording was slightly different in that case. Perhaps the right hon. Gentleman will make it clear.

Thus Chancellor of the Exchequer (Sir Kingsley Wood)

We will discuss it on the Finance Bill.

Mr. Campbell

I am not sure whether I am in Order in raising my next point. It is in connection with the announcement made by the Postmaster-General to-day. It has really nothing to do with finance, because, as he explained, the changes he announced were being made to save labour and not to raise revenue. I would like to point out to him that in Northern Ireland we have more labour than we know what to do with. I do not claim that Northern Ireland should be the object of charity—we do not ask for any charity—but I would like to make the point that if the Postmaster-General is going to impair the efficiency of the postal services in Northern Ireland by making these changes, he will not save any valuable commodity, because we have more labour than we know what to do with. I have made my two points, and I have not been called to Order. I hope that I may regard that as an indication that I have crossed this bridge without transgressing against the usages of the House.

Mr. Ritson (Durham)

I am sure that the hon. Member for Antrim (Mr. Campbell) is one of the few Members who has promised to be short and has fulfilled his promise. I cannot follow him to the same extent, but I will try to remember that many Members are waiting who have just as important points to put as we have. I would like to begin where my hon. Friend the Member for Hamilton (Mr. Fraser) left off in his able maiden speech. He is to be congratulated on his first speech in this House. I am not one of those old men who are jealous of the young men, because I have gone through the same process myself. It is a fine thing to have here a young, active miner with his determination, courage and character to help us in our work. He left off on the question of dependants' allowances. I am surrounded by a lot of financial pundits whom I am always afraid of. I am more afraid of our intellectuals than of our ignoramuses, because we can check them and cannot check the others. My hon. Friend cited the case of a man who was physically disabled and had to have a housekeeper. I want to raise the case of a young man who is keeping his parents. We had a good deal to say in the Debate on spinsters about sympathy with unmarried women who look after their parents. Let us pay tribute to the young men who have stood by their parents and who could have been married and happy but chose to hang on until their parents had passed on or were in a position to help themselves. They are to be commended for their courage. In the case of the young man I have in mind, his parents are delicate and cannot work although they are under 60. This man has an allowance of £25 a year for having dependant relatives who keep house for him. I am given to understand by some of my friends who are financial experts that he will not get the relief of £50 which has now been made for housekeepers. I feel that if anybody is entitled to the relief of the Chancellor's concession a man in this position is entitled to it.

The question of deducting Income Tax on weekly payments has been represented again and again until it is almost hackneyed. We were not taxed in the last war as we are in this and far more people have been brought in to pay Income Tax. When they are working in the winter time, especially in shipyards where owing to bad light they are on short time, they have to bear the burden of tax on the wages they had in the prosperous weeks of summertime. I hope that some steps will be taken to enable them to bear this burden more easily. The hon. Member for Ipswich (Mr. Stokes), in his racy and breezy speech, said he made an attempt to meet this difficulty but the Treasury turned it down because it would be illegal. The statement that he made was rather startling. I can assure the Government that a great deal of discontent and slackness is due to the fact that men do not appreciate and understand what this Income Tax collection means. I hope that the Treasury will try and see whether they cannot remedy this serious discontent among our people which is holding up production.

Old age pensioners are bearing the brunt of the added taxation on tobacco. I am not worrying about the tobacco smoker of the type we see now—those young girls of about 16. I am not grumbling about the effect of the taxation on them nor on myself as a smoker. I do feel, however, that something should be done for the old man whose only joy is his pipe and who is passing towards the western end of his life. As a policeman I remember men when they were in the cells, even young men, who were so saturated with nicotine that they scraped the lime from the cell walls and, having stolen a match, smoked through the porous lime contented that they were smoking something. I have even known men breaking up old clay pipe heads so that they could feel the taste of nicotine through their lips. Men got to that stage. It has become a fetish with them. But these old men could never smoke in the pit because of the danger of fire. They used to chew a bit while in the pit, and when they came home the only joy they seemed to have, when they had had their food, was to sit down and smoke a pipe. Old men of that type are living to-day in our homes for aged miners, and I think the Chancellor might have tried to ease their position, because they are smoking the commonest tobacco.

The Chancellor could have found the money in other ways. One hon. Member said there was an opening to tax the advertisement hoardings we see in the countryside. I think that if the Chancellor were to tax lack of imagination, there would be a fortune for him. Some of those hoardings exhibit the most hideous and unconvincing pictures that I have ever seen. Just imagine any wealthy beer or stout company advertising its name and the benefits of its great works. There is the picture of a seal trying to balance a bottle of stout on its snout. Surely the seal is a wise animal, because it knows that if it were to put the contents inside itself it could not then balance itself, let alone the bottle. There is another advertisement of a huge "steam navvy" with a great clamp descending upon a bottle of Guinness. Think of the waste of energy in trying to pick up a bottle of Guinness with a "steam navvy" which will lift about five tons at a time. I am not joking when I say that the beauty of our countryside is being made hideous through some of the most rotten advertisements I have ever seen, hiding up the beauty that God has given us. I think the Chancellor could have taxed some of those.

I was rather struck by something that was said about the position of sand and gravel companies. I hope the Chancellor will not do much in that direction. We know in Sunderland what sand and gravel have meant to us. We found that sand and gravel were being taken off our beaches, and that as a consequence coast erosion was going on. The sand protects the rocks against the effects of frost and sea water, and it served to protect the cliffs. We found that our cliffs were going and that railways which ran near the edge of the cliffs might be destroyed. The borough was asked to pay £750,000 to put them into order. When we came to inquire why these people were getting sand and gravel we found that it was being done under an Order in Council issued some years before, and because they were working below low water mark we could not get from them a penny towards the rates. They were taking thousands upon thousands of tons of sand and gravel, and that was causing disaster further along the coast as well as immediately round the place where they were working, and we could not stop them and we could not charge them a penny in rates, although they were making thousands a year. I hope that when the Chancellor is asked to consider the wasting assets of a sand and gravel company by reason of the demands that are made for sand and gravel during the war he will have regard to the damage that is being done.

I agree with the hon. Member for Ipswich on the subject of land values, but I am not going into that question. What I rose for was to ask the Chancellor of the Exchequer to consider the position of those young people who are standing loyally by their parents under trying conditions, with a view to giving them some relief. In these Debates everybody has congratulated the Chancellor upon his Budget speech. It was a wonderful physical feat. I have known him for many years, and the strain never seems to affect his style, or his capacity to make you believe that he is your friend when he is really a political enemy of the most active and able kind. With all our differences of opinion, political or otherwise, even when he annoyed us when we were in the Labour Government—because he is one of the best obstructionists I ever knew—we noticed that he always did it with a smile. He was the devil incarnate in his opposition, and appeared to be the Archangel Gabriel as he sat in front of us. He could vamp Nelson off his column if he had been Lady Hamilton.

Much has been said about the effect of increased taxation upon people with fixed incomes, but I hope the Chancellor will remember the avenues which he could explore in his search for revenue. I am not particularly worrying about the increased duty on beer, but I do worry about the old men who have been loyal to this country and whose sons and daughters and granddaughters have been given to the work of waging this war. They are the men who have built up a great community in the past; they have given us an example of family life and of fellowship and comradeship of which we ought to be proud. At the end of their days we have little to give them in the way of pension, and the only thing that many of them enjoy is a smoke. It may be wrong, it may be disastrous—some people are very bigoted in their views about smoking—but there is joy in smoking for those men, and at any rate it is not the cause of any mischief. Therefore, I hope that as far as possible efforts will be made to relieve those old people of the extra burden put upon tobacco.

Captain Duncan (Kensington, North)

My knowledge of sand and gravel, to which the hon. Member for Durham (Mr. Ritson) referred, is largely limited to bunkers in golf courses, and therefore I do not propose to follow him on that point, but he did say something with which I cordially agree when he told us that he was more frightened of the intellectuals among his party than of the ignoramuses, and that goes for the hon. Member for Ipswich (Mr. Stokes).

Mr. Stokes

Would my hon. Friend repeat that? I did not hear it.

Captain Duncan

The hon. Member, having made his speech, went out of the House.

Mr. Stokes

To do what all human beings do, to slake my thirst.

Mr. Ritson

I had not the hon. Member for Ipswich (Mr. Stokes) in my mind, because I do not know whether he is an intellectual or not, but he is not a snob.

Captain Duncan

I can only quote what the hon. Member said, and one must assume that he had the hon. Member for Ipswich in mind because he had just made a speech, and nobody could have been so deaf as not to hear it.

I congratulate the Chancellor of the Exchequer on his Budget, and if I call attention to various points in it, I shall do so not in a spirit of criticism but rather with the idea of offering suggestions. First of all, I wish to call attention to the National Debt, which has never been adequately discussed. My right hon. Friend said that up to now the debt on this war was £8,000,000,000-odd but the total debt, including that for the last war, is, according to the White Paper, £16,860,000,000. If I am right in my rough calculations, we are accumulating debt at the rate of between £2,500,000,000 and £3,000,000,000 a year. If the war goes on for another two years, the total National Debt will then be over £20,000,000,000. That seems to me to be a very large figure. I see that the service of the Debt has been increased by £50,000,000 this year, from £325,000,000 to £375,000,000. If that sort of thing goes on, it will make it extremely difficult to carry on the finances of the war upon a healthy basis after the war in such a way as to provide for the manifold necessities of the State, such as the social services. That point should be carefully borne in mind always. It has this effect, that if you are borrowing for destructive purposes such enormous sums, you are thereby losing the capital which you will want after the war. You cannot spend it in blowing up German tanks and still have it at the end of the war to use again. It will have gone, once for all.

Mr. Montague (Islington, West)

Does the hon. and gallant Gentleman suggest that, with the increased productive power which this war itself is showing us, it will be impossible to raise an extra £300,000,000 a year in new production after the war?

Captain Duncan

The hon. Member for Aylesbury (Sir S. Reed) was asked that question earlier on in this Debate and he answered it, to my satisfaction at any rate.

Mr. G. Griffiths

Give us the answer now.

Captain Duncan

The answer is that it depends upon demand, among other things. The destruction is proceeding at an enormous rate, and will of necessity so proceed, and in the future the very physical ability to obtain new capital will be very much more difficult. That leads me to something which my right hon. Friend said about financing capital expenditure after the war. I suggest that, as far as possible, the Government should not finance new capital expenditure after the war if it can be done in any other way. Take, as an instance, housing. If housing is to be done as it was done before the war, partly by private enterprise and partly by municipal production, I should like the municipal authorities to raise loans from the public rather than for the Government to issue stock to the local authorities. In every case where it is possible, I should like this to be done, rather than that the Government should attempt themselves to find the capital. There are obviously cases where that could not be done, and in those cases only should the Govern- ment themselves find the capital, if they can. Naturally, in order to raise money from the public the public must have the money to subscribe.

That leads me to the further suggestion that my right hon. Friend, in considering post-war finance, must also consider a reduction of taxation, because unless you have some covering to lay upon the back of the body politic, which has been stripped of it by two wars, there will not be capital with which to do anything in one way or another.

According to my right hon. Friend's figures, small national savings are now in the region of £2,000,000,000. National Savings Certificates are shown on the White Paper as amounting to over £1,000,000,000. Those certificates may well be, and I believe are, cashable more or less on demand or at a month's notice and they amount to a very large figure. They may well be an embarrassment to the Chancellor of the Exchequer after the war, if there is any larger demand for their encashment. It seems to me—although you cannot do it now because you want the money for Government expenditure and you want to get it from small investors—that there will come a time when we shall want deliberately to discourage investors from investing in Government stocks, National Savings Certificates, 3 per cent. Defence Bonds, etc., and to encourage them to invest in something else. From the national point of view and having regard to thrift, national savings are a very valuable asset, but from the point of view of the Government it may be an embarrassment to have this vast quantity of cashable security, the demand for the encashment of which may come in large measure and at an embarrassing moment.

There are certain obvious directions in which the investor might be encouraged to invest, such as public utilities. The demand for investment may spread very widely and not be in the best interests of the investor unless some form of control is taken over the channels of investment. I remember how a number of farmers in my neighbourhood invested their money after the last war largely in oil and rubber and other gambling counters. Some were Scottish, cautious and wise enough to get out before the slump, while others were not. These men caught the gambling fever and lost everything that they had made in the last war. If that condition prevails to any large extent and among the inexperienced, it will cause a very great deal of hardship and tragedy in many lives, particularly among the artisan class who are making a lot of money now but are inexperienced in this sort of investment.

My suggestion is that my right hon. Friend should explore this sort of thing: How are you to change the emphasis on small investments in such a way that the small investor can be assured within limits of a safe investment which is not in Government stock, the Post Office or Defence Bonds and about which the Stock Exchange can reasonably say to investors that if they invest in them they can expect a reasonable return and reasonable security? If there is to be investment freely, as before the war, and everybody is allowed to go gambling in some wild scheme at the end of the war, without knowing anything about it, that will not be in the best interests of the investing public and may cause immense hardship and a serious situation, which ought not to be allowed to arise.

Those are my only two points. I approve of the methods by which my right hon. Friend has raised additional taxation and the relief which he is giving. It is marvellous how the right hon. Gentleman and the country have risen to the enormous heights of present-day taxation. It is true that taxpayers are feeling the pinch, but I am sure that they will pay their taxes like Britons and are prepared to go on doing so until victory is won.

Mr. John Wilmot (Kennington)

I should like in the first instance to express my gratitude to the Chancellor for the very real concessions he has made on certain Income Tax allowances. In my view he has made them in the right place and at the right time, when increasing taxation was pressing unduly hard on some of these particularly hard cases. Particularly do I personally wish to thank him for his extension of the housekeeper allowance, and the dependent relative allowance, for which I pleaded with him last year, and I should like to acknowledge the very liberal spirit in which he has met that claim. I trust he will not think it churlish of me if I just point to two anomalies which remain after he has very nearly swept away all the outstanding anomalies in this aspect of Income Tax matters. This anomaly was referred to in the very graceful and effective speech of the new hon. Member for Hamilton (Mr. Fraser), and I would like, if the Committee will permit, just to point this matter by actual instances.

The housekeeper allowance has now been extended in this Budget to cover any taxpayer maintaining a resident housekeeper to look after a child or children in respect of whom Income Tax reliefs apply. But although it has been extended for that particular purpose to a new class of taxpayers, the purpose remains very narrow, and it is only when the housekeeper is maintained for the purpose of looking after young children that this relief applies. We welcome very much this extension, but there does remain, as my hon. Friend pointed out, the necessity, and very expensive necessity very often, to maintain a housekeeper, or very often to keep from productive employment some other member of the family, to maintain some person for the purpose of looking after an aged relative, very often an aged mother or father. These very often infirm and aged people frequently need as much and even more care than young children.

I had call upon me last evening at my constituency office—I sit for a London Division—a constituent in just this very case. Might I trouble the Commitee with the particulars of a case which has just been missed in this concession, but which has a very real claim to consideration? This young lady, who works very hard in a somewhat humble capacity in a Government Department which used to come under the supervision of my right hon. Friend, has two unmarried sisters, one of whom is wholly engaged in looking after an invalid father, who, after a busy and very useful life, is now afflicted by a most distressing illness which renders him completely incapable. This girl is giving up the whole of her life to looking after this aged parent, and in this family these two girls have to maintain out of their earnings four people, themselves, their aged father, sick, needing expensive attention and special food, and also the other sister, who has to give up the whole of her time to looking after him. These people are really in as much need of relief as those who have to maintain some- body to look after children, and I want to ask the Chancellor if he will look into this particular little anomaly which has been left and see whether in the next Finance Bill, or perhaps at an earlier stage, he can include these cases.

This particular type of case could, of course, be met in another way, which, if it were done in that way, would also cover a different type of case no less hard. If the dependent relative allowance was extended to cover all persons who are dependent and who have an income below the prescribed limit, this could be claimed not only for the invalid father but also for the wholly maintained sister, and if the Chancellor should choose to do it in that way it would also bring into account those children who are just outside the scope of the children's relief, who are just starting work but earning so little that they become an extra charge on the family budget rather than a contributing factor, which is the case, I think, of a great many children starting work for the first time.

In this regard there is the particularly hard case of the married woman living apart from her husband, who is not maintained by him and who has the care of children who are just over the Income Tax relief age and who are beginning to work but are not in fact earning enough to keep themselves. Again, I have a constituent case of this character. Here is a woman who for reasons which, when explained to me, seemed entirely adequate and satisfactory, has left her husband and will not return to him, and he therefore neither has a legal obligation nor does he maintain her. She is entirely maintaining herself by her own earnings and is maintaining and has brought up the children. These children are beginning to go to work, and this woman, because of these circumstances, is particularly hard hit under the present Income Tax relief rules. She is treated for Income Tax purposes as a single woman and gets no advantage of the married woman's allowance which the Chancellor very rightly gave in the last Budget. In this particular case, and I imagine in many thousands more, this woman is working in a factory with a lot of other women whose husbands are in the Army, many of whom have no children and pay no Income Tax at all. The married woman's earned relief and the soldier's earning position with regard to Income Tax are such that no Income Tax falls upon those women's wages at all, while my constituent, who is earning the same wage, who is earning by the same efforts and out of it is maintaining not only herself but her home and also her family, is having as well to pay quite a heavy charge in Income Tax. It does seem to me that in those circumstances a sense of injustice is very readily understandable. I appeal to the Chancellor to look into that aspect of the matter in the final tidying-up of these anomalies.

I wonder whether I might now detain the Committee for a few minutes longer to emphasise once again, turning to an entirely different matter, what I believe is the reinforced demand, with another year's experience of the necessity of "pay as you earn" Income Tax deduction for weekly wage-earners. This matter had become extremely pressing by last year. The Chancellor realises the case, I think, and he said in his admirable speech on Budget day that he was looking into the question. But when I examined the words he used I was somewhat disappointed as to the possibility of getting this dealt with during the current year. He said: No acceptable plan has as yet been forthcoming. There is, however, to be considered in connection with this whole matter the different situation that may arise on the return to peace-time conditions, when a considerable change-over in employment may be expected to take place. My advisers are now engaged in a close examination of this aspect of the matter and the consideration of a current earnings basis for the deduction of tax will not be ruled out of their deliberations."—[OFFICIAL REPORT, 12th April, 1943; col. 946, Vol. 388.] That conveyed to me an impression that he was not likely to do anything about it until the end of the war. If so, it is very regrettable, because already the need has become very pressing indeed. The changing necessities of war production—and they may change vastly as we come nearer to victory—involve consequential changes in the working lives of a large number of working men and women. People who a few months ago were being pressed to the maximum of overtime, working night and day, are now, owing to a shift of production, working normal, or even short time, days. The crux of this matter, the point where the hardship falls, is when a worker who has been working long time changes over to short time, and has to pay long-time tax out of short-time earnings. I might give the figures which are involved. Let us take a single worker, earning on ordinary day rates £5 a week. His tax comes to 18s. a week. He goes on overtime and night work, and his normal £5 a week is built up to £8 a week. This single worker upon a weekly wage of £8 is liable to a tax of 44s. a week, instead of the 18s. that he would pay on £5 a week. Consider his position when he comes back to £5. There is not a great margin. Working-class budgets are largely week-to-week budgets. There are always some boots or children's clothes to buy when the earnings are stepped up by overtime. Consider the fellow who has been earning £8 a week, and has been liable to tax of 44s. a week but has been paying only 18s., leaving 26s. a week as a liability which comes upon him later, when he has returned to short time. The family man is in slightly better case, but not very much. A married man who receives £5 a week is liable, assuming that his wife is not earning, to 10s. 6d. tax, but when his wage goes up to £8 a week his tax goes up to 32s. 6d. It is that 32s. 6d. which later on is levied upon his reduced earnings.

I need not carry the matter further, but I would like to deal with the Chancellor's aspect of the matter. He says that there is a case for doing this if it can be done. I think it can be done, because they have already done it in Canada. The Chancellor shakes his head, but I take my information from "The Times" newspaper. Their Canadian correspondent reported on 16th March that this had been done in Canada, and so sure were they of it that the city editor wrote an article on that day, pressing upon the Chancellor the necessity of doing the same thing in this country. Also, I see the President of the Federal Reserve Bank of New York has worked out a plan, which he is pressing upon the American Legislature, for the same purpose, of having taxes paid by weekly wage earners as the income is earned. I do not think more need be said about this, but I emphasise that the problem is urgent. It is embittering life in the factories, and I think is militating against full war-time production. Men feel a sense of injustice at having to pay a big tax out of a small wage.

There is another aspect of the matter. The Chancellor has, very rightly, put a bottom limit to the pay packet that has to bear a tax. A married man with two children pays no tax, whatever his past or present liability, if his pay packet contains less than £5 a week. Consider the position of a man who has had a long period of overtime, but not long enough for the tax to be deducted from it. He then goes on short time, and his pay falls below £5 a week, he being a married with two children. He leaves this debt for weeks, or it may be months, until he becomes oppressed with the sense of debt and of complete inability to remove that debt. Either he is going to feel a sense of frustration because he cannot pay his debt—and that is what the most honourable man will feel—or else he will feel that an unliquidated debt is a thing he need not worry about. That is not a good frame of mind to foster. If people regard debts to the Exchequer in that way, they will soon come to regard debts to other people in that way. The Chancellor admits that when we come to post-war conditions there will be urgent need; but there is urgent need now. Vast changes have taken place in industry, and as those changes increase the necessity for a pay-as-you-earn policy increases.

I would like to say one word yet again about the position arising from these increased taxes on luxuries. I think they are wholly good, with one exception, which has been already mentioned in various parts of the House. Those who are living on very low fixed incomes, and who by no exertions of their own can increase those incomes, are in a position in which the Committee would not wish them to be put. Particularly hard is the case of the old age pensioners, but there are others. I would ask the Chancellor, if he cannot find any way of mitigating the tax for this particular class of persons, to consider either an increase in the basic old age pension or an extension of the principle of disregard for certain earnings. The principle of supplementary pensions has greatly eased the old age pensioner's lot, but there are a large number of people who just escape receiving the supplementary, because of children's allowances or because of some past savings. I would ask the Chancellor, therefore, to extend the principle of disregard in dealing with supplementary pensions.

Might I thank the Chancellor, once again, for the lucid presentation of his Budget? He has done more than any other Chancellor in my time to speak the language of the ordinary man in financial matters. In doing that he has helped very much indeed the very necessary work of enabling ordinary people to understand financial problems. We also owe him a debt for those remarkable and most informative White Papers which he has laid this year. We have not had the time really to learn all that is in them, but we have already learned very much, and it is a very good thing that we are using these opportunities for getting more and more information and learning more and more about the real basis of our financial structure. We all of us had and still have very much to learn.

I am sorry that one hon. Member Who preceded me should have sought to spread misunderstanding about certain phrases that were used by my right hon. Friend. We know what he meant to say, and the Chancellor of the Exchequer has helped us to understand the real truth of what he meant to say. That was, that when we come to the essential question when every individual and every community has to ask itself from time to time. "Can we afford it?" the test of whether we can afford it is to be found in this. Have we the capacity and the ability to obtain certain raw materials and, by our labour, to fashion those materials into the things that We need to wear and to eat and to make a civilised life? If we can do those things, then we can afford it. If we cannot do those things, then we cannot afford it. That is the test. The symbols referred to were the simplest means of expressing the result of that test. The Chancellor of the Exchequer has helped us to understand that, and he has gone through the real things that the account books record. They are only meaningless symbols if they are divorced from the things they represent. They have in our time been so divorced. We did once tell ourselves that we could not afford clothes, that we had wool that we could not use and looms that were idle and men who were unemployed. We did say once that we could not afford houses when we could have made the bricks, and we had the men who could have made them into houses. I hope that we shall not say that again, and I thank the Chancellor for helping us to understand and to avoid that fundamental error.

Sir John Wardlaw-Milne (Kidderminster)

I would like, first of all, to say how much I agree with the remarks of my hon. Friend the Member for Kennington (Mr. Wilmot) in regard to the question of "Pay as you go," in connection with Income Tax. He put the case very fluently and at some length, and it is not at all necessary for me to deal with it in more than a sentence or two. The point he makes—and it has been made by other speakers—regarding the situation which may arise at the end of the war is one which the Treasury will have very seriously to consider. It is obvious that there will be hardships on people who may, by the removal of overtime earnings, suddenly be called upon to pay considerable sums for which they have been unable, under the conditions under which they live, to make suitable provision. There is one point that I would put to the Chancellor of the Exchequer. I do it with some diffidence, because my hon. Friend the Financial Secretary in his speech yesterday made an appeal to the Committee not to take this matter too far, as the Chancellor of the Exchequer had already said it was to be under consideration. I would like to emphasize what my hon. Friend opposite said, that the, Chancellor's statement appeared to refer to post-war conditions, and I agree with him that that is too late. Although I do not want to carry it too far, the Chancellor of the Exchequer might seriously consider the setting up of a Committee, on which the workers themselves would be represented, to try to come to a settlement on what is a very difficult problem. There is no question that there are difficulties in a scheme of this kind, but I believe that the Chancellor of the Exchequer, if he could get the advice and good will of those concerned, might find there are ways and means of doing it.

I feel a little shy about joining in this chorus of praise which the Chancellor of the Exchequer has had to endure for the last two days. He has a very cheery countenance at any time, and as I have watched him in the last two days his cheeks have grown a little pinker as every speech has taken place, till he must have an extraordinary feeling of diffidence and shyness when he gets up to reply. Apart from the very delightful things that have been said—and no doubt he will say it will take him some time to thank those who thanked him, one after another, in the course of this Debate—I do not want for a moment to suggest that I do not share the admiration of the Committee for the physical and mental effort he put forward in bringing the Budget before us and for the very clear statement, not only in this Committee, but published in the White Paper. The proposals to raise £100,000,000 by taxing unnecessary luxuries, but luxuries in which most of us indulge, are obviously quite sound, although I am bound to say that the question of how we raise or whether we raise £100,000,000 in this year, when we are dealing with some £6,000,000,000 a year, seems to be very far away from realities. I do not suggest that it is not sound. It is only questionable when you get to this one point, Is it advisable in the middle of the war to stop laying further burdens on the people? That is the question. I do not mean to say that no one should drink beer or whisky or necessarily have a smoke. People of all classes are being deprived not only of luxuries but of what might be described as luxuries which are almost necessary to-day. A great many people are suffering, and especially the poor.

When you consider this further taxation the only criticism one can possibly make about it is, that there is a point at which it is not advisable in the war to make the burden too heavy. We are very apt to forget that although certain classes of the community are earning high wages and certain manufacturers and others no doubt are earning very good profits and are paying Excess Profits Tax, we have to face the fact that there is a large section of the population on very small incomes, who are not better off through the war but are, in fact, worse off and are suffering very badly indeed. Whether we raise £100,000,000 this way or not is not the really important matter. The real matter for consideration is the increasing debt and its consequences, if any, in the post-war years. I was very careful to say "If any." I hope to show that it is possible—and I agree to some extent with those who have spoken before on the matter—that it will not have a crippling effect upon us at all but at the same time we have to consider it. In the very admirably expressed figures of my hon. Friend yesterday we take pride in raising £8,000,000 a day by taxation out of the £16,000,000 we are spending, and that is a matter for congratulation.

But it is also a matter of considerable perturbation and anxiety. Our debt, truly, is to ourselves, but the service of that debt in the post-war years will mean not only the redistribution of income, on a very big scale, which may be good but will also mean a handicap, unless we are very careful, to our export trade, because we are a country which will have to import many millions of pounds' worth of food. We have to consider that aspect, and particularly we have to consider what the effect will be on the social conditions of this country after the war. The debt, of course, is an internal debt; theoretically, it is to ourselves; it is merely a change of ownership, but there is grave danger in people holding the belief that because we are spending £16,000,000 a day on the war, it does not matter what we spend on other things. That sort of idea is fatal. Let us understand that the people of this country are paying for the war in part by definite sacrifices, not only by giving up luxuries, but by giving up purchases of all kinds, by living on a lower standard of life and by wearing old clothes, for example. They are definitely paying, and it is as well that we should understand they are paying. This question of £16,000,000 a day cannot be dismissed lightly. It must not be said that because we are spending this sum on the war there is nothing to prevent us from spending another £2,000,000 or £3,000,000 or, in fact, half-a-dozen millions on this or that. It is very stupid to keep on talking about finance meaning nothing. It is equally proper to keep finance in its place and not let it be master of the situation. But it is not wise that people should have the idea that the war can be paid for by a large number of tokens or symbols.

Mr. Stokes

Does the hon. Gentleman agree that wars have never been paid for financially?

Sir J. Wardlaw-Milne

I am afraid that that is so and has always been so in history, but all the same there is danger in laying a greater burden than necessary on posterity. One thing the Budget has brought out, particularly to the thinking person, is the debt we owe to other people. What sort of taxation the Chancellor would have suggested if he had not had this contribution from Canada I do not know, but I think it is well that we should emphasise the tremendous debt we owe to Canada in that connection. The burden we are bearing is undoubtedly heavy, and the results upon our position after the war may be serious. My own honest belief is, however, that if we face the position properly, if we realise that in future the whole basis of our prosperity will be a question of consumption and not of production, we shall be able to overcome that difficulty and carry the debt.

But we must not get away from the idea that to carry it we shall have to have a prosperity and an efficiency such as we have not seen in this country so far. Although the war has in certain directions improved the efficiency of industry—and it is bound to do so—we have a lot of leeway to make up. In some directions there has been an improvement in efficiency and in others efficiency has been lessened. I think the promises of the Chancellor of the Exchequer regarding post-war conditions are not generous enough in the case of industries such as those which have been concentrated. They are spending large sums of money in keeping their factories in existence, and they are earning nothing. There have been great hardships, and I do not know to what extent they can be mitigated by any action which the Government have promised at the present time. The taxation proposals of the Budget are perfectly sound so far as they go. I do not think they will very much affect the position in which the country will find itself, and I believe we shall be able to carry the burden of debt in the end if we work in the spirit of promoting consumption. There is no doubt, however, that the Government will have to have their plans in order before the end of the war if we are to get industry on its feet again when hostilities cease.

Mr. A. Edwards (Middlesbrough, East)

I would like to say a word at the opening of my speech on a matter which was raised by the hon. Gentleman the Member for Kidderminster (Sir J. Ward-law-Milne) and another Member, namely, the references to symbols, which seemed to cause some amusement. I do not think there is anything amusing in the Prime Minister taking a statement from a recent speech of my right hon. Friend the Member for Wakefield (Mr. Greenwood) and broadcasting it to the world, as he did recently.

Sir J. Wardlaw-Milne

I was not referring to that particular remark; I was referring to the sort of speeches outside which have said that money did not matter.

Mr. Edwards

Well, a previous speaker on this side of the House referred to it, and it caused a considerable amount of amusement on the Treasury Bench. The Prime Minister has not shown that standard of conduct he usually shows, and I think he should come to the House and apologise. It will be a disgraceful thing if what he said is allowed to go uncorrected. There was not the slightest justification for the Prime Minister taking the statement from the context of what my right hon. Friend the Member for Wake-field said, which, as everybody knows, was absolutely right. We are dealing with symbols. I think the Prime Minister did a disservice to this House, and I hope he will take an early opportunity to offer some kind of apology or explanation.

Mr. Stokes

I will bet my hon. Friend a "fiver" that the Prime Minister will not.

Mr. Edwards

I want to pass on to the references which have been made about taking Income Tax from current earnings. Really the matter is so simple that the Treasury cannot believe it is practicable. The complicated minds of the Treasury could not see a simple thing, so they let it pass. I do not believe it is difficult to make a simple arrangement whereby a man can have his taxation deducted from his weekly earnings. Reference, too, has been made about unnecessary spending, and I have not much feeling on that matter. It was, however, seriously suggested that those who do not smoke or drink should pay some equivalent cost towards the war. Well, I have been a lifelong abstainer and non-smoker, and if I make no demand on the services of men who, at the risk of their lives, bring materials here from abroad, and on labour and time in this country, I do not see why I should also pay tax in addition.

Sir J. Wardlaw-Milne

The hon. Member has not made a sacrifice.

Mr. Edwards

In saying what I have said, I would like to point out that I have never associated myself with temperance reform, for the simple reason that most temperance reformers I have known would drive me to drink. I did not quite follow the hon. Member for Kidderminster when he said that our debt was an internal debt. I cannot see that if will make the slightest difference to our export trade. The people who hold the bogy of export trade before us forget one thing—that after the war we shall be the best customer in the world and be the best market. Other countries will be searching for markets and they will not be able to sell goods to us without taking goods from us. The new Keynes Plan will perhaps help us to cover up the time lag, but ultimately there will have to be an exchange of commodities.

Sir J. Wardlaw-Milne

Our export trade is normally a competitive trade, and therefore, if we are not going to take cognisance of the conditions of the capital debt we have incurred, it is clear we shall have to have an international agreement to keep our prices and our cost of living at a level with others.

Mr. Edwards

That is a subject which perhaps we can go into at a more appropriate time. Nor do I see that the debt will lead to a very considerable redistribution of wealth. That also is a fallacy which I hope we can go into on some other occasion. There is one thing that always, strikes me about the payment of the debt. In business, if an amount is spent that has been completely wasted, it is shown by a writing down of assets in the balance-sheet. Having wasted this £8,000,000 or £10,000,000 there is no writing down of assets in anybody's balance-sheet, and in fact, the most prosperous people will show an increase in their assets. If the Chancellor brings out a national balance-sheet, as he has partly promised to do, we shall see just who makes the sacrifice if we see where the assets are written down. As a matter of fact, our capacity to produce will be infinitely greater at the end of the war than it was at the beginning. In discussing this matter nobody has taken into consideration the enormous progress there has been in scientific research which, will reduce costs and increase potential production enormously. I do not see any difficulty in this matter, and the only thing I wish is that there was more serious thinking about planning after the war.

I come now to a matter which affects my own constituency. In the past my constituency has had to exist almost entirely on iron and steel. After the last war it went through a most distressing period. No provision had been made for renewing plant which was completely worn out, and about 90 per cent. of the blast furnace equipment was absolute junk. When the question was put why they did not bring it up to date, they said they just did not have the money. Let me say here that I do not feel that the making of a profit in itself is necessarily harmful. I do not think the Chancellor of the Exchequer and the Government are going to give us a socialised State, so we may as well face up to a considerable period under the present conditions. Hon. Members on this side will have to face up to the realities of the industrial and financial system that we have and make the best of it for some considerable time. The code under which we operate regarding the writing down of assets and depreciation allowances in regard to Income Tax was made about 100 years ago, when Income Tax was 7d. in the £. Those of us who have to run businesses know perfectly well that we always have considerable expenditure which is not allowed as expenditure by the Income Tax authorities. This did not matter very much when Income Tax was only 7d. in the £, or 1s. 8d. in the £, which was the highest figure to which it rose before the last war, but it means a great deal when Income Tax is 10s. in the £ and when there is an Excess Profits Tax of 100 per cent.

This matter very much concerns the industry which I represent, because we shall find ourselves in a very serious position. The Advisory Committee which fixes the prices has been very rigid and sometimes not altogether fair in the prices it has allowed. Some steel enterprises will find themselves in a very serious position if this expenditure is not allowed. I am concerned that the Chancellor should make an adequate allowance for replenishing plant. He made some reference to this in his speech, but he was not altogether clear. The obsolescence provision takes care of equipment when it is definitely replaced, but I would like it to go further and give the obsolescence allowance when the plant ceases to function, without insisting on its being replaced. The same remark applies to deferred repairs, about which the Chancellor was more explicit; I understand he intends to deal with them.

There are one or two other minor points to which I want to refer. The Treasury always seem to lose sight of the vital factor in these matters. I understand that, in regard to the Post Office, there are to be increased charges for certain services, including trunk calls. Surely, the vast majority of trunk calls are made by business people who charge them up as a cost which the Chancellor has to pay in the end. Is it worth while making changes of that kind, which mean an immense amount of work for somebody in the Departments, and which lead to no increased collection by the Chancellor? It took me two years of argument to persuade the Chancellor to take the import duties off machine tools that were being brought from America to this country.

Mr. Assheton

May I point out to the hon. Member that the Postmaster-General said that the object was not to raise increased revenue but to make a saving in man-power?

Mr. Edwards

I do not see how that will be done, because the change will mean an immense amount of work in the Departments. If there is a decreased use of telephones as far as business is concerned, it will mean cutting out a labour-saving device. I have already suggested that one of the things that should be done in regard to immediate post-war development is the provision of about £100,000,000 for the development of telephones so that each town can be dialled instead of each exchange. I think it is a great mistake to make the telephone more difficult or more expensive.

My hon. Friend the Member for Ipswich (Mr. Stokes) dealt very usefully with the War Savings Campaign. It really is disgraceful that we should continue to delude people about this, and that dozens of Members of the House should spend their week-ends in the country persuading people that they are in some way helping the war effort and the production of munitions of war by their savings. It is ridiculous to say that people are disloyal if they hoard bank notes in old stockings. It does not make sense. The only effect of hoarding bank notes in that way is to lend them to the Chancellor free of all interest. What help would it be if they put the bank notes into War Savings Certificates and got 2½ per cent. interest?

Mr. Assheton

There is one other object, and it is that if people have a lot of money in their pockets they are much more likely to spend it.

Mr. Woodburn (Stirling and Clackmannan, Eastern)

I agree with some of the statements my hon. Friend is making about war savings generally, but in regard to the hoarding of notes, when the war ends and people no longer feel the necessity to hoard notes, is there not a great danger that all this hidden money will suddenly come on to the market and create a most dangerous inflation? Is it not of advantage that money should be controlled and regulated in some way by a public authority?

Mr. Edwards

I agree that there is a little danger there, but, with price controls, it does not matter. You should stop using materials or labour in producing things not wanted for the war. That is the way to deal with the inflation danger. The Chancellor has deliberately followed methods of inflation. He has increased steel prices by 50 per cent. If you get the same amount of material for more money, that is inflation, and he has done that with a good many commodities. I am afraid that some of my friends on this side have been guilty of this false talking to people up and down the country. They have collected £500,000 for aid to Russia and China. No one who thinks the matter over can deny that Russia and China will not get a pennyworth of goods.

The Deputy-Chairman

I am afraid that must be outside the boundary.

Mr. Edwards

I was only going to use it as an illustration. They are getting under Lend-Lease all that they can possibly get.

Mr. Woodburn

On a point of Order. May I suggest that it is in Order in so far as it is a very effective way of reducing the purchasing power of the community, which is part of the Chancellor's activities?

The Deputy-Chairman

I think that is a very ingenious argument, but it will equally apply to every form of subscription that you could imagine. I must rule subscriptions of that sort out of Order.

Mr. Edwards

Had that not been collected from the pockets of the working people, the Chancellor would have had to find £500,000 more this week.

There is only one other thing I should like to say, a minor thing but an important matter of principle. The Government have recently found a considerable amount of money for taking over certain factories, in one case £750,000. We took it over because the directors had failed in their job. The Chancellor allows compensation to be paid to these directors, a sum not subject to tax. If a man loses his job to-day, he does not get any compensation. In some cases if a director loses his job for some reason he is paid compensation for loss of office. The "Financial World," referring to the matter, said it seemed as improper to assess for Income Tax compensation paid for loss of employment to a director as it would be to a worker who got compensation under the Workmen's Compensation Act. It is no comparison at all. The chairman in the case that I refer to will draw as much money as though he had been paid his full salary of £10,000 a year until he reached the age of 103. It seems to me that compensation for loss of office should be taxed in the same way as any other income, and I think the Chancellor is allowing a serious mistake to pass un-corrected.

I think he should stop the only serious loophole left for profiteers or racketeers. There are people who are making very considerable sums of money, and there is only one way they can do it, and that is by capital profits. I think the Chancellor would do well to say that any capital profits for the duration of the war and a period after shall be subject not only to Income Tax but to Excess Profits Tax. Very large profits are being made, and it is a most disgraceful thing. I should like to have seen it dealt with at the beginning of the war, but it is not too late to make a start now.

Mr. Quintin Hogg (Oxford)

We are discussing the largest Budget in our history, a Budget which might have been expected to earn the Chancellor of the Ex- chequer a shower of brickbats but, instead, he has earned a number of bouquets sufficient to gratify the heart of a prima donna. If in laying my modest violets at his feet, I do no more than say I congratulate him, it is simply from a desire not to detain the Committee. The hon. Member for East Stirling (Mr. Woodburn) in a very interesting and constructive speech, referred to the Budget as a milestone, and I think there are Members on this side who would accept that description, remembering that a milestone represents not the terminus of a journey but a stage upon it, and one at which the traveller does not as a rule spend much time. It seems to me that a certain number of broad generalities can be drawn from the discussion which has ranged over two days and has produced so many interesting and attractive speeches. The first is that we are gradually passing through a transitional stage between two different conceptions of what our Budget is. It still is in form a statement of the accounts of the Treasury—the ordinary expenditure and revenue of the year—but it is gradually developing into an annual review of our whole economic life and resources.

We are told we must not use the phrase "national balance-sheet" because it contains perhaps some misleading associations, but whether the phrase is just or unjust, I believe the idea underlying it is perfectly sound and that the conception of national finance which it implies is gradually receiving recognition. The outward and visible signs of that are the White Papers which accompany the little blue sheet on Budget day and the difference in the amount of time allotted in the Budget speech to the economic circumstances of the country compared with that which is confined to the narrow limits of the financial statement. I believe the process should confine, because I think it will lead in the end to a much wiser view of our economic policy. It has been dictated, not by any abstract conception of economic theory, but by the necessary facts of the case. The very size of the modern Budget renders it a tremendous instrument of national policy which must bear a direct relationship to our whole economic prosperity. We can no longer regard national finance as something which may be set on one side while the economic life of the country goes on unaffected by it on the other side.

The second broad generalisation which it occurs to me that we can make as a result of this discussion is that our conception of the purpose of taxation is altered. It has been in the past a mere means of acquiring revenue. It is no longer that, but has become, as one hon. Member on this side said, an instrument of national policy, and that in two ways. In the first place, it is a redistribution of national income. Listening yesterday to the eloquent speech of the hon. Member for Dumbarton Burghs (Mr. Kirkwood), urging the old arguments so well and so movingly, one could not help thinking that one was listening to one of the great monuments of the gallant and glorious past. The revolution which the hon. Gentleman has worked for so laboriously and so well for so many years is taking place in front of his eyes, and in his extreme old age he does not see that it is happening. He goes on making the same old speeches as if the rich and powerful remained unassailed in their original stronghold. The revolution is taking place, and we cannot stop it. What we have to consider is what implications are involved by that rather important fact. We are not afraid of redistributing the national income. We have done it during the war, and the whole lesson of history is that, although we might desire to reverse the process when peace comes, it will be quite impossible to do it. These changes may have been introduced in an emergency, but they have come to stay, and we cannot prevent them from continuing.

That leads me to the third generalisation I want to make. If we are revising our conception of national finance and our conception of national taxation, we have also to revise our conception of national expenditure. I believe that I shall not be accused of patronising when I say that we can congratulate hon. Members on doing that, especially some hon. Members on the opposite side of the Committee. We have passed out of the phase of national expenditure when as each burden is imposed it may be demanded as a concession by the rich to the poor. The fact of the matter is that national expenditure nowadays is a question for the poor to decide as to how they spend their own money, because that is where it is coming from. The hon. Member for Leigh (Mr. Tinker) referred yesterday to certain fortunes that are left at decease. There is no doubt that certain large capital sums remain in private hands, but there is no one who sees what is going on in society who does not realise that that is coming very rapidly to an end. Those people are, in fact, living on capital, and perhaps it is as well that the change which is coming and is happening all the time should happen in that way. It would be much more kindly and more in accordance with the spirit of this nation. The fact of the matter is, however, that further burdens in expenditure are being borne and will be borne by the poor. It is known by hon. Members opposite as well as by hon. Members on this side that there is no major Measure of social policy at the present time which costs money that does not bear directly on the working classes of the country when it is brought into effect. I do not think that that should deter them for a moment, so long as they realise that it is their money and their responsibility for what is being done.

That leads me to the last thing I want to say. These new conceptions of national finance have led, during the course of the last two or three days, to a discussion of what is meant by the question whether we can afford expenditure on the scale on which we are engaged at the moment. It is true that we must revise our conception of what is meant by affording a thing. We can no longer regard expenditure in the light of the question, which I have heard asked on my side of the Committee sometimes, as to whether there is money in the till. There is no till for the purpose of the question, and money does not mean what we used to think it did. At the same time, we must not think of money as "sounding brass" and "a tinkling cymbal." A symbol it most certainly is, but a meaningless symbol it most certainly is not. In the hands of one individual it is a symbol of work that has been done. In the hands of another it is promise of work that will be done. In the hands of a third it is a reflex of work which is being done. In the hands of a nation money reflects a practical reality. It reflects, as was said by the hon. Member for Kennington (Mr. Wilmot), the productive capacity of the country, the skill of its workers, the raw materials over which it has command and the prosperity of its agriculture. In one sense we can say that money, like other material things, is meaningless, but that in the long run as in all human affairs, where there are will and faith there is a way. But we cannot afford to ignore the practical consideration.

There is one practical consideration which I thought the hon. Member for Kennington forgot. The hon. Member for Kidderminster (Sir J. Wardlaw-Milne) did refer to the importance of the export trade. The hon. Member for Kennington said that all that money meant was that it gave us a capacity to obtain raw materials and turn them into things we can use. That is not, in my view, the only question before the country. There are certain things that we can produce and use for ourselves. There are food and the whole of the produce of this country which can be used by the inhabitants of it. We cannot produce enough food for ourselves, however. Therefore in the long run the prosperity of our finances and the future progress of our social life depend upon our ability to produce that which other people can use outside this country. That leads me to my last remark. National finance has developed from a mere statement of the accounts of the Government into a review of our national prosperity, but national finance itself is gradually giving way to a new conception, because none of our problems, economic or other, can be solved on a purely national basis.

Mr. Bartle Bull (Enfield)

The Chancellor has received a lot of compliments, and I will not therefore say any more on that line. I would like to make a point which I do not think has been made about the 100 per cent. tax on jewels and furs. I have heard that there is a certain black market in furs and that some are sold off the backs of women. I do not know whether that is true, but if it is, I hope that it will be possible to do something to stop it. With regard to the 100 per cent. tax on jewellery, I would like to suggest that engagement and wedding rings up to a certain value should be exempted from the increased tax. I do not know how that would work out, but the Chancellor is an able man, he has been at the job a long time, he is well paid, and it is for him to work it out. I suggest that there must be some way of doing this. There are people in all walks of life who will get married. I remember when I was a pupil in chambers to a well-known K.C. He used to say that when persons get married for the first time you cannot advise them, you cannot stop them—he may be young and she may be young—but that when a man or woman got married a second time, that was the time to look out, and it was their own fault. I am not expressing any opinion, and I am not concerned with them, but I think the Chancellor could devise some way of allowing people who are getting married for the first time to buy an engagement ring and a wedding ring without incurring this additional charge.

I shall be very brief, but there is one other point I want to make. The Chancellor said in his Budget speech that in order to balance the Budget he needs another £100,000,000. To a man like him that cannot seem a great deal of money. But it is a certain amount, and to obtain it he has proposed certain taxes on non-essential goods. I should like to ask whether he wants the public to buy these non-essential goods or would prefer them to save the £100,000,000. I am only hoping and presuming at the same time that he does not mean the brewing trade to become a forgotten industry. I hope he is bearing that small point in mind. The Chancellor and the Financial Secretary are both able men, and I have no doubt that if they bend their minds to this problem a little, they will be able to think it out. The Chancellor, charming man that he may be, has been generally praised throughout these Debates. For a year I was Parliamentary Private Secretary to my late chief when he was Financial Secretary to the Treasury, and I should like to add a word of praise for the Financial Secretary. I remember how much we did in my time to make life possible for the Chancellor, and therefore I think the Financial Secretary should also have a word of praise. Finally, I sincerely hope those two extremely able Members will be able to work out some way by which people who will, as I say, get married once will be able to buy once an engagement ring and a wedding ring without having to pay this increased taxation on those rings.

Mr. Kendall (Grantham)

There are only two points to which I wish to refer. One is a reference made by the hon. Member for Gravesend (Sir L. Albery) to my Company and E.P.T. The whole of the organisation which I control will be gratified at the remarks which that distinguished member of the Public Accounts Committee has made before the country, and I will not carry that matter further.

I come to the taxation on tobacco. Everybody who is working to-day in this country can easily afford the additional tax on tobacco. It does not inflict any hardship upon them at all, and the consumption will not decrease because of this additional taxation. If it had been the wish of the Chancellor to reduce the amount of tobacco consumed, I should have thought it would have been far better to ration tobacco to everyone. It is a simple fact that only those who are on pension will suffer from this additional taxation. Every working man and woman in industry that I know of—and in my own organisation there are something like 8,000—can afford this additional tax on cigarettes and tobacco, but the old age pensioners in my constituency cannot afford it, and I hope that when the Chancellor comes to answer some of the questions that have been put to him he will deal with the problem of how these old people can get tobacco, which is one of their small comforts, without having to pay the additional tax. The amount of money the Chancellor will get from this additional tobacco tax will be very small indeed compared with the total revenue. I ask him on behalf of old age pensioners to do something, either by way of issuing coupons or by the issue of something at the post offices where they get their old age pension, which will enable them to get relief from this additional burden. It should not be too hard a task, and I do not think we are asking too much in putting that point to the Chancellor.

Lieut.-Colonel Sir Thomas Moore (Ayr Burghs)

I am sorry that my hon. Friend the Member for Ipswich (Mr. Stokes) was not able to slake his thirst adequately—Oh, here he is. I am glad the hon. Member for Ipswich has been able to slake his thirst twice since he addressed the Committee, because it is a pleasure to demonstrate to him the personal affection I have for him and at the same time the utter contempt I have for his financial theories. The hon. Member always interests us, because he has got an innate charm which nothing, not even his queer and odd conceptions of finance, can destroy. He has flamboyant phraseology, he has a reckless enthusiasm, which commend him to the Members of the Committee as a whole, and I hope he will not misunderstand me when I suggest to my right hon. Friend the Chancellor of the Exchequer that now that he is putting an increased tax upon entertainments, he might extend that tax to the House of Commons in the case of the speeches of the hon. Member for Ipswich.

I will leave that matter for the moment and deal with the Chancellor himself in his efforts to solve a not very difficult problem, and that is to finish emptying the pockets of the general public, and I would pay him a tribute for his pertinacity in trying to prevent us from spending anything on anything and his urbanity in making us agree that we like it. That was a great achievement. Incidentally, I must pay a tribute to the Chancellor upon his Budget speech. Everyone has done it, and I should fail in my duty if I did not fall in with the general tendency, but I do pay a genuine tribute of envy at his resilience in being able, after his magnificent speech of nearly 2¼ hours here, to go to the microphone and talk to the public without any signs of fatigue or lack of persuasiveness.

I have only one point of criticism to make, because I have a great regard for my right hon. Friend and, indeed, a measure of affection for him, but I do think that his method of raising this comparatively trifling sum of £100,000,000—for it is trifling in comparison with the £6,000,000,000 Budget—suffers from the grave fault which has been expressed by my hon. Friend the Member for Grantham (Mr. Kendall) and many other Members. It tends to ignore the position of those with fixed incomes and old age pensioners. I hate stressing this factor, which is the only weakness in an otherwise perfect Budget. The Tobacco Duty affects many people who have no luxuries and few comforts and who deserve to receive more consideration than the Chancellor has shown for them in this Budget. I know that the Chancellor must find this £100,000,000, and obviously must find it from the pockets of those who are best able to pay it. A tax such as I once suggested before to him, of £1 per year per bicycle would yield, according to my information, about £12,000,000 a year, and it would have prevented the necessity to put this substantial increase on tobacco.

Mr. Kirkwood (Dumbarton Burghs)

It would be a tax on the workers.

Sir T. Moore

It would amount to one halfpenny a day per user, and if that is not a contribution which anyone could and would afford towards the well-being and safety of this country, I completely misunderstand my fellow citizens. I shall not go into the question of symbols, which evidently touches some people very tenderly, but I remember that my hon. and gallant Friend the Member for North Ayrshire (Sir Charles MacAndrew) said that he would not mind relieving the right hon. Member of Wakefield (Mr. Greenwood) of a few meaningless symbols if he had any of them in his pocket. I sympathise with the right hon. Member for Wakefield in his characterisation of pounds, shillings and pence. The sum of £6,000,000,000 means nothing to me, and yet it is made up of these meaningless symbols.

Budget Debates offer us an opportunity of suggesting certain methods by which the Chancellor can eliminate national waste and accumulate national income where possible. I am not dealing now with the prevention of spending, because my right hon. Friend has a good team round him for that purpose, the Minister of Food, the President of the Board of Trade and so on. They all assist us to withstand the attractions of spending money in these days, and therefore that point does not arise. I made a suggestion, however, to my right hon. Friend on which he gave me no answer, and I would like to make it again. It is that all purchases up to £1 in retail shops should be paid for in cash. The answer which he gave me was that the suggestion was not practicable; yet at every railway station you find people paying for railway tickets in cash. Why should that method not be extended from the buying of railway tickets to making purchases in retail shops? If my right hon. Friend went to any retail shop or store, he would soon become convinced that the adoption of my suggestion would mean an enormous saving in labour, time and in paper for invoices and accounts alone. I think it would be well worth trying.

No doubt the chief matter which is worrying and puzzling us all in this Budget discussion is how we are to find the money to pay the interest on our internal loans at the end of the war, and how we are to start our trade again and secure the overwhelming prosperity to which some hon. Members have referred, if we are to have a colossal Debt of something like £16,000,000,000. This Debt will mean an expenditure of between £500,000,000 and £600,000,000 a year in interest. Where can we find that money, and how are we to set about getting it? That is one of the matters for which Sir William Beveridge took some responsibility, because he laid down further expenditure that he would like to see us incur in addition to the cost of the war. He left the matter like that. Neither Sir William Beveridge, his supporters nor his critics have tried to analyse the repercussions which his scheme and all other schemes must have. After the first two or three years when the war is finished, there is no doubt, so far as I can see, that owing to the immense devastation created throughout the world, there will be a very exhaustive home market to be satisfied, but it will be satisfied after two or three years at the very outside, and then we shall have to enter into the field of severe international competition. There we shall come against the insoluble problem of standards of living. How are we to reconcile the standards of living, say of the handful of rice of the Japanese workman with the anticipated roast beef of the British workman? If we cannot solve that problem, our hopes of permanent peace after the war are doomed.

I suggest to the Chancellor of the Exchequer that there is a possible solution, at any rate of a temporary character, which might extend to a period of 20 years or even 40 years after the war, if the right hon. Gentleman and the War Cabinet are courageous enough to give a lead to this country to adopt it. It seems to me that the only way is that the world must be zoned into areas, each with approximately the same standards of living. The Under-Secretary of State for Foreign Affairs referred to this matter at a public meeting some time ago, but he talked about regionalising. I prefer the word "zoning." When you talk about zones of countries of approximately equivalent standards of living there flash almost immediately to your mind definite types of zone. There are the British Empire, the Americas, Asia, the Scandinavian countries and the Latin countries. You could group those countries within their zones, and arrange complementary free trade traffic within the zones and tariffs without the zones. Naturally we should not find certain raw materials in all zones, because no country produces all that it requires, and so we come to the unzoned areas—the Colonies. Colonies must remain for development and administration under their present——

The Chairman (Major Milner)

The hon. and gallant Member is going far beyond the confines of this Debate.

Sir T. Moore

I agree that I am doing so, but it is somewhat difficult to stop short at a certain point when developing an argument to show how we are to raise money in a competitive world to pay for what we are now spending. I was only trying to suggest a method by which this problem might be solved. However, in view of my undertaking, and of the fact that we have just before us the very welcome speech of my hon. Friend on the Front Bench opposite the Government, and also a speech by the Chancellor of the Exchequer, who will no doubt relieve us of a number of doubts created by his original speech, I will protect myself from breaking any further Rules of Order by resuming my seat.

Mr. David Grenfell (Gower)

I was elected to the House of Commons nearly 21 years ago and I have listened to every Budget speech since with the exception of one. I will say that taking responsibility for delivering the Budget statement on behalf of the Government is a task which Chancellors have always regarded with trepidation and sometimes with extreme anxiety, but on this occasion the Chancellor came to the House in his usual modest manner and made a statement that will be epoch-making in the history of the government of this country. The right hon. Gentleman has earned the encomiums that have been passed upon his speech, and he wears the congratulations which are due to him with the modesty that habitually belongs to him. I, too, would like to say something about the enormous increase in the magnitude of Budgets. I remember when a £200,000,000 Budget was regarded as an impossible thing. Then, in the course of my service in this House I have seen the figure climb up to £1,000,000,000. A £1,000,000,000 Budget was regarded as a catastrophe. The Chancellor came to us on Monday and asked us to approve the spending of £5,000,000,000 of the nation's money, for which he is responsible as the authority charged with the distribution of the national wealth for national purposes. This £5,000,000,000 burden the country has borne by wise distribution, by wise apportionment of the responsibility, and by wise expending of the money collected from every individual in the country.

I would like, if it is possible, to give some idea of what this represents. Five thousand million pounds would have been quite an impossible figure, if it had been attempted, say 20 years ago. Forty years ago it would have been a fantasy to talk about £5,000,000,000., These thousands of millions which we have never seen—I take the word of the Chancellor that they are here somewhere—are tokens of the enormous wealth which this nation creates, day by day, by toil, by skill, by technical knowledge, by organisation, by production in a multitude of forms, by transport, by good husbandry, by wise and careful distribution and by wise government. The significance of these tokens to the individual citizen depends on where they are written. On one side of the balance sheet they are tokens of hope, security, contentment or prosperity. Written on the other side of the balance sheet they are tokens of want, of penury, of woe, of despair. These 5,000,000,000 tokens in the national sense, for which the Chancellor is responsible, represent only a portion of the currency used for our various purposes in this country, but this great sum is a token of a great purpose, a token of the nation's courage, a token of the nation's will to victory and the instrument by which that victory shall be attained. We have to show our appreciation of the nature of currency and the importance of wisely using these tokens. In olden times, when Chancellors were less lucky than the Chancellor of to-day, they were called Exchequer tokens. Examples of these tokens are still preserved in some corner of this building as museum pieces. They were called by that name in those days. These tokens of to-day are living symbols, active symbols of this nation's power, and we should not apologise for trying to indicate, from time to time, what their character is.

I would like to recall to the Committee some fact in connection with the number of tokens. The magnitude of this Budget is not at all a cause of dismay to us at the present time, I remember when I began modestly to talk about questions of national finance. I then realised that we all have to rely upon experts in these matters, and we are apt to display great credulity concerning them. I was told 40 years ago, at the beginning of this century, that the whole national income was £1,600,000,000 a year. I believed it, because I remember working very hard and getting far less than £100 a year at that time. I believed that the national income was somewhere in that neighbourhood. The experts said so and we all accepted it. I have seen it grow. I remember there was what is called inflation of about 16 p.c. between 1900 and 1914, and then came the rapid inflation in 1914, 1915 and 1916. I remember that when we were trying to maintain our standard of living, paper money came into existence. In the period previous to that there was direct relationship with gold and a gold currency in 20s. and 10s. units. We began our acquaintance with paper money in 1915 and 1916. We had to live even in times of war and we could not live without increasing the number of currency notes at our disposal. The pound became worth 8s. in the course of that war. That was a serious time for the wage-earners in this country. We built up a large National Debt in that period, a very serious obligation on the country. I hope we shall be able to manage better this time. Then there was deflation, and prominent members of this Administration were responsible for the deflation that wrought havoc upon the export trade, particularly coal and steel, in this country. [Interruption.] There are people still in this House who were directly responsible. So we have gone on.

Now the amazing fact is brought to light, I think in the White Paper issued by the Chancellor himself, that our national income is nearly five times as large as it was in 1898 or 1900. So, these tokens do not represent stable values. No one would say that we produce five times as much coal, five times as much steel, five times as much textiles, or that we had five times the agricultural production we had when the national income was computed at one-fifth of the figure of to-day. So money does change. The value of these tokens measured in terms of goods does change. The business of the Chancellor of the Exchequer is to manage the currency. I congratulate him personally, I think he has been very largely responsible. He has a natural equanimity—he disturbs us sometimes, but he has refused to be rattled—and I believe we have been able to manage the currency exceedingly well in the last 3½ years or so. I give an indication of the value of this to everybody in the country. We have spent practically the same to a halfpenny, on food in 1939, 1940, 1941 and 1942. What an achievement that with 47,000,000 mouths to feed and bodies to clothe, prices have been so well controlled. We know that supplies have been curtailed but there has been a relationship between the curtailment of supplies and the increase in prices, and we find we are able to spend almost exactly the same to a penny for four years, taking the nation as a whole. We have not been really short of food during the war. That is a great achievement. It is a factor in planning. An indispensable condition of planning is that you must be able to know what your own requirements will be year by year in order to buy food, to buy clothes, to buy fuel and to pay rent. That great achievement is an augury from which I expect very much.

I feel sure however that some of the Chancellor's friends would lead him far astray. We have heard speeches to-day from Members who do not know the work that has been done, and the promise that is given of the work to be done in the future. The country will not tolerate conditions such as we had after the last war. We must not think of returning to the conditions of 1919 and 1920. Our millions of young people, boys and girls, who have seen life, who have played their part heroically, will not have that. There are no words we can use which are too flattering, too high in praise for the services that have been given by our young people who have gone into the various Services and have gone abroad. I heard something to-day about sacrifices. What about the sacrifices of people who have broken up their homes, scrapped everything, gone away to seek new ways of training their hands and minds in the service of the country? To those who have gone into the Forces, men and women alike, I always lift my hat metaphorically, when I think of them. I do not know how many millions of people at the end of the war will be waiting for the machines to start up again. Can anybody tell me whether we shall have 5,000,000, 6,000,000 or 7,000,000 people waiting for employment?

That is the time when we shall have to get a Chancellor of the Exchequer, and a Government, and a House of Commons, and a people, sufficiently well-informed upon the prospects and the possibilities of managing this estate which is our country, this estate in which we are all partners and workers, this estate upon which we shall have to live in the days when peace comes to us again.

I would like very much to be able to convince the Committee that on this side we think there is no price too heavy, no sacrifice too bitter, no personal service that we will not render to win the victory, and to preserve freedom, the larger freedom to build still greater liberties for our people in this country when the external enemy has been defeated. But we shall never start right unless we start right with the Chancellor of the Exchequer—unless the Treasury is put on right lines. This money of which we speak is an object of adoration, an object of great respect, for many people. Frankly, I always doubted the wisdom of giving my personal attachment to this money. There is a great misunderstanding. What we really want in life is a chance to live our own lives as much as we can, but so that we do not interfere with and interrupt the opportunities of our neighbour to do the same. We want freedom to live, and we want the opportunity. This must be provided by national organisation. Gone are the old days of laissez-faire; gone are the old stupid days of class privilege; new days have come upon us, and we are now recording in this Budget a stage of progress.

Somebody said that this Budget was a milestone. I would like to know which milestone it is; how many more miles we have to go before we get where we want to be. But so long as we are satisfied that we are on the right road we do not worry very much, because somebody else will be able to take our places as advancing years come upon us and we drop out. I am sure that there is a great future for us, so long as we start right. There is no way of fighting a total war—and nothing but a total war will bring us victory—except by concentrating all the strength of the nation on the war effort. You cannot do that if any portion of the nation's spending power is spent on anything that does not add to the strength and production of the nation. If you tax, you must tax evenly. In a society so varied in circumstances as we are, there are rich and poor. Somebody said that there are no rich people, but the White Paper says that there are quite a number of rich people. There are too many rich people, and there are people who are too rich. In a society such as ours it is not easy to apportion the contribution of each man, when you consider that there are 13,000,000 households in this country and probably 25,000,000 or 26,000,000, people—I have not the figure with me—working in different employments. It is difficult to say exactly what you require in contribution from each. Are you to have direct taxation, or are you going to get equality by a measure of indirect taxation? I do not think we can get equality. You cannot tax the full £6,000,000,000 on national income, and so you tax as far as you can, without unduly putting a burden upon your average citizen; without taking too much clothes away from the bodies of the people, and without reducing their food supply.

I remember the discussions in this House, the political debates in the country, the party struggles over the "free breakfast table." What did that mean? That was a claim that the necessities of life should not be taxed, that reasonable conditions of living should be afforded to everybody, and that when they had enough to maintain their physical fitness and capacity of living, they were then to be taxed on the surplus. The Chancellor has done even better than that. He has given us, not quite a free breakfast table; but he has given the breakfast table subsidies to the extent of £50,000,000, and he has given us even better sustenance than we should have had merely from a free breakfast table. This nation is better fed. It is in better health, because a higher average of food and nutrition has been maintained for us in the last four years. Health is an important thing. The real wealth of a nation is in the health of its population. But when we have provided for health conditions, when we have given sound nutrition, when we have reasonably clothed and housed our people, there are so-called luxuries. I am not really competent to speak on these. About 20 years ago I gave up smoking. I have done my share of smoking in my life. Indeed, I started very much younger than the average man does. I do not want to say that a man should be taxed for smoking, but I would like to see less smoking. I think smoking is bad for some people. I have been a temperance speaker and I believe this nation would be stronger if we smoked less and drank less. It is right to say that. We cannot smoke or drink our way to victory. It is by plain living and by active devotion to work and to the cause of the country that we can make certain of seeing our way through.

I want to say a word or two again about this daily expenditure, and I again offer my thanks to the Financial Secretary for having given us the significance of this expenditure in day to day figures. Five thousand million pounds is a mouthful. We are spending £16,000,000 a day, of which £15,000,000 is for war purposes and the other £1,000,000 for ordinary governmental purposes. There is only one figure that has not been given, and I would like it to be given by the Chancellor of the Exchequer in terms of daily income. I think it is in the neighbourhood of some £21,000,000, whereas our daily expenditure for all purposes is £16,000,000 and there is therefore only £5,000,000 left. The question to be answered is, How do we spend £16,000,000 out of £21,000,000 a day, which is all we have to spend? It is said that we live on capital. We cannot live on capital indefinitely. I would like the point to be cleared up. I think the explanation is that while we have an income of £21,000,000 a day, a large part of it is already accounted for in the expenditure of the Chancellor of the Exchequer; it is payment for work and orders given by the Government. There is a suggestion in the White Paper that last year we spent about 38 per cent. of our income on war purposes. That takes some analysis and dissection, but I would like, if it were possible, to give this nation of willing workers and loyal citizens a still more familiar minute picture of the conditions under which the finances of the war are being maintained. I think that the continuous taxation will go on for another year or two. We have the fundamentals and the coal supply which, I believe, will carry us through. The essential material position seems to be secure. The problem of maintaining the finances need not worry us a bit if we proceed on sound lines, but I will leave that to the Chancellor.

I would like to express my pre-occupation with what is to come afterwards. I am very concerned, and while I will join with anybody in joyfully congratulating the Chancellor of the Exchequer on spending £5,000,000,000 of our money this year—and perhaps more next year—I want to know when the time will come to reduce our national expenditure. Are we to start cutting down our national expenditure when the war comes to an end? The Chancellor of the Exchequer has already said that we tax ourselves to the extent of £3,000,000,000. We borrow £2,750,000,000 or perhaps £3,000,000,000 this next year. We shall stop borrowing, I hope, when the war comes to an end, but we still have a Budget of £3,000,000,000 based upon our taxable capacity in war time. Will our taxable capacity in peace time, immediately after the war, be greater than our capacity in war time? If our people are not to be put back to work immediately and vast armies of unemployed appear on our streets, and men and women who have been earning high wages stop earning, the whole position will decline and the Prime Minister may find himself in a budgetary crisis before a year has passed after the conclusion of the war.

I would like to feel satisfied with the problem of maintaining the national income at its present level and the spending power at its highest possible level. The Debt is now £15,000,000,000 and 2 per cent., the cost of the service of the Debt, is £300,000,000 a year. Suppose we find before the war definitely comes to an end that we have a National Debt of £20,000,000,000 and that at, 2 per cent. we shall require £400,000,000 a year for the service of the National Debt. I would like to know whether we are prepared for the assumption of a burden of that size. That does not appear to me at all to be large, but it depends upon the volume of your national turnover at the time. If you cut your national turnover to £3,000,000,000 or £4,000,000,000 you cannot possibly meet the budgetary claims of 1944, 1945 or 1946. The only way to maintain the necessary level of general purchasing and spending power is by the Government themselves assuming responsibility for the promotion and creation of large schemes of public work under Government direction and control. We are willing to spend money in order to place our men in employment and to provide them with alternative employment with the least possible delay.

We shall solve this problem of post-war budgetary policy quite easily, but there is one thing we shall never be able to afford. We shall not be able to afford the mass unemployment of the last war when there was collapse and breakdown, and the bottom went out of our schemes. I hope that the Chancellor of the Exchequer will devote himself to this question and will take the House of Commons into his confidence. The House will be willing to authorise any essential social remedy, whether it comes from the Government or from this side of the House. We will help the country to understand and accept any proposal that is necessary for the benefit of the country. We shall offer proposals to him. I deem it a privilege, as a Member of Parliament and of my party to offer my own suggestions and the suggestions of the party to which I belong. We may have to exert ourselves still more strenuously and may yet have to draw more people into the service of the nation, but there will come a time when we shall have to apply ourselves as diligently, as courageously and as patriotically to preventing the aftermath, the backwash, which we had before returning to stability and providing foundations for rebuilding a better world after this war.

The Chancellor of the Exchequer (Sir Kingsley Wood)

There are two preliminary matters to which I would like to refer. First, I would thank you, Major. Milner, and the Deputy-Chairman for seeing us so well through these proceedings. This is the first big job that both you and the Deputy-Chairman have had, and I am very grateful to you for all your care during this particular period. I would also like to congratulate three hon. Members of this House who have made their maiden speeches in the course of these Debates. They were the hon. Member for West Belfast (Mr. J. Beattie)—I am sorry the Rules of Order prevent my handing out any more to Belfast at the moment—the hon. Member for Antrim (Mr. Campbell), and the hon. Member for Hamilton (Mr. Fraser), all of whom, I think, made excellent contributions. I congratulate them very heartily indeed.

I want, of course, at once to thank hon. Members in all parts of the Committee for their all too generous observations about myself in connection with the Budget. I can assure them that I will not allow my head to become swollen on that account. I remember a constituent of mine once proposing a vote of thanks to me at a meeting. He was not much of an orator but he was a good supporter of mine and, thanking me, he said, "I beg to move a vote of thanks to our Member, Sir Kingsley Wood. He is not an ornament in the House of Commons, but he is a good hard-working Member." That is all I pretend to be. Apart from the personal aspect of this matter, however, I am very gratified at the general verdict which the Committee and the country have given to this Budget. In presenting it, I endeavoured to be fair to all, so far as is humanly possible. Indeed, I kept that matter very much before me in devising the proposals I presented to the Committee on Monday. I particularly endeavoured to temper the full rigour of our very hard and considerable taxation at this time for those whose circumstances, justly, I think, in many respects, claim our sympathy and consideration. Defective though some of my proposals may seem to some hon. Members, I have put no further hardships or impositions on the necessities of life.

My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence), who always makes valuable contributions to these Debates, made one criticism to which I would like to reply. It was a criticism of the amount I budgeted for as our increase in actual expenditure in the financial year, which, he thought, I had underestimated and which, he said, might reach a considerably higher figure. I think that criticism is one that would naturally occur to anyone who has not had a full opportunity, as I have, of looking at the figures. I would like my right hon. Friend to remember this: The 1942–43 expenditure includes expenditure in Canada, against which we had a contribution of £225,000,000, whereas the 1943 estimate excludes the supplies we expect to get in kind out of the new arrangement which is being made by Canada. The estimate also excludes, for the reasons I gave in my Budget speech, the cost of Canada's generous contribution in connection with air squadrons and allied matters. Finally —and this is also important from the point of view of getting a correct estimate—the 1942 expenditure includes, what the 1943 estimate excludes, namely, the cost of war damage payments. If those matters are taken into account, I think my right hon. Friend will realise that I have exercised due care and that my officers have advised me with care and precision.

If any issue at all has been raised about this Budget—and I would not say that there has—it is that on this occasion I have turned to indirect taxation to obtain the assistance that is required at the present time. I want to tell the Committee, frankly, some other considerations which have been in my mind and also to make one or two suggestions about the alternative with which I was faced. The high level of direct taxation, which is spread over so wide a range of incomes, is only possible to-day through the willing cooperation of our people. In the higher ranges of income we find not a few taxpayers who are left, after taxation has been deducted, with only 1/20th of their income. In the highest ranges the State to-day leaves the taxpayer with only 1/40th of every pound he earns. That is not the whole story; at the other end of the scale incomes which have been taxed now were relieved of direct taxation altogether before the war. Direct taxation now starts when a single man earns a little over 46s. a week. There is another factor which I had to face and which my successor will undoubtedly have to face if we have to raise further taxation. I could not look, nor can any Chancellor, to the higher income groups alone to find the money that will be required. I have told the Committee before that if I were to take the whole of all incomes in excess of £2,000 a year, the additional yield to the Exchequer would be no more than £30,000,000.

When you are faced with having to raise another £100,000,000, you have to look to other sections of the community, many of whom have only recently come into the direct taxation field. While it is true that many are getting increased earnings and remuneration, I must not forget the great middle section of the community, which, for want of a better phrase, we call the middle class and lower-middle class, on which taxation at the present time is bearing more heavily than on any other section of society. If I were to raise that amount of £100,000,000 entirely from direct taxation, I might very well have to reduce the personal allowances, which have already been cut to £80 for a single man and £140 for a husband and wife. To raise the money in that way I would have to make a further cut of £20 in such allowances, and this would mean an increase in the tax bill for everyone concerned of something between £6 and £10 a year or between 2s. 6d. and 4s. a week. I am confident that if that step had to be adopted, it would weigh far more heavily on the small incomes than do the taxes which I have proposed on forms of expenditure which, after all, can be adjusted to meet the additional burdens. I am conscious of what has been said to me by hon. Members about the difficulty and the inconvenience—I think one must not put it much higher than that—of taxation on liquor, tobacco and entertainments. People must not assume, however—and I am sure nobody does assume, although they are sometimes apt to talk as though they do—that the extra tax on tobacco and beer means that these forms of consumption are entirely ruled out for people with small incomes. I have heard expressions used about taking away the old age pensioner's pipe. I should be the last to try to minimise the burden which people with small fixed incomes are bearing in these times. I want to pay my tribute to them for the cheerful way in which they are bearing the strain and the difficulty. The fact remains, however, that it is possible for them, as I shall show in a minute or two, to adjust their consumption to the increased taxation in a way which certainly would not be possible if I were to impose a rigid uniform increase of direct taxation from which there would be no escape.

Mr. Kirkwood

I can assure the right hon. Gentleman that the old age pensioners will not contribute this cheerfully.

Sir K. Wood

Let me deal with the matter, because I want the hon. Member to take a message to them. For instance, consider the actual effect of the increase which is proposed on cigarettes and beer. I suppose that what we would call a moderate smoker smokes, say, ten "Woodbines" a day. If he cuts down his smoking by one cigarette a day, he will be almost square with his pre-Budget expenditure, and if he cuts down his smoking by two, he will be actually in pocket. If one takes the case of a heavier smoker—I have known them and they are not in one sex alone—who smokes 15 full size cigarettes a day, if he cuts down his smoking from 15 to 13 cigarettes he will still spend no more than he was spending before this Budget was introduced. Take the case of beer.

Mr. Kirkwood

Did the right hon. Gentleman say, "Take the case of beer"?

Sir K. Wood

A man who drinks anything from four to seven pints a week will, roughly, be able to save the extra tax if he drinks half a pint a week less. I do not think that is a very severe reduction. I have beard a great deal about the pipe smoker. In the case of the pipe smoker I am advised that a man only needs to give up every sixth pipe to be all square. This is an improvement on the quota which I read the other day was suggested by Charles Lamb as the formula for wise pipe smoking. He said: One pipe is wholesome, Two pipes toothsome, Three pipes noisome, Four pipes fulsome, And five pipes quarrelsome. Therefore, hon. Members will see that my calculation allows him to have five of all those pipes before he has to give up one. I say that if these facts are taken into account, as they should be, it will be agreed that there is really no great weight in some of the observations that have been made in the Debate that we are bringing great hardship and are acting very unkindly to large sections of our people. I hope I shall not be misunderstood when I say that when one has regard to the suffering and hardship in many parts of the world to-day, this matter is a very small one indeed. Much as I would like everybody to have ten cigarettes a day or six pipes a day, to ask them to have only nine cigarettes or five pipes is a very small thing, having regard to the fact that we are at a crisis in our history. I think we must not exaggerate this matter too much.

I claim that the Government have endeavoured, in the four Budgets I have presented, to have regard to the poorer sections of the community. We have not been unmindful of such special classes as the old age pensioners and others who have to manage on small fixed incomes. When any hon. Members go to speak to old age pensioners, they must be fair in stating the facts to them, because I do not think the facts are always appreciated sufficiently. For instance, the Estimates for 1943–44 contain a sum of no less than £43,000,000, which is £13,000,000 more than last year, for supplementary pensions, which were first granted under the Act of 1940. My hon. Friend the Member for Gower (Mr. Grenfell), who spoke with such power, referred in a way in which I could not pretend to do to the great advantage to people with small fixed incomes of the stabilisation policy. The only thing the hon. Gentleman made a mistake about was the cost. The cost is now running at the rate of £180,000,000 a year. This is something that was never thought of in the last war and something which undoubtedly is of considerable benefit to those whose incomes have remained fixed. Moreover, all those with small incomes have received and are receiving the considerable benefit of our social services, which are unrivalled by those of any other country. In the Budget I have included, gladly and with no reluctance on my part—although it is an amazing thing for the people of this country to have been able to accomplish it, notwithstanding the very heavy costs of the war—another £60,000,000 for our social services in 1943 over what was provided for them in 1938. Therefore I claim that, on a fair consideration of what has been accomplished in this and the, other four Budgets, we have been mindful of the sections of the community who are hard pressed and are in difficult circumstances.

One concession, in connection with the dependent relative allowance, should be of real help in easing the circumstances of many old age pensioners. The remission which I have made in the Purchase Tax on what are known as household textiles of the utility type will undoubtedly be of very considerable further help to these old people. Therefore, if you take a balance and put on one side the matters that I have mentioned and on the other the tax on tobacco, cigarettes and beer, and view the thing fairly, due and proper consideration has been paid to the needs of these people whom we all desire to help as far as we can.

Many Members have been concerned with the matter of wage-earners' Income Tax. Although I do not seek to rid myself of my responsibility as Chancellor, throughout all these matters I have been in close discussion with the British Employers Confederation and the Trades Union Congress executive, who have been as anxious as I have been to see if it was possible to get on to the current earnings basis, but every time we have examined alternative schemes together they have shown greater hardships and difficulties, and we have come to the conclusion that up to the present we have not been able to devise a proper scheme which would really be better than the present one. We are watching with keen interest the proposals now being considered in the Canadian House of Commons for placing wage-earners' Income Tax on the full current earnings basis. I understand that the scheme requires the employee to make two tax returns each year and to work out his own tax bill, and the employer is made the assessor as well as the collector of the tax. How far we should be prepared to go in that direction I do not know. I have every sympathy with the feeling that has been expressed in this matter, and undoubtedly we have to look at it from the point of view of after the war. My advisers and I will look at it again to see whether anything can be done. I share the view expressed by many that, having regard to the complex nature of the subject, if a scheme is to be prepared, it will have to be done by the Board of Inland Revenue, and I do not think anyone is really so competent to undertake it.

Mr. Stokes

Is the main difficulty that the right hon. Gentleman is up against trying to find a uniform method?

Sir K. Wood

I will send the hon. Member a copy of the White Paper last year, which set out all the difficulties fairly——

Mr. Wilmot

And there are many.

Sir K. Wood

Yes, there are very many.

Mr. Kirkwood

The right hon. Gentleman said he consulted the employers and trade union officials, but he has not consulted the men who are affected.

Sir K. Wood

do not think we could possibly expect the men themselves to go into difficult and technical questions of this kind. I have naturally relied upon the experts who are associated with the Trades Union Congress and others to state the case on their behalf.

I should like to say a word about the taxation of business profits. I devoted some considerable time in my Budget speech to this matter and was able to give assurances on various points. I have given an assurance that allowance will be made in the computation of E.P.T. liability for instance, the restoration of factory lay-out which has been altered for war purposes, the return of factories which have been dispersed, the undoing of A.R.P. measures, the valuation of stocks, and deferred expenditure on repairs and renewals. I hope the assurances I have given on these points will have gone far to set at rest the anxieties of trade and industry. The hon. Member for Pudsey and Otley (Sir Granville Gibson), while he appreciated the reliefs which will be given to firms liable for E.P.T., mentioned in particular the case of a firm not so liable which would have to bring back plant and machinery which had been removed on the requisitioning of its premises. The Financial Secretary dealt with this point a week or two ago, when it was raised on the Adjournment by the hon. Member for Northampton (Mr. Summers), and he gave an assurance that a firm which had received compensation for the expenses of removing and erecting its machinery could reserve its right to submit claims for future expenses when the time came for re-erecting the plant. This is a separate matter from the allowance for taxation purposes, which, as I have said, will cover these points as far as E.P.T. is concerned. In general, I would repeat what I said in my Budget speech, that the whole question of the post-war position of business firms in relation to taxation is now being closely examined by the Inland Revenue Department, and this examination will cover the question of the taxation of undistributed profits ploughed back into the business and also of capital expenditure, for which no allowance is made under the existing taxation code. When these matters have been considered by the Inland Revenue and myself, they will have to receive full consideration in the House, and all concerned will be able to express their judgment.

The point was put to me whether I could not express in better terms the 20 per cent. of the tax which is to be given back under the conditions embodied in the Finance Act, 1942. I endeavoured to put the matter as well as it could be put in statutory form. I want everyone to feel that that is the definite intention as expressed by Parliament. I hope there is no doubt that this is a definite commitment on the part of the Government and that this reserve will be available to industry at the end of the war, and that it will make a real contribution to meeting the problems of transition to peace conditions. I was asked what the object of the 20 per cent. refund is. That is the object; the Government have made the concession, and Parliament has approved it.

In this and previous Budgets the country owes a great deal to the support which the House of Commons has given to the proposals. We could not have brought them in if there had been great divisions of opinion. The greatest credit of all is due to our people, who have so cheerfully accepted practically everything that has been asked from them. I would like this Budget to be regarded as simply one of six since the war began, because the object of all of them has been the same: first, to keep the finances of the war on a sound foundation, and, second, what to me is equally important, to see that the foundations of the better days after the war which we are now engaged in building shall be built good and strong. I also feel—and I think the Committee will agree with me—that it is vitally important that we should see that all this tremendous sum is well spent, not only for the sake of victory in war, but also for the sake of victory in peace. It is due to that great body of our fellow citizens who have contributed so mightily to the Savings Movement that the money they lend to the State shall be carefully safeguarded and wisely used. It is a function of the Chancellor not only to raise money but, under the strain and pressure of war, to see, so far as he can, that it is laid out to the best purpose and advantage. I hope that financial prudence is still a virtue. We do no harm—and I would like to take my part in the discussion about symbols—in occasionally reminding ourselves that there is no essential difference between the State and the private individual in that what the State wants it must pay for.

I do not fear for our future. If we can continue with equal circumspection to husband our financial strength, we can face the tasks before us with full confidence. The immense productive capacity of the world, which is now being used unhappily for the purposes of destruction, will, when victory has been achieved, be available to us, if we are wise enough to use it, to enable us to achieve a better and more secure life for all mankind. We have been considering the biggest Budget in our history and I believe that it is still further tangible evidence of our firm resolve to leave nothing undone in the financial field, as in all other fields, to achieve victory at whatever cost, so that freedom and happiness may soon again come to mankind.

Question put, and agreed to.

Resolved, That it is expedient to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance.

Resolution to be reported upon the next Sitting Day; Committee to sit again upon the next Sitting Day.