HC Deb 29 September 1944 vol 403 cc707-14

4.59 P.m.

Sir Waldron Smithers (Chislehurst)

We have had to-day an historic Debate on affairs of the war overseas and the approaching victory. I make no excuse for raising this matter to-night, because I want us all to feel that we must not be unworthy of the sacrifices that have been made in the last five years, and I want to point out most emphatically that it will be just as difficult to win the peace as it has been to win the war. Equal sacrifice and equal hardship will be demanded. This Adjournment arises out of a Question I asked the Chancellor of the Exchequer on 25th July on the cost of social services. I only want to put before the House a few facts which are quite non-political but which have to be faced by Members of all parties if we are successfully to win the peace. The cost of social services before the last war came to £63,000,000 per annum. Before this war the cost of social services had risen to £531,000,000 per annum.

It being Five o'Clock, the Motion for the Adjournment Of the House lapsed, without Question Put.

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Pym.]

Sir W. Smithers

As I was saying, the cost of social services has now risen to £531,000,000. To save detail I will give round figures. Since those figures were given by the Chancellor the House has passed or has envisaged expenditure of £132,000,000 on national health, £80,000,000 on education and about £690,000,000 on social insurance, although this covers some existing services, which brings the figure down to about £450,000,000. Industrial accidents will cost about £25,000,000, and expenditure on rehousing and rebuilding devastated areas cannot be less than £100,000,000. So we get a total approximating to £1,400,000,000, as compared with £63,000,000 before the last war. In addition, there is to be 4s. a week extra unemployment pay, and the Minister of Pensions recently told the House that the cost to the taxpayer of existing pensions was £80,000,000 and owing to the war would naturally rise, which would mean that the cost might go up to £150,000,000 or £160,000,000. These proposals are being put forward in spite of the fact that in 1913 the National Debt was £661,000,000, and in 1944 was over £20,000,000,000.

Another point is that when we are talking in terms of the pound sterling we must not forget that it is worth only 71 per cent.—that is about 14s. 2d.—of what it was four years ago. Details of the estimate are given in the OFFICIAL REPORT of 6th July, col. 1313. All these increases of cost, however worthy the object, in the view of many people, must lead to violent inflation. The. Minister Of Labour, speaking in London on 4th April, was reported to have said: I, as an old trade union official, do not want £10 a week if I can buy only £2 worth of stuff with it. I would rather have £5 so that I could buy £5 worth of stuff. In the cause of freedom the Treasuries of the various Allied countries have been pooled. It is true to say that this country is, for the moment, living on charity. We are living on Lend-Lease from America, and the princely annual gift of 1,000,000,000 dollars' worth of goods from Canada. There must come a time when this Lend-Lease, these gifts, must come to an end. Before we can think of increasing our social services the first job the Government have to do is to ensure that the people of this country are fed. One of the risks we run after this war is the risk of starvation. The Minister of Labour, again, is reported to have said on 11th February, this year: We have lost our overseas investments, pawned them, sold them and depreciated them and after the war we shall have to live on our annual production year by year. With our 45,000,000 people we are the one outstanding example of a country that is not self-supporting. We have to import from a third to one-half of our food and raw materials and, in order to import, we have to export. Having lost our overseas' investments, we have to export physical goods at a price which the impoverished world can and will pay, or we go under. Before the last war our annual balance of trade showed a surplus of £207,000,000. Just before this war there was a deficit of £52,000,000. That means that we are £260,000,000 per annum worse off than we were 25 years ago. We used to build £10,000,000 worth of ships for foreign owners. The position has been reversed. Foreign shipyards were building £7,000,000 worth of ships for British owners. During this period of 25 years world sales of coal have gone up by 161,000,000 tons per annum, while British sales have decreased by 48,000,000 tons. In the same period exported cotton piece goods declined by 5,000,000,000 yards.

It is interesting to note, if you draw a graph, that as the cost of social services has increased so our flourishing position in the world has decreased in proportion. The consumer always pays. He pays for our rates and taxes and for our social services. The fact is that the foreign consumer refuses to pay for our social services when their cost is added to the cost of production, as it must be. The cost of social services and the Government's expenditure on insurance premiums have to come out of the industry. To give an example, if you add Is. a ton to the cost of coal it means 3s. a ton to the cost of steel produced by using that coal. If master and man have to pay insurance premiums, it has to come out of the industry, out of the stuff they produce. The sum total of it all is that the cost of the social services has to be borne by industry, it increases the cost of production and makes it more difficult, and even impossible, for us to compete in the markets of the world. We have just been hearing about Dumbarton Oaks, Bretton Woods, Hot Springs and the like. Of course every one of us welcomes the more neighbourly spirit that is being shown between countries and every effort is being made to trade, but no human effort can get over variations in climate or harvest and the fact that some countries can produce some things which others cannot.

Say what you will, the law of supply and demand is like a steam roller, it will go along relentlessly and leave us on the hard high road of reality. Unless these facts are taken into consideration we are piling up for ourselves another 1931 crisis. Just after that crisis Mr. Ramsay MacDonald, then Prime Minister, speaking at Kilmarnock, said that the crisis was not about the distribution of wealth, but about the very existence of wealth, because our credit was being ruined in the eyes of the world. After the war we must be poorer. We have parted with our overseas investments and we have got no gold, but we have one great asset, and that is the integrity, the character, the experience and the knowledge of our people, both business-men and workers. The Minister of Reconstruction, who should know all the facts, said recently that no one could foretell our financial position because there were so many unknown factors. He also pointed out that the limit of taxation for those people who have got something has been reached. There is no more to be hoped for by "bleeding the rich."

We hear now a great deal of talk about social security. I say quite definitely that the increase in the cost of social services means social insecurity. As Hecate said in "Macbeth" And you all know security is mortal's chiefest enemy This vast expenditure will undermine and destroy the economic foundations of our country, which is not self-supporting. The other day, at a meeting, an enthusiastic fellow, whose keenness on politics I admire, an extreme Left-winger, said something like this: "You gentlemen of the House of Commons are no fools; you pay a clever man like Sir William Beveridge to organise poverty." The State is not a fairy godmother with a bottomless purse. We have these vast proposals, some passed and some envisaged, for increased expenditure, but there are other priority claims on the public purse. There are the pensions for this war; there will be the Army of occupation, for if we do not beat the Germans and keep them beat, there will be no social services at all; £100,000,000 has just been granted for increases of pay for men in the Services; and we have to play our part in feeding Europe and helping the people in the terrible conditions which have been revealed in the occupied countries.

I want to ask the Financial Secretary this simple question, and in doing so I am not impugning his own personal honour: Is it politically honest to the people of this country, 90 per cent. of whom do not know anything about invisible exports, or overseas investments, or the economic position of the country, to hold out these hopes? Is it right to let them think that all these things can come when, as the Chancellor said in answer to the Question which is the subject of this Adjournment Debate, he could not give details, and no one could, of the expenditure that was likely to be incurred? In conclusion, from a political point of view I think it is very dangerous for this Government, when the men will soon be returning, to make promises which can end only in bitter disillusionment. The Treasury must know the facts. I beg the Government to tell the people the simple truth, apart from all party politics, with the certainty that if you tell the British people the truth they will never let you down. "The truth shall make you free."

5.16 p.m.

The Financial Secretary to the Treasury (Mr. Assheton)

My hon. Friend has raised a matter of very great importance, and the House has listened with attention to what he has said. He will, I feel sure, appreciate the difficulty that I am in, since the time available for a reply on an Adjournment Debate of this kind is so limited that it is obviously quite impossible to deal fully with all the numerous facts and figures that my hon. Friend has given to the House. It is quite clear, however, that before very long we shall be having a Debate on the White Paper on Social Insurance, and I hope most earnestly that hon. Members on all sides of the House will devote a great deal of thought, and a great part of their speeches in that Debate, to the financial aspects of this matter.

We all recognise, I think, the significance of the heavy charges on various sections of the community which will be necessary in order to finance these proposals—charges upon the Exchequer, upon local authorities, upon employers, and, not least significant, charges upon the workpeople of this country—and I have no doubt that when the White Paper comes to be debated in this House there will be a speech from the Treasury Bench giving the views of the Government on these matters. One is apt to hear, I know, suggestions that the Treasury should pay for this and the Treasury should pay for that, but it is not always remembered that "the Treasury" means "the taxpayer," and I should like to think that all hon. Members, in their speeches and in their thoughts, will substitute "taxpayer" for "Treasury" and thus make sure that they are approaching these matters of Government expenditure in a realistic spirit.

There is another important point that I should like to make and it is this: the taxpayer to-day is largely the working man or woman. We have only to look at the White Paper which was published at the time of the Budget—the White Paper on National Income—to see what a small proportion of the national income is now in the hands of the better-off section of the community, and how much of the taxes must therefore come directly from the masses of the people. As that White Paper shows, the private incomes left in the hands of Surtax payers, after payment of taxation, now represent only three per cent. of the total spendable private income in the hands of the community as a whole. No Government, I suggest, can make proposals for increases of expenditure without thinking at the same time of the taxes which are required to meet the burden. Most taxpayers, I think, believe that they are over-taxed already, and they are anxious to see relief from taxation. Some people suggest that the great bulk of the objects for which taxation is imposed involves merely a transfer of expenditure within the country. This may be true, but there is a limit to the extent to which taxpayers will allow the Government to spend their earnings instead of leaving them to spend their money themselves; and do not let us overlook the deterrent effect of excessive taxation on business enterprise.

We have lived through a period of five years during which we have been spending money at a colossal rate and using our capital resources without hesitation in the hour of our national need. Do not let us imagine that this can go on indefinitely. To do so would be to live in a fool's paradise. Even with the highest possible level of employment, we shall have to be very careful indeed if, as we undoubtedly shall, we are to meet our commitments. It is for this reason that I welcome any notes of caution which hon. Members strike in connection with proposals for new financial commitments, and it is in that sense that I thank my hon. Friend the Member for Chislehurst (Sir W. Smithers) for drawing the attention of the House to this matter.

5.22 p.m.

Lieut-Commander Gurney Braithwaite (Holderness)

The Financial Secretary, to whom we have listened with great interest, as we always do, excused himself from making a lengthy reply on the ground of lack of time. I would remind him that during the Debate last Spring on the Budget Resolutions, more than one voice, including mine, was raised on this matter, and we did not succeed in drawing any reference, or any lengthy reference, from him or from the Chancellor on this vital matter. Very little was said at the end of the Debate on the Budget Resolutions. I believe some reference was made during the Finance Bill.

Lieut.-Colonel Dower (Penrith and Cockermouth)

I must interrupt my hon. and gallant Friend to point out that on every occasion I have heard the Financial Secretary speak he has always sounded a note of caution as to the vast expenditure we are undertaking.

Lieut.-Commander Braithwaite

That is not quite the point I was making. Some of us did say that there are two ways of looking at your national balance, that in the national economy it is apparently usual for Departments to put forward their requirements, and for the Chancellor then to meet them by taxation, whereas in our private lives we have to do the opposite, and it is that which I would like to see brought to the notice of the people. We are told in the Press that we are shortly to have the pleasure of the company in this House of Sir William Beveridge. I noticed one cartoon in one of the Left Wing papers the other day depicting him as a doodle-bug arriving in our midst, shaking up the old gang. I shall be very pleased to see that gentleman among us, because I believe that when we get him here it is he who is going to get the shaking up, when some of the things he has said out of doors are submitted to the acid test of Parliamentary Debate. I believe a good deal will happen from the point of view of debunking.

If I may follow up what the Financial Secretary has said, I agree very much indeed with the remarks he made about the importance of us showing a sense of responsibility in our speeches in the country on this matter. I think there have been two developments in this war which will greatly aid us and him in his objective. The first is. I think. that when we go to this long delayed General Election, we shall find among the workers of this country an entirely different attitude towards taxation and particularly towards Income Tax, since the introduction of Pay-as-your-earn. There was a time when proposals for an increase in Income Tax were widely approved in those circles on the natural ground that they did not have to pay. Those who now propose an increase in the Income Tax will have to take account of the change.

The Chancellor has said over and over again how determined the Government are that the millions which the workers have put by as a result of the National Savings Campaign shall retain their value when the time comes for redemption. That is something which we should also stress. How unhappy a consequence it would be if, after all of us have gone on platforms urging the people to lend their money to the Government—and all parties have done it—there should result from that, through a lack of responsibility among ourselves or anybody else, a depreciation of the value of those savings, which would render them perhaps of only half their previous value. I think I heard my right hon. Friend say that it would be possible to maintain them at the same value as at the time of lending. If so, how much greater is our responsibility to see that we do not slip so far down the hill as to make our people share the fate of the unhappy people of Germany after the last war. I think that the Debate has been of value. I think that the speech of the Financial Secretary will have value if it is given publicity in the country. I am grateful to my hon. Friend the Member for Chislehurst (Sir W. Smithers) for having raised the subject.

Question put, and agreed to.

Adjourned accordingly at Twenty-seven Minutes after Five o'Clock, till Tuesday next, pursuant to the Resolution of the House this day.