HC Deb 28 November 1945 vol 416 cc1336-403

3.25 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

I beg to move, in page 13, line 48, at end, insert: (3) Subsection (1) of Section fifteen of the Finance Act, 1925 (which, as amended by subsequent enactments, provides for a reduction of tax of an amount equal to one-tenth of the amount of earned income, but not exceeding one hundred and fifty pounds) shall, as respects the year 1946 –47 and all subsequent years of assessment, have effect as if—

  1. (a)the words 'one-sixth' were substituted for the words 'one-tenth'; and
  2. (b)the words 'two hundred and fifty pounds' were substituted for the words 'one hundred and fifty pounds,'
and Subsection (2) of the said Section fifteen (which, as amended by subsequent enactments, provides, in a case where an individual or his wife is of the age of sixty-five or upwards and his total income does not exceed five hundred pounds, for a deduction of tax on an amount equal to one-tenth of his income) shall have effect as if the words 'one-sixth' were substituted for the words 'one-tenth.' After the gay badinage which the Committee enjoyed last night, I have in the cold light of day to recall hon. Members, and particularly the Chancellor of the Exchequer, to a more serious mood. Some of us on this side of the House do not take too tragic a view of the Surtax proposals of the right hon. Gentleman. Nor do we regard the Amendment moved yesterday as having done more than provide a convenient opportunity at an appropriate hour for the kind of Parliamentary frolic in which the Committee like to indulge, but this is a serious Amendment to which all of us on this side attach great importance. It seeks to restore the earned income allowance and also the allowance in cases where an individual or his wife is 65 of over, and his total income does not exceed £ 500. I am going to weary the Committee for a minute or two with a quotation from the Budget speech of the late Sir Kingsley Wood in 1941, because it had a very direct bearing upon this question.

Sir Kingsley Wood said: The present allowances from many points of view are not unduly generous, and many I know will feel that only the necessities of the time could possibly justify their reduction.… The Committee will appreciate that the primary object of these proposals is not to obtain taxation for taxation sake nor to raise revenue for the sake of revenue, but to make a considerable cut in purchasing power during the war.… He continued: There are means by which that object can be achieved without necessarily sponsoring permanent reductions in these allowances. I am proposing therefore that the extra tax which any individual will pay by reason of the reduction in personal allowances and earned income allowance be offset after the war by a credit which will then be given in his favour by the Post Office Savings Bank. In other words the individual citizen will have to pay the tax in full, but that part of the extra tax to which I have referred, while complying with our vital wartime necessities, will constitute some provision for postwar difficulties and will, I hope, form an additional fund for postwar savings for himself and his dependants." — [OFFICIAL REPORT, 7th April, 1941; Vol. 370, c. 1328 –9.] I would say to the Chancellor that that, in my view, constitutes what amounts to a definite pledge to the House of Commons. Let me quote a sentence from the Chancellor's own Budget speech. In his breezy way the right hon. Gentleman announced: This will bring back all these allowances not merely to where they stood in 1941, when the postwar credits were instituted, but to the prewar level." —[OFFICIAL REPORT, 23rd October, 1945; Vol. 414, c. 1892.] Yes, all except the most crucial and significant —the earned income allowance, the allowance for elderly people, and the allowance to children which is to be the subject of a subsequent Amendment.

Let us compare the points below which earned income will be exempt from taxation, first by the 1940 –41 personal allowance plus one-sixth earned income allowance; and secondly by the Chancellor's proposed personal allowance plus one-tenth earned income allowance. The single person under the 1940 –41 allowance will have £120; under the Chancellor's present proposals £122. The married couple with no children, under the 1940–41 allowance, £204; under the Chancellor's present proposals £200. A married couple with one child would have £264 under the 1940 –41 Budget, and £255 under the present pro- posals. A married couple with two children, £324 under the 1940 –41 Budget, and £311 under the present proposals; and a married couple with four children, £444 under the 1940 £41 Budget, and £422 under the present proposals. The proposals of my right hon. Friend will, in fact, bring into liability for Income Tax more earned incomes than did the arrangements made in the 1940 –41 Budget; and I suggest most seriously that by removal of the post-war credits, without restoring the earned income allowance, the Chancellor is guilty of what amounts, in the light of Sir Kingsley Wood's statement, to a breach of faith to the taxpayer. That at any rate is my view. The right hon. Gentleman stated on 25th October in his speech on the Budget: By my deviations from the 1941 position, however, leaving the earned income allowance for the moment as it is and giving these other additions, I have been able to clear a further 400,000 or so taxpayers from Income lax liability." — [OFFICIAL REPORT, 25th October, 1945; Vol. 414, c. 2305.] I want to ask the right hon. Gentleman who these 400,000 taxpayers are. I have certainly had the greatest difficulty in finding them. They are not among those who earn the money by which they live. There is no doubt about that.

This Amendment raises very wide issues indeed. The cold and calculated omission of the Chancellor of the Exchequer to restore the earned income allowances reveals an attitude of mind on the part of His Majesty's Government which, if persisted in, may bring this country to something near to ruin. As the Chancellor of the Exchequer said yesterday, the rewards of public service are measured in terms of status, ribbons, and —on occasions —titles. The rewards of private enterprise are measured in terms of cash.

On any computation the Government propose to leave about 80 per cent. of the industrial field of this country to private enterprise, and over 90 per cent, of our export trade. Are they creating the conditions under which private enterprise can successfully function? Are they providing any incentives to induce the people of this country to work, and work hard, which they must do if they are going to survive during the next few critical years? The answer to both these questions can only be "No." The punitive taxation imposed by the Chancellor of the Exchequer with such breezy bonhomie, added to the diet of lemonade and austerity prescribed by the President of the Board of Trade with such wry relish, is calculated to take the heart right out of industry at a very critical time.

3.30 p.m.

This country is bogged down. Anybody who has the temerity or the physical stamina to move about it can see for himself that there is a sense of futility and frustration among a great many workers. So it will continue as long as industry is crushed by a burden of taxation which is quite unjustifiable in time of peace, and no inducement is given to any class in the community to earn their living by hard work. Take, for example, a matter on which I personally have some knowledge, the case of fishermen. I could hardly make a speech without some reference to the fishermen. They have, for 20years, been unable to make ends meet. This year and last year, for the first time, they have had the chance to make a living and put something by. Have the Government under these earned income proposals, which vitally affect them, given them any inducement to go on fishing into the Autumn? They have in fact gone on fishing. They have done so under a sense of duty to the people of Europe, who are starving; but they have had no financial inducement to do so.

On what ground of principle does the Chancellor of the Exchequer justify this sudden and fantastic affection for the rentier, as against the producer? Is it the new Socialist doctrine? It is certainly not applied in Russia. We are told by the experts that we are now entering a new era, which has been aptly described by Mr. James Burnham as the era of the managerial society. They include not only the administrators of industry, but scientists, technicians, trade union leaders, professional experts of every sort —it is on these key men that the future economic well-being of this country must largely depend. They must, therefore, not merely be given a chance but also some encouragement. At present, they are being given neither.

Personally, I would like to see the principle of differentiation between earned and unearned income applied far beyond the scope of this Amendment. I would like to see it carried into the Surtax field, and beyond. The man who makes a living, active contribution to the welfare of the commun- ity should benefit as against the man who merely inherited a fortune from his grand-father. I should have thought that doctrine would have appealed to hon. Members opposite. But not at all, they prefer the man who inherits a fortune. Mean-while, this Amendment does at least help the class which stands in most need of immediate relief. If the Chancellor of the Exchequer refuses this Amendment, he had better go the whole hog and bring the President of the Board of Trade down to the House to move a new Clause exempting hair shirts from Purchase Tax; and let us go right ahead into austerity in a big way. If he refuses to accept this modest Amendment, which applies to a class of people who are largely responsible for returning hon. and right hon. Members to power, he will himself go down to history with an unenviable reputation as the champion of the rentier and the scourge of the worker.

Mr. I. J. Pitman (Bath)

It is with great pleasure that I support this Amendment. This is an issue on which I feel very strongly. It is a difficult issue to understand, and it has been made much more difficult because of a certain amount of confusion that has been brought into it. The Chancellor of the Exchequer paid me the compliment of interrupting me on one occasion to say that my arithmetic was wrong. It was arithmetic on a chart. He has had that chart for a number of days, and I think it is now clearly agreed that the arithmetic was right; and, following his statement at the end of the Second Reading Debate, it is accepted that 1,250,000, or about ten per cent., of the taxpayers have suffered through the change in the earned income allowance.

We must get this clear because there is confusion in this matter. I think it would help if we thought in terms of what one might call "out of pocket extraction." That can made up of two figures — the forced saving of postwar certificates, and the taxation proper. The postwar forced saving is not taxation in respect of that year. It is common ground that that certificate will be honoured at some time, and therefore any man who is suffering only under forced saving is not suffering taxation. Taxation is an amount in respect of a particular year. There are 1,125,000 people, all working men, who have suffered this increase of taxation which the Chancellor of the Exchequer himself admits.

I want to make clear that this worsening of the situation, this increase of taxation, begins to occur at a very low point. I should say that everybody would agree that £3 18s. 4d. is not a big income for a married man and his wife, yet that man has to pay 10s. 10d. more Income Tax under the Chancellor's Budget than he had under the Budget of the right hon. Member for the Scottish Universities (Sir J. Anderson). That is happening at a time when the £ 5,000 a year man — and the Chancellor himself is a very good instance in that category—

Mr. Sydney Silverman (Nelson and Clone)

Docs the hon. Member say that such a man would pay some 10s. more under this Budget than under the immediately preceding one, or under some previous Budget?

Mr. Pitman

Under the immediately preceding one, and the one preceding that. A married man with no children, drawing £5,000 a year —in which category I think the right hon. Gentleman is himself —is having a relief of over £219 a year.

Mr. Callaghan (Cardiff, South)

Will the hon. Gentleman tell us to which table in the financial statement he is referring?

Mr. Pitman

That is a point I am coming to later, that these tables are definitely misleading because they dc not take postwar credit into account. The Chancellor of the Exchequer has had this graph, which I have here, and which shows that the peak occurs at £ 204 a year — which is £ 3 18s. 4d. a week. A working man drawing that amount is made to pay 10s. 10d. more tax in this Budget; whereas a £5,000 a year man —I admit that this is wrong, to a small extent because I am using the right hon. Gentleman's own tables —gets a benefit of £219 12s. 6d. I am dead certain that in my own constituency there is not one elector, even among those who voted for other candidates, who would not join with all my supporters in saying most firmly that it is wrong that in a period of victory, for which we thank God, the Chancellor of the Exchequer should impose additional taxation on the small working man, while relieving taxation on the £ 5,000 a year man.

That is not the end of it. As £3 18s. 4d. is not a round figure, I have taken £4 a week as the round figure, and £1 2s. 6d. per additional child. These figures represent what the working man earns. They are not figures of a Subsection under any Beveridge or other plan at the expense of the taxpayer, but the earnings of the working man himself. I have had prepared this graph showing the way in which, at £ 2 a week per head for the father and mother, and £ 1 2s. 6d. for each child, the earnings are taxed. In blue you have the situation as under the Budget of the right hon. Member for the Scottish Universities, and in red you have the Budget proposed by this Socialist Chancellor of the Exchequer. It shows that in addition to "soaking" the small married man who has no children, the degree of "soaking" goes up, the more children that poor working man has. That is the point I want to bring home.

Mr. John R. Thomas (Dover)

Before the hon. Member puts the graph away, will he inform us what the steps represented on it involve in pounds, shillings and pence?

3.45 P.m.

Mr. Pitman

I can give it in figures from the table. I was going to give the table and the graph to the Chancellor, as I did my last graph. This line on the graph represents 1. Every one of these people will be paying that amount more than £1. Here you have £ 2, here you have £ 3 and at the top £ 4. The man with six children pays an additional tax of £ 3 9s. 3d. Again, that is not the sum total of the enormity, although this is by way of an anti-climax. Owing to the reduction from £165 to £125, at the point at which the highest rate of tax occurs, we get at a much earlier stage in a man's career the incidence of 9s as distinct from 6s. 6d. under the old tax, and for that period he is suffering a penalisation because he is paying at the higher rate earlier than he used to pay in the old days.

I would like to make this clear. In the initial Budget statement the Chancellor said quite clearly that everybody in the nation would benefit. He is perfectly right in terms of total out-of-pocket credit extraction, but if you treat, as you are treating, the post-war credit certificate as enforced saving and not taxation —it came out of Lord Keynes' plan; and I am sure nobody in the Com- mittee would wish to treat it as taxation if it is going to be paid back —then it is true from the Chancellor's own statement, that 1,250,000 working men and women in this country are being penalised. He said that first of all, on an earlier occasion in his Budget statement in this House; then he said it on the wireless, and then again in the Second Reading Debate. Worst of all, if I may say so with great respect, he said it in these tables. If I look at the £ 200 a year man, who on the chart is having no increase, here he is shown as saving 1s. 3d., plus a ½d. or a ¼d.

Mr. Callaghan

With great respect, that is the effective rate of tax on the 1940–41 charge.

Mr. Pitman

Yes, but in the other column it will be found that in the proposed charge there is a nil," so that this table purports to show that that man has saved in taxation.

Mr. Callaghan

Yes, he is saving £13.

Mr. Pitman

One shilling and three pence halfpenny.

Mr. Callaghan

I am sorry to interrupt, but the is. 3½ d. has nothing to do with it. It is the effective rate, and appears in column 5. It is obtained by dividing £ 200 into the amount of tax he pays— £ 13. Next year he is paying nothing at all. On a salary of £ 200, earned income relief is £ 20, personal allowance is £ 180, total £ 200 — tax nil.

Mr. Pitman

I am sorry. I was reading the wrong column, but it actually strengthens my case, because in this table he is shown as having a saving of £ 13, whereas in point of fact he is not saving at all. Here it is on the graph. I have made a careful study of this. These tables of the Chancellor's are based on the assumption that enforced saving is a form of taxation. It says "Income Tax" at the top, but it does not confine itself to Income Tax. It brings in this enforced saving of postwar credits. In terms of postwar credit, this man is £13 better off, but in terms of taxation he is not better off at all. He is exactly where he was with £200. If he goes up to £204 he pays 10s. 10d. more That is one of the points that has to be borne in mind. This matter has been a confusion to the whole country, and I think it is right that we should bring it out and air it in this Committee.

I ask myself why these facts are true. I quoted in this House the definition by Mr. Gladstone of a budget, that it was a policy for the determination of the welfare of the individual, the relationship of the classes and the fate of the nation. To settle the relationship of the classes and the fate of the nation on a basis by which you penalise the poor working man earning £3 18s. 4d. a week, and giving a substantial benefit to the £5,000 a year man, seems to me to be wholly wrong.

The Chancellor asked us to regard this subject as the first in a five-year plan. If this is the first step, I shudder to think what the final result will be. What is going to be the cost? Last Thursday I put down a Question to the Chancellor, asking him how many people there were in each class, and how much it would cost to give them back their earned income allowances in this respect. I have not had a reply from the Chancellor, although I gather he is going to give it. Why is there this confusion? When he brought in this Budget, did the right hon. Gentleman know that these tables and those statements of his were confusing or not? If he did not know, how can we justify paying £5,000 a year, providing a car and a further £219 a year, to a Chancellor who is unaware, when he introduces a Budget, that the effect of that Budget is to penalise the small man and benefit the rich one? I think hon. Members opposite are going to be in a dilemma. They will go on record as being determined —even when attention was called to it —to continue this increased taxation on the small working man at a period of European and world victory, or else they will have to get some Chancellor who will not get them into such a dilemma again. I was very interested the other day to hear an hon. Member opposite say we had a Chancellor who was six feet of solid democracy. It is not for us to say whether the top nine inches fall within that definition.

Mr. Norman Smith (Nottingham, South)

We have heard this Amendment justified by two hon. Members opposite, one of whom, the hon. Member for Bath (Mr. Pitman), I may describe as a high priest of orthodox finance, and the other, the hon. Member for East Aberdeen (Mr. Boothby), who, so far from being a high priest of orthodox finance, has by his speeches for many years persuaded me to regard him as unorthodox where finance is concerned. There is only one thing wrong with the Amendment. It is just a little untimely. I hope that the hon. Gentlemen will bear that in mind when the next Budget comes in April, or possibly a year later than that. It is only a matter of timing. After all, we are dealing with money, but money is a somewhat intangible sort of commodity, as many hon. Members opposite know perfectly well, and money has value only so far as it can be exchanged in shops for goods. What I admire about the Budget of my right hon. Friend the Chancellor of the Exchequer is the complete balance of the whole thing. I welcome the newly found enthusiasm of hon. Members opposite for the welfare of the working classes. It is a marvellous thing. Incidentally, the argument used by the hon. Member for East Aberdeen about the country being ruined is cancelled out by the arguments which were used from the Front Bench opposite last night. Either of the hon. Gentlemen is perfectly competent to be Chancellor of the Exchequer one day. I only regret that, at the age of 50, I probably shall not live to see it. I hope my right hon. Friend will reject this Amendment because it is untimely. My right hon. Friend has designed the whole Budget very carefully to preserve the value of the sterling. This Amendment, and others of a like character, if persisted in, will undermine our whole financial basis. That is where this intangibility of money would come in. I beg my right hon. Friend to resist this Amendment and preserve intact the structure of this Budget which, in my humble opinion, is a very fine thing.

Lieut.-Colonel Nigel Birch (Flint)

The Chancellor originally recommended his Budget on the grounds first that it was part of a five year plan, and secondly that it was an incentive Budget. An hon. Member has referred to the five year plan. I think we would be out of Order in discussing this on this Amendment, and an additional difficulty is that it does not exist, so far as we can see. I think the question of incentive is wholly relevant. My hon. Friend the Member for East Aberdeen (Mr. Boothby) has referred to the spiritual lassitude now descending on this country, and I feel that one of the reasons for that is the general feeling of the man in the street that if he does not lose his money on the swings, the Government will pick his pockets before he gets off the roundabouts. There is no doubt at all that this sleight of hand, as was clearly demonstrated by my hon. Friend the Member for Bath (Mr. Pitman), will very much encourage him to take that view. He loses his money when he gets off the roundabouts. First of all, he is told that he has not lost it and he must look in his pockets again. Then he finds that the £3 10s. 0d. that he is told he has not really lost, is only a piece of paper, and that if it had been a bottle of beer which had been taken out of his pocket it would have been a very much more serious matter.

The Chancellor's defence of this Measure was over-subtle and wrong headed, and reminded one of the early Church controversy about the year A. D. 600. What he actually said was: You may delight in believing that you own something, a piece of paper; but you only turn it into delight when you are able to spend it on something like entertainment, —the living stage, cricket and so on. He added: Some people may think only about capital investment and arrangements for the future, but the common view is that it is your income which you can spend that matters.' —[OFFICIAL REPORT, 19th November, 1945; Vol. 416, c. 145 and 147.] I wonder how true that really is. Suppose the Chancellor were to offer me or one of my hon. Friends £1,000,000 in postwar credits.

4.0 p.m.

The Chairman

So far the hon. and gallant Member has not been addressing himself to the Amendment at all. Instead he is making a Second Reading speech.

Lieut.-Colonel Birch

I apologise, Major Milner. The point I was trying to make was that this was not an incentive Budget, and that though, through the earned income allowances, people appear to be better off they are being taken in by these postwar credits. I was really making the same point as my hon. Friend behind me. To compare bottles of beer with pieces of paper like postwar credits is both wrong and extremely dangerous. I should very much like to know what the effect of such a view will be on the savings movement. That may be out of Order, but I have tried very hard to support that movement in my constituency and have spoken more than eight times to tell my constituents that bits of paper which are Government promises to pay are worth something and should be acquired, and that with them they may be able to buy two bottles of beer later instead of only one now. If one takes seriously the arguments of the Chancellor it knocks the bottom out of the argument used about the savings movement.

Mr. David Eccles (Chippenham)

I would like to say that I agree with all that my hon. Friend the Member for East Aberdeen (Mr. Boothby) has said. I know that to restore the earned income allowance would cost £100,000,000, or perhaps a little more. We have no figures in front of us of expenditure, and therefore it is not really possible for us to tell what we should be doing if we pressed for large reliefs in taxation; but even supposing it was £100,000,000 or more I think it would be too much money to put into circulation at this moment. I think the Chancellor is absolutely wrong in having preferred the kind of reliefs which he has chosen, especially, for instance, the is. off the standard rate of Income Tax. I disagree entirely with the hon. Member for South Nottingham (Mr. N. Smith) when he said that this Budget was in balance. It is precisely because I do not think the Budget is in balance that I put my name to this Amendment. The feature of the taxation proposals is that they encourage personal spending and discourage enterprise, and I object to our doing that at this moment in our history. After all, the next General Election is some way off and what the Chancellor wants now is goods and not votes, and yet he has preferred to distribute his favours on the basis of gaining popularity and not stimulating production.

I ask the Committee to consider why it is so necessary to stimulate the desire to produce. I do not think the average man or woman is born with a desire to work really hard five and a half days a week. Hundreds of years ago men worked because they were afraid of physical punishment, because they were slaves; but little by little we got rid of slavery, and then the major inducement was starvation, or fear of starvation. But now quite rightly, we get rid of that sanction by proposing to guarantee some thing like subsistence from birth to death. If both those historic sanctions to work hard have disappeared, for what motive are people going to work hard in the future? That is where this Amendment comes in because it is designed to stimulate the only motive that we know will work with the majority of human beings. I know that some hon. Members opposite believe that British men and women will work like ants, or some other industrious insect for the State, but we have absolutely no proof that this is so. I would call the attention of hon. Members to an interesting pamphlet written by the Member for East Cardiff (Mr. Marquand), who is now Parliamentary Secretary of the Department of Overseas Trade. I cannot re member the date of the pamphlet, but it was after he left the service of the Ministry of Production. In that pamphlet—

Dr. Morgan (Rochdale)

Is this in Order, Major Milner?

The Chairman

The remarks of the hon. Member seem to me to be in Order.

Mr. Eccles

In this pamphlet he pointed out that the direction of labour alone had not been sufficient during the war to induce workers to go from civilian industry to war industry, that in every case of major expansion in the munitions industry higher wages had to be offered than in the industry from which the labour was coming. That is not surprising, but it is a very interesting fact, and it shows that British men and women require financial inducements to work.

Major Cecil Poole (Lichfield)

Surely the hon. Member knows that millions of people in Civil Defence did voluntary work for the State during the war without any reward?

Mr. Eccles

I am very familiar with that, but I am now talking about the mass of producers, and the fact that we offered higher wages when they moved from civilian to war industry, and now that they are required back in textiles or in the coalmine we find that they will only go back, and quite rightly, if there is a higher wage awaiting them. In the negotiations that are going on now over wage scales in civilian industry there is not one glimmer of idealism or Socialism. Everyone is looking naturally for greater monetary rewards. I think it is true to say that human nature is very much like the donkey, in that it will only budge if it has a stick behind it or a carrot in front. We in this country will not tolerate the stick, and therefore we must adopt the carrot. and that is what this Amendment does. It is designed to improve the carrot. Hon. Members who put their names to this Amendment have in mind that we believe that a sharper distinction between earned and unearned income in the matter of taxation is necessary in the future and we are anxious about the volume of production.

Mr. Stokes (Ipswich)

Will the hon. Member bear in mind that the only way of getting money out of the employers is by means of the stick?

Mr. Eccles

Both the hon. Member and I, like many other people, work either for a salary or for the sense of pride in the business, and mostly it is a combination of both. We are anxious about the prestige and prosperity of this country, which depends on the volume of production, and we feel that the Chancellor, in not restoring the earned income allowances, has taken a wrong course. In fact, what he has chosen to do is to stimulate personal saving, not to promote enterprise, and I ask him seriously to consider whether he would not get a bigger revenue into the Treasury in the next few years if he were to accept this Amendment. This is a case of priming the pump, and I hope that he will consider it and that, if he cannot grant today what we are asking for, it will be at the top level for consideration in his next Budget.

Mr. S. Silverman

I understood the argument of the hon. Member to be that this was a good Amendment because, if we did not pass it, we should destroy the incentive of people to work. Then he put forward the other argument that the Budget was drawn in the way it has been drawn, in order to please the majority of people. Would he tell me how he would please the majority of people by destroying their incentive to work?

Mr. Eccles

What I. said was that this Amendment, instead of destroying, would encourage the desire to work. That is perfectly clear. Even the hon. Member works harder if he is getting something for doing so and the only reason I can gather why the Chancellor prefers his distribution of allowances and rebates was because —though this does not seem to be accepted on all sides of the Committee —agreater number of people would be removed from Income Tax altogether.

Mr. Silverman

The hon. Member said he went for popularity instead of increasing production.

Mr. Eccles

Nothing would be more popular than removing people from Income Tax. I am asking the Chancellor to be a little less anxious to be popular, and a little more firm in stimulating production.

Mr. Silverman

The hon. Member has not answered my question.

The Chancellor of the Exchequer (Mr.Dalton)

We have listened to a number of interesting speeches in support of this Amendment. It is true, as has been said by my hon. Friend the Member for South Nottingham (Mr. N. Smith), that not all hon. Members opposite have approached this problem from the same starting point. The hon. Member for East Aberdeen (Mr. Boothby), in moving the Amendment, assured us, referring evidently to the proceedings of last night, that this, at any rate, is a serious matter, and therefore I hope that I shall be able to treat it seriously. We have to set some limit, as the hon. Member for Chippenham (Mr. Eccles) appreciated, at this very early stage in the postwar era to the tax reductions that can be given having regard to the fact that there is still a risk, is there will continue to be for some time, of inflation. It is common ground all over the House —the view was not challenged when it was first put forward and therefore I need not elaborate the argument —that if we liberate a large amount of purchasing power through tax reductions of one sort or another, there is a danger, during the period when we arc reconverting industry, that there will be too much money and too few goods, with a resulting inflationary movement, and that, we all agree, would be most disastrous.

Mr. J. Pitman

I should not agree as regards the small man.

4.15 p.m.

Mr. Dalton

I will discuss some of the figures which the hon. Member has shown on the chart he sent to me in a moment. I want to begin with the general consideration which lies behind the policy in the Finance Bill.

The general consideration is that, on the one hand it is desirable to give as much stimulus as possible to economic activities of all sorts. I will challenge, if I may, in a moment, the suggestion of the hon. Member who moved the Amendment that there is no stimulus to private enterprise in this Finance Bill. On the other hand, we must not give too much tax reduction now or there will be a serious risk of inflationary developments which everybody would deplore, including the hon. Member who has been long and honourably associated with the Bank of England. So far as I know the Bank has always had a deflationary rather than an inflationary bias in the past, so I do not expect to find the hon. Gentleman disagreeing with me on this point.

The question, therefore, is, How much can we safely promise to let loose in terms of additional purchasing power through tax reduction, while keeping within the bounds of prudence, so far as inflationary risks are concerned? I formed the view, in the light of the discussions which I had with various advisers, that we could let loose something of the order of £ 300,000,000 a year, starting from next April. I am not now speaking of E.P.T. or of the other arrangements. I think that would be striking a balance between the inflationary risk and the need to stimulate people by tax reduction. It seemed to me —one cannot be exact in these matters —to be about the order, in respect of relief of Income Tax, which could be promised now. Of course, when we get to April, things will be clearer, and we shall see better. It may seem then that we ought to hold on to the position, or we may be able to go forward.

The Committee is discussing whether, at this point and today, we should decide in favour of a further adjustment for earned incomes. That is all we are discussing now. We are not discussing whether next April it might be right or not. None of us can tell how things will go between now and then. So far as the Finance Bill is concerned, I thought that £300,000,000 was about what we could spare in terms of Income Tax reduction. There were all sorts of alternative ways of doing it. Combinations of reliefs and remittances were possible to make up roughly that figure. It has often been suggested, and I have denied it and I deny it again; that not only did I not think about the possibility of this earned income reduction but that it did not occur to any of the officials of the Treasury or of the Inland Revenue who advised me on these matters, and that we were all taken entirely by surprise by the brainwave of the hon. Member for Bath (Mr. I. Pitman) when he announced it in the Budget Debate.

Mr. Pitman

I think the right hon. Gentleman is unfair. I do not think any body on this side has said that the question of the return of the earned income allowances was not considered by him. What we are complaining about is that now it produces some curious results in special cases, where £1,250,000

Mr. Dalton

I am coming to all that. 1 would like to get on to it. It is not the case that nobody has made this suggestion. It has been made by a number of speakers at various successive stages when this Bill has been considered. They have said, "It does not look as if the Chancellor has ever thought of this. Here's a bright new idea." I merely beg to assure the Committee that not only did I think of it myself, but that I discussed it at considerable length with my various advisers, and that it was obviously one of the starters.

Mr. Boothby

Perhaps the right hon. Gentleman will do me the justice of acknowledging that I said that this action on his part was cold and calculating.

Mr. Dalton

Yes, that is so. We are very well acquainted. We understand each other's language and states of mind. It has been suggested more than once, and I want finally to remove this suggestion, that nobody in the Treasury or the Inland Revenue, nor I nor any of my colleagues in the Cabinet, ever thought of the possibility of adjusting the earned income allowance until we came down to the House. Then up rose some hon. Gentleman representing Bath, or wherever it might be, and put this thing before us.

Mr. W. Fletcher (Bury) rose

Mr. Dalton

I think I had better get to the main part of my argument. These were the alternatives. I must apologise to the House, and particularly to those new to our procedure on the Finance Bill for having to say the same thing the third or fourth time, but that is how we work at the present in these arrangements, and repetition is quite unavoidable. As I have said on a number of previous stages in our Finance Bill discussions, it would have been easy, and it would have been the line of least mental effort and the line in some respects of least resistance, merely to have reproduced the exact scheme of allowances as they were in 1941, when the postwar credit was invented by Sir Kingsley Wood. That would have been easy, and it would have been cheap in terms of what I thought we could spend in Income Tax reliefs. To have done that would have cost about £225,000,000. I considered that as a possibility, and I definitely rejected it in favour of what I am proposing to the Committee now and which costs the Treasury a bit more than the mere reconstitution of the Kingsley Wood scheme. My proposals will cost the Treasury round about £300,000,000 in a full year.

My Budget proposals do however contain, as I have repeatedly explained and must once more say, certain reliefs which are going further than the Kingsley Wood allowances. They result in increasing certain Income Tax allowances beyond the point at which they stood in 1941. I will not again go over the very familiar and well-trodden ground, but would just refer to the personal allowance for Income Tax, both for the single person and the married person. The exemption limit, of course, will go back to where it was. In those two cases, the allowances are carried back not merely to where they were in 1941, after two years of war, but to prewar. We therefore get a larger total number of taxpayers completely relieved from Income Tax by reason of the operation of the allowances for the single person and the married person.

Suppose that I had merely put the personal allowances back to where they were before. Suppose I had gone on and readjusted the earned income allowance as is now proposed; 1 should not have been able to afford to reduce the standard rate by Is. in the. That is a matter of judgment as to which is the better and gives the greater incentive. There are a number of things in this Budget which, I shall argue, have had a stimulating effect on those who are in a fit state to be stimulated. Nothing would stimulate some people, but persons who are reasonably subject to stimulus, of whom there are great numbers, will, I think, have got a lot more stimulus and kick out of the standard rate coming down a "bob than by any playing around with the allowances. Reducing the standard rate by is. is a simple, intelligible and encouraging operation, and although it has cost a bit more, I am sure that it is worth while to make that cut.

The hon. Member for Bath speculated —although that is not the right word for anybody who is connected with the Bank of England, and perhaps I should say "surmised"—that if the thing were put to a body of electors in his constituency he would get more support for the proposition that it would have been better to restore the earned income allowance than to cut the standard rate. He evidently thinks that he would have got a lot of votes from those who voted for the other candidate at the Election. I doubt it, and after all there has not been a by-election in Bath. Here is the right hon. Member for Bournemouth (Mr. Brendan Bracken). He has recently come to us as a result of a by-election which we watched with great interest. I suppose this is the sort of point that the right hon. Member put at Bournemouth. I fancy that some of the speakers who supported the very distinguished Air Force officer who opposed the right hon. Gentleman in the Labour interest regarded this Budget of mine as rather good. I should not have been at all surprised if that argument had been used.

Mr. Brendan Bracken (Bournemouth)

I must apologise for having to disappoint the Chancellor of the Exchequer, but nobody was in the slightest bit interested in his Budget in the town which I now represent.

Mr. Dalton

Well, many thousands of voters were not much interested in the Conservative candidate. [Hon. Members: "Oh."] I am merely making the point, which was suggested to me by the physical presence of the right hon. Gentleman on the Front Bench opposite, that the hon. Member for Bath was talking about what would happen if he made a speech in Bath and the vote was taken afterwards. Perhaps the hon. Member went to Bournemouth and made a speech there. Perhaps he will tell us.

Mr. Pitman

We have not yet been told the cost of the Amendment. It may well be that the correct answer is that the right hon. Gentleman could give us both, which is what we are asking for in this Amendment.

Mr. Dalton

Asking for the fish and the chicken as well. Well, the food supplies do not run to that. We have to have a simple austerity meal at present. The point I am making is not a frivolous one, as the right hon. Gentleman would be the first to admit.

Mr. Bracken

As the right hon. Gentleman makes that point, may I say that a joke in his mouth is no laughing matter?

Mr. Dalton

We were being challenged with the statement that if a contrast could be made between what I am proposing in the Finance Bill and what the hon. Member for Bath was proposing, namely, no reduction in the standard rate but instead — [HON. MEMBERS: "No."] Yes, it was instead —of that a restoration of the earned income allowance, he thought that the majority of the electors of all parties would prefer the restoration of the earned income allowance to a reduction in the standard rate. It is a perfectly reasonable thing to say.

Mr. Osbert Peake (Leeds, North)

I think the right hon. Gentleman may be confusing the hon. Member for Bath (Mr. Pitman) with the hon. Member for Chippenham (Mr. Eccles).

Mr. Dalton

If it was so—

Mr. Pitman

That may be so. The record will be in HANSARD tomorrow and it will be quite clearly shown that I said that my electors would disapprove of a working man with a wage of £3 18s. 4d. paying 10s. 10d. extra tax in the year of victory when the Chancellor is getting £219 extra.

Mr. Dalton

The argument has been used. Perhaps it was the hon. Member for Chippenham (Mr. Eccles) who said it. Never mind. It was from the West Country somewhere, one of the few remaining places where the Conservative Party can get in. I am sorry if I got it wrong. I will deal with the argument as coming from the hon. Member for Chippenham. He worked with great distinction in the Ministry of Economic Warfare when I was there, and I am very pleased to see in this House. I merely say this, to finish this stage of the argument, that this is not a matter of theory but of practice. There have been a number of ocassions since by Budget was introduced for the electors to say whether they preferred what I propose or the alternative proposals of the Conservative Party. So far, they have been, on the whole, on my side for the most part. In Bournemouth—

Mr. Bracken

The right hon. Gentleman should not spend so much time talking about by-elections. The right hon. Gentleman is Chancellor of the Exchequer, though he does not seem to recollect it. He has been given a number of questions of a very serious character to answer, and I think he would do it much better if he replied to some of those questions instead of making so many taunts about by-elections.

4.30 p.m.

Mr. Dalton

I am very much obliged for all this guidance —it is most helpful —but if the right hon. Gentleman will sit tight I shall get on better. What I said was directly relevant to arguments from the other side which were supposed to show what public opinion thought of these proposals. I have said that £300,000,000 is as much as I think I can give in tax relief. The proposal is to give another £105,000,000 in a full year. If you add that to the relief I have given you will be running in my view a serious inflationary risk and I am not going to run that risk. The alternative would be to substitute another allowance within the £300,000,000 limit and I am not prepared to do that either, because I think the other allowances are in the aggregate better than the alternative. The other allowances, it will be remembered, involve a regrading of the standard rate so that the first £50 of taxable income is only charged at 3s. in the pound and the next £75 at only 6s. That has an indisputable effect on the effective amount of cash at the lower levels of income.

This financial statement means exactly what it says, so what will be the spendable income, or if people choose the save-able income, next year? In the case of a great variety of incomes the taxpayer is going to be better off. I repeat, because it has been challenged, that in terms of income next year everybody will be better off, including Surtax payers at the one end and the people relieved of taxes at the other end. The argument which has been applied on many occasions in previous Debates says "Yes. but you should take account of the postwar credits and if you take account of the fact that postwar credits will not be credited in fact next year you will find that some people will lose." It is perfectly true that in some cases that will be the result, as I have admitted on previous occasions, but I say that this argument is somewhat fantastic because the postwar credit is not going to be repaid next year. It will, of course, be repaid at a date to be determined in the light of the risk of inflation, the growth of production, and so on. It is a credit, but as the late Sir Kingsley Wood who invented it made abundantly clear, no date can be fixed when it will be repaid. I am not yet in a position to fix that date. I have made it clear that the date when credits can be released must depend on the general position and particularly upon the balance between production and consumption.

It would be very wrong, indeed it would actually destroy the full purchasing power of these credits, if they were released prematurely so that prices were forced up while goods were scarce. Therefore it is obvious that payment ought to be postponed for a season. It may be that they will be repaid by stages. I shall, of course, give full attention to the matter and fix a date when they can be repaid, but I must be influenced —very greatly influenced —by the consideration I have just mentioned. Next year therefore the post war credit will not be spendable. I say frankly it cannot be next year, and that being so it is artificial to treat this credit as being part of a man's income next year. The arithmetical basis of the argument is a rotten foundation.

Mr. Pitman rose

Mr. Dalton

I think that it would be better if the hon. Member —he is a bit of a jack-in-the-box —would let me get on without interruption, and I will deal with his point. Let us suppose that the foundation is not rotten and that it is reasonable to count the postwar credit which will not be credited to the person concerned next year as if it could really be properly treated as part of his income next year. Even on this basis, as I have previously told the House, out of 13,000,000 Income Tax payers not more than 1¼ million at the outside will be worse off according to the argument produced from the other side of the House, while 11¾ million will be better off, under the proposal I am making, than under the alternative proposal made from the other side of the House. It may be that 1¼ million is a high figure —when I say a high figure I mean that I have been given that figure and I accept it because I am anxious not to understate the possible number. It may be that there are not as many. I take the figure of 1¼ million in order to give the benefit of the doubt to those who have put this case. It may not be as many, and perhaps those who benefit may be more than 11¾ million.

What is the extent of this potential grievance, if I may so describe it, not using the word in any offensive sense; what is the extent of the amount to which people, even assuming the basis of the argument to be true, will be really worse off by reason of the arrangements which I have made? I will give particulars which I have had worked out. Let me take the taxpayers in groups. Every unmarried taxpayer gets a reduction in tax which is greater than the postwar credit. The unmarried taxpayers are all well in. Furthermore, the great majority of the married taxpayers are also advantaged by my arrangements as compared with the arrangements proposed from the other side. About 80 percent. of the 1¼million people to whom I have referred fall into two classes —married couples with no children and married couples with one child. Let me take first the married taxpayer with no children. There are certain bands of income, as they are called by those who work out these things, and those whose income lies between £200 and £207 and those whose income lies between £388 and £567 will be disadvantaged on the basis of calculations from the other side, which I do not admit to be valid, but which I take for the sake of clearing up the point.

But how seriously are they disadvantaged? That is the point. Within these limits the amount by which the no-longer-granted postwar credit would exceed the direct income tax reduction varies from sums of a penny or two up to a maximum of £1 18s. 8d. per year. That is the maximum grievance, if I may use that word, which could be manufactured by any married taxpayer with no children. Very few will be at that maximum level. For the great majority it is a question of shillings rather than pounds by which they are disadvantaged. Then take the other group of married couples with one child. There again there are bands of income within which this grievance may be argued to exist. Those incomes are between £256 and £272 and between £435 and £781. In their case the maximum of the disadvantage is £3 14s. 8d. a year.

Here again, in the great majority of cases, the difference will be a matter of shillings rather than of pounds. In the light of considerations such as these, it is really making very heavy weather when the Opposition marshal all their guns on this particular Amendment. In reply to the closing remarks of the hon. Member for Chippenham (Mr. Eccles) let me say that, of course, it is not ruled out that an adjustment of the earned income relief may be both possible and desirable, if not next April, then the April after that. One must never be so foolish as to commit oneself —and I do not commit myself —but I should think that it is by no means out of the question that before this Parliament comes to an end, it will be obviously sensible to make this particular adjustment. But it cannot be made now in this Budget.

4.45 p.m.

In conclusion, I would like to take up the remarks that were made by the hon. Member for East Aberdeen, who said that the Budget contained no inducements either to fishermen or to anybody else, and that no person associated with private business would be stimulated or stirred to do better by any of these tax remissions. I thought that was an extraordinary missing of the point. Are none of those people, not even the fishermen, appreciative of the cut in Income Tax from 10s. to 9s. in the £? Of course they are. Are none of them appreciative of the cut in the lower levels of taxable income? Would the business world have preferred me to have left the Excess Profits Tax where it was instead of reducing it to 60 percent.? Would the distinguished industrialists who have contributed to these Debates— [Hon. Members: "Order."] In what way am I out of Order?

Colonel Oliver Stanley (Bristol, West)

Surely the right hon. Gentleman must speak from a stationary position and not walk about.

Mr. Dalton

The thing is as easily said in one position as in another, and the thing 1 was saying was that these Debates have been adorned by a number of most valuable speeches from hon. Members on both sides who have had great industrial experience. Not one of them has said that he would prefer the Excess Profits Tax to stay at 100 per cent. On the contrary, all of them have expressed appreciation of the fact that it is coming down to 60 percent., and they have gone on to argue points of importance, but still of detail, about terminal losses, and so on, to which we shall come in due course. But how absurd it is to say that the Budget gives no stimulus to private enterprise. I am doing my best for private enterprise. I am still hoping for something from some bits of private enterprise. I am trying to meet the desires of the motor manufacturers, I am taking guidance from their communications. It does not advance the cause of this very modest and itself quite good Amendment —except that, as my hon. Friend the Member for South Nottingham (Mr. H. Smith) said, it is a bit untimely —to say that unless this Amendment is accepted, we are doing nothing in the Finance Bill for private enterprise. We are doing a great deal, and all the more enterprising people associated with private enterprise appreciate that that is so, and are going ahead on that basis. For the reasons I have stated, I cannot accept the Amendment now. It would disturb the balance of the Budget and it would mean that we would run a great inflationary risk. I cannot give what is asked for in the Amendment in addition to the reliefs I have given already, and I am not prepared to substitute what is asked for in the Amendment for any of the reliefs I have given. This Parliament will proceed on its course, and as I have said, it is by no means out of the question that something of this sort might be done before we next dissolve and go to the country. I ask the Committee to reject the Amendment.

Mr. Osbert Peake (Leeds, North)

The right hon. Gentleman the Chancellor of the Exchequer complained that some hon. Members on this side of the Committee had made rather heavy weather of the Amendment, but since the right hon. Gentleman has taken some 50 minutes to reply, it is clear that all the heavy weather is not on this side. I am very sorry to keep some hon. Members who are eager to go in to the Division Lobby waiting a few minutes, but I promise I will make up with brevity for the rather lengthy exposition which we have had from the Chancellor.

Mr. Kirkwood (Dumbarton Burghs)

The right hon. Gentleman's generosity is beyond human understanding.

Mr. Peake

Hon. Members on this side are most anxious to make some progress with the Finance Bill,' which contains several very good features. I think 1 should begin by saying that the Chancellor has saved us a great deal of trouble by giving a frank and full statement of the effect of the failure to restore the earned income allowances. He admitted that, regarding the increased amounts of tax which fell to be paid as a result of the reduction of these allowances in 1940 not so much as Income Tax paid but as compulsory savings, 1,250,000,000 tax payers will be worse off as a result of this Budget. That saves a great deal of rather difficult and complicated argument upon particular cases and particular figures. I want to take up one point in the speech of the hon. Member for South Nottingham (Mr. N. Smith) and the speech of the Chancellor. Both of them seemed to suggest that this matter could be dealt with, if not now, then in the Budget of next April. I advise the Chancellor to consult his officials at the Board of Inland Revenue. I believe it to be a fact that it is quite impossible to alter the Income Tax law in an April Budget since P.A.Y.E. was introduced. The tax tables have to be printed and circulated to employers before the first pay week of the tax year which begins on 1st April. It is quite impossible, in a Budget introduced about 23rd April, to make an amendment of this character which would mean reprinting the whole of the tax tables. Therefore, let the Committee be quite clear that there is no question of putting this matter right in the April Budget. It will have to be done, if it is done at all, for the tax year 1947–48. I think that is generally agreed.

Mr. Callaghan

It would be quite possible to do what was done on this occa- sion, that is to say, to give a different coupon value to the code numbers.

Mr. Peake

I am sure that the right hon. Gentleman the Chancellor of the Exchequer would have interrupted me if I was wrong on this matter. The hon. Member for South Cardiff (Mr. Callaghan) says that ex post facto you can alter the tax tables in some way. The P.A.Y.E. system is already sufficiently difficult, and if it is to be made quite incomprehensible by ex post facto alterations, the whole system will break down completely.

The issue before the Committee is, I think, a very simple one. I do not intend to argue the merits of a restoration of the earned income allowances to their former level. I shall not argue, as the right hon. Gentleman did, whether the electors would have preferred one form of benefit or another form of benefit from the present Budget. The simple issue is this. It was clearly understood, and in fact, a pledge was given at the time Sir Kingsley Wood introduced his second Budget in 1940, as Chancellor in a Government of which the right hon. Gentleman was a Member, that postwar credits would be granted in respect of the diminution of income suffered by people from whom the earned income allowances were being withdrawn. Therefore, quite regardless of any question of merit or expediency, it is wrong of the Chancellor, in the Clause that we are now discussing, to discontinue postwar credits as from April of next year and to do nothing whatever to restore the earned income allowances to their former level. The fact is that not only the people who are in receipt of earned incomes and who received these allowances, but also those who received the special allowance given to elderly people under the Finance Act, 1925, will be put in a position in which they can charge the Chancellor of the Exchequer and the Government with a clear breach of pledge. That is the 'situation which the Government have to face, and it is upon that issue that my hon. Friends and I will go into the Division Lobby.

Lieut.-Colonel Sir Walter Smiles (Down)

It seems to be a very unpopular thing today to defend those people with small incomes who have to work very hard for what they get. I was brought up in a Liberal household. I have not heard the Liberals support this Amendment. I remember that a great many books on the subject of thrift, hard work and character were extremely popular 50 or 60 years ago. Young men were told that they must not depend upon the Government, or upon anybody else, but must depend upon their own hard work, intelligence and ability, and that when they went out into the world, at anything from 16 to 20 years of age, they must look after themselves.

The Chancellor spoke about the 1,250,000 people who are affected by this Amendment. Let us analyse who are those people. Just as the non-commissioned officers are supposed to be the backbone of the British Army, I contend that these 1,250,000 people who will suffer if the Chancellor does not accept this Amendment are probably the backbone of our country. They are the people, the young married couples with no children or with

Division No. 30.] AYES. [5.0 p.m.
Aitken, Hon. M. Fox, Sqn.-Ldr. Sir G. Marlowe, A. A. H.
Allen, Lt.-Col. Sir W. (Armagh) Fraser, Maj. H. C. P. (Stone) Marples, Capt. A. E.
Amory, Lt.-Col. D. H. Fraser, Lt.-Col. Sir I. (Lonsdale) Marshall, Comdr. D. (Bodmin)
Astor, Hon. M. Gage, Lt.-Col. C. Maude, J. C.
Baldwin, A. E. Galbraith, Comdr. T. D. Mellor, Sir J.
Barlow, Sir J. George, Maj. Rt.: Hn. G. Lloyd (P'br'ke) Molson, A. H. E.
Baxter, A. B. Glossop, C. W. H. Moore, Lt.-Col. Sir T.
Beamish, Maj. T. V. H. Glyn, Sir R. Morris, Hopkin (Carmarthen)
Beattie, F. (Catheart) Gomme-Duncan, Col. A. G. Morrison, Maj. J. G. (Salisbury)
Bennett, Sir P. Gridley, Sir A. Morrison, Rt. Hon. W. S. (Cirencester)
Birch, Lt.-Col. Nigel Grimston, R. V. Mott-Radclyffe, Maj. C. E.
Boles, Lt.-Col. D. C. (Wells) Harvey, Air-Cmdr. A. V. Nevan-Spence, Major Sir B.
Boothby, R. Haughton, Maj. S. G. Nicholson, G.
Bossom, A. C. Headlam, Lt.-Col. Rt. Hon. Sir C. Noble, Comdr. A. H. P.
Bower, N. Hinchingbrooke, Viscount Nutting, Anthony
Boyd-Carpenter, Maj. J. A. Hollis, Sqn.-Ldr. M. C. Osborne, C.
Bracken, Rt. Hon. Brendan Holmes, Sir J. Stanley Peake, Rt. Hon. O.
Braithwaite, Lt.-Comdr. J. G. Hope, Lt.-Col. Lord J. Peto, Brig. C. H. M.
Bromley-Davenport, Lt.-Col. W. Howard, Hon. A. Pickthorn, K.
Buchan-Hepburn, P. G. T. Hudson, Rt. Hon. R. S. (Southport) Pitman, I. J.
Bullock, Capt. M. Hulbert, Wing-Comdr. N. J. Ponsonby, Col. C. E.
Butcher, H. W. Hurd, A. Poole, Col. O. B. S. (Oswestry)
Carson, E. Hutchison, L.t-Cdr. Clark(Edin'gh,W.) Prescott, Capt. W. R. S.
Challen, Flt.-Lieut. C. Hutchison, Lt.-Col. J. R. (G'gow, C.) Prica-White, Lt.-Col. D.
Channon, H. Jarvis, Sir J. Prior-Palmer, Brig. O.
Churchill, Rt. Hon. W. S. Jeffreys, General Sir G. Raikes, H. V.
Clarke, Col. R. S. Joynson-Hicks, Lt.-Cmdr. Hon. L. W. Ramsay, Maj. S.
Cole, T. L. Keeling, E. H. Reid, Rt. Hon. J. S. C. (Hillhead)
Cooper-Key, Maj. E. M. Kingsmill, Lt.-Col. W. H. Roberts, Maj. P. G. (Ecclesall)
Corbett, Lieut-Col. U (Ludlow) Lambert, G. Robinson, Wing-Comdr Roland
Crookshank, Capt. Rt. Hon. H. F. C. Lancaster, Col. C. G. Ropner, Col. L.
Crosthwaite.Eyre, Col. O. E. Law, Rt. Hon. R. K. Salter, Rt. Hon. Sir J. A.
Crowder, Capt. J. F. E. Legge-Bourke, Maj. E. A. H. Sanderson, Sir F.
Cuthbert, W. N. Linstead, H. N. Scott, Lord W.
Darling, Sir W. Y. Lipson, D. L. Shaphard, S. (Newark)
Davidson, Viscountess Little, Dr. J. Smiles, Lt.-Col. Sir W.
Digby, Maj. S. Wingfield Lloyd, Maj. Guy (Renfrew, E.) Smith, E. P. (Ashford)
Dodds-Parker, Col. A. D. Lloyd, Brig. J. S. B. (Wirral) Smithers, Sir W.
Donner, Sqp.-Ldr. P. W. Lucas, Major Sir J. Snadden, W. M.
Dower, Lt.-Col. A. V. G. (Penrith) Lucas-Tooth, Sir H. Spearman, A. C. M.
Drayson, Capt. G. B. MacAndrew, Col. Sir C. Spence, Maj. H. R.
Duthie, W. S. McCallum, Maj. D. Stanley, Col. Rt. Hon. O.
Eccles, D. M. Mackeson, Lt.-Col. H. R. Stewart, J. Henderson (Fife, E.)
Eden, Rt. Hon. A. McKie, J. H. (Galloway) Stoddart-Scott, Lt.-Col. M.
Erroll, Col. F. J. Maclean, Brig. F. H. R. (Lancaster) Stuart, Rt. Hon. J.
Fleming, Sqn.-Ldr. E. L. MacLeod, Capt. J. Studholme, H. G.
Fletcher, W. (Bury) Macpherson, Maj. N. (Dumfries) Sutcliffe, H.
Foster, J. G. (Northwich) Manningham-Buller, R. E. Taylor, C. S. (Eastbourne)

one child, who are just starting in life. The man will be working five and a half days a week and bringing home to his wife his wages. He and those like him will suffer if the Chancellor does not accept this Amendment. It is all very well for the Chancellor to tell us what he has done in the matter of Excess Profits Tax and in taking 1s. off the Income Tax, but those people are not so much concerned with those things; they are concerned with the amount of wages they will take home to their wives on Friday nights. If the Chancellor does not accept this Amendment, it will be a bad day for this country, and it will be a bad day for the country when it is generally accepted in the House of Commons that thrift and hard work are not going to be properly rewarded.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 162; Nose, 284.

Teeling, Flt.-Lieut. W. Vane, W. M. T. White, Maj. J. B. (Canterbury)
Thomson, Sir D. (Aberdeen, S.) Wakefield, Sir W W Williams, C. (Torquay)
Thorneycroft, G. E. P. Walker-Smith, Lt.-Col. D. Williams, Lt.-Cdr. G. W. (T'nbr'ge)
Thornton-Kemsley, Col. C. N. Ward, Hon. G. R. Young, Maj. Sir A. S. L. (Partick)
Thorpe, Lt.-Col. R. A. F. Watt, Sir G. S. Harvie
Touche, G. C. Wheatley, Lt.-Col. M. J. TELLERS FOR THE AYES:
Turton, R. H. White, Sir D. (Fareham) Mr. Drewe and Commander Agnew.
Adams, W. T. (Hammersmith, South) Edwards, A. (Middlesbrough, E.) Maclean, N. (Govan)
Adamson, Mrs. J. L. Edwards, Rt. Hon. Sir C. (Bedwellty) McLeavy, F.
Allen, A. C. (Bosforth) Edwards, John (Blackburn) MacMillan, M. K.
Allen, Scholefield (Crewe) Edwards, N. (Caerphilly) Mainwaring, W. H.
Alpass, J. H. Evans, E, (Lowestoft) Mann, Mrs. J.
Anderson, A. (Motherwell) Evans, S. N. (Wednesbury) Manning, C. (Camberwell, N.)
Attewell, H. C. Fairhurst, F. Manning, Mrs. L. (Epping)
Awbery, S. S. Farthing, W. J. Marshall, F. (Brightside)
Ayles, W. H. Foot, M. M. Mathers, G.
Ayrton Gould, Mrs. B. Forman, J. C. Maxton, J.
Bacon, Miss A. Freeman, Maj. J. (Watford) Mayhew, Maj. C. P.
Baird, Capt. J. Freeman, P. (Newport) Medland, H. M.
Balfour, A. Gaitskell, H. T. N. Messer, F.
Barstow, P. G. Gallacher, W. Middleton, Mrs. L.
Bartlett, V. Ganley, Mrs. C. S. Mitchison, Maj. G. R.
Barton, C. George, Lady M. Lloyd (Anglesey) Monslow, W.
Battley, J. R. Gibbins, J. Montague, F.
Bechervaise, A. E. Gibson, C. W. Morgan, Dr. H. B.
Belcher, J. W. Gilzean, A. Morris, Lt.-Col. H. (Sheffield, C.)
Benson, G. Glanville, J. E. (Consett) Morris, P. (Swansea, W.)
Berry, H. Gooch, E. G. Mort, D. L.
Beswick, Flt-Lieut. F. Goodrich, H. E. Moyle, A.
Bevan, Rt. Hon. A. (Ebbw Vale) Grenfell, D. R. Murray, J. D.
Binns, J. Grey, C. F. Naylor, T. E.
Blackburn, A. R. Grierson, E. Neal, H. (Claycross)
Blenkinsop, Capt. A. Griffiths, D. (Rother Valley) Nichol, Mrs. M. E. (Bradford, N.)
Boardman, H. Griffiths, Rt. Hon. J. (Llanelly) Nicholls, H. R. (Stratford)
Bottomley, A. G. Gunter, Capt. R. J. Noel-Baker, Capt. F. E. (Brentford)
Bowden, Flg.-Offr. H. W. Guy, W. H. Noel-Buxton, Lady
Bowles, F. G. (Nuneaton) Hail, Rt. Hon. G. H. (Aberdare) O'Brien, T.
Braddock, Mrs. E. M. (L'p'l, Exch'ge) Hall, W. G. (Colne Valley) Oldfield, W. H.
Braddock, T. (Mitcham) Hamilton, Lieut.-Col. R. Orbach, M.
Brook, D. (Halifax) Hannan, W. (Maryhill) Paget, R. T.
Brooks, T. J. (Rothwell) Hardy, E. A. Paling, Rt. Hon. Wilfred (Wentworth)
Brown, George (Belper) Hastings, Dr. Somerville Paling, Will T. (Dewsbury)
Brown, T. J. (Ince) Haworth, J. Palmer, A. M. F.
Bruce, Maj. D. W. T. Henderson, J. (Ardwick) Pargiter, G. A.
Burden, T. W. Hewitson, Captain M. Parkin, Flt.-Lieut. B. T.
Burke, W. A. Hicks, G. Paton, Mrs. F. (Rushcliffe)
Butler, H. W. (Hackney, S.) Hobson, C. R. Paton, J. (Norwich)
Byers, Lt.-Col. F. Holman, P. Peart, Capt. T. F.
Callaghan, James. House, G Perrins, W.
Champion, A. J. Hoy, J. Piratin, P.
Chater D. Hudson, J. H. (Ealing, W.) Platts-Mills, J. F. F.
Chetwynd, Capt. G. R. Hughes, Hector (Aberdeen, N.) Poole, Major C. C. (Lichfield
Clitherow, R. Hynd, H. (Hackney, C.) Porter, G. (Leeds)
Cluse, W. S. Hynd, J. B. (Attercliffe) Pritt, D. N.
Cobb, F. A. Isaacs, Rt. Hon. G. A. Proctor, W. T.
Cocks, F. S. Janner, B. Pryde, D. J.
Collick, P. Collindridge, F. Jeger, Dr. S. W. (St. Pancras, S E.) Pursey, Cmdr. H.
Collins, V. J. John, W. Ranger, J.
Colman, Miss G. M. Jones, A. C. (Shipley) Rankin, J.
Cook, T. F. Jones, J. H. (Bolton) Rees-Williams, Lt.-Col. D. R.
Cooper, Wing-Comdr. G. Jones, Maj. P, Asterley (Hitchin) Reid, T. (Swindon)
Corbet, Mrs. F. K. (Camb'well, N.W.) Keenan, W. Rhodes, H.
Corlett, Dr. J. Kenyon, C. Richards, R.
Cove, W. G. Key, C. W. Ridealgh, Mrs. M.
Crossman, R. H. S. King, E. M. Roberts, Sqn.-Ldr. E. O. (Merioneth)
Daggar, G. Kinghorn, Sqn,-Ldr. E. Roberts, G. O. (Caernarvonshire)
Daines, P. Kirby, B. V. Robertson, J. J. (Berwick)
Dalton, Rt. Hon. H. Kirkwood, D. Rogers, G. H. R.
Davies, A. E. (Burslem) Lang, G. Royle, C.
Davies, Clement (Montgomery) Lee, F. (Hulme) Sargood, R.
Davies, Harold (Leek) Lee, Miss J. (Cannock) Scott-Elliot, W.
Davies, Haydn (St. Pancras, S.W.) Leonard, W. Sharp, Lt.-Col. G. M.
Deer, G Levy, B. W. Shawcross. Sir H. (St. Helens)
Diamond, J. Lewis, A. W. J. (Upton) Shurmer, P.
Dobbie, W. Lewis, J. (Bolton) Silverman, S. S. (Nelson)
Douglas, F. C. R. Logan, D. G. Simmons, C. J.
Driberg, T. E. N. Longden, F. Skeffington, A. M.
Dumpleton, C. W. Lyne, A. W. Skinnard, F. W.
Durbin, E. F. M. McAdam, W. Smith, Norman (Nottingham, S.)
Dye, S. McAllister, G. Smith, S. H. (Hull, S.W.)
McGhee, H. G. Smith, T. (Normanton)
Edelman, M. Mack, J. D. Solley, L. J.
Sorensen, R. W. Thorneycroft, H. Whittaker, J. E.
Soskice, Maj. Sir F. Thurtle, E. Wigg, G. E. C.
Sparks, J. A. Tiffany, S. Wilkins, W. A.
Stamford, W. Tolley, L. Willey, F. T. (Sunderland)
Steele, T. Turner-Samuels, M. Willey, O. G. (Cleveland)
Stephen, C. Ungoed-Thomas, Maj. L. Williams, D. J. (Neath)
Stewart, Capt. M. (Fulham) Usborne, Henry Williams, Rt. Hon. E. J. (Ogmore)
Stokes, R. R. Vernon, Maj. W. F. Williams, J. L. (Kelvingrove)
Strachey, J. Viant, S. P. Williams, Rt. Hon. T. (Don Valley)
Stross, Dr. B. Wadsworlh, G. Williamson, T.
Stubbs, A. E. Walkden, E. Willis, E.
Swingler, Capt. S. Walker, G. H. Wills, Mrs. E. A.
Symonds, Maj. A. L. Wallace, G. D. (Chislehurst) Wise, Major F. J.
Taylor, H. B. (Mansfield) Wallace, H. W. (Wallhamstow, E.) Woodburn, A.
Taylor, R. J. (Morpeth) Watson, W. M. Wyatt, Maj. W.
Taylor, Dr. S. (Barnet) Webb, M. (Bradford, C.) Young, Sir R. (Newton)
Thomas, Ivor (Keighley) Weitzman, D. Younger, Maj. Hon. K. G.
Thomas, I. O. (Wrekin) Wells, P. L. (Faversbam) Zilliacus, K.
Thomas, George (Cardiff) Wells, Maj. W. T. (Walsall)
Thomson, Rt. Hon. G. R. (E'b'gh, E.) Whiteley, Rt. Hon. W. TELLERS FOR THE NOES:
Mr. Pearson nd Captain Snow.
Squadron-Leader Hollis (Devizes)

I beg to move, in page 13, line 48, at end, insert: (3) Section twenty-one o the Finance Act, 1920 (which, as amended by subsequent enactments, provides for a deduction of fifty pounds in respect of each child), shall have effect, as respects the year 1946 –47 and subsequent years, as if the words' sixty pounds' were substituted for the words 'fifty pounds' in Subsections (1) and (3) thereof. I commend this Amendment with some confidence to the kind attention of the Chancellor of the Exchequer and all hon. Members. The basic facts of the case are simple. The children's allowance of £60 was reduced to £50 at the outbreak of the war by the second Finance Act of 1939, and, therefore, it is logical that, with the conclusion of the war and the restoration of other allowances, we should bring forward the matter of the restoration of this allowance. I suggest that £50 in 1939 would by no means represent £50 today, with the increase of income and the increase in prices. On that ground, there is a strong case for the adjustment. Hon. Members who have followed the exchanges on the last Amendment will agree that the whole question of postwar credits is a case for readjustment. I will not take hon. Members again through the argument advanced by my hon. Friends, but, while appreciating the value of the argument of my hon. Friend the Member for Bath (Mr. Pitman), they will doubtless have noticed that the Chancellor's argument was that there were, indeed, some people with large families who were not doing well out of this Budget, but that that was not of great importance, because there were very few of them. If that be a valid argument against the last Amendment, it is surely a far more valid argument in favour of this Amendment. Therefore with some confidence I hope the Chancellor will accept this Amendment.

5.15 p.m.

The true object of all sensible policy should be, in the first place, to do justice to those people who have large families and, in the second place, to do everything we possibly can to increase their number. Therefore, if the number of them be few, that is a national calamity which should be faced by remedial legislation. The only argument against the restoration of the children's allowances in the Income Tax is that children's allowances are to be paid in general. We welcome that, but really they do not meet this case at all because they are to be paid to quite a different class of people. The classes of people who will gain out of these children's allowances are either people who have very small incomes or people who have very large families. I make no complaint, that is quite right, but very early up the scale of ordinary Income Taxpayers, unless a person has an enormous family, he will not gain out of the children's allowances, because he will have to pay out with the right hand as much as or more than he receives back in his pocket in the allowances.

What is the class for which I am pleading in this Amendment? I make no bones about it; I am pleading for the people who will primarily benefit from this Amendment, people with £600 or £700 or £800 a year, a class of people who have rendered services to this country in every respect incomparably out of proportion to their number, and a class of people who deserve special attention 'because, unfor- tunately, it is the class in which the birth-rate has fallen most steeply. In fact, I stand on this matter in precisely the same position as the hon. Member for Penryn and Falmouth (Mr. King) in a very able and courageous speech which he delivered from the other side of the House in the education Debate some three weeks ago. I stand here claiming that it will be a national calamity to every class of the community if that class should be driven out of existence. In making that claim I have very considerable support behind me. Only the other day I was reading a passage on what would happen if that class were driven out of existence. I read: Nor is it certain that we shall replace him by a more admirable type.…The leader of the future seems not unlikely to be the remorseless one-idea'd man, who governs us by hewing his way to his goal. He has no time for the open mind. He takes clemency for weakness and difference of opinion for crime. He has a horror of a various civilization and he means by freedom only a stronger kind of chain. Where we would be peaceful, he calls us to the affirmation of power. For the music of idle dreams he offers us the relentless hum of giant machines. The majesty of the forest is, for him, the volume of a timber supply, the rush of waters in the river, the source of electric power. The gentleman scourged us with whips. We must beware lest our new masters drive us to our toil for sport. Those wise words were from no less a man than Professor Laski. This class, as I say, has rendered service to the community incomparably out of proportion to their numbers —schoolmasters' children, doctors' children, clergymen's children. Has not the Chancellor a kind place in his heart for clergymen's children? What would have been the position of the Chancellor if such a Budget as this had existed in the time of his father? The position would be that he would never have been born —nor would I have been born. We could have paired in non-existence —but how boring that would be. That is the first basis of my case. I plead frankly a compassionate case for a class which both under this Budget, and indeed under the development of events over the last generation, has been more cruelly pressed upon than any class in the community and, at the same time, has continued to render at least as valuable services as any class of the community.

But it is not purely a compassionate case, nor indeed, a purely financial case that I am pleading in pressing this Amendment. We cannot consider parents as a class to be treated with compassion, and thrown sops where it is possible, in the way that we might throw sops to motor car users or cinema operators or, indeed, even to the Chancellor's publican friends I wish to speak without disrespect of the Chancellor's publican friends because, if only from internal evidence, 1 have reason to believe he is a constituent of mine. I have to spare him as a constituent, but I have by no means given up hope of the publicans. What happens, in my experience, is that publicans keep their mouths shut but, on the day, they give their support to a different cause from that of their most generous customer. Therefore it is not merely as a compassionate case that I plead for this Amendment.

There is a very much deeper ground on which I plead this case. Any question, such as I am raising at the moment, which touches the birth rate and the population question, touches the deepest and most important and most vital of all the problems of our national life, a problem which we must solve, for, if we fail to solve it, we shall smash into ruins all those dreams of a better England —whether they be held on this side of the House or on that side. Our most complacent and most optimistic ancestors thought there was a steady and easy progress going on, and that things got better and better, and we could look forward to a more rosy future. In these days we have discovered that the true lesson of history is a much more terrible and terrifying one. The great lesson of the past has shown us again and again that a nation attains to a condition of high living and to a certain luxury, and then the birth rate falls and the countries of lower standards come in and exclude it. They, in their turn, become prosperous, become infecund, and are conquered.

That has been the lesson of history again and again repeated, and every wise and patriotic person in this country is determined that that shall not be the fate of the English-speaking people in this twentieth century. But, if he is as wise as he is patriotic, he is very well aware that if we avoid that disaster we shall be the first civilisation in human history that has avoided that disaster. Therefore, of all problems, the most important is the problem of the birth rate. It is a very deep and a very mysterious problem. I am far from pretending that it is a mere matter of finance. I am far from pretending that you can raise the birth rate merely by lowering taxation, and that you are likely to raise it by such a comparatively modest proposal as that which I am arguing at the moment, but there is a financial effect in this Amendment and, almost more important, there is a psychological effect. There is no chance of a country solving this problem unless this Government and every other Government, in every piece of legislation that is introduced which has a bearing on that problem, show that they put it at the forefront, show that they consider the problem of increasing parentage the most important and the most pressing of all the problems of the day. Therefore it is both as the compassionate case of this particularly deserving class that I urge this Amendment and, above all, as a psychological rallying cry to the nation that the Chancellor should show that, when allowances are to be restored, the allowance to parents should be the first, and not the last of the allowances to be restored.

May I put the case in a slightly more financial fashion? On this, as on many things, it is rather difficult to come to an exact estimate of what would be the cost of this concession for which we are asking. There are in what I call round numbers —which it is now the fashion to call global numbers —some 10,000,000 children in this country. The concession we are asking is a raising of the allowance by £10. Income Tax is to be at 9s. in the £ that is to say, £4 10s. out of £10, and on that basis the maximum cost of £4 10s. if it were to come from the whole 10,000,000 would be £45,000,000. Of course the cost would be nothing like that, since a very large proportion of children are children of parents who are not Income Taxpayers at all, or who are paying very little Income Tax. I am told, though I do not hold any authority for the figures, and shall be glad to be corrected, that the cost would, be somewhere about £15000,000.

Let me put the point like this—which is the way I really approach it: Modern economists have generally reached the conclusion that it. is a mistake to think it a financial necessity to balance the Budget in each particular year and, as we know, the Chancellor has adopted that conclusion of theirs and has received general support in adopting it from every side of the Committee. The Chancellor has been asked — and has not yet been in a position to give a definite answer as far as I know —over what period of years does he consider that the Budget should be balanced? I do not want to press him on that point, nor do I suggest that the Budget necessarily should only be balanced over a period of a lifetime, but I suggest that in any financial consideration the period that should be in everybody's mind is a period of a lifetime. If we look at it in the light of a particular year, children are, of course, an expense — £15,000,000 or whatever it may be — and, for the moment, a dead loss. But once it be granted that the population of a country is in danger of falling below an optimum figure —and as unfortunately there is no doubt in this country that we are in that danger —then, in the long run, and over a lifetime, it is not a detraction from the wealth of a country that there should be more children, but an addition to the wealth of the country that there should be more children. Then £15,000,000 or whatever it may be, should be looked upon not as an expenditure but as an investment. The Chancellor is to give us a National Investment Board. I suggest to him, with all confidence, that there could be no more important and no more worthy object in which to make its first investment than in the children of this country.

5.30 p.m.

Mr. Lipson (Cheltenham)

I am very glad to support the Amendment moved by my hon. and gallant Friend the Member for Devizes (Squadron - Leader Hollis) so eloquently, and in a speech of great wit and humour. He has shown, and I agree with him, that this Amendment goes not only to the very roots of our national greatness, but also of our national survival. In asking the Chancellor to accept it, I join with my hon. and gallant Friend in, appealing not only to his sympathy and his kind heart, but also to his statesmanship and his vision of the future. Naturally, when the Chancellor of the Exchequer is asked to make any remission of his Budget proposals, there are three questions that he may very properly ask himself. First, is this concession in itself a good and a desirable one; secondly, how much will it cost; and thirdly, can I afford it? With regard to the first question, I would reply by asking what class of the community is more worthy of help and encouragement in a Budget than the parents of children? The Chancellor has a very real interest in this matter. These children will be the taxpayers of the future, and, naturally, the Chancellor is concerned with making conditions easy not only for himself, but for those who will succeed him in his high office. Supposing the parents of this country were to decide to go on strike and have no more children, what would happen to future Chancellors when they had to produce their Budgets? Therefore, I appeal to my right hon. Friend to consider the very difficult financial position in which many parents find themselves these days.

There is no class of the community which pays more, comparatively, in indirect taxation than the married man with children. If he pays more in indirect taxation, as he undoubtedly does, he has a very strong claim for some remission in direct taxation at the earliest possible moment. Who are these parents for whom this concession is demanded? They are the parents who have children of school and university age. Children's allowances are only paid as long as the children arc in receipt of some kind of education. These parents are the men who came under the National Service Acts during the war, for the most part, the men who have helped to make victory possible and, therefore, we ought to want to make conditions for them in the future as easy as possible. The overwhelming majority of these men, undoubtedly, have had their careers interrupted by the war and, therefore, the Chancellor ought to be sympathetic and to restore to them the allowance for their children which existed before the war.

What is it going to cost the Chancellor to make this concession? It is very difficult for anybody who is not associated with the Treasury to be able to make an exact calculation. My hon. and gallant Friend the Member for Devizes estimated the cost of the concession at £15,000,000. If he is wrong, perhaps the Chancellor will tell us exactly what the amount is. The Chancellor ought not to look at this matter purely from the point of view of the actual amount of money involved. There is a much bigger issue behind it. I do not think he need fear that, by making this concession, he will be adding to any danger of inflation or that it will make is impossible for him to balance his Budget. Fortunately for him, the rate of expenditure. which, apparently, he is prepared to accept for the months that lie ahead has left him a very wide margin, so that he can easily find —I hope with reasonable economy and without sacrificing any of the interests of the nation —the savings which would enable him to meet a remission of this amount.

To come back to the three questions: Is the concession in itself a good and a desirable one? How much will it cost? and Can I afford it?; I think the answers to all of them are such that the Chancellor might very easily make this concession. Though I sit on this side of the House, I speak as one who does not count himself in opposition to the Government but rather regards himself as a benevolent neutral, with emphasis on the word "benevolent," and therefore, if I make an appeal to the right hon. Gentleman, he will understand that it is not with any desire to add to his difficulties or with any desire to show opposition to the Government, but because I believe that such a concession would not only do him credit but would be of benefit to the nation.

Mr. N. Smith

I wonder if it is anything more than a coincidence that both these Amendments this afternoon should have been moved from the benches opposite by hon. Members who in the past have had the courage and intelligence to identify themselves with opinions which must be as unacceptable to their own party as many of my opinions are to my party. I congratulate the hon. and gallant Gentleman the Member for Devizes (Squadron-Leader Hollis) on the really admirable speech with which he introduced his case and in which he made a very good case, of most of which' I entirely approve.

I would go further. I would like to abolish taxation altogether, but to discuss that would be out of Order and you, Mr. Deputy-Chairman, would not allow me to advocate it. The hon. and gallant Member for Devizes told us many things. He told us about the appalling boredom of non-existence, to which I can personally testify, because I cannot remember anything before about 1890. He told us also that publicans keep their mouths shut, which struck me as being an extraordin- ary thing, seeing that, as I can testify personally, publicans get their living because we, their customers, do not keep our mouths shut. He also told us that, if the Amendment were carried, it would benefit a class of society whose incomes are of the order of £700 or £800 a year. I do not sneer at that class of society. I agree with him that it is a worthy class of society, but I would point out, with great respect, that the Chancellor has really given that class of society a handsome '' hand-out '' in the Budget. He has handed them a reduction of is., in the standard rate, plus the benefit represented by improving the allowances. The hon. and benevolent Member for Cheltenham (Mr. Lipson), in a very charming speech, wanted the Committee to put three tests to the Amendment. I submit, with very great respect, that he did not put the fourth, the question whether the Amendment is timely, which I suggest it is not: for the reason that the shops are not yet full of goods. The hon. and gallant Member for Devizes said that we were very near the time when family allowances are to be paid out. I suggest that the Amendment should be introduced at a little later date, by which time the shops will be full of goods. When they are full of goods, I am in favour of handing out as much purchasing power as will enable all the people who want goods to get goods, and I am sure that when that time comes the hon. and gallant Member for Devizes and I will be found advocating the same objective. But this is not the time, and I hope that my right hon. Friend the Chancellor will resist the Amendment.

Mr. Dalton

Perhaps it will be convenient for the Committee if I say at this stage that I am most sympathetic to this proposal on the broad form of taking care both of the children of the future and of the parents of those children who should be given such parental advantages as could be woven into our fiscal arrangement. But I cannot accept the Amendment today. I have already spoken on the broad subject of the total relief it would be wise to give if we are to avoid inflation. It would indeed be a poor service to the children and to those families if we were to allow inflation to set in.

I have already given the Committee my view, that we have gone to the limit for the moment in the body of Income Tax reliefs which are already included in the Bill. The hon. and gallant Member who represents me in this House made a very attractive speech and I disagree with nothing that he said, except on the single point of whether this is the moment to do what he proposes. In my view, it is not yet the moment. Obviously, it is one of the things one would like to do as soon as possible. It would cost £17,500,000, and that would take me beyond my safety limit, as I explained to the Committee, and moreover, the allowance at £50 is not included in the Post-War Credits discussion we have just had, because it was set at £50 in 1940. This is no argument of any new principle; it stands on another footing. It was reduced to £50 in 1940. Moreover, as my hon. Friend the Member for South Nottingham (Mr. N. Smith) has pointed out, the family allowances scheme, which is, I am very glad to say, based on the Bill which was passed in the last Parliament, is coming into effect, as far as payments out are concerned, in August. I am very proud to think, if I still succeed in holding my office until then, it will fall to me as Chancellor to provide for the finance of that family allowances scheme. I attach very great importance indeed to it and it indicates the road along which it is most undeniable we must proceed to travel, but at the moment I cannot accept the Amendment, though I am very anxious to do in effect what has been suggested by the hon. and gallant Gentleman as time and circumstances permit.

Lieut.-Colonel Sir William Allen (Armagh)

It is not often that representatives from Northern Ireland have an opportunity of taking part in a Debate in this House, but we do have an opportunity occasionally when the Finance Bill is introduced. I would remind the Committee that we pay the same taxes in Northern Ireland as are paid over here. I saw from a report of the speech of our Chancellor of the Exchequer of Northern Ireland the other day that we are contributing £35,000,000 to the Exchequer for this year, and we have been doing that for some years. I congratulate the hon. and gallant Gentleman the Member for Devizes (Squadron-Leader Hollis) upon his excellent and very well reasoned speech, and I am sorry that the Chancellor cannot see his way to accept the Amendment.

I remember that when the Irish Question was being debated my predecessor in the representation of Armagh while speaking in the House he was asked, "What are your arguments against Home Rule?" He turned to the Irish Nationalists who were sitting on this side of the House, and said, "I have 83 arguments against it." I have 23 arguments in favour of this Amendment but I am not going to go through 23 different headings in Debate. I want to tell the Chancellor of an individual in one of the constituencies in Northern Ireland who deserves well of the Chancellor and of this country. He is a man who has been married three times, and is the father of 23 children. I do not know if that will really be an argument. I may have been rash in mentioning it. The Chancellor might think that, if there were many families of that size, he would be more inclined to reduce the allowance from £50 to £40 than to increase it from £50 to £60. But surely such a man deserves well of his country. We have an opportunity now of doing something for the family of that kind of man. I appreciate the argument of the Chancellor that this is not quite the time to do anything, but let us see what can be done in the near future.

I feel that it is my duty to try to do what can be done for these men and their wives and children, who deserve so well of their country, and who have brought into the world those who will be responsible for future Governments. The children of today will be the men and women of tomorrow. I think that the Chancellor of the Exchequer and those responsible for the distribution of funds ought to consider this matter very seriously. I know the big heartedness of the Chancellor of the Exchequer, and I know what he has been doing, or trying to do, under very difficult circumstances; but here is a case, I think, which requires special consideration and attention.

545 p.m.

Mr. Gallacher (Fife, West)

I was concerned about the hon. and gallant Member who moved this Amendment posing as one who is interested in the population, and the future of the country. I am very much interested in the population, and in this financial statement. I know that this country and this civilisation will not go the way of past civilisations. In past civilisations, the ruling class became voluptuous, immoral, and decadent, and there was no air for the enslaved masses of the people. The masses of the people of this country are finding a way out, and will build up the population and save the country. That is why we have a Labour Chancellor of the Exchequer, and that is why the hon. and gallant Member is sitting among the decadents.

Captain Crookshank (Gainsborough)

We have had an interesting little discussion and perhaps the Committee will want to pass on to the next problem that a waits us. We listened with great interest to the sympathetic words of the Chancellor of the Exchequer although I fear that in the end he will come down on the side of not doing anything. That is often the hard lot of Chancellors of the Exchequer, but it seems to us that this is one of the allowances that should have priority treatment. The right hon. Gentleman reminded us that a cut was made at the beginning of the war, and we feel that such cuts should have a high place in the list of those to be restored. The status quo before the war is a sort of guiding line from which to start the allocation of allowances. The fact that this relief is estimated to cost only £17,000,000 does not seem to us, on these Benches, to be an adequate reason for not restoring it. I hope that we speak with a sense of responsibility about the general financial outlook, and that on some future occasion, we may have the benefit of further speeches from the hon. Member for South Nottingham (Mr. N. Smith), who told us that his objective was to abolish all taxes. That is a great idea; but, if it is adopted, I wonder how the State is going to be run?

In the meanwhile, without wishing the right hon. Gentleman to go as far as that on this occasion, it seems to us that the case for this relief was cogently argued, by the hon. Members behind me and the benevolent neutral below the Gangway, and received affirmation from all. The right hon. Gentleman made the point, which we have in mind, as he has, of the risk of reliefs having an inflationary tendency, and the hon. Member for South Nottingham said that we ought to wait until the shops are full. With those two propositions one has a lot of sympathy — although, if we are to wait until all the shops are full, under the present Administration, and the rate which they are turn- ing over production, we may have to wait a terribly long time. On the other hand, the arrangements which we are discussing in this Bill do not begin to take effect until April; and is it too much to hope that there may be such improvement by April that the difference of £17,000,000, one way or the other will not be really inflationary.

I dare say that the right hon. Gentleman feels quite firm about this and will not look at it again; but there is the Report stage to come, and he might weigh up the arguments meantime and find out the prospects of beginning to fill the shops. It might be possible for him to make some concessions then. From the way he put the case I do not, how-

ever, think that is very likely to happen, but we feel this allowance ought to be restored and, we propose to test the feeling of the Committee on it.

Mr. Vernon Bartlett (Bridgwater)

I support the Amendment, and I am sorry that the right hon. Gentleman has not been able to give way. The main argument, I think, was that we should be getting family allowances next year. I hope that we shall. I would remind him, however, that when we get family allowances they will not apply to the first child.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 161; Noes, 230.

Adams, W. T. (Hammersmith, South) Granville, E. (Eye) Pritt, D. N.
Allen, A. C. (Bosworth) Grenfell, D. R. Proctor, W. T.
Allen, Scholefield (Crewe) Grierson, E. Pryde, D. J.
Anderson, A. (Motherwell) Guest, Dr. L. Haden Ranger, J.
Anderson, F. (Whitshaven) Gunter, Capt. R. J. Rankin, J.
Attewell, H. C. Guy, W. H. Reeves, J.
Awbery, S. S. Hall, W. G. (Colne Valley) Rhodes, H.
Ayrton Gould, Mrs. B. Hamilton, Lieut.-Col. R. Richards, R.
Baird, Capt. J. Hannan, W. (Maryhill) Ridealgh, Mrs. M.
Barstow, P. G. Haworth, J. Robens, A.
Barton, C. Hewitson, Captain M. Roberts, G. O. (Caernarvonshire)
Battley, J. R. Hicks, G. Robertson, J. J. (Berwick)
Bechervaise, A. E. Hobson, C. R. Royle, C.
Belcher, J. W House, G. Sargood, R.
Benson, G. Hoy, J. Scott-Elliot, W.
Barry, H. Hughes, Hector (Aberdeen, N.) Sharp, Lt.-Col. G. M.
Bevan, Rt. Hon. A. (Ebbw Vale) Hynd, J. B. (Attercliffe) Shawcross, Sir H. (St. Helens)
Blackburn, A. R. Jeger, Dr. S. W. (St. Pancras, S.E.) Shurmer, P.
Blenkjnsop, Capt. A. Jones, J. H. (Bolton) Silverman, S. S. (Nelson)
Bottomley, A. G. Jones, Maj. P. Asterley (Hilchin) Simmons, C. J.
Bowden, Flg.-Offr. H. W. Keenan, W. Skeffington, A. M.
Bowles, F. G. (Nuneaton) Kenyon, C. Skinnard, F. W.
Braddock, Mrs. E. M. (L'p'l, Exch'ge) Key, C. W. Smith, Ellis (Stoke)
Braddock, T. (Mitcham) Kirby, B. V. Smith, Norman (Nottingham, S.)
Brooks, T. J. (Rothwell) Kirkwood, D. Smith, S. H. (Hull, S.W.)
Brown, George (Belper) Lang, G. Smith, T. (Normanton)
Burden, T. W. Lee, Miss J. (Cannock) Solley, L. J.
Butler, H. W. (Hackney, S.) Levy, B. W. Sorensen, R. W.
Byers, Lt.-Col. F. Lewis, A. W. J. (Upton) Soskice, Maj. Sir F.
Callaghan, James. Logan, D. G. Sparks, J. A.
Champion, A. J. Longden, F. Stamford, W.
Chater, D. Lyne, A. W. Steele, T.
Cheiwynd, Capt. G. R. McAdam, W. Stephen, C.
Clitherow, R. McAllister, G. Stokes, R. R.
Cluse, W. S. McGhee, H. G. Strachey, J.
Cobb, F. A. McGovern, J. Stubbs, A. E.
Collick, P. Mack, J. D. Symonds, Maj. A. L.
Collindridge, F. McKay, J. (Wallsend) Taylor, R. J. (Morpeth)
Collins, V. J. Maclean, N. (Govan) Taylor, Dr. S. (Barnet)
Colman, Miss G. M. McLeavy, F. Thomas, John R. (Dover)
Cook, T. F. MacMillan, M. K. Thomson, Rt. Hon. G. R. (E'b'gh, E.)
Corbet, Mrs. F. K. (Camb'well, N.W.) Mainwaring, W. H. Thorneycroft, H.
Corvedalc, Viscount Mann, Mrs. J. Thurtle, E.
Cove, W. G. Manning, C. (Camberwell, N.) Tiffany, S.
Daggar, G. Manning, Mrs. L. (Epping) Tolley, L.
Dairies, P. Marshall, F. (Brightside) Turner-Samuels, M.
Dalton, Rt. Hon. H. Maxton, J. Ungoed-Thomas, Maj. L.
Davies, Edward (Burslem) Mayhew, Maj. C. P. Vernon, Maj. W. F.
Davies, Clement (Montgomery) Mikardo, Ian Wadsworth, G.
Davies, Harold (Leek) Mitchison, Maj. G. R. Walkden, E.
Davies. Haydn (St. Pancras, S.W.) Monslow, W. Wallace, G. D. (Chislehurst)
Deer, G. Montague, F. Wallace, H. W. (Walthamstow, E.)
Diamond, J. Morgan, Dr. H. B. Watson, W. M.
Dobbie, W. Morris, P. (Swansea, W.) Webb, M. (Bradford, C.)
Douglas, F. C. R. Morris, Hopkin (Carmarthen) Weitzman, D.
Driberg, T. E. N. Moyle, A. Wells, P. L. (Faversham)
Dumpleton, C. W. Nally, W. Wells, Maj. W. T. (Walsall)
Durbin, E. F. M. Naylor, T. E. White, H, (Derbyshire, N.E.)
Dye, S. Neal, H. (Claycross) Whiteley, Rt. Hon. W.
Edwards, Rt. Hon. Sir C. (Bedwellty) Nichol, Mrs. M. E. (Bradford, N.) Whittaker, J. E.
Edwards, John (Blackburn). Nicholls, H. R. (Stratford) Wilcock, Group-Capt. C. A. B.
Edwards, N. (Caerphilly) Noel-Baker, Capt. F. E. (Brentford) Wilkins, W. A.
Evans, S. N. (Wadnelbury) Noel-Buxton, Lady Willey, O. G. (Cleveland)
Fairhurst, F. O'Brien, T. Williams, D. J. (Neath)
Farthing, W. J. Oldfield, W. H. Williams, J. L. (Kelvingrove)
Foot, In. M. Orbach, M. Williams, Rt. Hon. T. (Don Valley)
Forman, J. C. Paget, R. T. Willis, E.
Foster, W. (Wigan) Paling, Will T. (Dewsbury) Wills, Mrs. E. A.
Fraser, T. (Hamilton) Palmer, A. M. F. Wise, Major F. J.
Freeman, P. (Newport) Pargiter, G. A. Wyalt, Maj. W.
Gaitskell, H. T N. Parkin, Fit.-Lieut. B. T. Yates, V. F.
Gallacher, W. Paton, Mrs. F. (Rushcliffe) Young, Sir R. (Newton)
George, Lady M. Lloyd (Anglesey) Paton, J. (Norwich) Younger, Maj. Hon. K. G.
Gibbins, J. Pearson, A. Zilliacus, K.
Gibson, C. W. Peart, Capt. T. F.
Gilzean, A. Perrins, W. TELLERS FOR THE NOES:
Glanville, J. E. (Consett) Piratin, P. Mr. J. Henderson and Captain Snow.
Poole, Major C. C. (Liehfield)
Colonel Oliver Stanley

I beg to move, in page 14, line 16, leave out Subsection (4).

The effect of this Amendment would be to restore in those cases in which they were previously enjoyed — if for the moment I may use that term —postwar credits. This is an alternative way of dealing with the situation which has already been discussed on a previous Amendment. I do not want again to cover the ground which has been so fully and ably traversed in the Debate on the Amendment to restore the earned income allowance. Despite the appeals of hon. Members on this side, that Amendment was rejected by the Chancellor. The only other way in which it would be possible to maintain, under the new provisions of this Budget, the relative position as between the unearned and earned income of the Income Tax payer which existed last year under the new provisions of this Budget, would be for the Chancellor now to accept this Amendment. A great deal of his argument in opposition to the previous Amendment was that if he were to accept it, if he were to disburse the £105,000,000 which the acceptance of that Amendment would entail, there would be great risk of inflation. He told us that he regarded a reduction in taxation in the neighbourhood of £300,000,000 as the maximum which would be safe without incurring that risk. None of us here have any means of checking the accuracy of that figure, or of seeing whether we agree with that statement. For reasons which we well understand we are provided with no estimate of expenditure or revenue for next year. We cannot tell what changes would or would not unbalance the Budget. We can do no more than accept the ipse dixit of the Chancellor. All of us, therefore, are naturally impressed by that particular argument.

No one in any part of the Committee would be so frivolous or so irresponsible as willingly to run the risk of what might well be an ultimate tragedy for this country, and we only hope that, if and when the Chancellor uses the same argument against expenditure which might be dear to the hearts of some hon. Members opposite, they will be as impressed with the argument then, as they are now, and as ready to vote for the argument then as they have been today. The great merit of this Amendment and the solution it offers is that the question of inflation cannot be introduced into the Debate. We are not now proposing that the injustice, as we believe, to the earned income payers of Income Tax should be remedied by im- mediate cash payments, or rather by immediate remissions of taxation. We are suggesting that it should be remedied as it was last year and the year before, by the issue of postwar credits, which would be repayable as and when the Chancellor of the day believed that they might be paid without the danger of inflation being incurred.

Therefore, I hope that the Chancellor will find himself much more ready to accept this Amendment than he was to accept the previous one. In any case if he intends to refuse it he will have to think out some new argument. One of his arguments, judging at any rate from a previous speech he has made, may be that even if he were to give this relief, no one would say "Thank you" to him for it. I do not believe that is the case. I do not believe that the people of this country are so financially irresponsible that they attach no importance to having in the background a promise to pay by His Majesty's Government, which even if it cannot be encashed at the moment does represent a door open to them in the future. The right hon. Gentleman advanced the extraordinary theory that one does not enjoy money until one spends it. He might just as well say that he does not enjoy office until he leaves it.

Mr. Attewell (Harborough)

That is long deferred.

Colonel Stanley

Some of us might wish he should have the chance as soon as possible. I cannot understand an argument of that kind being seriously advanced. It might just as well be said that if a man had a net income of £300 a year and of that saved voluntarily —whereas these postwar credits are compulsory savings —£30, his real income was only £270 a year, and that if next year his salary were cut down to £270 he would be no worse off than before because he was still able to enjoy, that is to spend, exactly the same amount he spent the year before. That seems to me an argument which would be a foolish argument in anybody's mouth, but which, in the mouth of the Chancellor who wishes to appeal for savings, is dangerous in the extreme. The Chancellor has got himself into a difficulty. The previous Amendment, we realise, might have been dangerous on the inflationary ground. By this Amendment we are giving him the opportunity of redeeming the pledge made by the Chancellor of the Exchequer of a Government of which the present Chancellor was a member, and secondly of remedying an injustice which is undoubtedly imposed upon one class, and one class only, in this Budget, and of being able to do that without any possibility of incurring the risk of inflation which all of us will assist him in avoiding.

Sir Hugh Lucas-Tooth (Hendon, South)

On a point of Order. There are other Amendments, including one in my name on page 237 of the Amendment paper, which I understand are not to be called. Should we foe in Order in discussing those Amendments together with this one?

The Temporary Chairman (Colonel Sir Charles MacAndrew)

The next Amendment to that now being discussed has not been selected, nor have the two new Clauses in the name of the hon. and gallant Member for South Hendon (Sir H. Lucas-Tooth).

Sir H. Lucas-Tooth

Do I understand that I shall be in Order in raising the matter on this Amendment?

The Temporary Chairman

Yes, they are covered by this discussion.

Mr. N. Smith

The right hon. Gentleman the Member for West Bristol (Colonel Stanley) moved this Amendment with the persuasiveness that is characteristic of him, and I have no doubt that the Committee was very much impressed by his argument. I entirely agree with him that there is no truth whatever in the allegation that people do not enjoy money which is in their possession only prospectively. When postwar credits began, I was working in a big newspaper office in London, and it was quite a common thing at the time to see members of the staff, particularly members of the mechanical staff, solemnly adding up the sums of money to which they would subsequently be entitled, and even planning what they would do with the money when they got it. I have even known people who derived immense pleasure from thinking out what they would do when they got their prospective winnings from the Irish "Sweep."

That is all very well, but for the moment and in the immediate future we have to think of other things. I am opposed to this Amendment, and I hope the Chancellor will oppose it, because I am pretty certain that the Labour Government will last a good many years, and I do not want to pile up future difficulties for it. If effect were given to this Amendment the result would be to increase the dead weight of debt, not by much compared with the total, but it is a process which has been going on for years.' I cannot understand the almost unvarying levity with which hon. and right hon. Gentleman, not only in the party opposite, contemplate the steady augmentation of the deadweight of the National Debt. It means that in the near future one of two things will happen, if these postwar credits are continued. There is not a Member who would dissent from the view that the eventual and not unduly delayed restoration of these postwar credits is an absolute pledge. One day they have to be made good, people must have their money, and we are all in favour of that, and it should go forth from this Committee that when the money is paid it must have real value.

There are only two ways in which it can be repaid, and I am assuming it is going to be repaid during the lifetime of the present Parliament so that those printers and others may have the satisfaction of having their credits transmuted into reality. You can only do it in one of two ways, either by adding to the Debt, which is going to remain a burden on posterity —and we have enough of that already —or having recourse to deflationary measures. I personally shrink with horror from paying postwar credits out of current taxation, therefore I hope the Committee will not accept this Amendment because it is piling up trouble for the immediate future and I do not want that because I am convinced that for the next "10, 15 or 20 years there will be a Labour Government.

6.15 p.m.

Mr. Dalton

It may be convenient if I indicate the Government's view. We cannot accept the Amendment which proposes to add £105,000,000 to the National Debt. It would only make up the figure we have been discussing on an earlier Amendment to the taxpayers who can be alleged —although I do not admit the argument —to be worse off, but also to those 11,750,000 taxpayers who even on the basis of arguments from the other side of the Committee will be better off as a result of my proposals.

Mr. J. Pitman

I would call the attention of the Committee to the provisions of the following Amendment on the Paper, one which has not been selected, because it does not fall within the limitation which the Chancellor has just made. In other words, it would be a very small addition indeed to the National Debt in terms of postwar credits. As between the two Amendments put down, I was in this dilemma that one Amendment is for restoring of the postwar credits in full, which would at any rate have made this document correct —this particular White Paper which has misled so many people. The second Amendment, the one which merely restored the 10s. 10d. to the small working man drawing £3 18s. 4d., would make the Chancellor's statement on the wireless correct. I was hoping to have both, or at least one, accepted by the Chancellor.

Mr. Paget (Northampton)

The manner in which this Amendment was moved seems to suggest that hon. Members have forgotten what postwar credits were about. Postwar credits arose from the scheme of Lord Keynes and the basis of that scheme was that when, after the war, you got a period of deflation, it would be convenient to have some "dope" to put in and thereby create the new spending power which would then be required. It seemed natural to the people then in control that if there were more money to be spent, it should be spent by people on the highest income levels.

Colonel Stanley

The then Government included the right hon. Gentleman the Chancellor of the Exchequer.

Mr. Paget

That is as it may be, but it was a predominantly Conservative Government. It was a Government with a Conservative Chancellor and was putting forward a predominantly Conservative policy and, of course, they said "When there is additional money to be spent the rich shall spend it and not the poor." Now you have a Labour Government and when the community requires more spending power, we on this side of the Committee believe that that spending power will be more effective, and more useful in the hands of the poor and that the effect which was contemplated by these postwar credits, can be achieved by giving more money to the poor instead of more money to the rich. In my submission that is the simple answer to this Amendment.

Lt.-Commander Gurney Braithwaite (Holderness)

The Chancellor of the Exchequer, in perfectly firm language, has declared his resistance to this Amendment but I cannot think he has been altogether fortunate in the support he has received from hon. Members behind him or in the reasons they have adduced. If I may first refer to the brief and extremely vulnerable intervention of the hon. Member for Northampton (Mr. Paget), he rested his argument upon the fact that this postwar-credit system was a Coalition measure; that the fact that the present Chancellor was in the Government was neither here nor there and. that it was designed to assist the rich in postwar days. The hon. Member is perfectly entitled to put that point of view but I cannot congratulate him on the research he has made into the history of this matter. The hon. Member was not with us in the last Parliament. Had he been, he would have seen the spectacle of these Benches occupied by his political friends not one of whom raised any query or objection against the postwar credits system when introduced by the late Sir Kingsley Wood. Surely that was the time for those arguments to have been put forward, even in the hon. Member's absence there were others capable of putting forward these arguments to the House as then constituted.

Nor is he alone in that point of view. There was another, that is the Financial Secretary to the Treasury. He the other evening disclosed to the House —we are getting a good deal of confession just lately from right hon. and hon. Members opposite —that he never liked the postwar credit system. We had to make the best of it, he said, but he himself never liked it. I spent a good deal of time in the Library trying to find some record of the Financial Secretary's dislike but I cannot find it in any Debate, and I cannot find it in any Division List. It is true I was absent a good deal during the war years, but I have tried to rectify that by research. If I am doing the right hon. Gentleman an injustice, he will intervene but I am unable to discover that at any time he or any of the Socialist Party objected to the postwar credits scheme.

I am accustomed to getting a daily shock from the hon. Member for South Nottingham (Mr. N. Smith). He has again intervened. It causes me pain and grief nearly every time he rises, and as for the Chancellor of the Exchequer of the Exchequer, who staggered out just now for some refreshment, I cannot think that a cup of tea will be adequate to sustain him after what has been said. What has the hon. Member for South Nottingham said? Not long ago he disclosed his Stock Exchange activities during the years of the Conservative Government when he was able to make a good deal of money free of Income Tax. Today he has gone a step further. I never expected to hear a supporter of the first majority Socialist Government compare national finances with the Irish Sweepstake. He has just done so. He told us that in a Department during the war computations were made of what they would do with their postwar credits when the war was over and it was just as people did in considering their prospects in the Irish Sweep-stake. I hope I am not doing him an injustice, but if I am the Official Report will disclose it. At any rate I am not giving that impression to my hon. Friends whose sense of audition is equal to that of the hon. Member for Nelson and Colne (Mr. S. Silverman).

Mr. S. Silverman indicated dissent.

Lieut.-Commander Braithwaite

The hon. Member for Northampton said that nobody ever envisaged this system continuing into peace time. I did not challenge that remark, but I feel the Committee has this point to consider. When in fact do we reach that stage in our journey which can be described as "postwar"?

Mr. Paget

I do not want to interrupt, but I said nothing of the sort.

Lieut.-Commander Braithwaite

In that case the hon. Member was more irrelevant than I gave him credit for. I thought he was addressing himself to that issue. May I then rest on my own argument? I think we ought to consider when we reach the stage known as postwar. At the end of the 1914–18 conflict the emergency was declared at an end by an Order in Council, I believe in the month of September,1921, although I have not had the opportunity of looking it up. Have we now reached a stage of development where we have passed into the postwar era? The Chancellor seems to think so, the Finan- cial Secretary seems to think so. If so it opens up an entirely new range of conjecture. The hon. Member for South Nottingham, disappointed in the deferment of the drawing of his postwar credit, can take heart of grace. We ought now to have the war damage payments if we have reached the postwar years. The Government is not going to collect any more War Damage contributions but they are not being paid out. When in fact do we reach the postwar period? I had not intended to detain the Committee — the Committee has been detained by the obfuscations of the hon. Member for South Nottingham and his colleagues behind him, and when one hears rank heresy in the presence of a Socialist Government anxious to impress the country with its rectitude all an hon. Member of the Opposition can do is to lend what support he can to the Chancellor.

Mr. N. Smith

Is the hon. and gallant Member suggesting that it is rank heresy to say, as I say, that these postwar credits are in fact a serious obligation which has to be honoured?

Lieut.-Commander Braithwaite

I made no criticism of that part of his speech. The rank heresy I referred to—and I am glad I brought him to his feet again—

Mr. Evelyn Walkden (Doncaster)

I know the hon. and gallant Member is.

Lieut.-Commander Braithwaite

I know there is a frown on the genial countenance of the Parliamentary Secretary to the Treasury (Mr. Whiteley).

Mr. Walkden

The hon. and gallant Member was not noticing the schoolmaster.

6.30 p.m.

Lieut.-Commander Braithwaite

No one knows better than the hon. Member for Doncaster (Mr. Walkden) that those who sit on this side of the Committee have certain responsibilities. He would be the last to deny that for one moment. [An Hon. Member: "When are you going to start?"] I should not advise any sort of interruption otherwise it will not be a question of when I am going to start but of when I am going to finish The Finance Bill is exempted business and I am quite capable of making my observations even more tedious. In the meantime I propose to exercise my duty as a Private Member to oppose the Government's views. We have not yet reached that stage in the totalitarian State where we may not do so. Now perhaps I may make further attempts to bring my remarks to a conclusion. I am anxious to hear from the Financial Secretary first when his conversion on this matter took place, namely, that postwar credits are undesirable. It obviously was not when Sir Kingsley Wood first introduced them. There is no record of that nor in 1942 and 1943, nor again in 1944.Did he see the light on the road to Damascus on taking office? Was that the occasion? Perhaps he will follow the example of some of his colleagues and engage in a little self confession. In the meantime, is it the Government's view that we are now in the postwar era and is that the reason why credits should be discontinued, and if so they should take the logical course of paying out other commitments such as war damage?

Lieut.-Colonel Nigel Birch

It seems to be the general view that postwar credits are a thoroughly bad thing. But it seems to me that Lord Keynes' idea was a thoroughly good one —the idea that in an inflationary period forced saving was of great value to the country and that in a planned economy resulting purchasing power would be released during times of deflation. We hope there will be a time when there will be a few goods available. That is the time to release purchasing power. All Amendments put forward have been rejected by the Chancellor of the Exchequer on the ground that they are inflationary. The whole point about this Amendment is that it is not inflationary. The present situation is just as inflationary as it was during the war. There is therefore strong reason for continuing the system of postwar credits now and releasing the resulting purchasing power at some more suitable time. As far as the remarks of the hon. Member for Northampton (Mr. Paget) are concerned, not every one entitled to postwar credits is a rich man. I think plenty of us get letters from our constituents, especially old people, asking when the credits are going to be cashed. They are not the rich people of this country. I think the hon. Member's point is really a ridiculous one.

Mr. Pickthorn (Cambridge University)

This is not one of the subjects on which I feel at all sure that I am better informed or more perspicacious than other Members of the Committee.[Interruption.] I thought I should get that from hon. Members opposite. They are of course equally capable on all subjects. I am not sure whether I can put my question quite exactly, but I will do my best. I understand that the Treasury representatives, and particularly the Financial Secretary, have been asked how it came about that the wireless statement and the supplementary financial statement both ignored any possible minus effect that there might be by this treatment of postwar credits, whereas now it is admitted that there are some 1,250,000 persons who may be deleteriously affected. The question I put is how that difference came about; whether consideration was in the mind of Ministers and their advisers or whether it was not and whether the two statements were not unpardonably misleading if that consideration was in the Ministerial mind, but not alluded to even by way of footnote or in any way whatever.

Sir H. Lucas-Tooth

I support the Amendment. I gather from the Chancellor that he is not prepared to accept that Amendment, and if in the circumstances it goes to a Division, it is unlikely we shall be successful. I should like, therefore, to call attention to the new Clause which stands on the Order Paper in my name. [Option to retain 1945 –46 rate of tax.] The purpose of this Clause is quite simple. It is to give any taxpayer who feels that he is not getting as good a deal under these proposals, as he is under the present dispensation, the option of continuing next year under the present tax law. I submit that there are none of the objections to that Clause which have been advanced from various parts of the Committee this afternoon to others proposed. It is clear what the Chancellor of the Exchequer's attitude is to this question. It is summed up in what he said in the Debate on the Second Reading of this Bill. He then said:

Everybody will be better off, in varying degrees, next year than this, in terms of their incomes; and that is what most people think about. Some people may think only about capital investment, and arrangements for the future but the common view is that it is your income which you can spend that matters." — [OFFICIAL REPORT, 19th November, 1945; Vol. 416, c. 147.] That is the common sense of the proposal which I am now advocating. Those are the words of the Chancellor giving the express attitude of the Government quite clearly. I submit that they show extraordinary cynicism. The effect of the words is this —that as long as you give the taxpayer an increase of immediate spending power he must be happy. That is what those words say and that is the defence of the Government to this proposal. It is not only an impossibly cynical attitude to adopt but it is a most extraordinary attitude on the part of the Chancellor who expects saving to continue at the present level to stop inflation and who requires those savings if he is to give the benefits which are proposed in this Budget. It seems to' me that that attitude is utterly destructive of responsibility. How do you expect people to save, when you have told them that the only thing that matters is what they have to spend? The Chancellor has admitted that taking postwar credits info account, 1,250,000 people will be worse off and it is of course the worthiest section of that 1,250,000 who will be worse off in their pockets. It is that part who are regularly saving money, but who will now have to dip into their pockets and take from their spendable income and make good the savings which have been taken away from them by this Subsection. The purpose of the new Clause which I suggest the Government might accept, is merely to give those people who are adversely affected in this way the right to say "We do not like your proposals and we ask that we may continue as we have in the past year."

Major Legge-Bourke (Isle of Ely)

There are one or two points which have arisen as the result of statements which the right hon. Gentleman the Chancellor of the Exchequer has made. In his Budget speech he said: The Income Tax postwar credit dates from 1941. Part of each year's Income Tax has been treated in effect as a forced loan from the taxpayer —a very brutal operation." — [OFFICIAL REPORT, 23rd October, 1945; Vol. 41.). c. 1891.] A little later, on the Second Reading of the Finance Bill, he said this: What actually happened was that he —that is the taxpayer — received on a certain date a piece: of paper saying that His Majesty's Government undertook to pay him at a date to be fixed hereafter a sum of money!'' Later he said: To be given a piece of paper backed by His Majesty's Government to be payable at a date not yet decided is undoubtedly a benefit." —[OFFICIAL REPORT, 19th November, 1945; Vol. 416, c. 145.] Now which does the right hon. Gentleman mean? It cannot be an intolerable burden and a benefit at the same time. It does seem to me that the whole disposition of this credit business should be made absolutely clear to the country, for I am sure myself that it is not clear now. During the General Election a great many of my constituents asked me whether postwar credits were worth anything more than the paper on which they are written. I did my best to reassure them that they were worth more than that, because I remembered, rather bitterly, that I had three or four tucked away myself. I do feel that it is only right that the Committee should expect from the Chancellor a statement fully clarifying what he does mean by postwar credits. Perhaps he would give attention to this illustration which does bear on the point I am making.

Let us suppose —if I may be hypothetical for a moment —that a man whom we shall call "A" pays 15 per cent. interest on a loan of £100 which he has got from "B." At the end of two years "B" suddenly decides that the rate is high and he would like to encourage the unfortunate "A" to carry on a bit longer and so he arranges a five per cent. refund per annum, to be paid back when the financial situation is easier. When the end of five years is reached, we shall find that "A" is in a position of having paid £75, and to be £15 in credit on the I.O.U. from "B" on the refund. Now in the sixth year let us suppose that "B" decides to drop the rate of interest from 15 per cent, to 10 per cent., and at the end of the ninth year you will, find, if my calculations are correct, that "A" has paid "B" £115 and he is in credit to "B" for £15.

What I would like the Chancellor to give is an assurance that that is not the policy he is going to adopt for postwar credits. What it will boil down to is this, that no postwar credit will be paid back at all, if you substitute postwar credits for the five per cent, refund per annum which I mentioned in the example. At the end of that period there is a danger as far as I can see of postwar credits having been written off altogether, that the unfortunate taxpayer not having received one single penny in cash at all, and the Chancellor of the Exchequer will be able to turn round at some future date and say, "By lowering the rate of your tax and by failing to pay you back your postwar credits, we have had no cash transaction whatever and we can now consider. the whole debt written off." [Hon. Members: "No."] If that is the argument a great many people are going to be greatly disturbed and lose their faith even more perhaps than they have already lost it, in the right hon. Gentlemen sitting opposite.

6.45 p.m.

Sir William Darling (Edinburgh, South)

I have made many efforts yesterday and today to join in this Debate. I should think this is the most important subject that we shall discuss, and I am particularly impressed by the fact that I find myself tonight speaking for a very large majority of persons who are not persons of substance —persons who have hitherto believed that they were represented by right hon. Gentlemen and hon. Gentlemen opposite. The number of persons to receive postwar credits must be in the neighbourhood of 13,000,000. The great majority of those who have received postwar credits ranging from £65 down-wards are persons of no great financial substance. I wonder if His Majesty's Government, who are deeply concerned with the peace, comfort and happiness of the people of this realm, have taken into account the effect of postwar credits upon many thousands of humble people. Unlike the hon. Members for South Nottingham (Mr. N. Smith), the people with whom I am associated as colleagues in business do not treat them so frivolously. They brought them to me as documents of great value; they came at a time when there was little left in this country but confidence in its Government and its leaders, and they asked me if I would take care of their postwar credits and put them in a cement stronghold. This frivolous doubt as to whether they had any value or not apparently only existed in the minds of those with whom the hon. Member for South Nottingham apparently consorted.

Mr. N. Smith

Surely the hon. Gentleman knows perfectly well that my statement amounted simply to this: I was telling the Committee just how seriously London printers in the very large office where I happened to work took these postwar credits. I suggest to him that he ought not to use the word "frivolous" in connection with anything I said.

Sir W. Darling

I am sorry, but the hon. Gentleman certainly gave me the impression that in the printing office with which he is associated, these pieces of paper are treated in a frivolous manner and are regarded as comparable with those documents which are issued by the Irish Sweep Committee. If he did not say that, then I failed to hear him correctly and I apologise. If he tells me that the appreciation of those Government documents is high in the printing offices, I will believe him. It was with a shock that I heard him say that the "Natsopas" —am I right in calling them that?

Mr. N. Smith


Sir W. Darling

—with whom the hon. Member for South Nottingham is associated, did not think highly of postwar credits. The point I am endeavouring to make is that there are other groups of persons who rate them very highly and who, when much seemed to be going from them, thought that here was something in which they could place their confidence. I feel it was one of the many enlightened measures which came from the distinguished hands of the late Sir Kingsley Wood. He saw —and it was a simple analogy —that the encouragement of savings was important to this community, and he also saw, perhaps from the example of the farmyard, that a nest egg encouraged the laying of other eggs. There are people who do not save, but once they save a few pounds the habit grows with them. These postwar credits put in the minds of many people the possibility of saving money for their own needs and to add to it from other savings. I believe that it was a powerful prop in the financial economy of our country. There were many who, for the first time, appreciated that they had a stake in the country —something which has never been much admired by right hon. Gentlemen and hon. Gentlemen opposite, but a thing which I think is fundamental. It is a Government bond which is worth what it says it is worth. That is a contribution to the stability of national unity which cannot be over-estimated. I beg His Majesty's Government, who will have thrust upon them troubles enough of their own seeking, not to throw lightly away this number of shareholders who arc deeply interested in the business of the British people. The hon. Member for South Nottingham suggested that they were of little value. That is not the view that I hold, and it is not the view that hon. Gentlemen on this side hold after their Election experiences.

Mr. N. Smith

I did not make the suggestion that these postwar credits were of little value. On the contrary, I went out of my way to have it go forth from this House that all of us, irrespective of party, regarded them as being of their face value one day.

Sir W. Darling

I am grateful for the hon. Gentleman's correction. It was the hon. Member for Northampton (Mr. Paget), and not the hon. Member for South Nottingham.

Mr. Paget

It was not.

Sir W. Darling

It was certainly an hon. Member on the opposite side.

Mr. Gallacher

Try again.

Sir W. Darling

I cannot take the advice of the hon. Member for West Fife (Mr. Gallacher) to try again, because there are too many hon. Gentlemen opposite who are likely to have made an in- discreet statement of that sort.

I want to direct the attention of the Committee to the returning soldiers who have had no chance to establish themselves with any postwar credit. I think I am right in saying that their deduction for postwar credits is 6d. per day. Would it not be financially desirable to continue these postwar credits so that an increasingly larger number of people would have a financial stake in the country, which they would be tempted to enlarge and expand? If it is barriers against inflation that His Majesty's Government seek, this is not one which should be despised.

The objection to this Clause, so I understood —I am careful in my under- standings now, and I hope I will be corrected if I am wrong —was that the Chancellor said we could not afford the addition of £105,000,000 to the National Debt. The addition of £105,000,000 to the National Debt, he said, would be an addition to the wealth and purchasing power of the citizens of this country. If all the additions to the National Debt were as free from the suggestion of blame as that, I would not be unduly troubled about the National Debt. How much is this National Debt, to which the Chancellor is so reluctant to add this comparatively small sum of postwar credits? There are hon. Gentlemen present who know how much the National Debt is, but I have to indulge in some research in order to be in a position to tell the Committee what it is. In September, 1945, according to my research, it was £23,551,000,000.

Mr. Kirkwood

Is that all?

Sir W. Darling

I do not suppose that surprises the hon. Gentleman. At his' age nothing surprises him. On 8th September, 1945, according to my research, the National Debt was £23,551,000,000 gross. His Majesty's Government, which cannot afford postwar credits, propose to nationalise coal which some say will cost £200,000,000.

The Temporary Chairman (Colonel Sir Charles MacAndrew)

I think the hon. Gentleman is getting far away from this Clause.

Sir W. Darling

I am endeavouring to meet the argument of the Chancellor of the Exchequer that we could not afford the sum of £105,000,000, and I was venturing 'to suggest to the Committee that it is strange that an Administration, which can afford and proposes to afford, sums very considerably larger than £105,000,000 with equanimity, is disinclined to contemplate a comparatively small addition to the finances of a large number of small wage earners and relatively poor people in this country. However, as you say that is irrelevant, Sir Charles, I accept your direction and move to my conclusion encouraged by a good deal of support from hon. Members opposite. I am even disappointed in them. My conclusion is that this postwar credit has been, in the correct sense, a much more valuable and popular piece of finance than the Chancellor of the Exchequer and his supporters recognise. For the first time the people of this country have not had to go and buy bonds or shares. They have been given a postwar credit. Is it not something to have linked these millions who never before were linked financially with the Government? Is that not considerably preferable than that you should bind these shareholders to you with bonds of steel? It is for the Government to say whether it would be wise or unwise, but I am convinced, from the point of view of my constituents and of hundreds of thousands of others in this country, that it would be unwise to abolish the postwar credit.

Colonel Oliver Stanley

I rise only to ask whether we are to have a reply to this Debate. The right hon. Gentleman the Chancellor of the Exchequer, I think, listened to one speech, which was my own. It was very kind of him to assume that in that speech would be contained all the arguments worth hearing, but he was wrong, and since then he has left the Committee. We have no complaint about that; he has, no doubt, gone to "fortify the revenue," as it: is commonly called. Since then the defence of the Government on this most important Amendment has been left to the hon. Member for Northampton (Mr. Paget). Frankly, I do not think the choice in this respect was wise, because I think his defence of the Government has been an extremely dangerous one. It has been said, in effect, that the whole of the system of postwar credits was a Tory ramp. It was done by a Government of which, of course, his right hon. Friend was a Member, but, as he pointed out, the right hon. Gentleman was so weak willed and powerless that he could not prevent it, and it was done by the Coalition Government in order to help the rich. Of course, with a new Government something quite different was going to be done. If the hon. Gentleman thinks that postwar credits are a Tory ramp and that the only people who are going to gain from postwar credits are the rich, had he better not go the whole hog, and say that he and his party are not only going to abolish postwar credits for the future, but repudiate them for the past? His statement that postwar credits were a Tory ramp, must raise in every holder of these pieces of paper a doubt as to what are the intentions of the Government. In view of that, I think this Committee is entitled—

Mr. Paget

The position was this. Postwar credits were introduced when Income Tax payers were a comparatively small minority. Then, later on, the Income Tax payers increased enormously in numbers, and a number of people got a slice of this postwar credit cake which was never intended for them.

7.0 p.m.

Colonel Stanley

That is a most extraordinary argument. If it means anything it means that all postwar credits should continue if enough people are getting them. The hon. Gentleman then would support this Amendment, because on his own showing something like 13,000,000 people should, in fact, be getting postwar credits. In view of the confusion and alarm which will be caused by the hon. Member's speech I think we are entitled to some remarks from the Financial Secretary to the Treasury, who has sat patiently through the Debate and is obviously prepared to clear up this dilemma. We can assure him that he will be received not only with the usual courtesy but with almost the feelings one has towards one making a maiden speech.

The Financial Secretary to the Treasury (Mr. Glenvil Hall)

I thought that the reply for the Government had already been made by the Chancellor of the Exchequer himself and there is no one better who could give the reply. It is quite a common thing for the Minister in charge of a Bill to make a reply and then for speeches, particularly from the Opposition side, to be made after he has sat down, and no one thinks any the worse of him if he does not get up to reply to what has been said since he first spoke. I have no desire to detain the Committee. The answer given by the Chancellor of the Exchequer is the only answer that I can give, and I now repeat it. It is that he cannot accept this Amendment, for the reasons that he gave. It would mean putting to the credit of 13,000,000 people a sum of £105,000,000 this next year. Of that number of people 11,750,000, and possibly 12,000,000, are already getting, or will get in the next financial year, out of the concessions already made, more than the full postwar credit to which they are entitled this year, and which they are going to get. It would be indefensible in the view of the Chancellor of the Exchequer and of the Government, if postwar credits covering the earned income allowances' difference were now given to them in addition to the 1,000,000 or 1,250,000 people to whom reference has been made in the Committee today who on certain assumptions have suffered — and that is admitted —a small difference because of the fact that we have not put back the allowances on earned incomes to the same rate as they were in 1941, when postwar credits were introduced. For that reason, if for no other, it is impossible for the Government to accept this Amendment, which would give to nearly 12,000,000 people something to which they are not entitled and would mean an eventual cost of £105,000,000 to the Exchequer.

Sir H. Lucas-Tooth

May I ask whether the Government are prepared to accept my Amendment when we come to it?

The Temporary Chairman

I have already said that that Amendment will not be selected.

Mr. Pitman

1 should like to press for an answer to my question. I have asked

Division No. 32.] AYES. [7.6 p.m.
Adams, W. T. (Hammersmith, South) Byers, Lt.-Col. F. Evans, E. (Lowestoft)
Adamson, Mrs. J. L. Callaghan, James Evans, S. N. (Wednesbury)
Allen, A. C. (Bosworth) Champion, A. J. Ewart, R.
Allen, Scholefield (Crewe) Chater, D. Fairhurst, F.
Alpass, J. H. Chetwynd, Capt. G. R. Farthing, W. J.
Anderson, A. (Motherwell) Clitherow, R. Fletcher, E. G. M. (Islington, E.)
Anderson, F. (Whitehaven) Cluse, W. S. Foot, M. M.
Attewell, H. C. Cobb, F. A. Forman, J. C.
Awbery, S. S. Cocks, F. S. Foster, W. (Wigan)
Ayles, W. H. Collick, P. Fraser, T. (Hamilton)
Ayrton Gould, Mrs. B. Collindridge, F. Freeman, Maj. J. (Watford)
Bacon, Miss A. Collins, V. J. Freeman, P. (Newport)
Baird, Capt. J. Colman, Miss G. M. Gaitskell, H. T. N.
Balfour, A. Cook, T. F. Gallacher, W.
Barnes, Rt. Hon, A. J. Corbet, Mrs. F. K. (Camb'well, N.W.) George, Lady M. Lloyd (Anglesey)
Barstow, P. G. Corlett, Dr. J. Gibbins, J.
Barton, C. Corvedale, Viscount Gibson, C. W.
Battley, J. R. Cove, W. G. Gilzean, A.
Bechervaise, A. E. Crossman, R. H. S. Glanville, J. E. (Consett)
Belcher, J. W. Daggar, G. Gooch, E. G.
Benson, G. Daines, P. Goodrich, H. E.
Berry, H. Dalton, Rt. Hon. H. Greenwood, Rt. Hon. A.
Beswick, Fit.-Lieut. F. Davies, A. E. (Burslem) Grenfell, D. R.
Binns, J. Davies, Ernest (Enfield) Grey, C. F.
Blackburn, A. R. Davies, Harold (Leek) Grierson, E.
Blenkinsop, Capt. A. Davies, Haydn (St. Pancras, S.W.) Griffiths, D. (Rother Valley)
Boardman, H. Deer, G. Griffiths, Rt. Hon. J. (Llanelly)
Bottomley, A. G. Diamond, J. Guest, Dr. L. Haden
Bowden, Fig.-Offr. H. W. Dobbie, W Gunter, Capt. R. J.
Bowles, F. G. (Nuneaton) Dodds, N. N. Guy, W. H.
Braddock, Mrs. E. M. (L'p'l, Exch'ge) Douglas, F. C. R. Haire, Flt.-Lieut. J. (Wycombe)
Braddock, T. (Mitcham) Driberg, T. E. N. Hall, W. G. (Colne Valley)
Brook, D. (Halifax) Dumpleton, C. W. Hamilton, Lieut.-Col. R.
Brooks, T. J. (Rothwell) Durbin, E. F. M. Hannan, W. (Maryhill)
Brown, George (Belper) Dye, S. Hardy, E. A.
Brown, T. J. (Ince) Edelman, M. Henderson, A. (Kingswinford)
Bruce, Maj. D. W. T. Edwards, Rt. Hon. Sir C. (Bedwellty) Hewitson, Captain M.
Burden, T. W. Edwards, John (Blackburn) Hicks, G.
Burke, W. A. Edwards, N. (Caerphilly) Hobson, C. R.
Butler, H. W. (Hackney, S.) Edwards, W. J. (Whitechapel) Holman, P.

it of the Chancellor of the Exchequer and I have asked it, through my hon. Friend, of the Financial Secretary. It arises over this point. Now that we have come to the situation that postwar credits are not to foe granted this document is entirely false, and will never have a chance of being accurate again, unless we carry our Amendment, because it shows clearly that a married man with no children with an income of £200 a year is having a tax reduction of £13, whereas, in point of fact, if he has £204 he has an increase of 10s. 10d. in tax, and the whole country has been misled by this document. There is no footnote to this, no covering remark, nothing.

Sir W. Darling

Cannot an answer be given? A question has been put.

The Temporary Chairman

If no other hon. Member rises to speak it is my duty to put the Question.

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 294; Noes, 155.

Hoy, J. Murray, J. D. Stamford, W
Hudson, J. H. (Ealing, W.) Nally, W. Steels, T.
Hughes, Hector (Aberdeen, N.) Naylor, T. E. Stephen, C.
Hughes, Lt. H. D. (W'lhantpton, W.) Neal, H. (Claycross) Stewart, Capt. M. (Fulham)
Hynd, H. (Hackney, C.) Nichol, Mrs. M. E. (Bradford, N.) Strauss, G. R.
Isaacs, Rt. Hon. G. A. Nicholls, H. R. (Stratford) Stross, Dr. B.
Janner, B. Noel-Baker, Capt. F. E. (Brentford) Stubbs, A. E.
Jeger, Dr. S. W. (St. Pancras, S.E.) Noel-Buton, Lady Swingler,' Capt. S.
Jones, J. H. (Bolton) O'Brien, T. Symonds, Maj. A. L.
Jones, Maj. P. Asteley (Hitchin) Oldfield, W. H. Taylor, H. B. (Mansfield)
Keenan, W. Oliver, G. H. Taylor, R. J. (Morpeth)
Kendall, W. D. Orbach, M. Taylor. Dr. S. (Barnet)
Kenyon, C. Paget, R. T. Thomas, I. O. (Wrekin)
Kinghorn, Sqn.-Ldr. E. Paling, Rt. Hon. Wilfred (Wentworth) Thomas, George (Cardiff)
Kirby, B. V. Paling, Will T. (Dewsbury) Thomson, Rt. Hon. G. R. (E'b'gh, E.)
Kirkwood, D. Palmer, A. M. F. Thorneycroft, H.
Lang, G. Pargiter, G. A Thurtle, E.
Layers, S. Parkin, Flt.-Lieut. B. T. Tiffany, S.
Lee, F. (Hulme) Paton, Mrs. F. (Rushcliffe) Tolley, L.
Lee, Miss J. (Cannock) Paton, J. (Norwich) Tomlinson, Rt. Hon. G.
Levy, B. W. Pearson, A. Turner-Samuels, M.
Lewis, A. W. J. (Upton) Pearl, Capt. T. F. Ungoed-Thomas, Maj. L.
Lewis, J. (Bolton) Perrins, W. Usborne, Henry
Lindgren, G. S. Piratin, P. Vernon, Maj. W. F.
Little, Dr. J. Platts-Mills, J. F. F. Viant, S. P.
Logan, D. G. Popplewell, E. Wadsworlh, G.
Longden, F. Pritt, D. N. Waikden, E.
Lyne, A. W. Pryde, D. J. Walker, G. H.
McAdam, W. Pursey, Cmdr. H. Wallace, G. D. (Chislehurst)
McAlister, G. Ranger, J. Wallace, H. W. (Walthamstow, E.)
McEntee, V. La T. Rankin, J. Watson, W. M.
McGhee, H. G. Rees-Williams, Lt.-Col. D. R. Webb, M. (Bradford, C.)
McGovern, J Reeves, J. Weitzman, D.
Mack, J. D. Reid, T. (Swindon) Wells, P. L. (Faversham)
McKjnlay, A. S. Rhodes, H. Wells, Maj. W. T. (Walsall)
Maclean, N. (Govan) Richards, R. White, H. (Derbyshire, N.E.)
McLeavy, F. Ridealgh, Mrs. M. Whiteley, Rt. Hon. W.
MacMlillan, M. K. Robens, A. Whittaker, J. E.
Macpherson, T. (Romford) Roberts, G. O. (Caernarvonshire) Wigg, G. E. C.
Mainwaring, W- H. Robertson, J. J. (Berwick) Wilcock, Group-Capt. C. A. B.
Mann, Mrs. J. Rogers, G. H. R. Wilkins, W. A.
Manning, C. (Camberwell, N.) Royle, C. Willey, F. T. (Sunderland)
Manning, Mrs. L. (Epping) Sargood, R. Willey, O. G. (Cleveland)
Marquand, H. A. Scott-Elliot, W. Williams, D. J. (Neath)
Marshall, F. (Brightside) Sharp, Lt.-Col. G. M. Williams, J. L. (Kelvingrove)
Mathers, G. Silkin, Rt. Hon. L. Williams, Rt. Hon. T. (Don Valley)
Maxton, J. Silverman, J. (Erdington) Williamson, T.
Medland, H. M. Silverman, S. S. (Nelson) Willis, E.
Middleton, Mrs. L. Skeffington, A. M. Wills, Mrs. E. A.
Mikardo, tan Skinnard, F. W. Wise, Major F. J.
Milchison, Maj. G. R. Smith, Capt. C. (Colchester) Woodburn, A.
Monslow, W. Smith, Ellis (Stoke) Wyatt, Maj. W.
Montague, F. Smith, Norman (Nottingham, S.) Yates, V. F.
Morgan, Dr. H. B. Smith, S. H. (Hull, S.W.) Young, Sir R. (Newton)
Morley, R. Smith, T. (Normanton) Younger, Maj. Hon. K. G.
Morris, P. (Swansea, W.) Snow, Capt. J. W. Zilliacus, K.
Morris, Hopkin (Carmarthen) Solley, L. J.
Mort, D. L. Sorensen, R. W. TELLERS FOR THE AYES:
Moyle, A. Soskice, Maj. Sir F. Mr. J. Henderson and Mr. Simmons.
Agnew, Cmdr. P. G. Channon, H. Fraser, Lt.-Col. Sir t. (Lonsdale)
Aitken, Hon. M. Clarke, Col. R. S. Gage, Lt.-Col. C.
Allen, Lt.-Col. Sir W. (Armagh) Cole, T. L. Galbraith, Cmdr. T. D.
Amory, Lt.-Col. D. H. Cooper-Key, Maj. E. M. Gammans, Capt. L. D.
Anderson, Rt. Hn. Sir J. (Scot. Univ.) Corbett, Lieut.-Col. U. (Ludlow) George, Maj. Rt. Hn. G. Lloyd (P'br'ke)
Assheton, Rt. Hon P. Crookshank, Capt. Rt. Hon. H. F. C. Glossop, C. W. H.
Baldwin, A. E. Crosthwaite-Eyre, Col. O. E. Glyn, Sir R.
Barlow, Sir J. Crowder, Capt. J. F. E. Gomme-Duncan, Col. A. G.
Baxter, A. B. Cuthbert, W. N. Gridley, Sir A.
Beamish, Maj. T. V. H. Darling, Sir W. Y. Grimston, R. V.
Bennett, Sir P. Davidson, Viscountess Hannon, Sir P. (Moseley)
Birch, Lt.-Col. Nigel Dodds-Parker, Col. A. D. Hare, Lt.-Col. Hon. J. H. (Woodbridge)
Boothby, R. Donner, Sqn.-Ldr. P. W. Harvey, Air-Cmdre. A. V.
Bower, N. Dower, Lt.-Col. A. V. G. (Penrith) Haughton, Maj. S. G
Boyd-Carpenter, Maj. J. A. Drayson, Capt. G. B. Headlam, Lt.-Col. Rt. Hon. Sir C.
Bracken, Rt. Hon. Brendan Duthie, W. S. Hinchingbrooke, Viscount
Braithwaite, Lt. Comdr. J. G. Eccles, D. M. Hogg, Hon. Q.
Bromley-Davenport, Lt.-Col. W. Eden, Rt. Hon. A. Hollis, Sqn.-Ldr. M. C.
Buchan-Hepburn, P. G. T. Erroll, Col. F. J. Holmes, Sir J. Stanley
Butcher, H. W. Fletcher, W. (Bury) Hope, Lt.-Col. Lord J.
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n) Foster, J. G. (Northwich) Howard, Hon. A.
Carson, E. Fox, Sqn.-Ldr. Sir G. Hudson, Rt. Hon. R. S. (Southport)
Challen, Fit.-Lieut. C. Fraser, Mai. H. C. P. (Stone) Hulbert, Wing-Comdr. N. J.
Hurd, A. Morrison, Maj. J. G. (Salisbury) Snadden, W. M.
Hutchison, U.-Cdr. Clark (Edin'gh, W.) Morrison, Rt. Hn. W. S. (Cirencester) Spearman, A. C. M.
Hutchison, Lt.-Col. J. R. (G'gow, C.) Mott-Radclyffe, Maj. C. E. Spence, Maj. H. R.
Jarvis, Sir J. Neven-Spence, Major Sir B. Stanley, Col. Rt. Hon. O.
Jeffreys, General Sir G. Nicholson, G. Stoddart-Scott, Col. M.
Joynson-Hicks, Lt.-Cdr. Hon. L. W. Noble, Comdr. A. H. P. Stuart, Rt. Hon. J.
Kingsmill, Ll.-Col. W. H. Nutting, Anthony Sutcliffe, H.
Lambert, G. Osborne, C. Taylor, C. S. (Eastbourne)
Lancaster, Col. C. G. Peake, Rt. Hon. O. Teeling, Flt.-Lieul. W.
Law, Rt. Hon. R. K. Pickthorn, K. Thomson, Sir D. (Aberdeen, S.)
Legge-Bourke, Maj. E. A. H. Pitman, I. J. Thorneycroft, G. E. P.
Lindsay, Lt.-Col. M. (Solihull) Ponsonby, Col. C. E. Thornton-Kemsley, Col. C. N.
Linstead, H. N. Poole, Col. O. B. S. (Oswestry) Thorp, Lt.-Col. R. A. F.
Lipson, D. L. Prescott, Capt. W. R. S. Touche, G. C.
Lloyd, Maj. Guy (Renfrew, E.). Price-White, Lt.-Col. D. Vane, Lt.-Col. W. M. T.
Lloyd, Brig. J. S. B. (Wirral) Prior-Palmer, Brig. O. Wakefield, Sir W. W.
Lucas-Tooth, Sir H. Raikes, H. V. Walker-Smith, Lt.-Col. D.
Mackeson, Lt.-Col. H. R. Ramsay, Maj. S. Ward, Hon. G. R.
Maclean, Brig. F. H. R. (Lancaster) Reid, Rt. Hon. J. S. C. (Hillhsad) Watt, Sir G. S. Harvie
MacLeod, Capt. J. Renton, Maj. D. Wheatley, Lt.-Col. M. J.
Macmillan, Rt. Hon. Harold Roberts, H. (Handsworth) White, Sir D. (Fareham)
Macpherson, Maj. N. (Dumfries) Roberts, Maj. P. G. (Ecclesall) White, Maj. J. B. (Canterbury)
Manningham-Buller, R. E. Robinson, Wing-Comdr. Rol3nd Williams, C. (Torquay)
Marlowe, A. A. H. Ropner, Col. L. Williams, Lt.-Cdr. G. W. (T'nbr'gi)
Marples, Capt. A. E. Sanderson, Sir F. Wimerlon, Rt. Hon. Earl
Marshall, Comdr. D. (Bodmin) Scott, Lord W. Young, Maj. Sir A. S. L. (Partick)
Mauds, J. C. Shephard, S. (Newark)
Medlicott, Brig. F. Smites, Lt.-Col. Sir W. TELLERS FOR THE NOES:
Mellor, Sir J. Smith, E. P. (Ashford) Mr. Drewe and Mr. Studholme.
Molson, A. H. E. Smithers, Sir W.

Clause ordered to stand part of the Bill.