Motion made, and Question proposed,
That it is expedient to amend the law relating to the National Debt and the public revenue, and to make further provision in connection with finance."—[Mr. Dalton.]
§ 4.58 p.m.
§ Mr. Churchill (Woodford)
I do not intend this afternoon to do much more than offer my compliments to the Chancellor of the Exchequer on his bland, mild and temperate survey of the dark, tumultuous, tortured financial scene. His statement was upon the level to which we have been accustomed on Budget occasions, and those of his predecessors who are here specially join in offering him congratulations on the manner in which he has acquitted himself on this occasion. The right hon. Gentleman gave a great deal of innocent pleasure on all sides of the Committee by his description of the ingenious series of nets and barbed wire entanglements on which every farthing of profit was caught before it reached the pockets of the Income Tax payers and after that almost every farthing of income was caught by subsequent processes. This gave rise to a great deal of harmless joy, but whether, in the long run, the process will be one wholly giving rise to hilarity can only be seen as our economic and financial future unfolds. I was much interested in the juggle between the remission of the shilling standard rate, the regrading of the application of that rate to Income Tax and the additional burden thrown on the Surtax. It seems on the whole that not very much has happened as far as the medium and higher rates are concerned. There is a total remission of £97,000,000 and £7,000,000 are recovered on the Surtax, making a net total, as I make it, of £90,000,000.
§ Mr. Churchill
I will speak in a moment about the increases on the personal allowances, but, as far as all this business of the Surtax and the higher rates of Income Tax is concerned, hon. Gentlemen opposite must not be drawn into exaggerated hopes. They are no longer, as we stood in the days of the Lloyd George Budget, at the first frontier of a large and fertile territory. The entire area has been swept through, harvested and gleaned, and gleaned again and again, and we stand on the far side of what is now a thoroughly scrubbed field. It is an astonishing fact—which my right hon. Friend the late Chancellor has mentioned to me—that, if you took all the incomes in this country above £2,000, every penny of it, if you took the whole of that into 1909 the Exchequer, keeping the existing rates of Income Tax and Surtax going, the profit to the Exchequer would be £60,000,000, and that figure of £60,000,000 has to be considered in relation—that is a remarkable statement—to a Budget which has at present to be balanced in March next in the neighbourhood of £5,400,000,000. It has to be balanced at that rate. It must also be judged in relation to schemes of social betterment and reform which run into not £60,000,000 or £600,000,000, but, in many cases, into thousands of millions of expenditure in the long run. Therefore, the great glee which is manifested is rather of a shallow nature and those who feel it running through their veins should prepare themselves for the fact that that is probably the only satisfaction which they will get out of the business.
I must say that I am very glad that the personal allowances have been restored. During my tenure of the Exchequer, which lasted for five Budgets, there was, I think, not one in which I did not improve the position of the small Income Tax payer, by marriage allowances, by children's allowances, increase of personal allowances, and further differentiation in favour of earned as against unearned income and so forth. All those slowly built-up efforts were swept away in the great tide of the war, but it is very right that as the tides of war recede, these should be the first rocks to be uncovered. It is a very satisfactory way of spending £160,000,000, which I gather is to be the cost.
§ Mr. Churchill
Exactly—£160,000,000 gross, roped in with the other items, making a net sacrifice by the Exchequer of £90,000,000. It would be a very great omission on my part if I did not take this opportunity to return most humble, dutiful and grateful thanks for the announcement which has been made that compulsory insurance premiums against further damage by enemy bombs, are not going to be collected. It gives one confidence to feel that one lives in a land where there is so much broadminded tolerance shown by the executive Government. But I thought it was rather hot when my right hon. Friend came along 1910 for the last instalment after the danger against which we insured had, by the success of our arms, been swept away. It certainly does fall to the right hon. Gentleman to signalise this occasion by a memorable act of grace and generosity.
I must, however, strike a note of deep anxiety at the continuance of war expenditure, although for the greater part of the financial year the war will no longer be going forward. The Chancellor talked of a difference of perhaps £20,000,000in the balance of my right hon. Friend's Budget which will eventually be made known at the end of the financial year—£20,000,000 of an expenditure of £5,400,000,000 or something like that. That is negligible. Therefore, although by March, ten months will have passed since the Germans gave in, and six or seven months since the Japanese gave in, our war expenditure, half raised by taxes and half by borrowings, will be continuing and will be found to continue at this full, hideous, destructive rate. I consider that that is a frightful fact and, indeed, every effort should be made to improve upon that position, if possible. There is still time, four or five months before the end of the financial year, and great efforts should be made to do so.
I was a little surprised that the right hon. Gentleman, in speaking of this, dwelt unduly, as I thought, upon the great increase of the expenditure he would have to meet if more men were discharged from the Forces. The terminal charges of their service fall to be met when they come in, but it would be a most shortsighted view to look upon the financial position from a single year. I agree with what the right hon. Gentleman says about there being nothing secret or even sublime in its taking 365 days for the earth to travel round the sun. It might so easily have been a different figure. But do not let us escape—this is the last point I wish to make in these very personal observations—for one moment from the conclusion that, the sooner we get our men to work at fruitful labour, the sooner we get our industries humming, the sooner we shall be a live community again, and the sooner those consumer goods will be produced which are the sole unconquerable bulwark against inflation. There are different kinds of inflation. There is the inflation when a Government sets to work and debases the currency, 1911 there is inflation when there are far more demands for goods than there are goods to supply, and also when a Government has to come and borrow thousands of millions. All these are different forms of inflation, and for all there is one remedy—a greater increase of production, a greater increase of consumer goods which the great masses of the people need as they have never, in modern times in any community after a victorious war, needed so much before.
I have made these few comments and my right hon. Friend and I will consider carefully the line which we shall adopt, but, broadly speaking, we must regard this as an interim Budget which will do no harm, if it does not do any good. I hope that the phrase uttered by the right hon. Gentleman, that the larger remissions of taxation will be considered in the Budget of 1946, will be a substantive matter of great importance. If you continue at this rate of war expenditure in time of peace, and if you keep the taxation appropriate to meeting that rate of expenditure, and if you are also committed to the vast borrowings which are necessary while the expenditure is at that rate, the whole of these, taken together, will exercise a paralysing effect upon recovery and will sap the vital energies of this country during critical months, when much in the world may be won or lost. For the rest, I should like to tell the right hon. Gentleman that it is a satisfaction once in a while for us to hear a great topic ranged over in a satisfactory and adequate manner.
§ Ordered: "That the Chairman do report Progress, and ask leave to sit again."—[Mr. Simmons.]
§ Resolutions to be reported To-morrow; Committee also report Progress; to sit again To-morrow.