Commons Sitting of 7 April 1948

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]

CIVIL CONTINGENCIES FUND
Account ordered
"of the Civil Contingencies Fund, 1946–47, showing (1) the Receipts and Payments in connection with the Fund in the year ended the 31st day of March, 1947, and (2) the Distribution of the Capital of the Fund at the commencement and close of the year; with the Report of the Comptroller and Auditor General thereon."—[Mr. Glenvil Hall.]

ORAL ANSWERS TO QUESTIONS

  B.B.C. SIAMESE SECTION
  Mr. William Teelingasked the Postmaster-General what is the supervision exercised at the B.B.C. by British subjects over broadcasting news to Siam by the Siamese Editor of the Siamese section of the B.B.C.
  The Postmaster-General (Mr. Wilfred Paling): I understand from the British Broadcasting Corporation that supervision over the work of the Siamese Editor is exercised by the Head of the Corporation's Far Eastern Department, who is a British subject.
  Mr. Teeling: Is the right hon. Gentleman equally sure that the gentleman supervising the talks speaks Siamese and, if not, how can he cut off the speech of a broadcaster to Siam who said something not suitable to this country?
  Sir Waldron Smithers: May I ask the Postmaster-General whether he will ask the B.B.C. to exercise stricter supervision of all foreign broadcasts?
  Mr. Teeing: Will the Postmaster-General answer my supplementary question? Can he answer it?
  Mr. Paling: I am not sure whether he speaks Siamese or not, but I will make an inquiry about it.
  Mr. Wilson Harris: Would it not be possible to get a pair of Siamese twins of mixed parentage and set them to supervise each other?

  POST OFFICE

    Opened Letters
    Mr. Boyd-Carpenterasked the Postmaster-General how many letters entrusted to His Majesty's Mails have been opened by or with the connivance of his Department since 1st April, 1947.
    Mr. Wilfred Paling: The information desired is not available and, if it were, publication would not be in the public interest.
    Mr. Boyd-Carpenter: Can the right hon. Gentleman say why the publication of this information would not be in the public interest? Is it because his Department is ashamed of the scale on which it is doing this sort of thing?
    Mr. Paling: The hon. Member is wrong, as usual, in that assumption.
    Mr. E. P. Smith: Does the right hon. Gentleman realise that this Question has very disturbing implications and can he say why circumstances arise and under whose orders his Department interferes with anybody's mail?
    Mr. Paling: The Exchange Control Act is the Act under which this is done.
    Mr. Mellish: Will the Postmaster-General say whether this was the practice under the last Tory Government?
    Mr. Gallacher: Is not the Minister aware that this is a very long-standing practice and that the late John Wheatley tried to get information as to why my letters and other letters were opened under the Baldwin Government, and could not get the information?
    Mr. Boyd-Carpenter: I beg to give notice that, in view of the right hon. Gentleman's pointed refusal to answer the Question, I shall raise the matter on the Adjournment at the earliest possible opportunity.

    Telephone Service (Automatic Register)
    Mr. Peter Freemanasked the Postmaster-General when the automatic

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    register of telephone calls beyond the subscribers normal range of dialling local calls will become available.
    Mr. Wilfred Paling: The problem of extending subscribers' dialling beyond the range of local calls is being studied, but it will be some years before this facility can be made available.
    Mr. Freeman: In view of the fact that we now have to wait six months before we know the cost of these facilities for long distance telephone calls, could not some acceleration be made rather than having to wait from three to four years before installation?
    Mr. Paling: I do not think I can accept the statement about six months, but there is room for development in this respect and we are studying the question very closely.

  ROYAL AIR FORCE

    War Bombing (Germany)
    Squadron-Leader Kinghornasked the Secretary of State for Air what was the largest tonnage of bombs dropped on German territory in one night by the Royal Air Force; and what was the largest tonnage dropped by the Luftwaffe in one night in this country during the late war.
    The Under-Secretary of State for Air (Mr. Geoffrey de Freitas): Five thousand, five hundred tons and 1,200 tons, respectively.
    Squadron-Leader Kinghorn: Can my hon. Friend give any indication of the casualties caused by these two raids and also will he say, for our benefit and for the benefit of the House in future debates on Civil Defence, whether we can be given some idea of the effectiveness of bombing in the last war?
    Mr. de Freitas: On the first point, I can give the figures, though they in themselves are no indication of the success or failure of the operations. The attack on Germany was principally on Duisberg and it is estimated that about 2,400 people were killed.
    Mr. Skeffington-Lodge: Disgraceful.
    Mr. de Freitas: In the attack on this country, London was the main target and 1,300 people were killed.
    An Hon. Member: Is that still disgraceful?
    Mr. de Freitas: On the second point, as to the availability of evidence, there will be published this year a book giving the estimated effect of strategic bombing in the last war.
    Mr. Emrys Hughes: Do not these figures indicate that we were more effective baby killers than the, Huns?
    Mr. Scollan: May I ask if these 1,500 tons were dropped on one city in a single night?
    Mr. de Freitas: Actually, it was 1,200 tons, and the bombs were dropped principally on London, on 19th April, 1941.

  BURMA (BRITISH PROPERTY RIGHTS)
  Sir Waldron Smithersasked the Secretary of State for Foreign Affairs what steps he is taking to protect the rights and properties of British subjects in Burma who have suffered and are suffering heavy loss.
  The Secretary of State for Foreign Affairs (Mr. Ernest Bevin): His Majesty's Government naturally do not question the right of the Burmese Government to adopt a general policy of nationalising their basic industries, and since the Burmese Government have undertaken to pay fair compensation for British concerns expropriated under this policy, it may be hoped that a mutually acceptable agreement may be reached between that Government and the companies concerned. His Majesty's Government will, however, follow developments with the closest interest, and will certainly afford the companies concerned all legitimate support. It is the policy of His Majesty's Government to maintain close commercial relations with Burma, and I have no reason to suppose that the Burmese Government take a different view. We have much to contribute to each other, and we feel that British enterprise has a useful part to play in the development of the country.
  Sir W. Smithers: Does the right hon. Gentleman think he has answered my Question? If so, may I ask him if he is aware that since the Burma Independence Act was passed the lives of many British subjects have become intolerable?

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  Also, and especially, will he try to get reparations for those loyal British subjects of His Majesty the King who were turned out and lost their all during the Japanese occupation?
  Mr. Bevin: The hon. Gentleman should put down the Question he wants answered. I have answered the one he put down.

  GERMANY

    Carpets (Export)
    Mr. Stokesasked the Secretary of State for Foreign Affairs what arrangements have been made for the export of carpets manufactured in Germany; and how much capacity has been allowed for that purpose in the level of industry plan recently announced.
    Mr. Bevin: No special arrangements have been made for the export of carpets manufactured in Germany: contracts for the export of carpets from the Combined zone are negotiated in the usual manner by the German exporter direct with the foreign buyer, subject to the approval of the Joint Export Import Agency. With regard to the second part of the Question, no capacity has been allotted for export purposes, and there is no limitation in the revised level of industry plan on the capacity allowed for the manufacture of carpets, whether for export or for internal use.
    Mr. Stokes: Is my right hon. Friend aware that carpets have been imported from the Russian zone? Can he indicate to the House whether there is any restriction on the imports of carpets to this country? Any one wishing to do so has first to apply to the manufacturers' association of this country. Despite whatever J.E.I.A. may say, they have to get the approval of the manufacturers' association in this country before carpets can be imported, although there is a known shortage.
    Mr. Bevin: I should like to have notice of that question. I do not know what is happening in this connection in this country. I do know what is happening in the other country.

    British Subjects (Prison Sentences)
    Mr. Stokesasked the Secretary of State for Foreign Affairs how many
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    British members of the Control Commission staff in Germany are now serving sentences in German prisons, whether they wear German convict uniforms; and whether they are under the control of German warders.
    Mr. Bevin: None, Sir, but my hon. Friend is probably referring to former members of the Control Commission, of whom there are 12 serving sentences in a German prison. They wear prison clothes of a distinctive pattern supplied from British sources, and they are under the control of British staff, who are assisted in minor ways by German warders.
    Mr. Stokes: Are we to understand that a member of the Control Commission who is sent to prison ceases to be a member of the Commission?
    Mr. Bevin: Certainly.
    Mr. Stokes: Is my right hon. Friend aware that these people are in German prisons, in German convicts' uniform, are being controlled by German prison warders? Is it not the fact that this is completely contrary to what is laid down in the British Military Government regulations?
    Mr. Bevin: I do not think so. It is not true to say they are in German convicts' uniform. I have already answered that question. Nor are they under German warders. They are under British warders.
    Mr. Stokes: Will my right hon. Friend look into this matter?
    Squadron-Leader Fleming: Is it the fact that these British members of the Control Commission who have been convicted have no right of appeal, even to the Privy Council in this country?
    Mr. Bevin: I should like notice of that question.
    Mr. Stokes: Will my right hon. Friend look into this matter, because responsible members of the Commission are very much concerned about it.
    Mr. Bevin: Yes, I will.

    Travel Restrictions, Berlin (Soviet Action)
    Mr. Blackburnasked the Secretary of State for Foreign Affairs what action His Majesty's Government propose to take

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    in consequence of the impediments being offered by the Soviet authorities to the free passage of British persons from the British zone of Germany to Berlin.
    Mr. Bevin: I would refer my hon. Friend to the statement on this subject which I made yesterday in reply to a Question by the right hon. Gentleman the Member for Woodford (Mr. Churchill).
    Mr. Blackburn: Will my right hon. Friend make it plain that this issue is being handled with a proper sense of its gravity under his direction in view of the loss of 14 British lives, and that it is not being left for some dinner party discussions with Marshal Sokolovsky which Field-Marshal Montgomery is today reported to have described as great fun and very friendly?
    Mr. Bevin: I cannot, of course, know what Field-Marshal Montgomery is reported to have said. In this country these matters are dealt with by the civil Government and not by generals.
    Mr. Platts-Mills: If my right hon. Friend should find it possible to inquire into this sort of thing any further, will he himself consider making it possible for members of the British public, including Members of Parliament, to travel through the British zone when they wish to go to Germany and reach that country? Will he consider the same question from the point of view of Greece and Palestine, among other countries?
    Mr. Bevin: I have over and over again made offers towards facilitating completely free movement throughout Germany. This has been resisted with great bitterness and vehemence by the Soviet Government.

  UNITED NATIONS (ATOMIC ENERGY COMMISSION)
  Mr. Blackburnasked the Secretary of State for Foreign Affairs what action is contemplated by His Majesty's Government as a result of the deadlock which has now occurred in the Atomic Energy Commission of the United Nations.
  Mr. Bevin: As my hon. Friend will have seen in the Press, the Committee
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  of the Atomic Energy Commission, which has been engaged since the beginning of the year in a further study of the proposals put forward by the Soviet representative in June last, has completed its task. The Committee has since been considering a statement in the name of the United Kingdom, Canadian, Chinese and French representatives, fully supported by the United States representative, to the effect that the Soviet proposals do not form an adequate basis for an effective system of international control of atomic energy activities, and has now adopted by nine votes to two a resolution in this sense.
  The Committee's report on this matter, together with the report of another Committee which has been considering problems of the organisation and staffing of an international Atomic Energy Authority, will shortly come before the Atomic Energy Commission itself. In the meantime it would be premature to make a statement of the views of His Majesty's Government as to the future course which the Commission should pursue.
  Mr. Blackburn: Will my right hon. Friend bear in mind that two and a half years have now elapsed, during which individual member States have proceeded with the development of weapons of mass destruction, including the atomic bomb? Therefore, will His Majesty's Government reconsider this matter, in order that a proper sense of urgency may be given to it?
  Mr. Bevin: I do not think we need to reconsider it in order that a proper sense of urgency may be given to it. We have been considering it the whole time. It is of no use to enter into these arrangements, if we are to have international control and inspection, unless the whole world is open freely to that inspection.
  Commander Noble: Can the right hon. Gentleman give an assurance that when these reports, to which he has referred, are known he will make a further statement?
  Mr. Bevin: I should like to consider that.
  Mr. Blackburn: While entirely accepting the Foreign Secretary's answer, may I ask him whether he is aware that an increasing number of people feel that these

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  matters cannot be dealt with except at the highest possible level—by the heads of the Governments concerned?
  Mr. Bevin: I do not accept that view. It is the heads of Governments in their Cabinet capacity who give instructions, and it must not be assumed that officials and other people who make statements invent them themselves. If there is an international meeting or conference on any matters of this kind the people who attend them are the mouthpieces of the Governments of their countries. The mere meeting of heads does not make any difference.
  Mr. Harrison: Will my right hon. Friend continue to do what he has always done up to now—curb the warmongers that exist in this country of ours?
  Hon. Members: Who are they?
  Mr. Beswick: While I agree with my right hon. Friend's answer to the previous supplementary question, may I ask if he does not also agree that on this Commission the negative—or inspection—side has been emphasised throughout at the expense of the positive international development side which was put forward in the first proposals of David Lilienthal? Does he not feel that there is good ground for getting together at the highest level to consider the positive aspect of the original proposals?
  Mr. Bevin: We have been together on the highest level. We have discussed it. We have exchanged views about it. I cannot make other people move. I would remind the House that the first, the initial step towards getting atomic energy control was taken by the Prime Minister of this country, who went to America and got this machine moving. I can assure hon. Members that it is a great disappointment to us that it has not been more successful on both sides.

  CORFU CHANNEL CASE (HAGUE COURT HEARING)
  Mr. Boyd-Carpenterasked the Secretary of State for Foreign Affairs when the Hague Court will begin the hearing of the substantive case arising out of the murder of 44 British seamen in the Corfu Channel.
  Mr. Bevin: On 25th March the International Court rejected the Albanian
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  Government's "preliminary" objection on the jurisdictional case, and fixed the following time limits for the filing of subsequent written pleadings:

  (1) for the counter memorial of the Albanian Government, 15th June, 1948;

  (2) for the reply of the United Kingdom Government, 2nd August, 1943;

  (3) for the rejoinder of the Albanian Government, 20th September, 1948.

  Once these written pleadings have been submitted the Court will make an order for the date of the oral hearings.
  Mr. Lipson: Can anything be done to speed up the hearing of these matters by the International Court, because the period of long delay which elapses between the actual event and the hearing tends to bring the Court into disrepute as a means of settling international disputes?
  Mr. Bevin: I have a good deal of sympathy with that supplementary question, and when the United Nations consider the proceedings of the International Court that matter ought to be taken into account. The International Court acting promptly and in a businesslike way is one of the greatest safeguards for peace, but, as the hon. Member says, this long delay is very disquieting.

  AFRICAN COLONIES

    Conference on Wild Life (Report)
    Mr. Rankinasked the Secretary of State for the Colonies whether the East African Governments have yet reported the results of their inquiries into the position of game; and what steps are being taken in East Africa to prevent destruction of native crops and the spreading of diseases by game, and to make available to Africans additional meat supplies by allowing them to kill game.
    The Secretary of State for the Colonies (Mr. Creech Jones): Yes, Sir. I have received the report of the proceedings of the Conference on Wild Life, held in Nairobi last year, and the views of the East and Central African Governments upon them. I am considering the points raised by my hon. Friend in conjunction with these views.
    Mr. Baldwin: Is not the Minister aware that there is plenty of meat available to the African if he can be persuaded to kill some of the surplus goats and cattle which are at present eroding the land? One of the difficulties is to get the African to kill off the surplus.

    War Damage Compensation Claims, Somaliland
    Mr. Hugh Fraserasked the Secretary of State for the Colonies whether he is aware that, in spite of assurances given in April, 1942, no compensation has yet been paid to officials of the Colonial Service who suffered war damage in British Somaliland in 1940; that replacement costs have risen and are rising; and what action he proposes to take, and when.
    Mr. Creech Jones: The question of war damage compensation in British Somaliland is being considered with claims from all Colonial territories where war damage occurred. It is under inter-Departmental examination. I regret that I am not yet able to say when a statement can be made.
    Mr. Fraser: As two and a half years have elapsed since the end of the war, surely inter-Departmental consideration should have reached some climax by now?
    Mr. Creech Jones: I am very anxious about this matter, and will do all in my power to speed up a decision.

    Teachers, West Africa
    Mr. Sorensenasked the Secretary of State for the Colonies to what extent the United Nations' resolution against racial discrimination affecting teachers has been accepted and applied in respect of salaries to those teaching in West African schools; and what are the approximate salaries paid to European and African teachers, respectively.
    Mr. Creech Jones: I assume that my hon. Friend is referring to the resolution of the Second Session of the General Conference of the United Nations Educational, Scientific and Cultural Organisation, held in November, 1947, on the subject of a Teachers' Charter, which refers to bars founded on distinctions of race, colour, sex or creed. There is, of course, no question of racial discrimina-
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    tion in West African Government educational institutions. European and African teachers in the senior grades are paid on the same scales of basic salary, which commence at£450 and rise to maxima varying from£600 to£1,000. Europeans receive in addition an expatriation allowance, which ranges from£150 to£300 a year. Teaching posts in the junior grades are held exclusively by Africans.
    Mr. Sorensen: Do I understand the Secretary of State to say that this applies to all teachers in all kinds of schools, or only in Government schools? I think the latter. If so, could my right hon. Friend say what action is being taken to see that the same principle applies to the other schools as already applies to Government schools?
    Mr. Creech Jones: I have no effective control in regard to mission schools. My answer does relate exclusively to Government schools.
    Mr. Sorensen: Then, could the Secretary of State take any action at all, at least to recommend that mission schools should bring their scales up to those operating in Government schools?
    Mr. Creech Jones: This presents very considerable difficulty for mission schools, owing to the absence of funds, but I will draw their attention to the resolution of U.N.E.S.C.O.

    Disturbances, Gold Coast
    Mr. Sorensenasked the Secretary of State for the Colonies how many have been arrested, imprisoned or detained in connection with the present unrest in the Gold Coast; for what offences have they been apprehended; and whether all those thus affected will be brought to trial.
    Mr. Creech Jones: I have not this detailed information, but the Governor is sending it, and I will inform, my hon. Friend. I understand, however, that all arrests and imprisonments have been for specific offences arising out of the disturbances. No persons have been detained otherwise than for specific offences, although removal orders were made against six persons.
    Mr. Sorensen: Has the Secretary of State seen the announcement in the

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    Press, that something like 2,000 people have been apprehended by us; and will he pay particular attention to this matter, and examine the possibility of releasing some of that large number?
    Mr. Creech Jones: I have no information whatever that any persons have been detained, other than those who are charged with offences and the six persons of whom the House already has information. I should like completely to repudiate these Press statements that there are 2,000 persons behind barbed wire.
    Mr. Sorensenasked the Secretary of State for the Colonies if he will give particulars respecting further disturbances in the Gold Coast; and to what extent these were between the local inhabitants and Nigerian soldiers.
    Mr. Creech Jones: There was some renewal of disturbance in Accra on Easter Monday, when a crowd armed with sticks attempted to loot the stores of African petty traders. Prompt police action dispersed the crowd, and the curfew was reimposed. In one other town also an attempt was made to renew looting, but order was quickly restored. I strongly deprecate the suggestion, which is not supported by any news reaching me, that Nigerian soldiers were concerned in these disturbances.
    Mr. Sorensen: Does the Secretary of State say that there were no Nigerian soldiers? Surely, it is easier to try to get local militia, or soldiers, or police, than soldiers or others from other Colonies?
    Mr. Creech Jones: The question of security forces in West Africa is, of course, a matter which is receiving continuous attention. So far as the Gold Coast disturbances were concerned, to which the hon. Member refers, Nigerian troops were not involved.
    Mr. Drayson: Is the Secretary of State aware that these disturbances are the direct result of the presence in the Colony of trades union advisers from this country; and will he have these men recalled immediately?
    Hon. Members: Nonsense.
    Mr. Erroll: It is perfectly true.

  COLONIAL EMPIRE (COMMITTEE ON BLINDNESS)
  Mr Platts-Millsasked the Secretary of State for the Colonies whether he has considered the Report of the Departmental Joint Committee on Blindness in British Africa and Middle East Territories; whether he is aware that the incidence of blindness in the areas visited is about five or six times greater than in Britain; that the Committee considers up to 8o per cent. of blindness is easily preventable; and what steps is he taking to remedy this situation.
  Mr. Creech Jones: I am considering the recommendations contained in this Report, in consultation with the Colonial Governments concerned, to whom I am warmly commending it. I should like to take this opportunity of expressing my personal appreciation of the assistance afforded to His Majesty's Government by the authors of this valuable Report, and by the National Institute for the Bind in its preparation.
  Mr. Platts-Mills: While the statement the Minister has made will, no doubt, be greeted with great satisfaction on all sides of the House, does he not appreciate that on this side of the House there is grave concern that such an appalling situation should have been allowed to develop in any country controlled from here?
  Mr. Creech Jones: For a very long time I have been anxious about the problem of blindness in the Colonies. We are doing what we can to improve our medical services, and we give particular attention to this very trouble.

  ROYAL NAVY

    Convoys to Russia (War Losses)
    Mr. Hollisasked the Parliamentary Secretary to the Admiralty (1) what was the amount of British tonnage lost en route to, or from, Russia during the war;
    (2) what were the Royal Naval losses in men and ships in duties en route to, or from, Russia during the war;
    (3) what number of British merchant seamen's lives were lost in convoys taking supplies to Russia during the war.
    The Parliamentary and Financial Secretary to the Admiralty (Mr. John Duģdale): As stated in reply to the hon. and gallant Member for the New Forest and Christchurch (Colonel CrosthwaiteEyre) on 13th March, 1946, 2,055 officers and men of the Royal Navy and Royal Marines were killed, and 19 of His Majesty's ships were sunk. The number of Merchant Navy officers and men killed was approximately 525, and the tonnage of British Merchant shipping sunk amounted to 208,537 gross tons.
    Mr. Hollis: Would the Parliamentary Secretary take all possible steps to remind both the Russian people and people of this and other countries of these and similar statistics?
    Mr. Duģdale: I hope that the Question asked by the hon. Member and my reply will receive adequate publicity in the Soviet Press.
    Sir W. Smithers: Does not the Parliamentary Secretary realise that the present Russian intransigence is the measure of their gratitude for all those sacrifices?
    Mr. Speaker: That has nothing to do with this Question.

    Dartmouth Cadets
    Commander Nobleasked the Parliamentary Secretary to the Admiralty what arrangements are being made in respect of both seniority and fees for cadets who will now have to remain an extra term at Dartmouth.
    Mr. Duģdale: As regard seniority, no alterations are contemplated in the present rules for gaining time on the result of the cadet, midshipman and sub-lieutenants courses. As regards fees, from September, 1948, the cadets will be brought under the same financial arrangements as those who are to be entered at the age of 16. There will be no fees for tuition and board and lodging. The Admiralty will take over the supply of all further uniform and other clothing required by the cadets up to the training cruiser stage, and will meet their personal expenses at the college and in the training cruiser. The cost of these items will be recovered from the parents according to their income, by payments spread over the remainder of the cadet training period. Where necessary, this charge will be adjusted to ensure that the extra term does not involve parents in any additional expenditure.
    Commander Noble: With regard to seniority, I do not understand what the Parliamentary Secretary means by saying that there will be no loss. Does it mean the cadet will be dated at the beginning of the term or at the end, otherwise he will be losing three or four months?
    Mr. Duģdale: As the hon. and gallant Member knows, it is possible for a young officer to gain as much as 16 months seniority. The average gain is, in fact, nine months, and the average will be increased by the fact that these boys will remain longer at Dartmouth.
    Commander Noble: Suppose he does not gain any seniority. He will then lose three months.
    Mr. Duģdale: He might in that case.
    Commander Nobleasked the Parliamentary Secretary to the Admiralty why Dartmouth cadets do not receive railway-warrants for sick-leave and survey.
    Mr. Duģdale: Dartmouth cadets do not receive naval pay and hence do not acquire naval status until they pass out of the college and are appointed to sea. Until that stage is reached, ordinary fee-paying cadets are not entitled, under the present financial arrangements, to travel at public expense, either on ordinary leave or on sick leave, any more than they would be if they were attending any other school. In the case of scholars, the fees charged are inclusive of travelling expenses to and from the College.
    As from September, 1948, when fees for tuition and board and lodging will be abolished for all cadets, the inclusive charges which parents will be required to pay, according to their income, for uniform and other clothing and miscellaneous expenses of the cadets will cover all travelling expenses to and from the college. Parents whose incomes are so low that they cannot afford to pay these charges will, in future, be relieved of them.
    Commander Noble: At the present time, if the cadet is told to report for survey, I understand that he does not get a railway warrant?
    Mr. Duģdale: That has been the practice up to now, but, as I have said, one of the advantages of the new Dartmouth scheme will be that that practice will be altered.

    Prize Money
    Mr. Collinsasked the Parliamentary Secretary to the Admiralty if he is now in a position to make a statement with regard to the payment of war prize money to naval personnel.
    Mr. Duģdale: The question of prize money has, as I have stated on previous occasions, involved a considerable amount of discussion not only with other Departments but also with other members of the Commonwealth. I hope, however, to be in a position to make a statement shortly.
    Mr. Collins: Can my hon. Friend give some indication when that statement is likely to be made, and can he, in order to remove the doubts which exist, guarantee that these payments will be made to the personnel entitled to receive them?
    Mr. Duģdale: I think I can safely say, without committing myself exactly, that the statement will be made within two or three weeks. With regard to the second part of the Question, I would prefer to await the statement.

  ARMED FORCES

    Training Grounds (Joint User)
    Mr. Keelingasked the Minister of Defence how many meetings the Inter-Services Committee for the joint use of land for training has held; in how many cases has joint user been arranged; and whether he will give particulars.
    The Minister of Defence (Mr. A. V. Alexander): The Inter-Services Coordinating Committee on Land Requirements has held four meetings. Individual cases have, in the main, been dealt with by executive discussion rather than at formal meetings, but the Committee laid down the procedure to be followed for the Inter-Service examination of the land required by the Services for training. The procedure laid down ensured that full consideration was given to the possibility of joint user. Joint user has been effected in some 3o areas of which major examples are Dartmoor and Castle Martin.
    Mr. Keeling: Is not this rather a poor result from the efforts of this Committee, and is there any reason why small arms
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    ranges should not be used jointly by two of the Services, or by all three Services?
    Mr. Alexander: I am assured that that is being done wherever possible. I have had a look at some of the statements made by the hon. Member on 15th March, and I have not been able to reconcile them with my information. If he sends me some of the lists he mentioned, I will look into the matter.
    Mr. Keeling: Perhaps the right hon. Gentleman will correct some of my statements if I am wrong?
    Mr. Alexander: Yes, Sir, if the hon. Member sends me the list.

    Auster Aircraft, Palestine
    Major Tufton Beamishasked the Minister of Defence whether he is aware that a number of Auster aircraft have been used by the Jews in Palestine for bombing, machine-gunning and reconnaissance purposes against the Arabs; whether these aircraft were obtained from British sources; and whether it is his intention to allow these and other aircraft obtained from British sources to be retained by their present owners.
    Mr. Alexander: I am informed that one light aircraft, believed to be an Auster, was recently employed by the Jews in operations against the Arabs in Palestine. The source from which this aircraft was obtained is not known at present, but I am having further inquiries made.
    Major Beamish: Does the right hon. Gentleman recollect that, as recently as 4th February, he claimed that the sale of these Auster aircraft was not inconsistent with the policy of denying warlike material to both Arabs and Jews, and that he went on to describe these aircraft as non-military stores? May I ask whether these are still his views?
    Mr. Alexander: As I have said, I am having inquiries made into this particular aircraft. In this case, it did not enable the Jews to make their operations successful. What I said on 4th February was that these aircraft, which had been demilitarised and all of which were unserviceable, had been sold by open tender, and it was open to either side to buy them. [Interruption.] I gave that information. I am not sure what all the trouble is about. We gave orders that no further aeroplanes should be supplied.

  FOOD SUPPLIES

    Sweets (Reserve Stocks)
    Mr. De la Bèreasked the Minister of Food whether, in view of the fact that the records of the sweet manufacturers throughout the country show an excess production over that required for the existing sweet ration, he will now state what they propose to do with this excess, and what his policy is as regards the reserve stocks of sweets and chocolates built up in 1947, and the quantities which have been added to these reserve stocks in 1948.
    The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summer-skill): It is not the case that manufacturers throughout the country hold excessive stocks, but I am making inquiries as to the exact position in all sections of the trade. No special reserve stock of sweets was built up in 1947. A small reserve stock has been maintained for some years past to meet emergency conditions.
    Mr. De la Bère: Is not the hon. Lady aware of the unassailable truth that there are large stocks in Glasgow and in many other parts of the country, and that manufacturers have excessive stocks with no outlet for exports? In these circumstances, why cannot the people have another quarter of a pound on their rations?
    Dr. Summerskill: The hon. Member must remember that we should need 5,400 tons if we increased the ration by one ounce per head per week. We must be quite sure, first, of the facts which the hon. Member alleges.
    Mr. De la Bère: They have got 20,000 tons.
    Mr. Rankin: Can we be informed where these surplus stocks are being kept in Glasgow?
    Mr. De la Bère: If the hon. Member will see me in the tea room, I will tell him all about it.

    Farm Inspections, East Riding
    Lieut.-Commander Gurney Braithwaiteasked the Minister of Food how many prosecutions and convictions have resulted from visits by his enforcement officers to farms in the East Riding of Yorkshire since 1st January, 1948.
    Dr. Summerskill: Up to date, five prosecutions have taken place. Convictions were obtained in four cases, and one case was dismissed under the Probation of Offenders Act.
    Lieut.-Commander Braithwaiteasked the Minister of Food what provisions are made for disinfecting the feet of his enforcement officers following their inspections of farm premises.
    Dr. Summerskill: Enforcement inspectors carry disinfectant with them on their visits to farms, and use it where there is an outbreak of fowl pest or other disease.
    Lieut.-Commander Braithwaite: Is the hon. Lady satisfied that this regulation is being strictly enforced, and can she say whether the necessary steps have been taken to inform the farmers of their rights in this matter?
    Dr. Summerskill: I have made very careful inquiries, and I find that the officers carry a bottle of Lysol or Jeyes.
    Mr. Gallacher: Would it not be desirable for these enforcement officers to make these inspections in their bare feet and then to wash them afterwards?
    Lieut.-Commander Braithwaiteasked the Minister of Food how many enforcement officers of his Department have been employed in visits to farms in the East Riding of Yorkshire since 1st January, 1948.
    Dr. Summerskill: I regret that the information asked for in regard to the East Riding of Yorkshire is not available, but, on an average, 3o enforcement inspectors have been employed each week since the 1st January, 1948, in visits to farms in the East and West Ridings.
    Sir W. Smithers: Does not the hon. Lady now realise how right my right hon. Friend the Member for Woodford (Mr. Churchill) was when he warned us against the Gestapo?

    Meat Production Scheme, Queensland
    Mr. Errollasked the Minister of Food what agreement has been reached with Australia for increasing Queensland meat production through the agency of the Overseas Food Corporation.
    Lieut.-Colonel Bromley-Davenportasked the Minister of Food whether he will make an early statement on the scheme of the Food Corporation to raise pigs on a large scale in Queensland; and whether he can give an assurance that this scheme will not prejudice the long-deferred revival of the British pig industry.
    Dr. Summerskill: The Overseas Food Corporation and the Queensland Government have agreed upon a scheme for the cultivation of coarse grains and later, possibly, sunflowers, on an area of about 300,000 acres in Queensland. The coarse grains will be used for animal feeding-stuffs, and in particular pig feed, partly in Australia, and partly in this country. The exact use of the crop will be decided in the light of commercial and other considerations from year to year. The sunflower seed will be used to produce edible oils for the manufacture of margarine, etc. Legislation has been approved by the Queensland Parliament giving legal powers for the establishment of a statutory company to be known as the Queensland British Food Corporation. It is estimated that the financial requirements of the scheme may amount to 2½ million Ls Australian, of which the Queensland Government have agreed to provide up to ½million £s Australian.
    As regards the last part of the Question, the Government is determined to increase the food supplies of this country, both of home produced foods and of imported foods, especially from non-dollar sources. I have no reason to suppose that the revival of the British pig industry will be prejudiced by the arrangements I have described.
    Mr. Erroll: Can the hon. Lady say what the Australian participation will be in the management of this concern?
    Dr. Summerskill: I understand that about 1,000 men will be employed, half of whom will be Australians and the other half British.
    Mr. Erroll: What is the position in regard to management?
    Dr. Summerskill: The Corporation will be set up and we shall nominate the chairman and three members, and the Australians will nominate the vice-chairman and one member.

    Catering Establishments (Main Meals)
    Mr. Thornton-Kemsleyasked the Minister of Food the average number of main meals served per week to the civilian population, respectively, in restaurants or other institutions open to the public, in canteens and other institutions to which access is limited, and in schools.
    Dr. Summerskill: The average number of main meals served per week to she civilian population of the United Kingdom is, respectively, in restaurants and other catering establishments open to the public about 32 million, in canteens and other catering establishments to which access is limited, about 16 million, and in all schools the number served to day pupils is about 14 million.

    Cheese Ration
    Sir John Mellorasked the Minister of Food why the reduction in the cheese ration has been inflicted upon domestic consumers instead of upon privileged canteens.
    Dr. Summerskill: A reduction in the allowances of cheese is being applied to all catering establishments and institutions except those catering solely for vegetarians. The original announcement about the change in the cheese ration was incorrect in this respect, and has since been amended.
    Sir J. Mellor: Will the hon. Lady say whether this incorrect announcement was due to having too many public relations officers?
    Mr. E. P. Smith: Can the hon. Lady say when her Department expects to be able to answer my various letters on the subject of an extra cheese ration for rural builders?
    Dr. Summerskill: The hon. Gentleman writes so often that perhaps his last letter has not been answered, but I can assure him that I will give my personal attention to the matter.

    Early Potatoes (Wholesalers' Licences)
    Mr. Collinsasked the Minister of Food when he proposes to issue licences to grower-wholesalers, for the marketing of early potatoes.
    Dr. Summerskill: About 10,50o such licences are already in existence, and applications for the new season are now being dealt with.
    Mr. Collins: Is my hon. Friend aware that anxiety exists about applications for the new season? As these potatoes will be marketed six weeks hence can she give this matter immediate consideration?
    Dr. Summerskill: Yes, Sir. My hon. Friend's friend, Mr. Packer, has already received a form.

    Feedinģstuffs (Piģeons)
    Mr. Peter Freemanasked the Minister of Food whether he will now announce the details of the increased allowance and prices of food that will be available for pigeons; and when the new scheme will come into operation.
    Dr. Summerskill: The present arrangement, under which feedingstuffs for pigeons are issued to members of the National Pigeon Service, comes to an end on 24th September next. Revised arrangements, under which existing supplies will be more widely distributed, have been discussed with representatives of all Homing Unions, and an announcement will be made in due course.

  TRADE AND COMMERCE

    New Motor Cars (Overseas Visitors)
    Sir J. Mellorasked the President of the Board of Trade what steps are taken to ensure that new motor cars, purchased for export by visitors from over seas in priority to potential home customers, are exported.
    The Parliamentary Secretary to the Board of Trade (Mr. Belcher): There is no statutory assurance that a new motor car sold in this country to a visitor from overseas will in fact be exported, but I have no reason to suppose that this requirement is evaded to any material extent.
    Sir J. Mellor: Is it not quite easy at present for a visitor from overseas to acquire a car and then sell it? If such people are to have this priority, surely there ought to be some provision that they shall not be able to take unfair advantage.
    Mr. Belcher: There is a trade covenant in existence which covers the sale of new motor cars, and which is designed to restrict resale within a certain period. So far as I am aware that covenant operates satisfactorily, whether the purchaser is from overseas or lives in this country, but if the hon. Gentleman has any information that there is a traffic of the kind he envisages I should be glad to have it and look into it.
    Sir J. Mellor: How can a trade covenant possibly be enforced against an overseas visitor who has returned home? It would be useless.
    Mr. Belcher: It might be enforced against the purchaser. I do not know, but if there is any evidence to the contrary I should be glad to have it and look into it.

    Rails (Exports to Russia)
    Sir J. Mellorasked the President of the Board of Trade why the Government have diverted to Russia rails purchased for export to other destinations.
    Mr. Belcher: Rails were an important factor in last year's trade negotiations with Russia, as a result of which we are now receiving valuable supplies of coarse grain. On this account there was a temporary suspension of releases of surplus rails by His Majesty's Government last summer while negotiations were proceeding between the two Governments, but releases against a number of export orders were later permitted, and I am not aware that any rails actually purchased for export to other destinations were diverted to Russia.
    Sir J. Mellor: Will the hon. Gentleman be prepared to consider evidence which will prove the contrary?
    Mr. Belcher: Most certainly.
    Mr. Gallacher: Is the Parliamentary Secretary aware that the hon. Member for Sutton Coldfield (Sir J. Mellor) is anxious that new regulations should be introduced so that he can pray against them?

  SOCIALIST CONFERENCE (POLISH DELEGATES, VISAS)
  Mr. Elwyn Jonesasked the Secretary of State for the Home Department why there was delay in granting visas to

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  the delegates of the Polish Social Democratic Party desiring to attend the meetings of the Committee of the International Socialist Conference in London on 20th March, 1948; and who was responsible.
  The Under-Secretary of State for the Home Department (Mr. Younger): I am informed that although the invitations to attend this Conference were issued in January the Polish delegates did not apply to the British Passport Control Officer, Warsaw, for their visas until 15th March. The applications reached the Home Office on the 16th, approval was given on the 18th but the telegram despatched from London that day did not reach Warsaw until the 19th. I regret that there was a delay of two days in the Home Office, and appropriate instructions have been issued to the officers concerned.

  FUEL AND POWER

    Basic Petrol Ration
    Mr. Lipsonasked the Minister of Fuel and Power if he will restore a basic petrol ration not later than 1st May to assist the early staggering of holidays and enable, cricket and other sporting clubs to arrange in time their fixtures for away matches.
    The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. Robens): would ask the hon. Member to await the statement which, with Mr. Speaker's permission, my right hon. Friend proposes to make at the end of Questions tomorrow.
    Mr. Lipson: Will the hon. Gentleman inform his right hon. Friend that whatever concession is possible it would be doubly welcome if it was made to apply before the Whitsun holidays?

    Russell Vick Committee (Report)
    Mr. Lipsonasked the Minister of Fuel and Power if he will publish the report of the committee on the black market in petrol.
    Mr. Robens: The report of the Russell Vick Committee will be available in the Vote Office at 5.0 p.m. today, and will be on sale to the public tomorrow.

BOROUGH CONSTITUENCIES (PROPOSED ADDITIONS)
The Secretary of State for the Home Department (Mr. Ede): During the Committee stage of the Representation of the People Bill on 24th March, in connection with the proposed addition of 17 borough constituencies in England, I undertook to ask the Boundary Commissioners if they would receive and consider representations with regard to the proposed manner of dividing the 17 boroughs concerned from the local authorities, political parties and other persons interested, who would have had the right to make such representations to the Commission under the procedure laid down by the House of Commons (Redistribution of Seats) Act, 1944. I therefore wrote to you, Sir, on 25th March. I would like to inform the House that you have now been good enough to forward to me a letter addressed to you by the Deputy-Chairman of the Commission expressing the willingness of the Commissioners to consider such representations, and indicating the manner in which the representations should be made and the procedure which the Commissioners propose to adopt.
The Deputy-Chairman writes as follows:
"I have now had an opportunity of consulting my colleagues regarding the Home Secretary's request that we should consider representations relating to the proposals, details of which are set out in the White Paper published on 19th March for the division of the 17 boroughs selected for additional representation.
We are prepared to undertake this additional task, but it is clear that in the circumstances the procedure set out in paragraphs 3 and 4 of Part III of the First Schedule to the House of Commons (Redistribution of Seats) Act is not applicable. Moreover, considerations of time would appear to render it impracticable to employ the normal machinery of local advertisement or the holding of local inquiries if such were considered desirable. Perhaps the simplest course would be for an announcement to be made in the House to the effect that we are prepared to consider any representations relating to the 17 boroughs submitted to us within a specified period. The exact time to be allowed for this purpose will presumably have to be kept as short as possible in order to avoid unnecessary delay in the progress of the Bill. In our view a period of 14 days should be sufficient to enable all those interested to prepare and submit representations. The representations should, of course, be in writing and addressed to the Secretary, Boundary Commission for England, North Wing, Somerset House, London, W.C.2.

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When we have considered the representations, we will submit a report to the Home Secretary indicating what amendments if any, should in our view, be made to the published proposals in the light of the representations submitted."
In accordance with the suggestion made in the letter representations should reach the Secretary of the Commission not later than 24th April.
Mr. Osbert Peake: In view of the fact that the whole of these proceedings are unofficial, and without any statutory basis, will the right hon. Gentleman answer me these two questions? First, will he undertake to publish any reports made by the Commissioners under this procedure as soon as they are received, and in good time for the House to consider them before we reach the Schedules to the Bill? Second, will he tell me from what date the 14 days, which the Commissioners propose should be the time for laying objections, will run?
Mr. Ede: I will undertake that as soon as I receive a report it shall be published to the House as a White Paper, in the same way as the Commissioners' original proposals were presented. I will undertake that it shall be in sufficient time for consideration at any rate before the Report stage of the Bill. It may not be possible to have it available before the Committee stage, but on the assumption that the Committee stage is being taken first, and that it is available before the Report stage, I propose myself to put down Amendments to embody any suggestions made by the Commissioners when we reach the Report stage. I have suggested that the last day should be 24th April; as this is 7th April that is virtually giving 17 days' notice.
Mr. Keeling: Is the Minister aware that there are many areas outside these towns which have good reason to think that, owing to the increased representation now to be given to these towns, they should have the right to make representations? Has the Home Secretary considered further the suggestion I made to that effect during the previous Debate?
Mr. Ede: I have no doubt that the representatives of such areas will make their voices heard when we come to the First Schedule.
Mr. Maclay: Will the Home Secretary say whether he is really satisfied that 17 days is sufficient time for making repre-sentations? Having had experience of this in the earlier stages of the Bill, I suggest that 17 days is a very short time indeed for local authorities and others to go into the problem and get out the reports necessary.
Mr. Ede: The suggestion of the Commissioners was 14 days. By making the announcement today I have added three to that, and I think that in view of the very limited scope of these particular recommendations the time is sufficient.

NATIONAL HEALTH SERVICE (DOCTORS)
The Minister of Health (Mr. Aneurin Bevan): With your permission, Mr. Speaker, and the permission of the House, I would like to made the following statement.
I think that the time has come for me to make a statement to the House about the medical profession and the National Health Service. Needless to say, I make this statement on behalf both of the Secretary of State for Scotland and myself, and of the Government as a whole.
I have been receiving representations from many quarters and I have studied the resolutions which both the Royal College of Physicians and the British Medical Association have sent on to me—and which have since been published and are familiar to the House. Meanwhile I have been trying, so far as I am able, also to determine for myself what it is that is really and sincerely worrying the doctor.
No doubt, as we gain experience, we shall find many modifications which would improve the scheme. That is always true of major legislation of this kind. But it seems to me that it is somewhere beyond all this that the key to the doctors' unease and restlessness lies, and that it consists of some instinctive fear—shared by many most well-meaning men and women—that, although the Act does not propose it and although the Government have themselves denied it, the real objective is a full-time, salaried, State medical service. It is this fundamental point which I want now to tackle once and

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for all. As long ago as 1946, in this House, I said:
"Some doctors have expressed the fear that this is merely the beginning of a full-time salaried service. I cannot read into the mind of any future Minister or prophesy what may be done by future Governments, but that is not our intention."— [OFFICIAL REPORT, 4th November, 1946; Vol. 428, c. 1125.]
But it seems clear that something more than my spoken assurance is needed, and I am certainly quite willing to do anything to banish this apprehension for good. The Royal College of Physicians has made the useful suggestion, with which the other Royal Colleges associate themselves, that I should now make it statutorily clear that a whole-time service will not be brought in by regulation, but would require further legislation to make it possible. My colleagues and I accept that, most cordially. In short, we propose that it should be clearly impossible to institute a full-time salaried service by regulation alone. It would then need express legislation if it were ever proposed.
As the House knows, I am about to set up an expert legal committee to advise me on the disputed effect of the Act on partnership agreements. I hope to announce details of this Committee at Question Time tomorrow. It seems likely that a short clarifying Bill may be needed as a result of its inquiries. If so, I shall take the opportunity—and, if not, I shall invoke an opportunity specially—to ask Parliament also to clarify our intentions about any full-time salaried service, in the way suggested above.
There is one further way, I think, in which we can eliminate these apparently widespread fears of a full-time salaried service. By many doctors the proposed fixed element of £300 in remuneration seems itself to be a menacing thing to freedom. I for my part have always conceived it rather as an assurance for the young beginner and for the older practitioner wishing to ease up in old age, and as a peg on which to hang additional assured payments for doubtful areas or other risks—and these are all worthy objects. However, if doctors are afraid of sinister intentions in this, I think these worthy objects can be achieved in another way, and no amendment of the Act is needed for this. Let all new entrants to practice have the advantage of this assured element of £300 for a period of,
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say, three years. Then let each decide for himself whether he will forgo it and pass to a system of plain capitation fees, or stay as he is with his fixed £300 plus a lower proportionate rate of capitation. He will be able to do this at any time. Similarly, let any doctor in established practice be able to elect for himself at any time to go on to the system of £300 fixed payment, plus the lower capitation rate, if and when he wants to—for example, in old age—instead of the higher rate with no fixed payment at all.
So now it can rest with the individual doctor himself to decide the extent to which he prefers the combined system of £300 plus lower capitation, or all capitation—with the exception that beginners will start with three years on the former system.
One other point. I have already given assurances in this House that I do not for one moment intend to interfere with the ordinary rights of doctors to express themselves in speech or in writing with absolute freedom. Similarly I have already given assurances to the profession that the Chairman of the Tribunal under the Act will be a lawyer of high professional standing appointed by the Lord Chancellor. I need scarcely repeat such assurances now, but—for the removal of any vestige of doubt—I do so.
I trust that what I have said will finally free doctors from any fears that they are to be turned in some way into salaried civil servants." I look forward now to a future of active and friendly cooperation with the profession in putting into operation next July a great social measure, which can be made a turning point in the social history of this country and an example to the world.
Mr. Oliver Stanley: All of us in this House hope that when this National Health Service scheme comes into force, it will be in a form which will command the whole-hearted co-operation of the doctors. It always has been, and it still is, for them to decide, and I shall make no comment on the proposals which the right hon. Gentleman has made; but I am sure that speaking for everyone on this side of the House, we welcome anything which tends to break the deadlock which has occurred, and above all we welcome the tone in which the right hon. Gentleman has spoken today.
Mr. Clement Davies: May I, on behalf of my colleagues and, I am sure, on behalf of everyone in this House, congratulate the right hon. Gentleman upon the action which he has taken and the statement has has made. I am quite sure it is the desire of every one of us that the National Health Service should work smoothly and harmoniously. I should like to ask him whether he is prepared —as I am sure he is—to meet the negotiating committee at once if they desire to see him.
Mr. Bevan: As I have said on many previous occasions, and as my right hon. Friend the Prime Minister declared quite recently, I am always prepared to meet the negotiating committee when they desire to see me.
Dr. Haden Guest: May I also congratulate the Minister on this decision very largely on the ground that it will secure that the service will begin with the good feeling of the doctors and the good feeling of the whole country in this matter—a most important aspect of this new service?
Mr. Wilson Harris: Will the right hon. Gentleman clarify his very encouraging statement in two respects? First, will he give an assurance that no influence will be brought to bear on the doctors in the matter of issuing sickness certificates? Secondly, with regard to the basic salary, the formal suggestion of the Royal College of Physicians seems to leave it open —I am sure it is not the right hon. Gentleman's desire—to any Minister to raise the £300 by regulation to £600, £900 or any figure so long as it does not constitute a whole-time salaried medical service? Would the right hon. Gentleman be willing to go as far as to put into the amending Bill a provision that the original sum of £300 should not be increased except by a new Act of Parliament?
Mr. Bevan: That is a point of refinement which can be looked into later on. I am perfectly prepared to discuss the terms of the Amendment with the representatives of the medical profession. I should like to take this opportunity of pointing out that there is very considerable misapprehension on this matter. People appear to think that the power to make terms and conditions of employment by regulation is something the
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Minister himself wants. The fact is that it is usually what the professions themselves desire, because it makes the whole system much more flexible. If we had to have an amending Act every time we altered the terms and conditions of remuneration, very often they would not be altered. The recent increase in capitation would not have been possible except by regulation.
Sir Ernest Graham-Little: The right hon. Gentleman has asked what the doctors and the profession want. He has only mentioned one very important objection, and that is the fear of a full-time salaried service. I was present at the meeting of the Royal College of Physicians at which this resolution was passed, and I should like to point out—
Hon. Members: Speech.
Mr. Speaker: I would ask hon. Mem-bers to remember that they are limited to asking questions on the statement.
Sir E. Graham-Little: I should like to ask this question—will the Minister take into consideration the second resolution which has been published in the Press, and which was moved at the meeting of the Royal College of Physicians, and accepted by them?
Mr. Bevan: I am always prepared to receive any representations made to me either by the negotiating committee or by the Royal Colleges.
Mr. Baird: As the Minister today has been very generous to the British Medical Association, will he take into consideration the disquiet felt by Members on this side of the House about the delay in setting up health centres, and will he also consider making a gesture to this side of the House by speeding up the building of health centres?
Mr. Bevan: That lies rather outside the scope of the statement I have made, which is concerned with the terms and conditions of remuneration of the general practitioners I hope, however, that the statement I have made will elicit from the representatives of the doctors the same spirit of cordial co-operation.
Miss Bacon: Arising out of the last statement made by the hon. Member for London University (Sir E. Graham-Little), is my right hon. Friend aware

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that any further concessions made by him will not be welcomed by many of us on this side of the House?
Mr. Bevan: It will be the opinion of hon. Members in all parts of the House and of the general public that the Government have gone a very considerable way to meet the profession, and it now lies with the profession to show an equal desire to make the National Health Service a success.
Mr. Rankin: Will my right hon. Friend clear up one point? If at the end of three years a doctor decides to continue receiving the £300 basic salary, will he have to accept the lower capitation fee?
Mr. Bevan: Most certainly. He cannot have the £300 basic salary plus the higher capitation rate. He must take one or the other. The advantage of the proposal that I made is that the extent to which a fixed element is in existence will depend upon the initiative of the doctors themselves, and upon no one else.
Dr. Segal: In view of the cordial reception given from all parts of the House to the Minister's statement, will he now himself take the initiative in inviting the Negotiating Committee to meet with him to discuss their remaining fears about the National Health Service?
Hon. Members: No.
Mr. Bevan: Right hon. and hon. Members in all parts of the House will realise that the prestige of Parliament must be sustained. I am always ready to meet representatives of the medical profession. I should like to point out that we have sent to them in the course of the last few months a considerable number of letters asking for their co-operation on technical matters, and we have not received that co-operation.
Mr. Gallagher: While agreeing that it is very desirable that the National Health Service should start off in a healthy manner, would it be permissible for the Government or the Minister to advise the workers to show the same solidarity and tenacity as the doctors?

SOCIALISED INDUSTRIES (QUESTIONS TO MINISTERS)
Mr. Ellis Smith: I wish to ask for your Ruling, Mr. Speaker, on three Questions which I desired to ask and which have
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been refused. Let me make it clear that I cast no reflection on anyone. It is a question of the interpretation of what comes within the every-day running of the nationalised industries. In my view the Questions did not involve the daily management of the industries. They were Questions concerning the broad policy which Members of Parliament should be able to urge upon Ministers, who should, in the public interest, urge it upon the managements to adopt. This raises in a new form the issue of the relationship between Parliament and the nationalised industries. The vital democratic rights of the people's elected representatives are involved. I have read with care the rules on the admissibility of Questions, and not one word is said on this matter. The Lord President of the Council said on 3rd March last:
"None of us had better be final, conclusive or dogmatic about this matter. This as a question about which we have to learn as we go along."—[OFFICIAL REPORT, 3rd March, 1948; Vol. 448, C. 450.]
Mr. Speaker, I ask for your Ruling.
Mr. Speaker: The hon. Member for Stoke (Mr. Ellis Smith) has asked me my reasons for refusing three Questions which he wished to ask of the Minister of Transport. One of the Questions was about special trains, one about cheap fares, and the third about the general administration of the nationalised railways. On 1st March the Minister, in answer to a Question asking him to issue directions to the Commission to run no special trains, refused to issue such a direction, and said the matter was one in the discretion of the Commission, while on 2nd February he refused to answer Questions on the issue of cheap tickets or to interfere in the day-to-day operations of the Commission.
It seems to me that the hon. Member's Questions are covered by these answers, and that under the existing Rules I have no option but to refuse them, for it is my duty to administer the Rules. It is for the House to decide what the Rules shall be and to change them if they so please. I can only add the words which the hon. Member himself quoted, because I am always bearing this thing in mind,
"None of us had better be final, conclusive or dogmatic about this matter. This is amp; question about which we have to learn as we go along."

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That is the way I regard all these matters, and I endeavour not to be too harsh, but I am bound by the Rules.
Mr. Smith: I thank you very much, Mr. Speaker, for your Ruling, which I shall in no way attempt to question. I should like, however, to ask whether it would be possible for you to bear in mind, between now and the time when this question is next considered, that the right of the British Member of Parliament to interrogate Ministers is looked upon throughout the world as a most important one, and that it should be safeguarded as much as possible? I venture to hope that a most generous interpretation will be put upon this matter, in order that this right may be safeguarded.
Mr. Gallacher: Are we to be told that if the people of this country feel that special trains should be run at a particular time and express that feeling to the Minister through their Members of Parliament, the Minister is incapable of passing that desire on to the board of the nationalised industry?
Mr. Speaker: That is a matter for the Minister's responsibility, and not for mine.
Mr. Oliver Stanley: Would it be in Order for me to call the attention of the Leader of the House to the fact that you, Sir, have been placed in an unfortunate position by the Rules on this matter, and to ask him whether we can have an opportunity of amending those Rules?
Mr. Speaker: No doubt the right hon. Gentleman will remember that at the beginning of March we discussed this matter for half a day.
Mr. Stanley: When I asked that question, Sir, I had in mind your concluding words that this was not a matter on which we could yet have a final opinion.
Mr. Speaker: I was merely quoting from the Leader of the House.
Earl Winterton: Does your Ruling apply only to Questions, Mr. Speaker? Would it be out of Order to raise matters such as the one which was raised by the hon. Member for Stoke (Mr. Ellis Smith) on the Motion for the Adjournment, or would you Rule that it was not in Order because it was not within the Minister's competence?
Mr. Speaker: The noble Lord has asked a very useful question. The Rules relating to Questions are much stricter than the Rules about Debates. Any of these matters could be taken up on any evening by the Member who was lucky in securing the Adjournment, and it would be perfectly in Order to discuss them.

MEMBERS (GIFT PAREELS)
Mr. Quintin Hogg:: I would like to ask your guidance, Mr. Speaker, upon a particular point. Although, in some ways, the point is a more delicate one than that which has just been discussed, I would start with the assurance that no reflection is intended to be cast upon anyone.
Yesterday, in the Members Cloakroom, there was a large pile, rather gaily coloured, of gift parcels, with their distribution list attached The distribution list —I think it would be invidious to mention any names—was clearly of a political character. The contents of the gift parcels, from their shape, were obviously gifts of liquor. Inquiries elicited the fact that the gifts were from the Polish Embassy to particular Members of Parliament, who were obviously a certain section of a particular party.
The points upon which I desire to ask your guidance are these: to what extent is it right for the facilities of the House to be granted for a distribution—a mass distribution—of gifts in this way? To what extent is it legitimate, or desirable, or in Order, for hon. Members to accept presents from foreign Powers? Is the matter made better or worse by the fact that the presents are not universal but selective? If the House disapproves of such gifts, is there any method open to it whereby its disapproval can be made known to the donors? The last question is whether gifts of a selective character to Members of Parliament may or may not raise questions of Privilege.
Mr. Gallacher: The hon. Member has made a reference to one party. I want to make it clear that my party, in so far as I am representative of it, has had no contact with the Polish Embassy. The House can, therefore, "include me out."
Mr. Speaker: The hon. Member for Oxford (Mr. Hogg) has asked me four questions, but I am sorry to say that I am not quite sure that I can remember

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them all. I would like to make a statement about this matter. I find that 24 parcels addressed to individual Members of Parliament were handed in by a representative of the Polish Embassy yesterday for distribution, but they were accepted in error. Only one letter or parcel from any one firm or organisation can be accepted. Consequently, as soon as the attention of the authorities was drawn to this matter, the parcels which had not already been delivered, 10 in number, were returned to the Polish Embassy with a letter explaining the regulations. I would suggest, if I may do so very mildly, that it would have been better if the Polish Embassy had consulted with me before attempting this distribution, which is strictly contrary to our Rules. I am sorry that the incident took place.
Earl Winterton: The point arises whether a breach of Privilege has not been committed. I would like to raise this question tomorrow, when you, Sir, will no doubt have had time to consider the matter.
Mr. Speaker: I could not possibly answer a question about Privilege without notice. I do not think that there is any Privilege involved, but I do not want to answer the noble Lord's question offhand.
Earl Winterton: I will endeavour to raise the question again tomorrow.
Mr. Hogg: While thanking you, Mr. Speaker, for that Ruling, I would observe that, in so far as it is a Ruling, it is about the regulations under which the authorities of the House are at liberty to accept not more than one parcel from a single source. In my submission to you, I had in mind a definite question of principle which is raised by matters of this kind. Is there any means whereby we can ask your guidance, or whereby we can discuss in any way the circumstances in which it is legitimate for hon. Members to accept gifts from a foreign Power?
Mr. Speaker: That is really a hypothetical question. After all, any Member may receive a parcel from anybody. One cannot lay down the circumstances in advance.
Mr. Hogg: I am afraid I could not have expressed myself at all plainly. The point
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I was raising was not intended in any way to be hypothetical? It appeared from your statement, Sir, that certain of these gifts had, in fact, been accepted and taken away. I was, therefore, asking you for your guidance. I may have been receiving a gift of maple sugar from President Truman. I want to know in what circumstances one can legitimately accept presents of the kind which have been accepted by hon. Members? May we not have some guidance, or some knowledge of how we can discuss the matter? It seems very undesirable for hon. Members of this House to be in receipt of substantial presents on a selective basis from a foreign Power.
Mr. Speaker: I am bound to say that these questions are complicated, and they are questions of which I have had no notice. I should think I might have had a little time to consider my answer. The short answer would be that I should have thought it was very embarrassing to Members of Parliament themselves to receive these presents. The very names were written, I understand, on some list in the Cloakroom and they were chalked off as the parcels were received. I am glad to say that my name was not on the list. I think it would have been most embarrassing, and I should have thought it was really undesirable that parcels should be sent in this way.
Mr. Scollan: Is it not a fact that breach of Privilege can occur only if it is considered that the presents were given to Members of Parliament for the purpose of influencing them in their business as Members? [HON. MEMBERS: "Hear, hear."] If that was the reason, as the interrupters now seem to insinuate, why the gifts were made, it does not seem that the Polish Embassy put their price very high.
Mr. Gallacher: The Americans pay more and are more selective. Have an examination into what the Americans do.
Mr. Driberg: Further to the point of principle raised by the hon. Member for Oxford (Mr. Hogg), is not exactly the same point of principle involved if an hon. Member, for instance, accepts an invitation to dinner at the Embassy of a foreign Power, and have not those invitations in the past always been strictly selective?
Mr. Speaker: These are complicated arguments of which I have had no notice. I really cannot give an answer to all these points.
Mr. Mikardo: As one who, like yourself, Mr. Speaker, was not included in the distribution list, may I ask, in view of the fact that identical receptacles are used for liquor and certain other things, including corrosives and poisons, how it is possible for the hon. Member for Oxford (Mr. Hogg) to know from the outward appearance of a parcel that it contains liquor?
Mr. Rankin: Is it really in good taste for this House to cast aspersions on a kindly gift from the representatives of a friendly foreign Power?
Major Bruce: Would similar considerations apply to a present, say, of cigars?
Mr. Speaker: I think we had better leave this discussion now.
Mr. Neil Maclean: Are the same strictures likely to be placed against any hon. Member who receives a decoration from a foreign Power?
Mr. Speaker: I hope not.

BILL PRESENTED
  HOUSE OF COMMONS MEMBERS' FUND BILL
  "to amend the House of Commons Members' Fund Act, 1939," presented by Mr. Herbert Morrison; supported by Mr. Chancellor of the Exchequer, Mr. Secretary Ede, Mr. Bevan and Mr. Attorney-General; to be read a second time tomorrow, and to be printed.
ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee [progress,6th April].
  [Major MILNER in the Chair]

  AMENDMENT OF LAW
  Question again proposed,
  "That it is expedient to amend the law with respect to the National Debt and the public revenue, and to make further provision in connection with finance."

  BUDGET PROPOSALS AND ECONOMIC SURVEY
  3.53 p.m.
  Captain Crookshank: All great events in this country, whether the Cup Tie or the Derby or the Budget or whatever it may be, go through three phases. There is the anticipation, the time when people have a guess as to what horse will win or which side will be victorious or what taxes the Chancellor will put on; then there is the event, the great day itself which everybody is awaiting; and then there is the retrospect. This is the beginning of the retrospect. As the right hon. and learned Gentleman will know, the retrospect lasts quite a long time. At the first opportunity, obviously, the comments which I can make are bound to be somewhat sketchy. After all, the right hon. and learned Gentleman has had as many weeks to prepare his Budget as I have had hours to think of what I want to say about it.
  Moreover, for the first time we are having a combined Debate—the economic situation and the budgetary situation. It will be a useful experiment. We shall have to see whether it really works another year, but certainly last year we suffered from the fact that the then Chancellor refrained from addressing us on any economic topics before the Budget, saying that he could not anticipate what his statement might be; but when the Budget came he forgot about the economics and we got very little guidance from him of his general view on the whole subject. In view of his dual position, the present Chancellor has been able to overcome that, and consequently some part of this Debate will be concentrated more on the

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  economic side and some part more on the budgetary side. I shall speak on only a few of the Budget points today.
  I remember saying on the Second Reading of the Finance Bill last year that the surplus upon which the then Chancellor prided himself so much was in fact bogus. Well, according to his calculations it appears that that bogus surplus is twice as big. Perhaps it is therefore twice as bogus. In any event, the right hon. and learned Gentleman himself has helped us considerably by giving us two alternative versions in the financial statement of what the surplus might be. They vary from £636 million to £338 million. Indeed, it would be possible by making other calculations to show that the surplus of last year was not even as big as that.
  What the Chancellor said in his speech yesterday was that the size of the surplus was the measure of the inflation. That seems to me to make a rather poor show of his predecessor's boasts of the largeness of his surplus. "Not bad for Labour, eh?" I remember his saying in connection with that surplus, and the more he boasts of the size of it, the more obviously he must eat his words about the inflationary situation. However, I do not want to go into last year's Budget. Last year's Budget is dead. Last year's Chancellor is dead. "Let the dead bury their dead," and if anybody says he is not dead, let them ask him. He is going round suggesting the building of a statue for himself. Surely that is the normal sign of deadness.
  This Budget is staggering in its size. It may be that a brief review of the Press shows that many of the financial and economic pundits say that, within its limitations, it is a wise one, but the ordinary folk are appalled at the size of the tax revenue which the right hon. and learned Gentleman is going to exact in the coming year. Let us look at the last page of the statement where it says that the Chancellor's estimated total receipts from taxes this year is £3,512 million, an absolutely staggering sum remembering, mark you, that last year the corresponding estimate for total receipts from taxes was just under £3,000 million and the year before £2,918 million. In these three Budgets we see an increase in the estimated receipts from tax of close on £600 million, and that is three years after the war. It
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  seems to me an intolerable burden to put on the taxpayers of this country.
  The right hon. and learned Gentleman and many others take the point that we must work up in our budgetary plan for a genuine surplus—a genuine surplus to get out the poison—but if things had been properly managed it would not have been necessary. There would not have been any poison, and there might not even have been a snake. If expenditure had been watched and pruned at the proper time, I still think that the Chancellor could have got his large genuine surplus, which is admitted to be economically desirable, without having all these additional taxes. When all is said and done, high taxes and a big surplus are really one other form of saying "compulsory savings" or, to use the Chancellor's own phrase, "abstention from spending."
  The damage is done by having too high a tax total. Of course it may be mitigated for some people by altering the actual shape of the taxes, but that mitigation may itself be unfair as between one section and another section of the taxpayers because, according to his Economic Survey, the national income is estimated somewhere in the region of £9,000 million and he is taking out of it under taxation £3,500 million, which is very nearly 40 per cent. of the national income and, on top of that, most of the taxpayers have to pay rates. In addition, during this year there will be coming out of their pockets the increased contributions for the new insurance social service system so that the burden is obviously very heavy. On all that has hitherto been accepted as economically possible, a burden of over 40 per cent. in rates, taxes and compulsory payments, is something which it is impossible to continue for very long. The fact is that the whole thing is at too high a level.
  Perhaps I can put it in this way. A genuine surplus is like the roof of a house, and it is necessary in this case. However, one can have a roof on a two-storeyed, a four-storeyed, a six-storeyed house, or a skyscraper, and the Chancellor is putting his roof on the skyscraper. The more steps—that is, the more taxes—which we have to climb to reach the roof, the more we are under a strain, and the more we pant and puff and the more unendurable it is; in fact, we might even die in climbing to the top floor. So, if

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  one wants to keep the situation healthy, 'the thing to do is to reduce the steps and not have quite such a high building, although the roof—the genuine surplus—is still necessary.
  How should that have been achieved? Surely, by the reduction of public expenditure. The right hon. and learned Gentleman has had, even from his good friend "The Times," no less than two reminders upon that subject. Two or three days ago it pointed out—or shall I say, alleged, out of deference to the right hon. and learned Gentleman—that
  "nothing but a reduction of expenditure could restore to the Chancellor liberty of action, and that it is on this, above all, that any constructive Budget policy must concentrate."
  Yesterday, the Chancellor gave us a description of the three claims upon national resources. There was the public consumption expenditure, the capital development—public and private —and the private and personal consumption. Those are the three headings of the claims upon the national economy, but he spoke as if the first two—the claim of public consumption expenditure, that is, Government expenditure, and capital development, public and private—were fixed and immutable and could not be touched; they were the laws of the Medes and Socialists, nothing could be done about them. It was only on the third claim—the private and personal consumption—that limitation should fall.
  I do not know why it has not been possible further to reduce public expenditure. The right hon. and learned Gentleman asked yesterday, where? All I can do is to refer him to the speeches made more than once by my right hon. Friend the Member for North Leeds (Mr. Peake) who has indicated frequently the kind of cuts which could, be made in public expenditure. He has shown that there has been, and that there still is, wasteful expenditure, bad housekeeping, and that much of the money we spend is unwisely spent. The right hon. and learned Gentleman in his speech yesterday said that he had no intention of cutting down the social services—nor, indeed, have we—[HON. MEMBERS: "Oh."]—for whose creation we are largely responsible—[HON. MEMBERS: "Oh."] Certainly, all the improvements which have been passed during this Parliament are
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  largely the result of the cogitations—and the right hon. and learned Gentleman was party to them—when we worked out these plans together. There is no denying that fact, and we have not suggested cutting them down.
  Mr. Alpass (Thornbury): But hon. Members opposite said they were introduced too soon.
  Captain Crookshank: We were concerned with their introduction. Then the right hon. and learned Gentleman touched on, but did not amplify, the question of the food subsidies. We on this side have never considered them as a social service, nor has anybody else until just lately. We were all parties to their introduction. We know all about the reasons why they were brought in. They were brought in for quite a different purpose than what is now called social services, and the right hon. and learned Gentleman knows that perfectly well from his experience at the Treasury. I note, incidentally, that he said yesterday that they would be about £400 million. That is an increase on the previous figure given, for my recollection was that they were to be stabilised at £390 million.
  The Chancellor of the Exchequer (Sir Stafford Cripps): Last year.
  Captain Crookshank: But I understood that that would be the general level for the future. Certainly that was the impression I had from the speeches of his predecessor. I will not quarrel about it, but it is a change, like all these other £5 million, £8 million, £10 million—just let it go, it all piles up the expenditure. The Chancellor claimed that they represented 12S. to 14s. on every family. That was what he said yesterday. It is that word "every" which we think ought to be looked at again. Is there really a completely good and valid reason to subsidise every family irrespective of what their earnings or incomes might be?
  When we come to the extra taxation, we are extremely dissatisfied at the increases which the right hon. and learned Gentleman has put upon whisky, beer and tobacco, particularly whisky which, after all, his colleague the Minister of Food only yesterday told us is to be very much reduced in quantity anyhow.
  Sir S. Cripps: It will help.
  Captain Crookshank: I do not know what the right hon. and learned Gentleman means by "It will help." It will not give him as much revenue as if there was as much whisky in consumption, but for the more humble people with the smaller incomes who enjoy an occasional drink of whisky—this possibly applies more North of the Border than South—it is becoming quite prohibitive, particularly if there is very little to get.
  With regard to tobacco, I was astonished at what I heard the right hon. and learned Gentleman say in his broadcast last night. He said that he was putting up the duty on tobacco in order to remind smokers that we cannot afford to import so much. I can think of many ways of reminding people of that somewhat gloomy fact without putting up the price. When he comes to look at the general inflationary position, and when in his other capacity he has to deal with the problems of increased demands for wages, he will find that every increase in the price of tobacco has its reflection there, because it is not only the goods which come within the technical cost-of-living index that people have in mind when they consider that the cost of living is going up, and to pile up more and more the duty on tobacco seems to me to be unwise in the general economic situation today.
  On the other hand, the way he handled the Purchase Tax will win general approval—not that one has had a chance of studying all the schedules. Amongst other reasons, he makes it less complicated by abolishing the steps which were introduced just the other day. I have always held about the Purchase Tax that we ought to be a good deal more scientific in applying it than we have been so far, and I hope that under the right hon. and learned Gentleman's regime this may come about. I fancy it will. I cannot imagine him coming down, like his predecessor, and throwing£20 million on the table and letting us all have a scramble, first come first served, which is more reminiscent of the Shrove Tuesday pancake in the other Westminster than of the dignity of this House.
  I wish to ask why he has determined to abolish Schedule B and put all farmers on Schedule D. The reason he gave was almost as odd as his reason about tobacco. The tax on tobacco is increased in order that we should know we cannot
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  afford to import as much, but the reason for changing these farmers, who may be anything between 100,000 to 150,000—perhaps he can tell us—.and who are all small people, mostly the family farmer working with his wife and son, is that he believes the alteration in the method of taxation will help him to produce accounts. Apparently this is the way to teach them to keep accounts.
  Mr. Alpass: And they need it.
  Captain Crookshank: It is all there in the OFFICIAL REPORT.
  Sir S. Cripps: Will the right hon. and gallant Member read the other part?
  Captain Crookshank: Does the right hon. and learned Gentleman want it all?
  Sir S. Cripps: I do not want the right hon. and gallant Gentleman to read it all, but to read the reason, not the other part.
  Captain Crookshank: The effect is apparently that £2,500,000 more is taken from this section of the community under this change in the basis of taxation. I want to know what the Minister of Agriculture thinks about that, in view of the fact that we have only just concluded a price review in which taxation and everything else was taken into account—
  Mr. Alpass Mr. Alpass rose—
  Captain Crookshank: No, I cannot give way. If this is to help farmers to learn to keep accounts, the right hon. and learned Gentleman should set about it in another way, and not invite them to exchange the pen for the plough.
  As regards limitation of dividends, we on this side of the Committee are very glad that the right hon. and learned Gentleman is accepting the advice of my right hon. Friend the Member for Aldershot (Mr. Lyttelton), who told him in an earlier Debate that a voluntary appeal would get a great response. From what the right hon. and learned Gentleman said yesterday he feels he is getting that response. Having now mounted the voluntary horse, it seems obviously right to let it have a run, and not to try to change over on to the compulsory horse. From that we come to the changes in the allowances which have been devised, the right hon. and learned Gentleman told us, in order to try to improve incentives to greater production. Of course there was

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  an alternative. The choice the right hon. and learned Gentleman had to make was between so altering the allowances as to hope to bring about the effect he had in mind, and changing the standard rate of Income Tax. It is arguable, and probably a good many people would think that one way was better than the other. I do not propose to argue it at the moment, but I think it is quite clear that while the plan which the Chancellor has accepted and put forward does give an incentive, or is framed to give an incentive, to workers in industry, it does not necessarily give the same incentive to industry as industry, and does not seem to give any great incentive at the top level.
  Accepting on balance that the right hon. and learned Gentleman thought the change in the allowances was the better way of improving the possibilities of greater production, we are very glad to see what changes he has made, because I believe all of them were points we put forward in the last two or three Budget Debates, which his predecessor said he would be glad to consider if and when opportunity arose. We are glad that the time has come to put them into effect. It remains to be seen how far this results in greater production, but it is quite certain that alleviation will be given to a number of retired folk, pensioners and the like, long past the age of bothering about incentives. It will give alleviation to them in these times, which are difficult for everyone.
  Generally speaking, although we will argue points later on, that part of the plan seems good. So also does the outline—again one does not know the details—of the Chancellor's intention to deal with expense accounts. We are entirely with him there. It is monstrous that anyone should be able to "wangle"—that was the word he used; it is a colloquial word which he may have heard—the expenses. We would like an assurance that whatever arrangements are made will apply to the heads and employees of public corporations.
  Another big budgetary point is the capital levy which the right hon. and learned Gentleman has proposed. In the framework of a general anti-inflationary Budget, it seems to me bad and out of place, because it can only be paid for by liquefying capital and can only really be a disincentive to savings. The Chancellor really is rather a strange person, because,
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  in the beginning of his speech, when talking about savings and abstension from spending, he said:
  "… money saved should be invested safely and kept unspent until it is wise to use it." —[OFFICIAL REPORT, 6th April, 1948: Vol. 449, c. 47.]
  Yet, by the end of his speech he is going to force a whole lot of people who have saved to sell out to the tune of £105 million. These two propositions do not seem exactly to tally. Moreover, just as those who are having to pay the capital levy will have to sell out, some will have to buy, and the buyers will be the savers. Does it make sense? It does not seem to do so because the proposal has very little relevance to the problem. If there are many who, under the penal taxation, found they were able to save at all, they are represented by the careful man who, during all these years, has followed the lead given by all the Chancellors of the Exchequer who held office since the beginning of the war. They have deliberately saved and invested their money instead of keeping it fluid. They have deliberately followed the advice of the Government and tied it up and invested it in War Loans. These are the very people who are to be penalised, while the financial spiv, if I may use the word, who has kept his money liquid all the time, and has no invested income comparable to what the good saver has, is to get away with it.
  That seems to me to be a very poor line for the Chancellor to follow. He said in his broadcast last night that this form of capital levy would help against inflation, but in these days I do not see that it will do anything of the kind. I should have thought that it would have exactly the contrary result. In any case, it is a grievous discrimination between one class of saver and another. We shall no doubt have' to explore the details of this proposal very carefully. There are all sorts of complications, and I could think of many questions which I should like to put, but this is not the day upon which to do that.
  It seems to me that there are two difficult points which it might be as well to mention at once. The first, although I have not had time to be fully advised upon this subject, is that I am nervous about the effect of this particular form of levy at this particular moment on the agricultural industry, at the very moment when, under the recent Act, a lot of

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  capital expenditure is needed. The owners are now partners in the industry, as the Minister of Agriculture has told us so often. I should like to know what the effect of this proposal is to be upon the agricultural problem. The second point, which does really amaze me, coming from a right hon. and learned Gentleman, is the Chancellor's proposal that trusts will be empowered to pay out capital, and for trusts to be broken. It was said long ago that what is morally wrong cannot be politically right, and it seems to me that to take powers to break a trust for this sort of purpose is something which should not be done, as the right hon. and learned Gentleman yesterday forecast it would be.
  I think that we on this side of the Committee would say that the right hon. and learned Gentleman has framed his Budget at far too high a level of public expenditure; that because of that he has far too high a level of estimated receipts from taxes; that he should have brought down the whole thing to a lower step; although we would agree that in the inflationary situation in which we find ourselves he should work, as he has worked, to get a real genuine surplus out of the national income this year. We agree about that. The trouble is that it is all too high.
  It is difficult for anyone who is not an absolute wizard to keep track, at short notice, of all the masses of information with which we have been supplied in the last few weeks. The right hon. and learned Gentleman yesterday so skilfully, so persuasively, and indeed so brilliantly marshalled his facts and figures, that he carried us all along. We have had White Papers, black papers, economic surveys, some for the calendar year, some for the financial year, so that the figures never tally. For that reason it will be some time before we can do much more than give a preliminary glance at this problem. I am sure the right hon. and learned Gentleman will acquit me of not having gone deeply into all these figures, although possibly by the end of the Debate we shall be able to deal more critically, or more agreeably, with some of the things he said yesterday.
  After all, the whole of this structure is built up, as the various papers point out, on a series of assumptions. Unfortunately, from the calculations the Government made for the previous year, we found that most of the assumptions then were wrong. It may be that a lot of these
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  assumptions are wrong. Assuming, however, that the Chancellor's analysis is right, then I think he is right to budget for a genuine surplus—a genuine surplus, yes, but with lower figures en both sides. To add £250 million to our taxes this year is something which could, I am certain, have been avoided by wise housekeeping. To work on a basis of tax receipts of £3,500 million in the third year after the war is a terrible psychological error. It may be that the country will get over it, but on the other hand, it may be that the country will never adequately recover from such a staggering blow. Of course, as good and loyal citizens we hope and pray that the country will get out of its difficulties, in spite of the Chancellor of the Exchequer. We think that on this occasion he has to a large extent chosen the wrong weapon. He has been using the rod of increased taxation when it should have been the axe of reduction.
  4.25 p.m.
  Mr. Dalton: I listened yesterday with great pleasure to the speech of my right hon. and learned Friend the Chancellor. I thought it was a most masterly performance. I thought it showed a complete grasp of a great deal of very complicated material, and it seemed to me to show in a new field, my right hon. and learned Friend's gift, which we have often observed in other fields, of grappling, as he did yesterday, with great mastery and brilliance with matters which are to him relatively novel. I would like to congratulate him. I hope that even hon. Gentlemen opposite agree with what I have said, though they do not agree with all the conclusions at which my right hon. and learned Friend arrived.
  Subject to one or two minor points, which I will indicate as I go along, I feel that the broad lines of the Budget statement yesterday are right and should be supported. I have the same feeling in regard to the principal proposals for change which have been made by the Chancellor. There are some minor points, indeed a great many minor points, which, when we reach the no doubt lengthy Committee stage of the Finance Bill will fall to be considered in more detail. In spite of the effort of the right hon. and gallant Member for Gains-borough (Captain Crookshank) to draw a sharp distinction between my right hon.

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  and learned Friend's approach and my own, one reason why my feeling is friendly and favourable to this Budget is that I seem to detect here and there a certain continuity of ideas between the Budget of my right hon. and learned Friend yesterday and the four Budgets which preceded it.
  It may suit the dialectics—I will not say the dialectical materialism—of the Opposition to seek to draw a distinction between the approach of my right hon. and learned Friend and myself. They are entitled to what intellectual exercise they can get out of that, but undoubtedly I seem to detect that my right hon. and learned Friend has hatched certain eggs which were perhaps left behind in the Treasury before his arrival, in addition to others which may have been more lately supplied by other friends and advisers. A number of the practical proposals made by my right hon. and learned Friend are in a straight line of continuation from the proposals initiated by me, as I shall illustrate. I am obliged to the right hon. and gallant Member for Gainsborough for his kindly personal reference. I hope gradually to demonstrate to him that I am still alive. As to his suggestion, (that will perhaps come in due course. It was a hint for later action in a certain part of this Metropolis.
  The right hon. and gallant Gentleman said that although this occasion gave a very wide field of discussion, he would limit himself to what he called a few Budget points, and he did so. I should like to make an observation on the nature of this discussion, and to express a doubt whether it will be convenient, as a regular practice, to have some five days of roving and uncompartmentalised discussion upon the whole state of the nation, including not merely these Budget proposals, but all the many internal and external aspects of the economic life of this country. This is admittedly an experiment. It is interesting that it should be made, but I am inclined to the view that we should do better to break things up a little more. We are now to have a five-day Debate in which there is no organised separation of topics at all. I venture to anticipate that, when we get on to next week and the last two days out of the five, there will be a thin House,
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  thinner than today, largely consisting of hon. Members wishing to speak. There will be a general air of boredom and the end of the whole affair will be a rather blurred general picture with no sharp edges.
  The suggestion which I made when I was a Member of the Government, and these matters were being discussed, was that we should separate rather more sharply in time the Budget statement from the Economic Survey for the year. They should be separated by some months. The suggestion I again make to the Government is that they should try to get out an Economic Survey for any given calendar year towards the end of the preceding calendar year; that is to say, they should aim to get out by next November the Economic Survey for the calendar year 1949 and have a Debate on that before Christmas, well in advance of the Budget proposals, and cover the whole field then. The Budget proposals would come along later, and it would be proper to take a relatively wide field of debate then, but this would not place the House in such a difficult position as it is placed in under this new procedure. The Government will largely take their decision in the light of the way in which this Debate goes, and if my anticipations regarding next week are right, that will be a very good argument for the course I am suggesting.
  If I may seek to summarise and bring together the three principal proposals of my right hon. and learned Friend they are, first to maintain all socially necessary expenditure but to make reductions in expenditure in other directions; secondly, to build up a substantial surplus, over and above capital expenditure as well as the current expenditure of the Government, with the object of reducing, and perhaps even entirely removing, the inflationary pressure of which we are conscious; and thirdly, to re-arrange taxation so as 'to ensure, on the one hand, that such a substantial surplus is obtained and, on the other hand, to increase incentive and to share the inevitable burden more equitably among the different sections of the community. I think those are three admirable aims.
  The right hon. and gallant Member for Gainsborough (Captain Crookshank) was

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  very anxious to assure us that the Conservative Party were responsible for all the social expenditure which is now being made. As I understand it, he would not wish to diminish social expenditure at all. That is ruled out by the Conservative Party. It has been said by the Opposition that much of the social expenditure had a Coalition Government origin, but they have also said that it has been introduced too speedily—and that, I dare say, is still the view of the Opposition. They would not have introduced so quickly the social service developments that we have introduced. Later on, they would have done as much as we have done; but when that date would arrive, they have not made clear. We, on the other hand, acted speedily with regard to social service legislation, and I am quite sure that we were right. I had the responsibility, financially speaking, for that policy. In my Budget speech in April of last year, I said:
  "We have mounted, without halt or hesitation, the great social programme which the electors voted for when our majority was returned. … We are entitled to say that the new Britain, represented by this House of Commons, has taken the cost of social security proudly in its stride."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 38.]
  And so we have. If I have not misunderstood the right hon. and gallant Gentleman, the Opposition propose no change whatever in any of our social expenditure. If that is so, it is as well it should be stated. But they distinguish food subsidies from other forms of social service expenditure. The right hon. Member for the Scottish Universities (Sir J. Anderson) will no doubt speak in this Debate. On a previous occasion he said that, in his view, the food subsidies should be reduced to negligible proportions. It would be interesting to know whether the Opposition still stick to that line. The right hon. and gallant Member for Gainsborough was rather careful not to commit himself on this point. He made a complaint about £400 million having been indicated as the figure for this year, as against £392 million, and he suggested that it was from my Budget speech that he was quoting. He had not a copy and I have not a copy, but I remember that what I said was that £392 million was to be the figure for the financial year just concluded, and that it would not be justifiable, in the view of the Government,
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  for that figure either to be increased or diminished in that year.
  I went on to say, speaking in November, that it was too soon yet to say what the figure should be in the next financial year. Therefore, there was no agreement to hold this figure at £392 million this year. On the other hand, I think it is wise to hold it at round about £400 million. I think that can be argued on the dual ground that, if food subsidies were reduced, inflationary forces would be set in motion. It would put up the cost of living and encourage inflationary developments. That is the argument against reduction. But I should think there is no case at this stage for any large increase in the food subsidies, because it would endanger the achievement of a substantial surplus, which is the purpose of my right hon. and learned Friend. So about £400 million is, I think, right, although I would hope that in the expenditure of that sum there will still be flexibility of method and perhaps further concentration on a smaller number of more essential foodstuffs. That would also be slightly cheaper administratively.
  With regard to other expenditure, there is a useful reduction shown in the details of expenditure for the year, and the Committee will no doubt note the reduction shown in the war terminals in Table VIII (d) on page 15 of the Financial Statement. I am particularly glad to see the large reduction of £55 million in the Foreign Office German Section. It was my view, when I was a Member of the Government—and I sought to give effect to it in discussion with my colleagues—that we were spending too much upon the Germans. I am not here talking only of keeping them alive by supplying them with free food, but of the very complicated and elaborate machinery of control and the large staffs in London and in Germany trying to control the Germans in all sorts of ways which are not essential from the point of view of our national interest, which is solely that of our own security, and making sure that no war machine springs up again without our knowledge, or indeed at all. It seemed to me that there was a great deal of pettifogging interference in their affairs which was not necessary, and I am glad to find there is this big cut this year. It will mean

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  £55 million less expenditure and substantially fewer officials engaged on this job. I welcome that very much.
  With regard to other reductions in expenditure, my right hon. and learned Friend invited suggestions. I must say that the right hon. and gallant Gentleman today has not given very much response to that. He quoted the right hon. Gentleman the Member for North Leeds (Mr. Peake) and said that he had often made suggestions. I do not quite know what they are. I think they were very vague and general in character. Perhaps we shall be told later on. The right hon. and gallant Gentleman has not really come up to the challenge at all. He has talked a great deal about the need for cutting down expenditure. He has veered away from the social service expenditure, with great political apprehension, and nothing else has been presented to us. I hope that the Opposition will do their duty, in this respect at least, and put up practical and detailed proposals as to how this alleged enormously excessive expenditure is to be reduced.
  I would make a suggestion of my own as to an expenditure—which I think is very excessive. I think that the annual cost of the National Debt is very excessive. It amounts to £500 million a year for interest alone. I say that we really cannot afford to carry that indefinitely through the future. It is a large and intractable total. I add that it would be higher than it is but for the cheap money policy which has been pursued. Indeed, in regard to the floating debt alone, we have saved over £30 million a year from this vast charge by the steps taken to cut the short-term interest rates in the first few months of the life of this Government. But even so, it is very dangerous to be thinking of carrying forward a debt of this magnitude into the future. If the rate of interest were to rise higher, it would mean gradually, as debts fall due for replacement, that the rising rate of interest would force up the total cost of the debt. If prices were to fall, it would mean that the real cost of the debt would most seriously increase in terms of the goods and services required to meet the interest charges. This is a dangerous situation. Economy in the cost of the National Debt is the first and the strongest of all the arguments in favour of the cheap money policy. There are
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  other arguments in favour of it, of course. It would be of great assistance to the local authorities in regard to housing, and it would be of great assistance also not only to public Boards but to private industry at large.
  I had hoped—evidently vainly—that it would be possible to keep the question of the national credit out of acute political controversy. I had hoped that it would be generally accepted by all political parties and by all sections in the City of London and industry and elsewhere, that it was a national duty to keep the rate of interest down to the lowest possible figure, and that all would have cooperated to that end. That turned out not to be the case. At a certain stage, every effort was made to create a situation most unfavourable to the continuance of the cheap money policy and low interest rates. This is not the occasion to develop this theme in detail, though I have taken care to keep a certain amount of material at hand. But at a certain stage there did develop what was nothing less than a conspiracy in certain quarters to frustrate this policy, particularly in view of the forthcoming nationalisation of transport and electricity stocks. This was something which can correctly be described as a conspiracy to try to force down prices on the gilt-edged market so as to screw 3 per cent. rather than 2½ per cent. for those entitled to compensation money.
  Mr. Nigel Birch Mr. Nigel Birch (Flint) rose—
  Mr. Dalton: I would rather not give way at this moment. I would rather develop my argument. There is plenty of evidence in the columns of the financial Press to substantiate what I have said. The conclusion which I draw from it—I reach it in a word because I want to speak on other matters and I do not want to stay too long on this point, important though it is and responsible though some hon. Members on the other side may be, in part, for what took place—
  Mr. Peter Thorneycroft: On a point of Order. The right hon. Gentleman has made two allegations. In the first place, he has made a broad allegation of a general conspiracy on the part of some person. I could not understand. I do not know whether it was the nationalised Bank of England or not. He did not give way on that question. He is now

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  making allegations of conspiracy on the part of hon. Members on this side of the Committee. In those circumstances, would it not be right either that he should justify those charges or else withdraw them?
  The Deputy-Chairman (Mr. Hubert Beaumont): Right hon. and hon. Members are themselves responsible for statements they make in their speeches. It is, however, a general rule that imputations should not be made.
  Mr. Dalton: I think that perhaps there has been a misunderstanding rather than any serious difference of view as to the line of argument which I was following. I will, therefore, restate what I said in a manner which I think will not give offence to the hon. Gentleman but, nevertheless, will still be true. Gradually there developed a campaign in the Press, particularly in the financial columns of certain newspapers, designed to force down prices on the gilt-edged market and to force up the rate of interest, particularly in the period preceding the coming into operation of the transport and electricity stock nationalisation. The result of this was that 3 per cent. at par rather than 2½ per cent. at par, as had been contemplated at an earlier stage, became the basis of compensation. In a broad sense, it is perfectly correct to say that there was a conspiracy in the Press and in other circles to bring about that state of affairs. I think that that is perfectly true and, I would hope, not a statement to which the hon. Member for Monmouth (Mr. P. Thorneycroft) would take exception. I do not remember his taking any particular part in these Debates.
  On the other hand, the hon. Member for Flint (Mr. Birch) was most active and, at sittings both by day and night, be constantly used arguments of the kind to which I am referring. Evidently, therefore, he and certain others are a party to this; and that is what I said.
  Mr. Butcher: On a point of Order. Is the right hon. Gentleman entitled to refer to hon. Gentlemen on this side of the Committee who put proper arguments in Debate which are permitted by the Chair, and to suggest that those arguments are part of a conspiracy?
  The Deputy-Chairman: It would be most undesirable to curtail in any way the cut and thrust of debate. Any hon. Gentleman who wishes to reply, no doubt will have an opportunity later.
  Mr. Dalton: If skins are tender, shall I say that a number of hon. Members co-operated with a view to lowering the national credit and raising the rate of interest which the Government would have to pay for new loans?
  The conclusion which I draw from this —and I have stated this elsewhere—is that the powers at present possessed by the Government over the gilt-edged market are not sufficient and that my right hon. and learned Friend at sane stage will be well advised to take powers of direction over capital. The form which such powers should take would be, in my view, that in the case of large holders—I am not concerned here with small holders—any large holders such as insurance companies, investment trusts, large industrial reserve funds, and so on, where there is, say, more than £1000,000, to take a rough figure, of investible funds outside any particular business, it should be made a requirement that a certain prescribed percentage of that amount should be invested in gilt-edged securities. All large holders should be required to conform to this essentially national duty of maintaining the national credit. In due course, I hope my right hon. and learned Friend will give consideration to this point.
  I do not myself think that even such a measure will be sufficient for reducing within a reasonable time this enormous burden of the cost of the National Debt interest. In my view, there is only one straightforward and satisfactory way of dealing with the matter, and that is by means of a capital levy on a substantial scale. That will involve a large repayment of debt in a relatively short time, but I have never been shaken in my view that this is the most just and effective way of dealing with the debt when we are carrying a burden of this magnitude in time of peace. I feel sure that we shall have to come to this, and possibly at no very distant date. I do not blame the Chancellor for not introducing such a measure this year, particularly after the introduction of the Special Contribution, on which I shall have something to say

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  shortly, but I noted with great satisfaction the terms of the statement which my right hon. and learned Friend made on the matter. He said:
  "Various attractive suggestions have been put forward for a capital levy, but from the administrative point of view, a capital levy —in the ordinary sense of those words—is impracticable at the present time. It would be impossible to effect the valuation of all the capital assets in this country without a very large increase in the staff of valuers: and that staff is already very short for the jobs that it has got to do."—[OFFICIAL REPORT, 6th April, 1948; Vol. 449, C. 71.]
  I entirely accept that, and I feel that the labour involved in the valuation of the capital assets in question would be excessive at the present time. I note with satisfaction that my right hon. and learned Friend limits his rejection of this plan to the present time, and I also note with satisfaction the introduction of the Special Contribution; but I ask him to keep the idea of a larger capital levy on his list of possibles, as I did, when I was at the Treasury, and to reconsider it when the circumstances make it appropriate.
  So much for the question of expenditure. Turning to the surplus which the Chancellor wishes to build up to cover the capital as well as the current expenditure of the Government, I think that, in principle, that is right. Indeed, I myself frequently said, when I was Chancellor of the Exchequer, that we must vary our attitude to the surplus or deficit according to the danger of inflation or deflation, as the case might be. In an inflationary period, it is quite right to aim at a surplus over and above capital as well as current expenditure. In a normal year—I am not going into the details of the accounts, which can be discussed later—it would be reasonable to say that we should meet from revenue our current expenditure and borrow for capital expenditure, for such things as houses, industrial equipment in the nationalised industries and so on. It would be natural to borrow for these capital purposes and cover current expenditure from revenue, but, in an inflationary year, we should go further and cover capital as well as current expenditure. In a deflationary period, we should move in the opposite direction and be prepared to cover by borrowing all capital and some current expenditure as well.
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  I am glad to note that my right hon. and learned Friend yesterday made it clear that he is not bemused by the present inflationary pressure, and, indeed, recognises that things might so turn out that he might have to change both his tactics and direction in this matter. I was pleased to hear my right hon. and learned Friend say:
  "… but we must watch the situation carefully, and be ready to detect the moment when the inflationary pressure vanishes and gives place to deflationary tendencies; if such a thing should happen, we must then make a rapid readjustment of our economic and financial policies."—[OFFICIAL REPORT, 6th April. 1948; Vol. 449, c. 49.]
  It might have to be very rapid, because of some trade depression starting in some other part of the world, in order to avoid very unfortunate results to our employment and our trading activity. That is all I want to say about the surplus. I now want to say something about the proposals in the field of taxation.
  My right hon. and learned Friend claims, and I think reasonably, that the considerable number of tax changes which he proposes should be looked at as a whole and not taken in isolation. If they are looked at as a whole, first of all, it will be noticed that they very nearly balance. The Special Contribution is expected to bring in £5O million this year. All the other taxes taken together are expected to show a loss of £39 million this year and £56 million in a full year, and, therefore, broadly, the Chancellor's changes balance one another. But, if we have regard, on the one hand, to the stimulation of incentives, and, on the other, to a more fair division of the burden, I think the re-arrangement is good on both counts.
  My right hon. and learned Friend imposes another penny a pint on beer. I took steps to inquire what was the reaction to the extra penny a pint when it was put on in the autumn Budget last November. I was told that people who do not drink beer knew nothing about it, and that people who do talked much less about a penny on the pint than about the quantity and quality. That, I think, is fairly good information. People are very much more concerned about the quantity and the quality of the beer than about whether they have to pay another penny a pint for it, and if the Chancellor at a later stage, were able to arrange for more and better

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  beer, I am quite sure that the extra penny a pint would be readily forgiven. This penny on a pint is trivial in relation to larger issues.
  As to tobacco I cannot find it in me to blame my right hon. and learned Friend for extravagant tax changes, because, after all, I was responsible for the proposal to increase the price of 20 cigarettes from 25. 4d. to 3s. 4d., in spite of which it appears that almost as many cigarettes are being smoked now as before. I should have been interested—and perhaps we shall be told—to know exactly what are the latest figures of the reduction in consumption.
  Sir S. Cripps: Twenty per cent.
  Mr. Dalton: I am much obliged. That reduction is too small. We were asking for 25 per cent. and that is very small in relation to the total amount of smoking which is still going on, in spite of the taxation. The raising of the price to 3s. 6d. cannot be expected to excite great passion in the heart of one who was responsible for raising the price from 2S. 4d. to 35. 4d. without causing, apparently, any real disturbance in the country. Therefore, I cannot regard the beer and tobacco taxes as anything but mild changes on which it may be possible to generate a little political feeling but which bring in some useful revenue.
  With regard to the Purchase Tax, I always took the view that it ought to be gradually, but not very rapidly, reduced. The right hon. and gallant Member for Gainsborough was very shocked because we had Debates here, at the end of which representatives of the Government, having listened to the various arguments advanced, endeavoured to recommend to the Committee those changes which were most in accordance with the general wish of the House as well as with the national interest. The right hon. and gallant Gentleman, however, wanted the thing settled behind the scenes and in a bole-and-corner way, whereas I was prepared to wait to the end of the day and then announce what the Government were prepared to do. Except in the November Budget, when the rate of tax was put up to gather revenue quickly, in each of the three previous Budgets for which I was responsible, reductions of the tax have been made and revenue
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  has been given away on each occasion. My right hon. and learned Friend is doing the same thing here; he is proposing a net reduction in the Purchase Tax revenue.
  This is essentially the field of Committee points, and I am not going into detail. I have one or two doubts in my mind on a quick reading of his proposals, but, on the whole, I think his re-arrangement is certainly good. It simplifies the scheme of things, and, on balance, I think the burden of the tax is shifted away from some of the more essential articles on to some of the less essential. Broadly that is right. I have doubts about the wisdom of taxing children's non-utility clothing and other utility articles. I have always held rather firmly the view that utility as such should be exempt from Purchase Tax. That ought to be a principle. I am a little doubtful, therefore, even about' the fully fashioned stockings and the increase in tax on utility fur coats from 33⅓ per cent. to 66⅔ per cent. And I am a little doubtful about kitchen cupboards. I took a lot of interest in that matter. I was trying to get an exemption on built-in furniture to assist local authorities and the Ministry of Health, but I was told that it was not possible to define built-in furniture on the schedule, although I could exempt kitchen cupboards. There is not much money involved in these points, but think there are one or two matters here which should be re-studied.
  On balance, the shift is in the right direction. It is from the more essential to the less essential, and the Purchase Tax is gradually evolving into what I have always considered it ought to be—a substantial revenue yielder not to be swept away in a hurry, yielding revenue from luxury articles and from things which lie between the field of semi-essentials and luxuries. That is the direction in which it is now moving. I would like to refer to some interesting calculations which have been made by the National Co-operative Authority which were quoted in the "Cooperative News" on 13th March. The National Co-operative Authority collected information from the various societies as to the incidence of the Purchase Tax as it then was, on their sales, and it is very interesting indeed. It strengthens the view which I have often expressed, that those who object to the Purchase Tax un-

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  conditionally have not really studied the facts of its incidence. What the National Co-operative Authority has discovered is that the Purchase Tax approximates to only 2 per cent. of the total sales of the retail societies. That was before the changes proposed by my right hon. and learned Friend in this Budget. The Purchase Tax causes a reduction in the gross profit in the dry goods department of about 2½d. to 3d. per £sales. That is very small. The Purchase Tax affects the rates of dividend by about only ½d. per £ on the total sales of the societies.
  The conclusion—and the Co-operative movement has always made a propagandist point about this—in the leading article in the "Co-operative News" is:
  "It must be admitted that the evidence collected by the National Authority tends to prove that the overall effect of the tax on co-operative turnover and dividend is less than was previously assumed."
  The reason for that state of affairs is the width of the free list, and I am glad that my right hon. and learned Friend is not yielding to some of those who may have advised him to narrow the free list in regard to Purchase Tax. There are on the free list all foodstuffs, all utility products with the exception of one or two that I have been mentioning this afternoon, and a further number of articles which have been added during the past two and a half years such as pots and pans, crockery and much else. It is because the free list covers so large a part of the current expenditure of the working class family that the burden of the Purchase Tax is so very much less than is apt to be imagined by persons who have not studied the details. By the changes which my right hon. and learned Friend is now making, on balance he will have reduced the burden of Purchase Tax on the average working class family, but he will have still retained its very important revenue raising capacity. So much for the Purchase Tax.
  I welcome the Entertainments Duty changes. I would like to know how a rural area will be defined for the purposes of total exemption. It will be interesting to see the technique; I am sure it can be done, and it ought to be done. We should do all we can to make the country relatively more attractive than these vast overgrown towns into which so
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  many of our people have flocked. With regard to the Betting Duty, I foresaw, though I did not bluntly say so, that once we started on this road we would go on. I thought it would be well to begin on a narrow front and on a small scale. That is the English mode of making progress. I am not at all surprised that the dog bookies have caught it now, and in due course, no doubt, other developments will follow. In view of the state of some sections of public opinion on this matter, tactically it has been very wise to proceed by stages as my right hon. and learned Friend has done.
  I will say a word about the Profits Tax. I was responsible for recommending that it should be put up twice last year. It will be remembered that the tax on distributed profits was put up from 5 per cent. to 12½ per cent. last April, and then up to 25 per cent. last November, with a tax on non-distributed profits of 1o per cent. On the whole I think—though this is debatable, and, no doubt, will be debated —having regard particularly to the introduction of the Special Contribution, my right hon. and learned Friend is justified in leaving it there for the moment, but I do not think we can be quite satisfied with the response that has been made to the request that dividends should not be increased. No doubt, my right hon. and learned Friend will watch this.
  It is always a pleasure, though a rare one, for me to be able to quote the "Economist" with wholehearted agreement. I quote from the "Economist" of 20th March under the heading "Inviting trouble."
  "The range of dividend increases announced this week "—
  and this is as recently as 20th March-
  "is disturbing to say the least of it."
  Then a number of details are given. I will not read them out, but seven or eight firms are mentioned as having increased their dividends. A few days later other cases arose, including H.P. Sauce, which was commented on at the time. The "Economist" goes on:
  "It must not be forgotten that Sir Stafford has shown a genuine desire to gain the cooperation of industry in his assault on inflation and that he is at present watching 'with the keenest and most hopeful anticipation the actual results which can be achieved in the stabilisation and reduction of prices and in the reduction of profits and stabilisation of dividends.' Obviously the actions of industry are

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  being watched—and not only by Sir Stafford. Less conciliatory Labour members would prefer dictation to compromise, and if a section of industry prefers in its turn to act without regard to its responsibilities, Sir Stafford might well be pressed to adopt a sterner approach."
  As the "Economist" says, it is inviting trouble, that these industrialists should completely ignore both the requests of two successive Chancellors of the Exchequer and the proposals of the Federation of British Industries.
  Sir Peter Bennett: Surely, the right hon. Gentleman realises that that statement in the "Economist" was made less than a week after we presented our report to the Chancellor of the Exchequer. Therefore, the decisions had already been made. I do not think it is quite fair to quote that as evidence of the way in which industry has reacted to the suggestions which were made to them. There are companies representing over £3,000 million which have already agreed to freeze their dividends as soon as they can consult the people concerned and come to a decision.
  Mr. Dalton: I am not really on that point. I am only quoting the "Economist" upon these particular cases. I am perfectly well aware that it is not very long since my right hon. and learned Friend and the Federation of British Industries were in consultation about this, and we shall see, as the months go by, how the dividend declarations go. But it was not a very good start, for this upward rush to take place. It was not only the bunch quoted in the "Economist" of 20th March, for the following week there were a lot more, and I am merely sounding a warning note within quotation marks and we must see what happens. Perhaps the rest of industry will pay more heed than this group; it is a thing to look at. At any rate, up to the moment I think my right hon. and learned Friend is right to leave the Profits Tax as it is, and not to introduce any other special tax such as has been suggested, on profits in excess of some new datum line. I hope, and I am sure, he is being watchful of what is going on.
  I come now to the Special Contribution and I sense from what the right hon. and gallant Member for Gainsborough said that on this there will be a good
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  deal of discussion. It does not seem that this will go through by unanimous acclaim and gradually, no doubt, many points will be elucidated in discussion. We are both, this afternoon, dealing with it in a preliminary way. I give it an especially warm welcome. In all practical problems of taxation, as the right hon. and gallant Gentleman knows from his experience at the Treasury, one has to strike a balance between what may be called theoretical perfection on the one hand and practical administration on the other. One of the things which is very attractive about the Special Contribution is that it is beautifully simple in administration. We need no new valuation, but simply refer to the Income Tax declaration already made. It is perfectly simple and no new officials need be employed for valuation.
  It is limited in its incidence. The right hon. and gallant Gentleman spoke as though all the small savers, or a large number of them, were going to be affected by it, but it is of course limited in the first instance to Surtax payers. This is, indeed, a growing army. We have had many official documents issued and one of the best—issued a few days ago—was the latest annual report of the Inland Revenue Commissioners, which I always read with great attention. From it we find that the number of Surtax payers have been steadily increasing, in spite of all the burdens, to about 136,000 at a recent date from 100,000 before the war. I would like to know what is the rough preliminary estimate of the number of persons who will be liable to this Special Contribution.
  Sir S. Cripps: One hundred and forty thousand.
  Mr. Dalton: I am puzzled by that. Somebody must be wrong, because the Inland Revenue figures give 136,000. There is only one condition in which it can be understood—a very rapid increase in the number of Surtax payers since last year, because the latest figure here is 136,000 as the total number. The figure just given by the Chancellor of persons liable to the Special Contribution is larger than the latest number of Surtax payers and, as I was going on to point out, it is not all Surtax payers who will

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  pay the Special Contribution, but only people who are not only Surtax payers but who also have an investment income of £250 a year or more. I should have thought many Surtax payers did not have that investment income. They might be earning relatively high salaries without having investment capital, and I would ask that the figures should be explained to us in due course so that we may know just how many people will be liable. Personally, at a very rough guess, and I would not have thought much more than half of the total number of Surtax payers would have that income.
  Sir Arthur Salter: When the right hon. Gentleman is comparing the number of Surtax payers with the number before the war, will he appreciate that the main explanation of the increase is the depreciation of the purchasing power of money? The sum of £2,000 a year now is roughly equivalent to £1,000 a year before the war, and this is the obvious explanation of the increased number.
  Mr. Dalton: Maybe. I was only quoting the figures, and asking how many of these are now liable to this contribution.
  In Table 49 of the Inland Revenue Report there is a very interesting analysis showing what proportion of income is earned income and investment income respectively at different levels within the Surtax paying section of the community. What is brought out very clearly—it is not perhaps surprising—is that the higher the income, the higher in proportion is the amount derived from investment income and, therefore, it would appear that this Special Contribution is going to fall primarily upon persons who, within the Surtax field, are getting a relatively small amount of income from earnings and a relatively large amount from investments. That is as it should be, from the point of view of ability to pay. This levy, this Special Contribution, is in some measure, of course, an additional levy upon profits and this is another reason why my right hon. and learned Friend can justify the postponement of any further Profits Tax legislation.
  One word about the Income Tax reliefs. I am very glad that these reliefs have been brought in, but I hope my right
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  hon. and learned Friend is not going to regard this as the end of the road for this particular form of Income Tax reduction. I have often expressed the view, and I re-state it now, that one of the most effective and beneficial ways of reducing taxation is to reduce it upon earned income as distinct from investment income and upon smaller incomes, whether earned or unearned, as distinct from larger incomes. I am very glad that the earned income relief has gone up and I hope that in future years the earned income relief fraction may even go higher than one-fifth, to which it has been raised now, although that was the pre-war figure.
  Turning to the exemption limit, I would like information on one point here. We were told that raising the earned income relief would exempt half a million taxpayers from Income Tax, but we were not told how many more were exempted by raising the exemption limit from £120- £135. I would like to know that, and also what is the separate cost of this concession on the exemption limit. It is, of course, very much cheaper than raising the personal allowance all along the line and this is not being proposed in this Budget, but I hope it may be possible on a future occasion.
  I hope that my right hon. and learned Friend will see that the increased married women's relief is publicised, particularly in Lancashire. I am sure he will. The whole purpose of it is to persuade married women, particularly in Lancashire, to go back to industry, and I have a feeling that these Income Tax arrangements, even if they are frequently explained, are not always understood. I think pictorial representations should be used in order to emphasise the deliberately £avourable position which married women in industry now occupy in regard to Income Tax liability.
  The proposal of my right hon. and learned Friend to widen the band of taxable income taxed at less than the standard rate, is, I am quite sure, right. Indeed, he will know from conversations we have had that this was one of my thoughts some while ago when we were discussing how to try to meet the claim, that would be clumsy and unadministratable, for the exemption of overtime earnings from Income Tax. As the Chancellor explained yesterday, one cannot do that.

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  One cannot exempt overtime earnings in that way. We cannot have separate fiscal treatment for overtime earnings as such. However, we can do what is desired to be done by this sort of adjustment, which is the practical way.
  I hope that, here again, we have not reached the limit of what is contemplated, and that there may be yet a further widening of this provision, and, possibly, even the introduction of one or more additional intermediate rates between the standard rate and complete tax exemption. On the Income Tax proposals generally, I say that I welcome them very warmly. I am sure they will do the best that can be done for the price —the price is about £1oo million a year in tax remissions—in stimulating incentive, and they will also mean a fairer distribution as between different sections of taxpayers.
  A number of things take place on 5th July, for which, no doubt, the Opposition will claim all the credit—but the country will not believe them. On 5th July not only is this large scheme of tax remission coming into effect, but also the new social security scheme is coming into effect. I regard it as very good timing indeed, that these tax reliefs, which will operate with cumulative effect as re-P.A.Y.E., on 5th July will coincide with the increase in the insurance contributions. Indeed, in many cases, I hope, these new weekly tax reliefs will more than offset the increased contribution. Were it not that the Government consists of scrupulous and high-minded men, they might have been tempted, in view of this combination of circumstances, to arrange as part of the national plan a General Election that summer, with polling day in the first part of July.
  5.22 p.m.
  Viscount Hinchingbrooke: While lying in hospital in New Zealand commiserating with myself, I found it possible to feel some sympathy for the right hon. Member for Bishop Auckland (Mr. Dalton) on the news that he had relinquished the office of Chancellor of the Exchequer. Having returned here, and having heard him in his somewhat ugly mood today—at any rate in the middle part of his speech—I rejoice that the change has taken place, and I congratulate the country on having been spared a national calamity.
  Mr. Gallacher: To the noble Lord's gang.
  Viscount Hinchingbrooke: Had the right hon. Gentleman still been Chancellor of the Exchequer the City of London and the financial institutions embraced in it would have been required by now to support the national credit, compelled to do so altogether apart from their general and natural wish. If he had remained in office he would by now have imposed a capital levy far surpassing in size and scope that now introduced by the Chancellor of the Exchequer, to which I shall refer in a moment as one of the unpleasant features of this Budget. The right hon. Gentleman found it necessary to fling charges across the Floor of the House of conspiracy on the part of some of my hon. Friends, and I am happy to inform him that my hon. Friend the Member for Flint (Mr. Birch) will reply to him in detail tomorrow night. I hope that the right hon. Gentleman will be in his place to hear him. I could not find anything, I think, in which to agree with what the right hon. Gentleman said, except possibly when he asked for an economic debate to be held in December or January. That was a useful contribution. The Lord President himself was very anxious that that should happen when he gave evidence before the Select Committee on Procedure some time ago. He appears to have forgotten what he then said.
  The right hon. Gentleman talked about the maintenance of subsidies as a deflationary weapon. I could not follow his argument there. It seemed to me that if a policy of subsidising was a policy of deflation, it would have been carried out by this and previous Governments to its extreme limits, and we should have had very high taxation and very high subsidies to obviate inflation. But it has not taken place, and I do not think that, if he examines that line of thought, the right hon. Gentleman will find it a very satisfactory one. He referred to the reduction in expenditure in Germany at which we all rejoice, but I would like to point out to him that we have merely transferred the existing situation to the Americans. They have too easily assumed the mantle of Socialist planned economy in Germany. The horde of officials is still there, and the policy still is to manage

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  German affairs and so very largely to prevent the Germans from reviving their own economy. However, that is a Foreign Office matter, and I do not now propose to follow it up.
  The right hon. Gentleman said he would economise in the case of the National Debt, and that he would do it by reintroducing the cheap money policy which proved such a disaster a year ago, and from which we have, fortunately, emerged. Incidentally he would make National Savings and the National Savings Movement all the more unattractive by returning to lower interest rates. I would remind him that the actual burden on the community of the National Debt is not as great as he seemed to imagine. The service charge on the National Debt, expressed as a percentage of total private income, has risen only from 4.3 per cent. in 1939 to 5.5 per cent. in 1947. Although that amount looks very large in the estimate of expenditure, in fact the extra burden on the community is not very great.
  My right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) has pitched our general criticism of the Budget in, I believe, exactly the right form. He has complained of the excessive level of Government expenditure. It is that expenditure which, I believe, the Committee ought to tackle before anything else. I would draw the attention of the Committee to pages 14 and 15 of the White Paper, where are set out in detail the main items of Government expenditure. Wherever we look at those two pages we see substantial sums which could have been reduced. I am inclined to be more adventurous—or, as some might say, more irresponsible—than my right hon. and gallant Friend, and I would definitely apply economies to the social services. I regard inflation as a worse danger than the temporary putting off of increased educational and social service expenditure.
  If we look at the education and physical training items, as set out on page 14 we find an increase there of some £30 million. We find also a new item for fire services which could be cut down. Then there is the enormous new item of £143 million for the National Health Service. I think that in this particular year of great finan-
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  cial stress and difficulty it is quite wrong, particularly as the medical profession itself is not happy and satisfied, that we should introduce this scheme. There are also comparable amounts in the National Insurance Fund, and the National Assistance and Supplementary Pensions. I believe that the inflationary situation and the distorted economy of the country are so serious as to warrant a temporary percentage reduction in these services.
  Mr. Shurmer (Birmingham, Sparkbrook): The same old story.
  Viscount Hinchingbrooke: It is very difficult to single out definite items of Government expenditure and say that they should be eliminated. I would rather put it upon an emergency 10 per cent. or 15 per cent. basis, and say that whereas France and Belgium and other countries in Europe have found it necessary, in order to avert inflation, to make percentage cuts, and whereas Britain in 1931 also found it necessary and healthy to make percentage cuts, now is the time to act in a similar manner.
  Mr. Shurmer: Now the cat is getting out of the bag.
  Viscount Hinchingbrooke: There are various items which could be reduced very considerably. The Ministry of Works wants £11 million more this year. What on earth is that for? When examined closely, it includes a mobile labour force, of all extraordinary devices; yet we all know that throughout the country there are or could be ample private building organisations. The Central Office of Information is pressing for increases. When I was in the United States of America I saw some of their handiwork, and, believe me, it does not accurately reflect the state of British opinion; it is far too party in its bias, and in that sense most unfortunate, and calulated to be immediately rejected by the Americans. The Ministry of Fuel and Power ask for £2 million more this year. The Ministry of Transport Estimate is enormous. The National Coal Board has been formed, and the British Transport Commission has been formed. Are not these the organisations to take hold of the ancillary services throughout the country? Why is there not a corresponding reduction in the Estimates for the Ministry of Fuel and Power and the

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  Ministry of Transport, taking into account how the work has been concentrated in the new Boards and Commissions? There is the British Council Estimate, but in these days we cannot possibly afford to allow to continue expensive propaganda of the type now being put out by the British Council. Those are some of the items which I would ruthlessly attack.
  The Government make an appeal to the saving community to make a special contribution to national recovery, yet the Government alone press on with profligate expenditure. There are unfortunate signs that that expenditure is reaching a sort of finality. On page 11 of the White Paper we find set out the figures of national expenditure for the last few years: 1945–46, £5,648 million; 1946–47, £3,910 million, a reduction of £1,738 million; 1947–48, £3,209 million, a reduction of £700 million; now, in 1948–49, an estimate of £2,975 million, a still narrower reduction. There are clear signs that this Government regard national expenditure as beginning to stabilise itself—a view which we on this side of the Committee utterly reject, we consider that further drastic reduction should he undertaken. My suggestion of a 10 per cent. cut produces, on the present estimate, a reduction of a further £300 million, making a total, with the present calculated surplus, of £600 million, out of which I believe we could afford to dispense with the new Customs and Excise Duties, totalling £47 million, which will be regarded, in present circumstances, as inappropriate to the times, and will be resented by our constituents up and down the country.
  Is a surplus—any surplus—necessarily deflationary? I do not believe it is. For a long time we have heard about this £7,000 million of expenditure chasing L6,000 million of goods. It is quite clear that in order to remove all fears of inflation we ought to suppress £1,000 million of purchasing power. With the Chancellor's calculated surplus—even if he uses it the right way, to which I will come in a minute—he is suppressing only one-third of the excess purchasing power in the country, and to that extent the Budget is not deflationary. The Committee should realise that a surplus is not per se deflationary. It depends how the surplus is used. The reduction in the floating debt last year of £413 million has
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  to be set against a surplus of £658 million. In other words, the balance between the two was used in a manner which might have been inflationary, for example, as ordinary Government expenditure. It is only by a reduction of the floating debt that deflation can be guaranteed to be taking place. I should like to exact a pledge from the Financial Secretary that the calculated surplus this year will be used to reduce the floating debt. In that way we can have a positive guarantee that it is being employed as a genuine deflationary weapon.
  In passing, I should like to comment on the Chancellor's proposal to "screen" the allowances now given to business executives and directors. I do not think any hon. Member would be disposed to disagree that something must be done; but let me point out where we have got to and what will happen. First of all, we get penal, direct taxation, instituted; then businessmen come along and offer special inducements by way of allowances in order to retain their valuable executives; the Chancellor then chases those allowances, and tries to close the loophole. What is the result? He takes us straight away into a world of inducements in kind; tied houses, furnished flats, farms, cars, cigars, champagne and furs—in fact, into the kind of world in which some of the heads of national boards, and some Members of the Government, are now residing. The right remedy for this situation is, not to chase the allowances but to reduce the Surtax. That is what should be done.
  Finally, I would like to refer to the piece of party spite and rancour known as the Special Contribution. Of course, this "once for all" business is pure nonsense. [HON. MEMBERS: "Hear, hear."] I am delighted to have the agreement of hon. Members opposite, because from it we see that they desire to make this a permanent tax. I need not, therefore, waste time on the point. Just as Income Tax began as a means of paying for the Napoleonic Wars, so we shall now see this penal tax imposed year by year in order to satisfy Socialist spite and prejudice. I ask the Committee to consider the effect this will have upon the young men of this country. If they see that all avenues to permanent investment, to putting away a sum for the future, to setting aside something to spend one day upon a house, a farm, or a

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  collection of valuables are closed, what will they do? Many of them are now thinking whether they should go to free countries. I have a close friend who has made up his mind to go. There must be many who are trying to make up their minds whether to stay in Britain or whether to leave. It is no easy decision.
  Mrs. Florence Paton: Poor things!
  Viscount Hinchingbrooke: This tax will undoubtedly add to the forces which persuade them to go. I urge the Chancellor to reconsider this tax, and to withdraw it. He is a just and humane man; in many ways his Budget is correctly framed, but at the end it carries this most unfortunate device. I hope that on reflection, after the opinion widely expressed in the Press today, and again, as it will be, over the weekend, he will see that this is a mistaken tax, and will withdraw it. Apart from the survey which the Chancellor gave I find little to praise in the proposals except the Income Tax and Purchase Tax reductions. It is a Budget which by no means will stop inflation. Let that be absolutely clear. And I regret that the measured phraseology of the Chancellor was marred by a piece of virulent prejudice at the close of his speech.
  5.41 p.m.
  Mr. Shackleton: I am very glad that I have been called at this stage, because I particularly desired to reply to some of the statements which we have had from the noble Lord the Member for South Dorset (Viscount Hinchingbrooke). He mentioned that when he first heard of the misfortune which overtook the previous Chancellor of the Exchequer, he felt disposed to be charitable, but it is quite obvious to Members on this side that charity does not reside in the heart of the noble Lord. He made a number of observations and proposals with regard to cutting Government expenditure, and particularly the social services. He also suggested that some cut should be made in the case of the Central Office of Information, and he cited the example of the British Information Services in America, which, I would point out, do not come under the Central Office of Information. I think it should be known by the Committee that had we not got these
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  American information services, they would be necessary if only to undo the evil which the noble Lord did when he was in America. That opinion was expressed to me by practically every British official I met in America, as well as by many good friends of Britain who do not subscribe to the views represented by those of us on this side of the Committee, but who are concerned for the welfare of Britain and the Marshall Plan. The noble Lord's actions in America were in marked contrast to those of some of his colleagues, who were particularly anxious not to sell their country down the river in America.
  Having been stimulated to make this attack, may I make a further comment on some of the proposals of the noble Lord with regard to the Budget? He showed quite clearly the attitude of mind of the Conservative Party, if, in fact his proposals do represent the views of his party. It is important that we should know—incidentally the noble Lord's references to savings were a rash intervention on his part, bearing in mind-his previous record in this connection—whether the Conservative Party do, in fact, stand for a return to the policies of 1931. It is important that we should know whether the Conservative Party stand for large-scale cuts in social services and old age pensions, against which we as a party can take credit for having fought.
  Viscount Hinchingbrooke: The hon. Member is ignoring the substantial remissions of taxation which would accompany the cuts.
  Mr. Shackleton: I should like to know what substantial remissions are possible. The noble Lord has suggested a 1o or 15 per cent. cut in national expenditure, but he admitted that he was unable to suggest in detail where these cuts should be made. It is quite clear to Members on this side of the Committee what is the purpose of his suggestions, and that these cuts will be at the expense of the workers and that the tax remissions will not benefit the people as a whole.
  I should now like to deal with a few further points connected with the Budget, and particularly with the proposals in regard to the increased taxation on beer and tobacco. It is quite clear there is a general realisation throughout the country that we are in an inflationary situation,

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  and I congratulate the Government on their success in having managed to get that across. We have argued from time to time about the size of the inflationary gap, and about the steps necessary progressively to reduce it. It must be apparent to most people now, and I am sure it is to the Chancellor of the Exchequer, that we are at a time when the inflationary pressure is beginning to decrease. In these circumstances, it is unfortunate, when the Chancellor is trying to provide incentives to the better paid workers and to the middle class, which we all welcome, that he should be providing disincentives at the same time for the poorer sections of the community. Those who have studied fiscal policy in the past will remember that we on this side have consistently urged an attack on what was called "regressive taxation," but that is the very effect of the Budget so far as the taxation on beer and tobacco is concerned.
  If it is desirable to maintain this taxation, and I can see reasons for it, then I suggest that the Chancellor of the Exchequer should consider providing extra inducements by increasing certain food subsidies to make up for the loss of income which will be suffered by the poorer sections of the community who will definitely not benefit but will suffer as a result of this Budget. An increase in the food subsidies would provide a great stimulus to the people who are not benefiting from this Budget, and would make up for the loss they will suffer from the increased taxation on beer and tobacco. I think I can say quite safely that Members on this side, apart from this particular tax, welcome the Budget, and in particular the Special Contribution which is an ingenious scheme, and which, as my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) has said, is administratively a satisfactory arrangement. I hope that the Chancellor of the Exchequer will complete the good work he has done by sacrificing a small part of this overall surplus of £300 million, as a contribution to lowering prices. After all, it is a very arbitrary figure, and I am certain that we could afford to make up for the loss of incentive which the poorer people will suffer by granting some increases in the food subsidies.
  5.49 P.m.
  Mr. Lipson: The real test of this Budget will come later. With
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  the objects the Chancellor of the Exchequer has in mind of checking inflation and providing incentives to increase production, we all agree, but whether he will be able by the Budget he has introduced to achieve these objects, time alone will show. After considering the proposals, I must agree that this Budget at least merits success, because it is an honest Budget and a realistic attempt to face up to the financial position of the country. What I value very much is that the Budget shows that Britain is prepared, as she always has been, to face up to difficult situations, and to make whatever sacrifices the circumstances demand.
  Reference was made quite properly by the Chancellor of the Exchequer to our gratitude for what is proposal under the Marshall Plan. But this Budget is based on what Britain herself can do. There is no doubt that if we can obtain the benefit which we expect from the Marshall Plan it will help our recovey, and will mean that many of the sacrifices which people would otherwise have to make will not be necessary. The Budget is, in itself, a very valuable contribution which our people can offer to our financial recovery. I think it will have a good reception, not only in this country—as it has already had, for the most part—but throughout the world and, in particular, in the United States and countries such as Canada, which have a great interest in our financial future.
  From information which reaches me, one of the difficulties we have to face in selling our goods in dollar countries is the very widespread belief there that, sooner or later, the pound is bound to be de valued so that would-be purchasers have a great deal to gain by postponing their purchases until that happens. I believe that this Budget has shown that that is not the intention of the Government, that, on the contrary, we intend, so far as lies within our power, to maintain the purchasing power of the pound. If that is driven home—and this Budget will help to do that—it ought to make a considerable contribution towards the efforts we are making in our export drive to bridge the dollar gap.
  Expenditure, of course, is very high. The right hon. and gallant Member for Gainsborough (Captain Crookshank) said that it was an intolerable burden. I

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  believe it is nothing to the burden which our people would have to bear if we failed to check inflation, and there was a runaway of the pound. That would indeed be something to which the adjective "intolerable" truly might be applied. Whatever sacrifices we are called upon to make financially I believe that we ought to be prepared to make, so as to avoid that terrible disaster befalling our people. Complaints have been made about the hardships of the Budget, about the extra penny a pint on beer, and so on, but they will be as nothing compared to what our people would have to suffer as a result of runaway inflation. Because the danger of that is very real, and the results would be so disastrous, I believe that, literally, no economic price is too high to pay to avoid it.
  We should all like to see expenditure reduced. The Chancellor has thrown it back to his critics to suggest where reductions in expenditure should be made. That, I think, is not altogether fair. I should like the right hon. and learned Gentleman to assure us that the Treasury is still the watchdog of the public purse, and that he is still making every effort to ensure that the country is getting value for the money it is being called upon to spend. I have no illusions as to whether any great reductions in expenditure are possible in present conditions. I cannot agree with the noble Lord the Member for Southern Dorset (Viscount Hinchingbrooke), that there should be a reduction in the social services. From every point of view that would be a mistake, because I regard expenditure on those services, quite apart from its justice and humanitarianism—as a long-term policy of re-equipping the nation for the great tasks which lie ahead.
  Many of us would like to see more money spent on the physical re-equipment of our industries, but that is not possible at present. We can, however, do certain things, such as improving the health of our people and fitting them educationally to face the problems of the times and the battle of life, and those things we ought to do and should do. Ultimately, they will bring us a very rich return. I believe it is our principal hope for the future that we can make a better use of our human material with which, in the past, we have been all too wasteful. We
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  must eliminate the unpardonable sin of waste from our economic life, and I would like to have an assurance from the Chancellor that he is watching this question of wasteful expenditure. I will not say that it amounts to a great deal—
  Sir William Darling: Why not?
  Mr. Lipson: —although we hear stories of waste here and there, because of the unnecessary size of staffs and things of that kind, and small vexatious controls which should be swept away. The psychological effect of waste has, I believe, far more effect upon public morale than its mere economic importance. We ought to have an assurance from the Chancellor that he is taking pains to ensure that there is no waste. That is a duty which he ought to accept, in view of the heavy burdens of taxation which the people of this country have to carry.
  As for the actual proposals in the Budget, I welcome them for the most part. I am glad that there is to be what is an equivalent to a 10 per cent. reduction in the Purchase Tax, but I think some of the details will need examination. For instance, we are told that refrigerators are once again to be subject to Purchase Tax on the ground that they consume electricity. But if they do that they also save food, and the Chancellor must decide which is the more urgent from the economic point of view. From the health point of view there is no doubt which is the more important.
  I am also glad that in spite of the fact that the Chancellor has to impose such a heavy burden of taxation—£3,5oo million which is more than we paid during the peak of the war, and we ought to realise that—many people will have to pay less in taxation, through this Budget, than they paid before. I cannot help feeling pleased that many of my constituents will be in that position. In the constituency I have the honour to represent there are many retired people who have served their country well, perhaps in the Services, in education, or in other fields. Their pensions count as earned income, and they will benefit not only by the increased earned income allowance from one-sixth to one-fifth, but also from the new tax grading. It is right that we should think of these people, who are having a very hard financial struggle to

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  make ends meet. They have served their country well, and it is fitting that at a time like this those who are unable to supplement their incomes, as many in work do from additional sources, should get this relief.
  I would like to ask a question about the proposed capital levy. We were told by the Chancellor that powers are to be given to trustees to sell some of their holdings to meet this new obligation. Will charitable institutions be exempt from this levy? I hope the Chancellor will give sympathetic consideration to the suggestion that they should be. I do not think that it can be said that their expenditure is responsible for the inflationary tendency. He said that one of the reasons for imposing this capital levy was that the people who are expected for the most part to contribute towards the levy were among those who were spending in a way which helped to bring about inflation.
  I welcome the proposals for the relief of the living theatre, and, in particular, the imaginative one for the remission of Entertainments Duty on shows in country districts. I think that the Chancellor might be more generous over matters of numbers, but that is a question to be settled at a later time. I think that to limit the concession to an audience of 200 is rather on the small side, and that something better could be done. In the main, I welcome the Budget, because I believe that it is an honest attempt by the Chancellor to face the economic problems of the times and to try to bring forward a realistic solution; and that it will not only give confidence and hope to the people of this country, but also strengthen Britain's credit throughout the world. To the extent it does that, we can all give the Budget very hearty support.
  6.2 p.m.
  Mr. Ellis Smith: It was not in 1948 that some of us began to take an interest in inflation. It was in 1939 and 1940, when some highly-placed people were slow to make up their minds where they were on the war. At that time, a few hon. Members concentrated on this issue. The then Chancellor of the Exchequer, Sir Kingsley Wood, was having difficulty with some of his own people, and in a fine letter he thanked a few of us for the part we played in pointing out the dangers of inflation. Probably the
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  reason I was so interested and concerned about the effect of it was that I happened to be in the Army of Occupation in Germany, when the German people were suffering as a result of very terrible inflation. May I stress the fact that resolute action was taken then in order to deal with the danger?
  The trade union movement of this country took a responsible line with regard to it. Part of the policy to be adopted was that they would restrain themselves in regard to applications for increased wages, and the engineers, miners and others who could have taken advantage of the situation, refrained from doing so because of the policy of stabilising the cost of living by putting on the food subsidies. Now that so many are advocating the taking off of the food subsidies the Chancellor of the Exchequer and the Government ought to remember that the food subsidies were put on in order to prevent a difficult situation arising during the war, and it was as a consequence of that undertaking and policy that the trade union movement limited their application for increased wages to the small amounts that were received.
  It was because of that background, and because of what we knew took place in Germany, that a few of us, when the White Paper was issued, placed a Motion on the Order Paper asking the House to reject it, or the Government to withdraw it, because it perpetuated the serious anomalies that existed in industry, it contained fallacious economic ideas, and did not propose any resolute solution for dealing with the situation that might arise, namely, inflation. At the conference of trade union executives, according to Press reports, the letter of the Minister of Labour to wage councils and tribunals caused great concern. It was on representation made by representatives of the Trades Union Congress that the letter was withdrawn. In view of the concern expressed at that conference, could we be told something about this circular, who suggested it, and who framed the terms of it; and could we be given a report on this when the Minister replies?
  May I place this on record because of the idea that is prevalent? The present Foreign Secretary served on the Macmillan Commission. We always looked upon

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  that with pride. He said in September, 1931:
  "I am against inflation, but I am also opposed to deflation."
  Seeing that the National Debt was £6,500 million in 1931, and is now £25,000 million, I would like to know what is suggested for dealing with this problem. I happened to be present at the conference of trade union executives, and may I make it clear that the decision by five votes to two was not a decision in favour of, or of endorsing, the Government White Paper? That decision was a confirmation of the General Council's report after consideration of the White Paper, and many qualifications were placed upon even the acceptance of that T.U.C. report.
  I have before me cuttings from the "Christian Science Monitor," published in the United States. For years, thoughtful people in the United States have been very concerned about the danger of inflation there. President Truman, even in 1947, said that no resolute action was being taken for dealing with inflation. He placed on record his concern at the action of Congress in the way they had dealt with proposals of his, and I suggest that the action which failed in the United States would equally fail here. Appealing, appealing, and appealing will not deal with a situation of this kind. It is resolute action that is required and that will have to be taken. The Government are trying to bridge a very serious gap by Victorian, orthodox ideas. It is 20th century steel that is required, with science and modern tools, something to give people vision and hope, something to work for. Although these ideas may not be accepted in this House now, I do not mind. It is only a matter of time before they will be accepted.
  While I do not accept the conclusions, the facts are to be found in a book entitled "Britain in Wonderland," written by an hon. Member of this House. Britain could be on the eve of a new industrial revolution if the Government would plan, organise and harness democracy in this country in the way it was harnessed to win the war. Thanks to our scientists and engineers, we lead the world in the development and production of gas turbines, jet engines, new types of tyres, oil refining and in the production
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  of the most beautiful pottery in the world. These should be given super-priority in materials, manpower and factory expansions. This is the constructive economic road to greater wealth and production. This is the road to Britain's economic recovery, and that road should have been taken 12 months ago. We have now still a short time available. If this is not treated as a matter of urgency, it will be criminal neglect.
  The only firm that is in the race with British firms is Brown-Boveri's of Switzerland. We head the world with our national gas turbine establishments of Metropolitan Vickers, Parsons, John Brown, or the B.T.H. John Brown are manufacturing a gas turbine set for the generation of electricity in Scotland. Metropolitan Vickers will soon erect the first in Britain for the Trafford power station. Fifteen gas turbine locomotives are being designed in Britain. The United States, Switzerland and France are also in the race in the production of this new motive power, with Britain well advanced in this new development. The responsible authority should be receiving more encouragement from the Government than is the case. Metropolitan Vickers have designed, built and fitted the first gas turbine ever to propel a ship on the seas. They are now making a 2,500 horse power gas turbine locomotive for the Southern Region of British Railways.
  Have our ideas been given to others? Have we passed them on to others as we did to the Germans? I believe in world co-operation, but in the difficult economic situation in which we find ourselves, it wants to be real world co-operation or we ought not to hand over our ideas to others. For all the products I have mentioned, the world could be Britain's market. There should be two or three shifts working day and night on the production of these new, modern products. A Stoke firm have recently perfected a new type of rubber tyre. They are ahead of the world with it. The United States are working hard to catch up. We could have flooded the world with the new tyre had the firm received the encouragement they should have done. They have pleaded and pleaded, while others have marked time, vacillated and discouraged.
  Our pottery is the best in the world: so say the United States, Canada, Austra-

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  lia and New Zealand. It is true that our own people do not see it, but we could be exporting twice as much if the Government would plan and provide for the export of this pottery on the scale on which it should be produced. If we had an enterprising Minister with drive, initiative and understanding he would have a plan for this policy based upon the new economic ideas that themselves lead towards economic recovery and toward great wealth and increasing world trade. It was coal and cotton last century; in this one it could be gas turbines, jet engines and the other modern ideas which I have mentioned. Mountains of wealth could be had from modern, scientific, engineering and chemical industries. Before the war I spent years in this House advocating certain processes. By reading American literature and the report of the Nuremberg trials, I have been given the answer why the processes were not adopted in this country.
  Now we are to be allowed to develop a large-scale oil refining industry. It should be twice as large as is proposed and should be built more quickly. At Trafford Park and Partington, Manchester, the finest plants in the world are being erected. The Government should say to those concerned, "Build your plant twice the size. We will give you super-priority and settle the capital charges later."
  Mr. E. P. Smith: On a point of Order. Might I suggest that the Chamber is now adequately aired?
  The Deputy-Chairman: This is an instance of intelligent anticipation, for I have forestalled the hon. Member and given instructions for the windows to be closed.
  Mr. Ellis Smith: These facts arise out of our economic situation, but those closely in touch with industrial affairs are very much concerned about them. The same thing applies with regard to the replacement of machine tools. "The Times" of 27th December stated that this was one of the most serious problems with which British industry is confronted and that great concern was being expressed throughout industry with regard to it. The planning of machinery, and the staff responsible for planning in this country are far from satisfactory. In my view the present system is a device to
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  prevent real democratic planning. There is the Central Planning Staff, the staff of the former office of the Minister of Economic Affairs, the Economic Section of the Cabinet Office, and the Central Office of Information. How can we have a really centralised drive with so many responsible authorities? Further, how many of the people responsible, including members of those staffs, have ever been engaged in industry? We urgently require a Ministry of Economic Affairs with full authority to set in force the policy that I am outlining.
  A number of hon. Members a few weeks ago placed a Motion on the Order Paper dealing with the Economic Survey. In that Motion they set out certain principles. First of all they recorded their keen satisfaction at the response made by all engaged in industry. Often hon. Members, on the other side in particular, have not given the credit that is due to industry and to the people engaged in industry for the magnificent effort made during the past two and a half years in order to increase output, which was so urgently required. Now, fortunately, it is on record and can be examined in official Government publications where it will be seen that our efforts in 1946 brought far better results than the efforts in the United States, and that our efforts in 1947 are getting far better results relatively than those of the United States. I have not the time to quote the details for this, but if anyone doubts what I say he should examine the Government's Interim Index of Industrial Production and compare it with the Federal Reserve Board Index of American Production. Therefore, it is with justifiable pride that we point out that, in spite of the fact that we strained ourselves to win the war, and in spite of the fact that our people are having to carry on in industries with worn-out machines, the efforts that have been made during the past two and a half years are such that we have obtained better results than those great people in the United States.
  We go on in this Motion to say that the time has arrived when the Government should prepare a four-year plan. The Government do not agree with that. I do not mind that, because it is only a matter of time until economic conditions force this Government or any Government in power to adopt such a course if they

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  want to save the country. Then we said that it should be real democratic planning and that these plans should be made in consultation with industry and not superimposed on industry by others, and that the representatives of all grades in industry should make their contribution towards the plans which should be fitted into a national plan.
  Then we say that there should be, together with what I have mentioned, a policy of modernisation and development and the encouragement of joint production councils, which played such a great part in securing our output during the war. Those councils should be representative of all grades of organised industry. On 24th April, a number of enthusiastic people will come to London. On that day we shall see two great teams composed of the finest working class characters that it has ever been my privilege to meet. If we had a policy, a plan and an organisation with working class leadership, we might get the same dynamic liveliness into this country, and it might produce the same results that we shall see at Wembley on that day. We organised to fight the Fascist menace. We must, and we shall, organise to deal with the economic menace. Our Motion is a constructive one, suggesting a road forward. It is based upon a large State loan to finance a four-year plan and I believe it would draw into activity all the democratic organisations. It would fix targets for saving, in order to finance that development and there would be a compulsory loan for modernisation.
  We suggest also a British Commonwealth loan for the development of the Commonwealth. Why have we not called a British Commonwealth conference to organise economic development and cooperation, based upon these ideas? If anybody in industry had made the underestimate of manpower that was made in the White Paper of 1947, that person would have been discharged at a few moments' notice. Who was responsible for the miscalculation? We were told that the manpower available would be 278,000, whereas the figure was 611,000. Now we are told that labour is to be brought from the Continent. We are also told that unemployment will increase in certain areas from 300,000 to 450,000.
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  Why are those people being brought from the Continent? Can we be told how many more are to come? The White Paper states that we have now enough manpower and that there will be an increase in unemployment. I have heard it said that we may be bringing more than 100,000 people from Europe. The workers will rightly ask, "What's the game?" Are we to have increased unemployment in certain areas while thousands of people are to be brought from the Continent to start work in industry in this country?
  This is my final point. There is a department for Economic Affairs, with several assistants. There is the Steel Federation and the Iron and Steel Board. There are hundreds of regional representatives of the Ministry of Supply. There is the Central Planning Board, with its office staff. Superimposed upon all that, another committee has been appointed by the Minister of Supply in order to devise special measures for securing increased supplies of scrap. Is there no scrap left from all the steel we exported between the two wars to Germany and Japan? Is there not ample scrap in Germany? We have seen advertisements in the "Financial Times" from groups of firms in this country, covering hundreds of other firms who are responsible for gathering scrap.
  Last December the Minister of Supply said that he doubted whether we could secure more than one million tons of scrap from Germany. On the other hand, on the authority of a special investigation carried out by the United States, there are between 5,000,000 and 10,000,000 tons of excellent quality scrap metal lying in German industrial centres at the present time, but the German industrialists will not release it. In addition, the German steel concerns have six months' supply of steel. Our supply here is getting short, and the industry in the United States may also be held up for scrap, yet the yards of German dealers are full of scrap and there is a large amount of scrap among the rubble. The German industrialists have said that they will not part with that scrap.
  According to the "New York Times" of 7th March, 1948, these facts are on record in the report of an investigation carried out in the United States. If they are facts, this is a shocking revelation.

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  We need to ask, "Who won the war?" When are the Government—I see the Economic Secretary to the Treasury laughing. Is he laughing at what I have said? If so, let me remind him to take that laugh off his face because thousands of the cream of our country gave their lives in order to save this country and to save democracy. Some of us played our part in past wars and we are refusing to forget, no matter what it may mean to us, what we owe to the people who have given their lives to save us.
  If the facts to which I have referred are true, they are a revelation that our country is in a serious economic situation, and an indication of the need for planning and for an investigation to be made. It is time that the Germans were make to part with that scrap, which ought to come over in the form of reparations, in order that it may contribute towards the economic recovery of our country.
  6.29 p.m.
  Sir Ian Fraser: The Chancellor of the Exchequer was right to express in the terms he employed the appreciation of this country for the help which is promised under the Marshall plan. That plan is indeed a remarkable gesture, comparable only with the aid which came from America during the war under Lend-Lease. Ought we to look only to that quarter across the Atlantic for aid and co-operation? Cannot we find aid in large measure, and given with the greatest good will, within our own Commonwealth and Empire? I have just returned from South Africa. I was glad indeed that the Chancellor devoted a particular paragraph in his Budget speech to the importance of that country at the present time. I would remind the Committee that South Africa has recently lent us £85 million of gold. That sum of money does not actually compare in magnitude with the kind of credits which we have had from across the Atlantic, but I calculate that it represents a relative contribution from the population of South Africa between two and five times any loan which we have received from the United States.
  I am not suggesting that sums of this magnitude can replace aid from the United States or fill the gap, but it seems to me that greater appreciation should be shown from this country of the efforts
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  made by a country like South Africa than has been shown—
  Sir S. Cripps: We showed great appreciation when it was announced.
  Sir I. Fraser: The Chancellor tells me that it was shown. Maybe I was travelling at the time and missed the statements that were made. I do not want to go on record as doing more than calling attention to the importance of this contribution. Similar messages come from Australia, New Zealand and Canada, ant it seems to me that we may find ourselves shortly considering aid from the United States which will embarrass us in some ways. I want before I finish to make one or two observations about that. It is linked up with my view on South Africa.
  The Chancellor said that this was one of the few ways left to us by which we can strengthen our reserves. He was referring to the obtaining of more gold from South Africa, and he very wisely said that it would be good policy for us to open wider a particular export to South Africa than it has been opened in the past. There has been a demand from South Africa to regard it as a No. 1 country for export purposes almost in the dollar area. I am glad that in his capacity as Economic Minister, the Chancellor is indicating a policy on those lines. The Committee will be interested to realise that owing to the fact that South Africa is such a big producer of gold and that the United States is its ultimate customer, they are bound to keep a very open frontier to American goods, and although they conform to the broad general rules of the sterling area, to a great extent they behave in some ways as if they were in the dollar area. There is hardly any dollar restriction in South Africa, and almost any goods from the United States can be found there.
  Not long ago the Board of Trade reduced the extent of the exportation of some goods to South Africa, arguing that they must go to dollar countries. The effect was to cause very considerable feeling in South Africa, and, incidentally, one of the effects was that a good many of the goods sold to the United States found their way to South Africa from the United States, so that, either directly or indirectly, the dollars were not saved. I have no doubt that the Chancellor and his

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  economic advisers have this in mind. What I want to stress is that here is a country from which more gold can be had provided that a policy is initiated which will draw it forward. What is that policy? Maybe we can learn something from the Canadians. They were suffering from a dollar shortage because they had been buying too much from the United States and selling too little. That is the situation all over the world.
  I have two proposals to make, both of which may be controversial and to both of which there may be extremely good answers at the present time, but, nevertheless, I think the proposals should be made and the Government's answers to them should be given. My first proposal is that we should raise the price of gold. Let me say in passing that I have no interest in gold myself but I am interested in the trade in South Africa where I have an old family business which has been trading there for the last 8o years; however, I have no interest in gold and do not hold a single gold share. I suggest that we should raise the price of gold because we are the biggest producers of it. There is hardly anything we can sell to the United States so freely and easily as gold, and if we were to raise the price of gold, we would clearly get more dollars into the sterling area.
  There may be disadvantages in this course because it is logical to argue that if we raise the price of gold, we are at the same time devaluing the paper pound. Some people would say that we are causing inflation. I would argue that that is not the case at all. I read what the Chancellor said about the French adjustment. He said that he did not object to a realistic value in relation to gold being found for the franc. What he objected to, and flew to France to avert, was some unilateral action which might have had the effect of upsetting the sterling control. He did not object, or did not object so strongly, to the finding of a realistic value. I hold that the realistic value of the pound is not 4.08 dollars: it is probably three or something like that. If the effect of raising the price of gold and of bringing more gold forward was at the same time to devalue the pound in terms of dollars, I would not mind that because that is the second proposal I am going to advocate on its own merits.
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  What is wrong with the world is that we are all buying too much from the United States and are unable to sell enough to her, and we are consequently put in a position in which, more and more, we shall be unable to sell the goods that we make and, more and more, we shall not be able to buy the things we need. How is that balance to be put right? The Chancellor and those who follow the Keynes' view think that this can be organised and that for long enough they can go on putting off the day of reckoning until the adjustment that requires to be made is so much less. I earnestly hope that will prove to be so, but I do not think so. It seems to me that the most effective way to get things right in the world is to make the law of supply and demand work for us, instead of trying to stand up against it. If hardships follow, they will be infinitely less, I foreshadow, than the inevitable crash which will come when Marshall Aid runs out.
  Judging by the Government's use of the first dose of American aid during the last two years, and judging by the way in which it was spent in two years when it should have lasted for four or five, I cannot but fear that any further aid that comes from the United States will be similarly used up and will leave us high and dry after a year or two. I do not know what the detailed proposals are and whether the Americans will make conditions spreading it over, but I am quite sure that great adjustments are needed, and we alone can make them. The way to make them is to make the law of supply and demand work for us. If we have not the courage to cut off the supplies from the States which we cannot afford, let the law of supply and demand help us, because that will be the quickest way and will in the end cause less dislocation, unemployment and hardship. I do not deny that it will cause some or all of these things but I maintain that will be the quickest way.
  I should be very pleased if the Chancellor would in due course answer these questions because they are in many people's minds and they deserve an answer. To promote recovery this country should follow the good, sensible line which every prudent man follows in his own life. First, do not buy what we cannot afford to pay for, secondly,

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  do not borrow what we cannot pay back, and, thirdly, if we are in a bad way and cannot get all the things we want, set out to work hard for them, because that is really the only way in which they can be obtained.
  6.40 p.m.
  Mr. Piratin: The hon. Member for Lonsdale (Sir I. Fraser) will forgive me if I do not follow the points he has made, however interesting they are. I am sure the Chancellor will know how to deal with them. A lot could be said for what the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) said earlier about the difficulties we are meeting in trying to conduct this Debate. I know that I was in support of the idea a few weeks ago when we agreed to have a five days joint Debate, but it now appears clear that we are wandering from point to point. So far as each hon. Member is concerned, we are confronted with the problem of trying to deal with two subjects in one contribution, and none of us wants to take longer than is convenient for all concerned.
  I want to deal, first, with the Economic Survey part of the Chancellor's statement yesterday. I do not want to go into any detail, for the Chancellor himself, in spite of two and a quarter hours of meaty contribution, did not deal at length with that part of his statement, but I want to make one or two points. The first and most important relates to the Chancellor's problem, which neither he nor any one else has yet solved, of how to balance the drain on our reserves. We are given the figure of £220 million drain in the course of six months, which will mean a drain of £440 million in the course of a year. The problem is how to balance this, and the Chancellor had no solution. It is true that we have a Budget which is very well balanced, with an adequate surplus in the estimation of the Chancellor, but that Budget, as we now recognise, is not really the budget of the nation; it is the financial expression of certain expenditure of which the Government approve, and the real budget of the nation relates to the balancing of our resources, producing for the needs of the nation, and being able to produce sufficient to meet our imports.
  In this respect the Chancellor was not as optimistic as he was on the financial
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  side, for whereas it is quite easy to dabble with peoples' money, so that he finds himself with a £300 million surplus, and then dabbles with a couple of hundred million one way or the other in order to relieve a little here and add a little burden there, it is another matter in solving how to produce more and how to put the country, on its feet. That means planning, and the Chancellor has no plan. He goes further and tries to justify the absence of a plan by suggesting that any plan in operation would be in conflict with democracy. Now, whose conception of democracy is the Chancellor concerned about in this matter?
  Sir S. Cripps: Not the hon. Member's.
  Mr. Piratin: That of the Federation of British Industries or that of the Labour Party? I heard the Chancellor's interjection, and I hope he will be just as smart at answering all my questions. I do not think he will. This is what he said yesterday:
  "Since we are, and propose to remain, a democracy, we must remember that the economic plan is not something of which any Government can guarantee the execution The plan lays down the necessities of the situation"
  In fact there is a plan, but it is not meant to be carried out, for he says he does not expect to see the achievement of the plan and, for that matter, he does not con-template attempting its achievement. What a perspective this is. What would have happened during the war if those responsible for the military side of the Goverment's efforts had plans but did not expect them to be carried out? Where now, may I ask, is the Socialist planning of which we heard so much. Where now is the planned democracy that we heard about in 1945 from the Chancellor and his colleagues? I hope that Labour Members, at least, and for that matter all Members of the Committee—for this is a matter of grave national importance—will realise that this is not a Socialist approach but a capitalist policy which is being carried out by one who assumes the title of Socialist Chancellor, and who brings in a new interpretation of the word "democracy" in order to confuse the working class while toadying to big capital and industry. The strategy of the Government's plan was outlined likewise in the Chancellor's statement yesterday, when he said:

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  "The strategy of the Government's plan for bringing about a better balance of payments between ourselves and the Western Hemisphere is set out in … the Economic Survey"
  And he went on to give a resumé. He said:
  "The elements of those plans are, the diversion of exports to the dollar areas; the building up of alternative sources of imports in non-dollar countries; close co-operation with the sterling area, and with the countries of Western Europe and their dependencies; and the restoration of conditions of multilateral trade.…"— [OFFICIAL REPORT, 6th April, 1948; Vol. 449, c. 38, 42 and 43.]
  Why was there no mention of the Soviet Union and the Eastern European countries? At least the Chancellor might have thrown them in for overweight, as he threw in the expression "the sterling area." Nowhere does the Chancellor specify even the Commonwealth or the Dominions. With regard to the sterling area, let me quote from the "Daily Express" of 20th March. This is what an American writer says of "Britain's clutch on the sterling area":
  "The political and economic implications of this shift"—
  that is, how the U.S.A. can take over the responsibilities of the sterling area—
  "are so great that the experts have given up trying to figure them out. None of them believe the United States is well equipped for the job, but they agree that there is a basic inconsistency between Britain's participation in the Marshall Plan and her position as banker for the sterling area."
  At the end, he says:
  "The United States cannot allow Marshall dollars to be used to finance the sterling area instead of Europe. Britain must be prepared to grant credits to Marshall countries at the expense, if necessary, of the sterling area."
  Yet the Chancellor talked glibly about the sterling area and what our commercial relations are likely to be there. Why no mention of the Soviet Union?
  The Financial Secretary to the Treasury (Mr. Glenvil Hall): It is not in the sterling area.
  Mr. Piratin: I know that, but why no mention of it and of the other Eastern European countries? The Chancellor, who spoke for two and a quarter hours, could have added just a few brief words in order to give some satisfaction to certain hon. Members on these Benches.
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  Perhaps the Chancellor did not mention the Soviet Union because instructions were given by Mr. Marshall not to mention the Soviet Union. Who knows? Mr. Marshall gives so many instructions these days, which we take. Here may I make a few remarks, in passing, about Marshall aid, to which the Chancellor referred in such glowing terms. I do not wish to be personal, but the Chancellor is not given to sentiment, and when he uses an expression such as that is which he said of Marshall aid:
  "it comes as a light and hope to the freedom-loving peoples of the world."—[OFFICIAL REPORT, 6th April, 1948; Vol. 449, c. 41.]
  Hon. Members: Hear, hear.
  Mr. Piratin: Hon. Members do not really mean that. When the Chancellor uses such an expression, we must wonder what is this "light and hope"? He admitted later in the statement that Marshall aid will not solve our problems, nor those of Europe, and we have to ask these questions. What payment are we making for the Marshall aid which we are likely to get? The details we do not yet know, but what payment are we making? I think the Chancellor has a duty to the Committee to let the Committee know the payment. No one in his senses really believes that we are getting it free and gratis. It does not work out like that. Hon. Members were under no illusion over the extension of Lease-Lend during the war; we were rendering services for it.
  What is the position now? What services do we have to render now? I will suggest some things which are happening before our eyes. Any conception of a Socialist plan goes by the board. America would not be likely to give help to a Socialist Government in this country. They are not giving help to Socialist governments elsewhere. Why then should they give help to us? Secondly, such aid will be given provided we dissociate ourselves completely from the working class and Socialists of other countries. Thirdly, provided we maintain a large military force at a ruinous cost. I hope the Financial Secretary to the Treasury will take notes, for the public would like to know the answer to these questions. Why is it that in the popular edition of the Economic Survey there is no mention of military expenditure? Is that an acci-

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  dent, or is it published in that way on purpose? I am sure the public would like to know why they cannot be informed of the expenditure of £700 million of their hard-earned money. Fourthly, Marshall aid will be granted on the basis that this little country takes orders from Washington. In this connection I invite the Committee to look at column 39 of the OFFICIAL REPORT, where they will see that the Chancellor made this very interesting revelation in his statement:
  "Our net shipping earnings were only £17 million. As we are importing less than before the war, if we had as large a shipping tonnage as pre-war we could have earned a net income several times the pre-war level of £20 million, but owing to our shipping losses, the amount of tonnage available for the profitable cross-trade routes is less than before the war."— [OFFICIAL REPORT, 6th April, 1948: Vol. 449, c. 39.]
  Why then are we cutting down our steel allocations for shipping? The Chancellor has been asked this several times, but he has never answered properly. Shipyard workers on the Clyde, the North-East coast and Merseyside would like to have the answer, for no one denies the coincidence of the action taken by the Government in reducing allocations, which took place only a week or two after statements were made in America about our shipping output. I submit that these things do not reflect "light and hope," but, on the contrary, bankruptcy and despair.
  It is against this background that we have the Budget. The Labour movement, and, in particular, the trade union movement, were waiting anxiously to hear of taxation on profits, and of moves to keep prices down; for these things were promised, but now the Chancellor has said, and deserves to be quoted:
  "We have appealed to the directors of companies not to increase the distribution of profits this year, and to that appeal there has already been a wide response."
  I hope he will tell that to the workers in factories who have been told to refrain from increased wage demands, and who read the newspapers and know something about the financial columns. I would like to hear the comment they would make. He then says:
  "I propose to leave the matter there until next year."—[OFFICIAL, REPORT, 6th April, 1948; Vol. 440, c. 61.]
  I am very glad to have followed the speech of the right hon. Member for
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  Bishop Auckland. He criticised the Chancellor and his faith in the capitalists, and therefore I shall not go into detail. But I would like to mention one case because of the hypocrisy revealed. No one can call me hypocritical, even though they do not agree with my politics. Hon. Members know who I am, and what I am. The hon. Member for Moseley (Sir P. Hannon), who I am sorry is not present now, happens to be the President of the National Union of Manufacturers. He sets an example through the company of H.P. Sauce Ltd., of which he is chairman, by increasing their dividend from 35 to 40 per cent. But the Chancellor is satisfied that steps are being taken in this direction. One could quote dozens and scores of such examples. That hon. Member, with certain others, negotiated with the Chancellor on this matter, and that is the way in which their promises are maintained. Yet the Chancellor believes them.
  Let us look into the matter of profits a little and see why the workers thought that profits would be tackled. I have some figures taken from the White Paper on Income and Expenditure. The figures in Tables 11 and 14 are very revealing. Table 11 deals with rent, interest and profits and Table 14 with Profits Tax and Excess Profits Tax. I ask the Committee to compare one set of figures with another. In 1944 rent, interest and profits amounted to £2,248 million and the taxes of both kinds amounted to £517 million, equal to 23 per cent. of those profits taken in taxes. In 1945 the profits were £2,390 million and £475 million were taken, which is 20 per cent. In 1946, profits were £2,594 million and £391 million were taken —16 per cent. It will be noticed that the profits kept increasing while the tax kept decreasing and simultaneously the percentage of taxes against profits also decreased. In 1947, profits were £2,884 million and the taxes £286 million—the percentage of tax had gone down to 10 per cent. The Chancellor says that he estimates £250 million this year from Profits Tax and Excess Profits Tax as against £286 million for the past year, a reduction of £36 million income from this source. No one knows what profits will be in the coming year, but even if they are stable at £2,884 million, the percentage will be 8½.
  That is the relation of the Profits Tax and Excess Profits Tax to profits in the

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  past years according to the figures given in the White Paper. Is there not scope for further profits taxation? Someone has been misleading someone. The question is, who has been misleading whom? At the meeting of the Trade Union executives on 25th March, to which reference has already ben made, the secretary of the T.U.C. General Council, Mr. Tewson, said:
  "Prices are coming down, I give you my word."
  Of course, many rather simple-minded Executive members accepted that he, Mr. Tewson, knew that prices were coming down, that they would surely come down and, with prices, profits. At that meeting five million votes were cast for, and two million against, the T.U.C. resolution which gave support to the Government's wage-freezing policy. Does the Chancellor think, in view of his statement yesterday, that if that conference were to be held today, he would get that vote? [An HON. MEMBER: "Certainly."] Someone on the Front Bench says "Certainly." In that case he must think that they are a lot of stooges. But they are not all stooges. The working class would certainly not support that policy.
  There has recently been much talk, in the Press and elsewhere, and much expectation, of a capital levy. Many of us were led to believe that the Chancellor would take some steps along those lines, as the right hon. Member for Bishop Auckland hinted earlier. Now we have a Special Contribution to raise £105 million. The Chancellor was very careful to impress upon hon. Gentlemen opposite—there are very few on this side of the Committee who are personally concerned—that this would be a once-and-for-all-tax. Of course, the right hon. Member for Woodford (Mr. Churchill) was quite right yesterday in asking what guarantee there was that it is once-and-for-all—a Chancellor's word has been broken in the past and it can happen again. In October we were told that there was to be an advertisement tax. The Chancellor broke his word at the request of those represented by the party opposite, and it can happen again. I am sorry to have to upset hon. Gentlemen opposite. It can happen, but not with this Minister; hon. Gentlemen are quite safe. Why is it that the only point in his contribution yester-
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  day when he did something, however slight, along the lines of Labour Party policy—for the capital levy has been Labour Party policy since before the Communist Party was established—was brought forward by the Chancellor so timidly, so nervously, so discreetly? That is a sufficient indication of his attitude to Labour's policy.
  Turning to the other aspects of the Budget, I think that the whole Committee, as is evident from all sections of the Press, welcome the Income Tax reliefs which will, although only in a slight degree, provide incentives. They are in the main relevant to the higher-paid wage earner and the salary earner. It is time that some of those people got relief. I am speaking particularly of salary earners. They are hard hit. Their salaries have not gone up proportionately to the cost of living or in proportion to the increase in wages which wage earners, through their trade union organisations, have been able to secure. Therefore, the Chancellor has done some justice in this respect.
  What relief, however, is there for the working class? The average earnings of a working man are less than £6 a week—those are official figures. If we take a round figure of £6 a week as being the average earnings, the man with a wife and two children does not, on that amount, pay Income Tax, but he pays indirect taxation. The man who does not pay Income Tax should be relieved of some of this indirect taxation. That has been Labour Party policy. What is the effect of this Budget and of other financial impositions which exist at present on such working people? One cannot be dissociated from the other. Take beer; if one allows a working man a pint a day, he will be called upon to pay 7d. a week extra. There may be some on these benches, including the Chancellor, who may say, "Let him not have it." But the Chancellor has never worked in a steelworks or down a pit. [An HON. MEMBER: "Has the hon. Member?"] I have done many things which some hon. Members ought to do.
  I turn to tobacco and I hope that on this occasion the Chancellor will not do what his predecessor did when I raised this matter on a previous Budget, when he gave me a lecture about smoking less, although I had not smoked for 20 years. If one allows a man a packet of 20 a day,

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  the extra cost to him will be 1s. 2d. a week, that is, provided he smokes a medium brand.
  I wish to add some further figures which the Chancellor cannot disclaim; they are part of his policy. Food subsidies are to be stabilised at £400 million for the year. The "Economist," in its issue of 28th February, gave figures to show that to maintain prices on subsidised foods at the level at which they stood last year, would cost £525 million. Therefore, there is a gap of £125 million. This sum will have to be paid by the people who buy the food, and is, on the average family basis which I am taking, 4s. a week. In the case of clothing, with which I include leather, etc., the additional cost, as the prices gradually show themselves in retail distribution, will be 1s. 1½d. a week for the average family man.
  The total of these figures for beer, tobacco, food and clothing is 6s. 10½d. a week. I calculate that the amount to be deducted from that sum in respect of Purchase Tax reductions will be about 10d. a week. That leaves an increased cost of living of about 6s. per week at this period for the working man, and there is no relief for him, because he does not pay Income Tax on £6 a week, if he has a wife and two children. I am sorry that the hon. Member for Lonsdale did not say a word, as I had expected him to do, about the pensioners, for we all know the position he holds in the British Legion. There are people such as old age pensioners and Army pensioners who do not remotely approach paying Income Tax, and it is upon them, who are receiving no relief whatever in direct taxation, that indirect taxation will bear hardly. I hope that hon. Members on both sides of the Committee will say something on this matter, because interest has always been manifested towards these hard-hit sections of the population.
  How the Chancellor can really justify this policy I do not understand. I heard him say yesterday afternoon that we must look at the policy as a whole, but one cannot tell a working man earning £6 a week to look at the policy as a whole because he is receiving no benefit from the reduction of direct taxation. All he knows is the indirect taxation increases which he and his wife must bear. Can the Chancellor explain the beer tax? There
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  is no reason why this should be imposed. One can think of personal reasons, but no one is suggesting personal reasons on this occasion. What did the Chancellor say with regard to tobacco?
  "It is necessary to bring to smokers' attention once again the need for economising in tobacco, and I therefore propose to raise the Duties."—[OFFICIAL REPORT, 6th April, 1948: Vol. 449, C. 65.]
  There is no necessity to bring attention to the need for economising in tobacco. It is a very harsh and brutal way of doing it. Let us be frank. I am a non-smoker, but I know the attitude of people on this question. If a man will pay 3s. 4d., he will pay 3s. 6d. It will not prevent him from smoking. He may buy a cheaper brand at 2s. 7d.—that is what he is likely to do—but whether that means less tobacco, I do not know. But all in all, is not this a discrimination between those to whom the extra 2d. is a factor, and those to whom it does not mean anything at all? Of course, it is. The Chancellor of the Exchequer ought to have explained whether that is what he wants, and if it is, then it is good to know where he stands, and we can deal with the matter accordingly. I submit that these taxes on beer and tobacco should be withdrawn.
  I wish to say something about the betting tax with which I agree wholeheartedly. There is one thing I cannot understand. When the Chancellor's predecessor introduced his Budget, he said it was difficult to deal with bookmakers, and he gave that as one of the main reasons why he could not introduce taxation on racecourses. Our present Chancellor has, in my opinion, devised a very good method of dealing with bookmakers. If we can deal with bookmakers on the greyhound track why not deal with bookmakers on precisely the same basis on the racecourse—
  Mr. Glenvil Hall: They are enclosed.
  Mr. Piratin: Surely we have a way of breaking through those enclosures by legal means. There must be some method of doing these things. Surely, the Chancellor is not incapable of devising some method. He has shown himself so ingenious in so many other things.
  With regard to the Purchase Tax proposals, many of those I will deal with in Committee when I hope to submit Amendments which, I hope, will receive the sup-

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  port of other hon. Members. There are, however, one or two anomalies which strike the eye of everyone the moment they look at the items. The Chancellor proposes that children's non-utility clothing shall be subject to a Purchase Tax of 33⅓ per cent., whereas formerly it was exempted. He also proposes that silk garments, formerly at 50 per cent., shall be reduced to 33⅓ per cent. Therefore, children's non-utility clothing is now in the same category as silk garments. I think it is true to say that many parents who would like to buy utility clothing for their children cannot find it in the shops, and have to buy non-utility. I do not think that any hon. Member would say that silk is a necessity of life. I see no reason why the tax on it should not go up to 66 per cent. rather than down to 33. Those are some of the anomalies with which we can deal at a later stage.
  The economic situation calls for a change in direction of our external economy. It calls for trade relations with the Socialist countries and the Commonwealth. I am sure that hon. Members on this side of the Committee will be pleased if I recall to their minds what the Leader of the Labour Party said in a book which he wrote in 1937. The Prime Minister then said:
  "If the Labour Party were in power in this country, it could, with France and the U.S.S.R. and the smaller States which are largely governed under Socialist inspiration, pursue a policy of international economic operations based upon the utilisation of abundance instead of restriction."
  The Prime Minister wrote that in 1937 in his book, "The Labour Party in Perspective." I quote from page 225. It may be argued by some that conditions have changed, but principles should not have changed. What endeavour is being made to develop trade with those countries in line with the principles enunciated by the Prime Minister—or Mr. Attlee, as he then was?
  What we want is a planned economy in this country. A Budget today should include no additional taxation on the working class, but rather increased taxes on profits. It should include an increased tax on income from investments, and a tax on the disposal of capital shares. There ought to be a reduced rate of interest, and not the higher rate which is
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  now operating. Though this Budget may appear to give some relief in certain directions, the Chancellor himself says we have to see it from an overall point of view, and I would say that from an overall point of view it is disappointing—particularly for the Labour movement, which had been led to believe for the last two months that something was going to be done in the Budget to balance the sacrifices they had been called upon to make. This Budget does not fulfil the promise in Labour's programme.
  I would remind the Committee of a further quotation from the Prime Minister's book. On page 130 he says:
  "I have stated that Socialism cannot make capitalism work. The 1929 experiment demonstrated this. No really effective steps could be taken to deal with the economic crisis because any attempt to deal with fundamentals brought opposition from the Liberals."
  The Conservatives are completely out of the picture naturally.
  "Labour men who saw clearly the need for dealing with causes had to try to deal with results. The amount that could be extracted for the workers from a capitalistic system was limited. When this limit had been reached, failure was bound to ensue I admit that the experiment was not made under fair conditions. The Party was handicapped by the conditions of the time, which demanded drastic measures, and by its leading personnel, who had surrendered their minds to capitalism long before they sold their bodies."
  I take it that the Committee are clear that I am quoting what the Prime Minister said in his book in 1937. The Prime Minister may not recognise in himself and the Chancellor the description I have just read out. That is how he described Ramsay MacDonald and others. However, the Prime Minister should recognise that he and others among his colleagues are now treading the same path. If he cannot recognise it, I would point out that the working class are beginning to recognise it and that their attitude to the Budget will be shown in no uncertain terms.
  7.20 p.m.
  Mr. Vane: I intend to set a different example from that of the hon. Member for Mile End (Mr. Piratin). I am going to be brief and I hope that I am going to be less confused. I must say that I had great difficulty in following his argument. He started by asking the question, "When is a plan not a plan?" and went on to explain that it

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  was when it was expounded by a Socialist Chancellor trying to deceive the working class. That was approximately the gist of his argument. Nor have I brought books written by the Prime Minister with me, interesting though the extracts were and interesting though I feel that other extracts would be if one had the time to read them.
  I want to refer briefly to one point only. When my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) asked the Chancellor this afternoon what effect on agriculture this Special Contribution, as it is called, would have, the Chancellor shook his head. I do not think that that is a complete answer. He appeared to give the impression that it would have no effect at all.
  Sir S. Cripps: I intended to give the impression that he would be given an answer.
  Mr. Vane: The right hon. and learned Gentleman shook his head in a different way from that in which a person generally nods his head when he is indicating that he will give an answer. I would like to ask one or two further questions. May we be told how much of the £105 million which the Chancellor expects to get from this Special Contribution will be drawn from agricultural sources? That is very important. May we also be told why agriculture alone among industries should be singled out to bear some part of this charge? Presumably the object is to take a levy from income from investments and not from industry direct. I understood that from his words. He said:
  "Investment income for this purpose will include all rents, dividends, interest, and other such payments."—[OFFICIAL REPORT, 6th April, 1948; Vol. 449, c. 71.]
  I know that the word "rents" acts something like a red rag to a bull to some hon. Members opposite, but I am sure that it does not act in that way to the right hon. and learned Gentleman who, I believe, is himself the lucky possessor of some agricultural land. I hope that he will understand that what I am saying is very close to the truth. The Minister of Agriculture has told us very frequently that agriculture under his guidance has taken on a new shape in the form of a partnership between the farmer
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  and the land owner, each having his particular responsibilities. His recent Act of Parliament has put very special commitments on the shoulders of the providers of the fixed equipment without which British agriculture cannot carry on at its present level, far less expand as we understand that it is the policy of the Government that it should expand.
  Therefore, I would like to ask the Chancellor how he reconciles this new charge with the policy of the Minister of Agriculture—although it may not appear to be a very large sum in millions compared with some of his other taxes. As far as I can see, it will act as a complete deterrent to the flow of fresh capital for agricultural equipment which I understood that hon. Members on both sides of the Committee wanted to see. Also, it comes particularly badly just after the announcement of the Minister of Agriculture that he is at last in a position to offer to the industry the mass production of some form of farm building to help meet the very real need. At the same time, the Minister's county agricultural committees up and down the country are trying to encourage further investment in agricultural equipment. This is a very important point and I hope that the right hon. and learned Gentleman will give a full answer. This matter is bound to cause great anxiety throughout the agricultural industry.
  It is no answer to say that this will affect only comparatively few people and that it only begins when a man is in receipt of an income of £2,000 a year. It is always easy to pretend that somebody who may be rather better off than oneself can afford anything which the Government may happen to put on them. Maybe, but this will cause an immediate slowing up of all investment in fixed capital. I ask hon. Members, too, to consider the anomalies. It is possible that there may be a large farmer who is also, perhaps, a small land owner living at one end of a village, who may come within this category and may have to pay. At the other end of the village one may find, living in a small house, a successful bookmaker with an income infinitely larger than that of the man at the other end of the village. The first will be expected to pay a large contribution and the other, whose services to the community are negligible, will not be called upon to contribute one penny. In its present form I

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  am certain that this proposal will have a very serious effect entirely different from that which the right hon. and learned Gentleman expects. I hope that at least he will be able to tell us that it is hedged about with some conditions which will make it fairer than appears at first sight.
  7.26 p.m.
  Mr. Asterley Jones: The object of the hon. Member for Mile End (Mr. Piratin) was to show that the Chancellor was a wicked capitalist grinding the faces of the poor, and that all our troubles were due to the fact that we were accepting Marshall Aid. His anxiety to prove those two points rather tended to blind his eyes, and no doubt those of other hon. Members, to the fact that there was considerable substance in some of the points he made. I hope that the Chancellor will not overlook the fact that there are certain results of the proposals he has made in his Budget which will not be altogether beneficial. One thing of which the Chancellor cannot be accused in this Budget is spite against the middle class. There is no doubt that very real benefits are given to persons in the middle income groups by certain of these proposals, but to exaggerate these benefits would be a grave disservice.
  Yesterday evening when I left the House I got on a bus and I heard the conductor remark to another person, "They will always find some way of soaking the working man." He implied that the only thing in the Budget in which he took any interest was that he would have to pay a penny more for beer and two-pence more for cigarettes. I notice that the "Daily Worker" headlines today stress that the middle class benefit to a considerable extent. The hon. Member for Mile End referred in somewhat scathing terms to the appeal which had been made to the Federation of British Industries, and he said that some members had apparently not responded. I should like to point out that an appeal—nothing more than an appeal—has also been made to other sides of industry and so far there appears to be very little to complain about. If one side or the other does not respond to the appeal, further action will have to be taken.
  I would also point out to the hon. Member for Mile End that he said that
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  somebody has been misleading somebody else. I think that he has been somewhat misled. He pointed out that Item 2 of Table 10 in the White Paper on National Income shows that interest and profits rose from £2,465 million to £2,785 million, but he did not, as in fairness he should have done, point out that Item 4 shows that wages rose from £3,095 million to £3,530 million. That is a rather large rate of increase. The hon. Member for Mile End also failed to point out that Item 2 in Table 10 not only includes unearned increment but also farming profits and professional earnings, and, in this connection, I would like to say that it would be very convenient if, in future White Papers, professional earnings and farming profits were separated from the interest on shares. Part of my income comes from professional earnings, and I do not like to see them linked in the same category as unearned increments.
  Let us look at this matter on rather broader lines. We have, in the last few years, narrowed the gap between the lower-paid and the higher-paid very considerably. That is certainly so in terms of actual "take-home" money, as the Americans call it, but we must not overlook the fact that the lower-paid people get a correspondingly greater benefit from the social services than do the higher paid. All of us, when assessing our incomes, are compelled not only to look at what we get in actual cash, but what we collect from the Post Office every so often for family allowances. That is certainly a welcome addition to our incomes. We must also look at the concealed income in the form of food subsidies, whatever level of income we have, and we must also have regard to the fact that many people in this country are paying rents substantially less than the economic rents of their houses, the remainder being financed out of taxation. We must also look at the fact that a very large number of people in this country are being paid increased old age pensions, the increase also being paid for out of taxation. By no means all of it is paid for out of contributions.
  We have also to look at the fact that, from 5th July next, we shall have finished with the parish doctor and shall be providing a National Health Service for everyone. We must also look at the fact that many people are getting for their children a higher standard of education.

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  All these items represent income, though they may be income in kind, rather than cash, but they are paid for proportionately to a far greater extent by the people in the higher income groups. Therefore, the hon. Member for Mile End is completely wide of the mark when he tries to show that the Chancellor of the Exchequer is attacking, as he says, the working classes. The real answer to this statement is that the term "working classes," as was said by a judge of the High Court some months ago, is now completely out of date. The old idea that we could divide the nation into two rigid parts has gone. Certainly, there are the more wealthy and the less wealthy, but the step from the one to the other is far less perceptible than it used to be.
  In these circumstances, we have to see what steps can be taken to meet these enormous bills for social services, and I am very glad that a very large number of people seem to be breaking away from the old ideas that were once current as to the relative merits of direct and indirect taxation. My right hon. Friend the Member for Bishop Auckland (Mr. Dalton), in a remark which I do not think has received sufficient publicity, last year said that there are various ways of paying taxes. One could pay tax in accordance with the amount of beer one drinks, one could pay taxes in accordance with the amount of tobacco one smoked, or one could pay taxes in accordance with the amount of work one did, and that the easiest of the three to give up was work. That, to my mind, is one of my right hon. Friend's profoundest observations, because the ease with which taxes can be collected by indirect means is a very great argument in favour of using them scientifically, hut, up to now, they have not been used very scientifically. The state of the Purchase Tax, as it was up to yesterday, was a grotesque distortion of the state in which it should have been had it been properly planned. I have not yet had an opportunity of going through the myriads of schedules concerning it, but, whether or not it is more scientific than it was before, it certainly is the case that some things seem to be better treated than they were while some others are not. For instance, I cannot understand why non-utility furniture should be subject to two-thirds Purchase Tax. Utility furniture is completely free but, if people cannot obtain it—and it is impossible for
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  anyone who has not got units to obtain utility furniture—they are forced to pay an extra two-thirds on the wholesale value when buying non-utility furniture.
  However, the great merit of this Budget is that it does provide for more "take-home" money, even though it does throw rather more on to indirect taxation. There will be no great objection to that, because when there is more "take-home money," it means that there is a greater direct incentive. We have to be very careful not to provide too much benefit in kind which is not immediately perceptible as a result of labour, and also not to make the rewards of labour so small that people will not labour. On the other hand, we must also be careful that, when giving reliefs of direct taxes, we are not in fact placing a burden on the backs of people who are unable to bear it. The Chancellor, as I understood him, used this argument. He says that, by giving direct taxation relief, we are able to provide more "take-home money." By putting increased taxes on beer and tobacco, we are, in fact, making some people worse off, though they are in the position of choosing, if they so wish, whether to pay the taxes or not. In fact, we are making some people worse off, and here is some support for what the hon. Member for Mile End was saying. There is a certain number of people in this country today who are not subject to Income Tax, and therefore, they are gaining no relief at all from the proposals which the Chancellor has made. On the other hand, many of their simple pleasures are being additionally taxed, and, in particular, I think it is very difficult to justify the increased duty on beer and tobacco.
  I know that the argument against this is to give an increased incentive to workers to work overtime, so that the increased earnings for overtime will more than offset the extra 2d. on cigarettes or the penny on beer. That is the economic argument, but we must remember that a large number of people, and in particular many of those in the lower income groups, are not in a position at any time of the year to earn very much from overtime. Take the case of the agricultural worker. His possibilities of doing overtime during the winter are very small. His wages are, in fact, effectively frozen. At certain times in the summer he can do quite a lot, although certain categories of agri-

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  cultural workers, for instance, a cowman, have very little possibility of working overtime on cows. The responsibility there appears to me to lie with the cows rather than with the cowman.
  That is a somewhat absurd illustration of the fact that many peoples' possibilities of working overtime are very limited. Nevertheless, these people, who receive no relief from the direct taxation changes, are being asked to pay a little more on their beer and on their tobacco. The Chancellor may say to them that they should drink less beer and that would make them all square, but I think he tends to overlook the fact that so many of these people are working at hard physical work all day in the open air. Of course, one might say that they should drink cold water, but I do not believe in pushing Government interference to that extent. Let them drink beer if they want to, keeping their demands within reasonable limits. Therefore, I hope the Chancellor will reconsider this matter and will look again at the incidence of this indirect taxation on those people who in this Budget gain no benefit from the direct tax relief.
  It seems that if we are not careful we shall be getting a false picture of our economy. We still tend to think too much in terms of money wages, and not enough in terms of the various other benefits which come to all of us in greater or smaller proportions. I would not for a moment deprecate the practice. For one thing, it enables us to keep down our costs of production and, at the same time, to maintain a reasonable standard of living for the producers in industry. When competition becomes very strong that may be a very useful advantage to have. On the other hand, we must remember the psychological question which is this: to have more money in their pockets as a result of overtime is a very good thing and all right so far as it goes, but when the possibilities of earning that money do not exist and when, in addition, there is indirect taxation which takes the money out of their pockets, then, as the hon. Member for Mile End said among the other welter of information which was rather off the point, there is a definite and genuine grievance.
  It is not sufficient merely to say, "We dislike parts of the Budget and, therefore,
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  we express disapproval of them, whereas there are other parts which we like very much." I believe that if we say we do not like the Beer and Tobacco Duty we have to say more than, "Let us, therefore, tie our economy to the British Commonwealth and the Soviet Union and let us cut off Marshall aid." That is no answer at all. We have to make some sort of constructive suggestion as to how this could be put right. May I make two small suggestions? The Chancellor has given very considerable reliefs in his Budget to the middle income groups. I suggest that they go a little bit too far. He proposes that one-fifth of all earned income up to a maximum of £400 shall be free of tax. That means that one has to earn £2,000 before obtaining the full benefit of that £400. The Chancellor would have done well to have left the limit as it was pre-war at £300 instead of increasing it to £400. After all, people who earn from £1,500 to £2,000 are fairly well off. They are not as badly off as the agricultural worker, and I think that the Chancellor might easily have found something to put into the kitty.
  Again I think he has gone a little too far in making £200 payable at the lower rate of tax of 6s. When one looks at the figures one sees that he could have achieved the object which he set out to achieve by making the figure £150, and he could thereby have brought in a little more money. However, I would not like to go on record as being concerned mainly with carping criticisms. The main objects have been achieved by the Chancellor with a minimum of discomfort and with a maximum of result. While there are certain uneasinesses in the minds of all of us, particularly with regard to this question of profits about which I think most of us on this side of the Committee are uneasy, I think the Chancellor has done a magnificent job in almost reconciling the irreconcilable.
  7.45 p.m.
  Mr. Hollis: Whatever complaints anybody makes against the Chancellor of the Exchequer, nobody can complain that he has been backward in warning the country of the dangers of inflation. In the Economic Survey there was no attempt made to conceal the anxiety that was felt by those in authority about those dangers. Certain conditions to avoid inflation were frankly

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  stated, and no pretence was made that there was not still a grave danger that those conditions would not be fulfilled. Among those conditions, one of the most important that was stressed, and one which it was emphasised would be most difficult to fulfil, was that of maintaining private savings. When we look at the history of private savings over the past year, that anxiety is surely justified. On page 5o of the Economic Survey, we read:
  "When allowance is made for these factors, which did not prevail to any like extent in 1938, it is unlikely that, without a radical change in the willingness of individuals to save, the total of net saving in 1948 in the absence of inflation will reach the necessary figure."
  On the next page, we read:
  "All these counter-inflationary methods"—
  of which this private saving is one of the most important—
  "will have to be maintained, and many intensified."
  That being so, it would be idle for any hon. Member in any part of the Committee to try to conceal from himself the fact that there was a situation which must he viewed with great anxiety. Therefore, it is our duty to look at the measures of this Budget and see whether they are likely to be of assistance or a hindrance to private saving.
  It is from that point of view that I very strongly join with my right hon. and gallant Friend the Member for Gains-borough (Captain Crookshank) in expressing alarm at the Special Contribution and fear that the Special Contribution may turn out to have an inflationary effect and one damaging to confidence. It would give cause for alarm if we had merely to deal with the present Chancellor with his assurence that this contribution was to be levied once for all, and then finished with. But, as the Leader of the Opposition said yesterday, there are not many instances of financial devices being resorted to once and never being resorted to again. The words of my right hon. Friend were only too fully justified by what I can only regard as the most dangerous and sinister speech of the right hon. Member for Bishop Auckland (Mr. Dalton), who, instead of speaking of the Special Contribution as being levied once for all, changed it to the ominous phrase of "levied in the first instance."
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  Apparently, this is only the beginning of a full capital levy for which the right hon. Gentleman is working, in contradiction to the Chancellor's statement that a capital levy could not possibly solve the problem of dealing with this immediate crisis with which we are faced.
  With complete lucidity the Chancellor showed us yesterday the dilemma with which any statesman dealing with our financial problem today must necessarily be faced, and that dilemma, as he showed, is that the country badly needs two things which are, to some extent, in inevitable contradiction to one another. On the one hand, it is necessary to have a surplus in order to mop up purchasing power and to prevent inflation. On the other hand, it is necessary to have incentives, and it is difficult to think how we can have incentives unless we have some deduction of taxation. That is the dilemma—how we can have incentives and at the same time have a surplus, and that being so, while I associate myself with all that my right hon. and gallant Friend said about the necessity for economy and reducing Government expenditure, I think it is also very important that we should apply our minds to see whether we can find any way in which the sum of money which has to be collected can be collected in such a fashion as to act as less of a disincentive than it is at present.
  This volume of taxation, and the Income Tax that has to be collected, is bound to be a disincentive to a very considerable extent, but I would ask the Financial Secretary to bring to the Chancellor's attention, if not for the present Budget at any rate for the future, whether there can be some reconsideration of the whole method of assessment of Income Tax which, I think, could be greatly improved without any lessening of the amount which the Government are to receive out of it. I entirely agree with the Chancellor—and I hope everybody who has considered the matter for a second will agree—that there is no possible line of solution in letting people off Income Tax altogether for their overtime work. That scheme is an impossibility, and it is not necessary to go into del ail about it.
  I think we could say this: Income Tax is bound to have a disincentive effect,

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  any way, but it has an unnecessarily large disincentive effect now because the disincentive comes not so much from the absolute rate as from the marginal rate on which it is collected. Anybody who increases his income at all by a little extra work has to pay his largest rate on the increase in the money. A man with an income of £300 a year and one child pays—or, at any rate, until yesterday he paid—£1 a year in Income Tax, which is not a very large sum. If, with a little bit of extra effort, he raises his income from £300 per year to £301, on that extra one pound he has to pay not at the rate of a penny in the pound but at the rate of 2s. 6d. in the pound. Although there will be welcome reliefs granted in the new Budget, the same principle remains.
  I will quote an instance given in "The Times" this morning. If a man is married with one child and, for instance, gets £500 a year, he will have to pay £40 a year Income Tax at present. If he chooses to earn another £100, he has to pay £25 more Income Tax as a result of earning that £100, and so on. This marginal rate is the real problem to which we have to apply our minds. We soon reach the stage—£500 or £600—where people who earn any extra money at all have to pay on that extra money a sum which used to be 7s. 6d. in the pound and is now 7s. 2d. in the pound. Of the 12s. 10d. which they receive in each pound, in all probability they pay to the Government a very substantial proportion in addition, in the various forms of indirect taxes on the things on which they spend their money. As a result, a man is asked to do one pound's worth of work and really he gets a personal benefit out of it which may be 6s. or some very tiny amount, and that in a community—I am not complaining about it, for it is rightly so—where the necessities of life are guaranteed to a much greater extent than they have ever been before. That is where, I think, the problem of disincentive is a very serious problem.
  Every now and again somebody quotes a remark made by one of our great statesmen of the past—Sir Robert Peel, Mr. Gladstone, Mr. Asquith and so on—when Income Tax was 2d. or 1s. and they prophesied national disaster if it were raised. Those quotations are usually met with laughter, suggesting that the dis-
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  tinguished statesmen were idiots and were proved absolutely wrong. I think that laughter is very foolish. The disincentive effect of heavy taxation is not perhaps so immediately catastrophic as some people have prophesied it would be, but it gradually gets people down, like water dropping on to a stone, and it is far more foolish to say it has no disincentive effect at all than even to exaggerate the disincentive effect.
  That being so, the question is whether there is any solution to this problem of the marginal rate, which is a new problem today, at any rate in the psychological form in which it now presents itself, because up to 1940 people paid Income Tax not on the income they were earning at that time, but on the income of the previous year. In 1940, although there began the system of having the tax deducted immediately from income, the taxation was even then not based on earnings then made but on earnings that had been made in the previous year. Therefore, this marginal effect, in a psychological way, presents itself in a way which is new. Since 1943 we have had Pay-As-You-Earn and people have paid on the current income of the moment. There are some people who would solve the problem by abolishing Pay-As-You-Earn altogether.
  Sir W. Darling indicated assent.
  Mr. Hollis: My hon. Friend is apparently one, but I do not altogether agree with that. I think there are great advantages in Pay-As-You-Earn—three major advantages. The first is that it means that a person has to pay less tax when he earns less money, and no tax in the weeks when he earns nothing, through some misfortune or sickness, and that is a great advantage. Secondly, it is a system through which it is much easier to collect the tax, and thirdly, if wide changes in the national income take place, it has automatically an anti-inflationary effect, which is a good thing, because the yield of the tax automatically goes up with the rise of the national income. That is a good thing. I would not abolish it altogether myself, but I would commend an article to the notice of the Financial Secretary. I do not know whether he has read a very interesting article by Mr. Chambers in the "Lloyds Bank Review." I know the right hon. Gentleman is a very keen reader and

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  from time to time I have presented him with books of my own, and I am very glad to know he reads other authors as well.
  Mr. Glenvil Hall: And I read the hon. Member's books.
  Mr. Hollis: The article pointed out what is a great anomaly in our present tax system. I will mention it for the benefit of hon. Members who are less well read than the right hon. Gentleman, and it is that we now have two sorts of family allowances. No one is more keen than I am that parents should have an adequate allowance for their offspring, and there is nothing against it, but it is illogical that there should be two sorts of family allowance. Payments are made, on the one hand, directly for the children—the Children's Allowance—and on the other hand there are allowances for Income Tax. This is an historical anomaly which dates back to a time when one class of person was expected to pay Income Tax—the better-to-do person— and another class of person was thought to benefit from Children's Allowances—the poorer people who were not expected to pay Income Tax. Now it is illogical, and a typically English thing, rather like the tariff system before the time of Walpole.
  What I would suggest, therefore, is that it would be very much better for all people with incomes, say, up to £700 a year—all those who might be graded as the lower income groups—that all the allowances should be cut out altogether in the first instance, and that then there should be levied a flat rate on all their incomes which would be very much less than the present flat rate. Mr. Chambers suggested that we levy a rate of 3s. in the £ on everybody's income of incomes up to £500 a year. That could probably be conveniently deducted by the employer, and save a large amount of Inland Revenue book-keeping, because of the 19 million people who fill in Income Tax forms 16,500,000 have incomes of under £500 a year. This proposal would save a good deal of that book-keeping. Then we could pay back to those people their allowances. In some cases people would not pay Income Tax at all and would receive back in full allowances more than they paid. In other cases they would have so much repaid to them out
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  of what was deducted. But the great virtue of the scheme would be that nobody would pay a higher rate on the extra money that they earned.
  It is not a question of whether we can reduce taxation altogether, for I am not discussing that at the moment, but under this system a man would have more incentives even though the same amount of taxation would be collected though it would, we hope, be collected out of a larger national income, because there would be a larger volume of goods because of the reintroduction of incentives. The only people who would be worse off would presumably be those people without any dependants at all—young men and young women who, on the whole, probably are somewhat unfairly well off at present. If anyone has to be worse off it should not be the family people, and I do not think that there can be many hon. Members who would think that inequitable. I would beg the Financial Secretary to give an assurance that he will meditate upon this, and that he will ask his right hon. and learned Friend to meditate on this question of the revision of the whole incentive system, because I do not think anybody can seriously deny that the system at present is unnecessarily disincentive.
  8.3 p.m.
  Mrs. Jean Mann: I should like to deal with one or two points in the Budget speech concerning the concessions to, and inflictions on, the housewife. I believe that the Chancellor has congratulated himself on certain concessions given to the housewife, namely, the reduction of the Purchase Tax from 50 per cent. to 33⅓ per cent. I do not think that that reduction is nearly big enough. I have stated, and I must say again, that I think it is a niggardly peck—like a stepmother's kiss: it will be scarcely noticeable. The chief concern of housewives today is to get curtains for the windows and sheets for the beds. I do not think that that tiny reduction will mean that they can get either of those necessities. A mere is. 8d. in a yard of material costing £1 or the equivalent of 30s. will not make accessible these things—these needful things—which are at present necessary in the home.
  Again, I feel rather angry that there should he a 33⅓ per cent. new tax on utility fully-fashioned stockings. Does

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  not the Chancellor like to see neat stockings? Does he like the tight, corrugated-iron-ankle type of stocking? At present we have to pay three coupons instead of one and a half coupons for the fully-fashioned stockings; and that, surely, ought to deter most women from buying them. But, in addition to that, I am afraid it is evident that the Chancellor really wants money out of women. He asks for a 33⅓ per cent. tax. I think that the housewives will not at all be pleased with the 33⅓ per cent. new tax on children's clothing. Children's clothing outwith the utility ranges is to be subject to this new tax. Therefore, I do think that these new taxes are going to deprive the housewives of the little bit of benefit that they are getting in the reduction from 50 per cent. to 33⅓ per cent. One or two things in the Budget make me wish we had a strong trade union of housewives.
  Sir W. Darlinģ: There is the Housewives League.
  Mrs. Mann: The Housewives League is not a union—neither does it represent the housewives. It represents the innocent dupes of the Tory Party, and they are merely Tory Party stooges. If the housewives heard the Debates in this Chamber, or knew anything at all of what they themselves suffered from Budgets proposed by the party opposite, they would never be anywhere else but inside the Labour Party.
  Sir W. Darlinģ: They could at least get stockings.
  Captain Crookshank: Nor did they have to pay Purchase Tax on them.
  Mrs. Mann: If the Budget had been prepared by the Leaders of the Opposition I tremble to think what the housewives would have thought of it. But we can criticise some of the parts of the Budget which we think are unfair. I notice that protective boots designed for use by miners or quarrymen or moulders are exempt, but it appears that the protective boots that the mother puts on when she goes shopping—the cosy, sensible, little furlined ankle boots, are subject to tax. They are subject to tax because they are furlined. But a miner or a quarryman
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  or a moulder can have protective boots which are exempt.
  I also notice that there are a good many of the housewife, the No. 1 modern in-but not the housewives' tools of trade. They still bear one-third Purchase Tax. Yet there is all this talk about our tine women, and what a grand job of work they have done, and so on. We are getting just a little tired of listening to it, and we want a little practical consideration for the women going about their household duties.
  Why is the tax retained on the vacuum cleaner? That is the chief tool in trade of the tools of trade that are exempt—vention which has helped her, as I am sure every housewife would agree. Why is that, the housewife's chief tool in trade, still subject to 33⅓ per cent. tax? Is the market flooded with vacuum cleaners? In my constituency there have been deputations from a firm manufacturing vacuum cleaners, who say that the market is flooded with them because of the Purchase Tax. Consequently, last week workers were paid off, some were paid off the week before, and I was told at the weekend that in the coming week an even greater number is to be paid off. The firm say that the market is flooded with vacuum cleaners, that they have over-produced. If that is so, then I, as a housewife, am bound to say that in Britain there are thousands of homes in which the housewives could well do with vacuum cleaners. When my right hon. Friend replies I hope he will tell us if the home market is flooded. Otherwise, what is the reason for retaining the tax?
  Last year, when the tax on vacuum cleaners was introduced, we were told that the intention was to discourage the housewife from using too much electricity. I know that other home electrical appliances use a great deal of electricity, while the vacuum cleaner uses very little. I have constantly watched my electricity meter and tested the amount used for my radiator, my immerser and my vacuum cleaner, and, having watched the meter wheel go round, I know that of the three the vacuum cleaner uses the least. Surely the housewife is not to be so treated that she cannot get a vacuum cleaner, her chief tool in trade? I believe that a number of trades unions are urging that tools should be supplied free. I urge

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  that every housewife should be supplied with a vacuum cleaner free. I could just imagine the success of the Housewives League with the Tories if they went to those lengths. As a matter of fact, the alliance is getting pretty thin as it is. Surely, it is not too much to ask that in the case of vacuum cleaners, particularly if it is found that the home market is glutted, the tax should be considered again.
  I am sure that every housewife in the country will welcome the Budget, in that it retains the subsidies on necessary food items. Never before have we had a Government willing to spend £400 million in order to keep sugar, butter, lard, potatoes and bread at their present modest prices. I shall not join with those who scold the Chancellor about the 1d. on beer or the 2d. on the packet of cigarettes. Remembering the days when I suffered from Budgets introduced by the Tory Party, when the tax was on tea and sugar, I am sure it is much better to have the position reversed, and to see a Chancellor actually stretching out his hands to take the tax from the beer drinker and the smoker in order to give it to the housewife. This is an exceedingly imaginative Budget; a very good Budget, and one which we all welcome—apart from those items I have detailed, at which I hope my right hon. and learned Friend will look again.
  8.15 p.m.
  Mr. Sidney Shephard: Although I sit on the Opposition benches, I should not be honest with myself were I to disagree with all the measures in the Budget Statement. Indeed, with a good many of them I am in complete agreement. But I am sure that no hon. Member opposite, nor, for that matter, any of my right hon. Friends, would expect me to agree with the Special Contribution. We on this side of the Committee believe in the virtue of thrift. I have always practised thrift, and I claim that a man who has been thrifty all his life should have the benefit of it. I am utterly opposed to the idea that because a man has saved throughout his life he should be taxed, while the man who has been profligate should go free. If the Chancellor continues with this tax—and I am convinced it will be repeated—he will destroy that very virtue of thrift which has made
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  this country great. [HON. MEMBERS: "No."] Oh, yes; although hon. Members opposite may not agree.
  Mr. Shurmer (Birmingham, Sparkbrook): Has that man got it all by saving?
  Mr. Shephard: Yes, most of it.
  Mr. Shurmer: Most of it, may be.
  Mr. Shephard: Well, I have mine, and I object to being robbed of it. This Budget will be proved to be good or bad by three considerations: Will it stimulate savings? Will it induce people to work harder, particularly by way of overtime? Will it halt or reverse the inflationary pressure? I do not think any hon. Member can answer those questions at the moment. We must wait and see whether the Budget proves itself to be a good one. First, will it increase or induce savings? I was rather surprised that in his statement the Chancellor did not fix a target for this year. Was that because he saw that the target for last year was so far off achievement? The rich people are living on capital, so we cannot look to them for any savings. The middle class people have all their work cut out in balancing their family budgets, so we cannot look for savings from them. That leaves only the working class to whom we can look for increased savings. The working class has had a diet of war savings appeals for nine years, and, you know, it is becoming less appetising every year. The people see the shops full of goods; they want radios, furniture, and so on: can we wonder at it when they withdraw their savings and buy something they have badly wanted for years?
  There are only two ways whereby to stimulate the Savings Movement. The first is a negative method: have less goods in the shops, so that there is nothing for people to buy. The second method is to give an inducement to make people save Take housing as an example. There are in this country tens of thousands of people, working class people, who would gladly save in order to be able to build houses for themselves. Unfortunately, they do not know, and have been given no assurance for the present or the future, what will happen if they do save. If the Chancellor were to float a great housing loan, with a promise that in, say, ten years, people could build their own houses, I believe he would get all the savings he wants. Last July the Minister

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  of Health said that there would be no housing problem for the working class people of this country by the next Election. If that is so, is there any reason why people should not be allowed to build a private house in five or ten years' time? I ask the Government to look at the psychological aspect of the savings problem, to see whether they cannot produce a scheme likely to appeal to our people.
  From my experience—and I have had a good deal to do with working people—I am convinced that the earned income allowance, and other reliefs in this Budget, will go a long way to increase production. I have spoken to dozens of working men and I have asked them why they are not prepared to work overtime. Always they have one objection. I look forward to seeing a great upsurge in production as a result of these tax concessions, and also a greater willingness on the part of our people to work overtime.
  I want to turn to the main item which I shall raise tonight. The Chancellor of the Exchequer in his speech said that he did not think it was over-optimistic to build our exports up to 150 per cent. above the 1939 figure by the end of this year. He argued that that would mean an average of 130 per cent. for the year, and he quoted the January figure of 128 per cent. and the February figure of 121 per cent. as a sort of justification for his optimism. Frankly, I do not share that optimism. Wherever we look we see markets closing down, and the only markets which are really open are the hard currency ones which do not want our goods. One would have to be a super-optimist to assume that we are going to reach 150 per cent. over 1938 by the end of this year. Even with Marshall Aid, we are still going to have a deficit with the hard currency countries.
  We should consider any means whereby we can close that gap. A few months ago a group of gentlemen in this country, including my hon. Friend the Member for Ashford (Mr. E. P. Smith) produced a scheme for an international State lottery. It was discussed in the papers, and letters were written to the Press while a pamphlet was produced entitled, "Two million pounds British international State lottery." The object of that lottery was to help us in our balance of payments,
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  particularly with the hard currency countries, and also to remove the excess purchasing power which exists in this country. An international lottery sponsored by the State is bound to arouse considerable controversy in this country, and there are bound to be strong objections from various sections of the public. However, that is no reason at all why we should not look into the scheme and examine it very carefully. This idea of a State lottery has already been submitted to public opinion. That was as far back as May, 1945, when the "Daily Express" organised a ballot and the question asked was, "Would you favour or disfavour a State lottery if the profits from it were applied to the reduction of the National Debt?" Of those interviewed 71 per cent. were in favour, 22 per cent. opposed, and 7 per cent. did not know. That same paper organised another ballot early this year after the publication of the scheme I have mentioned. The result of that ballot was that 89.6 per cent. were in favour, 10.2 per cent. were against and 0.2 per cent. gave no answer. The "News Chronicle" also organised a similar ballot only last month and that resulted in 69 per cent. being in favour.
  From this it is fair to assume that there is a large body of public opinion which is in favour of a State lottery if it has as a definite object the helping of our nation with our foreign exchange position. The scheme briefly is that the British Government would hold this lottery every year for a given number of years, provided it was sanctioned each year by Parliament, and the lottery would have a total amount not exceeding £2,000 million in any one year.
  Mr. Shurmer: It is a lot of money.
  Mr. Shephard: Yes, it is a lot of money. The organisers of this scheme estimate that the expenses would be roughly £50 million, the prize money to be £1,000 million and the balance of £950 million would be profit. Tickets would be sold all over the world and undoubtedly would attract considerable support from hard currency countries and, in fact, from every corner of the earth. I have no wish to elaborate this scheme. It is sufficient to say that there are precedents. Both Westminster Bridge and the British Museum were built out of the proceeds of a lottery, and a

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  lottery was even resorted to on one occasion to pay the debts of the British Navy. We know that other countries organise these lotteries to their great benefit. Look at the Irish Hospitals Sweepstake, for instance. It enabled their hospitals to be reorganised from money sent in the main from this country. If our position is so desperate we should consider what means we should take to right it. I know there are objections, but the whole scheme should be carefully considered. It is worthy of being considered on its merits, weighing up the pros and cons and bearing in mind that it is an expedient designed only for a particular purpose and for a given number of years.
  8.27 p.m.
  Mr. Ronald Chamberlain: I do not want to follow the hon. Member for Newark (Mr. Shephard) on the merits of a State lottery, because perhaps I am prejudiced against such things. I have been a good deal in South America, where these things are recognised and are extremely widespread. Actually, I got very sick of having State lottery tickets pressed into my hands as I walked down the streets. I should not like the Government to rely on gambling on a grand scale like that.
  We on this side of the House welcome the qualified support for the Budget from the hon. Member for Newark. He did not go all the way with us and, indeed, perhaps he did not go very far. He made references to inflation and savings, and I shall have something to say on those subjects in a few minutes. In this Debate we have been trying to cover too wide a field, as hon. Members in all parts of the House have recognised. I am going to confine what I have to say to the actual Budget proposals, although I should have liked to deal with some aspects of the economic position.
  The Budget proposals, in my view, are very much like the traditional curate's egg—good in parts. They are good as far as they bring us further along the road towards the Socialist aim, as indeed they do in a number of ways, particularly with regard to relieving the burdens from those least able to bear them. The Budget proposals also bring us very clearly in the direction of economic recovery, and are good in that way; they provide real incentives, as hon. Members on all sides of the House have agreed. They also have a
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  deflationary aim, but, as I shall show in a moment, I do not think they succeed very well in that respect—but at least they have that declared aim.
  The Budget has, at the same time, very real and surprising defects. It aims at the right target, but with the wrong kind of instruments and the wrong kind of ammunition. To be quite frank, I think the Budget is a queer mixture of bold and courageous proposals and extremely inept and timorous proposals. The good features have been referred to a great deal. The Income Tax concessions and the Purchase Tax rearrangements, subject to certain adjustments, are all to the good; and so are the Entertainments Duty concessions, the retention of the food subsidies, and the measures taken in regard to expenses allowances. I stress those things because I shall have to criticise rather severely some other parts of the Budget.
  In that critical attitude I reiterate what other hon. Members have said about the penny on beer. This is one of the wrong and inept proposals; I see no reason or excuse of any kind for it. If I am told that it is necessary for the raising of revenue, I can suggest to the Chancellor many preferable and more productive means of raising the necessary finance. It does not save dollars. In other worth, there is nothing whatever good in it, and it is of an inflationary nature because it raises the cost of living. The Chancellor told us that one of the mainsprings and objects of the Budget was to attack inflation. In the matter of beer and tobacco, the Budget has an inflationary tendency and, therefore, those proposals are thoroughly bad.
  In regard to the additional tax upon tobacco, the Chancellor suggested that one of its main objects was that we should be made to smoke less. That is a thoroughly bad principle and is unfair discrimination. To suggest that in order to decrease consumption we should raise, the cost is quite wrong. If decrease of consumption is necessary, let us have a rationing scheme and face the matter properly. I think the position would have been satisfactory if left as it was. The idea of rationing by high price is bad. We heard the same suggestion made about petrol—we were told that one way to ration petrol was to put up the price to 6s. or 8s. a gallon, because that would

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  reduce consumption. That is a thoroughly wrong principle, and is discrimination in favour of the wealthier classes.
  I cannot agree with my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) that these increases in taxation are neither here nor there, that they are negligible and that we need not be bothered about a penny or twopence. They are extremely important psychologically and in the matter of incentive. I am sure that they will be very unwelcome in all working-class circles. The same is true of the tax upon pools. There, again, workers are called upon to pay more. The dog tote tax remains and dog bookies are to be licensed, while nothing apparently is to be done about horse-racing. That appears to be unfair discrimination, and is quite illogical. It is not enough to say that the process is gradual and that we shall do the thing bit by bit—it is not good enough to tax the sports of the workers and to leave untouched the sports of the upper classes and of the rich. That, again, is wrong and is unfair discrimination.
  The worst feature of all in this Budget—the Chancellor of the Exchequer will recall that I have raised this matter before—is the entire failure to tackle profits. We have heard from various hon. Members on this side of the Committee how profits, in spite of all requests and entreaties, are running at an unprecedentedly high level, but the Chancellor calmly says, "Leave it this year, and let us see what happens." The present Chancellor, his predecessor, the Prime Minister, and others who have spoken with authority, have said very clearly during the last 12 months that of all the inflationary tendencies the high range of profits was the worst and most serious—yet this thing, which is the worst form of inflation, the tremendously high run of profits, is to be left until next year.
  Certainly, something has been given to us; I do not know whether it is a capital levy, or an investment levy or tax. I think it is part of one and part of the other. For 25 years I have been advocating a capital levy and I still think it would be good, but not at this time, not at a time of inflation. It can be demonstrated that a capital levy is an inflationary measure; it should not be brought in at this time. In so far as this
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  is imposed as a capital levy, I do not think it is good at the present moment. In regard to its being an investment levy or tax, there again I think it misses the mark. It will be in the nature of a capital levy, as the Chancellor said quite clearly yesterday, and in the main will be paid out of capital, if only because it is in respect of investment profits which were declared in the last financial year. From that, it arises that capital will have to be uprooted and transferred, either as capital or as cash, to the Government. In that respect, it will very definitely have an inflationary tendency.
  Furthermore, I think the Chancellor was very wrong in saying that this thing, which is supposed to deal with the matter of profits, will not be brought in again, and that he will not do it on any future occasion. If the Chancellor had made a tax arising from investment he would not have had to add that very dangerous proviso, a very wrong proviso, that it will not be done again. The proposal is in respect of 1947–48. It therefore allows the run of profits in the present financial year to go on as high as ever. For all those reasons this proposal is a misdirected measure. It is probably right in basic intention, but it is put into operation very badly.
  With regard to profits, my right hon. Friend the Member for Bishop Auckland has said that they are the strongest inflationary elements in our national life, but nothing particular has been done in regard to them. I want to call the attention of the Committee to what was said by the White Paper upon National Income and Expenditure for 1947, in regard to profits and interest. There we were told, on page 8, that in the calendar year 1947 those items represented £3,242 million, more than double the profit and interest for 1938. Indeed, it has to be noted that the figure has gone up by £300 million since 1946 and that it is nearly as much as the total wages bill for the country. It is a most significant and wrong thing that with a Socialist Government we should allow these things to continue and that the total out-turn of profits and interest in 1947 should be nearly as much as the total wages bill. When rent is added, those items together make up 41 per cent. of the total private income of the country, compared with only 40 per cent. for wages. I commend

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  that to the Chancellor of the Exchequer. It is entirely wrong and out of focus.
  I begged the Chancellor several times last year to do something in regard to the matter of the high run of distributed profits. The Chancellor appealed to the Federation of British Industries and associated organisations to do something about this. He did not ask them to reduce the run of profits; he merely asked them to take measures to stabilise this tremendously and unprecedentedly high run of profits. They have given a reply that they will try to do something about it, but they make that reply subject to various conditions. They say that they look for special concessions for new businesses and those affected by the war, for stabilisation of wages and for a reduction in Government expenditure. In other words, they qualify their agreement and hedge it about with various conditions, and it is virtually a negative answer. It is, therefore, quite wrong and useless to approach the problem from that angle.
  The Chancellor of the Exchequer has mistaken what I have suggested on previous occasions. My suggestion is that the proper course is a ceiling on distributed profits. The Chancellor has suggested that I have asked for further taxation on distributed profits, but I have done nothing of the sort. To say that there should be a ceiling on the rate of distributed profits is not to suggest any further impost on distributed profits. I suggest a ceiling of say, 10 per cent. on distributed profits in relation to paid-up capital. That will mean a great increase in profits put to reserve, and there should then be a reasonable increase of the Profits Tax on undistributed profits—I suggest, up to 25 per cent. In that way we could more than cover any advantages accruing from the tobacco, beer and pools increases, so that if it is a matter of needing further revenue, it can be found quite simply in the measures I have suggested.
  I appeal to the Chancellor of the Exchequer to reconsider this matter. He says that he wants to turn off the inflationary tap, and yet this profits tap is pouring all the time at a tremendously high rate into the inflationary bath, and all he suggests doing is baling out a mere £300 million, while he leaves the tap full on. That is the wrong way to go about it, and even at this late hour he must do something about distributed profits. If
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  he does not want to bring in any further taxation proposals, there is still my proposal that a ceiling should be put on the amount which he allows to be distributed, with a view to combating the present very virulent tendency to inflation.
  8.45 p.m.
  Mr. E. P. Smith: It would be ungraceful and ungrateful of me if I did not tender my thanks to the Chancellor of the Exchequer for the way in which he has relieved the living theatre of parts of the burdens which it: carries. He knows that it is at best a risky and a precarious calling for those who engage in it, and I can assure him that the thanks of those who do engage in it, will be his for what he has done.
  I had not intended to intervene in the Debate tonight, and I should not have done so had it not been for the forthright and courageous speech of my hon. Friend the Member for Newark (Mr. Shephard) in which he introduced my name. The hon. Member for Newark is well known on all sides of the House as a broadminded and moderate hon. Member, as a capable, far-sighted and progressive industrialist and as a zealous and diligent member of the Church of England, to none of which qualities I can lay claim. He mentioned in the course of his speech the question of a British-sponsored International Lottery. Our economic plight is admittedly desperately serious. The writing is on the wall for anyone who cares to read. It leaps out of the Chancellor's own speech. If we cannot close the gap in our balance of payments we shall face semi-starvation in respect of food, and, what is perhaps even worse than that, starvation in raw materials for our industries, which may bring upon us some of the horrors of mass unemployment.
  While I give the Chancellor every credit for sincerity of purpose and determination, there seems to be an air of unreality hanging heavily over our economic situation. We appear at home to be boundingly prosperous, with a huge Budget surplus, and yet abroad we are virtually bankrupt. How are we to close that ghastly gap? First of all, by hard work. There must be extra endeavour, and we must increase our exports by every possible means. That is the first and overriding consideration, but we must remember that however hard and

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  harder we may work, however much we may deny ourselves and however much we may increase our production and our exports, we know that our optimum target is beyond our achievement unless we can ensure for this country a flow of hard currencies without the necessary corollary of exports. The scheme mentioned by the hon. Member for Newark for a British-sponsored International Lottery was advocated by me and was circulated by me to every hon. Member of this House, but I do not want the Committee to think of it as a project which has been conceived in the brain of an obscure back bencher. It is a bankers' scheme, formulated by a well-known and much respected international banker and backed by well-known and much respected international bankers—
  Dr. Morgan: We would rather have it from the hon. Member.
  Mr. E. P. Smith: I trust the hon. Member for Rochdale (Dr. Morgan) will keep his well-known irrelevancies for his own oration. These bankers have had access to data, to information and, above all, to foreign contacts which, of course, are denied to me. Roughly, the scheme is this, that the British Government should sponsor an international lottery of £2,000 million to be held annually for three, and possibly for four years; that £1,000 million should be devoted as prizes, and that the balance, less £50 million for running expenses, that is to say, £950 million, should accrue to the British Treasury; that the tickets should be available to the nationals of any country in the currency of that country.
  In passing, I might say that a prominent United States citizen who happens to control 1,500 chain stores in the United States, has undertaken to sell £20 million worth of tickets in dollars. He is certainly a citizen of no mean city. The bankers who are associated with this scheme estimate that the total of £2,000 million would be achieved in this manner; that £800 million would be subscribed by the nationals of Great Britain and the British Empire, that £400 million would be subscribed by nationals of the self-governing Dominions, and that £800 million would be subscribed in hard and soft currencies, of which £500 million would be in hard currencies. I will not weary the Committee with the details of
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  the safeguards to be imposed to prevent an outgoing of more of one particular currency than might come in, or to prevent—which is most important—any undermining of our own National Savings movement, but I do say that these safeguards are implicit in the scheme and that the right hon. and learned Gentleman knows all about them.
  I would remind the Committee too, that there have been undertaken by two very different newspapers reader-research and Gallup polls which show an altogether overwhelming majority in favour of the scheme; and, incidentally, my own mail increased to such an extent that I had to make special arrangements for dealing with it. Out of the thousands of letters I received, only two expressed disapproval. That is a rather remarkable thing because, in general, people are only too prone to write when they disapprove of anything you do, and are far less willing to give you their approbation. So we have on one side of the balance sheet a definite majority of opinion and, on the other, a minority opinion including the Archbishop of Canterbury, the Moderator of the Free Churches, and the Rev. J. Clark Gibson.
  I have no wish to be ill-natured or provocative, I am not a good enough Christian for that, but I would like to point out that at the last drawing of a British lottery which took place about 125 years ago, the Archbishop of Canterbury was present in his official capacity and, for all I know to the contrary he may have been accompanied by the Lord High Commissioner of the Church of Scotland. The leaders of the Christian churches are quite entitled to take their own view as to what may or may not be moral, but they are not entitled to lay down the law for, everybody else in this respect, or to assume, as they do, that those who happen to differ from them in this matter are in any degree less high-minded than they are. The Chancellor of the Exchequer can throw no little moral stones at me from the recesses of his own greenhouse because he is content to tax gambling and betting wherever practicable, and to draw what revenue he can from it, and from courses which I should regard as far worse forms of gambling than a harmless well-conducted lottery. It is, however, an open question whether moderate hazard or wagering or gambling is, even in the smallest degree, immoral. The keyword,

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  of course, is "moderate." But, if the bankers are even approximately correct in the estimates which they have given me, it would mean an annual accession to this country of from £200 million to £250 million in hard currencies and without the corollary of exports. And I am quite sure we should all be comforted, and even the Chancellor might find a little comfort if he knew that there was a substantial possibility of our receiving from £200 million to £250 million a year in hard currencies without having to export to procure it.
  Mr. Cobb: Would the hon. Gentleman answer one question? Would he tell us what would happen if every other country in the world decided to enter this Tom Tiddler's ground afterwards?
  Mr. Smith: You would have to be in first. That is the point. That, combined with harder work and extra production and an increase in exports would, in my judgment, well-nigh close the gap in our balance of payments. We are in this position: if our exports and our higher production have to be our main crutch, as we must admit they must be, such a scheme as this, if brought in, would be a good stick, and a limping economy may well have need of both.
  I should like to tender my thanks to the right hon. Gentleman the Financial Secretary to the Treasury for the kindness, courtesy and consideration which he showed me, and those associated with me, in the two long and exhaustive interviews which we had with him at the Treasury. He was good enough to summon in to aid us in our discussions his experts who deal with this side of Treasury business, and they were particularly nice and charming. I noticed, too, that they were all quite remarkably young. When I went to the Treasury on this mission I felt rather like the Roman general Titus after the fall of Jerusalem, when he insisted upon penetrating into the Holy of Holies in King Solomon's temple.
  Dr. Morģan: Write a play about it.
  Mr. Smith: He expected to find there the image of a golden ass which, according to the legend of the time, had led the forbears of the Israelites out of the desert. Instead, he found an absolute and an awe-inspiring emptiness. I did not expect to find a golden ass at the Treasury—that animal had been kicked out of the stable
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  in 1931 and was last seen wandering somewhere in the neighbourhood of Fort Knox—but I did find an emptiness which may have been absolute but certainly was not at all awe-inspiring. In fact, all the arguments which the Treasury put forward against this scheme were so empty that they did not even rattle. We all sympathise with the Chancellor in his arduous task, and I am sure no man envies him. Even we who disagree with him violently politically must appreciate the determination with which he is trying to tackle his odious job. I know perfectly well that he disapproves of me strongly in this matter, but I bear him no ill-will at all. I am only concerned at the plight of our country, and, had there been one overriding argument against this scheme, which has not been advanced, then nobody knows better than the Chancellor that I would have abandoned it straight away. If the right hon. and learned Gentleman desists from considering it anew, he will not deter me from continuing to advocate it until he meets me with some really convincing opposing argument. I will conclude by reminding the right hon. and learned Gentleman of the motto attached to a certain famous sundial:
  "It is later than you know."
  9.0 p.m.
  Mr. Eric Fletcher: I only desire to intervene in this Debate for a very few minutes, and I hope therefore the hon. Member for Ashford (Mr. E. P. Smith) will not mind if I do not pursue the special topic on which he has been making such entertaining remarks. I believe I am speaking for all back benchers on this side of the Committee in saying that we congratulate the Chancellor of the Exchequer on the Budget he introduced yesterday. I am sure it will be generally welcomed throughout the country as a sound, well-balanced and, as "The Times" says today, a very brave and courageous Budget.
  The Chancellor has once again with scrupulous honesty laid bare the grim realities of our financial and economic position. He has set before us fairly and squarely the two outstanding economic problems of the moment, the need to correct the inflationary tendency, and the need to provide incentives to enable all those engaged in industry to increase production. I believe that by the tax adjustments and other methods contained in the

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  Budget the Chancellor has probably adopted the best methods which could be devised to secure both those objects. He has provided relief where it will have the maximum effect in stimulating effort. I would, however, urge him to lend an ear to the representations made from both sides of the Committee with regard to the high level of Government expenditure. I believe that now the Chancellor is at the Treasury he will be able, if he is willing, to give a lead in that direction, and I believe that by giving a lead in that direction he can do something further to give an additional incentive to the productive efforts of the country.
  Broadly, in so far as criticism has been levelled against the Budget proposals, it has come from two extremes; either from the very rich, or from the very poor. I think it is true to say that the Budget has conferred benefits on the majority of the people of the country. It has certainly conferred benefits on all Income Tax payers, irrespective of whether they are Surtax payers, or taxpayers in any other category. I am not concerned with the criticism which has been voiced—and I have no doubt will be repeated—from the benches opposite, about the Special Contribution, or as I prefer to call it, the capital levy, which hits only the very rich. I regard that as a method fully justified in our present financial situation for attracting a contribution from those who can best afford it, and in a manner administratively simple. In my opinion, no Socialist Chancellor of the Exchequer need ever be ashamed of using the Budget to the full as an instrument, and in many ways the ideal instrument, for carrying us further on the road to implementing our Socialist programme.
  I wish to say a word about criticisms I have heard in my constituency from the poorest class of the community. They are not taxpayers, and they say, "We are not concerned with matters of high finance and the niceties of the Profits Tax. We are not concerned with problems of a capital levy; we are not concerned with the particular methods by which the Income Tax adjustments and reliefs produce benefits of one kind or another." I am referring to the 6 million odd members of the community who are not Income Tax payers. That class of people, and it is an increasing class, thanks to Income
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  Tax benefits already conferred, ask, "What has the Budget done for us?" In a negative sense, of course, one recognises that the food subsidies have been retained to the full, and for that we are all grateful. The people to whom I am referring are not so much concerned even with the increases in beer and tobacco taxation. There are many working-class families who cannot afford beer and tobacco. Their concern is only with the prices of food and necessaries. I want to remind the Chancellor of what he said yesterday about the housewife. I think his sentiments were admirable, but I doubt whether he has done enough to give effect to his intentions. He said:
  "I am … most anxious to make some contribution to a lowering of prices, and, what is more important still, to provide some relief for the hard-pressed housewife, who feels the incidence of this tax"—
  the Purchase Tax—
  "very keenly."—[OFFICIAL REPORT, 6th April, 1948; Vol. 449, C. 67.]
  I think the Committee will agree that it is only by a further revision of the Purchase Tax that any relief can be conferred on this very long-suffering class of the community, the housewife, and particularly the housewife in the poorest section of the community. They have for a long time borne the heat and burden of the day. I hope that on the Committee stage the Chancellor will consider whether he has gone far enough in carrying out his desire to give relief to the hard-pressed housewife. There are numerous revisions suggested in the Purchase Tax, but are they substantial enough?
  Dr. Morgan: What would the hon. Member do?
  Mr. Fletcher: I ask the Chancellor why, in the range of household goods, the Purchase Tax cannot be further reduced. I do not know whether there is any absolute virtue in reducing the number of categories, or why the Purchase Tax on many of the household goods, now running at 50 per cent., should not be reduced, not merely to 33⅓ per cent., but to 25 per cent. if they cannot be abolished altogether. A great many people in the category of the six million non-taxpayers are families living on budgets of a very marginal order—and they feel acutely the burden of Purchase Tax.
  These are people who have just enough, families who, after providing for their rent,

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  food, and absolute essentials, have nothing left over either for doctor's bills or emergencies. To them the price of beer and cigarettes and the rate of Entertainments Duty are almost irrelevant. Their problem is to save what they can for clothes, household replacements and unforeseen liabilities. They are concerned at the price they have to pay for clothing and household goods, knives, spoons, carpets, mattresses, bedroom furniture, all furniture whether utility or non-utility furniture, because they cannot always get utility furniture, and children's clothing. I would ask the Chancellor if it is really necessary to increase Purchase Tax on children's non-utility clothing. I voice these matters because of the protests I have received during the day from constituents of mine in Islington who point out that the Budget does not do enough to help them in meeting their family budgets.
  I would also remind the Committee that at the same time reductions in Purchase Tax are proposed in a range of luxury goods which are far beyond the purse of the working classes. In so far as the Purchase Tax applies to articles which are articles of necessity for the working classes, many of whom are living on small margins, I hope that between now and consideration of the Finance Bill these matters will be sympathetically considered by the Chancellor.
  9. 11 p.m.
  Mr. Gerald Williams: I was horrified to hear the hon. Member for East Islington (Mr. E. Fletcher) rejoice in the fact that the special levy has been proposed. It is not only completely unsound, but the money is not required by the Chancellor at the present time. There is no reason whatever for it, and people who take the trouble to think about the disastrous effect it will have on the country take a very different view from the one which the hon. Member has expressed.
  I want to make what I hope will be a helpful suggestion to the Chancellor. Apart from the view I hold about this special levy, I like a good many of the points in his Budget, but I am very disappointed to see that he has not decreased the standard rate of Income Tax. I am quite certain that the present high taxation in this country is seeping the lifeblood out of the people, and is in fact
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  the cause of nearly all our troubles. On several occasions I have advocated a decrease in the rate of Income Tax and also that there should be no tax on overtime. The Chancellor tells us that the latter is impossible, which is disappointing, but I will take his word for it, and congratulate him on having taken a step in the right direction by freeing many working people from tax.
  Let us consider what are our chief troubles. First and foremost there is our trade balance, which is hanging round our necks like a millstone. The second trouble is the shortage of goods at home. Our third trouble is the shortage of raw materials. I believe that all these three troubles would be greatly alleviated by a decrease in the standard rate of Income Tax. Most hon. Members will agree that at the moment people in the country are extremely depressed, that initiative and enterprise has been killed by this high rate of taxation, which saps away the vital urge to work. The Chancellor would perhaps be taking a risk by lowering Income Tax, but I wish to try to prove to him that he would eventually be rewarded for it by an increase in the production of industry for the home and export markets with more revenue as the result. Everyone would work harder with a little more incentive. At the moment the rich man, whose brains have helped industry and have brought about the success of our great industrial companies, is simply not encouraged to make any more money. Everyone knows that in many cases his brains, which meant so much in the past, are being lost to the future. In the same way the labourer, as has been pointed out in this Debate, is not prepared to work overtime. Under the proposals of this Budget many labourers will be released from liability to Income Tax, and that is a step forward. But those labourers earning bigger money, that is, the best men, will still have to pay Income Tax if they work harder. As an hon. Friend of mine pointed out earlier, it is the Income Tax on marginal earnings which really counts.
  The stimulus to industry would be so great by having Income Tax reduced that the Chancellor would be amply rewarded in a very few months. Incentives mean that more would go abroad, that is we would produce more and better goods for export, and that would enable us to buy more raw materials, which would indeed

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  be turning the vicious circle the other way round. More incentives would produce more goods for the home market, which, in turn, would be another incentive, because there would be something in the shops to work for. More incentives would give more contentment, better morale, better work, there would be less queueing, and consequently there would be time saved. We would then be able to have less restrictions, which would ultimately lead to more money saved, in that we could get rid of many of the civil servants employed to carry them out.
  I think hon. Members on all sides would agree that a reduction in Income Tax would be definitely an incentive, but many hon. Members will say that inflation would thereby be increased. I wish to make a suggestion to the Chancellor. I believe that this inflation would be partly covered because more goods would be produced, there would be more goods in the shops and there would be "more money chasing more goods," which is a step in the right direction. It would be partly corrected, because everyone would work harder, and would not have so much time to spend their money on entertainments, and so on. How are we to overcome the remaining part of the inflation caused by the lowering of Income Tax? The answer, of course, is in savings.
  How then are we to get this money into savings? We may intensify the National Savings campaign, but that has already been intensified, probably to the last degree. We might introduce compulsory savings, but that, to a Conservative would be extremely obnoxious. We might have a scheme like that of post-war credits, but post-war credits, unfortunately, already have got into bad odour with many people in the country. Could not we, therefore, make saving more attractive? Suppose at the end of the year the Chancellor said, "To give more incentive, we will reduce your Income Tax by 20 per cent." But instead of paying cash for that 20 per cent., could he not give Government Bonds, yielding, say, 4 per cent? That is a very attractive proposition. But they would only yield 4 per cent. so long as the Income Tax payers held the Bonds. If they did not wish to hold the Bonds they could have the cash instead, but would many
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  people be disposed to give up the equivalent of a 33 per cent, capital bonus by taking cash, instead of leaving their money in Government Bonds, yielding 4 per cent.?
  I am glad the Chancellor does not shake his head at my suggestion, and I hope he will talk this over with his technical experts when he gets back to his office tomorrow morning. My suggestion would be equivalent to reducing Income Tax by, say, 1s. 9d., with the probability that the money would not be spent, so that we should have the incentive on the one side and most of the money saved on the other side. This would be a great attraction for the rich man. He would like his Government loan at 4 per cent. to be paid for as long as possible. Also it would attract the salaried man. The working man might well be given this bonus in the form of national savings certificates. That is a handy form. The sum might be only £5, £10 or £15 a year, but it would all be savings. There would be no capital loss to the Income Tax payer and he would get a good return for his money. All that it would cost the Chancellor would be 1 per cent. extra on the Tax which was paid back. The Chancellor may perhaps think that this is a worth while scheme. I hope he will tell me if it is, or discuss it when he replies. I firmly believe that it would be an economic proposition. It would cause the extra production that he wants, and it would also cover the point in the Economic Survey for 1948 where it says:
  ".… it is unlikely that, without a radical change in the willingness of individuals to save, the total of net saving in 1948 in the absence of inflation will reach the necessary figure."
  Here is an encouragement to saving, an incentive for everyone to make more for export and to fill the shops at home with goods. The only possible loser would be the Treasury, but, as I have explained, the difference would be made up by increased production in industry and increased revenue. I hope that it will work; I think it will. I hope that the Chancellor will consider it very seriously.
  9.22 p.m.
  Mr. Lever: As usual, I came prepared to address the Committee for a considerable period of time, and I find that I have only a few moments at my disposal. I shall not

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  follow the hon. Member for Tonbridge (Mr. G. Williams), beyond saying that he has at any rate "got something" in suggesting that livelier ideas might be found to encourage national savings than the rather pedestrian methods still employed, which date from the time of Horatio Bottomley, or even the Boer War. I shall have to content myself with merely a partial economic salvation, because I cannot cover the entire field in the time at my disposal. Much to my amazement, I have to welcome the Chancellor's Budget. I find that, in spite of one or two minor criticisms, it is far and away the best Budget which this Committee has had. I say that as an admirer and as one who has great personal affection for the right hon. and learned Gentleman's predecessor.
  The first point about this Budget is that the whole approach is right. It is right that, for the first time, we have abandoned the notion of a Budget as a mere method of raising x million pounds to pay for the Armed Forces, the sewerage system and so forth of the country, and realised that we have to use it as a means of furthering the economic plan. That is a Socialist approach which would he unthinkable from a Tory Government. I welcome it. I will not allow the extra halfpenny on a glass of beer or twopence on a packet of cigarettes—two imposts which I would not have placed on the community—to spoil my welcome for a Budget which is so fundamentally beneficial to the working people, by hand and brain, in this country.
  I will not take up the time of the Committee in answering the political escapists opposite whose mutterings are to be heard from time to time. In the absence of reasoned arguments they have suggested all sorts of impracticable schemes to save the country, such as a reduction of Surtax, the abolition of food subsidies, and the cutting of social services. They have reached such a lamentable state of bankruptcy that a crackpot scheme for a national lottery amounts almost to a constructive proposal when it comes from hon. Gentlemen opposite. Therefore, I propose to devote myself to some of the criticisms which have been voiced by hon. Members on this side of the Committee. It has been suggested that the poorer people of the country will not get any
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  benefit from this Budget. That suggestion is quite unfounded.
  The whole purpose of this Budget is deflationary. The key benefit to ordinary people which overrides all the other benefits, which directly flow from the Budget will be that the purchasing power of the wages and salaries of ordinary people will start to reverse the tendency which has been present during the last few years. In other words, money in the hands of ordinary people and the social services of the country are steadily going to be worth more as the deflationary effects of this Budget make themselves felt, as they will. That is the real benefit that the ordinary person will get out of it.
  I now want to deal with an objection made by hon. Members on the other side about profits. Profits are taking too high a percentage of the national income. If the Chancellor of the Exchequer had suggested very high Income Tax and Surtax amounting, on higher incomes, to 29s. 6d. in the £, I am sure that there would have been delighted whoops from my hon. Friends on this side of the Committee and cries of "Bolshevism" from the other side, but that is precisely what the Chancellor has done in respect of inflated dividends and profits over the last 12 months. The Chancellor said that the Special Contribution was "once and for all time," but I am sure that hon. Members on the other side will join with me in saying that we will defend to the last the right not to be committed for all time by any Chancellor of the Exchequer. I have no doubt that hon. Members opposite will be in the forefront of the fray when this battle is joined.
  The other point I wish to make concerns the City—and it is rather queer for me, in the space of a few minutes, to have to adopt the rôle of a defender of the City. The ex-Chancellor suggested that there has been some sort of conspiracy in the City to destroy his cheap money policy. The reason I deny that—in fact, there is no evidence of it—is that it is rather important that none of our Ministers should have any excuses about conspiracies in the City, bankers' ramps or sabotaging civil servants, should they have to be called to account, not by hon. Members opposite, but by hon. Members on this side. If we do not get a Socialist success it will

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  only be through our own maladministration. I am not going to admit that that failure was brought about by some obscure conspiracy in Throgmorton Street. Indeed I am bound to tell the ex-Chancellor, that, in Throgmorton Street, when he departed, there was many an eye unused to flow on his behalf that was drowned as he departed. I can assure the present occupant of his office that the Cripps era has not entirely commended itself to gentlemen in the City, as the ex-Chancellor seems to suppose.
  I am glad that there has been no attempt to boost up gilt-edged and no attempt to continue the inflationary effects of the cheap money policy. There seems to be an erroneous idea among some of my colleagues that we should always have a cheap money policy for all persons at all times. I would, however, say to the Chancellor that he should make quite sure that the state of affairs whereby local authorities have to depend for money for their housing programmes upon the rates in the money market at any time should be abandoned once and for all. Local authorities should go to the Treasury and get their loans from the Treasury at 2½ per cent., and there is no reason why the Treasury should not provide them out of the Budget surplus or by subsidising their borrowing.
  One final word on this question of expense accounts and tax evasion. It is quite apparent that tax evasion, legal and illegal, is prevalent, and that something stronger is needed than the statement made by the Chancellor in his Budget speech yesterday. Undoubtedly, there is a great deal of inflationary expenditure going on at the present time which is not covered by the provisions made in the Budget statement. All sorts of people are buying luxury cars which are, allegedly, reasonably wanted for the purposes of their businesses. I should like the Chancellor or his representative, when he replies, to express the Treasury view as to whether £6,000 Rolls Royces or Rolls Bentleys are really "wholly necessary and reasonable" for business purposes. In spite of bleatings of hon. Members opposite of "jobs for the boys," or "cars for the boys," apparently £6,000 cars are quite in order if bought through the firm for wealthy merchants. I doubt whether there is any real need
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  of these cars, when it is resented that public servants should use the ordinary means of transport.
  I urge the Treasury really to get down to the question of tax evasion and expense accounts which assume very great importance and I urge that something should be done now in the way of instruction to the Treasury and Inland Revenue officials. After all, they have had the light relief of the hon. Member for Ashford (Mr. E. P. Smith) and the scheme for an international lottery, and they might profitably now turn their attention to the closest scrutiny of all forms of tax evasion, legal or illegal, and all forms of expense accounts.
  I will go no further because I promised to give my hon. Friend time to reply, but I welcome the Budget; it is a Socialist Budget and is obviously inspired by a Socialist approach. There are one or two matters about which I quarrel, such as this or that item of Purchase Tax or the liquor tax or the tobacco tax, but they are minor incidents in a very wisely conceived Budget, inspired by profound Socialist understanding and an understanding of the technique of Parliamentary Socialism.
  9.33 p.m.
  The Economic Secretary to the Treasury (Mr. Douglas Jay): The hon. Member for Exchange Division of Manchester (Mr. Lever), if I understood him right, like the majority of speakers today, gave general support to the present Budget, and, therefore, I shall not enter into controversy with him. The hon. Member for Tonbridge (Mr. G. Williams), who spoke immediately before him, as I understand his speech, painted rather a gloomy picture of British industry holding back and suffering from inertia and lack of incentive, and I think he wanted the Government to make a large reduction in the standard rate of Income Tax in order to encourage those rather lackadaisical industrialists.
  In reply to him, I would say that his description of British industrialists does not altogether agree with my experience. I believe that they are pretty active at present and that they do not require a large reduction in Income Tax in order to urge them on to public-spirited efforts. In the second place, he hardly seemed to notice that one of the most important

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  features of this Budget has been the large reduction in the effective rate of Income Tax on a very large number of productive workers, so I think we have gone a long way already to meet the point.
  In his opening speech, the right hon. and gallant Member for Gainsborough (Captain Crookshank) spoke, if I may say so, very agreeably, but he did not seem to me to make a very forcible indictment of the present Budget. His main point was, I think—indeed, it seemed to me to be his only substantial point—that the Government had not sufficiently reduced expenditure. I would like to make two comments on that straight away, Major Milner. The first comment is that we have, in fact, reduced ordinary expenditure, quite apart from the below-the-line items, by £700 million in the past year as against the previous year, and we are reducing it by a further £233 million in this present year as compared with the year just passed; and if you add those two together, so as to allow for the switch, as it were, of the Argentine food expenditure, that is a saving of £933 million over two years. As that is a sum virtually equal to the total expenditure in the Budget before the war, I do not think it is a bad record to have made that saving in only two years. That, of course, is after we have provided for the whole increase of expenditure this year on account of social services and the National Health scheme.
  My second comment is, that it surely is a remarkable tribute to the care with which the Treasury does, in fact, husband our national finances these days that the actual expenditure in the past year was only a fifth of r per cent, above the estimates. The hon. Member for Cheltenham (Mr. Lipson), who is not with us at the moment, asked for an assurance that we propose to continue in the tradition of what he called "wise housekeeping" and acting as the "watchdog" of the public purse. I can give that assurance; and I can also give as proof of our sincerity in that, the fact that we did achieve that record in the past year.
  I wonder how many private households and how many private businesses succeeded in the past year in not exceeding the total expenses which at the beginning of the year they expected to incur. I must say that I think that is a considerable tribute to the financial adminis-
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  tration of both the present Chancellor and of his predecessor. It seems to me, surveying the whole of this Debate, that there has really been no serious challenge to the main principles of the Budget which the Chancellor enunciated yesterday. The hon. Member for Cheltenham called it an honest and realistic Budget, in the very interesting speech which he made. I think that probably that is really the general verdict on it.
  As I understand it, there are three main principles on which this Budget is founded. First, I think we all agree that the present situation demands, as a prime national necessity in the interests of the whole population, further vigorous anti-inflationary measures. The hon. Member for Cheltenham gave as one reason for vigorous measures of that kind that we want to strengthen the purchasing power of the pound and the confidence felt in the pound abroad. I should like to assure him that we entirely agree, and we believe that the measures we have taken will, in fact, contribute to that end. The hon. Member for Lonsdale (Sir I. Fraser) made a suggestion on which I ought, I think, to comment, and which is relevant to this particular point. It was that we should try to get out of cur difficulties by raising the sterling price of gold. A rise in the sterling price of gold would, of course, be equivalent to a devaluation of the pound. I think I should say that we have no intention of taking that step. We do not believe that it is either desirable or necessary.
  We believe the solution is rather on the lines of what the hon. Member for Cheltenham suggested, that is to say, counter-inflationary measures to help maintain the true value of the pound. We take our stand on the arguments of Chapter IV, on the national income, in the Economic Survey, which, as hon. Members may remember, suggested—and I think that this only confirms the evidence of the naked eye—that the nation's savings were not running at that time at a sufficiently high level to check the inflationary pressure. That is the first principle, as I see it, of this Budget.
  Our second principle is that a bigger Budget surplus must be one indispensable further weapon in our effort to increase total saving and to fight inflation. I believe that the overwhelming weight of independent opinion endorses this. Hon.

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  Members will have read, for instance, the letter by Professor Lionel Robbins in "The Times" last Thursday, in which he suggested that,
  "The Chancellor should cling to his surplus and seek to enlarge it by all legitimate means at his disposal."
  "The Economist"—which is not always uncritical of the present Government—said virtually the same thing last weekend.
  Our third principle, I would say, is that this Budget surplus must be obtained in such a way as to increase rather than diminish the reward and incentive for the productive section of the community.
  Now, it would have been extremely odd had the Opposition seriously challenged any of those propositions this evening. For the past 12 months their main complaint against the Government, so far as I have understood it, has been that inadequate anti-inflationary measures were being taken. If there is any policy which Opposition speakers and writers have advocated over these months, it has been the policy of a bigger and better Budget surplus. We have heard this constantly, in particular from the hon. Member for Chippenham (Mr. Eccles)—whom I see present tonight—who told us a year ago, in the Debate on the Economic Survey, that it was the duty of the Government by all means in their power to check the growth of the vast mass of purchasing power left behind by the war, and overhanging us at the present time. The right hon. and gallant Member for Gains-borough said the same thing, as also did the right hon. Member for West Bristol (Mr. Stanley) on several occasions. Again and again we have been advised to introduce a bigger Budget surplus, a more counter-inflationary Budget: that is exactly what we are doing at the present time. In fact, it seems to me that the only difference between us and the Opposition on this point is that, whereas they are anxious to will the end, we are prepared to will the means as well.
  I was rather surprised that this evening more has not been said about the balance of payments problem, which, after all, stands at the back of the whole of this Debate, and is one, if not the main, reason for the counter-inflationary policy which the Government are following. It is true that the hon. Member for Newark
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  (Mr. S. Shephard) and the hon. Member for Ashford (Mr. E. P. Smith) did mention the balance of payments; but that was only as a sort of prelude to their suggestion for an international lottery, on which I do not propose to comment at any length now. The hon. Member for Mile End (Mr. Piratin) also introduced the subject of the balance of payments; but in his case that was only in order to make a number of fantastic allegations about the conditions of Marshall Aid which he thought were being imposed upon us. I can only say, briefly, that all those allegations were untrue, and that no such obligations or conditions are being imposed upon us.
  In particular, the hon. Member for Mile End mentioned the old story—although I notice that he has not stayed to hear the answer—that the Government made a cut in the allocation of steel for shipbuilding—apparently at the behest of Wall Street. As a matter of fact, we did not make a cut in the allocation of steel for shipbuilding: we made an increase—actually two increases—and the opinion of the Americans had absolutely nothing to do with it one way or the other. That has already been conveyed to people in the shipbuilding industry, for which the hon. Member was professing to speak. There is rather less shipbuilding in Mile End than there is on the Clyde, but apparently he was professing to speak for the workers on the Clyde. If the hon. Member were still here, I would assure him that we also mean to stick to our policy of democratic planning, and not to adopt the sort of method for which, as he frankly told us, he stands.
  It has been argued that there is some inconsistency between, on the one hand, our policy of holding down prices by subsidies, by the White Paper on Personal Incomes, Costs and Prices and other measures, and, on the other hand, maintaining our surplus by indirect taxes. That is a natural criticism which has been made both inside and outside the Committee, but I believe it is founded on a misconception. It ignores a fundamental distinction on which we base our price policy. We distinguish between two sorts of commodities. On the one hand, there are those commodities, in effect, necessities, where a rise in price would inevitably and justifiably provoke demands for

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  higher wages and pensions, and on the other hand, those commodities, luxuries and semi-luxuries, where it would not do so.
  In our opinion an all-round rise in the cost of food and other absolute necessities would provoke a demand for higher wages and other higher incomes, whereas a rise in the price of, say, jewellery or motor cars would not. Therefore, the policy of keeping the prices of necessities down is a truly anti-inflationary policy, and at the same time a policy of higher taxes on luxuries, because it draws away purchasing power into the Exchequer and does not, in fact, provoke claims for higher wages or salaries, is also an anti-inflationary policy. That, very briefly, is the logical basis of our policy on food subsidies and price controls as laid down in the White Paper on Personal Incomes, Costs and Prices, and it is also the basis of the changes in indirect taxation which we have introduced in the present Budget. Viewed in that light hon. Members will see on reflection that all these measures form part of a coherent anti-inflationary policy.
  Some hon. Members, particularly the hon. Member for Norwood (Mr. Chamberlain), have questioned whether we have not applied these principles in the case of beer and tobacco, which they have pointed out are natural commodities of ordinary consumption. It is perfectly true that these are commodities of ordinary consumption, though I must say they cannot be put in the category of absolute necessities, like milk, bread, fats, or meat. We regret very much the necessity for raising the tax on beer and tobacco. We recognise it will cause inconvenience and disappointment to a very large number of people, but I would ask hon. Members who have criticised this to reflect on these points. The Budget must be regarded as a whole and in the light of our balance of payments situation. Quite frankly this is not a Budget under which it is intended that everybody should in some way or another be better off. It is intended to check inflation and thereby to hold down the prices of real necessities, enabling those who earn more by work to keep more, whether they save it or spend it. We do not pretend that this Budget will enable everybody to be better off, whether they are working or not.
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  In the case of tobacco, I am afraid that we cannot accept the argument that everyone is entitled to go on smoking as much as before without paying any more for it. The fact is that, as a nation, we cannot afford the rate of smoking of American tobacco in which we have been indulging for the last two years, and the sooner we recognise that the better. I would also point out that the vast majority of those who are going to pay more for their beer and their tobacco will, at the same time, be benefiting by the food subsidies which we are maintaining and on a very much greater scale this summer by the large increase in social security payments.
  Mr. Assheton: And paying the contributions.
  Mr. Jay: Yes, they will pay the contributions, and it is perfectly right and just that they should do so. I hope hon. Members will remind their constituents of the facts which I have given.
  We accordingly believe that all these anti-inflationary measures are necessary. We believe that a big Budget surplus is necessary as well. The view of the Opposition, so far as I have understood today's Debate, is that they agree that the surplus is necessary, but, having willed the end, they do not seem to be willing to will the means. After all, if we are to have a large Budget surplus, we must have either higher taxes or lower expenditure. If the Opposition think that the right solution is higher taxes, they ought to tell us which taxes should go up. As I understood the speech of the right hon. and gallant Member for Gainsborough this afternoon, he was opposed to the increased taxation upon beer, whisky and tobacco. If he cuts those out, he makes a very large hole in the revenue. I did not notice how he proposed that we should make up the difference. If, on the other hand, his solution and that of the Opposition is that the gap should be close d by cutting expenditure, they should tell us which expenditure they want to cut.
  I cannot accept the view that there is no obligation upon the Opposition to tell us those things. Is it expenditure upon defence that the Opposition wish to cut first? I find that difficult to believe, particularly in view of the speech which the Leader of the Opposition made upon the Naval Estimates the other day. Do they

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  propose that expenditure upon the debt interest, which now totals £500 million, should be reduced? I do not believe that either, because the Opposition have been vociferously attacking our cheap-money policy for the last two years. If we had abandoned that policy and let interest rates go up to the level of 1920, the bill would not be £500 million but more like £1,000 million. Is it the social services on which the Opposition want to economise? Some of us were rash enough to think a year ago, following the celebrated speech of the right hon. Member for the Scottish Universities (Sir J. Anderson) about our having improved old age pensions and introduced family allowances too hastily, that that was what the Opposition really want to do. In by-elections the Opposition have been explaining away that speech ever since, and I think that the right hon. and gallant Member said today that that was not the intention of the Opposition.
  If that is so, we are very glad of it. We are very glad to have their support for the whole of our social service expenditure. I believe that the noble Lord the Member for South Dorset (Viscount Hinching-brooke) takes a different view. I was not here during his speech, but I think he wanted to make a cut in the social services; so we are still left in slight doubt on this point, as on so many others, as to just what the Opposition's policy is. If we may take an indication from their Front Bench, apparently they do not propose economies in the social services, so no contribution to the Budget surplus will come, in their view, from that source either.
  Finally, would they economise on food subsidies alone? Again, many of us inferred from the speech of the right hon. Member for the Scottish Universities about reducing those subsidies to negligible proportions that that was the Opposition's one contribution to a solution. But, frankly, I was left a little vague about the Opposition's attitude upon that matter, after the speech of the right hon. and gallant Member in opening the Debate. I believe they would advocate some reduction in the subsidies, coupled with a handing back of benefits to certain selected classes. I do not know how far the handing back of benefits would go. If it would not allow for increases in wages to many of the lowest-paid wage earners,
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  the result would only be to impose harsh burdens upon some of the hardest-pressed housewives in the whole community. On the other hand, if it would involve extra benefits on a wide scale, the surplus to the Budget which would come from that source also would be almost negligible. So far as I can understand it, the truth is that the Opposition want a Budget surplus in theory, but they are not yet prepared to tell us either which taxes they would raise or which expenditure they would cut.
  I gathered in particular from the right hon. and gallant Gentleman and from other Members of the Opposition that they specially disliked the Special Contribution, as we call it, on large unearned incomes. This contribution has been described on both sides of the Committee as a capital levy. We do not greatly object to that description, but we did not call it that ourselves because it is not assessed on capital. The Leader of the Opposition yesterday, in his very short speech, impugned our intention to make this a once-for-all levy. I would like emphatically to repeat that it is our intention that this should be a once-for-all levy, and I do not think it is very wise of hon. Members opposite to put ideas to the contrary into the heads of my hon. Friends behind me—
  Mr. A. R. W. Low: And right hon. Friends.
  Mr. Jay: My right hon. Friends have active minds as well. I was asked by the right hon. Member for Bishop Auckland (Mr. Dalton) how many persons will pay this levy. The answer is 125,000 persons. I was asked by the right hon. Member for Gainsborough whether farmers' profits are liable to this tax. The answer is that farmers' profits are not liable: they do not count as investment income for this purpose. The hon. Member for Cheltenham asked whether charitable institutions would be exempted from this contribution, and the answer is that they will. Briefly, there are three good arguments for this Special Contribution—
  Sir W. Darling:: Will the hon. Gentleman deal with the matter of children's clothing, to which hon. Members have referred?
  Mr. Jay: I cannot deal with that in the middle of the Special Contribution.
  Mr. Vane: Will the hon. Gentleman answer my question?
  Mr. Jay: There are three arguments in favour of the Special Contribution. In the first place, I believe that, on balance, it will be counter-inflationary in its effect. It may not be entirely paid out of income, but in so far as it is paid out of capital, it will make the payers feel rather less rich than they were before, and to that extent it will tend to reduce their expenditure. Secondly, one great merit of this tax is that it will make a contribution to a more democratic and equal ownership of property in this country. That is another objective to which hon. Members opposite have in the past professed to adhere but about which they have never done anything very practical. Thirdly, it has this merit. As hon. Members behind me have pointed out, there have been some very large profits and some very large capital gains in this country in the last few years. It is not very easy to catch those capital gains directly for various technical reasons, but we believe that this contribution will very largely fall on the same people who have benefited by these hitherto untaxed capital gains.
  Finally, for all those reasons we believe that this Budget is both economically right and socially just. You can call it an incentive Budget if you like because it transfers burdens away from active producers on to the property owners, or you can call it a housewives' Budget because it transfers the burden from women on to men and lightens the cost of household necessities. For all these reasons, I submit to the Committee that this is a wise and sane Budget.
  It being Ten o'Clock, The CHAIRMAN left the Chair to make his Report to the House.
  Committee report Progress; to sit again Tomorrow.

  FIRE SERVICES (DISCIPLINE)
  10.0 p.m.
  Sir John Mellor: I beg to move:
  "That an humble Address be presented to His Majesty, praying that the Order, dated 18th March, 1948, entitled the Fire Services (Discipline) Regulations, 1948 (S.I., 1948, No. 545), a copy of which was presented on 19th March, be annulled."
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  These regulations provide for the constitution in a fire brigade of a disciplinary tribunal from which an appeal lies to the fire authority. Regulation II reads as follows:
  "If the accused refuses or without sufficient cause fails to attend at the time and place appointed for hearing the case or, as the case may be, for hearing an appeal or is in legal custody, the hearing of the case or the appeal may be proceeded with and concluded in his absence."
  I should mention, first of all, that an appeal lies from the decision of the fire authority to the Home Secretary and, with regard to that, Regulation 15 reads as follows:
  "If the accused having been given not less than seven days' notice of the time and place fixed for the holding of an inquiry under the preceding Regulation does not appear at the time and place appointed or is in legal custody, the inquiry may proceed and be concluded in his absence."
  It will be seen from that, that it is quite possible that a fireman who is in custody awaiting trial on a charge in no way connected with the matter about which the disciplinary proceedings are concerned, may be entirely prevented from taking any part, or putting up any defence whatsoever, in those disciplinary proceeding. That would appear to be the most astonishing travesty of elementary British justice, and I have been rather surprised that we have not yet received any definite answer from the Home Office to convey their view as to the propriety of a fireman being deprived in those circumstances of the right of defending himself in the disciplinary proceedings. Yesterday I asked the Home Secretary this question:
  "why … he has deprived members of fire brigades while detained in legal custody, of the right of attending disciplinary proceedings against them, and has authorised the conclusion of the hearing of such proceedings in their absence; and whether he will rescind these regulations."
  The Under-Secretary replied as follows:
  "These regulations were made with the agreement of the National Joint Council for Local Authorities' Fire Brigades in England and Wales, on the understanding that the Council would be free, after further consideration of the details, to recommend amendments. My right hon. Friend will see that the point raised by the hon. Baronet is further considered in connection with any revision of the regulations."
  First the Home Office must accept entire responsibilty for these regulations. They cannot seek, as the Under-Secretary does not seek, to share responsibility with

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  the National Joint Council, but I think this answer is rather surprising, because the Under-Secretary says that the Council
  "would be free after further consideration of the details, to recommend amendments."
  Details of what? Presumably, the details of the regulations. One would have thought it quite reasonable if he had replied "after experience, and in the light of experience of the working of these regulations, to recommend amendments." That would be a perfectly reasonable proposition. One would have thought the details, as well as the general outline of these regulations, would have been carefully considered before the regulations were made. In regard to the principal points I have mentioned about the fireman in custody being deprived of any opportunity of defending himself, all the hon. Gentleman says is that the point will be
  "further considered in connection with any revision of the regulations."—[OFFICIAL REPORT, 6th April, 1948; Vol. 449, c. 28.]
  We ought to understand clearly from the Under-Secretary whether the insertion of those words "or is in legal custody" was deliberate, or were they merely a careless inclusion? Is the Home Office prepared to justify that? I was a little disappointed that the defence, if any, was not disclosed in yesterday's reply. I had a request—I thought it a quite reasonable request—from the Home Secretary to inform him of the particular points I proposed to raise, and I did not hesitate to inform him. I thought in the light of that it was a little surprising on this very simple and straightforward point that the Under-Secretary seeks to reserve his defence until he replies. This matter in connection with Regulations II and 15 which contained the objectionable words "or is in legal custody" can be disposed of quite easily if the Home Office desires to be helpful. Those two regulations could be revoked by Order tomorrow, without the slightest effect upon the rest of the regulations. The revocation of those regulations would in no way impair the functioning of the rest of the regulations. I therefore expect tonight that the Under-Secretary will tell us he is prepared to take that course, because I do not think we on this side of the House should expect anything less.
  My hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-
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  Carpenter) desires to mention a point in connection with Regulation 12, but I wish to refer to Regulation 2. This is a question merely of wording. Regulation 2 requires that a member of a fire brigade, charged with an offence, shall be supplied:
  "with such particulars as will leave the accused under no misapprehension as to the precise nature of the allegations on which the charge is based."
  I think that a rather tall order. It seems to me asking rather a lot of the fire authority if they are to make quite sure that the man is supplied with such particulars as to leave him under no misapprehension. However exact the full particulars they may supply, and however simple and clear the form may be, there are many people who would probably still remain under some misapprehension. I cannot understand why that Regulation does not simply require that precise particulars of the nature of the allegations shall be supplied to the accused. It seems to me to be expecting too much of the chief officer if he has to make quite sure that the accused remains under no misapprehension. That is only a minor point. On the main point I expect tonight that we shall have a satisfactory answer from the Under-Secretary.
  10.11 p.m.
  Mr. Boyd-Carpenter (Kingston-upon-Thames): I beg to second the Motion.
  My hon. Friend the Member for Sutton Coldfield (Sir J. Mellor) has referred to the answer which the Under-Secretary of State gave in the House yesterday. In its way it really was one of the most astonishing answers that have been given from the Treasury Bench in this Parliament. I understood him to be saying "Here is a statutory instrument, here is a provision which has, since 1st April"—perhaps an appropriate date—"been part of the law of England but this is simply a basis for negotiation, we will consider amendments, etc." That is really an abuse of the power of delegated legislation which Government Departments have. They would not have dared to proceed in that way had they been proceeding by Act of Parliament.
  It seems to me quite wrong to make part of the law of England something which, on the showing of the Under-Secretary, should be or might well be amended to its benefit. Really, to provide this, not as a draft for discussion

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  but as an actual statutory instrument, and to say afterwards "We will hear representations," is an abuse of the very considerable powers which the Home Department has. So also, it seems to me, are the provisions to which my hon. Friend has referred, Regulations II and 15. I find it very difficult to understand why it has been decided that a man who is in legal custody can be tried in his absence. If a man is in legal custody there can be no conceivable difficulty in producing him for trial. It is presumably the easiest thing possible to produce a man for trial when he is already in the custody of some public authority. Although there may be circumstances in which it is necessary to try a man in his absence, I do not think that any hon. Member wants that to be done save where it is absolutely necessary. Surely, it cannot be necessary in the case of a man who is in legal custody. My hon. Friend has put that point with great clarity and force, and there is certainly no need to underline it.
  I desire to refer to one or two other regulations in this statutory instrument which seem to me also to be liable to criticism, although I should say at once that they are nothing like so bad as are the provisions to which my hon. Friend has already referred. I first invite the attention of the House to Regulation 12, to which my hon. Friend indicated I should be referring. Under that Regulation it is provided that:
  "At the hearing of a case the accused shall be entitled to have the assistance in presenting his defence of a person selected by himself who shall be a member of the fire brigade or, if the fire authority so permit, a member of another fire brigade."
  There is a proviso, with which I need not trouble the House, that a person so taking part shall not be of equal or superior rank to a member of the tribunal. As I understand that provision, it denies to an accused man the right, if he so wishes, to be represented by solicitor or counsel. If hon. Members will look at Regulation 13, they will appreciate that the penalties which may be imposed by these tribunals are, from the point of view of the accused man, serious for a professional, in the fire brigade. Dismissal is a sentence of professional ruin. Equally a reduction in rank or forfeiture of pay may well be a serious matter. It seems quite wrong
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  that if such a man, when his whole professional future is in jeopardy, desires to be represented by a professional man, he should not be allowed to be so represented. According to the second paragraph of Regulation 12, when it comes to an appeal, apparently professional representation is allowed. Why then should it not be allowed at the actual hearing? Why should a man be denied the right to have such representation if he wishes by those who are trained in advocacy, and thereby possibly obviate the need for going to appeal later on? Even under our military procedure it is perfectly open for an accused man to be represented by counsel before a court martial, and it is equally possible, to take another professional analogy, for a man to be represented by counsel before the General Medical Council. Why, then, is there this exclusion here?
  The other point to which I invite the attention of the House is not perhaps as strong, but is one which I think calls for justification. It is the provision of Regulation 3 which provides that the accused shall be ordered to state in writing whether he admits or denies the charge and shall be allowed to give to the chief officer any explanation he may wish. Does that mean that the accused shall be ordered to state whether he admits or denies the charge at once, or will he be given the opportunity to consider the matter, and to take advice? All hon. Members who have any experience of our criminal courts know that people who are not experienced in the law and in their rights sometimes plead guilty, when they have a perfectly good defence. It does look as though there is a possibility in such cases that a man might well be called to admit his guilt of an offence when really he has a perfectly good answer to it. That risk is very much accentuated if he has to give, as it were, a snap answer, and is not entitled to consider his rights before so doing.
  Another question on the same regulation arises in connection with the second subsection:
  "The accused shall be allowed to state the names and addresses of any witness to relevant facts whom he may desire to give evidence at the hearing of the case."
  Does that mean that the accused shall not be entitled to call at the hearing any witness whose name and address he has not

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  previously advised to the authority? Does it mean that he will have to indicate who his witnesses will be, and so indicate to the prosecution the line of his defence? Or does it mean, as the next subsection provides, that when he exercises his right to indicate these witnesses, the authority will see that they are present? I should welcome an assurance from the Under-Secretary that it is the latter interpretation rather than the former which will be applied.
  I do not know whether any other hon. Members will desire to raise further points on these regulations, but as the hon. Baronet has indicated, there are a number of points in the regulations which call for criticism, which call for justification and which certainly should not be tacitly accepted by this House. The Under-Secretary, in his answer, indicated that the Home Office realise these regulations are unsatisfactory, but it must be appreciated that there are not many more days during which this Motion for the annulment may be discussed in the House. The time limit for praying against them expires somewhere about the end of the month. Therefore, if this House—not outside bodies, but this House—is to exercise its rights, it is necessary to do so now or close to the present day. I suggest that it would be very much more satisfactory for the Under-Secretary, when he has heard the discussion and considered the representations which may come in from outside, to say either that the simplest thing is to withdraw the whole of the regulations and issue new ones or, at the very least, to follow the appeal made by the hon. Baronet and withdraw Regulations 11, 12 and 15 and, unless justification can be put up for them and an explanation given, possibly Regulations 2 and 3. In any event, anybody concerned with the well being of our fire services cannot but be disquieted that these regulations have been made in their present form. It is in the hope that this position may be improved that I support the Motion.
  10.21 p.m.
  Mr. John Foster: I would like to call the attention of the Under-Secretary to Regulation 11 from a slightly different point of view. As he knows, that regulation provides that the trial of the accused shall take place in his absence.
  The Under-Secretary of State for the Home Department (Mr. Younģer): "May."
  Mr. Foster: I agree. I understand fully that unless there is a power of arrest or provision for the compulsory presence of the accused before a tribunal, there must be some machinery by which the accused may be tried in his absence. But where the regulation will fall down in practice, or where it will cause injustice, is that on the first occasion when the accused fails to turn up it will always be unjust to try him in his absence. Let us put ourselves in the position of a chief officer who is trying somebody accused of one of the offences in the Schedule. The accused has been told that his case will be taken on a certain day at a certain time. He failed to turn up. There is nobody there to explain the position. How on earth can the tribunal decide that he has failed to attend without sufficient cause?
  The only way in which this section can work is if it is said, first, that the accused shall appear on such and such a date, and then that if he fails to appear a notice shall be given to him that he will be tried that day week unless he has some sufficient cause for not appearing. On the first occasion, because the man is not there, one cannot say that he has failed to attend without sufficient cause. Let us imagine that he has sufficient cause and that the reason he has not turned up is that he broke his leg on the ice when going to the place where he was to be tried. He has not turned up and the chief officer says, "As far as I know he is without sufficient cause, and we shall proceed to try him." That is bound to happen in every case in which the man cannot get a message to the chief officer that he is unable to turn up because there has been a train smash or he has had an accident or some member of his family has been taken to hospital, or for a thousand and one reasons which may provide sufficient cause. If he is tried, he must go to the trouble, and maybe the expense, of an appeal. I submit that that kind of machinery will not work.
  If the Under-Secretary will consider other forms of parallel proceedings he will see that arrangement is always made to adjourn the case and give the man notice that unless he attends next time he will be tried in his absence. Then justice is done or, at least, the injustice of his being

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  tried in his absence because he has broken his leg is very much minimised. As I see the position at present, a man would not be able to prove that he has sufficient cause for absence if something happened to him very near to the hearing of his case.
  Under Regulation 12 (1) I do not see why the accused has to get the permission of the fire authority before he can engage a member of another fire brigade. I should have thought that it would be only justice that he could either ask a member of his own fire brigade to defend him or a member of some other fire brigade, but it may well be that he is accused of some offence, say, acting in a manner likely to bring discredit on the reputation of the fire brigade, and, if he is accused of that, maybe his fellow members of his own fire brigade are quite genuinely prejudiced against him because they think that he has done something wrong. He will therefore want some other person to defend him, but it surely is not right that the fire authority which is the very tribunal that may insist on trying him should be the authority whose permission has to be asked by an accused person in order that he may get a person from another fire brigade to defend him. It is not democratic, and it seems to me that it would lead to injustice. I therefore ask the hon. Gentleman to look into that point.
  The last point I wish to make is one on which I may be wrong. It has always struck me that, in English law, it is very unjust that there should be power to raise the penalty on appeal. It is very shocking to all other systems of jurisprudence that a man who appeals may have his sentence increased. It shocks all Continental and, I believe, all American jurists. It is mitigated to a certain extent in England by the difference between an appeal against conviction and an appeal against sentence. The reason for that distinction is that, if a man has been convicted and he thinks his sentence may be increased, when, so to speak, he is satisfied with it, and he appeals against his conviction only, and the tribunal find the conviction justified, unless the man appeals against the sentence they are unable to increase that sentence.
  Let us imagine a man convicted of an offence who thinks he has been unjustly convicted. The sentence imposed may be
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  very light indeed, but, if the man has to appeal against both together, he is in a very great dilemma, as I have found in practice myself in tribunals which allowed appeals against sentences and convictions together. One has to say to the man that he has got an even chance of getting off his conviction, but, if one says to the man that he may have his sentence increased, that man is thereby deterred against exercising his right of appeal against his conviction because he fears that his sentence may be increased. In other words, if a man were convicted of a serious crime, say, acting in a disorderly manner, and yet a very light sentence was imp used upon him, and he maintains that he has not been convicted justly, consider the difficulty in which he is placed, supposing that he has only been reprimanded. He has a black mark against him, but, if he appeals and loses the appeal, the tribunal may increase his sentence. Therefore, one has to advise a man in such circumstances that the reprimand is nothing, and that he might get off or not, and therefore, we advise him not to exercise that right of appeal, and not to have justice done, because the appeal tribunal may increase his sentence. That is the reason why, in English law, a distinction is made between an appeal against conviction and an appeal against sentence. I ask the hon. Gentleman if he will consider hat point along with the others I have raised.
  10.30 p.m.
  Sir William Darling: The large and increasing number of civil servants and State employees will be grateful to His Majesty's Opposition for raising this important matter. It does not seem to be recognised that with the extension of the number of public employees, there will be new troubles to be faced, and this is one of them. My hon. Friends have dealt with specific legal points. I should like to deal with a general point which has not yet been referred to. In Part IV it is stated that these regulations
  "shall not apply to a fire brigade maintained by a Scottish fire authority."
  Perhaps on that account hon. Members might think there is little excuse for me to speak on this subject. Hon. Members will be aware that, especially during the recent trials of the fire service, powerful reinforcements came from Scotland, particularly to the London Fire Brigade, and

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  there are today in English and Welsh fire services a large number of Scotsmen and Scotswomen, who must look to such protection as I can give them in this House and to the protection of this Measure. This is one of 25,000 documents which pour from the printing presses, unobserved and apparently uncounted, which often impose great disability on our people. But for the interest and energy of my hon. Friend it might never have been before the House.
  The second thing I wish to refer to occurs also in Part IV, in paragraph 19 (2), which says:
  "In these Regulations words importing the masculine gender shall include the feminine gender."
  This raises a very wide and expansive issue. If hon. Members will look at the kind of punishments to which women are to be submitted and relate them to the practice of a good ordinary business, they will see how harsh and hard these ill-conceived and apparently carelessly thought-out regulations are. I would direct the House's attention to the Schedule, "Code of Offences against Discipline." Reading in the one word "woman," it will be seen that:
  "A woman member of a fire brigade commits an offence against discipline if she is guilty of—(1) Disobedience to orders, that is to say, if she disobeys, or without sufficient cause fails to carry out, any lawful order whether in writing or not."
  If I attempted to apply that to any employees under the care of organised trades unions, I can say that the strikes system, deplorable though it is, would be infinitely more extensive. Let us look further. Any woman commits an offence against discipline if she is guilty of
  "Insubordination, that is to say, if she is insubordinate by word, act or demeanour."
  Hon. Members know as well as I do how much expression can be given in word and act, but what amount can be conveyed in demeanour. It seems to me that a senior fire officer charged with carrying out these regulations would find himself with his female staff continually involved in difficulties which the Under-Secretary possibly is too innocent and young to imagine, but I would draw attention to their extreme likelihood. Regulations of this character, ill-conceived and quite inoperative, especially when applied to female labour
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  —and these are women charged with very important duties—seems to me to be out of keeping with good standard practice. I repeat, if any business firm, factory, or organisation attempted to conduct their business on such a disciplinary code as this, I can assure the House there would be a wild revolt almost immediately the regulations were put into practice.
  These offences against discipline may, according to Part II (13), be punished by
  "dismissal; being required to resign as an alternative to dismissal ….; reduction in rank; stoppage of pay; reprimand; caution."
  I hope the Under-Secretary will look with great care into the powerful and weighty legal objections raised by my hon. Friends and that he will also look at the absurdity of using a mighty Nasmyth hammer to crack these gentle fruits, the feminine gender. I hope he will look at it again with a sympathetic mind so far as women are concerned. I see there are two hon. ladies here. I am quite sure no woman member of this House will dare tell her constituents she approved of the regulations in this disciplinary code.
  10.35 p.m.
  Mr. Manningham-Buller: I think that my hon. Friends have served a useful purpose in drawing attention to this order. I do not think any of us would dispute the desirability of a disciplinary code for the Fire Service; there is no difference of opinion on that. But that code should be properly and carefully drawn. I do not want to repeat the cogent arguments made by my hon. Friends, but I do want to draw attention to additional points worthy of consideration. Hon. Members in all parts of the House will, I hope, pay attention to the schedule which purports to contain a list of the disciplinary offences which a member of the Fire Service can commit in the course of his or her duty. My hon. Friend the Member for Edinburgh, South (Sir W. Darling), has called attention to the first two offences listed in that schedule, but I would like to know what is meant by the third:
  "Abuse of authority, that is to say, if he abuses his authority by oppressive conduct."
  Does that mean that someone gives a lawful order or command or exercises his authority in the fashion of a sergeant-major as portrayed in the music halls? Is that "oppressive conduct"? These

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  offences ought to be defined with some degree of precision. But more important than that to which I have referred is that dealing with corrupt practice in paragraph (7):
  "(a) improperly uses his position as a member of the fire brigade for his private advantage"
  Does this mean financial advantage? Private advantage may take a multitude of forms. The definition of corrupt practices in paragraph (b) says:
  "fails to account for, or to make a prompt and true return of, any money or property which comes into his possession in the course of his duties;"
  That, to me, is an astonishing definition of corrupt practices. It means that a man will be liable to be convicted for that offence if he delays in handing over money or property for a perfectly innocent reason, or if he makes an inaccuracy or mistake in his return. I am sure that the intention is that a man should only be found guilty of corrupt practices if he has had what we lawyers call a mens rea, but there is nothing here to distinguish that. The chief officer who will determine this matter will look up the code to see exactly what is meant by "corrupt practices," and if he is satisfied that a prompt and true return has not been made, he will not go farther, but find the man or woman guilty of corrupt practices. That is an entirely unsatisfactory position.
  Coming to the mode of control, one finds that it is here that the methods in force in the Fire Service are different from those in the Services or the Police Force. Here, the chief officer, except where a fire authority has directed under paragraph 5 that the case should be heard by them, may hear the case, or delegate the hearing to a tribunal. The accused person has no option. Any soldier brought before his commanding officer has the right to elect to go for trial by court martial. Any man brought before a police court on an indictable offence has the right at his own option to go for trial. No such right is given to a member of the Fire Service. Surely these men should have that right.
  It may be that a member of the Fire Service thinks the chief officer bears him a grudge. It may be a belief that is entirely unfounded, but if it exists is that member of the Fire Service likely to think that justice has been done to him by a
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  determination against him by the chief officer? Provision is made for the hearing of an appeal, but attention has already been drawn to the curious discrepancy with regard to legal representation. I am sure the House recognises that where discipline is administered in this manner inside a service, once there has been a determination of guilt there are all sorts of arguments against upsetting that decision. It is a natural instinct to say that it will look bad for discipline if the decision of the chief office is reversed. It becomes, therefore, more necessary in my opinion that the trial before the chief officer should be not only fair but it should appear to be fair. It it even more necessary, when it is provided that the accused shall have the right to cross-examine and call witnesses, to ensure that if he does not feel competent to do that himself he can employ someone trained in that occupation.
  I hope that the Under-Secretary will give the clearest possible assurance that this most unsatisfactory code will be reconsidered and redrafted, and that a new draft will be brought in at the earliest possible moment. He may say that there must be some code of discipline in force for the time being, but there is no reason why the course I have suggested should not be taken. I feel sure that, if it is, it will be welcomed by the members of the Fire Service and will lead to better discipline and better administration. The House will realise that the punishments that can be imposed can be very severe indeed. A reduction in rank, for instance, may mean a loss of pay which could exist for a long time and might' handicap an individual from ever securing promotion. It may well affect his pension rights. Under paragraph 14 there is a right of appeal to the Home Secretary, but only if the reduction in rank is
  "to a rank other than the rank in the brigade immediately below the one from which he was reduced."
  There is no right of appeal to the Home Secretary if there is a reduction of one rank. Is it right that there should not be in view of the consequences? I ask the Under-Secretary to say that that is another cogent reason for reconsidering this matter.
  There is one further and final objection. It should not be left to the Secretary of State, as it is under paragraph 14 (2), to

  303
  determine without hearing representations from the accused that the appeal can be decided without taking oral evidence. It seems to me that by that, the right of appeal loses much of its efficacy. I support the points raised by my hon. Friends. I have not repeated them but have added to them. I hope that, in view of all these observations, which are not without force, the Under-Secretary will say that the matter will be reconsidered immediately.
  10.45 p.m.
  The Under-Secretary of State for the Home Department (Mr. Younger): When disciplinary regulations for services of this kind are brought into force, it is a matter of considerable importance to a large number of people, and, indeed, it is a matter which should be carefully considered by this House. I therefore make not the smallest complaint that this topic should have been raised by the hon. Baronet the Member for Sutton Coldfield (Sir J. Mellor) tonight. I think that perhaps he, and those hon. Members who followed him, hung rather ponderous arguments upon slender facts. Before I have finished my remarks I hope that we shall have come very near together indeed in our view of what should be done. The hon. and learned Member for Daventry (Mr. Manningham-Buller) said that he hoped that even if I were to say that these regulations must remain in force for the time being, I should be able, at any rate, to give an assurance that there would be a very early revision of them. I think I can give that assurance.
  I think I should immediately explain something of the process whereby these regulations have come to be put before the House, and what the intention is regarding their revision. The hon. Baronet who opened the Debate and the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) complained, to some extent, of the answer which I gave yesterday, in which I merely referred to the agreement which had been reached with the National Joint Council. I am sorry if they did not think that that answer was sufficiently informative, and I take this opportunity to enlarge upon it. I have no doubt that hon. Members who are interested in this subject are familiar with, or at any rate have looked at, Section 17
  304
  of the Fire Service Act of 1947, which is the governing provision relating to the making of the Disciplinary Code.
  Under that Section, as was inevitable, the responsibility for the introduction of disciplinary regulations lies fairly and squarely upon the Home Secretary. I do not seek for a moment to evade that responsibility. At the same time, it is clear to anyone who reads Section 17, that very particular provision is made for consultation with any suitable representative body which may exist, and that it is the intention that the regulations for which the Secretary of State must ultimately take responsibility should be devised, or thrashed out, in consultation with what one might call both sides of the service—the employing authorities and those who are employed—and that great regard should be given by the Secretary of State to the views of any representative body.
  In the first place, if any representative body makes representations to the Secretary of State, he is under an obligation not to reject any recommendation without a reference back to the representative body. If the Secretary of State himself, without receiving a recommendation, wishes to put forward regulations of his own, then he is bound to put his own proposals in draft before the representative body. I want to emphasise that the Secretary of State is clearly intended by the Act, before he takes his final decision and brings a regulation before this House, to have paid very great regard to any representative body which exists. A representative body does exist. It is the one I referred to in my answer yesterday, namely, the National Joint Council for Local Authorities' Fire Brigades in England and Wales. This order applies only to the services in England and Wales.
  Sir W. Darling: Are there women representatives on this body?
  Mr. Younger: That depends on whether women are selected by the branch of the service concerned. The Council itself is made up of 43 members. It has, so to speak, an employers' side and an employees' side. On the employers' side there are the County Councils Association, the Association of Municipal Corporations, and the London County Council, all of whom are represented. On the employees' side there are the National Association of

  305
  Fire Officers and representatives of the union. Whether or not there happen to be women representatives chosen by these bodies to sit on the Council is not a matter over which the Home Secretary would have any control.
  That is the body which exists. It is the suitable representative body for consideration of these matters under Section 17 of the Act. Normally, I think it can be said, the initiative in revising or altering the disciplinary code might be expected, under the Section, to come from the representative body, and to be put up to the Secretary of State by them. There is provision also for the initiative to be taken by the Secretary of State. In this instance, the Fire Service is being transferred from the National Fire Service to the local authorities. There was urgent need for the code under which the National Fire Service operated to be adapted and to be in force in its new adapted form in time for the transfer on the appointed day of 1st April. There was, as hon. Members might imagine, great pressure of work, not only upon those concerned in the Home Office with the transfer, but also upon the representatives of the officers and men and of the local authorities.
  It was agreed between the Home Office and the Council that in this instance initiative could be taken by the Secretary of State, that the first draft should be drawn up by him, and that the Council should have an opportunity to consider it. The draft was drawn up and it was substantially the same as the code which had operated successfully for nearly seven years in the National Fire Service. Substantially, the only alterations made in that code were those necessary to adapt the terminology to suit the local authorities' service. This draft was considered in detail by the Council, by the representatives of both sides of the service, and it was accepted by them on the understanding that in the light of experience and when they themselves had time to give the matter rather fuller consideration, the Secretary of State would be prepared to consider an early revision.
  The hon. Baronet complained of the use of the words in the answer to yesterday's Question "after further consideration of the details." I am sorry if that was not clear. Of course, it would be open to the Council to suggest revisions which were not merely revisions of detail. It
  306
  would be perfectly open to them to do so but, in view of the fact that they have carefully considered this and expressed agreement on all the general principles, it was felt that it was only likely that they would require very early revision of matters of detail which had not, perhaps, occurred to them on first consideration. It is not only on details but on the regulations as a whole that they are entitled to have further consideration and to suggest early revision.
  The regulations now before the House contain virtually nothing new. There are one or two minor suggestions made by the Council and incorporated in the regulations. It was obviously necessary that some regulations should be brought into force by Parliament early. It was felt necessary to follow the code which had proved satisfactory, and to which, as far as I am aware, no objection was taken by any of the interested parties, and to have this understanding to which I have already referred, that there should be a very early revision as soon as the service representatives had had time to consider the code should they wish to have revision made. Probably, in fact, it would be much more effective if we were to have revision after there had been some brief experience of the new service under the local authorities.
  I think, in view of what I have said, hon. Members will agree that any points which may be thought suitable for revision should be first submitted to the form of negotiation which is laid down under the Act and that we should not attempt to alter the regulations without full opportunity for the Council to consider and make its own recommendations on the matter.
  Mr. Manninghann-Buller: May I put to the hon. Gentleman a question on that? I am grateful to him for the explanation of how the National Joint Council works, but does he not agree that, on principle, as this House has responsibility for legislation, whether it is made by statutory rule and order or by statute, it really is not a discharge of our responsibility if we merely leave it to other bodies to discuss what changes should be made? Is not the hon. Gentleman going to deal with the very serious issues which have been raised from this side? They really demand an answer. Finally, in view of his statement that the

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  Secretary of State can exercise his initiative in putting forward suggestions or alterations in this code with the National Joint Council, will he not, at least, say that all the suggestions which have been put forward from this side of the House, with a view to improving this code, will be considered by the Home Secretary and put by him before the Joint Council for their consideration?
  Mr. Younger: I really do not know why at this stage the hon. and learned Gentleman thought fit to intervene on this point. I have not made the slightest suggestion that the House should not take full responsibility for these regulations. I welcomed the raising of this matter by the hon. Baronet. In my reply to the single point raised in the Question yesterday, I specifically said that this would be brought to the notice of the Joint Council, and I was, in fact, going to say in my closing remarks that I propose to ensure that the Joint Council does consider all the points raised in this Debate.
  I do not think that there is any question of the Secretary of State or this House abdicating their responsibility for any regulations which may eventually be debated or approved. But I hoped that in my earlier remarks I had equally made it plain that undoubtedly a procedure was envisaged by the House which also places great responsibility for the giving of advice upon this Council. I was explaining in what way the letter and the spirit of Section 17 of the Act had been observed in drawing up these regulations, and I really do not think that there was any need for the hon. and learned Gentleman to intervene at this stage, or, indeed, to suggest that I was not going to deal with the points that were raised. I hope that I shall be allowed a few moments to deal with some of them—though some of them were points of detail upon which I have had no notice, and I am not prepared to give complete and full answers to all the points. I hope that I shall be able to satisfy the House why one or two of these matters on which complaints have been made have appeared in the regulations.
  Sir J. Mellor: Does the hon. Gentleman appreciate that this House will lose all control over these regulations after 14 days from 19th March when they were laid before Parliament? The hon. Gentle-
  308
  man says that there is to be consultation on the draft and so on, but they are now the law of the land, and within the fixed period from the date on which they were laid before Parliament we have some control. After that period we have no control whatever, and surely it is not reasonable for the hon. Gentleman to expect us to wait until the Home Secretary and the Joint Council manage to come to some arrangement, for we shall have no control by the time that arrangement has been come to.
  Mr. Younger: It would not be reasonable to expect the House not to comment upon these regulations and, of course, they have a perfect right to reject them if they wish; but I was hoping that in my speech I had said enough and that it was reasonable for the House, in the light of my explanation, to pass the regulations, on the assurance that I have given that all parties concerned in the Fire Service have agreed, and that there is an understanding that they will be further considered and revised if consideration shows that revision is necessary—revised very shortly—and on the further assurance that everything said in this Debate will be brought to the attention of the Council when it comes to give that consideration. I really think that is a reasonable proposition. I fully understand that before my explanation was given about the way in which these regulations had come to be made and presented to the House there might have been some doubt in the minds of the hon. Baronet the Member for Sutton Coldfield and others, but I do think that on the assurance I have given he might well be satisfied.
  May I just deal with the main points raised in the Debate. There is, first, the question raised under Regulations 11 and 15, where it is provided that the case or the appeal may be proceeded with and concluded in the absence of the person accused, and also if he refuses or without sufficient cause fails to attend at the time and place fixed for the hearing or is in legal custody. I entirely agree that one might presume that with a person in legal custody it should be possible to produce him, and that unless there is very great reason, the individual should not be tried in his absence. The reason why the regulation was proposed was that there are certain types of case in which, so I am informed, it is impossible, or, at any

  309
  rate, unreasonable, that a person should be produced. I am not aware that any case has actually arisen—but these words were contained in the previous code which has been in existence for six or seven years and on which no complaint has been made and on which no injustice has arisen.
  We might have the case of a person detained in Broadmoor during His Majesty's pleasure. If we had a relatively trivial disciplinary case pending it might be essential that it should not be left in the air over a long, undefined period, especially if other people were involved. It might equally be undesirable that the man should be produced. Legally there is not power to produce a person for this purpose from legal custody from a prison in Scotland. I know that that is a situation which it is not competent for me in these circumstances to discuss, but I understand that there are these exceptional types of cases for which this provision was originally put into the National Fire Service code and which appear in the present regulations. But all these matters could be and will be cleared up on revision, now that they have been raised in the House.
  Mr. J. Foster: Can the hon. Gentleman give the wording of the Amendment of the regulations, as it does not really make much sense from the point of view of construction. He will see the alternative is not a logical alternative: it is, if the accused fails to attend—or is in legal custody. That is not an alternative.
  Mr. Deputy - Speaker (Mr. Hubert Beaumont): The hon. Member was rising on a point of explanation, but he is now making another speech.
  Mr. Foster: If the hon. Gentleman looks at the so-called alternative he will see that it is not an alternative.
  Mr. Younger: I am afraid that is too abstruse for me. I should have thought that what is in the phrase is perfectly clear. I am bound to say that I have not entirely taken the point of the hon. Gentleman because it seems to me that, whatever the view of a professional draftsman might be, to the ordinary man the regulation is perfectly clear and intelligible.
  Mr. Boyd-Carpenter Mr. Boyd-Carpenter rose—
  Mr. Younger: I think I must be allowed to go on.
  Mr. Boyd-Carpenter: I am much obliged to the Under-Secretary for his habitual courtesy. Can he give an assurance that in no case will a man detained in prison, in Scotland if you like, who is willing and anxious to face a charge before a Fire Service tribunal, be tried in his absence when that absence is solely due to the fact that public authorities are detaining him elsewhere?
  Mr. Younger: I do not think that I can really give an assurance of that kind because the difficulty is that a disciplinary charge which might be pending might be one which involved many other people, and it would be improper to say that the case should not be proceeded with in any circumstances because it happens that one person was in a condition where he could not be legally brought. I do not think it would be proper for me to give an assurance in those circumstances. One would leave a charge in the air for an indefinite period. It is an unfortunate provision, and no doubt the correct way would be to amend the law of Scotland, but that is quite outside my province here, although perhaps it is a matter which might be considered.
  There was a further question of representation under Regulation 12 which was raised by the hon. Member for Kingston-upon-Thames. This is not an altogether unfamiliar issue, particularly as it affects legal representation by solicitors or counsel at tribunals which are not courts of law. It is a matter in which some sense of proportion is desirable. As he appreciates, it is provided that in all cases of appeal a person representing the accused need not be a member of a fire brigade, but that at the original hearing he must be. This point was carefully considered by the Council, and they came to an agreement among themselves on this particular formula. It has to be remembered that the vast number of cases at first hearing are cases which are readily settled. One does not want to turn hearings of that kind into courts of law where lawyers appear and argue points of evidence, lengthen the proceedings and so on. This is not an unfamiliar issue, and the best defence of it is that the system under this regulation is one which appears to have worked perfectly well in the past

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  There is again nothing new in what we are laying down here, and it is made with the approval of all those concerned in the working of the system.
  Mr. Manningham-Buller: Would the Under-Secretary answer this important point? Is there any precedent for a man being found guilty of corrupt practice without having an opportunity of legal representation, because he can have that stigma placed on his name and that stigma may remain after a trial without legal representation? Would the hon. Gentleman say that that point will be further considered and considered favourably if the Home Secretary can induce favourable consideration?
  Mr. Younger: I certainly will give an undertaking that it will be considered. I can say nothing about whether there is a precedent. That is something of which I would require notice before I can give any assurance. Those are the only points of which I had previous notice—the question of legal custody, and the question of representation.
  The hon. Member for Kingston-upon-Thames also referred to Regulation 3, and asked for elucidation and further interpretation of some of the phrases there, and whether the accused would be given time to take advice before he declared himself. That, of course, does not appear one way or the other in the regulations. Again I can only state that this code has operated satisfactorily, the interpretation in practice has been uniform, and over six or seven years has given rise to no complaints. I should have thought there was little likelihood of any party to the proceedings so interpreting the regulations that a man would be compelled to admit or deny his guilt before he had opportunity to consider his position or take advice.
  I think the points raised by the hon. Member for Northwich (Mr. J. Foster) would require detailed consideration, and I do not think I can be expected to deal with them fully now, without notice. I might perhaps refer to his point on Regulation 11, where he seemed afraid that a man who failed to appear might have had a perfectly good reason for not appearing but the tribunal might nevertheless proceed with the case. I should have thought myself, on the interpreta-
  312
  tion of the regulation, that it would lie on the tribunal to satisfy itself positively that the man had absented himself without sufficient cause; that they could not continue on the ground that he refused, or without sufficient cause failed to attend, without having taken some positive steps to ascertain that that was the case. These are detailed matters, and largely matters of service practice, and they have not, to my knowledge, given rise to any complaints in the past.
  I do not think that I should attempt at this stage to deal with the numerous points that have been raised of which no previous notice was given. They were mostly of a distinctly legal character. I should like to say this in conclusion. The hon. and learned Member for Daventry suggested that, even if these regulations must remain in force now, there should be an assurance that they would be revised at an early date. That is precisely the position as understood by the Secretary of State and all parties represented on the Council.
  Suppose for a moment that we were to accept the Prayer, we would then be left without any regulations. That I think is not acceptable to any member of the House. We could remake them rapidly, but the hon. and learned Gentleman will recognise that the numerous points which have been raised tonight could scarcely be dealt with with justice if we were to remake them overnight. If he and other hon. Members will look at Section 17 of the Act, they will see that it would be improper if the Secretary of State were to revise these regulations without going back to the Council. If substantial alterations were to be made in these regulations it would be necessary to take them back to the Council for full consideration. If the House agrees that that is the correct procedure, there is nothing between us on this side and those who have raised these criticisms.
  I am not complaining of the Debate, or of the criticisms, but the House should realise that it would be quite improper, in view of this provision, to attempt to alter this draft without going back to the Council and giving it opportunity for revision. That is precisely what we propose. I hope, therefore, the House will be prepared to approve the regulations on the assurance I have given and in the certainty that the procedure we have

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  adopted has been agreeable to all the persons concerned, the representatives of the men as well as the representatives of the employing authorities. They are satisfied with the procedure and they are prepared to recommend to the Secretary of State any revisions which seem necessary to them at the earliest possible moment.
  Mr. Manningham-Buller: I am not quite clear as to what the hon. Gentleman said in his last remarks. Am I to take it that if these regulations are allowed by the House at this time, there will be fresh regulations laid before us at the earliest possible moment, having regard to the criticisms which have been uttered from this side, some which have met with some support from the hon. Gentleman?
  Mr. Younger: The undertaking which I gave is that every point which has been raised in the Debate will be brought to the notice of the Council. Assurances have already been given to the Council—and they stand—that they will be given the opportunity of considering these regulations and if necessary they will be able to recommend necessary revisions. I cannot stand here and give assurances that when they have been discussed by all the organisations affected by the regulations it will be necessarily agreed that new regulations will be immediately necessary, but if it is thought that modifications are required I will certainly give the assurance that my right hon. Friend will not delay the bringing forward of revised regulations.
  11.17 p.m.
  Sir J. Mellor: I think the House has been placed in an intolerable position in this matter. The Under-Secretary has given a very courteous and lengthy reply, but I am afraid that the result is most unsatisfactory. He says the matter is to be discussed. He says there will he further regulations, as though these were only the basis for discussion, but they will soon pass beyond the control of this House. If he had given an assurance that within a specified time a complete set of new regulations would be laid before
  Parliament, then I think that would be satisfactory to us, because we could then, if we were dissatisfied, move to annul them; but he has not given us an assurance that any fresh regulations w111 be made or that any amendment will be made. Even if he did bring in amending regulations, that would not necessarily be satisfactory to us. Unless we have a whole fresh set of regulations laid before us we should not regain control. Therefore, I am afraid that the Under-Secretary has not satisfied me, at any rate.
  If delegated legislation is to be presented in this form, in draft, then it must be worked on a different procedure to this. There was an old procedure by which legislation was laid before Parliament, but this is done under the new procedure and we have only a matter of a month or five weeks in which we can object by means of a Prayer. It is quite intolerable for the Under-Secretary to expect us to take everything on trust and accept his assurance that everything will be discussed between the Home Secretary and the appropriate bodies. That is not good enough for us. He gave no satisfaction whatever on the point about legal custody. Surely that could be dealt with. The Home Secretary could make an order tomorrow eliminating "or is in legal custody" from Regulations 11 and 15. He could do it tomorrow and he has not even offered that concession. The hon. Gentleman raised the exceptional case of a man being absent. Surely that can be provided for in the regulations. Surely he can devise regulations that would ensure that no grave injustice is likely to be inflicted. In view of the most un satisfactory answer which we have received tonight I propose to divide the House.
  Question put,
  "That an humble Address be presented to His Majesty, praying that the Order, dated 18th March 1948, entitled the Fire Services (Discipline) Regulations, 1948 (S.I. 1948, No 545), a copy of which was presented on 19th March, be annulled."
  The House divided: Ayes. 16; Noes, 95.

  Division No. 121.]

  AYES.

  11.20 p.m

  Agnew, Cmdr. P. G

  Foster, J. G. (Northwich)

  Studholme, H. G.

  Bowen, R.

  Fraser, H C. P. (Stone)

  Thornton-Kemsley, C N

  Buchan-Hepburn, P. G. T

  Maekeson, Brig. H. R.

  Conant, Maj. R. J. E.

  Manningham-Buller, R. E

  TELLERS FOR THE AYES

  Darling, Sir W. Y

  Scott, Lord W.

  Sir John Mellor and

  De la Bere, R.

  Smith, E. P. (Ashford)

  Mr. Boyd-Carpenter

  Drayson, G. B

  Strauss, H G. (English Universities)

  NOES

  Anderson, A. (Motherwell)

  Griffiths, W. D. (Moss Side)

  Pryde, D. J

  Awbery, S. S.

  Guy, W. H.

  Ranger, J.

  Balfour, A

  Hale, Leslie

  Roberts, Goronwy (Caernarvonshire)

  Barton, C.

  Hannan, W. (Maryhill)

  Scollan, T.

  Bechervaise, A. E

  Hardy, E. A.

  Segal, Dr. S.

  Bins, G. H. C.

  Henderson, Joseph (Ardwick)

  Sharp, Granville

  Blackburn, A. R

  Herbison, Miss M

  Shawcross, Rt. Hon. Sir H. (St. Helens)

  Blenkinsop, A.

  Hobson, C. R.

  Silverman, J. (Erdington)

  Blyton, W. R.

  Holman, P.

  Simmons, C. J.

  Boardman, H.

  Hoy, J.

  Smith, S. H. (Hull, S.W.)

  Bowden, Flg.-Offr. H. W.

  Hubbard, T.

  Soskice, Sir Frank

  Braddock, Mrs. E. M. (L'pl, Exch'ge)

  Hutchinson, H. L. (Rusholme)

  Sylvester, G. 0.

  Braddock, T.(Mitcham)

  Jeger, Dr. S. W. (St. Pancras, S.E.)

  Taylor, R. J. (Morpeth)

  Brown, T. J. (Ince)

  Johnston, D H.

  Thomas, D. E. (Aberdare)

  Buchanan, Rt. Hon. G

  Jones, D. T. (Hartlepools)

  Thorneycroft, Harry (Clayton)

  Carmichael, James

  Keenan, W.

  Waited en, E.

  Chelwynd, G. R

  Kendall, W. D

  Wallace, H. W. (Walthamstow, E.)

  Coldrick, W

  Kinley, J.

  Weitzman, D.

  Collindridge, F.

  McAdam, W.

  Wells, W. T. (Walsall)

  Colman, Miss G. M.

  Maclean, N. (Govan)

  West, D. G

  Corlett, Dr. J.

  McLeavy, F.

  White, C. F. (Derbyshire, W.)

  Deer, G.

  Mann, Mrs. J.

  Willey, F. T. (Sunderland)

  Dobbie, W.

  Mitchison, G. R.

  Williams, D. J (Neath)

  Ede, Rt. Hon. J. C.

  Morgan, Dr. H. B.

  Williams, J. L. (Kelvingrove)

  Evans, A. (Islington, W.)

  Morris, P. (Swansea, W.)

  Williams, R. W. (Wigan)

  Evans, John (Ogmore)

  Mart, D. L.

  Williams, W. R. (Heston)

  Fairhurst, F.

  Moyle, A.

  Willis, E.

  Farthing, W. J.

  Nicholls, H. R (Stratford)

  Wills, Mrs. E. A.

  Forman, J. C.

  Pargiter, G. A.

  Younger, Hon. Kenneth

  Ganley, Mrs. C. S

  Pearson, A.

  Gilzean, A.

  Perrins, W.

  TELLERS FOR THE NOES

  Granville, J. E. (Consett)

  Porter, G. (Leeds)

  Mr. Wilkins and

  Griffiths, D. (Rother Valley)

  Price, M. Philips

  Mr. George Wallace.

  Question put, and agreed to.

  DISABILITY PENSIONS (DIABETES)
  Motion made, and Question proposed, "That this House do now adjourn." —[Mr. Pearson.]
  11.28 p.m.
  Mr. Granville Sharp: I wish to raise the question of the award of disability pensions to men who, after having served in the various Forces throughout the last war, have been discharged on medical ground with diabetes melitus. It is somewhat difficult for a layman to go into the details of this disease but there is no doubt it has caused considerable trouble to many men who have been discharged from the Forces. It would probably be best for me to give an example. On 6th March, in answer to a Question from me, my right hon. Friend the Minister of Pensions stated that whereas 3,600 men had been discharged from the Forces suffering from this disease, of the number who applied for a pension only 600 had been successful in their claim. It is really on behalf of the other three thousand that I am putting forward an appeal tonight.
  May I give an example? It is of a man whom I will call Corporal X. He served throughout the Italian campaign. He was a corporal in the 1st Battalion of a famous Scottish regiment—the Scots
  316
  Guards. He served on the West coast of Italy in a very arduous campaign. Prior to his enlistment he was a very fit man. There was no trace of diabetes in his family; heredity is one of the reasons sometimes given for diabetes. He went through the normal medical examination when he enlisted, and it included the usual tests to discover whether a man has diabetes. No trace of any such disease was found. He could do his 40 miles in full kit, and prior to his enlistment he was a first-class football player. Then suddenly, at the beginning of 1946 he got a feeling of lassitude. He was not the type of man who goes to the doctor and says, "I had better go to hospital." He thought there was something wrong with him, but he carried on for some time. Finally, he was taken to hospital in the North of Italy, and his case was diagnosed as diabetes. He was sent back to this country and discharged.
  Here was a man fit for very active service. He went through a very arduous campaign, and was discharged on account of diabetes melitus. Was this disease due to his military service or not? My right hon. Friend and his Department say that it was not. Why not? They admit that the onus of proof that it was not due to military service, that the disease was not aggravated by military service, rests upon them; but, when a close examination is

  317
  made of the type of argument which they put up, it is obvious that they are not recognising that the onus of proof is upon them. What they say is really this: no evidence has been put up to them of why military service could have caused, or aggravated, the disease. Therefore, they say that a pension cannot be awarded. I believe that if my right hon. Friend had his way, he would recognise that there is justice on the side of these men, and would say, "These men were fit for service; let us give them a pension." But unfortunately the Minister is not master in his own Department in that respect. He is compelled to listen to his medical advisers.
  I suggest that these medical advisers, not merely at the Ministry of Pensions but throughout this country and the world, do not understand diabetes melitus. I have read extracts from a few works on this subject and I have come to the conclusion that there is a variety of opinion on it. I want to give a quotation which I am sure will appeal to some hon. Members. It is from the Regius Professor of Medicine at Glasgow University—Dr. McNeil. Writing in the British Encyclopaedia of Medical Practice, he said that it was far from the truth that the mechanism of diabetes melitus had been solved, and he went on to say:
  "He would be bold indeed who could venture to affirm that he understood all the secrets of diabetes melitus."
  Sir William Darling: What is the date of that?
  Mr. Sharp: 1940. I have read a further work since that time, the biography of Dr. Banting, that even in those days it was fully recognised that this disease was not thoroughly understood. That being so, I suggest that the medical advisers in my right hon. Friend's Department are no better able to say whether the disease which has been contracted by this soldier and three thousand others was, or was not, contracted during their service in the Forces, or whether the disease, which might have existed prior to their enlistment but was not detected, had been aggravated by military service. That being so, I suggest that they have not been able to—and cannot—prove conclusively that military service did not contribute to or aggravate the disease.
  I would ask my right hon. Friend to say to his fellow Members in the Govern-
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  ment that it is about time that the Royal Warrant, which guides his conduct to a certain extent, was altered. I cannot go into that on an Adjournment Debate, but it is necessary that he should have powers to provide that a man who has served his country well should not be denied the right to proper maintenance in civil life. There are some very serious cases which my hon. Friends behind can raise. I will only mention one man in my constituency who, at the age of 22, has to inoculate himself daily with insulin. He has to earn his own living, and when it comes to overtime or anything like that, he just cannot do it. He is tired out. He goes home dreadfully tired and probably has to take a day or two off work.
  I suggest that men who are suffering in this way should have at least a 5o per cent. disability pension. They are certainly worse off, from the point of view of earning ability, than many of the men who are receiving such a pension. I ask my right hon. Friend to give further consideration to this matter and to tell us tonight that he is going to do something about it and that he is not going to accept the medical views of his own advisers as conclusive. They cannot be conclusive because there is no full knowledge at the present time of the causes of this disease.
  11.38 p.m.
  Mr. E. P. Smith: I have no wish to stand between the House and the array of medical talent, which, I am quite sure, will help to inform us in this matter, bat I do feel, and have always felt, very strongly indeed that any disease which affects a man on war service ought to be regarded as due to war service. In my own constituency I have had numberless cases of cancer which is a particularly difficult disease in regard to war pensions. I have encountered some of the most tragic cases in my whole career of that terrible disease. I would like to support what the hon. Member for Spen Valley (Mr. Sharp) has said about diabetes melitus. I do hope that the right hon. Gentleman will take whatever opportunity is available to him of trying to get the whole basis of pensions for illness contracted during war service widened and broadened.
  11.40 p.m.
  Mr. Chetwynd: I want to emphasise as much as I can the strong plea of my hon. Friend on behalf

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  of the sufferers from this very dreadful disease. I speak particularly of one case brought to my notice and now under consideration by my right hon. Friend, of an Air Force man who was admitted in 1939 as Ai, who went through Italy, and was discharged in 1944 with this disease. Tragically enough, later on, the disease developed into tuberculosis. This poor fellow is now in a sanatorium with very little hope of permanent cure, and because this disease, over which there is so much doubt, cannot be proved to have arisen out of war service, he is without future or financial security. Medical evidence in this man's case is such that the benefit of the doubt must be given to him. He has his own doctor's support and that of the head of the sanatorium.
  It is clearly proved that a nervous upset brought on this complaint. I defy the medical officers of the Ministry to say otherwise. Where they cannot prove quite clearly that disease was not attributable to war service, then obviously the benefit of the doubt must be given. I ask the Minister to get away from this niggardly attitude of his officers and do what his heart tells him to do—to behave as he has done in all other cases brought to him and to give way on this matter. It would bring great joy and comfort to many people.
  11.42 p.m.
  Dr. Morgan: I must be brief, although this is a subject which really takes some time to discuss. I congratulate the Minister so far on his very humane administration of the Pensions Ministry since he took office, but he himself is under great difficulty, for like other Ministers, he has to take the advice of his experts. Unfortunately, the bulk of medical men who get into Government Departments seem to lose a great deal of that human feeling which they should always have towards applicants.
  Mr. Thornton-Kemsley: That is why doctors do not want to be State servants.
  Dr. Morgan: There has never yet been produced in the last 3o years an international authority on this matter. I could go on talking about the Colonial Service and the Post Office, of which I have experience, but we have not time to
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  discuss that. I ask the Minister to use his powers as a humane administrator and, after listening to advice, to say "No" in spite of medical advice, and then say "I have still a reasonable doubt about this disease, that it was not caused or aggravated by service." How can they say that this disease was not caused by service? How can they say that, except from their own prejudice? It is well known in psychotherapy that many people have diabetes after shock—and shock there is in these cases.
  The opinions of one of my contemporaries at Glasgow University, a very brilliant man, have been challenged, even in these days. When a man gets into the Ministry of Pensions he knows very little of what he is talking about. That type of person expresses opinions as if they were laid down in the Bible and for reasons which really cannot stand up to cross-examination in any court of law. On that account alone, I ask the Minister to be quite frank with his medical advisers in cases like this, though I know it is difficult, as I have had experience of it myself. In spite of that, I do ask the Minister to act in a humane manner—as he has been doing in many cases—and to say "No, I am prepared to take responsibility for saying in certain cases that this is due to, or aggravated by certain circumstances." I ask the Minister to stand by his guns in this matter, and in spite of any professional advice he gets, to continue on the lines along which he has so far proceeded.
  11.46 p.m.
  The Minister of Pensions (Mr. Buchanan): No one could complain of the form or manner in which this Debate has been raised and no one can deny its importance. The hon. Member who raised the question proceeded quite properly by talking about the things he was interested in and built up a case from what he knew. That is good politics and good business, and I certainly welcome the Debate. Only one thing really sticks in the speech of the hon. Member for Stockton-on-Tees (Mr. Chetwynd). I take exception to his remark about my being "niggardly." This Ministry and myself are not niggardly, and nothing I have done there could induce anyone to say that I was niggardly. I take some objection to the phrase and I only hope that if

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  and when the time comes for the hon. Member to assume my mantle, he will be as generous to the people as I have been.
  I only want to say this about this question, that I am not a decider. The hon. Member for Ashford (Mr. E. P. Smith) raised the question of cancer. The cancer cases are much the strongest, even stronger than diabetes and much more tragic. They are much the strongest individual cases. If I wished, I could make hon. Members shudder by telling them about the case of a man with 20 years' service, including six and a half years in the Army and two years as a prisoner of war. Other cases pale in comparison.
  Let us stop this nonsense about the "niggardly Minister." Let us face the facts. The facts are that to justify a pension we have to prove our case, and we do it in accordance with the rulings given in the High Court. That applies also to the Court of Session in Scotland. Mr. justice Denning has laid it down firmly and strongly that the onus of proof is on us and we are required to satisfy the courts about that. Under the Royal Warrant I must for every person who is to secure a pension, whether for this disease or another, secure a medical certificate and if there is a doubt, the doctors must give it to the applicant. In these cases our medical opinion says there is no reasonable doubt that this disease did not arise out of war service. Those are the facts. Let us face them. I would ask hon. Members not to use general phrases, but to try to assist me in my work. In regard to the remarks of my hon. Friend the Member for Stockton-on-Tees, the first I knew about his case was tonight.
  Mr. Chetwynd: I have here a letter from my right hon. Friend's Department stating that the case is still under consideration.
  Mr. Buchanan: I was never told that the matter was going to be raised tonight. I get letters running in number into about a thousand, and it cannot be expected that I should be able to answer off hand one which the hon. Member for Stockton-on-Tees picks out.
  Mr. Chetwynd: I rang up my right hon. Friend's private secretary and asked for these papers because I intended to raise this matter tonight. That was before the Easter Recess.
  Mr. Buchanan: This is the first I have heard about it, but had I known about it I could have replied to it. The hon. Member for Spen Valley has told us about diabetes melitus, but he is not sure. If my hon. Friend can bring to me a real responsible medical opinion to say that we are wrong—and I want more than a general phrase—I will once again have the whole thing gone into thoroughly.
  Mr. Sharp: Will my right hon. Friend agree that if the doctors themselves admit that they do not know what are the possible causes of diabetes melitus, in many cases the benefit of the doubt should be given to the ex-Service man?
  Mr. Buchanan: In many cases it is. I was coming to that. In this war we have allowed 600 cases because we exercised the benefit of the doubt in their favour. In the previous war none of those applicants would have got in. Where there has been a doubt we have allowed it. It is because my medical advisers say that in 3,000 cases there can be no doubt thatI have had to refuse them. If there was a doubt about it, I would have given it to them, but my medical advisers Will not give me a certificate because they say there is no doubt.
  Mr. Willis: Is net that because the onus is on the medical officers to prove that the disease was not contracted in war service, and supposing the onus was on them to prove that disease was due to the war could they produce opposite arguments?
  Mr. Buchanan: On the shoulders of the Minister rests the responsibility for exercising the benefit of the doubt. There are other diseases worse than diabetes melitus. There is cancer, which is by far the biggest and by far the most tragic. There are other diseases like leukaemia, and in these groups medical opinion is behind me in the steps I have taken.
  Dr. Segal Dr. Segal (Preston) rose—
  Mr. Buchanan: I have given way about To times in 10 minutes, and I hope hon. Members are not trying to take advantage of my softness. This matter has been decided in law. Mr. justice Denning, who it must be admitted has been a great friend to the ex-Servicemen, has decided in every case that has come

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  before him that our doctors are right. In the Court of Session in Scotland, where three judges are required, only one case has gone against us. In all other cases the judges have taken the same view on diabetes as Mr. Justice Denning. In Northern Ireland one case has been heard, and the court there also agreed with Mr. Justice Denning. So we have the courts in England, Scotland and Northern Ireland agreeing with the independent tribunals in each case. It may be that the medical opinion can be upset; I am not sure; but if hon. Members can give me the slightest reason, apart from vague phrases like, for example, "He was Ai when he went in, and was not A1 when he came out," I will consider it.
  I have all the sympathy in the world with these cases. My problem is how to overcome the difficulties. If the hon. Member for Stockton-on-Tees and his
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  generous treatment were to be substituted for myself and my treatment, he too would have to decide this. He ought to apply his mind to this question: can he get any sort of evidence at all to get me to look at this case again? If he can, I will look at it. I will say this to the hon. Member for Rochdale (Dr. Morgan), who is a distinguished ornament of the medical profession: would he not apply his mind to helping me, rather than to a lot of abuse? Let him apply his distinguished medical brain to bringing me some evidence to counteract the doctors. If he can bring me decent medical evidence to show that diabetes is a thing that can be caused by war, I promise generous and fair treatment.
  Adjourned accordingly at Two Minutes to Twelve o'Clock.