HC Deb 22 June 1949 vol 466 cc291-329

Motion made, and Question proposed, "That the Clause stand part of the Bill."

7.45 p.m.

Mr. Peake

We now come to a Clause which is of very great importance. It concerns a matter which the Chancellor of the Exchequer dealt with in a cursory and cavalier fashion during his Budget Speech on 6th April. I refer to the very steep, heavy and onerous increase which the Chancellor proposes in the Matches Duty. The increase in the rate of duty is no less than 65 per cent. We shall have to have from the Economic Secretary a much fuller explanation of this action than that which the Chancellor gave when he introduced his Budget. On that occasion the right hon. and learned Gentleman told the House: Next I come to matches, where some increase in price is, in any event, necessary to meet the increased costs of production. The last rise in price was in 1940, since when, of course, there has been a very considerable increase in costs. The smallest practicable rise in price is ½d. a box, and this would be a good deal more than is required to cover these increased costs. I propose, therefore, to help and to absorb the difference in tax. The tax will be raised by 5s. 5d. a gross in the case of the ordinary box of 50 matches, with corresponding rates for other containers."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463. c. 2102.] When the right hon. and learned Gentleman said that the smallest practicable increase in the price of a box of matches was ½d., he was saying that the smallest practicable increase per gross of boxes was 6s. The Chancellor is taking an extra 5s. 5d. per gross in duty and leaving 7d. only for the manufacturers, and maybe the distributors, to cover the increased costs to which the Chancellor referred. Precisely the same effect of providing an extra 7d. a gross for the manufacturers would have been reached by reducing both the Excise and the Customs duties by 7d. per gross of boxes. The present rate of Customs on the ordinary box of matches is at the rate of 9s. per gross. That is to be increased to 14s. 5d. The Excise Duty is slightly lower, and that is to be increased from its present rate of 8s. 4d. to 13s. 9d.

Exactly the same effect could have been produced, if all the Chancellor wished to do was to permit the manufacturers and distributors to obtain an additional 7d. per gross, by reducing the present rate of Customs duty from 9s. to 8s. 5d. and the Excise duty from 8s. 4d. to 7s. 9d. That concession would have cost the Chancellor something of the order of £500,000. But instead of that, the Chancellor is increasing the price of the ordinary box of matches from 1½d. to 2d., and in the course of a full year he will get an additional £5 million by the taxation of matches.

It may be said that this is a small matter, that the ordinary housewife probably uses only one box of matches a week if she is economical and therefore, all that this will cost her is 52 halfpennies or 2s. 2d. a year; but, of course, there are many people who consume matches at a far higher rate. I am not a pipe smoker myself, but I am told that a pipe smoker can easily get through one, and sometimes two, boxes of matches in a day. It seems rather ridiculous to give special preference to old age pensioners with regard to the Tobacco Duty—to give the aged and poor people tobacco at what, in effect, are subsidised rates—if the Government take back a great part of the benefit by increasing the price of the matches upon which they depend for keeping their pipes burning.

I therefore suggest that we ought to have some much fuller explanation from the Economic Secretary before the necessity of increasing by no less than 33 per cent. the price of this common and essential article, which has to be purchased week in and week out by every housewife and every person in the country, however small their means may be. It rather seems as if the Chancellor is determined to impose some additional burden upon everybody, and that he has only to see some simple necessity which the smallest people in the country are compelled to purchase week by week to come forward and place an additional duty upon it. I therefore hope that the Economic Secretary will give us much better reasons than we have had hitherto for adopting the method of taking an extra £5 million of taxation in this way, when he could have achieved precisely the same object of giving some additional return to the producers of matches by a very small concession in his Budget.

Mr. Gallacher

This question of matches, like that of whisky, may be described as a burning question, but there is another aspect of the matches question which has to be noted. The Economic Secretary, the Chancellor and the Government do not like matches, because good matches, like good workers, will strike when the occasion so demands, and, in the eyes of the Government at the present time, anybody or anything that strikes is very unpopular. That reminds me of the fact that there have been many references to the Liberal Party, but it should be noted that the Liberal Party is now working to rule since the refusal to take them on the Tory-Labour combination that is going to Europe.

This duty on matches hits at the housewife lower-pain at the worker, and particularly the lower-paid worker. The housewife uses matches almost more than anybody else, and the pipe smoker uses matches, as the right hon. Gentleman opposite said, in considerable abundance. I myself am a pipe smoker, and I know the amount of matches I go through, and I also know the amount of duty which my friends have to pay on that account. I cannot understand why the Chancellor is making this duty bear so heavily on pipe smokers because the pipe has always been associated with peace and peaceful pursuits. It is entirely different from cigarettes, whisky and wild, wild women. Peace has always been the character of the pipe and of the pipe smoker.

I smoke a pipe, and when I consider this tax and hear some of the things said about it, my mind goes away back nearly 40 years. In fact, when I listened to one of our earlier discussions, my mind went back 50 years to an old music-hall house which used to exist in Paisley. A couple of chaps came on and one said to the other "I haven't seen you for a long time; where have you been?" The other answered, "I have been to the North Pole." The first then asked him, "How are food prices up there?" and he got the reply, "Just the same as here; 3d. a pint." Threepence a pint reminds me that forty years ago I got an ounce of tobacco for 3d. with a box of matches thrown in.

Mr. Selwyn Lloyd

Tory misrule.

Mr. Gallacher

Oh, yes, and the match workers were getting nearly as much as they are getting now. [An HON. MEMBER: "Phossy jaw."] I remember quite well reading all the stories about phossy jaw, but that was a still earlier period.

Now the price of a box of matches jumps up from 1½d. to 2d., and an hon. Member has already said that the Chancellor may think that this is only a very small matter—a halfpenny on a box. For a housewife using a box of matches a week, it is only a halfpenny per week and does not come to very much over the year, but I have had occasion in a previous discussion on these matters to draw attention to the old and very apt Scots saying that, many a mickle makes a muckle. A halfpenny here and there, 6d. in another place or 1s. on something else—they all add up and accumulate into what becomes a very heavy burden. In this particular matter of matches, as a pipe smoker and as one who uses a very considerable amount of matches, I ask the Economic Secretary to discuss the matter again with the Chancellor and see whether they cannot find some other way of assisting the manufacturers to meet the costs of production rather than by way of making an increase of this kind. I ask him very sincerely to withdraw this proposal.

Mr. Eccles

The first question I want to ask the Economic Secretary is this: do matches enter into the index figure of the cost of living?

Mr. Jay indicated assent.

Mr. Eccles

They do? I think that is very extraordinary. The Financial Secretary told us that the price of beer is being diminished in order to keep down the cost-of-living index figure, and yet, when we come to a later part of the Bill, we find this duty which raises the cost-of-living index figure. What is the common factor between these two? It is perfectly clear that both the diminution in the Beer Duty and the increase in the tax on matches are made solely for Treasury reasons. In the one case, the revenue was going to fall off because the price of beer was too high, and in the other, the Treasury said to the Chancellor, "Here is an article which is a necessity of life for every housewife, who has got to buy one or two boxes per week, so why not impose an extra halfpenny per box? We can get another £5 million this way," and, with that, they put on the duty.

Mr. Logan (Liverpool, Scotland Division)

It needs a good quality match to enable one to see the beer.

Mr. Eccles

Well, perhaps the hon. Gentleman knows more about matches alongside beer than I do.

Why do they want this £5 million at this particular time, when the cost of living has become a very serious question, and when it is of the greatest importance that anything which may give even the smallest push towards higher industrial costs should be avoided? It really seems that the Revenue is in a bad way. It must mean that the expenditure of the Government is so great that, even now, at the end of the boom, the Chancellor is scratching round so that, wherever he can find that any change in taxation can be made that promises to bring in very little more or will result in a very small drop in the source of revenue, a change has to be made. It is very fine Socialist planning; it is the first time we have had anything like it. This is a bad duty, and should not be put on at this time. There is no excuse at this particular moment in the trade cycle for raising the prices of the necessities of life. If it was absolutely necessary to get £5 million, it could have been got in another way.

Personally, I think the whole thing is quite unnecessary. After all, the Minister of Food lost £9 million in trading in potatoes. The Government are only getting back 50 or 60 per cent. of the loss which the right hon. Gentleman made in one series of transactions, and they are getting it out of the people by putting up the price of matches. It is certain that with more careful administration they could have saved £5 million over and over again. For all these reasons, I consider this to be a bad duty, and I hope that we shall go into the Division Lobby against it.

8.0 p.m.

Mr. Piratin

I hope that some Labour Members on this side will also voice their opinion on this matter, for it is a fact that no one can honestly make out a case for this increase either in the interest of the national economy or any other interest. It is for that reason that the right hon. Member for North Leeds (Mr. Peake) was able to quote at length that part of the Chancellor's Budget speech dealing with the question of matches. In that speech the Chancellor, unless he was speaking ironically—and we all have to be careful not to speak ironically because the OFFICIAL REPORT makes it look most awkward—tried to justify the increase on the basis of the increased cost of production. That was the only justification for it which he submitted on that occasion. Had he said that we were hard put to it for a few millions here and there, we would have listened to him on that occasion and subsequently, but he did not.

I wholeheartedly support the argument put forward by the right hon. Member for North Leeds in regard to the way in which the Chancellor could have met the increase in the cost of production if that were genuinely the reason for the higher duty. But, obviously, the Chancellor and his advisers could just as easily have seen the method suggested by the right hon. Member as he or any other hon. Member could, and, therefore, we are forced to the conclusion that that was not his intention.

I wish to raise a further point on this matter which has not been touched upon so far in this Debate and one which, of course, I do not expect hon. Members opposite to raise. It is the matter of profits. The firm of Bryant and May, of which everyone in this Committee and in the country has heard, made a profit of £785,000 for the year 1947–48 and paid a dividend of 16 per cent. free of tax. I am sure the Committee will be interested to know that for the previous year they only made a profit of £430,000. That means that they were able to increase their gross profit in one year by some £355,000. That is pretty good going and, in a way, confirms what the right hon. Gentleman the Minister of Health said in another capacity at the Labour Party Conference at Blackpool the other week—that private enterprise is doing very well under the Labour Government.

Mr. Erroll

Could the hon. Gentleman inform the Committee whether those figures represent gross or net profit?

Mr. Piratin

I said that they represented the gross profit and I also quoted the dividend of 16 per cent, free of tax which, as I said before, is not bad going for a firm like Bryant and May who are a well established concern and are no longer afraid of competition or of trading ups and downs. On that basis, therefore, when the Chancellor said that the cost of production had gone up, it may be that it was owing to some peculiar explanation of book-keeping. Quite frankly, I would like to know how it has, in view of the fact that this firm were able to increase their profits in one year by some 70 per cent. I have only taken the case of one firm, but I could no doubt cite others in the same way. I used the example of Bryant and May because theirs is a household name, and because that instance was sufficient for my purpose.

I believe that the Chancellor ought to try to establish his case more firmly, and that is why I opened my remarks by saying that I hope some Labour Members will also have something to say about this matter. The purpose of this increased duty can be construed in no other way than to raise some £5 million more money, and it is to be raised by indirect taxation. As everyone knows, indirect taxation falls most heavily on the poorly paid. Reference has been made to pipe smokers. I, like the right hon. Gentleman opposite, do not smoke a pipe, or cigarettes for that matter. But it is the case that many old age pensioners smoke pipes and that the extra halfpenny a day, or whatever it may be, falls equally on them as on the people to whom a halfpenny means nothing.

How can a Labour Chancellor of the Exchequer justify taxation of this kind, especially as in his Budget speech the right hon. and learned Gentleman said that, so far as revenue was concerned, we were not able to claim much one way or the other. In fact, one hon. Member on this side of the Chamber said that maybe we ought to have left well alone and left all taxes exactly as they were because the alterations made little or no difference to the Revenue. Had that been done, it would have saved many headaches, and I say in all sincerity that it might have saved many Labour seats—and Communist seats, too—at the elections which followed almost immediately. But it was not my Chancellor who introduced this Budget. I say quite seriously that I add my voice to those who have already spoken, and hope that Labour Members will speak their minds on this matter. It is not one on which the Chief Whip is operating with any great energy, and, therefore, I hope that hon. Members on this side will say what they believe. I also hope that the Economic Secretary, on behalf of the Chancellor, will take steps to delete this Clause, and to forget all about it.

Mr. Erroll

The tactics of the Communist Party are always strange and interesting. I am sure that no one expected today that we would receive from the hon. Member for Mile End (Mr. Piratin) the graceful tribute he paid to my right hon. Friend the Member for North Leeds (Mr. Peake) who opened the Debate on the Match Duty, and we certainly did not expect to hear from the hon. Member for West Fife (Mr. Gallacher) such glowing references to the old days of cheap goods and abundance under former Tory Governments. We were glad to be reminded that there was a time under Tory rule when one was given a box of matches when buying an ounce of tobacco which only cost threepence.

Mr. Gallacher

I think it was the absent Liberals who were the rulers at that time.

Mr. Erroll

The hon. Member did not make it plain which party was in power at the time; he said about 40 years ago, and I took it that he was referring to a period of Conservative government about that time. There must have been one about then. In addition to that, he was kind enough to put a stop to the references to phossy jaw made by a Labour Member below the Gangway by pointing out that that particular menace had been dealt with a long time before the occasion which the hon. Member had in mind. That menace had undoubtedly been overcome as the result of Factory Act legislation introduced by an earlier Conservative administration, and, therefore, we have cause to be grateful to Communist hon. Members tonight for what they have said about the party on this side of the Committee. I trust that in their new mood of willing co-operation they will bear with me while I deal for a moment with the profits of Bryant and May.

Mr. Piratin

It would be better if the hon. Gentleman would stick to the facts. I assume that he has read the Order Paper: if he has, he will have noticed that during the last few days there has been an Amendment down which we knew was not in Order, of course, but which indicated our policy on this matter long before the right hon. Member for North Leeds ever thought of it.

Mr. Erroll

We had noticed the Amendment and we had also noticed that, as usual, it was out of Order. We do not really expect Communists to learn democratic procedure entirely.

As to the profits of Bryant and May, it was noticeable that the hon. Member for Mile End was not prepared to say what was the actual figure of the dividend. He referred to the gross profit as a large figure of hundreds of thousands of pounds, and when he referred to the dividend he merely used a percentage. To have produced a proper comparison he should have given the figure for the gross profit and the actual figure for the total dividend distribution. Sixteen per cent. of the invested capital of a business may be a large or a very small dividend. One cannot possibly tell from the information supplied by the hon. Member. I would like to ask the hon. Member to tell us what the distribution of profit represented as a percentage of the capital actually employed in the business. I suggest it would be a very much more favourable figure. That is indeed the only true test. The figures quoted by the hon. Member are highly misleading and most tendentious, but very much what we would expect from him.

The hon. Member for Mile End referred to the increase in profits. Is not that possibly a sign of improved efficiency in management? Is it not just possible that the company deserves its increased profits? In introducing this matter to the House, the Chancellor said that the match makers would probably be faced with the necessity for increasing the price of matches in any case. Naturally, while one deplores any price increases at present, I think it is most significant that there has been no price increase in matches since the price control order for matches was introduced in 1940. To keep the price down to the 1940 level is a very creditable feat. The Minister of Transport, in addressing the railwaymen a few days ago, said that it was a fine thing that the railways had only put up their fares by 55 per cent. He forgot the match industry, as well as many other industries in the hands of private enterprise.

Mr. Butcher (Holland with Boston)

On a point of Order. I beg to move that candles be now brought in.

Lieut.-Commander Braithwaite

And matches, too.

Mr. Erroll

The fact that increased profits may have been earned will have been due to the drive to lower costs which the firm in question must have pursued. Faced with a controlled price for their matches, the only way in which they could maintain solvency was by more efficient methods of production and distribution. That those improvements were even more successful than they expected is shown by the increased profit, and reflects every credit on a firm which has done its best to supply matches to the public in this country for a very large number of years.

In his speech the Chancellor referred, if my memory serves me right, to the difficulty of increasing the price of a commodity such as matches by a small amount, and said that the match makers did not require a full halfpenny extra but only, say, one-tenth of a penny extra on a box. We are up against the familiar difficulty nowadays of the comparatively coarse price steps involved in a number of every-day commodities. One sees that in a number of other commodities such as newspapers, where the price is so small that any advance would necessitate an increase out of all proportion to what is required. Surely, it would have been possible for the manufacturers to get round their difficulties by putting fewer matches in the box and thus have achieved that fineness of grading which the relative coarseness of our monetary system does not permit at that particular level. In that way the price could have been kept down and the Chancellor could not have scooped in another £5 million of duty which we on this side of the Committee regard as unjustifiable.

8.15 p.m.

It is more than ever unfortunate that this duty should be coming along ruthlessly and callously, bumping up the price of matches, when the Committee on Resale Price Maintenance have issued an illuminating report demonstrating the difficulties in regard to the right prices for particular commodities and in making small variations in price. Whereas the price of 5¾d. for an article might result in a loss to the company, a price of 6d. may result in a wholly excessive profit. We have the same difficulty with matches. I do not think the committee's report refers specifically to matches, but all that they say applies with very great force to matches. It is most unfortunate that the Government should have missed or ignored altogether the opportunity of allowing a fine, carefully calculated price, which could have been initiated by the manufacturers, instead of going in for a much heavier price increase, the larger part of which the Government take for themselves. The figures that I have, and which are probably right, show that of the increased price of 6s. a gross the Chancellor takes 5s. 5d. and the industry only gets 7d. The Chancellor therefore takes a very big whack in this increase of a halfpenny a box.

To tie this increased tax to the argument that the manufacturers have got to put up their price, and that therefore the increase must be a halfpenny because that is the smallest practicable step, is singularly disingenuous when, as I pointed out, there are several ways of getting round the difficulty. There are interesting suggestions in the report of the committee on Resale Price Maintenance. There is the expedient of putting fewer matches in a box, and there are methods of offering different discounts for matches bought in larger quantities. One can get fine graduations of price on a dozen boxes, and even finer graduations on a gross. Surely a Government who are so wedded to bulk purchasing should be quick to see the advantage of encouraging people to buy a dozen boxes at once instead of only one. All these methods have been thrown overboard and ignored in the Chancellor's callous lust for more millions wherever he can get them.

Mr. Leslie Hale (Oldham)

I do not wish to follow in too great detail what has already been said by other speakers. I am not greatly impressed by the economic contribution of the hon. Member for Altrincham and Sale (Mr. Erroll) who said that the important matter is the amount distributed from profits and not the amount of profits. According to that argument, a firm which made a million pounds profit in a year and decided not to make a dividend at all would be entitled to a subsidy from public money because for once they decided not to distribute a dividend. I was not greatly impressed with the argument of the hon. Member for West Fife (Mr. Gallacher) who I was surprised to find quoting pleasant platitudes for once. Although it may possibly be true mathematically that many a mickle makes a muckle, it would require two billion mickles to make a muckle of this particular projected expenditure, and would involve each individual in this country striking 250 boxes of matches a day. No doubt, that would mean full employment in the match industry——

Mr. Gallacher

I remember when the sort of tobacco I am holding in my hand was 3d. and a box of matches was thrown in. Now the tobacco is 3s. 5d. and a box of matches costs 2d. That is both a mickle and a muckle.

Mr. Hale

The matter which we are discussing at the moment is matches. Incidentally, I gather that the hon. Member was referring not to tobacco, but to shag.

The hon. Member for Mile End (Mr. Piratin) is on much firmer ground when he says that this is an addition of £5 million to indirect taxation, and that we have to preserve a balance between direct and indirect taxation. Any increase in indirect taxation is one to which we should have regard. Nevertheless, I say quite frankly that when we are faced with the necessity of raising very large sums of money, then this is a tax which will not hurt anybody and really will not cause hardship to anybody; and to refer to it as callous and brutal and ruthless, as the hon. Member for Altrincham and Sale did, is really to make a mockery of the Committee's deliberations.

I rise only to put one or two small questions on one point in particular in the argument of the hon. Member for Mile End (Mr. Piratin). In his Budget speech the Chancellor opened the subject by saying that there really was a necessity for some increase in revenue for the match industry. He said it was because the price of their raw materials had gone up, although a good deal of the earlier part of his speech was devoted to the argument that the costs of raw materials generally were about to go down; and, as I understand it, the principal raw material of the match industry is timber, and cheap timber at that; and the whole of the indications at the moment are that the price of timber is about to go down. Thus they will not have the problem to face.

That being so, like the hon. Member for Mile End I tried to turn up some of the relevant figures. Bryant and May, to whom the hon. Member for Mile End referred, are, I understand, a subsidiary of the British Match Corporation who actually paid a bonus dividend last year—a very small one, it is true—in addition to their ordinary dividend. They paid a dividend of 8¼ per cent. and a bonus of 1 per cent. They made quite a good profit, after paying all taxation—and heaven knows that is fairly heavy—of over £300,000.

That seems to be a substantial sum and it is right, therefore, that we should ask the Financial Secretary what is the estimate of the sort of figure that will be available to this industry, what is the estimate of the amount they need and how has it been computed? We are told that the additional taxation will be 6s. per gross, that the amount to be taken by the Chancellor will be 5s. 5d. and that 7d. will be available for the industry and the retailer, although I imagine that the proportion returned to the retailer must be a very small one indeed. Thus we have something like 10 per cent. going to the industry. The amount for the Revenue is £5 million so presumably £500,000 is going to the match industry.

Before we give Parliamentary sanction to what is virtually a gift of £500,000 to the industry we are entitled to have some evidence that there is need for it. I do not want for a moment to dispute, and I quite accept at once, the principle that where we are controlling prices, and where we are to some extent controlling supplies, industry has a right to make representations and to say, "This is a matter which is affecting us harmfully and hardly and we have a right to demand an increase proportionate to the finance invested in the industry, to its turnover and so on." But so far no figures have been given, and all the figures I have been able to find indicate that the match industry seems to be in a singularly prosperous state. The shares of the British Match Corporation on 4th April, two days before the Budget, were quoted at 31s. 3d. to 33s. 3d.—rather lower than in 1945 but representing roughly the sort of figure that had prevailed over a long period. It seemed to be a pretty fair market value of their shares. Since then the shares have gone up by something like two or three shillings and now they are quoted at varying prices from 33s. 6d. to 35s. 6d.

Before Parliament agrees to a matter of this kind we are entitled to be told the figures, the estimates of the additional burdens being placed on the industry, and the estimates of the additional amounts that will go to the industry. It is in order to elicit that information that I have spoken on this subject.

Mr. P. Thorneycroft

I disagree with the first part of the speech of the hon. Member for Oldham (Mr. Hale) that this tax really will not hurt anyone at all. It is a tax on a necessity of life and there are plenty of people in this country—I do not know whether the hon. Member for Oldham is one—who find it extraordinarily difficult to balance their housekeeping accounts anyway. Any additional tax on any necessity of life is a burden.

Mr. Hale

May I intervene to make one point quite clear? I happened to do a little bit of shopping this weekend and I can say that the weekly ration of matches from the grocer who has supplied my not unsubstantial house for the last five years has been one box a week. My wife is not well-off and she has made representations to me on her financial situation from time to time, but I say that the additional halfpenny will not be decisive.

Mr. Thorneycroft

I compliment the hon. Member upon his housekeeping and upon his chancellor of the exchequer, but at the same time it cannot be gainsaid that there are many houses where they have more than one box of matches a week. This is a tax which, over the country as a whole, will yield a substantial amount—£5 million—on a necessity, and we cannot dismiss that sort of thing lightly. These sums mount up very much.

The other thing which the hon. Member said is one with which I agree. We shall certainly require—indeed, the whole Committee will require—a far more detailed account of what lies behind this than has been vouchsafed so far by the Chancellor of the Exchequer. As I understand it, the argument of the Government starts from the point at which the match industry said that their costs had risen by an amount which is equivalent to 7d. per gross. What I want to know is, what did the Chancellor do about that, what was his reaction to that statement and what did the Government do? Did they say, "We cannot have any price increase at all"? I thought the Chancellor of the Exchequer was against price increases. What suggestion did the Government themselves put forward? Did they consider, either by themselves or with the industry, the possibility of cutting the duty by 7d., because I should have thought that on the record of the match industry there was a very good case for that. Here was this industry which, with prices rising all round, had managed to hold its price steady over a very long period. No matter what the profits, everybody will agree that that is a good achievement. I should have thought the first reaction should be to help an industry like that to go on holding prices at the same level.

Was that considered and, if it was, why was it turned down? I think the Committee and the people who buy matches are entitled to an answer to that question. If that was not acceptable, were any of the suggestions put forward by my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) considered? I am quite sure that the match industry, faced with this problem, were not lightly going to put another halfpenny on every box of matches. Nobody does that with a commodity if it can be avoided, for there is competition to face. What other suggestions were considered? Were any other suggestions considered? I think we are entitled to know what those suggestions were and why they were turned down.

It may be that there is a difficulty about reducing the number of matches in the box. I do not know. Obviously those things must have been considered before the argument was brought forward that an increase of 7d. per gross had to be accepted. What were the increases in costs? Could we be told? Is it the price of timber or the labour costs, or what is it? I accept the Government's statement that there has been some increases in costs, but I think we should know what precisely they were. That is information which, I think, we ought to have.

I am bound to say that the whole Government approach to this matter does rather make nonsense of the attitude of the Chancellor of the Exchequer about increases in prices. Here we have a case where there is an increase in price and in cost of quite a small amount. Instead of resisting it with all the weapons at his disposal, many of which have been mentioned today, the Chancellor appears to welcome it with open arms. There is not only an increase of 7d. a gross, but he puts another 5s. 5d. on as well; and then he puts up the cost of lighters as well in an attempt to be fair all round. In such circumstances, to say the Chancellor of the Exchequer is trying to depress prices and costs is utter hypocrisy. [Interruption.] Hypocrisy is a general term of abuse. As I understand it, we must accuse the whole Government—as one does, indeed, quite readily—but not any specific member of it. If we could have that much more detailed information as to what efforts were made to assist the people of this country by holding the prices of these matches down, of what suggestions were put forward to that end and why they were turned down, I think the Committee would be much better able to come to a decision on the matter.

8.30 p.m.

Mr. Solley (Thurrock)

I think some hon. Members of the Committee may like to know the views of the Parliamentary group of Labour Independents. Those hon. Members on this side of the Committee who know, as they ought to know by heart the contents of "Let Us Face the Future" do not need to hear my speech, for they know what the views of our group are, namely, that this is an additional increase in the cost of living and, as such, must be opposed by all those who took seriously the promises upon which this Government were elected in 1945. It seems to me that the only people who can get any satisfaction at all out of this increased cost of matches, and who will gain anything, are the shareholders in the match companies. I notice with considerable interest that the journal which certainly will be acceptable to hon. Members opposite, the "Stock Exchange Gazette," on 6th May this year—and it was a good tip apparently—said this: The company"— that is, the British Match Corporation— will obtain some benefit from the extra halfpenny on a box of matches in the Budget, and this aroused hopes of a more favourable dividend policy. It seems to me an extraordinary thing that a Socialist Chancellor of the Exchequer should apparently have as his main object the spreading of gladness and joy towards those who read and contribute to the "Stock Exchange Gazette," and the spreading of dismay to the working class people of this country through an additional burden which they have to bear.

It seems more extraordinary when one examines the figures of profits of some of the companies. Reference has been made by my hon. Friend the Member for Oldham (Mr. Hale)—I hope he will allow me to call him my hon. Friend because we are still friendly in a Socialist way——

Mr. Hale

Is this an attempt to compromise me?

Mr. Solley

My hon. Friend mentioned some figures relating to the British Match Corporation. He gave round figures which, with no disrespect to him, seemed to me not to give an accurate picture of the profits of the Corporation. I should like to go into more detail. These are the official figures. In the year ending 30th April, 1948, the gross profits were £1,912,659. Incidentally, since the hon. Member for Monmouth (Mr. P. Thorneycroft) talked about the percentage of the gross profits of match companies compared with their capital, it is interesting to see that the capital of the British Match Corporation is £6,712,000. So it would appear that the gross profit is just under a third of the issued and total capital. The net profit after tax is £826,349, which is a pretty substantial percentage of the issued capital. The amount which served the purpose of dividend was £493,498. I must confess that if I did not know the Chancellor of the Exchequer better—and we all agree, at all events, on one thing: that he is a man of honesty and integrity—I should have thought he was shedding crocodile tears about the cost of production which the British Match Corporation and similar corporations were meeting.

We must face up to this problem, that in spite of the increase in the cost of production it is essential that that increase should not go towards increasing the profits still further, but that any increase of costs should be met out of existing profits. Indeed, if that policy were to be pursued, not only would it be unnecessary to have taxation of this kind but wages could be increased by taking a slice out of the profits of companies such as the British Match Corporation. It therefore seems quite clear that if hon. Members on this side of the Committee want to face up to their responsibilities, as I am sure most of them would like to do, they can do only one thing, and that is to voice an objection to this further increase in taxation which will be met mainly by the ordinary people of this country.

I know it can be argued: "This is a small matter. It is only some £4 million or £5 million." But here we are dealing in Committee with these small matters item by item. I should be out of Order if I were to say that all these additional items added together make a total sum which could be avoided by a complete switch in our policy commitments. I am not at liberty to enlarge on that, but that is a complete answer to those who say: "We must have taxation. We must have this money. Four million pounds does not matter. The working-class can pay and the Stock Exchange can make hay while the sun shines." I sincerely hope that as a result of this Debate there will be a little sorrow and a little rain instead of sunshine in the Stock Exchange tomorrow.

Mr. Jay

I am very glad to have this opportunity to explain the reasons why we made this increase in duty. In the first place, we were obviously in search of revenue; we had to have revenue in this Budget if we were to maintain the food subsidies, the health services, and all the other services to which we are committed, and at the same time not relapse into a Budget deficit, for all the reasons with which the Committee is familiar. When we looked round to find possible sources of revenue we discovered that in the match industry the facts were roughly these. First, as the hon. Member for Altrincham and Sale (Mr. Erroll) said quite rightly, the price of matches had not risen since 1940, and were therefore at a comparatively very low level. Secondly, since before the war profits in the match industry had been going down. The hon. Member for Mile End (Mr. Piratin) and one or two others quoted some profit figures. I also have studied the profits of Bryant and May, Limited, and what those hon. Members did not say was that as far as Bryant and May, Limited, are concerned, on the basis of profits earned for dividend the figure had been going down fairly steadily ever since 1938, and the dividend paid had also been going down. I think we must remember that in order to get the figures in perspective.

Next, a rise in the cost of materials and labour had also been going on fairly steadily. The hon. Member for Monmouth (Mr. P. Thorneycroft) asked what those costs were. They were almost all costs, which have risen substantially, in timber and in labour. Those rises in cost had reached the point at which there had to be some rise in price if the additional costs were to be covered. I can assure my hon. Friend the Member for Oldham (Mr. Hale) that the mere word of the match trade was not accepted for that. A very careful and rigorous examination of these figures of costs was made, and we were satisfied that the rise was genuine.

Mr. Hale

The dividend in 1936 was 25 per cent. plus a bonus of about 18⅔ per cent. Surely my hon. Friend does not really suggest that it is in the public interest to maintain figures so high as that, and that that sort of thing ought to be permitted to continue?

Mr. Jay

I did not say that that or any other figure of dividend should be maintained. I was merely stating the fact that the dividend of Bryant and May Limited had come down since 1938. There had been a simultaneous rise in costs, which had been examined and been established to be genuine. If there was to be a rise in the price of matches there could not, as hon. Members have pointed out, in practice have been a rise of anything less than a halfpenny a box. Had there been a rise of a halfpenny a box and all the extra profit had gone to the manufacturers, they would have enjoyed an enormous extra profit.

Mr. Piratin

On that point——

Mr. Jay

I do not think I can give way just now. We were unwilling that an increase in profits of that size should accrue to the manufacturers. Therefore, we came to the conclusion that the best arrangement was that there should be an increase in the price of a halfpenny a box, which corresponds, as the right hon. Gentleman the Member for North Leeds (Mr. Peake) has pointed out, to 6s. a gross boxes, and that of that 6s. gross increase much the greater proportion should be paid into the Exchequer and only the very small fraction of 7d. out of that 6s. should accrue to the match manufacturers.

Mr. Piratin

I am obliged to the hon. Gentleman for giving way. This is a very serious matter, in which the hon. Member for Oldham (Mr. Hale) and others will be interested. How did the Treasury decide that 7d. per gross boxes was the appropriate amount to provide for the match making firms in order to help them to meet the costs of production?

Mr. Jay

I was just coming to that. We made an arrangement by which out of the 6s. the sum of 5s. 5d. would accrue to the Exchequer and only the small proportion of 7d. to the match manufacturers. That 7d. was the amount which it was estimated, after the very rigorous examination of the manufacturers' figures of which I have spoken, was necessary to cover the additional costs of production. That we verified to the best of our ability. That was how the figure of 7d. was arrived at.

Mr. Pickthorn

It is not very helpful to the Committee for the hon. Gentleman to say "additional costs" unless we know the date of the basic line. Additional as compared with what date?

Mr. Jay

Over the period in which the steep rise in costs had occurred. I could not give the hon. Member an exact figure in years; but we came to the conclusion that that was the addition in costs which could justifiably have been covered.

The hon. Member for Chippenham (Mr. Eccles) asked whether there was an inconsistency here between our policy in the case of matches and our policy in the case of beer. What he had forgotten was that one of the main reasons for selecting beer for a reduction in price, which he represented as being inconsistent with the rise in the price of matches, was that by making the reduction in duty we contrived that the contribution of £4 million should come from the brewers' profits towards the benefit of the consumer; and that could not have been achieved in any other way. That was one of the main purposes of that change. Whereas with matches, by making the increase in the duty, we have contrived that 5s. 5d. out of the 6s. should accrue to the Exchequer rather than to the manufacturers' profits.

Mr. Eccles

Having listened to what the hon. Gentleman has just said, I should like to ask him whether he will now abandon the argument of the Financial Secretary that the reduction in the price of beer was made for the purpose of lowering the cost-of-living index?

Mr. Pickthorn

Sitting on the barometer.

Mr. Jay

Not at all. If I am not out of Order may I say the two are perfectly consistent. We wished to make a reduction in price and we wished a contribution to that reduction to come from the brewers' profits as well as from the Exchequer; therefore, the two are perfectly consistent. For all those reasons, in the case of matches we decided on the solution which is embodied in the Clause, which will achieve three results simultaneously. In the first case, it solves the problem that was confronting the trade, of increasing costs which had to be met somehow; second, it has secured for us an additional £4.6 million of revenue which had to be secured from some source or other; and, finally, it involves a rise in the price of a commodity which, as I say, has not risen at all since 1940 and which, as my hon. Friend the Member for Oldham rightly said, is, in all the circumstances, no considerable burden.

The right hon. Gentleman the Member for West Bristol (Mr. Stanley), who has shown a lot of interest today in the cost-of-living index, may be glad to know that this proposal affects the index to the extent of only 0.1 of one point. For all these reasons I must ask the Committee to reject the Amendment, and to oppose the new axis between the Tory Party, the Communist Party and the new Independent Party.

8.45 p.m.

Mr. Stanley

I sincerely regret that there has not been a greater attendance of Members on the Government benches to hear what the Economic Secretary to the Treasury has just said. The lesson which I hope Members opposite who are present will remember, and which they will do their best to make known among their less fortunate colleagues who are not here today, is not to trust the kind of figures which, until now, have been put out as their party propaganda. Here we have the hon. Member for Oldham (Mr. Hale), the hon. Member for Mile End (Mr. Piratin) and the hon. Member for Thurrock (Mr. Solley) providing, no doubt from wholly different sources, what appear to be the same figures, and quoting instances of what, I quite agree, would appear to a casual listener to be rather high profits.

Mr. Solley

Would not the right hon. Gentleman agree that whatever the source from which the figures come one thing is certain, that as a result of the Budget, in which this tax was proposed, there has been an increase in the Stock Exchange prices of match companies shares?

Mr. Stanley

Yes, I am quite sure that that has been the result, but I was about to point out that the hon. Members I have just named, have, with great sincerity, because they are trained to do it as part of their usual publicity, produced vast figures in an attempt to show that the companies concerned were making extravagant profits. I admit that the figures, which I heard for the first time, were impressive. We heard of the British Match Corporation making a gross profit of £1,900,000, with a net profit of £800,000 and being in a position, after contributing a substantial amount to reserve, to distribute a dividend of 16 to 17 per cent. which, on the face of it, would appear to be wholly satisfactory and, some people might say, a result which, in the circumstances of today, was rather too satisfactory.

But when the matter is properly examined by unbiased minds, intent only on arriving at the economic truth, what do we find? We find that this Corporation, which would appear to be doing so well, and which would appear to be the subject of the envy of many of us, is, in fact, almost in its last stages. Were it not for the fact that the Government, by this Clause, will enable this Corporation to have its proper share of another £500,000, no one could say what the future of the Corporation would be. That shows the very great danger of relying too much on the sort of figures of profit which have been quoted tonight. I have no doubt that what happened is that the Economic Secretary has been analysing these figures of profit and dividend on the right basis—the basis of capital employed in the Corporation rather than issued share capital. It is on that basis, a basis which has not yet been disclosed to us, that no doubt he has arrived at the conclusion that it is impossible to allow the British Match Corporation or any other match manufacturers to struggle on under the circumstances which they are facing today.

That is a very valuable lesson and I hope it will sink in with hon. Members opposite; but valuable as the lesson is, it is hardly so valuable as to cost £5 million at the consumers' expense. Although we accept fully the hon. Gentleman's analysis of the statistical position of the match industry, we accept his conclusion that without this further addition it cannot be expected to combat the diverse circumstances by which it is faced, circumstances which, as far as we can make out, it was already facing in the year in which it made the profit which has been quoted by hon. Members. I did not gather that this was something new, something which had occurred in the last year and to which, therefore, the figures were not attributable. We accept all that, and that something has to be done to help the match industry in its difficulties, but could it not have been done at a much cheaper cost to the consumer? No real answer has been given as to whether, if the purpose was to enable the match industry to survive, it would not have been cheaper to have done it by reducing the duty rather than by increasing it, and by allowing it by this reduction to reach the figure which was necessary.

We are, of course, forced to the conclusion that, just as the Financial Secretary tried to find some humanitarian reason for the reduction in the price of beer, that it was helping the beer drinker and not increasing the revenue, so the Economic Secretary has to search for a humanitarian reason for the increase of this duty, which he says is to help the poor match industry and not to increase the revenue. Of course, the fact is that in both cases there are signs of the desperate search which the Treasury has got to make for revenue. So desperate was the search that in one case, in order to maintain consumption, revenue has got to be reduced and in another case, where necessities are concerned, people have got to pay more, and they arrive at the same result by an increase in the duty. It is a tragic commentary, but this is the situation at which we are arriving at the end of a trade cycle, and this situation is reached in the days when the revenue is more buoyant than it may well be within the next 12 months. It is because of that, and because we believe that the help to the match industry, which we do not dispute, could have been given in other ways and at much less cost to the consumer that we must oppose this Clause in the Division Lobby.

Mr. Piratin

I want to make two further points. I am sorry to take up the time of the Committee, but I must say a word in reply to the speech of the Economic Secretary following a number of contributions from both sides of the Committee. The hon. Gentleman's reply was very unsatisfactory. First, I should like to put a question to him which I hope he can answer. Much play has been made of this suggestion that it is impossible, with a small article of this kind, to increase the price by a fraction of a halfpenny, the lowest unit recognised in our money, although in many stores they still have articles which include a farthing in the price. Be that as it may, the ordinary box of matches, which cost 1½d., is to cost 2d., but a box of Swan Vestas, which cost 3d., now go up to 4d. Surely if ½d. is the smallest unit, that kind of match should have gone up from 3d. to 3½d.

There is one further point I want to make. We have been told that the Chancellor hopes to get from this tax £5 million in a full year and £4.8 million in the current year. My computation is that if, of the 6s. increase per gross, 5s. 5d. is revenue and 7d. goes to the manufacturers, 7d. being roughly one-tenth of 5s. 5d., therefore the Inland Revenue gets £5 million and the manufacturers get £500,000. Hon. Members on this side of the Committee are entitled to ask whether the Minister is satisfied that the manufacturers of this commodity require as much as £500,000 to make up for the increased cost of manufacture.

Mr. Hale

It is 5 per cent. interest upon £10 million.

Mr. Piratin

I am not in a position to accept the figures which have been given to us, but the right hon. Member for West Bristol (Mr. Stanley) has told us that he is prepared to accept them, and he is entitled to do so. I refuse to believe that the people need to make a contribution of £500,000 to help the match manufacturers to make profits of the substantial kind that have been referred to. If the Economic Secretary would like to make some comment on this point, we shall be glad to hear him.

Lieut.-Commander Braithwaite

I was surprised that the Economic Secretary did not attach more weight to the amount of disapproval which has been aroused in the Committee since we started to discuss the Clause. The opposition has been vocal in some quarters and silent in others over almost the entire Committee. First of all, we had the objection of the Communist Party. It is understandable, because they would naturally be allergic to increasing the cost of anything that is inflammatory. Then we had the hon. Member for Thurrock (Mr. Solley) achieving the state once claimed by the Financial Secretary as that of "sitting pritty." We had the silent disapproval of the Liberals and the only friend the Economic Secretary has had so far is the hon. Member for Oldham (Mr. Hale). I do not think even he would describe his support as wholehearted. He expressed his anxiety at the £500,000 which would go to the match manufacturers. His approval was confined to the tax on the box of matches and he said there was nothing very much in that. His old-age pensioners will pay it, with the hon. Member's full approval.

No one has dealt with the argument which was launched at the commencement of this discussion by my hon. Friend the Member for Chippenham (Mr. Eccles). The Financial Secretary to the Treasury earlier expressed the Governernment's objective as an endeavour to steady the cost of living. Matches are included in the cost-of-living index figure, and by this method their cost is being raised. There is no doubt about that. On these benches we quarrel most of all with the concluding words of the speech of the Economic Secretary. He ended by saying that this money had to be obtained. We deny that entirely. It is suggested that the old-age pensioners of Oldham have to be taxed on their matches in order to help to make good the £9 million loss upon the ridiculous machinations of the Minister of Food. Had Government administration been run with any efficiency at all, no increased taxation of any sort or kind would have been necessary in this Budget. To inflict upon the poorest people in the community, when they are fond of smoking, this additional impost will stink in the nostrils of the electorate when they get an opportunity of expressing their opinion.

9.0 p.m.

Mr. John Lewis (Bolton) rose——

Lieut.-Commander Braithwaite

Those were not my final remarks. I am glad, however, that they were impressive enough to make the hon. Member for Bolton (Mr. J. Lewis) rise in reverence. Very soon now hon. Gentlemen opposite will have to justify all these actions. Are they well satisfied that in supporting this tax they are supporting something which is essential to the proper conduct of the finances of the country? Do they really believe that this £5 million could not have been saved by reasonable economy and more efficient administration in one field or another? If they are not convinced of that, there is only one thing for them to do, including the hon. Member for Bolton, to whom we hope to listen in a minute or two, and that is to flee from the wrath to come by joining us in the Lobby in a few minutes' time and voting against this increase.

Mr. J. Lewis

The hon. and gallant Gentleman the Member for Holderness (Lieut.-Commander Braithwaite) and the party which he supports have been a little over clever in the arguments they have advanced. In a sense they had the effect of cutting off the match manufacturer's nose to spite the Government's face. One thing which has been made clear is that the smallest practical denominator of increase per box of matches is a halfpenny. From that point of view, unless there had been some increase, it would not have been possible in any circumstances for an allowance for increased costs of production or materials to be made to the match maker. The right hon. Gentleman the Member for West Bristol (Mr. Stanley) hinted that he thought the Government might do it in some other way, but he did not say what he meant. Was he suggesting granting a subsidy to the match maker or was he suggesting that some other means should be adopted whereby the match makers could recover the cost of their material labour?

Mr. Stanley

Would it not have been possible to reduce the excise duty by the equivalent of £500,000? Would not that have had the same effect for the manufacturer while having no effect on the price to the consumer?

Mr. Lewis

That is the fundamental difference between those of us who sit on this side of the Committee and hon. Gentlemen opposite. Having regard to our programme of social services and taking into account the social needs of our people, we do not believe that it will be possible in the near future to reduce taxation. When putting forward the point of view of the Conservative Party regarding the reduction in the price of beer, the right hon. Gentleman said that the purpose was to increase consumption. He cannot have it both ways. If, when increased revenue is being obtained by the Government from this source the Government decide in their wisdom or otherwise, in accordance with the point of view expressed here today, that they should take into account the difficulties or the financial position of the match makers, it is a little unreasonable for the right hon. Gentleman to advance an argument that, whereas he feels the same way as the Government do about the economic position of the match producers, nevertheless he will go into the Lobby to vote against their getting an increase of 7d. per gross.

Hon. Members on this side of the Committee have referred to the £500,000 as if it were all going into the pockets of the producers. Out of that sum has to be paid Income Tax; if any part of that sum is distributed, 25 per cent. will have to be deducted from the distributed amount; and if any of what remains is placed to reserve, it will still be subject to taxation at 12½ per cent. In effect, it only means a proportion of the £500,000, for the Chancellor himself will retain a considerable part of it. It is not the slightest use the right hon. Gentleman protesting that, because in the interests of the consumer he feels that this revenue should not be increased, he is not at the same time dealing a deadly blow to the interests of the match makers. If the party opposite go into that Lobby and vote against this increase, it will be interpreted by the match industry as a gesture on the part of hon. Gentlemen opposite that they do not intend the industry to get any benefit from the Government proposals which were framed to take into account the increased cost of production.

Mr. W. Fletcher

We have had an interesting but rather mixed lesson in economics. I heard an interjection from the hon. Member for Oldham (Mr. Hale) when we were discussing the point that the Economic Secretary put forward about the amount which it was carefully calculated, after deep research, was to compensate for the increased costs of material, etc. for the match industry. The hon. Member for Oldham interjected "Five per cent. on £10 million." What possible relationship is there between a calculation of 5 per cent. on £10 million and the paying to the match makers of something directly related to the increased cost of the products they are using in producing matches?

Mr. Hale

If the hon. Member is asking me a question; I will give him the answer. If, as we have been told already, the companies are all making a profit, the answer is that it is an addition to their distributable surplus. Therefore it is right that we should answer the question put by one hon. Member opposite—what is the capital involved in the industry, what relationship does this bear? The British Match Corporation has a total capital of £6 million. I assumed there were other companies in the industry, which would bring it up to £10 million. In other words, as far as I can judge, it means an addition of about 5 per cent. of available dividend.

Mr. Fletcher

That is not what we were told. We were told by the Economic Secretary that the profits of the matchmaking companies had been declining steadily for a number of years, and also, of the capital of the British Match Corporation, we have been told at last from the Front Bench that £6 million represents only the original capital and does not take into account reserves.

Leaving that point aside, we had from the Economic Secretary, possibly inadvertently, one great flash which showed us what is really going on in the minds of the Government; one flash in an otherwise considerable degree of obscurity. That was when he said that this was a cheap article and, because it was a cheap article, it was something that should be taxed. It showed the desperate straits into which the Government have come. Surely on their own ideals they should rejoice that an article of daily use to practically everybody in the country is cheap. Yet they are forced by the financial impasse into which their bad administration has driven them, to take an article which should go to everybody in the country at the lowest possible price and, just because it is cheap, immediately to clamp a tax on it. If there ever was an indication of the abandonment of the whole of the policy which they have put over to the country of making life easier, then the attraction to them to put a tax on this necessary article is the greatest give-away of the straits in which they find themselves.

Mr. Harold Roberts (Birmingham, Handsworth)

This Debate has been a most disquieting revelation of the state of the finances of this country. To think that the Government find it necessary to resort to this expedient for a small amount is an indication of the great gravity of our general situation. The Debate has been one of the most remarkable that I have heard. Of many points of interest, perhaps the most interesting was the vindication of "big business" delivered by the hon. Gentleman who addressed us a few minutes ago. How often has one heard ignorant people talking about the large profit of this or that concern, quoting perhaps the gross profit and not looking carefully at the net profit. Again, ignorant people seem to think that the dividend is the important thing, whereas what is important is what is paid. Now we have learned that the half million is not really a half million, and that by the time Income Tax and other taxation is paid, and something is put to reserve, there is not much left.

The terrible threat has been uttered to hon. Members on this side of the Committee that, if we dare to go into the Lobby in opposition to this duty, we are no friends of the match industry. With a General Election coming on, it is a terrible thing to have it said against us before an enraged electorate that we are no friends of Bryant and May, but we have got to face it. On the other hand, how cheering it is for hon. Members opposite to know that, when they go to the country, there will not be any question of their being low fellows who do not understand high finance. Not at all. There are Members on those benches who, on this subject, could give us lectures on high finance, reserves, the Profits Tax and so forth, with the best of them.

I confess that I have never heard the Government benches in such a tangle. We learned this afternoon from the Financial Secretary that the cost of living is the important factor. This evening, we learn that this duty will involve an increase in the cost of living, though certainly only up to a decimal point. When it is said by hon. Members on this side that this is simply a Treasury device in a desperate search for revenue, there is grave shaking of heads. What it is except a search for revenue I have not yet discovered.

Having got that discrepancy, we then have the speech of the Economic Secretary, who, one would have thought, would have been able to make for himself the points which had to be made by back benchers about the finances of the match industry. We have had figures bandied about bit by bit and here and there, but I have never yet heard what the actual capital employed in the business is, and the speech of the Economic Secretary seemed to me to make confusion rather worse confounded. The fact is that this is the Nemesis of a great deal of loose talk and foggy thinking that has gone on for years, and now at last we are seeing where it leads. It leads, of course, to the Government becoming bogged in a hopeless morass of absurdities and contradictions.

Mr. York (Ripon)

I have heard 11 Budgets, each one of which has imposed increases in taxation in one way or another, and I think it is about time that we saw some change in this procedure. Therefore, when one has the opportunity, as one has on this particular Finance Bill, of attacking various increases in taxes, it is one's duty to do so.

I consider that this has been a particularly salutary Debate; indeed, the fact is that all the proceedings on the Finance Bill have been extremely salutary. We have had a very fine lesson from my hon. Friend the Member for Flint (Mr. Birch) on the question of profits in the motor industry, and we had a second lesson this evening from my right hon. Friend the Member for West Bristol (Mr. Stanley), from which one would have thought that all hon. Members opposite would now begin to realise that what they have been saying for the last 20 or 30 years was only moonshine, palpably and provably false.

Still, we have a few old stalwarts left, perhaps now confined to the non-crypto "cryptos," such as the hon. Member for Thurrock (Mr. Solley), who still go on saying that prices can be reduced if profits are reduced. But on this occasion, we have a fine, powerful, and, indeed, a large body of support for these bloated capitalists from all over the Socialist benches, saying that that is all nonsense. We get a wonderful defence from the Economic Secretary of the so-called high profits of the match industry, and we get another stirring defence from the hon. Gentleman the junior Member for Bolton (Mr. J. Lewis). Perhaps one day we may get a little commonsense from the whole of the Labour movement, for that, indeed, would be a wonderful thing. But, of course, by then their day will have gone, and their place will be taken by the new "Wee Frees" who are already forming their ranks behind the Government Front Bench.

9.15 p.m.

I feel that we have really come to a time when all increases in taxation must be opposed. It is monstrous that today we should be imposing a duty which is equivalent to about 5s. per family per year throughout the country, and that at a time when we know that the cost of living is rising rapidly. It is not only foolish, but quite wrong. I hope that my hon. Friends will take this matter to a Division because I believe it is entirely wrong to increase the cost of living, even though it is only by, say, a halfpenny a week, that is, if we are as fortunate as the hon. Member for Oldham (Mr. Hale) who only uses one box of matches a week. I, personally, find that quite an inadequate allowance. In my case, the extra cost involved would be more like three halfpence a week. I thought it was entirely against the general policy of the Government to increase the cost of living at all. I shall vote against this increased duty because I dislike this unholy alliance between the great capitalists and the Socialist Party. I also dislike the increase in the cost of living, and, above all, I dislike all increases in taxation.

Mr. Selwyn Lloyd

I am so completely dissatisfied with the answer given by the Government that I must say a word or two to the Committee on this matter, even though I know that hon. Members are anxious to divide. The only friend which the Economic Secretary really had was the hon. Member for Oldham (Mr. Hale), and he was only friendly in half his speech. During his words of commendation, he said that this increase would really not hurt anybody. I cannot believe that to take £5 million out of the pockets of the people is not going to hurt anybody, because, if that is the case, it would be an argument for putting an extra £5 million tax on almost any commodity in daily use. That being so, I utterly reject the suggestion that £5 million extra taxation will not hurt anybody.

The next argument which was considerably canvassed in the Committee was that relating to profits. The Chancellor cannot really be very surprised that hon. Members on his side of the Committee should get up and protest, because he really started the riot when he recently used the expression "Frightfully high profits" during his speech on the Second Reading of the Finance Bill. I am quite convinced that the right hon. and learned Gentleman must since have regretted using those words. [HON. MEMBERS: "No."] Well, if he does not, he certainly should regret using them because it has led to the kind of speech which has been made in this Committee today by four or five hon. Members who have talked about the frightfully high profits of the match industry. When the Economic Secretary came to give the Committee the facts he said that the profits were not frightfully high in the match industry, and that, in fact, they have been diminishing over a period of years.

Mr. Jay

I did not say that profits were not high. I merely said that they had come down.

Mr. Selwyn Lloyd

Where are we getting to now? The whole case for this increased duty, as the Chancellor said in his Budget speech, is that he wished to help the match industry to recoup themselves for their increased costs. That was the sole purpose, because he thought it was equitable to give them half a million, and, in giving them that assistance, he was taking advantage of the opportunity to take £4,500,000 for himself. The primary cause for this increase was that the match industry needed assistance in these difficult circumstances. If we now hear that the profits of the match industry are high already, what is the need for this increased assistance to them? The Economic Secretary has completely given away such case as there was, just as the right hon. Gentleman the Financial Secretary gave away the case with regard to the Beer Duty. I took down his words. The right hon. and learned Gentleman the Chancellor of the Exchequer was not in the Chamber at the time, but the reason for reducing the Beer Duty was because the Chancellor wanted to reduce the cost-of-living index figure. Here we have the match duty. Does the Chancellor wish to reduce the cost-of-living index figure? If so, why take an extra £5 million out of the pockets of the people in this country?

The Committee are left in a state of complete obscurity as to what the right hon. and learned Gentleman really wants to do. I suggest that the Government have completely failed to give the Committee the facts to which we are entitled. What was the level of profits in the match industry? What were their costs? What were their datum years? How have their costs increased over the years? What alternative methods were there? I understand that the price of a box of 50 matches was 1½d. If the burden of putting 50 matches into a box could not be supported by the match industry, why not put in 48? With matches, owing to their smallness, that would be a very easy way of reducing the size of the product in accordance with the cost. It could not have been easier than that the match industry should put fewer matches into the boxes. Another way, as has been suggested, would have been to have reduced the duty to make up the 7d. However that may be, we have not any facts or figures to justify this step which the Government have taken. Therefore, I shall very gladly vote against this increased duty, knowing what in fact everybody else should know, that this is a part of the cost of Socialism.

Mr. Pickthorn

Surely we ought to have an answer to the speech that has just been made. Surely the Chancellor cannot really think that he is treating the Committee decently in this matter. The whole Debate has been conducted upon the basis of partial figures given about the costs and the profits of the match producing firms. The most important details have been asked for repeatedly. We have asked repeatedly on what years is it that the comparison is made when we are told that, after an elaborate inquiry, the Treasury agrees that costs have gone up very considerably. That is, a perfectly fair question on a perfectly simple matter of fact, the answer to which I should have thought the Economic Secretary could hardly have come into the Chamber without having in his head and with which certainly he ought by now to have been provided. Surely the Chancellor cannot think it right that that question should not be answered. It is clearly relevant, and it clearly ought to be before us. Are we not to be given an answer upon that point.

There is a second question of fact which I wish to put. I apologise if I am mistaken; I put the question because I think I am helping the Economic Secretary. [Laughter.] That is quite serious. I do not debate unfairly; if I thought I was trying to catch him out I would put it in that way. He said that this additional halfpenny would put up the cost-of-living index by 0.1. Surely he must have got that wrong; it seems a surprisingly large amount. I think he must have meant.01. I am not sure whether you were in the Chair, Mr. Bowles, but he said 0.1 and what I think he meant to say was.01. We ought to be told which he meant.

Mr. Jay rose——

Mr. Pickthorn

Let me finish my question and then it can be answered properly. As a supplement to that question, may I put this to him? On the subject of the Beer Duty we have been told that the essential reason—at one time it was essential but at another time it was only an incidental reason—was to keep down the cost-of-living index figure. My question is: how much is that going to affect the cost-of-living index? The penny off the pint of beer will affect the index figure by what? By 0.1 or by.01.

or what? By more or by less than the halfpenny on the box of matches? That is clearly a relevant question—and it is simple, technically—which must have arisen in the course of the inquiry. It is not proper that the conscious rectitude of the Chancellor of the Exchequer should permit him to expect the Committee to decide a question of that sort without giving the Committee this kind of relevant information.

Mr. Stanley

When the Economic Secretary was at one time asked to give an answer the right hon. and learned Gentleman indicated that he was prevented from doing so because another hon. Member was in possession of the House. Surely now that there is no hon. Member in possession of the House he will answer the question and particularly will clear up this little point about where the dot comes in.

Mr. Jay

I should like to help the hon. Member over his difficulties with the 0.1. I said 0.1 and I meant 0.1.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 279; Noes, 136.

Division No. 167.] AYES [9 30 p.m.
Adams, Richard (Balham) Burke, W. A. Evans, E. (Lowestoft)
Albu, A. H. Butler, H. W. (Hackney, S.) Evans, John (Ogmore)
Alexander, Rt. Hon. A. V. Callaghan, James Evans, S. N. (Wednesbury)
Allen, A. C. (Bosworth) Carmichael, James Fairhurst, F.
Alpass, J. H. Castle, Mrs. B. A. Farthing, W. J.
Anderson, A. (Motherwell) Champion, A. J. Fernyhough, E.
Attewell, H. C. Chetwynd, G. R. Fletcher, E. G. M. (Islington, E.)
Awbery, S. S. Cluse, W. S. Foot, M. M.
Ayles, W. H. Cobb, F. A. Forman, J. C.
Ayrton Gould, Mrs. B. Cocks, F. S. Freeman, Peter (Newport)
Bacon, Miss A. Coldrick, W. Gaitskell, Rt. Hon. H. T. N.
Baird, J. Collick, P. Ganley, Mrs. C. S.
Balfour, A. Collindridge, F. Gibbins, J.
Barnes, Rt. Hon. A. J. Collins, V. J. Gilzean, A.
Barstow, P. G. Colman, Miss G. M. Glanville, J. E. (Consett)
Barton, C. Comyns, Dr. L. Gooch, E. G.
Battley, J. R. Cook, T. F. Gordon-Walker, P. C.
Bechervaise, A. E. Corlett, Dr. J. Greenwood, A. W. J. (Heywood)
Benson, G. Cove, W. G. Grey, C. F.
Berry, H. Cripps, Rt. Hon. Sir S. Grierson, E.
Beswick, F. Crossman, R. H. S. Griffiths, D. (Rother Valley)
Bing, G. H. C. Cullen, Mrs. Griffiths, W. D. (Moss Side)
Binns, J. Daggar, G. Gunter, R. J.
Blackburn, A. R. Daines, P. Guy, W. H.
Blenkinsop, A. Dalton, Rt. Hon. H. Haire, John E. (Wycombe)
Blyton, W. R. Davies, Edward (Burslem) Hale, Leslie
Boardman, H. Davies, Ernest (Enfield) Hall, Rt. Hon. Glenvil
Bottomley, A. G. Davies, Harold (Leek) Hamilton, Lieut.-Col. R.
Bowden, Flg. Offr. H. W. Davies, Haydn (St. Pancras, S. W.) Hannan, W. (Maryhill)
Braddock, Mrs. E. M. (L'pl, Exch'ge) Davies, R. J. (Westhoughton) Hardy, E. A.
Braddock, T. (Mitcham) Deer, G. Harris, H. Wilson (Cambridge Univ.)
Bramall, E. A. Delargy, H. J. Harrison, J.
Brook, D. (Halifax) Dobbie, W. Hastings, Dr. Somerville.
Brooks, T. J. (Rothwell) Dodds, N. N. Haworth, J.
Broughton, Dr. A. D. D. Donovan, T. Henderson, Rt. Hn. A. (Kingswinford)
Brown, T. J. (Ince) Dye, S. Henderson, Joseph (Ardwick)
Bruce, Maj. D. W. T. Edwards, W. J. (Whitechapel) Herbison, Miss M.
Burden, T. W. Evans, Albert (Islington, W.) Hoiman, P.
Holmes, H. E. (Hemsworth) Mellish, R. J. Simmons, C. J.
Houghton, A. L. N. D. (Sowerby) Messer, F. Skeffington, A. M.
Hoy, J. Middleton, Mrs. L. Skinnard, F. W.
Hubbard, T. Millington, Wing-Comdr. E. R. Smith, C. (Colchester)
Hudson, J. H. (Ealing, W.) Mitchison, G. R. Smith, Ellis (Stoke)
Hughes, Hector (Aberdeen, N.) Moody, A. S. Smith, S. H. (Hull, S. W.)
Hughes, H. D. (W'lverh'pton, W.) Morley, R. Sorensen, R. W.
Hutchinson, H. L. (Rusholme) Morris, Lt.-Col. H. (Sheffield, C.) Soskice, Rt. Hon. Sir Frank
Hynd, J. B. (Attercliffe) Morris, P. (Swansea, W.) Sparks, J. A.
Irvine, A. J. (Liverpool) Morrison, Rt. Hon. H. (Lewisham, E.) Steele, T.
Irving, W. J. (Tottenham, N.) Mort, D. L. Stokes, R. R.
Janner, B. Murray, J. D. Stubbs, A. E.
Jay, D. P. T. Naylor, T. E. Swingler, S.
Jeger, G. (Winchester) Neal, H. (Claycross) Sylvester, G. O.
Jeger, Dr. S. W. (St. Pancras, S. E.) Nichol, Mrs. M. E. (Bradford, N.) Symonds, A. L.
Jones, Rt. Hon. A. C. (Shipley) Noel-Baker, Capt. F. E. (Brentford) Taylor, H. B. (Mansfield)
Jones, D. T. (Hartlepool) Oldfield, W. H. Taylor, R. J. (Morpeth)
Jones, P. Asterley (Hitchin) Oliver, G. H. Taylor, Dr. S. (Barnet)
Keenan, W. Orbach, M. Thomas, D. E. (Aberdare)
Kenyon, C. Paget, R. T. Thomas, George (Cardiff)
King, E. M. Paling, Rt. Hon. Wilfred (Wentworth) Thomas, I. O. (Wrekin)
Kinghorn, Sqn.-Ldr. E. Paling, Will T. (Dewsbury) Thurtle, Ernest
Kinley, J. Palmer, A. M. F. Titterington, M. F.
Kirby, B. V. Pargiter, G. A. Tolley, L.
Kirkwood, Rt. Hon. D. Parkin, B. T. Tomlinson, Rt. Hon. G.
Lang, G. Paton, Mrs. F. (Rushcliffe) Turner-Samuels, M.
Lavers, S. Paton, J. (Norwich) Ungoed-Thomas, L.
Lee, F. (Hulme) Pearson, A. Vernon, Maj. W. F.
Lee, Miss J. (Cannock) Peart, T. F. Viant, S. P.
Leonard, W. Poole, Cecil (Lichfield) Wallace, H. W. (Walthamstow, E.)
Leslie, J. R. Popplewell, E. Webb, M. (Bradford, C.)
Levy, B. W. Porter, E. (Warrington) Weitzman, D.
Lewis, A. W. J. (Upton) Porter, G. (Leeds) Wells, P. L. (Faversham)
Lewis, J. (Botton) Price, M. Philips Wells, W. T. (Walsall)
Lewis, T. (Southampton) Pursey, Comdr. H. Wheatley, Rt. Hon. John (Edin'gh, E.)
Lindgren, G. S. Randall, H. E. White, H. (Derbyshire, N. E.)
Lipton, Lt.-Col. M. Ranger, J. Whiteley, Rt. Hon. W.
Longden, F. Rankin, J. Wigg, George
Lyne, A. W. Reeves, J. Wilcock, Group-Capt. C. A. B.
McAdam, W. Reid, T. (Swindon) Wilkes, L.
McAllister, G. Rhodes, H. Wilkins, W. A.
McEntee, V. La. T. Richards, R. Willey, F. T. (Sunderland)
McGhee, H. G. Ridealgh, Mrs. M. Willey, O. G. (Cleveland)
McGovern, J. Robens, A. Williams, D. J. (Neath)
McKay, J. (Wallsend) Roberts, Goronwy (Caernarvonshire) Williams, J. L. (Kelvingrove)
McKinlay, A. S. Robertson, J. J. (Berwick) Williams, Ronald (Wigan)
Maclean, N. (Govan) Robinson, Kenneth (St. Pancras, N.) Williams, Rt. Hon. T. (Don Valley)
McLeavy, F. Rogers, G. H. R. Williams, W. T. (Hammersmith, S.)
MacPherson, Malcolm (Stirling) Ross, William (Kilmarnock) Williams, W. R. (Heston)
Mainwaring, W. H. Royle, C. Willis, E.
Mallalieu, E. L. (Brigg) Segal, Dr. S. Wills, Mrs. E. A.
Mallalieu, J. P. W. (Huddersfield) Shackleton, E. A. A. Wyatt, W.
Mann, Mrs. J. Sharp, Granville Young, Sir R. (Newton)
Manning, C. (Camberwell, N.) Shawcross, Rt. Hn. Sir H. (St. Helens)
Marquand Rt. Hon. H. A. Shurmer, P. TELLERS FOR THE AYES:
Mathers, Rt. Hon. George Silverman, S. S. (Nelson) Mr. Snow and
Mr. George Wallace.
Agnew, Cmdr P. G. Cuthbert, W. N. Haughton, Colonel S. G. (Antrim)
Anderson, Rt. Hn. Sir J. (Scot. Univ.) Davidson, Viscountess Head, Brig. A. H.
Assheton, Rt. Hon. R. Dodds-Parker, A. D. Hinchingbrooke, Viscount
Astor, Hon. M. Dower, Col. A. V. G. (Penrith) Hogg, Hon. Q.
Beamish, Maj. T. V. H. Drayson, G. B. Hollis, M. C.
Birch, Nigel Drewe, C. Hope, Lord J.
Boles, Lt.-Col. D. C. (Wells) Duthie, W. S. Howard, Hon. A.
Boothby, R. Eccles, D. M. Hudson, Rt. Hon. R. S. (Southport)
Bowen, R. Erroll, F. J. Hutchison, Lt.-Cdr Clark (Edin'gh, W.)
Bower, N. Fleming, Sqn.-Ldr. E. L. Hutchison, Col. J. R. (Glasgow, C.)
Boyd-Carpenter, J. A. Fletcher, W. (Bury) Jeffreys, General Sir G.
Braithwaite, Lt.-Comdr. J. G. Foster, J. G. (Northwich) Jennings, R.
Bromley-Davenport, Lt-Col. W. Fox, Sir G. Keeling, E. H.
Brown, W. J. (Rugby) Fraser, H. C. P. (Stone) Kendall, W. D.
Buchan-Hepburn, P. G. T. Fyfe, Rt. Hon. Sir D. P. M. Lambert, Hon. G.
Butcher, H. W. Gage, C. Lancaster, Col. C. G.
Carson, E. Galbraith, Cmdr. T. D. (Pollok) Lennox-Boyd, A. T.
Channon, H. Galbraith, T. G. D. (Hillhead) Lindsay, M. (Solihull)
Clarke, Col. R. S. George, Lady M. Lloyd (Anglesey) Linstead, H. N.
Clifton-Brown, Lt.-Col. G. Gridley, Sir A. Lipson, D. L.
Conant, Maj. R. J. E. Grimston, R. V. Lloyd, Selwyn (Wirral)
Cooper-Key, E. M. Hannon, Sir P. (Moseley) Low, A. R. W.
Corbett, Lieut.-Col U. (Ludlow) Hare, Hon. J. H. (Woodbridge) Lucas, Major Sir J.
Crookshank, Capt. Rt. Hon. H. F. C. Harris, F. W. (Croydon, N.) Lucas-Tooth, Sir H.
Crosthwaite-Eyre, Col. O. E. Harvey, Air-Comdre. A. V. MacAndrew, Col. Sir C.
MacDonald, Sir M. (Inverness) Price-White, Lt.-Col. D. Thorneycroft, G. E. P. (Monmouth)
McKie, J. H. (Galloway) Raikes, H. V. Thornton-Kemsley, C. N.
Maclay, Hon. J. S. Rayner, Brig. R. Turton, R. H.
Maclean, F. H. R. (Lancaster) Reed, Sir S. (Aylesbury) Wadsworth, G.
Macpherson, N. (Dumfries) Renton, D. Wakefield, Sir W. W.
Maitland, Comdr. J. W. Roberts, Emrys (Merioneth) Walkden, E.
Marshall, D. (Bodmin) Roberts, H. (Handsworth) Walker-Smith, D.
Marshall, S. H. (Sutton) Robinson, Roland (Blackpool, S.) Ward, Hon. G. R.
Mellor, Sir J. Ropner, Col. L. Webbe, Sir H. (Abbey)
Morris, Hopkin (Carmarthen) Ross, Sir R. D. (Londonderry) Wheatley, Colonel M. J. (Dorset, E.)
Morrison, Rt. Hon. W. S. (Cirencester) Sanderson, Sir F. White, Sir D. (Fareham)
Mott-Radclyffe, C. E. Scott, Lord W. White, J. B. (Canterbury)
Noble, Comdr. A. H. P. Smiles, Lt.-Col. Sir W. Williams, C. (Torquay)
Odey, G. W. Spearman, A. C. M. Williams, Gerald (Tonbridge)
O'Neill, Rt. Hon. Sir H. Stanley, Rt. Hon. O. Willoughby de Eresby, Lord
Orr-Ewing, I. L. Stewart, J. Henderson (Fife, E.) York, C.
Peake, Rt. Hon. O. Stoddart-Scott, Col. M. Young, Sir A. S. L. (Partick)
Peto, Brig. C. H. M. Stuart, Rt. Hon. J. (Moray)
Pickthorn, K. Sutcliffe, H. TELLERS FOR THE NOES:
Ponsonby, Col. C. E. Taylor, Vice-Adm. E. A. (P'dd't'n, S.) Brigadier Mackeson and
Poole, O. B. S. (Oswestry) Teeling, William Mr. Wingfield Digby.
Prescott, Stanley Thomas, Ivor (Keighley)