§ 4.12 p.m.
§ Lieut.-Commander Gurney Braithwaite (Bristol, North-West)
I realise, Mr. Deputy-Speaker, that we are running a little behind the schedule arranged by the Chair and also that he who, on an Adjournment Motion, introduces the subject of post-war credits has to tread with even greater delicacy than that attributed to Agag in Holy Writ. There is always the danger of entering into the sphere of legislation, and we are also in the difficulty that last year when, on the Committee stage of the Finance Bill, an attempt was made to move Amendments on this subject, they were ruled out of Order—I have no doubt, perfectly correctly—by the then Deputy-Chairman of Ways and Means, the hon. Member for Nuneaton (Mr. Bowles) on the grounds that they would impose a charge upon the Consolidated Fund.
I appreciate also that the Financial Secretary is this afternoon "cabined cribbed, confined" by the imminence of the Budget Statement. I shall, therefore, concentrate upon some criticisms of the working and effects of the existing law on this subject, and I would begin by reminding hon. Members of the intentions in his matter of post-war credits when they were first introduced, during the Budget of 1941, by the late Sir Kingsley Wood, then Chancellor of the Exchequer. These were his words:I am proposing, therefore, that the extra tax which any individual will pay by reason 1453 of the reduction in the personal allowances and earned income allowance will be offset after the war by a credit which will then be given in his favour in the Post Office Savings Bank. In other words, the individual citizen will have to pay the tax in full, but that part of the extra tax to which I have referred, while complying with our vital war-time necessities will constitute some provision for post-war difficulties and will, I hope, form an additional fund of post-war savings for himself and his dependants."—[OFFICIAL REPORT, 7th April, 1941; Vol. 370, c. 1329.]Since then, certain steps have been taken. The Budget of 1946, introduced by the right hon. Gentleman the present Minister of Town and Country Planning, provided, as hon. Members will recall, for the repayment of post-war credits in the case of men at the age of 65 and of women at 60 years of age, those being the old age pension qualifying ages. Since then, however, four years have elapsed.
When a Question was put to the Financial Secretary a few days ago, on 23rd March, he informed the House that:The total amount of post-war credit outstanding is about £650 million.That is, in 1950, nine years after the proposal's introduction. The hon. Gentleman went on to say:The present rate of repayment is about £17 million a year."—[OFFICIAL REPORT, 23rd March, 1950; Vol. 472, c. 2173.]That is a solemn thought, because at this pace the last repayment will be made in the year of our Lord 1988. I think it is doubtful, Mr. Deputy-Speaker, whether you or I or any Member of the House now listening to me, will have the honour of being Members of this House at that date—1988.
The Chancellor of the Exchequer informed us in another Parliamentary answer, that the £ fell in value by 3s. 4d. between 1945 and January of this year, which shows an average of ¾d. for every month that the present Government have been in office. I also notice that one of those learned statisticians who are able to walk at ease among permutations and combinations which certainly baffle me, and, I suspect, even cause difficulty to Financial Secretaries of the Treasury, has calculated that, if this steady rate of decline persists, the value of the £ in 1988 will be minus 12s. 3d. We must, therefore, in the interests of the holders of postwar credits hope that this descent will be arrested, and arrested very soon.
1454 The present system of repayment is unsatisfactory and bristles with anomalies. The subject was debated more than once in the last Parliament. Concentration upon age as the criterion of repayment does present certain very obvious objections. If I may take those, one from each House of Parliament, whom I believe to be in receipt of the largest incomes, the noble Lord, Lord Nuffield, in another place, and the Prime Minister in this one, they, I imagine, must be in receipt of the largest net incomes in the country at the moment; and both have passed the qualifying age and have drawn their post-war credits. That system must, I think, be open to considerable criticism.
There is one obvious difficulty arising from it. It has been mentioned before, and it is worth referring to again now. It is the question of the clearing up of accounts after a person dies. He has included his post-war credit in his estate, and wills it to somebody who has to reach the ripe age of 65—or 60, in the case of a woman—before he can get the money. It obviously holds up the whole business of winding up a deceased person's estate.
This broad issue aroused a good deal of interest during the recent General Election. Indeed, hopes were raised on this subject, by a very important member of the Government, none other than the Secretary of State for Foreign Affairs, who was questioned on two occasions, so far as I can discover. One was at Plumstead on 9th February—not on this particular issue, but on one so near to it that I think it is worth while quoting what he said. I quote from the "Daily Telegraph" of the following day:Questioned about Post Office savings and war savings, he said, 'If people are saving up and the time comes to spend, that is what they have saved up for. I have never said we were going to keep their savings.'An admirable exposition of the situation. The right hon. Gentleman was again questioned at Woolwich on 16th February when the election campaign was at its height, and at the time when there was considerable speculation on just how it would go. The right hon. Gentleman, this time, was questioned specifically on the post-war credit issue, and he said:I think there is a lot of discontent about it. The real question is inflation, and all sorts of financial problems we have had. I will certainly see that it is discussed and examined afresh once we are returned.1455 It is now a little more than a month since the General Election, and I ask the Financial Secretary: What is the result of the fresh examination? Has it, in fact, taken place? I think there is no doubt at all that thousands of votes were swayed by so important a declaration from so important a Minister, the effect of which, in common language, was: "Put us back and your money will be forthcoming."[HON. MEMBERS: "No."] There is not the slightest doubt that that would be the general interpretation placed upon it. The Government are still chasing the taxpayers, direct and indirect, for revenue. People cannot now escape their full liabilities, with the exception of certain wealthy heiresses provided for by the Government during the last Parliament, one of whom is said to have been relieved of Surtax to the tune of £40,000 per annum. Can nothing be done for the holders of post-war credits?
§ Mr. Deputy-Speaker (Major Milner)
Would the hon. and gallant Gentleman be good enough to indicate what remedy he is suggesting?
§ Lieut.-Commander Braithwaite
I do not know whether it is in Order to outline certain steps which I believe could be taken. I realise that there is here the delicate borderline upon legislation, but I was reaching the stage where I was about to suggest, in a very brief summary, three possible steps. The first is the issue of savings certificates against this liability. I do not think that the encashments would be particularly heavy. The second is the right to set off postwar credit certificates against taxation claims. The third—which I deliberately put last because it might be a formidable problem for the Government—is the funding of this amount of £650 million, which, I think, could be done today on a 3 per cent. basis.
§ Mr. Deputy-Speaker
Surely all or some of those methods would involve legislation. On this Motion the hon. and gallant Gentleman is not entitled to discuss matters which might involve legislation, or for which the remedy would be legislation.
§ Lieut.-Commander Braithwaite
I was very careful to say when I rose that I realised how difficult it was to discuss this subject without trespassing upon the 1456 need for legislation. However, I would, with the greatest possible respect, point out that the funding of a debt requires no legislative action. A mere announcement by the Treasury that they are about to issue a funding loan does not require the consent of Parliament. I believe I am right in saying that. Of course, I realise that the Financial Secretary cannot give us any definite information at this moment without anticipating the Budget statement. I do not ask for that. But I do ask most urgently that the Chancellor shall deal with the subject during his Budget speech. As I explained earlier, on the last Finance Bill a detailed discussion was ruled out of Order. It is all the more important that the matter should be reviewed, and hon. Members given the Government's general conspectus about the future of post-war credits.
One hint fell during the last Parliament from the right hon. Member for the Colne Valley (Mr. Glenvil Hall)—whose faithful service to the Treasury has been so churlishly rewarded—when he said in the country that post-war credits were being deliberately withheld by the Government against a future trade depression. I ask the Financial Secretary whether this is so. After all, the right hon. Member for the Colne Valley occupied that office at the time he said it. Is it really intended to lock up the people's money for a political emergency? I think the House is entitled to know. Let the Chancellor come out into the open on 18th April and tell us his intention. These post-war credits were intended as a nest-egg for the very period through which the country is now passing, and I ask the hon. Gentleman: What have the Government done with the people's money, and what are they going to do?
§ 4.24 p.m.
§ Mrs. Jean Mann (Coatbridge and Airdrie)
The speeches of hon. Members opposite, their pessimism about our financial affairs, and their constant taunts, at home and abroad, suggesting the financial bankruptcy of the country, contrast very strangely with their optimism when they get into the House of Commons and assume that the repayment of £650 million worth of post-war credits is a matter that can be dealt with without legislation, without even inquiry, and, indeed, in a few minutes in an Adjournment Debate. It is not surprising that Members opposite, who have promised more houses, actual 1457 ownership of those houses, bigger pensions, better family allowances, and lower cost of food and lower taxation, should assume that the payment of post-war credits could also be made. They have promised them all and, at the same time, have warned the Government that stern measures were necessary to impress our economic condition on the people.
It was a very pressing demand during the election. I found, on almost every platform, that people were demanding the payment of post-war credits. They were also asking for houses, the payment of family allowances for the first child, lower prices, reduced taxation and higher wages. It reminded me of the demands of my children at various times when they all wanted something at once and I had to keep telling them that they would have to wait their turn. I noticed that the Tory Party promised everybody something immediately.
I wonder if there could be an examination of the post-war credits situation. I know that, hitherto, it has been said that repayment would create inflation, but the Economic Survey reveals a 2½ per cent. increase in productivity. That 2½ per cent. represents some £400 million in actual cash. There are so many of us who wish for many things out of that £400 million that one hesitates to put forward post-war credits as a priority, but I know that in my constituency the National Assistance Board are now paying out a good deal of money that they would not have to pay if the recipients had access to their own money, namely, their post-war credits. A certain amount of this money is being paid at the National Assistance Board's offices to people who originally hesitated, very much to apply, and who, if they could have their post-war credits would not apply at all. Therefore, the plea of the Treasury that we cannot afford the money does not apply in this instance, because the money is being paid out of a different fund.
There are other cases, such as allowances to widows and young men who are getting married and who have tied round their necks credits from firms for furniture. This would not be necessary if they had access to their post-war credits. I ask the Treasury to examine this question, and I hope my hon. Friend will try to devise a scheme whereby people might have some kind of access to their post-war credits.
§ 4.30 p.m.
§ The Financial Secretary to the Treasury (Mr. Douglas Jay)
As the hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite) has said, I am "cabined, cribbed, confined," first, by the rules of Order, second, by the imminence of the Budget and, third, by the clock. I cannot lengthily reply to the hon. and gallant Member, but I would like to deny immediately that my right hon. Friend the Foreign Secretary has, in his speeches, ever gone so far as to promise any release of post-war credits. What he did say was that the matter would be re-examined after the Election. I can assure the House that that has already been done, and that we have given a good deal of thought to this question.
As the hon. and gallant Gentleman said, the origin of post-war credits was the conception that some Income Tax paid during the war would be withheld until after the war and released at a suitable time. It was not, of course, a case of a loan from the public to the Exchequer. This was taxation which was actually paid and which the Government undertook that they would repay at a later date. The intention always was that when the expected post-war depression or deflation set in it would be valuable from the national point of view, to have these additions to purchasing power, as well as to savings from the personal point of view. It has happened that, owing to our unexpected success in maintaining full employment over the last five years, the expected deflation has never arisen.
To some extent, therefore, the difficulty is one of the handicaps which have attended on our success. The hon. and gallant Gentleman suggested that there was something rather improper in arguing that the date and rate of release of these credits might partly depend upon the arrival of a trade depression or different economic conditions. He may have forgotten that his own party manifesto at the General Election said, quite clearly, that any large and rapid release of these credits would be highly inflationary. With that judgment I agree; and it might apply to one or two of the practical suggestions which the hon. and gallant Gentleman made, and which I regret, 1459 for reasons of Order, I cannot pursue in any very great detail.
There is a good deal in favour of the practical compromise that my right hon. Friend the Minister of Town and Country Planning devised. He laid it down, by legislation, that these credits should be paid to a man on reaching the age of 65 and to a woman upon reaching the age of 60. That successfully solved the problem of making a start in the release of these credits without letting loose a flood of inflationary purchasing power. It also has the advantage of holding these credits as savings until roughly—admittedly, roughly—the age at which most of us retire from active work, and of then making them available. It has also avoided what would have been a real injustice if no repayment had been made for 10 or 15 years, when a large number of people would have died without receiving any of their credits at all.
At present, we are paying out about £17 million a year and although that is a small proportion of £600 million, nevertheless, in all the circumstances, I do not think it can be regarded as a negligible sum. I would like to assure the hon. and gallant Gentleman that I will convey to the Chancellor of the Exchequer his wish that this subject should be mentioned in the Budget speech. I do not think I can pursue much further his practical suggestions, although at the right time many interesting things could be said about them. I believe that for the moment, and in all the circumstances, we have devised the best possible practical compromise by sticking to the system of releasing these credits at the ages of 65 and 60 respectively.