Commons Sitting of 3 July 1951

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  SWINDON CORPORATION BILL [Lords] (By Order)
  Second Reading deferred till Thursday.
ORAL ANSWERS TO QUESTIONS
  BRITISH ARMY

    Educational Corps (Teachers)
    Mr. Gerald Williamsasked the Secretary of State for War the average age of teachers employed by the Royal Army Educational Corps.
    The Under-Secretary of State for War (Mr. Wyatt): The average age of teachers in the Royal Army Educational Corps is 35.25 years in the case of officers and 22.3 years in the case of other ranks.
    Mr. Williams: Is the hon. Gentleman aware that among those there are many young ones, and is he satisfied that they are mature enough to answer questions on political and international affairs of which they get very many knotty ones?
    Mr. Wyatt: The only very young ones are National Service men in the case of both officers and other ranks. Most of the officers, in fact, are over the age of 30.
    Colonel Gomme-Duncan: Did not the hon. Gentleman say that the average age of all other ranks is 22 years? Is not this very young, and could not they be employed on some more martial form of activity?

    .280 Rifle
    Mr. Bossomasked the Secretary of State for War approximately at what rate he expects the.280 rifles and ammunition to be made available for the use of the Services.
    Mr. Wyatt: It has now been decided to adopt the British E.M.2 rifle. The conversion to the new rifle and ammunition will be made as quickly as possible, but it will take several years to complete.
    Mr. Bossom: In the interval, what will happen to the Forces? Will they use the former rifle, or partly use this rifle and the old one?
    Mr. Wyatt: They will naturally go on using their present rifles until they get new ones.
    Lieut.-Colonel Sir Thomas Moore: Will the Minister undertake that no.303 rifles are withdrawn until there is an adequate quantity of.280 rifles and replacements available to take their place?
    Mr. Wyatt: I can assure the hon. and gallant Gentleman that there is no intention of leaving any soldier without a rifle at any time.
    Mr. J. Langford-Holt: Is it not regrettable that the only time the hon. Gentleman's Department does something it steps out of line with our Allies?
    Mr. Wyatt: I can assure the hon. Gentleman that this new rifle is the finest in the world.
    Mr. Bossomasked the Secretary of State for War if he will take steps to ensure that a slight readjustment is made to the new.280 rifle so that it can take the same rimless.300 ammunition which has been approved by the Canadians and is used by the United States Army.
    Mr. Wyatt: No, Sir. The readjustment for which the hon. Member asks would mean designing a completely new rifle.
    Mr. Bossom: Could not the Minister be a little less complacent about this, because if members of the United States and Canadian Forces can have similar ammunition to our own it will be of great benefit? Does he not agree it will certainly mean a considerable amount of work in readjusting, and ought not this to be considered very actively to secure the right results for all of us?
    Mr. Wyatt: There is nothing to stop the Americans standardising on our new rifle at any time, and in fact it would be an easier matter for them to adapt their ammunition than it would be for us.
    Mr. Bossom: Does the hon. Gentleman realise the number of people there are in the United States, in Canada and in this country, and is he asking those whose production is greater to do something to meet the lesser situation? Is it not a rather upside down way of putting it?
    Mr. Wyatt: The Government take the view that it is better to standardise on the best weapon available than on an inferior one.
    Mr. Duncan Sandys: What does the hon. Gentleman mean by standardising? Standardising what? Starting on an entirely new type of weapon is not standardisation.
    Mr. Wyatt: Standardisation means having the same weapon for both countries.

    Uniforms (Purchase Tax)
    Mr. Langford-Holtasked the Secretary of State for War what articles of uniform sold in quartermasters' stores, which are compulsory for either officers or other ranks, carry Purchase Tax.
    Mr. Wyatt: Officers pay Purchase Tax on any articles of uniform purchased in quartermasters' stores in the United Kingdom, but not overseas. The principal items available are battledress, anklets and boots. Other ranks pay no Purchase Tax on any item of clothing.
    Mr. Langford-Holt: Is not the hon. Gentleman entirely dissatisfied with the situation whereby officers are first compelled to join up and then compelled to buy these articles for the purpose for which they were compelled to join up, and will he make representations to his right hon. Friend the Chancellor of the Exchequer about it?
    Mr. Wyatt: All officers receive a tax free allowance yearly which makes provision for paying Purchase Tax on their uniforms.
    Brigadier Head: Does not the Minister consider that officers' battledress is essentially a utility garment and should, therefore, not be subject to Purchase Tax?
    Mr. Wyatt: It has never been the policy of the Treasury to say that all utility cloth should never pay Purchase Tax. It depends on the sort of garment when it is made up.
    Mr. John Tilney: Does not the hon. Gentleman agree that the difference in the tax free allowance as between other ranks and officers is only £6 5s. and that if on a jersey pullover the difference in price is as between 1ls. and 30s., that £6 5s. is very soon taken up?
    Mr. Wyatt: That is another question.
    Mr. Profumo: Could the hon. Gentleman say whether, if at any future stage discussions are opened with the Treasury with a view to increasing these allowances, his attitude will be as stated in his last reply, that the present allowances are satisfactory?
    Mr. Wyatt: Consultations are naturally going on between ourselves and the Treasury all the time with the hope of improving allowances of this kind, but I should warn the hon. Gentleman that it is very likely that if one gets any alteration in the allowance it will be to the detriment of the officer because the allowance for Purchase Tax might well be taken off.
    Brigadier Prior-Palmer: Is not the Minister also aware that the uniform allowance was introduced before there was any question of Purchase Tax, that that tax was not taken into account at the time, and that it is an additional imposition on the pocket of the officer?

    Vehicle Depot, Market Harborough
    Lieut.-Commander Baldockasked the Secretary of State for War how many male civilians are employed at the Market Harborough Vehicle Reception Depot camp; what are their average hourly rates; how many vehicles are completed per week; and at what average cost.
    Mr. Wyatt: Two hundred and seventy-one male civilians are employed at this Depot. Their average rate of pay is 2s. 10½d. an hour. The Depot receives and issues vehicles which are being rebuilt under Ministry of Supply arrangements. The average number of vehicles received, maintained and issued in the course of a week is 1,010. The average cost of each vehicle dealt with works out at £1 17s. 3d.
    Lieut.-Commander Baldock: Is the hon. Gentleman aware of the considerable disquiet in the neighbourhood about this employment of agricultural and other unskilled labour on jobs for which it is

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    generally felt it is not suited? Is he further aware that there is a general belief among people in the surrounding district that this labour is being inefficiently employed?
    Mr. Wyatt: I think the answer to that is that the average cost per vehicle of £1 17s. 3d. is a great deal less than it might be if they were handled on an inefficient basis.

    Temporary Ranks
    General Sir George Jeffreysasked the Secretary of State for War what is the position of officers of the substantive rank of major after they have as temporary lieutenant-colonels completed their periods of command of units; and whether such officers then have to relinquish their temporary rank and continue to serve as regimental officers in the rank of major.
    Mr. Wyatt: In the case of the Royal Armoured Corps, Royal Artillery, Royal Engineers, Royal Signals or Infantry, majors appointed to command units are, wherever possible, selected from those who will become due for substantive promotion to lieutenant-colonel before completing their tour of duty as commanding officer. Where this is not possible and the officer has afterwards to relinquish his temporary rank, he is not required to continue serving in the same unit.
    In other Corps, owing to the present shortage of officers, it is often necessary to appoint comparatively junior majors to command. When this happens every effort is made to appoint such officers to other lieutenant-colonels' vacancies when they finish command, but this is not always possible.
    Sir G. Jeffreys: Is it not time that a permanent system replaced the present system, or lack of system, of temporary rank? Is it not always extremely unpopular with any officer to have to revert to a lower rank, and is this really necessary? Is it not time a permanent system was evolved which would do away with these temporary ups and downs which may be necessary in war-time but cannot be necessary in peace-time?
    Mr. Wyatt: As I said in the original answer, this is something which very rarely happens because by the time a lieutenant-colonel's tour of duty in that rank is finished he is usually due for substantive promotion. But our restrictions
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    are due to the fact that we have only a certain number of substantive ranks within the Army as a whole to be filled

    Identity Discs
    Colonel Gomme-Duncanasked the Secretary of State for War whether official identity discs are worn by all officers and other ranks in Korea and Malaya; what orders have been made on this matter and if he is satisfied that they are being carried out.
    Mr. Wyatt: Instructions are that all ranks in the field should wear identity discs. The enforcement of these instructions is a matter for the commander. Some bodies have recently been found without identity discs in Korea and an investigation is being made to find out why. I should point out, however, that many bodies have already been identified by their discs.
    Colonel Gomme-Duncan: Can the hon. Gentleman say if identity discs are issued officially to officers and other ranks in these theatres of war? I understand he is satisfied that the orders are sound enough and that he said the carrying out of those orders is a matter for the commander concerned. Does he not agree that the disturbing case his right hon. Friend gave last week rather indicates there is some laxity somewhere?
    Mr. Wyatt: I do not believe there is laxity at all. It may well be that the enemy have removed these identity discs from the bodies.

    Recruiting Office, Canterbury
    Mr. Baker Whiteasked the Secretary of State for War whether he is aware that his Department have taken over No. 2 Roper Road, Canterbury, as a recruiting office, thereby depriving the city of a dwelling house, where there is still an acute shortage; and why alternative accommodation on War Department property was not used for this purpose.
    Mr. Wyatt: It has been found that recruiting conducted from civilian premises produces better results than from Army barracks, which as a rule are not so accessible for civilians. This requiting office, to which the only alternative is an Army barracks, will be occupied by the Army recruiter, an ex-soldier, and his wife. They will leave their present

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    house in Canterbury, so that the city will not be deprived of a dwelling-house.

    West Indies Regiment
    Mr. Braineasked the Secretary of State for War whether any steps have now been taken to re-form the West Indies Regiment.
    Mr. Wyatt: My right hon. Friend is in consultation with my right hon. Friend the Secretary of State for the Colonies on this subject.
    Mr. Braine: Will the hon. Gentleman bear in mind that informed opinion in the British West Indies is in favour of reforming this volunteer regiment which performed great service in World War I? Will he also bear in mind that its reformation would do much to encourage regional consciousness and pride in the West Indies and form a valuable addition to the strength of the British Commonwealth?
    Mr. Wyatt: I fully appreciate what the hon. Member has said. I am sure he also understands that many interests have to be considered in this matter. I can assure him that good progress is being made.

    East African Forces
    Mr. Alportasked the Secretary of State for War (1) whether he is satisfied that the types and numbers of weapons and other equipment available to the East African forces are adequate for the strategic role which these forces are liable to be called on to fulfil;
    (2) what action he proposes to take to increase recruiting for the King's African Rifles and the Northern Rhodesian Regiment; and if he will consider the pay and conditions of service offered to African ranks with a view to their improvement.
    Mr. Vaneasked the Secretary of State for War the establishment and present strength of the King's African Rifles and the Northern Rhodesian Regiment, respectively.
    Mr. Wyatt: The East African forces are basically equipped and organised on the same lines as the British Army. They are in possession of adequate supplies of
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    the right type of equipment. The possibility of raising additional African units is being investigated. No representations regarding pay and conditions of service have been received from the General Officer Commanding, East Africa. It would be contrary to practice to publish the information asked for by the hon. Member for Westmorland (Mr. Vane).
    Mr. Alport: Has the Minister's attention been drawn to a statement made by General Dowler, on giving up the command, with regard to the very unsatisfactory nature both of pay and conditions of service of Europeans and Africans and of the equipment of East African forces generally? Will he not consider investigating this matter more carefully than apparently he has been able to do?
    Mr. Wyatt: Inquiries are naturally being made into the statement to which the hon. Member referred, particularly as no representation on this matter has been received from the officer concerned.
    Brigadier Head: Is the hon. Gentleman aware that despite the serious manpower shortage in this country very little use is made of colonial manpower, and that although the War Office said that this matter has been under consideration for the last four years nothing is done?
    Mr. Wyatt: I cannot accept that statement. I assure the hon. and gallant Member that these particular battalions are up to strength.
    Brigadier Head: May I refer the hon. Gentleman to HANSARD, where he will find it was said four years ago by the then Under-Secretary of State that this matter was under particular attention?
    Mr. Wyatt: A lot has been done about it since.
    Brigadier Head: Nothing has been done.
    Mr. Alport: In view of the unsatisfactory reply, I beg to give notice that I shall raise this matter on the Adjournment as early as possible.

    Tunic Buttons
    Mr. Jannerasked the Secretary of State for War if he can give the results of the experiments now being carried out with a view to replacing the tunic button

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    which needs polishing with a new button; and whether the new type of button is likely to be adopted for all walking out dress.
    Mr. Wyatt: Anodized buttons are being introduced for wear with garments for which gilding metal or white metal buttons are at present used. Owing to restricted production, anodized buttons will be issued only for No. 1 dress and full dress for the present.

    Germany (Civilian Personnel)
    Mr. Sandysasked the Secretary of State for War whether the agreement of the German Government has been obtained in regard to the measures contemplated by His Majesty's Government to secure in the event of hostilities the continued services of German civilians now performing transport and other duties with British divisions.
    Mr. Wyatt: It would not be in the public interest to give this information.
    Mr. Sandys: Surely the hon. Gentleman can tell us whether the Government have been discussing this question with the German Government and, if not, whether they are not aware that, until the position of these men serving in British divisions is clarified, the whole organisation of our troops in that area is in a complete state of uncertainty?
    Mr. Wyatt: We are naturally aware of the importance of this matter, but to give the information for which the right hon. Gentleman asks would be to disclose the nature of our operational plans.
    Mr. Sandys: Could I not have an answer to the simple question, have His Majesty's Government discussed this with the German Government?
    Mr. Wyatt: I must refer the right hon. Gentleman to the original answer I gave him.
    Sir G. Jeffreys: Have any steps been taken in this matter at all, or have things not been left just as they are? Is it not essential to the mobility and efficiency of the British troops there that they should have these services properly reformed?
    Mr. Wyatt: I can assure the hon. and gallant Gentleman that we are fully aware of the importance of this matter.
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    Naturally, it has not been overlooked at all in the past.
    Mr. Sandys: In view of the importance of clarifying this issue, I beg to give notice that I shall raise the matter at the earliest possible opportunity.

  LOCAL GOVERNMENT AND PLANNING

    Farm Workers' Houses (Development Charges)
    Miss Irene Wardasked the Minister of Local Government and Planning (1) if he will give an assurance that the Central Land Board will no longer require land owners to pay stamp duty on agreements covering the possible change of use of farm workers' houses which at present are not subject to development charge;
    (2) why, in view of the fact that farm workers' houses are free of development charge, the Central Land Board seeks to make land owners enter into an agreement covering the possible change of use of a farm worker's house at an unspecified future date.
    The Minister of Local Government and Planning (Mr. Dalton): The payment of development charge is postponed while the house is occupied by a farm worker. If it ceases to be so occupied, the charge becomes payable. In order to postpone the charge, a stamp duty of 6d. is payable.
    Miss Ward: What statutory authority is there in the Act for charging that 6d.? Is the right hon. Gentleman not satisfied that the protection given in the Act safeguards the position of houses for farm workers?
    Mr. Dalton: I am perfectly satisfied. I do not think 6d. is much to pay for the postponement of the development charge.
    Miss Ward: What is the statutory authority for so doing?
    Mr. Dalton: If I did not believe it to be legal I should have stopped the charge.

    Smoke Abatement, Stoke-on-Trent
    Mr. Ellis Smithasked the Minister of Local Government and Planning (1) if he will take urgent action to

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    minimise the smoke poured into the atmosphere over the city of Stoke-on-Trent;
    (2) if he will take immediate action to minimise the effect of smoke poured into the air over Trent Vale, Fenton, Blurton and Longton, and to see that the chimneys of the tileries are lifted at once so that the smoke misses the houses of the people.
    Mr. Dalton: I regret that I have no statutory power to deal with this. As modern kilns are built, there should be considerable improvement, and officers of my Department have been in consultation with the manufacturers on the best ways of minimising this trouble.
    Mr. Ellis Smith: Does not my right hon. Friend agree that the conditions under which these people have been living for generations is scandalous? If they can do what they have done over Pittsburg, it should be possible to do the same in our industrial centres. In view of the fact that this House can devote days and days to considering the question of the pollution of rivers, does not my right hon. Friend think that the time has arrived when we should devote a few hours to dealing with the pollution of the atmosphere?
    Mr. Dalton: I quite agree that the atmosphere above the pottery towns is very bad. As my hon. Friend says, that is due to what has happened in past generations. That is past history. Labour has not been in power for one generation.
    Mr. Ellis Smith: Will my right hon. Friend take a personal interest in this by getting a leading official of his,Department to go to have an interview with the municipalities with a view to doing whatever can be done?
    Mr. Dalton: That has frequently been done, and it will be done again if necessary.
    Sir Herbert Williams: Is it not the case that the City of Stoke and the four other pottery towns have been dominated by Socialist councils and represented by Socialist Members of Parliament for years? As one who is concerned with the industry in Sheffield, may I ask what the council has done? Nothing.

    Oil Refinery, Brownwich
    Surgeon Lieut.-Commander Bennettasked the Minister of Local Government and Planning what negotiations have now taken place between his Department, the Caltex Oil Company, the Ministry of Agriculture and other interested parties in respect of the projected oil refinery at Brownwich, on Southampton Water; and what conclusions have been reached.
    Mr. Dalton: The Company have not yet applied for planning permission in respect of any site in this area. As soon as they do, I will give it immediate consideration.
    Surgeon Lieut.-Commander Bennett: In view of the undertaking that there would be a public inquiry before anything was started, and in view of the right hon. Gentleman's answer, would he say why work has been permitted to be started on the site?
    Mr. Dalton: I did not commit myself to there being a public inquiry. I was very careful on that ground, for security reasons. I said that there would be an inquiry, but the first step must be for the company concerned to put in an application for the use of some particular site. They have not yet done that, and until that step has been taken I cannot officially intervene.
    Surgeon Lieut.-Commander Bennett: It ought not to be assumed, then, that the private inquiry has already taken place?
    Mr. Dalton: No, Sir. Nothing can be assumed. The drill is that they put in a request for planning permission. They put it in to the county council. This case is so very important from the national point of view that I have given an undertaking that I myself will call it in as soon as it goes to the county council and will consider it, but the firm must take the first step.
    Sir G. Jeffreys: Does that mean that the right hon. Gentleman considers that the opinions of the county council and of local authorities, and local opinion, are of no importance in this matter at all?
    Mr. Dalton: No, Sir. It does not mean that. Of course, as I have said before, I will carefully consider the views of the county council, but this is a matter of over-riding national importance.

    Sewage Disposal, Bishop's Stortford
    Mr. Derek Walker-Smithasked the Minister of Local Government and Planning whether he has now crystallised his intentions in regard to arrangements for sewage disposal in Bishop's Stortford and district; and, if so, to what effect.
    Mr. Dalton: Several local authorities are interested in sewerage schemes in the Stort Valley, and I hope that a solution satisfactory to all will soon be found.
    Mr. Walker-Smith: What does the Minister mean by "soon"? Is it not over two years since his officials admitted the urgency of the problem? Is it not a fact that the Stortford Urban District Council have not been able to get any information since that time?
    Mr. Dalton: No, Sir. I am dependent here on getting local authorities to agree. The interests of local authorities are not entirely at one. The Stortford Urban District Council are only one authority among several. As soon as I can get them to agree we shall be able to move forward.

    Detention Centre, Goudhurst
    Mr. Deedesasked the Minister of Local Government and Planning whether his Department has considered the proposals by the Prison Commissioners to acquire Mr. Fegan's Home, Goudhurst, Kent, for use as a detention centre for young men; and whether, in view of the intensely-wooded nature of this country and the proximity of two large girls' schools, a public school and two preparatory schools, he will cause this proposal to be reconsidered.
    Mr. Dalton: I am awaiting the Kent County Council's views on this proposal.
    Mr. Deedes: When he considers this proposal, will the right hon. Gentleman bear in mind that it is a detention centre and that in view of the disquieting number of incidents and escapes recorded from institutions of this kind the decision to permit such an institution in the proximity of 14 schools in the neighbourhood is a matter which should receive very careful consideration?
    Mr. Dalton: I shall naturally pay attention to what the Kent County Council represent to me. No doubt they will put that point of view.
    Mr. Thornton-Kemsley: Will the right hon. Gentleman also consider representations which may be made from the many girls' schools in this particularly beautiful part of England?
    Mr. Dalton: Yes, Sir. I am willing to receive representations from girls' schools if the hon. Gentleman is authorised to make them.

    Blitzed City Centres (Reconstruction)
    Mrs. Middletonasked the Minister of Local Government and Planning how it is intended to make allocations of capital investment for the reconstruction of bomb destroyed towns.
    Mr. Dalton: My right hon. Friend the Minister of Works and I have now made a survey to determine what labour and materials can be made available for the further reconstruction of blitzed city centres without holding up work on housing, industry and defence. I hope soon to be able to communicate further with the local authorities concerned.
    Mrs. Middleton: In thanking my right hon. Friend for his interest in this matter, not only in his present office but ever since 1945, may I ask him whether he will take steps to see that when structures are completed the resources of labour are not distributed and used on less essential projects? Will he keep in close contact with local authorities to that end so that the work may go on as speedily as the resources of the nation and the needs of the nation will allow?
    Mr. Dalton: Yes, Sir. We will certainly keep that in mind. I hope it will not be very long before we shall be able to have some definite news for the local authorities concerned.
    Brigadier Clarke: Does the Minister appreciate that very little has been done since 1945? Will he assure us that he will not keep this matter under consideration too long but will let us have some information for the bomb-damaged cities?
    Mr. Dalton: The reconstruction of the centres of the blitzed cities is going on all the time. Of course, it is a question applying only to the city centres; it does not apply to housing, which is going on quite independently.

  HOUSING

    Chapeltown, Leeds
    Miss Baconasked the Minister of Local Government and Planning on what date he gave his consent to the scheme in the Chapeltown area of Leeds for the conversion of large houses into self-contained flats.
    Mr. Dalton: The council submitted two compulsory purchase orders on 16th May, but on 7th June they withdrew them. I could not have given consent before 8th June at the earliest.
    Miss Bacon: Is my right hon. Friend aware that the first act of the new Conservative Leeds City Council was to abandon this scheme? Is he further aware that as a result of this decision many very good houses which are now used as tenement houses and which could have been converted into good flats will fall into decay and disrepair?
    Mr. Dalton: My hon. Friend is quite right in saying that the withdrawal of the order followed the return of a Tory majority in Leeds. As to the consequences, it may well be that what she says is accurate, but I have no evidence on that point.

    Condemned Cottages (Repair)
    Mr. Bossomasked the Minister of Local Government and Planning if he will investigate the possibility of some arrangement being made whereby condemned cottages, which cannot be pulled down owing to the lack of other housing accommodation, may be made weather proof and inhabitable, particularly where the low rental makes it impossible for the owner to meet the expense involved.
    Mr. Dalton: If the hon. Member will let me have particulars of any cottages which he has in mind, I will look into the matter.
    Mr. Bossom: Is the right hon. Gentleman not aware that all over the country there are many cottages of this sort with which the Minister must, or should be, acquainted; and, in the circumstances, could he not give this consideration to see whether something could be done, as there is a possibility that a great many of these houses could be used for helping to lessen the housing problem.
    Mr. Dalton: This question relates to condemned property.
    Mr. Bossom: They are condemned.
    Mr. Dalton: Exactly. If they are condemned they are not fit to be lived in. Therefore, in the great majority of cases it would be a misuse of building labour and materials, which could be used in building good new houses, to expend them on patching up condemned houses.
    Mr. Bossom: While agreeing that it is better to have new houses, might I ask, when we are not having enough new houses and people are having to live, as the right hon. Gentleman knows, in condemned houses, whether he would not make some temporary arrangement whereby people can have a place to live in?
    Mr. Dalton: I have already asked the hon. Gentleman to give me details of any particular cases, but generally speaking I would be against using building labour and materials on patching up condemned houses.

    Resale Prices
    Mr. Edelmanasked the Minister of Local Government and Planning what action he will take to prevent profiteering in the resale of houses.
    Mr. Dalton: New houses built under licence since the war may not be sold for more than the sum named in the licence. The extension of price control to other houses raises serious administrative difficulties.
    Mr. Edelman: Is my right hon. Friend not aware that almost every estate agent in the country is asking swollen prices for pre-war houses which have absolutely no relation to either their cost or their intrinsic value; and will he take action against these profiteers who are increasing inflation and profiteering from the hardship of homeless people?
    Mr. Dalton: I have very great sympathy with the point put by my hon. Friend. In 1945 the Morris Committee reported, but it was not possible to take action on their report because, in the view of the Government, there were not sufficient valuers available to value all the houses

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    whose prices would have to be controlled, and the call on the time of valuers is not diminishing just now.
    Mr. Shurmer: Is my right hon. Friend aware that it is not only a question of profiteering in houses, but that, as a result of the withdrawal of the powers of requisitioning by local authorities, these houses stand empty for a long time so that the owners can get the highest bid; and ought we not to re-introduce requisitioning in towns where there are thousands waiting for houses?
    Mr. Jennings: Does the right hon. Gentleman not agree that the best way to stop this is for him and his Government to build more houses?
    Mrs. Jean Mann: Is my right hon. Friend aware that we have been told about the Morris Committee findings time and again, and that that has been used as an excuse from the Government Front Bench for the last four years; is he further aware that if an examination is made of the Morris Report it will be found that the reason given why it was impracticable to do anything was that the valuers were not demobilised, that they were still in the Army; and is he further aware that many years have since passed, and that now there is no excuse?
    Mr. Braine: Would the Minister not agree that one way of dealing with the situation would be to allow more flexibility to local authorities to build houses for owner-occupation?
    Mr. Manuel: Is my right hon. Friend aware that this matter is rife in Scotland, where many houses are unoccupied for long periods in order that the owner can get the price he wants; and would he consult with the Secretary of State for Scotland and get some concerted action on this matter, which is assuming very large dimensions in Scotland?
    Mr. Dalton: My writ does not run north of the Border, but I shall be very happy to consult with my right hon. Friend.

    Personal Case
    Mr. Vaughan-Morganasked the Minister of Local Government and Planning why he has refused an improvement grant to Mr. F. G. L. Carey. The
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    Barn, London Road, Redhill, who wishes to add a bedroom to this property.
    Mr. Dalton: Because this is a sub-sidised house.

    Council Houses (Sale)
    Mr. Nabarroasked the Minister of Local Government and Planning what representations he has received from the Kidderminster Rural District Council seeking permission for the sale of council-houses to suitable tenants; what was the nature of the response to these representations; and whether he will make a statement of the general policy of His Majesty's Government in that regard.
    Mr. Dalton: This Council made representations on 4th May last. I told them I could not agree. I would refer the hon. Member to my reply to the hon. and gallant Member for Wembley, North (Wing Commander Bullus), on 10th May last.
    Mr. Nabarro: Would the right hon. Gentleman not agree to reconsider this matter? Is it not a fact that a substantial reduction can be effected in the amount of the annual rates and taxes, through the contribution to housing subsidies, by allowing the sale, only in suitable and desirable cases, and where the council so desire it? Would he please reconsider it on those lines?
    Mr. Dalton: I am always prepared to go on considering it, but as at present advised I do not think I am in a position to reconsider it. This means selling public property to private people, and on the whole I think that is objectionable. No doubt the hon. Gentleman would not take that view, but I and many of my hon. Friends think that is so.
    Sir H. Williams: Would the right hon. Gentleman have a consensus taken among his colleagues to find out how many Ministers own the houses in which they live?
    Mr. George Thomas: Is my right hon. Friend aware that any reduction in the number of council houses available for those in the greatest need as would result from the hon. Gentleman's suggestion—[HON. MEMBERS: "No."]—is bound to be resented by those who are still on the waiting lists of local authorities?
    Mr. Dalton: I agree with my hon. Friend.
    Brigadier Prior-Palmer: Does the right hon. Gentleman not realise that the former Minister of Health gave an assurance at a Brighton conference that he was in favour of this in principle, and that if a case was put up by any local authority he would be prepared to consider it; and is the right hon. Gentleman's policy now in opposition to that declared by his right hon. Friend?
    Mr. Fernyhough: Does my right hon. Friend realise that, if local authorities charged the same price for houses as private enterprise charges when selling similar accommodation, there would be no request for them to be sold to the tenants?
    Mr. Nabarro: As it is evident that there is a considerable difference of opinion about this matter and that a good case can be made for the large number of tenants who want to buy these council houses, is the Minister prepared to hold an inquiry into the whole problem, particularly in the rural authorities' areas.
    Mr. Dalton: No, Sir.

    Agricultural Cottages (Evictions)
    Mr. George Jegerasked the Minister of Local Government and Planning what advice or instructions he has given to local authorities on the subject of evictions from council agricultural cottages.
    Mr. Dalton: I strongly object to such evictions and have often told local authorities so. If my hon. Friend will let me have particulars of any case he has in mind, I will look into it.
    Mr. Jeger: Is my right hon. Friend aware that there are three families in the Osgoldcross rural district that were evicted only a fortnight ago who will receive his sympathetic reply with a great deal of satisfaction?

  PALACE OF WESTMINSTER

    Commons Chamber (Ventilation)
    Miss Burtonasked the Minister of Works if the windows in the Chamber are made to open; and, if not, whether he will arrange for this alteration to be done.
    The Minister of Works (Mr. George Brown): The windows in the Chamber can be opened if necessary, but this would interfere with the proper operation of the air-conditioning plant.
    Miss Burton: Is my right hon. Friend aware that, strangely enough in this hot weather the Chamber has been the coolest place in the Palace of Westminister, but that in the Winter when the Chamber is full the atmosphere is unbearable; and could he do something about it for next year?
    Mr. Brown: I do not think that should be so. It is merely a matter of the control of the plant. I am sure that will be done.
    Mr. Godfrey Nicholson: Can the right hon. Gentleman say who is responsible for issuing orders as to the difference there should be at different times of the year between the outside and inside temperatures? Is he aware that many hon. Members often find the House a little too hot, and can he do something to cool it down?
    Mr. Brown: It may be that the feelings of each hon. Member varies with his own ability to engender heat. For controlling the temperature, we have engineers here for that very purpose.
    Mr. Nicholson: Who instructs the engineer?
    Mr. Brown: The engineer.
    Mr. Nicholson: Does the engineer instruct himself? Surely somebody must give him instructions?
    Mr. Donnelly: Will my right hon. Friend be very careful before opening too many windows in case the lady Members' hats are blown around?
    Mr. Molson: Could the right hon. Gentleman tell us the temperature at which it is intended to maintain the Chamber?
    Mr. Brown: Not without notice.
    Mr. H. Hynd: Who is responsible for giving instructions about anything in this building?

    Telephone Booths
    Sir T. Mooreasked the Minister of Works if he is aware that the basement telephone booths are not sound proof;

    2135
    and whether he will take steps to deal with this inconvenience.
    Mr. G. Brown: The basement telephone booths are reasonably sound proof, provided that the doors are properly closed. The answer to the second part of the Question is, therefore, "No, Sir."
    Sir T. Moore: That is just not true. The right hon. Gentleman must be well aware, if he has used these telephone booths, of the embarrasment that can be caused by these mechanical devices; and will he take immediate steps to go down into the basement telephone booths and try to conduct a conversation which will not be overheard by his next door neighbour, irrespective of whether the doors are closed or not?
    Mr. Brown: A lot depends upon the voice one uses when speaking on the telephone. I have used these telephones quite a bit myself. Since this Question was put down I have been there, and I can assure the hon. and gallant Gentleman that if he only shuts the door he will find that he can have a reasonably private conversation.
    Mr. Sandys: Would the right hon. Gentleman consider the possibility of providing rather more telephones in a more accessible part of the House?
    Mr. Brown: No, Sir. One of the things that strikes me in this job is that all sorts of people can spend all their time thinking up all sorts of new ways of spending money about this Palace. I think that on the whole the number of telephones here is adequate.

    Keir Hardie (Statue)
    Mr. Moodyasked the Minister of Works whether he has yet reached a decision on the desire of the House to erect a statue of Keir Hardie within the precincts of the Palace of Westminster.
    Mr. G. Brown: No decision has been reached on the proposal to erect a memorial to Keir Hardie as consultations have shown no unanimity on the subject in the House.
    Mr. Moody: Does my right hon. Friend realise that this will be a great disappointment to people in many parts of the world who are admirers of Keir Hardie, and will he take steps to see that
    2136
    something is done about it, and that very soon?
    Mr. Brown: Yes, Sir. I take the view that it is a very great disappointment that we are not able to make progress. I am willing to have further discussions on this matter in the House, if hon. Members can be pursuaded to take the view that it is a good thing to do so.
    Colonel Gomme-Duncan: Is the Minister aware that this disappointment is nothing to that from which Keir Hardie must be suffering from the modern Labour Party and its methods?
    Dr. King: Is my right hon. Friend aware that when this Question was debated in the House it received very generous support from both sides of the House, with the whole of this side in favour of perpetuating the memory of Keir Hardie within the precincts of the Palace of Westminster, and that if the Whips were taken off from the other side we should get it carried by a large majority?
    Mr. Brown: I am governed by some rules in this matter, as the House knows, but if it is thought useful to reopen discussion I will certainly do so.

  MINISTRY OF WORKS

    Offices (Derequisitioning)
    Mr. Walker-Smithasked the Minister of Works whether, in view of the prohibition of future office building for commercial purposes, he will accelerate the derequisitioning of office blocks.
    Mr. G. Brown: No, Sir. The restriction on office building, to which my right hon. Friend the Chancellor referred in his statement on 21st June, is being applied to Government office building projects, the vast majority of which are designed to replace requisitioned premises. The curtailment of new Government office building will therefore inevitably slow down the derequisitioning of office blocks.
    Mr. Walker-Smith: Is there no prospect of any addition to commercial office premises at all, and cannot the Government make some contribution by way of building their own requirements?
    Colonel Gomme-Duncan: Can the right hon. Gentleman say how his requirement link up with the Provision of new offices for the Ministry of Materials?

    Unlicensed Building
    Mr. A. Edward Daviesasked the Minister of Works (1) whether it is proposed to continue the present arrangements for unlicensed domestic and industrial building in view of the need to conserve building resources;
    (2) what estimate has been formed of the amount of unlicensed domestic and industrial building work which is at present proceeding; and what was the figure for 1950.
    Mr. G. Brown: I have already announced the continuation of the present licensing arrangements in my reply to my hon. Friend the Member for Islington, South-West (Mr. A. Evans), on 26th June. It is not possible to say precisely what amount of work is done below the licensing limits.
    Mr. Davies: Does not my right hon. Friend take the view that much work is being done of minor importance under the unlicensed system, and in view of the necessity of doing everything possible to build as many houses as we can in these difficult times, does he not think that we ought to stop up the leakage that is going on in this way?
    Mr. Brown: No, Sir. I do not. The work done under this limit includes all maintenance repair work on private houses as well as local authority houses, and I think that if we reduce the limit we shall only add to the paper work without making available any more labour or materials for building purposes.

    The Gaunt's House, Bristol
    Mr. Awberyasked the Minister of Works what is the purpose of the large buildings in Bristol, for the construction of which a licence has been given to the Pearl Assurance Company; and who are the prospective tenants.
    Mr. G. Brown: The building known as The Gaunt's House, Bristol, is being erected by the Pearl Assurance Company and the work was licensed in April, 1950. The building will be leased to my Department and will be occupied mainly
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    by staffs of the Board of Inland Revenue, the Ministry of National Insurance and the Ministry of Food. This will enable requisitioned premises to be released.
    Mr. Awbery: Is the Minister aware of the considerable concern of many people that an assurance society can build property for the Government? They want to know why the Government is not prepared to build their own properties.
    Mr. Brown: That is another question_ There are a number of policy issues involved there. It may be helpful to my hon. Friend to know that no further projects of this kind are now going forward.
    Mr. Ian L. Orr-Ewing: Is this not the best possible evidence of the way in which Departments conceal the expenditure in which they are involved by getting other people to do the work for them so that the amount does not appear on their Votes?
    Mr. Brown: That is certainly not so. This accommodation is rented, and the rent appears in my Vote in the ordinary way. There is no concealment going on. If the hon. Member takes the view that private enterprise should not be used in this way, I am prepared to take that view into account.
    Mr. Orr-Ewing: Is it not the case that capital expenditure does not appear on the Minister's Vote.
    Hon. Members: Answer.

    Coventry (Reconstruction)
    Mr. Edelmanasked the Minister of Works what the effect of changes in the investment programme will be on Coventry's reconstruction schemes; and what action he will take to ensure that the expansion of Coventry's defence industries will not be detrimental to essential building for civilian needs.
    Mr. G. Brown: The changes announced by my right hon. Friend the Chancellor of the Exchequer on 21st June should not in themselves have any substantial effect upon the reconstruction programme at Coventry, but its rate of progress is generally affected by the large amount of work of all kinds already in hand.
    Mr. Edelman: Will not my right hon. Friend agree that industrial areas like Coventry which have a particular responsibility for the defence programme should not thereby be penalised in their ordinary building programme?
    Mr. Brown: Yes, certainly, but I make the point that there is an enormous amount of building work programmed in Coventry.

    Food Office, Lambeth
    Lieut.-Colonel Liptonasked the Minister of Works when he will provide alternative accommodation for the local food office now at Lambeth Town Hall.
    Mr. G. Brown: I hope to be able to release the Lambeth Town Hall by the end of September.
    Lieut.-Colonel Lipton: is my right hon. Friend aware that his answer will be received with great satisfaction by those who have been deprived of their own public hall for some 12 years?

  NATIONAL FINANCE

    Savings Certificates (Value)
    Mr. Osborneasked the Chancellor of the Exchequer what is today's nominal value, including accrued interest, of a National Savings Certificate, purchased in August, 1945, for 15s.; and what is its real purchasing power allowing for the subsequent drop in the internal purchasing power of the pound sterling.
    The Chancellor of the Exchequer (Mr. Gaitskell): 17s. 11d. and 13s. 3d., respectively.
    Mr. Osborne: Is the Chancellor of the Exchequer personally proud of the policy that repays a 15s. loan at 13s. 3d. after having had the loan for six-and-a-half years?
    Mr. Gaitskell: I think that the hon. Gentleman knows perfectly well that I am much concerned about the rise in the cost of living, the cause of which is largely beyond our control.
    Sir H. Williams: Having regard to his concern, why does not the right hon. Gentleman stop the printing presses at the Bank of England which are the cause of the trouble?
    Mr. Osborne: As the Chancellor is concerned, will he give any hope that this depreciation is about to come to an end?
    Mr. Gaitskell: Yes, Sir. I think that there is some reason for hope here because international commodity prices, as I said the other evening, have recently shown a tendency to move downwards.

    Stock Dividends (Non-Resident Tax)
    Mr. Molsonasked the Chancellor of the Exchequer if he will make a statement regarding the remittance of sums to enable United Kingdom investors to pay the non-resident tax on stock dividends.
    Mr. Gaitskell: Yes, Sir. Residents of the United Kingdom who receive stock dividends in respect of foreign investments will in future be allowed to remit money to meet any taxes payable on the stock dividends in question, so that they can retain the securities without the necessity of selling some of them to cover the tax due.
    Mr. Molson: Will the Chancellor sympathetically consider extending this most valuable concession to rights to take up additional shares?
    Mr. Gaitskell: I am prepared to consider any suggestion of this kind on its merits. The hon. Gentleman will appreciate that this was a very small concession, not costing very much, which I could make easily.

    Property Revaluation
    Mr. J. R. Bevinsasked the Chancellor of the Exchequer whether the assessment of industrial and commercial properties so far reassessed under the provisions of the Local Government Act, 1948, show a substantial increase on existing levels; and, if so, by what percentage.
    Mr. Gaitskell: It is much too early to give any reliable estimate.
    Mr. Bevins: How can the Chancellor say that it is much too early to give the information when this has been going on for a period of three years? Is he not aware that proposals are now being made to raise the assessment of businesses and commercial premises in this country from 50 to roo per cent.? Does he not realise

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    that the whole of this revaluation is a mass of confusion, and will he apply his mind to this matter?
    Mr. Gaitskell: The hon. Gentleman's supplementary question raises a number of much bigger issues. I can only assure him that at the moment we really cannot answer his Question.
    Mr. Bevinsasked the Financial Secretary to the Treasury if he will make a statement on the practical difficulties now experienced by the Inland Revenue in seeking to create uniform property assessments under the Local Government Act, 1948.
    The Financial Secretary to the Treasury (Mr. Jay): I have no general statement to make on this matter, but if the hon. Member has any particular point in mind perhaps he would communicate with me.
    Mr. Bevins: Would the right hon. Gentleman confirm the point in my Question? I think he will find that the original idea of creating uniformity of assessments throughout the country has already gone by the board completely, in which case he will recognise that complete nonsense is made of the equalisation grants to local authorities? Will he look into the administration of this matter?
    Mr. Jay: I think the right hon. Gentleman's fears are exaggerated a little, but I will consult the Inland Revenue Department.

    Post-War Credits (War Widows)
    Miss Hornsby-Smithasked the Chancellor of the Exchequer what would be the estimated annual cost of paying Post-War Credits to the widows of war casualties six months after the latter's death.
    Mr. Gaitskell: I regret that this information is not available.
    Miss Hornsby-Smithasked the Chancellor of the Exchequer if he has considered the resolution, a copy of which has been sent to him, passed at the Annual Conference of the Women's Section of the British Legion, to the effect that Post-War Credits be paid to widows of ex-Service men six months after the death of any such war casualty; and what action he proposes to take in the matter.
    Mr. Gaitskell: Yes, Sir. I am afraid I could not see my way to adopt this suggestion.
    Miss Hornsby-Smith: In view of the very small amount which would be involved, would it not be possible for the Chancellor to reconsider this matter, as many of these women have lost their husbands through service to their country, and have lost their normal sources of income which they would have expected to get?
    Mr. Gaitskell: The hon. Lady will appreciate that a great many suggestions have been made to pay back Post-War Credits to various classes of persons on hardship grounds, and we have always had to turn them down because of administrative difficulties. The only reasonable way of repaying is on the basis of age. as we do at present.
    Mr. Profumo: Will the Minister consider the publication of a pamphlet explaining, in very simple words, why the Government take their present attitude with regard to Post-War Credits, in order to alleviate the widespread suspicion of the public that the majority of people now living will never be repayed during their lifetime?
    Mr. Gaitskell: I do not think there is any need for such a pamphlet. We have repeatedly explained the position.
    Mr. Douglas Marshall: What is the estimate of the cost of this concession?
    Mr. Gaitskell: I have already said that I could not give any such estimate.
    Mr. Moody: Will my right hon. Friend give sympathetic consideration to reducing the age limit for the repayment of Post-War Credits?

    Treasury Stock (Purchase Price)
    Sir Waldron Smithersasked the Chancellor of the Exchequer the total loss on Treasury 2½ per cent stock held by Government Departments, reckoning the difference between purchase price and the latest available market price.
    Mr. Gaitskell: It would not be in the public interest to disclose the price at which stock is purchased by the National Debt Commissioners or other Government

    2143
    Departments. In any case, no question of profit or loss could arise unless and until the holdings were realised.
    Sir W. Smithers: Surely the taxpayer is entitled to know the reason why so much of his money has been lost? is not the Chancellor also aware that the loss, whatever it is, is due to the fact that the present Minister of Local Government and Planning committed the folly of his cheap money policy, which is the reason for the whole of the trouble?
    Mr. Gaitskell: The hon. Gentleman is wrong in assuming that there has been a loss, and the rest of the supplementary question is therefore irrelevant.
    Mr. Godfrey Nicholson: Are not most of these figures published in White Papers, and do not the purchase prices of the stocks make it evident that many millions have been lost? If the Chancellor would look at the relevant White Papers, he would see all the figures.
    Mr. Gaitskell: No, Sir; the hon. Gentleman is wrong. The purchase price at which stock is bought is never published.

    Motor Cars (Purchase Tax)
    Mr. Draysonasked the Chancellor of the Exchequer what instructions he gave to motor car manufacturers, prior to the Budget, to hold up the delivery of new cars on the home market until after his Budget proposals had been announced.
    Mr. Gaitskell: None, Sir.
    Mr. Drayson: Is the Chancellor aware that a number of people were notified before the Budget that they would receive deliveries of cars on the home market before the Budget and sent their cheques accordingly; but, where they would have normally been kept waiting 10 days, have had to wait five or six weeks; and when, in fact, delivery was made an additional sum of money for double purchase tax had to be paid?
    Mr. Gaitskell: That is not a matter in which I have been concerned at all.

    Income Tax, Rule 9
    Mr. Profumoasked the Chancellor of the Exchequer the number of officers of His Majesty's forces who made claim during the year 1949–50 for Income Tax
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    allowances in respect of the maintenance of their uniforms, under Rule 9 of Schedule E of the Income Tax Act, 1918.
    Mr. Gaitskell: I regret that this information is not available.
    Mr. Profumo: Is the Chancellor aware that as the law stands at the moment he is under a statutory obligation to meet all just claims under this Section for the past six years, and will he take steps to draw that matter to the attention of all officers serving in His Majesty's Forces?
    Mr. Gaitskell: I think that my hon. Friend the Financial Secretary has already given an assurance on that point.

    Price-Controlled Goods (Tax)
    Mrs. Castleasked the Chancellor of the Exchequer why, in the case of certain price-controlled goods, Purchase Tax is charged on the maximum permitted price instead of on the actual price paid by the retailer.
    Mr. Chetwyndasked the Chancellor of the Exchequer why Purchase Tax is charged at the full rate when articles are sold at less than the maximum price.
    Mr. Gaitskell: Purchase Tax is charged by reference, not to the retail price, but to the wholesale price as determined in the open market. In the majority of cases where the tax is collected from the wholesaler in respect of the sale to a retailer, it is based on the actual price paid by the retailer. There are, however, cases, especially when goods are sold in bulk by a manufacturer direct to a large retail store, where there is no normal wholesale transaction. In such cases, it is necessary, in order to preserve a common basis of assessment for different traders, to settle in accordance with the law what the open market wholesale value of the goods would be. This need not necessarily be the maximum wholesale price allowed under price control, though this is one of the factors which has to be taken into account.
    Mrs. Castle: Is my right hon. Friend aware that where a member of the Carpet Trade Federation, which operates a price ring, agrees to sell to a retailer at less than the ring price, the Customs and Excise insist on Purchase Tax being paid on the maximum permitted price, rather than on the price actually charged to the retailer; and does he not think it improper

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    that a Government Department should in this way reinforce the activities of a price ring which is operating against the interests of the consumer?
    Mr. Gaitskell: I could not agree with my hon. Friend that the Customs are aiding and abetting a price ring in this matter at all. This procedure has always obtained since the Purchase Tax was first introduced, and it is the only way in which we can deal with the difficult problem of direct sales in bulk from the manufacturer, if we are to be fair to other traders, who pay their wholesalers in the normal way.
    Mr. Chetwynd: Will my right hon. Friend have another look at this to make sure that the consumer can get the full benefit of the cheap price?
    Mr. Gaitskell: It has been looked at a great many times since the Purchase Tax was introduced, and I repeat that if we are to be fair to all the traders concerned and put them on the same basis in regard to the tax, I know of no other way to do it; but I am quite prepared to have another look at it.
    Mr. Grimond: Does the right hon. Gentleman not think that this tax runs quite contrary to Government policy of reducing prices? Is he aware that tax is sometimes charged on freight and postage, and will he look also at that aspect?
    Mr. Gaitskell: Perhaps the hon. Gentleman will put a Question down.
    Mrs. Castle: Is my right hon. Friend aware that his reply does not deal with my point, which concerns, not the difference of treatment between one retailer and another, but a difference of treatment of one retailer by one member of the Federation and another; and that he is, in fact, allowing a retailer to be held to ransom by the price ring by the operation of two different prices?
    Mr. Gaitskell: Perhaps my hon. Friend will give me the particulars. Perhaps I have misunderstood her.

    Korea Operations (Cost)
    Mr. Emrys Hughesasked the Chancellor of the Exchequer his estimate of the cost to this country of the first year of the war in Korea.
    Mr. Gaitskell: The additional direct expenditure so far incurred by the United Kingdom is about £10 million.
    Mr. Hughes: Can the Chancellor give any estimate of the indirect cost?
    Mr. Gaitskell: No, Sir; that is not possible.

    Television Sets (Deaf Persons)
    Mr. Geoffrey Hirstasked the Chancellor of the Exchequer whether he will grant deaf people similar facilities for obtaining television sets as are now granted to blind people in the case of wireless sets so that there is equality in treatment as regards relief from Purchase Tax.
    Mr. Gaitskell: The degree of dependence of the blind upon the wireless is unique, as was recognised on all sides of the House when special relief from Purchase Tax on wireless sets was granted to them. Their exceptional position has also been accepted in the granting of free wireless licences, and in the special treatment accorded to them on pensions. In the circumstances, I cannot agree to extend similar treatment to deaf persons in respect of television sets.
    Mr. Hirst: Does not the Chancellor appreciate that the people who are totally deaf feel that they are suffering from an affliction which is equally handicapping as the loss of sight to those who are blind? Surely there is a case in reasonable justice for totally deaf people to have some facilities for obtaining television sets through some system as is now in operation to enable the blind to get wireless sets? Will not the right hon. Gentleman look at this matter again in a more sympathetic attitude?
    Mr. Gaitskell: I have looked at it, and we all have sympathy with these totally deaf people, but I am bound to say that I cannot put their claims above those of many other categories of people, including bed-ridden persons and others, who might have an equal claim to exemption if we were to give it to the deaf.

    Cost of Living
    Mr. Osborneasked the Chancellor of the Exchequer if he has considered the resolution recently passed by the Trades Union Congress, a copy of which has

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    been sent him, and if he will appoint a Government commission to investigate ways of curbing the continually rising cost of living; and if he will make a statement.
    Mr. Gaitskell: The hon. Member is misinformed. No such resolution has been sent to me, and I am not aware that any resolution of this kind has been passed recently by the T. U. C. I do not consider that any useful purpose would be served by appointing a Government commission of inquiry.
    Mr. Osborne: If I send to the Chancellor the Press cuttings from various papers stating that this resolution was passed last week and sent to him, will he consider it? Does he not agree that the continually rising cost of living ought to be faced, and must be faced, unless runaway inflation is to result?
    Mr. Gaitskell: I will wait until the hon. Gentleman sends me the cuttings.

    Gift Parcels (Imports)
    Mr. Peter Freemanasked the Chancellor of the Exchequer whether, on completion of a certificate to this effect, he will permit one bona fide gift per annum from a near relative, not exceeding £2 in value, to be admitted into this country without duty or Purchase Tax, in view of the heavy cost of collection in proportion to the value and the hardship to those of small means.
    Mr. Gaitskell: No, Sir. I am afraid the administrative costs required to police such a concession would far outweigh any saving in collection costs.
    Mr. Freeman: Can my right hon. Friend anticipate his next Budget statement and consider something along these lines, especially in view of the precedent
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    which he has in allowing small quantities of tobacco and wine to be brought in without paying duty?
    Mr. Gaitskell: That is a very old precedent, but I would draw my hon. Friend's attention to another concession, that regarding food parcels and other things, which are allowed in free up to 22 lb. in weight.
    Mr. Freeman: Will the Chancellor consider those other points?

    LOCAL GOVERNMENT MANPOWER
    Mr. Geoffrey Cooperasked the Chancellor of the Exchequer when it is anticipated that the final report will be made by the Local Government Man-Power Committee.
    Mr. Gaitskell: I would refer my hon. Friend to the reply I gave on 26th June to my hon. Friend the Member for Islington, East (Mr. E. Fletcher).
    Mr. Cooper: Can my right hon. Friend say when an opportunity will be provided for these reports to be debated? Since the Interim Report indicated a considerable duplication and waste of effort between local government officials in their respective responsibilities and in their contacts with Central Government Departments, should not a similar Committee be set up to investigate the manpower wastage in Central Government Departments?
    Mr. Gaitskell: The question of a debate is one for my right hon. Friend the Leader of the House, and not for me. I suggest that my hon. Friend should await the publication of the report in the autumn. As regards the second question, there is no such intention at present.

ORDERS OF THE DAY

  FINANCE BILL
  Order for Third Reading read.
  3.32 p.m.
  The Financial Secretary to the Treasury (Mr. Douglas Jay): I beg to move, "That the Bill be now read the Third time."
  The Bill emerges from a somewhat extensive discussion which has been distinguished by the mental and physical staying power of my right hon. and learned Friend the Attorney-General, itself no less tenacious than the Government's majority; has been enlightened by a number of constructive contributions from various parts of the House; and also enlivened, but not perhaps enlightened, by some rather less constructive interventions by the Leader of the Opposition. Leaving aside the right hon. Gentleman and his interventions, we can agree that in some respects, if not very major ones, the Bill has been improved by our long debates.
  Nevertheless, the essentials of our original Budget proposals stand preserved in our Bill and, in our judgment, the policy enshrined in them stands confirmed by events. The first principle of our Budget and our Finance Bill this year has been this: that, at a time of rising prices and profits, some restraint must be placed on home demand, and the main extra revenue required for re-armament must come from increased taxation on profits. Therefore, we raised steeply the percentage of profits paid in taxation by increasing the Profits Tax on distributed profits, as well as the -standard rate of Income Tax, and by the withdrawal of initial allowances.
  In reply to those who feared that this might denude industry of necessary working capital, I gave an estimate in the Budget debate that profits were going to be high enough, after allowing for depreciation, and for the purchase of materials at higher prices, to pay the higher taxes and to maintain existing dividends. Company reports since April have Sully confirmed that view, and have shown that the increase in taxation we made was certainly not too large. Indeed, if it fails in its purpose of restraining further increases in dividends, we shall be compelled, in order to restrain the inflationary pressure on living costs, to find some other method of keeping dividends down.
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  Secondly, we believe that the defence programme required the disinflationary increases in taxes included in the Bill on certain of the less necessary consumer goods, such as motor cars, television, and wireless sets, as well as on profits and higher incomes. That view has also been fully confirmed by the obvious upward pressure of the cost of living since then, which has given no support to those who thought that we should have had an easier Budget and Finance Bill.
  Thirdly, we took the view that we ought to make a major attack in the Bill on evasion of direct taxes, and of Profits Tax in particular. We are as firmly of the opinion as ever that this is absolutely right and necessary, even though the Opposition may appear at times to be more opposed to these evasion devices in theory than in practice. Surely a campaign against evasion is not merely a matter of collecting extra millions from the narrow Revenue point of view; but is also a matter of maintaining the confidence of the great body of the public that incomes in this country are fairly distributed and fairly taxed.
  If asked why it is that both our production and productivity have been much higher since the war than before, I would guess that there are two main answers. The first is that full employment has removed the impulse to go slow and a great deal that went with that, and secondly, that the mass of the people have greater confidence than they had before in the justice of the system by which the fruits of their labours are distributed.
  Mr. Churchill: Is this part of the October Election campaign?
  Mr. Jay: No, Sir; this is the Finance Bill, which the right hon. Gentleman does not seem to have studied so closely as some of his colleagues. Many people forget how great is the redistribution of incomes carried out by the taxation embodied in this Bill, compared with that of 20 years, or indeed of 40 or 50 years ago. It is worth recalling for instance, that in 1913–14 a married man with two children and an income of £30,000 a year had £27,575 left after paying tax. In 1938–39, he had £13,684 left. With the taxation imposed by this Bill he has £4,191.
  Mr. Jennings: We did not have a spendthrift Government then.
  Mr. Jay: When figures like those are presented to the ordinary wage earner or salary earner, he is inclined to say that they are all very well on paper but that those with large incomes manage to evade their paper obligations. That may not be as true as.he thinks, but it is because we want to maintain the confidence of the people in the fairness of the system that we attach great importance to the Clauses in the Bill designed to defeat evasions and avoidance of taxation.
  We have accepted quite a number of minor improvements in the Bill from hon. Members on both sides, and not only from hon. Members opposite. My hon. Friends have mainly preferred to make their suggestions by correspondence and consultation and rarely by putting down Amendments on the Order Paper. That explains both why they have more often convinced us, and why the Government have put down so many Amendments on the Committee and Report stages. I should mention my right hon. Friend the Member for West Lothian (Mr. Mathers), who had the distinction of putting down two Amendments and of adding one word, "aesthetic" to the Bill, and, I believe, to this branch of the law.
  Among the main changes made, the tax evasion Clauses have been amended so as to involve the minimum of work for industry and for the tax collector, while preserving the powers which are essential. In the case of Clause 33. which affects companies seeking to transfer abroad, we have now provided that the Treasury shall have power to give a dispensation—to use my right hon. Friend's own word—in certain circumstances which are shown to be reasonable. In the case of Clause 34, which really does no more than continue the normal double taxation practice, the powers will now only apply where the Commissioners of Inland Revenue specify that they should. Under Clause 24, as a result of the Amendments we have made, the overseas recipient has been given the right to obtain exemption from the return of his bank interest as taxable income.
  On the side of Customs and Excise, further reliefs have now been given by way of both Entertainments Duty and Purchase Tax. The amended Entertainments Duty Schedule, which the House approved last night or early this morning, will at once keep down the price in the
  2152
  cheaper cinema seats, to the advantage of the old age pensioner and the children and the small country cinemas in particular. It will supply added revenue to the British film producer, as well as £6,500,000 of revenue towards the cost of the re-armament programme. In the case of the speedways, my hon. Friends will have noticed that the Schedule will actually involve a reduction of a id. in the duty on the ls. 9d. ticket.
  The exemption of household goods from Purchase Tax, to which we have added tooth brushes and some boot and shoe materials in the course of the debates on the Bill, were intended particularly to assist the ordinary housewife. Therefore, in consultation with my right hon. and learned Friend the President of the Board of Trade, I have been following up these reductions to see if prices to the public have gone down. I find that where the goods are price-controlled this has occurred, unless there were other offsetting increases in costs; but it has not happened in by any means all cases where there was not price control. That might sometimes be due to the fact that they were old stocks which had already borne the higher tax, but it is a reminder that reductions in the tax do not automatically involve reductions in the price to the public. I propose, therefore, to consult further with my right hon. and learned Friend the President of the Board of Trade to try to ensure that wherever possible these reductions are passed on to the public.
  Altogether, the tax concessions made since the introduction of the Bill will cost, so far as we can estimate, £4,700,000 in a full year. That is without allowing for the drawback for oil on exported goods and the concession on the initial allowance for ships, which is difficult to put into figures. There have also been increases made by my right hon. Friend the Minister of Pensions on the allowance for war pensioners running Ministry of Pensions cars, as well as of course, much larger increases for old age pensioners and National Assistance. But they are not included in the Bill, and therefore I will leave them out of the argument.
  As against the change of £4,700,000, which seems to us to be about as far as we can go if the essential disinflationary purpose of the Bill is to be maintained, I find it a little hard to understand the

  2153
  attitude of the Opposition. The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton)—I regret that he is not with us on the last lap—estimated, no doubt giving himself the benefit of the doubt, that another £50 million—not more —could be saved on Government expenditure. But, even neglecting the Amendments which the Opposition have not pressed to a Division, and which may perhaps be regarded as just part of the annual parade, the Opposition have pressed to a Division Amendments, including those relating to Petrol Duty and the undistributed Profits Tax, which would cost £70 million or £80 million this year and well over £100 million in a full year.
  I presume that when the Opposition press a proposal to a Division they mean to imply that in their view the proposal ought to be carried into effect. Therefore, on their own showing, the measures for which they have voted would have stoked up the inflationary pressure by about £50 million a year and thereby added to the pressure on the cost of living from that source. I am not allowing there for the fact that the Opposition voted against the initial allowance, which would have lost us a great deal of revenue, not this year but in two years' time.
  Sir Arthur Salter: Surely the hon. Gentleman realises that some of the Opposition's proposals were alternative ones and that when the Opposition voted for certain of the later Amendments, they knew that some of the earlier Amendments which would have cost money had been defeated. The hon. Gentleman cannot possibly argue on the basis of the sum which he has just mentioned.
  Mr. Jay: The right hon. Gentleman is always very ingenious, but I assume that the Amendments for which the Opposition voted were ones that they put forward seriously.
  Sir Peter Bennett: The hon. Gentleman has again made a statement about the depreciation allowance. Surely he knows that this was claimed by Sir Stafford Cripps to be simply an Income Tax-free allowance, but what has happened is that as the Income Tax has gone up it has been a fine on industry. My company is having to pay £17,000 more in tax than it would
  2154
  otherwise have done it the depreciation allowance had not been instituted. How can the hon. Gentleman claim that there would be any loss to the Government? It is only a postponement of payment.
  Mr. Jay: As the hon. Gentleman's company is going to pay more tax, it shows that if the change were reversed, the Revenue would get less.
  We again commend the Bill to the House. It is, after all, primarily designed to finance the defence programme and to face squarely the undeniably great economic difficulties—do not let any of us forget them—which still confront us, as a result of the huge increase in import prices and the renewed pressure on our balance of payments. For that reason, we fully agree that the Bill claims to be an austere and honest—to use the words of the Leader of the Opposition just after the Budget speech— rather than a popular Measure. Clearly, this is not the year in which we can make the reductions in taxation which we should like to make.
  Although that is so, however, perhaps I may be allowed to make this final observation. We have listened for some hours in this Chamber to eloquent and even heartrending stories by hon. Members opposite about struggling Surtax payers, the sorely oppressed motor car owners, and the company directors almost begging in the streets, and all the rest of it. Yet when one goes out of the Chamber on to the Terrace, as I confess I do from time to time and look across the river, or at the launches on the river, or if one goes anywhere outside and sees the real British public, it certainly strikes one that they are better dressed, and in better heart, and more able to enjoy themselves than I can remember for a very long time.
  The economic difficulties that face us are very real, and some of them are likely to get greater. But if one turns away for a moment from the sometimes exaggerated gloom of hon. Members opposite, and contemplates the British nation as it really is, one is filled I find with renewed confidence that those difficulties will nevertheless be overcome.
  3.49 p.m.
  Captain Crookshank: I rise to make the last speech from this bench on the Finance Bill, and it will not be like that of the Financial Secretary, an election speech. I agree with

  2155
  what he said in compliments to the,Attorney-General for his courtesy and lucidity and his endurance all through one night during the passage of the Bill when "through the night of doubt and sorrow" the led the pilgrims opposite into the Division Lobby while the other Ministers were taking a rest, whether earned or not. I want to thank the hon. Gentleman for his reference to my right hon. Friend. We regret the absence in the later stages of the Bill of the right hon. Member for Aldershot (Mr. Lyttelton). And here Oliver to Oliver succeeds, just as on the Front Bench opposite Wykehamist follows Wykehamist in these financial matters.
  Now we come to the end of the journey. We have passed through all the trees and we can now have a look at the wood. It is just on three months since the right hon. Gentleman opened his Budget, and the basic facts of the situation, as he then expressed them, remain unaltered. I must remind the House of one thing. The Finance Bill, of which we are taking leave today, is the legislative form of the Budget proposals. The supply has not yet, of course, all been voted, but here, through this Bill, we are authorising the raising of the necessary tax revenue for the purpose. And the figure of tax revenue for this year is £4,015 million. I want to remind the House that that figure is one-third higher than the figure in the most expensive year of the war. It is a figure which shows an increase of just about £1,000 million since the first Budget introduced by the first predecessor of the right hon. Gentleman.
  That is the measure of the extra taxation which has been imposed upon the nation by the Socialist Government—over £1,000 million. In parenthesis, it is interesting to remember that it is just about the same figure as the total tax revenue which was estimated for the last year before the war. It is a staggering thing when one reflects that that is what the taxpayers of this country are invited by us, through the passage of this Bill, to shoulder as their burden.
  Mr. Douglas Houghton:Will the right hon. and gallant Gentleman give way?
  Captain Crookshank: No, I would rather make my speech, as it is the last one I shall make on this Bill. At the
  2156
  time of the Budget a great number of people, on first reaction, said, "This is not so bad," in spite of the staggering figure. I think that was really because they had expected that different taxes would have been put on, and because the taxes did not happen to be put upon any of the things in which they were directly interested. They forgot, or overlooked the fact, that this great increase over last year was cumulative over the enormous rise which has taken place in the last five or six years. We are, in fact, piling up Pelion on Ossa not for the third time but for the sixth time.
  The basis of the whole level of taxation is already so high that just because the impositions this year were not an enormous increase on last year, people forgot that they were an increase on something which was already almost intolerable. And the views of the two sides of the House were well reflected by something which occurred during the Budget Statement itself. The Chancellor had reached the stage of his speech when he was explaining that there was a gap between what we would get on last year's taxes and what we wanted to get, and how was he to fill it up? He said:
  " We have a gap of £150 million.…"
  No doubt he remembers saying it—
  " There are obviously two ways we can set about closing it—either by cutting down Government expenditure—(Opposition cheers)—or by increasing taxation—(Ministerial cheers)."
  That was a vocal comment on his need to fill up that gap which was certainly revealing. It put quite clearly once again the complete rejection by all Socialists of the old Gladstonian theory that the best place for money to fructify is in the pockets of the people. They think that the best place for it to fructify is in the coffers of the Treasury. We have seen how, instead of fructifying in the last year, it has been squandered all over the place.
  During these days we have debated the Clauses of the Bill in detail and, in spite of the Financial Secretary rather brushing it off, important changes and concessions have been made. It is a fact that the right hon. Gentleman has accepted many of the suggestions which have been made from this side of the House. We know nothing about those other pressure groups behind, to which the hon. Gentleman referred. Though

  2157
  we did have an exhibition by the hon. Lady the Member for Blackburn, East (Mrs. Castle), the other day with which I dealt at the time. But the fact that so many concessions were made—and I do not apologise for referring once again to something I said last night—makes it most disgraceful that the Prime Minister should have sent that election message to Westhoughton saying that we, the Opposition,
  " do all they can to hamper the Government by means of sham fights and late Sittings.…"
  They were not sham fights. If they had been sham fights they would have had no results, but they did have results. It was all the more discreditable of the right hon. Gentleman that he should have said that at a time when he was motoring to Glasgow—not using the British Railways which he nationalised—[HON. MEMBERS: "Cheap."]—but on a four-day pair provided for him by the kindness of the Opposition Chief Whip.
  The Chancellor of the Exchequer (Mr. Gaitskell): The right hon. and gallant Gentleman cannot. be allowed to make aspersions of that kind upon my right hon. Friend without retaliation. Does not the right hon. and gallant Gentleman realise the purpose of my right hon. Friend's visit to Glasgow? He did not want to go particularly, but he was asked to go by the Glasgow Corporation. [An HON. MEMBER: "Why should he go to Glasgow? He ought to have been here] Because he was—[Interruption.]
  Viscount Hinchingbrooke: This is the biggest Bill of the year.
  Mr. Gaitskell: If I may say so, it was an extremely cheap observation, and I am surprised that the right hon. and gallant Gentleman should have made it.
  Captain Crookshank: I am sorry that I seem to have set off the Government supporters, but we felt it very strongly that to accuse my right hon. Friends and myself—when we were doing the public duty which we were sent to Westminster to do, of dealing with the finance of the year—of waging a sham fight, is something which we resent very much. It is not only the Prime Minister who gets invited by corporations and other bodies and sometimes have to refuse on the
  2158
  ground that they have to be here. [HON. MEMBERS: "Cheap."] The proof of the pudding is in the eating, but we did get concessions as a result of the debate that took place; and if hon. Gentlemen opposite can contain themselves, I shall tell them about one or two as I go along, because they are of great importance.
  Of course, we disapprove of the increases in the Purchase Tax. I appreciate what the Chancellor tried to do, but we are sorry that our united endeavours have not yet succeeded in finding a good way of dealing with these annual discussions on how the Purchase Tax itself, granted there has to be one, can be better arranged from the trading and industrial point of view. We are sorry that this year has not brought success, but I am sure that all concerned will go on thinking about it.
  We also disapprove of the increase in, the Petrol Duty because that means a rise in prices, since the cost of transport enters into the price of almost everything. The result is that this tax, which is the deliberate act of the Chancellor of the Exchequer, makes him deliberately responsible to some extent for the rise in the cost of living. We are glad that the anomalies and absurdities of the Entertainments Tax are to be reviewed, and yesterday we welcomed the new Clause dealing with changes in the cinema taxes.
  When I heard the Financial Secretary just now explaining how first of all it would benefit the old age pensioners and all those who use the cheaper seats, and then that it would benefit everybody in the cinema industry and that, at the end of the day, it would bring £6 million to the Exchequer, it seemed to me that at last we had found a perfect tax which would not hurt anybody and would do good to all the people who might use the cinema. I do not suppose it is really as wonderful as all that, but it is certainly an improvement on what originally appeared in the Bill.
  Our greatest anxieties, of course, have been the fresh imposts and restrictions that are placed by the Bill on industry—the rise in the Profits Tax and in Income Tax. We took, and continue to take, grave exception to Part III of the Bill, and especially to Clause 29 and later to Clause 33. Why did we do that? It is because the great need of the hour is

  2159
  greater production and greater productivity. It was noted at the time that the Chancellor of the Exchequer did not make reference to that in his Budget speech. But the need is there, and that should mean, surely, that more, not less, money should be retained in various businesses. Less will be retained as a result of the grabbing policy of the Chancellor of the Exchequer.
  We object—we have argued it, and I shall not go over it now—to the abolition of the initial allowances, and also to the containing within the jurisdiction of companies which for their own business reasons might wish to change their domicile. We find it very hard to understand this ringed fence theory of the Chancellor—the financial iron curtain—because we believe that in doing this in this way this year, he is sowing very dangerous seeds. I do not understand how it squares with the general international Socialist conception.
  I should have thought that the Government wanted to spread our effort as far as they could. In fact, they are never tired of boasting what they are proposing to do under the Colombo Plan, yet here their action, in deliberately setting about to compel people to stay in this country—and incidentally, as a result, making it more difficult for foreign people to come here should they want to do so—is quite contrary to common sense. I do not see why we should want to build for ourselves this financial straitjacket.
  Of course, we have to admit the argument—but only up to a point; not all the way with the Government—that 'the re-armament programme obviously requires some restraint in the industrial capital expenditure for other purposes. Even British industry, splendidly though it is reacting to the cause of the hour, cannot do everything at once; that is obvious. But we cannot overlook that the effect of initial allowances serves to offset the ever-increasing cost of replacement, and that is where the difficulty will come.
  No argument that we have heard yet—and time is running very short to hear one—can justify the disappearance of the initial allowances and the increased Profits Tax at the same time. We feel that the Government have taken a short
  2160
  sighted view. We try to look at the picture for a rather longer period than the next 12 months, and as we look at it, as far as we can discern its outline for the future, we think that in two or three years' time the result of this cumulative effort on the part of the Government will be very serious to industry.
  We made proposals for reducing the Profits Tax on profits put to reserve which are required for re-equipment and modernisation. It would not have affected the right hon. Gentleman's Budget programme to the extent that the tax represents a transfer from private to public savings. In fact, on that point I should like to take up a point that the Financial Secretary has just made. He was quoting figures to show how, as a result of successive Finance Acts, what was left to a person who had a high nominal income after taxation had dropped and dropped and that over a period of 30 years what was left to the Surtax payer to whom he was referring had dropped from £27,000 net to about £4,000 net. That is true, but it is nothing necessarily to be very happy about in the industrial sense, because of the £27,000 which was left to the taxpayer, say 30 years ago, a considerable proportion went back into investment.
  Now, the man with the £4,000 obviously cannot do anything like as much, if anything, and the result is that the Government have to be called in to provide some of the investment capital which otherwise would have been available as a result of the savings of the more wealthy person. The result of the Government being called in to fill up that gap is that all the rest of us, including that man, have to be taxed to provide that amount of capital.
  Mr. Daines: So what?
  Captain Crookshank: The hon. Member says, "So what?" It is a very bad thing that the Government should get themselves mixed up in that way. I should have thought that even the hon. Member would remember, without my telling him again, about the groundnuts, the Gambia, and all the rest of it. [Interruption.] The hon. Member asked for it. This is merely an illustration that if risk capital cannot be used for ventures of that sort because it has been taken away by the tax gatherer, and if experiments

  2161
  of that kind have to be made, the Government are the only people left to do it; and that is the disastrous result of years and years of that kind of financial policy.
  I turn now to another point, which again follows what the Financial Secretary said. I want to make it quite clear because, again, of the shocking thing which the Prime Minister, of all people, said about it. We on this side have not in any way or at any time condoned tax avoidance and when the Prime Minister —again in that Westhoughton message—said that
  "The long debates on Clauses in the Finance Bill to prevent tax dodging are typical of their tactics,"
  it is quite untrue, and unworthy of him to have said it. He has been in the House as long as I have, and he knows perfectly well if he charges his recollection that year after year successive Conservative Chancellors had to introduce tax avoidance Clauses because some clever person had found a way of getting out of his obligations; but they were always carried with the assent of the House. After all, if somebody dodges his tax it only means that all the rest of the honest taxpayers have to pay just that fractional amount more to make up the difference.
  Mr. Jay: The right hon. and gallant Member will agree that the other side of the House sought yesterday in the Division Lobby to reverse one such Clause which was carried by Mr. Neville Chamberlain in 1936.
  Captain Crookshank: I do not think anything of the sort.
  Mr. Jay: It was a Clause relating to sums settled on children for education. When the right hon. and gallant Member looks at HANSARD, he will find that that is so.
  Captain Crookshank: That is not a tax-dodging thing.
  Mr. Jay: Certainly it was. Mr. Chamberlain himself said it was for the purpose of preventing tax avoidance. [Interruption.]
  Captain Crookshank: One of my hon. and learned Friends reminds me that that was concerned with maintenance. Whatever happened yesterday has no relation to the Prime Minister's statement of 18th June. Of course, we do not condone tax avoidance in any way. It is a monstrous
  2162
  thing to have to repudiate that sort of allegation coming from that source.
  If we look at the effect of Clause 29 on normal genuine transactions and its effect on overseas trade, we naturally felt very great anxiety when the debates in the Committee stage began. Here is the answer to the Prime Minister from the Chancellor himself. The Order Paper yesterday was absolutely cluttered up with Amendments to that Clause, one after another, all of them conceding points which we had argued; five major points in that one Clause.
  As it is amended, the Commissioners have to specify transactions giving rise to directions; reductions of dividends are not to fall within the Clause, nor are issues of debentures for cash; nor is the Clause to apply when consent is given under Clause 33; besides that, the Commissioners have to notify a company that no direction will be made where particulars are submitted before the transaction and where the transaction is for bona fide reasons. We struggled for hours in Committee to try to get those very concessions, and we have got them now.
  We are very glad to find that our arguments were considered sound by the right hon. Gentleman. We were sure that they were sound in the beginning, and now he has accepted our point of view. It is therefore a complete justification of the long time which had to be spent on that Clause. But even at the end of the day, or night, as it may have been—even at the end of the argument—it remains a bad Clause.
  Those are the points I particularly wanted to emphasise. My hon. Friends will continue the debate no doubt, and other points will be brought out. We are all conscious, of course, that the cloud which overhangs this Finance Bill, as it overhung the Budget Statement is the need of re-armament which the Government and the nation have accepted. To make it a complete success and to get the maximum amount of production as quickly as possible, surely it is important to see that the right incentives are there and that the rewards for good work, whether on the part of workmen or management, are available. That is paramount, and yet incentives are still at a discount. I think that one Minister said some years ago that incentives are "all bunk"; I do

  2163
  not know whether he has changed his mind.
  I want to pray in aid, though I admit this is an unusual instance, the right hon. Member for Ebbw Vale (Mr. Bevan). I gather that the Government are likely to have a good many expressions of view from the right hon. Gentleman, but he was stating something of 'importance yesterday and, although we were talking of minerals, most of what he said is applicable throughout this field. The right hon. Gentleman said:
  "I take the view, and I have always taken the view, that if there is a social purpose to be accomplished of any importance, either the State should do it or the State should make it possible for private enterprise to do it; but what the State should not do is to be inert and to surround private enterprise with such inhibitions that private enterprise cannot do it." —[OFFICIAL REPORT, 2nd July, 1951; Vol. 489, c. 1928.]
  That really is the whole argument. We say that in this Bill that is exactly what the Chancellor is doing. He has surrounded private enterprise with every kind of inhibition. In the field where he wants private enterprise to flourish and to get ahead to do the work and carry on with the re-armament programme, we find in various Clauses in the Bill that there are those very inhibitions. Even if he listens to nothing else which his late colleague has to say in the next few months, the Chancellor should reflect on the wisdom of those words.
  It really does look as if the mind of the Government, in spite of all that has happened, were still centred on the idea that it is far more important to see that everyone has an exactly equal minute share of the cake than to see that fair reward is given to those whose effort is to make a bigger cake so that everyone can have a larger share.
  We acknowledge that the Chancellor has come some way in his statement that it is foolish to ignore the function of profit as an incentive. Yet all this really amounts once more to an exhibition of the urge which is always very near the heart of most Socialist politicians to kill the capitalistic system and knock out all capitalists, small as well as great. If that is done we are satisfied that that is the road to ruin for this great industrial nation. We feel this Bill is one more step along that bad road which we have been treading for the last six years.
  2164
  We take leave tonight of the Bill, for better or worse. It cannot be touched, it cannot be amended elsewhere. This will very soon be the law of the land. We have rightly pointed out this year, last year and the year before that we were reaching the limit of our taxable capacity. We have not a real margin for further taxes. We have not really got the margin which the right hon. Gentleman claimed he had this year.
  We have great fears of these new and crushing burdens because of the effect they will have on our business and commercial life. We have tried, as I pointed out—and we have succeeded by our arguments—to secure certain modifications. The responsibility is not on our shoulders; the responsibility rests on the Government for having introduced these proposals and forced them through the House. While they are bound to remain responsible, as Shakespeare said:
  "The evil that men do lives after them."
  Alas, that is the case—the evil will live on.
  4.15 p.m.
  Mr. Grimond: As the right hon. and gallant Member for Gainsborough (Captain Crookshank) has said, we have now reached the last lap of this somewhat long journey on which the Chancellor and Attorney-General have led us. I have no intention of retracing our steps to discuss the general principles which lie behind the financial policy of the Budget, nor of going off into the bye-ways which were discussed on the Committee stage. I only wish to say a word or two about two matters already touched on this afternoon, which I think of some importance.
  The first is the question of capital creation. I think there is some misunderstanding in the country about this question because it is so often spoken of in financial terms. What we are really concerned with is whether we are putting enough of our annual production aside for the replacement of the implements and buildings which maintain our industry and trade. That, for this country, is a most vital matter. Everyone in this country today is concerned about the continual rise in the cost of living, the continual rise in prices. Many of us think that the only way ultimately of tackling that rise is by increasing production.
  The only way we can see increased production in this country is by providing

  2165
  more capital per worker and keeping more than abreast of modern inventions and modern techniques in industry. It is well known that, as far as inventions are concerned, this country is second to none, but I think it is also generally realised that in the application of inventions this country has sometimes lagged behind.
  The setting of this Budget is that of re-armament. As the Chancellor and the Financial Secretary told us, it was bound to be an unpleasant Budget given that historical setting and present-day world conditions. The Chancellor told us that in these conditions he was bound to reduce the amount of our resources which go to civilian capital investment, and I think he also said that in his view the rate of capital investment was, if anything, too high in present conditions. On the other hand, from this side of the House we have had one Member after another rising to point out that the industries of which he has experience are finding it difficult to raise risk capital.
  What is the explanation of the difference between these points of view? I very much doubt whether we can say that the capital creation in this country at any time is too high or too low. I think we are inclined to look on the economy of this country as static, or at least we are inclined to look at it as expanding rather slowly and regularly, whereas I think it has always expanded irregularly and, at its best, extremely fast, and always that expansion has relied on the rapid creation of capital.
  As a layman, I am inclined to agree, on the figures put before us, that the Chancellor has a strong case for saying that the rate of capital investment at the time of the Budget was probably as much as we can afford, given his premises. But the two questions which arise are these: Are his premises correct, and are we putting the amount of resources we can put aside for investment to the best possible use? On both these heads, I feel that the planners have not sufficient knowledge. I further feel considerable doubt whether the Chancellor's answer is the correct one for all industries. My own feeling is that an established industry can raise all the capital it wants—if C. I. C. permission is obtained, of course. There is, however, considerable doubt in all parts of the House whether the experimental industry can get the capital it requires.
  Mr. Dailies: Would the hon. Member say that before the war the railways, being an established industry, found it easy to raise capital?
  Mr. Grimond: No, I do not think they did, but I am talking about an entirely new technique in industry. I do not know whether we can be satisfied today that the capital for that sort of purpose is forthcoming.
  My second point about the question of raising capital is that it has almost become a dogma of all parties in this country that we have to raise the standard of living not only in this country but throughout the world. It is often said that this is one of our main defences against the menace of Communism, and there is a great deal in that contention. What I feel doubt about is whether any of us pays sufficient attention to the magnitude of the task. To make even the slightest dent in the poverty of Africa and Asia would require on the part of the combined Western European countries an immense effort which I very much doubt whether they alone are capable of undertaking. If America is called in aid, admittedly the situation improves considerably, but it is undoubtedly true that if we are to do battle with world poverty it will have to be by a very long-term policy of investment.
  Some of us have been a little worried in the course of the debates on the Finance Bill by the restrictions which are being placed on the raising of capital abroad and the movement of capital abroad. We quite see and admit the necessity in the circumstances of today to deal with tax evasion by companies which seek to move assets purely to escape taxation. But having discussed this matter again and again over detailed points during our consideration of the Bill, I feel it necessary to draw attention to the broad conclusion that if we are sincere in our professions about intending to do something for Asia and Africa, we have to face the fact that we can do so only by putting capital into those areas.
  While Government agencies have a part to play in putting in that capital, we shall still have to rely to a great extent on private enterprise and we shall have to do that for some time. I do not think the Chancellor would disagree with that statement. I think that he would agree

  2167
  that the Government cannot do all the saving and investment which is necessary in Africa and Asia today. But if the tendencies contained in this Budget were to continue we should be placing serious obstacles to the process to which so much lip-service is paid throughout this country.
  I turn now to the thorny question of tax evasion. It has been said by a member of the Conservative Party that it is a matter on which no gentleman should have an opinion. I have no doubt that it is a matter which is liable to misinterpretation.
  From the great part which the Attorney-General has played in our discussions on the subject it is obvious that questions of tax evasion—which is a phrase that I do not very much like—are as, much moral, constitutional and legal questions as they are financial. It has been suggested that it is time that we took such questions out of the Finance Bill altogether because the Chancellor, in the Clauses of the Bill which deal with tax evasion, is not concerned with the raising of revenue. It is a defensible view that these questions could be better discussed separately from economic and financial considerations.
  There are great difficulties involved because much of our taxation today is quite openly designed primarily not to raise revenue but to assist planning. The Chancellor has told us that this year Purchase Tax must in his view be primarily regarded as a revenue-raising tax. But it has from time to time, and no doubt will again, be used to divert demand from goods which in our general planning we feel that we cannot affords to produce to meet unlimited demands. There are several other taxes today which are designed to minimise consumption and not to raise revenue. No doubt the Chancellor would be pleased if from those taxes he raised no revenue.
  I quite see the difficulty today, therefore, in keeping tax-evasion and kindred subjects out of the Finance Bill—I am a complete novice in these matters—but it seems to me that it is fundamentally different from either the economic or the financial Clauses of the Bill. It raises very important legal points. They are apt to be represented as points which
  2168
  affect only companies and large financiers but I do not feel that that is true today.
  My own feeling is that tax evasion is a problem which to a greater or lesser degree faces everyone in the country. Few people can be entirely happy either as to whether they know where to draw the line or whether, having drawn it, they follow it correctly. When we have before us Clauses which give powers to the Commissioners of Income Tax or the Treasury to make extremely important decisions which may have serious results to individuals, and in certain cases even more serious results to companies, we are doing something which, while I do not say that it has not been done before in this country—I am sure it has—is reaching such a degree that its whole nature is changing and Parliament is losing control.
  I am all against government by theory. The best of our legislation in this country has grown up piecemeal and to meet particular circumstances, but I must confess that in the discussions on these tax evasion Clauses it has seemed to me that the root of the matter has not been touched, and that the time has possibly come when some general consideration of the important principles and effects which are involved should be given and that these Clauses should be taken out of the Bill.
  So much of our discussions in the Committee stage and before that on Second Reading has appeared extremely remote to the ordinary man; one can see from the amount of time and attention given to them in the radio and Press that we have lost the ear of the public. But all the Clauses of the Bill are ultimately concerned with the sixpences and the pennies in the pockets of every labourer, clerk and housewife in the country. The legislation passed here may make the difference between prosperity and disaster to every one in this country. Even these tax evasion Clauses and the whole system of tax collection may bear very heavily not only on the man in the City of London but on the ordinary man engaged in business in the streets of every city in the country.
  4.28 p.m.
  Mr. Douglas Houghton: The thoughtful speech by the hon. Member for Orkney and Shetland (Mr. Grimond), to which we have just listened,

  2169
  calmly delivered with a note of friendliness towards these ventures, noticeably reduced the temperature of the House after the speech by the right hon. and gallant Member for Gainsborough (Captain Crookshank). The hon. Member suggested that matters of tax evasion are not really proper to the Finance Bill and might be dealt with by separate legislation. There has been one example of an attempt to do that, and it was singularly unsuccessful. That was after the Report of the Royal Commission on Income Tax of 1919–20.
  If my recollection is correct, the Government of the day shortly afterwards introduced a Bill containing many of the recommendations of the Royal Commission, especially on the administration of Income Tax and on other matters upon which the Royal Commission had made recommendations. The ultimate fate of that Bill was that it was withdrawn. I believe that it became so mutilated and so contentious in its passage through the House that the Government of the day found it, if not impracticable, difficult from a Parliamentary as well as from a political point of view to proceed with it.
  Whether the separation of these contentious matters from the current questions of finance and the other provisions of the Finance Bill led to some fractiousness on the part of the House towards the provisions I do not know, but at all events I think that experience does not encourage us to accept the suggestion which the hon. Member made that a similar device should be adopted in future for dealing with questions of administration of the tax, the checking of tax evasion, the provision of means for revealing tax liability and so on. Anyhow, for many years past it has been the tradition that these matters are part of the Finance Bill and have been debated along with the other provisions relating to our annual supply of revenue for Government and other purposes. I shall come back to some aspects of Income Tax evasion which are dealt with by this Bill.
  The hon. Gentleman in another remark said that many of the matters which we have been discussing for hours and even days in recent weeks are far removed from the common man, and he quite rightly pointed to the small amount of publicity in the newspapers to much
  2170
  of what we have been discussing. Yet on leaving the House early this morning I happened to get into conversation with a common man who had been listening to our debates in the Gallery of this House for the whole time of our sitting. I said to him, "Have you been sitting there all this time?" and he said, "Yes, I have." I said, "Well, then, you are crazier than we are." He said, "No, I do not agree. Although much of what you have been discussing has appeared trivial, a great deal of it complex, and some of it contentious, nevertheless all that you have been doing is affecting somebody's pocket and possibly all our pockets." I think that was a balanced view from one who must have grown weary listening to the debate in this House last night. One can, I think, take comfort from much that we have done, despite the great weariness of the flesh in recent weeks.
  I want now to deal with the speech of the right hon. and gallant Member for Gainsborough. When he began, he said that he was not going to make an electioneering speech. Well, he soon forgot himself, because he plunged swiftly into contentious observations which, if they were anything at all, were surely excerpts from the Conservative Party manifesto, which is doubtless now being drafted for when the election takes place. In the course of his remarks he said that the total revenue provided for in the Finance Bill this year is one-third higher than at the peak of the war, and he went on to say that £1,000 million represented the extent of the additional tax imposed by the Socialist Government. I think I got his words correctly.
  That is an observation which either indicates abyssmal ignorance of the difference between war-time finance and peacetime finance, or it comes so near to dishonesty that the most gentle epithet that can be applied to it is that it was grossly misleading. Much of the provision for the expense of the war was met, as the right hon. and gallant Gentleman knows, by borrowing on a large scale. He also remembers that in the early stages of the war much of it was provided for by large-scale selling of our overseas investments. He will remember "Cash and Carry," which bled us white on gold reserves, on dollar reserves and on overseas investments in the dollar area.

  2171
  The right hon. and gallant Gentleman will also remember later in the war the splendid example of mutual co-operation between the new world and Western Europe—Lend-Lease. Surely if the right hon. and gallant Gentleman is going to compare the burden of taxation today with the burden of taxation at the peak of the war, he must take into account additional provision for war finance and the war effort. In the Budget today we are without much of the assistance of large-scale borrowing that was an essential part of war-time finance.
  Another thing which the right hon. and gallant Gentleman omitted to mention is that in the last two or three years it has been imperative to increase substantially the amount we are spending on defence. No hon. Member opposite will criticise what the Government are doing towards making our security greater and our defences stronger. Indeed, when in February my right hon. Friend the Prime Minister announced the defence programme, I recall that the right hon. Gentleman the Leader of the Opposition got up and asked whether it was enough. That is a burden which must now be carried substantially on the revenue of the country.
  I wonder whether members of the public realise that in this financial year every penny they pay in direct taxation is going to defence. That is the measure of the burden of defence expenditure in the current year. When taxpayers are being asked to pay their Income Tax and Surtax it might encourage them to pay with an easier grace if they realised that that was their contribution this year to defence, and if our expenditure remains on the present level, it will be their contribution to defence for several years to come.
  The right hon. and gallant Gentleman, in referring to the level of Government expenditure, omitted all mention of those taxes which are being imposed now for the sole purpose of financing our social services. They are re-distributive taxes—those which are collected from members of the community who can afford to give up something out of their private incomes and from their standards of life for redistribution to bring about more equality of incomes. When the right hon. Gentleman said that our philosophy is that every member of the community shall have a
  2172
  minute piece and an equal share of what is going, it was a scornful reference to his misconception of our philosophy. We do not stand for absolute equality of all incomes, but we do stand for a much greater measure of re-distribution and a much larger measure of equality than has; been a feature of our social, industrial and economic life of the past.
  The right hon. and gallant Gentleman, of all people, now brings Gladstone to-his aid and preaches in 1951 the Gladstonian doctrine that money should be left to fructify in the pockets of the people. In Gladstone's time a lot of the money fructified in the pockets of a few of the people. In Gladstone's time we saw the expansion of the British aristocracy, the lavish expenditure by the nobility of the land. It was the peak of prosperity for the rich. But the state of affairs of large numbers of the workers, the victims of the Industrial Revolution, would not bear comparison with the conditions of today.
  The right hon. and gallant Gentleman was very nettled indeed at the reference made by the Prime Minister in his message to the Labour candidate in the Westhoughton bye-election. I think he was so nettled because he felt in his own mind that there was a good deal of truth in what the Prime Minister said.
  Colonel J. R. H. Hutchison: Not a word of truth in it.
  Mr. Houghton: There have been sham election fights in the debates on the Bill—and some shammer than others. The right hon. Member for Ormskirk (Sir A. Salter) excuses himself by saying, "Of course, not all the Amendments the Opposition put down could have been accepted, but some were alternatives to others." When he says that, I think he means that when the Opposition saw some Amendments defeated they found alternatives which they hoped the Government would accept.
  I ask hon. and right hon. Gentlemen opposite whether their proposal to reduce Profits Tax and their effort to reduce the Petrol Tax were alternatives to the proposal to increase the child allowance for the poor widow? Were they alternatives to increasing the child allowance for those who are sending their children to independent schools? Were they alternatives to the proposal to increase the dependent relative allowance?

  2173
  I do not believe they were. I think that there is no doubt, considering the whole of the Amendments proposed by hon. and right hon. Gentlemen opposite, that they combined their traditional interest in the protection of wealth with a mock sympathy with the difficulties of the workers and the middle classes.
  I want to refer to the Clauses in the Bill dealing with tax evasion—Clauses 24, 29 and 33. Clause 24 deals with a problem which the Royal Commission studied 30 years ago—which has not till now been tackled by any Chancellor since—when it drew attention to the widespread evasion that was then taking place, when Income Tax was much lower and when the number of taxpayers was much fewer than it is today, by the failure to disclose interest on bank deposits, and when the Inland Revenue authorities were denied the opportunity of testing the validity of returns and accounts by reference to the knowledge of the amounts of capital that individual taxpayers had tucked away.
  The Chancellor this time has grasped that nettle firmly, and has provided in the Bill that, on a demand being made by the Inland Revenue, joint stock banks, the Post Office Savings Bank, and others in similar business arrangements with clients, shall reveal the bank deposits which yield an interest of more than £15 a year.
  I want to say something about the Post Office Savings Bank in this connection. I think that my right hon. Friend was right in treating the Post Office Savings Bank exactly the same as the joint stock banks and trustee savings banks in this matter. I know that, generally speaking, depositors in the Post Office Savings Bank are not conscious tax evaders. They are certainly not the scrimshanks, generally, that the Inland Revenue want to catch. However, a person who wishes to conceal from the Inland Revenue what accumulation of capital he has will seek out those places for investment or deposit where there is either no deduction of tax or no necessity to disclose interest on untaxed income; and he will select, no doubt, to deposit the maximum he may in the Post Office Savings Bank, and he will probably select a building society and a trustee savings bank, and may spread his resources also, not only amongst them, but amongst a number of branches of the joint stock banks.
  2174
  So it is necessary to be able to bring together what may be the varied affairs of individual taxpayers, even though they include Post Office Savings Bank interest, although, on the whole, the Post Office Savings Bank is not a direction in which Income Tax evaders ordinarily put their money.
  I do, however, wish to make one suggestion to my right hon. Friend regarding the Post Office Savings Bank. There are, I believe, something like 21 million deposits in the Post Office Savings Bank. How many of those are of over £600, which is the material amount for our purpose, since £600 there yields £15 interest, I do not know, but I would put it at something like one million, if not more.
  How many of those million depositors have remembered to disclose in their Income Tax returns what interest they have had from their deposits, I do not pretend to know, but I believe there are many who are depositors in the Post Office Savings Bank who, quite unconsciously, have failed to declare that amount of interest, believing that, because interest was paid without deduction of tax, it was free of tax. There is a good deal of confusion in the public mind between income paid without deduction of tax which is still taxable and interest which is paid tax-free —as in the case of interest from the building societies.
  Incidentally, I am distressed to realise how ignorant some hon. Gentlemen opposite are of how the Post Office Savings Bank works—of how these accounts are held centrally. It will be the Postmaster-General who will make the disclosures to the Inland Revenue under this Clause of the Bill. It will not be the local post offices, because the local post offices have no information of the credit standing to the accounts of depositors in the Post Office Savings Bank. That information is held in the central office of the Post Office Savings Bank which is part of the headquarters of the Post Office.
  When the Inland Revenue authorities get to work with the power given to them under this Clause, I fear that many cases will come to light, not of conscious tax evasion, but of many people who, quite unwittingly, because of their ignorance of the position, have failed to make returns of their income from interest on their deposits. I have known of cases of old age pensioners and others now on

  2175
  quite small incomes. If they are to be asked to pay up arrears of tax from the period when they were liable to pay tax—when, say, the old age pensioner was still at work—I fear that considerable hardship may be imposed on those individuals.
  Therefore, I suggest to my right hon. Friend that the work under this Clause should be undertaken with care, with discrimination, and with every sympathy with those whom it was never intended to catch. I believe that to be very desirable indeed.
  Mr. Joynson-Hicks: Is not the hon. Gentleman introducing rather a new element into this matter? Is he not saying that the law which imposes the duty upon the Inland Revenue to collect taxes should be administered with restraint and discretion by the Inland Revenue? Surely, that is an entirely new procedure, which is quite contrary to what he has been practising all his life?
  Mr. Houghton: No. The general sentiment I have expressed should surely be essential to the administration of any fiscal system. However, the Inland Revenue authorities already have power to write off tax in cases of hardship where, in their discretion, it would impose intolerable hardship on an individual to exact every last penny of Income Tax arrears accumulated over a period of years. I am certain that hon. Gentlemen will see in the reports of the Comptroller and Auditor-General reference to amounts which have been written off on the ground of hardship. I am merely asking my right hon. Friend to bear that power in mind when the net is plunged into the sea and some rather small and quite harmless fish may be caught in it.
  Sir Patrick Spens: The hon. Member will appreciate that the Government accepted an Amendment which I suggested to the effect that they should not be able to go more than three years back and therefore the liability even to persons with the Post Office savings is considerably reduced by that Amendment.
  Mr. Houghton: I am afraid that the hon. and learned Member is still under a misapprehension. Although it is true that my right hon. Friend accepted an Amendment that the power to ask for disclosure should not go back more than three years, I would say straight away that that does not limit in any way the power of the
  2176
  Inland Revenue to go back six years if, on inquiry into a given case, they found income which should have been taxed and had escaped tax for as long as that.
  After all, when the Inland Revenue are once aware of the existence of a deposit account revealed under Clause 24 of the Bill, they are free to ask the taxpayer himself to be quite open and frank about the amount of interest, not only for the three years disclosed, but any earlier amounts of tax going back for six years which the Inland Revenue already have power to assess under the present Income Tax Acts. So the power of disclosure is restricted to three years, but liability to tax will still extend to six years if the amount of income has been in existence that long.
  I wish to refer to the two other Clauses in the Bill which deal with tax avoidance; Clause 29, which deals with tax avoidance of Profits Tax, and Clause 33, which contains other provisions against tax avoidance. Hon. Members opposite have criticised my right hon. Friend for introducing into this Bill omnibus Clauses which deal generally and not particularly with methods of tax avoidance. They have said, especially the hon. Member for Chippenham (Mr. Eccles), whose contributions to our debates have been most appreciated, that it was a canon of good constitutional law that the crime should be specified, the misdemeanour should be particularised; so that a taxpayer would know exactly where he stood and could steer himself just clear of it, if he could find an astute lawyer or a shady accountant to help him.
  We all know from past experience, especially when Mr. Neville Chamberlain was Chancellor of the Exchequer, that to attempt to stop tax evasion by specifying particular methods which shall be banned, has not proved successful, because loopholes have been opened somewhere else almost at the same moment as the others have been closed. After all the experience he has had, my right hon. Friend is right to say that we are tired of complicated and contentious legislation which seeks to specify all the devious methods of tax avoidance with a view to stopping people paying less than they should, and that we must now make more comprehensive provisions for checking this abuse.
  At any rate, I think the House and all those interested—and some of those who

  2177
  are not—will watch carefully to see how these new omnibus Clauses work in practice; to see whether the Inland Revenue will be the tiresome people that many hon. Members opposite have suggested they will be; and whether it will impede the merchant adventurers from setting sail into the far seas to unexplored lands to invest their capital, and to bring home rich rewards.
  If I know anything about merchant adventurers they are tax avoiders as well and my right hon. Friend is right to try to provide continued facilities for merchant adventuring without continued facilities for tax avoiding. I am quite sure that under these Clauses, especially with the Amendments now included in the Bill, the right combination has been found. I have confidence that these Clauses will be operated fairly and with the minimum of interference with the legitimate activities of those who may be concerned. This experiment, long overdue, in checking tax avoidance by comprehensive provisions will be extremely interesting and significant.
  The right hon. and gallant Member for Gainsborough reminded the House that it is just about three months since the Chancellor of the Exchequer introduced his Budget. We live in unstable times, when much can happen in three months, and sometimes one wonders whether to introduce a Budget in April and conclude its financial form in July is quite as speedy a process as may be needful in these days to relate the circumstances to measures designed to deal with them.
  I do not know whether, were he introducing his Budget today, my right hon. Friend would do some things a little differently. I think there is one thing he might have done differently; he might have increased the child allowances more than he has done. There have been Amendments from hon. Members opposite to give increased child allowances to widows and to allow tax deductions in favour of minors which should cover the cost of fees and text books; but there is no doubt that the most urgent relief that can be given would be to those families with young children rather than to married couples without children—
  Lieut.-Commander Gurney Braithwaite: On a point of order. Will subsequent speakers be
  2178
  allowed to pursue this line of thought? There is nothing about it in the Bill.
  Mr. Deputy-Speaker (Major Milner): The hon. Gentleman is, of course, only entitled to refer to matters in the Bill on Third Reading, and those relating thereto.
  Mr. Houghton: I thought I was in order in referring to something which is in the Bill, which is a proposal to increase the Income Tax allowance for children. My reference was that perhaps in the light of circumstances today, it would have been a good thing to have had that allowance a little higher than it is. I will not pursue that point.
  I merely wished to say that my right hon. Friend, when he introduces his next Budget—there is no doubt at all that he will introduce another Budget, and the right hon. and gallant Member for Gainsborough might just as well keep his electioneering speeches in his pocket for all the difference they will make to my right hon. Friend—will have the opportunity of looking at some of the provisions in this Bill; and of seeing whether they can be further adjusted to the economic strains and stresses which unhappily, so long as our Defence expenditure remains at its present level, will continue to be felt by many sections of the community. I have supported my right hon. Friend throughout the debates on the Finance Bill on many provisions which have met with considerable opposition from the benches opposite.
  As we take leave of this Finance Bill, which is the legislative form of the Budget, we should not overlook two factors. One is that the object embodied in this Bill was received with approval by large sections of the thoughtful public when my right hon. Friend introduced it. Also, we must not overlook some of the questions which are outside this Bill—in particular, the provisions of the National Insurance Act—which were part of the comprehensive survey of the nation's welfare and the needs of the people when my right hon. Friend introduced the Budget. Hon. and right hon. Gentlemen opposite would have been glad and proud to have introduced a Finance Bill along these lines.
  5.1 p.m.
  Colonel J. R. H. Hutchison: I hope that the hon. Member for Sowerby (Mr. Houghton) will not think

  2179
  me discourteous if I do not immediately follow him on the questions which he has been discussing. In the course of my remarks some of the points which he mentioned will fall into their context.
  I am anxious to treat the question of this Finance Bill from a rather different angle from the one from which it has been considered over the past weeks. We have listened for many hours to discussions on the material effects which the various Clauses in this Bill are likely to have. Very often, material considerations outweigh psychological ones, but we should be making a mistake if we lost sight of the psychological considerations.
  This country owed its pre-eminence in the past to a number of assets. Some, such as the flying start we had in industry, have already gone: some, such as our closeness to the sea and, consequently, the facility of cheap sea transport and our climate, are still with us; and some are threatened by some of the provisions of this Bill. The characteristics to which I refer are enterprise and commercial courage. Changes which are almost imperceptible, and all the more insidious for that reason, are creeping over the character of our people. I think that the tendency will be quickened by some of the provisions of the Bill.
  What are some of the main ingredients which go to make up the British character? Are they not, first and foremost, courage and independence; then, in a second group, judgment and decision; and, in a third group, honesty and respect for the law? Under the sort of pincer movement of controls and punishing taxes, commercial courage and independence are being gradually eroded. The tax penalty on success, rising to 19s. 6d. in the £, is certainly not conducive to commercial courage or to adventure in trade.
  These islands were a bastion of the independence of the individual in the past. That independence is being undermined by the fact that in so many industries now is there only a single supplier. I wonder how many hon. Members get letters from their constituents of a similar nature to those which I have had during the course of this Bill, giving examples of matters about which they complain but saying, "Don't quote me."
  What is this attitude of mind which is creeping over the people of this coun-
  2180
  try as a result of which they are afraid to be caught complaining because of the victimisation they may suffer at the hands of a single supplier which, in many cases under nationalisation, is the Government? What will happen to the character of the people under the system of confidential reports which is also one of the accompaniments of nationalisation? But I must not dwell too long upon that though it goes to help to build up an edifice which I think is a dangerous one.
  I have tried to show that commercial courage and adventuring are being attacked. What about the second group of characteristics—judgment and decision? This country was famous for the pioneers that it sent all over the world. Indeed, much of the opening up of the world was due to our pioneering. Yet, under Clause 33 of the Bill, the Treasury will, in the ultimate, decide whether a pioneering adventure shall take place or not. If the Treasury is not consulted then somebody who infringes the conditions of this Clause will be liable to savage penalties.
  Is the Treasury really better able to judge? The fact that it is not was voiced yesterday by no less and no more unusual an advocate of my case than the right hon. Member for Ebbw Vale (Mr. Bevan), who had some pretty severe strictures to lay upon the Treasury in the matter of prospecting for minerals. The Chancellor, pressed by hon. Members from these benches, has agreed to set up an advisory panel to advise the Treasury on these matters. He has taken powers to allow certain exemptions, but the Treasury is still the dominant and controlling master in the matter. All that it has done is to change its garb from that of gaoler to that of governess.
  The Treasury has to give no reasons for any refusal which it may, if it sees fit, make. In fact, there was an example only the other day. Imperial Chemicals went to the Capital Issues Committee, conforming, as far as the ordinary outside mind could see, with all the requirements laid down by the Committee when an application goes before them. But that application was turned down and, as far as I know, no reason was given for the refusal and no appeal from that refusal is allowed.
  In considering these matters what must the Treasury be guided by? Surely it

  2181
  must be guided by its jealousy of preserving taxes. Its eye must be continually upon the tax yield. I would not go so far as to say that no other considerations enter into its mind, but the jealousy of taxes and the necessity to preserve tax yield must be the main criterion by which it judges these matters.
  If that is to be the main criterion, what chance have many of the projects of getting past the Treasury? What chance would there have been in the past, with similar legislation, for the opening up of the rubber industry, the gold industry, railways all over the world, and a global insurance system? Would the Pilgrim Fathers ever have got consent from the Treasury? Would the actions of such great men as Clive and Rhodes have turned them into criminals?
  The Socialist method of thought extols the present system of living. It is really extraordinary to what length they will go to prevent the dwellers in these islands from escaping from paradise. They seem determined to impose a sort of permanent attack of financial claustrophobia upon us.
  The third pair of characteristics which I mentioned at the start of my speech as going to make up character, are honesty and respect for the law. In the past these two characteristics were the envy and the wonder of other Europeans and, indeed, of all foreign peoples. Yet today there is considerable evidence of its erosion. I do not say that it was possible to avoid rationing—I am only talking about the psychological effects of what has happened—but rationing was undoubtedly followed by something which was unknown in this country in the past—the black market.
  Mr. Deputy-Speaker: The hon. and gallant Member is surely going rather outside the scope of the Bill.
  Colonel Hutchison: I thought that all this was linked up with the various provisions contained in the Bill. Extravagant taxation—and I think you will agree, Mr. Deputy-Speaker, that in this Bill there is extravagant taxation—has led to a system of trading in notes, which is one of the tax evasion methods about which the hon. Gentleman was speaking. In the past, these evils were either insignificant or non-existent. Characters do not change of their own free will, but
  2182
  they can be changed by circumstances and by treatment, and I believe that character is being changed by the treatment that is going on under Socialism, and will be further changed by this Bill.
  Also, in the Bill, and finally, we make a dangerous breach with a precious British tradition, namely, the doctrine that a man is innocent until he is proved to be guilty. This is thoroughly un-British and contrary to all our cherished ideas on the matter. Not only that it is psychologically bad. The more we go on presuming guilt the more likely are we to get it: the more we talk about good behaviour the more will people tend to behave well.
  This is an extension of the Goebbels system of the war, whereby, by reiteration, the people of Germany finally came to regard persecution and inhumanity as something very near normal. By this concept of life, which is carried on by the Bill which we have been considering, I believe that the character of the people is being eroded, not very obviously —I do not want to exaggerate the story —but gradually, and their moral fibre is being impaired. This is, after all, the decade which invented the phrase, "I couldn't care less." This is the decade in which spivs have become V. I. Ps. Funds can be rebuilt, but character, if it can be rebuilt at all, can only be rebuilt with great difficulty. Let us remember the words of Abraham Lincoln:
  "You cannot build courage and character by taking away a man's independence and initiative."
  And Abraham Lincoln was a very wise statesman.
  5.12 p.m
  Mr. Daines: For some reason which I have never been able-to understand, when we reach the Third Reading of a Bill, a nostalgic tone seems to enter our words, as if we part with the Bill with great reluctance. My hon. Friend the Member for Sowerby (Mr. Houghton), expressed that traditional sentiment, and the hon. and gallant Member for Scotstoun (Colonel Hutchison), who has just spoken in funereal tones, also did likewise and then went on to talk about the psychology underlying the Finance Bill. Certainly, the hon. and gallant Gentleman appeared to me as the undertaker of the party.

  2183
  I am not sorry to see the back of this Bill; indeed, I am glad to see the back of it. I think we have been dealing with it far too long. I want to make only one other reference to the speech of the hon. and gallant Gentleman. It is to that part of his speech in which he was dealing with the old Tory fable of the loss of moral fibre that has revealed itself among the people under a Socialist Government, and his theory that they were reluctant to come forward and give evidence. The hon. and gallant Gentleman was not quite saying that they were afraid of economic victimisation under nationalisation, and he did not quite say whether it was economic victimisation by monopolies and so-called trade associations.
  All I want to say to him is that it is his responsibility, in his public capacity, as I think it is mine, that, when he comes across a case where there is victimisation, he should expose it on the Floor of the House. I look forward, when we have our next debate on monopolies and resale price maintenance, to having a little support from the hon. and gallant Gentleman, who, I notice, was missing on the occasion of our previous discussion.
  Colonel Hutchison: The hon. Gentleman will know that we, on these benches, have never extolled or believed in the victimisation of the public by any form of monopoly. I did, in fact, say "under nationalisation and a single supplier."
  Mr. Daises: The point I am trying to make is that the hon. and gallant Gentleman was very adept at spreading a little muck and leaving it. He should make his case and make a charge, and he should then stand by that charge when it is made. The practice of spreading dirt by innuendo and inference is one which does not commend itself to the average hon. Member of the House.
  It so happens that, so far as these benches are concerned, I am in the middle of the road. The last speech which I made on the Bill was against the Government, so I might as well balance it today by making a speech for the Government. The right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) quite unexpectedly raised the temper of the House this afternoon when he made an apologia, at great
  2184
  length, for the time taken by the opposition on this Bill. I may be a bit out with the actual time, but I think some thing like 100 hours of the time of the House has been spent on this Bill. The right hon. and gallant Gentleman justified that by saying, "Well, we have done our job; look at the concessions we have got." It seems to me that the old phrase about an elephant having been in labour and producing a mouse was a very accurate description of their efforts.
  Mr. Henry Strauss: it was not an elephant; it was a mountain.
  Mr. Daises: I think "elephant" sounds better. In any case, the hon. and learned Member for Norwich, South (Mr. H. Strauss) will no doubt follow me in his usual erudite way and put it right in his own pedantic and literary fashion, so that I feel comforted if I have stumbled a little on that account.
  The Opposition cannot have it both ways. If they are claiming that this yea: they have been doing their duty by keeping us sitting over 100 hours, what have they been doing in all the other years since 1945? Where was all the great care over public money in previous years, in which we spent only about one-third of the time which has been spent on this Bill this year? Hon. Members may check it up. This year, it has been carried to fantastic lengths, but I must be quite fair and say that none of the speeches to which I have listened seemed to me to be filibustering; all the same, I think the filibustering may have occurred in the vast variety of subjects to be dealt with, but we must be quite fair about it.
  So far as I am concerned, I am not at all impressed by the way in which we have handled the Finance Bill. I think it is perfectly fantastic and stupid that 3 grown-up body of people like us, in the Mother of Parliaments, every year have to sit through the night until 4. 5. or even 6 or 7 o'clock in the morning, to deal with certain essential parts of our legislation. I think it is crazy. I suppose we have the old vested interests sitting on the Front Bench, who will say that they cannot run their Ministries unless they have the whole morning free.
  All I have to say in reply to that is that they cannot have it both ways. If their argument is that we cannot have the Bill earlier in the day, because they

  2185
  have to do their Ministerial work, what about the vast amount of Ministerial time which is spent in the House, particularly in this Parliament, because of the balance of the parties? It seems to me that we ought not to carry on with an out-of-date method of timing the hours of Parliament, arising out of the convenience of lawyers and professional gentlemen, and resulting in the most important part of our work being dealt with at 7 or 8 o'clock in the morning.
  The hon. and gallant Member for Scotstoun dealt with the psychology of the people; I am not worried about that, but I am worried about the mentality that was applied to the Bill at 4 and 5 o'clock in the morning. It seems to me that we are a rather dull lot, and, in case we want to give ourselves any medals for this, it is just as well to remember that the public do not think very much of it. They think we are a dim lot to carry on in such a stupid way.
  The right hon. and gallant Member for Gainsborough gave us his views about the country going along the road to ruin, and his hon. and gallant Friend also dealt with the psychology of the road to ruin, and dealt with it in good old Tory terms. He dealt, of course, with the familiar argument, which has been contained in all the speeches, that the only way in which we are to get a risk capital going and get the adventurous spirit into industry is by allowing the wealthy to accumulate even more wealth than they are doing.
  That is the argument; that is the familiar Tory position. They believe that we have arrived at a stage in economic development where the State or some form of public corporation can run the basic industries which are not rich enough to produce vast capital accumulations, and that the boys with the risk capital will only share in the industries where there are rapid accumulations of capital. In other words, they want to get us back to the old days where the rich get richer. What it amounts to, as far as I can see, is that if we have the misfortune of a return to Tory Government, we shall rapidly have the clock put back to where the public have the skilly and the Tories have the cream.
  One of the mistakes of this Bill is the same as that made by Labour Governments in the whole of their finance policy since 1945. May I say, in passing,
  2186
  that I have raised precisely this point in previous Budget debates? We have concentrated far too much of our time and attention upon forcing down income and have left capital accumulations alone. I should have thought the Financial Secretary would occasionally have refreshed his own mind and that of his chief with the very admirable book he wrote under the title "The Case for Socialism."
  In that book he dealt with precisely this problem and in which he showed that despite everything we do so far as Estate Duty and Death Duty are concerned, at the end of the year the amount of capital in private hands is substantially the same as it was at the beginning. What I am afraid will happen if we get a return of a Tory Government and a really good Tory Chancellor of the Exchequer—I exclude the right hon. Member for Ormsk irk (Sir A. Salter) from that category—is that he will put the whole thing right in about two Budgets.
  My final point concerns tax evasion. I welcome everything we have done, but what I get rather appalled about are the other things which the Department could do without coming here for fresh legislation. Let me give one illustration. The Government brought in a method of taxing bookmakers on the dog tracks. What happened? The bulk of the bookmakers are men who, apparently, have some other form of income. Therefore, the only return they make for Income Tax purposes under Schedule E is that received from their known job. But they do not stand on the race-course all the time purely to make losses, although there is the classic case of the bookie who had to keep his job going on losses just because it was his job.
  I have raised this point with my right hon. Friend, and have found that the activities of the Excise Department are so watertight that information is not passed from them to the Inland Revenue. I should have thought it perfectly simple for the Excise Department, which issues the stamp and collects the money and which has the name and address, to pass the information over to the Inland Revenue. I think there is still a lot of work to be done in the field of tax exasion, particularly among shopkeepers and the smaller businesses. This debate today, though very nostalgic, has been a pleasant one, and I think we have all

  2187
  enjoyed it in a quiet sort of way. I repeat that I have no tears to shed at the passing of this Bill. I am glad to see the back of it, and if I am a Member of this House next year, as I hope to be, I trust that we shall tackle the Finance Bill then in a more intelligent way than we have tackled this one.
  5.25 p.m.
  Sir Edward Boyle: Before I come to my main point, perhaps I may be allowed, although it is not in the Bill, to reply to the Financial Secretary about redistributive taxation because it seems to me he failed to prove the one point which is most important. A man with £30,000 a year today has much less income available than he would have had 50 years ago, or even before the war, but the hon. Gentleman was unable to show us that the poorer people of the country were comparatively better off.
  I thought it very interesting that just before the General Election in January, 1950, the "Economist" published a series of tables to show the effect on the various classes of the community of the economic policy pursued over the last few years. If we allow for increased taxation and rising prices, we find that the average male weekly wage-earner in 1950 was better off than in 1938, but no better off than he was in 1945. I think it still has to be shown that there has been any substantial rise in the standard of living of the weekly wage-earner under the present Government.
  The hon. Member for Sowerby (Mr. Houghton) described the tax system as drawing in money from those well off and giving it to those less fortunate. My hon. Friend the Member for Flint, West (Mr. Birch), in last year's Budget debate, made the point that the amount of tax levied on people with incomes of less than £500 a year was less than the amount of money spent on the social services, and that we were approaching a stage where taxes were ceasing to have a real re-distributive effect.
  Mr. Daines: The hon. Gentleman is not taking into consideration the social wage which, I think, approximates to £2 10s. a week for a family of four. His first figure does not take into account the mass unemployment of that time, and
  2188
  neither do his figures take into account the fact that more members of families are working today.
  Sir E. Boyle: The hon. Member's second point does not seem to be very relevant to the question of the standard of living.
  Mr. Daines: It would have seemed relevant to the hon. Member if he had been unemployed.
  Sir E. Boyle: I am talking now about financial statistics. The hon. Member's first point is, I agree, something which must be taken into account, but I do not think that even when we take into consideration the fact that the Insurance Act has been in force for two years there is much evidence that the standard of living is substantially better than it was in 1945.
  I wish to answer three points made by the Chancellor of the Exchequer in the course of these debates and, first, the one he made on Income Tax, when we were discussing Clause 13. Hon. Members will recall that there was quite a lively exchange between the Chancellor of the Exchequer and the right hon. Member for Aldershot (Mr. Lyttelton) on the subject of Income Tax, during which the Chancellor said:
  "…whether or not taxation has inflationary effects…depends really on whether the people taxed are determined to maintain their standard of living and draw on their savings to do so."—[OFFICIAL REPORT, 6th June, 1951: Vol. 488, c. 1171.]
  Of course, it is perfectly true that today the climate of opinion in this respect is different from what it was 50 years ago. Fifty years ago people did, on the whole, try very hard to live within their incomes, whereas today everyone is determined to keep up his net spendable income by some means or another.
  Surely there are two simple reasons for that. The first is, as my hon. Friend the Member for Chippenham (Mr. Eccles) has said, that when the Government takes more than a certain proportion of the national income in taxation, everyone resents it and tries to compensate for that by getting higher money incomes for themselves. The second point is that we shall never get people to economise and to make things easier for the Government while they feel that the Government are not setting a good example. I want to be perfectly fair about the question of cuts

  2189
  in Government expenditure. I think that the average elector in this country today would fully agree with what the Minister of Defence said in the debate on 26th July last year:
  " It would be very foolish of me to deny that in a vast expenditure of £780 million there are not some items that could be pruned away."—[OFFICIAL REPORT, 26th July, 1950; Vol. 478, c. 473.]
  If that was true then of a defence expenditure of £780 million, how much more must it be true today of a total Government expenditure of more than £4,000 million?
  It is no good the Chancellor trying to discount altogether all the points made in the speech of my right hon. and gallant Friend the Member for Leicester, South-East (Captain Waterhouse), during the Budget debate. I noticed that in later debates the Chancellor tended to discount that speech, and said that all the reductions that amounted to anything at all were disavowed by my right hon. Friend the Member for Saffron Walden (Mr. R. A. Butler). That really was not true. Only half the reductions recommended by my right hon. and gallant Friend the Member for Leicester, South-East, could in any sense be regarded as involving changes of policy. My right hon. and gallant Friend did not cover the whole field though he spent about an hour on his speech. If the Government really gave the impression that they were tackling administrative expenditure in the way he suggested, they would do a great deal towards making people feel that they, too, should economise, and it might be that taxation would then have a more disinflationary effect.
  Secondly, I should like to make one comment on the Profits Tax, because I thought that part of his Budget speech which the Chancellor devoted to this tax was very interesting. He said:
  "But it is one thing to recognise the justification for profit in the case of the individual firm as a reward for efficiency…it is quite another to ignore a situation where, by reason of the general economic climate and not through the aptitude of individual managements the whole level of profits and the share of the national income taken by it, is rising."—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 854.]
  First of all, if the Chancellor really thinks that profits should be a reward for efficiency, is it not rather curious to increase a tax which has the effect of reduc-
  2190
  ing the difference between the respective rewards earned by efficient and inefficient producers? Secondly, is it not rather odd that a Socialist Chancellor should say by implication that he is not capable of doing anything to influence the economic climate? We, on this side, have always said that he should do so, and that profits have been too easy to obtain during the last few years.
  I cannot help feeling that the real trouble is that hon. Members opposite do not believe full employment is compatible with a policy designed to promote economic efficiency. They think full employment can only be maintained if one always keeps demand steadily ahead of supply, with paper profits rising steadily upwards. I believe it is perfectly possible to maintain a full employment policy and, at the same time, to ensure that only efficient producers make large profits. It is quite ridiculous to suppose one can only maintain a full and stable level of employment in an essentially inflationary situation.
  The last point I wish to make concerns Clause 33 relating to tax evasion, and again I quote the Chancellor. He said:
  "Hon. Members opposite do not regard the tax avoidance, of which I have spoken, as such a serious factor as we do; and on the other hand they take a more serious view of the possible consequences to legitimate business which the Clause will have."—[OFFICIAL REPORT, 13th June, 1951; Vol. 488. c. 2451]
  When one uses a word like "serious" one can mean a number of things by it. I think the right hon. Gentleman has been dominated be a strong feeling about the moral aspect of tax evasion, and we on this side are dominated by the belief that this Clause will really do harm to the British economy. I suggest that however much hon. Members opposite may feel strongly about a particular evil, before taking steps to check what one regards as a moral evil one must count the cost and realise the precise effect, in terms of hard fact, of the steps one wishes to take. I cannot feel that in this Clause the Government have sufficiently counted the cost of what they are doing.
  I think that, on these points, there are deep-seated differences of opinion between the two sides of the House. It is absurd to gloss over such differences where they exist, and while I know hon. Members opposite will not agree with the points I

  2191
  have made, I hope that at any rate a speech of this kind will do something towards clarifying those issues on which there really is a substantial divergence of view between hon. Members opposite and ourselves.
  5.35 p.m.
  Mr. Spearman: I think there are two tests by which the Finance Bill can be judged. One is how fairly the distribution of a burden is laid, and that is very important. But in conditions today I think more important is the other test as to how far the Bill will encourage maximum production in this country. I believe it is in that test that this Finance Bill fails. I heard the hon. Member for Sowerby (Mr. Houghton) say that we on this side were only concerned with the protection of wealth. That is one of those wild and reckless statements that politicians on all sides sometimes make and it need not be taken very seriously because no thinking person would believe it.
  Mr. Houghton: I meant it very seriously.
  Mr. Spearman: Then the hon. Member is evidently not in the category of politicians who speak without due thought, as we all sometimes do, but a reckless and unthinking person and I do not think any attention will be paid to his contention by thinking people outside.
  We on this side are concerned with the expansion of wealth because only if wealth continues to expand can the social services be maintained and a high standard of living secured for this country. If we become once more a poor country we can no longer afford the tremendous redistribution of wealth we had under all Governments in the last 50 years. We shall have to go back to conditions where there is an immense inequality of wealth and where there is a privileged class and totalitarian methods are used, as in Russia today. It is only a rich country that can afford to move towards equality and a high standard of living. That is why we on this side of the House, and I think all reasonable people, want to see an expansion of wealth. Without reasonable security that expansion will not take place.
  We on this side must admit that this Bill might have been worse. If the Chancellor had produced a Finance Bill which
  2192
  would have retained a united Cabinet it would have led to disastrous consequences very soon. But I also think that the Bill might have been, and should have been, very much better if we were so going to develop our resources that we might carry through the re-armament programme with a minimum disturbance to social conditions.
  I should like to comment on two points. One is the cost of living. When the cost of living first started to rise, it was the common practice of hon. and, indeed, of right hon. Gentlemen opposite to deny that the rise was taking place. Today, They no longer take that line. They prefer to say that it is all on account of Korea, I think that is not so at all. I think the rise in the cost of living is quite deliberate. It is an essential part of this Finance Bill.
  It is quite impossible in these conditions to arm painlessly. To arm as we are doing must hurt. It means the diversion of men and resources to arm the country and that means there have to be cuts in other expenditure. Either the Government cut their expenditure or else the consumer cuts his. One way of cutting the consumer's expenditure is to raise taxes, but the Chancellor appears to think, like most thinking people in this country, that taxation is now at a level where any increase would kill the goose that lays the egg because it would be a discouragement all through the ranks of industry, from the workers to the management.
  The right hon. Gentleman is also finding that taxation at this level is causing more and more dis-saving and is, therefore, ceasing to be a dis-inflationary weapon. For that reason this Budget inevitably implies a rise in the cost of living, because by permitting that it mops up purchasing power and leaves resources for re-armament. I therefore say that it is a deliberate policy of the Government to put up the cost of living. That rise has nothing whatever to do with Korea, but is a deliberate and inevitable consequence of this Bill.
  What we on this side of the House would say is this: if the country were asked whether they would like cuts in Government expenditure—other than eliminating waste, with which we all agree —of course they would say they would not; but if they were given the choice between cuts in Government expenditure

  2193
  and a rise in the cost of living—and that rise goes far enough—I think most people would prefer the first choice. They would say, "If there are to be cuts in expenditure by the Government we shall have some choice as to where the burden will fall. We can see that it hurts those who can most afford to bear it. But if the burden takes the form of enormous rises in prices, that hurts that part of the population who can least afford to bear it." Such a choice is a complete abdication of planning. It permits the burden to fall wherever it may, regardless of choice or plan.
  The second point I want to make is in connection with the increase in the Profits Tax and the abolition of initial allowances. At present I think about two-thirds, or perhaps rather more, of a company's profits are being absorbed in taxation. That must clearly mean that there is not a great deal left for paying out or maintaining dividends and, at the same time, carrying out the necessary improvements in the capital equipment of the industry.
  If the company cut dividends it will be quite impossible for them to raise new money. If they do not cut dividends they will not have enough resources left to carry out those improvements which ought to take place. Most unfortunately, this affects, most of all, those young and vigorous companies which it is vital that we should encourage if we are to expand industry as we ought. Those companies with great reputations and with accumulated reserves can much better improvise and find the resources than these new and vigorous people we ought to encourage.
  I do not think hon. Members opposite always realise how unsatisfactory our investment programme has been. If they look at the Economic Survey of Europe for 1949 they will see that this country's investment is enormous. It is more per head than in any country in Europe except Norway. But if they look at the figures for investment in industry they will find that we invest per head of the people engaged in industry only one-third of the amount in America and not much more than half of the amount in France.
  If they look at Table 8 of the Economic Survey they will find that the distribution of investment is of this order: the total new investment in manufacturing industry is £405 million, but the total new invest
  2194
  ment by the Government in nationalised industries and other undertakings amounts to £624 million, or about about half as much again. I believe that is a clear indication that though investment as a whole is very large in this country, and though investment in nationalised concerns is considerable, the amount which is going into progressive industry, and particularly into smaller companies, is nothing like as much as it should be—nor can it be under these arrangements.
  I have heard hon. Members opposite, among them the hon. Member for Stechford (Mr. Jenkins), suggest that there was some conflict between our advocacy of the maintenance of initial allowances and our advocacy of dearer money; he thought the two were in conflict. But it is just because we feel there are not enough resources available today to do all the investment that should be done that we suggest it is vital to use that weapon which will most effectively weed out those things which, however desirable, are not vital.
  There are many things in which we are investing today, especially in the nationalised industries and by the Government, on social amenities, which are good of their sort but which will not pay a quick return and which we cannot afford today. One of the instruments which would most effectively weed out those things which are not so desirable and which would lead to a concentration on things which are most desirable is an effective use of the interest rate.
  Mr. A. Edward Davies: Would the hon. Gentleman give a few examples of untimely expenditure in nationalised industries?
  Mr. Spearman: Yes. If the hon. Gentleman will look at Table 8 of the Survey he will see, as I have said, that whereas manufacturing industry takes £405 million, gas, electricity and water take £177 million and transport and communications £317 million. All that sort of thing is given in the Survey.
  Mr. Davies: Surely the hon. Gentleman will admit that those basic services are absolutely vital if we are to have increasing production. In all sorts of industries we have not sufficient gas and electricity or we lack adequate transport. Where is the economy in a policy such as that which he suggests?
  Mr. Spearman: What I say is that if those concerns had to pay a higher rate for the money they would carry out only those improvements and investments which would pay a quick reward. I do not deny that these things are good; I say that things are being done today which we cannot afford because we cannot even do those things which are still more urgent.
  In conclusion, I believe that this Finance Bill is like a ship which has been patched up—enough to keep afloat but not enough to reach the other end. It might have been worse. It avoids a disastrous collapse, but it will certainly not encourage the expansion of wealth and the development of industry in this country to enable us best to carry the burden which we must carry in the future.
  5.48 p.m.
  Mr. J. J. Robertson: I intervene in the debate very briefly to refer to Clause 30 and to the remission of Death Duty on properties to be handed over to the National Trust. This Clause is a welcome gesture on the part of the Chancellor of the Exchequer and can be received as such by all sides of the House. Of course, it is not an innovation because as far back as 1935, when the right hon. Member for Woodford (Mr. Churchill) was Chancellor of the Exchequer, a remission of Death Duty on landed estates was introduced.
  The difference between that remission and the remission proposed by the present Chancellor is that the latter has seen to it that the remission is given to bodies who have some public accountability—who can report to local authorities or to the Chancellor, if need be, that the money saved by the remission has been spent for the purpose for which it was given. To that extent the Clause should be doubly welcomed by the House.
  I should be out of order were I to enlarge upon the provisions made in the 1925 Finance Act, and continued ever since, whereby landed estates have considerable remission of Death Duty. I do not now intend to say what would have been said better on Second Reading, but I trust that the Chancellor will continue the good work he has started in this direction, so that in future remissions or rebates of Death Duty will be
  2196
  given in the way he has been giving them so far, to those public bodies who have received this assistance as a result of the generosity of the Chancellor.
  5.51 p.m.
  Mr. Joynson-Hicks: I appreciate very much the point which the hon. Member for Berwick and East Lothian (Mr. Robertson) has just been making, but it is a rather more detailed point than the one I was proposing to pursue myself, and I therefore hope he will forgive me if I do not follow him.
  I am grateful for the opportunity of very briefly making some observations of a general character, which I have not previously done on this Bill. I thought initially that it was a bad Bill, and I am still of the same opinion. We have to some extent succeeded in improving it in matters of detail, but we have not succeeded in overcoming its basic defects. I think that the first and primary defect is that it is a Bill which is the machinery for the production of £4,015 million during the ensuing year. That is a bad thing in itself.
  The second thing which is fundamentally bad is that, in order to raise that sum of money, the Bill incorporates certain bad principles. In fact, they are cause and effect. If in a country of this size, producing the amount of wealth we do, the Government require or insist upon raising revenue to the extent of over £4,000 million, it is bound to be forced to the necessity of introducing principles of financial legislation which are in themselves bad.
  The cause is that the weight and burden of taxation have become too heavy for the economic structure to bear; it is beginning to bend and to creak, and we are now in the phase where we are entering a new spiral—a spiral where, in order to achieve the product of the tax, it is becoming necessary to bolster up the legislation with ever more complicated and more detailed provisions in order to ensure that as much as possible of the estimated amount of the money is collected.
  Each time a new tax is put on a new safeguard has to be introduced, and each time a safeguard breaks down yet another safeguard has to be put on in order to bolster up the whole mechanism of the machine.

  2197
  What we ought to be doing is simplifying the system of our revenue production and collection. Instead of that, every time that we are asked to pass a new Finance Bill we are introducing more complications into it.
  The effect of that can only be one thing, and it is an effect which is even more widely felt on the industrial side than it is on the Government side, because the effect is simply to increase the overhead expenses of industry and commerce, and also to diminish the productivity of industry. It means that more effort in industry has to be diverted towards implementing the work of the Chancellor in the raising of taxation as against continuing to produce wealth.
  Two or three years ago I asked Sir Stafford Cripps when he was Chancellor of the Exchequer whether he could estimate for us the number of man-hours which had to be spent in industry in collecting taxation for the Government, by P.A.Y.E. and matters of that sort. Sir Stafford almost laughed; he said that it would be quite impossible even to estimate the amount of time which was occupied in that way. Well, I wonder whether that really is so. If the present Chancellor would apply his mind to that, I believe that he would be staggered by the number of unproductive man-hours which have to be occupied throughout industry and commerce in what is really doing the job of the Treasury in the collection of their taxes. All those additional man-hours are dead weight on the industry, which are reducing its productive capacity, reducing its profit-earning capacity, and therefore reducing its taxable capacity.
  I want, if I may, to try to illustrate by three quite short points why I consider that certain of the fundamental principles introduced into this Bill are bad. The first one, of course, is Clause 29, which was referred to by the hon. Member for Sowerby (Mr. Houghton), who defended it with considerable ability. That is the Clause in which the Government admit that the problems of industry with regard to Profits Tax have become so complicated that it is impossible for the Government to say that they can introduce legislation to ensure that such profits as may be made by a company shall be liable to taxation. Therefore, the Government have thrown a net right round what hitherto has been understood as being
  2198
  the legal liability of companies, so far as Profits Tax is concerned; and they have said that anything caught within that wider net shall be, in the discretion of the Commissioners, liable to taxation.
  Where the principle is bad is that it leaves the taxpayer—who normally speaking is, or at any rate was, an honourable person and an honest minded man—in a state of doubt as to what he can or cannot do without getting caught by Profits Tax. Further than that, the Government have thrust upon the Commissioners the invidious onus of having to decide, in their discretion, without the guidance of the law, whether or not that person should be subjected to tax. Those are two principles, both of which are, in my submission, bad principles of law and bad principles of taxation.
  Next there is Clause 24 which, substantially, grants power to the Treasury to obtain information, particularly from banks. We have never heard who are the other people referred to in Clause 24 from whom information may, by direction, be obtained. Even now I still hope that we may have some information upon that. The necessity—and this is where the principle comes in—of the Government having to pass legislation to obtain from banks information against the taxpayer, who is under the liability to make his own return for assessment, is a confession of Government failure.
  It shows that there is something wrong when we have got to the point where this power has to be sought. It is an admission that there must, in the Government's belief, be a lack of morality and a fall in the standard of honesty of the people. Finally, it is an abuse of the confidence which should exist between man and man, whether they be banker and client or anybody else. It is the setting of one section of the community against another in order to give away the private information of the other party. That action, I maintain, is a bad principle for us to introduce into law.
  To my mind, Clause 33 is the most heinous of all; yet it was passed with singularly little comment during the course of the debate. It is, I submit, a breach of our constitutional position in this House. We in this House, on the advice of the Government, pass a provision for the restriction of certain transactions leading to the avoidance of In-

  2199
  come Tax, etc., in which we say it shall be unlawful to do something. We then go on to say, "But, nevertheless, notwithstanding we have made this action unlawful, we will give permission to the Treasury officials to say that it can be done." That must obviously be wrong in principle and a bad thing for us to do.
  I am very sorry indeed that we should have descended to such a position where it is necessary to resort to these methods in order to implement the taxation liability upon the people of this country. This is stated to be a Finance Bill designed to finance rearmament, but rearmament, as the Chancellor has said, is dependent upon increased production, and yet this Bill of all things is designed to handicap production.
  I will not go further into that because it returns me to the point at which I began —the amount of taxation which is involved. The amount which the Government are seeking to raise cannot be raised without handicapping the production of this country. It is the weight of the taxation itself which has now become the inflationary element throughout the whole of our financial and economic system, and we have got to the point—and I beg of the Government to realise it and not fight against it any more—when inflation can no longer be checked by greater taxation because taxation has itself become inflationary.
  6.3 p.m.
  Mr. Jenkins: A large part of the speech of the hon. Member for Chichester (Mr. Joynson Hicks), was devoted to technical points about revenue collection, and I prefer to return to some of the broader economic considerations which were put forward by the hon. Member for Scarborough and Whitby (Mr. Spearman), and the hon. Baronet the Member for Handsworth (Sir E. Boyle). I think that it was because the hon. Member for Scarborough and Whitby is always so very mild in his manner that I am sometimes left breathless by the extreme nature of the things he puts forward. I think that it was the eighth Duke of Devonshire who once described himself as being "A moderate man: a violently moderate man." The hon. Member for Scarborough and Whitby is the reverse of that. He is a
  2200
  mild man, but a mild extremist, so far as these economic questions are concerned.
  I think that was demonstrated by his speech this evening, when he made some strong statements about the relationship of the rising cost of living to this Finance Bill. I think that he said that it was the deliberate policy of the Government to put up the cost of living, the deliberate policy being carried out in this Bill. He went on to say that this had nothing to do with what was happening in Korea.
  Mr. Spearman: I said that the only intelligent understanding of this Budget was that it meant to put up the cost of living because it had disregarded cutting Government expenditure and it had disregarded that further taxation—

ROYAL ASSENT
Message to attend the Lords Commissioners.
The House went; and, having returned—
Mr. SPEAKER reported the Royal Assent to:

1. New Streets Act, 1951.

2. Coal Industry Act, 1951.

3. Ministry of Materials Act, 1951.

4. Uttoxeter Urban District Council Act, 1951.

5. Dee and Clwyd River Board Act, 1951.

FINANCE BILL.
Question again proposed, "That the Bill be now read the Third time."
6.15 p.m.
Mr. Jenkins: When we were interrupted, the hon. Member for Scarborough and Whitby had interrupted me, not I think to deny either of the two remarks I had attributed to him, which were, in the first place, if I may reiterate them, that it was the deliberate policy of the Government, as enshrined in this Finance Bill, to put up the cost of living; and secondly, that it had nothing to do with Korea. He interrupted me, not to deny it, but to put a new gloss on his previous remarks by saying that this Finance Bill did not free resources which could be used for re-armament, which would have to be done if re-armament was to be carried through without increasing the cost of living.

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I suggest that the Finance Bill deals with the problem of freeing resources in the re-armament programme. This Finance Bill covers the cost of paying for re-armament, and it produces on top of that a more or less balanced Budget. This Finance Bill goes a little further than that, and fulfils what may be called the canons of the new Crippsian orthodoxy in raising enough revenue to cover the total expenditure of the Government during the year and that part of our investment expenditure, which it may be thought private savings will not be sufficient to cover. In that sense, from the point of view of dealing with the demands of re-armament and the situation at home, I should have thought that this Budget was quite adequately a disinflationary Budget, and I am not aware of any detailed argument against it put forward from the other side of the House or by economists in sympathy with hon. Members opposite.
Mr. Eccles: Because the simple fact is that the Government propose to spend £900 million more this year than last year and are only raising about £130 million more in taxation.
Mr. Jenkins: I am very shocked to hear the hon. Member for Chippenham (Mr. Eccles), whom we on this side of the House regard as one of the more informed hon. Members opposite on these financial questions, get up and say something which shows that he has not followed any part of the main portion of the Budget speech of my right hon. Friend, which dealt in great detail with this question and shows how, accepting what I described as the canons of the new Crippsian orthodoxy, he produced a perfectly disinflationary Budget so far as home factors were concerned.
Mr. Eccles: The hon. Member is going on the assumption that it is the inflationary gap which has to be filled, and if it is filled all is well. I never accepted that the calculations of the Chancellor on that matter are correct. The fact remains that he is spending in one way or another, from capital or from current expenditure, very vast sums more this year than last year which are not being taken up in new taxation. The Chancellor gets out of that by saying there will be sufficient private savings to bridge
2202
the gap. No one believes it but the Chancellor.
Mr. Jenkins: The hon. Gentleman has rather changed his ground. He is not so much challenging us—in fact, I think he admitted in the middle of his rather long intervention that the inflationary gap was adequately covered. He is moving towards to what I know is rather a pet theme of his, which is that any Budget which takes about 40 per cent. of the national income is wrong, by its very nature, no matter how adequately the inflationary gap is covered.
Mr. Eccles Mr. Eccles rose—
Mr. Jenkins: The hon. Gentleman has interrupted me twice standing up, and I do not think he ought to interrupt me any more. I do not think his is a view which we can take very seriously. If his party are committed to the re-armament programme and to maintaining even the skeleton of the Welfare State, then to talk about vast reductions in Government expenditure from a Budget concerned with only 40 per cent. of the national income is not practical politics but is only a rather romantic lament for times past.
Mr. Eccles: I undertake that this is my last intervention. I think the hon. Gentleman will agree that this year's taxation is increased by £120 million or £130 million. Does he maintain that that is all the additional expenditure put upon the country by the re-armament programme? If not, where is the difference coming from, except from a rise in prices?
Mr. Jenkins: I do not accept that position for a moment. [Interruption.] The hon. Gentleman cannot keep quiet for a moment. He said that it was to be his last interruption. It is not so much the interruptions standing up that I mind but the interruptions sitting down. I do not say that there is not in the Budget a very happy paradox between the amount which is raised in new taxation and the very much larger amount which is to be spent as new expenditure. That has been made possible by a number of factors like the running down of the very large foreign trade balance, the increases in savings, and the like, factors which were given full allowance, not only by Labour Party commentators but by a good many independent financial commentators in the time leading up to the Budget. So much

2203
so, that the gap which sources like the "Financial Times" and the "Economist" had predicted that we would have to close was pretty accurate. Therefore, we have my right hon. Friend the Chancellor of the Exchequer and a great number of other authorities, like the "Financial Times" and the "Economist," against the hon. Member for Chippenham, a fairly heavy preponderance of opinion against those who say that the Budget is not disinflationary.
I want to come back to the hon. Member for Scarborough and Whitby, from whom I have been diverted for rather a long time. We are having sharp increases in prices at the present time, but I should have thought that even the hon. Member, if he were making a less mildly polemical speech, would have admitted that they have a great deal to do with Korea and the subsequent putting up of world commodity markets which has affected companies all over the world.
Mr. Spearman: It is no doubt my own fault that I have misled the hon. Gentleman, but I did not say that the rearmament which has taken place after Korea had no effect upon commodity prices. What I wanted to say was that the rise in prices that the Government must expect in order to make the Budget intelligible, had nothing to do with Korea.
Mr. Jenkins: I submit that that is entirely untrue. It is a fact that rises ill prices are taking place which this Budget will not counter and which have a great deal to do with Korea. I should be extremely interested, even at this late stage of the Finance Bill, to hear a budgetary policy put forward opposite by which it might be possible to counter the price increases which we have been importing from abroad. I have no idea what hon. Gentlemen opposite mean by saying that that can be done by a Budget and that it would be done by cuts in expenditure. Does the hon. Gentleman think that a couple of Ministers' cars less will cancel what has been happening in the wool market of Australia? It is a fantastic proposition.
The other possibility is that the Opposition are thinking of having a Budget not in our new style, "adequately
2204
disinflationary" but a Budget so violently disinflationary that it is deflationary, one that would set up at home deflationary tendencies strong enough to cancel out the price inflation that we have been importing from abroad. The sort of Budget surplus one would need to have would demand the most swingeing increases in taxation and would set up a really dangerously deflationary situation here at home in which we should have large-scale unemployment in order, in the present situation, not merely to maintain the balance at home but to tip it down in order to counteract the great uuward trend which we are importing from abroad
The hon. Member for Scarborough and Whitby also brought before us a cry familiar from those benches, which was echoed by the hon. Member for Chichester to some extent, and that is the old cry we have heard in Finance debates for a number of years. It is that the redistributive policy of the Government, by means of a Budget sharing things out rather more fairly, is a policy which militates against increases in the national wealth and therefore leaves less to be shared out. It is rather late in the Bill to argue that point in great detail, but it has been the cry of "Wolf," which we have heard so often and which has been so untrue.
Mr. Assheton: But the wolf did come.
Mr. Jenkins: Perhaps one could make it out that the cry did not start even with this Government or with this series of Budgets, but long ago. It was applied to Budgets like that of Mr. Lloyd George in 1909, that any increases in taxation would necessarily decrease the size of the national income. It is an a priori point of view, and not a shred of practical evidence have the party opposite been able to bring forward. It is a piece of dogma which they regard as irrefutable by any logical evidence. They believe it. They have always believed that it would be so, and so they think that it must be so.
Mr. Spearman: Sir Stafford Cripps said in this House that we had now reached about the limit of direct taxation which could usefully be imposed.
Mr. Jenkins: Nobody has suggested that there might not be a position in which we might take so much in taxation that the theory of the Opposition might become true. All I can say is that the Opposition cannot be taken very seriously upon it because they put forward the theory about every Budget, whether or not it is true. The reply to the right hon. Member for Blackburn, West (Mr. Assheton), who interrupted by saying that the wolf did come, is that the great disadvantage was that the people who shouted "Wolf" had made the cry quite useless by the time the wolf appeared. That is the position of the Opposition so far as this cry about taxation is concerned.
The hon. Member for Handsworth had a great deal to say against the Profits Tax. He quoted a statement in which the Chancellor had said that he was not against profits when they accrued to companies because of their efficiency and that he was against great increases in profits when they arose out of general economic factors more or less independent of the individual company. The hon. Member tried to controvert that point of view and asked: "Why impose a tax like the Profits Tax, which minimises the difference between the reward to the efficient company and the reward to the inefficient company?"
I find it very difficult to think of any tax upon profits which would not have increasingly this effect. I cannot see any other conclusion to the argument of the hon. Baronet on that point other than that we should not tax profits at all because any tax on profits has exactly that effect. If one is to put forward that argument one should be prepared to face that difficulty.
The hon. Gentleman also said that we on this side of the House had no faith at all in our ability to combine full employment with a situation which was not inflationary and in which there could be rewards for efficiency and penalties for inefficiency. I suggest that it is an extremely wrong and, in a sense, unfair criticism of Labour financial policy in this year to bring that forward. I should have thought that we had been pretty successful, and certainly more successful that any other country in the world, in combining a stable price level with full employment during a period when one did not have world inflationary factors
2206
working with one. That is certainly true of the period from the spring of 1948 to the end of 1949, but it is not a test of financial policy to say that because there are rising prices at present and we have a rampant inflation going all over the world, Labour financial policy is necessarily an inflationary policy in all circumstances and cannot possibly combine full employment with a reasonable degree of disinflation.
I entirely disagree with the hon. Member for Handsworth and other hon. Members in their attacks on the Profits Tax. The Profits Tax is one of the best parts of the Finance Bill. It would be intolerable—perhaps it is intolerable at the present time—when new burdens are to be borne, that a greater share of the national income should go to profits than had previously been the case. I expected rather more from this increase in the Profits Tax, which after all is a very substantial increase—from 30 per cent. to 50 per cent.—than has proved to be the case. I thought it would have a bigger effect on the general situation, but the buoyancy of profits and the determination of directors of many companies to be rid of the restraint they have had for a number of years is so great as more than to counteract the effect of the increase in the Profits Tax at present.
That changes my attitude to the whole question of the Profits Tax. When one was in a situation in which dividends were kept almost completely steady there was something in the argument that a Profits Tax, even a Profits Tax on distributed profits, merely took money away from company reserves and brought it to the Exchequer, but in a situation in which company dividends are very far from being frozen and steady but are tending to increase very sharply and in which one needs factors to reverse that trend, ones attitude to the Profits Tax must be entirely different.
I consider that the dividend policy which has been pursued, not by all companies but by a great number of companies, during the past three months greatly strengthens the case for the Profits Tax, which was strong any way, and indeed goes rather further and raises the question whether there ought to be further measures to deal with the problem of increasing profits and distribution.
6.34 p.m.
Sir Patrick Spens: I always enjoy very much the speeches on economics which we have in the House, but, on the other hand, I very often feel that they are somewhat away from the real facts of the situation. It is interesting to realise that hon. Members on the Government benches are at any rate attempting to put up some excuse other than Government policy for the inflationary situation in which the country is and to minimise entirely Government policy as a factor in the inflationary situation.
I do not propose to deal with that at all. I am certain that the situation is such that it is absolutely essential that we should endeavour to secure every new possible source of wealth for this country and so make more secure the prospect of employment here. It is because I believe certain Clauses in the Bill will do exactly the reverse that I want to make a few remarks.
The hon. and gallant Member for Scotstoun (Colonel Hutchison) dealt with those who wanted to expand their business abroad or to venture abroad and to the extent to which they would be debarred by some of the Clauses. I want to look at the matter from the other point of view. For centuries the wealth of this country has been increased by people coming back from our Colonies and from abroad to set up businesses and headquarters of businesses here. The amount that we owe to additions of wealth which have come in over the centuries because this has been the place in which to trade and to have headquarters is incalculable.
Let us imagine what would face someone from the Colonies or abroad, who has not the same high respect as we have for the Treasury, the Inland Revenue and the Inland Revenue officials, coming here to do business. Under the first Clause that we came to, this person would find that in certain circumstances a mere surveyor of taxes, no doubt under orders from the Commissioners of Inland Revenue, could demand particulars of his bank account. Going a little further, he would find that if he entered into certain ordinary business transactions, which he thought would be for the benefit of himself and subsidiary companies, they could all be re-written and taxation charged as
2208
the Commissioners of Inland Revenue thought fit.
Going still further, he would find that if he proposed to transfer his business or sell to a subsidiary company abroad the price at which he thought fit to sell could be inquired into, the transaction upset and the whole of his taxation revised on that basis. Finally, he would find that, if he got his business going really successful, in no circumstances could he extend it abroad or even go back to the country from which he had come without the consent of the Treasury.
If one takes a bird's eye view of those four Clauses, does anyone think that a single foreign person will ever come over here and incorporate a company in this country? The man would obviously say that it was not "incorporation" but "incarceration" as a result of the Clauses. The result of this must be detrimental to the whole future trade outlook of the country. Why is it done? These wide powers are given to officials because, for the first time, it is thought necessary to introduce what the hon. Member for Sowerby (Mr. Houghton) regards as "sweeping powers" so that the Inland Revenue may get at every possible evader of taxation.
Time after time during these debates, in the middle of the night and in the early hours of the morning, we have heard that Conservative Chancellors never took any steps to deal with evasion of taxation. The hon. Member for Sowerby, who was not in the House before the war when I was, knows quite well how untrue are the statements that have been made. I entered the House in 1933 in the middle of the campaign against evasion of Surtax, and up to the time when I left the House in 1943 I believe there was not a single Finance Bill that did not deal with some specific type of evasion of taxation. Tax evasion was dealt with right up to the war in the traditional way, namely, the House laid down by its legislation what the transaction was that was not to be entered into or what special measures should be taken by the Commissioners to deal with the situation if it was entered into.
Then came the war. We know that there crept into not only finance legislation but all sorts of legislation the idea of giving the Treasury, above all, and other Departments all sorts of powers to do

2209
things which we would never have dreamt of empowering them to do in time of peace. Time after time we had enactments of one sort or another to provide that certain things could happen if a Minister thought it proper. We left wide discretion to Ministers and Departments and, above all, to the Treasury to manage our affairs during war.
Now we are in peace-time and not wartime, and yet these wide powers are being given to officials to do all sorts of things, to make up their minds whether the taxpayer has done something rightly or wrongly and to make decisions; and in these Clauses the possibilities of protecting the taxpayer by the ordinary machinery of the law courts have been reduced to the absolute minimum. I believe that the new system—the hon. Member for Sowerby readily admits that it is a new system—is utterly wrong and against the interests of all subjects in the country, and it is absolutely frightening to anybody who thinks of setting up a business here.
For those reasons I regard the Budget, whatever may b its other merits, as a bad Budget, because I am absolutely certain that the Clauses I have mentioned will dry up potential sources of great wealth and future employment here.
6.40 p.m.
Mr. Henry Strauss: The hon. Member for Stechford (Mr. Jenkins), in replying to my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman), said that my hon. Friend had stated that it was the deliberate policy of the Government to put up the cost of living. The hon. Gentleman said that that was not so and, of course, I accept it from him. That is admittedly the effect of their policy, but I agree it may not be their deliberate aim, because everyone knows that they often achieve exactly the opposite of that at which they are aiming. We are, of course, familiar with their split minds. We are familiar with Ministers saying at one moment that the aim of the Government is re-distribution by way of retribution and saying almost in the next breath that what they want to do is to encourage savings. We are quite used to all that.
Many hon. Members have said that, when the Chancellor of the Exchequer originally made his Budget speech, many people thought that the Budget might
2210
have been much worse. I would say, even of the Finance Bill, that it might have been much worse, but for one Clause. That Clause is so bad and the injury it will do to this country is so great that I believe its influence will be remembered long after the rest of the Budget is forgotten. It is mainly about that Clause that I wish to speak, the Clause at present numbered 33.
The hon. Member for Sowerby (Mr. Houghton)—to whom I think we should be grateful because throughout all stages of this Bill he has intervened from time to time and given us the benefit of his views, to which I, at any rate, always listen with interest—dealt with some Clauses on tax avoidance such as 29 and 33. Owing to the pressure of time I shall say very little about Clause 29. I had reason for some mild satisfaction in that the Government produced 39 lines of Amendments to this Clause on the Report stage, embodying Amendment after Amendment which I had the pleasure of moving during the Committee stage. On that Clause, therefore, I shall say nothing more tonight. Let me come at once to Clause 33.
Let us examine what Clause 33 does. First, of all, at what companies is it directed? Here, fortunately, the Chancellor of the Exchequer was very frank in his speech during the Committee stage. The companies at which Clause 33 is directed are companies which, though resident in the United Kingdom, are trading abroad. That is the important thing to remember: they are trading abroad but they are resident in the United Kingdom. The object of the Clause is to prevent them from leaving the United Kingdom and going abroad, possibly to the country where they are carrying on their trade.
The first thing to realise is that those companies need never have been resident here at all. Why did they choose to be resident here. The answer is, for some of those advantages which were described in the speech of my right hon. Friend the Member for Aldershot (Mr. Lyttelton), such as the banking facilities of the City of London, the insurance facilities, shipping and, I might add, the reputation of, and the possibility of access to, English law. All those things made it attractive for them to be resident in the United Kingdom. From that residence the United Kingdom drew immense advan-

2211
tages in invisible exports which even today constitute one of the main things on which the Chancellor necessarily relies.
This Clause, then, is directed at companies which are trading abroad and which need never have come here at all. What is the form of the prohibition? It says this:
"All transactions of the following classes…shall he unlawful unless carried out with the consent of the Treasury."
Now let me read the first of those classes of transaction:
"for a body corporate resident in the United Kingdom to cease to be so resident";
That is what the Socialist Government say ought to be prohibited in 1951. I ask hon. Members, with those words fresh in their minds, to remember these words:
"All merchants, if they were not openly prohibited before, shall have their safe and sure conduct to depart out of England, to come into England, to tarry in, and go through England, as well by land as by water, to buy and sell without any manner of evil tolles by the old and rightful customs, except in time of war;"
That is from Magna Charta, 1215. The text can be found in the first volume of the Statutes Revised, which any hon. Member can find in either of the Division Lobbies. He will find it in the Statute of Magna Charta of 1297, 25 Edward I, Chapter XXX. That shows the extent of the revolution that is here being enacted and the blindness to the nature of British greatness which the mere putting forward of this Clause involves.
Hon. Members opposite have sometimes asked why, if we attack some things in this Finance Bill so violently, did we not criticise more violently the original Budget speech of the Chancellor? The answer is simple. He never mentioned this Clause and, when it was printed, it was adversely criticised not merely by the Conservative Party and the Liberal Party but by every thinking organ of opinion in the country. There was nobody who was at all conscious of the nature of the factors on which British commercial and industrial greatness had been built up, who was not horrified when he saw this Clause. So much for the mere existence of this Clause. I tell the Chancellor of the Exchequer that, even if he withdrew this Clause now, he would not do away with the injury that he has done to British
2212
credit; nothing could do that, but he would at least diminish it.
Let me call attention to two legal monstrosities in this Clause, apart from the nature of the Clause itself. The first is that it contains in subsection (2, b), as last printed, a presumption of guilty knowledge in persons. There have been previous examples of creating a criminal offence for a company and then saying that, where the company commits the prohibited act, every director shall be deemed to be a party to it. until he proves the contrary. There is precedent for that but there is no precedent at all, as was admitted to me by the Attorney-General, for this presumption of guilty knowledge contained in that subsection. That is the first legal monstrosity in the Clause.
The other legal monstrosity has been mentioned by several hon. Members who have spoken this afternoon. What is made unlawful under this subsection is unlawful unless carried out with the consent of the Treasury. The Chancellor of the Exchequer claims a dispensing power. That has a very serious connotation and a very ugly sound in English constitutional history. It does not become better when it is claimed by the Chancellor of the Exchequer in 1951.
In answer to me last night the Chancellor of the Exchequer dealt with the point that I had put to him and said that the powers that he had taken for granting a consent generally could be used in a manner that would be absolutely unfair, as far as the law was concerned. He said that he did not mean so to use those powers, but he refused to give the undertaking that, where he gave a general consent, he would refrain from discriminating between bodies corporate not already resident in the United Kingdom and other bodies corporate.
What does that mean? It means that he can say to any company not yet in this country, "I will give you permission to come and will free you from every prohibition in this Clause," but to any company which came in the past, relying on British credit, honesty and fair play, he will say, "I will give you no similar advantage." I say that that is another desperately serious blow at the reputation of this country. I believe that this Clause is so great a blemish on this Bill that, were there no other fault whatever in the Finance Bill, the Finance Bill should be utterly condemned.
6.54 p.m.
Lieut.-Commander Gurney Braithwaite: It is a signal privilege for a back bencher to utter the final words on behalf of his party at the conclusion of the financial discussions of the year, and particularly at the end of the long pilgrimage upon which hon. Members have been occupied both by day and night since 10th April. I may be old-fashioned, but I have always regarded the Finance Bill as the most important Measure of any Session, meriting considerable expenditure of time, particularly since the abolition of the Report stage of the Budget Resolutions which used to be a useful preliminary stage of these discussions.
Before I turn to more controversial matters, may I be permitted to say that on this side of the House these debates have been conducted under a sense of loss which I cannot but feel is shared by hon. Members opposite, at the absence from our debates of the concise and sparkling speeches of Oliver Stanley who could illumine the darkest and longest all-night Sitting by his shafts of humour.
But whatever our sense of personal or party bereavement, the work of the House has to continue, and I think it may be claimed for the Finance Bill, 1951, that it has produced a particularly high quality of speech and temper throughout our protracted proceedings. For my part, I never remember a Committee or Report stage sustained with such spirit or at so worthy a level, and I find that on this side of the House no fewer than 129 hon. Members have taken part in the debates on the Committee stage. I feel that that must be a near record, but the Parliamentary statisticians can tell us whether that is so or not.
One morning when dawn was breaking, and I was making some laudatory remarks about the speeches of some of my hon. Friends, and some distinguished characters opposite had just joined us after a night of refreshing sleep, I was asked by the hon. Member for Sowerby (Mr. Houghton) whether this was the annual prize giving, and I told the hon. Gentleman, as I am sure the Government Whip will confirm, that the occasion for such is not the Committee stage, particularly after an all-night Sitting, but the Third Reading when, in accordance with our traditions, it is usual to make some comments upon those who
2214
have been on the bridge throughout the voyage.
As it was the hon. Member for Sower-by who raised the subject, perhaps I might deal with him first. I have here his terminal report compiled from research both at Westminster and in his constituency. I am sorry to inform him that, as my father used to say to me so frequently, it leaves considerable room for improvement, for it reads as follows: "Conduct fair, tries hard, may do better in a lower form during the autumn term."
The Chancellor opened these long debates with a speech which was recognised on both sides of the House as one achieving a particularly high standard, whether judged by form or quality. His frequent interventions since have been amicable apart from some asperity during the watches of the night and a curious outburst of passion this afternoon which I thought was due to fatigue rather than bad temper.
The Financial Secretary has been painstakingly zealous and less susceptible to criticism than in days of yore, but I thought he made an odd speech this afternoon in moving the Third Reading, when he girded at my right hon. Friend the Leader of the Opposition for the part he has taken in our discussions, in asking from time to time what the Government's intentions were as regards our long debates and in moving to report Progress for that purpose.
This mystified me until the hon. Gentleman went on in his speech to make an even more curious pronunciamento, which was that his hon. Friends had carried out discussions on the Finance Bill by the superior method of correspondence and consultation rather than by the delivery of speeches and the tabling of Amendments. That is surely an admission that in a Socialist State Parliamentary debate has become objectionable. I thought it a sinister hint of the manner in which right hon. Gentlemen opposite intend to conduct their business should the electorate be so misguided as to give them another opportunity of doing so.
Mr. Jay: The hon. and gallant Gentleman is in error. I did not say "instead of making Parliamentary speeches." I said "instead of putting Amendments on the Order Paper."
Lieut.-Commander Braithwaite: That, if I may say so, makes the hon. Gentleman's offence even greater than I though. How frustrated would have been the common man referred to by the hon. Member for Sowerby who, when he reads it, will be offended by being so described, because none of us regard ourselves as being common men. How frustrated will the common man feel when he reads what the Financial Secretary said this afternoon. No longer can he regale himself by listening to the representatives of the people discussing the nation's affairs; all will have to be done by correspondence and consultation. The Strangers' Gallery would have to be closed.
The Economic Secretary to the Treasury, who has now joined us, came to the discussions on the Finance Bill hot foot from a not very happy experience in the Argentine, which will be discussed on Thursday and, therefore, cannot be referred to now, and found himself immediately plunged into much hard work on complicated Treasury briefs, which I imagine, all of us would find difficulty in mastering.
As I observed the hon. Member for Bosworth (Mr. A. Allen)—that devoted amanuensis who, for the moment, is absent for the first time—flitting to and from the fount of information which resides under the Gallery, I was reminded of an incident graphically described in Chapter 8 of the Acts of the Apostles in which, hon. Members will recall, or ought to recall, Philip in his travels came up with
"a man of Ethiopia, a eunuch of great authority"
who was reading the words—I am glad to see that the hon. Member has returned, but I am afraid that he has missed the quotation from Holy Writ and will have to turn to the record tomorrow morning. The eunuch of great authority was reading the words of the Prophet Esaias and Philip said to him:
"Understandeth thou what thou readest?"
To which came the reply:
"How can I, except some man should guide me? "
The Economic Secretary obtained guidance from under the Gallery and we all did our best on this side of the House but, unlike Philip, we were not invited into the chariot.
2216
The Secretary for Overseas Trade had what I might describe as a walking-on part. I think he only crossed the stage once, and then it was to tell us, appropriately, of Turkish Delight—the outcome of the Torquay negotiations.
We must all regret that the Attorney-General is not here to take a final curtain. With his usual courtesy he has sent me a telephone message, because I informed him I intended to make some remarks about him, to say that he is engaged elsewhere and I am sure we all understand that. The right hon. and learned Gentleman carried a well-nigh intolerable burden, a continuous tour of duty of nine hours and remained throughout calm collected and courteous without even a suspicion of annoyance on his countenance except during certain interventions by the hon. and learned Member for Gloucester (Mr. Turner-Samuels) or the hon. Member for Sowerby.
Beneath a smiling face, we are told, there is often to be found an aching heart and the amiable features of right hon. Gentlemen opposite cannot conceal the stark reality of this Budget. Its chief features have been canvassed this afternoon. I will only refer to them very rapidly. There is the increased Petrol Duty, which must surely go down to history as the "Groundnuts tax," counterbalancing, as it does, with great exactitude, the sum poured by the Government so light-heartedly into the burning sands of Africa. It also raises the costs of distribution and public transport. If the hon. Member for Sowerby had described that as an omnibus Clause I would have known what he was talking about.
The Entertainments Duty is to be overhauled and I hope that the right hon. Gentleman, when reviewing the whole of this impost, will not be unmindful of sport, amateur sport in particular. I thought I detected yesterday some note of the Chancellor becoming somewhat cinema-minded. It would be a pity if the whole Entertainments Duty was ranged round the requirements of one industry. I hope, therefore, that the review will be of the broadest character.
The taxation of undistributed profits, which finances re-armament at the expense of the export trade of this country and the modernisation of its plant, we believe to be unwise. The so-called tax dodging Clauses, in our view, make a far

2217
deeper incision than is necessary into our economy and, as so many hon. Members have so well said, act as a brake on overseas development. We are sorry that the Purchase Tax Committee is not to possess the powers suggested from this side of the House. We believe our proposal was a more effective piece of machinery. May I say to the Chancellor that, while review is desirable, reduction is far more so?
The Third Reading of the Finance Bill is the occasion every year when we look back on the long road travelled for the past three months and consider the impact of the Budget upon the taxpayers as a whole. Despite the observations of the hon. Member for Stechford (Mr. Jenkins), concerning whom I shall have a word to say in a moment, it aggravates instead of soothing our inflationary distresses. I well remember how, in 1945, hon. Members opposite had a ringing slogan that, with the nationalisation of the Bank of England, finance would become the servant and not the master of the people. But finance is the master—
Mr. Norman Smith: Hear, hear.
Lieut.-Commander Braithwaite: I hear an echo of a voice which has been too long silent, the financial adviser to His Majesty's Government.
I was going on to say that when 8s. in the £ in every wage and salary is confiscated there is a harsh master and that the cost of living continues to rise with the printing press in hot pursuit. After all, the paper £ is no more expensive to produce than the American dollar, but what a difference when they perform their functions of purchase and sale!
There is another complaint I have to level at His Majesty's Government on this occasion, that the taxpayers are once again, in 1951, confined to barracks. Last year, when performing this same function, I said to Sir Stafford Cripps—and when he replied he did not deny that it was true—that the high cost of railway fares was preventing people from taking their holidays. They were sitting in their gardens watching the trains—of which they are the owners—thundering past half empty on the way to the coast. This year it is estimated that seven million people are so immobilised and I submit to the Government that the so-called "free" Health Service loses much of its value if
2218
the contributors are denied access to the health giving properties of sea and mountain. I commend that to the Minister of Local Government and Planning.
The cuts in social services go far beyond the charges imposed by the right hon. Gentleman for teeth and spectacles. They have caused a grievous decline in the value of benefits under our social services and all these facts are the consequence of former follies, not of the right hon. Gentleman himself, although he is in close juxtaposition with the architect of them, but he was an accessory, as far as I know, before, during and after the fact.
We are living today in the morning after, or hangover of, the Daltonian debauch which resulted in the investment of the Unemployment Fund at par—that was a fact that did not emerge at Question Time today—in Treasury 2½ per cent., losing at the moment, if realisation were necessary, one-third of the capital involved. Despite £6,000 million devoted to defence since 1945, with so little to show for it, we are now confronted with a new re-armament programme of £4,700 million, a fresh burden on a patient nation.
That is not the end of the story. because as I said during the debate on the Budget Resolutions this is not the only Budget introduced by the Government this year. The Postmaster-General had a curtain raiser only the week before, and there has been the increase of railway fares. We are confronted with a tripartite tyranny on the part of the Socialist Government. I and my hon. Friends feel that the British people deserve a better fate than this.
My right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank), who opened the debate from this side of the House, referred to our Budget and Finance Bill discussions as a pilgrimage, a word which had also occurred to me—a pilgrimage symbolised to some extent by that described in John Bunyan's masterpiece, which I have recently been re-reading. Even if all the incidents are not in chronological order, can we not, on both sides of the House, say that in 1945 our nation set forth, after six years of war, from the City of Destruction. Only to flounder into the Slough of Devaluation, of which the hon. Member

2219
for Stechford has never heard in his defence of the Socialist Party; and we are wandering in By-Path Meadow on the advice of Mr. Worldly Wiseman and Mr. Timorous, both of whom can be clearly observed on the Treasury Bench opposite?
Now, in 1951, we are invited to disport ourselves in Vanity Fair built for our delectation by Mr. Vain Confidence. And yet the most exacting part of the road remains to be travelled. I feel confident that as our British people ponder upon the lessons of this Finance Bill they will turn again to Mr. Greatheart, who brought us through the dread Valley of the Shadow.
7.12 p.m.
The Chancellor of the Exchequer (Mr. Gaitskell): In rising to address the House for the last time on this Bill I should like to begin by associating myself with what the hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite), said about the absence of Oliver Stanley. We on this side of the House always appreciated enormously his wit and his humour, the light touch and, at the same time, the penetrating speeches that he made. I should also like to say how sorry we are that the right hon. Member for Aldershot (Mr. Lyttelton) who led for the Opposition during the earlier stages of the Bill and up to the Report stage is also ill and unable to be here.
I must say to the hon. and gallant Member for Bristol, North-West, that at least in that part of his speech which he described as the prize giving section, he gave us a very entertaining and amusing exposition. I cannot say that the rest of his speech was quite so relevant and entertaining to us, but I would add that he also, in his interventions from time to time, generally keeps us in a lively mood.
The right hon. and gallant Member for Gainsborough (Captain Crookshank) made what I thought was a very unfortunate and ill-chosen reference to the Prime Minister's visit to Glasgow. While I do not wish to labour the point I should have thought that when Glasgow University—I was mistaken in referring to the Corporation when I intervened—has its
2220
quincentenary, to which the Prime Minister of Great Britain is invited, all Members of the House, particularly the Scottish Members, would wish that he should be there. Let me say at once that the right hon. and gallant Gentleman told me that he would be unable to be here and I warned him of what I intended to say about Glasgow. I will come later to the question of the Prime Minister's letter and will tell hon. Members why I think he was perfectly entitled to say what he did in that letter on the occasion of a by-election.
This is not the time to go over the whole Bill again, still less to go into the major issues of the Budget. The hon. Member for Scarborough and Whitby (Mr. Spearman) made some astonishing statements about the Budget, and he was supported by the hon. Member for Chippenham (Mr. Eccles), both of whom were very accurately dealt with by my hon. Friend the Member for Stechford (Mr. Jenkins). He has really saved me the trouble of saying anything more. I thought that his speech was exactly right. The idea that the Budget deliberately, or indeed not deliberately, increases the cost of living, is, of course, absolute nonsense.
I was astonished to hear the two hon. Members, who, I should have thought, understood these matters a little better, suggesting at this late stage—not previously, I think—that we had deliberately planned a deficit Budget to increase inflation. How anybody could listen to or read the Budget speech, and subsequent speeches on the Second Reading of the Finance Bill, and still believe that, how, if they understand the general principles contained in the Budget they can still believe that, passes my understanding, except that there is, of course, one simple explanation, that it is a little try-out for a possible bit of election propaganda.
The Opposition concentrated a good deal of their attack on this Bill on the Profits Tax, on the suspension of the initial allowances and on tax evasion and the anti-tax evasion Clauses. I wish to say a few words about these three subjects. We were not surprised that the Opposition objected to the increase in the Profits Tax. We expected that that would be their reaction. But we believe, and here I very much agree with my hon. Friend the Member for Stechford, that

2221
what has happened since the Budget has abundantly justified the increase in tax on distributed profits from 30 to 50 per cent.
I justified it at the time not on the ground that I wished to penalise efficient businesses but because it seemed to me that, owing to circumstances largely beyond the control of the management in individual enterprises, profits were rising. They have risen—we all know that. We have seen the figures in the papers, and I make no apology for saying that in those circumstances we were right to increase the tax and to raise it to the admittedly high level at which, out of the total distributed dividends, the Government now take some two-thirds in taxation—in Profits and Income Tax.
Frankly, my only doubt is whether the increase in tax was really sufficient to achieve the objective which I had in mind. What I wanted to do—and I made it very plain to the House at the time—was to encourage companies to put a higher proportion to reserve and to distribute a smaller proportion of their profits, so that as far as possible the level of dividends paid would not increase or would at any rate increase only in very special cases.
If the dividend distributions continue—though I admit they have diminished since the Budget—if there is a sign that they are increasing, we shall have to reconsider the position because of the general effect which the payment of large dividends has on the economy as a whole, an effect which is disproportionate to the amount of money involved. It has an effect in all sort of other ways which are generally inflationary.
As to initial allowances, the hon. Member for Orkney and Shetland (Mr. Grimond) dealt quite fairly with our attitude on that matter and I do not intend to say a great deal about it. The purpose of suspending the initial allowances, as the right hon. and gallant Member for Gainsborough recognised, was not to raise revenue or to improve the budgetary position; it was to discourage money spent on investment. It was an anti-inflationary measure. Quite obviously, it brought no particular political advantages, and it was not confined in its influence to this year. It was done because in the circumstances of rearmament, and in view of the enormous
2222
importance which must attach to maintaining at least a high level of exports in the engineering industry, we thought it necessary to discourage too many orders coming for British industry.
Of course, we should all like to see a high level of investment—I do not disagree in the least with that—and we would all recognise that the higher the level of investment, on the whole the more we were likely to get an increase in productivity, and the bigger the increase that might result. But we have to address ourselves to this problem. The engineering group of industries and the building industry—the two main groups of industries concerned—are all fully occupied, their capacity is being worked to the full, and it is impossible to see how the defence programme can be fitted in and exports maintained unless there is some decline in home investment.
If we did not do anything to discourage that, there would simply be an additional inflationary pressure. Perhaps I have not sufficiently explained what that signifies: namely, that if we allowed it to go on, there would be too much money chasing too few goods, and there would be some impact, at any rate, on the cost of living, which makes it all the more extraordinary that the hon. Member for Scarborough and Whitby, whose party has been opposed to us on the supension of initial allowances, should accuse me, through the Budget, of putting up the cost of living. Of course, it has exactly the opposite effect.
As to the supply of money capital, I do not frankly at this stage see any serious danger. If we have a situation in which the amount being spent on equipment for British industry is larger than we can sustain physically, it does not look as though there is any shortage of money capital. That makes me feel that the elaborate arguments that have been put forward in connection with the suspension of initial allowances and the Profits Tax really cannot be sustained when one looks at the facts as they are today.
The anti-tax evasion—or anti-tax avoidance, as the Opposition prefer to call them—Clauses have, of course, been the most hotly contested of all. I can only say that I do not think that the Government would have been doing their

2223
duty had they allowed companies to migrate freely and to escape the Profits Tax and Income Tax in certain cases which they could thereby do. We were very seriously concerned with this problem.
What, however, hon. Members opposite, and particularly the hon. and learned Member for Norwich, South (Mr. H. Strauss), overlooked, is that in fact under the Exchange Control Act, so far as the migration of companies is concerned, there has already been existing for the past four years control of the kind to which he objected so much. It is only because we thought that we ought not to use that Measure, which is designed for exchange control purposes, to prevent tax avoidance, that it was necessary to bring in that part, at any rate. of the Clause in the present Bill. I cannot therefore readily accept that all the sinister consequences that the hon. and learned Member seemed to indicate would follow, have any substance whatever, because they certainly have not been apparent in the last few years.
As for Clause 24, which requires that interest paid on bank accounts should be disclosed, the hon. Member for Chichester (Mr. Joynson-Hicks) objected strongly to this and seemed to think that it was a new idea, but he overlooked that the Royal Commission on Income Tax of 1919 recommended that action should be taken about this.
Mr. Joynson-Hicks: It was not taken.
Mr. Gaitskell: It was not taken, I daresay, but it is not a very new idea. I have listened to all the arguments, and certainly I cannot see any reason why income which is paid in the form of interest on deposits should not be disclosed when income which is paid as wages must be disclosed. There is no possible ground for the distinction.
Of course, the main argument of the Opposition has been the usual familiar one that we ought not to have this high taxation because taxation is ruining the country, and that therefore there should be cuts in Government expenditure. I thought that the right hon. and gallant Member for Gainsborough might, perhaps, have taken some account of the very detailed analysis that I gave in my Budget speech of exactly what was being
2224
spent and the way in which it was spent; because, of course, half of Government expenditure is spent on defence and interest on the National Debt, and of the rest some three-quarters is spent on social services. In my Budget speech, I went in detail through the rest of it and showed the economies that we had achieved.
All we have had from the Opposition is the suggestion from the right hon. Member for Aldershot (Mr. Lyttelton), that there might be a £50 million economy—the kind of casual figure which anyone could put forward—and a much more detailed proposal from, I think, the right hon. and gallant Member for Leicester, South-East (Captain Waterhouse), which has never been taken up by the Opposition Front Bench and on which we have had no indication from the Conservative Party whether they agree with him. I suggest to right hon. and hon. Members opposite that they should study that speech and say frankly to the country whether or not they agree with the right hon. and gallant Member's proposals.
As the hon. and gallant Member for Bristol, North-West said, it is customary —and a very pleasant custom it is—to say what we feel about different persons who have taken part in the proceedings on the Finance Bill. It is with very real pleasure that I now do that. As regards the Opposition, on a number of occasions excellent speeches have been made, and the level of debate has been high, but that does not mean that every word that was said had to be said or that we need have spent quite so many hours on discussing all the Clauses of the Bill. It would be surprising if among some 250 Amendments and 90 new Clauses there were not some good ideas included, but I think we could well have dispensed with quite a lot that was said and proposed. We therefore think that my right hon. Friend the Prime Minister was absolutely justified in the strictures which he passed upon the Opposition.
Mr. Lionel Heald: Does the Chancellor of the Exchequer disagree with the Leader of the House when he said on 19th June:
"I want quite wholeheartedly to pay tribute to the way in which there has been a great effort on the part of both sides of the Committee to conduct our proceedings with reasonable speed, without doing any undue injury,

2225
to the necessity of properly examining the Bill."—[OFFICIAL REPORT, 19th June, 1951; Vol. 489, c. 406.]
Does the right hon. Gentleman agree with that or not?
Mr. Gaitskell: That was one of the good moments in the proceedings. Unfortunately, it was not always like that] wish it had been.
Turning to our own side of the House, many things have been said already about my right hon. and learned Friend the Attorney-General. I was fortunate enough to have his company and assistance during the passage of the Gas Bill, and I must tell the House, if I may be permitted, a story about the Committee stage of that Bill, which continued upstairs, as hon. Members will remember, for two days and two nights. The story, which is of course only a rumour, is that at one point in those proceedings, early in the morning of the second day, an Opposition Amendment was moved and my right hon. and learned Friend got up to reply. Ten minutes later, somebody looked up and observed that my right hon. and learned Friend was speaking to a completely sleeping Committee. I think that we should regard that as typical of him, although, of course, he did not do it this year: we can run relays here, but we cannot do it upstairs.
I think it would be agreed that although my right hon. and learned Friend may be unshaven, hungry and tired, his voice is just as harmonious, his conduct just as courteous, and his argument just as persuasive and lucid. He is an incomparable Attorney-General, and on the Front Bench we value his assistance enormously.
The Financial Secretary has continuously, throughout the whole Bill, come in again and again to deal with a great many Amendments. He copes not only with the vices and the things which we tax rather heavily, but also with the virtues, where there are always claims for relief. Let us not forget that my hon. Friend the Economic Secretary took the burden of one all-night sitting himself. I should like to say to my hon. Friends on the benches behind me how very indebted we are for their support in the Lobby, and for the
2226
admirable discipline which has been observed. As for myself, I will only say that I practise, to the best of my ability, a policy of devolving as much work as I can on to other people.
Finally, I should like to say "Thank you," last but not least, to the officials who have helped us throughout this Bill, and who have been here throughout our long Sittings, and have sent my Parliamentary Private Secretary along with notes from time to time to help us out. They are a very, very fine body of men, as I know the House realises, and we all appreciate them.
So, with gratitude to all I have mentioned, and now at this stage with a more benevolent feeling towards the Opposition than I have had throughout the Bill, I say farewell to a Measure which I think embodies the various proposals which, though unpalatable, are in the circumstances necessary, and which I think involves important steps towards ensuring that taxpayers pay what they are supposed to pay.
Question put, and agreed to.
Bill accordingly read the Third time, and passed.

FESTIVAL OF BRITAIN (ADDITIONAL LOANS) [MONEY]
Resolution reported;
That, for the purposes of any Act of the present Session to authorise the making of additional loans to the company formed for the purpose of managing the Festival Gardens provided in Battersea Park as part of the Festival of Britain, 1951, it is expedient to authorize—

(a) the payment out of moneys provided by Parliament of sums (not exceeding in the aggregate one million pounds) required by a Minister of the Crown for the purpose of making loans under the said Act of the present Session to the said company;

(b) the payment into the Exchequer of any sums received by any such Minister by way of interest on, or the repayment of, loans made by him under the said Act of the present Session to the said company; and

(c) the release by any such Minister, in whole or in part, of claims in respect of loans so made.—[Mr. Gaitskell.]

Resolution agreed to.

FESTIVAL OF BRITAIN (ADDITIONAL LOANS) BILL
Considered in Committee.
[Mr. MATHERS in the Chair]

FESTIVAL OF BRITAIN (ADDITIONAL LOANS) BILL

  Clause 1.—(ADDITIONAL LOANS TO FESTIVAL GARDEN COMPANY.)
  7.33 p.m.
  Sir Waldron smithers: I beg to move, in page 1, line 10, at the end, to insert;
  "but the Minister shall not make any loan until the investigation now being made by the police into allegations of fraud on the Festival sites have been completed and any consequent decision of the courts made known."
  We had a late Sitting last night, and we have today dealt with an important Bill, which has just been passed, and I promise the Committee that I shall not be very long. But I do not want hon. Members to think that because I shall be brief I do not attach great importance to this Amendment. I am fortified in that, because in the stop press of the "Evening Standard" this evening, there is an item;
  "FESTIVAL GARDENS AND L.C.C. Failing to get satisfactory reply on excessive expenditure of £1,600,000 on Festival Gardens, Mr. Henry Brooke Leader of the Opposition, moved adjournment of L.C.C. this afternoon, so that the matter could be thoroughly discussed."
  Subsection (1) says;
  "The Minister may, with the approval of the Treasury, make to the festival gardens company (in addition to any loans made by him thereto under section two of the Act of 1949) loans of an amount not exceeding one million pounds, and any loans under this section shall be made on such terms and conditions as the Minister thinks fit."
  I think that is giving much too much power to the Minister. After all, what is the security for these loans? The next Amendment on the Order Paper tends, I think, to support that point of view. My object in moving to insert these words is so that no more of the taxpayers' money shall be risked till we know the result of the investigations which, I believe, are on foot by the police.
  There is another point about this Clause which I believe is important. As I understand it, the money is already spent, and there are allegations of fraudulent spending. I want to know how often before in the history of the House of Commons the Government have been able to spend a large amount of money without the permission of this House. When the case
  2228
  comes on in the courts, there may be more revelations, and before we give power to the Minister to spend this money let us know the worst, and let us know how the money has been spent.
  This Clause is typical of Socialist financial mentality. It is irresponsible. and it puts a premium on fraud. I have always been told that one of the main duties of a Member of Parliament is to be a guardian of the public purse. Now there is no difference in principle between the budget of the humblest home and the Budget of the country. A man who spends more than his income finishes in the bankruptcy court, and that is what is being done under the financial policy of this Government.
  It may be said that the £1 million in this Clause is not a large amount. I have always been told that if you look after the pence the pounds will take care of themselves. This Clause is in keeping with the whole policy of the Government since they came into power, the background of which is this. In 1946–47 the ordinary expenditure was £3,910 million; this year it is £4,197 million; and as a consequence the purchasing power of the £has fallen from 20s. to 14s. 6d.
  Now, this cannot go on, and we must make a protest every time more money is spent by the Government, especially when there are allegations of waste. I am quite sure that none of our big banks would lend money to a man accused of theft until he was cleared. I doubt whether any banker today would lend money to the Festival of Britain, so why should the Government squander more of the taxpayers' money to satisfy what is known as "Morrison's folly"? How many houses could have been built for our people with all the money spent on the Festival of Britain, or with only this £1 million? There is an old saying that there is no smoke without fire.
  I do not know the truth of the two examples I am about to give; I hope it will come out at the trial. One example is that lorries were driven into the site of the Festival of Britain and driven out, with no proper check kept on them. The other is this. When it was found that there was some leakage of goods and materials, a policeman was put on the gate. A man came along with a barrow covered over with a tarpaulin, and the policeman stopped him and asked. "What

  2229
  have you got in there?" "Only some rubbish" he was told; and after he had had a look he told the man, All right, go on." Then 14 more men did the same thing—
  Mr. Mellish: On a point of order. In view of the fact that investigations are being made by the police and, as I understand it, as there may possibly be court proceedings, is it in order for the hon. Gentleman to make allegations of this kind, which he says may not he proved?
  The Deputy-Chairman (Colonel Sir Charles MacAndrew): I thought that the purpose of the Amendment was to cause the Minister to wait until the investigation had been made. What the hon. Gentleman is now saying seems to anticipate it.
  Sir W. Smithers; I am giving the reason why this investigation should be continued. May I just finish this point? The only thing that happened was that next morning there were 15 barrows and 15 tarpaulins missing. No contractor could allow or could afford such things to happen, and why should a Government allow this alleged waste and expenditure to take place? That is why I want this Bill held up until we hear the result of the court proceedings.
  The Minister is a business man and the best of a bad lot. He has a very difficult job in trying to put right the folly of his predecessors. I ask him, would he allow such things to happen in his own business? Of course he would not, and for that reason I ask him to accept this Amendment.
  The Lord Privy Seal (Mr. Stokes); It is quite clear from where the hon. Member gets his ideas. I do not propose to weary the Committee with a recapitulation of all the statements I attempted to make clear on the Second Reading debate. The Amendment arises from the widespread reports in the Press of corruption and irregularity. In point of fact, if the hon. Gentleman will examine the White Paper, and will turn to page 33, he will see that the independent accountants appointed to investigate the goings on on the sites state clearly;
  "We have seen no evidence to suggest that the managements of any of the contracting firms or of the professional firms engaged on the contract have knowingly been parties to any irregularities which may have taken place at a lower level."
  Sir W. Smithers; They may not have been parties but the things may have happened.
  Mr. Stokes; I know a great deal about this, because as soon as I took over responsibility for the job one of the things I was anxious about were the very reports on which the hon. Gentleman no doubt has based his Amendment. I immediately gave notice to the proper authorities that investigations should be made and they were made. All the points put to me about irregularities were found on examination by the police to be not worthy of further consideration. While it is true there are still investigations going on by the police — and I have no statement to make tonight to the Committee on that account— as the independent accountants said. examination of the extent of the irregularities must wait until the whole thing is costed and added up. I made that clear during the Second Reading debate a week or two ago.
  The purpose of the Bill, as I then explained, is to make a statutory provision for additional loans so as to enable us to have the Festival Gardens this year. If we carried the Amendment, it would mean that the Government would have to continue in the irregular fashion which has been so much criticised by the Opposition. In fact, what the hon. Gentleman is asking me to do is to continue to do precisely what everybody criticised us for doing in order to get ourselves out of the difficulty that quite clearly we were in, and to which I shall make reference when discussing the next Amendment; that is, to continue to make use of the Civil Contingencies Fund. Therefore, for the reasons which I have given that there is no proof of any fraud, and the irregularities so far as they are known are being investigated, and will continue to be investigated until they are laid, the Amendment is quite unacceptable, and I ask the Committee to reject it.
  Amendment negatived
  7.45 p.m.
  Mr. W. Robson-Brown: I beg to move, in page 1, line 14, at the end, to insert;
  Provided that before releasing any claim against the Festival Gardens Company for a sum exceeding the amount authorised under the Act of 1949, the Minister shall present to Parliament a detailed financial statement showing the expenditure and receipts of the

  2231
  [MR. ROBSON-BROWN.]
  Festival Gardens Company; and that he shall not exercise the additional right to grant releases conferred upon him under this subsection until twenty-eight parliamentary days have elapsed from the date on which the aforesaid financial statement has been presented to Parliament.
  I am satisfied that this Amendment will meet with general approval in all quarters of the Committee, and not least with the approval of the Lord Privy Seal himself. Its intentions and its purpose are quite clear. It is, first, to give an opportunity to the House to consider the financial position of the company at the end of the first year of operations and to consider fully and accurately both expenditure and receipts. A further thing which is very vital and necessary to consider fully is the final report of the auditors appointed by the Lord Privy Seal to investigate the affairs of this company.
  There has been a good deal of uneasiness in the country— some of it justified and some not— and we believe it vital that the Government finances should be fully accountable to this House and that any misunderstandings should be taken away. I am perfectly satisfied that there is no hon. Member who would not agree that it is in the public interest that a full light be turned on the affairs of Festival Gardens, Limited. I believe it important in the interest of the Festival Gardens themselves that there should be no misrepresentation or distortion of the facts which would affect the success of the gardens, or any aftermath and bad taste which there might be if any fact or misdemeanour were hushed up.
  The gardens have already proved a great pleasure and enjoyment to a considerable number of people. We are all confident the gardens will go from success to success and we hope that the robust, confident prophecy of the Lord Privy Seal that it will also be a financial success will, in the end, be justified. I have the feeling it might well turn out to be the most successful venture of its kind and something of which we shall all he proud. Speaking for myself, I hope that the reaction of the public and the financial returns will be such as to justify it going on a second year. I would go further and say that I hope it will be a Permanent feature of London life.
  Mr. Stokes; I am very much obliged to the hon. Gentleman for his words in
  2232
  support of the Festival Gardens and the desirability of their being allowed to continue to give enjoyment to, I was about to say, hundreds of thousands of people. Expressing my own opinion, I hope he has his way, but I would tell him that while I have no objection to the intention of this Amendment, because I think it right that Parliament should know how the money has been spent and where it has gone before giving any final release, I am advised that, from a technical point of view, it would be impossible to get a suitable drafting which would go into the Bill in the time at our disposal today.
  I would ask the Committee to be prepared instead to accept an assurance from me that I will have the full figures published in the form of a White Paper as soon as those figures are available, and there shall be no "release", I think that is the technical term, until that has been laid before Parliament and Parliament has had an opportunity of discussing it. I should add that the hon. Gentleman mentioned a further report from the accountants. In point of fact, there is no further report. Their report has been referred to as a preliminary report but the persons who were responsible for calling for the report are the Board of Festival Gardens, Ltd. They have decided to suspend further investigations until they have a final settlement with the contractors and until the final costings are known. It is for them to decide whether or not any further investigation is required.
  I think it possible there may be confusion in the minds of some people as to the difference between a further report from the independent accountants and the issue between Festival Gardens, Ltd., and their contractors, and what further action they propose to take on that account. As to the Amendment, I will give an undertaking that the figures shall be made available to Parliament before any release is granted. I hope that on that account the Committee will agree to reject the Amendment.
  Mr. Duncan Sandys; What the right hon. Gentleman has said meets the main substance of this Amendment very fully. It is undesirable, in some cases, for the House of Commons to accept Ministerial assurances as a substitute for the proper drafting of legislation;

  2233
  but that applies more to long-term legislation, and this is a short-term affair. I imagine that it will be a matter of months before we get this statement. Therefore, I think that my hon. Friend will be willing to accept the clear, precise assurance given by the Lord Privy Seal, which I understand is intended fully to cover the proposal contained in the Amendment.
  Mr. Robson-Brown; I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Motion made, and Question proposed, "That the Clause stand part of the Bill."
  Sir W. Smithers; I should like to ask one question. Earlier the Lord Privy Seal mentioned irregularities and he did not deny that the money had already been spent, as I pointed out, without permission of this House. Was it spent with Treasury consent?
  Mr. Stokes; Yes, of course. I explained that on the Second Reading of the Bill. The problem with which the Government were confronted in the early days of this year, with the opening of the Festival Gardens planned to take place early in May, was to find some means of providing money. With Treasury permission, they made use of the Civil Contingencies Fund for the purpose of carrying on. This Bill now regularises the situation by removing the need to use the Civil Contingencies Fund.
  Question put, and agreed to.
  Clause ordered to stand part of the Bill.
  Clause 2 ordered to stand part of the Bill.
  Bill reported, without Amendment.
  Motion made, and Question proposed. "That the Bill be now read the Third time."
  7.53 p.m.
  Mr. Parker; Most hon. Members welcomed the statement made by the Lord Privy Seal on the Second Reading that the Pleasure Gardens should remain open not merely for the coming year, but possibly indefinitely. I think he also suggested that they might remain open for five years. I wish to urge that the House as a whole should press on the Government the desirability of trying to make arrangements to enable the
  2234
  Pleasure Gardens to become a permanency.
  I am certain that the great mass of the people in London, and those from the provinces who have visited the Festival, think that it should be made a permanent feature of London life. Mention has been made of the Tivoli in Copenhagen and of Skansen in Stockholm. These are places which are a combination of fun fair, open air theatres and other activities in pleasurable surroundings, with restaurants, and so on. We have been told that these gardens have flourished for many years in the Scandinavian capitals, but that it was impossible to create anything of the kind in this country. In the last few weeks we have seen that what was considered to be impossible has become a great success in London. I am certain that most people would like to feel that the Pleasure Gardens were to be permanent.
  This is not a matter merely for the Government. The London County Council and the local authorities of Battersea and Chelsea are also interested. I urge that the Government should approach these local authorities at a fairly early stage to try to get some agreement that the Pleasure Gardens should be made permanent. It is said that in the neighbourhood of the gardens in Battersea and Chelsea there are many people who would object.
  Mr. Deputy-Speaker; I am sorry to interrupt the hon. Gentleman, but he seems to be making something in the nature of a Second Reading speech. These questions do not arise from this Bill. which merely provides for certain loans to be made.
  Mr. Parker; I conclude by pressing that some arrangement should be made with the local authorities as soon as possible, so that an announcement can be made and people will know where they are, financially and otherwise, on this question. I suggest that hon. Members should be given an opportunity of expressing their views to the Government at an early stage.
  7.56 p.m.
  Mr. Sandys; My hon. and right hon. Friends on this side of the House have already fully voiced their criticisms and their objections to the way in which the

  2235
  earlier loan granted by this House has been handled, and our regret as to the necessity for this Bill. This is not the occasion to level those criticisms again. The right hon. Gentleman gave us certain answers during the Second Reading debate. Some of them were not very complete. Perhaps he had not very much time to look into all the questions that were asked. I should be grateful if he would consider some of these questions which still require examination.
  The gist of most of the speeches from the benches opposite during this debate have been that the roundabouts have been great fun and, therefore, the money has been well spent. I have been to the funfair and, like many other hon. Members, I have taken my children. I think we can all agree that, from the point of view of entertainment value, this is a great success. But that is no valid explanation for the gross overspending of the money of the taxpayers and the London ratepayers.
  I am glad to have this opportunity to pay my tribute. We can all agree that the decorations and the general layout of the Pleasure Gardens are very attractive and highly successful. I wish to add my tribute to those already paid to the architects and artists responsible. On the question of the continuation of the Festival Gardens, it is not a matter with which I —
  Mr. Deputy-Speaker: I am sure that the right hon. Gentleman appreciates that the question does not arise from this Bill at this stage. I am anxious that we should not extend the scope of the debate.
  Mr. Sandys: I was about to say that I did not propose to deal with that question, because I felt that it was outside the scope of the Bill.
  I would sum up the attitude of my hon. and right hon. Friends on this side of the House by saying that, judged from the standpoint of amusement, the Pleasure Gardens are undoubtedly a very great success; but, judged from the standpoint of public finance, it is, as the right hon. Gentleman himself has said, a sorry story. It is a sorry story of delay, muddle and waste. We on this side of the House protested, and we registered our protest by dividing on the Second Reading.
  2236
  We do not propose to divide against the Third Reading tonight, but that is only for the simple reason that we recognise that the money has to be found. We recognise that commercial debts which have been entered into by the Government-sponsored company cannot be repudiated, however much we deplore the way in which the money has been spent. So I conclude by saying that, reluctantly and with protest, we are obliged to accept the position that, once again, the taxpayer will have to pay the price for the Government's incompetence.
  8.0 p.m.
  Mr. Gibson: I should like to give this Bill my blessing on Third Reading, and to say that, while it is true that, in connection with the Festival Gardens, there has been some gigantic under-estimating, to put it mildly, and while there is a large sum of money required and the Bill provides a way of meeting that problem without getting the Minister and the Treasury into difficulties later, it is also true that the people of London, and those from the provinces who have visited the Gardens—and this is particularly true of the people living around Battersea Park—have no objections whatever to the existence of these wonderful new Pleasure Gardens and that many of the fears which they had in the early days have disappeared.
  For instance, I myself voiced the fear that the fun fair would be extremely noisy, and that the people living in the road alongside the park would suffer at night from that noise. I am told by people living in that road that there is absolutely no sound coming over to them from the fun fair, but that a good deal of sound reaches them when the fireworks are discharged. Incidentally, I hope the Minister will do something about the noise of the exploding rockets, which go off two or three times a week.
  I am told that people living around the fun fair have no objection, except that, late at night, when their children and perhaps they themselves are in bed, they can hear these rockets, which go over at almost the same time as aeroplanes from the London Airport. They remind them vividly of the very bad time they had in that area during the war, when the bombing took place. At any rate, that point is worth remembering.

  2237
  I hope that the Bill will not only enable the Government to meet the enormous additional charge which is necessary but, as a result of it, there will be time to consider carefully the future of the site. In that connection, not only Festival Gardens Ltd. and the London County Council will have to be consulted, but the borough councils of Battersea and Wandsworth, and possibly, those of Chelsea and Westminster on the other side of the river, because it will be necessary to obtain general agreement in that part of London if the Gardens are to be made a permanent feature. In the meantime—
  Mr. Deputy-Speaker: I am sorry to interrupt the hon. Gentleman, but unless he and other hon. Members relate their remarks to the money which it is proposed to provide in the Bill, their remarks are out of order.
  Mr. Gibson: I beg your pardon, Mr. Deputy-Speaker, but I thought I was relating my remarks to the £1 million which the Bill will provide the means of spending.
  The fact is that this project has been an enormous success—a success which has disappointed many hon. Members of the Opposition, who did their utmost to damn it with very faint praise in days gone by. Personally, I was very glad to hear this evening some praise for the project, and a recognition that the passage of the Bill will enable the finances of the scheme to be put in order and to permit a thorough examination. If it results in an extension of the use of the Festival Gardens for a longer period, which will enable the promoting company to recoup themselves of these extra charges, this discussion may well have been worth while, and, certainly, the Bill itself will have been worth while.
  8.6 p.m.
  Mr. George Wigg: I want to say a word or two on the concluding stage of the Bill, and to draw the attention of the House to the fact that we have reached the Third Reading at a time when even the Opposition cannot deny that the Festival will be an outstanding success. Furthermore, it is quite certain that, if the Government will take the decision to continue the Festival Gardens for more than a year, ultimately we shall make a great profit. I think I am in order in pointing out that,
  2238
  although there has been a loss, we can get our money back.
  It is also important to point out that in overcoming many difficulties there has been one difficulty to which we have not given half enough attention, and that is the carping criticism, much of it ill-natured and almost all of it ill-informed, which has come from the Opposition benches and the Opposition Press during the last few months. It is now the fashion to claim that we all have a share in the success of the Festival. But I am not one of those whose memory is quite as bad as that, and I remember that there were those in the Conservative Party who seized every opportunity of denigrating what we are trying to do.
  We might have expressed the hope that the right hon. Gentleman the Member for Streatham (Mr. Sandys) would have had the good nature to be as generous as his hon. Friend the Member for Esher (Mr. Robson-Brown). Perhaps even he, after one or two more visits to the Festival, will be able to say what we all feel—that the Festival Gardens should go on, not only for next year, but should become a permanent feature of our national life. I think I am still keeping to the point—
  Mr. Deputy-Speaker: I fully appreciate the hon. Gentleman's sentiments, but he should relate his remarks to the Bill. I am quite sure that he is capable of doing that.
  Mr. Wigg: It is part of the Opposition's case that we have lost all this money, and that we are not going to get it back. I am putting the contrary point of view, that we have not lost this money, that it is only lent and that it will come back, and I think we ought to keep that in mind. We ought not to let the Opposition get away with that, as they have got away during the last few months, and that is why I put forward the argument that, despite the Opposition, we have a good chance of making not only a great success of the Festival—this is now certain—but of making a financial success as well.
  8.8 p.m.
  Mr. Stokes: Whatever else may be said about this quite short debate on the Third Reading of this Bill it is certainly true that everybody has agreed the Festival

  2239
  Gardens is a good idea. Whatever the criticism, as my hon. Friend the Member for Ealing North (Mr. J. Hudson) said the other day in a brilliant impromptu speech, the Gardens are a "howling success".
  The right hon. Gentleman the Member for Streatham (Mr. Sandys) asked me to answer points I did not answer on Second Reading. Good though my memory is, I could not attempt to do that today and if there are particular points on which he wants further elucidation I will certainly endeavour to give it to him if they are seriously exercising his mind at this late stage.
  As to his complaint about over-spending I can only say in reply, as my hon. Friend the Member for Dudley (Mr. Wigg) did, that the situation is not really as gloomy as that, provided this enterprise continues to run, which is not a matter for me to decide. The revenue is proving extremely buoyant and better than anybody expected. I shall not try to give a figure because that depends on the public fancy and on that most fickle of all things the weather. The attendance figure goes down in a deep dive immediately the barometer drops or it comes on to rain and it is quite impossible to give a forecast at present.
  Nor is it necessary to reiterate all the things I said during the Second Reading debate. I am glad that the Pleasure Gardens and funfair have been welcomed and that people realise they are worth while. I was glad to see in one of the more prominent daily papers a statement to the effect that the Mayor of Battersea said it would be a very good idea to keep the Gardens going for another year and that members of the council thought so, too. It is the intention of the Government to take the opinion of all the local authorities concerned and we hope to make an announcement to the House in the not distant future, certainly before the House rises for the Summer Recess, as to whether the Gardens shall go on. With those very short remarks I hope the House will give the Bill a Third Reading without a Division.
  Question put, and agreed to.
  Bill accordingly read the Third time, and passed.

  PARLIAMENTARY CONSTITUENCIES (REDISTRIBUTION)
  Draft House of Commons (Redistribution of Seats) (Oldham and Ashton-under-Lyne) Order, 1951 [copy presented, 5th June], approved.—[Mr. de Freitas.]

CIVIL DEFENCE REGULATIONS
8.12 p.m.
The Under-Secretary of State for the Home Department (Mr. Geoffrey de Freitas): I beg to move,
That the Draft Civil Defence Corps (Scun thorpe) Regulations, 1951, a copy of which was laid before this House on 29th May, he approved.
Both the Civil Defence Corps Regulations, 1949 and the Civil Defence (Public Protection) Regulations, 1949, confer certain functions on county councils. county boroughs and five specified non-county boroughs. Referring to this last group of authorities, my right hon. Friend the Secretary of State for the Home Department said in July. 1949 in the House:
"It will he seen that there is a small group of large non-county boroughs which have been given a special position…"
Then he mentioned them by name and he described them in these words:
"…which are large urban populations surrounded by a very considerable tract of country which has no urban characteristics at all. I think they stand in a special category. It may be possible to add a few other county districts to that number."—[OFFICIAL REPORT. 26th July, 1949; Vol. 467, c. 2399–2400.]
The purpose of this draft Regulation is to add the borough of Scunthorpe to these specified non-county borough authorities. There have been several applications from local authorities to be scheduled in this way. We have given most careful consideration to these applications on their merits, but only in the case of Scunthorpe has it been considered that the needs of the county district could not be met by a delegation of authority from the County Council.
In the case of Scunthorpe, the Parts of Lindsey County Council felt that since they had so wide an area to administer, and since the borough of Scunthorpe constituted an entirely different Civil Defence problem, it was desirable that Scunthorpe should be scheduled. The

2241
County Council accordingly supported the application of the borough council.
In no other case was there this agreement between a county district council applying for scheduling and the county council concerned. The factors that influenced us in coming to the decision to ask the House to add Scunthorpe to this list were that it was a populous authority, its importance as a steel manufacturing town, and the general agreement that its needs could not be met by delegation.
8.15 p.m.
Mr. Geoffrey Lloyd: We do not disagree with what the Under-Secretary of State has said. We wondered why the problem of Scunthorpe did not arise earlier and was not dealt with earlier, but from what the hon. Gentleman said I take it that the consultations with the County Council and with the local authority itself took some time. Undoubtedly, that is the reason. We see no reason to oppose this Motion.
Question put, and agreed to.
Resolved:
That the Draft Civil Defence Corps (Scunthorpe) Regulations, 1951, a copy of which was laid before this House on 29th May, be approved.
Resolved:
That the Draft Civil Defence (Public Protection) (Scunthorpe) Regulations, 1951, a copy of which was laid before this House on 29th May, be approved.—[Mr. de Freitas.]
8.17 p.m.
Mr. de Freitas: I beg to move,
That the Draft Civil Defence (Public Protection) (Warnings) Regulations, 1951, a copy of which was laid before this House on 14th June, be approved.
I must detain the House for a few minutes on these Regulations because they are an important step in our preparations in Civil Defence. We have now reached the stage in the re-establishment of the air raid warning system when we must begin making some local arrangements. Hon. Members who follow Civil Defence affairs closely in the House will know the Parliamentary history. It has been taken in stages. I will refer to the fact that my right hon. and learned Friend the Secretary of State for Air mentioned it last October. The Home Secretary mentioned it last November, and in January the Prime Minister used these words:
2242
"We shall, however, press on with Civil Defence planning; and we shall accelerate those Civil Defence measures which directly support the efficiency of the Armed Forces—in particular, communications, the control network and the warning system."—[OFFICIAL REPORT, 29th January, 1951; Vol. 483, c. 583.]
At this point, in January" the warning system was quite clearly regarded as, and stated to be, part of our immediate defence programme. Again, in March, in answering a Question in the House, it was shown that we were working closely with the Departments in this matter, and a great deal of progress has been made.
We are now at the point at which I am presenting these regulations under which local authorities can take a practical step towards re-establishing the warning system. I want to emphasise that the Government are according to the re-establishment of the warning system a priority equal to that given to the active air defence of this country.
8.19 p.m.
Mr. Geoffrey Lloyd: I am glad that we have had that explanation from the Under-Secretary of State, because it must be clear that the warning system is one of the most important of the first things we must do in re-establishing the Civil Defence organisation. We all regret its necessity very much, but as far as we can see, even if the international situation improves, as long as a potential aggressor has a big air force and particularly if it possesses also the atomic weapons, Civil Defence must in a way be regarded, at any rate up to a certain level of preparation, as one of the basic defence services of the country. In any case, we must go on with the re-establishment of the warning system.
Rather serious problems will arise as a result. I do not want to go into details but, broadly speaking, I think it is true to say that bombers are now at least twice as fast as they were during the last war. That means, of course, that there would be only half the time in which to give the warnings. That lays great stress upon the need for a thoroughly efficient warning system and communications system. It also lays great stress upon the need for what I might call primary sources of warning beyond the shores of this country.
In other words, it means that the radar system, from which our warning system

2243
derives its information, should, if possible, be extended to the Continent of Europe. Anyone can see that it might therefore be possible to recoup some of the time which we are losing by reason of the great, increased speed of aircraft by getting our warnings from further away. It is also necessary that the speed of communications within the warning system here should be brought to the highest level of efficiency.
I should like to ask whether consideration has been given to warnings relating not merely to aircraft but to guided missiles. It will be within the recollection of some hon. Members that towards the conclusion of the last war there was a system by which a certain warning could be given even of guided missiles. It was true that the time factor was very, very narrow, because the sources of launching were relatively near to these islands. If the sources of launching were further away, it might be possible to get a warning which would have a practical result and be really useful in this country. The hon. Gentleman may not be able to answer that this evening, but perhaps he would give consideration to it.
Hon. Members may remember the way in which, when we heard the first warning in the last war. On the very first day, when the sirens went we all trooped downstairs to a rather improvised shelter. In general, people did take shelter when the sirens first went in the early part of the war. Then, when they got used to the sirens, I think it will be agreed that people came to regard them as more in the nature of an alert than a final warning, and said to themselves, "That means they are coming along," and they were inclined to wait and listen until the planes were getting near before they took shelter.
I rather doubt whether we should be wise to do anything like that in the event of an atomic event. Flashburn, as the Under-Secretary has explained to us previously, is instantaneous, and very dangerous, but dangerous only to those people actually exposed to it at the moment of the flash. If people can get indoors, or even if they can cover themselves up, they can get almost complete protection. But that does mean that they must actually be in shelter, or at any rate away from the open air at the moment that the bomb is dropped.
8.23 p.m.
Mr. de Freitas: The possibility of atomic attack in no way changes the organisation of the warning system. The object of the warning system must be to give the longest possible warning of any attack, whether atomic or "conventional," but because it is of greater effect in the event of an atomic attack it makes it even more important to have an effective warning system. It is not for us to discuss now what sort of advice we would give to people about what they should do when a warning or alert is sounded. These Regulations concern only the system of warning.
Because of the increased speed of aircraft and the possibility of guided missiles, we must admit that we face a very grave problem. Fortunately, it is not a problem which the Home Office is trying to tackle alone. We have the best brains of the Post Office working on the technical side to try to speed up the dissemination of a warning; and, secondly, we have the Royal Air Force, which has the heavy task of defence. They are working desperately hard on an early warning system, so that with our scientific and operational Allies on the land and in the air I feel that we may well be able to solve this problem, and I am confident that we shall do so. These Regulations are a small but important part in setting up the warning system.
8.25 p.m.
Mr. James Hudson: I have not been able to forbear from intruding into this debate after hearing the speech of the right hon. Member for King's Norton (Mr. Geoffrey Lloyd). I think that he has been thoroughly mischievous in the way in which he referred to the permament character—as he suggested —of the system of warning and of the Civil Defence preparations which he regards now being almost in the first priority of our defence arrangements.
He assumes that even an improvement in the situation abroad will not relieve us from considering this issue in the way in which we have been considering it tonight. I am perfectly certain that a vast number of people in this country will not accept that view, however attractively it may have been presented this evening. The view that is being taken by the people I know in a constituency close to London

2245
is that if all these things happen as the result of high speed missiles and the use of atomic and hydrogen bombs the City of London will be a hopeless place in which to live, whether there are warnings or no warnings.
If there is any hope that out of the changing situation that we are now watching with interest abroad a new and better attitude will be adopted towards us by other countries, I hope that the Government—and I got up merely to say this and not to leave it to one or two on the Front Bench to say it—despite all the encouragement which at present they are receiving from the opposite side, will regard it as their first duty to avoid Civil Defence arrangements, which, I believe, if put to the test, will be found to be largely futile for the purpose suggested.
I hope that we shall try to get ourselves into the state of mind that if we can improve the feelings between ourselves and Russia and the other countries behind the Iron Curtain, that is a reason for getting away both from re-armament in a large measure and the particular arrangements that we are discussing this evening. I felt that it was necessary to voice that note of protest.
8.28 p.m.
Mr. Logan: I cannot for the life of me understand the viewpoint which has just been put by my hon. Friend the Member for Ealing, North (Mr. J. Hudson). I can understand the pacifist idea, but to think that we should not take preparations appears to me to suggest that we are living in a world of disillusionment. Everyone knows that after the havoc created by the last war it is absolutely essential for the welfare of the nation that its people should have a timely warning and as scientific a warning as it is possible to get.
It may be all right to come to an understanding, but today we have no reliance on that, and, what is more, we cannot get action from those who ought to be pacifist and who can end war tomorrow if they feel so inclined. We must make every preparation, and it is essential to the welfare of our people that the Government should be supported and that we should feel that we have the people to put the job into operation.
Question put, and agreed to.
Resolved:
That the Draft Civil Defence (Public Protection) (Warnings) Regulations, 1951, a copy of which was laid before this House on 14th June, be approved.
8.30 p.m.
The Parliamentary Secretary to the Ministry of Food (Mr. Frederick Willey): I beg to move,
That the Draft Civil Defence (Emergency Feeding) Regulations, 1951, a copy of which was laid before this House on 29th May, be approved.
These Regulations will place on local authorities the responsibility for emergency feeding arrangements. The authorities concerned are the same authorities as deal with the rest centres. We have fully consulted the local authorities and we have also consulted the catering industry. I am happy to say that we have the full support of the catering industry for the steps we are taking.
8.31 p.m.
Mr. Geoffrey Lloyd: I was interested to hear from the Parliamentary Secretary that his Department have consulted with the local authorities, because my inquiries have not led me to find much evidence of those consultations. When the Home Office undertake a job, for example, like that dealt with in the previous Regulations, there is ample consultation, but I have not seen much evidence of it for emergency feeding. I am glad that the hon. Member for Ealing, North (Mr. J. Hudson), who made such a passionate speech just now, is endeavouring to assist in the emergency feeding arrangements by getting the Parliamentary Secretary a little information on the subject.
I feel that the Ministry of Food have been rather slow with this work. My information is that the Food Defence Plans Department of the Ministry of Food was set up very soon after the Civil Defence Act was passed, under which these Regulations which we are now discussing arise. If that Department has been in existence all that time, it seems to me that two and a half years is rather an excessive period to pass before these Regulations come before the House. From what I have been able to discover, only about 2½ months would be needed to do what has been achieved so far. I hope this Department and other Government Departments will give the Home

2247
Office better co-operation than we feel has been given in this case to get on with the job which it is the duty of the Home Office to co-ordinate.
The hon. Gentleman would agree that our experience of emergency feeding in the last war, particularly towards the end when the raids unfortunately were so heavy—Plymouth is rather a good example of what I am saying—suggests that it is not wise to concentrate the emergency feeding arrangements either in the centre or to a great extent within the area of the local authority or in the town. It was found that it was very important for emergency feeding centres to be dispersed beforehand around the perimeter and outside of what we must call the target area. If that is the case, the Parliamentary Secretary will agree that in the unfortunate event of an atomic attack, the area affected will be much larger than was the area affected by a raid in the last war.
So it is even more important that plans should be made, on the one hand for effective dispersal of feeding arrangements, and on the other for some reliance on a mobile form of centre, such as the Queen's Messenger Convoys. Hon. Members will recall that these Convoys were mobile feeding units. They were lorries with special equipment, completely mobile, and able to deal with feeding at very short notice, proceeding at once to the site of an incident. I am wondering if that scheme is going to be considered again. If the hon. Gentleman would give us some information on that, I should be grateful.
8.34 p.m.
Mr. Willey: I can only speak again with the leave of the House. Perhaps I ought to amplify one or two of the points made by the right hon. Member for King's Norton (Mr. Geoffrey Lloyd) on the subject of consultations with local authorities. It is quite clear that the inquiries which he made must have been very superficial.
In fact, we have discussed these Regulations with the Association of Education Committees, the County Councils Association, the Association of Municipal Corporations, the Welsh Joint Education Committee, the London County Council, the Rural District Councils Association,
2248
the Metropolitan Boroughs Joint Standing Committee, the Urban District Councils Association, the Association of County Councils in Scotland, the Convention of Royal Burghs, the Association of Counties and Cities in Scotland, as well as Government Departments. The inquiries of the right hon. Gentleman did not reveal any of those consultations, so we must regard it as a fact that his inquiries have been remarkably superficial. The other points that the right hon. Gentleman made will be borne in mind.
Question put, and agreed to.
Resolved:
That the Draft Civil Defence (Emergency Feeding) Regulations, 1951, a copy of which was laid before this House on 29th May, be approved.

UTILITY CLOTHING SCHEME
Motion made, and Question proposed. "That this House do now adjourn."—[Mr. Bowden.]
8.37 p.m.
Mr. Chetwynd: We are fortunate in having adequate time in which to discuss the general question of utility clothing. There is an anxiety about the cost of living, and the recent announcements by the Board of Trade of increases in manufacturers' maximum prices for certain classes of utility goods have focussed the attention of the public on the utility clothing scheme.
The scheme has proved a great blessing in the last few years, and has enabled many people to get the advantage of carefully price-controlled goods of assured quality and good design, at reasonable prices. This utility scheme has been one of the effective instruments of Government policy which has protected the standard of life of our people against the worst effects of the post-war worldwide inflation. I am anxious because this scheme, so well maintained by my hon. Friend over the past 18 months, seems to be in some danger of breaking down. Unfortunately, it has not been possible to insulate the scheme against the prevailing upward surge of world prices, brought about in the main by the uncontrolled scramble for raw material consequent upon the Korean war and the stock-piling that has taken place.

2249
This fact, together with the impact of essential wage increases in the textile and clothing industries, has made it impossible for the President of the Board of Trade to resist the pressure of manufacturers for increases in maximum prices. There is a real danger that the floodgates, which have kept back the price increases for some time, have now been opened and cannot be closed and that, unless some firm and immediate action is taken, the utility clothing scheme may be swept away. In my view that would be a great tragedy for the people of this country.
I want to deal specifically with the utility clothing scheme as it affects children's clothes. It is difficult to deal with one part in isolation, but I want to confine myself to children's clothing for two main reasons. The first is that the greatest hardship is being felt at the moment by mothers who have the responsibility of clothing and caring for children. I want to tackle the problem where the shoe pinches most, and where there is greatest need. While on this point I ought to pay tribute to the mothers of families for the wonderful way in which they have managed to clothe their children up to the present. I believe that our children are the best dressed, the neatest and the cleanest dressed that they have ever been. My greatest fear is that, as a result of the price increases, it may be more and more difficult to maintain those standards in the future, especially if the prices go on increasing.
The second reason why I want to confine myself to children's clothing is that, as the House knows, all children's clothing is free of Purchase Tax. There is a special problem which is not present with other utility clothing, because the inducement to manufacturers to produce more children's utility clothing in competition with their production for export and for non-utility lines is not so strong, because more profit can be made by them in other fields than the utility, and the tendency is to stress export and non-utility as against the urgent needs of utility.
I have some facts about the rise in the price of clothing. I calculate that between March and June this year at least seven orders have been made increasing the maximum prices of various articles of children's utility clothing. These will not
2250
work through into the retail stage until about September, but the general impact is that they increase the price of boy's utility suits and coats by roughly 28 per cent., boys' cotton shirts, vests and pyjamas by up to 5 per cent., cotton and cotton mixture utility cloth up to 15 per cent. and most infants' and girls' utility light outerwear by 20 per cent. The latest order of 6th June, which became effective on 11th June, allows an increase in prices of utility coats and heavy outerwear of 25 to 30 per cent. All this coming in a few months has meant a serious problem for mothers and housewives.
I want to give a few individual items to show how the increase in the prices affects the clothing of children of various ages. I will compare like with like as regards standards and quality. An expectant mother knitting woollen clothes for her coming child finds that, whereas a year ago she paid ls. 9d. an ounce for babies' knitting wool, she now has to pay 2s. 6d. When the child arrives she will find that the essential napkins have risen in one year from ls. 11½d. to 2s. 9½d. each, and that is a considerable burden upon a young mother. For a child of four or five, the mother will have to pay 65s. 7d. for a tweed coat set instead of 52s. 9d. That is in the specification of utility cloth No. 209. The cheaper quality has gone up from 44s. 6d. to 49s. ld.
A 22-inch school gabardine coat, utility No. 223, which is an essential article of the child's school equipment, has increased from 58s. 6d. to 72s. 3d. A gabardine raincoat for a girl of 10 has gone up from 81s. 4d. to 101s. 11d. That figure alone represents more than a week's wages for many of our people and it is really time that we tackled the problem seriously. For a boy of 10 the cost of a grey flannel suit has increased from £2 3s. 6d. to £2 10s., and in the field of accessories which arc essential I am informed that a boy's woollen tie which cost 2s. 9d. last year is now 3s. 1d. and new stocks coming forward to the shops will be marked at 5s. 6d.
I now turn to footwear, where the position is all the more alarming, and this is where we need definite action now. The latest permitted increase of 28th June allows an average increase of 7½ per cent. in the maximum prices for boys' and infants' footwear. This increase is not so great as the increases in men's and

2251
women's sizes, but even so they make a boy's grade 1 pair of shoes 55s. instead of 51s. 9d., a girl's grade 1 pair of shoes 55s. instead of 51s. 3d., and, worst of all, infants' shoes a maximum of 33s. instead of 31s. 3d.
When we consider the rate at which infants wear out their shoes or grow out of them, this is placing an intolerable burden upon any family in this country. The price of utility footwear is fantastically high in my opinion, and is likely to be still higher in the next six months. When we add to the original cost of the shoes the price of repairs, something between 10s. and 11s. 6d. for soling and heeling the shoes of a boy of 11, we can see that there is a clear case for the most drastic action to tackle this serious position. I will come to the remedy in a moment.
In my view there are two immediate grounds for action by my hon. Friend. My considered view, after careful examination, is that even with the increased cost of raw materials the permitted increases are at all stages disproportionate to the cost of production. My hon. Friend has told us that, before an increase is allowed, an investigation is made into costs. I want to know from him what is the nature of that investigation and what consideration is given when the trade association comes along, not only to individual items of production but to turnover. It is quite clear that the firm with a huge turnover is getting away with something, whereas others with a smaller turnover are scraping along.
We are also entitled to know, in view of the increases, how far are prices fixed to enable the less efficient producers to make profits, thereby allowing the efficient firms to get an unduly large profit. If we consider all the profits of companies engaged in manufacture, distribution and so on, we see that they are reaching astronomical proportions. I want to know, too, what room is there in all these utility grades for a pruning of margins at all stages. We also ought to know how recent are the figures supplied by the trade associations for costing purposes. I have no definite information, but my guess is that these figures are at least a year old and ought to be looked at again.
Now I turn to what I think is the bad effect psychologically of these price increases. The frequent increases and the
2252
way they are dealt with in the Press, through shortage of space and other reasons, create the effect in the public mind that prices are now out of control. We get the kind of case which we had last weekend in every shoe shop in this country where, two days before, there had been a notice in the Press and over the radio that prices were going up from Monday. As a result, all the shops were full on the previous Saturday and assistants were selling shoes as hard as they could go. In actual fact that panic buying was unnecessary, because the goods in the shops would not have increased in price since the price increase referred only to manufacturers' prices coming from the pipeline in four or five months' time.
In order to halt this upward tendency, it is necessary to make a breach in the constantly rising edifice of prices. And in order to show that the Government are in earnest in their desire to check the rising cost of living, it is necessary at this time that we should take some items and reduce them. This could be done without grave danger to the manufacturer, the wholesaler or the shopkeeper. It can be done at the stage with some items of woollen clothing, I will give my reasons. According to "The Economist" of 16th June this year:
"Many manufacturers are selling even now at prices some way below the maximum, and with the prospect of falling raw material prices the clothing industry may find it hard to take full advantage of the new price ceilings, particularly those for wool garments."
The price of raw wool today is 10s. a pound below the peak reached last year. I am certain that nothing would do more good to the morale of the consumer than for my hon. Friend to give an assurance tonight that we have reached the peak of price increases and that, in the case of wool, where there is this sharp fall and where the maximum price is not being charged, he will take immediate steps to reduce that maximum. I believe that would give confidence to the public that we have control over the utility scheme, that we are carefully watching it, and that we are seeing that no unreasonable profits are being made from it.
Closely associated with the question of price is the question of quality. One of the benefits of the utility scheme and the utility mark is that they have afforded to the consumer a guarantee of quality

2253
as well as of price. People have known that when they have turned to utility articles they have got value for their money. My fear is that with the increase of prices, bringing the utility up to something like non-utility prices, many people will be forced to take goods of inferior quality because they cannot afford the high prices.
I have been told that utility cloth No. 206, a grey flannel for boys' suits, is a very poor cloth, yet it has been in existence for some time. It is liable to pull out from the seams under the armholes; it is so soft and raglike in substance that not even the most careful mother can mend it. A suit made from this cloth cost £2 6s. last year, and it had holes in it in less than six months. It would be tragic if confidence in the utility scheme was lost because of such examples, and I ask my hon. Friend to give some assurance that everything is being done to prevent a debasement of standards of the utility mark.
It is essential that if we are to help the housewife in her daily battle to make the housekeeping money go round and to keep her children respectably clothed, we must maintain at all costs a supply of carefully price-controlled utility articles, and we must use all the controls necessary in order to do so. I am convinced that this can be done without causing hardship to the manufacturers, the spinners and the weavers of clothing, who recently have been having a golden time. Such action is in the interests of the retailers, because they may have to meet a serious sales resistance in a few months' time unless something is done to bring down prices. Any measure of control, or of allocation of cloth in return for a percentage of utility goods, that my friend can take along those lines, will receive the firm support of all Members on this side of the House.
Let me deal now with what is, perhaps, the real and only long-term solution: that is, the question of subsidy. I must make this very earnest plea to my hon. Friend tonight in order to strengthen his hand in dealing with manufacturers, and so on, and also in the hope that my appeal and the support of the House will be powerful enough to reach the Cabinet and that we can get some decision from them.
I am certain that we must have a reintroduction of the utility clothing and
2254
leather subsidy. We cannot ask for it over the whole range of utility clothing, because that would be too great in present circumstances, but we should inject this subsidy into that part of the scheme where it is urgently needed and will do most good: that is, in children's utility clothing. We have the finest children and babies in the world, and we ought to see that they are well and properly clothed.
8.53 p.m.
Mr. Grimond: When the debate began it looked as though the custom of recent nights was to be reversed and the debate was to be entirely sustained from the opposite side of the House. But we have received an accretion to the Liberal benches, and I hope that later in the evening we shall have an intervention from the hon. Member for Edinburgh, South (Sir W. Darling), who is a great authority on clothing although, perhaps, not on utility.
The Parliamentary Secretary will be relieved to know that I do not intend to take this opportunity—I resist the temptation with difficulty—to suggest that we dress all children in Orkney and Shetland handwoven tweed. The subject of the debate is a most serious one, and the whole House is much indebted to the hon. Member for Stockton-on-Tees (Mr. Chetwynd). for having raised it tonight. Furthermore, we congratulate him on being lucky enough to obtain a quite considerable period in which it can be discussed.
There are few items in the budget of the ordinary household which are of greater concern than children's clothing. They are not a thing on which any parent wants to economise. They are, unfortunately, something which has to be continually renewed and recent increases in prices to which the hon. Member for Stockton-on-Tees referred are undoubtedly causing great concern and hardship in many families.
The hon. Member mentioned the question of quality and I think this is a most important matter. There is a tendency, as the utility scheme meets with difficulties owing to the rising cost of raw materials, to allow some debasement of the quality of goods in the scheme. I think it a very difficult matter and clearly, with the increases in wool prices, it is getting more and more difficult to work

2255
the scheme; but, in dealing with it, I say to the hon. Gentleman on the Government Front Bench that he should not debase the quality of these goods.
I think the utility scheme has done a very great deal of good. This is not the time to open again a discussion on the general principle of the Purchase Tax. We have had some discussion about that lately and, whatever we may think about that tax, I readily agree that so long as we have it it is very necessary to have a utility scheme and to remove the tax from what are undoubtedly essentials such as children's clothing on which no one would wish that we should unduly economise.
The hon. Member suggested various remedies. He suggested that a disproportionately large margin was allowed at various stages of production. We really must break down the belief that because a maximum price is fixed that is the price at which goods have to be sold. It is a question of competition and I think competition should be a great factor in keeping prices down. But when we come to competition we have also to bear in mind that the manufacturers themselves have to meet rising costs. What we have to face is the fact that we must have a greater output, more production, right through the whole of our economic life. I do not think that that will be easy—
Mr. Harold Davies indicated assent.
Mr. Grimond: I am glad that the hon. Member agrees.
If we are to maintain the standard of life and check this continued rise in prices we must have more and more efficient production. There are some people who feel that some rise in prices is not altogether bad, that it guarantees full employment and is preferable to deflation. So long as it is kept in check, I have some sympathy with that view, but rising prices and a state of inflation always tend to hit the poorest members of the community. These are people whose wages, pensions and remuneration in general rise last, and they are the people who have to meet the rising prices very often before any readjustment has been made in their incomes.
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We must have some fear that the floodgates are open and that we may get into a state in which inflation goes beyond the bounds regarded by anyone as reasonable. The answer to that is more production, greater effort and the giving up of restrictive practices not only by manufacturers, wholesalers and retailers, but by the trade unions, where those practices exist.
As I say, one method of tackling this matter is greater competition, and greater production throughout the whole of industry. But wool, of course, is a product which is dependent on world markets and it would be unrealistic to expect anything from the hon. Member on the Front Bench tonight which would solve the matter in a few weeks or by a single stroke of Government action. The fact is that the price of wool has risen enormously in the past year and, although it may be falling today, it remains at an extremely high level.
We have, however, some right to ask the Government what are their intentions for the future of the utility scheme. Do they intend to continue on roughly the same lines, allowing rises at all stages of production? Do they intend possibly to give a subsidy on special articles, as has been asked for? Do they intend possibly to give some other form of assistance? I can quite see that an increase in family allowances, for example, which cannot be discussed tonight, might be one way of approaching this matter and might be a better way than the giving of a direct subsidy.
I hope that we shall have some enlightenment from the Government as to what are their intentions, and I should like to join with the hon. Member for Stockton-upon-Tees in impressing on the Government that this is a matter which is causing great concern in families throughout the country today. There are few aspects of life today that bear more directly or hardly on people than does the rising cost of living, and this is a most serious part of it.
9.1 p.m.
Mr. Slater: My hon. Friend the Member for Stockton-upon-Tees (Mr. Chetwynd) has more or less covered the whole position in relation to children's clothing. He has given many examples of price increases that have taken place

2257
in children's clothing. There is great dissatisfaction in the country among mothers with a low standard of income because of the rising prices in the whole range of children's clothes.
I am one of those people who are rather afraid that because of what is taking place we might find ourselves eventually, because of the rapid increase in prices, in the position in which we found ourselves before the war. It is all very well for people to try to put over to the public a policy to the effect that wages are much in advance of the increase in the cost of living. That may be so in certain instances, but to try to put that over to the public at present is almost impossible.
We must take into account the fact that the workers in the textile industry may be receiving two and a half times the money that they earned pre-war and that that is bound to be reflected in the price of the finished article, but people with a fixed wage of about £5 a week, and who have a small family to keep, find it rather difficult, in spite of family allowances, to meet the price demands made upon them. I agree with my hon. Friend the Member for Stockton-upon-Tees that more could be done in that respect.
The idea was ventilated some time ago by my hon. Friend the Member for Coventry, South (Miss Burton), who advocated that a subsidy might be given in respect of children's clothing. It would be well for the Minister who is to reply to this debate, to tell us, if he is able, along what lines the Government are thinking of trying to ease the position of those people who even on today's income are finding it very hard to meet the demands of the day.
9.4 p.m.
Sir William Darling: I find myself unusually encouraged by my close proximity to the fount of Liberal leadership in the House. I venture to speak on this all-important topic because for a long time I have been waiting to see the bold member of His Majesty's Government or their supporters who would "bell the cat." I have been waiting for a long time for the hon. Member for Stockton-upon-Tees (Mr. Chetwynd) to tear the veil of the temple in twain and show the hypocrisy and the complete failure of the Government to control the cost of living. He will be dealt with for
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doing so, but what he has said in such restrained and temperate tones is said over every shop counter throughout the country.
We all know that the cost of living is the greatest bugbear of the community today. The reason for the rise is in the hands of those persons who, for the past six years have guided and conducted our affairs; the Government who, six years ago, took control of our lives and destinies at home and abroad, from the Bank of England down to babies' bootees. Thus, today, we find ourselves disastrously placed in every field, whether it be the field of high finance or of babies' bootees.
"The fault, dear Brutus, is not in our stars,
But in ourselves, that we are underlings."
I am glad to see the Parliamentary Secretary sitting there. He has a very difficult problem to solve; as in the case of Ministers with higher destinies doodling will not help him very much. He has to answer the awkward remarks of his hon. Friends—
The Parliamentary Secretary to the Board of Trade (Mr. Rhodes): I was putting down the answer which I will give the hon. Member in good time.
Sir W. Darling: I withdraw then; the Parliamentary Secretary was not doodling. I am sorry. Probably when he is raised to a higher position in the Government he will be given an opportunity to doodle very extensively, but I am delighted to learn that tonight he is to substitute doing for doodling, which is a change from the action of some of his right hon. Friends.
I remarked that the veil of the temple had been rent in twain. What has happened to those posters which decorated the buses and which appeared on hoardings throughout the country stating that the Co-op will cut costs? We have heard little of that recently. It was an admirable poster, depicting a long strip of cloth and a pair of scissors cutting it exactly in the middle. The Co-op would cut the cost of living. Has the Co-op cut the cost of living of the families on whose behalf the hon. Member for Stockton-on-Tees so rightly pleads?
Mrs. Middleton: May I ask the hon. Member if he is himself a member of a Co-operative society and whether he has tried the Co-operative way of cutting the cost of living?
Sir W. Darling: That is a personal question. I will tell the hon. Lady that I was once employed by a Co-operative Society at 10s. a day as a temporary salesman, so I know something of the inside workings of the Co-operative movement.
But I return to my main charge. Where is the proof that the Co-operative societies have cut the cost of living? If they have cut the cost of living, as they blazoned abroad that they have, what has the hon. Member for Stockton-on-Tees and his hon. Friend the Member for Sedgefield (Mr. Slater) to say? We have to face the fact that the Government which tried to control everything has failed to control anything, and that the cost of living rises high above our means. If there is a piece of deceitful advertising it is to say that the Co-operative societies have cut the cost of living by half—
Mr. Nally: Who said that?
Sir W. Darling: The Co-operative societies were saying that they were cutting the cost of living, and the picture suggested that they were cutting it in half. No doubt the Member for Plymouth, Sutton (Mrs. Middleton) will show the picture to her hon. Friend the Member for Bilston (Mr. Nally). It is an interesting little scroll. It states that the Co-ops cut the cost of living, and there is depicted a pair of scissors cutting, not two inches from the end, but right in the middle.
Mr. Chetwynd: Would not the hon. Gentleman agree that it is precisely the uncontrolled part of the economy dealing with the import of these articles from overseas where there is the greatest rise, that has its effect all through the economy, and that it is only through Cooperative trading, and so on, that we have been able to cushion the people from its worst effects?
Sir W. Darling: That may or may not be so. What I am concerned to say to the hon. Member who is whining about incompetence and ineptitude of his Government is that they started out to control things and have failed to control them. He has given an admirable case of that tonight. I understand the irritation of the supporters of the Co-operative Society that there should be such revelations of the ineptitude of this much boasted organisation.
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I have a suggestion to make, that this question is out of order. With great respect, if a subsidy is to be given for children's bootees and other garments—I will not go into a detailed specification —surely that would require legislation.
Mr. Deputy-Speaker (Colonel Sir Charles MacAndrew): Can a subsidy be given without legislation? If not, it would be out of order to discuss it.
Mr. Rhodes indicated dissent.
Sir W. Darling: It is quite out of order, and the Parliamentary Secretary can resume his doodling, because he cannot do anything about it.
Mr. Rhodes: Doodling would adequately answer all that the hon. Gentleman has said up to now.
Sir W. Darling: I congratulate the hon. Gentleman. He is fully equipped for his task.
I have directed the attention of the House to the failure of the Co-operative societies to do what they said they would do. I would now direct the attention of the House to over the Atlantic where, at this very hour, because the Shop Hours Act does not operate so ruthlessly as it does here, the stores are packed with women buying at 25 per cent. and 50 per cent. discount.
There has been a complete tumble in retail prices under a system which is relatively free from controls, at any rate as we know them in the retail trade in this country. Will not the hon. Gentleman who pleads for subsidies which are out of order address his mind to something which would be in order? It would be in order, because the Minister has nothing to do with it, to follow the example of the free retail traders of the United States where, today, prices for motor cars and every other item of daily and general use are tumbling. That, surely, is significant, because in that country there are no controls of the character that we have and, more than that, there are very few Coops.
Mr. Chetwynd: In view of that confession, will not the hon. Gentleman support the Government in their proposed legislation to deal with resale price maintenance?
Sir W. Darling: The hon. Gentleman has no proposal except control. The fidelity with which he still continues to pursue what is obviously a policy that has failed does more credit to his heart and his loyalty than to his head. But I will answer the question. Do I favour price maintenance? Of course I favour price maintenance. It would be extremely hard and unfair if the "Daily Herald" were sold for 3d. in Aberdeen and 1½d. in London. That is not price maintenance. I think it would be extremely hard if a 2½d. stamp cost 4d. in Aberdeen and 2½d. in London. That is not price maintenance.
Those are two examples which perhaps the hon. Member for Bilston will think over in the leisure which will come to him over the week-end. Price maintenance means that those who shop in the remote areas can buy at the same price as those who shop in London. Wherever one buys Eno's Fruit Salts the price is the same in Aberdeen as it is in London. Is that good or bad? Does the hon. Member want the people of Scotland to pay more for everything produced in the London area? Is that his proposal? That is not price maintenance; it is folly which will bring him to disaster. I see that the hon. Member for Bilston cannot contain himself any longer.
Mr. Nally: As the people of Scotland have to listen to more speeches from the hon. Gentleman than we do, it is perfectly right that fruit salts should be sold at a rather cheaper price in Scotland, because they have a relieving effect on the system.
Sir W. Darling: The originality and tortuous character of what the hon. Gentleman says rather baffles me. Price maintenance does not mean that they would be sold more cheaply in Scotland, but that they would be sold at the same price. I am sorry that that point has eluded the hon. Gentleman.
I will proceed to the practical suggestion which the House is compelled to consider and discuss. During the last few days many suggestions have been made from this side of the House that His Majesty's Government should cut taxation. A cut in taxation and a reduction in the extravagance of the Government would put more money into the pockets of the people and enable them to
2262
have greater spending power. Had that proposal any support from hon. Gentlemen opposite? Two days ago we brought forward a proposal that people with families should get an Income Tax concession and every hon. and right hon. Lady and Gentleman opposite walked into the Division Lobby against this proposal, which would have helped people with families to meet some of this excessive cost.
Every proposal to cut the cost of living has been opposed and defeated by the Government. If the cost of living rises, as it will rise, the responsibility will lie on the benches opposite, and I regret to say that from their political point of view and from the point of view of their political fortunes, every man, woman and child in the country will know where to point the finger as the source of the evil. [An HON. MEMBER: "Nonsense."] An hon. Gentleman opposite says "Nonsense." If he goes to his constituency, where, if I remember rightly, he has a somewhat precarious majority, and, when he is told that the reason why the cost of living rises is because of the Government's policy, retorts "Nonsense," the reply of the ballot box will be quite conclusive.
Mr. L. M. Lever: I was waiting, along with the rest of the House, with avidity, for a practical solution towards countering the rising cost of living, which every one of us would like to do. Where are the hon. Gentleman's solutions?
Sir W. Darling: I know the difficulty which the hon. Gentleman has in containing himself, but he must try to do so.
I propose to recapitulate my arguments for his information. The rising cost of living is a grievous business, as we all agree. The responsibility for it lies with the Government.
Mr. Lever: No.
Sir W. Darling: It is indubitable, because hon. Gentlemen opposite have been in control for the last six years. All the triumphs are theirs, and all the failures, surely, must be theirs. If I do not take the hon. Gentleman along with me, let him be assured that the public are with me. The second thing I say is that the Co-operative societies promised their million supporters—they are the most

2263
powerful of all monopolies—to cut the cost of living, and they failed to do so.
I would not advocate subsidies. I think they are a delusion and a snare. They are the bottomless pit which leads to complete destitution. I will not encourage any suggestion of subsidy whatever. People should stand upon their own feet, and there should be reality in manufacturing, trading and distribution. I do not agree with the suggestion, which is quite out of order, that there should be a subsidy. What I would say—
Mr. James Hudson: Would the hon. Gentleman advocate that all subsidies, which he thinks are so dangerous. should be removed?
Mr. Deputy-Speaker: That would require legislation. and would be out of order.
Sir W. Darling: I would certainly consider it, if it were in order, and I would particularly consider the subsidy which Scotch whisky pays to the comfort of the hon. Gentleman. The taxation which we bear on Scotch whisky alleviates the cost of living of the hon. Gentleman. I am against that subsidy.
I suggest that the range of utility goods for children is unnecessarily complicated and varied. I think it is quite practicable for the Ministry to lay down to manufacturers of essential children's clothing no more than 10 or 12 items which would cover the whole field—a standard pair of breeks for the boy, a standard pair of socks and a standard pair of shoes, and so on. A limited number of these items, 10 or 12 in all, would be standardised, and would be retailed, hon. Gentlemen opposite may take it from me, if not by the Co-ops, by private enterprise traders at practically the cost of production. That would be a contribution on a limited line to the bare, basic needs of the children.
The hon. Member for Leek (Mr. Harold Davies) says that it will be regimentation, but who is he, the supporter of a Government which is today regimenting every man, woman and child in the country to speak of regimentation? Every boy and girl up to 14 or so would have standard clothing. There is nothing wrong with standard clothing. At the best public schools for boys and girls the pupils wear the same clothes. I understand hon. Members opposite sometimes
2264
go to dinners and dances. They do not wear uniforms on those occasions. They do not wear a kilt or a sarong or a silk hat. They wear a dinner jacket, like their neighbours.
There is nothing wrong with uniform. Let us see that the children of this country have a standard uniform. The Boy Scouts' Association provide at a nominal price the essential clothing that boys wear. The Girl Guides' Association do the same for the girls. That is the kernel of my idea. I sympathise with the hon. Member for Stockton-on-Tees, but let us discourage the production of some useless and expensive fripperies which are given to children by indulgent mothers who hope to see the beauty that is no longer theirs reflected in their girls. That is a laudable thing, but costly.
Those who want quality without trimmings, ornament or decoration in clothing which meets the needs of decency, orderliness and seemliness, in jumpers, shoes, and so on should have it. This would be not only a limited field in which the Parliamentary Secretary could exercise his gifts but he could exercise them there with greater success than he is doing on a far wider range elsewhere. Let us have standard flannel bags for boys and standard shoes. At that time of life children are not interested in being different from one another. It is their parents who want to be different.
My solution to this problem is not subsidies, but that we should limit the utility range severely and that we should not deny those persons who want the best for their money the opportunity of buying a standard uniform. Those who want variety will spend their money, and rightly, on pretty party frocks and kilts and the like. The hon. Member for Leek might have a little Lord Fauntleroy suit.
I suggest that for ordinary needs there should not be a subsidy but a standardised suit for boys and girls up to the age of 14. That would be sold—and I guarantee that it would be sold—not by the Co-operative societies, because they do not like standard prices, but by those who want to serve the citizens of the future at a very nominal profit. I present the Parliamentary Secretary with the idea. He will find it more acceptable than the idea of a subsidy. It will require no money from the public and no further extortionate taxation, but it will require

2265
more thought and more successful planning than we have had hitherto.
9.25 p.m.
Mr. Jack Jones: I did not intend to enter this debate until I heard the hon. Member for Edinburgh, South (Sir W. Darling). I was rather amazed to learn that he wanted to control and fix prices and to regiment people to pay the same price for and have the same texture, colour and so on in their clothes. I am the proud father of six children, four of whom have been married since the war, and I have five young grandchildren. I hear the story every time I go home of the ever-increasing price of children's clothing.
I would say, on behalf of the back benchers on this side of the House, that we are not at all satisfied with the position. There are no medals and there is no credit to be awarded for the ever-increasing prices. We are not concerned about those people who can afford to pay the prices and who are not worried by them; we are concerned about those people who are struggling on small wages to bring up a family in the way in which everybody in this country wants to see a family grow up.
The question is, what are we to expect to have to pay in the future if things go on as they are? The hon. Member for Edinburgh, South, prompted me to make my maiden speech. He is certainly provocative; he is entertaining, and I think that every time he speaks a hat should be sent round in order that we may pay an entertainment fee to listen to him. There is not the slightest doubt about it —as he is a Scotsman, he comes from a clan which has always believed in the highest possible margin, the highest possible price and the highest possible profit. Let us make no mistake about that.
I am a little tired of the hypocrisy which we have been getting recently from the Opposition benches suggesting that they are the only people who are concerned about the price of children's clothing and children's shoes. For the first time in the history of this country there are very few shoe-less and very few ill-clad children to be seen. That is for the first time in British history. That does not mean that we are satisfied to see them having to pay present prices for new clothing and new shoes. The hon. Member for
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Edinburgh, South, says the Government are to blame.
Sir W. Darling: They are.
Mr. Jones: And yet in the pamphlets of the party opposite they say "Set the People Free." They set the wool manufacturers and the wool growers of Australia free.
Sir W. Darling: Prices are down.
Mr. Jones: Only in the last fortnight. The hon. Gentleman should look a little further back than the last fortnight. Prices for wool are free, in uncontrolled capitalist markets, and they rocketed to 134 pence a lb. That was the price in Australia for wool—higher than ever in the history of the world. One of my hon. Friends says I am wrong. It was even more—it was 340 pence per lb. That is a fantastic figure.
Sir Herbert Williams: Russian buying.
Mr. Jones: That has nothing to do with it. If Australian producers—that is, the Australian capitalist Tory producers —are willing to sell their wool in the free uncontrolled markets to the Russians at the expense of British children, then Heaven help the capitalist Tories in Australia. It is in the uncontrolled market that the trouble arises.
The next question which arises is this. Having got the wool at a reasonable price, are we getting the best that we can from the wool we are able to buy? I say we are not, and I am speaking as a practical man. I know what wear we get out of clothing. I want to tell this country and the House that the Parliamentary Secretary to the Board of Trade has done more in 18 months to get quality utility clothing at a fair price than any other junior Minister in the history of this House—and that can be proved. It has been admitted on all sides, and it is admitted by the trade.
It is sheer hypocrisy for the Opposition to get up at this late stage and make these claims after a century of exploitation. One can remember when the only clothes which the children had were available to them on the Saturday and Sunday and for the rest of the week were in the pawnshops in Britain. Hon. Members opposite allowed that system

2267
to operate without any control and without any effort to control it.
Now we have difficulties because of potential war conditions, because of Korea, because of stockpiling, and because of the greed of those people who see and seize an opportunity once again to profit at the expense of this country. For hon. Members opposite to say in such circumstances that they are the advocates of control and are best friends of the working class and their children is sheer, unadulterated hypocrisy of the worst kind—and I say so.
Let hon. Members opposite go into the mining areas. The hon. Member for Edinburgh, South, knows about the mining areas. Let them go into East Fife or into South Wales or into my area and see the miners and the steel workers and the workers in heavy industries, and let them look at the children. I am not satisfied that these people are getting clothing at the right prices, but I say again that the Government have done more to control prices than any other Government. Take the question of the Argentine. This House cannot go to the Argentine Government and say, "You must sell your hides and skins to this country at our price."
Sir W. Darling: They used to.
Mr. Jones: Yes, they used to, when there was no demand and prices were down: but in a world of demand, go out into the cotton fields in Egypt and talk to the Egyptians, go into the Sudan and talk to the Sudanese, go into South Africa where the cotton growers and pickers are, and they will tell His Majesty's Opposition that they will no longer be satisfied, as they were in the past, with the fear of the gunboat just off the coast, and the fear of the might of this country; they will not put up with those things. They want what we want.
Almighty God may have made a mistake when he made mankind all with pretty much the same sized stomachs, but the cotton picker in Egypt today wants for his cotton what the British miner wants for his coal, the Argentinian wants for the hides and skins he produces what we want, and that is a higher standard of living; and the only way they will get a higher standard of living is by getting higher prices for the goods they sell to
2268
this country. One of the troubles is the high prices demanded by other countries because of their desire to live as well as the party opposite have lived for far too long, and better than they deserve. That is the trouble in the world today.
The hon. Member for Edinburgh, South is a businessman. Can he get up here with his hand on his heart and say that in the chops he helps to control he has of his own volition, knowing that the prices of children's clothing are too high, said to his operatives and his managers, "Reduce the prices" to set an example, and to do what they have done in New York? Has he done that?
Sir W. Darling: Not only have I done it, but retailers throughout the country and the public are just now enjoying what they call the summer sales. I will send the hon. Gentleman a catalogue.
Mr. Jones: There are very few articles in the utility range on sale at summer sales. If the hon. Gentleman will go and look at the summer sales, he will find that they can afford to cut prices drastically and have fictitous sales because of the profits they have made on the uncontrolled articles they have sold. Make no bones about that. Otherwise they would not be holding summer sales but would be selling out completely.
I emphasise that we on this side of the House are not prepared to see prices increasing. We want all the controls possible. For the party opposite, whose theme is "Set the people free" to come along on occasions like this and say "Control us more and more," because the next election may arrive shortly and they want by propaganda speeches such as we have heard tonight to get the votes of the people, is sheer, unadulterated hypocrisy.
9.33 p.m.
Sir Herbert Williams: We have just listened to a somewhat inflamed speech from the hon. Member for Rotherham (Mr. Jack Jones). I listened to it with interest, because it was not quite clear what he was driving at. He will find it interesting to read his speech in HANSARD tomorrow, because he was telling us that one of the main reasons for the rise in the price of the children's clothing we are discussing tonight was because the people in Egypt, in the Argentine and in Australia want a higher price for the raw materials they produce.
Mr. Jack Jones: And they get it.
Sir H Williams: That is not quite the same thing as he was saying earlier in his speech, when he said that the rise in these prices is due to the terrible iniquities of my hon. Friend the Member for Edinburgh, South (Sir W. Darling), who is a shopkeeper.
Mr. Jones: That was part of it.
Sir H. Williams: The hon. Gentleman was giving two completely different explanations. It is no good talking about the price of one commodity. Let us get down to the major issue. Some hon. Members may remember that on the night of 8th March and in the early morning of 9th March there were on the Order Paper seven Prayers concerning the increase in the cost of living. Let me remind the House of what happened that night. We selected seven orders, all authorising increases in prices.
Mr. L. M. Lever: Did the hon. Gentleman vote for them?
Sir H. Williams: Let me finish my point. I have not the slightest doubt, as I have said before in these debates, and as I said on a debate on furniture the other night, that the manufacturers concerned succeeded in satisfying the Parliamentary Secretary and his chief that these increases were justified. What we sought to do on that occasion was to try to get a general debate on the increased cost of living and the causes of it. Unfortunately the rules of order made that impossible. Instead of having one debate ranging over the seven orders which covered a very wide range of commodities, we were forced to discuss each order by itself. I remember the discussion. I got up at seven minutes past three in the morning to move an order with regard to furniture. At the end of 50 minutes, I had delivered a ten-minute speech because there was nothing but babel from the other side. We were discussing the same subject as we are discussing tonight.
Mr. Logan: Did you divide on it?
Sir H. Williams: I have already explained that we tacitly assumed that the hon. Gentleman and his chief had examined the books of these various manufacturers and were satisfied that
2270
unless they had this authorised increase, production would cease; therefore, what was the point in dividing? Hon. Members opposite were justifying the authorisation of increased prices owing to increased costs. What we were getting at was the fundamental cause. That is what we have to get down to.
My hon. Friend the Member for Edinburgh, South, has referred to the effect of taxation upon costs, and, of course, the range for public economy is vast.
Mr. Logan: Where?
Sir H. Williams: One has only to look at the Civil Estimates. Quite obviously, I cannot go into details, otherwise I should be out of order. I would completely destroy the "Central Office of No Information." I would effect economies in our Defence Forces where there is more waste than in any other direction I can think of. That is just in passing.
The general statement made by the hon. Member for Edinburgh, South, is quite clear. One of the substantial causes of the high cost of living is the very high level of taxation. We have a burden of expenditure which, leaving out of account everything to do with defence and everything to do with the National Debt, is about three times as much as it was prewar, and to say that there is no room for economy is sheer nonsense.
Mr. Monslow: Is the hon. Gentleman suggesting that food subsidies and money spent on the social services would be the basis of his cuts?
Sir H. Williams: What is the purpose of food subsidies but to reduce the cost of living and the object of Purchase Tax but to increase the cost of living? Any intelligent Chancellor of the Exchequer would pursue the general policy of gradually diminishing both the Purchase Tax and the subsidies. What is the sense of charging too much for some things—many of them essential—by reason of Purchase Tax and at the same time reducing the cost of other things by subsidies? It is much better that things should be sold at their proper price.
Mr. Logan: What is the proper price?
Sir H. Williams: It is something related to the normal cost of production.
Mr. Logan: Would the hon. Gentleman then reduce excessive profits?
Sir H. Williams: It is no good the hon. Gentleman trying to catch me on that subject; I am much too fly a bird for that. I asked the hon. Gentleman to get hold of any of the companies that tomorrow morning publish their accounts in any newspaper and compare the amount paid in wages and salaries and the amount of the net distributed profits, tax-free in both cases, and he will find that in most companies the ratio is about 15 to one. If we were to wipe out the whole of the distributed profits it would not make more than 3 or 4 per cent. difference to the price of anything. [Interruption.] I think that the hon. Gentleman referred to services. If I visit his establishment and pawn my watch, he charges me interest on it when I come to redeem it.
Dr. King: One of the points made by the hon. Gentleman was that we should cut Purchase Tax. We are debating the rise in the cost of children's clothing. The Government have removed the Purchase Tax on children's clothing.
Sir H. Williams: The debate has drifted a little wider than the immediate issue. The hon. Member for Test (Dr. King) took it beyond that issue, and it has become a general debate on the increased cost of living. On the Adjournment, provided it does not involve legislation, anything we say, within reason, is in order.
Let us take the next issue. As long as 1946, speaking at the Conservative Party Conference at Brighton, I urged that we should allow the pound to find its own level. I did not get much support, but I continued with that subject. Ultimately, Sir Stafford Cripps, after declaring several times that he would not devalue the pound, did devalue it and he did a much worse thing, for instead of allowing the pound to find its own level he re-fixed its value. After that many of our exports cost us far more than would have been the case if the pound had been permitted to find its own level. That is one definite issue which can be taken by administrative order.
Mr. L. M. Lever: What about our exports?
Sir H. Williams: We are talking about the increased cost of living, and exports
2272
and imports will equalise themselves without currency control, capital control or any other control provided the pound is allowed to find its own level. We tried it twice in recent times. On 19th August, 1919, as a result of the decision announced in the House of Commons by the then Prime Minister, the pound was allowed to find its own level.
Mr. Keenan: And what happened then?
Sir H. Williams: In five months the adverse balance of trade was completely corrected.
Mr. Lever: What about the unemployed?
Sir H. Williams: That did not come about until a year later and for entirely different reasons. Trade continued at a high level and then in July, 1920, there was a sudden collapse of prices in Japan, next in the United States, and finally here, with the result that unemployment rose. By November of that year there were one million out of work.
Mr. Lever: The Tories were in power then.
Sir H. Williams: It was a Liberal Prime Minister who made the decision.
Mrs. Middleton: Supported by the Tories.
Sir H. Williams: Mr. Lloyd George was a Liberal.
Mr. Lever: What about 10 years afterwards?
Sir H. Williams: That was 1931, when the hon. Member's friends were in power and we had nearly three million unemployed.
Mr. Lever: What about 1924 and 1925?
Sir H. Williams: In those years, when I was first a Member of Parliament, we laid the basis of our modern social services, including the whole system of widows' pensions, orphans' pensions and contributory old age pensions. [An HON. MEMBER: "Only 10s. a week."] It was more than the 5s. allowed by Lloyd George, and it was contributory without a means test. [Interruption.] The hon. Member for Ardwick (Mr. L. M. Lever) need not interrupt me about these things, because I remember them all.
Mrs. Middleton: What about all the propaganda?
Sir H. Williams: I do not know about that, but I joined the State Children's Association before the hon. Lady was taking an active interest in politics.
Mrs. Middleton: How long have I been active in politics?
Sir H. Williams: I do not know, but I am only judging by the hon. Lady's youthful appearance.
Mr. Nally: On a point of order. I should like to ask for your guidance, Mr. Speaker. I understand that the subject chosen for the Adjournment debate tonight was children's clothing. It began as a serious debate, and one would like to ask whether it is considered that the sort of thing we have listened to for the last moment or two comes under that head, and could some steps be taken about the matter?
Mr. Speaker: On the Adjournment, I have no control. The subject which is put down is not official. It does not appear on the Order Paper, and, therefore, I am rather powerless in the matter. At the same time, in view of the subject chosen by the hon. Member for Stockton-on-Tees (Mr. Chetwynd), I hope that we shall devote ourselves as much as possible to it.
Sir H. Williams: May I point out that I was devoting myself essentially to that subject? Hon. Members will remember what I said a little earlier. It is no good discussing by itself the price of certain articles of children's clothing unless the fundamental issue behind it all is dealt with, namely, the rise in the cost of living. I listened quietly to the speeches of hon. Gentlemen who preceded me. I should not have raised these issues if I had not been asked questions by hon. Members and requested to give them the answers.
What is the use of discussing the cost of living when it is only a fortnight since the Chancellor agreed to grant to the Bank of England, which is a State institution, the right to print 50 million more £1 notes? Everybody knows that inflation comes entirely from the currency system. We can stop the increase in the cost of living tomorrow morning if the Chancellor will go to the Bank of
2274
England and tell the Governor to withdraw £50 million from circulation. That is the issue we have to face. If we go on using the printing press to create purchasing power without simultaneously producing commodities to balance it, the cost of living will inevitably go up.
Mr. J. Hudson: Is the hon. Gentleman saying that the Tory Party would actually embark upon a policy of deflation?
Sir H. Williams: I am glad that the hon. Gentleman said that. I know the difficulty that he is up against, but politicians on all sides have been talking an awful lot of nonsense about what they call the policy of full employment, which is being achieved today by deliberate inflation. Political parties are going to come up slap bang against this issue of how we are to stop inflation. Some setback will be inevitable, because if the politicans of all parties do not stop inflation we shall get what has happened time and time again in various countries: inflation will go on until it falls over itself. We shall have a catastrophic fall in prices, and unemployment beyond anything that hon. Members have ever experienced before. Hon. Members are declining to face up to it now.
There is a common underlying force in these things, and until the Chancellor of the Exchequer does his proper business, hon. Members can go on denouncing profiteering, but prices will continue to rise, to the misery of the people.
9.49 p.m.
Mr. Logan: I have listened with great pleasure not only to those who are business men but to those who are not, dealing with this subject. I am interested in what it costs to clothe our children. I can remember when sheets were sold at 3s. 11d. per pair. They are now 52s. 6d.
Sir W. Darling: Unbleached, too.
Mr. Logan: Blankets used to be £3 3s. a pair; now they are £7 10s. A bedroom suite used to cost £8 10s. and now costs £60. A Sheraton suite that cost £30 now costs £250. I begin to wonder where costs are leading. I am reminded that the shopkeeper must have a fair return. No one disagrees with that policy. I have asked what a fair return is. I should imagine that a fair return in profits ought

2275
to be commensurate with the wage of those making the goods sold for profit, and if the worker is unable to get a living wage there is no justification for extortionate profits to be made out of the product of his labour. In that way we get down to a logical standard of life.
Whether hon. Members on this side of the House or on the other side be doctrinaire about a particular policy I do not know and do not care. What I am concerned about is a population getting a standardised wage. Most of our areas contain congested districts where large families live. The life of the nation depends on the money coming into the home, and if the people do not get good food, clothing and shelter the nation pays the penalty in malnutrition. We see that there has been a great rise in prices since the war and we also see that there is a better standard of life. Our children are not badly clothed and there have been no barefooted children in our cities for the last eight to 10 years.
Sir H. Williams: For the last 30 years.
Mr. Logan: The result of the great social revolution is that the children of neither the rich nor the poor are walking about barefooted in our great cities. We have seen a wonderful change.
When my hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd) mentioned a subsidy, an hon. Gentleman said that that would be out of order. Surely it is not out of order when we are trying to solve such a problem as this. We have had to try to solve many problems in this House. I have heard many solutions suggested from a business point of view which have been totally impracticable and I have heard many absurd suggestions from people who know nothing about business. We meet here to consider the problems of the day, and if a subsidy is necessary, then we must bring about a subsidy. If costs exist which impoverish the people then it is for the House of Commons to consider the problem.
Why should costs be rising gradually day by day? Take the case of a little child's coat. It consists of half a yard of cloth which cost about 10s. 11d. before the war, but is now 65s. A dish cloth that used to cost ld. now costs 6d. An engine wiping greaser carried
2276
by the firemen on his belt, costs 1s. 6d. Pillow slips are now 4s. 6d. each, and we used to be able to get any amount of them at ls. 6d. or 1s. each.
Sir W. Darling: Under wicked capitalism.
Mr. L. M. Lever: People could not buy them then.
Mr. Logan: The world has gone mad over the cost of goods. Children's boots are made not of leather, but of paper. The tops of boots are of split leather and they have paper insoles, while the outer soles are made of a rubber composition. Prices asked for these are 15s., 17s. 6d. and 21s.; and this week we heard that a good standard boot will cost £5 2s. I do not know where the £5 will come from, and I am wondering how families will carry on. I am also wondering where the spiral will end, because if the cost of material goes up day by day then the demand of the workers will be for more pay.
Let us look at the quotations for stocks and shares. We shall find that most of the companies dealing in these commodities show the great profits that are now being made through the market quotations of their shares.
Sir W. Darling: Not the Co-ops.
Mr. Logan: Whether it be the Co-op. or any other "op.," I am not concerned.
No one who charges people more than a fair price for his goods has a right to the sympathy of the House. I am not concerned with any huge organisation or cartel, but with the poor and the middle classes who live in our huge city areas, and who are the manhood and womanhood of the nation. They have large families and their children go to war. If they are good enough to fight for the nation they are good enough to be protected against excessive costs, and it is our duty in this House to deal with this matter.
The Board of Trade have a legitimate, perfect and moral right to look into excessive costs and any Government, whether it be Labour or Tory, will be faced with this huge cost of living. The present pernicious system is one of the most damnable things in operation. The Board of Trade ought to take cognizance of the high rise in prices to see what can

2277
be done to give not only a fair and a legitimate profit to the trader but, at the same time, to see that the men and women who produce the goods are not bled when they have to purchase them.
It is a curious thing, but often the man who makes the cloth and the boots is badly clad and badly shod. It is a tragedy to find today that the man who makes them is not able to purchase them and that they go into a market where people can sell at exorbitant prices. If the House of Commons means anything, to me it is a place of moral values where men place a right value on the labour of men and women. The Board of Trade should see that justice is done.
Looking back over prices during the last 50 years of my life, I say that the prices being charged today are out of all proportion to the pay of the labour engaged in making them, and the Minister should take that into consideration. Go where he will he will find that people are fed up with the high prices of goods. The hon. Gentleman who brought this subject forward tonight put his case in a reasonable fashion and he dealt with some of thy; major problems that ought to be solved.
9.59 p.m.
Mr. Nabarro: I am sure that few hon. Members in any part of this House will disagree with the pious but admirable sentiments expressed by the hon. Member for Liverpool, Scotland Division (Mr. Logan), who is one hon. Gentleman opposite, representing a tiny minority with a little commercial and business experience—
Mr. Janner: What about the hon. Member who is speaking.
Mr. Nabarro: The hon. Gentleman who is interrupting me is surely a lawyer, and very few people on the other side of the House have the executive business experience to which I was referring.
It being Ten o'Clock, the Motion for the Adjournment of the House lapsed. without Question put.
Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Pearson.]
Mr. Nabarro: I shall address my comments specifically to the question of the
2278
excessive profits that are alleged to be earned in the manufacture of children's clothes. In the course of the last few months, we have had many Prayers in the House. We have had Prayers complaining about the cost of carpets, of hardware, of sewing cottons and of a whole range of manufactured commodities. Whenever one of those Prayers has been taken, the accusation has been made from hon. Members opposite that it is a political manoeuvre on the part of the Tory Party to keep the House up late and that the complaints in regard to the inflationary policy of the Government have been without justification.
This evening, we have the interesting counterpart—a little honesty from the hon. Member for Stockton-on-Tees (Mr. Chetwynd), who genuinely and sincerely makes a speech on the Adjournment Motion, complaining in exactly the same terms as the Prayers of hon. Members on this side of the House of the inordinate rises in the costs of our essential goods and services.
The Parliamentary Secretary to the Board of Trade, who is presently to reply, is a business man. He has been the principal executive of a textile firm for many years. Let him answer this specific point: Is he satisfied that the complaints made by hon. Members behind him, to the effect that the Board of Trade are lacking in the performance of their duties in regulating profits and fixing prices, is a genuine charge? From my knowledge of trade negotiations with the Board of Trade to fix prices for utility clothing, for carpets or for any other manufactured commodity.
I have always found the Board of Trade not only most capable, most helpful and most punctilious, but most fair in trying to ensure that an excessive profit is not earned by the manufacturer and that the interests of the consumer are protected. [Interruption.] If the hon. Member for Kirkdale (Mr. Keenan) has any complaint that what I am saying is untrue or exaggerated, let him go outside the precincts of the House' and accuse the Parliamentary Secretary of neglect of his duty in allowing manufacturers to make excessive profits on price controlled articles.
Mr. Keenan: Is it not the fact that the price control standard that is set is based on the production costs of the least efficient manufacturers?
Mr. Nabarro: If the hon. Member will allow me to continue and not try to make my speech for me, I shall pass to that point in a moment. For every £3 of gross profit that a manufacturer earns, the Welfare State and the Treasury that serves it, take back £2.
Sir H. Williams: More.
Mr. Nabarro: My hon. Friend says "More." Perhaps they take back £2 ls. out of every £3. There would not be any monkey nut schemes in East Africa, or any egg schemes in West Africa; there would not be any National Health Service, any educational reform, or any of the social services for which hon. Members opposite take credit, if it were not for British industry providing the financial sinews through their contribution of two-thirds of all the gross profits that are earned, being returned to the Treasury. [Interruption.] The hon. Member for Westhoughton (Mr. J. T. Price), who recently returned to the House with a handsome majority, represents a manufacturing constituency in the North-West, and he says "where are the profits?"
Mr. J. T. Price: I did not say that.
Sir H. Williams: It was said by an hon. Member below the Bar of the House.
Mr. Nabarro: I am sorry that I attributed that remark to the hon. Member.
The Welfare State is being financed very largely by British industry. I want to depart from this quite false allegation that excessive profits are being made on utility goods because of the whole principle of children's utility clothing and other commodities of a similar character. Of course, the utility prices today are kept artificially high as a result of the negotiations between the Board of Trade and the manufacturers, simply because under a utility system, under this wretched abracadabra of control and subsidies in which we have got ourselves entangled, the price is unfailingly set on the basis of the costs of the slowest and least efficient manufacturer.
I heard many gibes from hon. Members opposite when my hon. Friend the Member for Edinburgh, South (Sir W. Darling). Was speaking earlier, because he advocated in forthright fashion a return to free enterprise and the essential features of a capitalist society.
Mr. Monslow: Unrestricted?
Mr. Nabarro: The hon. Member says "Unrestricted?" In the case of utility clothing, of course, we recognise that for the time being we must carry on with the scheme. But what I believe is urgently necessary is a steady decontrol of all these schemes in an effort really to restore a measure of competition in place of the present system of subsidies and Board of Trade control which is manifestly inflationary.
Many hon. Members have referred to the inflationary tendencies of the last few years. I think the position will probably get worse before the year is out, but every hon. Member opposite might do well to remember that the principal cause of the rise in the cost of raw commodities in the last two years has derived directly from the devaluation of sterling.
Mrs. Jean Mann: Nonsense.
Mr. Nabarro: An hon. Gentleman said "Nonsense."
Mrs. Mann: No, an hon. Lady said it.
Mr. Nabarro: The hon. Lady said it in a very masculine voice. [An HON. MEMBER: "Her name happens to be 'Mann'."] She will be interested to know that one grade of wool in which I have been interested in my constituency, carpet wool, was costing 46 pence per 1b. before devaluation in September, 1949, but, within three months of devaluation, that same wool was costing 78 pence. There was an increase—
Mrs. Mann Mrs. Mann rose—
Mr. Nabarro: If the hon. Lady will allow me to complete my sentence—there was an increase of two-thirds in the cost almost overnight. What was the cause? Devaluation, preceded by the wretched acceptance of the American Loan, Marshall Aid and rigid adherence to Bretton Woods and all the financial shibboleths which the Socialists have strongly supported for so many years.
My hon. Friend the Member for Croydon, East (Sir H. Williams), referred to the question of the fixed and arbitrary rate of exchange between the pound and the dollar. Of course, Sir Stafford Cripps made a dreadful blunder when he fixed that rate of exchange,

2281
but Chancellors of the Exchequer who preceded him from 1945 onwards, made a more dreadful blunder when they failed to recognise that the greatest asset and strength of the British economy lies in the strength of its currency, in the strength of its sterling, and that that could only be established on world markets by a completely free pound, untrammelled and untied to any foreign rate of exchange. By that means we could have stemmed inflation a long time ago and the inflationary difficulties of which we complain today would never have been experienced.
10.4 p.m.
The Parliamentary Secretary to the Board of Trade (Mr. Rhodes): This has been a longer debate than I anticipated earlier in the evening. It has rambled all over the shop but at least it has allowed people to say what they have in their minds, which in some cases was not very much.
I personally have no apology to make for the utility scheme in any shape or form. I stand by the utility scheme as I have for the last 15 months and as I have fought for it and cared for it for the last 15 months because—in spite of its imperfections—if it had not been for the utility scheme we would have had such a high rise in the cost of living that we would not be thinking in terms of it now, but in terms of it a lot earlier, probably coinciding with the war in Korea.
The first job I did when I went to the Board of Trade was to set about this question of the utility scheme. At that time there were, hon. Members may remember, many shortages in all types of clothing and accessories, such as household textiles, but gradually through the summer, autumn and winter months last year we built up in the shops a stock which has stood this country in good stead when prices have been increased.
I wish to deal with the points that have been raised. I shall probably not do so in the order in which they were made but that does not matter. Let me deal with the point about paper shoes. A lot of nonsense it is. Let my hon. Friend get hold of the Footwear (Supply, Marketing and Manufacturers' Prices) Order, 1950, and look at the specification which cannot be departed from. If manufacturers do depart from it they are subject to penalties.
Mr. Logan Mr. Logan rose—
Mr. Rhodes: No, I do not intend to give way. My hon. Friend had his say.
Mr. Logan: Then the Parliamentary Secretary had not right to say, "Nonsense."
Mr. Rhodes: My hon. Friend said they were made from paper.
Mr. Logan: I said many of them were, and I still say so.
Mr. Rhodes: Let my hon. Friend see how the order says—
Mr. Logan Mr. Logan rose—
Mr. Rhodes: I am afraid there is only limited time. If my hon. Friend will look at page 9, he will see the minimum standards laid down.
Mr. Logan: We wear boots in our house.
Mr. Rhodes: If my hon. Friend will not take any notice, very well.
Mr. Logan: I am able to tell paper from leather.
Mr. Rhodes: I am glad that my hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd) raised the question of children's clothing. I wish to remove, if I can, a few of the misconceptions in the public mind. My hon. Friend referred to seven recent Board of Trade orders increasing the prices of children's clothing. That in itself is misleading because those orders apply to a number of different garments, and with one exception, and that for a particular reason, it is not true that there has been more than one increase since March in the price of any one garment.
In comparing clothing prices 12 months ago and now, we should bear in mind that raw material prices then were substantially lower. I can give the House a clear indication of the movement of material prices by pointing out briefly that wool cloth prices rose by 40 per cent. for worsteds and 30 per cent. for woollens from June, 1950, to February this year, and these February cloth prices relate to last October's prices for wool.
I wish there were less talk about this question of wool prices. There is nothing in the shops apart from one small aspect of the hosiery field which has anything

2283
to do with wool prices higher than those of last October. The prices since that time have been taken by the manufacturers and those engaged in the industry back again almost to where they were last October. That has been the slack that has been taken up by the manufacturers and the people engaged in the industry: reference was made to 10s.— I say 100 pence. From the beginning of October no garments of wool and animal fibre have been put in the shops based on any higher prices than the raw material prices ruling last October.
There has also been an increase in the cost of linings in the case of gabardines and wage increases in the clothing industry during the last year. I will deal at greater length with clothing price increases later, but at the moment I wish to deal with the subject of footwear. There is a lot of nonsense talked about this. Our system of price control for the footwear industry divides shoes into three grades. We have been able to rely on the competition in the footwear industry to keep the prices of different qualities within each grade down below the maximum permitted price for its grade, and at any time over the last year I am sure hon. Members will have been able to confirm that maximum prices were certainly not being charged in every case for each grade.
Sir W. Darling: There was no profiteering?
Mr. Rhodes: I hope that some hon. Members have had a look in the shops today. I had a check made on the prices being charged in shops not far from this House during this afternoon. Until the end of last week the maximum price for boys grade III shoes was 22s. 9d., for grade II, 34s. 2d. and for grade I, 51s. 9d. The new permitted maximum prices were 24s. 6d., 36s. 9d. and 55s.
Mr. Logan: What sizes?
Mr. Rhodes: My check this afternoon showed that in not one single case had the prices risen above the former maximum prices. In fact, in not one single case were they even at that level. The orders introducing these new maximum prices will have two effects. They will bring back into its original grade footwear which had moved into a higher grade
2284
because of increases in basic costs arid. therefore, make that footwear subject to the new maximum prices for its original grade.
Second, they will enable manufacturers of top quality footwear selling at the top of the utility scale to continue to sell their quality of footwear as utility. I had an inquiry made today of one of the largest firms which manufactures and retails footwear. Everyone knows the name of the firm. They told us that they have not altered any of their prices, and that they are exactly the same today as they were last week. This, I think, gives the direct lie to the suggestion that prices in the shops will rocket to the new permitted ceiling prices.
Mrs. Mann: Tory propaganda!
Mr. Rhodes: Those who were selling below their maximum before have no more incentive now to raise the prices than they had last week and I think that the trade are as anxious as we are that prices should be kept down so far as possible.
I wanted the opportunity to say this in order to avoid unnecessary anxiety to the consumer. There seems to have been a lot of nonsense spread abroad about what these increased maximum prices will do. When we authorised the increases we were at pains to emphasise that it did not mean that all prices would increase. May I quote from the statement we issued to the Press:
"…The system of price control is such that some of the increases of cost have already been taken into account in the prices of a large part of the output and, therefore, the full permitted increase will not be applied except to a small proportion. In the case of the majority of the output the increase may he expected to be considerably less."
Was that interpreted to the public in that way?
Reverting to the case of the large manufacturers which I quoted a moment ago, they had some trade in men's shoes at the old maximum price for grade I, namely, 85s. 3d., some trade, again in grade I at 79s. and a great deal of trade, again in grade I, at about 65s. As I say, these prices remain the same today. There may be an increase in the shoes which are still selling at 85s. 3d. in order to allow the manufacturers to continue to make that duality of shoes within the utility scheme for which the basic costs have un

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doubtedly risen. I am not arguing that. That is why the prices were put up. Precisely the same applies to children's footwear, but the increase in maximum permitted prices has only been some 7½ per cent.
I am grateful to my hon. Friend for raising this question in a sane, practical and common-sense way. The Press has given a good deal of publicity lately to the news of price increases. There may be a reason for that. I hope that in fairness they will give equal publicity to the statement which I have made tonight about the prices of utility shoes.
While on the subject of the announcement of price increases, I should like to make two points clear. First, the manufacturers do not necessarily push their prices up to the maximum level permitted. Secondly, in the case of clothing, they very often have good stocks at the old prices. When I have said this to my friends recently they have looked sceptical and said that the maximum price is the price at which clothing is sold, and that when new prices are announced it is difficult to get any goods at the old prices.
I should like to give some information which I had collected on Friday. These are a snap sample taken in London, Cardiff, Cambridge, Birmingham and Manchester since last Thursday. Two hundred examples were taken. We really went to business on this. The details show that, in the case of girls' heavy outerwear, girls' overcoats were priced in the shops now at 84s. when the maximum price in the utility schedule is 110s. 4d.
Mr. Logan: For what age?
Mr. Rhodes: Size 39 inches.
In the case of light outerwear, goods were priced in the shops at 13s. 11d. when the maximum utility price was 19s. The price of locknit underwear was 7s. 8d., when the maximum price in the utility schedule was 9s. 7d. I think that illustrates the point I was making. A girl's cotton frock, for which the maximum is now 19s., was selling at 13s. 11d. These are not extreme cases. I could have picked out much more spectacular ones. I recognise that these prices apply to old stock, but that proves one of my points which is that it is by no means true to say that in every instance prices will soar to the new maximum level.
Mr. Logan: What makes my hon. Friend think that they will not?
Mr. Rhodes: I was asked about our costings investigations. These investigations are carried out by the Board of Trade accountants or by our Accountant Adviser. They examine costings from representative traders. We do not take the highest cost of manufacture as the basis of our price fixing. On the other hand, I assure hon. Members that in my opinion we can never knock the inefficient man out of business simply by using price control alone. The less efficient manufacturer can always change to lines that suit him better, or he can make something completely different.
It is extremely important, especially with children's wear, that a full range of sizes should be produced and that we should maintain quality. We have always, of necessity, to strike a balance between keeping prices down to the maximum possible extent and securing adequate supplies in the shops. This is perhaps the time to say that when prices of raw materials are falling_ we can normally depend on competition to reduce clothing prices.
In the case of wool and animal fibre clothing, if hon. Members refer back to October, 1950, they will find that prices fell. If and when material prices fall below the level on which our garment prices are based we shall review the maximum prices we allow. I can assure my hon. Friend for Stockton-on-Tees that we will bear the point he mentioned in mind, and call for a meeting of the traders concerned to discuss at the appropriate time the reducing of prices.
My hon. Friend also referred to the question of profits. Naturally, the large-scale firm makes a larger absolute profit than the smaller manufacturer. Otherwise, there would be no incentive to increase production. On the other hand, when the price of the raw materials increases we do not allow increased profits on these increased costs of manufacture. When there have been big increases in manufactured prices we have reduced the percentage margin for distributors. We shall continue to keep a very close watch on distributors' profits.
My hon. Friend mentioned utility cloth No. 206. I do not think that it is a fair example. Traders and manufac-

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turers have made a good show of quality during these last few years, and utility clothing is regarded as of such good value that many people from the Continent come to this country to buy our clothes, saving their fares on the transaction. Utility cloth represents good value for the money. It is unreasonable to expect the same quality of cloth at the same price in a period of rising prices. My hon. Friend recognises the value of the utility scheme. It has been a wondeful thing for the ordinary people of this country, and the utility range offers very good value for many excellent ranges of quality.
I will end on this note. The hon. Member for Edinburgh, South (Sir W. Darling), spoke about the Government controlling our lives, and then there was talk about debasement. Before the war cheap clothing was possible not through debasing quality, but through debasing lives. The wages that were paid to the people who produced the cloth were very
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small, and I hope that we shall never see their like again. The hon. Member for Edinburgh, South, said that the Labour Government had, since 1945, controlled the lives of the people. He meant it, of course, as a joke, and he said it with his tongue in his cheek. I want to tell him that the Labour Government will never consent to the debasement of the lives of the folk who make this cloth, and that they will work unceasingly to see that the quality of the stuff that is made is fit for the people who have to wear it.
Mr. Nabarro: Will the Parliamentary Secretary respond to the accusations made by half a dozen of his hon. Friends. to the effect that the manufacturers are making excessive profits and that the Board of Trade are thoroughly slack in not assessing those profits?
Question put, and agreed to.
Adjourned accordingly at Twenty-nine Minutes past Ten o'Clock.