Clause 14.—(HIGHER RATES OF INCOME TAX FOR 1950

§ Mr. David Eccles (Chippenham)
Clause 14 establishes the rates of Surtax for the year 1950–51, and in view of some of the remarks that came from the other side of the Committee last night about Surtax, I think we ought to consider the question a little further. Of course, the fact that under this Clause a certain number of taxpayers will have to pay 19s. 6d. in the £ may not seem at all unwelcome to hon. Members opposite. They may say, "What does it matter one way or the other to a man with £15,000 a year whether he is allowed to keep an extra £100?"
It is to the principle of the very high rates of Surtax that I object because, together with Clause 13, which we passed last night, we are taking one more step in the direction of the complete destruction of the financial incentives to those who can earn the highest income. I know that the bulk of the incomes in the highest Surtax class are not earned incomes; in fact they are investment incomes; but for the moment I am not concerned with those investment incomes, although I might mention that anybody who goes round the Festival of Britain will observe how many of the events and acts in our history to which attention is there drawn owe their origin to men who either inherited or accumulated substantial property. That struck me very much when I was going round the Festival.
Be that as it may, what is really urgent is to think out afresh how we can reward, and so keep at full stretch, the best brains we have in this country, and even how we can dissuade some of their possessors from going overseas where taxation is lighter. The argument from the other side of the Committee last night can be summed up by this quotation from the speech of the 1236 hon. Member for Stoke-on-Trent, North (Mr. A. Edward Davies). He said: I say that they"— he meant these higher rates of taxation— do not discourage incentive amongst properly socially-minded people who wish to see this country emerge from its present difficulties …"—[OFFICIAL REPORT, 6th June, 1951; Vol. 488, c. 1123–4.] Of course, the words "properly socially-minded people" beg the question. According to the hon. Member for Stoke-on-Trent, North, a properly socially-minded person is precisely someone who does not want a financial incentive, so we do not get any further with that. It is humbug to pretend that there are, or that there ever will be, a very large section of people who will not pay attention to financial incentives. I want to be fan-to hon. Members opposite, but I do not think they are any more anxious than we are on this side of the Committee, when we have done a broadcast or written an article for a newspaper, to return the cheque to the B.B.C. or to Fleet Street. When we have done a bit of work, we all like to get paid for it. That is the situation in which one has to consider these highest rates of Surtax.
The case with regard to them is often argued on much too narrow a basis. There is very much more in it than a difference of opinion between the two sides of this Committee as to what net income society ought to allow any man to keep for himself. Hilaire Belloc once wrote, and it struck me as very true, that what men really want is not money but their own way. A tax like this which takes 97½ per cent. of any man's earnings does much more than deprive him of £ s. d. It effectively prevents him from getting his own way in respect of part of his efforts. However much he puts into it, the natural consequences and rewards of his efforts are blotted out. To that man the tax is what we now laboriously call a disincentive, but I prefer Mr. Belloc's phrase—it prevents him from getting his own way.
There are not many taxpayers who have the brains to earn more than £15,000 a year. They are very rare birds, and nowadays they are precisely the people who are in demand all the world over.

§ Mr. Keenan (Liverpool, Kirkdale)
Is the hon. Gentleman suggesting that technicians pay 19s. 6d. in the £?

§ Mr. Eccles
I am referring to those earning over £15,000 a year and who pay 19s. 6d. in the £ surtax. That is all I am discussing. In the Middle Ages the international figures were theologians, scholars and humanists, but today it is the scientists and the engineers for whose services kings and capital cities compete.

§ Mr. Sydney Silverman (Nelson and Colne)
They do not get as much as £15,000.

§ Mr. Eccles
The hon. Gentleman does not know how much is paid to the first-class technicians. They are paid more than £15,000 in some cases. The more complicated science becomes and the more desirable it is to lay out great projects—let us say under the Colombo Plan—the fewer are the people with the highest technical skill capable of carrying them out. One of my hon. Friends is in a very good position to tell hon. Members opposite what constructional engineers get in these days.
The point which hon. Members opposite do not appreciate is that it is just this type of international technician who most powerfully raises the standard of life. What he and his like do has more effect in increasing production than can be achieved by any other handful of people. If he is frustrated because hon. Gentlemen opposite hate to see him keep more than 6d. in the £ of his earnings, in what conceivable way can the British people benefit? Is it really better to satisfy jealousy or to defeat poverty? That is the issue behind the highest rates of Surtax. We say it is better to prefer plenty than to prefer equality.
This is an issue that we ought not to be frightened about merely because it seems very unpopular to protect the interests of a handful of men earning very high incomes. I say this quite sincerely because I am sure these people add to the prosperity and standard of life of this country. They being human themselves and there being international competition for their services, we are very foolish if, in pursuit of some theory of levelling down, we deliberately make it less attractive for them to exercise their abilities in the United Kingdom than in many other places in the industrial world.
Although we are not going to vote against this Clause now, I must say that 1238 I look forward to the day when substantial alterations in the Surtax rates will be carried through, and that in the true interests of every section of the British people.

§ Mr. S. Silverman
The hon. Member for Chippenham (Mr. Eccles) is to be congratulated upon having made a very frank, candid and honest speech. I agree with him absolutely that if the view which he expressed commends itself to a politician or to a party, to use his own phrase, he ought not to be afraid of it. Indeed, so far from being afraid of it, people who hold that view ought to advertise it, because there are so few people among the ordinary folk in offices, streets, public houses, mines, workshops and factories who share that view. If the hon. Member is ever to get his way, he will have to advertise his view on a big scale, and I hope he will not take it amiss if I offer him a little advice on how to do it.
In view of what the hon. Gentleman said, I am sure he will use all his influence with his friends to see to it that when the Conservative Party make up their election programme for the election which they would like to have as soon as possible, they will give pride of place to this suggestion which he has made: let us begin to fight for social justice by doing something for the poor, unfortunate, frustrated people who earn more than £15,000 a year. It would be an excellent way for the Conservative Party to present a programme at the election when it comes, and I am sure it will do us on this side of the Committee a great deal of good by showing exactly where are the interests of those who would like to see this Government replaced by another.
4.15 p.m.
I do not know whether the hon. Gentleman is right or wrong in his view that people who are at the top of the tree in those professions to which he referred, whose capacities are of the first order and are fully employed and are, indeed, the subject of international competition, will really sulk in their tents like Achilles unless they get this further £100 that the hon. Member is so anxious about. I suspect he is mistaken in that view and that the people whom he has in mind, such as the scientists and the technicians, do not feel so frustrated or disappointed as he thinks they do.

§ Mr. John Lewis (Bolton, West)
Nor do they get those salaries.

§ Mr. Silverman
Nor, if I may repeat the interruption, is it in the main the scientists, engineers and technicians who get these salaries. However, I do not want to quarrel with the hon. Member about that. He made his plea on their behalf and not on behalf of the crooks and entrepreneurs who form the bulk of the people whose earnings are in the class that he was talking about. He was not speaking for them. He was speaking of the technicians and the scientists, and I am saying that he is wholly mistaken in thinking that of those scientists and technicians there are very many who would sulk unless they got these extra few pounds. I agree that their emoluments are pretty high. Their capacities are fully occupied and they are happy in what they are doing. They feel they are rendering some service to the community, and I do not think that they will thank the hon. Member for the kind of things he said in their name this afternoon.
If the hon. Member had his way, the revenue would be reduced accordingly. I should like to know whether he is suggesting that it should be reduced by that amount or that the amount we should lose by making these concessions to those earning £15,000 and above annually should be made up by greater taxation on those who earn less.

§ Mr. Eccles
My argument was that production and wealth would increase if the incentives to those in the highest earning classes were increased. Therefore, if the revenue loses a certain amount directly by reducing this tax on them, the revenue would more than gain it by the increased tax obtained from the wealth produced.

§ Mr. Silverman
I think the hon. Gentleman, in his enthusiasm for his case, does what many of us are inclined to do—I am sure I do it myself from time to time—and that is to prove far more than he intends to prove. What he is saying is that if a man earning £15,000 a year or more could only be saved from all this tax, he would work so much harder that production would be increased and everybody would benefit. Is it an argument which is limited to a man who is earning £15,000 or 1240 more? [HON. MEMBERS: "NO."] No, not at all; I thought the hon. Member would say so. If a man is earning only £10,000, would he not equally be stimulated to greater productivity by Income Tax concessions? Or if he were earning only £5,000 or £3,000 or £2,000 or £500—at what annual salary does the incentive cease to work?

§ Mr. Eccles
The incentive ceases to work when the tax takes away such a high proportion of every pound earned that it is literally not worth doing the work. The hon. Gentleman must know that if, for one reason or another, a man has an income of over £10,000 a year there is no attraction for him to go on to the board of a company where the fees, quite rightly, are not more than £400 a year—and yet his advice might be extremely useful to that company. Does that effect of the level of taxation commend itself to the hon. Member?

§ Mr. Silverman
The hon. Gentleman says that everybody would be greatly relieved if their taxation were less. He need not be at such great pains about it; we all agree with him; but what the Committee are considering this afternoon, and what concerns the Chancellor, is how to raise a certain amount of money. The hon. Gentleman has put forward the answer that if only the Chancellor would relieve the man who pays the highest rate of Income Tax and Surtax from part of the taxation, there would somehow or other, as a result, be greater revenue.
I do not think that is so, nor do I think the hon. Gentleman really means that. There would obviously be a loss of revenue; the Chancellor would have to do without part of the revenue or make it up at the expense of people whose earnings are less than £15,000. I think the hon. Gentleman might do himself greater justice in the contributions he makes to these discussions, which I always find interesting and valuable, if he refrained from pursuing these hares and will-o'-the-wisps which I am sure, in his own serious mind, he does not believe for a moment.

§ Mr. Spearman (Scarborough and Whitby)
May I give the hon. Gentleman an illustration from my own constituency which completely contradicts the 1241 view he has been trying to express? I have a constituent who owns a very flourishing business and he has told me that if he spent a further £100,000 on certain improvements to his business he could very much reduce the price at which his products are sold. But if he spent that £100,000, which obviously would entail a good deal of risk—the risk of something going wrong—and a great deal of hard work, the advantage to him would be a net amount of £100. Is it, therefore—

§ The Deputy-Chairman (Colonel Sir Charles MacAndrew)
I did not call the hon. Gentleman. I thought he was about to ask a question, not to make a speech.

§ Mr. Spearman
I was asking the hon. Member for Nelson and Colne (Mr. S. Silverman) whether I might give him an illustration which I think shows that he is entirely wrong.

§ The Deputy-Chairman
But it was a much longer illustration than I anticipated. Mr. Joynson-Hicks.

§ Mr. Joynson-Hicks (Chichester)
I am sorry to interrupt the illustration of my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman) and I hope the Closure will not be moved before he has had an opportunity of completing that illustration and developing his further remarks. I want to some extent to follow the hon. Member for Nelson and Colne (Mr. S. Silverman). I listened with great attention to the speech made by my hon. Friend the Member for Chippenham (Mr. Eccles), and I agree with every word of it; and I then listened to a representation of that speech by the hon. Member for Nelson and Colne, and I did not recognise a single word of it. Never have I heard so much talk around so little accuracy of quotation. Never before have I heard such a speech which purported to be a criticism of what had been said but which was in fact a dissertation of the hon. Gentleman's own views.

§ Mr. S. Silverman
I think the hon. Gentleman is a little unfair. His hon. Friend the Member for Chippenham (Mr. Eccles) interrupted twice in the course of my speech. I was glad to give way to him and to reply to his interruptions to the best of my ability, and to what extent to his satisfaction it is not for me to judge. 1242 Throughout the whole of my speech the hon. Member for Chippenham did not for a moment complain of any misrepresentation.

§ Mr. Joynson-Hicks
It is quite possible that my hon. Friend did not fully appreciate that the hon. Member for Nelson and Colne was seeking to quote from his speech, but in any case it was gratifying to note that the hon. Member for Nelson and Colne was twice called back to the subject by my hon. Friend. What interested me particularly about the hon. Member's speech, and what caused me to pay even closer attention to what he said, was that he offered to give advice to my hon. Friend. The hon. Member for Nelson and Colne is, I know, a member of my own profession—and an exceedingly skilful and successful one at that; and I wondered whether he was going to give the old professional adage which we have. He did not. We have an admirable adage in our profession which says that advice which is gratuitously offered is quite useless.

§ Mr. Silverman
With respect, I think the hon. Member has the adage wrong. It is not that advice one gets for nothing is useless. I remember the adage differently—never give advice for nothing because the recipient is apt, though mistakenly, to think it is worth what he paid for it.

§ Mr. Joynson-Hicks
In any case, the assessment by my hon. Friend the Member for Chippenham of the value of the advice would be what it was worth. I should not have wished to detain the Committee on this Clause had not the Government, by their action last night, precluded many of us who still wanted to continue the discussion on the Income Tax Clause from having an opportunity to do so. This Clause deals with Surtax, which is a part of the system of taxation in this country. Although certain aspects of it can be considered by themselves, many aspects react upon other parts of the system.
If we have a speech later from the Treasury Bench upon this subject, I have little doubt, from the precedents of last night, that we who are speaking on the Surtax Clause from this side of the Committee will again be misrepresented. It will be suggested that we claim that the whole of the economic affairs of the country could be put right by lowering the Surtax, to the consequent profit of a 1243 small minority of the population. We are quite prepared to accept that misrepresentation for we are accustomed to being told things which are not correct. We do not claim that at all. What we claim is that those who are directly affected by Surtax have just as much a right to have their affairs considered in this Chamber as those who are affected by any other class of taxes.
In the case of Surtax the matter really goes further than that, because although we must appreciate that the tax falls directly upon only a small minority of people in this country indirectly Surtax affects the whole community. In considering the question of Surtax it is, therefore, relevant to bear in mind the effect which that tax and the entire high rate of taxation throughout the country have upon our affairs.
First, I think we should take into account that in the vast majority of cases in the high ranges of Surtax the tax itself has now become definitely inflationary. I speak objectively here, because I am certainly not a high Surtax payer and very often do not pay Surtax at all, so that I am not directly affected. But people do not reach a position in which they have a liability to a right rate of Surtax without having built up a substantial public life, which carries with it its own responsibilities.
The hon. Member for Nelson and Colne separated the technicians, and those about whom my hon. Friend the Member for Chippenham had been speaking, from other classes and went on to refer to other categories of high Surtax payers. I gather he implied that they represented the majority, and he referred to them as being crooks and entrepreneurs. But these are not high Surtax payers, because if they are crooks they are a jolly sight too careful to arrange their affairs to see that they do not get caught by Surtax. I see on the Treasury Bench the Attorney-General, who in his previous office had great experience of the Inland Revenue authorities, and I feel quite sure that he will bear me out, and that he does not recognise that there have been any crooks or entrepreneurs amongst the high Surtax payers of this country.
4.30 p.m.
The people in the higher grades are those who, because of the life which they have led, in the glare of full publicity, 1244 and because of the ramifications that they have built up in their lives, with a high degree of public as well as private responsibilities, are probably responsible for the payment of a considerable amount of wages out of their incomes, and when we get to the point of taxation at its present rate—and here I come back to the point I was making, that this is an inflationary tax—they can maintain those responsibilities, they can pay those wages, only out of the realisation of capital; and therefore, far from people of this particular class being able any longer to set a lead in saving for the benefit of the nation as a whole, they have no alternative whatsoever except to liquidate such capital as they have in order to maintain responsibilities which they built up, generally and very largely in the public interest of this country.
On that particular point there is one further aspect that I have never been able to understand. It is just as good for the country as a whole that people in these higher Surtax ranges should have children as it is that the people in any other tax range should. Those who are liable only for the payment of Income Tax gain tax relief according to the number of children whom they have to support. Why should not the same advantage be given to those who also have to pay Surtax? It always seems to me that one of the most sensible things that could be done would be to allow a certain measure of Surtax relief according to the number of children, upon similar lines as there are Income Tax reliefs. I know full well the challenge which this suggestion can bring forward, and I would not suggest that the present is the appropriate time for it to be done, but, as a matter of tax principle, I can see no reason at all why it should not form one of the principles of our scheme of taxation in this country.
I entirely agree with what my hon. Friend the Member for Chippenham said about the general, as well as the financial, effects of this high rate of taxation from which we are suffering in this country. I should think that all of us in the professions know of cases of people who are capable of earning an income which would bring them into the high ranges of taxation and who, because of the ability, and the sound public—or social, if hon. Members prefer that word—sense with which they have lived, have saved and are already able to enjoy an investment 1245 income from their savings—so much so that at the present time it is beneficial to them to retire from active working, and live on their savings and incomes from savings, rather than go through the ardours and strain and stress of earning that additional money.
Who of us is there who, having reached middle age, and can see two alternatives before him, is really going to be activated on ordinary grounds—there may be special circumstances, such as wanting to maintain a business for one's children; something of that sort—to feel that it is worth while carrying on working as hard as he can for the sake of securing a benefit which is of no greater advantage to him than is retiring from work altogether?
In addition to that there is, as we all know, the wide range of cases of people who are quite definitely leaving the country—people who are capable still of being of great value to the country by their work, by their abilities, by their brains and by their experience, but for whom it is not worth while staying in this country. I, personally, cannot see how those people can be blamed when, having an opportunity, they take up a new life in another country in which they are able to retain and enjoy the advantages which they are able to gain for themselves. It is that effect which this high range of taxation is having upon a wide range of the most valuable people in our community that has caused be to speak on this Clause of the Bill.

§ Miss. Jennie Lee (Cannock)
I was very much struck by almost the opening sentence of the speech of the hon. Member for Chichester (Mr. Joynson-Hicks). He was presenting to us a picture of an honourable man in business who had built up a substantial way of life with substantial responsibilities, public as well as private, and he was pointing out that a rate of taxation at high levels meant that that man did not have those margins in his income that would enable him to carry out what were often traditional public responsibilities.
The reason why I was so struck with that sentence is this. Hon. Members opposite seem to me to have at least a dual psychology. It is probably much more complicated than dual, but they certainly have a dual psychology. I have been shocked again and again at the mean, 1246 tawdry criticisms that have come from the benches opposite about the expenses of Members of Parliament. I do not know of any business man—I do not know of anyone in any way of life—who carries heavier or more substantial public responsibilities than we do. On another occasion when hon. Members opposite are niggling at the cost of the Dining Room or niggling about some other trivial matter, I may remind them of how they speak and of how their minds work when they are discussing other people in relation to public responsibilities.
We here, if we are serious Members of Parliament—and we all are, I hope—have interests that go far beyond our constituencies. We have also got national and international interests. That means we require a certain mobility in the way we live. It is very good that we should move about, sometimes even beyond the confines of our own country. It means we have got to meet people. But that all costs money. Hon. Members opposite, far from thinking of these things, again and again make public speeches and broadcasts trying to insinuate into the public mind that Members of Parliament are overpaid.

§ The Temporary Chairman (Mr. Touche)
We cannot discuss the payment of Members of Parliament on this Clause.

§ Miss. Lee
I am sorry. I was only making an analogy.

§ Mr. Jennings (Sheffield, Hallam)
Is the hon. Lady suggesting that hon. Members on her side of the Committee travel about the world at their own expense—at the cost to them of heavy sums of money?

§ The Temporary Chairman
That is just the sort of thing that we cannot discuss on this Clause.

§ Miss. Lee
What I was saying was that I do not think it is good that the only people who travel around on delegations and the like should be strictly official Government personnel. The back benchers on both sides of the House of Commons are very important people. I am simply pointing out that I cannot understand how, on a Clause like this hon. Members opposite can say that it is impossible for the private business man to carry out his public responsibilities while they expect those of us who give our 1247 whole time to public work to carry out our responsibilities.
I agree that there is a very highly developed technique now among people to whom we usually refer as spivs or crooks. Somehow or other they manage to go into business and they seem to be doing and living very well. They are not the people who often appear as earning the highest incomes. I hope that the Chancellor will think again about this because while I think that the taxation does not fall too heavily on those who have the largest incomes at present I can sympathise with the annoyance of an honourable man who sees someone else employing all kinds of shady tricks which he himself would not employ. I hope that in the rest of the discussion on the Clause hon. Members opposite will remember that Members of the House of Commons have substantial public responsibility and that none of them has suggested that we are under-paid.

§ Mr. Boyd-Carpenter (Kingston-upon-Thames)
As I understood it, the argument of the hon. Lady the Member for Can nock (Miss. Lee) was a very considerable criticism of the Clause. It was that people in responsible positions required appreciable net incomes if they were properly to discharge their responsibilities. I do not quarrel with that argument, but I would beg the hon. Lady to apply that argument to not only the sphere of hon. Members but also, as is the duty of hon. Members, to those people outside for whom we are responsible. I hope she will allow me to observe, in parenthesis, that highly remunerated and high responsibilities, whether by hon. Members or anybody else, sometimes have to be discharged after half-past twelve in the morning.
The hon. Member for Nelson and Colne (Mr. S. Silverman) tried, with that dialectical adroitness which we all admire, to suggest that criticism of a level of taxation of this kind was based solely on sympathy for these frustrated persons with about £1,500 a year. The hon. Member is far too intelligent, whatever some of his hon. Friends may be, to be taken in by that argument. He knows that the only point of public importance with which the Committee is, or ought to be, concerned is whether or not it is in the public interest to remove a very high 1248 proportion of the larger earned incomes. That is the public issue—whether or not it is in the interests of a healthy economic society to do that.
Hon. Members opposite have a long and complicated record of intellectual dishonesty on this very issue. They used to say—the late Mr. John Burns said it—that no man should have more than £1,000 a year. It is fair to say that when that late lamented right hon. Gentleman achieved a Cabinet salary of £5,000 a year he amended the statement by saying that that did not, of course, include supermen; and no doubt right hon. Gentlemen who are his successors on the Government Front Bench will regard themselves as being within that exception.
4.45 p.m.
The attitude that high salaries and high net earnings are not in the public interest comes singularly ill from an administration which has itself, by direct legislative action, created more highly paid posts than any other Government in this country. Right hon. and hon. Gentlemen opposite have created on the boards of the nationalised industries scores of appointments at £5,000 a year. They have created a more limited number of appointments at the rate of £8,500 a year plus expenses, plus travel and, in the case of several boards, plus a fund of some thousands of pounds a year available for entertainment at the chairman's discretion.

§ Mr. J. Lewis
I would remind the hon. Gentleman that the matter before the Committee is not how much is being paid to people but how much is being taken from them by Surtax.

§ Mr. Boyd-Carpenter
I hope it will not be beyond the hon. Gentleman's considerable intellectual gifts to appreciate that it would be a very curious suggestion that his right hon. Friends should have created large salaries not for any public purpose but solely to take most of them away again. I must say that I take a higher view of right hon. Gentlemen opposite than does the hon. Member, although I am bound to concede that he is able to study their intellectual processes more closely than I can and so he may well be right.

§ Mr. Boyd-Carpenter
Let us start on the basis that when the Government create 1249 a large number of posts at a high rate of salary they do so because they believe that for those posts at any rate a high rate of salary is in the public interest.

§ Mr. Manuel
Will the hon. Member give way?

§ Mr. Boyd-Carpenter
I am sorry; I cannot give way. I am dealing with another aspect of the matter. I am assuming that when scores of appointments at the rate of £5,000 a year are created that is done because it is recognised that highly responsible posts require a high rate of remuneration. Having accepted that principle in practice and having created this very large number of appointments, surely the Government cannot possibly take the attitude that high net earnings are not in the public interest. Surely it is still more debarred from taking that attitude when it has arranged the remuneration of those appointments in a way designed to protect them as much as possible from the incidence of taxation by giving remuneration in kind by way of motor cars, accommodation, and so on. I am not quarrelling with their doing that. I think they are right to do it. I think that no money is too much to pay a man if he is really to try to run the Coal Board with its present set-up. But I find it a little revolting that right hon. Gentlemen who have done that should then say what a dreadful thing it is for anybody else to earn high net salaries. That is wholly inconsistent and wholly wrong.

§ Mr. Manuel
May I put a point to the hon. Member?

§ Mr. Boyd-Carpenter
All right. The hon. Member has been so persistent that I must yield to his blandishments.

§ Mr. Manuel
I thank the hon. Member. When he is talking about the highly-paid posts which have been created, is he taking into his reckoning the larger number, in the aggregate, which have been abolished and that less money is being paid out in these spheres of industry than was formerly the case?

§ Mr. Boyd-Carpenter
I believe I can follow the hon. Gentleman's intellectual processes. His reasoning is that it is all right for the Government to create highly-paid posts to which they themselves appoint as long as they abolish other 1250 highly-paid posts to which they do not appoint. But surely hon. Members cannot come forward and say, "We are sea-green incorruptibles and think that no man should be paid more than £1,000 a year" when, at the same time, they create large numbers of posts at five and eight times that amount and try to excuse that by saying that they have abolished some others which were not even paid out of publicly-owned funds. That will not do. The Government must squarely face the issue of whether or not it is in the public interest that high responsibilities should be highly rewarded.
By their actions in the sphere which I have indicated they have accepted that, just as people throughout the world, including Soviet Russia, have been forced by the facts to accept it. If the answer to that question is "Yes," I feel that some of the arguments of the Treasury Bench and of hon. Members below the Gangway are so inconsistent with the actual actions of the party opposite as to savour of hypocrisy.
Taxation at this level makes it physically impossible for the young man, however gifted and energetic, setting out on life, to set before himself as a practical ambition the acquiring of a fortune or, at any rate, the acquiring of a fortune by hard and honest work in his trade or profession. As the hon. Member for Cannock (Miss. Lee) said, it is, of course, possible to acquire a fortune by the methods of the spiv, by being fortunate in a football pool or on the race track or, perhaps, on the Stock Exchange—or, as an hon. Friend of mine points out, by a selective process in the course of matrimony. But the one thing that is absolutely barred to a young man of ambition and of character is the possibility of acquiring a fortune by hard and industrious work at the trade or profession of his choice.
I think that hon. Members opposite must ask themselves whether they think that is a good thing for an economic society such as ours; whether it is wise to say to the younger generation, "For you the possibility of acquiring a fortune is absolutely barred." I myself believe that to put that idea into the minds of the younger generation in a society such as ours spells slow but inevitable economic death.

§ Mr. J. Lewis
I was stimulated into making a short contribution to this debate by the speech of the hon. Member for Chippenham (Mr. Eccles). It would, however, be asking too much to expect anyone to follow the line of argument of the hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and to be expected to refrain from making one or two references to what he said. He has managed to combine in a very short speech three accusations against the Government. One, that they are jealous of highly-paid persons, two, that they are hyprocritical, and three, that they are suffering from intellectual dishonesty because we suggest that at present it is necessary to maintain a high level of Surtax.
The hon. Member for Kingston-upon-Thames painted a very interesting picture in the latter part of his speech. He pointed to the lack of opportunities available to young people to reach those pinnacles of wealth and happiness which lie at the top of a high ladder which every young man should have the opportunity to climb. If anyone is responsible for intellectual dishonesty it is the hon. Gentleman himself, who knows full well that for every man who climbs to the top of that ladder a thousand people have to remain at the bottom.

§ Mr. Osborne (Louth)
Does the hon. Gentleman not agree that that argument, for the same reason and in the same proportion, applies to the members of the Socialist Party who are struggling at the bottom and want to reach Downing Street?

§ Mr. Lewis
The hon. Gentleman's intervention is as useful a contribution as are his previous interventions in the House. I am not one of those doctrinaire people who believe that it is a good thing to have a high rate of Income Tax and Surtax. I believe that there may be an argument that incentives play a very important part in the contribution to the national economy and the efforts that people are called upon to make from time to time in the various spheres of their operations.
Whereas I should like to see Income Tax at 3s. 6d. in the £ and Surtax reduced consistent with the maintenance of the highest level of social welfare, I think that I am representative of 1252 reasonable opinion in the Committee which recognises that at present, in view of the international situation, it is quite impossible for money to be raised to pay for our defence without having this high level of taxation to provide a high proportion of it. It is useless for hon. Members opposite to seek to advance such arguments, knowing full well that they must be dishonest arguments, because if taxation were reduced in any sphere they would immediately say that we were not making the necessary contribution to our defence should the level of expenditure be affected.
The hon. Member for Kingston-upon-Thames dealt throughout a considerable part of his speech with the question of high salaries. I believe—and you are to judge, Mr. Touche—that that had nothing to do with the debate now before the Committee. The hon. Member for Chippenham was talking of people in the range of £15,000 to £20,000 a year. He spoke about the effects of the incidence of Surtax on their net earnings. The hon. Member for Kingston-upon-Thames, however, talked about people who earn £5,000 a year. I think his party will recognise that the man who earns £15,000 a year still has greater net earnings than the man who earns £5,000 a year; in fact, incentives to greater effort, although I admit that they are small, still exist.
The fact remains that these appointments at high salaries in the nationalised industries or on other Government boards are to a large extent prestige appointments as much as anything else, and the prestige of the job is usually reflected in the salary that is paid. The man who earns £5,000 a year on a nationalised board has to pay Surtax in the same way, so I do not see how that argument applies.
The hon. Member for Kingston-upon-Thames referred to the expenses of people in nationalised industries—payment in kind by means of transport, and so on. I wish he would consult with some hon. Gentlemen sitting on his own benches who are industrialists, and who know full well that if there is any sphere where there is payment in kind it is in the field of industry where directors of companies, as a rule, have their expenses paid and that their transport expenses are paid by the company with whom they are associated. I think that it would be utter hypocrisy 1253 to deny that these circumstances exist quite legitimately in the majority of industries.

§ Mr. Boyd-Carpenter
I would like to challenge the hon. Gentleman's statement because I made no such admission. If I were to do so, it would not be material to my argument. My argument was that a Government who have done this in respect of appointments which they themselves make when running their own industries cannot possibly say that it is wrong for that to be done elsewhere.

§ Mr. Frederic Harris (Croydon, North)
Would the hon. Member for Bolton, West (Mr. J. Lewis), not agree that in the last few years the tendency has been to reduce expense allowances of any kind made by public companies, whereas the tendency in the case of public appointments has been to increase expense allowances?

§ Mr. Lewis
I am quite willing to concede the first point. The tendency has been to tighten up, and justifiably so. I have no evidence whatever that the second part of his premise bears any relationship to the facts. What evidence is there that the expenses of people engaged in the nationalised industries have been increased? I think that it is dangerous, in a debate of this kind, to throw out such suggestions when there is no ground for assuming that they are true. I think that it remains on a general level in all forms of industry, both national and private, that legitimate expenses are paid by the employer whether it is a nationalised industry or whether it is private enterprise. There are expenses which any director has to incur and which he could not afford to do if they had to come out of his own pocket.
My last point relates to a matter raised by the hon. Member for Chippenham, who, I am glad to see, has returned to his place. He referred to the scientists and the technicians. The hon. Gentleman is asking too much when he advances the argument that the majority of scientists and technicians are in the £15,000 to £20,000 a year class.

§ Mr. Eccles
I did not say the majority.

§ Mr. Lewis
I am sorry if I misrepresented the hon. Member on that point. He says that he did not say the majority. 1254 But only a small proportion of them, perhaps 2 per cent., are in that class. The hon. Gentleman must know full well that in the majority of cases where scientists and technicians are employed in the industry or where they are, in fact, employed by trade institutes or learned societies they have very moderate salaries but they perform, nevertheless, very useful functions. They are very happy people generally in the sense that they have a great personal interest in the work they are doing and the contribution they are making to society; but what is essentially true in this instance is that in very few cases is their work related to productivity so that if their work is not related to output in that sense there is no means of increasing their salaries by their direct efforts and results of actual scientific investigations and technical work which they carry out.
The work invariably redounds to the benefit of the company by whom they are employed, and it is an utterly fallacious argument to say that there is disincentive because they are subject to a high rate of Surtax. The argument of the hon. Member for Chippenham is wrong in two respects, firstly because the scientists, and technicians, except in very few cases, do not come into the £15,000 or £20,000 class; and, secondly, because even if they did, their work is not affected by greater incentives which would have to relate to increased output out of which they would get some personal benefit.
Everybody will agree that our tax is very high. We are admittedly the highest taxed country in the world. But we are also a country which has something of which we can be justly proud—the finest system of social services in the world. No doubt, hon. Members opposite will agree with that, because from time to time, particularly at election times, they claim that they are responsible for having made some contribution to that system.
Nevertheless, I think it will be conceded that tax as it is today is something which bears very heavily upon the majority of the people of this country, and we should like to see it reduced, though, as I said before, consistent with the maintenance of the highest level of social welfare. If we have to spend thousands of millions of pounds on defence we cannot afford to reduce taxes. 1255 When it is suggested that our national life is directly affected in terms of productivity through lack of incentive because people have to make an important contribution through the medium of a high level of Surtax, I say that it is an utterly fallacious argument. Surtax bears heavily on certain people who have important commitments, but Income Tax at its present level bears heavily on the middle classes as well. It is a general problem associated with national conditions, over which we in this country have no control.
If hon. Members opposite concede the point that defence is necessary, then it has to be paid for, and if it has to be paid for, in the main, it has to be paid out of taxation. Hon. Gentlemen opposite cannot have it both ways. Is any hon. Member opposite prepared to stand up and say that he would like to see Surtax reduced and Income Tax maintained at its present level? Of course not. I would not imagine that for a single moment.
This debate is purely academic, because it is so reduced by virtue of the lack of logic in the arguments of hon. Members opposite. It is merely academic, too, in the sense that it expresses a point of view which everybody would like to see realised, but it does not involve consideration of the effects of the reduction of tax and other factors associated with it, so that the whole argument which has been advanced by hon. Members opposite is without foundation. I myself would be delighted to see lower Income Tax and lower Surtax, but hon. Gentlemen opposite must know that in today's circumstances it is not possible. I maintain that the speeches which have been made from the Opposition benches this afternoon show no sense of realism whatsoever.

§ Mr. Jennings
I wish to intervene for only a short time and, first, to refer to the speech of the hon. Member for Nelson and Colne (Mr. S. Silverman), who, I am sorry to say, is no longer in his place. He discussed this subject from the purely party political point of view; he argued that nobody should speak for the Surtax payer who was earning in the realm of £15,000 a year, and he said he supported the mass of 1256 people who had the smaller incomes. We need to lift this subject completely out of the political arena.
I deal very frequently with Surtax assessments. I can assure hon. Members that there are many people with substantial incomes, though not of the level of £15,000 a year, who would be prepared to take on more responsibility but for the burden of Surtax. They say it does not make it worth their while. Men who are asked to join boards, and who have other interests, do not think it worth while to shoulder extra responsibilities because of the small amount of net income which comes to them after the Surtax has been taken from their salaries.
As a Surtax payer I have no hesitation in saying that this is the worst tax that I pay, and that I hate the very sight of it. It is a most vicious tax and it has reached saturation point. It is most unfair in the method in which it is applied and, apart from that, it hinders the national effort, in that but for it there would be many people who would be willing to do more work. In the national interest there should be some relief in the higher rates of Surtax, so that men who would be prepared to do these extra tasks would get something out of it.
I know instances of men who propose to retire earlier than would normally be the case because of the great burden which Surtax puts upon them. I meet such people very frequently, and they say to me, "After I have got my income with the Surtax taken off I cannot do what I should like to do, and I have got to realise some of my capital to do such things as keep my family at school and maintain the other responsibilities which I have." There is no question but that this tax is having a detrimental effect on the industrial effort of this country.

§ Mr. J. Lewis
The hon. Gentleman is trying to be fair, and I hope that he will take this point fairly. Is not the question of the ability of any Surtax payer to meet his outgoings dependent to a large extent on the standard of living he has created for himself? Very rarely do we find a Surtax payer who cannot send his children to what he would consider the best schools and pay for them there. It all depends on the standard of living to which he is accustomed.

§ Mr. Jennings
The hon. Member must have forgotten entirely that there are many people in this country who have had responsibilities thrust on them, and these are the people who are feeling very hurt. They cannot get out of these responsibilities without causing extreme hardship on other people. They have to face that position and carry on as best they can. Surtax demands are forcing them to make inroads in their capital to meet their responsibilities. Such an unfortunate state of affairs exists in this country in a very large number of cases, and I am not speaking now of the people with £15,000 a year, but rather of those with lesser incomes. It is damaging the system of incentives and encouragement to our people.
I was about to instance the case of a man, an excellent man at his job, who would be quite capable of carrying on and of giving a great deal more effort to the country. The burden of Surtax on his income has made him feel that it will be far better for him to retire and leave things alone. There are many people in that position. On the other side, there are workpeople who feel that the burden of taxation is so great that it is not worth their while working overtime. I do not think that hon. Gentlemen opposite can dispute that there are many cases in this country of that kind.
When taxation becomes a burden to a person, no matter what his station in life, it acts as a disincentive to carrying on and working harder. For that reason I believe that I am speaking for a fair number of people. It is a matter of the national interest, which we ought to consider free from party politics. [Laughter.] Certainly. If I were in the party arena on this point I should take a view like that of the hon. Member for Nelson and Colne (Mr. S. Silverman). He made a party political speech when he said that we were standing up for the £15,000 a year man and that he stood for the others, the clerks, the cooks, etc. That is vote catching. We do not want that sort of thing.

§ Mr. S. Silverman
I do not think that I did say that. I was commenting on the speech made by the hon. Member for Chippenham (Mr. Eccles), who confined himself to the £15,000 a year class. As for vote catching, I do not quite understand the hon. Member.

§ Mr. Jennings
My hon. Friend the Member for Chippenham (Mr. Eccles) instanced a case of a £15,000 a year man, but his general argument did not refer to the £15,000 a year class. Instead of trying to twist the argument round in his own favour, the hon. Member for Nelson and Colne should face the issue which my hon. Friend the Member for Chippenham put to the Committee. Instead of looking at this matter from a vote catching and party political point of view he should realise that it needs far more courage to stand up here for the rights of a few people than it does to stand up on the benches opposite to oppose these few and claim to be standing up for the masses. This is a matter of justice. However few there are of such people in this country it is the duty of every hon. Member in this Committee to see that justice is done to them. Hon. Members who do not contribute to that view are not facing up to the issue.

§ Mr. Kirkwood (Dunbartonshire, East)
Before the hon. Gentleman leaves that point, will he tell the Committee the yearly income of the man to whom he referred, before tax is applied to it?

§ Mr. Jennings
The income is £2,000 a year, but I do not think that that matters.
An hon. Gentleman referred to the men at the top. We cannot have everybody on the £15,000 or £10,000 a year mark. This world is such that we must have people in different stations of life. To believe otherwise is one of the fallacies of Socialism. We have to have people earning managerial salaries, as managing directors or in other controlling positions. The hon. Member for Bolton, West (Mr. J. Lewis), interrupted me when I spoke of people sending their boys to public schools, and said that people had to be content with sending their boys to something less than the best public schools. I would like to tell him that the cost of keeping a boy in an approved school is now £400 a year, which is more than Eton.

§ Mr. J. Lewis
I am obliged to the hon. Gentleman for giving way. On the last point which he has made, I would reply that I was not trying to tell people where they should send their boys. I said it was a matter of the standard of living, 1259 and that people in the Surtax class who desired to send their boys to good schools need not necessarily send them to the best schools. In other words, they can still get education for their children. On his first point, I think the hon. Member is confused because we are not talking only about people in the highest ranges of income. The point which the hon. Member for Chippenham (Mr. Eccles) made was in respect of highly-paid men, such as the £15,000 a year man. A man in the managerial class is not worried about incidence of Surtax at all.

§ Mr. Brendan Bracken (Bournemouth, East, and Christchurch)
You do not do so badly yourself.

§ Mr. Lewis
You are a pig.

§ Brigadier Prior-Palmer (Worthing)
On a point of order. Did you, Mr. Touche, hear the hon. Member for Bolton, West (Mr. J. Lewis), say to my right hon. Friend the Member for Bournemouth, East, and Christchurch (Mr. Bracken): "You are a pig"?

§ The Temporary Chairman
I did not hear it. I was listening to the hon. Member who was addressing the Committee.

§ Brigadier Prior-Palmer
It was very audible to hon. Members on this side of the Committee. The hon. Member called my right hon. Friend a pig, and I suggest that he should be asked to withdraw the expression.

§ Mr. Bracken
I did hear a dim sort of echo from the hon. Gentleman. I never associated a pig with him, so I do not care what insults he offers to us.

§ The Temporary Chairman
If the hon. Member for Bolton, West (Mr. J. Lewis) called the right hon. Gentleman a "pig," it is an unparliamentary expression, and he must withdraw it.

§ Mr. Lewis
I am certainly prepared to withdraw the expression, under your direction, Mr. Touche. The fact remains that the right hon. Gentleman himself made an objectionable remark—

§ The Temporary Chairman
Order. We cannot discuss the matter.

§ Mr. Lewis
I was about to say that the right hon. Gentleman himself, before I was provoked into making the statement, 1260 which I readily withdraw, made a provocative and nasty remark about me. If the right hon. Gentleman, because of his pugnacious attitude, provokes people into making remarks, you should call upon him to withdraw his provoking observations.

§ The Temporary Chairman
I did not hear any such remark from the right hon. Gentleman, and I cannot ask him to withdraw any remark which is not unparliamentary.

§ Mr. Bracken
In any case, I would not associate pig with the hon. Member for Bolton, West.

§ Mr. Jennings
I think the remark was put in this way, that the hon. Member opposite had not fared very badly in his life himself. People in glass houses should not throw stones. If the hon. Gentleman opposite does not know that there are many managing directors and general managers getting several thousands of pounds a year he does not know much about the country's trade and industry.
I appeal to the Committee to look upon these matters impartially. In the higher incomes we have reached saturation point in regard to Surtax, and I ask the Chancellor of the Exchequer to realise that human nature is human nature, whether a man is Socialist, Liberal or Conservative. In my opinion, no man will work longer hours and a longer week for 6d. in the £. This ought to be examined from a commonsense point of view. I deal, and have done for years, with assessments of Surtax, and I know that it creates a disincentive to many people. I ask the Chancellor to examine this so that we can get a fair balance and a fair approach to the subject.

§ Mr. Keenan
I regret that this debate has gone on so long, but there are one or two things that should be said from this side of the Committee. The impression given by hon. Members opposite, which has so far not been contradicted from this side of the Committee, is that the productive wealth of the country depends very largely upon those paying Surtax, those in the range of this Clause to which exception is taken. If it were possible, I should like to know how many people receive £15,000 a year or more? Unless they have £15,000 a year or more, they do not pay 19s. 6d. in the £, as I understand it. How many people 1261 are paid more than that for the position they hold or the function they are supposed to fulfil?

§ Mr. Bracken
Nobody, except the Prime Minister.

§ Mr. Keenan
He does not receive that. I do not know how much the right hon. Member for Bournemouth, East, and Christchurch (Mr. Bracken) receives, but I think it a pity that some of his friends in the theatrical profession have not recommended him to compete with people like Danny Kaye, because sometimes he amuses me just as much. He is in the wrong occupation as a Member of Parliament.
Last night, when we were dealing with Income Tax, a certain assertion was made by the Opposition, which was repeated this afternoon by the hon. Member for Chippenham (Mr. Eccles), that those affected by this Clause, those who receive over £15,000 a year—very few of whom earn it professionally, or in any other way; it is generally derived from the ownership of shares or property—

§ Mr. Jennings
Oh, no.

§ Mr. Keenan
Oh, yes, it is. At present values there are very few people worth £15,000 a year or more. The difficulty is, not in getting people to receive £7,000, £8,000, £9,000 and £10,000. The difficulty is to get more miners, and to get people for the undermanned industries. The hon. Member for Chippenham and others have spoken of the difficulty in getting these supermen or superwomen who produce all the wealth. This idea of the brain worker producing the wealth of this country is out-dated. I ask hon. Members to remember where this idea came from. In 1894 Mallock published a book on the Mallock theory. He said that it was not the worker in industry who produced the wealth but the man at the top: "Direction ability" I believe he described it. Never was such nonsense uttered in economics as that. Those in industry, not because of specialist knowledge and ability but because of their brain, have their place, and today are remunerated accordingly. There is a scale of payment for services rendered.
Too much emphasis has been laid upon the value of these people. We are not worried about the specialists, or the professional men. We are not short of them 1262 today. The trouble is that everybody is pressing to get into the professions. Everybody wants a super-education to escape having to work for his living. Hon. Members, like everybody else who has any affection for those responsible for the inventions of the world, want to do the best for those concerned. I am not unmindful of that, and I am not anxious to prevent them from carrying on. But if that is done at the expense of other members of the community, then the others are justified in kicking up a fuss about it.

§ Mr. Eccles
If the Clause had referred to miners, I assure the hon. Gentleman that I would have said something about miners, and other workers. The Clause happens to refer to Surtax payers, and I therefore confined my remarks to them. I should like him to realise that I think that both miners and Surtax payers are necessary to productive processes.

§ Mr. Keenan
I am prepared to accept that, but the evaluation the hon. Gentleman places upon miners, judging by his criticisms of the Coal Board from time to time—

§ Miss. Irene Ward (Tynemouth)
There are no miners on the Coal Board.

§ Mr. Keenan
The Coal Board are, for good or ill, the employers of the miners.
There is no justification for the opposition to this Clause. I am sorry that it is not possible so to arrange taxation that we could get more than we are getting from those who are getting something for nothing.

§ Mr. Bracken
Talk to your friends.

§ Mr. Keenan
It would be very interesting to know what you get for doing very little.

§ The Temporary Chairman
The hon. Gentleman must not address the Chair in that way.

§ Mr. Keenan
I intended to refer to the right hon. Member for Bournemouth, East and Christchurch, and not to you, Mr. Touche.

§ The Temporary Chairman
In any case it has nothing to do with this Clause.

§ Mr. Keenan
Then I shall not address myself to you personally.

§ Mr. Bracken
I do not think the hon. Gentleman ought to refer to the Chair and to make financial inquiries into the affairs of its occupant. I can assure the hon. Gentleman that "very little," as he says, will describe my position.

§ Mr. Keenan
I have made the point I was particularly anxious to make, which was to contest the assertion made last night and today, that the emphasis should be on the super-person with a large income. In that argument there was no recognition of those at the bottom. I say that additional taxation should be imposed upon those in the Surtax class rather than upon those who, by hand and brain, work for their living. The fact is that they could not carry any more. As I was saying before the right hon. Member for Bournemouth, East and Christchurch, interrupted, all I regret is that taxation could not be so designed that we would get at the Surtax payer more than we do. I know perfectly well that if we had not reduced Surtax at the expense of Income Tax, it would have been 20s. in the pound. While I know that is not the right way to do it, I am not certain it would not have been a justifiable way.

§ Viscount Hinchingbrooke (Dorset, South)
I am glad that the hon. Member for Kirkdale (Mr. Keenan) admits that it is one of the basic urges of our life and civilisation to rise above a mundane and common level of employment and to educate oneself for something better. That should occur throughout the entire community, and I should have thought that full equality of opportunity is what is most desired by all men in public life. Our arguments on this side of the Committee this afternoon are entirely designed to assist that process.
The hon. Member for Bolton, West (Mr. J. Lewis), and the hon. Member for Nelson and Colne (Mr. S. Silverman) both fell into the common error of not distinguishing between the character of the speech of my hon. Friend the Member for Chippenham (Mr. Eccles) and others on this side of the Committee, on the one hand, and the fact that, on the other hand, we shall not vote on this Clause. We do not desire to deprive the State at this moment of over £100 million, and certainly not by this means. We need the sum for re-armament. But that is not to say that we should not have a debate on 1264 the principles of Surtax, even if that debate is largely academic this year. What is Parliament for unless it is to formulate principles of public action in advance of the ability of any Government Department to carry them out? That is what Parliament is meant to do, and we are entirely justified in having a debate about Surtax in the hope that something will occur in future years.
My hon. Friend the Member for Chippenham hoped that the party on these benches would be able in a short time to put into effect some reductions of Surtax. He was not referring to one level or to the elimination of the entire Surtax range, or to any specific scheme for reducing it. I hope, with him, that the party on these benches will put into their election programme something of this kind. I saw the Financial Secretary and one or two other hon. Members opposite smile a little when this subject was introduced. It was patent from the speech of the hon. Member for Nelson and Colne. The hon. Gentleman tried to waive down his supporters behind him, the idea being to let the Tories blow the gaff on this subject because then the Socialist researchers would marshal the arguments, sift them through the Transport House organisation and reproduce them in the constituencies against their opponents when speaking on the platform.
In my view, the time has now passed when it will be possible for hon. Members opposite to do this kind of thing with advantage to themselves or to the country. Maybe 25 years ago, maybe in 1945, there were some advantages to be derived from that process, but the situation we are in today discounts any possibility of right hon. and hon. Gentlemen opposite being able to get away with a superior electoral attitude on this issue. I look back to days when there were too many, shall I say, irresponsibly rich men in this country. I have never been one of those who wished to see Surtax wiped altogether off the slate, and in my remarks this afternoon I have no wish to see the entire Surtax abolished. I think there is a case only for beginning to reduce it.
Indeed, there are some rich men today who are at an advantage over their fellows or over those of equal intellectual power. There are those who can draw upon their capital and live today in the same way of life as they have lived in 1265 the past. Whereas there are other people of equal, or even superior, intellectual attainment starting life today who simply cannot make a decent living for themselves and their families, and who cannot hope to save anything for the future, So, in considering this subject, we ought to differentiate between those two classes.
We have now arrived at a situation where it is impossible any longer to raise the wealth of this country by penalising one section of the community and giving the proceeds to the rest. This process has been going on now for a number of years. It is not entirely the party opposite who have done it. We, on this side of the Committee, have been doing it deliberately for the last 25 years. There is a good deal to be said for helping those in more slender circumstances by reducing the undue exercise of privilege and money power of those who are extremely rich. But that we have now arrived at a situation when the total wealth of this country cannot be raised any longer by that process, I am absolutely convinced.
It is because I believe the public know that in their heart of hearts that I am sure no political gloss which right hon. and hon. Gentlemen may try to put over in the country on what has been said this afternoon will be of any avail. People know, after five years of Socialism and super-planning and super-bureaucracy and undue equalitarianism, that the wealth of this country is not rising at the speed it should. They are beginning to see examples of other countries, which do not have this huge taxation, gaining advantage over us in productivity and rising faster than we can out of this economic dislocation produced by the war.

§ Mr. Kirkwood
Which countries?

§ Viscount Hinchingbrooke
Western Germany is one, and the United States of America is another. Switzerland and South Africa may be others. In all those countries, certainly in the two I named first, the common experience of those living and travelling there is that they are rising in prosperity at a greater pace than we are. The fact that we are not rising so fast is largely due to the lack of incentive, to the lack of opportunity, and to the fact that so many people are curbed and curtailed in the enterprises they want to create and in the expanding standard 1266 of living which they wish to acquire for themselves and their families.
If the hon. Member for Kirkdale was right in saying that the desire of each man is to create a better opportunity for himself to rise above the mundane level of existence, and if my hon. Friend the Member for Hallam (Mr. Jennings) is right in saying that men of enterprise today are contemplating going abroad because they cannot save or establish their families, is that not part of the general argument that the whole State is in this position and cannot get back to the prosperity it was in before? In their hearts people realise that, and it will not be the slightest use for the Financial Secretary or anybody else to carry to the hustings the arguments put by this side of the Committee today.
Whatever may be said in favour of collectivism for spending wealth effectively once it has been created, there is nothing to be said for its power to raise or even maintain wealth. Our people are now fully aware that Socialism as an instrument of planning the creation of wealth has failed, and miserably failed. My hon. Friend the Member for Chippenham has done a great service from the point of view of the future prosperity of our beloved country in raising this matter so cogently and effectively this afternoon.

§ The Financial Secretary to the Treasury (Mr. Douglas Jay)
We have had a fairly full and not uninteresting debate on the Clause, which, after all, refers simply to Surtax in the year 1950–51. We have already decided last night what the Surtax should be in 1951–52; therefore, we are not being very forward looking at the moment and so, perhaps, we could now come to a decision.
Nobody, of course—certainly, no one in the Government—would wish to maintain such high rates of taxation as we have at present were it not for the defence programme, which, I think, the whole Committee agrees has to be paid for as we go. The hon. Member for Chippenham (Mr. Eccles), however, and the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and others argued that these rates of taxation are injuring the production of wealth. The hon. Member for Kingston-upon-Thames said that they would lead to slow economic death, and the hon. Member for Chippenham implied that with lower rates of Surtax there 1267 would be some rapid and considerable increase in production. We could argue this in theory at great length, but I certainly do not intend to do that because to my mind the facts are against hon. Members opposite when they argue in that way; and the facts are much more convincing than any theoretical argument.
Were these arguments true, we should have had lower production since the war than we had before, when taxation was much lower, and we would have had a slower increase in production and in productivity. The hard fact is that since the war, with higher rates of direct taxation, we have had much higher production, a much more rapid rise in production and in productivity, and also, of course, record exports and a record rate of physical investment. We have also shown a higher rate of productivity than a great many countries with lower rates of taxation.
Those are facts. This taxation has led not to economic death, but to exactly the opposite. I confess that I should have had much more sympathy with the argument of the hon. Member for Chippenham before the war, when we had not had this experience. But we have had this experience. We live and learn—or, at least, all of us live and some of us learn. I hope that the Committee will now approve the Clause.

§ Sir William Darling (Edinburgh, South)
I am not satisfied with the observations of the Financial Secretary, all the more so because his supporters this afternoon, having fired their shot, have left. We heard the hon. Member for Nelson and Colne (Mr. S. Silverman) who referred to Surtax payers in the main apparently as crooks and entrepreneurs. The hon. Lady the Member for Cannock (Miss. Lee) spoke of them as spivs. The hon. Member for Bolton, West (Mr. J. Lewis), used a porcine expression which he was required by the Chair to withdraw. That is the kind of level of debate we have had this afternoon.
The brief and compact speech of the Financial Secretary does not seem to me to have dealt with the weakness of the arguments from the Government side. His supporters—and, Heaven knows, support was very necessary for him—have gone after singularly ineffective and tendentious speeches, and he has misjudged 1268 the temper of the Committee. Consequently, I presume to make a few remarks upon this subject.
I congratulate my hon. Friend the Member for Chippenham (Mr. Eccles) on his courage. It is not an easy or popular thing that he did. To come into the Chamber and to defend the rich is a singularly difficult thing to do in view of the long-standing prejudice in the minds of hon. and right hon. Members opposite. Defending a few rich men brings no reward—or votes—and consequently this attitude cannot be appreciated or even understood by the Government and their supporters.
The Financial Secretary and his hon. Friends have treated this matter lightly, because the truth is that, instead of despising rich men and casting them aside in a two or three minutes' speech, the business of a Chancellor of the Exchequer who understands his trade is to nourish the rich men. The more of them he has, the less he has to take away from the poor. The more rich men he has to tax, the less taxation he will need to take from those who are now resenting the payment of the existing rates of taxation.
5.45 p.m.
The Government's attitude towards rich men, which is the attitude of envy and of jealous people throughout the history of the world, is not generous and is not, indeed, just. To take away 97½ per cent. of what one believes to be one's honest earnings is an improper, undesirable and unfair thing for any Government to do. It is just as much an injustice to deal an injustice to a rich man as to a poor man. Life, liberty and the pursuit of happiness are, I think it would be agreed, the rights of all men.
Hitherto, it may be said, these things have been denied to the poor, but are the Government now to deny them to the rich? Is a rich man, merely because he is a rich man, not to have life and liberty and the pursuit of happiness? I know the gloss which will be placed upon these observations of myself and my hon. Friends by Transport House, but Transport House has never been very much concerned about justice. There are rights for rich men, as there are rights for poor men, but the Government's view is that there are no rights for the rich men. The only rights the Government recognise 1269 are of those who are numerically considerable and who are likely to be their continuing supporters.
After all, who are these rich men? They are about one in a million—that is about the number of rich men we have in the country. At the present time, these are the people who are infinitely precious to the Chancellor. How he rubs his hands when he learns of a £2 million estate of which £1¾ million is going to fall into his Treasury. Does it make the Chancellor happy, or his withers unwrung, when he draws Death Duties on that scale? Does he come weeping to the House of Commons? On the contrary, there is much rejoicing in the Treasury when these events occur. If when these men are dead the Chancellor draws these substantial Death Duties from them with such pleasure, why should he not rejoice in their continued life? Why should he not join with me in seeking their more and more abundant prosperity?
I want seriously to ask the Committee—I am glad to see present the hon. Members for Stechford (Mr. Jenkins) and Gloucestershire South (Mr. Crosland), two, I am told, of the most brilliant young economists of the Government—what has happened to Pareto's Law, which said that the more rich men there are in a society, the better is its general standard of living. A society which has the greatest number of rich men is generally the society which is best for all, and this is very easily demonstrated. In a society where the richest man has £5,000 a year, the poorest man in it will have £100 a year; but in a society where the richest man has £100,000 a year, he would like a couple of fellows to be his deputies at £5,000 a year. But that is not how it works. As my right hon. Friend the Member for Aldershot (Mr. Lyttelton) would say, the man who gets £100,000 a year may want two deputies at £5,000 each, but they would require £50,000 or £60,000 each, while the man in the other society who has £5,000 a year gets his deputies at £2,500.
I ask the Government, and particularly the young economists who are going to guide, I hope, their own lives, and ours, successfully, is Pareto's Law no longer accepted? Is it no longer true? Is it not the case that the country where there are the greatest number of rich men—the United States, for instance—has 1270 the highest standard of living? Is this no longer true?

§ Mr. Crosland (Gloucestershire, South)
May I interrupt the hon. Member, whose speech everyone is enjoying? He spoke about honest earnings and the rich men who earn £100,000 a year from being captains of industry, or whatever they are. Will he deal with the point, which is the one which exercises the minds of hon. Members on this side of the Committee, that as soon as people get into the higher Surtax brackets—this has not been mentioned in the speeches of hon. Members opposite—the bulk of the income is unearned and not earned income? That is what we are concerned about on this side of the Committee.

§ Sir W. Darling
Being a fellow countryman of yours, Sir Charles, I was simple enough, in my search for information to give way to the hon. Member. It was in order to know whether Pareto's Law which says, far from the rich becoming poor and the poor poorer, the more rich the rich become the less poor the poor become, was correct. But the hon. Member, like Socrates, is merely asking questions and not informing the Committee. I say it is the duty of a Socialist Chancellor of the Exchequer to encourage the accumulation of personal wealth and that the more rich men he has in this country the fewer poor men there will be.

§ Mr. Follick (Loughborough)
What about India?

§ Sir W. Darling
The more rich men there are the less will be the burden we have to place on the poor.

§ Mr. Follick
What about Egypt and India.

§ Sir W. Darling
The hon. Member for Loughborough (Mr. Follick) wants to know about India. He is a much-travelled man already and a man of leisure; if he cares to go to India and find out, I shall not detain him.

§ Mr. Glenvil Hall (Colne Valley)
I am much obliged to the hon. Member for giving way, but I wonder whether he recollects some of the industrial history of the 19th Century in this country when some men did get rich, and very rich, but never were the poor poorer than at that time?

§ The Deputy-Chairman (Colonel Sir Charles MacAndrew)
I hope the hon. Member will not deal with the 19th Century, as this Clause deals with the 20th Century.

§ Sir W. Darling
Strange as it may seem, Sir Charles, two good minds think alike and I was about to point out that in those days there was no Surtax and that they had nothing to do with Surtax.
The Financial Secretary made a great deal of play with figures on the improvement of productivity in the last few years and rightly claimed that it is something for which he should have credit. I submit that if there is credit in the productivity of the machine, the mechanical device, there is a like credit to be given to the productivity of the person. If he accepts (hat analogy, I am very happy, because he will then recognise that he cannot justify productivity by the installation of productive machinery if he will not also recognise the productivity of persons. This Clause deals with the enhancement of the productivity of persons.
I want a really expanding productive society, and I believe that no man can grow rich at the expense of society, except with the consent of the people. I will not go back to the Middle Ages, or the Industrial Revolution, but to more recent times. I should like to know of a man who has grown rich when the public did not will it. I once told Lord Beaverbrook, the former Mr. Max Aitken, that he was an exceptionally modest man. He was shocked when I made that assertion, but I said to him, "Sir, you are a rich man because every day two million people say, 'Here is a penny for you.'"
It is the public who make a man rich and we must not run down a man who makes £15,000 a year, because it is the public who make it possible. If I am a grocer and become a very rich grocer, it is because thousands of persons voluntarily give me orders for groceries. The same applies if I am a newspaper proprietor and four million people buy my paper. They are all independent, with independent minds like yours, Sir Charles, and say, "Here is 1½d. for your paper." If that is not democracy, I do not know what is! Democracy may do many good things. It certainly freely makes men rich.
1272 I put it to the Minister that this is a fruitful and useful debate and he should not be discouraged, but encouraged, by the fact that his quondam supporters who talk of crooks and spivs and entrepreneurs have fled. He is on sound ground even if he stands alone. What has been said by my hon. Friend the Member for Chippenham and others, let him read, and when he has another Budget to produce—which will be many years ahead—let him think well of his fatted calf the Surtax payer, for without him he would be a poor thing and the country would be a poorer thing.

§ The Deputy-Chairman
I think we might come to a decision on this Clause. It is a very narrow point and we have had two hours on it.

§ The Deputy-Chairman
I think we should come to a decision.

§ The Deputy-Chairman
I think the Committee should come to a decision.

§ Mr. Osborne
May I submit this to you, Sir Charles? I want briefly—and I promise to be brief—to put a point on the effect of this Clause on production, which has not been put, and I think I am entitled so to do. If I am ruled out of order, I will sit down.

Clause 14.—(HIGHER RATES OF INCOME TAX FOR 1950–51.)