HC Deb 22 November 1951 vol 494 cc729-38

Motion made, and Question proposed, "That this House do now adjourn."—[Brigadier Mackeson.]

11.33 p.m.

Mr. Ralph Morley (Southampton, Itchen)

I am raising this matter in this House—I regret at so late an hour and with so scanty an attendance—because of my experience during the recent General Election. I had a quiet Election, with practically no heckling and very few questions, but at nearly every meeting, whether outdoors, in school classrooms, or at dock gates, questions were invariably asked me about post-war credits. They were asked by my supporters and my political opponents.

They asked why the Government had not paid out the credits at an earlier date, why the Government would not consider the cases of widows and orphans who were suffering hardship and who could do with the credits of their fathers and mothers who had died. I was also asked about people in straitened circumstances to whom the release of credits would be a substantial relief. There seemed to be a widespread idea among the general public that these post-war credits are fairy gold which they will never see and never handle.

In introducing the scheme for post-war credits in the Budget of 1941, Sir Kingsley Wood, then Chancellor of the Exchequer, said:— … the extra tax which any individual will pay … will be offset after the war by a credit which will then he given in his favour in the Post Office Savings Bank…that part of the extra tax…will constitute some provision for post-war difficulties and will, I hope, form an additional fund of post-war savings for himself and his dependents."—[OFFICIAL REPORT, 7th April, 1941; Vol. 370, c. 1329.] It may be argued whether he was wise or not in instituting this system of postwar credits. It is possible that when the nation was fighting for its life the taxpayers would have borne very heavy taxation without undue complaint. But there is no doubt whatever that Sir Kingsley Wood was specific in the statement he made that these post-war credits would be paid out after the war, and would be put to the accounts of the people to whom they were due in the Post Office Savings Bank. When I and most other people read that statement at the time we came to the conclusion that as soon as the war was over the credits would be available for them to draw in cash or to leave to accumulate interest. Nobody thought these credits would not be disbursed until men and women reached old age.

Mr. Speaker

The hon. Gentleman is raising the question of the repayment of post-war credits. I am not satisfied whether that can be done without legislation. Perhaps the Financial Secretary will assist me in this?

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)

As I understand it the only step which can be taken without legislation would be the payment in full which, if carried out in full and simultaneously, could be effected by Treasury Order. Any alternative scheme would require legislation.

Mr. Speaker

That is what I supposed. I hope the hon. Member will keep himself in order, bearing that in mind.

Mr. Morley

I hope I shall be in order, Sir, in reporting some of the letters I have received from people who desire to draw their post-war credits. There is the case of widows. I know of one whose son was killed in the war and who had a post-war credit due to him; the shock of his death was so great that his father died shortly afterwards, and he also had a credit due; but the widow, now in straitened circumstances, is not able to draw those credits for some considerable time.

I had a letter only yesterday from a woman constituent who said her mother was a widow and that her brother, who had reached the age of 13, was becoming expensive to keep and wanted a great number of things, which the widow could provide if only she could draw her post-war credit. This morning I had a letter from another constituent, who said her husband's wage was only £4 a week, he had been sick for a considerable time, the rent and rates amounted to 26s. a week, and they had just received a demand for £12 back payment of rates. They were not in a position to pay this demand, and it looked as if the husband would have to go to gaol, but if the post-war credit was paid, there would be no necessity for him to go to gaol.

I recognise that it would not be possible to pay the whole outstanding credits in one payment. Originally, there was a sum of £800 million due in post-war credits, of which about £200 million has been payed off, and there is now about £610 million outstanding. At the present rate of payment of about £17 million a year it will probably be in the 'eighties before the last is payed off. It might even be later than that, because if a man dies before 65 his post-war credit goes to his heir, and if the heir dies before 65, the credit goes to the heir's heir, and so practically to the last syllable of recorded time. It would, therefore, take many years before the whole of the post-war credits were dealt with.

I recognise the great difficulty in the matter, and I am afraid that everything I say will be ruled out of order by the Minister, but how delightful it would be if the Treasury could possibly make an Order that post-war credits should be paid out one year sooner in every successive year, so that, next year, they would be paid at 64, the following year at 63 and the year after at 62. Thus, on the one hand, the age at which the credits will be paid out would be decreasing each year, while, year by year, everybody would be getting older, and, before long, the two converging lines would meet.

Since this is, after all, a debt, as I hope the Financial Secretary will agree, I am wondering if that debt could not be funded. I think a debt can be funded without legislation, but by Treasury Order, and I am wondering if it could not be funded and a reasonable interest paid to the holders of the post-war credits, if it is not possible to repay the credits as a whole at a very early date. I am not raising this matter as a party issue at all. As a matter of fact, I have in the last two Parliaments put down Questions to successive Chancellors of the Exchequer and Financial Secretaries to the Treasury, and have received "dusty" answers from both. It appears that Chancellors and Financial Secretaries are hard-hearted men whom it is very difficult to move into any manifestation of pity for the financially unfortunate.

This question of the repayment of post-war credits has not only been raised from this side of the House. The hon. Member for Stratford (Mr. Profumo) said quite recently that the nonpayment of post-war credits was the most monstrous swindle any Government had ever perpetrated in the whole history of the country. I will not go as far as that, because I think that particular hon. Member has a gift for rhodomontade which I cannot possible emulate. I would prefer what was said by the hon. Member for Worcestershire, South (Mr. De la Bère), who said that the position regarding the repayment of post-war credits was most unsatisfactory. I think hon. Members on both sides will agree with that.

In raising this question, I am perfectly well aware that the Financial Secretary cannot anticipate his right hon. Friend's Budget statement, but I would like him to appreciate the great feeling there is in the country over this question. I would ask him to tell us that he will persuade his right hon. Friend to give it sympathetic consideration and that, without revealing any Budget secrets, he can say that there might be a possibility that the disbursement of post-war credits will be expedited in the near future. If he can do that, I am sure he will earn the gratitude and esteem of some 12 million of his fellow citizens.

11.44 p.m.

Mr. Douglas Houghton (Sowerby)

First of all, I would congratulate my hon. Friend the Member for Itchen (Mr. Morley) on the skilful way in which he addressed the House without infringing the rules of order.

I should like to declare a vocational, as well as a personal, interest in this matter, because, if by any miracle, H.M. Government did decide to repay the whole of the post-war credits, it would be the members of the Inland Revenue Staff Federation who would have the job to do, and I happen to be their Secretary. I suppose that the time is long past when it would be profitable to discuss the economic consequences of post-war credits, but, if the late Lord Keynes were still alive, I am sure he would have many interesting reflections to make upon the cause during the war of this very big post-war problem.

I am not going to make any suggestions to the Financial Secretary because I am sure I should not be anything like so skilful as my hon. Friend in avoiding the difficulties of order. But what I am going to put to him is a humble appeal that the Government should consider their policy in regard to the unpaid post-war credits. There is a great deal of misunderstanding on the part of post-war credit holders, and a great deal of uncertainty as to what is the position.

I suggest to the Financial Secretary that the economic situation being what it is, and foreseeable perhaps for several years to come, it would be a kindness and would remove uncertainty among those who are looking for repayment of post-war credits earlier than already provided for if the Government were to say what they propose to do or what they do not propose to do about the repayment of post-war credits. Clearly, we all understand that the whole of them could not be repaid at once in one go. The paying out of £600 million in present conditions would not only be a great strain upon the Exchequer, but would have serious inflationary consequences.

That not being possible, something between the complete repayment in one go and the present arrangement might be possible. However that may be, I think that if the Government could say—not tonight perhaps—or could consider in the course of the coming months what their policy is going to be for some years ahead, then everybody could make their arrangements accordingly, and would not be expecting that perhaps next year a kindly Chancellor would give them their money back or perhaps the year after that they might get it a little earlier than seems possible at present. I think it would be a good thing if we could have a period of certainty for good or ill about the repayment of these credits. Not only would the public know where they stand, but members of the Inland Revenue Staff Federation would know where they stand, and that, from my point of view, would be a good thing.

11.48 p.m.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)

I should like to express my gratitude to both the hon. Members who have spoken for the most courteous, moderate and reasonable way in which they have expressed their views, and I would, if I may, add my personal thanks to the hon. Member for Itchen (Mr. Morley) for being so good as to notify me in advance as to the general line he proposed to take.

I am very sorry that his experience of Financial Secretaries and Chancellors of the Exchequer has been that they have given him "dusty" answers, and I will at least seek to give him an answer which is not "dusty," though he will, I know, appreciate that the possibility of my being able to reply tonight with any degree of definiteness to the point of view he has put forward is obviously not a very considerable one.

We have not yet reached the time of year at which the phrase, "I must not anticipate my right hon. Friend's Budget statement" becomes part of the regular currency of Parliamentary discussion, but we are getting somewhat near to that period, and it is obvious that considerations of this magnitude must inevitably be considered jointly by those responsible and as a part of the general financial discussions of the year.

I was very struck by what the hon. Member for Sowerby (Mr. Houghton), who has very great experience in these matters, said on the subject of definiteness. I will certainly see that the point he has put forward is carefully considered. The difficulty which at once strikes one about it is this. As he mentioned, in the present financial position of the country definiteness would have to be much more for ill than good. If we were to say something very definite, it inevitably could not be anything at all pleasant. I appreciate that, from the point of view of the very fine body of public servants, and on behalf of the people concerned, there is great weight in what he says. I will give the assurance, here and now, that this matter will be most carefully considered.

But let me deal with the general history of post-war credits. It is too well known for me to add more than a word or two to what has already been said, although I might make a very slight correction in the figures which have been mentioned tonight. The original sum involved was £800 million, and of that £177 million has been repaid, under the scheme introduced by the late Government, to those who reach old age pensionable age; and another £20 million has been dealt with by setting it off against income tax arrears under the scheme of the right hon. Gentleman the Member for Bishop Auckland (Mr. Hugh Dalton). Outstanding is £603 million, so far as we can calculate it.

I think that I need only add that, at the time, there were two reasons, be they good, or be they bad, for the introduction of the scheme. It was originally introduced in connection with the reduction of the personal allowances of Income Tax payers, introduced in the Finance Act of 1941. The purpose of the scheme, as I understand, was, in the first place, to make seem less onerous—to make it seem so—the burdens necessarily imposed for fighting the war. Secondly, it was to create a substantial amount of purchasing power which could be released after the war should a depression develop. The line of thought there was closely associated with the White Paper on employment, presented to Parliament in 1944 by the then Minister for Reconstruction.

This matter was last raised as an Adjournment Motion by the hon. Member who is now Parliamentary Secretary to the Ministry of Transport (Mr. Braithwaite), and the hon. Member for Battersea, North (Mr. Jay), who replied on behalf of the Government, said that he was "cabin'd, cribb'd, confin'd" by the Rules of Order. Whatever may have changed since that time, the Rules of Order remain, and I feel a great deal of sympathy with the hon. Member for Battersea, North.

It is very difficult to deal, on their merits, with the various proposals, including those so temperately put forward this evening, for accelerating repayment. We are in the paradoxical position of finding that the solution of immediate repayment of the £603 million now outstanding, the one solution which all hon. Members, on its merits, have ruled out, is the only solution which you, Mr. Speaker, would rule in.

I can, therefore, only deal with these matters in a general way, but it has struck me, since I assumed my present office, that we have all discussed these schemes for the acceleration of payment of postwar credits somewhat in the dark; that is, without knowing what the schemes would cost. But I can tell the House that I have arranged for inquiries to be made with a view to ascertaining as accurately as possible—and complete accuracy is not obtainable—for publication before the House rises for Christmas, a statement of what the cost of these alternative repayment schemes to widows, at death, and so on, will be. I will make those figures available in one way or another so that when we next discuss this matter we can do so with the full knowledge of what the financial considerations will be.

I hope I do not need to say that my doing so does not indicate any necessary willingness on the part of the Government to accept any proposal. It is merely to facilitate the House of Commons in coming to a decision in due course. I can give figures tonight in the particular matter which the hon. Gentleman the Member for Itchen referred to—the proposal to bring the age of payment down one year. The cost would be slightly more than the present cost of paying at old age pension age. That figure is about £17 million. Of course, as one gets into lower age groups there is a slight increase in the number of people in the age group.

Mr. Wilkins (Bristol, South)

Will the figures that have been promised to the House include these figures?

Mr. Boyd-Carpenter

Certainly. The figure for the reduced age would be just under £18 million, and if it is reduced by more than a year it is a matter almost but not quite of arithmetical progression.

I am bound to warn the House about this. There are the greatest difficulties at this moment in any increase in expenditure, particularly of a nature such as this, which inevitably means an increase in the purchasing power available in the country. I need only commend to hon. Gentlemen what was said by the Chancellor of the Exchequer on the debate on the Address on 7th November. It is a matter of great danger to the whole chances of financial recovery to allow any substantial amount of further purchasing power to be made available.

Although, in the hon. Gentleman's eyes, Financial Secretaries and Chancellors have hard hearts, it is essential that the House of Commons should have a hard head. No one, in the long run, would benefit by large increases in purchasing power being made available. Those who gain by one turn of the wheel will inevitably lose by higher prices and a weakened national financial position on the next turn of the wheel, and I beg hon. Gentlemen in putting forward proposals of this sort—for each of which on their separate merits there is an immense amount to be said—to bear in mind the picture as a whole—so lucidly described by the Chancellor—of a situation in which the danger of increased inflationary pressure in this country with all its consequences, is a danger that simply cannot be exaggerated.

That is why I cannot give any undertakings tonight; except this. I give willingly the undertaking that what has been said tonight—and on a good many other occasions in this House and elsewhere—will be most carefully considered by the Government. It will be weighed on its merits, but against the whole background of our national financial policy; and before the time comes for introducing the financial proposals for next year, full and sympathetic consideration will be given to the issues which have been so well put forward in this House. I can give that assurance but the House, I think, will not expect me tonight to give any other.

Mr. S. S. Awbery (Bristol, Central)

Is there not a moral obligation upon the Treasury to meet its promise to the people and to pay back this credit?

Mr. Boyd-Carpenter

There are many moral obligations upon the Treasury, and the supreme moral obligation, as I understand it, is to conduct the nation's financial affairs in general for the benefit of the nation. No separate obligation, however morally backed it may be, can be allowed to supervene against that supreme obligation. Apart from that, I am not disposed to argue with the hon. Member, but he himself will recall that, while the obligation remains, the precise date of its discharge or the rate of its discharge must be judged against the background of the nation's financial situation. I do not think that he himself will dissent from that view.

Question put, and agreed to.

Adjourned accordingly at One Minute past Twelve o'Clock a.m.