§ A. Small income relief
§ In section fifteen of the Finance Act, 1952, £300 shall be substituted in all places for £250 (the income limit for the full relief), £400 for £350 (the income limit for the marginal relief) and nine-twentieths for two-fifths (the fraction governing the marginal relief).
§ B.Personal allowances and reduced rate reliefs
§ Sections two hundred and ten and two hundred and twenty of the main Act shall be amended so that—
- (a) there shall be an increase of £30 in the sum of £210, and of £20 in each of the sums of £120, referred to in section two hundred and ten (as amended by the Finance Act. 1952), but accompanied by the following reductions in the sums referred to in section two hundred and twenty (as so amended), that is to say, a reduction of £40 in any sum of £100, £250 or 1400, and a reduction of £80 in any sum of £200; and
- (b) the fractions of thirteen-eighteenths, eight-eighteenths and four-eighteenths referred to in section two hundred and twenty (as amended by the Finance Act, 1953), shall be altered so that the reduced rates given by those fractions shall in each case be 3d. less than the present rates of 2s. 6d., 5s. and 7s.
§ C. Child relief
§ Sections two hundred and twelve and two hundred and thirteen of the main Act shall be amended so that—
- (a) there shall be an increase of £15 in the sum of £85 referred to in subsection (1) of section two hundred and twelve (as amended by the Finance Act, 1952), and in subsections (2) and (3) of section two hundred and thirteen (as so amended); and
- (b) paragraph (b) of subsection (3) of section two hundred and twelve (emoluments payable to or in respect of a child undergoing training) and the provisions supplementary to it shall be omitted.
§ D. Old age relief
§ In subsection (3) of section two hundred and eleven of the main Act three-fifths shall be substituted for five-eighths (the fraction governing the marginal relief for incomes over six hundred pounds).
§ E.Dependent relative relief
§ Section two hundred and sixteen of the main Act shall be amended so that there shall be an increase of £20 in the sums of £85 and £145 referred to in subsection (1) of the section (as amended by the Finance Act, 1952. and the Finance Act, 1953).—[Mr. R. A. Butler.]
§ 3. Income Tax (Surtax Rates for 1954–55)
§ Motion made, and Question proposed,
§ That income tax for the year 1954–55 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1953–54;
§ And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913—[Mr. R. A. Butler.]
§ 4.55 p.m.
§ Mr. Herbert Morrison (Lewisham, South)
The Committee has listened with its customary interest to the Budget speech of the Chancellor of the Exchequer. He has established something of a record in the brevity of his speech, which is, I suppose, understandable in the circumstances. This is a half-way Budget; it is not a complete Budget. That being so, it is natural that the time taken to explain it should be shorter than usual.
§ Mr. Morrison
The Chancellor has said that he has no intention of reducing indirect taxation. That will cause considerable disappointment in the country, and it is regrettable.
64 It was anticipated that something would be done about the Lancashire textile industry. It was announced by the Government a little while ago that a full statement of their intentions in this matter would be made before Easter, but it had subsequently to be admitted that they could not make a statement—presumably because they did not know what to do about the matter. Now all that is being said is that there will be a 50 per cent. reduction in the Purchase Tax range of textile goods which, I think the Chancellor said, will cost the Government between £2½ million and £3 million. That does not seem to be doing much for the Lancashire textile industry, and the news will be received with considerable disappointment by that great county.
It is clear that the Chancellor is not too comfortable about the balance of payments situation. It is pretty clear that he thinks the outlook gives cause for anxiety. We are sorry that that should be so, because it is always a matter of grave concern to the economic well-being of the country. I have no doubt that the pessimism of the Government about the balance of payments situation and the balance of trade is one of the factors which has caused them to propose a General Election.
There are disappointing features about the Budget. Those which the Opposition have cynically cheered—[HON. MEMBERS: "The Government."]—I am sorry, I mean the Government; that was a legitimate confusion with an anticipated future. The features of the statement which have been cheered by Government supporters were cheered in a tone of voice and in a manner which was perfectly cynical in its outlook. They thought that some of the proposals of the Chancellor would help to get them votes. No doubt they considered that it was not so much good the Chancellor of the Exchequer having an eve-of-the-Election Budget unless it was for the purpose of getting votes. Indeed, the Chancellor of the Exchequer himself in some of his observations has exhibited a frankness and a cynicism which has been almost charming.
One of the things I like about the Chancellor of the Exchequer is that when he is saying something which is cynical or which, if I may say so, borders on the untruthful, he does it with a smile at us which says. "I know what I am doing.
65 I know that I am bordering on the untruthful. I know that I am cynical. I know that I do not believe what I am saying. So please forgive me and let us be as cheerful as we can." That is one of the characteristics of the Chancellor of the Exchequer.
§ Mr. Morrison
I had the advantage of sitting on this side and looking at the Chancellor of the Exchequer. The hon. Member only had the advantage of looking at the back of his head. I know, and the hon. Member does not know.
Having made these few observations—and it is right on these occasions that they should be only a few observations—nevertheless I congratulate the Chancellor on the clarity of his statement. It was clear, it was understandable, and we know exactly what he is getting at. Of course, it will be necessary that the Parliamentary Opposition shall do its duty and that there shall be proper, reasonable and adequate discussion of the proposals the Chancellor has put forward.
§ 5.2 p.m.
§ Mr. Eric Johnson (Manchester, Blackley)
It is not easy to take in the whole content of a Budget speech, even if it is delivered with the clarity and lucidity which we associate with speeches made by my right hon. Friend the Chancellor of the Exchequer. I am quite sure, however, that all fairminded people will agree that it is a good Budget, an honest Budget and one calculated to meet the needs of the situation as set out in the Economic Survey.
I am especially pleased with the action my right hon. Friend has taken for the relief of Income Tax on smaller incomes. Like all Budgets, as the right hon. Member for Lewisham, South (Mr. H. Morrison) indicated, the present Budget contains certain disappointments. There were one or two things that we had hoped might have been included, but I recognise the special circumstances which faced my right hon. Friend and I venture to hope that perhaps some of these matters will be put right by administrative action when Her Majesty's present Government in due course resume their duties fortified by the result of the General Election.
66 To turn from my right hon. Friend's Budget proposals to the Economic Survey, I do not think anyone would quarrel with the sentence with which the section on "Developments at Home" begins. It states:At home 1954 was a prosperous year.As my right hon. Friend indicated at the beginning of his speech, that is undoubtedly true. It seems to be a very modest way of describing a situation when we enjoyed a higher standard of living and when we earned more, spent more and ate more, and when, on top of all that, we saved more than ever before.
But, as hon. Members are well aware, prosperity at home often seems to lead to difficulties in connection with our balance of payments, and we cannot help feeling a little anxious about the deterioration in the position in the last half of 1954 and in the first quarter of this year. As my right hon. Friend indicated, however, it is probably too early yet to judge the effects of the measures he took at the end of February to meet the situation. While it is right to acknowledge the danger, I do not think there is any need to be despondent.
I do not want to weary hon. Members with a lot of figures, with which, no doubt, they are already familiar, by reading the Economic Survey and the other documents which have been made available, but there is one aspect to which I should like to draw attention. Although exports increased by £144 million in 1954 over 1953, more than five-sixths of this amount went to the sterling area; and exports to the dollar area fell by £24 million, whereas imports increased by £46 million. It is, however, extremely satisfactory to learn that there has been a marked improvement during the first quarter of this year, especially in the case of the United States, to which our exports have risen considerably, and also in Canada, where the position recovered in March to a marked degree but is still slightly below the position in the corresponding first quarter of last year.
There can be no argument that something has to be done to reduce the trade gap. The question which must be answered and which we must all face is whether we can export more or must import less. That seems to be the only choice. To say that we must reduce our imports is surely to advocate a counsel 67 of despair. That could only be done in two ways. One is by restricting the volume of imports by such methods as controls, tariffs, quotas and so on. As my right hon. Friend has already indicated, that would be contrary to our policy—which, I am sure, is the policy accepted on both sides of the Committee—of doing all that we can to stimulate the flow of trade all over the world. Furthermore, it would defeat its own object by prompting other nations to take retaliatory measures against us.
The second method of reducing imports would be to cut down the amount of money available for spending at home. As we have seen from my right hon. Friend's proposals, he has very rightly rejected both those courses; but a situation of that nature might well have arisen if we could not do anything to increase our exports. I believe that we can do something to increase our exports, and it is in that connection that I venture to address to the Committee a few remarks about the policy of increased trade with Canada in general, and with the Province of British Columbia in particular.
I wish to speak about trade with the Province of British Columbia because I had the opportunity of revisiting it—I lived there for seven years—last summer. I went there to examine the prospects for one type of merchandise, but when I was there I had the opportunity of seeing a little of the quite extraordinary development which is taking place and of learning something about the opportunities of trade with that province.
It so happens that there is at present in this country a trade buyers' mission from the Vancouver Board of Trade, which corresponds to a chamber of commerce; it is not a Government Department. The mission is accompanied by the Minister of Trade and Finance for the Province of British Columbia. But before I say anything about British Columbia, I should like to say a brief word about trade with Canada in general. It may well be that because of the total absence of London newspapers the first Budget speech made by the new Canadian Finance Minister, Mr. Walter Harris, did not attract the attention it deserved. It was referred to in a leading article in the "Manchester Guardian," and it was referred to in another article in the 68 "Economist" last week. Perhaps the most significant part of that speech—at any rate from our point of view—was that the Canadian Government had rejected the request of the Canadian woollen manufacturers for protection against imports of British cloth.
That seems a very bold step to take, the more so in view of the fact that there has been something of a trade recession in Canada, where it is said that unemployment has been rising. According to the report in the "Manchester Guardian," the Minister said:As the world's fifth trading nation, it is clearly in our interest to encourage overseas countries to earn dollars in order that they may be able to buy our exports.There may be a message in Mr. Harris's speech for one or two other countries besides Canada.
Be that as it may, the speech shows that Canada is willing to buy goods from other countries, and there is no doubt that British Columbia has a very real desire to buy as many British goods as it can. That is shown by the visit of the trade mission to which I have referred, which consists of 50 or more leading businessmen from Vancouver. They have come to buy and not to sell. It is an epoch-making visit, because they came over in the first passenger flight on the new trans-Polar route from Vancouver in the almost incredible flying time of 16½ hours.
Advice given by politicians to businessmen is rarely welcome. But I know what I am talking about when I say that the only way to do business with British Columbia is for heads of businesses and other concerns to go out and to see the market for themselves. They cannot do that by staying here, and it is not much good thinking about going out to get orders unless they can talk about reasonably quick delivery. In times like the present, when the income and expenditure of consumers have both risen by some £2,000 million since 1951, it is only natural for businessmen to want to sell all they can in the more easy home market and in the sterling area before they turn their attention to a highly competitive market like British Columbia where they will have to face American competition right on its own doorstep. I have no doubt that it will pay them in the long run to get into that great and 69 rapidly growing market, and there is no doubt that it will be very much in the national interest.
The potentialities of the British Columbia market are not realised here. I will not give a lot of figures to the Committee but a few facts to illustrate the opportunities to be found in British Columbia. One can only describe these opportunities as phenomenal. British Columbia was well described in an issue of the "Financial Post"—which is not a Vancouver but a Toronto newspaper—last March as "a new El Dorado for Western Europe. That is an accurate description when it is realised that British Columbia leads Canada today in per capita wealth, purchasing power, and production. The population has increased by 55 per cent.—a very remarkable figure—since the war.
Even more astonishing is the fact that the industrial output of the province has grown from 250 million dollars before the war to no less than 5,500 million dollars in 1954. It would be quite possible to give a very long list of some remarkable enterprises in varying stages of completion but I do not want to do that. I want to mention only one or two, of which the most striking is the development of hydro-electric power. British Columbia is estimated to have a total potential of 11,200,000 horse-power, of which only 2,100,000 has yet been developed.
The largest single unit, development of which was started last year, was the first stage of the 420,000 horse-power plant for the Aluminum Co. of Canada. It is located in and around the Kemano Mountain, and will provide power for the smelter at Kitimat. The story of the Kitimat project is now well known. It involved reversing the flow of a large river, and driving a 10-mile long tunnel through the mountain to supply a great power-house built right inside the mountain itself. Even this scheme is dwarfed by the 700-million-dollar Frobisher project, which is now being started in the northern wilds of the Province. These things are really extraordinary.
The Frobisher project will reverse the natural northward flow of a 60,000-square-mile watershed, which is larger than England and Wales, and will direct the water through turbine-filled caves to 70 the Pacific Ocean, where it will form an artificial deep-water port. Another result will be the formation of a water storage system which, next to the Great Lakes, will be larger than anything in either North or South America. It will-produce 4,300,000 horse-power, which is twice the final output of the St. Lawrence Seaway power project. This immense amount of electricity will be used for smelters in processing cobalt, nickel, iron, manganese, and so on, brought from mines as far apart as Alaska, South-West Africa, New Caledonia, the Philippines, and other places.
The final example I want to give of large-scale development in British Columbia is especially interesting, because it is being done by British capital. I refer to Anacis Island which lies in the Fraser River near New Westminster and which is being developed into an industrial estate. It is estimated that 225 million dollars will be expended eventually to put up 250 factories which will employ about 40,000 people.
In addition to these more spectacular enterprises, there are older firms who have been established a long time and who are very anxious to buy British goods. The British Columbia Electric Co., for example, has planned to spend about 40 million dollars this year to buy a lot of things over here that they need. The Committee will be aware that the fishing industry is a very large buyer of supplies in Britain; it wants to get still more supplies from us. A large number of smaller enterprises such as grow up in any new country have also come into existence and give great opportunities for the sale of British goods.
British Columbia wants not only capital but people. That is not surprising when it is realised that the province is about the size of Great Britain, plus the whole of Ireland, France and Portugal put together, but it has only 1,300,000 people, of whom only 60,000 live in the northern part. British Columbia wants people of British stock more than anything else. The country is not called "British Columbia" for nothing. I am a great believer in Empire settlement but I am not going to talk about it except to say that some redistribution of our population within the Commonwealth might be a good thing. I am not suggesting that 71 the right way to solve our balance of payments difficulty is to transfer a large part of our population to British Columbia. But, quite apart from other considerations, it is worth bearing in mind that people who go out from these islands and settle in any part of Canada or the Commonwealth are not only potential customers for our goods but potential salesmen, because they demand the sort of goods to which they have been accustomed when in this country.
I said earlier in my speech that if we did not export more we would eventually have to import less, and I have ventured to indicate some of the ways in which we might export more. I have said something about the vast potentialities of the market in the Province of British Columbia. But the development of the resources of the Commonwealth, and the free movement of its people, has an importance transcending such other important matters of our standard of living, because it is on a strong and prosperous Commonwealth that the peace of the world so largely depends.
§ 5.20 p.m.
§ Mr. Norman Smith (Nottingham, South)
Before returning to the Chancellor's Budget statement, I wish to congratulate the hon. Member for Blackley (Mr. E. Johnson) on putting over a prepared speech which will probably prove to have been the last he will make in this Chamber, his majority on the last occasion having been exiguous. There are other hon. Gentlemen opposite, such as the hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield), on whose chances of being returned I should not like to wager sixpence. Even the majority of the hon. and gallant Member for Ilford, South (Squadron Leader Cooper), whom we all like, is very small.
§ Squadron Leader A. E. Cooper (Ilford, South)
It is 5,600. I do not know how much more the hon. Member wants.
§ Mr. Norman Smith
Hon. Members opposite had better make the most of the time remaining to them.
The Budget statement is quite obviously an electioneering one. We were treated to a long homily about the necessity for keeping down personal spending and personal consumption at home in the interests of exports and investment, but at the 72 end of the homily we got a Budget concession which puts additional spending power into the hands of very nearly everybody.
I have calculated that by his previous Budgets the Chancellor gave a millionaire with three children £49 a week in hard cash to spend. This afternoon he has given to that same millionaire an additional £48 a week hard cash to spend, making £97 a week extra as a result of the right hon. Gentleman's Budgets. There is no guarantee whatever that the millionaire will invest either the £48 a week he was handed this afternoon or the £49 a week he had previously received since the present Government took office. The sum of £97 a week is quite a lot of money. In all my life I have never spent that amount in a week.
What is the use of talking about encouraging exports and reducing personal expenditure at home when money is being given on that scale to the people who need it least? I have said that it is an electioneering Budget. It is a class Budget. It is not only that millionaire who gets a heavy hand-out. The Chancellor was at pains to point out that he was giving the biggest hand-outs to those who bore the greatest burden of taxation, and so he arrived at the expediency of reducing from 6d. to 3d. the reduction on the lower rates of tax. The right hon. Gentleman seemed to pride himself on that.
From our point of view it is a class Budget. It is also a moneylenders' Budget, because so far as I can see its whole structure—though happily the Chancellor gave away an appalling secret in an unguarded moment—appears to have been designed so as to conceal the effects, which the right hon. Gentleman admitted would be delayed, of the February increase in the Bank Rate. That increase, of course, was calculated to benefit moneylenders. What else was it for? I would suggest that the Chancellor's statement, if not the Budget itself, was rather fraudulent. I withdraw that adjective; it is not very nice—though I have no doubt that stronger adjectives will soon be heard in plenty from the hustings.
The Chancellor's speech was a little disingenuous. It was not so frank as it might have been. I am not sure that it was not intended to make the House believe something had happened which 73 had not in fact happened. The right hon. Gentleman said that in February the Bank Rate had been raised, and invoked the Almighty in thanks for that. I do not like that because, as something else in his speech showed, it was not only the increase in the Bank Rate that sent up the £ about five cents in the exchange markets of the world.
The Chancellor wants us to believe that that was due to his having raised the Bank Rate in time, but he then made a little slip of the tongue such as all Chancellors seem prone to make. I heard the late Lord Snowden make slips; the right hon. Gentleman the Member for Woodford (Sir W. Churchill) made slips and so, this afternoon, did the present Chancellor of the Exchequer. He happened to remark that the increase of £430 million in the Floating Debt was due to a payment to the Exchange Equalisation Fund. There is a pretty kettle of fish; £430 million was borrowed in Treasury Bills from the banks—which, incidentally, created the money out of nothing—to go to the Exchange Equalisation Fund. They then bolster up sterling in the exchange markets of the world, and that accounts for the nickel which has been added to the price of sterling.
That is gaining a temporary present advantage at the expense of the future. It is no light matter to add £430 million to the Floating Debt. I could run my house beautifully were I allowed to print bank notes or coin money out of nothing for purposes of fraud without fear of punishment. Page 8 of the Financial Statement shows that Treasury Bills have increased by £430 million, and the Chancellor himself let slip this afternoon, in parenthesis—thinking, I suppose, that a lot of hon. and right hon. Gentlemen were not listening—that he had used it for that purpose.
The Budget speech was very disingenuous, and when the Chancellor tried to maintain that the Bank Rate had had the effect of fortifying sterling he was being less than frank with the Committee and with the country. The country should know that not only does this Tory Budget—which probably, almost certainly, will be the last Tory Budget for many years—hand out to the millionaire I instanced £48 a week additional to the £49 a week he has already had, but increases the 74 National Debt by £430 million of bank-created currency for the purpose of dealing in exchanges; of fortifying sterling by making purchases and pushing up the price. The country should know that the future is being penalised by adding to the National Debt £430 million which will eventually have to be repaid.
The real fact about the Bank Rate increase is that it was intended for purposes quite different from that of fortifying sterling. The increase was simply a class instrument used by a Conservative Government to benefit a class—the professional dealers in money, the money market in the City of London, and the commercial banks whose business it is, in the case of the latter to create and lend money, and in the case of the former to lend money at a rather higher rate of interest than that at which it is borrowed.
That is the real class for which the Conservative Party exists. The Conservative Party is still the political reflection of the financial interests of the City of London, and we have never seen that shown better than today in this Bank Rate by which, as the Chancellor admits—and again this is shown in the estimates for 1955–56 in the Financial Statement—debt interest will cost the country £30 million a year more in 1955–56. As he had the candour to admit, that is because of the increased rate of interest.
Moneylenders benefit from these things. They benefit from this increase in the Bank Rate, and it is quite easy to demonstrate that the people who do not benefit and who are penalised are ratepayers and suchlike. After all, local authorities run a large part of their business with borrowed money. In my constituency one-eighth of the rates, or 2s. 6d. in the £, is accounted for by debt interest. The rates must increase as the years go on, because we have this penal Bank Rate which benefits a class who receive higher interest at the expense of everybody else, including ratepayers, people who mortgage their houses and so on.
But that effect is deferred. It will not become very painfully obvious until long after the General Election—that General Election which has been hurried in this way because Conservative freedom, so far from working, is able to function only so long as the terms of trade are in favour of this country, as the Chancellor was at great pains to make abundantly clear. We 75 have had this afternoon the first admission by an important Government spokesman that all that has happened by way of the balance of payments in the last few years since this Government took office has been a matter of pure and simple luck for them, a lovely piece of cake for the Tories which the Labour Government did not have, namely, the fact that the terms of trade were in their favour. Now that the balance has gone the other way, Conservative freedom begins to topple and it becomes necessary to do the sort of thing which the Government did when they raised the Bank Rate.
I want to criticise another thing that the Chancellor said. He seemed to take pleasure in telling the Committee that there was more confidence in the United States of America, that trade was on the upgrade there. I am glad it is, for the sake of the Americans. Goodness knows, we on this side of the Committee do not wish them any harm. But why does the Chancellor want the Committee to believe that this is something about which we may rejoice? If American trade goes up and business becomes more buoyant over there, then the American demand for raw materials also goes up and the terms of trade turn against us. The simple fact is that the Government look forward to the day when there will be as few as possible impediments to trade—they do not say so, but I suppose they mean when there will be no impediments to the movement of labour and capital, as well as goods, across frontiers. They want to go back to convertibility.
They must know that so long as America, relative to the rest of the world, is dimensionally in the position of an elephant in a chicken-run, the rest of the world will be penalised by whatever happens in America. If America is buoyant then the terms of trade turn against us. If America has a slump, we lose markets. The chicken loses both ways, whatever happens to the elephant. It is time we made it our set purpose to create a sterling area insulated as far as humanly possible from the rest of the world.
I want to refer to one or two other things that the Chancellor said. I think I ought to refer to the tribute that he paid to the workers in the National Savings Movement. He said that National Savings had shown a net gain of £120 million 76 this year. It is perfectly true that they have. We can all endorse his praise for the workers in the National Savings Movement. They are devoted, unselfish people who do an unpleasant job. But really it is time we ceased to pretend that the National Savings Movement was something worthy of support by well-informed people whose intentions are objectively and genuinely honourable.
I have always refused to take any part in the National Savings campaign in my constituency. I have always made clear to my constituents precisely why. I will not go to poor people, less well off than I am, and ask them to do something that I would not dream of doing, namely, investing in gilt-edged securities. No hon. Members opposite would invest in gilt-edged securities. They invest in industrials. It is not fair to ask poor people to put aside £100 which they have laboriously saved, and buy Government bonds when one knows for certain that within a few years, when they go to draw their money out, it will be worth less in purchasing power than when they put it in.
I should feel dishonest if I went on to a National Savings campaign platform. I do not think that the people in the movement are dishonest. On the contrary, I endorse the Chancellor's praise of them. I think they are self-sacrificing, devoted, patriotic people; but they are not acquainted with the facts. They do not understand that capitalism must inevitably entail in the long run a steady erosion of the value of the currency. It happens in all countries in the world. It has been happening since the reign of Queen Elizabeth, and it will go on happening unless and until we socialise credit. However, I do not propose to pursue that topic this afternoon.
I repeat, this is an electioneering Budget. But I do not believe the people's votes will be influenced by it. I would not like to be in the position of a Conservative candidate addressing a works gate meeting. Addressing a chamber of commerce meeting is very different. I am going to address works gate meetings. I shall have a large programme of them. I shall not be afraid to deal with these Budget concessions. An easy Budget-as many people will regard this—at the same time as a tough Bank Rate does not make sense. The Chancellor is not 77 dealing openly with the House. This Budget stands condemned for what it is—a device sacrificing the future to get a pre-election advantage, a class device to enrich moneylenders, and an electioneering instrument which I believe will fail in its purpose.
§ 5.37 p.m.
§ Lieut-Colonel Wentworth Schofield (Rochdale)
As my hon. Friend the Member for Blackley (Mr. E. Johnson) has said, and in spite of what has been said by the hon. Member for Nottingham, South (Mr. Norman Smith), there is not the slightest doubt that this Budget will be received with satisfaction by the great majority of the people in this country.
I want to say a few words about Purchase Tax and the way in which it contributes at present to the difficulties of the textile industry. In view of the fact that my right hon. Friend the Chancellor was present at the meeting held by the former Prime Minister and attended by representatives from the cotton textile industry of Lancashire, Lancashire has been expecting confidently that the Chancellor would have something to say this afternoon which would help the cotton industry in its struggle to keep its spindles and looms running.
The optimists in Lancashire were quite confident that Purchase Tax would be completely removed from cotton textiles. Even the pessimists thought that it would be reduced by at least one-half. I am afraid that Lancashire will be rather disappointed that the pessimists were right.
§ Lieut-Colonel Schofield
They may be a little disappointed that the pessimists were right, because the textile industry is one which is least suited to a tax of this kind.
We have been told this afternoon by the Chancellor that if the people of this country are to enjoy a rising standard of living we must export more. But I respectfully suggest to the Chancellor that one of the things which has militated against the export trade in cotton textiles is the incidence of Purchase Tax, and especially so because of the form in which 78 it is levied on textiles. I refer to the D scheme.
With the flooding of our traditional markets in the world by cheap Japanese and cheap State-aided Indian cotton goods, Britain's best chance of increasing her exports lies in the production of cotton textiles of the very highest quality and in being in a position to offer a wide range of those textiles to foreign buyers from which they can make their choice, together with an assurance that Britain will be able to deliver from stock to satisfy the buyers' demands.
But we cannot deliver from stock unless the industry is fully engaged in making those higher quality textiles. Overseas the industry has to face very keen competition, and it can meet that competition only by the production of the finest types of cotton goods made from superior types with fast colours and other special finishes. Those are the sort of goods which in the past have been a feature of Lancashire's textile production and one of the features on which Lancashire's reputation as cotton textile producers has been built.
Before the days of Purchase Tax, Lancashire was able to adjust its production for export according to the dictates of fashion and design throughout the world in the full confidence that if those goods could not be sold abroad, they could at least be sold in the home market. Nowadays, because of the Purchase Tax which these high quality goods attract, no manufacturer, converter or dealer can be certain that he could sell his goods in the home market.
The position is further aggravated by the fact that it is almost impossible to develop export lines of high quality cotton unless there is a healthy home market in which to test the taste and the fancy of the public. The trouble is that it is quite impossible today to test the taste and fancy of the public for these high quality goods because of the Purchase Tax which makes the finer quality goods so dear compared with those qualities which fall below the D line. Because of the operation of the D scheme, which imposes a graduated tax on the better quality textiles, home demand has been diverted to tax-free quality goods, and in that way the production of the higher quality goods in a volume sufficient for a successful export drive has been prevented.
79 Another point which should be considered is that Lancashire possesses both the skilled craftsmen and the machinery to make these high quality textile goods, but if these skilled craftsmen are underemployed, they will drift away from the cotton industry, and if the specialised machinery is allowed to stand idle it will be impossible to train new entrants to replace them. If that condition is allowed to continue, Lancashire's ability to compete in the export markets will be even more seriously impaired.
Before the Easter Recess, my right hon. Friend the President of the Board of Trade said that a great deal of Lancashire's troubles are due to the falling off of her exports. I am glad that this afternoon the Chancellor has recognised that fact and, in his forthright manner of dealing with a situation as it arises, has done something in a practical way to help the cotton industry to regain its exports. I only wish personally that he had gone the whole hog and taken the tax off altogether, but for what he has done I personally am thankful, and I am quite sure that Lancashire as a whole will be grateful for the assistance which he has given especially to textiles as against any other leading industry of the country.
§ 5.45 p.m.
§ Mr. Edward Shackleton (Preston, South)
The hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield) is, of course, greatly respected on this side of the Committee, and I think our only major difference of opinion with him at the moment over the future of the textile industry is that he still believes that this Government can do something for Lancashire, whereas we on this side of the Committee know that they have no intention of doing anything at all.
Indeed, it is obvious that the high-flown phrases with which the meeting between the late Prime Minister and the textile leaders of Lancashire was announced were largely a build-up, a smoke-screen, to obscure the fact that very little would be done, or indeed could be done, by a Conservative Government. I appreciate the difficulties which a Conservative Government have in these matters. They are, of course, debarred from any planning approach to the problems of industry in this country.
80 It is a very great disappointment that all we heard from the Chancellor—and I think it is a pity that he made such a short speech—was a general exhortation to Lancashire and an announcement of a reduction in the Purchase Tax rate. It is also rather interesting that he proposes to make this reduction by regulation and not, as in the ordinary way, through the Budget machinery. So essential is it for this Government to have an Election at the earliest possible date, before world economic events catch up with them, that at the very time of the year when we should properly be discussing alterations in Purchase Tax, they propose to use this device which confines the argument simply to a single debate on the regulation. At other times of the year the position is quite different. Why, in that case, did they not do it before? Why did they wait until today, when they could have done it before the Easter Recess?
§ Squadron Leader Cooper
The hon. Member is not correct in asserting that this is the first time that this procedure has been adopted. A few weeks ago the House approved an affirmative Resolution dealing with rates of Purchase Tax in precisely the same way as will be done in this case.
§ Mr. Shackleton
The hon. and gallant Gentleman always seems to miss the point. I said it was the first time that this procedure had been adopted about this time of the year when normally we deal with these matters through the Budget machinery. Of course it is done constantly at other times of the year, and in this case it could have been done a month ago, but the Government have waited until Budget day in order to do it. Then, instead of opening the whole field of Purchase Tax to debate, as well as the question of indirect taxation, they have preferred to deal with the matter by Treasury regulations.
The hon. and gallant Member for Rochdale made the points which have repeatedly been made by him and others about the effect of the D Scheme, and we are wholly in agreement with him about the dangerous effect which it has had on quality production in Lancashire. But when the Chancellor dismissed Lancashire's troubles as being due to a decline in the export markets—although he said there were many other causes— 81 I wondered how closely he was listening when the delegation came from Lancashire.
It is disappointing that the Chancellor said nothing to show that he personally is aware of some of these problems which confront Lancashire—the problems of Indian imports, for example. He said nothing about the effects of the present uncertainty in American prices of raw cotton or about the stock position in Lancashire, and I urge both the Ministers to take very seriously the position of the holding of raw cotton stocks in Lancashire. There was a brief debate on the subject the other day.
All this is taking place at a time when the Bank Rate has been raised and that, on the whole, will be to the disadvantage of Lancashire in re-equipment or in carrying forward her difficulties. On the very day on which the Chancellor in effect refuses to do more for Lancashire, he has announced these tax concessions in the Budget—not in words which could be understood by the whole country, because he is very careful not to draw attention to the real effects of the tax concessions which he has made.
The right hon. Gentleman said that he wanted an expansionist Budget. Whether an expansionist Budget is one which gives an increase of over £200 a year to someone who is possibly not working at all and who has an income of £10,000 a year, or which gives a substantial increase to the hypothetical person with £50,000 a year, I do not know.
If hon. Members do not think there are people with £50,000 a year, they should look at the recent Report of the Commissioners of Inland Revenue, in which they will find that there are some people with £50,000 a year from unearned income. For them the gain is about £1,200 a year. The Lancashire textile worker on short time, or possibly without a job, gets nothing from this Budget. If hon. Members opposite look at the Financial Statement, they will find that a man with a wife and three children, earning £9 a week, will not benefit from the Budget. It has been called an expansionist Budget; yet the Chancellor thought it a good thing to ease the position of those with small investment incomes. That may be, but it is equally desirable to ease the lot of those who have to bring 82 np their families on low wages. We have seen no concession of any kind to meet their problem.
The Chancellor has tried to do two things. Obviously he has been given advice by the Bank of England, the Treasury and his advisers generally that no tax concessions of any kind should be made this year at a time when we are faced by—I will not use the word "crisis"—an impending increase in the balance of payments problem. At the same time, knowing that trouble will come to a head in the course of this summer, the autumn, or is coming to a head already, it was absolutely essential for him to produce an electioneering Budget. But if the Chancellor and hon. Members opposite believe this is going to be an electioneering Budget they will be mistaken. It does what Conservative Governments have done time and again—it eases the lot of those who have a considerable amount of wealth and does nothing for those living at the lowest level. It is another example of the return to the regressive type of taxation which was so marked a feature before the war.
I regard it as a sad and, in some ways, a tragic Budget at a time when the country is faced with very grave situations. At a time when we need to increase productivity the incentives are being given to a very few and will not help the country but will only, in the eyes of the Chancellor, lead to a possible Conservative victory. I hope that when they return to this side—as they will in the next few weeks—the Chancellor and other hon. Members opposite will realise that the penalty of folly is sometimes failure and that the penalty of a dishonest Budget is going out of office.
§ 5.54 p.m.
§ Squadron Leader A. E. Cooper (Ilford, South)
We have had two speeches from hon. Members opposite, both of which have been contradictory. Both claimed that this was an electioneering Budget and then went out of their way to prove that it was the direct reverse and that, in consequence, we shall lose the General Election on 26th May. Hon. Members opposite must really make up their minds about the Budget. Either it is a class Budget and an electioneering Budget, or a Budget which will help the country; it cannot be both. My view of the Budget 83 is that it is a very good and honest Budget. It certainly disappoints hon. Members on both sides of the Committee by some of its omissions, but I suppose that there never has been a Budget which has satisfied everybody.
I do not profess to be able to deal expertly with the Lancashire textile industry, but I would mention to the hon. Member for Preston, South (Mr. Shackle-ton) that in his speech today the Chancellor was very careful to point out that he was dealing purely and simply with the fiscal side of the problem. It has already been stated that Government's policy on the future of the industry will be announced very shortly. It is, of course, good electioneering on the part of hon. Members opposite to cite the case of the man with a high income who derives considerable benefit from tax concessions. That is true, but, at the same time, it is surely fair to point out, as the Chancellor did this afternoon, that the proposals will relieve no fewer than an additional 2,400,000 people from paying any Income Tax whatever.
§ Squadron Leader Cooper
That is a very considerable number of people who will be relieved in that way. Why has that been done in that form? Surely the reason is very simple. We must get more productivity in every branch of industry in order that we can get costs down and make available a greater volume of goods for the export market.
§ Mr. Shackleton
Would the hon. and gallant Member not agree that in that case it would have been better to have given an increase in earned income relief?
§ Squadron Leader Cooper
I was going to follow the argument and I think I shall answer that point in the next few sentences. At present, we find it difficult in industry to get men to work overtime—
§ Squadron Leader Cooper
That may be so in certain cases, but in other parts of the country it is difficult to get people to work longer hours of overtime when they know that they have to pay a considerable amount in tax. The result of 84 the concessions made today will encourage people to work longer hours, knowing that they will not have to give away so much—indeed, any—of that increment by way of tax.
§ Squadron Leader Cooper
Here again we come up against a contradiction. The hon. Member for Stoke on Trent, South (Mr. Ellis Smith), whose knowledge of industrial matters I respect, tells us that men are already working more overtime in industry, yet other hon. Members tell us that there is an economic crisis in the country because men are not working overtime. Hon. Members cannot have it both ways.
§ Squadron Leader Cooper
The hon. Member for Preston, South pointed out that one of the reasons there was to be a General Election was that he thought there would be a crisis by the end of the year. If he looks in HANSARD tomorrow, he will find that those were almost exactly his words.
§ Squadron Leader Cooper
Apart from tax concession which the private individual gets by way of reductions, industry gets a very large share of the concession. That was the prime purpose of the concession, to give greater incentive to industry to go out into the world and sell more goods.
What I have to say now may be considered by hon. Members opposite as something with which they can go about the country to attack the Conservative Party if they desire. Unfortunately, at present in some industries there is an unwillingness to go about the world to seek new markets. The reason is very simple: the weight of taxes is so great that there is no return whatever to industry for the great effort which has to be made 85 to get those markets. In other words, the incentive is destroyed. Our approach to industry must be that, while there may not be so much return coming to this country as a result of new markets being developed, by reason of the severe competition which exists in other countries—prices being so much lower, and so on—nevertheless, it is essential for the nation to have that business because it is an insurance for future prosperity. That is the only means whereby we can continue to buy the food and the raw materials necessary to sustain a high and ever-expanding standard of living.
One of the things which we here must do in the months ahead, and after the General Election, is to drive home the point that it is not simply a question of selling goods in foreign markets and of getting a profit from their sale. We have got to sell the goods to ensure a continuity of our supplies of raw materials.
That means that our export technique must undergo a radical change. I travel the world quite a lot trying to sell goods for the chemical industry, and I know from experience in foreign countries that in many cases representatives from British companies are not empowered to take decisions on the spot. They may get an offer, but they have to refer to London or to somewhere else in this country in order to get a decision whether or not the price can be accepted.
It is a fact that, when travelling abroad in search of business, in the great majority of cases one is interviewed by the directors or presidents of companies. One is very rarely interviewed by anyone below those levels. Therefore, it is necessary that the men whom we send abroad in search of business should be of the same level and capable of taking decisions on the spot.
In past years we have received a lot of help from the Board of Trade and the Foreign Office in countries abroad, but I believe that, somehow, we have to improve that set-up. Within the British Commonwealth, the Board of Trade controls these commercial counsellors, but in countries outside the Commonwealth these officers come under the control of the Foreign Office. They are not necessarily very good business men, although in some cases they are. At times, I have found that the information which indus- 86 try really needs in some of these countries is not readily available. Although I know that there are difficulties in the way, I suggest that wherever possible these commercial counsellors should come under the control of the Board of Trade and should have no connection whatsoever with the Foreign Office.
I now wish to say something about the travelling allowance which business men receive when they go abroad. This is a sore point. I know that some hon. Gentlemen opposite might try to make political capital out of this, and say that an allowance of £10 a day when travelling abroad is a lot of money to spend on the business. But I can assure them that if, for instance, one goes to America, Canada or Switzerland, an allowance of £10 a day is a very small sum of money indeed. I believe that the Treasury must look at this matter again to see whether it is possible substantially to raise the present limit so as to enable British business men to entertain at a proper level in foreign countries.
I believe that the development of our export markets transcends all the other problems with which we, in this country, are faced, with, of course, the exception of how we are going to deal with the hydrogen and the atomic bomb. I am sure that the markets are there to be won not only for the present but for long years to come, but I am equally sure that, unless we can build up a substantial export business, there is no possibility whatever of maintaining even the present standard of living which we enjoy at present.
I beg hon. Members opposite, who have considerable influence in the coalmining areas, to impress upon their constituents the difficulties with which we are now faced. I am not trying to make any party point here, and I think that hon. Members opposite will admit that I have tried to make a constructive speech. But our coal problem is something which we as a nation must seriously tackle in the years to come.
We are faced with the situation that in an industry which has been nationalised for a number of years, which has an enormous capital investment programme in hand and a degree of mechanisation far greater than ever before and a manpower almost approximating to what it was before the war, the output of coal is about 30 million tons a year less than 87 it was in pre-war days. There may be—and, indeed, are—very good reasons why that should be so. I am not attempting to allocate the blame, but merely to point out the fact that we are producing 30 to 35 million tons of coal less today than before the war.
To make up this deficit we are having to spend substantial sums in dollars to keep our industries going. We ought surely to be able to tackle this problem objectively, because, as the Chancellor said this afternoon, if only we could settle that problem then we should be going a long way towards solving the economic problems of the country.
Finally, I wish to express my disappointment at one omission from the Budget. I fully understand why this Budget has had to be framed in the way it has. That has been done to provide incentives for people to work harder to produce more and to encourage industry to go out and search for extra markets so that we may provide ourselves with the necessary raw materials. All that I clearly understand. But if the cost of living continues to rise—even though wages have risen faster—that cannot be a good thing for the country. So long as wages increase faster than the rate of productivity we shall always be in trouble.
It seems to me that steps should have been taken in the Budget to bring about a situation which would have helped to reduce the cost of living. I should have thought that 6d. off petrol, with a consequent abolition of the duty on white oils, would have been a way in which that could have been done. Many people may say that 6d. off a gallon of petrol would benefit only the private motorist, the £100,000 a year man of whom the hon. Member for Preston, South is always talking. But the amount of money spent on private motoring is only a small proportion of the whole. The great bulk of the petrol is used for the public transport of goods and people.
§ Squadron Leader Cooper
When I use that term I refer to white spirits and to all those hydro-carbon oils which are used in the manufacture of paint, varnish and lacquer. Surely the hon. Gentleman reads his post.
§ Mr. Shackleton
The hon. Gentleman talks about the petrol duty. I am asking whether he means diesel oil as far as it affects public transport.
§ Squadron Leader Cooper
I am talking about the duty on petrol and that type of oil.
I should have thought that 6d. off petrol would have been a great help. It would certainly help to keep down distribution costs. I doubt very much whether it could be argued that such a reduction would be inflationary in any way. Indeed, I should have thought that the reaction would be the reverse and would help to remove the constant demand for wage increases. It may well be that during the debates which are to take place we may be able to wring a concession from the Chancellor on this point, or that it may be done subsequently. Having said that, I should like to congratulate my right hon. Friend on a very clear, concise and constructive Budget which will be of very great help to the country.
§ 6.10 p.m.
§ Mr. Thomas Hubbard (Kirkcaldy Burghs)
The hon. and gallant Member for Ilford, South (Squadron Leader Cooper) complained that hon. Members on this side of the Committee could not make up their minds whether this was a General Election Budget or not. I cannot claim to know the intentions of the Chancellor and the Government about the Budget any more than I can claim to know what was in their minds when they decided to have a General Election, but I can claim that a week ago I attended a huge gathering, representing a very large section of the community, who will get nothing at all from the Budget. That gathering was the old-age pensioners' annual conference. Far from having any benefit from the Budget, these people, who are the poorest section of the community, will suffer even more.
If it was the intention of the Government and the Chancellor to put forward a popular Budget, these proposals are a complete misfit. We are always told, for example, that single men suffer most from the incidence of Income Tax. Many of them work hard and do a good deal of overtime, but a single man earning £8 a week will have a concession of only 6d. in the £ on the standard rate of Income Tax, which is a little over £2 a year whereas, as a result of increased National 89 Insurance contributions, he will be paying £2 12s. more. Therefore, he will be 10s. worse off than he was before.
A single man may have an income of £600 a year, or roughly £16 a week, but all the concession that he will receive as a result of this reduction in Income Tax will not meet the increased contribution which he will have to pay in respect of National Insurance. The incentive—if this concession was intended to be one—will miss the mark altogether.
One should consider side by side with this so-called concession the recent increase in the Bank Rate, which will be reflected in increased rates made by local authorities, because, obviously, the dearer money will be the more local authorities will have to pay for their borrowings for house building, making streets and preparing sites for factories. The increased Bank Rate will make life more expensive for those who are supposed to be receiving a concession, intended as an incentive, by way of reduction of Income Tax. The increased cost of living will far outweigh any concession granted to them in the Budget. When one adds to that the increased contributions in respect of National Insurance one finds that a great number of people will be very much worse off.
The hon. and gallant Member for Ilford, South spoke of the need to increase coal production, whereby we should be able to increase our exports and, therefore, pay for our imports, and he said that that was essential for the proper balance of trade. I agree wholeheartedly with that, but when the hon. and gallant Member talks about the miners' output being less now than hitherto —
§ Squadron Leader Cooper
I did not say that output per man was less, but that with manpower approximately the same as before we were getting less coal from the mines, which is not the same thing.
§ Mr. Hubbard
When a man talks about coal production he should know 90 that what must be taken into account is the number of men who are actually working at the coal face. It must be obvious that, as time goes on, the coal face is further and further away and that there must be new developments in coalmining. There are new developments. The production of coal is important for our export-import trade and a target has been set for the future, 1965, but the kind of loose talk in which the hon. and gallant Member for Ilford, South indulges will not help in reaching that target.
Miners today are working voluntary shifts and have been doing so ever since nationalisation of the coal mines. Although they fought for many years, and made many sacrifices, to obtain a five-day week they have been working 12 shifts a fortnight and doing a great deal of overtime. Many of them are on piece-work rates. If a real incentive is to be given to the miners it should be given to them as a whole. An attempt has been made to grade the types of workers in the pits and the hon. and gallant Member for Ilford, South should leave these things to people who understand them rather than be critical of miners who do a job which the hon. and gallant Member and his friends would not care to do.
Many miners today are themselves producing 15 tons of coal. If the hon. and gallant Member thought of that in terms of moving that weight of coal, taking it from the bowels of the earth and handling it in all kinds of bad conditions underground, he might be a little more restrained in his criticism of this section of the community.
If more incentives are needed, the workers, who are the producers of the wealth of the country, should be able to feel that if the Government have any surplus to distribute they will at least benefit, but a reduction of 6d. in the standard rate of Income Tax obviously benefits the individual more in proportion to the size of his income. As I have shown, the ordinary and even the extraordinary wage earner is receiving nothing whatever from the Budget by way of incentive. Already the Chancellor is taking care to ensure that he takes more from the wage earners than he gives to them.
To return to the old people, many of them have been expecting to be a little 91 better off at the end of this month. They have believed the reports, which appeared in the newspapers up to the time when they ceased to publish, that they were to to have an increase in old-age pension, but many of them are now finding out that the poorest of them are much worse off than they were at this time last year. The very poorest of old-age pensioners are those who receive supplementary pensions and payments from the National Assistance Board. Whereas a single old-age pensioner is receiving a 7s. 6d. basic increase, there is a reduction of 5s. in National Assistance payment, leaving a maximum increase of 2s. 6d.
One should bear in mind, in this connection, that this same section of the community has to pay increased costs caused by the increase in the Bank Rate and by the removal of subsidies and controls, which have led to an all-round demand for increased wages which, in turn, have increased the cost of transport and coal. All these costs have to be met in equal measure by this poor section of the community, which receives no concession from the flat-rate decrease in Income Tax.
We find that these old-age pensioners, many of whom were themselves miners during the greater part of their lives, find that the increased cost of coal, which was announced almost at the same time as the increase in pension rates, means that they are not one bit better off. If there is an additional 6d. on the bag of coal, that means that their cost of living will be increased.
Vegetables have gone up in price, the cost of tea is increased and butter has gone up. It seems to me that the policy of the party opposite is to increase the cost of food by 1s. one day and bring it down 4d. the next and then claim that the cost of living is coming down. That has always been their system. I remember that during the war, when rationing was in force, people would be told one week they could not have any jam at all, and then, later, would be given 1 lb. of jam, whereupon the Government would claim they were giving something extra to the people.
That is what is happening to the old-age pensioners. The cost of butter, margarine, tea, cheese and practically every commodity that the old people buy rises to a figure beyond their purchasing power.
92 Then it is reduced a little and the Government immediately try to convince us that the cost of living is coming down. That is the sort of confidence trick that can be put across once, but once it has been played the people begin to understand it.
If it were the intention to make this an election Budget, a popular Budget, then the plan has badly misfired, because the large bulk of the people of this country will not get any concession from it. They will find, indeed, that their standard of life will be reduced as compared with last year. Notwithstanding the Income Tax concession, the people who can save this country from an economic crash if one is coming will not benefit. I hope hon. Members opposite will not say that I said that there would be such a crash, but there were some indications in the carefully guarded words of the Chancellor about the possibility of economic difficulties in the future.
Many people are asking, why this hurried Budget, why this hurried General Election if everything in the garden is lovely? There was no constitutional need for the Government to appeal to the country at this time, and if there was no constitutional need there must be something else driving them to do it. Perhaps hon. Gentlemen opposite are not so naive as they pretend to be; and no doubt these things will emerge in due time.
At the end of the day all Governments are judged by results, and the fine-sounding phraseology of the Chancellor of the Exchequer today will in no way assist anyone to enjoy an increased standard of life. Many of the institutions which the working people support are in difficulties, and it is to these that the working people look for enjoyment after working hard and doing overtime. For example, they may want to go to a football match. What is happening generally to football clubs? Almost everyone of them in Scotland, at any rate, is approaching bankruptcy. The only alternative to a reduction in the crippling Entertainments Duty is to increase the cost of admission to the matches. Will that increase the standard of living of the people?
Are we not entitled to think that these people deserve some amenities? The same thing applies to the cinema and to the live theatre, where this duty is also crippling. There are some things, such 93 as cricket, which are exempt, and I do not condemn cricket. I do not think, however, that the Government are playing cricket with the ordinary people. They are playing ball with them by hitting them over the head with it time and time again, and often with the bat as well.
If it was the Government's intention to present an election Budget, then they have failed and I am quite satisfied that before the end of this debate and, most positively, before the election takes place they will find that the people are not so naive as the hon. and gallant Gentleman the Member for Ilford, South would have us believe.
§ 6.25 p.m.
§ Mr. Robert Crouch (Dorset, North)
I should like, first, to congratulate my right hon. Friend the Chancellor of the Exchequer on his excellent speech to the Committee this afternoon. He put forward in a very lucid way, which most people will be able to follow, the present financial position of this country. We can feel proud of the way in which he has fulfilled his various and very difficult duties during the last three and a half years. Indeed, one of the proofs of his stewardship is the fact that savings have increased by such a very large amount during the last 12 months, because, unless the people had had more money in their pockets, there would not have been this rise in saving which, if I heard the Chancellor aright this afternoon, amounts to no less than £130 million.
My right hon. Friend also mentioned that during the last year there had been a rise of no less than 9 per cent. in personal incomes. Now hon. Members opposite are suggesting that the Income Tax concessions will not have the effect that the Chancellor desires. I think they will, and I also think, in spite of what has been said by the hon. Member for Preston, South (Mr. Shackleton), that the cutting of Purchase Tax by 25 per cent. on a large range of textiles can do no other than have a very good effect on the textile industry, not forgetting the linen industry in Northern Ireland.
My hon. and gallant Friend the Member for Ilford, South (Squadron Leader Cooper) mentioned overtime, and one hon. Member opposite said something about British workers working a day longer than in the United States. But I have not heard anything said about the 94 farm worker, who has to look after livestock throughout the whole week and works seven days every week. I was hoping that the Chancellor might have found it possible to give some concession to those men who, on Saturday afternoons and Sundays, tend sheep, cows, pigs and poultry, because those are livestock which have to be fed. They cannot be shut down as factories can; they have to be cared for throughout the whole week.
One disturbing part of the Chancellor's Budget speech—and I was sorry to hear it—concerned the drop of no less than £4 million which had occurred in the amount of duty recovered on beer. This has been going down year by year by the hundred thousand pounds. It is a problem which he will have to face up to next year, because I feel certain that he will present the Budget which has to be submitted to the Committee in a year from now. There is nothing unusual about a Chancellor presenting a Budget, facing a General Election, and presenting another Budget after he has returned to office. [HON. MEMBERS: "If he returns."] He will return.
Another point upon which I should like to touch is the question of output. The Chancellor told us that the output per man had increased by 2½ per cent. during the last 12 months, and I think that that is very encouraging. But he also said that there had been an increase in wages of 4 per cent. With modern machinery and the aids from science that we have today, if wages go up by 4 per cent. we should not have a drop of 1½ per cent. in output per man, because high wages, as has been proved all over the world, are sustained only when there is high output.
The hon. Member for Kirkcaldy Burghs (Mr. Hubbard) spoke about the price of tea, butter, cheese and other commodities having gone up and then having dropped in price. He suggested that this was deliberately done so that the Government could say that prices had fallen. May I remind him that when hon. Gentlemen opposite were sitting on these benches his right hon. Friend the Member for Bradford, Central (Mr. Webb) used to give a Christmas bonus. The right hon. Gentleman gave one in 1950. The right hon. Gentleman appeared to be giving the people something, but if the hon. Gentleman will look at the rations received in 95 January, 1951, he will find that over the two months the increase levelled itself out, so perhaps it would not be wise to proceed with that argument too far.
I appreciated the Chancellor dealing with the various subsidies given to agriculture, distinguishing them from food subsidies. It is generally assumed that the cost of supporting the agricultural industry is £250 million, but the Chancellor said it was only £163 million.
§ Lieut-Colonel Marcus Lipton (Brixton) indicated dissent.
§ Mr. Crouch
Yes, the Chancellor said that the cost of supporting agricultural prices was £163 million and that there was a subsidy of £41 million on bread, and that the various welfare schemes cost £36 million.
I was also pleased to hear my right hon. Friend re-emphasise the necessity during the coming year for us to grow more of our feedingstuffs. He explained that it was for this reason he had increased the ploughing grant, and the fertiliser grant and had increased the guaranteed price for both oats and barley. If, by growing more feedingstuffs, we can save foreign currency, it can be used for other goods which we are not able to produce. I feel sure that the agricultural community will make full use of the ploughing and fertiliser grants during the coming 12 months and that, therefore, the industry will be able to show a much better balance sheet at the end of next year.
The Government are to be congratulated upon the way they have treated the industry since they have been in office, and all sections of it have responded, so that the production from our farms today is greater than it was when this Government came into office. I conclude as I began, by congratulating my right hon. Friend on putting such a frank and clear picture of our finances before the nation.
§ 6.34 p.m.
§ Mr. William Keenan (Liverpool, Kirkdale)
I shall follow the hon. Gentleman the Member for Dorset, North (Mr. Crouch) only to the extent of saying that most of the subsidies provided by the Government are given to agriculture. It is true that subsidies are given for milk 96 and bread, but the industry about which the hon. Gentleman speaks so much is obviously benefiting a great deal.
I want to complain about the failure of the Chancellor to do anything for the people who do not pay Income Tax. Instead, the right hon. Gentleman has done what he did two years ago; that is, he is benefiting only those who pay Income Tax. There are about 7 million out of the total of 23 million workers who do not pay Income Tax, and the Chancellor said that he would release 2¼ million more from its incidence. The reduction of 6d. means that some people will benefit to the extent of only 1s. a week, whereas those with the largest incomes will get the most relief.
My hon. Friend the Member for Nottingham, South (Mr. Norman Smith) pointed out that a millionaire with three children would benefit to the extent of £48 a week. It appears to me that this Income Tax rebate will reduce the amount of Surtax, though I have not heard that point mentioned. I say this because two years ago, when 6d. came off Income Tax, the Surtax rate fell from 19s. 6d. to 19s., so the present rebate will probably reduce it to 18s. 6d.
After all the justifiable expectations, we have been given only this remission of 6d. This could have been used to offset indirect taxation, thus benefiting the seven million or nine million people in the low income ranges. There are about four million old-age pensioners who will not benefit one halfpenny from this Budget, and here I want to supplement a point made by the hon. Member for Kirkcaldy Burghs (Mr. Hubbard). On 25th April the new National Insurance scales will come into operation and a single person will receive 7s. and a married couple only 4s. more. Yet the Government made a great song and dance about this at the end of last year, saying how greatly the old people would benefit by the increased rates. I said at the time we were discussing the amending Bill that the increases would merely compensate the old-age pensioners for the increased cost of living. I repeat that one million of the four million pensioners will benefit only slightly, because instead of the couples getting 11s. they are getting only 4s.
It is disgraceful that the Chancellor has not done more than he has done. He 97 had an opportunity as he had two years ago to do something for those on small fixed incomes. Surely it would have been more humane, a better gesture and a better General Election move if he had done something for the others instead of confining the easement in taxation to those who are the best off in the community, because the greater a man's income the more he will benefit from the Budget.
My hon. Friend the Member for Nottingham, South mentioned the National Debt. This is something about which I have always been concerned, thougn it is not because the country owes me any of it. A few weeks ago I put a Question to the Chancellor and he said that during the last two and a half years, while Chancellor, he had increased the National Debt by more than £600 million. My hon. Friend pointed out that this Budget increases the amount by £400 million. I took down the figure given by the Chancellor of what we owe under the National Debt; it is £26,930 million. A year ago we were paying about £600 million per year in interest on that sum. I would remind the Committee that this means that £1 of every £8 that the Government collect in revenue is paid in interest to National Debt stockholders. It is surely nearly time the nation woke up and realised that we are still paying for the Napoleonic wars and all the other wars that we have since had.
Today, the Chancellor is increasing the National Debt to give an easement in taxation to his friends, people who are in no need of it. I understood that in the orthodox financing of the country a Budget surplus should be devoted to the reduction of debt, but I have not seen much of that being done. Instead, the Chancellor is increasing the National Debt. It is not fair to say that what the Chancellor has done is dishonest, but it is not the way in which the masses of the people of the country are entitled to have their financial affairs arranged.
In view of other legislation and other actions by the Chancellor, such as with the Bank Rate, it seems to me that all that the Government have done in the last year or so and are doing now is to protect big business and finance. The bankers were never as well entrenched as they are today.
98 There have been expressions of opinion as to whether or not the Budget is a good one. I believe that the Chancellor and the Conservative Party are of the opinion that it is a good Budget from an electioneering point of view, and I think they believe that they will cash in on it, I have no doubt that those who benefit from it—and two-thirds of the workers who pay taxation in one form or another will get a shilling or two from it—will think that they are doing well. They do not appreciate, and will not, the numbers who are getting no benefit. It is a Budget which is likely to appeal to many. It will certainly appeal to people who have good positions in which they command decent salaries, for they are the only ones who will benefit from it.
I hope that the mass of the people will realise that no Government should ever legislate, as this Government have done in the past, simply for those who are better off. What has been happening during the last few years has been the undoing of what the Labour Government did in their six years in office, when they tried to build up the social wage and so arrange the country's finance that even though the individual did not see the benefit in his wage packet he certainly got the benefit of the legislation which was enacted in the interests of the people of the country as a whole. This is a deplorable Budget. It is as bad as the one two years ago, and I hope that people will recognise that and treat the party responsible for it deservedly at the General Election.
§ 6.46 p.m.
§ Mr. J. A. Sparks (Acton)
I am very glad to have an opportunity today to make some comments upon the Chancellor's statement. It struck me that, in the first part of it, he was painting a very rosy future prospect for our country but that, in the second part, he was contradicting his prophecy by saying that a good many people would have come to the conclusion that this was no time for making any concessions. It was probably that remark which caused my hon. Friends to believe that therein lies the reason for the decision of the Government to go to the country on 26th May. Apparently, the Government anticipate a recession in trade in the autumn or later which would redound to their disadvantage, but they feel that if, in the 99 meantime, they can get the General Election over they may ride the storm successfully.
I feel that the Chancellor is placing too much reliance upon the effect of the concession. He said it was designed to provide an incentive in industry. As my hon. Friend the Member for Kirkdale (Mr. Keenan) said, there are nearly 7 million workers—I think he said 7 million—
§ Mr. Sparks
—who pay no tax at all. On the assumption that those who pay Income Tax will thereby receive an incentive because of the reduction of 3d. in the £ at the lower rate, and will work much harder than they ever did before, surely those who receive no advantage whatever will have a disincentive to do more work than they did previously.
I think that, on balance, there is nothing at all in the argument, because, as my hon. Friend has said, those who will benefit most are the rich. Ordinary working-class people will benefit very little indeed from the so-called concession. The income of many of them is so low that they do not come within the tax range, and there are millions of others whose Income Tax payments are so small that the reduction will make very little, if any, difference to them. The little difference it does make is quite inadequate to compensate them for the way food prices and the cost of living have risen during the time the present Government has been in office. What will create an incentive is to improve the health, the housing and the social conditions of our people. That is precisely what the Chancellor has not attempted to do in deciding to grant the relief which he proposes.
I could suggest to the right hon. Gentleman a wide range of ways in which, if he had any money to spare, he could have used the money more usefully, and in which he would have created a greater incentive. Why did the Chancellor not use some of this surplus to improve the National Health Service? Why did he not agree to use some of the surplus to reduce the charges being made for dental treatment and for optical treatment, for instance? If one consults any dental surgeon, one will be told that 100 since the introduction of charges dental surgeons have found that attendance for treatment under the National Health Service has dropped.
Today, there are many people who are in need of dental treatment. Many of them, when they belonged to approved societies before the National Health Service came into existence, were getting free treatment. Many millions more were paying only 25 per cent. of the cost, but the right hon. Gentleman's Government seems to think that it is a good thing that those people should pay 50 per cent. of the cost of dental treatment. There is a whole range of other examples. Surgical boots have been mentioned. There are many appliances needed by disabled persons who, by virtue of their disability, are unable to earn incomes which other people can earn. When their existing appliances need replacement, in most cases the disabled people have to pay the complete cost.
Then there is the subject of the 1s. charge for prescriptions for medicine. This aspect of the National Health Service should have been taken into consideration by the Chancellor when he was thinking of dealing with any surplus. I am not suggesting that he should have wiped out all the charges in one fell swoop, but he might have reduced the charges for dental and optical treatment from 50 to 25 per cent. He might have waived completely the charge for appliances for disabled people and considered whether it would not have been a good thing to reduce the 1s. charge for prescriptions to 6d. At least, that would have been an indication that the Chancellor was anxious to improve the standard of health and provide facilities for people, especially those in the lower income groups, to make the fullest use of the National Health Service.
There is very little in the proposals to assist local government and the ratepayers. All too often we forget that the ratepayers provide a considerable amount of money to help maintain services many of which are really national in character. Our local authorities provide a wide range of services which are really the responsibility of the Government and the State. To some extent the State has recognised that this is so, because the State does make a contribution to the expenses of local authorities, but in these days that contribution is absolutely inadequate.
101 Every one of us is aware of the way rates have increased throughout the country. The burden of the rates has grown very heavy in recent years, and is likely to grow much heavier in the next few years.
That is due to a variety of reasons, including the generally increased costs of providing the services which the Government acknowledge to be national rather than local in character. The Chancellor's proposals hold out no hope that the ratepayers will be relieved from any of that additional burden. The Financial Statement gives some indication of the financial burden which ratepayers now have to carry. For instance, in 1954–55 no less than about £440 million were raised in rates. That compares with the year 1950–51, when the late Government was in office, when the figure was £322 million. So, in the last five or six years, there has been an increase in the demand upon local ratepayers from £322 million to about £440 million. The burden has considerably increased, and, moreover, has increased out of all just proportion.
The contribution which the Exchequer makes towards local services in some cases is increased to some extent. I want to refer especially to the Exchequer Equalisation Grant—a grant of money which the Exchequer gives to some local authorities on a basis which is most unfair. That grant has remained very much at the same level during the last few years, and the right hon. Gentleman proposes to increase it in the coming year by only £900,000 over the whole country. I should like to draw the Chancellor's attention to one thing which he could have done to ease the rate burden on local authorities.
Sooner or later something will have to be done, because the burden of the rates is growing so acute that some services may have to be closed down completely, if the ratepayers are not able to find increasing sums of money to continue them. If the Chancellor had a surplus, and was wondering what to do with it, why did he not consider repealing the derating provisions of the Local Government Act, 1929, and permit local authorities to recoup to themselves the full value of the rates levied upon industry?
I do not desire to go into the pros and cons of derating, but it has an effect on local authorities because, as the Committee is well aware, a whole range of industries, most of them very prosperous, 102 pay only 25 per cent. of their rates, whereas the ordinary householder and the shopkeeper pay 100 per cent. Why should not the Chancellor, if his policy is creating a condition of industrial prosperity, as hon. Members opposite claim, repeal the derating provisions of the 1929 Act, and call upon the prosperous industries in future to contribute 100 per cent. rates, as the householder and the shopkeeper have to do? If he had done that, he would have placed an income of about £80 million a year in the coffers of the local authorities.
I know that to some extent the Chancellor would lose by doing that, but that is one way in which he could have effected a distribution of the surplus. It is true that industry would then return a lower surplus to the Treasury, and would pay less in taxation to the Treasury, but it would have been a means of easing the burden on local authorities, and particularly upon the ratepayers.
I should like also to draw the attention of the Committee to page 13 of the Financial Statement which shows a very significant decrease in the Exchequer contribution to local services. For instance, the grants to Development Areas are being reduced by approximately £200,000. I know that does not sound very much, but when we consider the immense amount of redevelopment that is awaiting action throughout the country, it is vitally important that these grants to Development Areas should be considerably increased.
The amount which the Government contributed towards child care last year was £9. 9 million. They propose to contribute £9. 7 million in 1955–56, again a reduction of £200,000. What actually does this figure mean, and what is meant by child care? We know that there are many children in the country in need of care for various reasons. Some people blame the parents for that, but in many cases the parents are not to blame because of physical disabilities and other factors.
Many thousands of children need care in day nurseries. The right hon. Gentleman has been calling for increased production in industry. There are parts of the country where there is a great shortage of women labour, particularly in light engineering, where there are many routine jobs which are not, in a sense, men's jobs, and which the women folk can do on 103 half-days or on one, two or three days a week. In my area in particular, which is heavily industrialised, there is a great shortage of manpower and many industries there would welcome particularly young women, whether single or married, to do those jobs which are so necessary in the public interest. Many of these industries are engaged in the export trade.
During the war period, it was possible to provide a fair range of day nurseries to which young mothers could bring their children and leave them there, knowing that they were being attended to properly while they themselves were at work. Without those day nursery facilities, the young women would not have been able to do that work, and industry, to that extent, would have been starved of labour.
During the last two or three years, the policy of the Government has been to reduce the number of day nurseries throughout the country, squeezing out these children and depriving industry of the labour of able and capable young women, just because they have children. The Government and their friends outside, particularly those who control the Middlesex County Council, seem to think that young married women should make their own arrangements to have their children looked after. That is all right if it can be arranged—but few people are willing to look after young children. Do we want to go back to the old days of so-called foster mothers, who looked after young children but were really not fitted to do so? Consequently, in my area industry has lost the services of a number of young women, because they have been driven away from the use of day nurseries by the ridiculously high charges which are being imposed.
I had a letter this morning from a disabled man who is not able to follow regular employment, and whose wife has to go out to work to help maintain him. He had been accustomed to leaving his child in a day nursery for 5s. a day. He has now obtained another job which brings him in £1 or 25s. a week more, if he does a full week's work. He advised the authorities to that effect, and they stepped up the charge from 5s. to 9s. a day. He says that this completely washes out the little extra money he was hoping to earn to help pay off his debts, and has 104 put an additional burden upon him because he can no longer afford to leave his child in the day nursery.
To meet his weekly budget and to keep going—and from the information which he supplied to me the poor fellow is in debt—he says that he will no longer be able to keep his child at the day nursery because he cannot afford 9s. a day charge. That means that either he or his wife will have to stay at home. In either case, his condition of life is worsened. He has appealed to the Middlesex County Council to reduce this assessment, but it has refused to do so. That sort of thing is happening throughout the country. That is why the Government can show a falling off in assistance to local authorities for maintaining child care services.
§ The Financial Secretary to the Treasury (Mr. Henry Brooke)
I know that the hon. Member is very familiar with local government, but he has slipped up here. In page 13 of the Financial Statement, the cost of day nurseries does not fall under the heading of "Child Care" but under that of "Health Services."
§ Mr. Sparks
I am glad that the hon. Gentleman has put me right, but that does not invalidate my argument. The case I put is absolutely sound and it can be inquired into. Does the hon. Gentleman refer to Table VII (b), in page 13?
§ Mr. Sparks
The provision for day nurseries may well come under general health services. Nevertheless, it will be found that the actual amount devoted to day nurseries has fallen considerably during the last few years because of the reduction of day nurseries and the squeezing out of people unable to pay the higher charges.
My argument is that if the Government had any money to spare they could have increased their assistance to local authorities and enabled a reduction to be made in the high charges. This would have encouraged women to go into industries which are hungry for additional labour and where often the main source of supply is from young married women.
In the same table there is an item "Miscellaneous," which shows a reduction of £3. 9 million, from £11. 3 million to £7. 4 million. It is difficult to discover precisely what miscellaneous services are, 105 but I want to draw attention to one of them. I refer to the power which county councils have to provide homes, hostels or residences for old people. There is nothing more distressing than the conditions in which some old people have to live when perhaps a man has lost his wife and he is pushed away on his own in a room, or he may live as a lodger or perhaps with relatives who do not really want him. One of the greatest services that we are providing to help old people in these circumstances is the provision of decent homes or hostels where they can live together, discuss their own problems and where they have private rooms of their own. In these places they are provided with proper food and medical attention.
Hon. Members who have visited the homes run by some of the county councils will have appreciated the comfort given to the elderly people, and will know how they are grateful for what is being done to care for them in the evening of their lives. I am sure that the gratitude of the old people is sufficient reward for any contribution that we can make to their comfort in their declining years.
It is well known that this costs money. It is true that those who draw a pension make a contribution, and it is right that they should, but over and above that there is an additional cost. The local authorities are quite unable to extend this service, first, because of the rate burden and, secondly, because the Exchequer contribution is so small, and presumably the Exchequer is not willing to increase it. I wonder whether expenditure of this kind is included under the heading "Miscellaneous," where a considerable reduction is shown. If it is, that again will prevent the local authorities from carrying out more work of this kind.
The same item may also contain provision for home helps. There are some elderly married couples who do not want to live in hostels with other elderly people. They would rather stay in their own homes. We all know how physical infirmities develop. Perhaps the wife may not be able to keep the place clean or do the cooking, or perhaps the husband becomes an invalid. There comes a time when outside assistance must be provided. Somebody must come in and help to tidy the home and to do a bit of charing or cooking. The local authorities have what 106 is called a home help service, mainly designed to help old people, though help is also provided to others who may be in distress by reason of physical incapacity.
This service to elderly people is totally and absolutely inadequate, because local authorities are not able to spend as much as they would like. Here again, if the right hon. Gentleman had had any surplus to dispose of, he could not have spent it more wisely than by helping local authorities to provide a more adequate home help service for the aged.
Finally, I wish to discuss housing. Why should not the Chancellor have done a little more for housing? I know that he will reply, "We have done very well; we have built 300,000 houses," but the problem is that of rents. The White Paper shows that Government grants and payments to new towns are falling. They fell last year also. I suggest that the difficulty in getting people to go to the new towns from the congested areas arises because the rents are too high. People moving from London have to pay a higher rent in a new town, though their wages are lower than they were in London. Although many people would like to go to a new town and would be prepared to make a sacrifice to go there, sometimes the sacrifice is too great.
Apart from the new towns, we are finding, especially in Greater London—and the same probably applies to all our great cities and towns—that the problem of rents for new accommodation is very serious. The Government have made it much more difficult by increasing the interest charges on loans to local authorities for housing purposes. In fact, the amount to be provided next year for loans to local authorities for housing purposes will be many millions less than last year. In many cases rents are so high that people cannot afford them.
If the right hon. Gentleman had money to dispose of, why did he not reduce the interest rate from 4¼ per cent. to 3¼ per cent.? Or, better still, why not grant interest-free loans for housing purposes? After all, housing is a great social service and it has been demonstrated that private enterprise is not in a position to provide housing accommodation for the people, by which I mean the ordinary people and not those who have money to buy then-own homes. The ordinary workers, who we are told are to receive an incentive 107 by the reduction in Income Tax, cannot expect their housing needs to be supplied by private enterprise. Therefore they look to local authorities and the State to improve them, and I cannot understand why the right hon. Gentleman increases the interest rates on housing loans when the rents are already very high, in spite of the subsidies.
It is revealed that the estimate for providing housing accommodation for the Armed Forces was £10 million and the out-turn was £1 million, which means that last year the Government allocated £10 million for that purpose but spent only £1 million. It is true that next year the Government are estimating to spend £7 million, but we may find, instead of £1 million, that the amount actually spent may be only £500,000. I am not satisfied with the present rate of progress in the provision of decent accommodation for Service men and their families.
As a member of the Sub-committee of the Select Committee on Estimates, which examined the cost of building construction for the Armed Forces, I was privileged recently to visit a base ordnance depot and to see some of the new work being carried out. I was surprised at the condition of some of the old accommodation in which Service men and their families are living. Some of that accommodation is an absolute disgrace. What the Army would do without Nissen huts I cannot imagine, but that accommodation should have been condemned long ago.
In one hut it was not possible to have electric lamps stronger than 40-watt, and one can imagine the strain imposed on the eyesight of the men using the huts. The place was badly furnished and presented a most unattractive, dreary and dismal appearance. It was used by 15 to 20 men as their sleeping quarters. There was no sanitary accommodation and at any time in the day or night the men had to walk about 200 yards to find sanitary accommodation. One can imagine the inconvenience caused in the dead of winter.
It is true that the authorities are providing new accommodation and some of the new sleeping quarters and barracks accommodation is excellent. But the work is not being done quickly enough. How can it be, when the Government 108 allocate £10 million, but authorise the expenditure of only £1 million to cover the housing requirements of the Air Force and the Navy as well as the Army? If we expect to attract to the Armed Forces young men who will have a real interest in their job, we must make better provision for married quarters. Although some provision is being made for the wives and children of Service personnel, far too many families are living in old Nissen huts which are a disgrace.
I know that the Army authorities do their best to furnish this accommodation properly, but the actual huts are dreary places and we cannot expect Service men and their families to be happy and contented unless we improve their housing standards. I should have thought that the right hon. Gentleman would have devoted much more money to accelerating the rate at which new buildings are being provided to house Service men and their families.
I have spoken much longer than I anticipated, but I had a great deal that I wished to say and I consider this the time when it should be said. I feel sure that in Committee on the Finance Bill a much better case will be deployed against the right hon. Gentleman. He will be told that his methods of disposing of the surplus are ill-considered. He could have used the surplus in far better ways to improve the health, homes and social conditions of the people and so created the incentive needed to increase production.
§ 7.30 p.m.
§ Mr. G. R. Howard (St. Ives)
I will not detain the Committee very long, as the point I wish to make is a local one. While adding my congratulations to my right hon. Friend the Chancellor for the excellent, and, if I may say so, honest Budget, I am sorry that there is no time, perhaps in view of forthcoming events, to mention specifically a vexed question concerning the Isles of Scilly.
I know that this is not a question which is very popular in the House or one which receives very much support, but I feel very strongly about it and should like to put forward to my hon. Friend the Financial Secretary one or two points which, perhaps when we are returned again—
§ Mr. Howard
—may be considered, because of the great power of approval or disapproval of the Treasury in this matter.
Before the present incidence of taxation affected the people of the Islands, I think few would have complained about the fact that they had to provide for themselves a medical fund to cover additional emergency health expenditure. They have done this, I understand, for many years, but now when they are brought under our taxation and are paying their full National Health contribution, it is grossly unfair that they should have to meet the demands of this emergency health fund. Anybody who had letters such as I have recently received would find that they provide full support for the case I am making, and I would suggest that any Member of Parliament who refers to the Isles of Scilly in an offhand way should be given these letters to read.
One letter from a lady relates how she had to cancel an appointment for medical treatment on the mainland because she could not afford the expense of going over to the mainland.
§ Mr. Howard
The question here is this. Surely this is a case where, if they are faced with this extra expense, the cost should be borne by the Ministry of Health, with Treasury approval, because it is not just a question of going over for one day. In bad weather people may be held up and have to spend two or three days in Penzance. When they cannot get back to the islands, these people must bear the expenses of staying away from home, and I have a number of bills as well as other data here to prove the point.
There are other ways in which the Treasury can help. Here is another suggestion which could be considered. Surely it would be possible to do what is done in certain instances in Scotland, and that is to make special grants towards the provision of water and sewerage schemes and also to provide a remote area housing subsidy, both of which are very expensive items, in the islands.
Of course, the biggest question of all which ought to be considered is that of 110 the steamer which serves the Scilly Isles, and the cost of a new one. We can only hope that the proposals in a future Budget will do something to help this small company in the financing of their new steamer, which is going to be very costly. Any help the Government may be able to give in that respect will be very acceptable indeed. I was very disappointed recently when I was unable to get any help on the subject of an agricultural grant, as in the case of Northern Ireland, because it was felt that the main exports from the islands were flowers, whereas, in fact, there is a certain amount of agricultural exports, such as potatoes and pigs, as well as the necessary agricultural imports, such as feedingstuffs and so on, which should also rank for grant.
I beg of my right hon. Friend not to consider these islands as fortunate places where people go in summer, but as places where people are living all the year round and trying to build up a first-class T.T. attested herd, as well as growing flowers and doing what they can to improve the agricultural output of the country. Therefore, anything the Government can do to help will be very much appreciated in view of the increased burden now being suffered by the islanders because of the heavy incidence of taxation that has come to them.
§ 7.35 p.m.
§ Mr. Frederick Lee (Newton)
I welcome the concession the Chancellor has given to the parents of apprentices, who will now be able to claim the same remission of taxation available to those parents whose sons and daughters are continuing their education. On two previous occasions I have moved Amendments designed to have this effect, and two years ago we were successful in halving the amount then obtaining. Therefore I very much welcome the fact that this year the Chancellor has equalled things up a little.
I am afraid that that is about the only thing upon which I can congratulate the Chancellor on this Budget. Speaking as one who comes from Lancashire, I agree at once that there was a period when the concession on the Purchase Tax which he has now announced would have been very welcome. I think, however, that the time when it might have done a lot of 111 good for Lancashire has long since gone. The great problem which has been presented to the Chancellor and the President of the Board of Trade is the question of Indian imports, which are continuing to increase and are so very much cheaper than anything Lancashire can produce. Indeed, if the operatives in the Lancashire textile industry were working for nothing we should still not be able to compete with the prices at which Indian cloth can be brought into this country.
If the whole story has now been told, and if the Government have nothing further to say to Lancashire on this subject, I think they must have come to the conclusion to write off the Lancashire textile industry. It would appear that this is sheer political prejudice, because there is and has been a suggestion put to the Government in the last few weeks that the Government themselves should handle the purchase of cotton cloth, but, because of their dislike of bulk purchase from an ideological point of view, they have refused to accept the suggestion. It is now absolutely clear that they have nothing whatever to put in its place, and I would have thought that if these are the last words of the Government to Lancashire, it is pretty obvious that the Lancashire textile industry is doomed and that, as far as this Government are concerned, we have nothing more to hope for.
At a time when our balance of payments is in a precarious state, I believe that the Chancellor's speech today was a complete and utter tragedy. I have never heard such complacency in my life in the presentation of a Budget to the House, and at a time when, according to the returns for last month, we are getting further into debt on our visible trade to the tune of some £3 million per day, which I think works out at about £1,000 million a year. I know that there is a different story about invisible exports, and therefore I do not say that our total deficit is running at about £1,000 million, but I do say that the whole picture which is presented to us, even if we take the invisibles into account, is calamitous. When we listened to the Chancellor presenting a Budget in which the balance of payments position is mentioned in such a cursory or by-the-way fashion, while he was concentrating on issues which he 112 hopes will bring him extra votes in a few weeks' time, I considered that it was not only hypocritical but completely irresponsible.
I hope that during the remaining days of this debate the Committee will show that, irrespective of the result of the election in a few weeks' time, there is a sense of responsibility in this House which will condemn an attitude of the sort which we have seen on the part of the Chancellor today. Indeed, since last month's figures cannot be affected by the statement of the Australian Government in which they declared that they felt it necessary to curtail their imports, the position is even worse than last month's figures would seem to indicate.
We know that during 1954, for instance, exports to Australia and New Zealand rose by more than the total increase in our exports in that year. Therefore, the very markets upon which we have been relying so heavily and which have played such a great part in enabling us to increase exports are now closing against us. Yet, while that position obtains, we hear the sort of complacency from the Chancellor this afternoon about which I have already complained.
The principal proposal made by the Chancellor was to reduce the standard rate of Income Tax by 6d. in the £. I am not complaining about reduced taxation, and none of us will, but how he could, in February, increase the Bank Rate to the highest level at which it has been for 24 years—and tell the House that he did so because he was afraid of inflationary pressures and wanted to warn industry of the condition of our trade—and then come to the conclusion that the obvious corollary is to increase inflationary pressures, defies all logic. He must certainly not complain if people come to the conclusion that the central feature of his Budget has been more in line with the views of those who are looking for votes in a few weeks' time than those who take a responsible attitude towards the future Government of this country.
It would be nice to know whether we could have an answer to this question: will the Government pledge that, in the event of their being returned, this is the only Budget that we shall have in the next 12 months?—or can we take it that once they have got over this election period 113 we may have an interim Budget of a very different calibre from that which has been described this afternoon? I fully appreciate that the question will never be put to the test, but it would be interesting to know just what would be the answer of the Government.
The Chancellor read us a homily about the dangers of increased wages. I appreciate that when wages are rising faster than production there is very great danger. The Chancellor dodged that issue by telling us that there had been an increase in production over the last two years. What he failed to tell us was that in 1952—the first full year of his Government—there was a catastrophic fall in our production, at a time when our competitors were vastly increasing theirs, and that any slight increase in production now must be regarded in relation to the low level of production in 1952, and not as comparable in any way with the advances made during the five years when the Labour Government were in power.
§ Mr. H. Brooke
If the hon. Member will look at the Economic Survey he will find that the increase in production since the Labour Government went out of office is 10 per cent.
§ Mr. Lee
That bears out precisely what I have said. This is the fourth year of office of this Government, and the increase in production is 10 per cent. We averaged a 6 per cent. increase in each year, over a five-year period. Work out the difference. The levels of increase that we have had in the last two years do not represent a continuous flow from the increased production which we had between 1946 and 1951; they are merely an increase to be regarded in relation to the reduction we had in 1952. Therefore, we must not deceive ourselves into thinking that there is the same impetus in industry today as there was during the period of the Labour Government.
It is even more important to contrast this increase with the increases in the percentage of world trade in which our principal competitors are now participating. I appreciate that, no matter which Government had been in power, we should still have had to face competition from Western Germany and Japan. I suppose that we all agree that they had to be allowed to live in the world and get 114 into the export markets, because unless they did so we might again witness the kind of warlike activities in which those two nations indulged previously. We must look at these matters in their right perspective. On the other hand, it is extremely dangerous that at this period our exports are falling as a percentage of world trade as a whole. In the last analysis this nation cannot live and keep a decent standard of life for its people unless it can maintain and increase the percentage of world trade which flows through its ports.
For a considerable period I have been putting Questions to the Chancellor as to his policies in relation to the economic weaknesses which have been revealed. In reply to a Question which I put to him some weeks ago, he told me that he had no intention of reducing imports; his policy was to increase exports. That is very good, but I should like to ask him whether, taking account of the bloated level of our imports at the present time, and his inability to control them—because he has thrown away import controls—he is still of the opinion that, with Australia reducing her imports; with the vastly increased exports of Japan, Western Germany and the United States, and with competition in the principal lines which we are trying to export, he believes that over a comparatively short period of time he can increase our exports to such a level that the gap which is now revealed in our balance of payments position can be bridged. Unless he is able to do that, we shall return to a situation where we have the old import-export gap, which has widened upon two or three occasions since the war.
On 7th December last year we had an economic debate, and the questions of the import-export gap and the terms of trade were debated quite extensively. We made the point that there had not been any basic strengthening of the British economy, but that we owed practically everything to the favourable terms of trade which we have enjoyed during the lifetime of this Government. Even on 7th December last the right hon. Gentleman who is now the Minister of Supply, and was then the Economic Secretary to the Treasury, replying to my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), claimed that the policies of 115 Her Majesty's Government had done much to lower import prices. He said:these policies"—of Her Majesty's Government—contributed to the change in terms of trade, from which, I agree, we have largely benefited."—[OFFICIAL REPORT, 7th December, 1954; Vol. 535, c. 804.]In that case, why are we in difficulties today? Why does not the right hon. Gentleman wave his wand again? If the policies of the last three years have played an enormous part in bringing down import prices, why cannot the right hon. Gentleman continue them? His refusal to implement the policies which he followed then is an act of treachery to the British people. And yet the right hon. Gentleman, who was then Economic Secretary to the Treasury, because of his ability to show us these things has now been made a full Minister. At the very moment when he was saying these things he must have known that the terms of trade had turned by something like 6 per cent. That is the principal reason we are now in such grave difficulties in our trading position.
When the Chancellor of the Exchequer treats the trade unions to a homily about the disgraceful tendency of asking for higher wages, I suggest that when that comes from one whose policies have resulted in vast increases in share values, dividend distribution and profit-raising, it is nothing less than confounded cheek for the right hon. Gentleman to say how bad it is to ask for increased wages.
When my party occupied the benches opposite and when I had some responsibility for giving answers from the Dispatch Box, I remember the sneers from the party opposite about the Government's action in suggesting restriction of wage advances. We were trying to be fair to the unions and to increase the social wage which we were giving through the Health Service and so on. We were asking the unions to take a responsible attitude towards wages, and we got a response from them. They behaved in a perfectly statesmanlike way in consequence. But the party which accused us then is hardly the one which should treat us now to a homily about the awful consequences of asking for increased wages.
116 There can be no doubt that the policies embarked upon by the present Government from the time of the 1952 Budget were designed to recreate the distribution of wealth which we had in the pre-war years. Because of those policies, the party opposite shouted, "Away with controls of every type." The Chancellor today has failed to show to the nation the dangerous situation that we face. He has failed to show that the only way he could control it was by the use of the very instruments which we left him and which he has now thrown away. Therefore, he has had to go back to the old financial mechanism of the use of the Bank Rate, and neither the Chancellor of the Exchequer nor any man can say where that policy will end. Instead of giving the Chancellor the chance to select the things upon which to damp down, this will have the effect of damping down some of the industries whose products we need most.
It is a great tragedy that after all our work of economic expansion in bringing the nation from the position which we inherited in 1945, and which was described by the former Prime Minister, the right hon. Member for Woodford (Sir W. Churchill), as the position of a bankrupt nation, we now see that in order to pursue what is tantamount to a class policy all the great things which we did are to be sacrificed.
The people should have been made aware of the extent of our economic unbalance. Can any hon. Member on either side imagine Sir Stafford Cripps coming to the Dispatch Box and making the kind of speech that we heard from the Chancellor today, with our adverse trade balance running the way that it is? Of course not.
§ Mr. Lee
Sir Stafford Cripps was sneered at as "Austerity" Cripps, but he created the policy which brought the nation from bankruptcy. There are no men of that calibre on the Government Front Bench now who are prepared to tell the people, irrespective of elections, that the nation's position is dangerous and that it is necessary to take certain steps to obviate the dangers.
Throughout the world great manufacturing industries are growing up in nations 117 which previously were our customers, and we know that the production of the raw materials of industry is not keeping pace with the increased development and expansion of the manufacturing industries. When winding up a debate on science and industry, I complained some time ago that the Government had economised on the Department of Scientific and Industrial Research and that the geological survey which we had asked that Department to undertake was being retarded because of the economies that were being forced upon the D.S.I.R. In fact, that Department's report in 1953 showed that because of those economies the rate of progress was such that the geological survey could not be finished for 100 years. Because of our exposure of the Government's policies they have since been forced to give the D.S.I.R. more money, but I should like to know at what pace the geological survey is proceeding.
How soon can we know what raw materials and minerals are below even our own soil? What a paradox it is that here, in the home of the Industrial Revolution, no one yet knows what raw materials lie beneath our own soil. There has been a great deal of talk about Commonwealth expansion. Have the Government agreed to find capital to assist the Commonwealth Governments to undertake similar research?
These are the vital issues which the Chancellor should have tackled today. He did not get anywhere beneath the surface. He merely hoped that by holding out the carrot of 6d. off Income Tax, he would preserve his party's majority. As one of my hon. Friends has pointed out, the increase in rents which must flow from the increase in the Bank Rate, and the increased interest which local authorities must now pay for their borrowing, will more than offset the benefits which can be obtained by the average working man from 6d. in the £ off Income Tax. And so we see the same old game from the Tories: when something is given with one hand, more is taken away with the other hand.
The majority of old-age pensioners are grateful for the advance in pensions, not realising that there is no reason why they should not have had it two years ago. And yet almost in the same week as the Chancellor at last concedes the advance in pensions the rents of the very 118 same people probably will rise and thereby the advance in old age pensions will disappear. But that will not be the case with the higher income groups; theirs is a positive gain. That is why they say, "Thank God we have a Tory Government. We are in a privileged position."
The trade unions have advised the Chancellor of the Exchequer every year on his Budget proposals, but on almost every occasion he has ignored them. Despite this damping down of the unions' enthusiasm to assist in national survival, I am convinced that they will continue to play the rô le they have played for so many years and will do their best to maintain the liaison and partnership between Government and the unions which existed in the days after 1945 and which saved the nation from bankruptcy.
I hope that the result of this political electioneering Budget will be that the vast majority of people realise that a Government which engages in this kind of irresponsibility, when the nation is fighting for its existence, is no Government to be maintained here for another five years.
§ 8.0 p.m.
§ Mr. John Rankin (Glasgow, Tradeston)
We have listened to the introduction of a Budget which may go down in history as a classical example of anticlimax in financial manipulation. The Chancellor painted a picture in the rosiest of colours: production is going up, productivity is increasing, wages, social services and everything like that are doing well and, above all, taxes are falling. Hon. Members on all sides of the Committee will agree that it is a long while since we have had such a rosy picture.
There was a strange anticlimax. The Chancellor declared that he had a surplus of £433 million for this year in the Treasury coffers and that in the coming year he expected to find another surplus of £282 million; yet he had to convey that surplus was entirely non-existent in our trading relations with foreign countries. In the first three months of this year the balance of payments was in deficit to the extent of practically £80 million. The Chancellor well knew that that was a serious position, because in the corresponding period of last year the deficit was £40 million. The position has considerably worsened.
119 There was the Chancellor of the Exchequer this afternoon, with all the money that he needed to bestow largesse all around, but he was unable to touch all of it. He was like Tantalus, chained to a pillar, while the refreshing water that would have brought new spirit to the people of this country was just outside his reach. He could not touch it because of the balance of payments debt that he carries on his shoulders. If that deficit continues to rise at its present rate, as it well may—the danger of a trade recession was certainly present in the mind of the Chancellor—it is possible that the right hon. Gentleman may be faced in the next three months, as well as in the next two quarters of the year, with deficits not far different from the one that faces him now, and that at the end of the year, while having a surplus in the home account of £282 million, he may have a deficit in the external account of nearly £300 million.
That is the position that stayed his hand this afternoon. That was the anticlimax to the speech that he delivered. If it were possible to use the home surplus to meet the debts that may face us abroad, instead of having something to distribute we should actually be in deficit by a sum varying from £20 to £40 million. That is the real position of the country. It does not justify the rosy picture that the Chancellor painted, and that he would not have painted, if he had been facing that position honestly.
Some people are very pleased with the Budget. The hon. Member for Dorset, North (Mr. Crouch) said he thought it was very successful; no wonder. He represents a farming division. His division is part of that section of the community who will be subsidised productively in the Budget to the extent of £323 million. The farmers will support the Budget because "Rab's in his heaven. All's well with the farming community"; so the hon. Member for Dorset, North was pleased.
The hon. Member should not forget that when the Government came into power subsidies were being given to the people who have to eat farm produce, and that they amounted to £410 million. They helped to keep down the cost of living to ordinary working people. When seeking the suffrages of the people of Great Britain, the Tory Party was asked, 120Will you cut the subsidies that are given on the food of the people?" The reply given to millions of electors—who were diddled by it into voting for the Tories—by Lord Woolton, if I am able to mention such an august name in this place, was, "Whatever we may do if returned to power, we shall not cut food subsidies.What did the Tory Party do when it was returned to power? It cut the food subsidies from £400 million to £250 million, and the cost of living of the people, who were thus set free, has been one of the problems of the Government ever since. The people have not been able to benefit from the surplus which the Chancellor had available because his hand was stayed by the fact that he faces this position, as the hon. Member for Handsworth (Sir E. Boyle), whom we congratulate upon his new appointment as Economic Secretary to the Treasury, will learn to his cost before he is very much older.
§ Mr. Paul Williams (Sunderland, South)
The hon. Gentleman is talking about the cost of living. I have the great privilege of representing a part of Sunderland, where the majority of the people, in fact 80 per cent. of the male population, are engaged in shipbuilding and allied trades. In 1951, there were practically no television licences operating in Sunderland, but at the end of last month there were 17,000. That represents one licence for every three houses in a very industrialised section of the community. Does not the hon. Member agree that that is an indication of increased prosperity?
§ Mr. Rankin
I, too, have the pleasure and privilege of representing a great shipbuilding area, and I probably do so with a greater sense of my security in the future than does the hon. Gentleman. I cannot, from my division, echo the words that he has just used. They may apply to Sunderland, but not to the Govan division, which I hope to represent in the next Parliament in place of the division which I represent at present.
I am willing to enter into verbal combat with the hon. Member on the question of television. I ask him whether it is not strange that while the number of licences issued in 1951 was a little over 1 million, by the end of 1954 4,400,000 licences had been issued yet one has only to go among working-class homes to find that as far as the aerial is evidence—and, of course, it is not complete evidence—it 121 does not seem that the working classes have been participating very largely in the issue of new television sets.
§ Mr. Williams
I issue, across the Floor, an invitation to the hon. Member to accompany me anywhere he likes in County Durham, where he will find his statement disproved.
§ Mr. Rankin
Let the hon. Member come back to the House of Commons first, after the General Election. I do not mind going anywhere with him. He is a very pleasant and agreeable young man.
§ Mr. A. C. Manuel (Central Ayrshire)
The hon. Member for Sunderland, South (Mr. P. Williams) is only a very young Tory yet.
§ Mr. Rankin
I am sure that the hon. Member for Sunderland, South will forgive me if I do not pursue the matter too far.
I have been trying to show that, whatever his desires might have been, the Chancellor's hand was stayed because of the gravity of our position internationally. Because of that, the old folks have been left out, and I agree with every word my hon. Friend the Member for Kirkcaldy Burghs (Mr. Hubbard) said on that point. Entertainment, which is a necessary aspect of people's lives today, has been neglected for that same reason. We who live in Scotland know the difficulties which the entertainments industry faces there.
In my own division, where cinemas charge very low prices indeed of 8d., 9d. or 1s., with few going beyond 2s. 3d. a seat, the cinema industry is facing difficulties because of the tremendous demand which the Treasury makes upon it. Every year £37 million is extracted from the cinemas and, at the same time, £3 million is given willingly by them to the productive side. The cinemas have to find £40 million while receipts are falling from quarter to quarter and from year to year.
Although the cinemas are faced with that situation, and with the competition of television and of evening football matches, the Chancellor, hoping to reap the taxation, has refused to give any help because he has to face a great and growing problem. I said that the hon. Member for Dorset, North, however, was satisfied. The subsidies are all right for the farmer. The subsidies were cut for 122 the community, despite a pledge made over the wireless to millions of people that they would not be cut. When the Tories go back to the people on 6th May they will have to answer for that sin whenever they appear on their platforms.
I do not use the word "petty" in any unkind spirit, but the excuse that has been made for the somewhat petty alleviations which the Chancellor has granted is that they will probably help production. The right hon. Gentleman has reduced Purchase Tax on cotton and linen by 50 per cent. When he made that statement I felt quite thrilled, but he then said that in a full year it would cost us £3¼ million. It seemed to me a piece of bathos that such a tiny sum of money should have been worked up earlier in his speech as a great gesture towards the reviving of an industry which was suffering.
The Chancellor might have done something for the industry in another way. On 29th March, 1952, one of the great firms in that industry, Morton Sundour Fabrics, issued 14 shares for every share that was held—a capital appreciation of 1,400 per cent. in an industry which has today got from the Chancellor £3 million to keep it breathing. This capital appreciation is the one thing which has distinguished the run of the Tory Government since 1951. There have been bonuses, free bonus shares and high dividends and, of course, the people have been set free.
The same thing is true of almost any industry in the engineering or commercial life of the country. Cerebos which produces a salt that is used on almost every table in the country, issued £3 for every £1 share held during the period with which I am dealing. No wonder that we are told that the salt has not yet lost its savour. The same thing has happened in the case of Tootal ties and, as to "Milky Way," the farmers who, through their distributive agencies, have been distributing the milk which is subsidised by this Parliament were able to issue one £1 share for every share held by their shareholders. We are subsidising today an industry which can do that.
The Chancellor might have approached that problem in a somewhat different way. He could have thought of applying a capital gains tax, which is used in America, and from the product—which 123 would not have increased total consumption, which he wants to keep down—he could have alleviated a little more the lot of the old-age pensioners. It has been claimed that this reduction of 6d. in the standard rate of Income Tax will help industry. That is not a new argument. We heard it last year and we are hearing it again.
Two years ago the standard rate of Income Tax was reduced and the Excess Profits Levy was abolished. Private companies whose incomes had increased by nearly £200 million in 1954 found themselves relieved of tax payments to the extent of £80 million by those two actions on the part of the Chancellor. Where did the £80 million go? Was it ploughed back into industry to help production, as the Chancellor wanted? It is curious, but in that year dividends increased by almost the amount that the companies were saved in paying to the Chancellor of the Exchequer. In other words, dividends increased by almost £80 million.
Let us look at another angle of this question. Let us take the motor car industry. In 1950 the cars produced for the home market were valued, at factory prices, at £65 million. In 1954, this figure had risen to £205 million. That is quite a welcome sign, but the metal-using industries as a whole increased production by 8 per cent. above the 1953 figure. Those figures are taken from the Economic Survey. The number of cars produced rose by 25 per cent. This, again, was very welcome, but while the value of motor car exports rose by 13 per cent. the value of sales on the home market rose by 33⅓ per cent. Since 1951 the value of the private car sales on the home market has increased from £70 million to £135 million in 1954. In a way, that would not be an unwelcome sign if, at the same time, the exports of the metal-using industries had not fallen by £30 million.
We do not live by selling motor cars on the home market. We live by our exports. That is what the Chancellor wants to maintain. That is what he hopes will be the result of the financial policy he is pursuing, but that is what is failing because he has refused to operate the physical controls that Labour operated. He has refused to say to the 124 producers of motor cars, "You will get steel for that purpose if you are going to export your cars." He has set them free to sell the cars wherever they like, and the natural result is that the cars are being sold on the home market, because it is easier there and the roads of Great Britain are today a testimony to the foolish policy that is being pursued by the Tory Government. All he is doing is removing from his own shoulders to the shoulders of the Minister of Transport and Civil Aviation the problems which he ought to be facing.
I suggest that the policy that is being followed is failing, and we ought not to be following the policy of depending on financial controls to sustain and encourage our exports. It has been failing for the last four years, and this will have to be reviewed. If Labour returns to power, as I am sure it will, then that is one of the first things which a Labour Government will have to tackle.
Not only do we depend on our exports, but we also depend on our agriculture. The hon. Member for Dorset, North who sits for an agricultural division—I am sorry he is not here—would not have been as happy about the position of agriculture if he had read the Economic Survey produced by his Government. There, we are told that in 1954 there was a reduction of 500,000 acres in our tillage area and in our yield per acre, compared with 1953. This is serious.
The total crop production in 1954–55 will be down by 2,580,000 tons, compared with 1953. While it is true that livestock production will be up by 162,000 tons, the milk decrease will be 7 million gallons for the year just finished. The net agricultural output as a whole will be down by two points. I cannot say that that is a happy position where exports are declining and agriculture is not thriving as it ought.
These are the things which place the Chancellor of the Exchequer today in that position of anti-climax where he has had plenty of money at home yet is unable to use it because of the precarious situation in which we are placed on the balance of payments' front. I know, of course, that the excuse is that last summer was a bad summer. But that is only an excuse. The fact is that it only emphasised the position that we must husband the resources 125 of this little island more carefully than the Tories are doing if we are to feed our people as they ought to be fed.
I say in all sincerity to the Chancellor that he ought to think again about the road along which he is going. He should remember the lady who took the wrong turning. If he does not re-think his policies then, if he continues on the road along which he is going today, he may see a very red glow before he reaches the end. There was a famous character in our history who, when leaving the town of London, paused for a moment and turned again. I suggest that, while the Chancellor still has time, he should follow the example of Dick Whittington and turn again.
§ 8.29 p.m.
§ Lieut-Colonel Marcus Lipton (Brixton)
The Budget statement which we have heard this afternoon will come as a great disappointment to large numbers of people, and the speeches we have heard already will be but the forerunner of a widespread expression of public dissatisfaction and indignation with the financial programme outlined by the Chancellor of the Exchequer.
We hear that the prosperity of the country has increased, but I would direct the attention of the Committee to Table 11 in page 22 of the Economic Survey for 1955, which shows the consumption of food in the United Kingdom during the past few years. The significant thing about that table is that in 1954, as compared with 1950, the consumption of dairy products, eggs and fresh vegetables has gone down.
It is a strange state of affairs when, as a result of the alleged prosperity introduced by the present Administration, the consumption of such essential articles of food has gone down in the past four years. No one would suggest that those articles can be regarded as luxuries, yet their consumption has decreased. Why? Because large numbers of humble people are not able to afford to buy those articles of food at their present prices.
The Chancellor of the Exchequer pulled out the only plum he could pull out—6d. off the Income Tax. At the same time as he announced this concession he suggested, more or less, "Although I am giving you 6d. off Income Tax, do not spend it." What guarantee, what plan, 126 what control has the right hon. Gentleman in mind to ensure that this is not spent on unnecessary goods? What guarantee can he give us that this Income Tax concession will not increase the excess of demand about which the Government have been concerned for a considerable time?
It is because of that excess of demand that the Bank Rate has had to be increased. Various restrictions have had to be imposed on hire purchase because the demand was too great. Yet here we have millions of pounds being thrown into the pockets of people who can do without it. The net effect must be to increase demand and thus create a situation which will be much worse than it has been hitherto. An indiscriminate tax concession of this kind, which benefits those who have to a far greater extent than those who have not, must be a stimulus to spending and will by no means tend to increase our exports. If that is the object of the Income Tax concession, we are entitled to ask the Government to indicate what guarantees they can give or what provision has been made to ensure that this potential spending power, which is being added to the spending power of people who already have too much, will really be diverted into the export trade.
It will not help to keep the economy on an even keel and—although we all hope that this will not happen—it will certainly increase the possibility of an economic recession, signs of which, unfortunately, have appeared already in our textile areas. The Government know the danger there, but they have announced what even the most ardent supporters of the Government in Lancashire must admit is an absolutely paltry concession in a hopeless attempt to solve a very serious economic problem.
I said just now that large numbers of people will be profoundly disappointed by the Budget. The Chancellor seems to suffer from the curious idea that indirect taxation is not a matter which needs to be given any priority when considering the rising cost of living. He has done nothing to reduce the petrol duty. Many responsible organisations have produced figures which show conclusively that the petrol duty has an important effect, increasing distribution costs and in that way increasing the cost of living for every section of the community. We have been 127 asking the Government to make a concession with regard to light hydrocarbon oils for industrial purposes, which would cost very little, but that very reasonable demand has been completely ignored.
The cogent arguments put forward by the entertainments industry have been dismissed without any real consideration. What is the use of giving a concession of 6d. off Income Tax to actors and actresses who are unable to earn a livelihood at all? Would it not be better, from the Government's point of view, to encourage actors and actresses to earn some money on which they would be glad to pay Income Tax? In South London, the theatres and music halls have been closing down. The only theatre left in South London is at Streatham. It produces good plays, but it has been losing money for some years and will find it impossible to carry on. The only music hall left in South London is in my constituency. This means that because the Government ignore the legitimate demands of the entertainments industry an increasing number of people will be denied the opportunity of making a living and earning an income upon which to pay tax. Also, the tax revenue from greyhound racing has been falling steadily for some time past.
Many of us hoped that the Government would be a little more generous about the repayment of post-war credits, a concession which would have been of direct benefit to people in very humble circumstances. Nothing has been done. Large numbers of people have to seek National Assistance while possessing the entitlement at some time or other to the repayment of post-war credits. Something ought to have been done in that direction.
If the Chancellor had really wanted to make a concession which would be of some value to wage earners and, in particular, low wage earners, why has he not given them a concession by allowing them to set off against their Income Tax liability the cost of travelling to their work? As a result of the tax on petrol among other things, the cost of travel is increasing and so we have a vicious circle in which the Chancellor of the Exchequer, by his economic policies, raises the cost of living, raises the cost of travel, and then denies to wage earners the right to deduct from their taxable income the cost of travelling to and from work.
128 The Chancellor of the Exchequer may think that he has made a very widespread concession by taking 6d. off Income Tax. But I remember that not very long ago the Chancellor gave figures in the House to show that 8,600,000 workers earned less than £5 a week after tax and National Insurance contributions had been paid. I remember that on the same occasion he said that approximately another 10 million people earned less than £10 a week, yet the Tory propagandists and Ministers say that the prosperity of the people is increasing and that the average income of all the adult working population is about £10 a week. The Chancellor of the Exchequer's own figures indicate that out of a total population of more than 23 million more than 18 million workers earn less than the average of £9 17s. 3d. a week. That will give some idea of the value of the Income Tax concession which was announced by the Chancellor of the Exchequer this afternoon.
When we talk about tax concessions which will enable industry to compete in the export markets, let us not forget that industry is already deriving very considerable advantage from derating. That should enable industry to compete in the export markets. I repeat that the Income Tax concession to wealthy commercial and industrial undertakings is not likely to reduce the cost of the product, nor to increase exports. I should like to think that the immediate effect of the 6d. reduction in Income Tax will be an increase in the export of motor cars, or a reduction in the price of motor cars to the home purchaser.
Another subject which should engage the Chancellor's attention, and to which I have referred on previous occasions, is the extent to which the Exchequer already subsidises industry. It can be gauged from the amount of money which is spent by commercial firms on advertising. The great beauty of advertising is that its whole cost can be charged against profits. In other words, almost half the cost of the advertising in this country by manufacturers of soap powders and other people is, in effect, borne by the Exchequer. When will the Chancellor of the Exchequer make up his mind that at least a proportion of this expenditure on advertising shall not be a deductible expense in the computation of profits?
Very large sums of money are involved, as will be seen from a statistical review 129 of Press advertising which was published recently. That indicated that in 1954 there was a 20 per cent. increase in Press advertising over that for 1953. In 1954, about £71 million was spent in the various papers in London and the provinces and in magazines and trade papers compared with less than £59 million in 1953.
It is, of course, worth while for these large companies to spend large sums on advertising when, in effect, almost half the cost of it is borne by the Treasury. For example, figures which I have show that the amount spent by Cadburys on advertising its chocolate and cocoa products last year was £578,000. Persil, the soap powder firm, spent £576,000. Kellogg, the cereal food manufacturers, spent £563,000, and the Shell Oil Company, £452,000. I think that the figures would seem to establish that 25 per cent. of the selling price of every packet of detergent sold in this country is spent on advertising. Here is a rich field which, I would suggest, the Chancellor ought to examine if he really wants to improve the public funds and find new sources of revenue which would not add to the cost of living of an already overburdened population.
Reference has already been made to the difficulties of the old-age pensioners, and I have quoted figures which show that to millions of people 6d. off the Income Tax does not mean a thing. When hon. Members opposite go to their constituencies in the forthcoming General Election, I should like them to take note of the answers when they tell old-age pensioners who are drawing National Assistance, and who are now to be 2s. 6d. a week better off as a result of the changes in the pension and National Assistance scales, that one of the things which the Government have done is to take 6d. off the Income Tax.
In any event, what the Government are doing, as has been mentioned by previous speakers, is to give with one hand and to take away far more with the other. When the Government talk about taking 6d. off the Income Tax, they should in all honesty remind people that the £1 of October, 1951, is now worth only 18s. 6d., so, in fact, there has been a cut of 1s. 6d. in the £ in the standard of living of everyone, compared with 1951. There has been a cut in the purchasing power of the £ to the extent of 1s. 6d., that is to say, 130 7½ per cent. If the Government can persuade the ordinary people that by announcing this concession of 6d. off Income Tax they are restoring to them the 7½ per cent. cut in the internal purchasing value of the £, I hope that they will get a better response than I think they will receive in the most backward Conservative areas.
For all these reasons, I think that the Budget will be regarded merely as an electioneering manoeuvre on the part of the Chancellor, to retain those marginal seats at present held by Conservative Members by a very tiny majority, and possibly to win one or two marginal seats which are held by a narrow majority by Opposition Members. There is no other justification whatsoever for the Budget which we have heard this afternoon.
§ 8.50 p.m.
§ Mr. Thomas Oswald (Edinburgh, Central)
I do not want to burden the Committee by speaking at great length, but it is apparent from the numbers present on both sides that hon. Members are somewhat disturbed by the Budget introduced by the Chancellor today. Many of us were keenly disappointed, primarily because some of the local newspapers, especially those in Scotland, indulged in a tremendous amount of wishful thinking in the past three weeks, suggesting that the Chancellor was about to give back to the taxpayer millions of pounds.
Today we find ourselves in the invidious, fantastic and ridiculous position that the Chancellor once again has given what little concession he has to those who can best do without it and do not really require it. There was nothing at all in his speech about any cut in the petrol tax which might have brought about cheaper fares and lower road haulage costs which, by and large, might have brought down the price of many commodities. There was no suggestion of any reduction in the duty on industrial oils, although almost every hon. Member has had a continuous flow of correspondence from the industrial undertakings which use such oils asking for relief from the burden.
There was not one word about any cut in Entertainments Duty, especially in cinemas, although reams of paper have been sent to all hon. Members asking them to do something to keep our 131 cinemas going and to give the people the opportunity of enjoying a cheap form of entertainment. There was not one word about a remission of tax for the live theatre although, again, over the past five or six weeks we have been receiving in almost every mail requests not only from local theatres but from national theatres—from the managements, Equity, the Variety Artistes' Federation and others who make their living from the live theatre.
There was not one word about any concession to the hundreds of thousands of poor souls who are on fixed incomes. We talk glibly in this Chamber about giving a concession to the old-age pensioners. We have asked them to go through a hard winter and to wait until 25th April before any concession is given to them. What is the situation? We have reached a stage where those old people are not only feeling the pinch but are very much disturbed at the attitude of the Government to whom they looked for a further concession today.
As my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton) said, if hon. Members opposite think that they can go to their constituencies during the General Election campaign and convince the old-age pensioners that, because 6d. in the £ has been given as a concession in Income Tax, they should well into the polling booths to record their votes for Government supporters, they are mistaken. The artist who prepared the Government slogans which are on the hoardings painted them on boomerangs. Assuredly those boomerangs will come back upon the Government and their spokesmen for all they promised to do and failed to carry out.
I make a special plea for the pensioners. I hold in my hand correspondence about one of my constituents. I have permission to publicise it. The details refer to an old couple who live in Central Edinburgh. Both are old-age pensioners. The man is incapable of working. In 1941 their only son, a flight sergeant in the Royal Air Force, was shot down and never returned to his home. They received a message from Buckingham Palace which read:The Queen and I offer you our heartfelt sympathy in your great sorrow. We pray that your country's gratitude for a life so nobly given in its service may bring you some measure of consolation.132 That was signed by His late Majesty King George VI.
This old couple received a pension for the loss of their son valued at 13s. Two years ago, because they were in receipt of a small pension from the Post Office, the 13s. was cut to 5s. 6d. I raised the matter with the Minister of Pensions and National Insurance. I have in my hand correspondence from the right hon. Gentleman stating that, after due consideration and a special plea having been made on their behalf, he was restoring the pension to 13s. I have another letter with a different date, which states:With reference to the war pension of 13s. a week payment to you arising from the death of James Flannagan, I have to remind you that the award is based upon your financial circumstances"—a means test—and it is necessary to take into account your total income from whatever source it is derived. In view of the increase in your retirement pension, it is necessary to reduce your dependant's pension to 5s. a week.What a noble sacrifice was made. Yet it was valued at 13s.
Not so many weeks ago the Minister of Pensions and National Insurance claimed that it was because of the increase in the cost of living that there was to be an increase in retirement pensions. This couple will receive the increase of 11s. in the retirement pension on 25th April. But the dependant's pension of 13s. has been cut to 5s., and so their total increase will not be 11s. but 3s.—1s. 6d. each for the loss of their son who went out as one of the few in an endeavour to save this nation.
I say to hon. Members opposite, "Do not be smug about this, because I am quoting only one such case." My hon. Friend the Member for Edinburgh, East (Mr. Willis) showed me a similar letter which he has dispatched today to the Minister. I am dispatching this letter to the Minister this evening and asking him to restore the pension in the same way as he did two years ago because of special circumstances. It is all very well to tell people that they can still go to the National Assistance Board and make a special plea, but in every instance where a supplementary pension is paid it is taken into account as a consequence of the so-called increase in retirement pensions.
133 I wish to make a special plea to the Chancellor of the Exchequer that before his Finance Bill reaches finality he should pay some regard to those people who will suffer as a result of increased rents and rates and transportation costs and the still continuing rise in the cost of living.
If as the Government claim we have reached the stage of being on the verge of prosperity, why cannot some of that prosperity be paid back to the taxpayers who created it? Surely those who have built up this prosperity are entitled to a greater share of it? Instead of that, all the concessions that have been given today are being passed on to those in the higher income groups. It is all very well for an hon. Gentleman opposite to shake his head, but he knows that this is a factual statement.
I have raised this matter as a special plea on behalf of those who at the moment are finding themselves in difficulty, and I sincerely hope and trust that, before we reach the end of this shortened debate on the Budget and the Finance Bill, more concessions will be squeezed from this recalcitrant Government.
Whereupon, Motion made, and Question, That the Chairman do report Progress and ask leave to sit again—[Mr. E. Wakefield]—put and agreed to.
Resolutions to be reported Tomorrow. Committee also report Progress; to sit again Tomorrow.