HC Deb 17 March 1958 vol 584 cc1046-9

Motion made, and Question proposed, That the Clause stand part of the Bill.

9.34 p.m.

Mr. Douglas Jay (Battersea, North)

I want briefly to say only two things. Since the Financial Secretary has threatened us with some further measure in the Finance Bill to deal with loans to nationalised industries, we on this side of the Committee want to make it perfectly clear that we should be opposed to transferring these borrowings from the Budget and forcing the nationalised industries on to the money market.

We do not have the rather childlike faith which the hon. Member for Kidderminster (Mr. Nabarro), who is not with us tonight, confessed on Second Reading, in the identity between the interests of the money market and the national interest in this matter. I wonder what point there is in transferring these borrowings away from the Budget to the City. We ought to destroy once and for all the delusion under which the right hon. Member for Flint, West (Mr. Birch) appears to labour, as well as the hon. Member for Kidderminster, that somehow by making this transfer it would be possible to reduce the level of taxation which the Chancellor has to impose in his Budget. This, of course, is total nonsense.

I do not think that the Financial Secretary to the Treasury will disagree with me that if we transfer £200 million of borrowing away from below-the-line in the Budget, where it is now, and put it in the money market instead and require the money to be borrowed there, it will absorb that amount of private savings which otherwise would have been available for something else. But because we have mopped up that amount of private savings, the Budget surplus will have to be that amount the larger. Therefore, the amount of taxes that we shall have to raise will have to be exactly the same as it was before.

I hope that the Financial Secretary will agree with me that if we make this transfer and reduce taxation by that amount the effect will be exceedingly inflationary, but if, as we must do in this case, we leave taxation unchanged, it is a bookkeeping operation from the point of view of deflation and inflation, and it has no effect whatsoever on the economy. It astonishes me that the right hon. Member for Flint, West, who was a year or more at the Treasury, is still labouring under this total delusion. If this is the way in which Budgets have been constructed in the last two years, it may explain the repeated financial crises which we have been having in the last eighteen months. I do not ask the Financial Secretary to consult me, but if he will consult the Paymaster-General or any of his other colleagues in the Treasury, they will explain this matter to him and make it perfectly clear.

The only difference that we make if we transfer these borrowings to the money market will be either to make it impossible for the nationalised industries to borrow at all or, if they do borrow, to raise their costs by increasing the interest burden. If, indeed, at one and the same time we are to hold down the prices charged by the nationalised industries below the economic level and force them to borrow at a much higher interest rate, we shall make it impossible for those industries to carry on at all. It may be that that is what the hon. Member for Kidderminster really wants to do, but I hope that it is not what the Government want to do.

I agree with a great deal of what was said on Second Reading by the hon. Member for Cheadle (Mr. Shepherd). I think that he was right in saying that all of us in Parliament in the past have gone too far in controlling the price policies of these industries for political rather than economic reasons. If we are to make a success of these industries in the future, we shall have to give them more freedom in their price policies and continue to enable them to borrow for their essential development programmes at reasonable rates of interest.

9.44 p.m.

Mr. Arthur Palmer (Cleveland)

I want to put again very shortly a point which I raised on Second Reading and to which, as far as I can remember, the Financial Secretary did not reply, namely, how far there has been consultation with the nationalised industries on this matter and whether the House of Commons is to be provided at a later stage with any statement from the Government about the future long-term policy in financing the nationalised industries.

The Financial Secretary rather hinted that if there was to be a change then a change of a more permanent character would be made in the Finance Bill, but surely this is an extremely big question and I should have thought that it would have been valuable to the Committee, and particularly to those of us who try to follow these matters, if some kind of White Paper or other statement were issued by the Government giving the result of the method of doing the job up-to-date and indicating long-term policy for the future.

9.45 p.m.

The Financial Secretary to the Treasury (Mr. J. E. S. Simon)

I dealt so far as I could with the main arguments on each side on the Second Reading of this Bill, hoping in the end, I confess, to have said precisely nothing, because, of course, as I indicated, the policy as to how the nationalised industries should be financed must be put forward by the Chancellor of the Exchequer in its proper context; in other words, in his development of his economic policy as contained in the Budget and Finance Bill.

The hon. Member for Cleveland (Mr. Palmer) asked two specific questions as to how far there is consultation with the nationalised industries. Of course, there is constant consultation between the Ministers responsible for the nationalised industries and the heads of those industries as to what are their investment needs, and these are kept under review by the Government generally in reviewing their investment policy in the public and private sectors. So far as letting the House of Commons know what is the long-term policy on investment in the nationalised industries, I take note of what the hon. Gentleman suggested and will bring it to the attention of my right hon. Friend the Chancellor of the Exchequer.

I do not think the right hon. Member for Battersea, North (Mr. Jay) will expect me to reply to what he said in answer to my hon. Friend the Member for Kidderminster (Mr. Nabarro). I think I should only say that when I said that my right hon. Friend the Chancellor would deal with this matter in the Finance Bill, that was not a threat; it was a promise.

Mr. Jay

May I ask the Financial Secretary whether he will at least clear his own mind on this point before the Budget?

Mr. Simon

I am happy to say that my own mind is perfectly clear.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill reported, without Amendment; read the Third time and passed.