Commons Sitting of 7 April 1959

Preamble
The House—after the Adjournment on 26th March, 1959, for the Easter Recess —met at half-past Two o'clock.
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  FINSBURY SQUARE BILL
  Read the Third time, and passed.
  RAILWAY CLEARING SYSTEM SUPERANNUATION FUND BILL [Lords]
  Read the Third time and passed, without Amendment.
  RAILWAY PASSENGERS ASSURANCE BILL
  Read the Third time, and passed.
  TEES CONSERVANCY BILL [Lords]
  Read the Third time and passed, without Amendment.
  NORTH DEVON WATER BILL
  As amended, considered; to be read the Third time.

  LONDON COUNTY COUNCIL [MONEY]
  Bill to regulate the expenditure on capital account and lending of money by the London County Council during the
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  financial period from the first day of April, nineteen hundred and fifty-nine to the thirtieth day of September, nineteen hundred and sixty and for other purposes, read the First time; and referred to the Examiners of Petitions for Private Bills.

ORAL ANSWERS TO QUESTIONS
  SCOTLAND

    David MacBrayne Ltd. (Subsidy)
    Mr. Ernest Daviesasked the Secretary of State for Scotland why, in the Estimates for his Department, the subsidy to David MacBrayne Ltd. for maintenance of transport services in the Western Islands and Highlands is increased from £246,150 to £282,100.
    The Joint Under-Secretary of State for Scotland (Mr. Niall Macpherson): The agreement between the Government and the company provides for increases or decreases in the annual grant to take account of losses or profits. The adjustments are made retrospectively, and the provision in the Scottish Home Department Estimate for 1959–60 is higher than in the previous year because such an adjustment had to be made for 1958.
    Mr. Davies: Can the hon. Gentleman say to what extent control is exercised over the company and to what extent the accounts are available? Can they be placed in the Library so that hon. Members can see them?
    Mr. Macpherson: I should require notice of the second part of the hon.

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    Gentleman's supplementary question. The company is an independent company operating entirely independently.
    Mr. Woodburn: Can the hon. Gentleman say whether the Government-appointed director attends regularly?
    Mr. Macpherson: The right hon. Gentleman would have to give me notice of that question also.

    Assault Cases (Prosecution)
    Mr. Gowerasked the Secretary of State for Scotland if he will take steps to permit private prosecutions in Scotland for assault, as in England and Wales, without the concurrence of the Public Prosecutor; and if he will make a statement.
    Mr. N. Macpherson: No, Sir. My right hon. Friend is not aware of any demand in Scotland for such a change in the existing system of prosecution, which has worked satisfactorily for many years.
    Mr. Gower: Does not this question spotlight what would seem to be a defect in what is otherwise agreed to be an excellent system of law in Scotland? Without saying anything about the Waters case, the result of the inquiry into which has not yet been announced, does not the Minister recognise that no such case could arise in England and Wales because in such a case in England and Wales it would be the court which would decide whether there was a case to answer?
    Mr. Macpherson: I think my hon. Friend will appreciate that it would hardly be possible to debate the merits of the Scottish and English systems in this regard at Question Time. I can only say that the system in Scotland has long been accepted as satisfactorily protecting the interests of the individual.

    Herring
    Mr. Grimondasked the Secretary of State for Scotland if he will now make a further statement on the arrangements made by the Herring Industry Board for the new herring season.
    The Joint Under-Secretary of State for Scotland (Lord John Hope): I have nothing yet to add to the Answer I gave the hon. Member on 24th March.
    Mr. Grimond: Can the hon. Gentleman say when he will be in a position to add
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    something to the previous Answer, and also whether he is discussing with the fishermen's associations the price of herring for fishmeal?
    Lord John Hope: As the hon. Gentleman knows, representations from various sections of the industry have to be considered. I shall certainly provide an answer for the hon. Gentleman as soon as I possibly can.
    Mr. Hector Hughesasked the Secretary of State for Scotland on what date he received the letter sent to him by the Scottish Kipperers and Herring Freshers Association, protesting against the proposal of the Herring Industry Board to increase the minimum price of herring in the home market, and asking him to receive a deputation on the subject; what reply he has sent; and when and where he will receive the proposed deputation.
    Lord John Hope: The letter was received on 23rd February. Representatives of the Association were subsequently invited to meet officials of my right hon. Friend's Department and did so on 12th March. My right hon. Friends are considering the views of the Association along with the proposals of the Board.
    Mr. Hughes: Does the Under-Secretary realise that the proposed change will increase the cost to the processor by 10 per cent. and to the consumer by anything from ld. to 3d. a lb. of fish and will not be satisfactory to anyone except the Herring Industry Board?
    Lord John Hope: All these relevant considerations are certainly taken into account while we are making up our minds about this.

    Advance Factories
    Mr. Hector Hughesasked the Secretary of State for Scotland (1) how many new advance factories he plans to erect in and near the city of Aberdeen in the immediate future; where each will be located; when the work on each will commence; and when that work, according to his estimate, will be completed;
    (2) whether he has now considered the plans made by the Government of Northern Ireland to attract there new industries by building advance factories, by offering factory space at reduced rents, and by a flat freight rate for transport of factory products; and if he will now devise and

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    publish similar plans to attract new industries to Aberdeen and North-East Scotland.
    The Parliamentary Secretary to the Board of Trade (Mr. John Rodgers): I have been asked to reply.
    Since Aberdeen and North-East Scotland are not in a Development Area, the Board of Trade have no power to build advance factories there or to offer factory sites on preferential terms. The inducements which the Government are offering to attract new industry to places of high unemployment are well known and are considered more appropriate to the circumstances of Great Britain than those available in Northern Ireland under the separate legislation enacted by the Northern Ireland Government.
    Mr. Hughes: Does the Parliamentary Secretary realise that it is most unsatisfactory for the President of the Board of Trade to reply to a Scottish question of this sort, especially as the Secretary of State for Scotland has promised advance factories of this kind and they are badly needed? Will the Parliamentary Secretary who has replied get in touch with the Secretary of State for Scotland with a view to inducing him to redeem the promises he has made?
    Mr. Rodgers: I am constantly in touch with my right hon. Friend the Secretary of State for Scotland, and I remind the hon. and learned Gentleman that we are building one advance factory in Scotland on an experimental basis at Coatbridge at the moment.

    Radioactive Waste
    Mr. Lawsonasked the Secretary of State for Scotland (1) if he is satisfied with the adequacy of the recommendations made to industrial firms for the handling and disposal of radioactive industrial waste; and if he will make a statement;
    (2) if he will publish as a White Paper the regulations governing the disposal by industrial firms of radioactive industrial waste, together with a description of the appropriate State organisation responsible for the publicising and enforcing of such regulations.
    The Joint Under-Secretary of State for Scotland (Mr. J. Nixon Browne): An expert panel of the Radioactive Substances Advisory Committee has reported
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    on the best way to control the handling and disposal of radioactive waste. The Government will shortly be consulting the local authority associations and others interested about proposals for legislation and the issue of a White Paper will then be considered.
    In the meantime, my right hon. Friend's officers will continue to give advice to firms in Scotland and to local authorities, and the Atomic Energy Authority are willing as an interim measure to assist in the disposal of radioactive waste which cannot safely be disposed of locally.
    Mr. Lawson: Am I right in thinking that at present there are no regulations governing the disposal of such waste? If that is so, the reply given by the hon. Gentleman will be heard with great satisfaction? Will he bear in mind that in this matter the interests of the public as well as of the handlers of the material should be taken into account? Will he therefore see that local health authorities have a large voice in ensuring that whatever regulations are passed are carried out?
    Mr. Browne: Yes. The hon. Member is right in relation to industrial waste; that is, waste from industrial firms. My right hon. Friend, in conjunction with other Ministers, will do everything he can to bring this to a satisfactory conclusion.
    Mr. Patrick Maitland: Will my hon. Friend also consider consulting farming interests about their view on this matter, because in many cases there have been protests about damage to stock? This is a fairly old story. Will my hon. Friend look into it and bear in mind that farmers, especially the Scottish N.F.U., may have something useful to tell us?
    Mr. Browne: Yes. My right hon. Friend the Minister of Agriculture is being kept fully informed.
    Mr. Woodburn: Is the Joint Under-Secretary aware that this is the second time in recent months when alarming broadcasts have had to be made as a result of what appears to be carelessness in that it has been possible for outsiders to touch this material? Children have been involved in both cases and the public are alarmed at this apparent carelessness in dealing with this dangerous material.
    Mr. Browne: My right hon. Friend is satisfied that in this case there was no carelessness. It was a very unfortunate occurrence. The firm was doing what the Alkali Inspectorate had suggested that it should do, and there is no cause for public alarm.
    Mr. Woodburn: If it was possible for children to get their hands on this material, it seems that the precautions have not been sufficient. Is the Minister prepared to see that they are made sufficient in the future?
    Mr. Browne: In the particular instance they have been already made sufficient.

  TRADE AND COMMERCE

    Consumer Protection (Committee)
    Miss Burtonasked the President of the Board of Trade when he expects to be able to announce the terms of reference drawn up for the Committee appointed to consider the whole question of consumer protection.
    Mr. J. Rodgers: My right hon. Friend expects to make an announcement soon.
    Miss Burton: Does the Parliamentary Secretary consider that next Tuesday will be "soon"?
    Mr. Rodgers: I am afraid that I cannot give an exact date to the hon. Lady at this moment.

    Timber Trade (Report)
    Mr. Remnantasked the President of the Board of Trade what steps he proposes to take to terminate the arrangements substituted by the imported timber trade for the agreements and undertakings condemned by the Monopolies Commission in 1953.
    Mr. J. Rodgers: My right hon. Friend is not yet in a position to make a statement.
    Mr. Remnant: Is the Parliamentary Secretary in a position to say what he is not in a position to make, because his recently issued report states that the new arrangements are, in effect, the same as the previous undertakings condemned by the Monopolies Commission? Is he not therefore prepared to do anything?
    Mr. Rodgers: Various courses of action are being considered and a number of points have still to be settled before my right hon. Friend decides what precise action the Government will take.

    Anglo-Soviet Trade
    Mr. Lewisasked the President of the Board of Trade on what dates he has made an approach to the Soviet Government for the purpose of discussing their requests for long-term trade credits; and when he expects these discussions to commence.
    The Minister of State, Board of Trade (Mr. J. K. Vaughan-Morgan): I am not at present in a position to add to the Answers which my right hon. Friend gave on 12th March to the hon. Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) and the hon. Member for Coventry, North (Mr. Edelman).
    Mr. Lewis: Can the Minister of State explain why, as both the Soviet Government and the British Government have expressed their desire for an increase in trade between the two countries, it has taken so long for some progress to be made? Can he give us some idea as to when there will be progress?
    Mr. Vaughan-Morgan: I certainly cannot be specific about dates. I remind the House that my right hon. Friend has already seen the Soviet Ambassador, but I cannot and am not prepared to divulge in detail what was discussed.
    Colonel R. H. Glynasked the President of the Board of Trade by how much the United Kingdom's exports to the Union of Soviet Socialist Republics rose between 1951 and 1958; and what further increase he expects in 1959.
    Mr. Vaughan-Morgan: Our direct exports to the U.S.S.R. were £3.7 million in 1951 and £23.7 million in 1958. I prefer not to speculate about 1959 and subsequent years.
    Colonel Glyn: May we take it that the Government desire to see an increase in this trade?
    Mr. Vaughan-Morgan: Yes, of course.
    Mr. Swinglerasked the President of the Board of Trade when the proposed trade mission to the Union of Soviet

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    Socialist Republics will depart; and what proposals for the expansion of AngloSoviet trade it will make.
    Mr. Vaughan-Morgan: I am not yet in a position to say when the mission will depart. The scope of the mission is under consideration.
    Mr. Swingler: When the Prime Minister returned from Moscow, was not the impression given that this matter of trade would be followed up very rapidly? Since both sides say that they wish to see an immediate expansion of this trade, what is the reason for the hold-up? Why cannot these negotiations be commenced immediately?
    Mr. Vaughan-Morgan: I think that everyone who knows anything about it knows that if a mission like this is to be a success a good deal of preparatory ground work is necessary.
    Mr. Osborne: Would my hon. Friend consider the possibility of half a dozen top industrialists—men who have already contact with the Soviet Government —s going with the mission so that they can take advantage of the favourable impression that the mission would create?
    Mr. Vaughan-Morgan: I am afraid that I cannot add to my Answer.

    Children's Shoes (Standards)
    Miss Burtonasked the President of the Board of Trade whether he is in a position to make a statement on the progress made during the discussions which have been taking place on standards for certain components for children's shoes between the British Standards Institution and footwear manufacturers.
    Mr. J. Rodgers: I understand that the discussions are still proceeding and that no conclusions have yet been reached.
    Miss Burton: Is the Parliamentary Secretary aware that we have reached this stage after five years? Does he know if we are likely to wait another five years before he is able to make a statement?
    Mr. Rodgers: I am glad to have the hon. Lady's forecast of the time that we have to wait. As she knows, the discussions are continuing, and we very much hope that an agreed standard for the components of children's shoes will be arrived at.

    Exports to United States
    Mr. Elliottasked the President of the Board of Trade what is the place occupied today by the United States of America as an export market for the United Kingdom, compared with its position in relation to other United Kingdom export markets in 1948.
    Mr. Vaughan-Morgan: The United States of America is now our largest export market; in 1948 it occupied sixth place. Our exports have risen from £63.5 million in 1948 to £272.5 million in 1958.
    Mr. Elliott: While thanking my hon. Friend for that most encouraging reply, may I ask him what are our prospects for further enlarging our market in the United States of America?
    Mr. Vaughan-Morgan: I hope that we have every chance of increasing our exports to that market which, despite some of the obstacles that have been placed in the way, in general offers great opportunities to our exports.
    Sir A. Hurdasked the President of the Board of Trade what success the Government have had in stimulating exports of capital and consumer goods to the United States of America in the last seven years.
    Mr. Vaughan-Morgan: Exports of manufactured goods to the United States rose from £124 million in 1952 to £245 million in 1958. For the main classes of consumer goods, including cars, the increase was from £89 million to £160 million. For the remainder, mainly capital goods, the increase was from about £35 million to about £85 million. I should like to pay tribute to the enterprise shown by exporters in this very important market and also of course to the great work done by the Dollar Export Council.
    Sir A. Hurd: Will my hon. Friend add a word about the part which Government agencies have played? The Question asks particularly "what success the Government have had". Can the Minister of State say whether we have been effective through our commercial attaches. and so on?
    Mr. Vaughan-Morgan: I think that they have been very effective. We work in the closest co-operation with the

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    Dollar Export Council. I should also like to pay a tribute to the role of the Export Credits Guarantee Department.
    Mr. Robens: Can the Minister of State tell us something about the rejection of English tenders on the ground of State security, about which the Prime Minister spoke to General Eisenhower when he was in Washington?
    Mr. Vaughan-Morgan: I am afraid not at the moment.

    Nigeria
    Miss Vickersasked the President of the Board of Trade to what causes he ascribes the rise in United Kingdom exports to Nigeria; and what steps the Government is taking to increase such exports further.
    Mr. Vaughan-Morgan: Nigeria is a developing country and, except for a setback in 1957, her imports have been steadily growing. We have shared in this increase, but we are now meeting growing competition. I toured Nigeria in March, 1958, and as a result of my recommendation our Trade Commissioner staff there has since been strengthened. New offices are being opened at Enugu and Kaduna and a third office will eventually be opened at Ibadan.
    Miss Vickers: While congratulating all concerned, may I ask whether, in view of the fact that Nigeria will shortly become independent, there will be no technical hitches in continuing this export trade?
    Mr. Vaughan-Morgan: I see no reason for that. It was, in fact, in anticipation of independence that I recommended that our Trade Commissioner staff should be strengthened.

    New Factories, Portsmouth
    Mr. Stevensasked the President of the Board of Trade how many inquiries concerning new factory building have been referred by him since 30th September, 1958, to the area represented by the hon. Member for Portsmouth, Langstone.
    Mr. J. Rodgers: Since 30th September, 1958, the Board of Trade has drawn the attention of approximately 30 industrialists to Portsmouth, mostly in respect of the Langstone Constituency area.
    Mr. Stevens: Is my hon. Friend aware that the steps his Department has taken since last September have gone a great way towards allaying the anxieties and disappointments caused by his Department's refusal to grant an industrial development certificate to British Nylon Spinners, but is he further aware that there is still a considerable way to go? Will he, therefore, continue the very good efforts so far made?
    Mr. Rodgers: I am very grateful to my hon. Friend for his remarks. I should like to inform him that the occupation by the Plessey Company of the Admiralty Under Water Research Establishment should provide substantial additional employment soon.

    China
    Mr. G. Jegerasked the President of the Board of Trade what trading arrangements are in operation between the United Kingdom and China; and whether he is satisfied that no goods or materials are being exported to China which may be used in the military activity against Tibet.
    Mr. Vaughan-Morgan: I am not sure what kind of trading arrangements the hon. Member has in mind. There is, of course, an embargo on the export of strategic goods to China, and I have no reason to believe that Chinese military activity in Tibet has been materially assisted by exports from this country.
    Mr. Jeger: Will the Minister assure the House that, in spite of the clamour from certain quarters for East-West trade, the embargo on military goods will continue?
    Mr. Vaughan-Morgan: Yes, indeed, Sir.

    Hull and Goole
    Mr. G. Jegerasked the President of the Board of Trade what action he proposes to take, following the Parliamentary Secretary's visit to the Humber, to alleviate the unemployment situation in Hull and Goole.
    Mr. J. Rodgers: Since my visit to Hull in February, the Treasury has received five firm and eligible applications for financial assistance for developments in that area; all of these are under consideration by the Development Areas Advisory Committee. I am glad to say

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    that the level of unemployment at Goole has not been such as to warrant its inclusion among the places for which this assistance is available. Industrial development certificates will be freely granted for suitable projects in both Hull and Goole; four certificates covering 173,000 sq. ft. have been granted for Hull since my visit.
    Mr. Jeger: Can the Parliamentary Secretary say why he did not include Goole in his visit to the Humber ports? Is he not aware that the unemployment situation in Goole is causing a great deal of anxiety to the people of that town?
    Mr. Rodgers: My only reason for not including the hon. Gentleman's constituency was that the specific reason for my visit was to go to D.A.T.A.C. areas and Goole is not a D.A.T.A.C. area.

  NATIONAL FINANCE

    Inter-Parliamentary Union (Grant)
    Mr. Haymanasked the Chancellor of the Exchequer whether he will make a statement on the annual grant made to the United Kingdom Branch of the Inter-Parliamentary Union.
    The Financial Secretary to the Treasury (Mr. J. E. S. Simon): As the hon. Member will have seen from the Estimates, the grant-in-aid for 1959–60 to the United Kingdom Branch of the Inter-Parliamentary Union will be £11,500.
    Mr. Hayman: Will the hon. and learned Gentleman ask his right hon. Friend to take into account that even with the grant of this amount hon. Members who represent this country abroad often have to find a substantial part of their own expenses? The Inter-Parliamentary Union is an important body. Will he ask his right hon. Friend to bear this fact in mind?
    Mr. Simon: I will certainly draw the hon. Gentleman's observations to the attention of my right hon. Friend. I know that there are difficulties of the sort he has indicated, but when I saw a deputation from the Inter-Parliamentary Union last summer its members indicated that they were not asking for more money. I have certainly not had any recent representations on the matter.

    Purchase Tax (Jewellery)
    Mrs. L. Jegerasked the Chancellor of the Exchequer what further consultations he has had with representatives of the jewellery trades regarding the imposition of Purchase Tax on secondhand jewellery; and what administrative arrangements he is making to deal with the collection of this tax.
    The Economic Secretary to the Treasury (Mr. F. J. Erroll): My right hon. Friend and I received on 25th March a deputation representative of all sections of the trade, and we are considering what was said.
    Mrs. Jeger: As there is some confusion about this suggestion, will the Economic Secretary answer two questions? First, if a dealer buys at an auction, for instance, does he have to pay the tax then and again when he passes the jewellery to the retailer; and does the customer then have to pay again on the same article at the time of purchase? Secondly, what is the position of ordinary members of the public? For instance, a husband whose wife has died may dispose privately of a few quite modest articles of jewellery. How is such a person to know how much Purchase Tax is to be paid and to whom to pay it?
    Mr. Erroll: The tax would be paid by the dealer, provided that he is registered, on his sale to a retailer. Therefore, no tax would be paid by the dealer on acquiring an article from an auctioneer; nor would tax be paid by the relative of a deceased person on disposing of his or her jewellery.

    Crown Pensioners
    Dame Irene Wardasked the Chancellor of the Exchequer whether he is aware that many elderly recipients of Crown pensions are, on humanitarian grounds, equally entitled to an increase in pension recently accorded to elderly war widows; and if he will take appropriate action.
    Mr. Simon: My right hon. Friend is aware of the difficulties which face many elderly recipients of Crown pensions, and he will bear their claims in mind.
    Dame Irene Ward: Am I to judge from that rather forthcoming Answer that there may be something in the Budget?
    Mr. Simon: Mr. Speaker, the reply was not meant to indicate any such thing.
    Mr. Harold Davies: Is the hon. and learned Gentleman aware that when some of these elderly widows had their pensions increased their rents were increased under the Rent Act, thus cancelling the increase in pension? If I give him the names and addresses of some of these war widows, who have had increases and who belong. to a war widows' organisation run by the Government, will he look into the matter?
    Mr. Simon: I need hardly say that I should certainly look carefully into any evidence that the hon. Gentleman submitted to me.

    Bankruptcy Cases (Deposited Funds)
    Mr. Stevensasked the Chancellor of the Exchequer if, in order to reduce the net cost of administration of bankruptcy and winding-up proceedings, he will consider making provision for the investment in equity shares of moneys arising in these circumstances and deposited with the Board of Trade.
    Mr. Erroll: The whole question of the investment of these funds is at present under review.
    Mr. Stevens: Is my hon. Friend aware that in recent years a number of highly-respectable institutions, such as insurance companies and the Church Commissioners, have so changed their policy? Is he further aware that that policy is likely always to be profitable, as industry keeps so vigorously prosperous under a Conservative Government?
    Mr. Erroll: While agreeing with my hon. Friend's general contention, I must point out that these funds are withdrawable on demand, and are normally withdrawn after comparatively short periods. It is, therefore, necessary to invest in very liquid stocks, and equity capital would not be suitable for this.

  HOUSING

    Completions
    Mr. Awberyasked the Minister of Housing and Local Government and
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    Minister for Welsh Affairs how many houses were completed by public authorities and private enterprise for each of the five years preceding the latest available figures.
    The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke): With permission, I will circulate these figures in the OFFICIAL REPORT.
    Mr. Awbery: Can the right hon. Gentleman say whether the average for these five years is below or above the 300,000 that we were promised, and whether the building for the current year is likely to be less or more than the average for the past five years?
    Mr. Brooke: I cannot forecast for certain what the building in the current year will be, but certainly for the five years referred to in the hon. Gentleman's Question the average is above 300,000 a year.
    Mr. Mitchison: Is not the Minister aware than the number of council houses built last year is little more than half of the number built five years ago; that the total number of houses built last year has also diminished, and that his slum clearance campaign has resulted in clearing just about half as many houses as the local authorities were prepared to clear without the campaign?
    Mr. Brooke: When the figures are published they are likely to show that the slum clearance campaign has hit the Government's target in 1958. These figures certainly show that in considerable parts of the country the need for new houses is substantially met. They also show the tremendous contribution made by private enterprise since the Socialist shackles on it were struck off.
    Mr. Speaker rose
    Mr. Awbery: On a point of order. In view of the fact that the Minister's reply involves only five lots of figures, could we not press him to give us the figures?
    Mr. Speaker: We have passed from that now.
    Following are the figures:

    NEW HOUSES BUILT BY PRIVATE BUILDERS AND PUBLIC AUTHORITIES IN GREAT BRITAIN

    Period

    By Private Builders

    By Public Authorities

    Total

    1954

    90,636

    257,169

    347,805

    1955

    113,457

    203,938

    317,395

    1956

    124,161

    176,464

    300,625

    1957

    126,455

    174,635

    301,090

    1958

    128,148

    145,547

    273,695

  UGANDA

    W.H.O. Survey
    Mr. Stonehouseasked the Secretary of State for the Colonies which recommendations of the World Health Organisation Nutrition Survey in Uganda are being accepted by the Uganda Government; what measures are being taken to implement them; and which recommendations are being rejected.
    The Secretary of State for the Colonies (Mr. Alan Lennox-Boyd): The recommendations have only recently reached the Governor of Uganda and are still being examined.
    Mr. Stonehouse: Is the Secretary of State aware that the distressingly high child mortality rate in Uganda, where four out of ten children die before they reach the age of 14, is due partly to the serious malnutrition in the country? In view of the good work done by the World Health Organisation, will the right hon. Gentleman consider inviting that organisation to establish a permanent malnutrition advisory team in the Protectorate?
    Mr. Lennox-Boyd: Before answering that question we had better all await the reading of the report; I had better await it and the Governor as well. At first sight, the report seems to be basically sound.

  NYASALAND

    Corporal Punishment
    Mr. Brockwayasked the Secretary of State for the Colonies for what offences and at what ages male children and young persons may become liable to six and twelve strokes, respectively, under the Amending Bill to the Children and Young Persons' Ordinance published in the Nyasaland Gazette of 31st March, 1959.
    Mr. Lennox-Boyd: Hitherto in Nyasaland a juvenile might be caned only for an offence for which an adult could be caned. Most of such offences are of a kind which are seldom or never committed by juveniles. The Nyasaland Government now seeks powers to provide for caning, in cases where it is deemed desirable, for offences committed by children or young persons. A child is a person over 7 and under 12 years of age. A young person is over 12 and under 16. The change proposed would bring the law of Nyasaland into line with that in other territories.
    Mr. Brockway: Is it not a fact that this amending Bill has been introduced during the course of the emergency but is to become part of the normal law of Nyasaland? Is the Secretary of State aware that many of us will be shocked that children of 7 should he liable to beating in this way by the order of courts administering British justice?
    Mr. Lennox-Boyd: As I have said, the proposed change would, if carried, bring the law of Nyasaland into conformity with that in most other African territories. Personally, I do not share the hon. Member's view about corporal punishment.

  SCIENTIFIC AND INDUSTRIALRESEARCH

    Scientific Attaché, Moscow
    Mr. Robensasked the Parliamentary Secretary to the Ministry of Works, as representing the Lord President of the Council, whether he will make a statement on the appointment of a scientific attaché to Moscow.
    The Parliamentary Secretary to the Ministry of Works (Mr. Harmar Nicholls): As my noble Friend has announced in another place today, an appointment has now been made and the scientist appointed is at present making a preliminary visit to Moscow.
    Mr. Robens: Do I take it that Questions concerning the work of the scientific attach´ in Moscow should now be addressed to the Foreign Office and not to the Parliamentary Secretary to the Ministry of Works?
    Mr. Nicholls: I would like notice of that question.

  PRIVATE MEMBERS' TIME (COUNTS)
  Mr. Woodburnasked the Prime Minister whether he is aware that the time remaining for private Members in the business arrangements of the House may be lost to the Members interested by the calling of a count and other Members withdrawing from the Chamber; and whether he is prepared to propose in future Motions such alterations to Standing Orders as will guarantee to hon. Members successful in ballots the opportunity to move their resolutions as intended by the House.
  The Prime Minister (Mr. Harold Macmillan): I would remind the right hon. Gentleman that the Select Committee on Procedure which reported recently did not make any recommendation limiting the power to claim a Count.
  Mr. Woodburn: Is the Prime Minister aware that the other Friday an hon. Member who had drawn success in the Ballot was nearly deprived of his opportunity by this tactic? Is it not rather mean on the part of other Members who are not interested deliberately to prevent an hon. Member having the opportunity with which the House wants to provide him?
  The Prime Minister: During the present Session private Members' business has been taken on thirteen Fridays. On only one occasion has the House been counted out. The right to call a count is a very long-established practice, dating in the case of this House to 1641, and some form of quorum is common to nearly all assemblies.

  STRONTIUM 90
  Mr. Mossasked the Prime Minister, in view of the fact that the rate of accumulation of strontium 90 is twice as rapid as was previously supposed, and that the residence half-life of radioactive material in the stratosphere is shorter than was previously believed, if he will give an estimate of the consequences these facts have for the health and welfare of individuals and of the general population of the country.
  Mr. Grimondasked the Prime Minister if he has now had an opportunity
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  to study the latest information on the fall of strontium 90 and other radioactive products; and if he will make a statement.
  The Prime Minister: The latest American theories about the rate of fallout are being studied, and I am not yet in a position to make a statement. We have, of course, a comprehensive monitoring programme in this country. The Medical Research Council has recommended that immediate consideration would be required if the concentration of strontium 90 in human bones showed signs of rising greatly beyond ten strontium units. The latest measurements do not indicate that we are approaching anywhere near this level.
  Mr. Moss: While thanking the Prime Minister for that reply, may 1 ask whether he is aware that there is growing public anxiety on this matter? Is he able now to say how long it will be before he is able to make a statement on the American report which is now being studied?
  The Prime Minister: No, Sir. I cannot tell quite when my advisers will have completed their researches, but, of course, this is a matter which makes us all the more anxious to bring the present negotiations going on at Geneva to a satisfactory conclusion.
  Mr. Grimond: Do not the variations in these estimates show that very little is known about the effects of this fall-out? When the Prime Minister has more definite information, will he see that it is published in a simple form so that the public can understand what the dangers may be?
  The Prime Minister: I will try to have it published in a form in which I can understand it, and then, I hope, everyone else will.
  Dr. Summerskill: In view of the concern which is felt over the recent revelations concerning the inadequacy of the reports from America and also the concern in this country regarding the danger of radioactive material, will the Prime Minister now consider whether he will appoint one of the existing Ministers, with a qualified staff, to be responsible for the collation and distribution of information in this country?
  The Prime Minister: No, Sir. I am responsible for this and with every regard for the quality of my colleagues, I propose to remain responsible for it.
  Mr. Mason: In view of the fact that the Russian dirty tests and the American high-level tests took place many months ago, and as it has been admitted that we already have a good tracking system, is it not a fact that the Atomic Energy Authority's recordings have already confirmed the American statements that strontium 90 has more than doubled in the atmosphere and is gradually falling in this belt?
  The Prime Minister: Undoubtedly, it has increased, but it is nowhere near the danger level yet. Nevertheless, it makes it all the more important to try to bring these negotiations to a satisfactory conclusion.

  UNITED STATES (ENGLISH ELECTRIC CONTRACT)
  Mr. de Freitasasked the Prime Minister what particular representations he made during his recent visit to the United States of America about the awarding of the Greer's Ferry Dam English Electric Company's turbine contract to the United States firm which had recently been allowed to export earth-moving equipment to this country.
  The Prime Minister: I made clear the great importance which Her Majesty's Government attach to these questions of trade and economics. I do not think that it would be appropriate for me to give any greater detail of the content of these private conversations.
  Mr. de Freitas: Does the Prime Minister realise that Lincoln has suffered in two ways from this sorry business, first, because it was to have made components for the English Electric equipment, and secondly, because orders for Lincoln-made bulldozers have been cancelled as a direct result of the British Government's decision to allow the import into this country of bulldozers made by this same American firm? Is it not bad enough to be hit on the chin by the American Government without being kicked on the shins by the British Government at the same time?
  The Prime Minister: I think the general view of this House is in favour of the
  22
  principle that the broad prosperity of the free world can best be built upon an expansion of international trade. Nevertheless, we have to take into account the facts and in this connection, while I am not prepared to reveal my private conversations with the United States authorities, I can assure the hon. Gentleman that we have put forward our views as strongly as we can.

  NUCLEAR WEAPONS AND ROCKET BASES
  Mr. Swinglerasked the Prime Minister if, as a gesture of good will and a token of Great Britain's determination to resolve international problems by negotiation rather than by force, he will order the suspension of all work on nuclear weapons and rocket bases from the date of the opening of the Foreign Ministers' Conference on 11th May.
  The Prime Minister: No, Sir.
  Mr. Swingler: Has not the Prime Minister himself often said that it is deeds, not words, which count, and would it not be a startling and inspiring spectacle if one Government in the world were prepared to take some action towards disarmament in an attempt to stimulate the Foreign Ministers to discover ways and means of international agreement?
  The Prime Minister: No, I do not think that unilateral action of this kind would have the effect which the hon. Gentleman hopes.

  FOREIGN MINISTERS' CONFERENCE
  Mr. Healeyasked the Prime Minister to what extent it is Her Majesty's Government's policy to make participation in a Summit Conference dependent on progress of the forthcoming Conference of Foreign Ministers.
  The Prime Minister: Her Majesty's Government's position is set out in their Note of 26th March to the Soviet Government.
  Mr. Healey: In view of the Prime Minister's known belief that Mr. Khrushchev is the only person who can take decisions about Soviet foreign policy, will he not press upon Her Majesty's

  23
  Government's Allies that they should not demand more of the Foreign Ministers' Conference than agreement on procedure and the agenda so that a Summit Conference may be held as soon as possible?
  The Prime Minister: I will not weary the House by reading the Note. I think it sets out very fairly a very sensible position.

  GERMANY (EASTERN FRONTIERS)
  Mr. Healeyasked the Prime Minister what discussions he had with the President of France concerning the eastern frontiers of a reunified Germany.
  The Prime Minister: These were private and confidential talks and I cannot reveal what subjects were or were not discussed.
  Mr. Healey: Is the Prime Minister aware that General de Gaulle has publicly announced his view that a united Germany should accept the Oder-Neisse line as Germany's frontier with Poland? Is he also aware that this view is strongly held by the majority of the British people? Will he, therefore, associate himself with this view, as nothing would do more to improve the prospects of successful negotiation on German reunification?
  The Prime Minister: The hon. Gentleman has made his point, and I have no doubt he will be content with that. I still believe that when I am fortunate enough to have these private discussions it is better for them to remain private.
  Mr. Gaitskell: Can the Prime Minister say whether the Western Powers are now in agreement as to the proposals to be put forward at the Foreign Ministers' Conference regarding Berlin and Germany and the eastern frontier?
  The Prime Minister: That is a quite different question. A very large measure of agreement has been reached through the meeting with N.A.T.O. which has just taken place, and any final work which is necessary to be done in order to reach an agreed position will be conducted between now and 11th May.
  Dame Florence Horsbrugh: Does my right hon. Friend think that the majority
  24
  of the British people have studied this question of the line or frontier and know all about it and have yet come to a decision?
  The Prime Minister: I must leave that to the decision of some future Gallup poll.
  Mr. S. Silverman: When the right hon. Gentleman says that a large measure of agreement has been reached on questions put to him by my right hon. Friend the Leader of the Opposition, can he say whether the area of agreement includes any agreed policy about this question of the Oder-Neisse frontier, and, if so, will he tell us what it is?
  The Prime Minister: The four Western Powers, acting, in a sense, as trustees for all the N.A.T.O. Powers, are about to enter negotiation on 11 th May with the Soviet Government. I do not believe it to be very wise to reveal before that negotiation begins every detail of the position they propose to take up.
  Mr. Gaitskell: While appreciating that it is not always wise to disclose everything in advance in an important negotiation, may I ask the Prime Minister whether he is aware that there is a good deal of concern because of Press reports of serious disagreement between the West German Government in particular and the British Government? Can he say whether those reports are justified, and whether it is the case that Dr. Adenauer is coming to pay a visit to this country?
  The Prime Minister: In regard to the Press reports, I read quite a number of them, and I find comfort in the fact that they are nearly always conflicting. In regard to a visit by the German Chancellor, when I saw him last in Bonn I expressed the regret which we all felt that illness prevented him from making his visit before the end of last year, the visit which had been planned for December. I extended a further invitation, and I have every hope that he will find it possible to accept that invitation in the near future.

  UNITED NATIONS (CHINA)
  Mr. G. Jegerasked the Prime Minister to what extent his recent discussions with President Eisenhower included the admission of China to the United Nations.
  The Prime Minister: As the hon. Member will be aware, it is not customary to divulge the details of confidential conversations with foreign statesmen.
  Mr. Jeger: Does the right hon. Gentleman not agree that if China were a member of the United Nations it would be far easier to have her behaviour discussed and universally condemned?
  The Prime Minister: I do not know whether election to a society is because of the virtues or of the vices of the member to be elected.
  Mr. Jeger: In the case of Hungary and Suez, membership of the United Nations proved an effective factor.
  The Prime Minister: This is a point which the hon. Gentleman has made and I note it, hut he has asked me a Question to which I have made a reply, and I hope he will be content with having made his point.

  BRITISH ARMY

    Personal Case
    Mr. Swinglerasked the Secretary of State for War why a soldier, whose name has been submitted to him, of 251 Company, Royal Pioneer Corps, Leamington Spa, was posted as an absentee when in fact he was sick on leave and medical certificates had been sent to his unit; why he was arrested on return from leave although special steps had been taken to inform his unit of his sickness; if he is aware that the soldier's kit was missing when he returned from leave; and if he will cause a thorough investigation to be made of the circumstances of the case.
    The Under-Secretary of State for War (Mr. Hugh Fraser): The soldier was posted as an absentee because two of the medical certificates which he sent to his unit had been altered. He was tried summarily yesterday by his commanding officer and admitted having been absent without leave. He was sentenced to 14 days' confinement to barracks and forfeiture of 12 days' pay. The soldier's kit
    26
    was taken into the unit store during his absence because it had been left insecurely in a kit bag and an unfastened locker.
    Mr. Swingler: is the Under-Secretary of State aware that the letter from the soldier's father which I sent to him is not in accordance with that reply? Is he saying that the statements in that letter are inaccurate? The medical certificates were submited in the proper way during the period of leave and the Commanding Officer was properly informed of the soldier's sickness. Is the hon. Gentleman saying that the information given to me, and which resulted in this Question, is misleading?
    Mr. Fraser: In all, seven medical certificates were handed in, signed by three doctors. In the case of two, those received on 3rd March and 9th March. the dates had been altered.

  MINISTRY OF DEFENCE

    Pensions
    Dame Irene Wardasked the Minister of Defence whether he will now announce a general increase in the pensions of widows of officers and other ranks.
    The Parliamentary and Financial Secretary to the Admiralty (Mr. C. Ian Orr-Ewing): I have been asked to reply.
    My hon. Friend has pressed this matter with persuasion, persistence, vocal power, and even patience. I hope she will not have to wait much longer for a statement.
    Dame Irene Ward: While thanking my hon. Friend, and while apologising for not being able to follow the P-line, may T ask him whether all these "ps" will have satisfactory results and whether he will exert his pressure in that direction?
    Mr. Orr-Ewing: I think my hon. Friend is asking that the statement, when it comes, will not be pusillanimous. I am sure that is true.

NEW MEMBER SWORN
Albert Victor Hilton, esquire, for South-West Norfolk.
ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee.
  [Sir CHARLES MACANDREW in the Chair]

  BUDGET PROPOSALS
  3.20 p.m.
  The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): The account I have to give to the Committee this afternoon is, I believe, an encouraging one, but the note I want to sound throughout is not one of satisfaction at past achievements but one of challenge to the opportunities that now confront us if we have the enterprise and the vigour to exploit them. Above all, any feelings of complacency that easy times lie ahead, and that we can now sit back and enjoy them, would be an utterly misleading recipe for our future conduct. As one Sunday newspaper put it, rather well I thought, this is a springtime of opportunity, not a harvest of prosperity.
  Our debates on the Budget tend to the confined to the record of the year just ended and the prospect for the coming year. This is, to some extent, I suppose, a consequence of the form in which this annual survey of our affairs is presented, and up to a point this is right. But it is a good thing, every now and then, to stand back and try to see, in longer perspective, where we have been and where we are going.
  At the cost of some over-simplification, I should say that we have been dealing with three major problems during recent years. The first has been to fit the British economy to stand in the modern world without artificial supports and constrictions. These were necessary under a wartime régime, but subsequently became increasingly irksome, distorting, and, most important, ineffective.
  The second has been to promote a great increase in the proportion of our national resources saved and devoted to investment, so that we should be able to hold our own in the world and achieve the economic growth which is our objective.
  The third has been to reconcile the maintenance of high and stable levels of employment with a sound balance of payments and price stability. All of these
  28
  things— high rate of investment, a sound balance of payments, and price stability;—are, I believe, essential conditions for full employment in the long run.
  How have we got on? The process of freeing the economy from war-time controls and constraints is now virtually complete. Price control and all the general consumer subsidies have gone. Particular demands are no longer swollen by charging people less for things than they really cost. The market is free to do the job which it alone can do quickly and efficiently of making the finer adjustments between supply and demand. People can spend their money at home as they wish without bureaucratic supervision or direction.
  Externally, the £ is standing firmly on its feet, after the removal of most of the controls which had been necessary since the end of the war. Sterling is again in a position to play to the full its immensely important role as a reserve currency for the world. By the progressive removal of trade restrictions we have shown that we in the United Kingdom are ready to pursue the policies which all countries need to follow if we are to have expanding world trade. Hon. Members will agree, I am sure, that expanding world trade is the indispensable condition both for our own economic growth and for that of the free world as a whole.
  The share of fixed investment in our national production has been rising steadily ever since 1952. In the year just ended, investment of all kinds took just 20 per cent. of our gross national product compared with 16 per cent. eight years ago. It is interesting to recall that the share taken on average between 1900 and the outbreak of the last war was probably not more than about 12 per cent. This shows how great is the change which has been brought about in the proportion of our resources devoted to investment. Another good thing is that this increased investment has included a massive effort of overseas investment, nearly the whole of which has been in the Commonwealth. Long-term investment overseas last year came to about £240 million. This is nearly double the rate obtaining eight years ago.
  The problem of reconciling price stability with expansion still persists, as

  29
  indeed it does with virtually every other democratic country. I suppose that this is one of the most important and intractable economic problems with which the modern world is faced. There is no simple and single solution which can be introduced overnight by a decision of Government. Nevertheless, a greater degree of price stability exists in the United Kingdom today than at any time since 1945.

  BUDGET PROPOSALS
    SURVEY OF 1958–59

      INTERNAL SITUATION
      I come now to the developments of the last twelve months. In last year's Budget Speech I forecast that in the coming months home demand would, on the whole, remain firm, but that there would be a slackening in export demand and a fall in investment in stocks—not a fall in stocks, but a fall in investment in stocks. As a result, I thought that the declining trend in production which was just beginning to run might continue during the rest of the year. I felt confident, as I said then, that our balance of payments would remain strong, and I emphasised that the fall in import costs gave us an opportunity to halt the trend of rising prices from which we had so long suffered.
      Broadly speaking, these forecasts have been borne out by events. Let us look, first, at the components of home demand, allowing in each case for the effect of price changes—say, consider them at constant prices. First, consumption expenditure remained roughly constant in the first three quarters of 1958. It then rose in the last quarter. This was largely, though not entirely, because of increased purchases of what are called consumer durables resulting from the ending of restrictions on hire purchase. Home investment in fixed capital remained steady at the record level reached in 1957. Although investment by manufacturing industry and the building of new houses by local authorities were both declining, other sectors showed a compensating increase. Current expenditure on goods and services by public authorities went down a little, again in real terms.
      Coming now to exports, the decline which I foresaw occurred, though there was some recovery towards the end of the year. The rate of stock-building was a good deal lower than in the previous year.
      30
      The falling-off in these two sectors—exports and stockbuilding—was enough to bring about a decline in the level of industrial investment, and a rather smaller fall in total output. I think that the fall in total output over the year was something like 0.6 per cent. Towards the end of the year, both the index of industrial production and of total output began to rise again.
      The level of unemployment rose through the year, as we had feared it might, and reached 2.8 per cent. in January last with, as hon. Members are aware, great unevenness in its incidence. Since then we are all glad that there has been a very welcome decline. I shall be returning to this subject later on.
      Over the year, the Index of Retail Prices rose by exactly two points, or rather less than 2 per cent. —I am speaking of the calendar year now. The most important factor here undoubtedly was the benefit which we had received from lower import prices, and the average wage increase, also, was smaller than it has been in recent years. These developments should encourage our hopes for continuing price stability.
      Taken altogether then, we have had a year in which much has been achieved. On the debit side, there was the increase in unemployment to which I have referred, and the check to the growth of production. On the other side, we have maintained a record level of investment and reached a new record level of consumption, combined with near price stability and a very satisfactory balance of payments. I am glad to say that the record level of total personal saving reached in 1957 was substantially repeated in 1958. As the year went on, and as it became clear that inflation had been eliminated from the economy, we were able to relax the various restrictions on demand and, indeed, to take positive steps to encourage some expansion of activity. Hence the sequence of measures of which the Committee is aware, beginning with the increase in initial allowances by 50 per cent. made in the Finance Act last year. The Bank Rate has been reduced by stages from 7 to 4 per cent. The request to the joint stock banks to limit their advances has been dispensed with, and they have used their freedom to develop their services in a number of directions with robust initiative—I might

      31
      almost say with gusto. The ceiling on the public investment programme has been raised and a series of increases in future investment expenditure have been approved and put in hand. The restrictions on hire purchase have been completely removed, and the raising of capital by domestic borrowers has been substantially released from control.
      I should like to make clear that these steps have been taken progressively as soon as it became clear in each case that they were safe and desirable. In short, while the Government did not hesitate to apply restraints when these were necessary, they have been equally alert to remove them at the earliest moment when they had done their work, and to resume encouragement to expansion.

      EXTERNAL SITUATION
      On the external side, we have had an exceptionally good year. The surplus on current account in the balance of payments in 1958 is estimated at £455 million, as hon. Members know. This is far higher than in any other year since the war. In fact, it may be the highest for many decades. We were greatly helped by the fall in world prices which enabled us to buy the same volume of imports as in 1957 more cheaply. The volume of exports held up well in the first half of the year, fell away after that, and then recovered somewhat in the last few months of the year. For the year as a whole exports were 3½ per cent. down, and that drop, of course, had a significant effect on our economy, and was partly responsible for the rise in unemployment during 1958; but the drop in exports was somewhat smaller than might have been expected at this time last year. Invisible transactions made their customary large and very welcome contribution to the surplus.
      The Committee is well aware that a current surplus of a particular size is not by itself a sufficient criterion of our external financial position. The United Kingdom is a large capital exporting country, and it is only when our surplus is more than big enough to cover the net capital outflow that we are able to strengthen what I may call our monetary position. This external monetary position, that is, the balance between our monetary reserves and our monetary liabilities, is really the key figure. A
      32
      good current surplus is, of course, a prerequisite of strength—there is no question about that—but our position at any time cannot be judged simply by that any more than it can be by the movement of the reserves.
      I said that in these respects 1958 was a very satisfactory year. My reason for saying that is that our current surplus last year was amply sufficient to pay for our investment abroad and a healthy balance was left over to improve our monetary position. On the one hand, the reserves rose by £284 million, and, on the other, the sterling holdings of other countries and international bodies, which are part of our liabilities, of course, rose by £54 million. So we can broadly say that our monetary position last year improved by over £200 million.
      This improvement all took place in the first half of the year which is always the seasonally favourable period. Last year the seasonal factors were reinforced to some extent by the fact that our imports were costing less, while our export earnings had not then begun to suffer seriously from the reduced purchasing power of our customers. Many of our customers were still drawing down their reserves. In the second half of the year the surplus on current account fell to £128 million, which was offset by net investment abroad, and by the capital repayments on the North American loans. There was little change in the reserves during the second half of the year, while the sterling holdings of non-sterling countries continued to rise.
      This position of approximate stability has, as far as I can judge, continued in the early months of the present year. Exports have been running slightly lower than a year ago while imports are a little higher. As the Committee will remember, I said in my Budget speech last year that I did not expect the extraordinarily favourable relation between the value of imports and exports that obtained then to last very long.
      At the end of 1958 we abolished the distinction between American and transferable accounts and, by doing so, unified the transferable and official rates for sterling. At the same time, in concert with a number of other European countries who had taken similar measures, we brought into effect the new arrangements for monetary co-operation in

      33
      Europe embodied in the European Monetary Agreement. In spite of a succession of disturbing events abroad, external sterling has been strong and the rate has shown a marked improvement since this move was made. That, I think, is tangible evidence that the rest of the world welcomed as healthy and timely this move along the course which all parties have agreed to be the right one, although the party opposite differed from us as to timing.

    EXCHEQUER OUT-TURN 1958–59
    I must explain now how the Exchequer has fared over the past year. The details will, of course, be shown in the White Paper later this afternoon and I will only summarise the figures now. Even so, I fear that hon. Members are likely to have more than their fill of figures and statistics during the next year or so. There is a story that Disraeli, when Lord Derby asked him whether he would be Chancellor of the Exchequer, pleaded ignorance of the duties he would have to perform. Lord Derby replied, "You know as much as Mr. Canning did, and, anyway, they give you the figures". Fortunately, that well-tried practice continues today.
    EXCHEQUER OUT-TURN 1958–59
      REVENUE
      Revenue last year was £5,480 million, £137 million more than in the preceding year, and £41 million above the Estimate. Inland Revenue duties yielded £3,016 million—that is, £46 million above the estimate—and Customs and Excise duties £2,191 million or £2 million above the estimate, while other revenue produced £7 million less than the estimate.

      EXPENDITURE
      Expenditure above the line was £5,103 million, £28 million more than the original estimate. Defence expenditure exceeded the estimate of £1,418 million by £50 million. This was the result partly of increased expenditure, mainly for the Navy, and partly of a reduction of £35 million in the German contribution towards local defence costs resulting from the new Agreement. Civil supply expenditure at £2,849 million was only £8 million above the original estimate, extra expenditure on a number of services being offset by substantial savings on agricultural and other Votes.
      I must congratulate my right hon. Friend the Minister of Agriculture, Fisheries and Food on having a better record to date in this matter of the cost of agricultural assistance than his immediate predecessor had during his last year. I hope that he will keep this up—his record, not his expenditure—without, of course, raising the cost of food in any way to the consumer. The additional supply expenditure was partly offset by a saving of £30 million in expenditure on Consolidated Fund Services, which had been estimated at £816 million. This was mainly the result of the reduction in short-term interest rates to which I have already referred. To sum up the result above the line, there was a surplus of £377 million, compared with my estimate of £364 million. I must apologise for the discrepancy. I have not holed out, but I have at least got on to the green.

      BELOW THE LINE
      Now I turn to below the line. Below the line receipts, at £326 million. were £3 million more than the estimate. Payments amounted in total to £885 million, £38 million less than the estimate. Advances to the National Coal Board exceeded the estimate by £12 million, those to the British Transport Commission for railway deficits by £33 million, while those to other nationalised industries fell short of the estimate by £18 million. We have debated the finances of these industries at some length in recent months and I will not comment further on them now.
      Advances for export credit guarantees also exceeded the estimate by £18 million, mainly as a result of increased assistance to the Commonwealth by means of loans made under the Export Credits Guarantee Act. There was a saving from the fact that Exchequer loans to local authorities were about £65 million less than had been expected. As a result, the Local Loans Fund made no call upon the Exchequer during the year; as the total of borrowing by local authorities has not fallen, this was a further welcome sign that they are relying to an increasing extent on market resources.

      SUMMARY OF OUT-TURN
      The out-turn can, therefore, be summarised as follows. Above the line there was a surplus of £377 million. Below the line the deficit was £559 million. So the

      35
      overall result, which determines how much Government expenditure has to be met by borrowing, was a deficit of £182 million, as compared with my estimate last year of £236 million.

      NATIONAL DEBT
      The need to finance this overall deficit was the main reason why the National Debt increased over the year by £143 million to a total of £27,375 million. This increase does not, of course, represent an additional burden on the taxpayer since it was much less than the total of Exchequer advances for productive investment by the nationalised industries and other borrowers who pay interest to the Exchequer.
      I must now try to satisfy the technical appetites of those hon. Members of tae Committee—I trust a majority—who display a laudable interest in the Government's funding activities. Other hon. Members may relax for a few minutes. During the year we have had to deal with two major maturities, £676 million 4 per cent. Conversion Stock, 1957-58, which fell due for repayment last June, and £592 million 2 per cent. Conversion Stock, 1958-59, which matured last January. We were successful in converting the major part of these maturing stocks by the issue of £353 million 41 per cent. Conversion Stock, 1963, £299 million 51 per cent. Conversion Stock, 1974, and £250 million 41 per cent. Conversion Stock, 1964. These are enormous figures and reflect a highly satisfactory outcome of our funding operations last year. The remaining £366 million was paid off in cash and it is chiefly because of this cash payment and of the overall Exchequer deficit to which I have referred that the floating debt has risen during the year by £391 million.
      Last year, however, the rise in the floating debt was not associated with a rise in the floating debt held by the banks and by the market generally. The rise was in the holdings of the Departments. This occurred as the Departments sold Government stocks to the market and as maturing stocks which they had acquired were redeemed. On the other hand, holdings of floating debt other than by Departments decreased during the year. The restraint thus exercised over the total of floating debt in the hands of the market considerably strengthens our ability to influence future monetary
      36
      Developments, but it has not been used to restrict credit at the present time. On the contrary, there has been a considerable expansion. Advances made by the clearing banks to private borrowers have risen in the twelve months ended 18th March by about £500 million, while their net deposits have risen by nearly £250 million.

      NATIONAL SAVINGS
      The floating debt could not have been kept to this level but for the success of the National Savings Movement, which has enjoyed a golden year, if I may describe it like that. During the year net sales of National Savings certificates were £132 million, Defence bonds £108 million and Premium Savings bonds £66 million. The Trustee Savings banks have also had a good year with an increase of about £40 million in the amount invested. The Post Office Savings were not quite so good, but there has been a welcome improvement in recent months. These results have taken the Savings Movement a very long way past the target of £150 million which Lord Mackintosh gave me at this time last year, and which I think I reported then to the Committee.
      In fact, we have had an increase of well over £300 million net in the amount invested in the various forms of national savings—the best figure for twelve years. It is very heartening to see such a fine response to a combination of enthusiastic salesmanship and what are rightly regarded as attractive terms for these savings securities. The figures which I have given show once again what an extremely valuable and important part these small savings play in raising the funds for investment for the future wellbeing and development of our country. They are surely an impressive tribute to the unflagging efforts of the devoted groups of voluntary workers up and down the country who give up so much time to this.

    EXCHEQUER PROSPECTSFOR 1959–60

      REVENUE
      I come now to the Exchequer prospects for the year ahead. On the basis of existing taxation, Inland Revenue duties are expected to yield £3,050 million in the coming year, £34 million more

      37
      than the actual receipts last year. The revenue from Customs and Excise duties is estimated at £2,245 million, an increase of £54 million over last year's receipts. I expect £110 million from the motor vehicles duties, £3 million more than last year. The estimate for other revenue is £215 million, £49 million more than last year, but this increase includes a special receipt of £22 million from an advance repayment of debt by Germany. Total revenue above the line is, therefore, estimated at £5,620 million, or £140 million more than last year.

      EXPENDITURE
      Coming to expenditure, the Committee will not be surprised to hear that expenditure above the line will also increase. The Consolidated Fund Services are expected to require £728 million, a reduction of £58 million on last year's out-turn, largely resulting from the fall in short-term interest rates and from additional receipts of interest on below-the line advances. Supply expenditure is estimated at £4,495 million, £178 million more than last year's out-turn. Thirty-four million pounds of this increase is in defence expenditure and £144 million in civil expenditure. This latter figure mainly reflects continuing increased expenditure on the social services, both those directly administered by the central Government and also those such as education which are mainly run by local authorities.
      I estimate total expenditure above the line this year at £5,223 million, which is £120 million more than last year's actual out-turn. So on the basis of existing rates of taxation, we have total revenue estimated at £5,620 million against expenditure of £5,223 million, giving a surplus above the line of £397 million, or £20 million more than the actual surplus last year.

      BELOW THE LINE
      Payments below the line will show an increase. Before I give the figures it might be convenient if I mention the provision of capital for the nationalised industries. Since 1956, as the Committee knows, the capital needs of the nationalised industries have been met by loans out of the Exchequer. The powers authorising these loans—which originated in the Finance Act, 1956—
      38
      expire at the end of August of this year and I have to consider how the industries' requirements are to be supplied after that date. The considerations of credit and market management which led to the assumption by my right hon. Friend the Prime Minister of direct Exchequer responsibility are still as strong as ever. I have, therefore, decided again to recommend that the powers should be extended for a further period of one year. The extension of the Exchequer lending power, for which I propose to move a procedure Resolution, will provide for additional lending of £550 million to take account of the enlarged investment programmes which the Government have authorised.
      The estimated figures for payments below the line are as follows. Twenty-eight million pounds more than last year will be needed for the operations of the Export Credits Guarantee Department, mainly for loans, and I expect to provide for the first time £20 million for advances to Colonial Governments and £25 million for loans to building societies under recent legislation. The National Coal Board will need £2 million more than last year and £6 million less is being provided for the British Transport Commission for railway deficits during the current year. Other capital advances from the Exchequer to the nationalised industries will be £138 million higher than last year. I am not making any provision for loans to local authorities since, even if the rate of borrowing from the Public Works Loans Board is higher than last year, the volume of repayments should keep an adequate balance in the Local Loans Fund without further advances from the Exchequer. Repayments by the nationalised industries and other borrowers are expected to produce £22 million more than last year. In total, I expect the net total of payments below the line to be £752 million, that is, £193 million higher than it actually was last year.
      On the basis of existing taxation the surplus above the line in the coming year is, therefore, estimated at £397 million and the net total of payments below the line at £752 million. This would leave net expenditure of £355 million to be met by borrowing, as compared with £182 million last year.

      EXTERNAL ECONOMIC PROSPECTS
      Turning now to my crystal ball, I must say something about the economic outlook for the coming year, because that is what must largely influence the kind of action I ought to take in this Budget. This, of course, is much the most difficult part of my task. I will begin with the external prospect. This, so far as I can judge, is satisfactory. As I mentioned earlier in my speech, imports are showing a tendency to rise in volume while the growth of exports is still delayed by the difficulties in foreign markets, especially in the sterling area. Consequently, our current surplus on the balance of payments will certainly be a good deal smaller this year than the exceptional level of last year. However, I expect it to be a respectable surplus which should be sufficient to cover our investment abroad.
      In this connection, I should tell the Committee that I expect, in 1959, a larger outflow of capital on Government account than in recent years. This results partly from the decision we took at the Montreal Conference to help still further the less developed countries of the Commonwealth. We have undertaken commitments to other countries as well. The needs of the primary producing countries will, of course, vary with the prospect for their exports, which, in turn, will vary with the level of activity in the more highly developed industrial countries.
      There are one or two special features about 1959 which will have a close bearing on the state of the reserves. First, there is the repayment of £71 million to the International Monetary Fund which was reflected in the reserve figures last month. I am sure that the Committee will agree that it was satisfactory that, taking this large figure into account, the reserves fell by as little as £6 million over the month. Over the first three months of the present year the reserves have risen about £25 million after allowing for the repayment of £71 million to the International Monetary Fund.
      Secondly, we expect to pay later in the year a gold payment to the International Monetary Fund amounting to £58 million in connection with the increase in quotas, a subject which we debated recently.
      40
      Other countries in the sterling area will be increasing their quotas, too, and in so far as they make their payments from their balances in London there will be some draft on the gold reserves on that account, also. In view of these and other factors I expect, on balance, the gold reserves to show some fall in 1959.
      As far, however, as the fall may be due to the special payments I have mentioned, the ultimate effect is to maintain or more than maintain the strength of our position, because in exchange for these payments we are acquiring second line reserves of a far greater value. Thus. the repayment last month increased our International Monetary Fund drawing rights by an equivalent amount. The gold payment we make to increase our quota will further increase our right to draw in times of need, by up to five times the amount of the payment.
      To sum up, even though the reserves may well show a net decline for these special reasons, 1959 should be a satisfactory year both for the balance of payments and for the external economic position generally. Economic expansion will be bound to bring in its train a higher import bill. And this tendency for our imports to increase is likely to precede a recovery in our exports. It is, in fact, to some extent a precondition of such a recovery that we and other industrial countries should buy more from primary producers. But in the longer run we must match this higher import bill by at least an equivalent increase in our export earnings if we are to keep a sound balance of payments and to continue to play our part in international economic development.
      The conclusion I reach is that it is impossible to exaggerate the importance of our maintaining and, indeed, improving our competitive position through efficient investment and lower costs. This is, to my mind, the key to success in the future.

      HOME ECONOMIC PROSPECTS, 1959–60
      So much for the external outlook. Our consideration of the economic prospects at home for the next twelve months starts from the position that we have at present some unused resources of capital equipment and manpower which could now be

      41
      employed productively if the demand were there. Although the current level of unemployment is low in comparison with most other industrial countries, it is still too high. It must be our unceasing endeavour to get every person we can into productive employment without putting at risk the stability of the foundations of our economy on which the prospects for full and steady employment must rest.
      There is no greater waste than the human waste and misery of unnecessary unemployment. And the reserves of manpower on which we could draw extend beyond the numbers of those registered for unemployment benefit; there are the possibilities of drawing back into the labour force some of those who have left it in the last year or so, while some of those who have continued in employment are underemployed and will be able to produce more when opportunity offers.
      The reserves of physical capital are, no doubt, at least as great as those of manpower. But this unused capacity is very unevenly spread throughout industry. We have not yet reaped the full benefit in higher output which we should, and shall derive from the massive industrial investment of the last four years. Some of this has replaced—not necessarily increased—existing capacity with more modern and efficient equipment, and in some industries changes in the pattern of demand will have made it unlikely that all the capacity will be wanted. For these and other reasons, the concept of unused capacity cannot be precisely defined, and still less can it be measured exactly.
      Praiseworthy attempts have been made at a quantitative assessment by using sample inquiries and in other ways. These have helped us to get our orders of magnitude straight, and that is useful. But I do not think that anyone is in a position to say that there is at this time 8 per cent., or 12 per cent., or any other precise percentage of unused capacity over the economy as a whole. What can be said is that the physical possibilities both of capital equipment and manpower now exist for an appreciable increase in production above its present level. This is one of the basic assumptions of my Budget.
      I turn next to the question how far such an increase in production may be expected to take place in the next twelve months under the influence of the forces
      42
      already at work. I will start with home demand. The biggest element there is expenditure by ordinary consumers. Expressed in real terms, consumption expenditure has risen significantly since the autumn of last year. A large part of this increase has been the rise in expenditure on consumer durable goods such as cars, refrigerators and washing machines, resulting from the reductions in Purchase Tax made in the Finance Bill last year and the subsequent removal of restrictions on hire purchase.
      The removal of restrictions on hire purchase has proved a useful and effective method of providing a quick stimulus to this sector of the economy. But the effects are greatest in the early months and I expect them gradually to fall off as the months go by. For this reason, though consumption expenditure should continue at a high level, I would not expect it to go on increasing at the same rate as it has been over the past six months throughout the rest of the year.
      Next, there is fixed investment, which for some years has been running at a very high level indeed, judged by our own standards in the past. On the private side, there is one element, capital expenditure by manufacturing industry, which has been declining during the last twelve months. This is expected to go on declining during the rest of this year, judging by the sample of firms whose forecasts are collected and aggregated by the Board of Trade. The Board of Trade figures forecast a decline of about one-tenth in this part of capital expenditure between 1958 and 1959. This is a trend which has caused me some concern. Nevertheless, to get the picture right we must remember that investment by manufacturing industry is only 45 per cent. of the total of private investment, and that the other elements of the total—private investment by distributive and other industries, and private housebuilding—are both expected to increase. Taking it all together I expect a small rise in the total of private investment, in spite of the fall in the manufacturing sector.
      Coming now to the investment programme of the public sector, I forecast a strong rising trend over the coming year. All the programmes in this sector have been carefully examined during the last nine months, after the lifting of the ceiling imposed by my predecessor in

      43
      September, 1957. A number of substantial increases have been approved. A full analysis of the present programmes has been given in the Appendix to the Economic Survey, and I will not go into any details about them today.
      I will confine myself to two points. The first is the scale of the upward trend. The increase from 1957–58 to 1959–60, that is, over the two years which, in my statement last November, I put at £125 to £150 million, will, because of further increases in short-term capital expenditure approved since then, in fact amount to nearly £200 million. Secondly, I must repeat the warning I gave last year, that it is not realistic to suppose that the large long-term investment programmes in the public sector, of the nationalised industries and others can be rapidly varied up and down in accordance with the state of trade and the need to raise or lower the general level of demand from time to time. Something effective can be and is being done in this way, but for large parts of the public sector programme the possibilities are limited if we are to have sensible plans made and carried through with confidence and efficiency.
      From the capital programme of the public sector I turn to current expenditure by public authorities on goods and services. In pursuance of our policy of securing economy in the public service, Ministers have taken care to restrain their Departments' expenditure to what is essential for the efficient discharge of public services. In terms of the volume of goods and services I am expecting that this expenditure will be roughly constant.
      The last, and most uncertain, element of home demand is expenditure on industrial and Commercial stocks. During 1958, the volume of stocks continued to increase, though at a lower rate than in previous years. Prediction of such a volatile item is a hazardous business, but I should not be surprised to see a further increase in the volume of stocks in the year to come.
      Exports, of course, contribute a most important element in total demand absorbing not far short of 20 per cent. of our resources. We have made good progress in the dollar markets, but generally, as the Committee is well aware, our exports have been hampered for some time past by the reduced incomes of the
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      primary producing countries and the slowing down of economic activity in many industrial countries.
      I think that we must expect this reduced purchasing power in some of our most important markets to continue for some little time yet. However, I would hope that by the second half of this year the position of the primary producing countries will be improving, and they should be able to buy more. We may also hope that expansion will be resumed in the industrial parts of the world. My expectation, therefore, is that our total exports will continue to run at about the present level for a few months to come and then, if our salesmen and businessmen continue to exploit their opportunities with energy, they should increase somewhat.
      Taking all the elements of demand together, and allowing for the proportion of our supplies we are likely to draw from imports, my conclusion is that the trend of total production of goods and services is likely to be upwards in the coming months. It has, indeed, been rising since about the end of the third quarter of last year. But this rise is not likely to be at all rapid—indeed, if nothing more were done, it might slow down in the second half of the year, since the biggest factor in the rise, consumption expenditure would be increasing less fast as the effect of the decontrol of hire purchase wore off.
      The rise in the index of industrial production might be a little greater than the rise in total production. The rise in output might turn out to be proportionately greater than the rise in employment. The increase in productivity which this would imply would be a natural consequence of the high rate of investment in recent years.
      There can be no doubt that the measures which we have taken already, and which I mentioned briefly just now, are taking effect. The increase in hire-purchase sales, the increase in private house-building and the big growth in public sector investment, are three convincing examples. Moreover, in the coming year I shall continue to see that our monetary policy, and, in particular, our funding operations keep in step with the development of our economic policy generally. Nevertheless, the prospect for home production as I have set it out does not represent a full enough use of the capital resources which have been created in recent years. Nor can we be content

      45
      with the possibility that unemployment might continue at around the present levels allowing for seasonal changes. I have, therefore, felt it right to consider most seriously whether a further stimulus should be given to the economy through the Budget.

      BUDGET AIMS
      The Committee will agree that no economic expansion is secure unless it is founded on a strong and stable currency. That is an article of faith and a basis for policy which we in the United Kingdom must always keep steadfastly before us. Before recommending measures which would exercise a stimulating effect I have to ask myself, on the one hand, whether they can be justified in terms of our balance of payments and the international position of sterling; and, on the other, whether they would be likely to jeopardise the degree of price stability to which we have with much difficulty attained in the last twelve months.
      I will deal, first, with the external conditions to which our policy must be adapted. The measures of September, 1957, have led to very satisfactory progress in our external economic affairs. Confidence in sterling has been very strong, and the reserves have been built up to a more adequate level. I conclude that we can now afford a moderate increase in imports, which is the natural accompaniment of recovery in demand and production at home. We must not forget, too, that we in the United Kingdom have our own contribution to make to the re-expansion of the world economy after the mild recession of the last year.
      If each nation were to pursue too cautious a policy in regard to its balance of payments, international trade would stagnate. But if renewed growth of production and trade goes forward satisfactorily in the world as a whole, we shall benefit from it in a stronger demand for our exports and other services, provided we can give delivery at the right time and at the right price. I am confident that British industry is now in a condition to take the fullest advantage of such opportunities. My conclusion, then, is that external considerations coincide with domestic ones in making it possible as well as desirable to accelerate somewhat the already slightly rising trend of product ion.
      As regards stability of prices, the immediate prospects are reasonably encouraging. There may be small seasonal increases in some food prices in the late spring, but, if so, these should come down again in the summer. I derive much comfort from the consideration that the law of averages should ensure a good potato crop this year. I must ask my right hon. Friend the Postmaster-General whether " Ernie" could comfort me further by telling me exactly how good the chances are. Further ahead, the uncertainties increase. As world recovery proceeds, import prices may rise and reduce the benefits which we have so far enjoyed from very favourable terms of trade. Another serious possibility more within our own direct control is a new round of wage and salary increases on a scale which would push up costs and prices.
      The main factor making for stable prices in 1958 was the fall in import prices. It is true that the wage increases last year at an average of 3½ per cent. were distinctly smaller than in recent years, and this undoubtedly helped towards steadying the cost of living. But if this progress is to continue, almost everything depends on the degree of restraint shown in wage negotiations this year. For only by stabilising or reducing our costs can we secure the additional exports which we must have if expansion is not to be checked by too heavy calls on our balance of payments. We must not be misled by our recent experience into thinking that further increases this coming year on the scale of last year would be either justified by the economic facts or consistent with stable prices.
      The cost of living has been virtually stable for almost a year. I hope that all concerned will realise what an exceptional opportunity we now have to keep it so. If we do so, we shall secure two priceless advantages of the utmost importance for our future: first, our export prices will remain competitive in the markets of the world; and, secondly, the social hardship and injustice inevitably resulting from rising prices, which fall most heavily on those least able to protect themselves, will be avoided for the future.
      The possibility of securing these two advantages—indeed, the overwhelming need to secure them—have dominated my

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      approach to the framing of this Budget. Every Budget should have a main aim or theme running through it, related to the current needs of the economy. I have no doubt whatever what the first requirement is today. It is an improvement in the competitiveness of our economy. All our hopes for the future depend on this. If we are to expand our internal economy and, at the same time, to continue to play a leading part in the development of the Commonwealth we must have, year in year out, a strong balance of payments.
      To seek that by restricting imports would be, perhaps, the easy way, but the wrong way. The right way is through an expansion of trade. I am absolutely certain that a steady increase year by year in our export trade is the first and essential prerequisite of a sound and expanding home economy and must be our paramount aim, but if our exports are to grow they must be competitive. We are going to have to earn our living in a very competitive world, and that means that we must keep our costs and prices stable. So the aim of this Budget is to help in keeping the cost of living steady and in lowering unit costs of production by encouraging a steady but not excessive expansion in production and a continuing high rate of industrial investment. These are the essentials for future prosperity.
      Although we have made some progress we cannot claim that, as a nation, we have yet found the solution to the problem of the interaction of rising money incomes and rising prices. The fact that it is still unsolved must influence our judgment on the rate of expansion which it is safe to permit in the economy. We must at all costs make it our business not to return to an over-load on the economy, which would make a resumption of inflation inevitable. At the present time, however, this is clearly not an immediate danger, though we must continue to watch the trend of incomes and prices carefully.
      There can now be some definite expansion of demand without re-creating pressure on supplies of goods and labour, on one proviso, which is that such expansion in demand takes place in ways which do not raise our costs of production, distribution and transport. Having weighed all
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      these considerations, I have come to the conclusion that it would be right for me to seek, through the Budget, to give a further limited but effective impetus to the expansion of our economic activity.

    BUDGET PROPOSALS
    This conclusion raises two questions. How large an increase in demand can our economy safely absorb? And what action on my part will be necessary, allowing for direct and indirect effects, to produce an increase in demand of that order? These are the questions which have been constantly in my mind in recent months. The answers involve difficult decisions, and, in the end, all that I can say is. "This is the best judgment I can make ". I have already mentioned some of the considerations I have had in mind, and which must be in the minds of the Committee, too.
    I must remember two things. First, the need to ensure that no increase in exports which we might hope for is held back because of competing demands at home; and, secondly, though neither we nor any other Government can enforce or guarantee price stability, now that it has been achieved, it would be folly to throw away the chances of its continuance. These considerations are reinforced by our past experience that it is uneconomic and costly to run our industries above capacity, and that industrial efficiency benefits from the easing of excessive pressure of demand. For all these reasons, I must clearly keep well within my judgment of what is physically possible.
    As for the relation between the scale of budgetary action and the ensuing effects on the economy, I will mention two points of which I have also had to take account. The first is that the net cost to the Exchequer of any concession is likely to be less than the gross cost. This is because some part of the increased expenditure and incomes which the concession generates will return in due course to the Exchequer in the form of higher direct or indirect tax revenue; some part, too, in savings. These thoughts are, of course, a source of much comfort and consolation to me. The second is that the total effect of any net concession will normally be greater than its direct effects. For the increased spending which results directly will raise the incomes of those who produce goods and services to meet

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    it, leading, in turn, to an increase in their spending, and so on, in diminishing sequence. That is what the economists know, I believe, as the multiplier effect.
    Earlier in my speech I called attention to the concern I felt about the prospective decline in private manufacturing investment. It is true that a key factor leading to expansion of investment is a prior expectation of expansion in the demand for the products of capacity already installed, yet I am most anxious that this year the growth of investment should follow on the expansion of demand with as short an interval as possible.
    These, then, are some of the considerations which I have had to weigh. I am sorry that I have no time to tell hon. Members the other considerations. I have said that, if I made no changes in taxation, the prospective surplus above the line would be £397 million. In present economic circumstances a surplus of this size is no longer needed. I can, therefore, now contemplate with safety some tax reductions that will lead to a fuller use of our resources without creating dangerous pressure on the economy.

    BUDGET PROPOSALS

      PENSIONS INCREASE
      Before I turn to my taxation proposals I should like to mention one matter which is not technically a budgetary issue, but is still highly relevant in human and economic terms to the way I use the surplus. There is one group of people whom I have felt it my special responsibility to consider. They are the public service pensioners: the retired teacher, civil servant, local government officer, National Health Service officer, policeman, fireman and others, and also the Service pensioners of Her Majesty's Forces and their widows.
      Very many of them were helped by the Pensions (Increase) Act of 1956, and the corresponding Royal Warrants, but, now that there are signs of easement in the economy, I am sure that the Committee would feel it right that we should take another look at their position and see what additional help can be given. I am inviting representatives of local authorities to enter into consultation at once and I hope that it may then be possible to put proposals for legislation before the House within a few weeks.

    MINOR PROPOSALS
      DIVIDEND STRIPPING
      I come to certain minor proposals. Coming now to my proposals on taxation, and getting my priorities right, I will deal, first, with two provisions for the protection of the Revenue. I regret to say that cunning people have devised yet another form of dividend stripping at the expense of the Revenue, through companies set up and resident in the Irish Republic which take advantage of a provision in our Double Taxation Agreement with that country. This device must be countered, and we have reached an agreement with the Government of the Republic of Ireland for an amendment of our Double Taxation Agreement that will bar such dividend stripping in the future in both countries. This agreement must be validated by a Clause in the Finance Bill.

      BOND WASHING
      I propose, also, to deal with a new form of the device technically known to the initiated as "bond washing", under which certain dealers in securities and exempt institutions are making a quick and illegitimate profit at the expense of the Revenue by purchases of securities cum-dividend and their sale ex-dividend. There will be full safeguards for normal legitimate business. The details will appear in the Finance Bill.
      I come now to tax reductions, and shall start with a number of comparatively small proposals which together will be of benefit to quite a lot of people.

      VEHICLE LICENCE DUTIES
      First, road passenger transport. During the last few years, mainly as a result of the increase in the number of private cars and motor cycles, which, in turn, is a reflection of our higher standard of living, bus operators have faced increasing difficulty in maintaining their services, particularly in rural areas. With my right hon. Friend the Minister of Transport and Civil Aviation, I have been considering this difficult problem, and I am satisfied that the bus operators should be given some tax relief to help them to maintain the rural services. Rural and urban services are very commonly operated by the same concerns, and I have, therefore, come to the conclusion

      51
      that I must find some way of helping the industry generally.
      The most practical step seems to me to be a reduction in the annual Excise duty payable on passenger vehicles with more than eight seats. I propose, therefore, to reduce the Excise duty payable on buses and coaches to about one-third of the present rate, subject to the present minimum of £12. I intend to make this reduction effective from immediately, and for that purpose to provide for refunds of duty on licences which have been taken out at the old rate. Because of this provision for refund on current licences, this concession will cost the Exchequer about £6 million in the present financial year, though the cost will fall to £3½million in subsequent years.
      Also in the field of vehicle Excise duty, I am proposing that vehicles left standing on the highway should have to be licensed. I do not know whether hon. Members frequently leave their vehicles unlicensed on the highway. It never occurred to me, but it appears that some people have developed the bad habit of doing so, and we think that it ought to be stopped.

      HYDROCARBON OIL DUTY
      I propose, also, to make certain very minor changes in the scope of the duty on heavy oils used in road vehicles so that in future oil used in a subsidiary engine mounted on a vehicle will not be chargeable with duty, and, also, that only those vehicles which use the roads to an extent which makes them licensable as road vehicles will have to use dutiable oils. Details will be found in the White Paper. The effect on the Revenue will be negligible.

      ESTATE DUTY ON LIFE POLICIES
      I come now to four minor measures for relief from Inland Revenue taxes. The first concerns the treatment of life assurance policies for Estate Duty purposes. As my hon. and learned Friend the Financial Secretary promised last year, we have been engaged in a close review of this matter which arose out of a Court decision in the case in re Hodge. The Finance Bill will include a Clause the broad effect of which will be that gifted policies of insurance will be treated just like gifts of other kinds of property for
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      Estate Duty purposes. This will apply both to life assurance policies and to policies providing annuities. I must ask the Committee to await the Finance Bill for details.

      CORPORATION DUTY
      For my second relaxation I have been stimulated by the example of Mr. Khrushchev. I have read in the Press that he has announced the impending abolition of Income Tax. I felt that I must not be outdone. I hasten to prevent inordinate expectations being too quickly raised—it is not Income Tax of which I am proposing the total abolition. It is Corporation Duty. This tax was introduced in 1885 with the object of compensating the Exchequer for the loss of the death duties on property held by certain corporate and unincorporated bodies. There are wide exemptions, including bodies engaged in trade and all limited companies, and the yield of the tax is only about £150,000 a year.
      The tax is arbitrary in its incidence and many of the amounts payable do not repay the trouble of collection. The Inland Revenue would be involved in a great deal of unremunerative work if it were to hunt out every case of possible liability. It is not sensible to maintain this troublesome duty for such a small yield to the Exchequer, and I have come to the conclusion that we ought to get rid of it. To abolish a tax entirely should surely qualify a Chancellor of the Exchequer for a monument, of sorts.

      STAMP DUTY—POLICIES OF MARINE INSURANCE
      I have been impressed with the case made against the present system of stamp duties on sea insurance policies. These policies are subject to ad valorem duty, the rate depending on several complicated factors. The duty is, in effect, largely a tax on exports. A large part of the marine insurance business of the British market is overseas business and I do not want to retain a tax which may represent an obstacle to this business. I therefore propose to get rid of the special duty on sea policies and to make them subject only to a fixed duty of 6d. like other kinds of accident policies. This change will also bring some benefit

      53
      to the shipping industry and to shippers. The cost will be about £2 million this year and £3 million in a full year.

      PROFITS TAX—CONTROLLING DIRECTORS' REMUNERATION
      Fourthly, I can now announce another small relief which was urged upon me last year. For Profits Tax purposes there has always been a restriction on the amounts that might be deducted for the remuneration of the directors of director-controlled companies. This is necessary, so that the directors may not take out in the form of remuneration what was really the return on the capital invested in the business and ought to bear Profits Tax.
      The maximum amounts at present allowable are fixed by a rather complicated scale with alternative limits. The first limits which apply to the larger companies are 15 per cent. of the companies' profits, subject to a maximum of £15,000. That is the total for all the controlling directors. The other scale, which, in effect, applies to the smaller companies, depends upon the number of full time working directors and runs from £2,500 for one such director to a maximum of £7,000 for four or more such directors.
      I have come to the conclusion that there is now a good case for a modest increase in this scale, which I propose to vary so that it becomes £3,000 for one full-time working director, £5,000 for two, £7,000 for three and £9,000 for four or more such directors. The alternative limit of 15 per cent. of the profits, subject to a ceiling of £15,000, will remain unchanged. This relief will cost nothing this year and about £3 million in a full year.

    MAJOR PROPOSALS
    I turn now to my major proposals. A Chancellor of the Exchequer with a larger prospective surplus than he needs can either try to do a little good in a greater number of places, or can concentrate on a few changes that he thinks will be most helpful to the whole economy. I had no doubt at all that, though some disappointments will be inevitable, the second course was the one I ought to follow.
    MAJOR PROPOSALS

      PURCHASE TAX
      I shall begin with the Purchase Tax. I should like to remind the Committee of the background. In my last Budget I simplified the structure of the tax, reducing the rates from seven to four. In consequence, the tax on some important classes of goods was then sharply reduced. I said then, and I must repeat now, that we must continue to look to this tax for an important contribution to the revenue. I recognised that because of the problem of retail stocks violent and abrupt change—or the anticipation of such change—has a disturbing effect on trade, but I reminded the Committee that anything approaching a major reform of the tax was bound to involve substantial changes in the rates on some goods. That being so, my aim was to get the tax into a form which would not only be fairer and simpler to administer, but would also enable any future changes to be made with the minimum disturbance to trade.
      I think that it is fair to say that my objective in making the tax a more effective instrument was to a large extent achieved. Certainly, a year's experience has revealed no basic defect in the new structure. It is significant that my hon. Friend the Member for Kidderminster (Mr. Nabarro) only found scope this year for 199 Questions on this tax. I propose, therefore, to leave that general structure unchanged this year.
      There are, however, two cases which I regard as special ones and exceptions from that. First, I propose to abolish the Purchase Tax on commercial vehicle chassis. When the tax was imposed on commercial vehicles, in 1950, the intention was to damp down investment in this particular form of capital equipment. When, later, the need for restricting the purchase of commercial vehicles disappeared, the substantial revenue yielded by the Purchase Tax on them was an obstacle to its abolition. I now think that I can accept this loss and I am glad to be able to remove this tax on commercial vehicles altogether.
      Secondly, I propose to free replacement television tubes from tax. This tax has been represented to me as being unduly burdensome, and technical developments in the reconditioning of tubes have made it difficult to administer the tax with equity. I must, of course, take care that

      55
      this concession does not give an opportunity for tax avoidance on the sets themselves, and a Treasury Order to safeguard this point will be laid before the House tonight.
      Apart from these two exceptional cases, I propose to lighten the weight of Purchase Tax in general by reducing the three higher rates, by one-sixth each. The 60 per cent. rate will accordingly be reduced to 50 per cent., the 30 per cent. rate to 25 per cent., and the 15 per cent. rate to 12½ per cent. I do not propose any change in the 5 per cent. rate, which is already as low as is consistent with the concept of a tax raised at moderate rates on a wide range of goods in general use.
      While these reductions will give a material measure of relief to the consumer, they should not give rise to any serious difficulty in regard to tax-paid stocks held by retailers, who will in any case benefit from the improved trade due to the tax reductions proposed in this and other parts of my Budget.
      The total cost of these Purchase Tax reliefs, which will operate from tomorrow, is £59 million this year and £81£ million in a full year.

      BEER DUTY AND LIQUOR LICENCE DUTIES
      These changes in Purchase Tax will make a small contribution towards reducing the cost of living. The total incidence of Purchase Tax on the cost of living, however, is not heavy—the whole £490 million yield of it amounting to not more than 1·5 points on the Retail Price Index. So I had to look elsewhere to find some relaxation which would help more with the cost of living. Few indirect taxes directly affect the cost of living significantly though most may do so indirectly in the long run. One tax which does have a marked effect is the Beer Duty. Because a very large number of people drink beer regularly in moderation, changes in its price have a marked effect on the cost of living.
      There were other reasons too why a reduction in the duty on beer called for consideration. For a number of years after the war, consumption of beer showed a downward trend, and, although for a short time it seemed that a more stable situation had been reached, there was a
      56
      further and appreciable fall in the year just ended. I depend on this duty for a large contribution towards the revenue and I must do what I can to safeguard the foundations of this contribution for the future.
      The level of the duty is at present a high one. Apart from an adjustment in 1950 to provide for an improvement in the strength of beer, it has remained unchanged since the reduction made by Sir Stafford Cripps in his Budget of 1949. A reduction now would, therefore, be appropriate, not only on its merits, but because it helps to prevent a further decline in the Revenue—a fitting celebration perhaps of the achievements of an exhausting decade.
      A change in the duty on beer also gives me the opportunity to introduce a reform in the system of liquor licence duties. The present system is complicated and costly to administer, and I propose to replace it by a simple system of fiat rates of duty which will give a very useful administrative saving. The licence duties will in future be treated as registration fees rather than as a source of revenue, and the proposed rates have been fixed at low levels with this in view. For example, the rate for the ordinary publican's "full" on-licence, and for the off-licence selling the full range of alcoholic drinks, will be £5 a year. There will be a comparable change in the club duty, and a consequential change in the basis for assessing compensation levy. I propose also to abolish the provisions requiring monopoly value to be charged when a new on-licence is taken out. Full details of these changes will be found in the White Paper.
      Since the proposed rates of licence duty are very much lower than the existing rates, there will be a reduction in the yield of revenue which, together with the cost of abolishing monopoly value, I estimate at £5½ million in a full year. I intend that the benefit of this concession shall be wholly passed on to the consumer. On the basis of current consumption of beer, the £51 million of licence duty revenue which I shall be losing in a full year is equivalent to 4s. 5d. on a barrel of 36 gallons. I propose now to reduce the duty by 43s. 7d. a barrel which, together with the 4s. 5d. for the licence duty change, adds up to a total reduction of 48s. Od. a barrel.
      This means a reduction in the retail price of 2d. a pint. I recognise that this will involve some problems of adjustment in the trade, but I am satisfied that the difficulties can be overcome and that the prices to the public will, in fact, be reduced by the full 2d. a pint. So the equivalent of the whole of the reduction in duty will be passed on in lower prices.
      So, at a cost which I estimate at £36 million this year and £40 million in a full year, we shall obtain a reduction in the price of beer to the consumer by 2d. a pint and a considerable simplification of the present system and a useful administrative saving.
      The reduction in the beer duty will operate from tomorrow. The changes in licence duties will apply in respect of excise licences issued or renewed after today. For licences already current the duly position will not be affected: the new rates will apply when the licences are renewed later this year. Club duty, which is paid annually in arrear at the beginning of the calendar year, will similarly remain unchanged for this year, and the new club licence duty which will replace it will come into force on 1stJanuary, 1960. Monopoly value will cease to he chargeable after today. I should emphasise that these changes in the Excise licence duties in no way affect the control over the sale of alcoholic drink exercised by the licensing justices.
      As a minor adjustment, I also propose to reduce the duty on a rather special product known as "black beer ", which I understand may be of interest to some hon. Members from the North of England. I propose to reduce this duty also by 2d. a pint and to modernise its form. The cost of this change, which operates from tomorrow, is trifling, and has been taken into account in the estimate I have just given.
      These reductions in the Purchase Tax and the Beer Duty will spread widely part of the benefits of the reduction in the burden of taxation which I am able to make in this Budget, and they will make a useful contribution in keeping down the cost of living. The combined effect of the two measures will, in fact, be to reduce the Retail Price Index by about four-fifths of a point. With the usual seasonal reduction in the price of milk which my right hon. Friend the Minister of Agriculture, Fisheries and Food has
      58
      approved from the beginning of May, the result will be a reduction of the index by a full point.

      RATES OF INCOME TAX
      The remissions in indirect taxation 1 have just described will give a valuable stimulus to the economy. But nothing has so great or widespread an effect as the levels of direct taxation. Our present rates of Income Tax and Surtax are high. The standard rate rose from 5s. 6d. in 1938–39 to a maximum of 10s. in the war years and, even after two reductions made by my right hon. Friend the Home Secretary, still stands at 8s. 6d. The combined top rate of Income Tax and Surtax, which was 15s. in the £ in 1938–39, rose to a maximum of 19s. 6d. in the £ and even now stands at 18s. 6d. in the £ I have no doubt that these high rates are bad for industry because they cut unduly into profits that can be put to reserve for development and expansion. They also tend to discourage effort and initiative on the part of individuals, and so doubly harm the national interest.
      I am glad this year to be able to do something to lessen those effects. I think it right this year to give a more than proportionate reduction in the reduced rates of tax, taken as a whole, particularly the lowest band which now pays 2s. 3d. in the £. I have, therefore, decided to propose a reduction of 9d. in the standard rate of Income Tax and 6d. in each of the reduced rates. This change will cost £192 million this year and £229 million in a full year. Of these amounts, £57 million this year and £63 million in 1960–61 will be in respect of the profits of companies put to reserve.
      These changes will involve a complete recasting and reprinting of the P.A.Y.E. tables. This will mean that for P.A.Y.E. purposes the tax changes cannot become effective until the first pay day after 7th June.

      INVESTMENT ALLOWANCES
      In my review of the economic outlook, I said that I was concerned about the prospective decline in private investment in the manufacturing sector. Our economic future, and especially the strengthening of our competitive position in world markets, demands that we should continue the progress we have made towards higher levels of investment.
      This progress should not only continue, it should also be as steady as possible. There is a tendency, which is easy to understand but none the less unfortunate, for private investment to fall away when the economy tends to be slack for other reasons and to be strongest when other demands are strongest.
      The general effect of my other proposals in this Budget will be to stimulate the economy and in the process to stimulate investment. But I think that present circumstances demand that I should do more, and this has led me to consider the question of investment allowances. These are inherently more attractive to the recipients than initial allowances of the same amount because, unlike the initial allowances, they are not deducted from depreciation claims in later years. There are a number of arguments both for and against them. But after careful consideration I think that in present circumstances I must give priority to the need to encourage those who are hesitating about the timing of their investment plans. I have, therefore, decided upon a general restoration of investment allowances in respect of capital expenditure becoming due and payable after today.
      The rates of investment allowance for the main classes of assets will be 20 per cent. for new plant and machinery and 10 per cent. for expenditure on the construction of industrial buildings. These were the rates in force under the 1954 Finance Act. In addition, I propose that expenditure on new plant and machinery shall be eligible for a 10 per cent. initial allowance and expenditure on the construction of industrial buildings for a 5 per cent. initial allowance. These two allowances together will take the place of the present initial allowances of 30 per cent. on plant and machinery and 15 per cent. on industrial building.
      Capital expenditure on new mining works, which at present qualifies for a 40 per cent. initial allowance, will become entitled to a 20 per cent. investment allowance plus a 20 per cent. initial allowance. I propose no change this year in the present special treatment of capital expenditure on ships and on scientific research. Capital expenditure on new agricultural and forestry buildings and works will become entitled to an investment allowance of 10 per cent. as it was under the 1954 Finance Act. The general
      60
      provisions that were applicable to investment allowances when they were formerly in operation will again apply.
      I want to emphasise that my main object in taking this step is to encourage firms, who are planning either extension or modernisation schemes, to put them in hand now. The new investment allowance will fortify the effects of the increase in initial allowances made last year. The kind of investment expenditure that I want to encourage is that which has as its object higher efficiency even more than expanded capacity. There is a certain amount of spare capacity available now in industries making capital goods which may be no longer available later on when we hope exports will have risen. This step is, therefore, an incentive to bring forward some expenditure which would otherwise take place later on. It is not, therefore, a fiscal provision which it would be right to expect to continue regardless of the state of our industrial economy. The special stimulus to investment which these allowances will provide is desirable in present economic circumstances. In different conditions such a special stimulus may be no longer justified, and then it would be equally appropriate to reverse the action I am taking now.
      This partial replacement of initial allowances by investment allowances will cost the Exchequer nothing this year and £91 million in 1960-61. The tax proposals I have described will cost altogether £295 million this year, and this is as far as I can go in taxation reliefs. I must not only look to the cost of any reductions this year, but also to the problems which they may pose in future years.

      POST-WAR CREDITS
      I think, however, that this year I can allow some further stimulus beyond that which will be given by the tax concessions I have described, with safety and indeed with benefit to the economy. This gives me an opportunity, which I very much welcome, to do something for the holders of post-war credits.
      These credits, as the Committee knows, were created in the war years and represented the extra tax payable by reason of certain reductions in the personal allowances and in the earned income relief that were made to raise revenue for the war. Repayments of these credits are

      61
      being made currently to men becoming 65 and women becoming 60 and to the beneficiaries of deceased persons who would have reached those ages, at the rate of about £17½ million a year.
      Of the original total of about £765 million of credits, about £25 million has been set off against tax arrears and £310 million has been repaid, leaving some £430 million outstanding. While inflation persisted no Government has felt able to accelerate the rate of repayment. But one of the benefits of the stability which has been attained is that it is now possible to do something more. I propose this year to start a comprehensive attack on this problem.
      First, I propose now to reduce by two years the ages at which owners of credits become entitled to repayment of their credits. The qualifying ages will become 63 for men and 58 for women. This will mean that this year I shall pay off three years instead of one, at an additional cost of £35 million. This is as far in this direction as I feel justified in going now. I propose, however, to seek enabling powers to permit the repayment of credits by statutory order, so that if, later in the year, financial and economical circumstances were such as to justify going further I should be able to make a proposal to this effect.
      Secondly, I propose that all credits now belonging to the beneficiaries of holders who have died shall be paid forthwith, and that, for the future, credits still outstanding shall be repaid on the death of the holder. These repayments will amount to £34 million this year.
      Thirdly, I have carefully reviewed the question of payment in cases of hardship. The provision I have already mentioned for payment at death will cover the case of widows who are entitled to credits left by their former husbands, and that deals with one very deserving class. I have, however, decided to go further. I realise that, in so doing, I have embarked—perhaps rashly—on a course which all my predecessors, and I hitherto have thought to raise such problems of discrimination as to be inexpedient. I have done so because hon. Members have urged on me on so many occasions not to refuse to deal with certain clearly defined cases of hardship because a concession could not be extended to other, perhaps equally hard, cases. So I have selected three
      62
      categories which, on the top of the other administrative work caused by these proposals, are as much as we can deal with this year.
      I would ask hon. Members to bear in mind that we can deal only with categories of hardship that can be defined readily and precisely. In practice, this means that normally we must use classifications already employed by Departments in connection with social services. Further, I must ask hon. Members not to press me to extend these hardship concessions further this year. I am aware there are many other people who on grounds of degree of hardship may have claims as strong as those I have chosen.
      The classes I have selected are: First, persons who, for a continuous period of 'twelve weeks ending after today, have been receiving National Assistance. Secondly, persons who, after today, are persons named in a register of blind persons, required under Statute to be kept by a local authority. This will not include persons registered as partially blind. Thirdly, persons who, after today, are receiving constant attendance allowance or unemployability supplement under the War Pensions Instruments, the Industrial Injuries Acts or the Industrial Diseases (Benefit) Acts or who would have been in receipt of unemployability supplement if they had not claimed an alternative benefit, or would have been in receipt of constant attendance allowance but for being a hospital in-patient.
      This is a start anyway, of which I hope hon. Members will approve, and we must see how it goes. Though information is scanty, I estimate that repayments in these hardship cases will total about £2 million a year.
      Finally, as further evidence of my desire to clear up this long-standing problem, I propose that post-war credits that have not become eligible for repayment by 1st October, shall carry interest from that date until the beginning of the month in which repayment is made. or to a date three months after the beginning of the month in which the credit became eligible for repayment. The accrued interest will be paid at the time that the relative credit is itself repaid. The rate will be 2½ per cent. compounded with annual rests. This is the same as the rate now paid on Post Office Savings Bank accounts. As the amounts involved

      63
      for any one person will be relatively small, I propose that this interest shall not be liable to tax. The cost of interest will be negligible this year and will rise, on the assumption that there is no further acceleration of repayments—and I should hope there would be in fact—to a maximum of £7 million a year in 1980–81 and will reduce slowly thereafter.
      I estimate that with these additional repayments we shall pay off this year a total of £89 million out of the £430 million outstanding. I hope that part of this will help to swell the total of National Savings in the coming year.
      I should mention one other matter affecting post-war credits. The reduction of tax allowances that gave rise to individual post-war credits had the effect of increasing the compounded rate of tax paid by building societies in respect of interest to their depositors and shareholders above what it would otherwise have been. The extra tax paid by the societies on this account was calculated and recorded and one of my predecessors —the late Sir Kingsley Wood—gave the societies an assurance that it should be repaid to them at a later date. The total amount outstanding is about £31 million. I do not feel able to repay any of this amount this year but I propose to make statutory the societies' title and to provide that the amount outstanding may be repaid, partly or wholly, as and when the Treasury by Statutory Order may prescribe.
      I propose that the amounts due to building societies, like other credits, shall carry interest from 1st October at 2½per cent. free of tax. Interest will be paid only when the relative amounts of credit are repaid.
      To enable me to make these repayments I propose, as I have said, to seek powers in a special Bill, which will be published in a day or so, to vary by Statutory Order the conditions under which post-war credits may be repaid. I hope we shall get that Bill passed with the minimum delay and make the necessary Statutory Order giving effect to the proposals I have outlined immediately thereafter.
      I must warn the Committee that this operation involves a lot of detailed planning and a very great effort on the part
      64
      of the Inland Revenue. It would jeopardise the success of the operation and involve delays in payment if the plan were to be changed. So I hope that the Committee will accept the proposals in the Bill when it comes forward as the best way I can find of taking quick action in a direction which, I am convinced, everyone will approve.
      I have authorised the Inland Revenue and the other Departments concerned to start immediately on the task of printing and distributing the millions of application forms that will be needed for this operation. The forms will describe the precise categories of persons who may make claims as I have outlined them, and will indicate any evidence that will have to be supplied. It is hoped that these forms will be available in Post Offices in about a month's time and that the Inland Revenue may begin to make repayments early in June. I hope that, apart from difficult cases, the bulk of the repayments can be made by the end of August. I urge all concerned, once they have sent in their application forms, not to pester the Inland Revenue, which will work with the utmost speed, since a mass of reminding letters may merely delay the operation. I feel justified in describing this as a comprehensive attack on the post-war credits problem.

      SUMMARY AND GENERAL CONCLUSIONS
      To sum up, the tax changes I propose will cost £295 million this year and leave an estimated surplus above the line of £102 million. In addition, the proposals for additional repayment of post-war credits will cost £71 million extra below the line. These changes will leave the sum to be met by borrowing at £721 million. This is a large figure, but I am satisfied that, in our present economic circumstances, it represents the right balance between taxation and borrowing and the right figure from the point of view of the balance of the economy, too. Behind us is a year of solid achievement. Our economy is stronger and more firmly based than at any time since the end of the war. We have the opportunity now to resume a steady rate of advance—not full steam ahead but steady ahead with confidence.
      This is no spending spree Budget. During the last two years, we have had the highest level of personal savings in our history. There is now room in the economy for more production. This should give us room for rather more personal spending. But, even more, I want to encourage the continuance of a high level of saving because on that the growth of investment and our whole future welfare depends.
      I believe that the measures I have proposed in this Budget will bring benefits. directly or indirectly, to every section of the community, and will give an invigorating stimulus to the economy which will encourage us as a nation to make the most of the opportunities that lie before us.

      CUSTOMS AND EXCISE
      1. Beer (Excise and Customs)
      Motion made,
      That—
      (a) as from the eighth day of April, nineteen hundred and fifty-nine the duties of excise and customs, and the excise and customs drawbacks, in respect of beer shall be as shown in Part I of the following Table;

      TABLE

      PART I

      BEER OTHER THAN BLACK BEER FALLING WITHIN PART II

      Specific gravity of worts before fermentation

      Rates

      Excise duty

      Excise drawback

      Preferential customs duty

      Full customs duty

      Drawback on preferential customs duty

      Drawback on full customs duty

      1.

      2.

      3.

      4.

      5.

      6.

      7.

      £

      s.

      d.

      £

      s.

      d.

      £

      s.

      d.

      £

      s.

      d.

      £

      s.

      d.

      £

      s.

      d.

      1030 degrees or less.

      5

      11

      9½

      5

      11

      11½

      5

      12

      2½

      6

      12

      2½

      5

      11

      11½

      6

      11

      11½

      Exceeding 1030 degrees.

      5

      11

      9½

      5

      11

      11½

      5

      12

      2½

      6

      12

      2½

      5

      11

      11½

      6

      11

      11½

      and

      6s.

      7½d.

      and

      6s.

      7½d.

      and

      6s.

      7½d.

      and

      6s.

      7½d.

      and

      6s.

      7½d.

      and

      6s.

      7½d.

      for each additional degree.

      for each additional degree.

      for each additional degree.

      for each additional degree.

      for each additional degree.

      for each additional degree.

      Provisions as to Part I
      1. Columns 4 and 6 relate only to beer qualifying for Commonwealth preference, and columns 5 and 7 do not relate to such beer.
      2. As respect beer the worts whereof before fermentation were of a specific gravity of less than 1030 degrees,—
      (a) the excise drawback shall not exceed by more than twopence for every 36 gallons
      (b)paragraph (a) of this Resolution shall not apply to black beer, the worts whereof before fermentation were of a specific gravity of 1200 degrees or more, but in respect of such beer duties of excise and customs shall, as from the eighth day of April, nineteen hundred and fifty-nine be charged, and drawbacks allowed, as shown in Part II of the following Table;
      (c)the said duties and drawbacks shall be in addition to those charged and allowed under section two of the Finance Act, 1933 and section three of the Finance Act, 1957 but in lieu of any other duty or drawback in respect of beer;
      (d)subsection (6) of section one hundred and thirty-three (relief from duty on beer prepared by mixing) of the Customs and Excise Act, 1952, shall apply to all beer so prepared after the seventh day of April, nineteen hundred and fifty-nine, except beer which is not black beer the worts whereof before fermentation were of a specific gravity of 1200 degrees or more but is beer of which one of the constituents was such black beer;
      (e)no rebate shall be allowed after the said seventh day of April in respect of black beer;
      (f)this Resolution does not affect drawback in respect of beer as to which it is shown to the satisfaction of the Commissioners that duty was paid under the law replaced by this Resolution.
      the amount of duty which is shown to the satisfaction of the Commissioners to have been paid;
      (b) the amount of customs drawback allowable shall not exceed the amount of duty which is shown to the satisfaction of the Commissioners to have been paid, less threepence for every 36 gallons.

      PART II

      BLACK BEER OF GRAVITY OF TWELVE HUNDRED DEGREES OR MORE

      Specific gravity of worts before fermentation

      Rates

      Excise duty

      Excise drawback

      Customs duty

      Customs drawback

      1.

      2.

      3.

      4.

      5.

      £

      s.

      d.

      £

      s.

      d.

      £

      s.

      d.

      £

      s.

      d.

      1200 degrees

      …

      …

      11

      15

      7

      11

      15

      9

      11

      16

      0

      11

      15

      9

      Exceeding 1200 degrees

      …

      11

      15

      7

      11

      15

      9

      11

      16

      0

      11

      15

      9

      and 1s. 5d. for each additional degree.

      and 1s. 5d. for each additional degree.

      and 1s. 5d. for each additional degree.

      and 1s. 5d. for each additional degree.

      General
      1. The excise duties are in respect of beer brewed in the United Kingdom and the customs duties in respect of beer imported into the United Kingdom, and the drawbacks are on the exportation from the United Kingdom as merchandise, or for use as ships' stores, of beer on which it is shown to the satisfaction of the Commissioners that the excise duty or customs duty, as the case may be, has been paid.
      2. Any rate of duty in this Table is for thirty-six gallons of beer the worts whereof before fermentation were of the gravity specified in the Table in relation to that rate, and duty or drawback on any less number of gallons shall be charged or allowed proportionately.
      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. Amory.]
      The CHAIRMAN put the Question thereupon forthwith pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions).
      Question agreed to.
      The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.
      2. Liquor Licences (Excise)
      Motion made, and Question,
      That, in relation to licences bearing a date after the seventh day of April, nineteen hundred and fifty-nine,—
      (a) the amount of the duty of excise chargeable on a licence specified in the first column of the following Table shall be the amount specified in relation thereto in the second column of that Table:

      TABLE

      Description of licence

      Amount of duty

      £

      s.

      d.

      Dealer's licence under section one hundred and forty-six of the Customs and Excise Act, 1952

      5

      0

      0

      Retailer's on-licence under section one hundred and forty-nine of the said Act of 1952—

      Spirits

      5

      0

      0

      Beer

      1

      10

      0

      Wine

      1

      10

      0

      Sweets

      1

      0

      0

      Cider

      1

      0

      0

      Retailer's off-licence under the said section one hundred and forty-nine —

      Spirits

      2

      0

      0

      Beer

      1

      10

      0

      Wine

      1

      10

      0

      Sweets

      1

      0

      0

      Cider

      1

      0

      0

      Occasional licence under section one hundred and fifty-one of the said Act of 1952—

      All intoxicating liquors

      10

      0

      Beer or wine only

      5

      0

      Passenger vessel licence under section one hundred and fifty-three of the said Act of 1952

      1

      0

      0

      (b) relief from duty on retailers' licences shall not be allowed under any of the following provisions—
      the proviso to paragraph 1 and paragraphs 3 to 12 of the Fourth Schedule to the Customs and Excise Act, 1952,
      sections thirteen and fourteen of the Finance Act, 1942,
      section forty-seven of the Finance (1909-10) Act, 1910;
      (c). the amount of the reduced duty under section one hundred and sixty-seven of the said Act of 1952 on a licence for the sale of spirits of wine for medicinal or scientific purposes shall be two pounds:
      (d). the relief from duty allowed by reason that a licence to a person as a dealer or

      69
      retailer is granted after the commencement of the licence year shall be calculated in accordance with section two hundred and thirty-seven of the said Act of 1952, so however that, where a dealer or retailer has been granted relief under subsection (3) of section one hundred and sixty-nine of the said Ac: of 1952 on his trade being temporarily discontinued, the said section two hundred and thirty-seven shall apply as respects the grant, on his first resuming his trade thereafter, of his new licence as a dealer or- retailer as if paragraphs (a) and (b) of subsection (1) thereof were omitted;
      (e) relief from duty on a retailer's or dealer's licence under subsections (1) to (3) of section one hundred and sixty-nine of the said Act of 1952 shall he limited to such proportion of the full amount of duty for a year as is specified in the following table in relation to the month during which the licence ceases to be in force or, as the case may be, the trade is discontinued, that is to say,

      Month from the commencement of the licence year

      Proportion of full duty

      first to third

      three-quarters

      fourth to sixth

      one-half

      seventh to ninth

      one-quarter,

      and that amendments of the law be made arising out of the foregoing provisions of this Resolution.
      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. Amory.]
      put and agreed to
      3. Registered clubs (Excise)
      Motion made, and Question,
      That—
      (a) for the year 1960 and subsequent years, in lieu of the duty on statements of purchases imposed by section one hundred and fifty-six of the Customs and Excise Act, 1952, the secretary of a registered club shall be required to take out an excise licence, on which there shall be charged a duty of live pounds, authorising the supply of intoxicating liquor in the premises specified in the licence to members of the club and their guests, and provision shall be made for matters supplementary to the new charge to tax;
      (b)in relation to a statement of the purchases made in the year 1959 the secretary of a registered club shall not be entitled to elect that the duty on the statement shall he charged for each pound paid by or on behalf of the club during the year 1959 in respect of a purchase of intoxicating liquor.—[Mr. Amory.]
      put and agreed to.
      4. Justices' on-licences (monopoly value and compensation charges)
      Motion made, and Question,
      That in respect of justices' on-licences—

      (a) no condition shall be imposed requiring payment of monopoly value, and any sum paid under such a condition which became due after the seventh day of April, nineteen hundred and fifty-nine shall be repaid;

      (b) on renewals in the year 1960 or any subsequent year appropriate percentages of the maximum charge fixed under section eighteen of the Licensing Act, 1953 shall be determined by reference to the annual values by reference to which such percentages fell to be determined for the year 1958, and the amount of any compensation charge to be levied in respect of a renewal in the year 1959 shall be calculated as if the appropriate percentage had been so determined for that year.—[Mr. Amory.]

      put and agreed to.
      5. Hydrocarbon Oils (Rebates)
      Motion made, and Question,
      That as from the eighth day of April, nineteen hundred and fifty-nine

      (a)for the purposes of section two hundred of the Customs and Excise Act, 1952 (by which rebates are not allowed on heavy oils used as fuel for vehicles to which that section applies) and the definition of " heavy oil vehicle " in section two hundred and two of that Act (which enables regulations to be made for giving effect to section two hundred) heavy oils shall he deemed to be used as fuel for a vehicle if. but only if, they are used as fuel for the engine provided for propelling the vehicle or for an engine which draws its fuel from the same supply as the engine so provided;

      (b)the said section two hundred shall not apply to any vehicle while not used on a public road unless a licence under the Vehicles (Excise) Act, 1949 or the Vehicles (Excise) Act (Northern Ireland), 1954 is in force for the vehicle or a certificate or document in the form of a licence, issued in pursuance of regulations under section twenty of the Act of 1949 or of 1954 (which relate to the registration of exempted vehicles) is current in respect of the vehicle, and shall not in any circumstances apply to any vehicle exempted from duty under the Act of 1949 by paragraph (h) of subsection (1) of section seven (which relates to road construction vehicles) or subsection (4) of that section (which provides for exempting occasional use of roads in passing from one part of a holding to another) or exempted from duty under the Act of 1954 under paragraph (h) of subsection (1) of section seven (road construction vehicles) or subsection (5) of that section (occasional use) or to any vehicle mentioned in paragraphs (a) to (d) of subsection (2) of section four of that Act

      (c)subject to the foregoing paragraph, the said section two hundred shall apply to any

      71
      vehicle chargeable with duty under the Act of 1949 or 1954 as a goods vehicle.

      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. Amory.]
      put and agreed to.
      6. Mechanically propelled vehicles kepton roads (Excise)
      Motion made, and Question,
      That vehicle excise duties shall be chargeable in respect of the keeping, as well as the use, of mechanically propelled vehicles on roads.—[Mr. Amory.]
      put and agreed to.
      7. Hackney Carriages (Excise) Motion made, and Question,
      That in the case of any licence under the Vehicles (Excise) Act, 1949, taken out after the seventh day of April, nineteen hundred and fifty-nine for a hackney carriage not being a tramcar, the annual rate of duty

      (a) if the carriage has seating capacity for four persons or less, shall be ten pounds,

      (b) if the carriage has seating capacity for more than four persons, shall be twelve pounds together with an additional ten shillings for each person beyond twenty for whom the carriage has seating capacity,

      seating capacity being calculated exclusive of the driver.
      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. Amory.]
      Put and agreed to.
      8. Hackney Carriages (rebatesand refunds)
      Motion made, and Question,
      That, if any Act of the present Session relating to finance reduces the excise duty on hackney carriages other than tramcars, then on the surrender after the commencement of that Act of an excise licence for such a carriage taken out before the eighth day of April, nineteen hundred and fifty-nine, the rebate under section twelve of the Vehicles (Excise) Act, 1949, shall be computed as if the rate of duty on the licence had been the appropriate rate fixed by the said Act of the present Session, but the holder of any such licence (whether current or not) shall on making due application be entitled to a refund of duty in respect of the excess for the period falling after the end of March, nineteen hundred and fiftynine.—[Mr. Amory.]
      put and agreed to.

      PURCHASE TAX
      9. Purchase Tax (Reliefs)
      Motion made, and Question,
      That, as from the eighth day of April, nineteen hundred and fifty-nine, but subject to any Treasury order under section twenty-one of the Finance Act, 1948,—
      (a) for any charge of purchase tax at 60 per cent. there shall be substituted a charge at 50 per cent., for any charge at 30 per cent. there shall he substituted a charge at 25 per cent., and for any charge at 15 per cent. there shall be substituted a charge at 12½ per cent.;
      (b)the Second Schedule to the Finance Act, 1958, shall be amended as follows:—
      (i)in Group 18 (which relates to broadcast receivers) the following paragraph shall be added under the heading " Exempt"—
      "(2) Television picture tubes.";
      (ii)Group 28 (which consists of road vehicle chassis, mechanically propelled) shall be omitted.
      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. Amory.]
      put and agreed to.

      INCOME TAX
      10. income Tax (Charge and Ratesfor 1959–60)
      Motion made, and Question,
      That

      (a)income tax for the year 1959-60 shall be charged at the standard rate of seven shillings and ninepence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, shall be charged in respect of the excess at rates in the pound which respectively exceed the standard rate by the amounts by which the higher rates for the year 1957-58 exceeded the standard rate for that year;

      (b)the reduced rates resulting from subsection (1) of section two hundred and twenty of the Income Tax Act, 1952 (that is, 2s. 3d., 4s. 9d. and 6s. 9d.) shall each be reduced by sixpence;

      (c)the fraction of the excess of a claimant's income over a specified figure which is to be taken for the purposes of relief under subsection (3) of section two hundred and eleven of the Income tax Act, 1952 (age relief) subsection (2) of section fifteen of the Finance Act, 1952 (small income relief) and paragraph (b) of subsection (1) of section thirteen of the Finance Act, 1957 (age exemption) shall be reduced by subtracting one-twentieth (that is, to eleven-twentieths. two-fifths and nine-twentieths respectively) and the limit of total income for the purposes

      73
      of subsection (2) of section fifteen of the Finance Act, 1952 shall be increased to four hundred and five pounds.

      But the amounts of tax deductible or repayable under section one hundred and fifty-seven (pay as you earn) of the Income Tax Act, 1952 shall until the eighth day of June, nineteen hundred and fifty-nine be the same as if no such changes had been made as are above provided (any necessary correction being made on or after that day by adjusting subsequent deductions or repayments under that section or, if need be, by an assessment).
      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. Amory..]
      put and agreed to.
      11. Income Tax (surtax rates for 1958–59)
      Motion made, and Question.
      That income tax for the year 1958– 59 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 1957– 58.
      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. Amory.]
      put and agreed to.
      12. Income Tax (Capital Allowances)
      Motion made, and Question,
      That further provision be made with respect to investment allowances and initial allowances.—[Mr. Amory.]
      put and agreed to.
      13. Income Tax (Purchase and resale of securities)
      Motion made, and Question,
      That further provision be made, for income tax purposes for cases where securities, stocks or shares are purchased after the seventh day of April, nineteen hundred and fifty-nine so as to make interest or dividends receivable by the purchaser, and the purchaser resells the securities, stocks or shares or sells similar ones.—[Mr. Amory.]
      put and agreed to.
      14. Double Taxation: Irish Agreement
      Motion made, and Question.
      That the Agreement between the United Kingdom Government and the Government of the Repblic of Ireland relating to the Agreements set out in the Eighteenth Schedule to the Income Tax Act. 1952, which was signed on the fourth day of April, nineteen hundred and fifty-nine, shall be confirmed and shall,
      74
      subject to its being given the force of law in the Republic of Ireland, have effect accordingly.—[Mr. Amory.]
      put and agreed to.

      MISCELLANEOUS
      15. Estate Duty (Policies of Insurance)
      Motion made, and Question,
      That it is expedient to amend the law relating to estate duty where, in the case of persons dying after the seventh day of April, nineteen hundred and fifty-nine, policies of life insurance have been assigned or have been kept up for the benefit of persons other than the assured.—[Mr. Amory.]
      put and agreed to.
      16. Stamp Duties (Policies of Insurance)
      Motion made, and Question,
      That it is expedient in any Act of the present Session relating to finance to amend the law so as to impose, subject to such exemptions as may be provided for in the said Act of the present Session, a duty of sixpence on policies of sea insurance and other policies of insurance, to make other provision in relation to stamp duty on policies of insurance and to make corresponding amendments of the law relating to marine insurance, so however that this Resolution shall not authorise any amendment of the law relating to stamp duty on policies of life insurance.—[Mr. Amory.]
      put and agreed to.
      17. Profits Tax (Consequential Charges)
      Motion made, and Question,
      That it is expedient to authorise any consequential charges to the profits tax (including charges for past chargeable accounting periods) which may result from amendments of the income-tax law relating to investment allowances and initial allowances and to the purchase and sale of securities, stocks and shares—[Mr. Amory.]
      put and agreed to.
      18. Amendment of the law
      Motion made, and Question proposed,
      That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description and amendments reducing generally, for all goods to which it applies, any rate of tax which is not altered in pursuance of some other Resolution of the Committee of Ways and Means.—(Mr. Amory.]
      5.26 p.m.
      Mr. Hugh Gaitskell: On behalf of my right hon. and hon. Friends, I should like to offer our personal congratulations to the Chancellor of the Exchequer on presenting his second Budget. A Budget speech is sometimes tiring for the Committee but it is always an ordeal for the Chancellor. There were moments towards the end of the right hon. Gentleman's speech when we were a little concerned because we thought that the strain was telling upon him. None of us would consider it in any way discourteous if the right hon. Gentleman feels that he would like to withdraw from the Chamber after his massive performance.
      The right hon. Gentleman gave us a fairly bald. straightforward narrative, and although we disagree with some of the ways in which he presented his Budget and some of the interpretations that he placed upon the statistics, and although we shall have some criticisms and suggestions to offer, I think that the whole Committee would wish me to say that we appreciate his modesty, his unassuming manner, his firm refusal to try to secure cheap applause and his good humour even when, towards the end of his speech, a certain restlessness was evident on this side of the Committee.
      It is not my purpose to embark upon a lengthy economic speech or criticism of the Budget. My right hon. Friend the Member for Huyton (Mr. H. Wilson) will make the main speech on behalf of the Opposition tomorrow. I would wish only to make a few comments which occur to me after listening to the right hon. Gentleman. He has produced a Budget which involves giving away something not far short of £400 million. It is a very large sum, and, if I may say so. I think that he is a lucky man to have been able to do this. Any Chancellor who is in a position to give away £400 million may be fairly described as lucky.
      Before we discuss the exact way in which it is proposed to distribute this money, I think that we should consider the circumstances out of which the decision to give away £400 million arose. The right hon. Gentleman spoke of the solid achievement of last year, but he knows perfectly well, as the whole Committee does, that it would have been possible and desirable to produce a Budget
      76
      of this kind only in circumstances where there was unemployment, slack in our economy, and where it was necessary to take positive action to expand from the stagnation in which we have been resting these last few years.
      It is a paradoxical fact that with the modern understanding of the part which may be played by the Government in our economic affairs, which owes so much to the late Lord Keynes, one can produce a popular Budget when things are bad far more easily than when things are good. That is, in effect, what the right hon. Gentleman has done this afternoon.
      The Chancellor referred to the balance of payments and described it as being exceptionally favourable in 1958. So it was. But the right hon. Gentleman himself pointed out—I must say in all fairness to him—on no less than four occasions that the reason for this was not due to anything which he had done, to anything which the Government had done, but was simply due to the extraordinary improvement in the terms of trade which we had enjoyed in that year. Indeed, the whole of the improvement, and more than the whole of the improvement, in our balance of payments was due to the reduction in the price of our imports.
      The right hon. Gentleman referred to the rise in consumption—a small rise, I think of about 2 or 2½ per cent. in real terms—but he did not go on to explain that that was not due to any expansion of production but to a decline in stocks. In other words, we were consuming more than we produced. The other reason was a fall-off in exports so that more was consumed at home.
      The Chancellor referred to the greater price stability. But, once again, this is overwhelmingly due to the fall in world prices to which he referred so often.
      The next point I wish to make is that, having got into this position, the first important move made by the Government was to use the public sector to get them out of it. The right hon. Gentleman quite rightly made much play with the expansion in public investment. I agree with him that it was right that public investment should be expanded. But in order for public investment to be expanded there must be a public sector, a large public sector. Where would the Government be today were it not for the nationalised industries? The right hon.

      77
      Gentleman would not be boasting of the expansion of public investment; he would be worrying far more than he was about the decline in private investment.
      Finally, on this general issue I could not help wondering as I listened to the right hon. Gentleman, to his arguments and to the reasons why he believed that we might now have this expansionist stimulus, why he did not say and do so many of these things six months or even a year ago. After all, a year ago we were in the middle of the most favourable six months in our balance of payments. The favourable part was all in the first half of last year. There was far less danger of expansion involving us in a balance of payments crisis at that moment than there is now. It has never been made clear why it was necessary to wait so long before giving the economy the boost to the economy which it certainly needs.
      To refer briefly to the changes which the right hon. Gentleman has introduced, I am very glad that he has decided to do something about post-war credits. As he knows, I have pressed this rather strongly this year because it has seemed to me that in a year of depression it was so obviously right that this problem should be tackled and that post-war credits should be repaid faster than they have been. I am only sorry that the right hon. Gentleman decided to limit the repayments, the change, to two years only. In my view he might well have gone down five years. That, of course, would have meant paying back a larger amount, but I do not believe that the whole of it would have been spent, and it would have removed from the Government and the Treasury altogether a much larger part of the problem. Nevertheless, I certainly agree with what the right hon. Gentleman has done so far as it goes.
      I also agree with the right hon. Gentleman's decision to restore the investment allowances. I am glad the right hon. Gentleman has done that because there were certain advisers in the technical Press who were saying that we need not bother about investment, we needed simply to boost consumption, which in my view is quite wrong. That, too, I certainly welcome.
      I welcome, also, the announcement that public service pensions are to be raised. I must withhold further comment about
      78
      that until we know the details of what precisely is proposed.
      We welcome, of course, the reduction in Purchase Tax, though I cannot help pointing out that the one class of commodities which is not affected by this is the most essential class. The benefits go to the less essential, to the luxury type of article, which, of course, has paid the higher tax.
      No doubt, too, there is much to be said for a reduction in Income Tax and in the beer tax. But I must say this. When one is looking at the problem as a whole and seeing how best we can distribute this very substantial sum of money, I most deeply regret that the Chancellor and the Government decided to leave out a class of persons who, I think, are the most deserving of all, namely, the old-age pensioners.
      I would have thought that, in circumstances where the right hon. Gentleman quite openly is trying to stimulate consumption, it would be right to do so where at present the hardship is greatest. That he has failed to do. That is indeed our main criticism of the distribution of the £400 million.
      We shall pursue this matter in the days to come in this debate. We certainly welcome the tax reliefs such as they are, but we deplore the circumstances which gave rise to them, and we could wish that more had been done—and very much more had been done— for a very deserving class of people, namely, the old-age pensioners.
      5.47 p.m.
      Mr. A. E. Cooper: It is not surprising that in his reply to my right hon. Friend the Chancellor the Leader of the Opposition should suffer from an attack of sour grapes. During the weekend I read very carefully the speeches made by Chancellors of the Exchequer since 1945, and I quite suspected that the Leader of the Opposition would make some observation with regard to old-age pensions.
      I would like to point out to the right hon. Gentleman that throughout the whole of the six years when the Labour Government were in power only once did they do anything for old-age pensioners. That is in striking contrast to what has

      79
      been done during the past seven years by a Conservative Government.
      I congratulate my right hon. Friend on what I think is a first-class Budget. Of course, we all have our ideas about how public money should be dispensed, but I should like to make this one final comment to the Leader of the Opposition. The Chancellor is not giving anything away. He has nothing at all to give away. The money which he has belongs to the wage and salary earners of the country. The Chancellor is, in fact, taking less—not giving anything away;— from the wage and salary earners.
      I think that this is a good time;—it is now some 20 years since we entered into a period of full employment in this country, namely, from the outbreak of the Second World War;—to take some sort of stock of conditions which have operated since that time and to try to analyse as objectively as we can the policies which have been pursued by various Governments at various times to check inflation and to give us a high level of prosperity, stable prices and the like.
      It is essential that we should take such stock, because never before in the history of this country have we gone through a period such as we have in the past twenty years. Way back in the Victorian era the standard of living of our people was nothing like it is today. Economic conditions did not compare, and we have no yardstick by which we can measure the circumstances of those days in relation to those of today.
      I suggest to the Committee that the first mistake made after the end of the war was the Labour Government's policy of cheap money at a time when there was a completely unsatisfied demand, both in Europe and in this country, for all types of goods and commodities. At that time Europe lay virtually devastated after the war. The great industrial machines of Germany, France and Belgium were destroyed and we were trying to fill the great vacuum of demand. That also was true in the Far East and the Middle East, where war had trod its ugly path.
      The demand for all types of goods and commodities was great, far greater than we could hope to meet from our resources. Cheap money-2½ per cent., or whatever it was at that time;—meant that
      80
      further purchasing power was being injected into the system at a time when it was unnecessary so to do. Whatever our views about it may be in retrospect, we were fortunate at that time, as I am sure that the Leader of the Opposition will be thy, first to admit, in that we had £1,000 million of American and Canadian money by way of loan and then four years of Marshall Aid. Those enormous sums of money kept the balance between our export and import demands and enabled a relatively stable position to be maintained.
      Notwithstanding that, because we had the full paraphernalia of Socialism being exercised throughout our economy—namely, import restrictions, price controls, a comprehensive rationing system and allocation of raw materials—in 1949 we were forced to devalue the £, with consequent hardships inflicted upon all sections of the community. Prices rose throughout that period at a rate greater than wages and also greater than productivity, with the result that inflation continued to spread, not only in this country, but also in other countries. We were not alone in this sort of situation.
      In 1951, a Conservative Government was elected. Some of us tried by argument in the House of Commons to impress upon our Government, as we had tried to impress upon a Labour Government, the idea that increased taxation to cure inflation was wrong. I think that the right hon. Gentleman, whose knowledge of economics I acknowledge as being considerable, will agree that increased taxation to cure inflation is possible only if one has under one's control every facet of the economy, which includes wages. That has been the key to our problem over the past few years. Because we have not had control over wages we have been unable to control inflation, except in the last eighteen months.
      In 1955 my right hon. Friend the Lord Privy Seal introduced an autumn Budget of which there has been considerable criticism. I and one or two of my hon. Friends were not able to support the Government in that Budget, for the reasons which I have just outlined—that it was an attempt to deal with inflation by increasing taxation and, at the same time, leaving uncontrolled the very factor which could correct the situation, namely, control of wages.

      81
      As a result of the 1955 autumn Budget, we suffered in the next few months the most severe rise in wages that we had experienced for many years. It was, therefore, not surprising to some of us who were thinking along different lines economically that in the autumn of 1957 we had these difficulties in the international field, with the run on sterling.
      It has always seemed to me that the only real way by which one can stop inflation or correct it, if one is unable to control wages, is to resort to the orthodox and classical method of stopping the supply of money. That is precisely what my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft), who was then the Chancellor of the Exchequer, did in September/October, 1957- by increasing the Bank Rate to 7 per cent., by limiting bank advances to the level of the previous year and by limiting investment to the level of the previous year. All this had the effect of damping down the economy-
      Mr. E. Fernyhough: And producing half a million unemployed.
      Mr. Cooper: —and the effect was considerable in a very short time.
      The hon. Member for Jarrow (Mr. Fernyhough) says " and producing half a million unemployed ". That may well be so, but I submit to him and to the Committee that had those steps not been taken, had we continued to pursue measures along the lines of previous Chancellors of the Exchequer, we should not today have half a million unemployed. We should probably be far beyond the million mark, because it is surely not a matter of luck that the whole of Europe has unemployment figures of 6, 7, 8 or 9 per cent. and more, whereas we in this country have only 2½- per cent. It is good management in this country, particularly in the past two years, that has enabled us to hold the position, as we have done in the past.
      Mr. Fernyhough: The hon. Member says that it is only by good management over these last few years that the number of unemployed has been held. Does the hon. Member think that that is winning the battle?
      Mr. Cooper: I am pointing out to the hon. Gentleman that today we have an unemployment figure of 2½ per cent. of the insurable population of the country. Every country in Europe, without excep-
      82
      tion, has an unemployment figure of not less than 5 per cent. Some countries have an unemployment figure as high as 8 per cent. Even in America the figure is 7 per cent. I submit to the Committee that this country has a record which is the envy of all the world, and we have done that by virtue of good management and taking the right steps at the right time.
      I submit to the Committee a point which has not generally been raised in the House. The Labour Party's proposals for their next Government, if they ever form one, represent by general consent an increase in expenditure of roughly £1,000 million a year. In the very last sentence of their 6d, " glossy " they ask how the money is to be found. They say rather blandly that it will be found by expanding the economy.
      I have gone to some trouble to find out exactly what is meant by this. Very roughly, the national product at the present time is about £20,000 million. Therefore, recognising that the present taxation system takes about 25 per cent. of that product, that £1,000 million means that the national product has to increase by at least £4,000 million in order to bring the same amount of revenue to the Exchequer. Anybody who knows anything at all about these matters knows perfectly well that to try to get across to the electorate the idea of increasing the national product by £4,000 million and thereby avoiding any increase in taxation is utterly dishonest.
      That is the first point; but the second is even more important. Situated as we are in this little island, with this high standard of living, dependent entirely upon coal for our economic strength, imports and exports play a far greater part in our life than in that of any other country. In relation to the national product, imports represent roughly 20 per cent. of what we need, so that if. as the Labour Party claims, it will increase the national product by £4,000 million in its first year of office, it means that our import bill must be increased by, again roughly, £1,000 million. That has to be met by a corresponding amount of exports—
      Mr. B. T. Parkin: The hon. Gentleman is, of course, working on his own figures when he speaks of £4,000 million. Is he really suggesting

      83
      that the increase in productivity which we on all sides want to see will produce only the same percentage of taxable income as the existing national income? Would it not be the case here, as in every other business activity, the last unit of output would produce much more taxable income than the earlier ones?
      Mr. Cooper: The hon. Gentleman is, of course, quite correct, but we are not now dealing with marginal figures but with the enormous figure, under the Labour Party's proposals, of £1,000 million.
      Mr. John McCann: That is only the hon. Member's assumption.
      Mr. Cooper: Those in the Conservative organisation are quite capable of working out the costs of the Labour Party's proposals. It might interest the hon. Member for Rochdale (Mr. McCann) to know that his hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) spoke recently in my division. He was challenged with these figures and did not dispute them at all. Until there is some contradiction from the Labour Party, these figures must be accepted as the cost of its proposals.
      As the hon. Member for Paddington, North (Mr. Parkin) says, with the increase in production we would get a greater revenue. That, of course, is true, but the amount will be marginal in relation to the huge sums of money involved. However, my point is that in order to get this great increase in the national product, roughly £1,000 million of extra imports will be required, and they will have to be paid for by roughly £1,000 million of exports.
      As we have seen from the Economic Survey, and as my right hon. Friend the Chancellor has confirmed this afternoon, the difficulty with which we have been faced in these last twelve months is that there has been a slight falling off in the export markets. Some hon. Members opposite may have read this week's Economist, in which these figures are analysed in closer detail, but I want to address myself to one point in particular.
      If hon. Gentlemen will examine their newspapers every day of the week they will be able to note the number of small stoppages that take place in various factories all over the country—in the main
      84
      for the most ridiculous reasons. For instance, very close to my own division there was recently a strike at the Ford factory. It was nothing to do with the management. It was a strike among the shop stewards, who called their men out because one man had not paid his union dues. The result was that the factory was virtually closed down for five or six days, with a consequent loss in wages to the workpeople of not less than £150,000—
      Mr. Harold Davies: The United State is ten times worse at that racket.
      Mr. Cooper: The effect was that the shopkeepers in the area suffered to that extent and, way down the line, various manufacturers had just that much less to produce to satisfy the needs of the area. That is just one instance. If we multiply that figure throughout the country, and if we consider the restrictive practices in this or that industry, the total lost production through strikes of various kinds assumes frightening proportions.
      I invite hon. Members opposite to look again at this week's Economist, from which they will find that for the first time since the end of the war we are now down to third place in percentages of world trade. Once we were second. Germany has taken our place. Another fact that should interest the hon. Member for Jarrow is that until a year or two ago we were No. 1 nation for ship construction. We are now third. Why? It is not because of any policies that can be attributed directly to Her Majesty's Government but simply because restrictive practices within the shipbuilding industry, and the activities of men like Ted Hill and his boilermakers, the " screwy " strike at Cammell Laird's shipyard, have undermined the confidence of buyers of ships in our ability as a nation to deliver the goods when we say we will deliver them—
      Mr. Harold Davies: This is not a General Election. The hon. Gentleman is not trying to win our votes, but I do wish that he would talk sense. In the first place, this Government which he is eulogising have refused Polish shipbuilding orders and have refused to send small boats to China, and so have reduced our shipbuilding position in the world. The hon. Member is using his privilege here to blame Ted Hill and all that kind of

      85
      Stuff—and that on a vital day in the House. I only hope that he will hurry up and finish his diatribe.
      Mr. Cooper: I can well understand the hon. Member not liking this sort of thing—
      Mr. Davies: It is not accurate.
      Mr. Cooper: It is very accurate. It is germane to the subject, and it is the sort of thing that has bedevilled British industry for years.
      Mr. Davies: Not as much as hot money.
      Mr. Cooper: I say here, in the full responsibility of my position as an hon. Member of this House. that the trade unions have to face a very serious responsibility for many of the industrial difficulties that we have faced in the past year or two. I go further. The Trades Union Congress and the top leaders of the individual trade unions have lost control of many of their branches. If they had not lost control, the sort of thing which is happening at Ford's, Briggs' and in many other factories simply could not happen.
      What we must recognise is that this country above all others is the one which cannot afford industrial difficulties. We must work as a team if we are to survive in the difficult years which lie ahead. What do hon. Members opposite intend to do about the sort of thing which is happening? Let me refer to a conference of the Communist Party held at St. Pancras Town Hall. [Interruption.] We are all very glad to see the hon. Member far Brixton (Mr. Lipton) back after his long illness, and we hope he is fully recovered, but it is no use his saying, This is only Communism." The Communists in this country are slowly and inexorably getting control of some of our trade unions. It is not in their interests to have good industrial relations. That is the very antithesis of everything for which they stand.
      This frightening statement was the last thing that was said at the Communist Party Congress. I quote Mr. John Williamson's words:
      "Fords and British Motor cannot he brought to their knees by action of workers in individual departments alone. Unity in action from ton to bottom is vital."
      86
      Is that the sort of talk which is likely to bring about a happy atmosphere within industry, an atmosphere which over a period of years may help us to build up a real team spirit and generate a level of prosperity which will be the envy of the world? We have it in us to build up something of great strength and to give us back our position of leadership, both industrially and morally, in the world.
      Far too much do we play party politics on the little issues and ignore the really big ones. I believe that the Budget which my right hon. Friend has introduced today will help to lift up the standard of living of our people in many ways. It is a wise Budget. As I said earlier, there will be many other ways in which hon. Members would have wished my right hon. Friend to distribute his money, but I beg hon. Members opposite to recognise that if they sit in the House of Commons as representing trade union and Labour thought they must face the obligations and responsibilities attendant upon them.
      6.12 p.m.
      Mr. Frank Allaun: The hon. Member for Ilford, South (Mr. Cooper) believes that this has been a popular Budget. I say that it is unfair, mean and harsh. They have given nothing, not a penny, to the two neediest sections of the community. They have completely ignored the needs of the old-age pensioners and of the desperate families on the council house waiting lists.
      It would have been easy for the Chancellor of the Exchequer, with part of the £400 million that he is doling out to others—and it is going mostly to the very rich—to raise the old-age pension to £3 a week and to cut drastically the present fantastically high interest rates on loans to councils for corporation house-building. The Chancellor has done neither of these things. He could have given the old-age pensioners the 10s. a week which we on this side are pledged to give them. To give five million pensioners a 10s. a week increase, which is little enough, would cost the country £130 million a year. This Budget has not given them a penny.
      It could be argued by hon. Members opposite that some of the old-age pensioners will benefit from the reductions in Purchase Tax. In my view, they will

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      not benefit to the extent of more than a few pence a week, because the three items which consume nearly the whole of an old-age pensioner's budget are rent, coal and food and on none of these items has there been any reduction. I will come later to the item of clothing.
      Today, when we see glimpses of spring and summer, it occurred to me as I travelled here by train that there are millions of elderly people who have never had a holiday, because they could not afford it, and they never will have one; but with an increase of 10s. a week it would have been possible at least to have given them, perhaps for the first and only time in their lives, a week's holiday this summer.
      It seems to me that the Cabinet must be out of touch with ordinary people, otherwise it could not have ignored these crying needs. Even now, after the Government have four times rejected our plea for a higher old-age pension, I hope that the Government will listen to us and change their minds.
      My second point concerns those who are tragically housed. The present interest rate on Public Works Loan Board loans is 5¾ per cent. A house costing £1,500 to build costs eventually £5,300 before the interest has been paid back over 60 years. As a result, many of our councils, who are doing their best, are forced to confine their housing purely to slum clearance tenants. This is causing tragic results.
      In my own constituency this week I have visited two families. One was a mother and father and eight children living in two tiny bedrooms, with mixed sexes, the eldest of the eight children being a girl of 19. The mother has a lung complaint and goes to hospital for an operation next week. One of the children also has a lung complaint. Two of the children were scalded. One can imagine what it is like to be cramped together in a tiny kitchen without hot water or a bath. All the water must be heated on the gas stove and in these conditions accidents easily happen. The family has been three years on the housing list and is still waiting.
      Two hundred yards away is another family of a mother, father and eight children. The father is a disabled ex-Service man from the last war, the mother has a weak heart. They have been nine
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      years on the housing list. There are cases with even higher priority. That is why this family is still on the housing list. Councils throughout the country, particularly in the industrial areas, are being forced to refuse houses to people like this who need them, even though the councils are doing their best, because they can only struggle to rehouse slum clearance tenants. What a fantastic situation this is. I assure hon. Members that such tragic housing conditions break up families. At the same time, however, large numbers of building workers are on the dole.
      The relief that the councils are seeking is a reduction in the Public Works Loan Board interest rate. Until 1951, it was 3 per cent. It is now 5¾ per cent. I am disgusted that the Government, who can afford to give away large sums to the very rich—that is what it boils down to when we examine the figures—cannot afford to give anything to these needy people who are in a terrible position.
      The Income Tax reduction will mean not a penny advantage to nearly half the population. At present, a man and wife with two children pay no tax at all if they earn less than £546 a year, or ten guineas a week. A man and wife and three children have no liability for Income Tax if they are earning less than £649 a year, or £12 10s. a week. Every hon. Member knows there are a lot of decent working people earning far less than that. Therefore, they will receive no benefit from the reduction in the Income Tax. This is a huge slice of our population, and self-evidently they are the worst off financially.
      Socialists believe in a very high Income Tax, but only on the very high incomes. The Chancellor himself could not deny that the principal benefit of his proposals will go precisely to those with very high incomes. A man whose income is £100,000 a year—and there are quite a number of those in this country—will receive as a result of this 9d. off the Income Tax—I have just worked it out-£3,750 from tax, which is quite an item. There is quite a number of old-age pen— sioners—
      Mr. Cooper: Would the hon. Gentleman explain how he worked that out? It is quite untrue. The 9d. referred to Income Tax and has nothing whatever to do with Surtax.
      Mr. Allaun: Yes, but the hon. Member is wrong, because this 9d. in the £ refers to every of taxable income.
      Mr. Cooper: The hon. Gentleman has not read the Budget Resolution we have just voted upon. It says that income exceeding £2,000 shall be taxed
      "at rates in the £ which respectively exceed the standard rate by the amounts by which the higher rates for the year 1957-58 exceeded the standard rate…"
      Perhaps the hon. Gentleman would be good enough to look at that.
      Mr. Allaun: If I am wrong, I apologise for my mistake. I certainly understood it that way.
      What I can be certain about—and 1 do not think the hon. Gentleman will correct me on this point—is that those on the lower scale will receive 6d. reduction in their tax while those on the full rate of 8s. 6d. will receive 9d. reduction in their tax. This is a reversal of all good tax principles. Surely we believe in progressive taxation. This is quite obviously retrogressive. It carries out the old maxim,
      "Unto him that hath shall be given ".
      This Budget includes expenditure of £1,500 million a year on the armaments programme. This is £80 million a year more than last year's Budget figure, but that estimate was, of course, exceeded, and I suggest to the Committee that it is highly probable that this year's figure of £1,500 million will also be exceeded. Up to 1950 we were spending £750 million a year on arms. I do not think that the prospects of peace would be any worse if we reduced our present £1,500 million to that figure. Indeed, I believe that the prospects for peace would be considerably brighter, because that would reduce suspicion and tension, produce that atmosphere in which agreement could be reached, and end the fatal arms race.
      One item alone in our arms expenditure is £500 million on developing the Blue Streak: £500 million on developing one weapon, a suicide weapon, because every hon. Member knows that if we use that weapon we shall be wiped out shortly afterwards.
      What could we not do with £750 million saved? We could solve the problems of poverty. We could raise the school leaving age to 16, and we could give the old-age pensioners £3 10s. a week. We
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      could begin to build Jerusalem in England's green and pleasant land. There is a lot of bunkum talked in this Chamber about helping those in need in Africa and Asia. Some of this talk is well-intentioned, but some of it is hypocrisy, because we cannot help them if we are spending all this money on these weapons.
      I come to two minor points. The Chancellor has told us that there will be 2d. off a pint of beer. He said that this will be passed on to the consumer. I suggest we should not cheer too soon, because several well-known breweries whose names I could mention announced a few days ago a ld. increase in the price of their beer. I do not know whether this was a rather cute anticipation of the Budget so that their increase in price will not be noticed, but there is not, believe me, going to be a reduction of 2d. on all beers which hon. Members think there will be.
      Lastly, the Purchase Tax. Five per cent. remains on essentials, clothing, wool, cotton and other textiles, and 10 per cent. comes off non-essentials such as motor cars. To everyone here it is well known that those industries, textiles and clothing, are in a terrible state. Thirty thousand have left the industry in Lancashire in the last year, and in my own constituency clothing is very badly affected. One would have thought that if the Government were really keen to relieve unemployment and at the same time to cut the clost of living, this is precisely the reduction which they would have made, but there is not a penny off. I do not want to go into this now because I raised it with the Chancellor last year, but this tax is full of anomalies. On certain cloth one pays no tax, if one takes a suit length to a tailor; if one goes to a tailor and buys the tailor's cloth one has to pay tax. In any case, I very much doubt whether it is worth the cost of collection. I hope we shall press the Government to change their mind about this.
      To conclude, I believe that this Budget is largely of benefit to the very rich; the very poor will not benefit at all; and that is why I say it is the shareholder's delight but the poor man's disappointment. While it may be toasted in the clubs of the West End, in the pensioner's cottage it will be damned.
      6.27 p.m.
      Mr. Rupert Speir: In general, I regard the Budget as being sensible and sound in its conception. The Chancellor, quite rightly, said himself that this is " no spending spree Budget ". I think it ought, however, to do three very important and desirable things. It ought to encourage expansion and employment; it ought to encourage stability in the cost of living; and it ought also to encourage more savings. Some may say that these are three incompatible targets, that they are hostile to one another, but I think that the Chancellor has so skilfully worked his Budget that these three targets are quite compatible during the coming year.
      Above all, the Chancellor has pleased me by his Budget proposals because he has made it abundantly clear that so far as lies within his power it is his intention to do his utmost to prevent any unnecessary unemployment. In his speech the Chancellor quite rightly said that in certain areas in Britain unemployment is still too high. I quickly add that by comparison with other industrial countries overall unemployment in Britain is still at a very welcome low level: but the Chancellor, by the words he used, clearly demonstrated his sympathy for those who are at present suffering the burden of unemployment. He rightly referred to "the human waste " and " misery " which unemployment causes. Rising prices, a rising cost of living, can also cause much human misery. We have seen that in these post-war years.
      For my part, however, I am glad to go on record as saying that if one had to choose between inflation and rising prices, with all the misery which inflation occasions to individuals, or, on the other hand, deflation with mass unemployment, I would choose the former, because I think that there is no greater tragedy, apart from war, than mass unemployment. I am glad, therefore, to see that the Chancellor is proposing to take steps to encourage the expansion of trade both here and abroad, because he realises the necessity for a great trading nation like Britain to play her part in a further expansion of trade, not only here at home, but also in the international field. We who live in these small overcrowded islands must realise that for the maintenance of a high level of employment and a high standard of living, we are in
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      the long run absolutely dependent upon the prosperity of the world and upon an expansion of international trade.
      I do not wish to detain the Committee for long in my remarks this evening, and, therefore, I will not say anything more of a general nature regarding the budgetary provisions, but I should like to refer to what the Chancellor himself called one of the minor provisions of his Budget. Here I reluctantly have to register my doubts. Continually during the past six years, I have been urging upon the Government the need for some assistance for rural transport. I have not necessarily asked for a direct subsidy for rural transport, but I have asked for the removal of penal taxation—a system of taxation which is killing off the prospects of any small operator hoping to make a living by means of operating buses in our rural areas.
      I have written to the Chancellor on innumerable occasions, I have taken deputations to see him and the Minister of Transport, I have attended many conferences in this building and in other parts of the country, and, in general, I fear that I have become a notorious bore on this subject. At last, after six years of agitation, the Chancellor has given rural transport a mention in his Budget, and I am afraid that I must appear ungrateful when, now that at long last the Chancellor has taken some action, I question whether that action will be of any valuable assistance to the small operators.
      I very much doubt whether a reduction of two-thirds in the Excise duty on buses will do very much to help the small operators. It will help the bigger boys, admittedly. It will certainly help the bigger companies, and they will welcome this reduction in the duty, but the bigger companies do not need our help. They are doing quite nicely. They have a lucrative trade in the urban areas, and do not operate to any very large extent in the remote rural areas. They have been operating in urban areas, where they get the cream of the traffic, and can easily carry the loss occasioned by operating in the rural areas. It is the small operator whose operations take place in the remote rural areas for whom I have been agitating in past years, and for whom I fear this Budget concession will only be equivalent to giving a very small blood transfusion to a man who is desperately ill.

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      It is true that these operators will also get some further slight relief from the proposed increase in the investment allowance. It is also true that they will benefit slightly from the Chancellor's proposed abolition of the Purchase Tax to chassis of new commercial vehicles—but how many small operators in rural areas can afford to buy new commercial buses? All they can afford are secondhand or third-hand vehicles which the companies operating in the urban areas have put on the scrap heap. I feel that we have a long way to go before we get anywhere near to solving the rural bus problem, although this Budget certainly makes a small start. I 'have a feeling that perhaps those hon. Members on this side of the Committee who represent rural areas have at last got their feet in the Treasury doorway, and I can assure the Chancellor that we shall not allow the door to be slammed shut in a hurry. We have got a long hard journey ahead of us.
      Mr. Percy Collick: I have some sympathy with the point which the hon. Gentleman is trying to make in relation to rural transport. What I can never understand, when this sort of speech comes from the benches opposite, is why the hon. Member belongs to the Government party. Surely, being a Conservative, he believes that the basic motive of industry is the making of private profit, and, therefore, when rural transport cannot make private profit because of its difficulties, and fails to provide a transport system, the alternative to that is to make transport a public service?
      Brigadier O. L. Prior-Palmer: And run at a loss.
      Mr. Speir: I do not want to make this a party issue. I have had support from the benches opposite for my campaign for rural operators, and I would willingly support the party opposite on nationalisation if I thought that nationalisation would be the solution to the problem. I would not support the hon. Gentleman on other aspects of his party's policy, but I would willingly see the whole of the transport system of the country nationalised if I thought that would be the solution of this problem.
      It was people like the hon. Member for Birkenhead (Mr. Collick) who
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      encouraged the public, before 1945, to think that nationalisation would be the solution. Yet, we have had the railways nationalised, and today the British Transport Commission owns a lot of buses, particularly in the north of England, but far from helping to solve the problem the Commission has actually made the position in the rural areas far more difficult than it was before. It has not only closed down branch line after branch line, and thereby stranded people living in the countryside, but the bus companies owned by the British Transport Commission have not been all that helpful in providing rural transport services.
      Therefore, I do not believe that the rural communities would he wise to look to nationalisation for a solution of this problem, but, for my part, I am quite prepared to have an impartial committee set up to look into this problem and I would be only too pleased to accept its solution of the problem whatever it might he. It is much easier to state the problem than to find a solution.
      I close by saying that the Budget, although it makes a start in the right direction, still leaves a long hard journey ahead of us. Unfortunately—and this is the point I wish to emphasise—time is very limited. When the rural operators are experiencing average receipts of about 9d. per mile, but incurring running costs of from ls. 6d. to ls. 9d. per mile, they cannot possibly hope to remain in business for very much longer. I therefore hope that the Government will bestir themselves, and, in doing so, I would recall to them the words of an old Chinese proverb, which says:
      "Hasten, the hour is later than you think."
      6.40 p.m.
      Mr. Ellis Smith: sI wish to associate myself with the remarks of my right hon. Friend the Leader of the Opposition when he expressed his concern at the terrible strain on the Chancellor of the Exchequer. When I tried to intervene it was with a view to assisting the right hon. Gentleman, because anyone who knows anything about the administration of National Assistance legislation knows that difficulties are bound to arise and that people would be thinking about how they would he affected as soon as the

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      changes were broadcast. If further explanation had been made and more details given it would have saved a good deal of misunderstanding.
      In addition, there are the most urgent cases of those who are unemployed through no fault of their own and those who are sick. Surely, they should have been considered when the payment of post-war credits was being considered. However, when 1 saw the Chancellor's face and the way in which he was gripping the Dispatch Box, it was enough for me. I am sure that if we could have given him any assistance most of us on this side of the Committee would have done so.
      In these times Budget day must be a terrible strain on the Chancellor. We all know him to be a most courteous and conscientious man. After working as he has been working lately, it must have been a very great strain upon him when, today, he reached the climax of his work. I hope that he is now fully recovered and is able to continue with the work which he has undertaken.
      The Chancellor made a number of statements which will provide me with a basis for what I want to say. In these days any real Labour man must differ fundamentally from a real Conservative. This is not a personal matter. It is a question of deciding which is the best road for our country and for the world to travel. As a result of experience of two world wars, of being employed in one of the most efficient and large-scale industries in the country and of many years spent in the House and in other activities, I stand here a more convinced Socialist than ever. It is on that basis that I wish to put forward some constructive proposals and to make an analysis of the present situation within the limited time available to me.
      I am convinced that this or some other Government will have to embark upon a policy of the kind which I shall outline if Britain is to be worthy of the past and prepared to build upon foundations which will make this generation worthy of those yet to come. That is the philosophy which will guide me in what I want to say. The Chancellor said that it is good sometimes to stand back and ask ourselves where we have been and where we are going. I should be
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      delighted if right hon. and hon. Members would ask themselves that question. The right hon. Gentleman went on to say that the country has been converted now to a free economy. This is where we on this side of the Committee differ from him fundamentally, which I will show by the evidence that I propose to produce.
      The Chancellor said that expanding world trade is an indispensable necessity. I heartily accept that. It applies to our country probably more than to any other country. I hope that we shall build upon ideas of that kind. The right hon. Gentleman said that we had been greatly helped by the big fall in world prices. Fundamentally, that fact explains the large concessions which the right hon. Gentleman has been able to make today and which have been welcomed. The Chancellor also said that the United Kingdom is a large capital exports country and that our monetary adjustments are made on that basis. He said that enormously increased loans had been given under export credit facilities. We on this side of the Committee welcome that fact. Many more millions will have to be placed at the disposal of the excellent services provided by the scheme for export credit facilities. He said, also, that economic output in the coming year must require increased exports. I agree wholeheartedly. The right hon. Gentleman dealt with the fact that the consumption of durable goods had increased and he spoke about motor cars and refrigerators, but the consumption of those two products affects only a relatively limited number of people.
      The Chancellor spoke about the need for stability in prices, with which we all agree, and about the need for an improvement in the competitiveness of our economy. When I heard the right hon. Gentleman say that, I reflected that I had been hearing that comment for many years, but that only a small section of the community was required to pay heed to it. Everyone else continues to improve his or her standard of living while those mainly engaged in the export trades, especially in engineering, which, at present, is responsible for between 40 or 50 per cent. of total exports, have their wages kept down and their earnings kept relatively low and the status quo maintained in their living standards. I propose later to make some further brief comments on

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      that subject, based on the Chancellor's speech.
      I have been protesting for several years about the fact that a debate on the Economic Survey is included as part of the debate on the Budget. I will not dwell again on that subject except to say that in the limited time at our disposal we are not doing justice to our duty in Parliament by dealing with these two subjects in one debate. If one takes an interest in the country's problems one cannot make a close analysis of the Budget proposals and of the economic situation at the same time. In these days a man ought not to be called upon to stand the terrible strain which the right hon. Gentleman had to stand today. That applies in a lesser degree to all of us. To be fair to one another we must limit our speeches. I did not check the time taken by the Chancellor, but I think that it must have been two hours at least. To require him to make a speech of that length on top of the strain of all the preparations for Budget day and all his responsibilities is asking too much of any Chancellor, yet year after year we continue to take these two debates in one.
      Although it is surprising how many people seem to forget it, one of the most important duties of a Member of Parliament is to interrogate Ministers. As can be discovered from reports of past debates, it was the practice for many years that when questions were asked during debate Ministers were called upon to reply, but in recent years it has become the practice for Ministers—and I do not speak politically—to make speeches from prepared briefs instead of dealing with questions asked and points made in the course of debate during the day.
      Today, my observations will be of an interrogative character, but, first, I want to congratulate the civil servants who have been responsible for the excellent documents placed at our disposal for this debate, including the Economic Survey, and the White Paper on Preliminary Estimates of National Income and Expenditure, 1953 to 1958. All these must have meant a tremendous amount of work behind the scenes, and I believe that occasionally we should pat civil servants on the back in order to encourage them in their work.
      The same applies to those who are doing their duty in the House of Com-
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      mons. I was pleased when my hon. Friend the Member for Southampton, Itchen (Dr. King) put down the following Motion on the Order Paper:
      [That this House, noting that 16th February, 1959, is the fiftieth anniversary of the Official Report of the Parliamentary Debates (Hansard), congratulates all concerned with its daily production on the accuracy, integrity, industry and speed with which the Debates of this House are recorded, printed and preserved.]
      The Official Reporters, who spend many hours reporting our proceedings, provide another example of what I have in mind.
      Now I will ask a few questions based upon Cmnd. Paper 712, the Preliminary Estimates of National Income and Expenditure. On page 5 I see that the total income from rent was £639 million in 1953 and £1,031 million in 1958. Can we have an explanation of these figures? On the same page, under the heading " Remittances Abroad ", I find that in 1953 net remittances abroad were £4 million, in 1956 they were £28 million. in 1957 they were £43 million and in 1958 they were £28 million. Are these differences the result of speculation? Inside this country we have to restrain our expenditure, especially those engaged in productive industry. Is there no restraint on the speculators? Should this be allowed to continue while people engaged in industry work as hard as they do?
      Mr. Shonfield, who is, admittedly, one of the most competent economists in this country, wrote in last Sunday's Observer that the 1957 crisis was due entirely to speculative capital movements. Is that the explanation of the £28 million, £43 million and £28 million? If so, it only proves what some of us were saying in 1957, when a few clever people who thought they knew all the answers pooh-poohed the idea. Now I would like them to face up to what is contained in the White Paper. If my analysis is correct, it means that while many of our people work hard, rich speculators are allowed to dissipate our resources, with the result that our people have to work harder still for less.
      Now I come to page 10 where, under the heading " Property Income Paid Abroad " there are the following figures: in 1953, £354 million, in 1958, £552 million. Again, net investment abroad in 1953 amounted to £179 million and in 1958 to £455 million. May we also have

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      from a Minister some explanation of those figures?
      Last November I wrote to the Financial Secretary to the Treasury on behalf of a number of constituents in a large industrial establishment whose shop steward had written to me on their behalf about travelling expenses The reply I received was most courteous, but I would like the Committee to hear the following extract:
      "The general rule is that the cost of travelling to work is not an expense in respect of which a deduction may be claimed for Income Tax purposes, and I am afraid that the view is taken that it would be wrong to amend the law to give relief of this kind."
      When the Chancellor today announced large-scale concessions I thought about those workers travelling to and from their employment. The hon. Gentleman the Member for Hexham (Mr. Speir) has already protested about his proposal not being fully accepted, which further strengthens my point.
      Many workers, not only in the industrial area I represent but also in others, have to travel from, say, Stoke-on-Trent to Crewe, Radway Green. Stafford, Manchester, and other places because of a lack of diversification of industry in their area. There is also a fair amount of unemployment in these areas, with the result that people are forced to travel long distances rather than be unemployed. The question of housing also enters into the picture, because people hesitate to move from an area where they have lived for a long time.
      Another difficulty arises in connection with education. All these questions lead people to decide to travel long distances rather than to move their homes. I understood that it was the policy of the Ministry of Labour to encourage greater mobility of labour, and, therefore, it was only reasonable to hope that people who are rendering great service to our export trade would participate in the millions of pounds worth of concessions announced by the Chancellor today.
      Now I want to ask a question. I understand that legal advice is being given from Fleet Street and the Strand to people who are well placed, especially those appearing regularly on television, on expense accounts. I understand that a large number of small companies have been
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      formed within the last two years. The public are entitled to know how many companies have been started by individuals during the past few years for this purpose. Is it correct that some people have formed a company composed of themselves and one other person? Is it right that well-known television artists should form these companies and, as a result of expense accounts, can run their cars free? Is it right that they should do this when the people for whom I am speaking are not allowed any such concessions?
      Although we welcome the concession on post-war credits, I agree with my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) that these should have been dealt with on a broader basis. I know of nothing worse than to be sick for a long period, or to be unemployed, and I should have thought that such people would have shared in this concession.
      We used to take a pride in leading the world in social services, but now we are behind many European countries in this respect. If anyone doubts this, let him go to the Library and the Librarian will provide him with the means of checking up what I am saying from the Reports prepared for the International Labour Office, at Geneva. Our social services were far too low in 1938 and they were fixed too low in 1946. I plead guilty to that at once. For instance, sickness benefit in 1912. expressed as a percentage, was 32; in 1938, it was 22; and in 1958 it was 19.5. Unemployment benefit in 1912 was fixed on a percentage of 22; in 1938, it was 25; and in 1958 it was 19·5.
      The time has arrived when substantial improvements should be made in the social services. We pledged ourselves, during the war, to maintain full employment, or, if it was impossible to provide employment for any man or woman who was willing to work, to see that the social services should be maintained at a far higher level than hitherto, because it is the unemployed person who is paying for the country's economy. I will not make much of this now, because one has not time, but there is no doubt that the unemployed are standing the cost of it more than any other section of the community. I was pleased to see this view endorsed in an excellent article in the Economist, on 20th December. It was an article of a kind which I never thought would appear

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      in such a reactionary periodical. It said:
      "Britain's half a million jobless are performing a service for the economy, and they deserve to be paid more for it."
      Had there been more time, I should have liked to quote long extracts from that article.
      There are a few questions that I want to ask. Are the European steel exporters quoting lower prices than our steel manufacturers? If so, what is the explanation? They are embarking now on large-scale advertising in an attempt to defeat democracy. Therefore, we are entitled to answers to these questions.
      Are the Belgian sellers of ferroconcrete quoting well below British prices? Have they recently obtained a large-scale order in the United States? Are continental ships' plates being quoted at well below British prices? Are German heavy steel plates quoted well below British prices? Have European costs been assisted by the importation of cheap American coal? If so, who has won the war? We sacrificed ourselves in two world wars. No section of workers worked harder and longer than the miners. There were no disputes worth talking about. During the next few days I should like an answer to the question whether European costs are being assisted by imports of cheap American coal.
      Do we want to export more steel? If so, why are we not exporting more steel at present? Why have the Germans exported machine tools of such great value compared with us? Seeing that prices are about the same, why does Germany export 52 per cent. of machine tools into Sweden? Is the British export of machine tools into Sweden only 14 per cent., and if so, why? Seeing that our efficient and well finished machine tools will bear comparison with any in the world, seeing that our prices are well below those of the Swiss, the United States, Germany and France, why have we not a greater share in world exports of machine tools? How many millions of pounds of national income have we lost as a result of inaction in this respect for so long?
      On page 17 of the Economic Survey we find that between January, 1957, and February, 1958, the index of wholesale prices fell by 11 per cent. I doubt whether that was enough, but I have not
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      time to dwell upon it, so I will accept what is stated. Why has there not been a substantial reduction in the cost of living? Time after time this afternoon the Chancellor of the Exchequer—I agreed with him—emphasised the necessity for maintaining stability of prices. But it is not only stability of prices which is required. We also require large-scale reduction in prices. Seeing that the country has benefited by the reduction in world prices, why have not internal prices been reduced?
      In my view, the country urgently needs a new economic policy in harmony with the twentieth century, with its mass production and science. Through high interest rates and high dividends, through our country being endangered by speculation two years ago, through the grip of trade associations this country is more in the grip of trade associations than any other country in the world through the large profits which are being distributed, through devaluation—I plead guilty there and through too many watching too few at work, the people in productive industry are working relatively harder and faster for less pay than the workers in any similar country.
      Our people are prevented from receiving the benefits of mass production. Instead of adopting a policy of the kind that the Chancellor has admitted that he cannot bank upon for much longer, why do we not adopt a more up-to-date policy which would reduce the high profit margins? This would mean that labour would have a larger share in the product of industry, and the policy would tend to increase the demand for consumption goods since wages are more readily and more fully spent than other incomes.
      We have heard a great deal about our contracts for power plant in the United States. I understand that when he was in America the Prime Minister made a protest about what has happened. I do not think that an official protest has been made. At all events, Ministers and hon. Members have protested, and I agree with them. However, I have never heard the real explanation given for the fact that we can obtain such orders.
      Those orders are being obtained partly because our exports are subsidised. Does any hon. Member doubt that? The Economic Secretary to the Treasury is present and I hope he will check what I

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      say, because I do not want to make a mis-statement. Is it not a fact that between 40 and 50 per cent. of the products of the engineering industry are being exported? They are being subsidised at the expense of highly skilled engineers whose earnings are relatively low, for the policy carried out by the national engineering employers for 30 years has resulted in devaluation of skill. Under a veneer of acceptance, our skilled engineers are receiving nowhere near what they should be receiving compared with engineers in America. That is why we are able to quote in the way we do.
      1 do not say that is the whole explanation. No one takes greater pride than I do in the efficiency of some of our large-scale industries which are obtaining these contracts. No one is friendlier than I am with some of the people who are responsible for this work, and I give credit where it is due. However, I contend that part of the explanation is that our engineers, especially skilled engineers, are not receiving what they should.
      I propose to quote from the excellent export guide of the General Electric Company. I hope that the Economic Secretary will make a note of this. This export guide—I am quoting from the one issued in January, 1958—is one of the best of its kind. It says:
      "The colossal size of the potential market in China. Coupled with the rapid development that the Chinese Government is undertaking, inevitably makes China a very attractive prospect to exporters. there should be sufficient left to finance at least some increase in imports from Britain The long-term potential of this market is the most important reason for its cultivation The most successful means of establishing oneself in the Chinese market is first by way of technical assistance."
      Nobody knows that better than the Economic Secretary.
      "China needs this assistance badly It paves the way for orders West German experience has shown"—
      that and yet Britain is not treating this as an urgent matter.
      For twenty years I have advocated Commonwealth economic co-operation on a planned basis. We have little time left in which to arrange for that. We have already forced Australia and New Zealand to look elsewhere, and Canada will do the same unless urgent action is taken.
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      Britain urgently needs an expansion of steel production. That expansion should take place in Canada. A British steel consortium should be organised to construct the world's most modern large-scale steel plant in Canada and our steel plants should be fully utilised at home. Volunteers from this highly skilled industry should be asked to man the steel works in Canada.
      There are mountains of iron ore in Canada. There is wheat in abundance, but there is no coking coal. On the other hand, there are tons and tons of coking coal in Britain, particularly in north Staffordshire. It is true that in some areas it has been worked out, but a recent survey has shown that there is still an abundance of it.
      There are 50 million people in this country and 350 million in India, the centre of the Commonwealth. Pottery and textiles are wanted in Canada and India. In this situation there are great potentialities. Instead of talking so much about the European community, we should concentrate on the Commonwealth. The terrible unemployment in Lancashire between 1900 and 1910 forced scores of my cousins to go to Canada, New Zealand and Australia. Such people want to co-operate with us and there is enormous good will. There are great possibilities in this situation, if only we seize the opportunity.
      Almost every country in the world is planning along these lines and Britain will be left behind unless we have a similar policy. Ghana, India and other nations are already adopting economic planning policies. As I said before, the time has come for Britain to embark on a similar policy; and on this issue we must not be prepared to compromise, for the country's future is at stake. Only conservative Britain—and I do not use the term in a narrow political sense is not adopting a policy of State planning under which the best results can be obtained by the use of modern scientific techniques.
      Labour is pledged to planning, but I ask my right hon. Friends whether they are prepared to fulfil those pledges. When in opposition, it is easy to put questions of that kind, but we want men and women who are strong, determined and courageous, who have the necessary

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      leadership, who mean business, and who believe in planning, if the country's interests are to be served.
      I speak like this, because I know the people who prevented such a policy being adopted when Labour was last in office and I know the people who have received promotion since then. If anyone doubts the truth of what I am saying, I have documentary proof. If we are to be worthy of the movement of which we are members, we have no right to appeal to the country at a General Election unless we will implement our promises when we become the Government.
      I can remember the Prime Minister, when he was in opposition. I always had a sneaking regard for him because lie was tall, slim, handsome, and possessed all those benefits of life in education and social status which some of us did riot possess. He did not speak as some of us speak because of our background. Year after year he spoke about planning. Does he still believe in planning?
      Mr. Arthur Moyle: The middle road.
      Mr. Ellis Smith: To a certain extent 1 would not mind if we travelled the middle road, although it is dangerous because one is on neither one side nor the other—one often sees cars travelling very fast in the middle of the road. However, the situation is such that one must be on one side or the other. In those days, the Prime Minister was on the side of planning. Within limits, we had a similar policy during the war.
      Such a policy is now applied to military purposes. There is a general staff in America which decides military policy for the Western world. At Fontainbleu, there is a general staff which plans for N.A.T.O. Yet we have no economic general staff. There is merely a general scramble. Much as I admire him personally, and pay tribute to his conscientiousness, the Chancellor this afternoon prided himself on supporting the general scramble in the freedom of our economy. What he said meant that those engaged in the export trade will have to work even harder.
      We need urgent action to cut imports and maximise exports. We continue to import oil and we close down coal mines and pile up stocks of coal and do not fully utilise our mining capacity. It is time for us to stop transporting coal and to
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      begin to make gas where the coal is and then to pipe the gas to where it is needed.
      We should instruct the power industries to adopt a national policy, for that would be the greatest contribution which could be made towards the solution of our balance of payments problem. The Central Statistical Office is responsible for some excellent publications. There has been a great improvement in the Economic Survey and we have statistical information in the Monthly Digest of Statistics. The United Nations publishes economic surveys and there is the allegedly confidential economic report which is issued to members of the Advisory Council, but not to Members of Parliament. There are also Board of Trade reports.
      The logical outcome of all that is that there should be a national investment Man, instead of the present speculative scramble. My party is pledged to a national investment board. Some of us thought that such a board would be established the last time Labour was in power. Those behind the scenes were able to prevent such a proposal being implemented. There will be no excuses the next time. But even before the next time the Government should set up a national investment board. We ought to organise a Ministry of Planning and Production as soon as possible, to make plans for economic development and to put forward an investment programme. If we did this we could unite all our people in an effort for greater production, to make Britain greater than ever. It is on that basis that the House of Commons should be considering future economic policy.
      We are living not in the eighteenth or nineteenth century, but in the middle of the twentieth century. Science has made greater progress than man ever dreamt of in the past. Even H. G. Wells and other similar writers never thought that within our lifetime we would make the scientific progress that we have. When I was young and was told by my mother about the miracles that took place as related in the Bible, I never thought that I would live to see the day when miracles would be performed. But miracles have been performed on me. I only wish that other people who have suffered could have had the same fortunate experience that I have had. As the result of the application of medical knowledge here I

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      stand now, practically as strong as ever. These miracles have been provided in our lifetime, and I am convinced that if Britain would adopt a national economic policy based upon scientific ideas of the kind to which I have referred, she could have a greater future than she has ever had in the past.
      Mr. Allaun: On a point of order. During the course of my speech I was interrupted by an hon. Member who said that I was incorrect in saying that a man earning £100,000 a year would save £3,700 on this Budget. I accepted his correction and apologised. I have since checked the matter according to the Government documents and I find that I was correct. Is there any means within my power which will enable me to withdraw my apology and my acceptance of correction?
      The Temporary Chairman (Major H. Legge-Bourke): The hon. Member has achieved his object in asking that question. Perhaps he will be prepared to leave the matter there.
      7.22 p.m.
      Brigadier O. L. Prior-Palmer: I wish that I could follow the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) in his very interesting and effective speech. I am delighted to see that he is as well as he is, because it has always been a great pleasure for me to listen to him.
      As a result of the action of Her Majesty's Government, at a time when things looked pretty black—drastic action, which was extremely unpopular with many people—we have come through the wood, and a Budget for which we have all hoped for many years has at last been produced. I only hope that the shot in the arm which has been given by the measures adopted today will not result in another inflationary spiral. It is a risk, but it is one well worth taking.
      The road upon which any Chancellor of the Exchequer now has to travel, between inflation and deflation, is really a path no longer; it is a knife edge. The slightest thing can tip the balance one way or the other. It is an extraordinary fact that whereas, during the pre-war years, there was unemployment and deflation, to which nobody appeared to be
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      able to find a solution, since the war the solution appears to have been found. I should like to know how that has come about, because I do not understand it. The war launched us into an inflationary spiral which has continued ever since.
      I want to emphasise with all the power I have available that any expansion of industry, designed to encourage exports for the benefit of our livelihood, will he of no avail if industry does not take the opportunity with both hands and increase its efficiency both in sales abroad and in its own factories and organisations at home. This is vital, and it is up to industry to take the opportunity. It has been given what assistance the Government can give it. A Government can only create a climate; it cannot legislate to improve output and exports. The climate has been created, and it is now up to industry to show that it is worthy of the opportunity given it.
      I now turn to local authorities. An increasing burden of local authority expenditure is being put upon ratepayers. Some people say that local authorities are extravagant, but that is untrue. I know that drastic pruning takes place in local government finance, and that there is a meticulous scrutiny of expenditure. Even so, expenditure is increasing alarmingly from year to year in local authority budgets. To a certain extent this is due to Ministerial direction, through directives laying down minimum standards, which hamper local authorities in the erection of schools, for example, and in other work. I implore the Government to realise that local authorities experience great difficulty in trying to maintain the standards laid down by Ministries. Very often standards which are applicable in one case are inapplicable in another, and I urge that greater flexibility and responsibility should he given to local authorities on the question of minimum standards and costs.
      Another reason for the increasing burden on ratepayers is that local authorities, from their own incomes, are now providing services which benefit the country as a whole and not merely individual authorities. This is true of education. I am becoming very alarmed at this trend because, at no distant future, I believe we shall arrive at a stage where the burden upon ratepayers will be quite intolerable. It is wrong that

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      people who are living on their savings in retirement, and are not in receipt of any State pension, should have to pay these increased rates each year. The Government should begin to look ahead to see where this trend is leading us, and to consider whether or not local authorities should be given greater assistance in providing services which benefit the whole country. From that point of view, I was sorry that the Budget made no mention of low interest loans to local authorities believe that greater assistance could be given to local authorities in that respect.
      There has also been no mention of the very vexed question of the aggregation of married couples' incomes. I apologise for raising this point again. This is not the first time that I have done so; it is the third year running. I shall not go into the matter in great detail, as I have done in the past, but I suggest that it is a ludicrous anomaly that whereas, in the lower income groups, married women are encouraged, by way of allowances, to go out to work, in the higher income groups —at the level of the woman who receives a first in technology or science at a university—everything is done to discourage the married woman from going out to work.
      As a result of my speeches in the past I have had hundreds of letters from people all over the country, quoting specific cases of brilliant women who were happy in their job of lecturing, or whatever it was, but who said to themselves, on getting married, " This is not on; I just cannot afford it." If her husband is earning £2,100 a year, which is not a very high salary for a competent executive, he will have to pay Surtax on the first penny earned by his wife. The situation is virtually the same as in 1799 when Income Tax laws were first brought in. I think it shocking that a woman should have her hands tied at this stage of our development, when we need every technologist and every scientist that we can find.
      Mr. Ellis Smith: Is it not a fact that next year the incomes are to be assessed separately?
      Brigadier Prior-Palmer: Not yet—no doubt it will be as the result of my speech. The only thing done last year was to give a £100 allowance, and the amount of income before the operation of Surtax was put up to £2,100.
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      I have received disturbing information about the number of our male scientists who have gone with their wives to America to work there. At a recent conference in America a certain scientist found to his sorrow that a number of people who had been with him at his university were now working in America. Not only were they getting far higher salaries than they would get in this country, but the incomes of the husband and the wife were taxed separately, so that from that point of view they were much better off.
      I hope I have the figure right—every sort of figure has been bandied about—but I think that at last I have found a Question which received a reply on 28th January and from which I gather that the cost to the country of the separate assessment of the incomes of married people would be £5 million not £200 million as I think, by a slip, the Chancellor stated the other night at the Festival Hall. I do not know what figure my right hon. Friend was thinking of then, but this proposal would make a difference to the standard rate of Income Tax amounting to one-twentieth of a penny.
      I know that the Royal Commission was against this, but that is not what I am asking for. To be honest, this proposal would not help those on the lower income levels. They receive so many allowances as a result of being married that if their income is below a certain level, they would lose if the income of the husband and the income of the wife were assessed separately. I am not advocating that such an assessment should be made in the case of those people, and so the cost would be less even than one-twentieth of a penny on the standard rate of Income Tax.
      The present system constitutes virtually a tax on marriage. People who marry are being charged a pretty high " rent - for a State-recognised marriage -for a " nationalised wife " if the Committee cares to regard it in that way. Considering that the payer receives no adequate allowances, no maintenance or repair allowance, no rebate of any sort, I consider that the tax is a rather high one. And what about " dilapidations "? Nothing at all is allowed for them. To be serious, I suggest that couples whose income puts them in the Surtax group should have their incomes assessed separately, which would cost the country

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      very little, or else they should be given a further increase in their allowances.
      Repeatedly in these debates I have referred to the position of one section of the community whose plight is very sad and who have been extremely hard hit s—harder than anybody else—by inflationary tendencies. I refer to those people who do not receive any State pension. At the time when they were working it was the fashion for people to save to provide for their old age, to be their own insurers as it were. Now they are trying to provide for their last days out of their savings. They are spending their capital, and in many cases it is a race between death and the total expenditure of their capital.
      I agree that it is difficult to know how to help these people. A certain amount of assistance was accorded to them by the raising of the lower limit of Income Tax, by which many of them were absolved from paying Income Tax. But there is a block of people who have not that advantage and who are just above the National Assistance level. It is hard to know how to help them, except by lowering the cost of living. As has been said today, the cost of living has remained stable for about a year, but that is not good enough. There would have to be a drastic fall in the cost of living in order to help these people.
      There may be some who are paying Income Tax because their joint incomes are assessed for tax. Surely it would be possible to assist them by assessing their incomes separately. I implore my right hon. Friend the Chancellor of the Exchequer, who has the advantage of a brilliant staff, and who possesses an able brain and can command the assistance of two able assistants, to think out ways in which these people may be helped. Had I ever been at the Treasury, I should have made an attempt to tackle this problem. Were I occupying the position of my right hon. Friend, and if my staff could not produce an effective scheme for helping these people within the space of twenty-four hours, I should ask to have my staff changed. I implore my right hon. Friend to see whether something can be done for these people.
      I have not gone into the details of the proposed reductions in Purchase Tax and
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      I do not know at the moment whether the people in the hotel industry will he affected. They pay a high rate of Purchase Tax on what they term the tools of their trade—linen, knives and forks, salt cellars and other breakable things. The hotel industry represents one of our greatest invisible exports and I urge the Treasury and the Chancellor to do something to help it. Time after time during Budget debates this plea has been advanced and now, when there is opportunity and a little latitude, cannot we help what is one of our greatest invisible export industries?
      Everything possible should be done to educate not only the children of this country but people who have left school and who can take advantage of further education schemes. I believe that we must continually search for other ladders, besides those to which we have become accustomed, in order to assist education. Some of our larger industries run their own educational systems and I think that a wonderful idea which results in great benefit to their workers. But it costs money, and the reason the practice has not spread among the smaller industries is of the cost. It would not cost the Treasury very much to make a tax concession on money spent by industry on educational schemes. I urge the Government to do this.
      7.39 p.m.
      Mr. Robert Woof: I would agree entirely with the opening remarks of the hon. and gallant Member for Worthing (Brigadier Prior-Palmer), that the Budget is designed to encourage employment and productive expansion provided all that glitters is gold. But whatever a Budget may bring, we are always left with the thought that there exists a clear distinction between the conception of a standard of living and a standard of comfort. When one examines the proposition of a balanced Budget as applied to those who have to face the hard facts of life, one cannot but observe everything with which they are faced and all those who are interested in the welfare and progress of society.
      One of the first results of this is the extraordinary diversity and the distinction that separates all those who are fortunate enough to be able to acquire the amenities of civilised life in the modern world, and those who are below the subsistence level

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      and are being brought to suffer destitution through no fault of thir own. The facts are clear enough to anyone who is content to consider the matter dispassionately and who refuses to escape from the national desire to achieve the greatest possible happiness in avoiding hardship and distress.
      While we not only recognize our moral responsibilities and obligations in economic affairs we do, at the same time, refuse to rest content until the main lines of economic activity bring reward. Faced with the multitude of problems that surround us, many of them a long way from solution, there probably never was so important a period in the history of the world as the times through which we are now passing. I do not want to go at all deeply into the measures proposed in the Budget, or into the upper atmosphere of finance, which will take a great deal of detailed study, especially since it is only about three hours since they were announced: but there are aspects of the economic situation which need to be viewed, because certain consequences are bound to ensue unless effective remedy and action are taken.
      I was interested this afternoon, as were many other right hon. and hon. Gentlemen, to hear the Chancellor of the Exchequer talk of the Government's desire to get every person they could into full employment. He was stressing the great waste caused by unemployment and he talked about the objective of full employment. The right hon. Gentleman said that he looked for increases in production above the present level as one of the basic assumptions of his Budget. Those observations appear to be in line with the Economic Survey for 1959. According to that, the Government are in a position to be satisfied. While references have been made to the tendencies in competent competition — it is one of the features of modern industry that it is in constant competition and rivalry at every stage of its existence — are we supposed to gather inspiration and encouragement from the Government's desire to foster expansion because world trade is extended over a wider field so that the Government can look forward with more confidence in the belief that production and demand will rise?
      Will that allow for the productive capacity to be more fully employed? Can we take it that it is now beyond
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      the region of doubt that there will be no lack of employment? We know that competition produces inequalities that we do not like, but when future necessities demand that the stream of trade should slow down, so that we can maintain the present standard of comfort, can we be justified in asking that more workers will be pressed into service for work with greater regularity, as a definite course of Government action?
      I am sorry that the Minister of Labour is not in his place. I appreciate that he has quite a lot of problems and complaints on his mind, and cannot be in this Chamber every minute of the day. Nevertheless, the right hon. Gentleman seemed quite jubilant, on 18th March, when he announced the decrease in unemployment. Of course, that is an encouraging fact. It is always good news to hear that workers are regaining their employment. Do the Government claim that when unemployment falls, and many hearts are lifted, that is a great and noble achievement for the Government? If so, when unemployment increases do they say that that has nothing to do with the Government? In this connection, I cannot but remark how extraordinary it was that at about the same time as the Minister of Labour made his announcement hush-hush plans were put forward by the National Coal Board to displace more than 5,000 miners in Durham County this year.
      If the Coal Board only knew the correct estimate and the absolute truth of the further measures to be taken in the rest of the districts there would be every reason for dismay and pessimism. While this shock has created a lot of disturbance in Durham County it coincides with a series of real economies to reduce output and run down manpower. What is worse, the principal measures to meet the cuts involve a complete ban on recruitment of adult labour from outside, including that of craftsmen and of certain juvenile craftsmen. Where mines are dying of exhaustion we acknowledge that there is no hope whatsoever.
      When our mines are deliberately cut and the men have to look into other avenues for work only to be impeded in the attempt through lack of employment that is a very serious affair. The consequences build up into an impossible

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      situation. There are lots of cases of hardship in Durham. At the last colliery where I hewed coal before I came to the House of Commons there was a staff redundancy scheme. As a matter of fact. the staff are going through one of them now. They are having quite a lot of difficulty in replacing men. On top of that the men have been definitely told by the Coal Board that when May comes 200 men are to be dismissed.
      The employment exchange is to use the colliery institute for the purpose of signing men on. I suppose that it will have the usual board outside saying, " Sign on here for unemployment benefit." I make no apology whatever for speaking on such a vital constituency matter, as there is such a disturbing and dominant fear of unemployment lurking in this assumption. I am not sure of many things, but I am sure that if the Minister of Labour could see his way clear to safeguard the livelihood of these and other men who, in the near future, are to be victims of these cuts by the Coal Board they will be kind enough to buy him a medal as big as a gramophone record and he will have every reason to be jubilant.
      We cannot shut our eyes to circumstances which have arisen and to what we see in the present situation which entitles us to ask how far the Government are prepared to comprehend and diminish this scare. What is at stake is the weekly livelihood of our people and the worry accompanying housekeeping revenue for families placed in adverse circumstances through industrial calamity. In rapid changes which have a material bearing on economic and social life there are times, we must admit, when some things are vitally important and everything else is swept to one side, but if we are to avoid extreme conflict, with industrial change at a time when we need all our energies to establish the British economy on a secure foundation in world trade and exchange, assuming the foreknowledge of the present purpose of the Government to promote recovery, their future obviously will be bound up with economic problems both human and material which will spring from the belief of all those subject to industrial change.
      These changes require that the tenacity of the habit of work of these people
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      should not only be recognised but be made more consistent with the opportunity being provided of alternative employment. In this world of such tremendous progress very few people can really become their own masters. What has become individually impossible is now left for people to gain collectively. Whatever else we may think when people are condemned by such a verdict as that given by the Coal Board, there emerges a new want.
      It has often been asked whether economics is more correctly described as a science or an art. I believe that the art of good government lies in ensuring that a dying industry should be gradually replaced so that the productive capacity of all those affected can be exerted. They should be placed in the position of achieving the highest pitch of efficiency which will obviate them having to live in a state of suspense.
      7.55 p.m.
      Mr. Eric Johnson: We have just been privileged to hear from the hon. Member for Blaydon (Mr. Woof) a speech which was most moving and of great sincerity. He will perhaps forgive me if I do not attempt to answer some of the points that he made, because there are one or two matters to which I want to refer and I do not wish to detain the Committee unduly long.
      I think that it will be generally agreed throughout the country that my right hon. Friend the Chancellor of the Exchequer gave us some very good things in his Budget today. Our heartiest congratulations are due not only to him but to his predecessors in office and his colleagues in the Government, not so much for the concessions that he announced today but for the policies of the past two years which have made those concessions possible. My right hon. Friend has been able to present a Budget which, I think, will be popular and which is undoubtedly sound because he has handled our economy with very considerable skill.
      It seems to me that the Chancellor is rather like a man driving an exceedingly fast and powerful car on a rather slippery road where an extra touch on the throttle of inflation would send him over a precipice, or a too severe application of the brakes of deflation would send him into

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      the rocks, and whichever happened the result to our economy would be equally disastrous. On 23rd January last year, in, I believe, his first speech after taking office as Chancellor of the Exchequer, my right hon. Friend said:
      "Our aims remain exactly as they were — stable prices at home and a stronger £ abroad." — [OFFICIAL REPORT, 23rd January, 1958; Vol. 580, c. 1276.]
      Those aims have been fulfilled. The Index of Retail Prices today is virtually the same as it was a year ago and it has been possible, as a result of this policy, to write, in the last paragraph of the Economic Survey:
      "At the beginning of 1959 the United Kingdom economy is undoubtedly much stronger than in previous years. Demand and production are rising and the economy can afford to expand more than in the past three years."
      The Leader of the Opposition said today that i t is much easier to produce a popular Budget when things are bad than when they are good. If people cast their minds back a few years, I do not think that many would believe that things were wonderfully good in 1951 when the Leader of the Opposition was Chancellor of the Exchequer and produced a Budget in which he increased Income Tax, Profits Tax.. Petrol Duty, Entertainments Duty and Purchase Tax. That can hardly be described as a popular Budget.
      When the right hon. Member for Huyton (Mr. H. Wilson) speaks tomorrow I wonder whether he will remind us of what he wrote of certain events which took place ten years ago:
      "The whole basis of our recovery was knocked away in 1948 by a slight recession in America and the country was driven into devaluation."
      I wonder whether he and hon. Members opposite will contrast that with what happened ten years later, when we were facing a more serious recession in the United States, but when, thanks to the policy of my right hon. Friend, so far from being driven into devaluation, our reserves have increased month by month with two exceptions, one when we made heavy repayments on loans from Canada and the United States, and the other, as my right hon. Friend said earlier, when we made repayments to the International Monetary Fund. Furthermore, in contrast to the devaluation which took place in 1949, at the end of last year our position was strong enough to allow us to make
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      the £ very much more freely convertible and, despite the prophecies of disaster which were made by members of the party opposite, our reserves have continued to grow and the £ still remains strong and stable.
      One of the most satisfactory things about the position today is the growth of personal savings. I am sorry to keep quoting from statements made by right hon. Gentlemen opposite when they are not there — I do not suppose they will mind very much — but I wonder whether the right hon. Member for Huyton recalls saying of Premium Bonds that they were " another gimmick of the Prime Minister that does not work ". I wonder whether he still thinks they are a gimmick that does not work when we arc told that the contributions from Premium Bonds last year were no less than £12 million a week.
      Since we have been in office, in every Budget but one we have invariably managed to reduce taxation, and right hon. and hon. Gentlemen opposite must feel some grudging admiration for the Conservative financial policy which makes these things possible. When they were in office people wondered every year what new taxes would be imposed. Since we have been in office people every year have wondered what taxes would be reduced.
      Mr. McCann: Surely the question of taxation is being taken figuratively. While direct taxation may have been reduced, the effect of removing subsidies resulted in far higher taxation than taxation according to income.
      Mr. Johnson: We have removed every kind of tax, whereas the hon. Gentleman's party increased them. I wonder why that is. I do not follow that explanation. It is all the more remarkable that we have done that despite the fact that the party opposite increased its taxes although it had £2,000 million of foreign help while it was in office. We have had about £710 million in defence aid and foreign loans while we have been in office, but we have repaid £455 million of debts incurred by our predecessors and still have gone on reducing taxes.
      It is a great achievement that my right hon. Friend has been able to keep up this good record and do it once again despite the difficulties in which we found ourselves in the summer of 1957, and also

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      despite the recession of trade which has taken place.
      Surely it is a remarkable achievement that we were able, last year, to earn this surplus of £455 million on our balance of payments. It will not be easy to keep this up during the year ahead of us; far from it. Wage rates went up by 3½ per cent. last year and although there was — and I am very glad it was so — a higher output per man in industry there was still some increase in labour costs per unit of output. Despite the increase shown in the balance of payments, our exports did fall last year, as my right hon. Friend said, and it will be very much harder to sell our goods in future, especially since the European Common Market has come into existence. We must make an intensive effort to increase our exports wherever we can and find new opportunities for selling goods where they have not been sold hitherto.
      I could suggest many countries where we might do more than we are doing. Because they are countries in which I am particularly interested, perhaps I may refer to Canada and Israel. Israel is a small country, but it is not enough for my right hon. Friend the Minister of State, Board of Trade — who is, unfortunately, not here any longer — to say to me, as he did in an Answer to a Question I put to him on 17th February:
      "…what Anglo-Israeli trade at present needs is an expansion of Israeli exports either to this country or to other countries with convertible currency in order to earn more to pay for imports from this country." — [OFFICIAL REPORT, 17th February, 1959; Vol. 600, c. 171.]
      That is perfectly true as far as it goes, but it does not go far enough. Today, Israel has the most stable Government in the Middle East, and the Israelis are our best friends in the Middle East. They have a rapidly growing population and are a wonderfully able and energetic people. We ought to do all we possibly can to help them, and it would pay us to get their economy on a really sound basis. The two best ways for the Government to do this are: first, to encourage more investment in Israel, which will in turn lead to a growing market for our goods; secondly, to provide Israel with better facilities in the London money market.
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      Returning now to trade with Canada, the Committee will recall the policy which was initiated by the Canadian Prime Minister to encourage Canadian purchasers to get more of what they wanted to buy from this country. An important trade mission from Canada came over here, and it is probably a record that this trade mission came with the intention not to sell Canadian products, but to encourage British businessmen to make a greater effort to sell their goods in Canada and get a larger share of Canada's imports, which amount to about 5,000 million dollars a year. Last year, our exports to Canada totaled 527 million dollars. That is the best we have ever done, but it is only one-tenth of the total amount which Canada buys from abroad now and that is just a fraction of the amount they will buy abroad in the future.
      Our exports to Canada rose by 1 per cent. last year. That is not very much, but it looks all the better when we know that Canada's total imports fell by 8 per cent., so we did quite well. In January of this year our exports were up by 25 per cent. compared with January of last year. While that is satisfactory, we are still only scratching the surface of this enormous potential Canadian market.
      I would like to remind the Committee that the market is wide open. There are no restrictions and no quotas, and Canada wants British goods. There is no possibility of the Government intervening to repudiate a contract, or interfering with a contract which has been made by a private firm to supply them with goods. There is no danger of that happening. But the fact that Canada wants British goods does not mean that British goods will automatically sell themselves; they have to be sold on their merits. Goods are sold on quality, price, appearance and delivery and we must provide a better after-sales service than we are providing at present.
      I am convinced we can do a lot in this market if the heads of firms will go out and see for themselves what Canadians want, and then come back here, make the product, and advertise it far more widely and effectively than they have done before. There are unlimited opportunities for British goods in what is still the most rapidly expanding market in the world.

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      May I turn for a moment to my right hon. Friend's Budget proposals? When we read the Economic Survey I expect that most of us thought that there was a very strong case for encouraging consumer expenditure, because, obviously, companies will not put down new plant and build new factories unless they are sure that they will be able to sell their goods. I expect that we have all been speculating on what my right hon. Friend would do, and I wondered whether he would limit himself to a few changes which seemed best calculated to stimulate the economy, thereby red acing unemployment and the cost of living, or whether he would take the opportunity of spreading what he could do rather more widely and dealing with some of the anomalies and injustices which still exist in our taxation system.
      My right hon. Friend made some changes which I had not expected, and I am sorry to say that he did not make some of the reductions which I hoped he would make and for which there seemed to be a very strong case. Perhaps I may mention, first, some of the disappointments. I am very disappointed that he did not find it possible to reduce the tax on petrol and diesel oil. It seemed that there was a strong case for that, provided that the benefit was passed on to the customer. Transport affects practically everything we use, and if such a reduction in tax had been passed to the customer it would have brought benefit to everyone. On the other hand, there is no sense in reducing a tax if it is to be used not to bring down prices but to pay higher wages and give bigger profits to people in the transport industry.
      Another disappointment, which, again, will be widely shared, I think, was that my right hon. Friend did not remove the anomaly, as I think it is, of the remaining Entertainments Duty on cinemas. There is surely no justification for keeping this tax. It is unfair because it is payable even when a loss is made, which seems to me quite wrong. The figures are well known of how rapidly the admissions are falling in the cinema industry. The fall between 1957 and 1958 was 161 million. Last year, 217 cinemas closed, following 189 the previous year and 187 in 1956. When all is said and done, the yield from the tax is only about £9.2 million this year and it will fall to about £7.2 million next year owing to the increasing fall in admissions.
      Mr. John Rankin: I am glad to have the hon. Member's support in the attempt which has been made to abolish the tax on cinemas. Why did he not append his name to the Motion which appeared on the Order Paper asking the Chancellor to abolish that tax?
      Mr. Johnson: I had taken various other opportunities, through other channels, of drawing my right hon. Friend's attention to that Motion. I wish that I could flatter myself into supposing that the addition of my name to the Motion would have turned the scales. If that is so, then I deeply regret that I did not add my name.
      I am afraid that the cinema industry is in grave danger. I think that the exhibition side may well collapse; and if there is not a home market the production side cannot continue, either. If that happened it would mean the loss of an amenity which provides entertainment for many millions of people every week. It would mean the loss of the prestige and the influence derived for us by those of our films which are sent abroad. It would mean unemployment in the cinema industry. To my mind, for the sake of a mere £9.2 million it is risking too much to retain this tax. It is wrong to threaten an industry for the sake of that amount of money.
      Purely as a personal view, I cannot understand the policy of any Government or party which subsidises opera and things like that, which nobody wants to attend, and taxes cinemas, which we all want to attend. That is a personal view, but such a policy is incomprehensible to me.
      I had hoped that something would be done to remove another anomaly — the discriminatory tax on dog racing. I will not labour that point, because I noticed that in a television broadcast the other day my right hon. Friend the Home Secretary said that the Government had made progress in preparing comprehensive legislation about betting. I have heard that one before, but we still go on hoping for the best, and I hope that there will be comprehensive legislation, because that is the right way to deal with this matter, rather than piecemeal. Nevertheless, it is an unfair tax. The right way to deal with it is to tackle the whole problem of betting.

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      Another tax to which I want to refer — and perhaps it is not popular to refer to it — is Surtax. It seems to me that there is a very strong case for a change in the Surtax level. It is absurd that Surtax should still be payable when one's income reaches £2,000 a year, which is the same level as in the past, although that income has today a purchasing power of only about £700 compared with before the war. That seems to me to be an absurdity which ought to be removed, although I agree that it might not be a very popular thing to do.
      I turn to the tax reductions which my right hon. Friend has made, which I most heartily welcome. I believe that everyone will agree that the right thing to do was to reduce Income Tax fairly sharply. That was the general opinion of all those who write on these matters in the daily and weekly newspapers. It was a very good thing to reduce the standard rate by 9d. in the £. We always hear the argument, " What is the good of that to people who do not pay Income Tax? " It is perhaps not unfair to remind the Committee that it is largely because of the policy of previous Conservative Chancellors of the Exchequer that a good many people are not paying Income Tax today who would have been paying it under the rates which existed when the Labour Party was in power. It is also true that, indirectly, the reduction in Income Tax benefits those people who do not receive any direct result from it. At any rate, it is a good way of stimulating the economy, and that brings advantages to all.
      The reduction of Purchase Tax on commercial vehicles is also a measure which will meet with widespread approval. It was somewhat overdue. If that is passed on, as I hope it will be, it will undoubtedly benefit everybody by making possible some reduction in prices. It was obviously wrong that commercial vehicles should not be treated as plant, as, in fact, they are. Without looking at the Schedule, it is difficult to recall from memory what has been directly affected by the other Purchase Tax changes, but anything which reduces Purchase Tax is always welcome.
      I admit that I was taken by surprise by the reduction in the beer duty. This is none the less welcome, even though I do not drink very much beer. I know
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      that many people do, and I believe that it is a good and desirable thing to do when it is possible.
      What pleases me most, perhaps, is the Chancellor's action on post-war credits. I have been badgering my right hon. Friends on the Treasury Bench on this matter for a long time, as have other hon. Members. I think that the Chancellor has tackled the problem in probably the best way. Last week the Economist made the interesting suggestion that interest should be payable on the outstanding credits. In doing this as well as reducing the age at which tax credits are payable, my right hon. Friend has frankly gone further in this matter than I dared hope. I believe that it was better to reduce the repayment age by not more than two years and to handle the matter as the Chancellor has handled it today. I think that that is the right way to do it, and I especially welcome the fact that he has at last agreed that it is possible to define hardship. I have ventured to make various suggestions to him over the past two years as to how hardship could be defined. I am glad that at last that has borne fruit.
      In framing his Budget my right hon. Friend had to devise some means of stimulating the economy to increase employment and to hold steady the cost of living. He had to devise a way which would help those who are not able to benefit from reductions in direct taxation. By and large he has done a very good job. Another thing that he had to bear in mind, apart from the effect on this country, was the effect of his Budget abroad. What effect would it have on the confidence in our money? I believe that confidence in our money abroad, which has been restored over the last eighteen months, will be further strengthened now. I think that what he has done will commend itself to the nation as a whole and that time will show that today he has acted both with wisdom and foresight.
      8.21 p.m.
      Mr. Harold Davies: I do not intend to be long. A broad brush is all that one can use when one has only just heard the Budget and not had time to delve too deeply into the figures and the analysis given by the Chancellor of the Exchequer. The impressionist brush is often rather more effective than that which deals with niggardly detail and

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      with the paying of a little tribute here and the taking away of a little praise there.
      The outstanding thing, in my view, about the Budget is that it misses the point of the civilized world in which we live. We are living in a completely different world from the old-fashioned world in which we used to budget. The Government are budgeting in a nineteenth century world when we are living in the kind of world in which an hon. Member can be in London one night, can catch a plane and the next night can be in Saigon or Nigeria, for example. We are living in a world in which, in a matter of seconds, we can talk to people in Buenos Aires or Bombay and in which people can talk between the diamond market of Amsterdam and the diamond market of London. The whole world is one market. It is wrong to think of it in accordance with the old-fashioned definition of a market, which was a place where prices were much the same, such as the old-fashioned village butter market, where one found only slight competition, and that in quality.
      Those days have gone. Now the whole world is so small that it is one market. There are only two people in the modern world left for people to bow down before, as they used to bow down before the mediaeval priests who calculated the number of angels balanced on the point of a needle. The two people they bow down before today are the economist and the nuclear physicist. The magic of the modern world is seen in the nuclear physicists. People feel that their knowledge of mathematics, the miracles which they do and their awe-inspiring movement of molecules and atoms is such that no person dare question them, even concerning strontium 90, on which they were all wrong. Next we have the economists, prophesying this, that and the other in weighty, erudite papers. There are many things of more use to civilization than some of the rubbish written in these so-called weighty papers.
      There is a world question which confronts any British Government in power. It. is: how can Britain live? I learned when I was in the Philippines — and I have been back from there only a few days — that 200 British businessmen might be pushed out of there if we are not careful. They are acting as the sort of traders we would have called Compradors. They
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      have carried out a function. They sold goods. They knew where to buy glass or corn or oil, for instance. They have acted in the transitional period of capitalism as a useful middle man. The function had to go in the modern world. It cannot teach men how to distribute goods. That is why my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) was right. We have to have a planned society, and this Budget has missed the opportunity. Is this the kind of Budget to make Britain secure in this modern world?
      The first point which is admitted is one which the Sunday Observer mentioned. It is two years after the event. I asked about the "hot" money going through Kuwait and Amsterdam and Africa two or three years ago. My Questions received a pompous, negative reply. But I was right. The Treasury knew, and the Ministers who gave answers to Members of Parliament from the Treasury knew, that " hot " money was passing in that way. What is more, they knew they would have to allow a certain amount of it to go on. " Hot " money created the crisis two years ago. How do the Government propose to protect our economy?
      Bond washing and that kind of thing will go on in this kind of world where people juggle with money and perform very little useful function. One of the broad features of this completely new world is being met with old-fashioned types of budgeting. There is no longer any true competition in the world. A petty-minded Conservative — I do not mean this in a nasty sense — over a pint of beer in the local " pub ", tells me that he has been a Tory for years because he runs a fish and chip shop down the road, or happens to employ ten men, or sells butter over the counter. He is serving a purpose in society. He says that we must have competition. He has no conception of the society in which we live. The very goods he buys, which are advertised on television and all over the world, are controlled by restrictive practices. What kind of world is this?
      When I was on the other side of the world, in Laos and Cambodia, I saw wattle huts, roofed with rice stalks, where Coca-cola and 7-up were being sold and the children in the village were using hula hoops. This is the kind of world in which we live. We have one

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      world physically and geographically, yet we are trying to build up a crazy quilt of economic patterns and pretending that there is true competition.
      I had a letter this week from the North Staffordshire Water Board, which is trying to serve a necessary social function by supplying water to our people in North Staffordshire. They sent out to steel and cast iron pipe firms and every tender which came back had the same price for a pipe main. We talk about a free competitive world and about this Budget stimulating competition. It does nothing of the sort. In the modern world a group of people can get together and exercise restrictive practices more easily. The world being so small, the opportunities are greater.
      We have heard a very charming little speech from the Chancellor. One would imagine that we were in the village school listening to the local vicar telling us about the wonderful and inspiring work which Conservatism had done for our society. We heard all about an expanding economy. What is the truth? I turn to the White Paper, which tells us that there was a 10 per cent. drop in steel production last year. What is expanding about this economy? The only place where there has been expansion is in distribution, where 6,000 more people are employed this year compared with last year. There are 6,000 more people distributing less than they did the year before. Without being an economist, but with a little knowledge of arithmetic, one can say, " Ergo, prices must go up".
      Mr. Reader Harris: They have not.
      Mr. Davies: They have. The hon. Member should not argue; he is an intelligent man and he must know that. I am not making a political point.
      Mr. E. Johnson rose —
      The Temporary Chairman (Mr. W. R. Williams): Order. If the hon. Member does not give way, the hon. Member for Blackley (Mr. E. Johnson) must resume his seat.
      Mr. Davies: I am sorry, Mr. Williams. I usually give way, but I want to make my speech brief.
      Let us look at the facts. There are 22,000 fewer miners this year than there
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      were last year. There is no argument about that. The White Paper tells us that. The White Paper is the word of the Treasury, and only God and the Treasury know what goes on in this country.
      Mr. Rankin: Sometimes only the Treasury.
      Mr. Davies: In the textile industry, there are 65,000 fewer workers this year compared with last year. There are 106,000 fewer women employed.
      We are told about stimulating hire purchase. The world is overloaded with hire purchase. I mix with the people and I know that a man who buys a thing like a new motor cycle or a new television set does so because his wife is working. There are now 106,000 fewer wives working than before, and there are many more than the numbers actually shown on the unemployment register. What will happen to the hire-purchase installments?
      At the same time as all this is happening, there has been a colossal increase in rents. We have the example, given at Question Time today, of a war widow who receives an increased pension and then finds that her rent goes up, under the Rent Act, from £36 to £94. All these things have been quietly brushed aside. The Chancellor drank his milk — I was sorry to see him looking a little unwell today — and, having drunk it, he became the champion of the " froth-blowers " and decreased the price of beer. I only wish that Id. of the 2d. that he took off beer could have been given to old-age pensioners.
      The basic production figures are the things which really count, and here we see the dangerous feature in the economy. We have only three things with which we can face the world. There are the minerals under the earth, the land we farm, and the skill, intelligence and common sense of our people. What has happened to those things under this Government?
      There are fewer miners. What of agriculture? We need only to turn to the Economic Survey to find, on page 15. this sentence:
      "In agriculture, the main object is greater efficiency rather than an increase in total output."
      This is a contracting economy, and it is no good arguing about it. Here are the figures. The acreage of wheat and rye

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      is less now than it was in 1954–55. I will not bore the Committee by quoting the figures; hon. Members must accept the facts. The acreage of potatoes is less now than it was. The tonnage has dropped from 7,325,000 tons to 5,556,000 tons. Beef production has dropped.
      There was a Minister of Food who said that we wanted more red meat and we should have more of it. Under this Government's agricultural policy, beef production since 1954–55 has dropped from 797,000 tons to 783,000 tons. Pig meat production has dropped from 757,000 tons to 726,000 tons. I am interested in these things. I represent an agricultural constituency.
      Where is this expanding economy? It is expanding in the professional services, in the miscellaneous services and in distribution. There are more people writing on paper and more people distributing less. There is bound to be inflation.
      I wish that my party was able to spend on intelligent propaganda the amount of money which the party opposite uses. Today, there has been a hidden admission in the Budget that the only thing to prime the pump of British industry is the nationalised industries. They are being allowed only £100 million more for investment in the public sector next year than has ever been allowed before. Why? Because the only effective machinery we have today, as my hon. Friend the Member for Stoke-on-Trent, South said, is planned machinery. One can plan in the public sector, in the nationalised industries, and one cannot do so in the private sector.
      I will not bore the Committee by reading that admission, because hon. Members know it. We have the Chancellor's admission today that there has been 2½ per cent. less investment in the manufacturing sector of private industry, and that is a sector of private industry which counts. The Budget hides from society some of the real facts of the world in which we live.
      Of course, we welcome the reduction in the price of television tubes, but why do not the Government do something about restrictive practices in the sale of television tubes, which are some of the wicked impositions on modern society?
      We also welcome the proposals about the post-war credits. This, again, is a
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      completely non-political point. We are delighted that the Government have done something about repaying post-war credits.
      Another non-political point is that we want the countryside to have the same communications as exist in the towns. If we do not want people to crowd into the cities, then there must be proper amenities in the villages. The pay load on buses running in country districts is obviously less than that on buses running in industrial centers. I have been approached by rural bus companies in my constituency more than once about this problem and I am delighted that the Government proposes to do something about it.
      If a millionaire's son or the son of a humble member of the poorest of the poor wins a scholarship to university, and qualifies for a monetary grant, that grant should belong to the child, irrespective of the income of the father. I should like to see a stimulus in respect of education grants. and the child given the grant which it has won.
      I have tried not to go into niggardly detail. To sum up, neither the Labour Party nor the Conservative Party will solve our economic problems if we are idiotic enough to think that we can be a great nuclear Power and spend thousands of millions of pounds on armaments. The Clausewitzian theory of society is finished. I will not use the word " Christian " in this context. I am getting tired of the use of this word when I think of the hypocrisy of exploding H-bombs on Christmas Island. I have recently returned from the Far East, where the Mohammedan, Buddhist and Pagan smile when we talk about our Christian attitude to the H-bomb. Therefore, no Government will solve the problem unless we have the courage to alter our whole attitude towards the cold war and face the armaments problem. It is sheer folly to think that we can have prosperity in this kind of world.
      We must break down the barriers in trade. One hon. Member hoped that we would not be silly enough to try to trade with China. I hope that if a firm in his constituency receives a large order from China he will be pressed to ensure that it is allowed to carry out the work.
      A Government cannot tax ad lib. One does not have to be much of an economist

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      to realise that taxation can stop the stimuli of production. We must find oher ways of raising money than taxing the man at the point of production. This is the tragedy. It is the man at the point of production who is taxed while the man with an expense account escapes. I do not want to take advantage of Parliamentary privilege, but there are people who can live completely on their expense accounts. The time has come when the whole system of taxation should be reviewed by a commission of inquiry.
      We are grateful for the way in which the Chancellor presented his Budget. I wish that he had told us that there was at least some hope for the old-age pensioner in this inflationary society in which we live. However, he failed to do that. It is the duty of both sides of the Committee to take the old-age pensioner out of politics and to ensure that he gets what he deserves, namely. a little more security than he has at present.
      8.40 p.m.
      Mr. Reader Harris: I always listen to the hon. Member for Leek (Mr. Harold Davies) with interest and respect, because he always speaks with sincerity and in the most entertaining fashion. I hope, however, that he will forgive me if I say that I found some parts of his speech a little unintelligible because I was not clear whether he wanted more competition or less and whether he believed in a Communist-planned society or a capitalist, free enterprise society. If he believed in the latter, obviously he would want to see that it worked better than it does. I should not have thought that if that were the case the Budget would do any harm to it. I should have thought that it would do it some good. If the hon. Member believes in a Communist-planned society —
      Mr. Rankin rose —
      Mr. Harris: I do not want to be in any way personal. I hope that the hon. Member will let me develop my argument. I do not want to try to make a fool of the hon. Member for Leek.
      The great challenge which we have to face is that to our Western way of life in a capitalist society, in the face of an
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      increasingly popular Communist society that governs the other half of the world. There are new and emergent nations which will either look to the right or to the left. I hope that they will look to the right, to the capitalist world, for their salvation and for all the help that we can give to them to increase their technological knowledge and to raise their standard of living. If our capitalist society is to be attractive to the new nations it must work well at home. There must be a right balance between competition and restraint upon competition to a certain degree, which is obviously necessary if 50 million human beings are to live together in peace on a small island.
      The hon. Member for Leek was rather less than charitable towards the Budget. He said that it would not be a stimulus to competition. I am open to correction. but I was not aware that my right hon. Friend the Chancellor had said that it was intended to be a stimulus to competition. I certainly think that it will be a stimulus to the economy.
      The action which gives me the greatest pleasure is that taken by the Chancellor in respect of post-war credits. The Financial Secretary to the Treasury will remember that at the Conservative Party Conference at Blackpool last October I moved a resolution urging the Government to do something about the earlier payment of post-war credits. My hon. and learned Friend slapped me down in the best Treasury style and with enormous effect, because for the first time since the war when it came to a vote the Conference voted for him and not for me. When I found myself turned down both by the Financial Secretary and by the Conservative Party Conference I was convinced that something would be done about it in the Budget, because I believe that it is the French or the Chinese who have a saying that things are not what they seem.
      It would be churlish perhaps to criticise the Budget. Neither shall I follow the example of my hon. Friend the Member for Blackley (Mr. E. Johnson) in drawing comparisons with what happened under a Labour Government. That was ten years ago. It is not fair to compare what happens today with what happened four or five years after the war when conditions were very different indeed.

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      I am open to correction, but I believe that the Budget gives no stimulus to house ownership. I had hoped that something would be done to encourage people to own their own houses. However, the Finance Bill will be coming along if we do not have a General Election, and so I hope we shall be able to move appropriate Amendments on another and more suitable occasion.
      Naturally I am also a little disappointed that nothing has been done to encourage people to invest in Britain's businesses through the medium of the Stock Exchange. Hon. Gentlemen opposite obviously will not agree with me because they do not like capitalism to the extent that. I do. I should like to see everybody become a capitalist because I am against a system in which there are a few capitalists with all the rest working for them. I want everyone to have something to conserve because then they are more likely to vote Conservative. Therefore, anything that can be done to stimulate investment by the purchase of stocks and shares is a good thing. Again. perhaps, we can move Amendments on a more appropriate occasion.
      My hon. Friend the Member for Blackley said he was sorry that nothing had been done to reduce the petrol tax. I think we are all sorry about this. The greatest argument in favour of reducing that tax is that it would probably reduce the fares of public transport. I do not entirely blame the Chancellor for not reducing the petrol tax for the sake of the private motorist, because this tax does not seem to be restricting people in the purchase of cars. If we encouraged the purchase of cars in this way, it might result in more people being on the roads than there are now, and then there would be so many cars on the roads that none of us would ever get along any of them.
      I am also glad that something is to be done for retired people. I have had a great many representations from those of my constituents who are retired civil servants. Their plight is tragic, and there appear to be a great many in Heston and Isleworth, which seems to be a place where many people like to retire. I have had some tragic tales of retired civil servants, and other public servants, who cannot manage on the pensions they receive; pensions based on what they were earning when they retired perhaps
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      10 or 20 years ago, which have not kept pace with the increase in the cost of living despite the Pensions (Increase) Acts.
      One question I would like to put to the Financial Secretary to the Treasury is whether the British Railways super-annuitants will benefit under the Budget proposals? A Motion was put on the Order Paper by hon. Gentlemen opposite, and I was the only Member of the Tory Party to add my name to it, because many of these super annuitants live in Heston and Isleworth and their plight is as tragic as that of the other public servants. The Motion reads:
      That this House, being of opinion that exceptional hardship has resulted to British Railways super annuitants, many of whom are not in receipt of National Insurance benefits, in a period of declining money values, calls upon Her Majesty's Government to bring forward proposals for the alleviation of this hardship,
      I hope that when the Financial Secretary or the Chancellor replies to the debate he will tell us that these super annuitants will benefit with the others.
      I agree with the hon. Member who said that those speaking so soon after a long speech can only paint with a very broad brush, so I will say no more except to add my congratulations to those extended by many other hon. Members to the Chancellor on the firm action he has taken. The success of this Budget will depend on two things. One is the extent to which it reduces unemployment and the other is the extent to which it promotes exports. I hope the Chancellor will forgive me if I say that I do not see how reducing the tax on beer by 2d. will promote exports, though I hope it will. At any rate, it may encourage people to greater efforts. I am not against this concession because it is high time the beer tax came down. Beer is a simple pleasure for the mass of people and it should not be taxed as highly as it is. However, it is essential to reduce the unemployment figures and to do everything possible to promote our export trade.
      On the day before the House adjourned for the Easter Recess I had the opportunity to point out to the House — there were only three Members present at the time — the vital need for finding new

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      markets. This is becoming increasingly important because of the loss of markets in Europe caused by the break-down of negotiations on the European Free Trade Area, as a result of which British industry is feeling the draught already. So we need new markets elsewhere and I hope that what is being done in this Budget will enable our exporters to get busy again to find new ones. For the sake not only of the unemployed at present affected by the recession, but for the sake of the whole country, I hope that as soon as possible we shall have the highest possible measure of employment once again.
      8.50 p.m.
      Mr. John Rankin: The hon. Member for Heston and Isleworth (Mr. Reader Harris) accused my hon. Friend the Member for Leek (Mr. Harold Davies) of being in favour of what he called " a Communist-planned society ". The hon. Member is entitled to express himself in whatever language he thinks appropriate to the occasion, but I am certain that he must have forgotten that during the war this country was a planned society in which some people were directed to their jobs and some were directed to the Services, in which our food was given to us in accordance with instructions and arrangements, and in which wages were more or less fixed. Not even the hon. Gentleman would have described our planned society for war as a Communist-planned society.
      We on this side of the Committee suggest that if a planned society worked so effectively during the war it could work as effectively in peace. If the hon. Member is trying to make us believe that the Conservative Party has no plan at all, then I hope that at some stage during the debate speakers from the Government Front Bench will assure the country — which would be panic-stricken at the thought that we had a planless Government in control — that the Government have at least some sort of plan in mind.
      The hon. Member made an even more fantastic suggestion. He said he wanted everybody to become capitalists. Yesterday I was present at the launching of H.M.S. " Lincoln " at Fairfield Yard in my division. As the hon. Member spoke, I wondered how Fairfield would look if all the workers became capitalists
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      and each started to launch his little ship into the Clyde. It might, of course, be a good thing if all became capitalists. The hon. Gentleman would then have established an equality, which he is far from desiring, in which every member of the State would do some useful work. At present many who are drawing vast salaries are not doing as much useful work as they ought.
      Today I have listened to almost lyrical praise of the Chancellor's performance. I have also listened to comparisons — the hon. Member discarded them but hon. Friends of his made them — designed to show how much more effective the capitalist Tory Government have been than the previous Labour Government. When hon. Members make those comparisons, which are not to the point, they are missing the whole issue. We are not concerned with whether the Tory Party has been more effective in Government than was the Labour Party. Both were running the capitalist system, and if the capitalists cannot run the capitalist system better and more effectively than the Labour Party, there is no greater condemnation of the system supported by hon. Members opposite.
      The Tory Party is trying to apply an ethic and an economic theory which does not correspond with the realities of the age in which we live. It is completely out of date. I have no objection to a stimulus being given to the production of motor cars, but that stimulus comes at a time when it is dangerous to walk on the roads because there are so many cars, and at a time when the Government grudge every penny they spend on making roads fit for the cars whose production they are encouraging.
      We sing about the " bonnie banks of Loch Lomond ", and yet there is no complete road up one side of Loch Lomond. The song says:
      "Ye'll tak' the high road, and I'll tak' the low road,"
      but there is no high road. There is only the low road along one side of the Loch and it is so narrow that cars cannot pass one another. While the Government inject money into the production of motor cars, they grudge every penny which has to be spent on roads, which are a public service. My hon. Friend the Member

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      for the Western Isles (Mr. Malcolm MacMillan) can tell the Government far more about the roads in his constituency than I can.
      Mr. Ellis Smith: He needs an aeroplane.
      Mr. Rankin: That is perfectly true. Because Scotland does not have the bridges if needs, there is no road right up the east coast of Scotland. Hon. Members are still clamoring for a bridge across the Tay to give us that direct road, which would save the country much money. The Government have not grasped the fundamental difference between us, and they grudge every penny spent on the advancement of a public service.
      There are many other examples. Millions of pounds are spent on the advertising and manufacture of patent medicines which are sold at fantastic prices. Before we rose for the Easter Recess, I drew attention to one patent medicine which is sold in small celluloid packets at five pellets for 5d. That medicine had exactly the same formula as aspirin which is sold in bottles at 24 for 4d. Millions of pounds are spent in advertising that product, yet we grudge spending anything if we can avoid it upon the National Health Service, which would diminish reliance on this patent medicine stuff.
      Hon. Members opposite voted against that Service. They must realise that the economic theory which guides us is different from that which guides them, and that the argument is not really whether they run the present capitalist system more effectively than we were doing when we were in power. I do not want to pursue that matter any further, although I could go on citing many other examples to prove my point.
      I want to return to the Budget, and to examine briefly the reasons for the adulation which the Tory Party bestowed upon the right hon. Gentleman. By means of reductions above and below the line he has injected £366 million of spending power into the economy, and hon. Members opposite cheered him to the echo for doing so. But the Economic Survey tells us that because the Government went into the public market and offered to pay a very high price for money they withdrew from the pockets of
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      investors £368 million in the last year. They took that money from the pockets of people and in doing so robbed the investment market and created 500,000 unemployed. Then, because the Chancellor said that he is going to give back the money he has taken away, hon. Members opposite cheered like mad. They do not understand that he is only returning something that he had previously taken away.
      He took £368 million, but he is returning only £366 million. What on earth will he do with the £2 million that he still has? Will he use it to help build more roads and bridges in Scotland? Perhaps he will give it back during the passage of the Finance Bill, when he will have to meet the demands which are bound to come from this part of the country.
      One group of people might have received some thanks from the Tory Party today. Because of the policy of the Government 500,000 people have been put on to the streets. On television the other night we saw a steel worker who could normally earn £14 or £15 a week and, when he chose, could raise his earnings to £20. The Chancellor's action put that steel worker on to a system of working two weeks out of three, and for four shifts instead of the full number he could have worked, so that instead of earning £14, £15 or £20 a week he was able to earn only £8 or £9 for two weeks out of three and £4 for the third week.
      That is what this Government did by their policy, not only to that steel worker but to thousands mare like him — to 500.000 people in the country. When the Tories were giving thanks for what the Chancellor had done in paying back the money he had previously taken away, they might have spared a thought for the unemployed, those 500,000 who made this Budget possible.
      There is one thought which evidently is in the minds of many hon. Members. It has been expressed by speakers from both sides of the Committee and I hope that it will be expressed even more vigorously as the debate goes on. While the Tories were cheering the Chancellor, till many of them must have been dry and looking for more than milk to " slochen " their thirst — is that the proper expression? — [HON. MEMBERS: "Slake."] Well, hon. Members know what I mean

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      and I still think " slochen " is the better word — but we have not yet a Scottish Parliament. Through the cheers of the Tories I heard the sighs of the old-age pensioners. All of them will be disappointed people tonight. We have done something about the price of beer; we have assisted company directors; we have taken something off Purchase Tax and improved investment allowances, assisted Income Tax payers and so on, and we all welcome those things. But why should the old people be left out in the cold?
      This afternoon I was writing to an old lady in my constituency who had asked me to approach the National Assistance Board to inquire whether she could be provided with boots and clothing and an overcoat. There are many people like that old lady still seeking to cover their rags, almost their nakedness; yet today, when the Chancellor had so much to give away, he did not spare a thought for those old people trying to protect themselves from the bite of a spring which, so far, has been very unfriendly. Why did the Chancellor pass them by? I hope that the hon. and learned Gentleman the Financial Secretary is taking note of these things and that in due course we may receive some explanation for that action. The Chancellor has helped other pensioners and again we are glad about that. But why has he singled out this almost solitary fraction of the community and ignored them? Why has he meted out to them this unjustifiable treatment, particularly when he told us that we are living in an expanding economy?
      Mr. Ellis Smith: May I interrupt my hon. Friend to make a point which I should have made in my own speech, but which I forgot? I think that it should go on the record. My hon. Friend will remember that when in the past there have been increases in the old-age pension and the supplementary pension, old-age pensioners have received no additional benefit. That can happen again unless steps are taken to see that the Regulations and the administration of National Assistance are changed to cater for that position.
      Mr. Rankin: As a good Socialist I have no objection to my hon. Friend's making his point during my speech. That is the helpful system for which we stand, but I hope that it will not be too widely used during my speech.
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      I want to look at the position of the cinema tax or Entertainments Duty. I have spoken on the subject here for several years. We have gradually reduced the tax until, this year; we thought that the Chancellor of the Exchequer might abolish it. With some of my hon. Friends I put a Motion on the Paper calling for abolition and giving reasons.
      [That this House, recognising the important part played by the cinema in the life of this country and the need to maintain in being British film production and being aware of the economic difficulties from which the film industry is suffering, urges Her Majesty's Government to permit the British film industry to compete on equal terms with other forms of public entertainment by abolishing entertainments duty, the cinema industry being the only form of such entertainment which now bears that duty.]
      I asked some Government supporters for their signatures in support of the Motion but they said — I hope that I am not revealing any confidences; if so, I will not pursue the matter — that they did not think I needed to worry because they were sure that the Chancellor would abolish the tax. They therefore did not append their names to the Motion. I hope that they are as disappointed as I am and many of my hon. Friends are, and that, during the debate, they will say so to the Chancellor. If a new Clause on this subject is proposed to the Finance Bill I hope that we shall have the support of those Government supporters in pressing it upon the attention of the Government.
      The amount of money involved is very small, only about £9 million. If there is no modification of this position before the Finance Bill is passed it is certain that many more cinemas will close because of the operation of the tax. Already, last year, there was a contraction in their number. Many proprietors of cinemas, who otherwise would have closed them, were enabled to hang on and make ends meet because sweets and non-alcoholic beverages were sold there and because of advertisements on the screen. The great mass of these cinemas will have to be closed this year because their owners cannot go on meeting the continued demands of this duty.

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      Let us take an example in Scotland. In 1957, 11 cinemas, and in 1958, 20, were closed. Since 1st January this year, in the first quarter, 16 cinemas have been closed. That is at the rate of 64 a year. The number will continue to increase while the tax remains. I hope that the Chancellor will realise that if his decision not to abolish the tax is allowed to stand, it will speed many cinemas to an early death. It seems strange that the Chancellor, who is seeking to stimulate the economy, does not try to stimulate those places where the workers who keep the economy ticking over go for their entertainment.
      It is strange that the right hon. Gentleman does nothing to help such centers of entertainment by further reducing or by abolishing the tax. He must remember that if he allows this tax to remain and compels cinemas to close he will reduce the amount of money which goes to the production levy and stimulates the film industry in this country. If he is to continue supporting the industry and has not the cinema admissions to enable him to carry out a large part of that financial support, but wants the British film industry to show the world the British way of life, he will have to help it in the long run from Government funds.
      I set out with the intention of following the good example of my hon. Friend the Member for Leek, and I have spoken a little longer than I meant to when I rose, but I want to put one point to the Financial Secretary to the Treasury. Did I follow the Chancellor aright when he said there was nothing for shipping? Those were the words he used. I wrote them down when he was dealing with the fact that initial allowances would now be superseded by investment allowances of 20 per cent. and so on. I have not all the percentages in mind. He then used the words, " There will be nothing for shipping." If there is to be nothing for shipping, obviously one great stimulus for shipbuilding will be withdrawn. If our home shippers have no investment—
      The Financial Secretary to the Treasury (Mr. J. E. S. Simon): As the hon. Member put it specifically to me, I have just looked up what my right hon. Friend said. It was:
      "I propose no change this year in the present special treatment of capital expenditure on ships and on scientific research."
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      In other words, the very favourable investment allowances continue and, of course, they benefit from the remission in Income Tax.
      Mr. Rankin: I am glad to have that matter put right. The words were uttered but perhaps I missed the context because I was sitting opposite the Chancellor and had become very much alarmed. I was beginning to wonder whether he would be physically fit to finish the Budget statement he had started to expound.
      Today the Chancellor has provided £366 million extra spending power. He and the Government may well feel that the Budget is a sure election winner, but the people of this country should remember that every penny that has been given out today can be recaptured, just as happened in 1955. The way in which it has been given out makes it as easy to take back as it was to give. The Chancellor has certainly balanced his Budget. On that we make no quarrel, but he still leaves untouched the social imbalance. I have given examples of that in my speech. Perhaps he has not touched that problem because, as I tried to show, the party opposite is not fitted to handle it. So he is leaving it to a Labour Government, alone fitted to cure it, because Labour believes that society was not made just for the things we juggle with in the Budget, but was made for people. A Labour Government alone can create that type of society in which men and women can live healthy, happy and contented lives.
      9.20 p.m.
      Major Sir Frank Markham: I am sure that the hon. Member for. Govan (Mr. Rankin) did not intend to speak for three-quarters of an hour. I am sure that he meant to be much briefer, and, as I hope to be much briefer, I trust the hon. Member will forgive me if I do not review many of the arguments he has advanced but stick simply to my own last which is, first, to say what I think about the Budget, and, secondly, to make one or two suggestions to the Financial Secretary to the Treasury.
      First, the Budget is one that should have given to all sides of this Committee a great deal of pleasure and satisfaction. The fact that the strength of Britain is such this year that remissions can be made to the amount of about £370 million should surely be welcomed by everybody

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      whatever their party opinion or attachment. The Opposition have shown extraordinarily little vision or generosity in not welcoming this Budget much more than they have. It is evident that this is not just one Budget of a kind; it is the eighth in eight years in which taxation has been reduced. It is one of a great series. It is one in which, whatever the status or standing of any man or woman, he or she can say that after several years of increasing taxation under the Socialists, at last under a couple of Conservative Governments there have been eight Budgets practically in succession in which taxation has been reduced, and not by small amounts either.
      The Opposition should have been much more statesmanlike and generous and welcomed, for example, the very pleasant decrease in Income Tax to 7s. 9d. in the £ whether a man is earning £11 a week or is a Member of Parliament receiving something much higher. There is always a hint by the Opposition that they would have done better in reducing taxation, but when they were in power taxation was increased. Do not let us forget that.
      Mr. Rankin: We should have done better.
      Sir F. Markham: I said I would not speak for as long as the hon. Member who preceded me and I will not be provoked or give way to interruptions.
      Another thing I am sure we all welcomed in our hearts, whether we be teetotal or beer bibbers, was the reduction of the tax on beer. It is, after all, the traditional drink of the English nation and one is only too happy that at last the very high taxation on beer has been reduced.
      I am sure that the proposals in the Budget about post-war credits will be welcomed throughout the whole country. I should like to congratulate the Chancellor on this and the other dozen relaxations that have been given in this Budget. It is a magnificent Budget and the country as a whole will applaud it.
      I come now to make two suggestions. One hon. Member has made some suggestions about expense accounts. Expense accounts can and should be justified, as they were by the Royal Commission on Taxation a few years ago. What is so unfair is that whilst Members of Parlia-
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      ment and directors, and many other industrialists, can have their legitimate expenses deducted from their gross income and pay taxation only on the net income, the Chancellor, and previous Chancellors, has not seen fit to bring in or even to consider a similar system for teachers, insurance agents, and so on.
      A teacher, for example, who does his job thoroughly will spend some of his own income on going to refresher courses, on special visits to find out things in connection with his work. He buys books and apparatus, and he often comes on trips to the House of Commons with the children from his class and pays for them out of his own pocket. All of those expenses should be expenses to be set off against the gross income.
      So far my correspondence with me Treasury has not been very hopeful in this respect, and I ask my hon. and learned Friend the Financial Secretary whether he will take the matter up personally and draw the Chancellor's attention to it. There should be expense allowances for teachers, insurance agents and others who perfect themselves in their professions by spending their own money. They should have allowances in the same way as directors and hon. Members have allowances in respect of sums which they spend in the furtherance of their duties.
      My second suggestion deals with the White Paper. If the Financial Secretary will refer to Table XII of the White Paper he will find typical examples of the burden of Income Tax, including the burden on those with incomes of £100,000 a year. I regard that as sheer fantasy. I have never in my life met anybody who received or earned £100,000 a year in this country. There may be such people in Texas or even in California, but I do not believe that it is true of even a handful of people in this country. This table should be realistic and should stop at £40,000 or £50,000 which I believe today is about the top income of leaders of the Bar in their most productive and successful period. Perhaps we could have information from the Labour Party Front Bench on this matter. I know that no one makes a greater income while the killing is on than leaders of the Bar at their best period. I do not think that fashionable novelists or directors or even company promoters make these large sums of money.

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      I suggest that in future these tables should be restricted to realistic groups. What happens is that as a result of the figure given for an income of £100,000 and of Press comment, especially in the Daily Herald or the Daily Worker, people imagine that there are some persons in this country who will secure from the Budget a reduction of over £4,000 in their taxes. The Treasury should be challenged to say how many people there are M this category and whether there is any point in including these fantastic figures in Table XTI as is done every year.
      Finally, may I make a comment on a point which is made time after time? The hon. Member for Govan made a plea on behalf of old-age pensioners. We could all make that same plea with the same sincerity. [HON. MEMBERS" Go on."] Very well, I will do so and I will do it by pointing out that since the Conservative Government have been in power the old-age pension has been increased three times, the National Assistance rate has been increased four times and the purchasing power of both is greater in real value now than it ever was under the Socialist Government. These increases were not necessarily made at Budget time.
      Mr. Rankin: On a point of order. Is it in order for the hon. Member to circulate false information? He said that I spoke for forty-five minutes, whereas I spoke for only thirty minutes.
      Sir F. Markham: I apologies to the hon. Member. It seemed like forty-five minutes !
      May I return to the subject of old-age pensions? We have increased the old-age pensions three times in the last seven years and the National Assistance rate four times. Of those seven occasions, five were not at Budget time. I am not a prophet, but if I were I should say that in my opinion old-age pension rates will again be increased this year.
      Mr. Rankin: When?
      Sir F. Markham: I am not prepared to answer that, but I think that National Assistance rates will be increased, too. Our record in these matters compares very favourably with that of the Opposition. Instead of chiding the Government about not including an increase in pensions in the Budget, the Opposition should remember that we have already
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      done far more for the pensioners than the Labour Party did. They should go by our record and not by their own. I am convinced that the old-age pensioners will have a fair deal in the future, as they have had in the past. I welcome this Budget, I think it a remarkably good one, and I am proud to be one of those who can support it wholeheartedly.
      Mr. Stan Awbery. Is the hon. and gallant Member aware that when a Socialist Government were in power, and the country was in a very bad financial position, almost bankrupt, we more than doubled the old-age pension for a man and wife, from 20s. to 42s.?
      Sir F. Markham: And at the same time that Government devalued the £ and made it worth much less in real purchasing power.
      Mr. Awbery: We were told that we were bankrupt.
      9.30 p.m.
      Mr. John McCann: The hon. and gallant Member for Buckingham (Sir F. Markham) repeated an assertion which has been made a number of times in this debate by hon. Members opposite, that successive Conservative Governments have reduced taxation. In an interjection during the speech of the hon. Member for Blackley (Mr. E. Johnson) I tried to point out that this taxation reduction is purely relative. It is true that Surtax has been reduced in successive Budgets, but the same Tory Government took off the food subsidies which had the effect of making the cost of living much higher.
      In real terms, a loaf today costs an old-age pensioner twice as much as in 1951. The increased charges in the Health Service were imposed by a Tory Government, and quite recently they have increased rents through the operation of the Rent Act. It is no use reducing taxation for those people on the top level if the result is to increase indirectly the burden on those on the lower levels of taxation.
      The hon. and gallant Gentleman talked about the strength of Britain, and I am sure that we all hope to see Britain maintain her position. But we must be honest and say that no credit for this accrues to the Government. The Chancellor was honest enough to say that our favourable

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      position resulted from a fall in world prices. We can only hope that that fall will continue, so that our industry may be given sufficient impetus to enable it to increase our exports. During the second half of last year exports fell and production has not risen in any way. While it is easy to give " sops " by means of a Budget, I must remind the hon. and gallant Gentleman that some of us feel that had it not been for the stupidity of Suez, the Chancellor would have had another £250 million to distribute.
      This is the second Budget speech to which I have listened as an hon. Member of this House. I heard the first one shortly after I became a Member and I recall thinking, after looking forward to all the excitement of Budget day, that it consisted of ninety minutes of figurative boredom and twenty minutes of information. I do not mean to detract in any way from the excellent performance of the Chancellor, but when I listened to the string of figures that he gave us, I felt that they were all either below the line or above my head —
      Mr. Malcolm MacMillan: Or below the belt.
      Mr. McCann: However, I do not wish to indulge in an academic dissertation on what the Chancellor should have done.
      My hon. Friend the Member for Leek (Mr. Harold Davies) said that he had recently returned from Laos and Cambodia and the hon. Member for Heston and Isleworth (Mr. Reader Harris) spoke in similar vein, which emphasises that we are living in a changing world, a world which is becoming a market. Now that countries are so close together we have to be careful what we do. But it is from the point of view of the effect of this Budget on the people we represent that I wish to discuss it. If I am not so enthusiastic as some hon. Members think I ought to be, I apologies in advance.
      I am always ready to welcome any attempt to lift the burden of the cost of living borne by those in the lower income groups and I believe that an attempt to do that has been made today. But, having said that, I wish to qualify it by examining what has been done in comparison with what I think should have been done.
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      The reduction in the duty on beer will be received with acclamation in the pubs " and working men's clubs. There is no question about that. But it will be a nine-day' wonder, and, if the Government do not have a quick election they will not find any benefit from it. Has it been done specifically to help the man who drinks, or to help the brewer to offset his falling sales?
      I wonder, also, in a quixotic sort of way, how the housewife will feel now that the Chancellor has enabled her husband to stay out an extra night a week or a little longer on the night he does go out. As one hon. Member pointed out, the brewers in the North have been a little quick to beat the gun. Several brewers there recently put up the price of bitter beer by a ld. a pint. Anyone there who is capitalistic enough to drink bitter will have a reduction of only Id. when the duty comes off.
      Mr. Awbery: He will be bitter.
      Mr. McCann: Income Tax is a different matter. We all expected something off Income Tax, but the Government have their priorities all wrong. I am one of those strange people who believe that luxuries and high incomes should not receive any exemption until the people at the bottom of the scale have had all they can. It may be 9d. at the top and 6d. at the bottom, but there are 12 million people who do not normally pay tax at all. In the textile industry there are hundreds of thousands of operatives who, because of short time and loss of bonus, are below the Income Tax level. This concession will be a very sour grape to them.
      The hon. and gallant Member for Buckingham referred to Table XII. It has been said that the Chancellor is not giving any relief to the people with over £ 2,000 a year. Resolution No. 10 says:
      "(a) Income Tax for the year 1959-60 shall he charged at the standard rate of seven shillings and nine pence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, shall be charged in respect of the excess at rates in the pound which respectively exceed the standard rate by the amounts by which the higher rates for the year 1957ndash;58 exceeded the standard rate for that year;"
      The hon. Member for Ilford, South (Mr. Cooper) interpreted that to mean that Surtax would not alter in any way. The tables to which the hon. and gallant

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      Member for Buckingham referred show, on the Government's own figures, that a man with a wife and two children—an average family—receiving £565 a year does not pay Income Tax at all. Everybody in that category with less than £565 will not pay anything, and a man similarly placed who has £600 a year, or about £12 a week, will receive the magnificent sum of 13s. 4d. a year.
      At the other end of the scale, the £100,000-a-year man—the Tories, who have published the figures, must know that there are such peoplex2014;will receive the magnificent sum of £3,671 a year out of the Budget. Thus, at the top end, there are people who will receive £3,761, and, at the bottom, there are 10 million or 12 million people who will receive nothing at all.
      I am very disappointed that the Chancellor has decided not to touch petrol or diesel fuel oil. I am not so disappointed about petrol because the state of our roads now is such that we should not, perhaps, encourage more cars to come on the road, but I take a different view about diesel oil fuel, which is used for public transport vehicles, particularly in view of the movement of population outside the towns. Many local authorities are now building housing estates well outside industrial areas. It is quite a problem for a man to pay high fares out of his wages. Had the Chancellor considerably reduced the fuel oil tax on commercial vehicles and public service vehicles he would have stopped quite a number of wage claims in the not too distant future.
      At the risk of being accused of repetition, I also want to deplore the fact that nothing has been done for the old-age pensioner. Members on both sides have spoken about what the Government have done and Members opposite have told us what the Government will do. It seems to me that it is a case of yesterday and tomorrow, but nothing at all today. These are the people who built up the economy of this country and have devoted their working lives to making things far easier for us. We have dealt them a very bitter blow by neglecting them.
      During the Rochdale by-election, after the Government had robbed the old people of the tobacco coupon under the guise of an increase in pension, I received many letters from people who said that because of what the Government
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      had done the pipe, which was their only solace in the evening of their days, had been laid on one side. If anybody thinks that the old-age pensioner, who cannot afford to smoke and can hardly afford the necessities of life, will get anything out of a reduction of 2d. on a pint of beer he is optimistic. I only hope that the old people will not be the victims of a confidence trick and that they have not been deliberately left out of the Budget so that a special Bill can be introduced for electoral purposes just before an election. Our old people do not deserve to be used as tools in the electoral machine.
      I should like to say how pleased I am that the problem of Purchase Tax has been tackled. Here again, when Conservatives talk about reducing taxes it is as well to remind them that Purchase Tax today brings in twice as much as it did in 1951, when we left office. Again, I think that the Government's priorities are wrong. It is all very well to take 10 per cent. off a car costing £2,000 or £3,000, but I think that the necessities which people require should have been dealt with before the higher ranges were touched. I am disappointed that Purchase Tax has not been taken off the whole range of textiles to enable the industry to complete its reorganisation.
      I am sorry that the Chancellor has not been bold enough to grant tax-free loans or even gifts not only to encourage industries to take the place of the contracting textile industry, but to help the industry to reorganise itself to meet foreign competition. The Chancellor's reference to a good year might be true from the point of view of balance of payments, but I must remind him that we in Lancashire will not think about good years any more unless the Government's policy is changed. Over 400 mills have closed in the last four or five years, and 65,000 people have left the textile industry.
      In the last twelve months, the good year about which the Chancellor spoke, over 150 mills have closed, others are on the verge of closing and 4,000 people have left the industry. The tragedy is that new industries are not replacing them. The displaced people in textiles who have lost bonuses and are suffering from short-time working get no benefit from tax reliefs. The Government could have been far more bold in encouraging

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      industry to be developed in the almost derelict areas.
      I also regret that the Chancellor has not done anything for the cinemas. As my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) said, the revenue from cinemas is only £9.2 million. While the Chancellor gave some relief last year, the fact remains that many cinemas have closed. The little cinema at the corner of the street where I have lived for many years closed last Saturday. On Sunday, a huge notice appeared stating that the cinema was now closed and another notice to the effect that the building was to let. It is only when such things happen to one's own little local cinema that one realizes that this is happening.
      It was at a little cinema of this kind that many of us spent our time, in childhood when we played " wag " from night school, in the depression of the 'thirties when, out of work, we found escape there from the boredom of life, and where also we did a lot of good work in the back row when we started courting. These things come to mind when these cinemas are closed. I hope that the Chancellor will look at this problem again.
      We on this side of the Committee welcome the changes which are to be made in the payment of post-war credits. Some of us have been asking for a long time for a fresh approach to this problem and we are pleased to see that at last the Chancellor has been able to arrive at a criterion of hardship. I am worried, however, about a matter which was mentioned in an interjection by my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith). I hope that whoever winds up the debate will give us an assurance that those people who are now receiving National Assistance, which in itself will enable them to withdraw postwar credits, will not be penalized by having the amount of post-war credits payment deducted from the National Assistance. If that were to happen, the position might just as well be left exactly as it is. I am sure that the people would never forgive the Government if they did that.
      It has been said that the responsibility of the Government is not only to govern, but also to lead. An hon. Member opposite said that the only duty of a Government is to create the climate and
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      that then trade unionists and industrialists can do the rest. The Chancellor said that his whole theme was expansion, and that the investment allowances, which we welcome although they come at a rather late hour, were dedicated to that end. But I have just come back from Germany where I saw the German people, equipped with almost completely new modern industry, competing with us in some of our traditional roles. I saw there the danger to any expansion of our economy if we do not really get down to business. We in the trade unions have a responsibility in the fight for expansion and I am rather disturbed when hon. Members opposite make irresponsible attacks on trade unions and say that the trade unions themselves are responsible for the loss of production through tip-cat strikes and the like, ignoring the fact that there are fewer strikes here than in any comparable country.
      To create the right climate, a Government must give workers the impression that they are being fair to all sections of the community. When one recalls that the Index of Retail Prices rose by 2 per cent., wages by 3 per cent., but rents, profits and dividends by 9 per cent. last year, one can forgive the workers if they feel that they are not having a fair deal. I should have liked to have seen more people benefit from the Budget. I confess that if I had my way the Chancellor would not have enough money to meet all the benefits given.
      I should have liked to have seen the tax on local authority borrowing reduced so that the local authorities could provide amenities for their people. I should also have liked to have seen an attempt made to create a free National Health Service so that people could go to the doctor when they felt ill instead of feeling, as the old people in particular do, that they cannot afford it. These things cannot be done, but they should be mentioned.
      Finally, if this Budget is a genuine attempt to stimulate the economy of the country, the entire country will welcome it; if it is a stunt to gain electoral advantage the Government will get the answer they deserve when they finally decide to go to the country.
      9.50 p.m.
      Mr. Ray Mawby: I rise because there is one point on which I agree with the hon. Gentlemen the Members for

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      Rochdale (Mr. McCann) and Glasgow, Govan (Mr. Rankin), and I should like to express the disappointment I feel on the question of Entertainments Duty as it affects the cinema. I represent a constituency which is more rural than many others. We who represent predominantly rural areas appreciate the problem of the closing of the small cinemas and recognise that it is a greater social problem than is realised by those who live in large towns.
      I would not say that the complete removal of Entertainments Duty is the answer to the problem and that its abolition would result in every cinema remaining open, since we are seeing many social changes, for instance, the effect of television upon the cinema. At the same time, I deplore a position in which so many of our rural cinemas can remain in business only by selling popcorn and bottles of pop. There are many cinemas, especially in my constituency, whose annual balance sheets show that they are making a loss and that they can keep open only by dispensing popcorn and lemonade. I, like many other cinema-goers, would prefer not to have people sitting on either side of me eating oranges and popcorn which the cinema owner must sell in order to keep the place open.
      Therefore, I express a certain amount of disappointment that something has not been done to ensure that even a little assistance is given to the cinemas, particularly the rural ones. The problem of the rural cinema is the same as that of rural transport. So many people have a moped or a television set that fewer require public transport or the local cinema, and most of those who do in the main are the aged or the young. I believe we should do everything we can to ensure retaining in the rural communities people who are the backbone of this country but who, if the rural services continue to decline, will drift to the towns.
      Having said that, I would add that I believe that this Budget is on the whole a good one and that it will be accepted as such by the country. I look upon the concessions not as money being given—I hate that term—but rather as tending to leave in people's pockets more money than has been left in them hitherto. In other words, the Budget is not giving people something but allowing them more control over more of their own money. My right hon. Friend has shown that
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      he can leave this extra money in people's pockets and yet maintain our visible trade surplus, a general stabilization of the cost of living and a greater recognition by the rest of the world of the value of our currency. That is an important factor. We talk about what the Government can do for this or that person, but the greatest thing the Government can do is to give our people, whether they invest, manage or work, a feeling that there is stability here, that prices will not continually rise and that the £ is recognised by the rest of the world as a stable currency.
      I believe that all engaged in exports, whatever part they are playing, can look forward to a greater opportunity and a more positive approach to their position vis-à-vis the rest of the world. When we have to export more than 30 per cent. of the goods that we produce it is essential that we should be recognised throughout the rest of the world as having a currency which is stable and upon which the rest of the world can rely, for that can do nothing but good to our industries.
      Last year there was an American recession, and that reminds us of the situation ten years ago. I would remind hon. Gentlemen opposite that at that time the right hon. Member for Huyton (Mr. H. Wilson) said that, regardless of all the efforts of the Government, the American recession had forced us to devaluation of the £. Things can happen in the rest of the world over which we have very little control, and that must always be remembered. Although it was a worse depression in 1958, we did not have the Chancellor saying that we could do nothing about it. We came out of it with a stronger £ with a stronger balance of payments position and with higher gold and dollar reserves.
      Mr. Fernyhough: But with more unemployment.
      Mr. Mawby: Hon. Members opposite concentrate upon the number of unemployed. We concentrate on the number employed. At the moment we have an unemployment rate of 2.5 per cent. That must be taken in relation to what the Leader of the Opposition said in 1951 that during the period of full employment the unemployment rate had been about 2 per cent. That shows that we have not been doing too badly.

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      The main point is that there are about 500,000 more employed in the country than in 1951. During the intervening period we have seen a general reduction in defence contracts, a run-down of the defence system, a gradual run-down of National Service and school children in the " bulge" coming into employment. We have been able to ride the storm of the American depression and have come out of it with 500,000 more employed than in 1951.
      The difference between the two sides is that we are interested in having as many people employed as possible consistent with breaking the back of inflation. There are signs that we have broken the back of inflation, as my right hon. Friend has indicated. On top of that, he has been able to say to everyone in the country, " We are prepared to leave more of your money in your own pockets ", and thus stimulate the economy.
      My right hon. Friend has decided to reduce the ages at which men and women can have their post-war credits repaid. He has also said that those people not entitled to draw their post-war credits will nevertheless receive interest on them. That is the proper way to deal with this loan and I applaud my right hon. Friend's intention immediately to repay those people in the greatest need.
      It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.
      Report of Resolutions to be received Tomorrow.
      Committee also report Progress to sit again Tomorrow.

  SCOTLAND (CRIME DETECTION)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Whitelawl]
  10.1 p.m.
  Mr. William Hannan: The subject of the debate tonight arises out of the famous, or infamous, trial of just a year ago, when a person was found guilty of seven murders out of eight for which he had been indicted in Scotland. During that trial, there were new sensations daily. The trial was probably unique in two of its features. One was the special plea of impeachment, and the second was that the accused man dismissed his counsel half way through the trial.
  Apart from those aspects, there are other features which form the main subject of the debate and which raise questions about which the public was gravely disquieted during the trial. Those features were only vaguely hinted at by the Press at the time. Stronger voices have since been raised and there has recently been published a book by Sheriff Substitute Wilson, of Renfrewshire, a book which has been widely reviewed in the Press. In his book, Mr. Wilson makes very valid criticisms of the procedure following on the arrest of the accused man.
  Two questions which arise are: first, why was there such a delay in the first instance in calling in Glasgow police, who have up-to-date equipment and who are the best equipped police force in Scotland for dealing with serious cases of crime? Arising out of that is the second question: why should there not be a central criminal investigation department in Scotland under the direct control of the Scottish Office?
  That question was put in the Press. It arises from the mistaken view that Scotland Yard, in England, is under the direct control of the Home Office. As I understand, that is not quite true. Strangely enough, Scotland Yard gets its name from the fact that it is housed in buildings which were formerly the residence of the Scottish representative in London when Scotland and England had separate Parliaments. It is under the direction and control of the Metropolitan Police and

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  not under the control of the London County Council.
  What is the objection to the formation of a central investigation department in Scotland? It would be mobile and furnished with the most up-to-date equipment, wireless, and so on, and could move at speed into any area in which it was required. Speed is the essence of the problem because, in the Sexton Blake style, some scientific action, possibly an examination, ought to occur while the trail is hot.
  The Glasgow Herald put the case very succinctly when, on 30th May, 1958, it said:
  "The public interest evoked by the trial is probably unequalled in judicial history."
  It went on to say that the public had had revealed to it a state of affairs which caused horrified disquiet, and it referred to
  "an underworld of housebreakers, gun peddlers and criminals of other sorts."
  But the paragraph most pertinent to this debate said:
  "There is another aspect of the case which should give cause for thought. The first in chronological order of the crimes of which Manuel was found guilty took place in September, 1956. He was not arrested until January, 1958."
  That is a period of fifteen months. Although this man had been suspected right from the beginning it was only 10 days after the Glasgow police were called in on 5th January, 1958, that an arrest was made.
  The newspaper went on to say:
  "In between—"
  that is, between September 1956 and January 1958—
  "seven persons were murdered. No one who followed the trial closely will be disposed to under-rate the difficulties which faced the Lanarkshire County Police. But any district of the country is liable to be afflicted with crimes beyond the capacity of any but a highly organised C.I.D. such as Glasgow, and, on more modest scale, the other large cities of Scotland possess. The question of reorganisation of the Scottish police forces deserves to be at least re-examined."
  By way of Questions my hon. Friends and I have asked for such a review, aiming at the formation either of a central, mobile C.I.D. or the selection of an existing competent C.I.D. force, to be designated by the Secretary of State, which can move in either on his direction or request, or at the request of a local police chief.
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  The public asked why seven persons had to die before the criminal was brought to justice, when he had been suspected from the beginning. They also asked why an innocent man—the father of one of the victims and the husband of another—was incarcerated for 67 days on suspicion. Public perturbation and concern for young people went to extravagant lengths. They were accompanied to dance halls and through alleys and dark passages in order to preserve them from harm.
  Is the Secretary of State satisfied with the state of efficiency of Scottish C.I.D. laboratories and forensic experts? If so, why is there such a large percentage of undetected serious crime? I understand that although the police are very anxious to achieve the highest possible percentage of detection they regard the position as satisfactory if they solve 30 per cent. of these crimes. I do not know whether that can be confirmed by the Joint Under-Secretary. We cannot expect 100 per cent. success in the detection of crime, but we want to be assured that worthwhile efforts are being made.
  I cannot bring myself to believe that the fault lies with the individual officers, who apply themselves sincerely to this job, and I hope that by raising this subject I shall not bring any solace, comfort or encouragement to any people, to the extent that they think that, as a result of what I am saying, they can take an extra chance. We are anxious to see that the police are properly supported and receive all the help they can be given in achieving their objectives.
  I believe that the weakness lies in this point of administration, and the time lag which is possible before the local police chief makes up his mind to request outside assistance. I believe that, as a whole, the facilities at the disposal of the C.I.D. are inadequate, and that the training courses for detectives are inadequate.
  In his book, Mr. Wilson poses this question: in the light of modern techniques, was police organisation adequate to prevent some of the murders? He criticises the fact that the first incident which took place, involving Ann Kneilands, early in 1956, two years before the culprit was brought to book, the body was interred without scrapings being taken from under the nails. No samples of the blood or tissue were taken, which

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  would have provided a pointer to an association with the criminal. At least, there was no evidence at the trial to suggest that that had been done. The cross-examination showed that it did not take place in respect of any of the other victims.
  Naturally, as no scientific scrutiny took place regarding these matters, the question arises: do the Lanarkshire police have the necessary facilities at their disposal, and if not, why did not they call in the Glasgow police much earlier? Mr. Wilson also refers to a curious gap in the evidence concerning the clothing of the accused person which was removed for examination on more than one occasion, but there was no evidence of that at the trial. Can that be confirmed by the Joint Under-Secretary? If that is so, is not there a plain duty on the Home Department to improve the methods in the C.I.D. departments outside the cities? There is also the question of why Glasgow was not consulted on this matter at an earlier date.
  The Joint Under-Secretary may answer that it rests with the chief constable of the area concerned to invite outside aid. The presiding judge at the trial of which I am speaking, Lord Cameron, was the Advocate Deputy in a famous trial before the war, the Buck Ruxton case. He was the man who had to bring together the administrations and co-ordinate the efforts and investigations of Edinburgh, Dumfries and Lancaster to " knock heads together " and get something done.
  In the recent case, did petty jealousies exist between Lanarkshire and Glasgow and, if so, does this mean that such petty jealousies must take precedence over the public interest? That is a very important question which I hope that the Joint Under-Secretary will attempt to answer. The Press, police authorities and lay and medical authorities, as well as legal authorities, are posing the same question.
  I wish to stress that no reflection is cast on the efforts of individual officers. I think that the fault lies in the autonomous position of local officers. I realise that I am in danger of being ruled out of order in suggesting that legislation would be necessary, but I wish to make this point. Is not the Secretary of State entitled to " knock heads together" by
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  issuing a directive? Or is the Lord Advocate or the town council entitled to do that?
  A detective cannot solve a crime by his own efforts, despite what one reads in books written about the exploits of individual detectives or what one sees in the serials which appear on I.T.V. and B.B.C. television programmes. Detection involves co-ordination and team-work among officers.
  In November of last year, and again in March of this year, I addressed Questions to the Secretary of State. The upshot was to ask whether a central C.I.D. could not be formed and whether the Secretary of State would undertake to issue such a directive. From the reply which I received on 17th March it is clear that the right hon. Gentleman was still of the same opinion and did not think that any other organisation was needed. He pointed out that in Scotland the responsibility lies with the local police force; but how long is it to lie there before action is taken? This was the very essence of the fault in the recent Manuel case.
  I must get on with asking one or two other things. What about the training school which has been established? In England such schools were established in the 1920s at Hendon and Wakefield, and courses of thirteen weeks' duration take place there all the year round. My information is that in Scotland the training courses last only for four weeks in any one year. Even at that, there are only brief lectures given to senior officers. Will the Joint Under-Secretary of State say whether he is convinced that the facilities in Scotland in this respect are equal to those which exist south of the Border?
  I believe that the school in Scotland is held in alternate years in Glasgow and Edinburgh. There will be one in Glasgow next year. Officers from all over Scotland may go there. What is the present personnel of the C.I.D. in Scotland, and how many of that personnel have been through such a training course? There is so much more that I want to say that I shall not have the time. I am truncating my remarks to give the Joint Under-Secretary of State an adequate opportunity to reply.

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  There is one other thing concerning the selection of men for the C.I.D. In Glasgow, such men must have had four years' experience and be in possession of the Police Elementary (Scotland) Certificate. Can the Joint Under-Secretary of State tell me whether the same standard is expected of the C.I.D. in the rest of Scotland, and if not, why not?
  Lastly, I would draw the hon. Gentleman's attention to something which the police, in Glasgow at least, are finding a handicap. They have wireless communication with their officers on a wavelength which they know is being listened to and interfered with. The result is that when they want to send a message to an officer they cannot impart information to him straight away, but have to ask that officer to telephone back to headquarters so that they can pass on the real information. They have to go to that trouble in the interests of security. The Joint Under-Secretary can inquire at Glasgow if he wants any more information. We shall be grateful if he can try to answer some of the points I have put to him.
  Mrs. Jean Mann: On a point of order. Before the Joint Under-Secretary of State replies, may I ask whether this discussion is in order? We know that my hon. Friend the Member for Glasgow, Maryhill (Mr. Hannan) has asked for a C.I.D., but we also know that we cannot get the Scottish chiefs of police to consult a C.I.D. Is it in order for the Joint Under-Secretary of State to tell me now whether new legislation will be required to compel Scottish chiefs of police to consult such a C.I.D. when the time comes?
  10.20 p.m.
  The Joint Under-Secretary of State for Scotland (Mr. Niall Macpherson): Perhaps I might answer the hon. Lady's question when I come to it. I think it would fit in rather better if I dealt with matters as quickly as I can and cover as much ground as I can.
  The hon. Member for Glasgow, Maryhill (Mr. Hannan) has raised an important question tonight and one which is very much in the public mind, especially at a time when crime is showing a tendency to increase.
  The public are perhaps most anxious of all about the personal security and protection of their wives and children
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  and of old folk from assault, but it is not crimes against the person but crimes against property which are showing a marked increase. Nevertheless, we should never be content until every author of such an assault has been brought to justice. The hon. Member talked about 30 per cent. of cases being cleared up. At present 87 per cent. of crimes against the person in Scotland are cleared up. That is roughly six out of seven. He asked about crimes in general. He can get these figures from the annual statistics, but the numbers which are cleared up are running at about 40 per cent. I must say that Lanarkshire is rather above the average in the number of crimes cleared up. He also said that it is important that crimes should be cleared up quickly, and with that I fully agree.
  The hon. Member expressed dissatisfaction with the system and methods of crime detection in Scotland and cited in particular the Manuel case. Before dealing with more general points, I should like to deal with the hon. Member's question why there was delay in calling in the Glasgow police in that case. I have no special knowledge of the Manuel case. I have read about it in the Press and have also read the very interesting account of the trial by Sheriff Wilson, including the opinions expressed in the last chapter.
  Perhaps I could make these brief comments. The Watt murders were discovered on 17th September, 1956. On the 2nd October, 1956, Manuel was sentenced to eighteen months' imprisonment for housebreaking in Hamilton and was released on 30th November, 1957. The three murders or sets of murders, that followed were between then and New Year's Day, 1958. So it is not true that Manuel was at large all this time.
  The second point was that it is true that Manuel was not charged until after the Glasgow police had been called in, but the post hoc propter hoc argument is very dangerous. It would not be fair to the Lanarkshire police. Glasgow police would, I think, be the first to agree that Manuel was not brought to book just because the Glasgow police were called in. Sheriff Wilson, in his account of the trial, described Peter Manuel as the man who talked too much. What appears to have put the police on to his scent was the lavish way in which he used notes

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  stolen from the Smarts' house and what led to his conviction above all was his own tongue and confessions which tallied with the facts.
  The third point the hon. Member made was that it is said the Lanarkshire police were remiss in not taking scrapings of the fingernails of Anne Kneilands and samples of blood after her death. The hon. Member and Sheriff Wilson are apparently not aware that ex-Superintendent Hendry, formerly superintendent of Lanarkshire C.I.D., has strongly denied that such elementary investigation was not undertaken. He has expressed resentment at the slur on Dr. Imrie, the Glasgow City Police surgeon, who examined the body of Anne Kneilands together with Professor Allison. While the public were naturally disturbed about the case, there are no grounds for concluding that something was far wrong with the system of detection. These were callous, purposeless crimes and the murder of Anne Kneilands was the most callous of them all.
  Mr. Thomas Fraser: He was not convicted of Anne Kneilands' murder.
  Mr. Macpherson: I hope the hon. Member will not—
  Mr. Fraser: On a point of order, Mr. Speaker. In the interests of accuracy and veracity, I wish to point out that the hon. Gentleman has connected Peter Manuel with Anne Kneilands' murder, but Peter Manuel was not convicted of that murder.
  Mr. Speaker: That is not a point of order for me.
  Mr. Macpherson: I understood that he confessed to the murder of Anne Kneilands—
  Mr. Fraser: He was not convicted.
  Mr. Macpherson: —after the appeal.
  The first suggestion made by the hon. Member for Maryhill was for a central C.I.D. The hon. Member said that it should be called in either at the request, as I understood, of the Chief Constable, or on the instructions of the Secretary of State.
  The hon. Lady the Member for Coat-bridge and Airdrie (Mrs. Mann) is quite
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  right in saying that it would require legislation to empower the Secretary of State to give a direction for such a C.I.D. to be called in, but that does not prevent the C.I.D. being available to be called in when it is desirable.
  The matter of giving directions in this way was considered when the 1956 Act was in contemplation and there was very strong opposition to it from all sides. Indeed, the main principle is the constitutional one of the independence of the police authorities. There is also the great practical difficulty as to how the Secretary of State would know when to issue such a direction. Her Majesty's Inspector of Constabulary could advise the Secretary of State if he thought a case was not being properly handled, but the likelihood is that if there was not a fairly quick arrest public pressure for him to give the direction would develop, and he might find himself either having to resist it or to intervene—perhaps quite unnecessarily—at an inopportune moment. As it is, Her Majesty's Inspector of Constabulary can suggest to a chief constable that he might benefit from assistance from another force.
  It is not realised how frequently other police forces make use of the Glasgow C.I.D. as well as those of the Edinburgh and other large forces. Another C.I.D. may be called in to a case, either to take over the case completely--and that is done from time to time—or to assist in a particular way. For example, in the case of a murder in Inverness, experts from Glasgow were invited to examine the scene of the murder and to report to the Inverness Chief Constable. Or they may make use of the facilities of the Identification Bureau which has an admirable library of fingerprints. They may consult Glasgow about the methods of criminals in Scotland. It is Glasgow which does the ballistic tests. There are scientific methods of detection available there and also a very good photographic unit.
  The hon. Member asked about forensic science laboratories. Glasgow has a laboratory, and something like three-fifths of the total use of the Glasgow laboratory is made by outside forces; two-fifths by Glasgow and three-fifths by outside forces. The Glasgow laboratory works very closely with the city analyst and University Forensic Medicine Department, and other forces also work with the forensic medicine departments of other universities.

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  There is a good deal to be said for a police force having its own laboratory, but, as far as I know, there are no complaints about lack of facilities in Scotland although individual forces vary considerably as to the facilities they have.
  The second suggestion was that detective training should be improved. The hon. Gentleman is right in saying that at the present time there are four-week' courses organised in alternate years in Glasgow and Edinburgh. Some 30 to 40 detectives attend each of these courses. The syllabus is considered and approved by the Advisory Council to the Board of Governors and the Scottish Police College, and the Chief Constables I: Scottish) Association is consulted on various matters. Last year they were con-stilled about the length of the courses and they recommended that the period should remain at four weeks. The Central Conference of Detective Officers also considered the length of the course this year and decided that the matter should be discussed further at the six-monthly conference of the groups— that is the East, North and West groups.
  The longer the course is, the more work of a practical character, schemes and exercises and so forth, it is possible to do. The difficulty for the smaller forces
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  is to spare the detective officers to attend longer courses, although of course detective officers can be attached to other forces for instruction, and frequently are.
  Of course, the chief constable may feel it worth while to send a good man on a comprehensive course whereas he may not be so particular in his choice for a short course. That was a common experience in the Army with those who had to organise and fill up courses during the war.
  These matters are very much under discussion at the present time—how long the courses should be, what their contents should be, and who should be sent on them. These are professional matters for detectives but I would not like it to be assumed from the Manuel case that there is anything radically wrong with crime detection in Scotland. There is always room for improvement, and we hope to be able to go on making improvements to what is well known to be a very fine force, a force that is characteristic of all that is best in this country and one of which the country is proud.
  Question put and agreed to.
  Adjourned accordingly at twenty-nine minutes to Eleven o'clock.