HC Deb 17 April 1961 vol 638 cc822-70

In total, the proposals I have outlined for increasing taxation will bring in £68 million in the forthcoming year. The effect will be to give me a surplus above the line in 1961–62 of £506 million. This will be a substantial factor in moderating the growth of home demand to the extent necessary to make room for increased exports. It will also mean that in 1961–62 the overall deficit or, to put it another way, the borrowing requirement of the Budget will be reduced to £69 million. This amount is well within what I may reasonably expect to raise from National Savings and other forms of non-marketable debt, for example, Tax Reserve Certificates.

In other words, while we shall not lose sight of our longer term aim of lengthening the debt already in market hands, and shall have to deal with the stock which matures in February next, we shall not, if things go as we expect, be looking for new money from the gilt-edged market in 1961–62. This will give us additional room for manœuvre in our monetary policy from now on. Our firm intention to keep our financial house in order will be clearly demonstrated.

I believe that my proposals for the new economic regulators will very much improve the Government's capacity to adjust trends in the economy without violent movements. I believe that my proposals with regard to Surtax will have a dynamic effect upon the initiative and effort of individuals, including those engaged in exporting, whose work is of vital importance to the community. They will mean that valuable resources of manpower will have more inducement to stay in this country. I readily acknowledge that there is still much to be done in the reorganisation of indirect taxation, and in the increasing of incentives throughout the economy. In this Budget I have tried to act where action was most urgently necessary.

1. Television advertisements duty

Motion made, That on advertisements inserted for payment in television programmes broadcast from stations in Great Britain after the end of April, nineteen hundred and sixty-one, there shall be charged a duty of excise, to be paid by the person providing the programme; and (subject to adjustment under any provision which the Act giving effect to this Resolution may make for the adjustment of liabilities for revenue duties) the duty payable in respect of any insertion of an advertisement in such a programme shall be of an amount equal to one tenth of the amount or value of the consideration payable for the insertion to that person (inclusive of any amount allowed by him by way of agency discount or commission, but exclusive of any amount recoverable by him in respect of the duty).—[Mr. Lloyd.]

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. Hydrocarbon Oils (reduction of rebate)

Motion made, and Question, That for heavy oils delivered for home use after 6 o'clock in the evening of 17th April. 1961, the rate at which rebate of customs or excise duty is allowed under section one hundred and ninety-nine of the Customs and Excise Act, 1952, shall be reduced by 2d. a gallon. 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. Lloyd.]

put and agreed to.

3. Hydrocarbon Oils (repayment of rebate)

Motion made, and Question, That on hydrocarbon oils on which before 6 o'clock in the evening of 17th April, 1961 (in this Resolution referred to as "the relevant time") rebate of customs or excise duty has been allowed under section one hundred and ninety-nine of the Customs and Excise Act, 1952, and not been repaid, there shall be repaid 2d a gallon of the rebate allowed, if at or after the relevant time the oils are stored on a site where there is for hydrocarbon oils storage, whether in one ownership or occupation or not, of an aggregate capacity of 200,000 gallons or over (or of an aggregate capacity not shown to the satisfaction of the Commissioners of Customs and Excise, if they so require, to be less than 200,000 gallons); and the following provisions shall apply:

  1. (a) except In so far as other provision is made for oils in or removed to bonded storage, rebate shall be repayable on the first removal of the oils after the relevant time from storage on such a site (or, if that happens before the passing of the Act giving effect to this Resolution, then on the passing of that Act), and shall be repaid by the person in whose possession the oils are immediately before the removal, but the amount paid shall be recoverable by him, where he is not the owner, from the person to whose order he held the oils immediately before the removal; and
  2. (b) sites in common ownership or occupation (companies of which one controls the other, or which are under common control, being for this purpose regarded as one person) shall be treated as together constituting a single site if hydrocarbon oils can be delivered from one site to the other by pipe or if the sites are managed as a single unit.—[Mr. Lloyd.]

put and agreed to.

4. Surcharges or rebates in respect of revenue duties

Motion made, and Question, That it is expedient to provide for bringing into operation and withdrawing increases or decreases, not exceeding ten per cent., of amounts due for certain customs and excise duties and purchase tax or (whenever duty or tax became due) for drawbacks or rebates thereof or allowances for goods chargeable thereto, and to make consequential provision as respects repayments and other matters, so, however, that this Resolution shall not authorise provision relating to part only of the field of operation of any one duty or rate of purchase tax.—[Mr. Lloyd.]

put and agreed to.

5. Pool betting duty (extension of definition of betting)

Motion made, and Question, That for the purposes of the pool betting duty the making of payments for the chance of winning any money or money's worth shall be treated as bets if the payments are made on terms under which the payors have a power of selection which may (directly or indirectly) determine the winner, notwithstanding that the power is not exercised, if they would be so treated had the power been exercised; and this Resolution shall apply whenever a payment was made, but only where the winner is determined by reference to an event occurring after the twenty-eighth day of April, nineteen hundred and sixty-one. 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. Lloyd.]

put and agreed to.

Rate of Duty
Description of vehicle Initial Additional if used for drawing trailer or side-car
£ s. d. £ s. d.
1. Bicycles (other than bicycles which are electrically propelled) of which the cylinder capacity of the engine—
(a) does not exceed 150 cubic centimetres 1 0 0 12 0
(b) exceeds 150 cubic centimetres but does not exceed 250 cubic centimetres 2 5 0 12 0
(c) exceeds 250 cubic centimetres 4 10 0 1 10 0
2. Bicycles which are electrically propelled 1 0 0 12 0
3. Tricycles neither constructed nor adapted for use nor used for the carriage of a driver or passenger 2 10 0
4. Other tricycles 6 0 0
5. Vehicles other than mowing machines, being vehicles with more than three wheels neither constructed nor adapted for use nor used for the carriage of a driver or passenger 3 15 0

6. Vehicles excise duty

Motion made, and Question put:That—in the case of licences taken out after the seventeenth day of April, nineteen hundred and sixty-one,—

  1. (a) the rates of duty on licences (other than trade licences) for the descriptions of vehicles specified in Parts I to V of the following Table shall be substituted for the rates for such licences specified in the Vehicles (Excise) Act. 1949. and section eleven of the Finance Act, 1959 (hackney carriages other than tramcars);
  2. (b) the annual rates (section ten of the Act of 1949) of duty for general trade licences shall be increased from twenty-five pounds to thirty pounds and from five pounds to six pounds, and for limited trade licences shall be increased from five pounds to six pounds and from one pound to one pound five shillings.

Weight unladen of vehicle Rate of duty
1. 2. 3. 4. 5.
Description of vehicle Exceeding Not exceeding Initial Additional for each ton or part of a ton in excess of the weight in column 2
£ s. d. £ s. d.
1. Vehicles mentioned in section 4 (2) (a) of Act of 1949 2 10 0
2. Vehicles mentioned in section 4 (2) (b) of Act of 1949 2 10 0
3. Vehicles mentioned in section 4 (2) (c) of Act of 1949 2 10 0
4. Vehicles mentioned in section 4 (2) (d) of Act of 1949 2 10 0
5 Vehicles mentioned in section 4 (2) (f) of Act of 1949, other than showmen's vehicles 2 tons 30 0 0
2 tons 4 tons 48 0 0
4 tons 6 tons 66 0 0
6 tons 7¼ tons 84 0 0
7¼ tons 8 tons 102 0 0
8 tons 102 0 0 18 0 0
6. Vehicles mentioned in section 4 (2) (f) of Act of 1949, being showmen's vehicles. 7¼ tons 30 0 0
7¼ tons 8 tons 36 0 0
8 tons 10 tons 42 0 0
10 tons 42 0 0 6 0 0
Weight unladen of vehicle Rate of Duty
1. 2. 3. 4. 5.
Description of vehicle Exceeding Not exceeding Initial Additional for each ¼ ton or part of a ¼ ton in excess of the weight in column 2
£ s. d. £ s. d.
2. Goods vehicles which are propelled by steam or are constructed or adapted to use gas as fuel, other than farmers' goods vehicles, showmen's goods vehicles or local authorities' watering vehicles. 12 cwt. 12 0 0
12 cwt. 16 cwt. 15 0 0
16 cwt. 1 ton 18 0 0
1 ton 3 tons 18 0 0 3 0 0
3 tons 4 tons 42 0 0 4 10 0
4 tons 6 tons 60 0 0 6 0 0
6 tons 108 0 0 4 10 0
3. Farmers' goods vehicles 12 cwt. 12 0 0
12 cwt. 1¼ tons 12 0 0 15 0
1¼ tons 2 tons 14 5 0 10 0
2 tons 2¼ tons 15 15 0 15 0
2½ tons 3¼ tons 17 5 0 1 0 0
3¼ tons 20 5 0 10 0
4. Showmen's goods vehicles 12 cwt. 12 0 0
12 cwt. 16 cwt. 13 5 0
16 cwt. 1 ton 14 10 0
1 ton 1¼ tons 15 10 0
1¼ tons 15 10 0 1 5 0
5. Local authorities' watering vehicles which are electrically propelled. 1¼ tons 7 0 0
1¼ tons 2 tons 7 0 0 3 0 0
2 tons 3 tons 16 0 0 15 0
3 tons 5 tons 19 0 0 1 0 0
5 tons 29 0 0
6. Local authorities' watering vehicles which are not electrically propelled. 12 cwt. 12 0 0
12 cwt. 16 cwt. 15 0 0
16 cwt. 1 ton 18 0 0
1 ton 2 tons 18 0 0 3 0 0
2 tons 4 tons 30 0 0 2 0 0
4 tons 5 tons 46 0 0 1 10 0
5 tons 58 0 0
7. Goods vehicles not included in any of the foregoing provisions. 12 cwt. 12 0 0
12 cwt. 16 cwt. 15 0 0
16 cwt. 1 ton 18 0 0
1 ton 3 tons 18 0 0 3 0 0
3 tons 4 tons 42 0 0 4 10 0
4 tons 60 0 0 6 0 0
Description of Vehicle Rate of Duty
£ s. d.
1. Electrically propelled vehicles 9 0 0
2. Other vehicles—
(a) vehicles not exceeding six horse power, if registered under the Roads Act, 1920, for the first time before the first day of January, nineteen hundred and forty-seven 10 15 0
(b) vehicles exceeding six horse power but not exceeding seven horse power if registered as aforesaid 12 10 0
(c) vehicles not included in the foregoing sub-paragraphs 15 0 0
For the purposes of this Resolution weight, cylinder capacity, horse power and seating capacity are to be determined, and other expressions interpreted, in accordance with the Act of 1949.
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. Lloyd.]

The Committee divided: Ayes 345, Noes 205.

Division No. 138.] AYES [5.4 p.m.
Agnew, Sir Peter Cooper, A. E. Gower, Raymond
Aitken, W. T. Cooper-Key, Sir Neill Grant, Rt. Hon. William
Allan, Robert (Paddington, S.) Cordeaux, Lt.-Col. J. K. Grant-Ferris, Wg Cdr. R.
Allason, James Cordle, John Green, Alan
Amery, Rt. Hon. Julian (Preston, N.) Corfield, F. V. Gresham Cooke, R.
Arbuthnot, John Costain, A. P. Grimston, Sir Robert
Ashton, Sir Hubert Coulson, J. M. Grosvenor, Lt.-Col. R. G.
Balniel, Lord Courtney, Cdr. Anthony Gurden, Harold
Barber, Anthony Craddock, Sir Beresford Hall, John (Wycombe)
Barlow, Sir John Critchley, Julian Hamilton, Michael (Wellingborough)
Batsford, Brian Crosthwaite-Eyre, Col. O, E. Hare, Rt. Hon. John
Baxter, Sir Beverley (Southgate) Crowder, F. P. Harris, Frederic (Croydon, N. W.)
Beamish, Col. Sir Tufton Cunningham, Knox Harris, Reader (Heston)
Bell, Ronald Curran, Charles Harrison, Brian (Maldon)
Bennett, F. M. (Torquay) Dalkeith, Earl of Harvey, Sir Arthur vere (Macclesf'd)
Bernnett, Dr. Reginald (Gos & Fhm) Dance, James Harvey, John (Walthamstow, E.)
Berkeley, Humphry d'Avigdor-Goldsmid, Sir Henry Harvie Anderson, Miss
Bidgood, John C. Deedes, W. F. Hastings, Stephen
Biggs-Davison, John Digby, Simon Wingfield Hay, John
Birch, Rt. Hon. Nigel Donaldson, Cmdr. C. E. M. Heald, Rt. Hon. Sir Lionel
Bishop, F. P. Doughty, Charles Heath, Rt. Hon. Edward
Black, Sir Cyril Drayson, G. B. Henderson, John (Cathcart)
Bossom, Clive du Cann, Edward Henderson-Stewart, Sir James
Bourne-Arton, A Duncan, Sir James Hendry, Forbes
Box, Donald Duthie, Sir William Hicks Beach. Maj. W.
Boyd-Carpenter, Rt. Hon. John Eccles, Rt. Hon. Sir David Hiley. Joseph
Boyle, Sir Edward Eden, John Hill, Dr. Rt. Hon. Charles (Luton)
Braine, Bernard Elliot, Capt. Walter (Carshalton) Hill, Mrs. Eveline (Wythenshawe)
Brewis, John Elliott, R. W. (Nwcstle-upon-Tyne, N.) Hill, J. E. B. (S. Norfolk)
Bromley-Davenport, Lt.-Col. SirWalter Emery, Peter Hinchingbrooke, Viscount
Brooke, Rt. Hon. Henry Emmet, Hon. Mrs. Evelyn Hirst, Geoffrey
Brooman-White, R. Errington, Sir Eric Hobson, John
Browne, Percy (Torrington) Erroll, Rt. Hon. F. J. Hocking, Philip N.
Bryan, Paul Farey-Jones, F. W. Holland, Philip
Buck, Antony Farr, John Hollingworth, John
Bullard, Denys Fell, Anthony Hope, Rt. Hon. Lord John
Bullus, Wing Commander Eric Finlay, Graeme Hopkins, Alan
Burden, F. A. Fisher, Nigel Hornby, R. P.
Butcher, Sir Herbert Fletcher-Cooke, Charles Hornsby-Smith, Rt. Hon. Patricia
Butler, Rt. Hn. R. A. (Saffron Walden) Forrest, George Howard, Hon. G. R. (St. Ives)
Campbell, Sir David (Belfast, S.) Foster, John Howard, John (Southampton, Test)
Campbell, Gordon (Moray & Nairn) Fraser, Hn. Hugh (Stafford & Stone)
Carr, Compton (Barons Court) Fraser, Ian (Plymouth, Sutton) Hughes Hallett, Vice-Admiral John
Carr, Robert (Mitcham) Freeth, Denzil Hughes-Young, Michael
Cary, Sir Robert Galbraith, Hon. T. G. D. Hulbert, Sir Norman
Channon, H. P. G. Gammans, Lady Hurd, Sir Anthony
Chataway, Christopher Gardner, Edward, Hutchison, Michael Clare
Chichester-Clark, R. George, J. C. (Pollok) Iremonger, T. L.
Churchill, Rt. Hon. Sir Winston Gibson-Watt, David Irvine, Bryant Godman (Rye).
Clark, Henry (Antrim, N.) Gover, Sir Douglas Jackson, John
Clark, William (Nottingham, S.) Glyn, Dr. Alan (Clapham) James, David
Clarke, Brig. Terence (Portsmth, W.) Glyn, Sir Richard (Dorset, N.) Jenkins, Robert (Dulwich)
Cleaver, Leonard Godber, J. B. Jennings, J. C.
Cole, Norman Goodhart, Philip Johnson, Dr. Donald (Carlisle)
Collard, Richard Good hew, Victor Johnson, Eric (Blackley)
Cooke, Robert Gough, Frederick Johnson Smith, Geoffrey
Jones, Rt. Hn. Aubrey (Hall Green) Morgan, William Smyth, Brig. Sir John (Norwood)
Joseph, Sir Keith Morrison, John Soamee, Rt. Hon. Christopher
Kaberry, Sir Donald Mott-Radclyffe, Sir Charles Spearman, Sir Alexander
Kerans, Cdr. J. S. Nabarro, Gerald Speir, Rupert
Kerby, Capt. Henry Neave, Airey Stanley, Hon. Richard
Kerr, Sir Hamilton Nicholls, Sir Harmar Stevens, Geoffrey
Kershaw, Anthony Noble, Michael Steward, Harold (Stockport, S.)
Kimball, Marcus Nugent, Sir Richard Stodart, J. A.
Kirk, Peter Oakshott, Sir Hendrie Stoddart-Scott, Col. Sir Malcolm
Kitson, Timothy Ormsby Gore, Rt. Hon. D, Storey, Sir Samuel
Lagden, Godfrey Orr, Capt. L. P. S. Studholme, Sir Henry
Langford-Holt. J. Orr-Ewing, C. Ian Summers, Sir Spencer (Aylesbury)
Leather, E. H. C. Osborn, John (Hallam) Sumner, Donald (Orpington)
Leavey, J. A. Page, John (Harrow, West) Talbot, John E.
Leburn, Gilmour Page, Graham (Crosby) Tapsell, Peter
Legge-Bourke, Sir Harry Pannell, Norman (Kirkdale) Taylor, Sir Charles (Eastbourne)
Lewis, Kenneth (Rutland) Partridge, E. Taylor, Edwin (Bolton, E.)
Lilley, F. J. P. Pearson, Frank (Clitheroe) Taylor, W. J. (Bradford, N.)
Lindsay, Martin Peel, John Teeling, William
Linstead, Sir Hugh Percival, Ian Temple, John M.
Litchfield, Capt. John Peyton, John Thatcher, Mrs. Margaret
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield) Pickthom, Sir Kenneth Thomas, Leslie (Canterbury)
Lloyd, Rt. Hon. Selwyn (Wirral) Pike, Miss Mervyn Thomas, Peter (Conway)
Longbottom, Charles Pilkington, Sir Richard Thompson, Kenneth (Walton)
Longden, Gilbert Pitman, I. J. Thompson, Richard (Croydon, S.)
Loveys, Walter H. Pitt, Miss Edith Thorneycroft, Rt. Hon. Peter
Low, Rt. Hon. Sir Toby Pott, Percivall Thornton-Kemsley, Sir Colin
Lucas, Sir Jocelyn Powell, Rt. Hon. J. Enoch Tiley, Arthur (Bradford, W.)
Lucas-Tooth, Sir Hugh Price, David (Eastleigh) Tilney, John (Wavertree)
McAdden, Stephen Price, H. A. (Lewisham, W.) Turner, Colin
MacArthur, Ian Prior, J. M. L. Turton, Rt. Hon. R. H.
McLaren, Martin Prior-Palmar, Brig, Sir Otho Tweedsmuir, Lady
McLaughlin, Mrs. Patricia Profumo, Rt. Hon. John Van Straubenzee, W. R
Maclay, Rt. Hon. John Proudfoot, Wilferd Vane, W. M. F.
Maclean, SirFitzroy (Bute&N. Ayrs.) Pym, Francis Vickers, Miss John
McLean, Neil (Inverness) Ramsden, James Vosper, Rt. Hon. Dennis
Macleod, Rt. Hn. Iain (Enfield, W.) Rawlinson, Peter Wakefield, Sir Wavell (St M'lebone)
MacLeod, John (Ross & Cromarty) Redmayne, Rt. Hon. Martin
McMaster, Stanley R. Rees, Hugh Walder, David
Macmillan. Rt. Hn. Harold (Bromley) Rees-Davies, W. R. Walker, Peter
Macmillan, Maurice (Halifax) Renton, David Ward, Dame Irene
Macpherson, Niall (Dumfries) Ridley, Hon. Nicholas Watkinson, Rt. Hon. Harold
Maddan, Martin Ridsdale, Julian Watts, James
Maginnis, John E. Rippon, Geoffrey Webster, David
Maitland, Sir John Roberts, Sir Peter (Heeley) Wells, John (Maidstone)
Manningham-Buller, Rt. Hn. Sir R. Robertson, Sir David Whitelaw, William
Markham, Major Sir Frank Robinson, Sir Roland (Blackpool, S) Williams, Dudley (Exeter)
Marlowe, Anthony Robson Brown, Sir William Williams, Paul (Sunderland, S.)
Marples, Rt. Hon. Ernest Rodgers, John (Sevenoaks) Wills, Sir Gerald (Bridgwater)
Marshall, Douglas Roots, William Wilson, Geoffrey (Truro)
Marten, Neil Ropner, Col. Sir Leonard Wise, A. R.
Mathew, Robert (Honiton) Royle, Anthony (Richmond, Surrey) Wolrige-Gordon, Patrick
Matthews, Gordon (Meriden) Russell, Ronald Woodhouse, C. M.
Maudling, Rt. Hon. Reginald Sandys, Rt. Hon. Duncan Woodnutt, Mark
Mawby, Ray Scott-Hopkins, James Woollam, John
Maxwell-Hyslop, R. J. Seymour, Leslie Worsley, Marcus
Maydon, Lt.-Cmdr. S. L. C. Sharpies, Richard Yates, William (The Wrekin)
Mills, Stratton Shaw, M.
Montgomery, Fergus Simon, Rt. Hon. Sir Jocelyn TELLERS FOR THE AYES:
Moore, Sir Thomas (Ayr) Skeet, T. H. H. Colonel J. H. Harrison and
More, Jasper (Ludlow) Smith, Dudley (Br'ntf'rd & Chiswick) Mr. Edward Wakefield.
Abse, Leo Callaghan, James Edwards, Robert (Bilston)
Ainsley, William Castle, Mrs. Barbara Edwards, Walter (Stepney)
Allaun, Frank (Salford, E.) Chapman, Donald Evans, Albert
Awbery, Stan Chetwynd, George Fernyhough, E.
Bacon, Miss Alice Cliffe, Michael Finch, Harold
Baxter, William (Stirlingshire, W.) Collick, Percy Fitch, Alan
Benson, Sir George Corbet, Mrs. Freda Fletcher, Eric
Blackburn, F. Craddook, George (Bradford, S.) Foot, Michael (Ebbw Vale)
Blyton, William Crossman, R. H. S. Forman, J. C.
Boardman, H. Cullen, Mrs. Alice Fraser, Thomas (Hamilton)
Bowden, Herbert W. (Leics, S. W.) Darling, George Gaitskell, Rt, Hon. Hugh
Bowen, Roderic (Cardigan) Davies, G. Elfed (Rhondda, E.) Galpern, Sir Myer
Bowles, Frank Davies, Ifor (Gower) Ginsburg, David
Boyden, James Deer, George Gooch, E. G.
Braddock, Mrs. E. M. de Freitas, Geoffrey Cordon Walker, Rt. Hon. P.C.
Brookway, A. Fenner Diamond, John Gourlay, Harry
Broughton, Dr. A. D. D. Dodds, Norman Greenwood, Anthony
Brown, Alan (Tottenham) Donnelly, Desmond Grey, Charles
Brown, Rt. Hon. George (Belper) Driberg, Tom Griffiths, David (Rother Valley)
Butler, Herbert (Hackney, C.) Dugdale, Rt. Hon. John Griffiths, Rt. Hon. James (Lianelly)
Butler, Mrs. Joyce (Wood Green) Ede, Rt. Hon. C. Griffiths, W. (Exchange)
Grimond, J. Mallalieu, E. L. (Brigg) Skeffington, Arthur
Gunter, Ray Mallalleu, J. P. W. (Huddersfield. E.) Slater, Joseph (Sedgefield)
Hale, Leslie (Oldham, W.) Manuel, A. C. Small, William
Hall, Rt. Hn. Glenvil (Colne Valley) Mapp, Charles Smith, Ellis (Stoke, S.)
Hannan, William Marquand, Rt. Hon. H. A. Snow, Julian
Hart, Mrs. Judith Marsh, Richard Sorensen, R. W.
Hayman, F. H. Mason, Roy Spriggs, Leslie
Healey, Denis Mayhew, Christopher Steele, Thomas
Henderson, Rt. Hn. Arthur (RwlyRegis) Mellish, R. J. Stewart, Michael (Fulham)
Herbison, Miss Margaret Mendelson, J. J. Stones, William
Hewitson, Capt. M. Millan, Bruce Strauss, Rt. Hn. G. R. (Vauxhall)
Hill, J. (Midlothian) Milne, Edward J. Stross, Dr. Barnett (Stoke-on-Trent, C.)
Hilton, A. V. Mitchison, G. R. Swain, Thomas
Holman, Percy Monslow, Walter Swingler, Stephen
Holt, Arthur Moody, A. S. Sylvester, George
Howell, Charles A. Morris, John Taylor, Bernard (Mansfield)
Howell, Denis Moyle, Arthur Taylor, John (West Lothian)
Hughes, Emrys (S. Ayrshire) Mulley, Frederick Thomas, George (Cardiff, W.)
Hughes, Hector (Aberdeen, N.) Oliver, G. H. Thomas, Iorwerth (Rhondda, W.)
Hunter, A. E. Padley, W. E. Thompson, Dr. Alan (Dunfermline)
Hynd, H. (Accrington) Paget, R. T. Thornton, Ernest
Hynd, John (Attercliffe) Pannell, Charles (Leeds, W.) Timmons, John
Irvine, A. J. (Edge Hill) Pargiter, G. A. Tomney, Frank
Irving, Sydney (Dartford) Parkin, B. T. Ungoed-Thomas, Sir Lynn
Janner, Sir Barnett Pavitt, Laurence Wade, Donald
Jay, Rt. Hon. Douglas Pearson, Arthur (Pontypridd) Wainwright, Edwin
Jeger, George Peart, Frederick Warbey, William
Jenkins, Roy (Stechford) Pentland, Norman Watkins, Tudor
Johnson, Carol (Lewisham, S.) Plummer, Sir Leslie Wells, Percy (Faversham)
Jones, Rt. Hn. A. Creech (Wakefield) Prentice, R. E. Wells, William (Walsall, N.)
Jones, Dan (Burnley) Price, J. T. (Westhoughton)
Jones, J. Idwal (Wrexham) Probert, Arthur White, Mrs. Eirene
Jones, T. W. (Merioneth) Proctor, W. T. Whitlock, William
Kelley, Richard Pursey, Cmdr. Harry Wilcock, Group Capt. C. A. B.
Key, Rt. Hon. C. W. Randall, Harry Wilkins, W. A.
King, Dr. Horace Rankin, John Willey, Frederick
Ledger, Ron Redhead, E. C. Williams, LI. (Abertillery)
Lee, Frederick (Newton) Reid, William Williams, W. R. (Openshaw)
Lever, L. M. (Ardwick) Reynolds, G. W. Willis, E. G. (Edinburgh, E.)
Lewis, Arthur (West Ham, N.) Rhodes, H. Wilson, Rt. Hon. Harold (Huyton)
Lipton, Marcus Roberts, Albert (Normanton) Woodburn, Rt. Hon. A.
Loughlin, Charles Roberts, Goronwy (Caernarvon) Woof, Robert
Mabon, Dr. J. Dickson Robinson, Kenneth (St. Pancras, N.) Wyatt, Woodrow
McCann, John Ross, William Yates, Victor (Ladywood)
MacColl, James Royle, Charles (Salford, West) Zilliacus, K.
McKay, John (Wallsend) Shinwell, Rt. Hon. E.
McLeavy, Frank Short, Edward TELLERS FOR THE NOES:
MacMillan, Malcolm (Westen Isles) Silverman, Julius (Aston) Mr. Rogers and Mr. Lawson.
MacPherson, Malcolm (Stirling) Silverman, Sydney (Nelson)

7. Vehicles (excise): agricultural tractors, etc.

Motion made, and Question, That for the purposes of section thirteen of the Finance Act, 1959, a vehicle of which the two front wheels are less than a specified distance apart shall be treated as a three-wheeled vehicle.—[Mr. Lloyd.]

put and agreed to.

8. Income tax (charge and rates for 1961–62)

Motion made, and Question, That income tax for the year 1961–62 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 1960–61 exceed the standard rate for that year. 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. Lloyd.]

put and agreed to.

9. Income tax (surtax rates for 1960–61)

Motion made, and Question, That income tax for the year 1960–61 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 1959–60. 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. Lloyd.]

put and agreed to.

10. Income tax (dependent relatives)

Motion made, and Question, That the amounts of two hundred and ten pounds and one hundred and thirty-five pounds specified for the purposes of section two hundred and sixteen of the Income Tax Act, 1952, shall each be increased by twenty pounds. 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. Lloyd.]

put and agreed to.

11. Income tax (increase of relief for National Insurance contributions)

Motion made, and Question, That the amounts specified in Part I of the Third Schedule to the Finance Act, 1960, other than the amounts of five pounds substituted by paragraph 2 of Part II of that Schedule, be increased as follows, that is,—

  1. (a) those specified in paragraphs 1, 3 and 5 by three pounds, and
  2. (b) those specified in paragraph 2, 4 and 6 by two pounds,
but this Resolution shall not require any change in the amounts deducted or repaid under section one hundred and fifty-seven (pay as you earn) of the Income Tax Act, 1952, before the sixth day of July, nineteen hundred and sixty-one. 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. Lloyd.]

put and agreed to.

12. Income tax (double taxation relief)

Motion made, and Question, That provision be made—

  1. (a) whereby, as respects past as well as future periods, foreign tax is to be treated for the purposes of sections three hundred and forty-seven and three hundred and fifty of the Income Tax Act, 1952, and the Sixteenth Schedule to that Act, as payable if it would have been payable but for certain reliefs under foreign law;
  2. (b) for allowing credit for foreign tax under Part XIII of the Income Tax Act, 1952, on any income in respect of which such credit was allowed in a previous year of assessment;
  3. (c) for repealing the provision whereby for the purposes of the said Part XIII foreign local taxes are treated as not corresponding to income tax or the profits tax.—[Mr. Lloyd.]

put and agreed to.

13. Income tax (ministers' residences)

Motion made, and Question, That in connection with exemption from tax under Schedule A for the official residence of a clergyman or minister of any religious denomination, it is expedient to modify the law relating to the taxing of rents and to maintenance reliefs.—[Mr. Lloyd.]

put and agreed to.

14. Income tax (capital allowances, etc. for motorcars)

Motion made, and Question, That as respects vehicles of a type commonly used as private cars, provision be made for limiting capital allowances (with consequential amendments as to balancing allowances and charges), deductions from profits or gains or emoluments, and management expenses claims and maintenance claims.—[Mr. Lloyd.]

put and agreed to.

15. Income tax (assessments for Schedule E emoluments)

Motion made, and Question, That—

  1. (a) assessments to income tax (including additional assessments) made more than twelve months after the end of the year of assessment shall be made, as respects emoluments assessable under Schedule E, in accordance with the practice generally prevailing at the expiration of the twelve months, but without prejudice to any change of practice occurring before the sixth day of April, nineteen hundred and sixty-one;
  2. (b) it is expedient to extend the time for making and amending assessments (including additional assessments) to income tax in respect of such emoluments received in the year 1955–56 or any subsequent year, and to make consequential provision for the purposes of Chapter II (expenses allowances) of Part VI of the Income Tax Act, 1952.—[Mr. Lloyd.]

put and agreed to.

16. Income tax (returns of interest payments by Industrial and Provident Societies)

Motion made, and Question, That subsection (4) of section four hundred and forty-three of the. Income Tax Act, 1952, be extended so as to cover share interest as well as loan interest.—[Mr. Lloyd.]

put and agreed to.

17. Employers' surcharge

Motion made, and Question, That provision be made for imposing and withdrawing surcharges on employers liable to pay flat-rate contributions under the National Insurance Acts or the corresponding enactments in Northern Ireland, so, however, that this Resolution shall not authorise a surcharge exceeding four shillings a week for each person for whom such a contribution is paid or the imposing of surcharges in respect of some, but not all, persons of any description relevant for determining the amount or aggregate amount of contributions payable under those Acts or enactments.—[Mr. Lloyd.]

put and agreed to.

18. Profits tax (increase of rate)

Motion made, and Question, That as from the beginning of April, nineteen hundred and sixty-one, the rate at which the profits tax is to be charged by virtue of subsection (1) of section twenty-five of the Finance Act, 1958, shall be increased from twelve and a half per cent. to fifteen per cent.—[Mr. Lloyd.]

put and agreed to.

19. Profits tax (charges consequential on income tax amendments)

Motion made, and Question, That it is expedient to authorise any charge to the profits tax which may result from amendments of the law relating to allowances, deductions or charges for income tax purposes.—[Mr. Lloyd.]

put and agreed to.

20. National savings stamps and gift tokens

Motion made, and Question, That there shall be paid into the Exchequer any sums received by the Postmaster General from the sale of national savings stamps and national savings gift tokens, and that for purposes connected with such stamps and tokens it is expedient to authorise the issue of sums out of the Consolidated Fund and the borrowing in any manner authorised by the National Loans Act, 1939. of money for the purpose of providing or replacing sums to be so issued.—[Mr. Lloyd.]

put and agreed to.

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 or for all goods to which any of the several rates of tax at present applies.—[Mr. Lloyd.]

5.22 p.m.

Mr. Hugh Gaitskell (Leeds, South)

I rise in accordance with the customary traditions of the Committee to offer on behalf of all of us our congratulations to the Chancellor of the Exchequer on his Budget statement. These congratulations, again in accordance with custom, relate of course to the form and manner of its presentation.

The Chancellor of the Exchequer has had an interesting political career. He is best known, I suppose, to the House as a Foreign Secretary, with whom we did not for the most part agree. When he went to the Treasury there were those who said that this was not quite the right job for a man who had spent so much of his time on foreign affairs, but I recall very well the days when the right hon. and learned Gentleman was in opposition and we who are now on this side of the House were in power. He then certainly was, as a Conservative back-bencher, an extremely effective critic of financial policy. For my part, therefore, I was not surprised when he moved to the Treasury, and one expected from him a considerable display of expertise in his new post.

There are always advantages in having a new Chancellor of the Exchequer, because at the very least he is not tied down by the mistakes of his predecessor. He is free to say what he likes about former Chancellors of the Exchequer, and there are many precedents for a Chancellor, on the Conservative side particularly, saying to the House rather unkind things about those who went before him. The right hon. and learned Gentleman is no exception.

I could not have bettered the right hon. and learned Gentleman's indictment of the general state of the economy after more than ten years of Tory rule. Prosperity was definitely based on an insecure foundation and the situation in industry was most unsatisfactory. Our exports were quite inadequate, and there were many other things of a critical character which fell from the right hon. and learned Gentlemans' lips this afternoon. I agree with all that, but I think that he might have rubbed it in a little more.

If we consider the situation with which we are confronted today, we have to recognise that for a year now there has been virtually no expansion whatever in industrial production and that since 1955 we have had only one year in which production was expanding, admittedly fairly fast during those 12 to 15 months. But we are now stagnant again, and what is even more serious—and this is what the Chancellor admitted—is that in 1960 we had a balance of payments deficit on current account of not less than £344 million.

This is a very high figure indeed. One must contrast it with the aim repeatedly stated by Chancellors of the Exchequer from the Conservative Front Bench that we should have a surplus of at least £300 million as an average figure over the years. But not only that. This deficit of £344 million took place in a year when conditions favoured us, when so far as the balance of payments was concerned the terms of trade were in our favour, not against us, as for instance they were so heavily against us in 1951. This took place at a time when production was not even expanding, and, therefore, one would not have expected on that account a rise in imports, which is indeed one of our problems.

I therefore cordially share the Chancellor's anxieties about the present situation. I wish I could say that his analysis of the situation with which we are confronted was matched by the measures he put forward to the Committee, because I cannot feel on any ground that they are adequate to deal with the situation.

Mr. William Ross (Kilmarnock)

Or relevant.

Mr. Gaitskell

Or indeed relevant They do not exist.

What are the major problems? They are the expansion of exports, in a framework of rising productivity. Is there a single thing which in this Budget directly contributes to either of those? I cannot see it. There is no encouragement to investment here. It is all very well for the Chancellor to dismiss this in a sentence as not the only thing that matters. Admittedly it is not the only thing that matters, but it matters a great deal, and the fact remains that although manufacturing investment has been rising, though I have not had time to check the figures, I think it is now only about at the 1957 level. It ought to be much higher and much nearer to the level of our European competitors, and one would have thought that this year all efforts would have been concentrated on anything that would increase productivity. But not a bit of it.

On the Chancellor's proposals, I can only give my first reactions. My right hon. Friend the Member for Huyton (Mr. H. Wilson) will develop our views at greater length and in detail tomorrow. The Chancellor has, first of all, proposed to give the Government power to vary indirect taxes throughout the year at any time between Budgets, and also to impose, modify or take away what I suppose could be called a payroll tax. In my opinion it would be foolish to dismiss this idea out of hand as just another interference. Certainly we would not oppose in principle giving a power to act between Budgets. There is something slightly absurd about waiting each year for a Budget before one can take action in the fiscal field, but one would need to think very carefully, not only about the particular idea that is involved here, but also still more about any application that might be made of it.

I would point out certain difficulties that seem to me to arise. First, on the proposal to vary indirect taxation, I do not see any special difficulty of a technical kind in varying the rates of indirect taxes. No doubt strong feelings would be expressed about this if and when the taxes were imposed, but I would have supposed that there would have been difficulties about varying Customs duty from time to time, apparently without any regard to any international obligation under G.A.T.T.

Mr. Selwyn Lloyd indicated dissent

Mr. Gaitskell

The right hon. and learned Gentleman says that is not so. Perhaps he would clear that up.

Mr. Lloyd

That would be one of the specific exceptions which I made. It certainly cannot apply to any kind of import duty.

Mr. Gaitskell

In that case it is a very big exception. Clearly, if one starts from the cases in which there are no duties at all today, they are ruled out from being affected by this. Nor could one do anything which was in conflict with the margin of preference which is allowed under G.A.T.T. The significance of this as far as Customs duty is concerned is, therefore, not very great. I am obliged to the right hon. and learned Gentleman, because it is important to clear that up.

There seem to be two great difficulties about the payroll tax. The first is that the degree of employment and unemployment is not the same all over the country. It would be all very well to impose a payroll tax in what used to be called a red area, because there was a great shortage of labour in that area and one could anticipate that the result of such a tax would not be adversely to affect employment. It would be quite another thing to apply such a tax—and it must be applied nationally—in development areas where there was already unemployment. This is one great difficulty.

The second difficulty which I see is that when one imposes a tax of this kind, by its very nature, one must increase the costs of those industries which use proportionately a large amount of labour. It is not their fault that they do this. It is not the fault of the coal mining industry that wages happen to be a much larger proportion of total costs of production than they are, for instance, in the electricity supply industry, which is a capital intensive and not a labour intensive industry, or, as my right hon. Friend the Member for Battersea, North (Mr. Jay) points out, in the chemical industries. We shall certainly distort the price structure, which, as far as I remember, is something which Conservative Chancellors of the Exchequer have always been very hesitant about on previous occasions.

This is, however, a matter on which I would not take a very firm line either way. One needs to know a great deal more about it and one would be guided in one's attitude to it by the way and the circumstances in which such taxes were imposed and modified and the use which was made of any revenue obtained from the tax.

We welcome some things which the right hon. and learned Gentleman has done; we certainly do not object to them at all. It was common sense, as I think my hon. Friends agree, to increase the tax allowance in respect of National Insurance contributions. It is a flat-rate allowance and, therefore, since the National Insurance contributions have been raised, it is only right that the allowance should be raised, too. If the right hon. and learned Gentleman had not done that, he would certainly have been dealing very hardly with the vast majority of the population.

We welcome, for what it is, the small increase in the dependants' allowance. The House as a whole will clearly welcome the tax relief to be afforded to those receiving compensation for suffering and loss incurred as a result of the Nazi régime. All those things are to be welcomed, and there are other minor changes to which I do not think we object.

When it comes to the taxation side, I must say outright that I am glad that at last the Chancellor has done something to deal with the problem of profits on television. He has imposed a modest tax on the advertisements of commercial television. It is something. It is the thin end of the wedge. But let him have no illusions; as far as we are concerned, the immense profits which have been virtually handed to these companies on a plate will still be very large, even after this tax has been imposed, not least because it is a tax not on their profits as such but on their advertising, and it may well be that they can pass a great deal of this on to the firms which advertise with them.

We do not oppose the proposal for the increased tax on hydrocarbon oil. Like the tax on television advertisements, this has been part of the Labour Party's policy in recent years, and we are glad that this has been done. We think that there is a case for it, particularly in the light of the relationship between oil and coal to which the right hon. and learned Gentleman referred.

Having said that, I must say that I regard the other main measures which the Chancellor has introduced as being both inadequate and unjust. I will comment first on business expenses. Are we to suppose that the people who get away with a great deal in this respect—and it is common knowledge that this is a scandal—will be terribly exercised because the annual depreciation allowance on a motor car, as I understand it, is to be increased from 9 per cent. to 12½ per cent. and the total amount which may be written off in a single year is to be limited to £2,000? No doubt a few people who run Rolls-Bentleys will be a little concerned about this, but nobody else will be much influenced by it. As I understand it, that is what the Chancellor proposed. If he imagined that his very harmless words about this whole matter would cause any despondency among business men, then he had only to look at the face of his hon. Friend the Member for Kidderminster (Mr. Nabarro) to see what are the true facts in this matter.

I come finally to the major change which the right hon. and learned Gentleman has proposed, this very substantial reduction in Surtax liability. I should like to make it plain that for many years we have taken the view generally that the taxation system was in great need of reform because it imposed an unduly high burden on those who earned their income and were subject to earned Income Tax as compared with those who got their money much more easily than either by the sweat of their brow or by their brains or in any way which is earned. On that account, we have repeatedly recommended a change in the whole situation by which speculative profits and capital profits would be made liable to taxation and the present evasion of death duties and inheritance taxation would be prevented.

In opposing the Chancellor's proposal, I do not want there to be any misunderstanding. We are by no means satisfied with the present situation. If the right hon. and learned Gentleman had proposed a far-reaching measure of fiscal reform in the course of which he proposed to impose a capital gains tax which, whatever he may say, is long overdue in this country; if he had proposed a mere redistribution in the same income group between those who get their money very easily and those who get it in a more difficult way; if, above all, he had brought it forward in a year when we had not just had a long Parliamentary battle about the increase in National Health Service charges and contributions, there might conceivably have been something to be said for some relief to the Surtax payers, together with other direct taxpayers.

But the facts are these: the right hon. Gentleman takes roughly, in round figures, in a full year, £60 million off Surtax. It is very close to the amount which he has imposed in the Health Service contributions and charges. What happens is that a man on £10 a week is to pay 10d. a week more in contributions and is to pay more when he goes to the doctor for his prescription, and the man earning from £2,000 to £5,000 a year is to be substantially better off. Nothing which the right hon. and learned Gentleman says can get away from that direct comparison.

Furthermore, this is done at a time when immense capital profits continue to be made. I think I am right in saying that the rise in the average value of Stock Exchange shares, of equities, in the last six months is at least between 10 per cent. and 20 per cent. It is at any rate very substantial. Of course, there are pauses; shares do not go up in value all the time. But if we take the figures, for instance, since 1953 we see that the increase in the index of equity shares is about 400 per cent. It is enormous. Even in the last couple of years the rise has been very substantial. Yet nothing is done about this. We all well know that it provides a very large increase in the available purchasing power to a very small number of people. It is high time that they paid their fair share of the contribution to the revenue.

There is one other thing which I would say to the right hon. and learned Gentleman in connection with his proposals for relieving the Surtax-payers. In the early part of his speech he mentioned one danger which confronted the economy today; he was concerned about the tendency towards rising costs. He pointed to the fact that wages had been rising faster than productivity.

I would make two comments on that. Whether wages rise faster than productivity depends not only on whether wages rise but also on whether productivity rises, and this is the trouble—that productivity has not been rising. For the last year it has almost certainly fallen, because we have a rather larger number of people in employment and we have a stagnant industrial production

Secondly, over and above that, does the right hon. and learned Gentleman imagine that the organised workers will feel very disposed to respond to his appeal to exercise self-restraint when they are obliged to pay not only about £50 million more in Health Service contributions, but about £240 million more in the new pension scheme contributions, largely to relieve the Exchequer and at a time when the Surtax payer is being relieved to the tune of £60 million? The Chancellor of the Exchequer may say that all this is offset by Profits Tax, but the rise in profits in the last year alone fully justified a further small increase in Profits Tax.

I sum up the Budget in this way. It seems to me that all Budgets should be tested by two criteria. First, will they benefit the economy as a whole? Will they lead to an expansion of production and, at the same time, a favourable stable balance of payments? Secondly, will they distribute the income of the country more equitably?

On both these counts this Budget is to be condemned. It does nothing whatever to stimulate production, nothing whatever to stimulate exports, and unquestionably, so far as it makes any changes at all, taking into account earlier changes—they must be taken into account, because they are a form of tax and should have been made at the time of the Budget—there can be no doubt that it makes for a more unfair distribution of income, and on that count alone is also to be condemned.

5.41 p.m.

Vice-Admiral John Hughes Hallett (Croydon, North-East)

The right hon. Gentleman the Leader of the Opposition began by saying that as was customary he would only criticise, or chiefly criticise, the manner in which my right hon. and learned Friend delivered his Budget statement. However, he devoted a good deal of his time to the substance of what was in the Budget. I am not sure that he entirely and correctly apprehended the precise nature of many of the proposals.

This is I believe my maiden speech in a Budget debate. One great advantage when a non-expert is speaking is to be called first before the experts can be called and also at a time when, by tradition, fortunately most of my hon. Friends have gone to listen to further details from my right hon. and learned Friend the Chancellor of the Exchequer.

I must say, for what it is worth, that I regard the Budget as one of great courage and wisdom. I am sure that very few people expected before my right hon. and learned Friend rose that he would propose an increase in taxation of no less than £80 million a year. I am equally sure that his judgment is correct and that that is the right thing to do. Having heard the Budget statement, I shall certainly soften some of the criticisms that it had been in my mind to make of the manner in which our economic affairs have been conducted in the past few years.

I was also delighted to hear my right hon. and learned Friend say that he is a firm believer in the value of administrative economies. Many of us on this side of the Committee have laboured, on the Estimates Committee, on the Public Accounts Committee and, when possible, in Estimates debates on the Floor of the House of Commons, to criticise the more detailed aspects of expenditure. We have had very little change in the past, because we have always been met by the argument that little can be done administratively and all depends upon policy.

I was also pleased and relieved to hear my right hon. and learned Friend say that the main purpose of his Budget is to counter inflation. I remain convinced that that is the principal threat facing the country today, and indeed it is about that that I have really risen to speak. We must face the fact that my right hon. and learned Friend inherited a difficult situation. He has certainly made the best of it, although I daresay that he and many of his colleagues must now regret that they did not give more robust support three years ago to my right hon. Friend the present Minister of Aviation when he tried to rout the squander maniacs once and fox all.

We must face the fact that the country has once again been spending too much. It does not matter in which quarter we look—the Government, local government, the nationalised industries and private industry are all to blame.

Mr. George Thomas (Cardiff, West)


Vice-Admiral Hughes Hallett

That is part of Government expenditure. I strongly criticise the increase of £49 million, or whatever the sum was, in this year's Estimates, but I hasten to add that that is a drop in the ocean compared to the general increase in Government expenditure.

It is not only a matter of corporate expenditure. Almost every individual in the country who has been able to lay his hand on the cash has been spending too much. I say this notwithstanding the rise in the percentage of savings. It is the underlying reason for the adverse balance of payments situation. It is also the reason for the regrettable renewed rise in the cost of living.

I very much doubt whether even after twenty-one years of this nightmare fall in the value of money the effect it has on the tragic minority of people whose main income is a fixed one is sufficiently understood. We argue at great length about the rate of Income Tax. But how little that matters to the great majority of people compared to the cost of living. The present rate was fixed in the 1959 Budget when the index stood at roughly 110. Today the index has risen to 113.

It is interesting to note that to a married man who retires on an income or pension of £750 a year the effect of the 3 point rise in two years is the same in round figures as if there had been an increase in the standard rate of Income Tax of 1s. 6d. in the £. In other words, even for those who enter retired life with well above the average income of retired persons, the comparatively small rise in the cost of living which has taken place in the last two years has had twice as much adverse effect as the benefit they gained from the large reduction in the standard rate of Income Tax which was made two years ago.

I must be fair and admit that in the special case I have taken the £750 a year man has been approximately compensated by the rise in the rate of National Insurance pensions which we approved earlier this year. However, it is also only fair to say that that increase was made for very different reasons. It is largely fortuitous that that should be so.

I invite the Committee to consider the effect of the change in the cost of living, small though it is often represented as being, on the more wealthy members of the community. Let us take the case of these young executives—they must be very brilliant—who earn £2,500 a year. If my calculations are right, the purchasing power of their net income has fallen by £46 a year in the last two years. The Surtax concession that they will enjoy from 1963 onwards is worth £40.

For a short time—rather less than three years—it seemed that at last there was some hope that the value of the £ had been stabilised. That hope has now faded, and I very much doubt whether any one or any event will ever revive it. The prudent man will surely now abandon the expectation of living to see a stable currency, and will seek to order his affairs accordingly.

Let us, therefore, consider for a moment the causes and consequences of this state of affairs. Many experts enlarge upon the precise reasons for rises in the cost of living. They use economic jargon that I do not pretend to understand—I am not sure that they themselves always understand it. My own explanation, as a non-expert observer of the industrial scene, is simply that Britain has invented and perfected a method whereby new inventions that are in-intended to lower production costs have the reverse effect of raising them.

I want to take an imaginary example. Let us suppose that some new automatic machine tool is invented to make car bodies. Let us suppose that, at a cost of £1 million, some manufacturer installs it in his works. He does so because he believes that it will enable the work now done by, say, 2,000 men to be done by, say, 1,000 men, and thus reduce the cost of the final product. But what happens, as we all know, is very different.

To begin with, there is a redundancy dispute; probably the threat of a strike. In the end, it is agreed that instead of 1,000 men being discharged only 500 men will be discharged, leaving at work on the process 1,500 men of whom 500 will be employed gazing at machines perfectly capable of working without any human scrutiny at all.

The next stage is a wage claim, starting from shop stewards of those 1,500 men and based on the argument that their productivity has gone up—a wage claim that is almost invariably conceded in whole or part. Then, of course, the shareholders who put up the capital expect higher profits and higher dividends. At the end of the day, the firm is fortunate if it succeeds in holding the cost of the product, let alone reducing it.

That, however, is only the beginning of the process. If that were all, it would be rather hard to justify even mentioning it in a debate on our economic state. The fact that there has been a rise in the wage rates and earnings in one group in this part of the engineering industry sets off a kind of chain reaction and leads to a corresponding rise in the wages and salaries in every branch—

Mr. Ellis Smith (Stoke-on-Trent, South)

The engineers had no rise in two years.

Vice-Admiral Hughes Hallett

If I may say so, the hon. Member has interrupted me with a point that is not relevant to the general principle that I am describing. I am also surprised to learn that the engineers have not had a rise for two years.

That is not the end of the process. The whole Committee knows that when there is one rise in one sector of the industrial team today it is followed by demands for rises in sympathy inside industry and, indeed, by automatic rises in the Civil Service, the fighting Services, and so forth, whose wage conditions are reviewed automatically at regular intervals by relation to the industrial wage rate.

In an authoritarian State, I have no doubt that all this would be avoided by the control of wages and salaries, but that is something we know would be quite unacceptable and unwanted by anyone in this country. The alternative that we have so far seen is that Minister's appeal for restraint. I suggest that such appeals are a sheer waste of time and breath. The trade union leaders, the Ted Hills of this world, the men who speak for professional associations on various wage negotiating committees are not open to appeals of that nature. One and all, very understandably, they are out to get as much as they possibly can for their own members, and let the devil take the rest—

Mr. Charles Loughlin (Gloucestershire, West)

I am sorry to interrupt the hon. and gallant Member, but he must not make attacks like this on trade union leaders. Does he not recognise that a tremendous contribution has been made by the trade union movement to the increased productivity we have enjoyed over the last few years? Instead of simply attacking the trade unions, would it not be better for him to outline to the Committee how he would apportion the increased productivity arising from the introduction of new methods of production? We may be getting somewhere then. Otherwise, he is simply repeating that which has been said time and time again, to no purpose.

Vice-Admiral Hughes Hallett

I can answer the last part of the hon. Gentleman's question at once. I should apportion the increased benefits of productivity to a progressive lowering of prices. But the more interesting part of the hon. Member's intervention was his description of my observation as an attack. If he likes so to interpret it he is welcome to do so, but I was careful to say that appeals for restraint to those who take part in wage negotiations are a waste of breath because the job of those people is to secure the best possible return for their own members—

Mr. Loughlin

Then why refer to Ted Hill?

Vice-Admiral Hughes Hallett

Because, as I understand it, he happens at the moment to be the Chairman of the Trades Union Congress.

I have explained why I am so much afraid that this disastrous process of rise in prices will continue. It is a process whereby those members of our population—that is to say, the majority of the population—who are in a strong bargaining position, because they are at work, ceaselessly improve their own standards of living at the expense of those on fixed income; that is to say, mainly at the expense of the elderly and the retired. There is nothing whatever new in all this. I can only say to hon. Members opposite that I am thankful to say that the process has been somewhat slower under Tory rule than it was in the six years immediately after the war when they were in power.

What concerns us today is not the past but the future. What is likely to happen when people as a whole realise that there is no hope of stable prices? This matter was carefully considered in the First Report of the Council on Prices, Productivity and Incomes, under the Chairmanship of Lord Cohen, a Report that the Opposition derided so much but which, none the less, I venture to think had some very wise things to say under this head.

I want to quote one or two sentences from paragraphs 96 and 98 of that first Report. It stated: Once, however, a steady upward trend of prices came to be generally accepted and anticipated, something would have to be done to mitigate the rentiers' losses—otherwise the Government would cease to be able to borrow any money on fixed interest terms. In the summer of 1957 there were, indeed, signs that such a development was far from being merely an academic possibility. Later in paragraph 98, describing what might be done, the Committee says: Wages, salaries and pensions could be tied to some index of the cost of living. Even interest and principal of Government and other loans, and the premiums and benefits of insurance contracts could, in theory, be adjusted in the same way. It seems, indeed, highly probable that if the rise in prices is not successfully checked, sliding scale adjustments of this kind will naturally develop under the pressure of the groups who suffer most from the present regime. The Report goes on in the same paragraph to point out the dangers and disadvantages of any such pressure. It says that the most important result would likely be that the upward movement of prices would cease to be slow. The final sentence in this paragraph, which we ought to note carefully, is this: The final result might well be a situation so disastrous that a remedy would have to be sought at all costs, including perhaps heavy unemployment and distress. If that tragedy occurs, let no one blame the Government. The responsibility will rest fairly and squarely on both sides of industry and also on the leaders of the professional associations.

I submit that the Government have a plain duty to help these people in fixed income groups, and to do so even if certain risks are involved. Besides that, we on this side of the House fought the last election on a pledge that elderly people should share in the growing prosperity of the country. So far that pledge has been honoured in part.

Mr. G. Thomas


Vice-Admiral Hughes Hallett

It has been honoured more than fractionally in respect of those whose main income takes the form of National Insurance income. It is right that attention should first be paid to those of our fellow countrymen who are the worst off.

Mr. Loughlin

The Surtax payers!

Vice-Admiral Hughes Hallett

The millions who have retired on savings or who depend chiefly on an occupational pension are worse off, both absolutely and relatively to the working population, than they were at the time of the last General Election. The question I therefore ask is: how can they be helped? In the case of public service pensioners, who add up to an important proportion of this body of people to whom I am referring, and in the case of retired employees of the nationalised industries, the answer is simple. The solution, one which lies within the power of the Government to introduce, is to lay down the principle that uniform pension rates should be introduced—uniform, that is to say, for any rank or grade and independent of the date of retirement.

I am well aware that that has always been the claim of the various pensioners' organisations. I myself supported the Government in resisting that claim when we debated the Pensions (Increase) Act, 1959, because at that time I sincerely believed and hoped that we had at last stabilised the value of the £. I could not take that line again because I am now sure that there is no other equitable solution.

Exactly the same can be said of those who depend upon occupational pensions paid by industry. To be fair, many private concerns have an excellent record in implementing the policy. But although the Government have no direct powers in this field, I fancy that they have a powerful weapon in the new graduated insurance scheme. Surely it would only be necessary to raise the upper limit of the earnings which attract graduated contributions, and in due course graduated pensions, in order to compel firms which run private schemes to make comparable adjustments.

There remains the question of those who save privately, whether they do so by means of personal investment or through some life assurance policy. In neither case can anything be done retrospectively. But I for one support the idea of a special type of Government bond to help those people. I do not propose to go into the details because there are many forms which such bonds can take, but one thing they share in common. They are personal to the individual who buys them. They bear the date on which they are bought. They bear some index—I would prefer the average earnings index rather than the cost-of-living index—and the rate of interest which they pay varies during the life of the individual purchaser as the index varies. Such bonds are redeemable at par—no less, no more—during the life of the purchaser and they are compulsorily redeemable at his death.

Moreover, some relief to the Exchequer could be obtained by the issue of such bonds because I have little doubt that a lower rate of interest, rather than the current rate of interest, would attract many investors. I have no doubt that many people would accept perhaps 4½ per cent. today in exchange for a hedge against further inflation. Other countries, as I understand it, have long since adopted this expedient when they have come to admit that their currency is unstable, and, with great regret, I think that that time has now arrived in our own country.

I have no doubt that these measures can and will be denounced as inflationary, and of course they involve the risks that the Cohen Committee foresaw, but so also does complete inaction. What is the alternative? What are commonly called the old middle-classes of this country who have already lost so much are not going to be fooled for ever and ever; neither are they going to give up saving and making provision for their old age. What they can do, and what I believe they will do, is increasingly to revert to the older methods of saving. That is to say, they will save in kind rather than invest. They will try to lay in sufficient stocks of durable goods to last them their lifetime. They will invest increasingly in bricks and mortar, and indeed they are doing so now. Finally, I dare say some would even prefer to save in the form of cash rather than risk its investment and subsequent reinvestment, thus possibly inflating the currency still further.

Such a prospect should be taken very seriously by the apostles of an expanding economy, because unless we are careful, one important source of money for capital investment will be progressively cut off. Should that happen, I say again that industry itself will only have itself to thank because in the eyes of millions of people in this country an expanding economy has come to be synonymous with the progressive lowering of their own standard of living.

My plea, therefore, is on behalf of those who live on fixed incomes. I am thinking not only of those who live on very small fixed incomes whom my hon. Friend the Member for Tynemouth (Dame Irene Ward) champions so often, but people as a whole who live on fixed incomes. By all means let us do our utmost to increase the nation's wealth and productivity—and I am sure that we shall hear a great many platitudes on that subject during the course of this three-and-a-half day debate—but do not let us attempt this expansion at the expense of those deserving people.

6.10 p.m.

Mr. Ellis Smith (Stoke-on-Trent, South)

I believe that the immediate result of this Budget will be that the House will be presented with the most controversial Finance Bill for many years, and I am fortified in that belief by the excellent preliminary observations made by my right hon. Friend the Leader of the Opposition. I want to place on record my objection to the continual use of Parliamentary time in the way that it is used in this Committee. In my view, which is based on past experience, one does not achieve the best results from having a Budget Statement and then the debate on that and the debate on economic affairs at the same time. In my view, to obtain the best results, from the point of view, particularly, of our country's interests as a whole, it would be better to have two separate debates in two separate weeks so that adequate attention could be given in a comprehensive way to both finance and economic affairs. Moreover, the time has long since arrived when economic problems should be dealt with by a separate Ministry, not by the Treasury as they are now.

I listened to the Chancellor with great care. I am very pleased that, at last, a Chancellor of the Exchequer has made a statement about the proposed action to deal with public expenditure. The right hon. and learned Gentleman went on to say that we must look five years ahead, and he is having a study made. I accept the first step taken in that direction but, if that is correct action, then it is logical also to expect similar action in economic affairs. I hope that this will be stressed more and more in the future.

As a result of past experience, I suspect that nothing much will come out of the Plowden Committee. The Chancellor said that exports are disappointing, with consequent serious effect on our balance of payments, and the position is not at all satisfactory. Any student of economic affairs will accept that. The right hon. and learned Gentleman then said that our Budget objective would be to increase exports and we should be able to gain for ourselves a larger share of expanding world trade. We must, he said, take into account future trends. My own view is that one or two of the proposals contained in the Budget will discourage exports and will not assist in our balance of payments problems.

I welcome the Chancellor's acknowledgment that the tax system needs simplification and his statement that the difficulties would be examined before the next Budget. His proposed surcharge tax on employees is, in my view, a retrograde step. It will tend to discourage exports. It will tend to increase the cost of production and, therefore, to lower our competitive position in relation to other countries. Several of his proposals of that kind should receive very searching examination by all those who have any regard for the position of our export trade.

This week, as I say, opens Parliament's annual review of our economic and financial affairs. For generations, the people have toiled to build up our great industrial Britain. I believe that it could become a greater Britain provided that we adopted the same policy in economic affairs as the Chancellor is at last proposing for financial matters. Britain could become much greater in this modern world if we planned and organised to enable us to fulfil his objective.

If our resources were organised and regulated in accordance with plans prepared for the future, this would be consistent with several of the proposals which the Chancellor made for dealing with finance. In my view—this applies to this side of the Committee in particular—it is time we accepted the military limitations imposed upon us by the post-war contracted world and the emergence of the two gigantic Powers, and it is time we admitted—this applies to the whole Committee—that we cannot stand the colossal military expenditure for which we have been responsible for many years. It has gone up this year to £1,656 million. In my view, we have lost fifteen years. We have still time, though not very much, to make up for those fifteen years.

If any hon. or right hon. Member on either side of the Committee disagrees with anything I say, then I invite him to go to the Library and ask for the book entitled, "The Long Revolution". I invite him to study particularly the chapters dealing with Britain in the 1960s. Hon. and right hon. Members opposite should read pages 294 and 295. I ask my hon. Friends, particularly those who met in mansions after the last General Election and proposed to retreat, to read page 298, read it again, and then read pages 211 to 235.

One of the most important needs in this country today is to have complete confidence that democracy can deliver the goods. Our country today, especially on the economic and industrial side, could be made just as dynamic to meet our peace-time needs as we made it in war time, provided that a correct policy of the kind I am outlining were adopted.

Some of us remember the days when the Conservatives were completely discredited in the eyes of the people of this country. It was my hon. Friends, and, even more, the trade union movement, who were responsible for bringing about that fundamental change in our nation which led to the Coalition "Win the War" Government. I believe that we are slowly but surely moving towards a similar situation in economic affairs, and that is why I make my plea today. I am reinforced in what I say by opinion represented in growing measure on the other side of the Committee, particularly in large industrial organisations, which recognises that the time has arrived when we should be applying a policy more in tune with the 1960s in dealing with our economic affairs.

I am reinforced in what I say by some of the most competent economic opinion in the country. For example, I have here an extract from a fine publication which deserves a much bigger circulation, namely, the quarterly publication of the National Institute of Economic Review. The key to understanding our present economic trend is to be found in a few extracts from it. The first extract that I wish to quote is this: It seems unlikely that Britain can hope to do much more than balance her current account this year. Britain's exports are still heavily concentrated in sterling area markets. She probably has less chance of keeping her present share there than of increasing it elsewhere. Taxation in Britain is not exceptionally heavy compared with other European countries. On page 18 there is this sentence: Britain's poor export performance during last year was the more surprising because, for the first time for a number of years, the change in the area pattern of world trade was not unfavourable to her. I put a number of searching Questions to the President of the Board of Trade, to the Financial Secretary to the Treasury and to other Ministers in order to obtain from them statistical evidence to illustrate the correctness of the line that I was, and am now, taking. It would take too long to quote extracts from those Answers, which I should have liked to do in order to reinforce my case, but they are on record. Therefore, I will not take up time by quoting them.

One of the greatest indictments of our past economic policy appeared in the Daily Mail of 13th March. It drew attention to a devastating letter which had appeared in The Times and then went on to make a critical analysis of the economic policy being pursued by the Government. I believe that what it said was correct. When one considers the position in the county from which I come and the great change which has taken place over the years, the inevitable question which arises is, are we putting too many of our eggs in one basket? This question arises mainly from the fact that we have an uncontrolled economy. There is no regulation and no planning of the economy, as the Chancellor is now proposing. I do not say that this is the complete explanation of today's problems, but I say that it is part of it.

The proportion of Lancashire's cotton products which is exported today is 10 per cent. compared with 85 per cent. in 1912. More recently, the United Kingdom's share of an increasing volume of world trade in cotton and man-made fibre piece goods dropped from 23 per cent. in 1937 to 6 per cent. in 1959. There is no attempt to regulate or to organise our economy. We leave it to private enterprise. I am the first to give credit where it is due, but I say that the responsibility for and the organisation of our economy should be a national responsibility so that we may attain the best export results possible from the great work which is being done by the manufacturing industries of this country.

I have here a reply which was given by the President of the Board of Trade to a Question which I asked on 17th May last year. It concerned the export of manufactured goods from the United Kingdom, Germany, France, the United States, and Japan, among others. Here again, I wish to save time and therefore will not quote what was said, as I should have liked to do. However, any student of economic affairs is bound to be concerned at the continuous dwindling in our share of world trade as shown by official statistics presented by the President of the Board of Trade on 17th May, 1960. I could give reply after reply by Ministers on similar lines.

The Economic Survey is further evidence of the need for a national plan. There is more need for a national plan in Britain than in any other country. The central Government have less influence on our economic affairs than that of any other country. We are more dependent on exports than any other country. Because of the high degree of skill of our workpeople and the techniques which have been developed—we have led the world in the development of patents and technology over the years—there is more good will for the people of our country and more demand for the products of our industry than for those of any other country. We should be capitalising on this and doing justice to our past in order to safeguard our future. At present, we are not doing this. The vested interests in this country exert a more powerful influence on economic affairs than they do in any other country. Therefore, instead of retreating from ideas, as some people do, I believe that there is more need for them than ever.

This is an extract from the Economic Survey. The Government …recognise the desirability of having a higher and steadier rate of growth, provided that this can be done without risk to the balance of payments, in order to encourage the sense of security and confidence in the future which are so important for business development". I accept that wholeheartedly. That is as sound an economic proposition as it is possible to get. In order to do justice to the ideas in the Economic Survey, hon. Members should be approaching our problems in a twentieth century way. In order to be worthy of the people in the export industry, which is doing so well, we should be harnessing our national resources to more modern ideas.

Some of us stand on good ground in this matter, because we have consistently and insistently advocated what I have been saying for many years. At last we are receiving increasing support—in many leading articles in newspapers, from many financial editors, from the Federation of British Industries, and from institutes concerned with economic affairs. We welcome the visitors from France to inform certain people in London of the results of their economic planning.

On 6th April, 1961, the Guardian stated: 'it is axiomatic that the growth of the economy must be interlocked with the growth of exports'. The President of the Board of Trade will accept that. The question is, do hon. Members insist that the Government should adopt a policy following the lines of that quotation? The Guardian went on: Endeavours by Government and industry to foster the growth of the economy will succeed only if they are designed to improve the country's competitive power. Growth and competitiveness can never be separated. After a long connection with large-scale industry engaged in world competition, I readily accept that, but when will the Government take action to implement suggestions of that kind? Exhortation has now been tried for fifteen years, but it has met with only limited success. We now need to take the next logical step forward in harmony with the Chancellor's new ideas about finance, and we have to be prepared to look ahead for five years to plan, organise and regulate the economy to get the best results.

If that reasoning is accepted, there must be a national plan, and that would mean a Ministry of Production and Economic Planning. That would call for a programme of action and it would set before the country an objective for which we would all work together, as we worked together during the war. Such a Ministry would draw up a list of priorities and would have to show more concern for the morale of labour than has been the case for the past few years. Highly-skilled men cannot be treated as they have been treated all my lifetime without there being some reaction sooner or later.

Just as the world is contracting in a military sense, so it is simultaneously expanding as a result of a general desire to assist backward areas and under-developed countries and to increase co-operation. That should provide Britain, a great industrial country, with the greatest economic opportunity it has ever had.

Because of these strongly held views, I asked the Prime Minister to consult other Heads of Government about holding a world economic conference this year. I followed that by asking whether the Commonwealth Prime Ministers' Conference would consider the need for an economic plan for the Commonwealth. The Prime Minister said that while he sympathised with the objective, he was not convinced of the usefulness of the method proposed. I went on to deal with the need for the Commonwealth to have a Commonwealth approach to economic problems. The Prime Minister said that he was entirely in agreement with what was suggested and that it seemed an irreproachable proposition. So many times I have heard sympathy expressed with views of this kind, but the time has arrived for action and the sympathy should be translated into concrete realities so that the country can work in harmony with modern twentieth century needs.

For many years after the war, we did not have intense competition from Germany and Japan, so we had a good start. What is the explanation why we have been left behind since then? I hope that during our debates of this week it will be explained to us why we have not maintained our relatively strong position. For fifteen years all engaged in the exporting industries have made great and increasing efforts to increase exports. Why are we not now in a stronger position than we were?

My own answers are, first, that we do not have a national objective. We are not working and striving for a common objective upon which we could all unite as we did to win the war. Secondly, we do not have an economic plan—we do not have an economic "General Staff". Thirdly, for ten years we have subordinated our trade and economic needs to our foreign policy—I admit that that is a strong statement. Fourthly, the powerful vested interests in this country are better organised than they are in other countries.

It is time that we worked out a policy to assist the growth of exports. The Economic Survey says: United Kingdom exports may be expected to benefit from any expansion of world trade, but only if they are competitive in price and delivery… Why have we not benefited more than we have in the last fifteen years? Our products are competitive in price. Why are we not adopting a national plan of the kind I have advocated?

The Economic Survey goes on to deal with personal expenditure. My only comment on that is that the Federation of British Industries has complained of Government policy in the last two or three years that it is economic suicide based upon political expediency. The Economic Survey goes on to deal with the need for more fixed investment and says: Investment by manufacturing industry, most of which is in the private sector, which had fallen during 1958…recovered… I am sure that we all welcome that, but the Survey goes on to say that there was a substantial rise in imports and at the same time a relative reduction in exports.

My view, based on experience and reinforced by the Chancellor's statement this afternoon, is that the time has arrived for certain imports to be controlled. We had a great success in this respect during the war when one of the most efficient Government Departments was the British Commercial Trading Corporation. Its object was to buy raw materials in all parts of the world to prevent the Germans from getting them and also so that we could continue the war, buying raw materials at the minimum cost and guaranteeing that we would keep industries going. The time has arrived for that to be done in peace.

British exporting industries are paying more for raw materials, which are processed into exports, than are the exporters of any other country. The reason lies in the powerful trade associations which began to get a grip on the impart of raw materials in 1931 and which, year after year, have increased their efficiency, their control and their grip, with the result that the hands of exporting industries are tied behind their backs before they even touch an ounce of raw material. It is time for that position to be altered. This is especially true for the engineering industries whose exports form a greater percentage of our total exports than do those of any other industry.

My views may not be accepted for the time being, but I have sufficient knowledge of the country's history, and especially that of the labour movement, to know that anyone who has the courage to pioneer will find that his views may not be accepted in his lifetime. However, as sure as I am standing here, if our country is to become greater and we are to maintain and improve our standard of living and hold our own with the rest of the world, the kind of policy I have enunciated will have to be accepted.

6.40 p.m.

Mr. A. E. Cooper (Ilford, South)

I want, first, in company with other hon. Members, to congratulate my right hon. and learned Friend on what I regard as one of the finest Budget speeches to which I have listened in eleven years. There are some parts of the Budget which will not be to the liking of everybody, but generally speaking it is a Budget which will be applauded in the country. One of the significant points is that the three most important matters which arise out of the Chancellor's speech either do not appear in the Schedule of Budget Resolutions or will not be in this year's Finance Bill. I do not know how that has been contrived, but it seems to me to be very clever.

I sometimes wonder whether the right hon. Gentleman the Leader of the Opposition is a politician or an economist. His speech today was overladen with political prejudice. The Labour Party, it seems to me, have become infected with this cult of universality and have a communal cookhouse mind; they have become so conservative in their approach to our problems that they are unable to look at them with a liberal mind. They must face the fact that high taxation, and certainly excessively high taxation, is not only a direct encouragement to tax evasion, tax avoidance and the business expense account but is positively inflationary.

I had hoped that, notwithstanding the difficulties of the present balance of payments situation, it would be possible to avoid any increase in taxation this year. It must be remembered that the Government's proposals increase the level of taxation by about 1.3 per cent. This is after many years in which the tendency has been the other way.

Why has this situation arisen? Are we trying to do too much? Are we investing too much overseas in the underdeveloped countries? Unfortunately, in the world struggle against Communism in which we are engaged, we cannot afford to do less than we are doing, and in some way this money must be found for such investment.

The present economic situation, both here and in Europe generally, is a direct encouragement to close ties being worked out between the United Kingdom, the Commonwealth and the rest of the free world, including the United States. When such an arrangement has been worked out we may well have to forgo some of our sovereignty, but in this tremendous struggle in which we are all engaged that is a cost which we may have to bear.

I suggest that the basic problem for this nation is our export potential. Does the Budget help in that? It will be argued that it provides no direct incentive to industry as such but provides only incentives to the individual, and that is a valid criticism. It may be argued that the total result of the Budget is to increase industry's costs and thereby to make it more difficult for us to compete in markets overseas. Having regard to the fact that the increase in taxation is about £80 million a year and to the fact that the present national product is about £23,000 million a year, I do not think that this year it is likely to have very much of a deterrent effect upon our exporting industries.

I submit that production is probably not our basic problem. If it were at present desirable, I have no doubt that production, taking industry as a whole, could be increased substantially within the limits of the existing plant and labour. Throughout the country there is still some short-time working, there is still under-employment of resources and there are still far too many restrictive practices both in industry and, if I may say so without causing offence to right hon. and hon. Members opposite, within the trade unions.

I have no doubt that tomorrow the right hon. Member for Huyton (Mr. H. Wilson) will give his league table its annual airing, garnishing it with a few merry quips at which we shall all laugh, and no doubt in consequence he will get a very good Press on Wednesday morning for a very witty speech. Generally, what he says is not very constructive when we consider our economic problems.

Mr, G. Thomas

Wait until my right hon. Friend says it.

Mr. Cooper

But the right hon. Gentleman's annual Budget speech is as certain, as regular and as obvious as night following day. We have only to look at last year's HANSARD to discover what he will say tomorrow. All he will do is to bring the figures a little more up to date. May I deal with the criticisms which the right hon. Gentleman will make tomorrow? If we are to produce more—and I do not believe that to be our basic problem—where do we sell it? This is something which never appears to occur to hon. and right hon. Gentlemen opposite. The easiest thing in the world is to produce. The most difficult is to sell. We can sell it quite easily in this country; that is not the problem. But if we do that and take all our production into domestic consumption in this country, our import bill will be increased substantially.

Mr. Thomas

We cannot sell it if we cannot produce it.

Mr. Cooper

I agree that there is a case for arguing on the line of the chicken and the egg, but I prefer it my way. We are probably one of the greatest international trading countries, and, as the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) rightly said, we depend for our very existence on international trade, and it therefore follows that we are affected directly and immediately by the vagaries of international trade. In the last year our problems have been accentuated by a shallow recession in the United States which led to a substantial decrease in the sales of motor cars. We also found that trade in Europe was not quite as buoyant as in previous years, and that had its effect. Another important fact which my right hon. Friend did not mention but which has had some publicity is that in the primary producing countries, the prices of raw materials have declined during the past year, with the result that the sum of money available for imports into those countries has been reduced. This is starting to build up again. At the same time, the situation in the United States and in Europe is improving. The result is already showing itself in a certain buoyancy in our own economy. I do not think that my right hon. and learned Friend was at all incautious or pessimistic about the situation which may face this country later this year.

I was particularly struck a week or two ago by the unemployment figure, which I believe was one of the lowest recorded in this country at the March count. It had no regard to the fact that we are about to enter the summer season, in which a substantial body of men and women who are not normally employed or are unemployed during the winter months find themselves at work. I think it not improbable that towards the middle or end of August we shall find ourselves with an unemployment figure ridiculously low to the point of danger.

That may sound a heresy to some hon. and right hon. Gentlemen opposite, but what I mean is quite simply that we shall at that time have reached the position when virtually there will be no single soul left to be employed in this country. [Interruption.] If I may anticipate what the hon. Member for Glasgow, Govan (Mr. Rankin) will say, it is the question whether that applies to Scotland.

Mr. John Rankin (Glasgow, Govan)


Mr. Cooper

It may well be that there will be pockets in certain areas where what I am suggesting may not apply. He would be an extraordinarily brave, or perhaps a very foolish, man who would say that his remarks were applicable to the whole of the United Kingdom.

Mr. Rankin

Does not the hon. Gentleman realise that in Scotland all the pockets have holes in them?

Mr. Cooper

I do not know what that is intended to mean but, usually, when one has a hole in one's pocket, there is nothing there, and the situation in Scotland is not all that bad. It shows over the last few months a tendency to get very much better, and I suspect that as a result of the operation of the new export credit guarantees financial measures, together with the other provisions outlined by my right hon. and learned Friend the Chancellor today, some of the heavy industry in Scotland may well benefit over the next few months and years. Let us not always look on the black side.

Mr. Rankin

I agree.

Mr. Cooper

Last year, speaking about this time, I suggested to my right hon. Friend the Prime Minister that he should have consultations with industry on the management side to see whether a new export drive could be created, and whether we could do something to infuse new life into what has become—let us face it—a rather stagnant operation. I also invited the Leader of the Opposition and his hon. Friends, who, for all their little local difficulties, have very great influence with the trade unions, to see whether they themselves would take part in this exercise and would use their influence within the trade unions so that, if it were possible, we could get some of these restrictive practices reduced.

As the hon. Member for Stoke-on-Trent, South has so rightly said in other words, if the nation prospers we all prosper, but if it fails we all fail, and nobody in this country will be insulated from such a debacle as that. There fore, I hope that hon. Gentlemen opposite will use the influence they have in the trade unions to see whether it is possible to reduce these restrictive practices in order to help management in this great struggle which affects the whole future so vitally.

Mr. Ron Ledger (Romford)

If the hon. Gentleman really wants us to help, I am sure that all my hon. and right hon. Friends will be willing to do so. Would he go further and give us one example of the way in which he wants to get rid of restrictive practices for which trade unions are responsible? I am asking him to give only one example, so as not to put too large a burden on the hon. Gentleman.

Mr. Cooper

I will not be drawn into a long discussion on restrictive practices, but we have had, for example, a considerable number of strikes in the shipbuilding industry which have been inter-union strikes.

Mr. G. A. Pargiter (Southall)


Mr. Cooper

The Cammell Laird strike is notorious, and the troubles there are still not resolved. I say to the hon. Gentleman opposite that a lot of the difficulties in the shipbuilding industry—and this is the primary reason why we have lost orders—have been due to the inability of the industry to deliver. I believe that that has been due wholly to labour difficulties. That is just one industry in which these things can be put right.

On the management side, we still have very many restrictive practices which have to be dealt with. I say to my right hon. Friend the President of the Board of Trade, whom I am glad to see here, that although the Restrictive Trade Practices Act is now working, in the view of many of us it is working far too slowly. There are so many industries which now have practices registered on the Registrar's books that it will be months, if not years, before they are dealt with. One difficulty is that it is still possible in present circumstances for new restrictive practices in management to be entered into.

I must declare an interest here. One is the British Hotels and Restaurants Association, which has introduced a new credit card scheme, which has been accepted by the Registrar as being registrable. It has the effect of being a serious agreement in that it opposes the use of credit cards in this country by that organisation by American visitors coming here. This is the sort of thing which ought not be be permitted while there is a Restrictive Trade Practices Act in force.

The task of our industry today is to produce goods in great quantity and great quality to satisfy an increasing population, which, nevertheless, is a decreasing producing population, with more children staying at school to a greater age, and an ageing population. The producing section of the community is being compressed and is having to produce very much more. Coupled with this is the fact that we have lifted our standard of living in this country so high, and we intend to go further, that it demands a very large production to deal with our export requirements. The times in which we live are times of great opportunity, and also of great challenge. I believe that the incentives which my right hon. and learned Friend has introduced in this Budget will go a long way towards helping us to rebuild and revitalise our export trade, and I congratulate him upon them.

6.58 p.m.

Mr. John Rankin (Glasgow, Govan)

I want to comment on one point upon which the hon. Member for Ilford, South (Mr. Cooper) touched. He referred to difficulties in industry and, of course, all of us on both sides of the Committee regret these difficulties.

I think he was not quite fair, however, in stating the position as it is in the yards today, because if he were more familiar with what is happening, he would realise that a good many of these strikes arise from the fact that employers do not consult sufficiently with their employees. Today, we cannot treat men in industry as if they were chattels. They are refusing to be treated in that way and, consequently, when changes, of which many of them as individuals may not disapprove, take place, which may threaten their future employment, they naturally want to know what safeguards they are to have. When these things are imposed upon them, then the employer is looking for trouble, and he generally gets it.

Looking at the Budget generally, I would say that it will be very popular with the Tories—

It being Seven o'clock, The CHAIRMAN left the Chair, further Proceeding standing postponed until after the consideration of Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 7 (Time for taking Private Business).

Mr. SPEAKER resumed the Chair.