HC Deb 26 June 1963 vol 679 cc1557-79
Mr. Mitchison

I beg to move, in page 54, line 9, to leave out from "relation" to "to" in line 11.

Mr. Deputy-Speaker

It will be possible to discuss with this Amendment the next following two Amendments, that is to say, in page 54, line 12, to leave out "that" and to insert "the said'; and in page 54, line 18, after "affect" to insert: (a) any duty chargeable under or by reference to the said heading as it applies to a conveyance or transfer of stock or marketable securities; or (b).

Mr. Mitchison

I am much obliged, Mr. Deputy-Speaker.

These Amendments raise a point which is important both as a matter of principle and as a matter of the amount of revenue involved. I regret that the Government's reluctance to accept a Motion earlier in the evening has forced us to consider them at this hour.

As I understand it, Clause 54(1) prescribes, in effect, the scales set out in Schedule 9, and these are scales relating to a conveyance or transfer on sale. The effect of the Clause is partly to reduce the duties in connection with convey- ances of land and so on, and with that point these Amendments are not concerned.

2.15 a.m.

Subsection (2) contains a reference to duty chargeable under or by reference to the heading "conveyance", and so on, as it applies to a conveyance or transfer of stock or marketable securities", and to a conveyance of that character the second column in the Schedule is made to apply. The Schedule appears at page 84 of the Bill and the second column is called "Ordinary rate".

The effect of the Amendments is to remove the reference at that point to a transfer of stock or marketable securities, leaving, therefore, that subsection to apply only to matters that come in under the heading "Lease or Tack", which I am not dealing with at the moment. The third Amendment saves, in effect, at the present rate the duty on stock or marketable securities. Thus, the effect of the three Amendments taken together is to deny the benefit of the proposed reduction, the halving of the duty in respect of one group only of conveyances—that is, conveyances or transfers of stock or marketable securities.

To put the matter in the simplest language, the intention of these Amendments is to leave the duty on stock transfers as it is at present instead of reducing it by half. It does not affect the duty on conveyances of land or lease or tack, or the rest of it. It is simply the one heading of Stock Exchange securities, and, strictly, not all those. That is the broad point that it is intended to raise and I turn from that to indicate why I regard it as important financially.

From Table 11 of the White Paper, one gets the figures separately for the effect of the reduction of duty on transfers of stocks and shares. The effect is to amount to a loss of revenue this year, 1963–64, of £16 million and of £25 million in a full year. I; is a considerably larger figure than that of the reduction of duty on other matters. It is, therefore, the main thing affected by the Clause and it compares with the larger items in other parts of the table. To take a rough standard of comparison, it is roughly—not accurately—about half the cost of the abolition of Schedule A. Therefore, this modest little Clause, as one might call it, has a considerable effect.

Let us consider what the effect is. First, the loss of revenue means that if the Chancellor of the Exchequer requires the money, somebody else has to pay it and the people who become entitled to this reduction are those who are concerned in buying and selling shares on the Stock Exchange. I have no particular comment or criticism to make on that. One does it oneself at times—at least, I do—but I fail to see why, if concessions are to be made, this class of people at that moment should get this concession.

We have been putting forward Amendments to the Bill asking for a number of personal reliefs, and I shall not go through them again, but we also have put Amendments forward—there were some of them today—on questions of indirect taxation. I simply put it to the House that what we are comparing here is, on the one hand, a benefit to be given to people who deal in stocks and shares in one way or another and, on the other hand, benefits to be given—say, the Purchase Tax on ordinary domestic articles, the present 10 per cent. Purchase Tax on pots and pans, boots and shoes and all the stuff that the Chief Secretary taxed for the first time after the 1955 election. Of course, it amounts to more, but very considerable concessions could be made. Industries which are in difficulty at present, and which are having to pay this Purchase Tax, could be relieved of it at the moment. There is quite a wide field for concessions when we are dealing with figures as large as this.

Then we are told that this is all nicely balanced and that the object of the Finance Bill is to allow a further expansion nicely balanced so as not to amount, on the one hand, to inflation, nor, on the other, to a continuance of the hard régime introduced by the right hon. and learned Gentleman the previous Chancellor of the Exchequer. If that is the position, how does this particular item come into it? Does it really encourage people to spend more or less? Is this the best use of the concessions by the national Revenue, if the object is to secure that balance, and to prime the pump, as it were, to a nicely measured degree? Therefore, looking at the matter not merely as a social matter but as some question of economic balance in the community, what exactly is the contribution of this particular remission of tax?

Nobody likes paying taxes. There are plenty of candidates for concessions of this kind. I am not going elaborately through them, but exactly what purpose really is served by halving Stamp Duty at the moment? It is true that at one period it was at the lower figure to which it is now intended to reduce it, but, after all, it is not the only thing in the world which has gone up, and it is not the only tax which has gone up either. Why select this particular one?

This seems to me to be a similar measure—I quite agree, on a less significant and obvious scale perhaps—but the same sort of measure as that which the Government introduced when, right in the middle of a Budget which appeared to have a whole lot of other objects, they suddenly introduced considerable concessions to Surtax payers. A considerable concession to traders and dealers in Stock Exchange securities seem to me to be exactly a concession of that character. I repeat, not so significant: the amount involved is considerably smaller; but the reason for it seems to me to be even smaller yet. What is it?

Are we to be told that if we have too much Stamp Duty in London people will transfer their stocks and shares somewhere else? No doubt, one can find an instance or two, but really, to suppose that the level of Stamp Duty in London seriously affects the places where these transactions are effected is too great a strain on my credulity, at any rate.

Are we, than, to be told that this will encourage—what is it called?—a property-owning democracy? I do not know. I have never quite understood what a property-owning democracy was supposed to be. I think it was supposed to be a collection of property-owning democrats rather than a property-owning democracy, but be that as it may, is it really supposed that the amount of this Stamp Duty will make much difference to that sort of thing? Again, I cannot believe it.

I would not pay much attention to the thing if it were not that the total of all these small concessions to Stock Exchange transactions amount to the very substantial sums I have mentioned. Therefore, I would say, in support of these Amendments, let the Government do what they are doing about land; let this conveyance certainly stand; but as regards Stock Exchange securities, there is no good reason for this at the minute, and they cannot very well persist in this when they refuse at the same time to make concessions about personal reliefs. Purchase Tax and the like, for which we have been pressing during these debates.

There are two kinds of reason for it. One is the social reason that if we are to benefit a class of people, this is not the class which stands most in need of relief; and the other is economic, that if we wish to use a nice balance of the Finance Bill to arrive at the state which we desire to reach in the economy, then I fail to see how this measure has any noticeable effect in that respect. In the light of that, I have come to the conclusion that the Conservative Party are doing what they have done so often before—making a concession to their friends in the City at the expense of the mass of the general taxpayers.

Mr. F. M. Bennett (Torquay)

At this late hour I will resist the temptation, though with difficulty, to run through all the irrelevancies and inaccuracies of the speech of the hon. and learned Member for Kettering (Mr. Mitchison), and I will comment on only one aspect.

He said that a certain matter would strain his credulity. I am not a judge of what ought and what ought not to strain his credulity, but before he comes to the House he should take the trouble to check whether this duty was a serious obstacle to the maintenance and improvement of the earning capacity of the City of London in invisible earnings. He is so blinded by prejudice about people who may or may not gain from this small concession that he has not troubled to investigate what has been happening in recent years since the Stamp Duty was doubled. Stock Exchanges have been growing and increasing in strength on the Continent of Europe, not only taking business directly away from Britain, which admittedly may be small, but often stopping a substantial number of foreigners from investing in British and other' shares in this country because they could do it a great deal cheaper overseas. The facts and the figures are there, and if the hon. and learned Member had taken the trouble to study them he would not have made the speech which he has just made. Milan and Berne—

Mr. Jay

Does not the hon. Member realise that if by this means we tempt investors from abroad to invest in this country, that does not increase our invisible earnings but exactly the reverse? It leads to dividend and interest payments from this country to people overseas, which increases our invisible imports, not our invisible exports.

Mr. Bennett

I had not expected to have to give a lecture on foreign exchange earnings at this time of night. The right hon. Gentleman is completely wrong. It is a matter of those who wish to invest not only in British securities but also in both American and Continental securities, which can easily be bought either on the Continental exchanges or in London. If the right hon. Gentleman knew that he could buy more cheaply on the Continental exchanges than in London because of the 2 per cent. Stamp Duty, where would he do his buying?

Mr. Jay

rose—

Mr. Bennett

I am sure that the hon. Member has the chance of catching your eye, Mr. Speaker, and can make his own speech. There has been a distinct choice where people could buy certain shares, either in London or on the Continental exchanges where there was no 2 per cent. Stamp Duty. So clearly can it be seen that prices for exactly similar shares could be shown on the Continental exchanges to be barely under the price in London plus 2 per cent. Stamp Duty which was incurred.

Mr. Jay

rose—

Mr. Bennett

Oh, really.

Mr. Jay

I thought that the hon. Member wanted to argue this seriously. I do not know why he is so impatient. If he induces an investor from France or Germany to buy shares on the London Stock Exchange, this does not lead to an increase in our invisible earnings. It leads to a payment from us to a foreign country, which is a minus and not a plus on our balance of payments. If the hon. Member understands that point, how can he argue (hat this will increase our invisible earnings?

2.30 a.m.

Mr. Bennett

What has been said is true in a sense if one buys any shares in England, but this applies whether they are bought on the Continent or in England. The argument is the same. When people invest in securities, whether British or Continental, and buy them through this country, the invisible earnings accruing from the transactions come to this country by way of the purchase, and that does not hold if they are bought on the Continent. [Interruption.] I do not know what that remark means. I have nothing to do with brokerage, nor am I concerned directly or indirectly with what I have referred to. It is a matter of common knowledge that, where invisible earnings are concerned, with the 2 per cent. Stamp Duty this country was losing an accretion of overseas business which it had obtained over a long time.

Mr. Callaghan

Rubbish.

Mr. Bennett

It is no good saying "Rubbish". It is a matter of facts and figures. To come here with a lot of Socialist cant and humbug about our trying to benefit certain sections of the community is an abuse of the House in this purpose. I am delighted that the Government have made an overdue relief which will lead to an increase in the foreign exchange earnings of the country, to the benefit of us all.

Mr. William Clark (Nottingham, South)

I hope that my hon. Friend will resist the Amendment. I cannot understand the hon. Member for Cardiff, South-East (Mr. Callaghan). If he wants a wealth tax and if by misfortune his party comes to office, I cannot think that it does him any good to resist investment in this country. It is obvious that the high Stamp Duty of 2 per cent. has been a deterrent to investment. What we want is more and more investment.

What we must do is to make the investor's life easier. I am not speaking about large investors. There may be some force in the argument that a large investor need not necessarily be helped. I am thinking about the small investor. who may or may not support the Opposition. I would think that he supported this side of the House. Should such a man have a 2 per cent. Stamp Duty to deter him from saving? The 2 per cent. duty that we have suffered for the last few years is quite wrong, and I am delighted that the Government have reduced it to 1 per cent.

I would point out to the Opposition that more and more small people are becoming more and more aware of the advantages of capitalism in the owning of shares. That is an irrefutable fact. In the last 10 years the number of people investing on the Stock Exchange has risen from 1¼ million to 3½ million. That shows that more and more people are prepared to invest in this country.

But I do not think that we invest enough. The N.E.D.C. has asked for personal savings of 12 per cent. At the moment the rate is 10½ per cent. There is still a margin of 1½ per cent. Anything should be done which can help the small investors. There are probably 3½ million investing on the Stock Exchange and probably 1 million in unit trusts. That is still a small percentage of the population.

I hope that my hon. Friend will resist the Amendment, because it would be wrong to take a retrograde step and increase the Stamp Duty to 2 per cent, again after the Government have accepted 1 per cent. I wish that my right hon. Friend had abolished it altogether. My hon. Friend the Member for Torquay (Mr. F. M. Bennett) has shown—it is no good the right hon. Member for Battersea, North (Mr. Jay) saying that investment in this country does not help our balance of payments; that is a very short-sighted view—that we must have investment in this country, whether it is from abroad or from our own nationals.

It is all very well for the right hon. Member for Battersea, North, to shake his head. I invite him to look at the investment of our overseas competitors—the Continental countries which compete with us. Their investment, expressed as a percentage of their gross national product, is far higher than ours. That is one reason why this country must do more and more to encourage investment.

I hope that my right hon. Friend will resist the Amendment. If the Opposition wish to push the matter to a Division I hope that they will do so, so that we can see how much strength they have. The people of this country want to own capital. Hon. Members on this side of the House want more and more people to own capital, and to be able to save their money. The Government must help them to do so. The reduction to 1 per cent.—it should have been to nil per cent.—will be helpful.

Mr. Mitchison

The hon. Member has not dealt with the alternatives that I mentioned. I did not expect him to. But does he really think that this tax is a tax on investment? I should have thought that it was a tax on transfers. That is what it purports to be. Surely, if one person buys, another sells. We are preventing someone selling as much as or as little as we are preventing someone buying. If this is merely investment it is not affected by the fact that somebody subscribes to buy shares, or to buy unit trust units, or invests in some other way.

Secondly, since the hon. Member chose to accept some remarkable propositions put forward by the hon. Member for Torquay (Mr. F. M. Bennett), what part of the business of the Stock Exchange does he think consists of transactions on behalf of overseas clients?

Mr. Clark

I am surprised at the naivety of the hon. and learned Member for Kettering (Mr. Mitchison) in suggesting that this country, with its money market in the City of London, can afford to ignore the foreign investor. This is begging the whole question. What we have to do, if we are an international money market—as everybody will agree we are—is to avoid putting anything in the way of the foreign investor. Not only are we putting something in his way by increasing the Stamp Duty to 2 per cent.; we are also putting a deterrent in the way of our own people investing. It is quite wrong and fallacious for the hon. and learned Member to suggest that a 2 per cent. Stamp Duty does not deter.

If a small investor has £50 to invest and buys a share, he is quite astonished if he has to pay £51 or £52 for that share, to cover the Stamp Duty. I am satisfied that the future of this country lies in increased investment, and anything that will bring that about will be a good thing.

Mr. Maurice Macmillan (Halifax)

This tax is primarily on transfers, as the hon. and learned Member for Kettering (Mr. Mitchison) has said, and not on investment, but he must not disguise the thinness of his argument by the use of what Sir Alan Herbert called "witch" words, and talk in a contemptuous way of people buying or selling shares on the Stock Exchange when it is just as relevant—and, I think, truer—to refer to investors wishing to change their investment.

The objection that I have to Stamp Duty—and the reason why I would rather see it abolished than reduced—is the burden it places on investment clubs, unit trusts and other organisations which protect the small investor by changing his investment on his behalf in the most suitable way.

I must also protest at some of the other words used by the hon. and learned Gentleman when talking about this class of people, referring to traders and dealers in Stock Exchange securities. If we are to encourage people as a whole to take a share in industry, this is no way to refer to them when they come to do their dealings on what after all is a market like any other. It is fair to say that on this side of the House, even if not on the other side, we would prefer the people to be encouraged to own a share in industry directly rather than to have it taken over nominally on their behalf by right hon. and hon. Members opposite.

Mr. du Cann

I am most grateful for the observations of my hon. Friends the Members for Torquay (Mr. F. M. Bennett), Nottingham, South (Mr. W. Clark) and Halifax (Mr. Maurice Macmillan), even at this very late hour. I feel, as the hon. Member for Cardiff, South-East (Mr. Callaghan) indicated in an earlier debate in Committee, that I am in danger of making the same speech again, not only the speech that I made then but also the speech that I made from the back benches in the past, but I will try to avoid the temptation.

I well understand that it is the intention of the hon. and learned Member for Kettering (Mr. Mitchison) to preserve the 2 per cent. rate of Stamp Duty on transfers of stocks and marketable securities. I think that this intention is mistaken; so, I am pleased to observe, do my hon. Friends. The third Amendment is the substantive one. That seeks to preserve the 2 per cent. rate, as the hon. and learned Gentleman said, by providing that nothing in Clause 54 is to affect the duty on a transfer of stocks or marketable securities.

The other two Amendments are really consequential upon the third. The first Amendment cuts out from Clause 54(2) the words which exclude transfers of shares and marketable securities from the relief from small transactions under paragraphs (a) and (b) of subsection (1). Since the third and main Amendment provides that nothing in the subsection is to affect the duty on such transfers, it renders these words superfluous: The second Amendment it purely a drafting Amendment.

I want to refer immediately to what my right hon. Friend the Chancellor of the Exchequer said during his Budget speech. He said this: The Stamp Duty on stock transfers and on house conveyances was doubled in 1947. I am convinced this was a mistake."—[Official Report, 3rd April, 1963; Vol. 674, c 488.] Those are my sentiments, and I understand that they are the sentiments of my hon. Friends.

If it is the intention of the Opposition to double again the rate of Stamp Duty should they become the Government of the country, I am sure that that will be noted by the millions of people who are now stock owners in the United Kingdom and by the hundreds of thousands more who, so we are told on authority, are on the threshold of investing. It was suggested, not perhaps in terms, but by inference, by the hon. and learned Gentleman that this was done simply as a sop to the City. These precise words were used in an earlier debate. The hon. Member for Cardiff, South-East said something during the course of that debate which I want to comment on tonight. He said that what is good for the City is not necessarily good for the economy. I have never believed that what is good for the City is necessarily good for the economy any more than the hon. Gentleman believes that what is good for the trade unions in general is necessarily similarly good for the economy.

Let me make the point entirely clear. The reason why this step is being taken is that we believe it to be very much in the interests of the economy as a whole to cut the Stamp Duty on stock transfers.

The hon. and learned Gentleman made a fair debating point when he said that there were many alternative things that might have been done. That is true, but it is reasonable for me to point out that one must look at this measure—I agree with his figures of cost—in the context of the very large number of tax reliefs and incentives which this year add up to a total bill of £269 million and in future years could add up to a very much larger bill. To suggest that we have dealt with the Stamp Duty and have not given any other reliefs is entirely wrong.

2.45 a.m.

The 2 per cent. rate of duty has been higher than the duty in any other important country. I draw the attention of the hon. and learned Member for Kettering to the Quarterly Bulletin of the Bank of England, published in June, 1963. Set out clearly on page 116 are the costs of purchasing securities. On a standard purchase, including the present rate of duty, the cost in the United Kingdom is 2.8 per cent. This compares with 1.2 per cent. in the United States, 0.4 per cent. in Switzerland, 0.7 per cent. in the Netherlands, 0.4 per cent. in Italy, 1 per cent. in Western Germany, 1.3 per cent. in France and 1.1 per cent. in Belgium. If the Opposition think it right that our costs should be so much higher than any other country, I flatly disagree with them.

Mr. Bruce Millan (Glasgow, Craigton)

The difference is that in most of those countries there is a capital gains tax. There is not in this country.

Mr. du Cann

I thought that at least one hon. Member opposite would say that. The absence of a capital gains or wealth tax here—although we do have a speculative gains tax—is not fully relevant, because it would not necessarily fall on the same people as the Stamp Duty—for example, the small investor or foreign investors. In any case, the figure I gave a moment ago of 2.8 per cent. will be reduced to 1.8 per cent.

In a number of foreign countries there is a duty upon the sales of stock as well as on purchases. When one examines the figures taking that factor into account, it becomes clear that the United Kingdom market, for the first time since the late Lord Dalton put up the tax in 1947, is properly competitive with overseas markets in general. It is competitive with the United States, France and Belgium. That is an important advance.

Mr. Callaghan

Why?

Mr. du Cann

I will give a number of reasons why. It is essential, apart from anything else, that we should have an efficient active market. A high rate of duty undoubtedly acts as a break on the market. There is, for example, no question that, while the rate of duty has been high, investors have been tending to transact their business in a freer market. The hon. and learned Member for Kettering has only to examine the SICOVAM in Paris or the development of American deposit receipts in New York to realise that. As a result, foreign exchange is lost and the raising of new capital is hampered.

I agree with my hon. Friends when they stress the need for savings, especially in productive industry. There is no question that if the development of the market is inhibited that must militate against investment of new savings and transfers through the United Kingdom market.

The hon. Member for Cardiff, South-East made the point in an earlier debate that he personally was in favour of the development of capital markets overseas, no doubt in the countries one immediately thinks of on the Continent, but also in the developing countries of the Commonwealth. I agree with him. I welcome this development. Surely it should be the aim of any Government in this country to encourage as far as possible a freer situation in regard to the movement of capital. That is our intention but, none the less, we must be allowed to do our utmost to see that the London market, with all its expertise and potential, is fully developed, with deterrents and barriers to that development removed.

A good deal has been said by my hon. Friends about the efforts that are being made to encourage the public to be shareholders in industry. There is no question, as a matter of fact, that new and potential investors are deterred, and have been deterred, by the 2 per cent. rate of duty—[Hon. Members: "Oh."] There is no doubt at all about that. What my hon. Friend the Member for Nottingham, South said was perfectly true. New investors resent, and resent very much, finding themselves penalised for investing their savings.

The hon. and learned Member for Kettering has suggested that this is something that will benefit large investors. That is true, but the largest investors of all are the institutions investing on behalf of a multitude of probably small policy-holders, and the like; or the trade unions, who I am delighted to see have established their own unit trust. Those are the large investors today. The logic of the hon. and learned Gentleman's argument is apparently to penalise them by maintaining a high rate of Stamp Duty but, inevitably, we must penalise the small investors, too. If that is what the Opposition want I, personally, want none of it.

It is also true to say that the 2 per cent. Stamp Duty tends to turn away potential overseas investors in United Kingdom industry. That is undoubtedly a fact. Many of us have seen examples of this occurring. But I agree with the right hon. Member for Battersea, North (Mr. Jay) and the hon. Member for Grimsby (Mr.Crosland) who, in an earlier debate, said that there are certain dangers in overseas investment in the United Kingdom, especially if it is volatile investment. The Government are perfectly well aware of that situation, but that is no reason to discourage long-term portfolio investment, any more than it is to encourage those wishing to invest in the United Kingdom to do their investment in New York or Paris rather than in London, which is the situation that obtains as a result of the high rate of Stamp Dutyin the United Kingdom—

Mr. Jay

I did not say that I was opposed to foreign investment here, or that I wished to discourage it. I was merely pointing out to the hon. Member for Torquay (Mr. F. M. Bennett) that investment here from foreign countries sometimes led to dividend payments from here to overseas, and so to invisible imports, not exports. One cannot justify it on those grounds.

Mr. F. M. Bennett

As I have been referred to by the right hon. Gentleman, is it not the case that the dangers of which he speaks would be precisely the same whether it was done through London or the Continental exchanges? The whole point is where it is done, and whether or not one thereby gets additional foreign earnings.

Mr. du Cann

We are probably all agreed. There are dangers in an excessive investment in the United Kingdom by overseas investors. On the other hand, there are certain advantages to be gained. Lately, we have been losing those advantages. We are satisfied now that we may have the opportunity of recapturing them, and we believe that to be a good thing.

My hon. Friend the Member for Halifax who, with other of my hon. Friends, has played such a remarkable part in encouraging and fostering the interests of the small investor, has argued in favour of abolishing Stamp Duty altogether, and I want to explain why I spent such a boringly long time at the beginning of my speech in referring to the drafting of the Amendment.

Whoever drafted the Amendment probably overlooked the fact that the existing provisions of Section 34 of the Finance Act, 1958, imposing duty at the 2 per cent. rate, are repealed by Clause 71(8) and Part IV of Schedule 12 of the Bill. That repeal is not affected by the Amendment so that, far from preserving the 2 per cent. rate on transfers of stocks and marketable securities, the Amendment would actually abolish the duty al together. Ironically enough, therefore, I must say that I cannot recommend the House to accept—

Mr. Mitchison

In dealing with the Finance Bill we do not try to put down all the subsequent repeals. The hon. Gentleman knows that perfectly well. It is quite exceptional to try to deal with the Schedule of repeals. The hon. Gentleman and everybody else in the House understood what the intention and effect of this proposal would be. [Hon. Members: "Oh."] Am I wrong? Perhaps hon. Members opposite did not understand. I am surprised. They spoke as if they did. At this hour of the night this sort of point is rather cheap and a waste of time.

Mr. du Cann

I will not waste the time of the House except to say that I am delighted to find that even by accident my hon. Friend the Member for Halifax is on the same side, so to speak, as the hon. and learned Member for Kettering. They must decide between themselves what they are going to do about this series of Amendments. I am satisfied for my part that my right hon. Friend was right to reduce the Stamp Duty and I am perfectly clear, as I believe were my hon. Friends, that there were good, positive reasons for doing this, which will bring substantial credit over a period of years to the British economy.

Mr. Callaghan

We have heard a great many unsupported statements and a great many prejudices expressed under the guise of fact, but what we are doing is discussing whether in the context of this Budget it is the right time and the right way to release about £25 million of taxation which has been collected for 16 years by successive Chancellors of the Exchequer without complaint. It is because of that concern that I think the House should consider the matter in that light.

There is a small, diligent lobby on the other side of the House, made up of the hon. Member for Halifax (Mr. Maurice Macmillan), the Economic Secretary before he was promoted to his present office, the hon. Member for Nottingham, South (Mr. W. Clark)—and I do not think the hon. Member for Torquay (Mr. F. M. Bennett). He is not here often enough in debates on the Finance Bill ever to constitute a lobby. I know that he is always here at three o'clock in the morning when this subject is discussed but I have not seen him at all previously today. [Interruption.] He appears to be wishing to be included in this lobby. I will withdraw, and include him. Except for this lobby, and Lord Ritchie of the Stock Exchange, I do not think that any of us has had letters from constituents protesting about this Stamp Duty.

I have a great many letters protesting about other things—Schedule A, Surtax, Purchase Tax, and the Rent Act. I do not remember ever receiving a letter from an investor in my constituency complaining of the 2 per cent. Stamp Duty. This complaint stems from a small group opposite who have a clear interest in getting the Stamp Duty abolished to the extent of £25 million this time and another £25 million if it is abolished altogether. They share this interest with the Stock Exchange.

Mr. Maurice Macmillan

Is the hon. Member suggesting that the objectives of the Wider Share Ownership Council are for the financial benefit of its members?

Mr. Callaghan

I do not know what that Council is. I know that the hon. Member for Halifax has constituted himself a powerful spokesman for the tiny and unrepresentative group who are trying to persuade the Chancellor of the Exchequer that the most important thing to be done year by year is to give £25 million back in this way. If the hon. Member would put this matter to the electorate he would find that they would disagree overwhelmingly, even though they would derive some benefit from the £25 million. There is absolutely no pressure at all for this reform.

Mr. W. Clark

I have no connection at all with the Stock Exchange. The reduction of £25 million does not benefit me one scrap. I am certain that with his usual courtesy the hon. Member will withdraw his remark that we who have spoken in this debate will necessarily benefit from this £25 million.

3.0 a.m.

Mr. Callaghan

I repeat that the hon. Gentleman has repeatedly constituted himself a member of this lobby in order to getrid of this £25 million. He can tell me that he does not benefit personally from it, and if he says that I believe him. Is that what he is saying, that he does not benefit from the reduction of the Stamp Duty? I did not say that he did; I said that he constituted himself a spokesman for the lobby. Everyone knows that at 3 o'clock in the morning when we get to this stage in the Finance Bill we can rely on half a dozen hon. Gentlemen who have not been near the place during the past ten days turning up in order to get the Stamp Duty reduced. I have seen it happen time after time. If hon. Gentlemen are so assiduous in the matter they cannot complain if they appear to constitute themselves a lobby. The hon. Member for Torquay was complaining that I was not including him in the lobby.

Mr. F. M. Bennett

I am perfectly happy now.

Mr. Callaghan

The hon. Gentleman is perfectly happy. He is one honest man at any rate. I am glad that he acknowledges to be a member of the lobby to reform the present legislation concerning Stamp Duty and to reduce the duty by £25 million. We all have our own sense of values. I understand that the hon. Member for Halifax believes this to be the most important matter in the Finance Bill.

Mr. Maurice Macmillan

indicated dissent.

Mr. Callaghan

The hon. Gentleman shakes his head, but it is the only matter on which he has bothered to speak. On what other matter has he spoken during the last 10 days? He has not been here, and he knows it.

Mr. Maurice Macmillan

The lobby to which the hon. Gentleman is referring is pressing for further reforms. The Stamp Duty happens to be the only one to which this Budget refers, and the only one at this stage that we can discuss.

Mr. Callaghan

The hon. Gentleman is confirming what I am saying. He thinks that this is the most important matter in this Budget which demands his attention, his voice and his appearance in the House. We are glad to see him here, even if it is only for this purpose. But I think everyone will determine the matter from his own sense of values. There are a great many other subjects of which we would have welcomed the hon. Gentleman's very powerful advice and argument had he thought them as important as the remitting of Stamp Duty on Stock Exchange transactions. But he does not. I wish that the hon. Gentleman would turn his powerful intellect to other problems on which he could be a great deal more use.

I just cannot share the view that of all the remissions of taxation that might be introduced this one stands out as the most important. This is why I oppose it and why I tell hon. Gentlemen opposite that most of their constituents would oppose it too. I said earlier, and I am yielding to the temptation myself now, that there is a great deal of unsupported assertion in the debate, but I do not believe that any average audience of British citizens gathered together would believe that at 3 o'clock in the morning we should have to spend a lot of time discussing whether £25 million should be taken off Stock Exchange transfers. I do not believe it.

Mr. F. M. Bennett

Divide against it.

Mr. Callaghan

We could divide against it, except that I understand from what the Economic Secretary tells us that owing to the deficiency in drafting if we do we shall be abolishing it—[Hon. Members: "Speak up."]—I cannot speak louder than I am now, but I hope that the hon. Gentleman will take it down and will report it to his constituents in Torquay. He may even climb back into the House on the basis of it. But I do not believe that the remission of £25 million of Stamp Duty is the most important problem that confronts the Chancellor of the Exchequer when he is unable to find the money to provide invalid cars for those disabled in industry. I hope that the hon. Gentleman will report the whole of that statement in full to his electors and see what they make of it.

I know what my sense of values is on this, and I am delighted that it differs from that of the hon. Gentleman.

Mr. F. M. Bennett

Come to Torquay.

Mr. Callaghan

I would not bother to come to Torquay, although it is a wonderful place, one of the most beautiful I have ever visited. But there is a great deal of missionary work to be done there. Halifax, of course, is a different proposition. If the hon. Member for Halifax were to invite me to come there and debate this issue with him, that would be worth doing.

Mr. Houghton

If my hon. Friend is going to Halifax, he had better come to Sowerby, too.

Mr. Callaghan

There are more sinners to be recovered in Halifax than there are in Sowerby. I am very willing to go to Halifax with the hon. Gentleman. Apparently he is not offering the invitations quite so freely as the hon. Member for Torquay. However, the offer is open and I shall be delighted to debate this issue with him in Halifax.

There was this question of investment. There seemed to be an awful blurring in the mind of the hon. Member for Nottingham, South as to what investment was. There are two different types of investment. One is the investment in which we start new schools, factories, railway lines, roads, plant and machinery. This is one form of investment which we agree must be very high and must be increased. There is the other form of investment which comprises those with spare Euro-dollars or Euro-sterling in the Continent of Europe trying to invest that money in the Stock Exchange. I agree with the Economic Secretary. That type of investment, which is entirely different from the other form of investment, with which we all agree, could on occasion be of benefit. But it could also be a great disadvantage to us and could influence the position of sterling very substantially.

The Swiss, as I think is becoming increasingly known, certainly on occasion, if not continuously, impose a penalty on those who wish to invest money in Switzerland. They make people pay interest for the pleasure of investing there because the Swiss do not want it. [Interruption.] The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) is an expert and if he has some marginal emendation to make, I will give way.

Sir Henry d'Avigdor-Goldsmid (Walsall, South)

I am delighted to take advantage of the hon. Gentleman's kindness, because he has got the facts wrong. The Swiss penalise people who do not invest. They penalise people who leave their money in the bank in the most dangerous form. If, on the other hand, they purchase investments in Switzerland there is no penalty of any sort. Therefore, whatever the argument may be, it is not correct.

Mr. Callaghan

I withdraw my flattering remark that the hon. Gentleman knows what he is talking about, because he does not—[Hon. Members: "Oh."]—not on this aspect of the matter. There has been a penalty for a considerable period if one invests in Switzerland from overseas, and they charge interest for the pleasure of leaving one's money there. This is precisely the sort of investment which the hon. Member for Torquay wants to encourage here, and which, as my right hon. Friend the Member for Battersea (Mr. Jay) says, leads to a great deal of hot money coming into this country.

Somebody talked about long-term portfolio investment. What on earth does that mean? There is no such thing. It is a meaningless jumble of words. There is portfolio investment, of course, but it is as longor as short as the man who purchases it wishes it to remain long or short. He can sell it straight away and embarrass us within weeks or months. I am not keen on encouraging a great deal of this type of investment through Europe into this country. As I said on an earlier occasion, I would sooner see them building up their own exchanges on the Continent of Europe.

I believe that hon. Members opposite are so interested in this because of the brokerage commissions. That is where the money is to be made and that is where the stockbrokers are. There is no doubt that they hope they will get a little more business and make a little more money this way. This is a typical way for the Conservative Party to behave, and they are behaving in a typical manner. I do not complain about it. Now, thank goodness, the eyes of the people are opening to what hon. Members opposite are doing. I think that their capacity for mischief is becoming exhausted and the time in which they are able to wreak it is running out, so that we shall be able to get back to a form of government which will be in the interests of the people—not in the interests of the Stock Exchange or of stockbrokers opposite, or the City, but in the interests of Britain.

Undoubtedly, the City of London can on occasion operate against the interests of British industry. It has done so in the past. It can do so again. Our concern on these benches is to ensure that, as far as possible, the interests of the City of London shall harmonise with those of British industry and the British economy as a whole. If they do not harmonise, then it will not be the interests of the City of London which will be placed first but the interests of the economy as a whole and the interests of British industry. That is what matters.

The Economic Secretary has told us that he would not accept these Amendments even if they were in order, so there is no opportunity for us to take this matter further, but I tell the hon. Gentleman that we shall remember it against him and remember it against the party opposite that they believe that, after 16 years in which the Stock Ex change has boomed, in which there have been more transfers each year than in the preceding year—

Mr. du Cann

indicated dissent.

Mr. Callaghan

Does the Economic Secretary deny that?

Mr. dn Cann

I was not denying it at all. As I understand the position, during the last 11 years or so, many more people have become investors in British industry. Lord Ritchie, the chairman of the Stock Exchange, said the other day, I think, that there were a further 500,000 on the threshhold of investing. There are 1,200 investment clubs where there were almost none five years ago. There are now, I think one of my hon. Friends reminded us, about 1 million unit trust investors—probably four times the number that there were five years ago. I regard this as a thoroughly desirable trend, and I am certain that the ideal of a property-owning democracy is something which is really attractive to people in this country, contrary, apparently, to what the hon. Gentleman thinks.

Mr. Callaghan

The Economic Secretary is bearing out my point. During the past 16 years, since the duty has stood at 2 per cent., the Stock Exchange has moved ahead every year. There have been more and more transfers each year. There is no evidence that people have been deterred. All the evidence points the other way.

Of course, this is a matter of taxation, which no one likes. No one likes paying for telephone calls, for wireless licences, for postage stamps. No one likes paying the tax on cigarettes, on whisky, on beer or on Stock Exchange transfers. If any thing is to be singled out, it is in the interests of hon. Members opposite to see that Stock Exchange transfers come first in the order of reliefs. I shall remember this against the Economic Secretary and against the party opposite, as a very clear indication of their sense of values and their sense of priorities.

Amendment negatived.