FINANCE (No. 2) BILL. (Hansard, 11 June 1945)

§ THE LORD CHANCELLOR (VISCOUNT SIMON)

My Lords, I rise to move the Second Reading of the Finance (No. 2) Bill. If your Lordships have provided yourselves with a copy of the Bill, you will be struck by its slim and graceful appearance. The explanation is that it is not the main Finance Bill of the year at all, but merely contains a few provisions of the main Bill which it is either necessary to pass now or just as well to pass now since they are quite uncontroversial. The Finance Bill that was introduced in another place after the Budget Resolutions had been adopted and was printed on the 3rd May is what you would expect, in these modern days, 530 a Finance Bill to be: that is to say, it is a volume of over fifty pages of print, it has a very large number of clauses, and I think several Schedules, and is interesting reading to those who like reading that sort of thing. The present Bill, however, is very attractive because of its brevity.

There is very little left in our system of taxation which requires to be annually renewed by Statute. In the old days, when some of us were younger, we used to be taught that there was one direct tax and one indirect tax which were a matter of annual enactment, and it was alleged that this was for the purposes, among other things, of securing an annual meeting of Parliament and of establishing the control of the House of Commons over the system of taxation. As a matter of fact, there are other very good reasons why the House of Commons should control such things, and nowadays there is no need to provide that Parliament should meet every year— it meets nearly all the time. It still is the case, however, that the Income Tax Act has to be annually renewed, though the Tea Tax has not, and the most important clauses here are Clauses 3 and 4 which provide for Income Tax continuing in this present fiscal year at the present rate, and then the following clause, No. 4, which provides for what might hereafter be authorized in the way of Surtax or Supertax. I might perhaps just observe, in order to remove a passing anxiety, that though in connexion with the Surtax the figure of £1,500 is mentioned, the Surtax, as some of your Lordships will remember, only begins now at £2,000, and the lower figure does not, in itself, indicate a change of policy hereafter. Authority was needed, however, to start at a lower figure, and the decision will be taken later by Parliament as to the figure—not lower than that—at which the Surtax will in fact start. The other provisions are of a technical character, important to those they may affect, but not so important to others.

The first clause, which deals with the Customs Duty on hops and the like, has to be enacted now because the present provisions are provisions for four years at a time. It started in the year 1925, and four times five is twenty. If you add twenty on to 1925 you will find that 1945 is the year when there has to be another 531 four years' jump. The provision under Clause 2, regarding the Purchase Tax, is a useful provision because it may be that certain relief will be needed in the case of goods which, though not marked with what is called the "Utility" mark in some cases, may be marked in some other authorized way. Subsection (5), which increases the standard profit in certain cases for the purpose of the Excess Profits, is really designed to give additional help to the small trader. He is not to be compelled, in the calculation of his excess profits, to start at the minimum figure at which he often started before, because, in any event, there will be added to that minimum figure one-tenth of the difference between that figure and £12,000.

Lastly comes the provision in Clause 6 which varies the present statutory provision as to the permanent annual charge for the National Debt. The Finance Act passed, I think, at the time when the present Prime Minister was at the Treasury, fixed that figure at £355,000,000. The effect of it was that if you did not require as much as that to pay the permanent charge on the National Debt, you had at least to set aside that much. That was the limit, unless, indeed, the charge was more, when the larger charge had to be met. That figure has really passed out of the area of practical reckoning and it is better, therefore, to adopt the higher one of £465,000,000, which I am informed is very much like the amount which will be needed in the present year for meeting fixed debt charges. Those are the objects of the Bill. I feel sure your Lordships will pass it with alacrity, if only because of its brevity.

LORD STRABOLGI

My Lords, I can assure the Lord Chancellor that we shall offer no opposition to this slender and handsome Bill which he has introduced. I have only one observation to make. Since the long sickness of my noble friend Lord Arnold, his mantle has fallen on my shoulders and I shall go through the form of initiating the small debate which your Lordships devote to perhaps the most important Bill of the year, the Finance Bill. This time I want to make a suggestion for the Bill that will follow 532 this. The Lord Chancellor said that this is an interim, temporary measure and that some Government will presently have to draw up the real Finance Bill. Whatever the result of the forthcoming appeal to the country, I am at this moment addressing certain Cabinet Ministers and I venture to suggest that some consideration should be given to using our arrangement of taxes to encourage exports. I particularly address myself to the noble Lord, Lord Woolton, because he is still, I understand, in charge of reconstruction, and if it is his duty to look into these matters perhaps he will consider this point.

The system of differential taxation in this country is unpopular, particularly with regard to Income Tax, but with regard to excess profits perhaps it might be possible to consider those firms which are in the export trade and give them some rebate or allowance. In most cases it is far more difficult—and it will be especially so in the years ahead of us—to carry on the export trade, with all its risks and uncertainties, than it is to cater for the home market; and some encouragement, we suggest, should be given to those manufacturers and merchants who are engaged in the export trade to compensate them for this extra risk and trouble. Particularly in regard to excess profits, if there could be some tempering of the wind to the shorn lamb it might give a fillip to our export trade which would be of great value to the whole nation.