HL Deb 23 May 1950 vol 167 cc446-64

6.10 p.m.

Debate resumed.


My Lords, when the noble Lord who had just resumed his seat before the intermission and I entered another place on the same day in November, 1922, I am sure it cannot have crossed the mind of either of us that nearly thirty years later it would be my privilege to congratulate him on his maiden speech in your Lordships' House. It would be an impertinence on my part to comment upon the matter of the noble Lord's observations. He has spent a lifetime in public controversy and passed through many ministerial appointments, finally ending up as a Cabinet Minister. Therefore, obviously on any subject, and particularly on that subject which is dearest to his heart, he has a contribution of value to make. I should not like this occasion to pass without saying that during the seventeen years that he and I sat opposite to one another in another place I never heard about him, from any member of any Party, any word other than of admiration and affection. I have a specially warm feeling for him, because some years ago he was very kind to my eldest son when he spent three months working in the Durham coal mines. Needless to say, we shall have the pleasure of hearing from the noble Lord on many future occasions, and we can be quite certain that every time he will speak with great sincerity and integrity.

My Lords, the difficulty of any actor trying to play Macbeth is that he has to be absent from the stage for twenty minutes during the tribulations of the Macduff family and, therefore, has to re-create the atmosphere which was there before he left. Now after an intermission we have to re-create the atmosphere of our economic debate. Anyone who votes Conservative, I venture to submit, desires above all things a substantial reduction of taxation, and a favourite adjective on the lips of all Conservative spokesmen in this connection is the word "drastic." "We must have drastic economy," they say, "leading to drastic reduction of taxation." That remark is invariably met by the retort which the noble Lord, Lord Pakenham, made this afternoon: "Show us where you will get it." This retort is by no means popular with responsible Conservative spokesmen. They are apt to say: "Put us in power and we will show you how"; or, "I cannot commit myself without knowledge of the inside figures," or something of that sort. One can thoroughly sympathise with responsible Conservative spokesmen in these somewhat evasive replies, because naturally they are afraid that if they commit themselves to anything definite the words they use may be taken out of their context and used in propaganda against them; and, moreover, their words may be held to commit the official policy of the Conservative Party. But in the dim obscurity of this Back Bench I am not handicapped by any of these inhibitions and, with your Lordships' permission, I propose to attempt for a few minutes to give you my idea of the definition of the word "drastic."

One of the commonest illusions under which the devoted electorate suffer is the idea that all these social benefits which they enjoy are obtained by the congenial process of "soaking the rich." This idea is carefully fostered by Socialist spokesmen—as witness Mr. Douglas Jay in the penultimate sentence of his speech in moving the Second Reading of the Finance Bill in another place. He said that the Welfare State has to be paid for, and we are paying for it by high taxation of companies' profits, of big incomes and of large fortunes. Let us examine that. The first point to be settled is what constitutes a rich man. I have often been intrigued by this, particularly in connection with the National Savings Movement about which Lord Pakenham spoke this afternoon. At what point in the eyes of the Socialist orator does an individual cease to be a deserving citizen who is unselfishly putting aside part of his hard-won earnings in order to lend to the Government and become instead a hard-faced capitalist hoarding his ill-gotten gains and grinding the faces of the poor? There must be a dividing line, and perhaps the noble Lord who is to follow me will devote a moment or two to clarifying the point.

At any rate, we must assume that anybody who pays surtax belongs to the latter undesirable class. It is all the more disappointing, therefore, to find that we get only £120,000,000 a year from surtax, a mere 2½ per cent. of our total expenditure. Then let me turn to death duties, from which we get £195,000,000, representing about 5 per cent. of our total expenditure. It cannot be said that anything like the whole of death duties is culled from rich men, because death duties start on estates of £2,000, and a person who after a lifetime of effort has not saved, say, between £2,000 and £8,000 has not been extremely successful except of course in a certain walk of life, and it cannot be argued for a moment that a person who leaves under £10,000 is a rich man, As the estates of those persons vastly outnumber the estates whose spectacular leavings are thought worthy of printing in the popular Press, I submit that it would be generous to assume that £130,000,000 of death duties are culled from rich men. Add that to the surtax, and it gives a total of £250,000,000.

Let me now turn to the profits tax, which brings in £270,000,000. Sir Stafford Cripps himself tells us that £60,000,000 is found by the undistributed profits tax, though that can be put back by companies to make good deterioration and depreciation. What of the odd £210,000,000? Reflect, my Lords, that in the Midland Bank there are 73,400 shareholders, and of that number no fewer than 38,000 hold £100 of stock or less, and a further 24,000 hold between £100 and £300 of stock. I venture to think that, in due proportion, that remark is true of any other public company. Therefore, it is obvious that a very large number of shareholders are by no means rich people; and so I submit that if I allow £150,000,000 of the profits tax as attributable to rich men that would be an over-generous estimate. Add that amount to the others and you get £400,000,000.

Now let us tackle the income tax figure of £1,406,000,000. We have a useful figure here, culled from Whitaker's Almanack for 1948. We find that in 1948 20,000,000 people paid £455,000,000 in pay-as-you-earn income tax. Straight away, that reduces the £1,406,000,000 to £1,000,000,000. But what of the remaining £1,000,000,000? There are 9,000,000 people whose incomes are between £250 and £500 a year; there are a further 1,500,000 people whose incomes are between £500 and £750 a year, and there are a further 1,000,000 with incomes between £750 and £2,000. Therefore I submit that if I agree that £600,000,000 of the income tax return is culled from rich men, that is a generous estimate. Add that to the others, and you get £1,000,000,000. What is the object of all these calculations which I have been submitting to your Lordships? It is that the idea that all these social services are paid for by rich men is entirely inaccurate. £1,000,000,000 will pay the interest on the National Debt—£537,000,000—and about half the cost of the Armed Forces—£781,000,000. That is right and proper because, as we know from a thousand Socialist platforms, rich men have always encouraged past wars because of the profits they made out of them, and will encourage future wars with the same laudable object. Therefore, the whole of that £3,000,000,000 of our annual expenditure is found not by rich men but by the devoted citizens whose votes all Parties so sedulously solicit.

I have rounded the corners, and am getting into the straight to deal with this word "drastic." Before I get there may I make two points? The first is that it is not possible to "soak" the rich any more—at any rate, so far as their incomes are concerned. Socialist politicians admit that themselves, and that is why the younger and brighter intellects among them are now so keen upon another capital levy. It is important that we should pay great attention to the opinions of these younger rising men, because, of course, Messrs. Attlee and Bevin and so on, after long and honourable service, are obviously on the way out. Whether they will in due course join the noble Viscount in these restful regions remains to be seen, but it is the younger men whose opinions are of growing importance to us.

Such younger men as Mr. Douglas Jay, Mr. Gaitskell and Mr. Crossman—two of whom, by the way, have been gathered to the breast of Sir Stafford Cripps at the Treasury—are openly in favour of a capital levy, and always advocate it under the ægis of their prophet, Kingsley Martin, of the New Statesman. They have not in mind a 5 per cent. affair, such as that inflicted by Sir Stafford Cripps—they talk about a large capital tax. So also do the twelve bright young men who wrote that pamphlet known as Keeping Left shortly before the Election. I am not seized of any pronouncement by the noble Lord, Lord Pakenham, on this subject, but of course he is of that vintage. As I have said before in your Lordships' House, he is the only bud in bloom in an otherwise somewhat blown bunch. I3ut it is only reasonable to suppose that if he is to keep in step with leis contemporaries in their march towards the heights of Olympus, then it is highly likely that he shares their views on this point.


If I may interrupt the noble Lord, I would point out that I am much more likely to share the views of the Minister of Town and Country Planning and the Secretary of State for War, having been educated at the same school as those Ministers, Eton College, while nearly all the gentlemen mentioned by the noble Lord were educated at Winchester, which I believe was the home of the noble Viscount opposite.


I understand that all the more reputable representatives, in both Houses and of both schools, repudiate those theories, but that those who have attained to wealth and distinction on the Government Benches from both schools join in support of what my noble friend is now expounding.


I will not enter into this inter-school business. I cannot help thinking that it is designed to put me off my stride, so I had better get on to the other points which I was making, one of which was with regard to the word "drastic." That is a very important point—namely, that no drastic reduction of taxation can be made without a drastic reversal of policy. Now if you meet any average Conservative in the street, he will ask: "When are you going to get rid of this wretched Government?" I always say, when I am asked that question: "Well, what do you expect a Conservative Government to do for you?" Ten to one, he will say: "I expect a drastic reduction in my taxation." I always say to him: "Now how would you bring that about?" He will say: "I would get rid of half of these blasted civil servants."

Now I want to quote Mr. Benson, the honourable Member for Chesterfield. Mr. Benson, it is true, is a Socialist, but he is a highly respected one and a very moderate one. He has been for many years a member of the Public Accounts Committee. In his speech on the Budge Resolutions in another place he said, in effect, that high taxation has come to stay because of the Welfare State, and that no substantial reduction can be made without a reversal of policy. He went on to deal with this question of the Civil Service. He said that there may be some waste in the Civil Service, but that under existing policies it would be quite impossible to reduce the Civil Service by 25 per cent. Even admitting that it could be reduced by 25 per cent., taking the average salary at £400 a year, there would be a possible saving of £44,000,000 a year. I do not despise £44,000,000 a year, but it is equal to only 4d. off the income tax—and that is not my idea of the word "drastic."

Now, my Lords, I am on the uphill to the post in dealing with this word "drastic" and it is here that I come under the whip. If I have a herd of one hundred cows and insufficient food to feed them, what constitutes the word "drastic" in relation to the reduction of my herd? Obviously, only such reduction as will cut down the number of cows to tit the food. Let me apply that to taxation. The taxation in this country is 8s. 4d. in the £ of the national income. The taxation in the United States, which is the next highest taxed country, is equivalent to 5s. 6d. in the £ of the national income. The taxation in all other countries is considerably lower than that. Is it thought that, in the long run, we can succeed with taxation 25 per cent. higher than that of the United States—the next most highly taxed country? If it is apparent that we cannot, then, of course, a reduction of something like £1,000,000,000 a year will have to be made in our annual expenditure—and it will not surprise me if in years to come something of that sort is forced upon us. I am not suggesting that to-day; but I do suggest a reduction of £600,000,000 a year in our national expenditure.

How can that be effected? I should save £200,000,000 on the food subsidies. In theory, that would increase the cost of living of a family of four by 5s. 6d. a week. Even if that were so, I believe that it could be met by a reduction in taxation which would more than compensate for that. But I do not believe that, after the first two or three months when things settled down, the halving of food subsidies would lead to anything like such an increase in the cost of living as that. I believe that the price of food throughout the world, so far as we are concerned, would tend to right itself. We should get on to a solid basis instead of the present fancy basis. There may be something in what Mr. Stanley Evans said (and was duly crucified for saying it in such a tactless way) that one part of the community is being unduly cosseted at the expense of another. Anyway, I should get £200,000,000 there.

I should get another £200,000,000 from the National Health Services. I do not know whether your Lordships think it desirable that a person who can perfectly well afford to pay should be able to go and get a couple of pairs of spectacles free of charge—not steel-framed, standard affairs but nice folding plastic ones—from an expensive optician in Wigmore Street, at the public charge. Only a few weeks ago I was told that a ship at Liverpool was held up from Saturday to Tuesday, unable to sail because several Indian lascars among the crew of that ship had not got their free spectacles; delivery could not be made before Monday, and the lascars would not sail without them. Is it right that anybody can get a nice wig, or dentures, or surgical boots, or bath chairs at the public expense whether he or she can well afford to pay for them or not? I consider that such action is financial insanity. I think that any nation which persists in such a course is bound to find itself on the financial rocks. These two services spend about £900,000,000. I have said nothing about the Fighting Services, which spend amongst them over £781,000,000. If there is not any waste in the three Fighting Services, then they are the only Government Department in the history of man in which that is so. It is the same with Education and in other Departments. Therefore, I should confidently rely upon getting a 10 per cent. reduction from the remaining £2,000,000,000 which is covered by the various Departments.

I have struggled past the post and now I come up to the congenial task of suggesting the manner of splitting up the prize money—this £600,000,000 which has been saved.


This is an exceedingly interesting calculation, and we are much obliged to the noble Lord. May I ask whether we are to understand that he considers he will get his £200,000,000 by knocking off the spectacles and the bath chairs and so forth?


No. I ought to have spent a little longer on that subject, but I did not want to detain noble Lords. It might, however, mean that there would have to be a drastic modification of the administration of our hospitals—and I do not know that that would be a bad thing. The treasurer of one of our largest hospitals told me last week-end that the cost of running his hospital had exactly quadrupled since the hospitals had been nationalised. I was talking at lunch to-day with someone also connected with hospitals and he told me the same thing. Indeed, I was myself connected with one of the London hospitals for some time, until I had to leave it on account of pressure of other work; and I saw that the cost of running that hospital was increasing by leaps and bounds. I have taken care to say that it is not possible In effect these drastic reductions without a reversal of policy. I know that I lay myself open to criticism in making this suggestion but, after all, I am speaking from an obscure position.

Let me get back to the question of the "prize money." I should divide my £600,000,000 into four packets of £150,000,000 each. £150,000,000 represents 1s. off the income tax. If you subdivide that into two packets of £75,000,000, one packet would make a 1s. 6d. reduction on earned income, and the remaining £75,000,000 would mean a 6d. reduction on unearned income. That would be a great added incentive to all persons in employment. The second packet of £150,000,000 represents exactly half the purchase tax. I understand that the purchase tax is very unpopular with housewives, and this amount of money would certainly help towards a reduction in the cost of living by doing away with half the purchase tax. This would mean that only articles of luxury would be liable to purchase tax. The third packet of £150,000,000 represents more than half the beer duty of £267,000,000. That would mean a reduction of about 5d. or 5½d. on the cost of a pint of beer.

My last £150,000,000 could be used to knock off a quarter of the £610,000,000 which we spend on tobacco. For dollar reasons I do not suggest that. We could take a choice as to what we should do with that £150,000,000. Supposing, for instance, that we were totally to abolish the entertainment tax of £46,000,000 and also the duties on tea, cocoa, coffee, sugar, matches, artificial silk and silk, that would take £36,000,000 making a total of £82,000,000. If you were to remit the £60,000,000 of undistributed profits tax, thus enabling firms to strengthen their position in the competitive field, that would add up to £132,000,000 leaving £18,000,000 to play with to make up my final £150,000,000. Perhaps that could be allotted to reducing the tax on petrol for public transport vehicles.

There are my suggestions, made on my Own, and I maintain that they would lead to a reduction in the cost of living and a great increase of incentives to all classes of the community. I do not suppose for a single instance that anybody will take the slightest notice of them, because unfortunately what I have suggested is not the policy of the Conservative Party. The policy of the Conservative Party, so far as I can understand it from The Right Road for Britain, is by no means that. What I am afraid of is that Conservatives throughout the country think that the coming into power of a Conservative Government will mean a drastic reduction in their taxation. That will be impossible unless, in my submission, the Conservative Party embrace a reversal of policy. It may be said that such a suggestion is reactionary. It is reactionary. When you see a man walking towards a precipice you do not go and push him forward; you rush to drag him back. That, I believe, is absolutely necessary in this matter of economy and taxation.

I am most anxious that there should be no false pretences in this matter. We are always told to speak the naked truth, to "set the people free." That is what I want to do—to set them free to the extent of £600,000,000 to spend their own money instead of having it spent for them by noble Lords opposite and their Party. What I have said this afternoon to your Lordships is my idea of the naked truth in connection with the question of economy and taxation. I do not believe that either Party will adopt it, but I believe it will be forced upon them, as I think either the noble Lord, Lord Cherwell, or the noble Lord, Lord Brand, said, "by other circumstances," or, to use a rather pompous, pedantic phrase, "by the irresistible forces of economic reality." That I believe is the only way in which eventually economy will be achieved. I have stated what I believe to be the truth in this matter. It is for that reason that I have inflicted this speech upon your Lordships.

6.43 p.m.


My Lords, may I first of all join with the noble Lord, Lord Blackford, who has just sat down, in congratulating the noble Lord, Lord Lawson, who was for so long a colleague of mine in another place, and say how much noble Lords on my side of the House, as I am sure in other parts of the House, enjoyed his contribution in his maiden speech. We shall be very glad to hear him again. There is something about his experience and way of life which commends itself to all classes in the community. He has a reserve of knowledge on questions of industry and social progress which I am certain will contribute much of value to our discussions.

In view of the lengthy statement already made by my noble colleague, Lord Pakenham, I do not propose to speak for many minutes this evening. The noble Lord, Lord Cherwell, made a very long contribution. Sometimes he irritated me and sometimes he made me feel that I should like to indulge in a real half-hour of political fisticuffs. But I do not propose to engage in that to-night. The more I listened to the phrases which were intended to lash, the more I remembered that, after all, there was a time when we were working together for the common safety and endeavouring not to cut Parties to pieces but to do our best in the work of the salvation of our country. Largely, what noble Lords on this side have to do is to justify the work which is being done, under the present representatives of the electorate, to secure salvation from our present economic troubles, just as we needed to be saved from the immediate physical menaces during the period of the war.

I think that the noble Lord who has just sat down has been a good deal more honest in his approach to this subject than often is the case with others. He is to be congratulated on thinking aloud, as he has done. He is obviously speaking entirely without notes, and from a careful study of what he considers the national Budget should be. He has presented it to the House with great sincerity. I believe he is right in what he says about those who agree superficially with Conservative Party propaganda in their treatise—that a great number of them, as he suggests, are inclined to think that if they voted Conservative they would get the kind of special reliefs in taxation that he himself has worked out so meticulously and so cleverly from his own ideas on the subject. That would be a great pity. Of course, what the noble Lord said really comes into line with a comment, very much resented at the time, made by the Prime Minister. Just before the Election, when Mr. Attlee read the short version of The Right Road for Britain, he described it as "a dishonest document." It seems to me that the noble Lord, Lord Blackford, confirms the view which the Prime Minister took on the matter.

However, although we can say that we are entitled to have our own opinions, I do not believe that we can get away from the fact that in all the great international bodies which are considering the economic problems of the world and the things required to be done in order to deal with problems, the general consensus of opinion is that there is no country in the world which has made such an extraordinary contribution to its own recovery and to world recovery as this country has. You can check the reports issued in the E.R.P. publications, 0.E.E.C. publications and the like. I think it can be shown that no country in the world has made a greater contribution than our own, especially when one remembers the handicaps from which we started. It does not help very much when we are subject to the continuous denigration which goes on in newspaper, in speech, in statement and in what the Chancellor of the Exchequer allowed himself to refer to in his Budget Speech as the kind of "gossip" that preceded devaluation last year, which led me to say the things I said at Oxford (of which the noble Lord, Lord Brand complains), about it being one of the factors which led up to devaluation.

I am not an economist and I am not a banker. I have not the special outlook of the noble Lord who has such great experience. But, having had some connection with ordinary business, my own view is that the basis upon which you could expect the greatest confidence and growing confidence in an exchange rate would be the extent to which you could ensure from your own people such self-denial of consumption that they could afford to increase their volume of exports. Right through 1948 and up to the beginning of February, 1949, that was the position which was being achieved by the British people under the general direction of the policy of the Government in charge. Then it was that a situation was created—not I think, as was suggested just now by the noble Lord, Lord Brand, from people reading figures which were published, but from actual active propaganda against the position of the British Labour Government—that led to a holding off from the market, a holding off which grew quite naturally from business men in America. Once that starts there is an understandable feeling that if only they hold off a little longer, devaluation is likely to come and then they will be able to replace at a cheaper level their stocks that they use in the meantime. That went on over six months. I do not propose to go more deeply into that question. As I was named by the noble Lord, I wanted merely to make my personal opinion perfectly clear.

The noble Lord, Lord Cherwell, has spoken about how much more labour is required from a Britisher to provide goods which will bring back the same number of dollars. That is a perfectly fair argument to make, although if I went with a small toothcomb through all the statements of Conservatives before devalution I should find a good many people who were saying things which were likely to contribute to the hastening of devaluation. My Lords, the extraordinary thing is that, in spite of this additional handicap of devaluation in putting up the prices of what we have to import in the way of food and raw materials, the achievements in the last eight or nine months of the British people—those leading industry and those who work in industry—in meeting that situation, has been quite remarkable. Instead of having a whole series of criticisms hurled at the Government on this particular point, I think that we are entitled to some credit for the fact that those in industry and commerce are doing so well in this matter.

When I listen to debates of this kind at the present time I always think of my own experience in Sheffield between 1921 and 1926. I heard the noble Lord, Lord Cherwell, talk about a comparison of rates of increase in productivity in certain years. I should want a very careful study of all the lines of production for each of the years I have mentioned before I accepted the conclusions at which he arrived to-day. If I were dealing with steel in the city which I know so well, I should want a comparison of production in 1920–21. I am speaking from memory, but I think the national production of steel in that year, under the wonderful alternative policy to Socialism, the deflationary policy, was 6,000,000 tons. Under the policy which has been adopted by the Socialist Government—in spite of all the criticisms which are hurled at us about this control and that restriction interfering with production—we have nevertheless raised the production of steel in the first quarter of this year to the equivalent of over 17,000,000 tons a year.


May I venture to ask the noble Viscount how much of that is due to the steel masters and the steelmakers, and how much is due to His Majesty's Government?


I should say first of all that if the policy adopted in 1945 had been that of the Government of which the noble Viscount was a junior member in 1921—namely, of leaving the industry absolutely free—the possibility of getting what the Government have got to-day would have disappeared.


As the noble Viscount has challenged me, I will challenge him now to say whether or not the policy of leaving the steel industry free to carry on, whether under broad directives or not, is exactly the policy which the Conservative or National Government introduced. And is it not exactly the policy which the Government are operating to-day, and which I sincerely hope will go on operating, instead of resorting to nationalisation?


There was, of course, the whole of their deflationary policy, starting with the Geddes Committee.


I am not talking about the deflationary policy. The noble Viscount said that his Government had introduced some system of dealing with the steel industry. I am asking him whether what he calls the control of steel to-day is not exactly that which was operating before and during the war, and which my Party has said is the right way of operating the partnership—and not nationalisation. I challenge the noble Viscount to say that this is not true.


I would say on that, of course, that the partners in the steel industry are not composed entirely of those who manage. There are a vast body of people working in the industry, from the unskilled labourer to the highly skilled mechanic, whose contribution to the recovery in steel production has been immense and who start off from a feeling of confidence in the Government they have elected. I speak with knowledge in this matter, because I represented that constituency for so long, and there is not a single great steel-producing centre which has not given overwhelming majorities to Labour in the last Election, because they believe in the policy that we are carrying out.


"Are carrying out"; not "are going to carry out"?


I said "are carrying out."

I now turn to one or two of the specific points that the noble Lord, Lord Cherwell mentioned, and I particularly want to say a word or two about his references to the wisdom or otherwise of introducing the petrol tax and the purchase tax upon commercial vehicles. I am sure that he knows, from his study of economic statistics of other countries, that most countries have endeavoured since the war to ensure some economy in the use of petrol by means of increasing the price, and that this commodity still costs very many dollars, even when it is the so-called petrol from the sterling area, because of the arrangements for the distribution of oil in the two areas. Prices in France, Belgium and Italy are still higher than the new price which has arisen as a result of the new tax in the Budget. During the past three or four years the consumption of petrol has been partially restrained in this country by the shortage of vehicles, but owing to the notable increases in vehicle production which have taken place this restraining factor is becoming steadily less powerful.

The rate of the petrol tax had not been increased in this country since before the war, and I therefore think it is fair to argue that this commodity, like so many others, should make an increased contribution to the revenue. It may be, too, that the new tax, coupled with the purchase tax on commercial vehicles, will lead to some saving in the consumption of commercial petrol. This might, in time, make it possible to make it a little better for private motorists; so I do not think there is any very great harm done in that direction. With regard to commercial vehicles, I would say that the noble Lord, Lord Cherwell, seemed to think that we were trying to do something surreptitiously in favour of the railways. He said that if that was so we should say boldly that we were taxing these people in order to assist the railways. I do not think that is the position at all.


I do not think I said that. I congratulated the noble Lord on the happy coincidence by which this tax did help the railways, in spite of the fact that it was not planned to do so.


If anybody connected with the Railway Executive were asked whether he would accept that last statement of the noble Lord, I believe he would largely disagree, because of the extent to which the Railway Executive are themselves interested in road transport. The general increase in the tax upon all oils affected by the duty shows that it would be exceedingly difficult to argue that this tax is going to be of considerable benefit to the railways.

Of course, the amount of investment in the production of such vehicles must be restricted if we are to achieve maximum exports. It is clear that that must be done if we are to maintain a proper balance in the use of such production in our fight for recovery and external economic stability, in the manner to which Lord Brand has referred. At, the beginning of 1949, it was expected that about 50,000 new commercial vehicles would become available on the home market. In fact 100,000 became available. In terms of money, the anticipated expenditure on this item in 1949 was £35,000,000, but the actual expenditure was £72,500,000—more than twice the target. There might perhaps have been some justification for this if the number of commercial vehicles on the road had been demonstrably below our needs. In fact, this has not been so. Before the war there were about 500,000 commercial goods vehicles in the United Kingdom. It is true that by the end of the war this number had fallen somewhat, but by the end of 1949 it had risen to no less than 800,000. The new tax, therefore, is a financial measure designed to strengthen the administrative methods that have been used to restrict this unduly large volume of home market sales.

Some remarks have been made about the use to be made of the revenue which derives from this duty. Without going into detail, I must say that I think it is of great importance to observe that the levying of this duty enables us to bring relief to that section of income tax payers by whom it was most needed. I would especially have said to the noble Lord, Lord Blackford, had he still been in his place, that it is important not to forget the considerable extent to which the reliefs given by the Chancellors of the Exchequer in the last three or four years have brought help to those in the lower ranks of Income tax payers. More than 4,000,000 people who were paying income tax during the war have been so relieved that they do not now pay any tax at all. Many other taxpayers in the lower division referred to by Lord Cherwell—that is those with incomes up to £500 a year—have had their taxes greatly reduced. By reason of this additional sum which is being raised, further relief is being brought to this section of taxpayers, and, because of its general application, it will also bring relief to those who get somewhat more than £500 a year, which was the limit mentioned by the noble Lord, Lord Cherwell.


I said: "From £500 a year."


I should say that this relief will also be an actual stimulus to production. There has been criticism from time to time in the last two or three years to the effect that where overtime was needed in industry, in order to keep up production and the export drive, the incentive to work overtime was being killed by disinclination on the part of the workers in cases where they had to pay income tax under the P.A.Y.E. system on the extra money which they earned. There will now be a considerable relief in that direction, which will act as a stimulus.


I am sure that when the noble Viscount reads my speech—if he does read it—he will see that I never complained about reducing this taxation. I am delighted to and him giving such admirable and eloquent support to our view that reducing taxation is a stimulus to production.


I hope that the noble Lord, in further propaganda efforts, both here and in other places, will give proper credit where it is due, and will make clear to what an extent taxation relief has been brought to the people and how it is a stimulus to production. The noble Lord almost tempts me to say what I had intended to say in more detail on the question of taxation and incentives. But the hour is late and after the long debate which we have had it hardly seems necessary. I would say, however, that there cannot be serious argument against the extent to which this relief has been given in general to what I would call the working end of the income tax-paving community. There is no longer any great deterrent to extra effort by reason of the taxation which is imposed. But there is something else which is contributing enormously to the volume of production which has been attained. I hope that the noble Lord will look upon that production first of all in the light of the figures which my noble friend Lord Pakenham has given concerning the first quarter of the year. When the figures for the whole year are available, different and rather fluctuating positions according to holidays and other periods may no doubt be disclosed, but if the same general tendency reflected in the figures for the first quarter continues right through the year, I think it will be a matter for warm congratulation to all concerned in keeping up this great effort.

Again, there is a tendency to forget another point of considerable importance. It is a fact that occasionally we get most irritating and suddenly projected pieces of what I call industrial insubordination—engendered very often by Communist cells. But people forget that the percentage of time which has been lost under the Labour Government is infinitesimal compared with what was lost during the reconstruction period which followed the war that ended in 1918. I think it would be just as well to mention the comparative figures at this point. The number of days lost in industrial disputes from V.E. Day in May, 1945, to April, 1950—a period of five years—was only 11,000,000. In the corresponding period from November, 1918, to October, 1923, it was no less than 178,250,000 working days. In other words, the comparison shows that less than one-sixteenth of the amount of time lost in the previous period was lost in this later period. That is very largely, of course, due to the general confidence of the working class in the Government which they have elected.

Another matter which I want to stress is the extent to which, in regard to costs of production, the leaders and the members of the great and powerful trade unions have stood behind the general policy of the Government of the country in all these matters. We have, I feel, great reason for satisfaction here. We also know, however, that if we are to achieve a victory in our struggle for complete economic freedom for this country it will not be enough to look to others for aid after 1952. A great deal more yet remains to be done. It will not be possible to achieve success unless we can continue our efforts on the lines which have been outlined to-day to prevent the dire results of inflationary pressure. It will not be done unless all classes in industry contribute of their best in keeping up the drive for further increases in production and increased exports.

I believe that, if the case as to what is being done is fairly stated, the Government are undeserving of the derogatory criticism which we have sometimes heard. The critics are even beginning to forecast the need for further devaluation. That is the forecast which is being made in certain circles—I have heard mention of it myself—in spite of the increasing volume of production and the increasing volume of exports which ought to create increased confidence in the maintenance of the rate of exchange. I believe we shall come through our difficulties successfully. I feel that the Government can appeal to the nation for continued support in these efforts for economic recovery; I think we can justifiably ask employers and workers alike to stand behind that general drive.

One other thing I should say is that I support what my noble friend Lord Pakenham has said in thanking all those who have done so much and sometimes thankless work in maintaining the National Savings Movement. There are people of all Parties in every area who are doing a job in this connection, purely far the public benefit which they hope will accrue. We assure them that it is very necessary to obtain that public benefit. We would thank them and ask all who possibly can to assist us to expand the Savings Movement, because it is certain that unless we can get the proper amount of capital investment we cannot make our recovery secure. If we can get an increase in personal savings, in addition to what we provide for capital investment by taxation, we shall go all the more quickly towards ultimate recovery.


My Lords, on behalf of the noble Lord, Lord Layton, I beg to move that the debate be now adjourned.

Moved, That the debate be now adjourned.—(Lord Shepherd.)

On Question, Motion agreed to, and debate adjourned accordingly.