I beg to move, in line 7, to leave out from "oils," to "of," in line 8, and to insert "not being light oils."

The present Resolution removes the duty of 1d. a gallon from fuel, diesel and gas oils, but, as at present worded, it does not specifically include kerosene, and the effect of the Amendment is to bring kerosene within the range of duty-free oil. The steps taken in the Resolution are welcomed on this side of the House as representing a concession to industry, but we are deeply disappointed to find that kerosene has not been included in oils from which the duty is removed. When the duty of 1d. a gallon was originally imposed in 1933, the purpose was to help the coal industry, and kerosene was included I imagine as much as an oversight as for any other reason, because the consumption of kerosene in those days was extraordinarily small. Since 1933, however, the consumption of kerosene has gone up considerably, particularly in the field of agricultural tractors which use tractor vapourising oils, in other words kerosene. In the 14 years since the development of the original tax, the number of tractors engaged has gone up by several hundred thousand and all using kerosene are at present paying a tax of id. a gallon on every gallon they use. Some 95 per cent. of the vapourising oil in this country is used by agricultural tractors, so it is really a tax on agriculture. We all know what a hard winter agriculture has had, and my hon. Friends and I were hoping that the Chancellor would be able to remit this duty for the benefit of the agricultural community this spring. It is a particularly unfair duty, because, as the Resolution stands at present, the tax of 1d. per gallon is removed from diesel oil for diesel fuel tractors. We have the anomalous position that while diesel oil tractors go tax free, vapourising oil fuelled tractors have to pay the tax of 1d. per gallon. On the grounds of logic and consistency alone it seems that the tax should be removed from tractor vapourising oil.

3.45 p.m.

There is a further reason why the tax should be remitted. Tractors using tractor vapourising oil are those used by the small man, whereas the diesel tractors are used on big farms for deep ploughing of large tracts of land. By reducing the duty, it would be a great benefit to the small farmer, the man who is probably more seriously hit than any other member of the farming community. There is another and more unwelcome development regarding the use of oil fuel in the agricultural industry. There has been a considerable increase in Gulf prices in the last few months, which I think will be reflected in the next few months in domestic prices. One way to offset that increase of prices would undoubtedly be if the tax on tractor vapourising oil could be remitted. Rather more than half the kerosene used by this country is employed in driving tractors. The remaining 45 per cent. or so is used in the form known as burning oil for paraffin lamps, paraffin heaters, and paraffin cookers. Kerosene is essentially used for lighting and warming the poor man's home in rural areas. If kerosene used as burning oil could be excluded from the tax, it would be essentially of benefit to the relative poor agricultural worker.

The total quantity involved is not very large. My hon. Friends will probably be elaborating in detail some of the figures. Some 630,000 tons of burning oil are used each year, so that the total quantity is relatively small: On the other hand, the remission of tax would represent a great deal of benefit to the small rural workers' families who have to rely upon paraffin as a means of lighting and heating their homes. Well-to-do people do not require paraffin, and, therefore, would not benefit. It is essentially a help to the poor man in agriculture which is proposed, and in regard to tractor vapourising oil the small farmer with his small light-weight tractor would be benefited. I hope the Chancellor will see his way to accept the Amendment, the cost of which would not be great, but the value of which would be enormous.

I beg to second the Amendment.

There are arguments in favour of it, from the purely agricultural aspect and from the domestic aspect. I think it is fair to say that, in 1933, it was openly avowed that the duty on heavy hydrocarbon oils was introduced in order that assistance should, indirectly, be given to the sale of coal. That as a basic reason for reversing the process now, would appear to be perfectly sound. If by reducing the duty now, the demand on coal were to be reduced, I think it would be of very great national assistance. Anyone looking at the matter on that broader ground, would wish that the Chancellor should give way and lessen the demand for a product which we know is bound to be in very short supply. I also advocate the change, from the point of view of the cost to the country.

One hesitates in these days to come forward with any proposal to reduce the national revenue in any form, more particularly as His Majesty's Government, with a vast majority, are burdening us with such heavy expenditure. We have to face up to the need for meeting those demands so long as that majority exists, but I think this case is rather outside the ordinary field of request. To retain a duty which in any shape or form adds to the production costs of agricultural produce, whilst at the same time heavy subsidies exist on food, is not either right, or reasonable, or, if I may say so, sane. It seems to me to be going an extraordinarily long way round to do what is nothing more than taking money out of one trouser pocket and putting it back into the other, after it has passed through many hands, including those of the Chancellor of the Exchequer. There again, we have a fundamental reason for asking the Chancellor to reconsider this tax. To those who are actually engaged in production, it does not appear right to start this money off on this long career, when we are quite overburdened enough with a considerable Civil Service, which has to handle these complicated manipulations. We should simplify that sort of thing as much as we possibly can.

Finally, on the question of burning oil, the oil used for heating, cooking and lighting, in rural districts, it is quite impossible, at present, in spite of the wishes of all those engaged in agriculture and the expressed opinion of all responsible bodies in the agricultural world, including an official committee, which was set up by His Majesty's Government, to improve, under the present Government, the condition of rural housing in the way we should like to see it improved. It is equally impossible to expect that electricity generating stations will be able to carry a heavier load than they are carrying today. We know that they cannot carry the load with which they are burdened at present. It is, therefore, quite impossible that these more remote rural districts, where, in fact, the greater part, of the burning oil is consumed for heating, cooking and lighting, can be served by electricity or gas. In those conditions, as we are dealing with those who are mainly employed, either directly on, or in connection with, the production of foodstuffs, the Chancellor should show that he really appreciates that the worker on the land is entitled to inducements and encouragement just as much as the worker below the soil. We are not asking that the farmer's wife or the farm worker's wife should get nylon stockings or additional supplies of food, or that additional houses should be rushed up at greater speed than they are being rushed up—or not rushed up—in other areas. We are saying that by reducing these duties, to meet a specific case, some inducement would be given to those who have carried on without praise and thanks through some of the toughest days and one of the toughest winters which this country has known for a long time.

I do not wish to repeat the statements which have already been made, but I intervene to say something which is vital, and which cannot be too often repeated. I ask the Chancellor to remember that it is the smaller farmer who uses the light tractor, and also that the women who would be helped by this concession are those who live in the outlying cottages, and who have not got the benefit of electric light. It would be some little gesture to the farming community and would help towards meeting the extra costs which have been put on the industry, by the introduction of double summer time, which has just come into operation. The concession here asked for would help,' to the extent of a few thousand pounds, to meet that extra expense.

I sincerely trust that the Chancellor will give consideration to this very reasonable Amendment. I am quite sure from what the Chancellor has said, in regard to the losses which the farmers have sustained, that he realises to the full the tragic losses that they have incurred. If, by means of this Amendment, which involves no great sum of money, he can help the farmers, I am sure that all Members of the House would be with him. I wish to bring one point to the Chancellor's notice. He may have thought in introducing his Budget that this particular point had not been given consideration prior to its introduction. A fortnight ago, in the enchanting little village of Lanreath, I was approached on this matter by many constituents of mine. Here is a chance for the Chancellor, by agreeing to this Amendment, to lift a certain amount of tax connected with vaporising oil for tractors, and to relieve, to a certain extent, the expense of people in rural areas who are using paraffin in their homes. I hope that the Chancellor will give sympathetic consideration to this proposal.

I support this Amendment from the Scottish angle. Scotland would probably derive more benefit from the Amend- ment than any other part of the country, because we have in Scotland a larger number of small farmers; we also have, in Scotland, very hilly country to work, which usually means a higher consumption of ploughing fuel. For bah those reasons, the concession contained in this Amendment would be of great benefit to my part of the world. Further, in Scotland, the rural development of electrification is probably less than it is in England. It would be of great benefit to the crofters and to those who live on the land if the tax were taken off paraffin for cooking, lighting and heating. I put in one special plea for something to be done for Scottish agriculture. We have had this curse of double summer time put upon us. It hits us harder than it hits farmers in England. To mitigate its evils, will the Chancellor not give us this small concession?

Hydrocarbon oils, which are the subject of the discussion this afternoon on this Resolution, are divided into two groups. It is as well that the Committee should remember that in discussing the Amendment. There are light hydrocarbon oils which, in the main, cover petrol, and the heavy hydro-carbon oils, which cover lubricating oil, kerosene, which is the subject of this Amendment, and heavy fuel oils. It is the heavy fuel oils with which my right hon. Friend proposes to deal by means of this Resolution. At the moment the tax on these heavy oils is 1d. per gallon, whereas on the light oils—petrol—the tax is 9d. It is proposed that the tax on the heavy fuel oils shall now disappear, that a further rebate of rd. shall be given, wiping out the Customs duty altogether. It is in accordance with the announcement made by my right hon. Friend in August last year that he intended to do this in his next Budget. He did it—he was quite open about it—in order to assist the coal industry of this country.

4.0 p.m.

The Resolution does not apply to kerosene, and the proposition is that we should include kerosene for two reasons. One is, that it would help the cottager who still, unfortunately, has to burn lamps; and the other is, that it would help the agricultural industry both here and in Scotland. The hon. Member for Altrincham (Mr. Erroll) pointed out that this Resolution puts diesel engine oil in the same category as the heavy oils that, in fact, are being exempted now under this Resolution. The diesel road vehicle engine oil will continue to pay the duty. It is not exempt under this Resolution. In fact, any oil which goes into a road vehicle, whether a heavy oil or petrol, is not under this Resolution exempt. The provision made in the Finance Act, 1935, still applies; and, up to the moment, at any rate, my right hon. Friend does not propose to alter what, at the moment, is the law. If we exempted kerosene there would, undoubtedly, be some pressure for exempting petrol, which is also used in tractors.[HON. MEMBERS No."] At any rate, that argument would be put forward, and if there is a case for exempting kerosene, there is certainly, an equally strong, if not a stronger, case for exempting petrol which is used in agricultural tractors; because in one case the tax is only a penny on the gallon, whereas in the other it amounts to 9d. a gallon.

The right hon. Gentleman is not suggesting to the House that there are petrol-driven agricultural tractors. Petrol is used in starting some of them, but there are no petrol-driven agricultural tractors.

There are.

I accept that point, which, I think, is a valid one. It is true that the overwhelming number of tractors used—certainly on heavy land—[HON. MEMBERS: "On farms."]—do work on heavy fuel, that is, diesel oil; but, nevertheless, it is also true—and will, I think, be found to be increasingly so as the years go on—that petrol is used in many of these vehicles certainly in those which do the lighter work on some farms. If we did include kerosene within the terms of this Resolution it would, in our view, at any rate, open the door to the exclusion of petrol used on farms. The cost at the moment of the concession which my right hon. Friend is making in this Resolution is in the neighbourhood of £4,250,000 in a full year. If kerosene were included, and if the Amendment were accepted, it would add another £1,500,000 to the cost. If, in addition, lubricating oil, which would be one of the few things left among heavy oils, were included also, it would make the cost of the concession £2,000,000, or thereabouts, in a full year.

May I say this finally? My right hon. Friend is not able to accept this suggestion, but that that does not mean that he is not open to argument when the further stages of this matter are reached. We still have the Finance Bill to deal with. I can give no undertakings or make any promise on behalf of my right hon. Friend, but he is willing—I think I can say this on his behalf—to look at this; and if a case were made out, and if he were impressed by it, he would be willing to see what could be done when we reach the Finance Bill.

We are very much obliged to the right hon. Gentleman for the assurance he has given, because we are satisfied that there is a case here. It is true that there is such a thing as a petrol-driven tractor today. But the number is minute. It is something which is new.[HON. MEMBERS: "No."] It may develop, but it is not true to say that, broadly speaking, tractors are petrol-driven in this country. They are not. If, therefore, assistance can be given in this way it will be welcome. I feel certain that it would have been given in 1933 had Parliament at that time been able to foresee the vast increase in agricultural mechanisation. I am sure Parliament at that time would have seen to it there was not a duty on what might be called, almost, one of the raw materials of the agricultural industry—one of the motive powers. Tractors in those days were few and far between. Since the war, as the right hon. Gentleman knows very well, there has been a terrific increase in mechanisation. In fact, is is claimed in some places that ours is now the most highly-mechanised of the agricultural industries in Europe. I say that from hearsay; I have not at the moment checked it. But if that possibility had been foreseen all those years ago, it is very likely that this duty would not have been imposed, and we should not have to discuss it today.

I am glad to see that the right hon. Gentleman is so open-minded on that point. I take it that that applies to the kerosene point, too, irrespective of user? It may be—I do not know—that one can make some distinction between the two. We feel that there is also a very valid argument for heating and lighting for the cottager. The kerosene position is very difficult in the countryside. Those of us who sit for agricultural constituencies are very conscious of it each year. We need not however prolong the discussion today, because we have the right hon. Gentleman's assurance, and we know that he will look into it.

The Chancellor of the Exchequer through the Financial Secretary has given us some assurance. As far as I am concerned, I regret to see the invidious position in which the Financial Secretary is placed. There is one point I would add to what has been said from this side. We have had the agricultural point of view put before us. There is another side, also. The right hon. Gentleman the Chancellor has intimated, through his assistant, that it may be possible to encourage the farming community at a later stage. But there is another aspect which is of some small interest in connection with food production. It is not often used, but this particular oil is also, at times, used in fishing vessels. I give that as one additional argument for our case. It is a matter which I think ought to be considered; and even although it might be only a small one, it would be a contribution to help an industry which is most useful to the country at the present time. I put this suggestion forward in a friendly way.

In view of the helpful answer given by the Financial Secretary, I beg to ask leave to withdraw the Amendment.

When the right hon. Gentleman was introducing his Budget he devoted a short passage to this Resolution, and I, for one, was very glad at the way in which he put this case, because it is certainly not a proposal one would normally expect to come from the Chancellor of the Exchequer to this House. He said:

"It is not a joyful thing, but it is a national necessity, to import more oil to make good the shortage in our own supplies of coal."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 71.]

I was glad to hear him say it was not a joyful thing; that on this occasion there was no song in his heart, no cardiac murmur; that he realised what a serious thing it was for this country to have to take such action. I am sure that no Member of the House, no matter on what side he sits, would disagree with me, that it is a sad thing for Britain that we have to encourage the use of imported oil from overseas, to take the place of the coal of which we have plentiful supplies beneath our own soil. We must all look forward to the day, which I hope is not far off, when the production of coal will be adequate to meet all the demands which we can possibly make upon it and will also provide us once again with large quantities of coal for the export trade, without which we shall fare very ill in this country.

There is one other point which the Committee ought to have in mind in dealing with the question of conversion from coal to oil-burning. It must not be thought that this is an economical proposition in itself. If I might illustrate it by the case of the railways, I would say that the railway companies have been invited—I would almost say commanded— by the Government to convert a certain number of locomotives to oil-burning. This is a very expensive business. Not only is conversion an expensive business itself, not only is the cost of the oil greater than the cost of coal for running the locomotives, but, in addition, expensive installations are required up and down the railway system, comprising tanks to hold the oil. All this is an additional expense in which we are now involved, because we have not got enough coal. I am sure that no hon. Member on this side of the House will wish to vote against this Resolution, but I did wish to express my agreement with the Chancellor when he said that this was not a joyful thing.

I would like to say that there is still a certain apprehension among manufacturers and others that, when the coal position is perhaps rather easier, this duty might be reimposed. I know that it would not be fair to ask the Chancellor to make any commitment regarding the future, but I do not think this Resolution should be passed without it being placed on record that a number of manufacturers are deferring their proposals to change over to fuel oil, because of the fear that the duty may be reimposed. There are very considerable possibilities in the change over, but these possibilities will be limited unless the manufacturers can be given a reasonable assurance that the duty will not be reimposed.

I wonder if the Chancellor will explain this Resolution.

Later on.

Then, I will make a few observations on this subject from our point of view. I am sure that the Chancellor will not be surprised if this Resolution leads to a certain amount of discussion. The language used in this Debate will probably be different from the language about this duty that can be heard outside; no doubt, we shall keep our comments within the bounds of Parliamentary discussion. But there is bound to be discussion on a matter like this, as there always is, when there is a drastic increase in taxation. On other occasions, the House is apt to be divided on party lines, because the wise Chancellor, in framing his Budget, not only acts on what he thinks are the right financial grounds, but, generally, has some regard to keeping in line with the political principles of the party which he adorns. In this case, I doubt if the right hon. Gentleman's proposals are any more agreeable to his own supporters than they are to those on this side of the House. I am speaking of this particular tax in the form in which it is being imposed in this Resolution. We are discussing today what was proposed by the Chancellor, and the form in which it is proposed in the Resolution now before us.

I should say that, if this Resolution, in this form, were left to a free vote of the House, the right hon. Gentleman would not get it. I do not suppose that that is going to happen, but the Chancellor is going to have to walk very warily, both today and later on, until he gets something on the Statute Book. I very much wonder—and, of course, we have all been wondering—what exactly were the real motives by which the right hon. Gentle- man was actuated. Like so many other things in this life, I think they were pretty mixed. At one time, perhaps his idea— and it would not have been a bad idea from that point of view—was to propose something so very drastic, as to be a real psychological shock to every citizen of the country, to make them realise how difficult our financial position was. If that is what he had in mind, I am prepared to affirm that this topic and the financial situation in which we find ourselves have been the main subject of conversation everywhere for the last week.

indicated assent.

Whether in clubs, pubs, buses, trains or elsewhere, this is the matter which has been generally talked about. If that was the Chancellor's idea, he has succeeded, but there is more in it than that. There is, among other things, £75 million in it. I want to say a word about the Imperial Preference rate. Would the right hon. Gentleman be good enough to give us some explanation with regard to that? It is a matter on which he knows we, and many others in this country, feel very strongly, and we have, in fact, had no explanation about it even after my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson) posed the question why the preference rate has remained at the same number of pence per pound, although the basic duty has been increased somewhere in the region of 50 per cent. Before this new proposal, it was 1s. 6½d. and it is still 1s. 6½d. That means that, if the Preference percentage before the rate was 4¾, it is now in the region of three per cent., and it raises the point whether, if we have a margin on a piece of paper and we double the piece of paper, we have to double the margin, or leave it as it was, or what? One would think that the margin would have gone up with the increase in the duty, but it has not. We should like to know what actuated the Government; whether there are any agreements on the subject, and whether the 1938 Trade Agreement with the United States completely prevents it? It would have been nice if the right hon. Gentleman had saved us the trouble of asking that question.

I thought I had better wait.

It may be that the idea of the right hon. Gentleman was to give a great shock to the nation, but that is not his admitted reason, which is to save dollars. He repeated that three times in the course of three days, and, when the right hon. Gentleman says something three times, he presumably means it. In the Budget speech the right. hon. Gentleman, however, said:

"I regard the saving of dollars as much more important than an increase in the revenue in this connection."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c 88.]

Then, so as not to be out of it, when my right hon. Friend the Member for the Scottish Universities was speaking, the Chancellor interrupted and said:

"I said that in my view the first "—

that is, the reduction of dollar expenditure—

"was incomparably the more important. I said I was very much more concerned to save dollar expenditure than to collect additional revenue."—[OFFICIAL REPORT, 16th April, 1947; Vol. 436, c. 211.]

Then, in winding up the Debate, the right hon. Gentleman said:

"I have repeated several times that I am primarily concerned here to save dollars."— [OFFICIAL REPORT, 17th April, 1947; Vol. 436, C. 464.]

And, of course, the ever-faithful Financial Secretary said, in his winding-up speech, that the prime object of the duty was deterrent. So far as the two Ministers are concerned, they have pinned themselves on the necessity for saving dollars. As a sort of excuse, apart from the general financial and economic one, the right hon. Gentleman expresses the opinion that we are smoking much more than, as a nation, we can afford. Here I want to take great exception to something which the right hon. Gentleman said on the wireless in this connection, because I was one of those who heard his broadcast. My right hon. Friend the Member for West Bristol (Mr. Stanley) was unlucky; he did not hear him. I heard him say—I took the words down myself:

"All people, including Mr. Churchill, have told me that we are smoking too much."

I do not know what private conversation may or may not have passed between the right hon. Gentleman and my right hon. Friend the Leader of the Opposition, but I do know that my right hon. Friend has never said any such thing here. The right hon. Gentleman produced a quotation on Thursday which certainly did not say that.[HON. MEMBERS: "Oh."] I have got it here; we need not dispute it. What my right hon. Friend said in a supplementary question on 4th February last was that other expenditure should be viewed with severe restraint by the Chancellor. That is a very different thing from the right hon. Gentleman going to the B.B.C. and telling the world and the people of this country that Mr. Churchill has told him that we are smoking too much. In other words, the right hon. Gentleman, in proposing a most unpopular tax, was trying to hide himself behind the broad back of the Leader of the Opposition.

May I interrupt for one moment to remind the right hon. and gallant Gentleman that the occasion on which the Leader of the Opposition did raise this point very acutely, was when he said that if a friend had lent him money, that friend would expect him to spend the money on things of real value and not in the profligate way in which we were spending dollars? Whether he mentioned tobacco, I cannot say, but it is certain that he indicated tobacco and films.

Be that as it may, I still think that it is no justification for the right hon. Gentleman saying what he did in the broadcast, and that, if the Chancellor wishes to introduce unpopular taxes, he should do so on his own responsibility, and not try to bring in my right hon. Friend. That would be in consonance with our ordinary political practice. I only make the point because I happened to hear the broadcast. Others did not. Perhaps they were lucky; I do not know. What my right hon. Friend said the other day was that, if it was the right hon. Gentleman's desire to save dollars on nonessentials, we were with him. He agreed that the saving of dollars on non-essentials has to be achieved, if possible. It has all to be looked at very carefully, but it has also to be remembered, in the context of the argument, that the saving which the right hon. Gentleman has put as his target is only 2½ per cent. of the expected dollar expenditure this year. That is a very small proportion of the expenditure that we are going to incur. On the other side of the argument, we have to put some of the disadvantages.

One and a half per cent., not 2½ per cent.

That makes it all the worse from that side of the argument. But if the purpose, which was three times repeated by the Chancellor and once by the Financial Secretary, is to try to cut down the dollar expenditure, then I cannot see the value of doing it this way, when there is no certainty that the purpose is going to be achieved, when we could get certainty at once, by proposing some limitation on the amount of dollars put at the disposal of tobacco purchasers. But that is not what the right hon. Gentleman has done. He is hoping; he has put a target; he is going to make an appeal that everybody should smoke less, and he hopes that it will come off, but it does not follow that anything of the kind will happen. If, on the other hand, he imposed some limitation on the amounts of dollars available, he would be certain that he would save those dollars, and he would know where he was. What he is really doing, in effect, is gambling during the whole of the 52 weeks of the financial year that there is going to be a similar reduction in tobacco to that achieved in the first week. It is a very big gamble, because all the previous history of the tobacco duties has been the same. When they were first raised, there were two or three weeks of diminished purchases; then the situation gradually righted itself. Tobacco has always been a commodity the purchase of which has gone on increasing; there has always been more consumption by the end of the year than, there was at the beginning. I think that that is a fairly accurate record of what has happened in regard to the duty on tobacco. Therefore, there is no certainty that the right hon. Gentleman will get his saving in dollars. He said that if we tried to limit imports without imposing any form of rationing:

"That would simply lead to queues and confusion, and difficulties on an immense scale."—[OFFICIAL REPORT, 17th April, 1947; Vol. 436, C. 464.]

There have been suggestions that that would involve black marketing, and all the rest of it. In that connection, I must say that I rather resent the general accusation that people of this country are so ready to indulge in the black market. Taking the country as a whole, I do not think that is true; I do not think it is true that we are as dishonest as all that. That is a bad thing to go out from this House. I believe that we can argue this further, and no doubt it will be argued. If one set one's mind to it, I am sure there are various ways in which savings could be effected. I have heard—and no doubt the right hon. Gentleman has heard —all sorts of proposals. We might make smaller cigarettes; we might have cardboard ends to them, like so many other countries; we might adopt the practice, which existed until recently, and for all I know still exists in the United States and exists still in certain countries in Europe, that smoking should be prohibited in a great number of places, such as theatres and cinemas. That sort of thing might lead to a gradual reduction. All those things should be explored before we come to the drastic and terrible alternatives which the right hon. Gentleman has put before the nation.

After all, he has to remember that, even though he is putting up the Tobacco Duty so enormously, on the other side of the picture and in another part of the Budget, he is releasing quite a considerable amount of purchasing power. He has told us that 750,000 are going to pass out of Income Tax. Some of the money thus retained will be available, if people so desire, to pay for the increased cost of their smoking. There may, alas, be a diminution in savings, because a lot of people in this country may even be so misguided—I am not commenting on that —as to prefer a cigarette to a savings certificate. The right hon. Gentleman may find his estimates about that going astray.

4.30 p.m.

We say that this is a bad tax on the grounds on which the right hon. Gentleman defends it. His grounds are that it is in order to save dollars. We say it is a bad device to achieve that purpose, because he does not know that he will save a single dollar out of it, and he may end up by having to find more dollars during this year than during the last 12 months, because people may go on smoking more even at the higher cost. Let us take the other side of the argument. The right hon. Gentleman said, "If that happens, we lose on the swings of the dollars and we gain on the roundabouts of the pounds. I may not save the amount of dollars I want, but on a 25 per cent. reduction I will get more revenue to the extent of £75 million sterling this year." We are against the tax on that argument. I am not going to raise the whole budgetary issue of the financial and economic situation; any Chancellor, of course, would have to raise some millions from somewhere.

We know that there has been a change in the views of hon. Members opposite on the subject of direct and indirect taxation. Last year I think it was the hon. Lady the Member for Epping (Mrs. Manning) who said that their philosophy was gradually changing on the matter of the desirability of removing something from direct taxation, and putting it on to indirect taxation, because I remember telling her that her philosophy moved in proportion to the number of people who were suddenly finding how unpleasant it was to pay direct taxation. On Wednesday the hon. Member for Accrington (Mr. Scott-Elliot) expressed the same sort of view. There is a change from the old-fashioned theory upon which the Socialist Party used to act. We are not against that idea, as hon. Members know quite well. What we are against is that in a given year one particular form of indirect taxpayer should be singled out, and that the whole of the burden should be put upon him to such a crushing extent.

If the right hon. Gentleman wanted to get £75 million out of indirect taxation, the fair thing would be to spread it over, so that everybody would pay a little indirect taxation, unless, of course, there are some paragons of all the virtues who never purchased anything at all. But to say that the smoker only should be singled out and should pay such an increased price means that the greatest—I am not sure if I ought to call it a hardship, because I do not know in what category one should put smoking, but let me call it a difficulty which is a rather simple word—the greatest difficulty of this high tax will fall upon that section of the community on which one does not want to see it fall, namely the oldest and poorest section and, from the trading point of view, on the smallest trader as opposed to the large one. The difficulties of the small tobacconist will be enormously enhanced. The large shops which sell tobacco and cigarettes will not suffer in anything like the same way. The poor old man, the old age pensioner, or whoever it may be, will feel the blow proportionately much more than those at the other end of the Income Tax scale. That is because this increase has been so very savage.

Does not the right hon. and gallant Gentleman agree that that applies to all indirect taxation?

Not at all. It does not apply to all indirect taxation but it certainly applies in this case. I am only talking about this Resolution. I am not talking at large on the subject of indirect taxation. We, on this side, take the view that the right hon. Gentleman has been fantastically unfair, and we are surprised at such unfairness from one who so often in his speeches has stressed the importance of fair shares all round. That is not only his whole political philosophy, but he has tried to make it his financial philosophy in his Budgets. Then suddenly he comes down with something which is quite contrary to anything which he has adumbrated in the past. We get this extraordinary situation. We have, on the one hand, the reason adduced that the purpose of this increase is to reduce the extent of our dollar purchases, and it is done in such a way that there is no guarantee at all that that end will be achieved, but there is this consolation to the Chancellor that if that does not occur he will get more money, provided it succeeds. If it does not succeed, and we have to use as many dollars or more dollars, the £75 million becomes a very much larger sum. He will get that, but it will be at the expense of the poor and the, old, and the small trader. That is the effect of this Resolution. It is a bad tax, and there is no denying that it must be modified. I do not doubt that it will be modified, but there is this difference. Before Budget day, the right hon. Gentleman was not at liberty to have any conversation with anybody concerned. Now he can discuss it with the trade, and see whether they can make any alleviations. He can listen to the arguments in this House, and the tax may emerge in a form very different from its present form.

The point is, What are we to do with this Resolution today? We are not voting on the possible modifications. We are voting upon this proposal. In the view of my right hon. Friends and myself, the proposal is a bad one. We trust that, as a result of our comments and comments elsewhere, there will be enough support for our view to make it necessary for the right hon. Gentleman to reconsider this most unfair proposal which brings the greatest difficulties on those least able to afford to pay, whether they are traders or consumers. It is for that reason that we oppose the Resolution: I would certainly be interested to hear the defence which the right hon. Gentleman may put up, but I hope he will agree that the sort of case I have outlined does require an answer, and I hope we shall get one. In the meantime, the Resolution as printed on the Order Paper is bad and we oppose it.

I think it is true to say that a good way to find out how the public are reacting to this tax is for Members to ascertain how those in their constituencies feel, now that they have gone back to their corners after receiving the blow in the ring. I made it my business, as I did during the coal crisis, to try to find out the reaction of my constituents. While no one likes the increase, it is amazing to see how the people have realised that, at last, they have got to be pulled up on the amount of their smoking. I made it my business to go round my constituency —not with a Gallup poll, nor relying on what the Press told me, because I am not prepared to place any reliance on a Gallup poll. In my short time in this House, I have been amazed to witness the somersaults of hon. Members opposite. I suppose all hon. Members have seen, as we in Birmingham have seen during the last 18 months, many posters bearing the words, "Shed the Socialist load," "Socialists still going wrong," and "You voted Labour; you have got it hard." I suppose we shall get some posters dealing with cigarettes. In one of the little districts of Birmingham, where people could not buy three pennyworth of coal before the war, we had a poster showing a man sitting by a fireplace with a candle, and bearing the words, "Socialism in our time." I have never seen such piffle in all my life.

As I have said before in this House, I have lived in slums, by choice, for a number of years. There, before the war, one met people who were prepared to walk into a shop and ask for two cigarettes and a couple of matches, but who, since the war broke out, have been able to buy packets of 20 every day of the week. Girls and women, who never thought of smoking before the war, admitted to me during this weekend that they now smoke at least 30 and 40 cigarettes per day. I think the Chancellor is doing a number of people a good turn, apart from the question of collecting the tax on tobacco. Small retailers are obviously doing an enormous amount of trade; it is to their advantage that girls as well as men should smoke, and should be able to purchase a large number of cigarettes. We know that there are a number of people in this country, small wage earners, who have not had any concession made to them in this Budget, who feel this very badly. I have been amazed at the unselfishness of ordinary people, and I believe that if the Chancellor can find some way out of this, he will go up in the esteem of those unselfish people.

I now wish to refer to a section of the community which, as we know, will get a concession as far as their postwar credits are concerned, namely, the old age pensioners. In Birmingham, we have an organisation known as the Sons of Rest. In practically every district, old age pensioners join together, and have a hut in a park in their district, where they meet during the day, spend their time together, playing cards" having a smoke, and so on. We ought to be prepared to find some concession to make to these old age pensioners. It has been said that we ought to have a rationing scheme. The right hon. and gallant Member for Gainsborough (Captain Crookshank) tells us that we ought not to talk about the "black market." But we know full well that a lot of people would sell their coupons, or exchange them, or traffic in tobacco, because a great many people do not smoke. Of course, there are a number of old age pensioners, but their number is small in comparison with the rest of the community. I cannot see why an opportunity could not be given to old age pensioners to purchase two ounces of tobacco at pre-Budget prices, on the same lines as those on which they obtain their tea on green coupons. We owe it to these people who are in the eventide of their lives, who want to live happily and comfortably, to see that they can enjoy a smoke. I believe the people of this country would stand this blow of extra taxation on tobacco and cigarettes if the Chancellor eased the position for old age pensioners.

I end my plea by saying, that I am prepared to give up a certain amount of smoking. For instance, if I smoke five cigarettes per day, one cigarette every two hours, that will be no punishment at all. If I allow myself an extra five cigarettes at the end of the week, that gives me two packets of cigarettes. If I buy them at the new price I shall be saving money every week. I urge the Chancellor to consider this. I hope he will leave the door open. By doing what I ask, he will regain the respect of everybody, whatever blow he gives them, provided he looks after the old age pensioners who have earned their rest in the industrial field. Some people talk about an extra shilling a week for old age pensioners. I hope the day will soon come when we shall raise the old age pension; I think we shall do so when the country gets a bit more stable. At the present moment we cannot do it. I hope the Chancellor will consider this question of rationing. I feel confident it will work all right, and the old age pensioners and the rest of the community will thank the Chancellor if he accepts our plea.

In order to indicate to the House the unity of purpose which prevails in Birmingham, I rise to endorse the appeal made by the hon. Member for the Sparkbrook Division of Birmingham (Mr. Shurmer). I think there is a case for these old people which merits serious and sympathetic consideration. I believe the hon. Member and myself have both been vice-presidents of the Sons of Rest. These old people, after a long career of service in industry, have formed these associations, and have community meetings in order to talk and have a smoke together. It would be a pitiful thing if the Chancellor, in all his exuberance and generous consideration for every branch of the community of this country, left these poor people out of account. I appeal to his kindness, and to his faculty for looking kindly upon everybody. I hope he will react favourably to the suggestion made by my hon. Friend opposite. I call him my hon. Friend because, in spite of many acute political differences, we have been constant friends for the last quarter of a century. There is an intimate friendship between all of us in Birmingham; in that great community we understand one another.

The hon. Member is not offering me a membership form for his party, is he?

I wish to be very emphatic in endorsing the appeal just made to the Chancellor. There is a good case for making a concession to these people. The Chancellor will realise from communications which reach him, from the volume of correspondence which comes to hon. Members, and from the Press, that there is, indeed, a real grievance on the part of these old people, whom this tobacco tax will strike very severely; it will make their declining years more uncomfortable than we should like to see. The Budget as a whole is, I think, an adventurous one. It does not do very much to the community, except to pave the way for the nationalisation of industry—the building up of a great fabric with which the old, poor people have not very much to do. The Chancellor has not made many concessions to Birmingham in the course of his life. Here is an opportunity. [HON. MEMBERS: Oh."] I am bound to say, I cannot imagine he stands very high in the affections of Birmingham. I cannot recall any particular instance on which he has made any special concession.

Would not a concession to the old age pensioners of Birmingham affect old age pensioners elsewhere?

My appeal is on behalf of Birmingham. If the concession is made to Birmingham, naturally it will extend to all other parts, and to all old age pensioners. I plead for everybody. Here is a chance for the Chancellor to perform a good deed today. In the record of the Chancellor of the Exchequer I do not think a long list of good deeds will stand to his credit. Here is an opportunity for him, by answering the appeal made by the hon. Member for Sparkbrook, for a concession in regard to tobacco for old age pensioners and the Sons of Rest. If the Chancellor makes this concession, then the hon. Member and myself will, indeed, have succeeded in extracting something from a difficult and hard Chancellor in his financial policy.

I think one of the most encouraging things about the increase in the tobacco tax, with all its unpleasantness, is the evidence it has afforded that the country is waiting for a strong lead in regard to the curtailment of dollar imports. The welcome given to this increase in a large number of quarters shows that people have become mentally prepared for the sacrifices which our foreign exchange position will inevitably force upon them; but that is the reason I am anxious about the expedient which the Chancellor of the Exchequer has adopted. I believe it will fail, and I believe that during the period while we are watching its failure evolve, we shall have lost valuable time in closing the floodgates that must be closed at once.

My first experience after the increase in the tax was to walk into my usual tobacco shop and see a notice, "No cigarettes." I tried the next tobacconist's shop up the street; I asked him what was the reaction, and he said there had been a smaller falling off this time than occurred even with the increases in previous Budgets. I believe that those people who' have a margin of money in their pockets will inevitably and gradually creep up back to their old consumption over a period of time, and we shall find that, at a moment when we need urgent action, we are only playing with a desperate problem.

I ask the Chancellor to consider also that the ordinary people who will be forced by financial stringency, absolutely compelled with no alternative, to reduce their tobacco consumption, are the very people who have not been responsible for the one-third increase in consumption; they are the people at the lowest end of the scale, with fixed incomes, who have absolutely no margin for increased expenditure upon luxuries. When I think of the thousands of old age pensioners in my constituency, when I think how they have to scrape and save to get their food and to have a tiny margin over for the little bit extra, the odd pipe of tobacco or the packet of cigarettes, I know two things —first, that they are not the people who, as the years have gone by, have expanded their consumption of tobacco, they are not the people who are responsible for pushing up our imports and, secondly, they are the people who will be compelled to retrench when others will be able to find devices for evading the effects of this tax.

The Chancellor says that his motive is almost exclusively to reduce our imports, but this tax really is a revenue-raising tax as well. After all, he said he was asking us to cut out one cigarette in four, just to pass over that one, which would not be noticed. Arithmetic is not my strong point, but I think I have worked it out correctly when I say that one in four means five in 20 I smoke 15 cigarettes a day, and my 15 cigarettes will still cost me 2s. 6d.; and, therefore, for the 15 cigarettes there is an additional 2d. imposed, on a commodity which it is very hard these days to say is a luxury to which the poorest sections of the community have no right to consider themselves entitled.

What, then, are we to do about it? I believe it is asking too much to tell the old age pensioners and the lowest income groups that they are the people who have to bear the burden of this patriotic duty. I appreciate the difficulties when considering any question of discrimination in favour of old age pensioners, and I would point out to those who suggest, as an alternative to a rationing scheme, that there might be some means whereby the old age pensioners would get a voucher for some tobacco at pre-Budget prices, that this would leave as big a margin for black market manipulation as any other device; in fact, I think it would leave a bigger opening for black market manipulation than would a straightforward rationing scheme with an alternative, such as sweets or tobacco. Let us look at the question not only of the old age pensioner, but of his wife. As one who has fought long, and will continue to fight, for certain equalities of treatment, I hope no hon. Members will suggest that the old age pensioner male should have a tobacco ration more cheaply than his wife.

I should.

I certainly would not. If we are to discriminate on tobacco on a financial basis and then on a sex basis, where shall we get? The ration of the old age pensioner's wife might become a nice little bit of currency which would involve us in that drop in public morality which we want to avoid. I put it to the Chancellor that the one essential thing that faces us is to curtail imports. I believe that we have to start with that. We have to start the simple job of buying less tobacco, and then, having done that, we have to make a decision as to how we can get that tobacco distributed in the fairest and the best way. I have recently been in Finland, where I found that the rationing system for tobacco was taken quite for granted and seemed to involve no black market difficulties, because if a person draws tobacco, he draws only half his sugar ration. I believe that in France there is tobacco rationing. I believe that this is something which we could solve on an organised basis which would not, in this hit-and-miss method, miss the rich and hit the poor.

There are very great difficulties in the hon. Lady's proposal of a rationing system for tobacco. A rationing system is a very good method for dealing with a shortage if, within reasonable limits, the commodity with which you are dealing is a commodity that is universally consumed, and in which there is not too wide a spread as between the maximum and the minimum consumption. I think, however, that if we applied it to tobacco, of which a very considerable proportion of the population are not consumers, and among consumers of which there is a very wide range between the minimum and the maximum consumption, one could not possibly avoid a very large element of transferable coupons. I will not say there would necessarily be a black market, for the exchanges might be made legally transferable. But in one way or another, there would have to be a great transference. The coupons would have to be given to everybody, and a great number of people would not want them or would not want all of them, and in some form or another, the coupons would in these circumstances obviously be passed on to somebody else.

This would necessarily have one important consequence. If the Chancellor wished to reduce consumption by a quarter, which is what he is looking for from the present tax, he would have to put the ration at not more than half of the present average consumption. For the heavier smokers, who would feel the loss of their tobacco most severely, this would mean reduction to a third or a quarter of what they have been used to. If such smokers have no legal and legitimate method of getting more tobacco by paying more, and sacrificing other things, they would feel it an intolerable hardship and there would be resistance or evasion against which no restrictions or punitive machinery could possibly be effective.

5.0 p.m.

I do not propose to follow in detail the special case of the old age pensioner. All of us, I think, have very considerable sympathy with the case which has been put before us. But we should all agree that whether this general policy is right or not, it is a national policy, and should not turn on the special hardship of one relatively small class, which it may be possible to deal with otherwise. A rather dangerous tendency seems to be developing for the old age pensioners to take the same place in the political terminology of the party opposite as the widows and orphans occupy in so many of the arguments from this side of the House. There is reality in the argument in both cases, but it would be wrong for the whole of a national policy to be deflected by special considerations, whether of the old age pensioners or of widows and orphans.

I am in some respects embarrassed by speaking before the Chancellor of the Exchequer. But, on the whole, I am rather glad that I speak before and not after him, because I want to suggest certain arguments in support of his policy; and I have sometimes found it is easier to do this before, than after, he has given to the House the reasons by which he himself justifies his policy. I propose to emphasise certain arguments which the Chancellor is precluded from using by the general line he has taken in his Budget. I do not think he can make a good case for this tobacco tax, if he puts as great an emphasis as he has put, upon its dollar-saving effect as against its revenue effect, because it is quite clear that the dollar-saving effect will be very small indeed. The Chancellor has himself said that he hopes for 30 million dollars— £7,500,000. Our hard currency deficit last year was £400 million. The Chancellor has said that he expects it will be substantially greater this year, and my hon. Friend the Member for Chippenham (Mr. Eccles) gave his estimate of as much as £750 million; but even if you take the lower figure £7,500,000 is a very small proportion indeed.

What is more important, however, is what proportion it is of the remaining hard currency deficit when we have run out of the loans. As things are at present, when we have run out of the loan, we shall be left with a remaining deficit, I would suggest, of at least £300 millions. I think that is a very moderate estimate. £7,500,000 is only two and a half per cent. of £300 million. It is really a terrible thing if we have to contemplate that, in order to meet a deficit of that kind, when it comes, by sacrifices, the country will have to be asked to suffer as much hardship as it is now being asked to suffer under this tobacco tax multiplied by 40 times. Yet that, on the situation as it now presents itself to us, is a moderate forecast of the future. This tax will perhaps have at least this advantage, that the Chancellor and the Government can use it to make it clear to the country, that this is only one-fortieth of the kind of sacrifice the country will have to suffer by the cutting off of hard currency imports unless the situation as regards output, production and exports improves more rapidly than it has been doing. The tax he has now introduced may in that case have a stimulative effect of much greater value than the actual £7,500,000 of dollars he may now gain. Whether he will get this £7,500,000 by a reduction in consumption is anybody's guess. I expect most of us have been trying to see what we can do. We have had a week to do it, and personally I have got my consumption down to 50 per cent.—for one week. But I know what the craving is, and I do not think I shall be able to continue to reduce on this scale, though I hope I may be able to achieve the Chancellor's 25 per cent. saving. If I do, I think I shall have done pretty well, and I think that will be more or less the experience of the country, or at any rate that part of the country which has been accustomed to smoke rather heavily.

We have had a very dramatic example, in what has happened in Europe, of the extreme difficulty of a very great voluntary reduction. After people have through exceptional circumstances been cut off from their normal consumption of tobacco for a number of years we find, as a consequence, not that they have lost the taste but that cigarettes have acquired a black market purchasing value which makes even the Chancellor's 2d. cigarette seem extraordinarily cheap. We have had a very unfortunate and uncomfortable reminder of one side of the consequences in the special Supplementary Estimate the Chancellor had to introduce in regard to our expenditure in Germany. I am therefore not very hopeful that the Chancellor will get a greater reduction in consump- tion than the 25 per cent, for which he is hoping.

I am reminded of an answer given by an old Frenchwoman who made her living by selling tobacco. She was asked at the time of the great depression how she was doing in those bad times, and she said, "Well, sir, not so badly; I have the great good fortune to have my business based upon the surest of all foundations, one of man's principal vices." In that context I think the word "man" must be taken to include woman. It is for that reason that I think the revenue effect of this tax will be much more important than its dollar-saving effect. Whereas the dollar saving is both precarious and, in relation to the deficit to be met, minute, the revenue effect is both assured and a very substantial factor in the Budget, for reasons which I will mention in a moment.

The Chancellor, I believe, has then a much surer basis for expecting his £75 million in revenue than for expecting a saving of £7,500,000 in dollars. That is a very important factor. It is a much more important factor than the Chancellor was easily able to argue, because in presenting his Budget as a whole, he presented it to us as a surplus Budget. He explained that at a time when we have not only full employment but more than full employment, we ought to have a surplus, so that we could quite properly run a deficit in later years. I quite agree with his general philosophy, but I do not think the Budget he presented to us was a Budget with a surplus of that kind. I think he would have been entitled to claim real credit for having produced for us an approximately balanced Budget, which was the description given to it by several of his own supporters, including the hon. Member for South Cardiff (Mr. Callaghan). It is in fact a rather precariously approximately balanced Budget, and in relation to it the revenue he will get from this tax is not a minor but a very important factor. The revenue of £75 million, without which there would have been in any sense which is relevant to policy or consequences a Budget deficit, will just about bring it into balance. It is enough to turn the scale since the deficit in the Budget would only have been small in any case. But it is a very small contribution towards the great dollar deficit of £400 or £600 million to make an estimated saving of only £7,500,000. And I think it is of the greatest importance that there should be a really balanced Budget. The danger of the present suppressed inflation is very serious indeed.

The right hon. Gentleman is now getting rather far away from the Resolution.

In deference to your Ruling, Mr. Deputy-Speaker, I will not develop further the point I was making, that the actuality of suppressed inflation, and the danger of even runaway inflation, is sufficiently great to make it important that the Chancellor should have a Budget that is indubitably balanced. I believe that the revenue effect of this tax is a factor of great importance. It is true that it is an indirect tax, which is open to the familiar objection, which we are all accustomed to hear, of being unlike Income Tax, in that it is not graduated in regard to economic position. But when we are looking at the balance between direct and indirect taxation in this Budget we must remember that the whole of the vast food subsidies, together with subsidies for other necessities, amounting to something like £400 million, are really indirect taxation in reverse. If we are to calculate how much indirect and how much direct taxation there is in this Budget, I think we should deduct the amount of the subsidies from the indirect taxation. If we do that. the proportion of direct to indirect taxation is very high indeed. When Income Tax spreads as far down the scale of incomes on the one hand, and is as severe as it now is at the other end, there can be no question that further increases in direct taxation would be a much greater deterrent to production than the indirect tax of which the Chancellor has now proposed. It is easier for me to emphasise that than for the Chancellor to do so because I attach more importance than he did to the revenue, as distinct from the dollar-saving, effect of the tax.

Because then the Budget gives some dollar savings which could not be obtained by any practical rationing scheme; because it produces a most important revenue which, in my view, just turns the scale between a surplus and a deficit Budget; because it does that in the form of tax which is in no degree a deterrent but which is, to some extent, actually an incentive; because it can be used as a dramatic and telling illustration of the kind of sacrifices that must inevitably be imposed on the country in about two more years, unless the hard currency deficit is reduced by greater output and exports at a much greater rate than it is being reduced at present—for all these reasons I think there is a much stronger case for this tax than the Chancellor has, so far, made out.

I make no apology for rising to argue the case of the old age pensioners, who have already had to meet an increase in the wireless licence and increases in other directions. Now that the price of tobacco has gone up it is impossible for our aged people to meet the extra cost. Only 1,500,000 people will get their postwar credits, whereas 4,500,000 will not be covered by this Budget at all. Men who live in institutions of this country receive only 2s. or 3s. per week pocket money. These men, whose life is spent in the institution corridors that we call workhouses, and who simply wait for mealtimes and bedtimes, are now having taken from them the only solace they have in the eventide of their lives. I would, therefore, ask the Chancellor to give some consideration to the old folk who served this country well in their younger days.

The increased tobacco tax was a shock to many people in my constituency, and although it is not forgotten that Members opposite pressed the Chancellor for months about dollar expenditure on tobacco and films—the right hon. Gentleman the Member for Woodford (Mr. Churchill), in particular, was indignant about it—people did not realise that the Chancellor would increase the tax by so much, although they knew that there would be some increase. No matter what happens, something ought to be done for the old age pensioner. It is said that nothing can be done, but I have known civil servants who can tell you 10 ways of not doing a thing, and 20 ways how to do it if they are instructed to do it. This can be done through the Ministry of National Insurance. Every pensioner comes under this Department; he receives his pension book and supplementary benefit. So, what is to prevent that Ministry issuing to our aged people 52 coupons, representing 2 ozs. of tobacco a week at pre-Budget prices? The coupon could be taken to the retailer, who would sell the old age pensioner his tobacco or cigarettes at pre-Budget prices, and who would then be reimbursed by the wholesaler who would, in turn, settle with the Treasury.

It is argued that there might be black market trade in the coupons by nonsmokers. Well, our currency laws have been violated recently by people abroad —and not by working-class people, by the way. There are Income Tax dodgers whom we prosecute if they are caught. But we do not abolish the Income Tax law. A declaration could be made by the aged man or woman that he or she was a smoker, and a dispensation of the kind I have suggested could be made on their behalf. I want to ask the Chancellor to consider between now and the consideration of the Finance Bill the question of giving some concession to these poor people who are feeling very keenly that he is taking away from them in the last days of their life the tobacco which they smoke and which is such a solace to them. The Chancellor has always been generous to our aged people and I am sure that if he makes this concession to them others who are in employment will be able to stand the shock he has given them, satisfied in the knowledge that the old people will be able to enjoy their tobacco at pre-Budget prices.

I am sure the House listened with sympathy and a large measure of agreement to the remarks which have just been made by the hon. Member for Houghton-le-Spring (Mr. Blyton). I agree with him that if this tax is to go through in its present form some such concession to old age pensioners is a moral obligation on the Chancellor. But I think that the fact that that is the case is only a proof that it is a very bad tax indeed. I do not think that it is the proper method to put on indirect taxation like this and then make exceptions in favour of certain categories. That offends against some of the chief canons of taxation and the fact that I agree with the hon.' Gentleman merely strengthens my disagreement with the Chancellor.

This is a most important proposal and one which is more important than most people in the country have realised. It is important intrinsically and also, if I may so put it, symbolically. It is important intrinsically because it is clearly a very bad tax. Nobody knows really what the object of the Chancellor is in imposing this tax; in any case, whatever the object, it is bound to cause irritation and discontent in application. If its object is to save dollar exchange we have heard from the senior Burgess for Oxford University (Sir A. Salter) that it may, if it is successful, save 1½ per cent. of the burden of dollars. But in so doing it will be a danger because it will give people the illusory impression that they are making great and effective efforts to close what the hon. Lady opposite called the flood gates which will, of course, not be the case.

If the Chancellor's intention is to raise revenue, it will be obtained at the expense of the classes of the community which are least able to provide it and will again cause great irritation, and I venture to say that a great deal of the added expenditure on tobacco will be diverted from fields where it would be much better employed—in household expenses, for instance, helping the harassed housewife and the children. If it is an anti-inflationary tax it is the most uneconomic way of doing it when one bears in mind the irritation it will cause. It has symbolic importance because it is clearly only the precursor of many hardships to come and many appeals which this Government or some other Government will have to make to the country in order to close the terrible gap between our imports and exports so far as hard currency countries are concerned.

So far as I can see, this is a sorry example of the Chancellor of the Exchequer coming up to a fence, suddenly jibbing and then turning round and making a half hearten effort to jump it but falling into the ditch. In the manner of little Jack Horner he has put in his thumb and come out with a poisoned finger. He will have to come back to rationing in the end if there is to be an equitable allocation of hardships. The principle upon which this Government rules the country is that it does not matter how miserable we are if we share and share the hardships alike. We on this side say that it does matter very much how miserable we are. We still believe in sharing and sharing alike, but we believe that it is prosperity that should be shared, while the other side believe that it is misery.

I have one suggestion to offer to the Chancellor. I believe that he should withdraw this tax and make an appeal for economy in smoking. I am perfectly certain from my own experience that there is no need for anybody to smoke at work. In the business in which I am engaged—my own family business of distilling—smoking is not allowed owing to the inflammable nature of the business. [Laughter.] As far as I know, neither clerks, directors nor workers miss it in the slightest degree. There are many other inflammable businesses and nobody misses smoking at all. I see no reason why anybody should work.— [Laughter.] —I mean smoke at work. I am sorry that I have amused the House because I have one further point to make which, although it may appear a facetious one, is really quite serious. I believe that from the point of view of national efficiency it is a great mistake to class snuff with smoking tobacco. Many people are laughed at for taking snuff, but snuff takers are much more numerous than is commonly believed, and there is this to be said about taking snuff. It entirely prevents the common cold, and any snuff taker will confirm this. For this reason I think it is a bad step from the national point of view to penalise snuff takers.

Finally, to the bearing that this tax has on the policy of Imperial Preference. If our hands were completely free we could have switched over from American to Imperial tobacco, and if the Chancellor is determined in his policy to reduce the imports of American tobacco he will have to turn his attention to liberating us from the effects of the trade treaty of 1938 and other agreements so that we may turn over to Imperial supplies. I believe that the right hon. Gentleman will find that he has got into much deeper water than he anticipated over this tax and I hope that neither he nor the House will leave the subject without a great deal more mature consideration being given to it.

I would like to express regret to see the Chancellor wearing bandages, particularly on the minatory forefinger with which he is wont to admonish the House. I have heard it suggested that the cause of the accident is that he "slipped up on tobacco" and that seems to me to be a not unreasonable hypothesis. The hon. Member for Spark-brook (Mr. Shurmer) has referred to the way in which this tax has been received in the constituencies, and I can confirm from the mouth of my own constituents a similar reception. They are quite prepared to accept as part of any concerted plan a good deal and more in the way of personal hardship than this if it be to maintain as the Chancellor is maintaining —and admirably maintaining—a stable economy and security of employment.

I should like to make one point, and I hope it is not an offensive one. It is that this does not arise primarily from the inefficiency of the Government, but from the complete irresponsibility and inefficiency of the Opposition and the total absence of the possibility of any alternative form of Government, save perhaps a dictatorship under the leadership of the hon. Member for West Fife (Mr. Gallacher). In the monumental survey of the Budget which I delivered last week, I did refer to one point of importance to which the Chancellor did not reply and to which the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) has referred. If the primary purpose is to save dollars —and indeed we will back the Chancellor in any efforts that he makes for the saving of dollars—one has to recognise the fact that the saving he computes is a one-way saving only. It merely means that the termination of the spending of the American loan money may be pushed back from some imaginary date in, say, September of next year, from the 20th to the 27th.

5.30 p.m.

If it is part of a concerted scheme to save dollars, of which we are going to hear the full details, we will back it to the full and explain the position fully to our constituents. There is a tendency in extreme Socialist circles for the centre of government to pass to another place, but hon. Members can still speak in their constituencies, and I am prepared to put the facts before my constituents, and I am sure that I will have the support of the senior Member for Oldham (Mr. Fairhurst). We had tobacco rationing in Oldham in the years before the war. We had bread rationing and food rationing as well, and now we have house rationing. Our people are now enjoying a measure of security and a purchasing power which they never had under a Conservative Government, and they will not boggle at this. I am bound to say that when I find myself in agreement with the right hon. and gallant Gentleman the Member for Gainsborough I rather suspect my orthodoxy, but I think there is a great deal of substance in his point. The difference between Imperial rates and hard currency rates is wholly insufficient today. I would like the Chancellor of the Exchequer to examine the amount of Rhodesian tobacco which is being consumed in the United States. It is remarkable that a great volume of Empire tobacco is being sold in the United States, while we are buying United States tobacco for consumption in this country. It may be that that is part of the heritage of the Trade Agreement of 1938 and part of the unwritten agreement behind the American loan. I hope that the Chancellor will look into this matter, because the planning of our Imperial resources is one of the matters which we must have regard to when we face, as we must face very quickly, the prospects of the termination of the loan.

I know that the right hon. Gentleman will look with sympathy, as he always does, to the proposals of my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton) in regard to some possible alternatives to remove the burden from the poorest community. I have a small suggestion to make, which I believe would be practicable, although it would not cover the whole ground, being limited in its aspect. The Chancellor of the Exchequer should consult the tobacco manufacturers with a view to the production of a special brand of tobacco, specially labelled and packed, which does not bear the burden of tax. This tobacco could be circulated in public assistance institutions and hospitals for consumption by resident inmates and patients only. It would not help the old age pensioners outside, but the person who goes into a public assistance institution frequently lacks friends and goes there because he is alone. I think it is a proposal which would cost very little. I hope that the Chancellor of the Exchequer will forgive me for giving him a word of fatherly advice on how to do this. He should first consult his principal adviser, who will, no doubt, tell him that it cannot be done, and then he should call his second adviser and tell him to put it into effect, which he could do in a few minutes.

The senior Burgess for Oxford University (Sir A. Salter) put forward a very reasoned argument, but it was based upon the collection of revenue and not on stopping the payment of dollars. The Chancellor of the Exchequer will be the first to agree that his whole argument has been that it was absolutely vital to save dollars, which was the reason for imposing this very heavy burden. I am confident that the effect of this proposal will be that the burden will fall on those whose incomes are at the lower levels. Why, if the Chancellor is primarily concerned with the question of saving dollars, does he not restrict the amount of imports of tobacco by 25 per cent., or even further if he wishes? If he did that, I would back him to the full, but what I cannot agree to is the imposition of a duty of this size, which imposes such a heavy burden on old age pensioners. I need not develop this aspect, because it has already been dealt with by other hon. Members who have pointed out the disastrous effect it will have on these people.

The old age pensioner has very little at the present moment. It is a pretty hard life, but I will not go into the reasons why it is a pretty hard life at the moment. Smoking is one of the last pleasures left to him, and now he is suddenly to have it taken away. It is not very encouraging for these people, who are in the winter of their days, to hear the President of the Board of Trade making his gloomy wireless statements. These people have a limited number of years, and there is no encouragement for them that hear that these hard days cannot be overcome in the near future. And now there is this crippling cost of tobacco, which is a very poor effort on the part of the Chancellor of the Exchequer. Reference has already been made to the question of the small shopkeepers, and I do not think we should be forgetful of them. I am told that the Chancellor of the Exchequer is an economist. He will realise that if a man is making a certain profit on 2s. 4d., and if he is to make the same profit on 3s. 4d., his capital is being raised by that amount. This is just not sensible business, and he will in any case do a very different kind of business in the way of turnover. The question of a rise in capital should be taken into consideration.

There is one point which I have not heard mentioned, and that is in connection with the statement made by the Chancellor of the Exchequer in the Budget Debate. He stated:

"In present circumstances I regret that this special arrangement can no longer be justified."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 87.]

That was in referenc to the Armed Forces. This is a matter of considerable importance. There have been occasions lately in this House, and there most certainly will be in the near future again, when we have discussed the question of finding men for the Armed Forces. It is not very encouraging in this respect if the Forces are not allowed to have this concession. The cost cannot be considerable, and I would like the Chancellor of the Exchequer to give us some idea how much is involved in granting this concession. The Chancellor of the Exchequer has stated that it is hypothetical how many dollars he will save by this proposal. I do not believe that he will save any considerable amount of dollars. I am willing to support him, as I have said, to the full in limiting the supplies of tobacco from the United States, but I am forced to vote against him on this Measure, which imposes the greatest misery and burden on the lower income groups in the country.

Before going any further I should like to correct misleading reports made about the condition of the Chancellor's right hand and arm, because I am reliably informed that they are suffering from the effects of his having delivered a knock-out blow, about a week ago, to Woodbine. The suggestion made by the right hon. and gallant Member for Gainsborough (Captain Crookshank), and explained in greater detail by the hon. Member for Farnham (Mr. Nicholson), is an idea which has not been investigated at all, so far as I know, and could well result in a reduction of the consumption of tobacco by at least 50 per cent. It is a plan which might be adopted in substitution for the presently proposed tax, or in addition to it or to any other plan, such as rationing, for reducing the consumption of tobacco. It has four principal advantages. The first is the one I have mentioned. The next is its apparent simplicity. I would have hesitated myself had any other hon. Members opposite suggested it also—because it seemed so obvious, that 'one would have thought that there must be a serious catch in it. But it has the advantage of simplicity. Third, it requires no legislation, but simply an agreement on both sides of industry and in certain Government Departments.

It involves the reversion to our former smoking habits which have been abandoned during the last 40 years. The habit has grown up, particularly during the last war, of smoking at all sorts of times and places where, 20 or 30 years ago, it was unheard of. One example, which struck me at the time, is that only a few weeks ago a public inquiry was held on behalf of the Minister of Civil Aviation into a tragic air disaster, in which a number of lives was lost, and I am told that during the public proceedings everyone, including the chairman conducting the inquiry and his secretaries, smoked furiously all the time. If this tendency proceeds much further, it will not be long before smoking becomes habitual even in this Chamber or in the Committees of this House. In many factories smoking is not allowed for safety reasons. Underground in mines it is not allowed, and the people working in them have been deprived and are now being deprived of tobacco because others more fortunate, and under less strict control, have been indulging in tobacco while they worked. In one large factory in my constituency, the manager told me that they had to allow smoking, although they did not like it during work, because otherwise they lost time by people making excuses and surreptitiously leaving their benches to smoke. I am sure that would not operate now in the circumstances which exist.

If this scheme were adopted, I suggest that an example should be set by Government Departments prohibiting all smoking during normal working hours, as it was until quite recent times, and that the same should apply in all offices in the City and everywhere where that prohibition could be supervised. In the case of farm workers and others who could not be supervised it could, I suggest, be quite safely left to them, in the circumstances in which we find ourselves, to honour that obligation if it were put to them in a proper way. This scheme has the inestimable advantage—and I think that every heavy smoker will agree with me—that speaking personally one does not find it very hard to be deprived of tobacco under conditions, or at times, when it is normal not to smoke. We, sitting in this Chamber, for example, do not want to smoke. We leave the Chamber to indulge in tobacco outside, but while we are working here or upstairs it is no hardship at all not to smoke, nor would it be in any factory or office where that was the habitual rule.

5.45 p.m.

I ask the Chancellor of the Exchequer to consider whether this cannot be done —and he should see that Government offices and Departments set the example —in public vehicles, in public corporations and all those places where the Government have any kind of influence or control and where such a rule could be promulgated and enforced. I believe that it would result in at least 50 percent. reduction, but if it was thought necessary still further to cut down, we could adopt a practice which has been prevalent in other countries for many years, and prohibit smoking in cinemas, theatres and railway trains. Instead of having one non-smoking compartment out of six or ten, we should do, as in America, and have no smoking except in one in ten. That would result in a very large reduction in a very short time without any difficulty at all.

With regard to the prohibition of smoking in Government Departments, does the hon. Gentleman propose to allow civil servants the same facilities for leaving the room to have a smoke as he himself and the rest of us exercise in this Chamber?

My knowledge and experience of the Civil Service is not so extensive as that of the hon. Gentleman, but I imagine that they are equally abstemious as he is with regard to imbibing refreshment, and in indulging in other activities which might make it necessary to leave their work for the purpose which he mentions. I was about to conclude by asking the Chancellor of the Exchequer if he would consider this suggestion very seriously, because he said in his Budget speech that it must be regarded as a patriotic duty to reduce smoking. Does that mean—because he seemed to rather whittle that away when he replied—that it is our duty to give it up altogether if we can. Whatever it means, I suggest that the Government should set an example by introducing the rule which I and other hon. Members have suggested in all places under their control.

I rather expected that hon. Gentlemen opposite would come back from the weekend in their constituencies in the frame of mind they have. They are torn between the opinions expressed to them over the weekend by their constituents and their having to vote for the Government tonight. I think that the hon. Member for Sparkbrook (Mr. Shurmer) was a little hard when he said that people would actually bless the Chancellor of the Exchequer for teaching them not to smoke. I think that, at the same time, the hon. Gentlemen was qualifying not so much to represent his constituency at the next Election, as to become the first chairman of the tobacco board. The hon. Member for Houghton-le-Spring (Mr. Blyton), supported by the hon. Member for Oldham (Mr. Hale), seemed to favour a scheme whereby tobacco should be distributed through the Ministry of National Insurance. I hope that the Chancellor will reject any suggestion of that kind. It would have a most unfortunate effect on the whole of the Income Tax law, and on the actual trading community. I am sure that he will not think of it for a single moment.

The matter of saving dollars has been mentioned by a number of hon. Members. The Chancellor of the Exchequer expects to save £7,500,000 in one year, and the senior Burgess for Oxford University (Sir A. Salter) rightly put that against the amount of the expected deficit on current trading, which he put at £300 million. I should have thought it would be something in excess of that, considering that we borrowed from America and from Canada £1,000 million and that we expect to run through it in two years. The rate of expenditure of these dollars coupled with the expected deficit on current trading would, I think, produce an adverse dollar situation of £500 million, and if we set an expenditure of £7,500,000 against that it is nothing more than a drop in the ocean.

It is also a drop in the ocean from the point of view of the tax. The Chancellor estimates to gain approximately £70 million in a full year from this tobacco tax and that is set against a total revenue of £3,450,000,000. It is surely hardly worth the great inconvenience and hardship involved in terms of a tax revenue. I am one of those who thing that there is nothing at all in the idea of a Budget balanced at the high level as an instrument of deflation. I hope to develop that theme on the Second Reading of the Finance Bill, because it would be out of Order here. But the Chancellor has taken credit for balancing his Budget and he has produced or pretends to produce £70 million as an aid to himself in doing that. In my opinion it is just in keeping with the other grave hardships that will arise when we run through the American Loan.

There are two tests by which we ought to judge all these Resolutions as they come before the House—whether they are disinflationary and whether they act as incentives. It seems to me that this tax is inflationary. It will raise the price of an article which is getting in shorter and shorter supply. When larger sums of money are associated with shorter supplies of goods, that is inflation. Secondly, it has not any effect upon incentives, at either end of the scale, whether the upper incomes or the lower incomes. The upper income people will obviously go on smoking as much as they did before. The right incentive to apply to them is to reduce the price of tobacco and release more of their money for other purposes. In the case of the lower income groups the tendency of this tax will be to cut down smoking and release more money to spend in other ways. The kind of incentive which should be given to people in the lower incomes is to withdraw part of their money. Absenteeism in the mining community is already due to excess of purchasing power. Therefore, this tax will not operate as an incentive through-out the lower income groups. It is obviously a tax designed to set the stage for next year's Election. The Chancellor of the Exchequer said that this was not a pre-Election Budget, but he has set the stage to make swinging reductions in taxation and to produce benefit after benefit in next year's Budget in order to secure the votes of supporters of Socialism.

I think it might be for the convenience of the House if I intervened at this stage. No doubt the Debate will continue after I have spoken, but since I have not given my views on this Resolution and since a number of interesting speeches have been made, I should like to have a chance of making some comments on what has been said. The Opposition are going to oppose this Resolution. I am not surprised. This is an unpopular proposal which I have made and it is not surprising that the Opposition will vote against a proposal which they think will be some-what unpopular in the country. As a general rule Oppositions vote against unpopular proposals; we have done it in our time. Therefore, I am not at all surprised that they are going to vote against it. At the same time, I am convinced that this Resolution should be accepted because I believe it is the first stage—and I want to repeat this because many hon. Members have worked out sums showing the percentages of the various amounts or the deficits that this saving will represent— in bringing our dollar expenditure, which has become too large, more in relation to our resources, and also the first step in bringing about a more balanced situation as between exports and imports.

I am appealing to the public, and I believe we shall get support from many quarters, for a total reduction in the aggregate of 25 per cent. in the consumption of tobacco, and that will mean, as has been said several times, and which is really repeating my own estimate, a minimum saving of 30 million dollars in the next year. This is a minimum because we can acid a little bit to that for a reduction in the stocks needed to be carried by the manufacturers if the rate of smoking goes down. So 'the saving will be 30 million dollars plus something in respect of the running down of stocks. It might well be with regard to this economy and with regard to others that will follow —we must see how things go—that we may ask for some 'further restrictions. At this stage it seems to me that this is a reasonable first step—the first shot in the campaign to bring dollar expenditure down and to bring the export and import gap to a narrower point so that we can look more hopefully to the future.

Before I sit down I will deal with the suggestions made by a number of my hon. Friends, and also from the other side of the House, about old age pensioners and other groups. I should like to leave over what I have to say until a later part of my remarks, but I should like to begin by drawing attention to the fact that it is only too easy to exaggerate here as in every other case, the effect of this tax upon the average family budget. I promised to give some figures and I have some now. I think that there will be no dispute that this is straightforward, non-controversial arithmetic. If we take a person with a daily pre-Budget consumption of 20 cigarettes at 2s. 4d. he or she used to spend in a week 16s. 4d. The post-Budget price of those 20 cigarettes will go up to 3s. 4d. If the person in question follows the invitation to reduce smoking by one-quarter, or 25 per cent., he or she will be spending 175. 6d. as against 16s. 4d. That is an increase in the weekly budget of 1s. 2d., no more and no less.

On the other hand, if he wishes to save a little money and if he reduces his consumption by one-third, he will do better. One right hon. Gentleman has told us that he has already reduced his consumption not merely by one-third but by one-half. [An HON. MEMBER: "It will not last long."] That remains to be seen. Anyhow, suppose there be someone who, smoking 20 cigarettes a day before the Budget at 2s. 4d., proposes to cut his consumption by one-third. He will then, at the higher prices, only be spending 15s. 7d. a week, against 16s. 4d. I commend this arithmetic in particular to Scotsmen.

How does one cut 20 cigarettes by one third?

I am assuming that at least three packets would be bought. Of course, this is a figure taken over a period of time. It would mean that he would buy two packets whereas before he had bought three each containing 20 cigarettes. Perhaps that would be the more precise way to put it. Take the case of the pipe smoker, and not a cigarette smoker, and suppose that he used to smoke daily, pre-Budget, half an ounce of flake at 2s. 8d. an ounce, his weekly expenditure would be 9s. 4d. The post-Budget price would be 3s. 9½d. an ounce in place of the 2s. 8d. an ounce, and if he reduced his consumption, as I have invited him to. do, by one-quarter, he would be spending 9s. rid. a week as against 9s. 4d. That is an increase of 7d. It is no more nor less than 7d., which is not a sum which will make all the difference, in such a case, between a high and low standard of living.

Supposing that this person, being a Scotsman, tried to save money by reducing his consumption by one-third instead of one-quarter, he would then spend upon his smokes in an average week 8s. 10d. instead of the previous 9s. 4d., so he would save 6d. a week. I mention these figures in order to illustrate how easy it is to exaggerate in this matter and to suggest that the effect of these increases upon any section of reasonably heavy smokers will be deeply calamitous. I leave over, as I have said, the case of old age pensioners and others, but I put this broadly in regard to smokers in general. This matter is very capable of exaggeration, but I am sure that all hon. Members will wish, as we all do, to restrain any such inclination.

It is said that this is only going to result in some percentage saving of dollars—the percentage varies according to the figures. It is said that it is a small percentage of the total dollar deficit. That is quite true, but I repeat that it is the first step. I should be very greatly blamed, and rightly, and the Government would be blamed, if later on we were proposing other restrictions designed to reduce dollar expenditure and we had not taken the first step with regard to tobacco. It is undoubtedly a less essential commodity. In regard to films, it would not be in Order to discuss that matter in detail. Films and tobacco do, in a sense, hang together in so far as they are inessential by comparison with foodstuffs. I have indicated to the House why I have chosen tobacco here and not films. As I have already said—and it would be wrong and out of Order to do more than just repeat it here—whereas excessive expenditure on tobacco is properly tackled, at any rate in part, by taxation, expenditure on films is not so tackled but is appropriately handled by other methods which it would be out of Order for me to develop.

Here, I would like to reply to the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank), who thought that I had taken in vain the name of the Leader of the Opposition in my broadcast. It is quite true that the Leader of the Opposition, whom I named in my broadcast, and many others, have suggested to me for some time that we ought to have a cut at this smoking. I hold in my hand a copy of HANSARD for 4th February in which there is reported a rather long exchange between the Leader of the Opposition and myself on the subject of tobacco. Other hon. Members also took part. The Leader of the Opposition asked me—and this is my justification for what I said in my broadcast—

"Is there any reason to suppose that the British nation would not be willing to submit to any curtailment of non-essentials in regard to imports of films and tobacco out of the American loan in order either that that loan should be expended on essentials or that it should last longer?"

In reply, I said:

"It would, indeed, be very helpful if such a state of opinion were to grow up.…"

of this kind adverse to spending so many dollars on tobacco, and on films also, though that is not now in question. I continued:

"… if such a state of opinion were to grow up; and if we could have appeals made from any quarter, I would be quite prepared to do my part, if it could be made a national appeal that people should economise, particularly on tobacco."—[OFFICIAL REPORT, 4th February, 1947; Vol. 432, c. 1576.]

That is what I am proposing to do and I shall take action from time to time to make these appeals. I hope, in the light of what was then said, that the Opposition can join in. They can record their votes tonight and make the most of that situation but, having done that, I hope that they will join in appealing to the public. We are spending much more money on tobacco than is reasonable in the situation that exists. We all agree on that. I hope that after the vote has been taken there will be a good many appeals made from all round the political circle, if I may so express it.

Is it not a fact that nothing said by the Leader of the Opposition suggested that he was in favour of a prohibitive tax?

That is not what I was claiming. I think that the hon. Member was not in the House at the time when the right hon. and gallant Gentleman was speaking. The right hon. and gallant Gentleman challenged whether the Leader of the Opposition had ever suggested, as I said that he did, that we were smoking too much of the dollar tobacco. I have given the evidence of his having said it. That is the sole point on which I was anxious to make a reply. It is nothing to do with the tax itself; it is about whether we are spending too much. I said that many people have told me that we are spending too much, and that is why the tax is going up. The argument is perfectly logical.

There was one other point raised by the right hon. and gallant Gentleman about preference, with which, perhaps, I might deal at this stage. It is the case, as he surmised, that the 1938 Anglo-American agreement reduced the preference previously prevailing on Empire tobacco to the absolute margin which existed before I introduced this Budget and which I am stabilising and maintaining in the Budget. It is obvious that if two figures both move up, the difference between them being maintained, then, of course, the proportion of the gap between the smaller and the larger is diminished. In that sense, the preference has diminished. In the other sense, the absolute margin is retained unchanged. It is true that it is the 1938 agreement which has influenced the preference. It is the general position, which was referred to in the House the other day by my right hon. and learned Friend the President of the Board of Trade, who is now concerned with directing the discussions in Geneva, which, of course, precludes us from reconsidering that particular aspect of the matter. In any case, the Americans could object even apart from that. Therefore, I say that the present preference on Empire tobacco derives from the 1938 agreement and that over and above that—not as a necessary element in the case—there is the undertaking made in this House as a preliminary to our going into these trade talks.

I would like to add another word about Empire tobacco. We are buying all the Empire tobacco that we can get. We have been buying for some time and there is no intention to depart from that. It would be quite a wrong idea to assume that there is a quantity of Empire tobacco lying about in any part of the world which we are not prepared to purchase. There was a statement to this effect made by my right hon. and learned Friend the President of the Board of Trade himself in the course of the speech which he made during the Economic Survey Debate. He said that we shall, of course, continue the policy of using all the Empire tobacco we can get, whether it is from Southern Rhodesia, which is the principal source, or from Nyasaland or India or elsewhere. In some parts of the Empire, in India for instance, there is a tendency now for much more of the production to be consumed within the country. The export surplus has diminished. But I can assure the House that we shall not be backward in purchasing whatever available supplies there may be of Empire tobacco. Indeed, the difficulty has sometimes been to persuade some of the manufacturers to use as much Empire tobacco as we could get and to blend it with other kinds. However, we are prepared to do our best to get agreement.

If it is admitted—I think everybody does admit it—that we must reduce the consumption of dollar tobacco, then the choice rests between the method such as I have suggested and various methods of regulating imports and rationing. As I told the House when this matter was being discussed before, we should have been most blameworthy if before I made this proposal on behalf of the Government we had not carefully examined the technical and administrative aspects of the alternative arrangements. We did so, and we reached the conclusion that none of these alternatives would really do. I will briefly tell the House why.

To make it quite clear, did the Chancellor in considering these matters have the opportunity—I imagine he did not—of considering them with the manufacturers?

There are limits to what one can discuss before a Budget. As a matter of fact, there is a continuing relationship, primarily through the Board of Trade rather than the Treasury, though we are in close contact with the President of the Board of Trade on all these matters. The Tobacco Controller works through the President of the Board of Trade, ministerially speaking, and he is in very constant touch and a constant link between the trade and the Government. I think we know their views pretty well, although we obviously could not put to them certain alternatives, one of which would have been a tax. What I am going to say should, in fact, carry a good deal of conviction, and I think it will. It is not politics at all, but a practical administra- tive question, and I cannot imagine that the manufacturers would be in disagreement with the principal points I am now going to make.

First of all, it has been suggested that we might simply cut down on the total import licences; that is, to say, "All right. We will reduce the import licence issues to 75 per cent., or what you will." However, it is perfectly clear that that would lead to queues in the shops. There would be no change in taxation, but it would simply cut down the licences. There would be no change in prices. We should have queues and shop crawling which would all be most troublesome. People would go about from place to place seeking to pick up a packet of cigarettes or an ounce of pipe tobacco. It would be most time wasting and it would have bad effects on production. It would have ill effects on a very large body of working people who would go around trying to pick up an odd packet of cigarettes, because this plan, which I am now discussing, is based upon the assumption that we are deliberately reducing our available supplies substantially below the demands of the public. That is what is meant if there is no rationing.

There would even be queues in the smoking room.

As my hon. Friend says, there would even be queues in the smoking room. In the first place, it would he very irritating to the general body of working people, and in the second place, it would quite certainly give rise to a great deal of absence from work. When I say that, I speak of what I remember during the war in the early days when I was appointed President of the Board of Trade. One of the first problems we had to consider was how to get our tobacco supplies, because at that time there had developed just the situation which it is now suggested by some people might he introduced, namely a shortage of tobacco supplies below the requirements of the population. There were queues hanging about outside all sorts of tobacconist shops, and it was both irritating psychologically and bad for production. I cannot think that that could really be put forward as a practical proposition. It would have all the disadvantages of my proposals, and a lot more as well.

Now let us pass to considerations of rationing. My right hon. Friend the President of the Board of Trade and I went into this, and the Minister of Food was also involved in regard to the suggestions for swapping tobacco against sweets, We formed the view quite definitely that it was not a practicable plan either to ration tobacco alone as a separate commodity, or to put it on points in competition with sweets and other articles containing sugar. With regard to the general rationing of tobacco, the facts are pretty well known. About one-third of the adult population, or one half of the total population, do not smoke at all, and among smokers there is a very wide variation in consumption, much wider than in the consumption of food or possibly the consumption of drink, though that varies widely too.

If we had an equal distribution based upon rationing we would have very great dissatisfaction, assuming there was no black market. We should run into administrative difficulties also, it would be unsatisfactory to people and there would be complaints because the ration would he much too much for those who did not smoke at all or much too little for the heavy smokers. The thing would not work out in the relatively equitable way that the rationing of bread or other foodstuffs does, and undoubtedly an uncontrollable black market would develop. That is not making any accusation against the general honesty, but people's attitude towards tobacco is different from their attitude towards many other things, and it is certainly a black market potential, if I may use that term. It would be a very much livelier black market than there is in relation to other commodities because of the attraction of and the satisfaction derived from tobacco. We should certainly get a very large and completely uncontrollable black market if we tried to ration tobacco separately.

Has the right hon. Gentleman considered the French system?

Is it a good thing to imitate the French in that respect? There are some respects in which the French are worthy of great imitation, but I do not think we should imitate the French primarily in matters relating to public administration. That is not the French strong suit. They have other strong suits.

There is not a large black market in cigarettes—[HON. MEMBERS: Oh."]

With very great respect, I will not venture to argue with my hon. Friend as to just how big the black market is in this, that or the other commodity in France. I am very anxious not to be led into saying anything which would be other than friendly to France. We may imitate the French in all sorts of other ways, but not I think in regard to matters touching the efficiency of public administration. There I must, as a Francophile, leave it. Further, there are 385,000 distribution points of tobacco, and that in itself would make any rationing scheme extremely difficult to introduce. Tobacco, much more than almost anything else, is sold in relatively small quantities by a very large number of retailed traders.

Much more than sweets?

I will not give an opinion on that. I am speaking now on the proposal to ration tobacco as a separate commodity. On that I say that 385,000 distribution points is a large number, and a large administrative machine would be necessary to operate a rationing scheme. I am prepared to justify to the hilt the staffs we have taken on, but I do not want to keep adding to them and taking people away from other work. I am prepared to argue that those officials who are administering the existing rationing scheme are doing valuable work in the public interest, but I do not think one ought, with equanimity, to consider extending rationing to commodities which are not of first necessity in our lives. Therefore, it was the view of the Government, reached after careful thought, that we should reject the proposal to ration tobacco as a separate commodity for the reasons I have given.

There is the alternative suggestion of rationing it along with other commodities on a points scheme. The arguments against this are somewhat different but, in my view, they are heavily conclusive against it. This, again, was much in our minds in the days of the Coalition, when I was at the Board of Trade and when we had discussions about this problem. The principal objection is the same now as then. it is that on the present points scheme you are rationing foods which have a nutritional value, and if you put up tobacco as an alternative, you will be diverting the use of coupons from things having a nutritional value—and sweets have a definite nutritional value insofar as they contain sugar—to tobacco which has not a nutritional value. Therefore, the deliberate view of the Ministry of Food, and I am sure they are right—and this was the view of the Ministry of Food when Lord Woolton was Minister, and it is the view of the Ministry of Food now that my right hon. Friend is Minister—is that it would be anti-nutritional to put tobacco into the points system and to make it an alternative to foods which build up the strength and energy of the human body. For that reason, in addition to administrative difficulties, we have rejected the proposal to ration tobacco, not separately, but along with other foods.

This brings us back to the proposal which I made in my last Budget speech and which I am submitting to the House, the proposal that we should put on an admittedly steep tax, with a steeper rise than has ever been made before at any one moment. Over the years, of course, the tax on tobacco has risen by more in its earlier stages than the rise I am proposing now. However, that was a rise in a series of increments, and this is one larger than ever before plus an appeal, which, I repeat, I hope will be made by all men and women of responsibility in public life in all parties to the public to achieve at least a 25 per cent. reduction. This is the proposal which I am submitting on behalf of the Government.

I have had, of course, a considerable correspondence on this subject. - I brought down a selection of some of the more abusive letters, but I have mislaid them. Perhaps it does not much matter, and I will pick them up again a little later on. On the other hand, let me hasten to add, only quite a small fraction have been really abusive; quite a number of them are from people who have chosen to write to me out of the blue and have fully recognised the national need for the policy which I am submitting. And quite a number of them have been very much in with the speeches made in this House this afternoon by a number of hon. Members who say that they have been in their constituencies at the weekend and have gathered the general impression that, although there was a feeling about certain particular sections of the com- munity being unduly hardly hit by this, yet on the whole there was acceptance of this as a national necessity.

I repeat, I have had a considerable correspondence. In addition, a high proportion of hon. Members who have spoken today, some from the other side of the House, including the hon. Member for Moseley (Sir P. Hannon)—who used some very kind words about me, which is so agreeable when it comes from that quarter of the House—and, I think, also the hon. Member for Farnham (Mr. Nicholson) touched, in passing, on the question of the old age pensioner. It can never be said by any person who is both truthful and informed that this Government has not done a lot for old people, deliberately and intentionally. After all, I do not think the increase of the old age pension was controversial in broad principle, though I venture to think that we put the old age pension up to a higher figure than a Tory Government would have done if they had won the last Election. At any rate, we put it at the figure which the House knows, and that made a very great change indeed in the conditions of many hundreds of thousands of old people. In addition to that, I have myself, with the full approval of both sides of the House, first last year and again this year, given the old people first place with regard to the repayment of the postwar credits, though the proportion of those people who draw postwar credits is not very high because, in order to draw a postwar credit, you must have been liable to Income Tax before, and many of them were not, having only their pensions on which to live. But surely that was a marked and decided preference for the old people when it came to the dispensing of this particular benefit?

Further than that, the food subsidies— which some people think should be reduced to negligible proportions—which are still nearly £400 million a year, in large measure assist the old people proportionate to their resources. I have not the figure, but if food subsidies were worked out, as they could be, in proportion to the incomes of the people on average consumption at different income levels, it would be found that the lower the income, the bigger was the contribution made by the food subsidy to the budget of the people concerned. Therefore, we have not been at all neglectful of the old people, or of the lower income groups.

The House will not expect me to give a snap answer this afternoon to what has just been said. I have given the reasons why rationing will not work, and my mind is closed on that. I shall resist the proposals to substitute rationing schemes for the proposal that I have put up. On the other hand, with regard to the Old Age Pensioners, my mind is not closed at all but, to be perfectly frank about it, it is open to a certain amount of administrative difficulty. No doubt in the last resort every difficulty can be overcome, but there are certain obvious difficulties which will have to be looked at, and I cannot commit my colleagues at this stage. However, I think this is the one positive point worthy of further careful examination, which has emerged from the criticism made in different parts of the House and put up by hon. Members opposite as well as those on this side.

If I may mention one difficulty, it is that of the old ladies of 65 or 70, who have never smoked in their lives. That has to be looked at. Somebody has suggested that we might require some kind of declaration to be made by the old person that they had been in the habit of smoking and that, if they did not make a declaration, they should not receive a ration.

I hope the right hon. Gentleman does not think that help to the older women is in the minds of the vast majority of hon. Members. That would be feminism gone mad. I think he will agree that old ladies of that generation—when the hon. Member for Blackburn (Mrs. Castle) reaches pensionable age, it will be a different matter. I wish to remind the Chancellor that old ladies of that generation would think it terrible to smoke a cigarette. To burden this matter, which many of us have at heart, with something which is quite unnecessary is wrong. I hope the Chancellor will look at this matter again.

I am very much obliged to my hon. Friend the Member for Epping (Mrs. Manning) for her intervention. All I was seeking to do was to indicate the difficulties of the problem. If we have some special arrangement for old age pensioners, these old ladies of whom we are talking will be included, and either we have to give them the same as the men, or something different. It is an administrative difficulty. The Government are not wishing to rush to a fixed conclusion on this matter. I wish to indicate to the House that here is an administrative problem, which we have to look at. Again, in regard to the thing being abused, it may be arguable as my hon. Friend the Member for Eton and Slough (Mr. Levy) pointed out, in another connection, that a black market might develop which could, perhaps, be ignored. But, one does not wish deliberately to create facilities for Black Market operations, and that point would have to be looked at. There was also the suggestion by my hon. Friend the Member for Oldham (Mr. Hale), who thought there might be some special kind of tobacco made which could be distributed through institutions.

I did say specially labelled and specially packed, so that it could be identified but not a special or a poorer kind of tobacco.

rose—

On a point of Order. I want to ask why there is sex discrimination in this House, and why the Chancellor refused to give way to me, but gave way to my hon. Friend.

That is not a point of Order, and I cannot give a Ruling.

I did not intend any disrespect to my hon. Friend the Member for Coatbridge (Mrs. Mann). The suggestion is again an administrative problem. Now we are through the Budget Stage, it is perfectly possible for these matters to be discussed with the manufacturers. I will undertake to have a further look at that matter. I never like to seem to be engaging in more commitments than I can carry out. But I wish to see whether there is some way of meeting the case for the old people. I undertake to apply my mind to them and to get my officials on that matter and, if necessary, to have discussion with the trade between now and the introduction of the Finance Bill, we will see what we can do. I would like to do something in that direction. It may turn out in the end that the difficulties are insuperable. On the other hand, we have often found that difficulties are not so insuperable as some had supposed. But there are diffi- culties, and I would not like to hide them.

In view of the fact that the Chancellor has said that he will look into the matter, and will consult the trade and get his officials working on the scheme to make some concession to the old people, will he also have in mind a concession to disabled Servicemen?

That is another administrative problem. The administrative problem is where to draw the line. This is so familiar; once we say we will do something for somebody, we are asked, "Why not for someone else?" and gradually the circle is widened. I am not wishing at this stage to make any further commitment than to say that I will look into the question in the light of the speeches which have been made, including the suggestion of the hon. Member for Lonsdale (Sir I. Fraser), to see where, in fact, we can draw a practical line. I hope the House will feel that I have shown some signs of being influenced by views expressed on both sides as I always try to do so, and I hope the House will do the justice in this. Of course I cannot tear up the whole Budget, but I am always prepared to listen. It seems one of the chief functions in these House of Commons Debates to listen to arguments put forward from different sections of the House as to how the main structure of the Budget, to which the Government are irrevocably committed, can be modified in detail.

I rather gather that the Chancellor is coming to the end of his speech and, if so, I want him to come clown with a heavy foot and hard on the suggestion made by the hon. Member for Widnes (Mr. C. Shawcross) that one way of making the Budget balance would be to stop civil servants smoking in Government offices. If anything like that is done it should be done generally and not in an arbitrary and discriminatory manner.

Before the Chancellor answers that point, may I point out that that was not my suggestion? What I said was that the Chancellor referred to appeals to the country, and that vague appeals of that kind are no good at all, but examples should be set, and a request made to all industry and commerce to carry out the scheme; it was proposed not from this side of the House at first, but from the other side.

We can have a look at that also, but the question is how to make an appeal. I would not discriminate against civil servants, of course; I would not ask them to do something which other members of the community were not doing. I feel that that is all I can say at this stage. The Opposition are going to vote against this, and I ask the Government majority to vote in favour. I give an undertaking on the lines I have indicated, particularly in regard to old age pensioners, and I will do my best between now and the Committee stage of the Finance Bill, to see whether it is practicable to work out a scheme which will give effect to requests and suggestions which have been made from many parts of the House, from this side and from that.

I think the House will be pleased to have heard the Chancellor say that he is going to consider the special circumstances of old age pensioners. Although I welcome that, I want the House to be clear that I oppose this Resolution completely, and will do so later when a Division is taken. I do so not on the grounds on which Conservatives are opposing it, for I agree with the Chancellor in his explanation of their attitude. When the Chancellor was speaking on the Budget a week ago, I characterised this Resolution as shameful, and I now have an opportunity of explaining in greater detail what I meant by that expression.

This is an unjust imposition. I know there are discussions on these Benches between hon. Members, many of whom are my friends, regarding the merits and demerits of indirect taxation and direct taxation. There is a growing conception among Labour Members of Parliament that direct taxation bears more heavily than indirect taxation, and if a saving has to be made, there should be reductions in direct taxation. It is for that reason, in my opinion, that many Labour Members of Parliament are under an illusion about the purpose and result of this tax. The Chancellor said last Tuesday, and it has been repeated today by a number of Members, that the main purpose of this tax is to save dollars, and that the question of revenue is only indirectly of importance. In fact, the amount of revenue which the Chancellor contemplates raising is 10 times the amount of dollars which he expects to save. That is a queer way of saying that he is primarily concerned with saving dollars, and only secondarily with the revenue, for if he is intent upon saving dollars, he knows many ways in which they can be saved. If he is not quite sure about it, I can help him.

In the first place, the House is aware of the large dollar expenditure which is involved in maintaining our Armed Forces abroad. In many of those cases, as quite a large number of hon. Members of this House will agree, the maintenance of those Armed Forces in those countries is not to our interest, let alone the interests of the people of those lands. Yet we are spending dollars for that purpose. The Chancellor is far better aware than I am of the precise amount of dollars which we are spending in that way. Secondly, if we are to save dollars on our imports, I submit that there is quite a substantial list of semi-luxuries and luxuries which we are importing, which we need not import at all—[An HON. MEMBER: "Name them."] Very well. I will give an example. Before Christmas my wife was looking for presents. She went into a shop, in the window of which she had seen a plastic brush and comb set, which she thought she would buy as a present. She was told that the price was £12. When she recovered from her amazement, she was told, "This comes from the United States, and Customs duty has to be paid, in addition to Purchase Tax, etc." She said to the salesman, "Why do we have to get this kind of thing from the United States?" He replied, "That is not my affair, Madame." He was quite right; that is our affair. That is the kind of luxury I have in mind. It is not for me to go into details. As the House knows, on a recent occasion, the President of the Board of Trade was asked to supply figures. All he gave was one comprehensive figure of manufactured goods imported; we have never had that total broken down. It needs to be broken down, and we shall find that it contains luxury goods.

Let us consider the question of films. We spend £17 million a year in dollars on importing films. I think that every intelligent Member of this House—every Member, if I may say so—knows that most of the films we import from America are not worth showing.[HON. MEMBERS: "No."] I repeat, most of them are not worth showing. The way to have saved precisely this amount of £7,500,000 worth of dollars would have been to decrease the imports of films by about half. Let me put it in this way. When I was a youngster, a film was exhibited for a whole week, whereas now, in most of the cinemas outside central London, films are shown for three days, and in the latter part of the week another film is shown. There is no reason why we cannot revert to the former system. It would mean that a person who goes to the cinema once a week, would be able to continue to do so. Those who like to go twice a week, would either have to see the same film twice or go to a different cinema, say an Odeon cinema as against an A.B.C. one, and so forth, and their wants would be met in that way.

6.45 p.m.

The Chancellor has shown a lack of imagination about how to save dollars, for which reason I conclude that his main intention was not that of saving dollars. If it is really his intention, and if the House agrees to pass this Resolution, and subsequently the Finance Bill, why not let him in that case, make a gesture? If we are to save £7,500,000 worth of dollars, but at the same time raise £75 million in Excise, let the Chancellor take an equivalent amount of £75 million-off beer, or off the Purchase Tax, or let him increase the amount of the food subsidies to that extent. So far as the Budget is concerned, such an action would have no bearing on the total, but it would be an indication of his good will and sincerity.

At this stage I should say something of which some Members are aware, and in consequence of which there was some laughter last week when I made an interjection in the Chancellor's Budget speech. The Chancellor may not know that I am a non-smoker. I can scarcely remember ever having smoked. So far as I am personally concerned, this tax means nothing. I am concerned, however, with what I believe to be the interests of my constituents, and, as this is a national matter, with the interests of all constituents. Last week the Chancellor turned to me and gave me a lecture on smoking less. It reminds me of the story of the man who went to see a doctor. He had a sore throat, and the doctor said to him, "I think that you had better confine yourself to 10 cigarettes a day." The man went away. Two months later he went to see the doctor again, and his throat was worse than ever. The doctor said, "Have you carried out my instructions?" The man replied, "Yes." The doctor said, "Have you stopped smoking so much? Do you only smoke 10 cigarettes a day?" The man said, "Yes, and that is the trouble. I was a non-smoker before." The Chancellor suggested to me last Tuesday that I should not throw away my stubs, when I hardly know what a stub is. The reason I am raising this matter goes far beyond any personal interest.

I come to the question of the problem of distribution. The Chancellor has just spoken on the question of rationing. Only last year there was suddenly imposed on the nation the rationing of bread. It was then suggested by some people that it would be difficult to carry out. It may be argued that there is a slight black market in bread, cakes, etc., but it is only a slight one, and bread rationing works effectively, and has proved most valuable. When P.A.Y.E. was introduced, it was suggested that it could not work, that it was not practicable, but it was introduced, it has worked, and it is an effective way of carrying-out Income Tax collection, so far as the people to whom it applies are concerned. Every step that is proposed is decried by those who do not want to see it introduced; it is always suggested that it cannot work, until the thing is put into operation, when it works and the public accept it. In almost every country in Europe, rationing of tobacco operates. There is hardly a country in Europe where cigarettes and tobacco are not rationed. But, of course, I would not argue with the Chancellor of the Exchequer about the relative efficiency or otherwise of those countries compared with our own. The fact is that, precisely because we are— we hope we are, and say we are—more efficient than they, we could introduce a better rationing system than France, Belgium or the other countries. I have some confidence in the Chancellor of the Exchequer in that respect.

I have stated by case, and explained why I oppose this Resolution. I oppose it basically, because it is an additional burden on earners of the lower wages in this country, and is against the policy of the Labour Party, which has been to equate the national burden, to bring down the burden of the workers by putting the onus, on those who can afford it. In this respect I believe the Chancellor of the Exchequer has made a mistake. If he has done it deliberately, I give the warning to this House, and particularly to the Labour Members, that he is going away from Labour's own programme. The workers are bearing this burden, and, whether they bear it by giving up cigarettes or not, the fact is that, in spite of the call for patriotism—and it is not always so effective in time of peace—the rich are not going to give up any cigarettes: they will smoke as much as before. Here and there a small proportion—and I believe that hon. Members of this House, including hon. Members opposite may do so—will set themselves the task of smoking 25 per cent. or so less; but, in the main, they will continue as heretofore; the workers will have to bear the brunt. I believe this is an unjust tax the Chancellor has brought in, and for that reason I oppose it.

If the Chancellor has found in his correspondence that there is not so much opposition against it, and if, as other Members have said—as I think the hon. Member for Sparkbrook (Mr. Shurmer) said—the working people are prepared to suffer sacrifices, then I would say it is only because they believe that they need to make the sacrifice in order to save dollars for this country; but it is also because they do not know enough of the amount of dollars we are spending that we do not need to spend. The Chancellor of the Exchequer himself said just a moment before that this is only the first shot to bring down dollar expenditure. I am quoting almost verbatim from what he said.

That is quite right.

This is the first shot. If this is the first shot, why must it be at the expense of the working class? Why should not the first shot be at the expense of the whole nation? I believe the country will not stand for this kind of thing. Hence, I oppose the Resolution. I hope the Chancellor will not suppose I am opposing it on the same grounds as the Conservatives are opposing it. I am opposed to it for the reasons I have given. I know that there are many on this side of the House who agree with me.

I think that the Chancellor of the Exchequer is one of the most courteous of Ministers in his attendance in the House, and I think that, in his presence, I should disclose my personal interest. The day before the Budget my broker, having heard that the tobacco tax was going to be very small, put me into tobacco.

Leakage.

He was, unfortunately, in touch with the wrong leak. I must say that I am wholly with the Chancellor of the Exchequer in wanting to cut imports of tobacco. I really am. I must say that when the Chancellor of the Exchequer wound slowly to the end of his Budget speech—" the longest day must have an end "—and when he finally came to that savage tax upon tobacco, there was not one of us who did not feel deep in his heart that that was a courageous thing to do. That was the first reaction. I felt it, and I gladly acknowledge it to the Chancellor. Next, I felt that it reassured 'me that we need not bother, as far as the Government are concerned, about a General Election this year. If that seems harsh, then I must say that the Budget seems to be one with very few concessions, and one which leaves the Chancellor ample opportunity a year from now to curry favour with a larger section of the public than he does this time. But, as events sometimes dominate Governments, instead of Governments dominating events. I must say that, when I heard the terms of his appeal, I began to feel some doubt about this tobacco business. The Chancellor of the Exchequer is not as good an evangelist as he looks.

He does not look like one.

He asked the nation to cut down its smoking by about 25 per cent., and he said, in effect, that if anybody wants to get out of that, he can do it by a special cash dispensation, by paying more for his cigarettes. That is what it sounded like. What was this sudden impost set upon the appeal to the better nature and the better judgment of the people to stop smoking? The Chancellor of the Exchequer may get £75 million, which he is going to take as conscience money. He did not mention the existence of it in his Budget. But he is really going to pocket conscience money—which I think in this case is overdoing the usual conscience money. He may get more than the £75 million. Imports may actually go up on those of last year. It seems to me that if the real purpose of the Chancellor of the Exchequer was to cut down imports he would not have done it that way.

I suspect that his interest from a revenue standpoint is very deep. After all, £75 million, even in these days of great extravagance, is a lot of money. I can imagine the Chancellor preparing his next Budget, weeping tears at the failure of the nation to smoke less, and saying, "After all, there is some compensation." The more I study this thing the more the revenue side appeals to me, as, I am sure, it does to the Chancellor of the Exchequer. I should like to ask one or two questions about the possible—not the actual—evasions. I gather the Chancellor of the Exchequer is sincere about this. What about the co-operative societies? A member of a co-operative society—if I can have the Chancellor's attention—

I am listening.

A member of a co-operative society can purchase - unlimited cigarettes and nothing else. He need not purchase any other form of merchandise in the co-operative shops. His purchases may go up by 10 per cent. or 15 per cent., and he can share them with his friends. He gets a dividend on those. I know that is a form of trading which the co-operatives have. Nevertheless, he is going to purchase cigarettes at less than the tax the Chancellor is putting on the rest of the people. [HON. MEMBERS: "No."] That is the fact. The net result on the man's pocket at the end of the week is that he has not paid the same for cigarettes. If the Chancellor is sincere about this, will he look at this point to see if there is some way of seeing that co-operative society members pay the same as everybody else does?

Surely, the dividends which co-operative societies can pay compare with the dividends of people who have money invested in private industries selling tobacco or manufacturing tobacco? Surely, the same principle applies?

We are talking about consumers. I know the hon. Member's idea. I do not trade with co-operative societies.[HON. MEMBERS; Shame."] I will never trade with them, as long as they continue this unfair practice.

The hon. Member must be aware that many cooperative societies do not pay dividends on cigarettes and tobacco, and it may be that the principle will be extended to other goods, not because this would be departing from some principle, but because it would be paying a dividend upon taxation and not upon goods? Surely, it is also worth while recalling that this method of redistribution of profits also applies to essential foodstuffs?

We are discussing the Tobacco Duty, and not the conduct of co-operative societies.

I hope the Chancellor will use his influence to carry that practice right through the movement, as I am sure he could. I want to say one thing more in explaining why, with a good deal of regret, I am going to vote against this Resolution. [HON. MEMBERS: Oh.''] Of course I am.

The hon. Member will balance the Communists.

Perhaps so, but politics make strange bedfellows. The reason why I will vote against this Resolution is because the Chancellor makes no provision, as I had hoped he would, for the old age pensioner, who, as he himself admitted a few moments ago, is a well-deserving case and who is going to feel the effect of this taxation most unfairly. That is a thing which we resent. We recognise the Chancellor's difficulties, but we resent the measure he has taken to deal with them. Here is one thing which the Chancellor could have done. Perhaps it is too late now, and yet, if he took this step, he might go done to history as a great Chancellor, at any rate, great for one day.

The one thing which this Government does not do is trust the people. This Government does not trust the people of the country, and never has trusted the nation, as the Leader of the Opposition trusted it. [Laughter.] Hon. Gentlemen opposite may laugh if they like, but this Government issues instructions to the people. Why did not the Chancellor make this appeal to the nation: "I want this to be a voluntary cutting down. I want those who are old and poor and who smoke few cigarettes not to suffer the same reduction as others. Will the theatres co-operate with me so that the abominable habit of smoking in theatres will be ended?" No other country in the world allows smoking in theatres as we do. To look through the cigarette smoke at some act on the stage, to have a man behind you trying to light a pipe while you are trying to hear the words of Shakespeare, is an abomination which the Chancellor could remove and the whole nation would support him in doing so. At the cinema, there is always a draught from the right to the left, and I always sit on the left. Could not the Chancellor persuade the railway companies to provide more carriages in which smoking is not allowed?

The Chancellor had a great chance, and, if he had made such an appeal, I would have responded at once. I think that every hon. Member of this House would have done the same thing, and we would all be cutting down. Since when has this nation failed to respond, when the need of the country demanded it? Is it too late now? I put this earnestly to the Chancellor. The voluntary system would have resulted in absolute fairness all over the country, because the little man, and the poor man who smoke few cigarettes would not have been penalised, and those of us who smoke too much might have improved our health. I think the Chancellor could have got this reduction without this punishing tax of £75 million which is so suspicious. I wonder what was the Chancellor's real objective. This tax is going to fall unfairly, and the Chancellor cannot assure the House that he will secure the reduction he wants, because he is gambling on saving the earnings of sin and getting it into the Treasury, because it is a sin if we go against the country's needs, and the Chancellor is going to profit by that sin. For these reasons, with or without the Communist Party, or half, of it, I shall vote against this Resolution.

I listened to the Chancellor's statement, and I am encouraged to hope that the plea put forward by hon. Members on both sides of the House in relation to the taxation of tobacco and its effect upon old age pensioners will result in some concession being made to them. Since the presenta- tion of the Budget a week ago, my postbag, and it may be the same with other hon. Members, has been full of letters complaining, not so much about the Budget in general, as about one or two particular items. The outstanding item of complaint is the tax upon tobacco, in relation to the hardship which it will inflict upon old age pensioners. I do not think I have had one letter complaining about the taxation of tobacco from the point of view of the ordinary member of the community. I am not a heavy smoker, but I am going to respond to the appeal of the Chancellor. Apart from the letters I have received, I have received a telegram, to which I attach very much importance, because it expresses the considered view of the representative body of the old age pensioners. It reads as follows:

"The Executive Council of the National Federation of Old Age Pensioners Associations, representing two million old age pensioners of Great Britain, view with alarm and disgust the further cruel increased burden placed upon its members by the increase in the tax on tobacco, and urges you to endeavour to exempt these veterans from the imposition of this proposal. We strongly urge you to fight against the increase being imposed on old age pensioners, who have already suffered severely through the increased cost of wireless licences, and are being cut off from every particle of comfort in social life."

That is signed by the General Secretary of the National Federation of Old Age Pensioners Associations, Mr. Tyrell, of Southport. In addition to that, I have had letters from a number of my constituents and from people in other parts of the country who know of my interest in the welfare of old age pensioners, asking me to do all I can to persuade the Chancellor to make it easier for the old people at least to enjoy a smoke in the eventide of their retirement. It may not be much, but they enjoy it.

Some time ago, I had an opportunity of analysing the great number of budgets and returns which came to me from the old people of this country. One of the amazing features that revealed itself in the analysis thereof was that it was very rare to come across an old man in receipt of an old age pension who smoked more than one or one and a half ounces of tobacco a week. They are not extravagant smokers, not because they would not like to increase their consumption of tobacco, but—and this is a very important point —because their economic circumstances prevent them from buying more than one and a half ounces a week. In giving the promise to this House that he was prepared further to consider some concession being made to the old people, the Chancellor made reference to administrative difficulties. I am not unmindful of the administrative difficulties which confront any Minister of the Crown when trying to arrange things for certain sections of the community. I remember some years ago, when there was an agitation for bringing into operation the Pay-as-youearn scheme with regard to Income Tax, that we were then told very forcibly by the late Sir Kingsley Wood, the Chancellor of the Exchequer of the day, that it was administratively impossible to bring that scheme into operation, and that it could not be worked. He said that it would involve this, that and the other. Yet, at a later period, the present Chancellor's predecessor brought forth the scheme, and no one can deny the fact that it has been one of the greatest reforms ever introduced into this House in regard to the payment of Income Tax by the workers.

I contend that there is a way out of the difficulty. Suggestions have been made as to how the Chancellor can overcome the difficulty of differentiation between one section of the community and another, among them, suggestions by my hon. Friend the Member for Oldham (Mr. Hale) and by my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton). Whilst it is not an easy thing to do, I believe that it is possible. I wish to follow the suggestion made by my hon. Friend the Member for Oldham, that it is possible for the retail tobacconist to get his supplies of tobacco for sale to the old age pensioner packed with a special wrapper. After all, old age pensioners do not go round the country buying tobacco; most of them buy their weekly tobacco from the same shop in the town or village. I believe that it is within the realm of possibility for that to be done.

7.15 p.m.

It is interesting to note that the Tobacco Duty, as we understand it today—I am not speaking about the name given to it under the old fiscal policy—originated in the year 1660. It was then twopence per lb. In the early part of the 18th century, it was raised to 6½d. a lb. At that time, it was thought that that was a very high duty to be placed on tobacco. It is not my intention to weary the House with the many increases that have been placed upon tobacco imported into this country between the 18th century and 1910. But I want to start at 1910, and to go very quickly through the taxation that has since been placed on tobacco. In 1910 it was 3s. 8d. per lb.; in 1915 it was raised to 5s. 6d. per lb., and in May, 1917, it was raised to 7s. 4d. per lb., but, in the latter period of that year, which was a war period, agitation was so strong that it was reduced to 6s. 5d. per lb. In the years 1918, 1919, 1920, 1921, 1925 and 1926 it stood at a level of 8s. 2d. per lb. During the six years of the post-war period after the 1914–1918 war it remained at 8s. 2d. I am fully aware of the changed circumstances through which we are passing which make it possible for the Chancellor to increase the Tobacco Duty, but I think that he ought very seriously to consider the figures of the existing duty in the post-war years of the 1939–45 war in relation to the figures existing during the six years following the 1914–1918 war.

From 1931 there has been a slow but gradual increase in the duty payable on tobacco. In 1931 it was 9s. 6d. per lb.; in 1939 it was 11s. 6d. per lb.; in 1940 it was 17s. 6d. per lb.; in 1942 it was 29s. 6d. per lb.; in 1945 it was 38s. 8d. per lb., and today it stands at 54s. 10d. per lb. From the early days there has been a progressive increase, with the exception of the first six postwar years of the 1914–1918 war. None of those increases was imposed in order to lessen the consumption of tobacco in this country. But today we are told that the heavy taxation of 54s. 10d. per lb. has been imposed in an endeavour to decrease consumption of tobacco. That is just the reverse to what happened after the war of 1914–18. Today we are faced with a very different situation. What we have been spending on the very heavy consumption of tobacco in this country, we have been spending out of borrowed money. No man; whatever his vices may be—if tobacco smoking can be considered a vice—can go on spending borrowed money on something which he ought to manage to do without or, at least, to do with less of. I am not complaining about the general contents of the Budget. I could put forward a good case on behalf of the miner for an exemption from the tobacco tax, but I am not going to do that. My main point in rising in this Debate was to put forward a plea on behalf of the old age pensioners.

Nobody can deny the fact that this Government, with the assistance of some hon. Members of the Opposition, have made concessions and helped to improve the economic position of the old age pensioners. We put forward our claims on their behalf in all honesty; we thought that we were doing right. That being so, we ought not to take away from those pensioners, in the form of increased taxation upon their tobacco, something which we gave them months ago in the form of increased pensions. I put forward that plea because I believe we are doing the right thing. I agree with the hon. Lady the Member for Epping (Mrs. Manning) that we do not need to consider cheaper tobacco, or the pre-Budget price, for the women folk in the ranks of the old age pensioners. I am concerned about the veterans of industry who in the past have played their part, and I think we ought not to make it difficult for them to enjoy a little solace in their remaining years. I hope the Chancellor and his Department will give very serious consideration to see whether it is administratively possible for the old age pensioners to have their tobacco at the pre-Budget price in order that they may enjoy this comfort in the eventide of their lives.

I would first like to say a word in support of the plea which has been made by my namesake, the hon. Member for Ince (Mr. T. Brown): The old age pensioners of this country have had no more active, steadfast, and consistent friend than he has shown himself to be. If we have to have this tax at all, and I hope we do not, then although administrative difficulties stand in the way—and, with some knowledge of the machine, I know that the problem is a difficult one, of exempting these old folks from the incidence of the tax—we ought to do our best to overcome them. But I do not want to see this tax at all. But it is a Resolution imposing this tax that we are discussing tonight. I always regard the Chancellor of the Exchequer as a man with a superlatively logical mind and when I find the right hon. Gentleman starting from exactly the same point that I start from in this matter, but finishing with an entirely opposite conclusion, I wonder whether his logic is at fault or mine. It is probably mine, but, at least, I will state the position as I see it, and indicate where I disagree with the conclusion drawn by the Chancellor.

The Chancellor told us today, in a speech of the utmost consequence for the future, that this tax must be regarded not only on its own merits, but as a first step in checking dollar expenditure. He went on to foreshadow that in subsequent Burgets we must expect other steps to cut down dollar expenditure. Therefore, if the principle upon which the Chancellor proceeds in this tax be a bad one, then we must take into account the possibility that it will be infinitely worse when, the lull range of the reduction of dollar expenditure is taken into account. In other words, this is not only a tax, but a precedent. The Chancellor—and everyone on both sides of the House will agree with him here—starts from the premise that we cannot afford to spend, out of the American dollars which we have borrowed, so large a sum as we are spending on imported tobacco. With that broad proposition, which the Chancellor told us in his Budget speech is the initial, point of departure for the whole of his approach to this problem, I think every hon. Member would agree. That expenditure has got to come down. The question is not whether it has got to come down, but how it is to come down, and it is on the issue of how, that I join issue with the Chancellor.

Nor am I in the least impressed by the line of argument that he followed this afternoon. He told us that this tax was not going to be so punitive, because if we could cut down our consumption of tobacco by 25 per cent. then, on the basis of 20 cigarettes a day, we should only be spending an extra 1s. 3d. a week in tax, and that if we cut down our consumption by 30 per cent., we should be paying less tax than we were paying before. The Chancellor has only to go on with a few more percentages, taking successively 40 per cent., 50 per cent. and 60 per cent., and so on, to prove that he is a positive benefactor, and that all we have to do is to take the tax in good heart, cut down our smoking, and we shall find ourselves with a lot more money in the bank. It is an ingenious line of argument, but I beg to remind the House again that the right hon. Gentleman has told us that is a precedent, and that when he has dealt with tobacco he will deal with food subsidies. I wonder if he will then apply the argument that if we cut down our consumption of meat, wheat, potatoes, eggs and so on, by 25 per cent. we shall not be so much worse off, that if we cut it down by 30 per cent, we shall be slightly better off, and that if we cut it by 100 per cent. we shall be a tremendous sight better off. We shall. But the only point is that we shall then be dead from malnutrition and under nourishment, in the attempt to sustain the Chancellor in the position of benefactor!

I agree we have got to cut down our consumption of American tobacco, and I agree further with the Chancellor that compulsory rationing is not the way to do it. I agree for two reasons. I believe that every time we consider a rationing scheme, we ought to consider the consequence of it in the terms of two or three things. First of all, we ought to consider it in terms of the labour withdrawn from productive industry to operate the rationing scheme. We have, say, something like 10,000 people engaged in the rationing of petrol. If those 10,000 men were not engaged in the rationing of petrol—

It is just over 3,000.

Just over 3,000 then. I do not argue about the numbers. I know it is a substantial number. Every man withdrawn from productive effort into unproductive effort is, to that extent, a national liability. Therefore, I agree with the Chancellor in saying that we must look at the numbers of staff required to operate a rationing scheme before we introduce such a scheme. The second thing we ought to consider—and to this I attach very great importance—is that if we apply a rationing scheme unnecessarily. of even when the balance of argument is, in other respects, in favour of it, the result of it may be, first of all, to produce a tremendous black market, and secondly to diminish the general respect in which the law of the country is held, so that there are additional burdens placed upon police, magistrates, etc. That is an element which must also be taken into account before we decide to impose a rationing scheme. On each of those accounts—the staff involved, the creation of a black market, and the diminishing respect for law and order, which has now reached a very advanced point in Britain—the Chancellor would be abundantly justified in summing up against a compulsory rationing scheme.

What, then, is the conclusion? We must here take into account the Chancellor's own declaration that he was not regarding this as a revenue-raising tax. He was either sincere in saying that, or he was not sincere. I should hate to think—and I do not believe it is the case—that he was insincere in saying that what he was concerned about was not revenue, but the cutting down of tobacco from abroad, especially from the dollar areas. If that is so, I should have thought he would have looked, not only at the Second Resolution but at the Third Resolution. I must not discuss the Third Resolution in detail, but I am entitled to point out this fact, that at a time when the Chancellor is cutting down the import of tobacco from abroad, he is doing nothing to encourage the production of tobacco in this country. In the Third Resolution, to which we shall come shortly, we shall be imposing the same, internal Excise Duty on tobacco that we had in the past—indeed, I think it is somewhat increased under the terms of the Third Resolution. I submit we might recognise that the American colonies have been independent now for quite a long time. We might recognise that considerations which may have operated in 1660 do not apply in the year 1947.

7.30 p.m.

It is perfectly possible to grow tobacco in England. We have actively discouraged its production in the past, initially because of our relations with the State of Virginia, at that time a Colony of this country. But that situation has gone by long ago, and we ought to have recognised it in our fiscal policy long since. If the Chancellor had come along and said, "While I propose to cut down the imports of American tobacco, I propose to take the most energetic steps to increase the home production of tobacco," then his profession that he was not concerned with revenue is one which would have carried conviction. But he has not done it. Although I do not often find myself agreeing with the Communist Party—partly because I do not think it is Communist, and partly because I do not think it is a party—I did agree with the contribution of the Communist Member today, when he said that the Chancellor was not at all convincing in saying it was not revenue which he was making for in this tax. He suggested that if the Chancellor had been sincere he would have applied any revenue that he fortuitously and unwillingly secured as a result of this tax to easing the burden somewhere else. I say, that if he were sincere in his view that this was not a revenue raising tax, he would have done something actively to remove the restriction on tobacco production in this country.

For all those reasons the Chancellor, in his speeches today and the other day, has not carried conviction with me. If he must take this line, I beg of him to rely upon the voluntary method in the application of a rationing system. He was quite right in saying that the distribution points of tobacco run into an extraordinarily high number—I think he mentioned 300,000. The interesting thing is, that they are nearly all small points of distribution—the local sweetshop and tobacconist, the local pub, and the village inn. These centres of distribution are not the great stores where the rich people deal; they are small shops, pubs and the like, where the poor folk deal. Now I have noticed this about shops run by poor folk, that a rationing system can be applied by them on a voluntary basis, which works much more smoothly than a compulsory rationing system with the whole force of Government behind it. [Interruption.] It is true from my experience—and I am entitled, if I may say so, to quote my experience—that when you are dealing with a stationary population, the individuals of which have their own customary tradesmen, with whom they are in the habit of dealing regularly, in the ordinary way tradesmen will try to give "fair do's" to their customers on a voluntary basis. That has been my experience throughout the difficulties of the war, and it is my experience today. As it is, we are to have neither the mathematical equality of compulsory rationing nor the removal of deterrents upon the production of tobacco at home. We have today a swingeing tax, not justified on the grounds of revenue, and no more effective than would be a single decision to reduce our imports of tobacco from America by 25 or 30 per cent., which the Chancellor stipulates as necessary. If the tobacco does not come here it cannot be sold, and he gets his effect with mathematical certainty.

indicated dissent.

But he does. It is no good the hon. Member shaking his head about this. This is a mathematical proposition. If the Government now license the import of so many millions of pounds' worth of tobacco from America and decide to reduce that limit by 25 per cent. next year, then obviously they get their 25 per cent. reduction in tobacco imported from the United States. The Chancellor can, by a single decision, get the 25 per cent. saving that he wants. It does not follow at all that he will do that now. On the very ground that he chooses as the basis of his case for the House of Commons, there is no guarantee whatever that he will get the 25 per cent. saving, unless he also limits the import of American tobacco. In other words, his own proposition may or may not do what he wants to do, and it does it at the price, I submit, of great strain and unfairness inside Britain, whereas the other proposition secures, automatically, the desired result, with no greater strain inside Britain.

I was shaking my head just now, not because I dissented from the proposition that by an import tax or a system for the reduction of bulk purchases, the imports of tobacco could be reduced mathematically correctly. It quite obviously could. I shook my head in distress that the hon. Member should be ignoring the real corollary of that, which is rationing.

I am very glad to hear that the hon. Member was not shaking his head in denial of the obvious and elementary truth which I was stating.

I shook my head in sadness.

Whether in sadness, or for any other reason, so long as the hon. Member was not demonstrating that one and one do not make two, I am content. With regard to the other part of his argument, that the natural corollary of a limitation of imports is rationing—and that, I gather, is his point—I am not denying that some kind of distribution of supplies must be arranged. But I have urged this afternoon, and given what I think are quite cogent arguments for the view, that we can achieve that effect by voluntary rationing without the disabilities which apply to compulsory rationing. I do not know whether my argument carries conviction to the hon. Member for Eton and Slough (Mr. Levy) or not.

I do not think the Government have made out their case on this matter. They have come forward with a scheme which will not guarantee the result they say is needed. It obviously involves vast unfairness in this country, and I believe it will act as a deterrent rather than as a promoter of production. If, in addition, the Government take the slightest notice of the speech made by the hon. Member for Widnes (Mr. Shawcross), and start trying to impose all sorts of restrictions upon the personal freedom of people, trying to dictate to them when they must smoke and when they must not, and if they go further and select particular categories of people, and say that they must not smoke in their offices, or wherever it may be, then the Government are taking on a whole packet of trouble. The Chancellor has been good enough to say today that he will reconsider this tax as far as the old age pensioners are concerned. We are very grateful for that. I beg him to go farther, and to reconsider the whole question of this tax, which should go. It is mathematically uncertain, socially undesirable, and extremely unfair to the poorest classes in this country.

There are, I know, many hon. Members on both sides of the House who wish to take part in this Debate, and it is in no attempt to bring the discussion to an end that I rise. However, I should like to say something with regard to the Chancellor's speech, while it is still fresh in the memories of hon. Members. My right hon. Friend the senior Burgess for Oxford University (Sir A. Salter) told the House that if he thought he agreed with the Chancellor he liked always to speak before him. If I disagree with the Chancellor, I feel that I am always strengthened by speaking after him. The Debate we have already had on this Resolution, and the Debate that we had on the First Resolution, are the best possible arguments for maintaining the Report stage of the Budget Resolutions. On both these Resolutions, the Chancellor has already given promises of concessions which he hopes to make between now and the Finance Bill.

If my memory serves me rightly, the Chancellor said he would consider what might be done before we reached the Committee stage of the Finance Bill. He did not say he would do it before the Finance Bill was introduced.

I do not see how the Financial Secretary's intervention alters very much the point of what I was saying. I am not trying to force the Chancellor into a promise which he did not give, but I am sure the Chancellor will agree that, on both the First and Second Resolutions, he has given grounds for hope that he will reconsider the matter between now and the introduction of the Finance Bill: That is a very potent argument for retaining this particular stage in our procedure.

All hon. Members who have spoken in the Debate from either side have spoken with moderation and, I think, under considerable feelings of difficulty. It is an extremely difficult subject we are discussing, a subject on which all of us are torn two ways. Certainly, I feel the difficulty, because when I listened to the Chancellor announcing the increase in the tobacco tax last Tuesday, my first feeling was that, whatever the merits, he had certainly displayed a considerable amount of courage in proposing an increase of tax of this character. But it is true that, throughout the Debate today, hon. Members opposite and the Chancellor have been trying to prove to us that it was not an act of courage. The hon. Member for Sparkbrook (Mr. Shurmer) said that the tax was welcomed in his constituency, and the Chancellor, by an abstruse process of mathematics which I found too complicated, and too inaccurate, to follow, set out to prove to my dazed mind that, as a result of this proposed innovation, if I would only give up smoking altogether I would be financially much better off than I am.

But I still feel, despite these claims, that this is likely to be, among a large number of people, an unpopular tax, and, therefore, a tax which it needs courage to introduce. Certainly, I welcome from the Chancellor a display of courage which might have served, had it only come a few weeks earlier, as an example to one of the right hon. Gentleman's colleagues, the Minister of Defence; but in the days that are to come, the Chancellor of the Exchequer will, I am afraid, have need of more and more courage. However, on this, the first occasion on which he has displayed it, I am sorry not to be in a position to support him.

What about the increase of the Surtax?

I would describe that as Dutch courage. The trouble that I feel, and which I think other hon. Members in all parts of the House feel, about this tax is that here the Chancellor has fallen between two stools. He sets as an objective the reduction of tobacco imports, and, therefore, a reduction of our dollar expenditure, and he sets, too, as a target, an increase of indirect taxation to balance the reductions in direct taxation by way of Income Tax relief, to which the whole House has assented. I happen to agree with both those objectives, but I feel that by trying to do the two things at the same time, the right hon. Gentleman has succeeded in doing both of them in the worst possible way.

Let us consider, first, the cutting down of dollar expenditure. I accept, for the purpose of this part of my argument, that the cutting down of dollar expenditure is, in fact, the Chancellor's first concern. I fully agree with that objective. All my hon. Friends on this side feel, and have felt for some time, that in the very difficult situation with regard to the dollar exchange, where I am afraid the difficulties are going to increase, we have been spending a disproportionate amount upon the purchase of tobacco, and we are prepared to support him in the common objective of cutting down this expenditure. It has been argued in some quarters that, after all, the saving that will be made, even on the Chancellor's most optimistic estimate, is a small one, and that it represents only 2½ per cent. of our total dollar expenditure; but if we are to take every effort at economising in dollars and dismiss each one in turn because it is so small, we may end by dismissing things which in the aggregate would make a really substantial contribution. We have to start somewhere, and, frankly, I believe that tobacco is the best thing on which to start, but the question we have to ask ourselves, if once we say that our objective is to save dollars, is whether the Chancellor's proposal will, in fact, save dollars.

It has been the experience of the past that, with every increase of tobacco taxation, there has been in the first few days, or weeks, or even months, a decrease in consumption, but inevitably, on every occasion, it has been followed by a gradual resumption of the original rate of smoking, and finally, despite the new burden, the expenditure on tobacco has actually increased. We have to face the fact that, rightly or wrongly, in the lives of a great many people in this country, smoking plays a quite different part today from what it did 20 or 30 years ago, when a tax of this sort was first imposed. To many people, at any rate, it is no longer a luxury which, with comparatively little difficulty, they can dispense with. To many people it has become almost as much a necessity of life as the staple commodities of human diet, and if anyone wants to have proof of that, not in this country but in the world as a whole, he has only to look at Europe during the last two years and see the extent to which the cigarette has played its part in the currency problems of Europe. The Chancellor has made an appeal that, apart from the increased duty that will have to be paid, everybody shall cut down his or her smoking. The right hon. Gentleman asked all of us to join with him in making that appeal. I can assure him that I will respond. I will start by making an appeal to myself, and I shall await with great interest to see how that appeal is received.

What about the noble Lord the Member for South Dorset (Viscount Hinchingbrooke)?

I am sure the Chancellor will agree with me that it has always proved to be very difficult to combine a voluntary appeal to people's good sense, patriotism and intelligence with restrictive measures taken at the same time by the Government. People may respond to one, they may have to obey the other, but they are inclined to say, "After all, if you put up the price in order to stop us, you have taken your action, and that being so, we are entitled to go on as it suits us best." Therefore, I say there is no certainty that the Chancellor will get the savings that he requires. In the course of this Debate, I left the Chamber for a few minutes in order to smoke a cigarette, and on looking at the evening paper, I saw headlines saying that already the consumption, which fell drastically after the increase of this tax, was beginning to rise.

All hon. Members will agree that the only safe and certain way for the Chancellor to secure the savings he requires would be to limit the importation of tobacco to the amount for which he is prepared to pay. No one, not even the Chancellor himself, would deny that if the only object is to save dollars, that is the first way in which one would consider it, and the way which, I imagine, in most of the other cases which he says will have to follow this, he himself or one of his colleagues will propose. Of course, we all admit that there are difficulties in the way of following that course in the case of tobacco. Having limited the amount of tobacco coming into this country, as you can quite easily, you are then faced with the difficulties of the distribution of a commodity in short supply among the internal consumers. I do not believe, however, that the Chancellor, for reasons which I will endeavour to state afterwards, was really quite fair in facing that difficulty.

There is the alternative, to which my hon. Friend the Member for Rugby (Mr. W. J. Brown) referred, of the voluntary rationing scheme. We all remember a time during the war, when, largely I think because of the destruction of factories and not through the failure of imports, there was a shortage of cigarettes. It caused considerable inconvenience and annoyance, but on the whole, as far as my own recollection goes—I was not in the Government and have no knowledge of the inside story—as far as I personally was concerned, it did not work too unfairly. If one had a regular supplier, he kept a regular, fair share for one. Equally, of course, there is the alternative of rationing. I fully share the right hon. Gentleman's dislike of rationing as a method. I fully share his dislike of diverting people from productive jobs to run a fresh and complicated rationing scheme, but really, when the right hon. Gentleman gives a pledge that he will consider sympathetically, and with hope in his heart, a relief for the old age pensioner, when he is able to do that and to face the administrative difficulties which there are in his way, I say that if he puts the same enthusiasm into it he will be perfectly well able to face the same administrative difficulties which would lie in the way of some general system of distribution. [An HON. MEMBER: "The numbers compared are larger."] I knew that for myself, even before the hon. Gentleman, inspired by the Chancellor, told me.

Undoubtedly the administrative difficulties will be formidable. We hope he will be able to overcome them, but I believe that if he can overcome the administrative difficulties in the way of that proposal, it would not be impossible to overcome them over the field as a whole. After all, it depends on how important it is that these dollars should be saved. If it is essential that they should be saved, and if this is the only way in which one can make certain of saving them, then I venture to think, as the Chancellor himself said in his speech, that the difficulties may become less insuperable than is at first assumed. That leads me to the second point. I am not convinced that the necessity to save dollars is the only reason for the Chancellor's introducing this tax. He has, of course, kept disclaiming that he has any interest in the revenue which this proposal will bring him. He has said three times that it is not his primary concern. Was it not the Red Queen in "Alice in Wonderland" who said, "If I say a thing three times, it is so"?

The Chancellor is not red.

I am sorry, it was a transference of ideas. I do not think the Chancellor can claim, and I really cannot believe him wholeheartedly when he stands up and says, that this £70 million does not matter, but is just a by-product of the way in which he has to stop the dollars going out, a secondary consideration and, in fact, if anything, rather an embarrassment which he would like if possible to get rid of. The fact is that this £70 million is an integral part of his Budget. It is an absolute necessity if he is to be able to give the reliefs in direct taxation and at the same time, as he said, to balance the Budget or even have a surplus at the top of the inflationary part of a trade cycle. Therefore, I believe that the need for this £70 million is one of the reasons, if not the chief reason, for taxing tobacco in this particular way. I agree with the Chancellor; just as I agree with him in his desire to save dollars, I agree with him in the necessity for raising sums of this amount by indirect taxation to offset the reliefs he has given on direct taxation.

Though it used not to be so when I first came into the House, it is now part of Socialist fiscal theory to relieve direct taxation at the expense of increases of indirect taxation, and in present circumstances, with the danger of inflation in front of us, I am in entire agreement with that policy. Frankly, I do not agree with my noble Friend the Member for South Dorset (Viscount Hinchingbrooke), who described this as an inflationary tax. On the contrary, I think it is definitely deflationary in its character, and I think, in the circumstances in which we are now placed, we should welcome it as such. I am not therefore complaining because the Chancellor feels that he must raise a sum of this amount by means of indirect taxation. If, however, there were no question of saving dollars, if all we had to do was to raise £70 million by indirect taxation, would anyone suggest that the fairest way to do it was to raise the whole of it from the consumers of one commodity alone? Would not everybody say, "If it has to be done, spread it fairly as between one sort of consumer and another"? Is it fair that the gambler, the drinker, or whoever it may be, should escape with no extra burden, while the whole of that burden falls upon one particular form of consumption which, to put it at the lowest, is no more anti-social than either of the other two I have mentioned?

It needs more foreign exchange.

The right hon. Gentleman has not quite followed my argument. I said, if we were not discussing the question of foreign exchange at all, would anyone say this was fair?

But that is what we are considering.

Yes, but we are concerned with two things—we are concerned with foreign exchange and with more revenue. The Chancellor has chosen to mix them up. I say let him divide them, let him come to us and propose the best possible way of restricting dollar purchases, which is by limiting in some way or another the actual imports into this country, and let him also come before us and propose the best possible way of raising £70 million by indirect taxation, which is by spreading it more fairly over various kinds of consumers and not concentrating on one. Let him do that, let him propose these things—which will be equally unpopular, there is no question of escaping unpopularity—instead of trying to do the two things at once and failing to do both; let him come to us and propose in each case what we could recognise as the best remedy, and we should be able to give him our support. which tonight we cannot do.

rose in his place, and claimed to move, "That the Question be now put."