Ways And Means
Considered in Committee [ Progress 12th April].
[Colonel Sir CHARLES MACANDREW in the Chair]
Question again proposed.
Amendment Of Law
That it is expedient to amend the law with respect to the National Debt (including the sinking funds therefor), Customs and Inland Revenue (including Excise), with or without amendment of the law relating to purchase tax of the following descriptions:—
Budget Proposals And Economic Survey
In view of the large number of Members who wish to take part in the debate, may I appeal to Members to make their speeches as brief as possible?
The debate, so far, has dealt mainly with finance and with Budget proposals of my right hon. Friend. This afternoon I want to deal with our overseas economic problems and with the trading and industrial implications of the needs of the export drive and re-armament programme.The Economic Survey shows the high measure of success the country had achieved by the end of 1950. The overall balance of payments showed a surplus of £229 million, the highest figure for a generation. It represented an improvement of £200 million compared with the previous year, and no less than £750 million compared with 1947. That was our balance with all countries. The sterling areas gold and dollar position showed a surplus at the same time of £287 million over the year, compared with a deficit of £381 million in 1949, and a deficit of £1,024 million in 1947. Our general favourable balance with the world as a whole was the result both of a further rapid increase in our exports and re-exports, and of a continual and most welcome increase in our earnings on invisible account. Receipts from our exports, including re-exports, reached the highest figure in all our long trading history—£2,221 million in the year, an increase of no less than £400 million over the previous year. In terms of volume, that is discounting the increase in prices, recorded exports were more than 15 per cent. above the previous year, and 62 per cent. above 1947. They were, in fact, getting well on towards the target which some years ago we all regarded as necessary if we were to pay our way in the post-war world. Invisible net earnings showed a surplus of £382 million, more than double the figure for 1949, and an increase which the whole Committee will welcome. But, in 1950, even before Korea, we were seeing a number of problems looming up in our overseas payments. There was, of course, first and foremost the rising cost of our imports, a process which was very seriously intensified after Korea. The volume of our retained imports in 1950 was almost the same as it had been in 1949. Food, drink and tobacco were down by about 2 per cent., and raw materials in spite of suggestions to the contrary, increased over the year by about 5 per cent. in volume. But the average price-level of our imports in 1950 was 18 per cent. above the previous year, while the average prices of our exports was only some 7 per cent. above the previous year. I need not tell the Committee that the price of our imports has risen even more rapidly in the early months of this year. In February they were already 25 per cent. above the 1950 average. Turning to our gold and dollar balance, the great improvement in the position of the sterling area, as I have said, turned a deficit of £381 million in 1949 to a surplus of £287 million in 1950, both figures exclusive of Marshall Aid. With Marshall Aid, there was an improvement of £576 million in our gold and dollar reserves over the year. There is a feeling in many places that the improvement in our gold and dollar position is due wholly or at any rate mainly to North American demand for sterling area primary products, and the high prices paid for these products. The figures published in the Survey and the associated White Papers, will, I think, show that of the total improvement in the sterling area dollar account between 1949 and 1950, only about one-sixth could be attributed to this cause; more generally, taking export, imports and invisibles into account, the United Kingdom was responsible for nearly half of the sterling area improvement. Of course, we do not want to underestimate the importance for the United Kingdom and other parts of the sterling area, of the very high level of United States economic activity last year. As the Committee, knows, this very heartening improvement, indeed revolution, in our balance of payments position, which has been the principal aim of our overseas economic policy in these past few years, brought us, alone in Europe, to a position where it was possible to suspend the receipt of Marshall Aid. My right, hon. Friend the Chancellor of the Exchequer, and hon. and right hon. Gentlemen in all parts of the House have paid tribute to the statesmanlike generosity of our American and Canadian friends which enabled this nation to put forth this unrivalled achievement in production and exports. When the economic history of these past years comes to be written, a great place will be given to what Marshall Aid, and the assistance given by Canada, have achieved in helping Western Europe to save itself by its own exertions, and not less in providing a degree of economic co-operation in Western Europe through the Organisation for European Economic Co-operation, which we have never before known in the whole history of the Western European economic community. To turn from what has been achieved in 1950, to the outlook for 1951, the Economic Survey draws attention to the very grave problems ahead of us. We have shouldered a tremendous burden of rearmament, in common with our partners in the North Atlantic Treaty Organisation and the Commonwealth. The whole Committee will agree that in meeting the needs of our defence programme, we cannot afford to weaken the foundations on which our economic strength and the defence programme itself must rest. There is full agreement in all parts of the Committee with the Prime Minister's statement of the aim before us—
The Economic Survey makes very clear what our problems are going to be in fulfilling this aim. We cannot hope for a surplus on our overseas accounts this year such as we had in 1950. Because of increased world prices, it is calculated that increased costs alone may add £700 million to our import bill this year, and if £150 million are added to this to provide for the increased raw materials of our production programmes, imports—making no provision for stockpiling—may rise from £2,374 million last year to £3,200 milion this year. Allowing for the increased surplus forecast on invisible account, we require therefore, a total of some £2,750 million to be earned by visible exports and re-exports if we are to pay our way. Some part of the increase will, no doubt, come from higher prices for our exports, especially those whose costs of production are being forced up by much dearer imports of raw materials. It would be of great advantage to us in fact if we could get higher prices for our exports. While our import prices have increased by 36 per cent. over the past year, export prices have increased by only 12 per cent. The prices charged for individual exports must be left to the manufacturers and traders and merchants who are selling the goods. They alone are in a position to know what the market will bear. Especially in those areas where we are seeing the reviving competitive power of German and Japanese industry. They alone are in a position to balance short-term advantage against the long-term effects of higher prices on their established trade. But having said that I am sure the Committee will agree that the national advantage will best be served by the highest reasonable charge that we can get for our exports. The higher the prices we get, the less the increase in the volume of goods we have to send abroad to pay for our imports. Some idea of the problems we are facing in 1951 can be gained from the trade figures for the first quarter of the year. The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), last Wednesday referred to the figures for January and February. Since then the provisional returns have been published for March, and they confirm what the right hon. Gentleman referred to as"to see that we carry as much of the load as possible ourselves, now, and refrain from mortgaging the future by running into debt abroad or reducing the investment on which our industrial efficiency depends."—[OFFICIAL REPORT, 29th January, 1951; Vol. 483, c. 586.]
For the first three months of this year, while our exports and re-exports averaged only £17 million a month above the 1950 average, our imports, valued on c.i.f. basis, were £66 million a month above last year's average, a very serious worsening in the position. To some extent the rise in our imports is due to increased volume—something like 5 per cent. above last year—and that will be welcomed by the Committee, but the main cause is the higher prices we are having to pay for what comes into this country. If it is true that we need to intensify our general, global export drive, the Committee will agree with the special need for an intensified export drive to the dollar areas, and, scarcely less important, to the Commonwealth countries of the sterling area. We simply cannot afford to end this period of re-armament with our gold and dollar reserves at a dangerously low level. And though they have been greatly augmented this past year, they still represent in real terms little over one-third of the reserves we had in this country in 1939. Though as I have said the improvement in our gold and dollar position cannot be traced to any single cause—it was a combined sterling area operation—there are favourable dollar-earning factors at work at the present time on which it would be dangerous to count. So while no one will disagree with the statement in the Survey that by the end of last year "the immediate task of post-war recovery was completed" and we are solvent, no one would suggest for a moment that our dollar problem is fully or permanently solved. There is one other thing we all realise very clearly. If in this period of rearmament we cast aside—as we have had to in two World Wars—all the work we have put in in establishing ourselves in dollar markets, it would be very difficult indeed, if not impossible, to build up our exports there a third time. Perhaps the Committee would allow me to remind it of some words used by a very great Canadian, and good friend of this country, Mr. James Duncan, at the recent Dollar Export Convention at Eastbourne:"a marked deterioration in our balance of trade."—[OFFICIAL REPORT, 11th April, 1951; Vol. 486, c. 1057.]
It is true that since devaluation our export drive to North America has been attended with considerable success. Our exports in the fourth quarter of last year measured in terms of dollars were 80 per cent. up on the fourth quarter of 1949. This is partly the result of devaluation and of increased economic activity in North America: but it is also a tribute to the work of British trade and industry, and to the work of the Dollar Exports Board. Perhaps, in that connection, while paying tribute to those from both sides of industry who have given their time and energies to serving on the Dollar Exports Board, I might correct a misstatement by the hon. Lady the Member for Tynemouth (Miss Ward). Sir Graham Cunningham, as Chairman of the Dollar Exports Board, was not, as she said, appointed by the Socialist Government. He was the nominee of industry, because the Dollar Exports Board is industry's own show. Turning from trade with the dollar areas to trade with the Commonwealth, I am perfectly sure that the high and still growing importance of our trade with the Commonwealth, and the need for much greater exports to Commonwealth markets, require no arguing before the Committee. The development of our trade with the Commonwealth over these past five years has been, I think the Committee will agree, a stirring and a heartening achievement. Without that development, our recovery would have been impossible. In 1950, 43 per cent. of our imports came from Commonwealth sources, compared with 37 per cent. before the war; 47 per cent. of our exports went to the Commonwealth, compared with 41 per cent. before the war; Nearly half of our food and more than half of our raw materials come from Commonwealth sources. In fact, trade with the Commonwealth is higher than ever before. This is a great achievement, and we must not allow the difficulties we are facing in this year to cause us to lose an inch of the ground that we have gained. Perhaps, in that connection, I might refer to the fact that, before the Torquay Conference, I told the House that we should do nothing there to weaken the structure of Commonwealth trade. When the results of that conference are published, in three weeks' time, the Committee will not, I think, judge that we have failed in our pledge. There are two additional and immediate reasons why we must increase our exports to the Commonwealth in 1951 and in the years that lie ahead. First, our balance of payments with Commonwealth countries, especially Australia, has worsened because of the very large increase in raw material prices. We have to send more goods to pay for the imports we need from these areas. Secondly, I do not need to stress the vital importance not only for economic reasons, but also as an essential part of our battle for peace, of doing as much as we can, even in present circumstances, to further the progress of the Colombo plan, that imaginative work of international planning in which this country and our sister nations in the Commonwealth took such an historic initiative. On the need for increased exports, especially to the dollar areas and the Commonwealth, there will be no disagreement, either in this Committee or in the industrial and trading community outside, but I am afraid, what may very well be even more clear to those who are charged with this task will be the very present difficulties of achieving it, and it is to these that I now turn. The first problem that becomes clear about our export drive this year and next arises from this, that exports which have played an important part in our trade, especially in the past year, will not be able to make the same contribution in the future. There is, first of all, the whole range of exports and re-exports of raw materials and of semi-manufactured goods of very low conversion value. If we include both raw materials and our very large exports of so-called manufactures which are in fact only semi-manufactures—textile yarns, semi-fabricated metals, and so on—these account for over one-fifth of our total United Kingdom exports. In the last half of 1950, they accounted for not far short of a third of United Kingdom exports to North America. Now no one has suggested a total ban on these exports, except, strangely enough, in a new-found zeal for the imposition of controls, the hon. Member for Orpington (Sir W. Smithers), but no-one else has suggested it. Many of those exports are necessary for the maintenance of production in the Commonwealth or by our other trading partners. In many cases they represent the interlocking of our economies. In many cases we have to send these goods overseas, in order to get in return the shipment to us of other essential raw materials that we need. In any event, we would not think of cutting this trade right out because we should naturally want to keep these markets open for the future. Apart from the amounts necessary to meet these particular requirements, it would clearly be wrong in present circumstances to allow the shipment in large quantities of scarce materials in raw or in semi-fabricated form, materials which are required to keep our own factories, especially defence factories, in full production, keep our workers in employment, and our exports of more valuable commodities in full flow. We have therefore put strict limits on these shipments, and apart from the special types of export I have mentioned, we can allow exports only of a reasonably high conversion value, with a special bias in favour of exports to the dollar areas and the Commonwealth. There is a second problem arising from the make-up of our export trade, to which the Economic Survey draws attention. With a re-armament programme necessarily concentrated on a narrow field of industry, particularly certain sections of the engineering and the electronics industries, we obviously cannot expect these industries to play anything like the same part in our increased exports that they have been playing in these last few years; but last year the engineering and metal-using industries in general, including vehicles and shipbuilding, accounted for very nearly half of our total exports to all markets. Clearly we cannot look to them for the increase that will be necessary. Indeed, as the Survey points out, it may not be possible to maintain engineering exports at the 1950 level. My right hon. Friends the Prime Minister and the Chancellor of the Exchequer have said on previous occasions that we reject the idea of over-riding priorities for defence orders over exports or other essential needs, but there are bound to be clashes in individual cases, and it is vital that the key defence orders must be met. My right hon. Friends and I have on past occasions outlined the procedure which should be followed, involving reference to the Government Departments concerned for final decision when there is such a clash. But I do want to emphasise that important export orders should not be turned down by firms simply because they are hanging on, waiting or hoping for defence orders. Interference with the volume of engineering exports in particular cases and classes there is bound to be, but it is vital for our economic strength, and indeed for the defence programme itself, that exports, even of engineering products, should be kept at the highest possible level. I should like particularly to stress the need to maintain the highest possible rate of engineering exports to Canada. The Committee know how much we were counting on exports of capital goods to help bridge our payments gap with Canada. Everyone who has been there has commented on the great potential demand for capital equipment of all kinds for Canada's rapidly moving programme of economic development—her transport, her oil, her iron ore, her industrial and hydro-electric developments and now her defence programme. These shipments are as important to our economic strength as they are to Canada. There are bound to be disappointments and subordination of orders in individual cases to our own defence needs. But to repeat the assurance I gave on behalf of the Government at the recent Eastbourne Conference and I am sure the Committee will endorse it:"It is not too much to predict that if you sever your contact with us once more and especially at this juncture, you will never regain your position. You will have irretrievably lost both our familiarity with your products and that extraordinary reserve of goodwill which has been the linchpin of your success in Canada in this post-war period."
Perhaps I should add at this point that, although some reduction of steel exports will be necessary through the difficulties we have had in the past few months in the supply of ore and scrap, it will be our intention to maintain supplies of steel to Canada at the highest possible level. The export objective of £2,750 million this year, it will therefore be clear to the Committee, cannot be reached without a very substantial increase in the exports of the industries outside the engineering and metal group; in other words, in the main the consumer goods industries, especially textiles, clothing, pottery, glass and so on. These industries already appreciate the challenge that they are meeting in the export field, but the Government intend to discuss fully with each industry concerned the export targets which should now be set up to provide a more specific measurement of the efforts required. I should like to say a word about the textile industries, because a tremendous burden is falling on them, and they have to carry it in the knowledge of new difficulties about raw material supplies. The cotton industry has made great progress in these past five years in recovering from the effects of war and of concentration, and in seeking to make up by modernisation, and by new methods the long years of stagnation caused by inter-war conditions. Neither production nor exports have recovered even to the low levels of 1938–1938 was a bad year—but there has been, especially in the past two years, a most welcome increase in productivity, and the industry has made a great effort in the dollar export drive. More progress has been made than is sometimes realised, I think, with redeployment; and this has not been easy, because the memory of pre-war conditions haunts the minds of workers and management alike. But I think a great tribute is due to the leadership of the Cotton Board, and to those on both sides of the industry who have followed that lead. This year the industry has to bear, in addition to an increased export target, a substantial volume of defence orders, which must be met. In total, taken against the whole output of the industry, they are not large, but they are concentrated to a serious extent on certain types of cloth such as drills and canvas which are already scarce and some of which are most important in our export trade. The task of the industry must be to meet the defence orders, to increase exports, and, though some reduction in supplies to the home market is inevitable, to ensure that that reduction falls on non-utility production and not on the utility programme. Since I referred to the danger of a famine in utility supplies in these same debates a year ago, there has been a great improvement. Utility apparel cotton cloths, were running in the fourth quarter of last year at a rate nearly 20 per cent. above the supplies in 1949 and deliveries of such household textiles as sheets showed an even greater improvement. I do not need to tell the Committee how important it is that utility supplies, which the consumer has come to regard as a real assurance of value for money, should be maintained. My Department is discussing with the cotton industry now how these programmes—defence, export, utility—as well as the supply of essential industrial cloths, can be fulfilled. I have naturally had to consider in these circumstances, whether the best hope of fulfilment lay in the re-imposition of all those war-time controls which were relaxed some two or three years ago in the interest of the export drive. There are two things very much in my mind, and, I am sure, in the minds of hon. Members in all parts of the House: first, the fulfilment of the priority programmes at the expense of non-utility production; secondly, control over prices, particularly in the early stages of production, so that the converters are not forced up against a price ceiling which would make it difficult for them to expand their deliveries of essential utility goods. My Department has discussed this with the industry, and I have had discussions with the Chairman of the Cotton Board. The industry is fully alive to its responsibilities in this difficult period and through the Cotton Board and through the leaders of its various sections, it has expressed its determination to co-operate with the Government in achieving these objectives. I accept these assurances, and one thing which enables me to do so is the fact that, in the Cotton Board, the industry possesses a development council ready and equipped to give a lead to the industry. The industry, emphasising the flexibility which is needed for the changing conditions of world export markets, has shown its determination to follow this lead, and I am sure that the Committee will agree that with our past experience of the work of the Cotton Board and its Chairman, Sir Raymond Streat, it is right that we should give the industry the opportunity it desires, confident in its assurance and determination to fulfil its national tasks on a basis of self-discipline and self-control. Therefore, I am sure the Committee will agree that, in view of the assurances that we have had, it is right that the industry should be given a chance to see how it works out. The problem facing wool—an industry which has, in fact, headed our dollar export drive—and also the problems facing rayon, I shall refer to when, in a few moments, I come to the raw materials problems facing British industry. But I should perhaps point out to the Committee, since we are looking at the difficulties which our export trades are faced, that just as raw material problems place a limit on the possibility of expansion of the textile and clothing industries, so there are other industries—and important dollar earners at that—such as pottery which cannot expand to anything like the amounts which could be sold, because of the shortage of the essential grades of skilled manpower. And in this case of pottery we have, I am afraid, to face the inevitable competition for manpower of important defence production, a competition which my right, hon. Friends the Minister of Supply and the Minister of Labour are trying to keep to a minimum. Many hon. Members, including the right hon. Member for Aldershot, have stressed during this debate that this great and additional burden of defence production, which has been super-imposed on an economy already fully strained with the efforts we have been making, would be well within our powers if we were able to count on a real continued increase in our national income and our national production, such as we have seen in these past few years. This was the point that my right hon. Friend the Chancellor stressed when he said, speaking in the Defence Debate in February:"The export drive to Canada goes on and…that goes for engineering products as well."
For reasons with which the Committee will be familiar we have not in the Economic Survey assumed the same increase in productivity which has been achieved in these past two or three years. Loss of output through turning over to defence production, and, more particularly, the serious raw materials position, would make it unrealistic to base ourselves on any higher figure than the 4 per cent. increase, which does, in fact, mean continuing in 1951 at the end of the 1950 rate of productivity, as the hon. Member for Barnet (Mr. Maudling) pointed out in the debate the other evening. It is the raw materials position which is the most serious problem affecting productivity. There is clearly no time to go into detail about that position. I gave a fairly full account to the House at the beginning of last month. I am bound to tell the Committee that the raw materials position has not improved since the House last debated it. With cotton, Lancashire is not getting anything like enough to meet her real requirements. We may get through this summer, after which the better American crop for which we are hoping should lead to an improvement, but at the present time we are losing on quality and we can hardly avoid a loss in productivity. I have to tell the Committee that the sulphur position remains critical and uncertain. We have still not been notified of our allocation for the second quarter of this year, much less for the second half of this year. I have, on every occasion, including the last debate in the House, stressed, the vital need for industry to know what supplies will be available, so that it can make arrangements for the future."We must rely mainly for increased production, as we have done in the last few years, and the past two years particularly, on a higher output per man-hour, higher productivity or efficiency."—[OFFICIAL REPORT, 15th February, 1951; Vol. 484, c. 647.].
Before my right hon. Friend leaves that point, in view of the alarming position he is putting before us so far as cotton is concerned and the many industries dependent upon sulphur, can he tell us what our American friends are doing about this; if any delegation is going out to see them, or what emergency action is being taken?
Perhaps a good part of the answer will come out in what I am about to say. As my hon. Friend will be aware, we have had delegations, representing both the Government and trade experts, on all these critical raw materials. We have had continuous meetings with our American friends. The most important thing of all is that we have now been able to set up international raw material commodity committees to go into the position of individual commodities. However, when I have said a little more on sulphur, the answer may be clearer to my hon. Friend.We have, so far as the second quarter of 1951 is concerned, received an interim allocation on account, and there is some hope that we may receive an allocation of 100,000 tons this quarter, compared with the totally inadequate figure of 81,000 which we had in the first quarter. But this 100,000 tons figure is by no means certain. If we are allocated 100,000 tons we shall be able to avoid those slashing reductions in industrial output to which I referred in my speech in the House in March. The Committee will agree—and the right hon. Member for Saffron Walden (Mr. R. A. Butler), who knows this industry, will agree—that if our hopes are disappointed, if we get no more than the figure we received last quarter, if we have to cut, for instance, the rayon industry by as much as 40 per cent., as would be the inevitable result—and many other essential industries in similar proportion—it would be an unparalleled industrial disaster for this country, and it would have profound effects, not only on exports and upon home supplies, but on our defence programme itself. As the Committee knows, since the first major cut was made in sulphur exports to this country from the United States, we have been restricting consumption by industry on a somewhat rough and ready basis—a general cut all along the line, with certain exemptions for particular industries. But we cannot go on with this. As I have said, industry must know where it stands. Essential production is being interfered with. The Government, therefore, intend at the beginning of next month to introduce a system of allocation, industry by industry, of both sulphur and sulphuric acid. If by that time we are certain of the 100,000 tons allocation, we shall be able to avoid some of the worst disasters that we have feared. But it will still be a most serious position. Reductions will have to be made in a number of industries. Supplies to the rayon industry, for instance, will still need to be cut by some 20 per cent. compared with the rate of production at the end of 1950. And I do not need to tell the Committee not only what that means to the industries themselves and those dependent on them, but what it means also to the consumer in the shops in the loss of much needed supplies—in the case of rayon, supplies of relatively low-priced goods. Similar cuts will have to be made on a number of agricultural requirements, paint, detergents, transparent paper, and a number of other products. Fertiliser production and super-phosphates will remain at their level of less than two-thirds of their total capacity.
It would help us to follow the right hon. Gentleman if he could indicate how this allocation of 100,000 tons, which he hopes to get, compares with the allocation for 1950.
The allocation of 1950 is not strictly comparable with this, because our requirements for both sulphur and sulphuric acid were rising sharply over the year. A number of new plants are coming into operation. In the course of the last month a number of major plants—oil refining, the beginning of the Margam project in steel, and so on—are placing new demands on sulphur. Perhaps the right answer to that question is that something like 110,000 tons might enable us to maintain a reasonable level of production in this country. Therefore if we get 100,000 tons we shall be considerably short; if we get 81,000 tons, we shall be facing a disastrous situation.There is perhaps one further point I should make clear about sulphur. It has been suggested in certain quarters that our sulphur problem is due to our failure to buy earlier, and to dollar restrictions. This statement is completely false. Even in the worst phase of the dollar crisis, dollars were not restricted below the supplies the industry wanted to buy and the supplies physically available in the United States. And on cotton, and indeed non-ferrous metals, the Committee will realise that if more dollars had been available in the first half of 1950, the quantities then bought would have been taken into account and deducted from the allocation made by the American authorities. This was, in fact, done in the case of cotton and other essential materials last autumn. On non-ferrous metals, particularly molybdenum, tungsten, nickel, copper and zinc, the position is if anything worse than when the Committee last debated the situation. And on these metals not only our general industrial production, but our defence programme itself will be in the gravest danger unless, as a result of the international discussions now proceeding in Washington, larger allocations are made to us. In the interests of the common defence production of all our partners in the North Atlantic Treaty Organisation, the Committee I am sure will agree that current defence production and other essential uses should have priority not only over the building up, but even over the maintenance of stockpiles. This fact is, I think, well realised by our friends, and the Members of the Committee will watch the progress of the discussions in Washington, in which we took the original initiative last autumn, with anxiety, but at the same time with confidence in the sense of responsibility of all who are taking part in them. On other raw materials, paper and pulp, jute goods, a whole range of chemicals and others, also causing anxiety, there is no time to go into detail, but perhaps I should leave the raw materials situation with one encouraging reference. Softwood at least, though our stocks are now seasonally at their lowest level, looks like showing a big improvement. The hon. Member for Kidderminster (Mr. Nabarro), asked about stockpiling last week. Perhaps he would like to hear my answer before he rises. Thanks to Timber Control's big Canadian purchases this year—purchases on a scale considerably exceeding a normal pre-war year production; thanks to heavy, though not panic buying by the private trade in Europe, the timber stock position this autumn and winter looks like being better than for a very long time past.
I am grateful to the right hon. Gentleman for giving way. I did not wish to intervene before he made that statement, but I am well aware of those trends and I wish to put this question. In view of the increasing stringency in the availability of steel, what steps are his Department taking to use what may well be a surplus of soft wood in substitution for steel supplies, particularly for structural work?
I cannot accept the word "surplus" because I think hon. Members generally, not least the hon. Gentleman himself, have stressed the need for building up a large stockpile of timber, which is of course a very bulky form of import in time of emergency, and we must push on with building up substantial stocks. I should not like to raise any hopes of increasing the amount available for consumption while that stockpiling is in progress, but certainly we shall be prepared as far as we can to substitute timber for particular types of steel as they become short in essential industry.
The right hon. Gentleman has rightly said that he cannot enter into details now regarding the shortage of raw materials, but it is essential that industry, the House of Commons and the public should know where we stand. How soon can we know, and will the right hon. Gentleman see that information is given?
We have been pressing for many weeks for information, particularly on supplies of sulphur. Talks are going on at the same time on a number of different commodity committees. The Cotton Committee has been adjourned. As soon as we get the information, naturally we should wish to put it at the disposal of the House and of industry immediately, but of course I am not in a position to say when we shall get an answer to our repeated pressure on this question.It is clear that the raw materials position, and, so far as certain sections of the engineering industry are concerned, the machine tool position, will determine the rate of production. But there are other factors. The hon. Member for Chippenham (Mr. Eccles), the other evening, referred particularly to restrictive practices, and I agree with him. There is no room in the industrial economy of 1951, even if there was before, for restrictive practices on either side of industry. My right hon. Friend the Minister of Labour is pushing ahead with talks with both sides of industry about means to increase output. But the Committee will agree that just as memories of past unemployment have a very natural effect when it comes to bringing in new methods in the individual factory, so the fear of working itself out of available raw materials at a time like the present is also a very serious thing when one is discussing new production methods. I do not think the hon. Gentleman meant to confine his criticism of restrictive practices to one particular side of industry. He would agree that they are very widespread on the other side. I think hon. Members on both sides of the Committee are disappointed, as I am, at the slow rate of progress in dealing with monopolies. I am not criticising the Monopolies Commission. They have a heavy responsibility, and a quasi-judicial one. None of us would have wanted them, in the interests of speed, to have given a less than fair hearing or a less than fair examination of the cases that were before them. Before a judgment can be given that a firm or trade association is acting in a manner contrary to the national interest, with all that that implies in the powers given by the Monopolies Act, it is right that the case should be properly, fully and fairly examined. But I think hon. Members in all parts of the Committee are coming to the conclusion, as I have, that the 1944 White Paper approach to the problem of monopolies and restrictive practices is not enough. That approach should go on—examination case by case of individual products and industries will always be needed. But if we are to tackle this problem with the urgency required, we shall need, in addition, general powers to deal with particular harmful practices, not in one firm or one trade association, but wherever they may be found in British trade or industry. That is why I shall shortly be laying before the House a White Paper with the Government's proposals for dealing with resale price maintenance—the fixing of retail prices by manufacturers and trade associations—and it will be our intention to follow this with further proposals to deal with other types of restrictive practice. As soon as we have received two or three more reports from the Monopolies Commission, we shall be in a better position to judge how far these practices, and which of them, should be the subject of general measures of control or prohibition. Finally, may I refer to a question which is in the minds of all of us: the continued increase in prices resulting from the rocketing course of world raw material prices in the past few months, especially since Korea? Some kinds of wool, as the Committee knows, had increased by March to something like 15 times the pre-war price. There has been some reduction since, but no one can say how long the reduction will last, whether it will continue or whether prices will once again begin to rise. This is causing great problems for the wool industry in planning its production and its attack on the export markets. It is causing even bigger problems for the consumer and for the housewife. The suggestion has often been made—it has been made in this debate by hon. Members opposite—that these high prices are the result of Government financial policy, but as my right hon. Friend the Chancellor pointed out a week ago:
But the burden of the increased prices falls particularly on those with the lowest incomes, who, if action were not taken by other Budget measures, would be the first and major sufferers from the cost of rearmament. It is this burden which provides the background against which, as my right hon. Friend said, his Budget was framed, and other measures proposed by him to spread the burden more fairly. Meanwhile, while we ourselves—except in concert with our friends, by multilateral action on an international scale—can do nothing to bring world prices down, we can and shall do everything in our power to prevent prices here rising more than would be justified by movements in world prices. Price control—the coverage of which is once again being extended—will be used to the full to stop profiteering, and so far as possible maximum prices will be limited to the amounts necessary to cover real and unavoidable increases in costs. In particular, those trades who are talking about increasing prices when there is no justification arising from increased costs would be very well advised to think again. This debate, my right hon. Friend's speech and the Economic Survey show how great is the task to which this nation has set its hand in the interest of safeguarding peace and of the liberties in which we all believe. The Survey, and the magnificent results of last year showed how great was the inherent production power and the virility of the British economy. The record level of our production, our export record, our achievement in the independence of external aid by the end of 1950, were a fair answer to the somewhat gloomy prognoses we have had at various times—the forecast of a worse dollar crisis than ever within a few months, the statement about the paralysis of our native enterprise, contrivance and genius by the right hon. Member for Woodford (Mr. Churchill), on the eve of the biggest production record in all our history. It was he, I think, who said:"Higher prices for imported raw materials, and to some extent foodstuffs as well, are pushing up our cost of living more and more. A tough Budget…cannot directly reduce a generally high level of costs to any material extent—except through a policy which deliberately creates losses and unemployment."—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 829.]
That was what the right hon. Gentleman said in 1949, yet we alone in Europe were able to suspend the receipt of Marshall Aid by the end of 1950. If it had not been for the re-armament programme, we should this year, as the Survey makes clear, have been able to look forward to a real and substantial rise in our national standard of living, but this has had to be postponed. World events have forced us to embark on a re-armament programme, costly in money terms and also in real terms—though not costly if it secures for us the peace which is beyond all price and beyond all measurement of economic cost. The Committee is in no doubt about the size and nature of the problem facing us. We are trying to do what has never been attempted before, to superimpose a heavy re-armament programme on an economy already fully strained with the efforts we have been making to pay for the last war and to pay our way in the world. In the war years, at least after the introduction of Lend-Lease, we had to build up our military production with almost no thought of production for the export trade. In these past few years we have had to build up our export trade with very little diversion to defence production. Now, we have to do both, defence production and exports. In many ways, therefore, this presents to British trade and industry, to managements and workers alike, a greater task, a greater challenge even than they faced in war-time and in these post-war years. But the great record of production in war and in peace, as recorded in the Economic Survey, has given us the assurance that in meeting this challenge the country will not fail."Every one of the countries of Europe outside the Iron Curtain…has got its life going in many ways better than we have done under a Socialist Government.…"
On this side of the Committee we are sometimes accused of being over-gloomy. I do not think, after the speech to which we have just listened, that that accusation can justly be made again. Nor do I think it can be made by the right hon. Gentleman, who has been most gloomy. The right hon. Gentleman gave a certain amount of useful information which will be appreciated by traders. I will refer later to raw materials and prices. I was glad the right hon. Gentleman talked about our foreign exchange position and how important it was to maintain it, because this year we are covering part of the gap by running down our favourable foreign balance and that must be a once only movement.I want to turn to the Budget and the details of the Economic Survey, because they are relevant, not only to this general debate, but relevant to many of the remarks made by the President of the Board of Trade. Although some people have said that we on this side of the Committee are not critical of the Budget but entirely favourable to it, I can assure the President of the Board of Trade that he is not alone in objecting to some features of it. It has been the fashion for some years for the Chancellor of the Exchequer to start his Budget by expounding the Keynesian mysteries of the inflationary gap, and I think it gave general satisfaction that that industrious acolyte the Chancellor of the Exchequer did just as well in performing the rites as the archpriest of the cult, Sir Stafford Cripps. For my part, I think the word "gap" is unfortunate. It suggests a static situation. What we are dealing with is a highly dynamic situation. Prices, wage levels, rates of exports, savings and so on are all relevant and the movements of these factors cannot exactly be foreseen. I shall not say anything about what I believe the gap is—I do not know—but what I shall try to do is estimate what is the contribution to the general economic stability which the Government ought to make and what contribution they are making. The Chancellor and the Financial Secretary both take credit for the fact that the "Economist" and the "Financial Times" have estimated the gap at the same amount as the Chancellor did, and it is certainly remarkable that these three authorities happen to have thought of the same number. I think the Chancellor is fully entitled to any satisfaction he can draw from that. After congratulating him, there are two main criticisms I should like to make of the right hon. Gentleman's exposition of the problem of the gap. The first criticism is that I think he said too little about the part that production has to play. He said in his speech very little and he did not repeat the forecast of a 4 per cent. increase. The level of production is clearly vital in the calculation of the gap; each 1 per cent. makes a difference of £80 million in the amount of taxation which may have to be charged. I thought that his presentation here was in sharp contrast to the way in which the problem has been put in the United States and the way in which the people of the United States have been asked to face their burden. There they have been told, and I think rightly so, that the increase in production, the all-conquering efficiency of the industrial machine in America, will enable them within a short space of time not only to have the mightiest armed forces in the world, but also to resume the increase in their standard of living. In the struggle in which we are now engaged, hope is very important. A few more speeches like that of the President of the Board of Trade and, it seems to me, morale will go right down. There must be an end of the tunnel somewhere and even if we cannot give the donkey a carrot, it is as well to let the donkey know that carrots do exist. I fear that the reason the Chancellor did not expand upon this was the same as the reason for the gloom of the President of the Board of Trade; that was that raw materials are short. I do not want to go into this at length—it has been much debated and I fully agree with the President of the Board of Trade that in certain commodities, such as sulphur, there have been special difficulties—but I think that as far as the great bulk of our shortages go and as far as the big run-down in stocks in the last year went, the key is provided by two remarks made by Sir Stafford Cripps. The first was something he said in his Budget speech last year. He said then:
Surely the main purpose of our overseas economic policy must be so to act as to enable our economy to go on running at full strength and not simply to collect dollars. Therefore, I think he stated our object too narrowly. The second remark to which I would call the attention of the Committee is one which he made in his broadcast on devaluation. There, talking of prices in countries which had devalued at the same time as us, he said:"The main purpose of our overseas economic policy is, of course, to eliminate the dollar deficit."—[OFFICIAL REPORT, 18th April, 1950; Vol. 474, c. 43.]
That I believe was a bad bet and the effect of those two ideas on Treasury policy was to make us unwilling to spend our dollars and equally unwilling to bid up for stocks of raw materials in the sterling area. It has worked out very unhappily because, as the President of the Board of Trade said, there was a strong revival of trade before the war in Korea. The United States were booming, Germany and Japan were coming back as buyers into the market and, as the Economic Survey said:"All such prices should remain unaltered."
Then the war in Korea came and I do not think it was until some time after that the truth dawned on the Government that it is better to pay more for goods than to have to go without them altogether. As the Economic Survey says:"Even before re-armament world consumption of a number of commodities was outstripping production.…"
We are told that it has been impossible, and is impossible, to buy goods even in the sterling area and even for dollars, but it is worth remembering that last year the United States managed to spend something like £1,000 million on stockpiling strategic raw materials. If they could buy, I cannot see why we could not, and if we are unable now, how are we to spend £143 million this year on stockpiling? I fear that the answer is that we have missed the boat and are now trying to undo past mistakes in very unfavourable circumstances. I think a detached observer, without any prejudices about State trading, would have said this should have been a favourable juncture to prove the worth of State trading. State trading works better on a rising market and this might have been an occasion where the gentleman in Whitehall might have known best. But it was not so. I think that the reason is that, while markets move very quickly, Governments cannot move so quickly. Bacon said:"Our whole economy rests on imports, and the consequences of not getting them would be far more disastrous than the consequences of having to pay more for them."
Therefore, they are apt to be caught with big stocks on a falling market and no stocks on a rising market. The result has been, as the right hon. Gentleman the President of the Board of Trade has said, that our energies cannot be fully employed, that we cannot hold out the hopes to our people which we should have been able to hold out to inspire them in their task, a task in which hope is, I think, almost as important as faith."States as Great Engines move slowly."
In view of the hon. Gentleman's reference to States as great engines, will he inform the Committee in the case of how many commodities completely regulated by private buying, stocks were accumulated during the period to which he refers?
Certain of them certainly accumulated stocks, but the right hon. Gentleman must remember that in these days private traders are pretty heavily restricted in the amount of dollars which they can spend on stockpiling. I was merely pointing out that unfortunately the gentleman in Whitehall did not know best in this matter; he did even worse.The second fault I have to find with the Chancellor's analysis is that I do not think he explained sufficiently to the Committee the extent to which he is relying upon rising prices to close the gap. As I shall show, I think that is important. In view of the very heavy new charges on the Budget, many people have naturally been surprised and puzzled at the smallness of the gap. Many hon. Gentlemen opposite, speaking in this debate, have attributed the smallness of the gap to Socialist economic policy. Surprisingly enough, I think that there is a good deal in what they say, because a big part of this gap is being closed by rising prices, and those rising prices are not unconnected with Socialist policy. After all, rising prices are not only a symptom of inflation, they are a cure for it, though a very rough cure. "Too much money chasing too few goods," is the classical definition of inflation, but if prices rise and incomes remain the same or rise less quickly, people can buy less, and consumption is cut down. Since more money is required to buy the same amount of goods, the balance is re-established at a higher level of prices. It has happened many times before. Inflation is the oldest of tax gatherers, and one of the most effective. It costs nothing to collect, and cannot be evaded. This is admited in the Survey, where it is pointed out that £50 million less of goods will cost £600 million more money. The comment made on this in the Survey is worth quoting. It is:
that is, rising prices—"As a result of…these influences"—
That is a more delicate way of putting the point which I have been endeavouring to put before the Committee. This gives rise to great anxiety for the future. The Chancellor is relying upon prices rising faster than incomes to close the gap. He is not only predicting a 10 per cent. rise in the cost of living; he has written a 10 per cent. rise into his Budget, and it is too late now to alter that. But what about the future? What is to happen next year? How is the gap to be closed, then? By another 10 per cent. or 15 per cent. rise in the cost of living? If it is, I think that we shall be up against some grave difficulties. Lord Keynes has often been blamed for all the inflationary policies being pursued. I do not think it fair to criticise Lord Keynes for not foreseeing that all the cures he proposed for chronic deflation would be applied to a state of chronic inflation. No one, in fact, wrote more forcibly upon this subject of inflation and the evil effects of it. He used these words:"the problem of maintaining a balance between the purchasing power of consumers and the reduced volume of goods and services available to satisfy their needs may not be so great as at first sight might appear."
It is the arbitrary effect which is so damaging. Socialists have very naturally prided themselves on the maintenance of the social services, but what has really happened? Since the rates of the main cash benefits were laid down, prices have risen by more than one-third. Therefore, in effect, such cash benefits have been cut by that amount. Supposing the Government said, "It is necessary to cut the social services," would family allowances, sick pay and old age pensions have been the first to be cut? I scarcely think so; yet that has been the effect of the policies pursued. It is not rational, and the trouble is that it does not stop at the social services. Rapidly rising prices generate social friction and disintegration throughout our whole economy. The enormous rise which there has been in nominal profits brings some of the most useful people in this country, the best brains in commerce and industry, into hatred among their fellow men. They are called profiteers, whereas the rise in nominal profits is not a cause of inflation but a consequence of it. Many of the people who want to destroy the present system take full advantage of it. I wonder how many of those who criticise the rise in dividends and say that it has been a major factor in inflation know what the figures are. In 1950, distributed profits were only £3 million higher than at the end of 1947, whereas during the same period wages and salaries had risen by £1,500 million. This rise in nominal profits tempts politicians to spread prejudice and to do things which are damaging to our industrial future. What I think is particularly damaging is that they are largely paper profits and not true profits. It is now admitted in the Economic Survey that a very large amount of the increase in profits this year are not real profits but simply money needed to finance the same amount of stocks at higher prices, though under our accounting system all that money is subject to taxation. In the same way real profits are reduced owing to the fact that to replace a piece of machinery may cost anything up to three or more times the original cost. If it costs three times as much, two-thirds of the money that has to be provided to pay for the new machinery is taxed at penal rates. Therefore, the net effect is a run-down in the real capital engaged in business. This effect is insidious and is not always realised by the victim. If I might quote Keynes again, he said:"By a continuing process of inflation Governments can confiscate secretly and unobserved an important part of the wealth of their citizens. By this method they not only confiscate but they confiscate arbitrarily."
It is against that background that we have to discuss matters like the Profits Tax and the abolition of the initial allowances. I shall not now discuss them; there will be many opportunities later to do so. But hon. and right hon. Gentlemen must realise that we are discussing these taxes against the background that paper profits and taxable profits are not true ones. If penal taxation at this rate is levied upon paper profits, the absolute and certain consequence will be that inflation will continue to increase. The Chancellor said some very strong words about the effect of a constantly depreciating currency, but his words were not as strong as those of Lenin, who said:"It is one of the evils of a depreciating currency that it enables a community to live on its capital unawares. The increasing money value of the community's capital goods obscures temporarily a diminution in the real quantity of the stock."
The Chancellor was clearly right to say that many of the factors making for a rise of prices were out of our control; just as in the nineteen-thirties many of the factors making for unemployment were out of our control in a time of world deflation. But we deceive ourselves if we put the whole blame on Korea. Korea has been used by hon. Gentlemen opposite as a life-belt and it will not support the weight they seek to put on it. The rise in shop prices as a result of Korea is an event of the future and not an event of the past. If we study the London and Cambridge Economic Service Index of Retail Prices, we get this in proportion. The average annual rise in retail prices since this Government came into power has been 6 per cent. The rise in 1950, the Korean year, was considerably smaller than the rise in 1947 and in 1948. If Mr. Dudley Sears is right when he says that this year prices are going up 15 per cent. it will mean that over the seven years of Socialist rule, 1945–51, the average annual rise in retail prices has been 9 per cent. In the previous seven years the average annual rise was 6.7 per cent., and we should remember that there was a rather more extended contest during that period than is now taking place. Therefore, I conclude that the Government have not been making the full contribution which they should have been making to maintaining the economic stability of this country. What is to happen now and what are the remedies? The remedies for inflation are just as well known as the causes, and they have been put forward time and again from this side of the Committee. Many of them I can only refer to but will not have time to discuss. There is monetary policy. My hon. Friend the Member for Chippenham (Mr. Eccles), said something about that on Wednesday. I agree with him. I think there is some improvement in Government policy now. The Chancellor positively prided himself on the rise in interest rates, which is a long cry from the days when I was told that I was guilty of conspiracy when I deprecated trying to force the long-term rate of interest down to 2½ per cent. There are unrequited exports. I will not discuss that, but Egypt is a sinister pointer. There are the nationalised industries, with their inefficiency and high cost. We now have the Transport Tribunal calling urgently for more economies. I think the demand for rising fares shows that the Minister of Labour is going on being a pretty expensive luxury even where he is now."If you want to destroy a State you must first debauch its currency."
Is the hon. Member suggesting that the Minister of Labour was quite wrong in arranging a settlement which provided for an advance in rates of pay for railway staffs?
Certainly pay had to go up, but it should have been accompanied by increasing efficiency. No provision was made for that.Then there is the disincentive effect of high taxation, and the handicap of our chronic shortage of foreign exchange, largely the result of the Government policy. But the biggest factor of all, and one about which I wish to say a few words, is expenditure. I believe that my right hon. Friend the Member for Blackburn, West (Mr. Assheton), was right when he said on Thursday night that the weakness and loss of authority and morale on the part of the Treasury during and since the war was the most important cause of this. In the old days the Treasury knew hardly any other word but "No" and they may have used it too often, but since the war I think they have used it not nearly often enough. I have worked for a good many years on the Select Committee on Estimates and I have noticed that services which are well established, and were going before the war are, generally speaking, fairly efficiently run. But anything started during the war or after the war always tends to get out of hand and to be waste-fully and inefficiently run. Take our administration of Germany as an example. There millions of pounds have gone down the drain. Take Government hostels; there is a good report on that if anyone likes to read it. Take agricultural services; there is another good report on that if anyone wants to read it. The Treasury do not seem to put upon the responsible Departments the duty of showing real efficiency. Again and again they seem to say, "Yes" where they ought to say, "No," Would any pre-war Treasury officials have released money to make a film on how the British spend their week-ends? Would they have allowed the continuing misuse of the Civil Contingencies Fund; and would they ever have allowed the Groundnuts Scheme? I do not want to talk about groundnuts, but the Chancellor said that our criticisms were trifling. Is £36½ million a trifle? My point is, what happened to the culprit? Under this régime the culprit is promoted but under any previous régime he would have been shown the door. Would any previous Treasury officials have shown this almost infinite gullibility about colonial adventures—I do not think we have got to the bottom of them yet—or would they have allowed the wild underestimating which there has been in the Health Service? Here we can at least record some improvement. It has been a long standing scandal. It is a remarkable fact that that doughty warrior, Sir Stafford Cripps, never managed to deal with the giant whereas "Young David" the new Chancellor has felled Goliath at the first attempt—or at least he has put him on the floor for the moment. That shows what one smooth stone can do. There are plenty more smooth stones about, and it is essential that they should be used by the Treasury. If we cannot get control of inflation in this country it is difficult to see how we can save very much of the welfare State. What is the use of hon. Gentlemen opposite boggling about charging people for their sham teeth when they accept what amounts to a cut of one-third in the family allowances without murmuring? It makes no sense. Internal inflation must be stopped and the Treasury must take steps to do it if these things are to be saved. I think the Chancellor will do his best, but I do not think he will succeed. Today the dominant political issue is the cost of living, just as in the nineteen-thirties the dominant political issue was unemployment. Hon. Gentlemen opposite sometimes talk about that now. Do they ever think why they lost the elections in 1931 and 1935?
May I ask the hon. Gentleman a question?
No. I suggest to the Committee that the reason why they lost the elections of 1931 and 1935 was that they showed no sign whatever of being able to deal with the problem of unemployment. They show today no sign whatever of being able to deal with the problem of the rising cost of living. They are set in their ways. They have used up their ideas; they have used up their luck; they can offer the country no hope for the future and no confidence in the present. I believe that the verdict of the country upon them will be not unlike the verdict of 1931.
I am not sure whether we liked the hon. Gentleman the Member for Flint, West (Mr. Birch), in his rôle as lecturer to the Economic League any better than we liked him last year in his rôle as the exuberant and aggressive slaughterer of Chancellors of the Exchequer. At any rate, today he covered rather more of the real matter of our economic debates than he did last year, and on many of the subjects with which he dealt I hope to have something to say myself.My right hon. Friend the Chancellor of the Exchequer, in opening his Budget, said that it was impossible in these days for a Chancellor to produce a Budget which was both honest and popular. He certainly has not produced a Budget which is very unpopular. Most hon. Members on this side of the Committee feel that he has combined with honesty a fair measure of humanity. We certainly welcome the improvements in retirement pensions, although we may have to examine some of the details with care. Nobody who had not spent the last few weeks in the Treasury—certainly no layman—could hope to argue the delicate arithmetic by which the Chancellor led us through what, in spite of what the hon. Member for Flint, West, said, I must refer to as the inflationary gap—closing the doors behind him. As has already been pointed out, the crucial figure in the whole of his argument was that industrial production should be maintained at its present level; in other words, at an average for the year of 4 per cent. above that of the previous year. Certainly, any decrease in this figure would increase the gap in savings that had to be filled, and any increase, unless totally swallowed up by higher incomes, would reduce it. I believe that the Treasury has always underestimated the rise in productivity in this country and has taken a too strictly technical economic view without taking into account some of the new factors which, I am pleased to see, are now mentioned in the Economic Survey. They are the factors not only of higher capital investment, but of a different approach to industrial production on the part both of workers, because of the full employment, and of employers, because of the considerable interest in recent years in education in methods of production and management. I always believed that productivity would continue to increase at a rising rate. Therefore, I never accepted the deflationary doubts of some hon. Gentlemen opposite. I welcome their change of attitude. I welcome particularly the enthusiastic optimism which some of them have displayed, and particularly the attitude of the hon. Member for Flint, West, in reply to my right hon. Friend the President of the Board of Trade. Events in the past have continuously proved them wrong. Year after year production has risen, but now events have come to their rescue and we face much more serious problems, chiefly because of the shortage of materials. On this we have had a severe warning from the President of the Board of Trade this afternoon. There is no doubt that this shortage of raw materials was the cause of the Chancellor's caution both in the Economic Survey and in his speech last Tuesday. The shortage of raw materials has, on several occasions, been the subject of criticism from hon. and right hon. Gentlemen opposite and was the cause of criticism by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) when he said last week that we were finding ourselves long of money and short of goods when we should have been long of goods and short of money. By that he meant that we should have spent more of our gold and dollar reserves on the purchase of materials last year, when he said that they were available. I would remind the Committee of what the right hon. Gentleman said in the debate last year on the Second Reading of the European Payments Union Bill on 16th November, 1950. After referring to suggestions in the International Monetary Fund Report that the sterling area countries should increase their expenditure in the United States, he said:
That was in November, 1950. He also said:"I fear that to urge greater dollar purchases now, upon the results of last year, may be rather superficial, or rather premature."
It is a little difficult now to believe the protestations of foresight which some right hon. and hon. Gentlemen opposite have put before us recently. There is no doubt that our level of production for the coming year is almost entirely dependent on the availability of supplies during the year, but it is possible to take too gloomy a view. There might be quite a sudden change in the situation. Recently there have been signs of a very rapid fall in retail sales, particularly of textiles, in the United States. It is a fall which, I am told, has taken place earlier and to a greater extent than in previous years. There is likely to be a substantial cotton crop in the United States, and this will bring down prices and might bring supplies forward, if they are in the hands of speculators, earlier. It is also the case that there has been a good deal of speculation in metals, especially in the United States, and a slight relaxation of international tension might throw some of those materials on to the market. I can only say that if we are lucky enough, or if these conditions were to come about and we escape a serious shortage, we should get a very much more substantial rise in productivity by the end of the year and, therefore, a much larger output than we have anticipated. But even if production rises, I find it difficult to believe that the total increase in price of the national product can be kept down to a figure of about 3 per cent. I may be wrong, but as far as I can see that is the figure on which the calculations in the Economic Survey are based. I agree with the hon. Member for Flint, West, that a more serious increase of the prices of consumer goods at home would have serious effects on those living on fixed incomes and those dependent on the social services. For this reason if there is, at the end of the year, a surplus in the national income accounts greater than was anticipated I hope that the Chancellor will look again at the ceiling on social services, especially as they affect those living on fixed incomes, such as those on retirement pensions. I wish now to refer to the increased taxation upon distributed profits and I will try to reply to the elementary economic arguments of the hon. Member for Flint, West. I have no doubt myself that the increase is fair. Here, I support my hon. Friend the Member for Stechford (Mr. Jenkins), who spoke last week. I do not believe that there can be any comparison between the incomes taken by those who work and the incomes taken by those who receive dividends. Figures can always lie, and the hon. Member for Flint, West, used figures which were grossly misleading when he compared the rise in wages and salaries since the end of the war with the rise in dividends. There are about 22 or 23 million wage and salary earners and only about 1,250,000 earners of profits and dividends. I do not think that the hon. Gentleman expected us to accept his arguments. I believe myself that the ordinary shareholder in a company is entitled to receive a sufficient return to cover both interest at the current rate and the risk which he takes, in investing his money, but, under the conditions of the last 10 years, and in spite of taxation and dividend limitation, he has received far more than that. There is no doubt that the rewards which these shareholders have received during the last two or three years, when the yield on ordinary shares has been nearly 6 per cent., were considerably higher than was necessary to cover the risks involved. I am not now referring to those starting a new business and risking all their own money in a little enterprise, but to those who contributed their money via the Stock Exchange to those economic institutions which make up more than 50 per cent. of the whole economic activity of our country; that is to say, the public joint stock companies. In addition, these shareholders are receiving a continuous capital appreciation of their shares, although I am very glad to see that, under a Socialist Government, that capital appreciation, according to Mr. Harold Wincott writing in the current "Lloyds Bank Review," has been less than in all other countries in the world, and I think that that is right. Nevertheless, there has been considerable capital appreciation. When they talk of the effects of taxation on company incomes, hon. Gentlemen opposite sometimes talk as if the operations of industry did not generate any private incomes at all, but as if, somehow, the whole of these economic activities were entirely carried on in the interests of the national community and as if no shareholder received any benefit. It is extremely difficult, if not impossible, to grant concessions to companies on economic grounds which do not affect the distribution of income as between different classes of the community, between those who receive earned incomes or those who receive unearned incomes, between those who work for wages and salaries and those who do not work but receive a return on their money. I am very glad to see that the Millard Tucker Report quite clearly states the principle that the argument that industry's cash reserves should, for tax purposes, be insulated against a fall in the value of money is quite insupportable, as it would involve giving preferential treatment to the owners of businesses against other classes of taxpayers. I would like to hope and believe that hon. Gentlemen opposite would accept that argument. I say quite frankly that I would have preferred—and I think it would have had many advantages—to have seen the imposition of dividend limitation on public companies, but in spite of the arguments of hon. Gentlemen opposite no doubt the increase in the tax on distributed profits will act in much the same way. It is true that, if dividends are not increased, the increase of tax will do no more than mop up a part of the increased profits that companies will earn this year, and it is true that rising prices may well absorb most of the rest, and that the real value of companies' reserves may fall. But when we consider this we have to consider it from the point of view of the requirements of the national economy as a whole. It is clear that, if we are to have this very greatly increased armaments programme, and there is not to be a drastic fall in the standard of living greater than any of us would like to contemplate, there has to be a reduction of home investment. The increased Profits Tax, with the abolition of the initial allowances and the restriction of bank credit, will tend to bring about that reduction in capital investment which, at the present time, we require. The Chancellor has said that the Service Departments will see that companies needing capital for defence purposes will receive help. On this point, I wonder whether it is too late to put forward the idea, which the Millard Tucker Report itself puts forward, that we should introduce a differentiation in this matter of initial allowances as between one company and another, and provide allowances at a varying rate according to national requirements and according to how a particular company's activities fit into the national interest. I welcome the concession given to the small owner-managed business, and I am not sure whether we should not do a little more for the people who run these businesses. It would not be a very expensive concession, because in spite of the very large number of such businesses the total volume of their activity in our economy is comparatively small. These are the businesses of the real risk takers, to whom the right hon. Gentleman the Member for Ormskirk (Sir A. Salter) referred last week, when he was deploring the decline of equity holders and of risk takers. These arguments can hardly be used about the large, established companies, whom these changes will mostly affect. I believe that the effect of the Budget will not be in any way to prejudice the general level of companies' activities. It is true, of course, that the postponement of investment will have to be dealt with in the future. When the time comes to do that, it is quite possible for the Chancellor to reverse the whole of the measures which he has now taken and restore the initial allowances, and so on, in order to assist industry to replace machinery and plant. It is also true that the prices of materials may have gone up in the meantime, and it may then be necessary to consider ways and means of financing industry. At that time it may be necessary for the Chancellor to increase the surplus in his Budget to ensure that there are sufficient savings in the community to meet the expansion and replacement of plant which may then be necessary. Ways and means will then have to be found for financing this without giving to the ordinary shareholder in public companies great advantages over other members of the community who have been making sacrifices in the same period."The purpose of my argument is to try to show that, until we can calculate the effect of a rise in prices of raw materials, we should be slow to rush into very much relaxation of dollar purchases."—[OFFICIAL REPORT, 16th November, 1950; Vol. 480, c. 1924–5.]
It is a very great honour to address this Committee for the first time. As a very new Member of this House, may I say that, however much I may disagree with certain aspects of the Budget, I certainly never hope to hear a more lucid and interesting presentation of the national accounts than that to which the Chancellor treated us last Tuesday.I very much agree with my hon. Friend the Member for Flint, West (Mr. Birch), who said that it was no good thinking of the inflationary gap as something static. It is a fallacy to think that one could ever take still life photographs of the national economy at any particular moment, and in this connection I should like to put a question to the Chancellor about his Budget speech. I read very carefully the paragraphs relating to the inflationary gap. When the Chancellor estimated private savings for the coming year at £170 million, did he take into account the effects of the increased taxation which he is imposing? It seems to me that the effect of the new taxes added together, must be to cause a certain amount of dissaving. I noticed also that the right hon. Gentleman said that, in his opinion, there would be no increase in personal savings during this year. I should have thought that there was almost bound to be some decrease because of the rising cost of living, and that seems to be the view of the right hon. Gentleman, if one compares the figures given in his speech with those in the Economic Survey. I should like to say a few words about the size of the Budget. Despite what has been said by hon. Members opposite, I am sure that we on this side of the Committee are right in saying that the size of the Budget today is in itself inflationary. It is not only the case that high taxation stimulates wage demands, but there is also the point that a swollen Budget means that there are many salary-earners who are not making any contribution to the total national production. This is not a new point, as it was made in the debate on the cost of living last November, when my hon. Friend the Member for Chippenham (Mr. Eccles), in answer to the hon. Member for Stechford (Mr. Jenkins), said:
That seems to me to be an important point when the total volume of national production matters, as it does today, almost more than ever before. As to the argument, which is also a familiar one, that a very large Budget does not really matter because so much of the revenue raised is used to effect re-distribution of income, many economists, including a number of Socialist economists, have, at one time or another, emphasised the danger of reaching a point where taxes no longer have a real re-distributive effect. In this connection, I am not going to quote Colin Clarke, because I know he has always been a bit of a wobbler from the point of view of hon. Members opposite; I certainly would not expect a writer, whose views are quoted with approval by Professor Hayek, to be acceptable to them. But let us take Mr. E. F. Schumacher who is, so far as I know, a perfectly orthodox Fabian. I dare say many hon. Members besides myself read with interest and profit a collection of essays published by Blackwell's some years ago called "The Economics of Full Employment." The general tone of that book was decidely Left Wing, as I am sure hon. Members who have not yet read it will gather, when I say that Mr Worswick and Mr. Balogh were contributors. But in the contribution to that volume on the subject of public finance, Mr. Schumacher used these words:"…the size of the Budget affects the proportion of the people of working age who are on unproductive jobs; if we reduce the size of the Budget, we most certainly increase the number of people who are producing goods to get into the shops."—[OFFICIAL REPORT, 7th November, 1950; Vol. 480, c. 793.]
I believe that we have now reached that stage, and, furthermore, that those words illustrate a very important point which is often made by hon. Friends of mine on this side of the Committee, namely, that we can never achieve economic efficiency if the financial policy of the Government encourages and even subsidises disrespect for the law. There is one other point about the size of the Budget which I wish to make. We are often told that the real object of my right hon. and hon. Friends is to deflate the economy to below the level of full employment. That charge, of course, is absolutely untrue. There is absolutely no intention on this side of the Committee to use unemployment as a weapon to reduce the bargaining power of the unions. My hon. Friends will agree that in normal times, at least, it is a sure sign that a sound financial policy is being followed that any increase in the value of national production should be accompanied by some rise in real wages. I want to say a word or two about the new taxes that are being imposed. First of all, I want to say something which is really non-controversial. On the question of dentures and spectacles, I hope that the right hon. Gentleman will cast a kindly eye on the suggestion in "The Times" on Saturday last, by the information officer of the Association of Optical Practitioners, to the effect that the charge on all spectacles should be exactly the same. It seems to me rather unfair that old people who suffer from cataract should have to pay more for their spectacles because of the very elaborate convex lenses they need. I believe I am right in saying that pebble lenses, which have, in many cases, to be imported from abroad, for people who are extremely short-sighted, are very expensive. Again, it seems a little hard that they should have to pay more than a common or garden myope like myself who coasts along quite happily with a prescription of minus 2.25. I should also like to say a word or two on the subject of the Profits Tax. To my mind, this tax does not really fulfil its object of penalising all dividend increases, because the companies which are going to suffer most severely are those which have to provide for a very high proportion of preference stock carrying a fixed interest. It is those companies which will find it hardest to maintain the present dividend on their ordinary shares if this increased rate of tax is imposed. It also means that more businesses will emigrate overseas, and will seek foreign registration. I have read a great many comments on the Budget over the week-end, as, I am sure, many hon. Members have done, and I have noticed that nearly everybody has paid compliments to the right hon. Gentleman the Chancellor of the Exchequer. I admit that the compliments in "The New Statesman and Nation" were of a rather pale kind, but they were compliments none the less. Everybody has said what a fine performance he gave us, but at the same time there has been a noticeable note of interrogation. People have been saying, "Where do we go from here?" Whoever presents next year's Budget will have to contend with a greater budgetary strain. I have already expressed the opinion that the size of the Budget is inflationary, and it is not sufficient for hon. Members opposite to go on drawing attention to the high prices of imported commodities, because the very fact that world forces are affecting the price level makes it more important than ever that we should pursue a sound financial policy at home. On the question of taxation, I wish to make two suggestions. The first is that we should try to make the system of high indirect taxation more progressive than it is at present. We have to accept high indirect taxation, but could we not try to differentiate, not merely between luxury articles and necessities, but between different grades of particular articles? Thus I rather regret that the Purchase Tax on all wireless sets is to be doubled, because the simple plug-in set is a great solace to many elderly people. But if anyone wants an expensive wireless set which has a sort of prestige value, then it seems to me that is something for which he can reasonably be asked to pay a higher rate of tax. I also agree with my hon. Friend the Member for Aberdeenshire, East (Mr. Boothby), who comes very near to making the "News of the World" my regular reading, when he suggests that there should be a differentiation in the rates of tax on earned and unearned incomes higher up the scale. In any event, unless we grapple courageously with the financial implications of our re-armament programme, we shall run a serious risk of undoing that work of post-war reconstruction, in which not only the authors of this year's "Economic Survey," but also hon. Members in all parts of the Committee take such pride."The high income tax imposed for the purpose of re-distribution is subject to the law of diminishing returns in more senses than one. It leads to a situation in which every item of expenditure that can be booked over expense account is automatically subsidised by the State at the rate of standard tax. The more progressive the scales of taxation, the smaller, at the same time, is the reward obtainable by business-men for extra effort and risk-taking. In a free society, the limits of taxation deserve the closest study."
I feel sure that the House will join with me in congratulating the hon. Member for Handsworth (Sir E. Boyle) on a very excellent maiden speech. I say that very sincerely because the memory of my own maiden speech is still fresh in my mind, and I hope, out of my own experience, that the hon. Gentleman felt as cool, as calm and as logical as he sounded. I liked his blend of the theoretical and practical together with that shaft of humour that occasionally came through. I am sure the combination of all those things will give him confidence to address this Committee and the House from time to time and bring to us some of the wisdom we have seen in potential in that maiden speech. I cannot follow him at the moment because we accept the non-controversial nature of a maiden speech, but though he went as near to controversy as to make his speech very acceptable, we must also accept the principle that it is non-controversial and therefore is not followed up.I want to deal specifically with pensions, but before doing so I join with the many hon. Members who have congratulated my right hon. Friend the Chancellor of the Exchequer on his first-class over-all Budget. I think, generally, the praise given to him has justified this first attempt on his part. But having said that with regard to the general nature of the Budget, I must join issue with him on his new provisions for National Insurance pensions. I confess at the start that I feel very disappointed with the Chancellor's pronouncement on this very important matter. We have had two speeches today dealing with matters of our economy concerning hundreds of millions of pounds. I want the Chancellor to realise that I am dealing with matters which affect people who are concerned with only 50s., a week even with the increase. I suggest to the Chancellor that he has introduced a new principle in his proposals. I always understood that the principles underlying National Insurance legislation and the National Assistance Board were introduced to meet the needs of those in financial distress. The new principle the Chancellor has introduced is that State insurance is designed to meet the manpower problems of this country. I know the manpower problems are most serious, especially in heavy industry but I ask him whether that is a good logical and sufficient reason to apply to State insurance, this principle, as the Biblical phrase has it, of
Is not that the true position with regard to the Chancellor's proposals? A man of 70 and over and a woman of 65 and over receive an increase of 4s. a week unless they are in need and are receiving the maximum allowance from the National Assistance Board. If they receive such supplementation the proposed new increase of 4s. will be deducted. This is giving with one hand and taking away with the other. I know that during the last week the Press have envisaged that the Chancellor may make some alteration in respect of supplementary pensions which will obviate all this; but I am not a member of the Press and I know that we have no official pronouncement of what the Chancellor is going to do on this vital matter. Therefore, I suggest to the Committee and the Chancellor that those who will benefit chiefly under the new regulations fall within two categories. The first category comprises those men over 70 and women over 65 who either have a private income of their own or are earning money through employment. Surely that is contrary to all we have believed and quite the opposite to the spirit of the original Act and even of the Beveridge Report itself. The Chancellor should clear up this issue when he winds up the debate tonight. I ask him to consider this matter seriously and to indicate whether or not he is prepared to alter the supplementary grant so that those who benefit under the new proposals shall not suffer because of their need. There is another problem. Why does the Chancellor draw the line at 70 in the case of men and 65 in the case of women? The decision is quite arbitrary. Has the Chancellor taken into account the old distressed areas and the heavy industrial districts of the country? In those areas there are thousands of men aged between 65 and 70 and women between 60 and 65 who cannot find work. Many of them are unfit for work even if it is found for them. One cannot expect a miner who has been out of the pits for three or four years to go back again to the coal face. One cannot expect that of a steel worker either. Those who understand Lancashire will know that one cannot expect a woman over 60 who has been absent from the textile industry, and especially the card room to take up that duty again. There are odd isolated cases of those who return but they are the exceptions and not the general rule. If the Chancellor will look closely at this problem of women between 60 and 65 and men between 65 and 70 who are not in work he will find it is in the main because they are physically incapable of going back to work. Most of the people between those ages who are at work are at work because the present pension level is utterly inadequate to meet their needs. There are thousands of people who cannot work or who cannot get work who are entitled to ask the Chancellor certain questions arising out of these new proposals. They are asking why there should be this preferential treatment for those over 65 and over 70 respectively according to their sex? They are asking, quite rightly, why a watchman over 70 years of age and receiving a full week's wage every week should receive the increase of 4s. whilst they are not to receive anything. They ask why should a woman over 65 years with a private income of her own receive an increase of 4s. a week and they get nothing. Those are very pertinent questions and I press the Chancellor to review the situation seriously again. I suggest that the new regulations are tinkeringly futile in view of the present situation. If I may offer this suggestion to him, I think my right hon. Friend could have managed this problem much better by a straight increase of the pension rate. By employing that method we should have preserved the principle of need which has been inherent in all Acts of Parliament in this country concerned with old age pensioners. I believe also that by that means we would have done something which would be administratively easy compared with the new proposals. Had the Chancellor dealt with the matter in a fair and equitable way, as applying to all pensioners, he would have given general satisfaction not only to the pensioners but to the general community. I therefore ask the Chancellor to look at this problem again and, if possible, to indicate when he winds up tonight what his intentions are."…whosoever hath, to him shall be given; and whosoever hath not, from him shall be taken even that which he seemeth to have."
One of the most civilising features of life in the House is the way in which maiden speeches are greeted on both sides. We on this side of the Committee were very appreciative of the kind words which the hon. Member for Brightside (Mr. R. Winterbottom) used about the maiden speech of my hon. Friend the Member for Handsworth (Sir E. Boyle). They were well deserved, but they were nevertheless generous. For my part I should like to offer the hon. Member for Handsworth my congratulations on one of the best maiden speeches I have ever heard.I make no apology for returning to the ever-present question of the rise in the cost of living. It broods over our whole economic life like a thunder cloud from which already many substantial drops have fallen, and which threatens to burst into a deluge which may well sweep away not only this Government but future Governments unless something is done to stop it. I believe that as long as we live, Governments will stand or fall by their success or failure in dealing with it. Yet I believe the Government are making the oddest of all mistakes. They are underestimating its consequences. They are making the biggest mistake they could possibly make in disclaiming responsibility for the rise in the cost of living. In the first place, I say that because I believe that position is untenable. I believe anybody can see the facts which were brought out so admirably by my hon. Friend the Member for Flint, West (Mr. Birch)—the steady rise in the cost of living, the steady pressure ever since the present Government took office in 1945. I believe it is ridiculous and untenable to ignore the link that exists between taxation and the cost of living. There are extraneous factors, of course. There is the Korean war and there is the rise in world prices and things like that, but the most stupid and simple-minded elector cannot fail to see that the greatest pressure on the cost of living is exercised by over-taxation. It will be our business to tell them so, so that they will see the plain truth which is that this country is living beyond its means. However, I do not propose to flog that horse any more, for though hon. Members opposite may not be convinced of these facts, all my hon. Friends are. Secondly, the electors will hold the Government to the declarations which they have made in the past, that Socialism will prevent the country's economy being over-run by blind economic forces. Hon. Members opposite may think that we never see the attractions of Socialism and are never moved by the arguments which they adduce. On the contrary, we are often affected by their arguments. I have often thought that one of the most attractive sides of Socialism is the way in which the Socialist declares that he is determined to be free of blind economic forces. I believe that item in the Socialist faith has been preached for so long, and has been so far accepted by the electors of this country, that they will hold the Socialists to it and will demand that any Government, whether Socialist or Conservative, shall assume responsibility for the level in the cost of living. I do not think it is any good the Chancellor treating it as a by-product of inflation which can be mopped up, like superfluous purchasing power can be mopped up. I do not think the electors are impressed when the Chancellor talks of taxation and calls it savings. It is as if one called a hæmorrhage a blood transfusion. The significant thing is that by approaching the cost of living in that frame of mind the Chancellor attempts to apply remedies to the rise in the cost of living which in themselves aggravate the disease. I shall not intrude on the time of the Committee as much as I should like in dealing with Profits Tax. But, I must say this: can anybody say that a tax on reserves, which is what Profits Tax is, is not likely to exercise continuous pressure on the cost of living? I do not believe that all hon. Members, and certainly not all members of the general public, understand the first thing about Profits Tax. I do not think they realise that it is a tax the incidence of which is regulated by the proportion of the net profits which are distributed to the shareholders. I believe it would come as a surprise if I told hon. Members that if a company makes £100 profit in a year and decides to distribute half of it to the shareholders—and I defy any hon. Member to say that that is an unfair proportion for the shareholders to have—the amount which will go to reserve will be £10 10s. Can anybody claim that a tax like that on reserves, which are so vital for re-equipment, financing business at a time of rising prices and so on, is not going to force a company to raise the price of its products to the public, and thus exercise pressure on the cost of living? These are subjects which have been and will be threshed out ad nauseam during the course of these debates. So I shall try to direct the attention of the Committee along other channels. I believe that the most significant and sinister feature of our discussions on the present economic climate of this country is that Parliament is becoming content to exercise less and less control over the great factors which govern our economic life, if we let the Government get away with it, for we have the Government saying, "We are very sorry but we are no longer responsible for the level of the cost of living. It is due to extraneous factors beyond our control." That is serious enough in itself, but I ask the Committee to consider the measure of control that we in Parliament exercise over moneys voted by Parliament. We rely more and more upon the Treasury watch-dog, but year by year the Treasury watch-dog is getting less and less vigilant. The conception held by the Treasury of its duties is less and less that of a department whose prime duty is to exercise a restraining influence on expenditure, and more and more that of a department whose main duty concerns the broad lines of economic planning. If anybody doubts that, let them read a most interesting lecture delivered last November by the head of the Treasury, the Stamp Memorial Lecture, and they will see those conclusions outlined unmistakably. It was a most significant lecture which passed almost unnoticed in this country. So much for moneys voted by Parliament. I think the situation there is serious enough, although, of course, we have the Estimates Committee, the Public Accounts Committee, and there are debates on the Floor of the House on Supply Days and on other occasions. I want to direct the attention of hon. Members to a section of our economic life about which no single word has been said during the Budget speech or in the course of these debates. I refer to the nationalised industries and corporations—coal, transport and the public utilities. The efficiency or inefficiency with which they are run has a most important and significant bearing on our economic life and so indirectly on the cost of living. A child can understand that the price of coal or transport or gas or electricity enters into the price of every single article or service which we use or consume. Yet we in Parliament exercise no scrutiny or control whatever over the financial operations of these nationalised industries and corporations. I have already said what happens with money voted by Parliament, in the Estimates Committee and so on. But there is nothing analogous in the case of the boards and corporations of the nationalised industries. We in Parliament represent the shareholders and the consumers, and we have to foot the bill, yet we do not elect the directors or scrutinise the accounts. It is worse than anything which ever existed under private enterprise, for there at all events we had the spectre of bankruptcy in the background compelling a certain level of efficiency and we had free competition, which also compelled a certain level of efficiency. I rise this evening to beg the Committee to re-assert its rights as the scrutineer of public expenditure—and it is public money which is employed in these industries and corporations—and not only to exercise its rights but once more to carry out its primary duty, which is to exercise a check on expenditure, a check on taxation, and to see that money voted by Parliament or found by Parliament is directed in the right way. I find it hard to believe that such a vast and overwhelmingly important sector of the country's economic life is ignored, is passed without a single word, in this the most important financial debate of the Parliamentary year. I shall not be expected to enter into discussion on the best form of machinery which should be established to deal with this problem. Personally, I favour some sort of machinery like the Select Committee on Public Accounts. But I would remind hon. Members that the Public Accounts Committee would get nowhere were it not for the Comptroller and Auditor General and his Department, and if we set up another Public Accounts Committee to deal with the nationalised industries, we shall have to set up an organisation parallel with that of the Comptroller and Auditor General. It is useless to discuss all the possibilities now, but I want today to strike the first blow and make the first move towards the appointment by this House of a Select Committee to investigate the whole question. I believe this cuts across all party differences. If things go wrong in the coal industry, in the transport industry, in the public utilities, we are all agreed that the whole country suffers profoundly. I think I can claim the agreement of all hon. Members when I say that it is the duty of this House to see that that does not happen. The Government must shoulder the responsibility for the level of the cost of living and we in this Committee must insist upon being able to carry out our duty in controlling such a wide branch of the national economic life as that to which I have referred.
As this is the first time I have intervened in a Budget debate I think I must apologise to the Committee because it is very difficult, when entering the debate at this late hour, for a novice in these discussions to introduce anything new. All the old Budget-puncher has to do is to pick up the old arguments, add a little pepper and salt and go on with the dishing out, but the novice in these discussions has not this aptitude. The few notes which I made at the beginning of the debate are now of no use because the arguments have been used so often. In apologising to the Committee I must say that I have to speak without notes and that I will do the best I can, although I have a formidable task under present conditions.The hon. Member for Flint, West (Mr. Birch), said something which I think should be corrected, because it is something new. He said that the Labour Party lost the election of 1935 on account of rising prices.
No. What I said was that the problem of the 1930's was unemployment and that Labour lost the election of 1931 and the election of 1935 because, when in office from 1929 to 1931, they showed no sign of being able to deal with it.
That is also rubbish, because the Leader of the Government at the time, Mr. Stanley Baldwin, told the country after the election that he dared not tell the truth at that time; if he had done so, he said, he would have lost the election. They called it "sealed lips," and it has gone down in the history of this country as a disgrace to all Parliamentary traditions. That was in 1935. [HON. MEMBERS: "What about 1931?"] The hon. Member for Flint, West, coupled 1935 with 1931. I hope he will accept that correction, as given by the then Leader of his own party.Turning to the Budget itself, the Chancellor has been congratulated on having made a very lucid speech and it might be unseemly for me to throw a spanner into the works, especially as I am a beginner in the debates. Nevertheless, there are various points which might be criticised and I shall criticise them, although a couple of days ago I had no intention of doing so; I had something else to say, but it has already been said several times. There have been very long speeches on both sides of the Committee, in which hon. Members have wandered all over the Budget. I intend to limit myself to one subject—that of Purchase Tax. I believe it was a mistake to increase the Purchase Tax on television sets. I am not a television fan; I do not like television; I do not like sitting and squinting at a little screen 12 inches by 12 or smaller, for hours on end. If I did so I should soon have to come to the Chancellor for some National Health Service spectacles, semi-paid. Until I can get a big screen before which I can sit in comfort, I shall not worry about looking at television. But the fact that I do not like television does not mean that there are not millions of people in the country who obtain great enjoyment from it. Until now television has been within the compass of a man earning £6, £7, or £8 a week. He could have a television set. As a result of the increase in the Purchase Tax we are taking television out of one group of money-earners and restricting it to a higher group of money-owners. We are depriving a very large section of the population of the enjoyment they could have in returning home at night and passing several hours before their television sets.
Does the hon. Gentleman realise that there are wide areas of the country which cannot receive television programmes?
That may be so, but I am pointing out that there were people in a certain income-group who, before, could have television-sets and who now will not be able to have them. I would substantiate this point by stating that the Stock Exchange seems to be more or less of my opinion on this question. [HON. MEMBERS: "Oh."] Well, there are stockbrokers opposite and they will correct me if I am wrong. E.M.I. shares were falling rapidly before the Budget. Within a month they had fallen from 21s. 9d.—I think—down to about 19s.—nearly 15 per cent. Now they are rising rapidly. In only one day after the Budget they rose 5 per cent., so we see that the Stock Exchange are convinced that the television manufacturers will not lose over this extra burden of Purchase Tax. All we are doing is shifting television from the lower-paid people, who would have been able to have it for their enjoyment, and giving it to others to whom this added tax makes no difference.Now I come to the question of household necessities. Everybody agrees that they should have been taken off the list of Purchase Tax. What I do not understand is why it has been so long, year after year, before they have been taken off the list. The idea of Purchase Tax, in the beginning, was not to produce a large amount of revenue but to curtail spending. I cannot imagine a woman going into Woolworth's, for instance, and buying three or four buckets just because Mrs. Jones has two or three. A woman who buys a bucket, or a pail or a mop or a duster, does so because she requires that article in her household. Why these were ever put on the Purchase Tax list is to me a mystery, and why it has been so long before they have been taken off the list is a bigger mystery still.
Does the hon. Member remember that during the last two years this Committee has not had any opportunity whatever of discussing these matters in detail? Hon. Gentlemen opposite supported the Chancellor of the Exchequer in preventing our discussing them.
That may be very true, but it was a Tory Government—or a war-time Government which was largely Tory controlled—which put these things on to Purchase Tax—
For war purposes.
—mostly for war purposes; but there was no need to add tax to them and make householders' expenses all the more, because nobody is going to waste money on household necessities. People buy of these what they need, and the idea of Purchase Tax was to prevent people from actually wasting money.Another question I want to come to is the question of business sundries. There is no Purchase Tax on the typewriter, but typewriting-paper, carbon-paper, typewriter-ribbons and everything else business requires, are taxed heavily. With Purchase Tax we are only making business life dearer and, in consequence, enhancing the prices of merchandise. We were promised in 1942 that Purchase Tax was only a war-time measure and would come off after the war. One of our own party, Lord Pethick-Lawrence, as he now is, practically gave us that pledge, but the tax has not come off. In my opinion—and I repeat that I any a novice in these debates—Purchase Tax is an odious, pernicious, and unfair tax, and some other tax should be introduced on luxury articles to take its place. It is odious because it directly encourages dumping. Friedrich List, upon whose economic theories Bismarck planned his whole trade-expansion policy, gave as a definition of dumping the raising of the prices of articles to home-consumers so as to cut the prices of exports to destroy trade-rivals. We are raising prices for home-consumers at the same time as we are devaluing the pound, so as to undercut our trade-rivals. If that is not dumping, I do not know what dumping is, and this country has always looked upon dumping as an odious trade procedure. The tax is pernicious because, by devaluing the pound, we have raised the prices of our imports so that the manufacture of goods becomes dearer on the substances we bring in from abroad. As the price of the manufactured article goes up to us, the Purchase Tax goes up at the same time. What we are doing is to penalise our home consumers twice, once by the enhanced price of the manufactured article caused by devaluation, and, second, by the consequent raising of the Purchase Tax. Surely something could be done to prevent Purchase Tax always rising with the price of manufactured articles. Third, it is unfair. Any foreigner can come into this country, buy his merchandise in our shops, and not pay Purchase Tax; or any Briton living abroad can do the same. If I go to the United States they do not exempt me from their Sales Tax because I am a foreigner. I have to pay the tax just the same as anybody else. We are told that this brings in dollars. It does not. It does not bring in much foreign currency at all. All it does is to deprive our own people of goods in the shops. I am sorry if I am not following on rigid lines in this debate, but I did explain that I was a novice in this business; and, moreover, I have come very late into the discussion, which is now nearly finishing, so that almost every argument has been taken up already. I am trying to find some. I may be asked what we can put in the place of Purchase Tax. The Chancellor asked us to give suggestions for reducing expenditure. I cannot give suggestions. I am not an economist. I know that Budget debates generally are economists' bean-feasts. But some of us have to say something, too. I represent 50,000 voters. They expect me to say something. They have not sent me here to be excluded from the debates.
I have 60,000.
I have been speaking to actuaries and chartered accountants who have been studying a problem which should be gone into carefully, and I would recommend a suggestion to the Chancellor for future Budgets. I am sure that his Budget next year will be even more lucid and better than this year's. [HON. MEMBERS: "He will not be there."] He will be there. What I have been thinking of is a change in the Stamp Duty. The first Stamp Duty was, I think, introduced about 1730 or 1733. There was an alteration about 1853, because the former duties had become so difficult to collect that they had to find a new way. This went right on to 1891, until there was what was called a consolidation of the Stamp Duty. From 1891 until today there has been virtually no change in the receipts Stamp Duty, except an increase in 1920 from 1d. to 2d. for receipts of £2 and over. Thus, a person who goes into a shop and buys an imitation pearl necklet for a couple of guineas has a 2d. receipt stamp put on the bill, and a person who buys a real pearl necklace for 2,000 guineas also has a 2d. stamp on the receipt.
The hon. and gallant Member shakes his head, but it is true.It is manifestly absurd to put a 2d. stamp on a receipt for two guineas and to put the same value stamp on a receipt for 2,000 guineas. The receipt for 2,000 guineas ought to have much more than a 2d. stamp. I am trying to give examples to show the absurdity of the present Stamp Duty. Even now, low as the receipts Stamp Duty is, shopkeepers are not putting stamps on these dockets. I have receipts from Selfridge's, Harrod's, and nearly all the big reputable stores in London, which I have kept but have not brought with me because I did not know I should be speaking tonight, and not one of them has a 2d. stamp affixed. [HON. MEMBERS: "Shame."] Yes, it is a shame, because somebody else is paying their taxes for them. The Stamp Duty Act of 1891 refers to "any acknowledgement or docket." I have brought this matter to the attention of the Treasury, who told me that it has become customary not to put these stamps on shop receipts. But that is not the law. The law says that they should be put on; they are not being put on, and on all the thousands of receipts made out every day money is being withheld from the Treasury, so that other people have to pay the duty which shopkeepers are not paying. If this Stamp Duty for receipts were to be made 1d. in the pound—not a heavy amount at all—I have been assured by actuaries that the amount raised would be so vast that it might replace Purchase Tax. Chartered accountants have told me that they always accept these dockets as receipts, yet the 2d. stamps are not put on. A Stamp Duty of 1d. in the pound for all purchases would bring in a terrific sum of money.
I cannot say how much, but actuaries have assured me that it might be enough to replace Purchase Tax.
Three hundred million pounds?
Ask the actuaries. To an ordinary person buying £1 worth of merchandise, 1d. is nothing; on £20, 1s. 8d. is nothing but in the aggregate the amount raised on all these dockets from various classes of dealers and shopkeepers would amount to a terrific sum of money.The principal obstacle under the Act of 1733, which was abolished in 1853, was that the money could not be collected because traders were expected to put on the stamps. As this would be a small amount individually, were the dealer or trader made responsible for affixing the stamps and the purchaser made responsible for paying for the stamps there would be no difficulty, because it would be up to the trader to take the cash for the stamps and to affix the stamps himself.
That is a Purchase Tax.
It would be a form of Purchase Tax, but a very reasonable form of Purchase Tax which would not fall heavily on anybody at all. To leave it to the traders to pay for all the stamps would be too penalising.
Would my hon. Friend allow me to ask a question?
No, I cannot give way. I have given way three times and that is quite enough.It would be too large an amount to expect a trader to pay on the thousands of pounds he takes in the course of a year, but if the cost is borne by the purchaser it is, individually, a very small amount.
I am not giving way.
Cannot I ask one question?
I appeal to you, Major Milner, for your protection.That is one small suggestion that I make. My second suggestion is a taxing of display-advertisements. I am not talking about advertisements in newspapers, but display advertisements which we are forced to look at whether we like it or not, and which are taxed in other countries. Even in Glasgow I believe there is a municipal tax on neon-display advertisements. If we do not want to read the advertisements in a newspaper we do not buy it, but we are forced to look at advertisements on buses, in big displays in Piccadilly and advertisements stuck up in fields, villifying the countryside, and they all go free of tax, while in other countries they are taxed. Here is a tax which would not hurt anybody, because those who would pay would be the firm getting the benefit from the advertisement. There is one last query which I wish to put to the Chancellor. Today, I received a letter from an old age pensioner. This is the letter:
that is in my area, and, as I have said before, I represent 50,000 people and this is one of them."May I be allowed to draw your attention to a specific case of old age pensioner's anomaly. I was a skilled worker up to last July, 1950, at the Red Bank Manufacturing Company. Measham"—
The letter goes on:"You remember addressing the workers in the canteen last Election. I was ordered by the doctor to cease work at once."—[Laughter.] Why is the Committee laughing because an old age pensioner has been advised by the doctor to cease work? [An HON. MEMBER: "It was the effect of the hon. Member's speech."] I am speaking for an old age pensioner. We on this side understand the miseries of the old age pensioners.
and he gives it:"I had given my firm notice that I would retire on 5th November, 1950. The reason was that I should have reached the age of 67½ on that date. I had worked two years and two months over the age of 65, with the idea that the wife and I would receive 2s. per week per year according to the Beveridge proposals. When I applied for this amount, I was told I was not entitled to the amount. I have not received one penny for the two years of work over 65 years. There must be others like me. My pension number is"—
On the back of the page the letter says:"Under the new proposals regarding old age pensioners they that work longer are now to benefit. Why not I and others in like circumstances?"
I hope that the Chancellor will, if he can, in this Budget, allow that benefit to go to the old age pensioners who have worked longer than their time, in the same way as he is proposing to do for others in the future."Pensions of this character must be made retrospect in some degree, to be socialistically fair and honest."
I am sure that the hon. Member for Loughborough (Mr. Follick), will not expect me to follow him—
Of course not.
—in the suggestions which he has made to the Chancellor with regard to stamp duty, sales taxes and advertisement duty. Those are matters which I know the Treasury have gone into and perhaps the Chancellor may be able to give him a reply.I should like to congratulate my hon. Friend the Member for Handsworth (Sir E. Boyle), on his remarkable maiden speech. Perhaps he will accept the congratulations of an old boy from Birmingham to the new boy who has just joined us, when I say that we appreciate the new blood that has come to us from Birmingham, which, in the past, has produced many statesmen and leaders. We see another coming. I have already congratulated the Chancellor of the Exchequer on the clarity and humanity of his Budget speech, but I told him that there would be points which I should criticise, and now I come to them. First, may I give my general opinion, which I have voiced here before, as an ordinary businessman. We have this traditional one year Budget. But, we have a three years' re-armament programme, and the ordinary business man who has a three years' programme would consider financing it for three years. I know that the Chancellor is only human and that we can hardly expect him, politics being what they are, to tackle a Budget for three years. I only mention the matter because I think that it is wrong to have a three years' re-armament programme and only one year's finance for it. The poor man who next year has to stand at the Treasury Box is going to have a more difficult task. There are two particular points with which I wish to deal. The first is the additional burden which has been put upon the motor industry and the users of motor cars—4½d. on petrol and one-third more on Purchase Tax. The Treasury appear to think that beer and tobacco have been taxed as much as they dare tax them. I do not know if people realise how much is raised from the motor industry in this country. Last year 9d. was put on petrol and a 33⅓ Purchase Tax on commercial vehicles which added to existing taxation, and these new taxes amount to a burden of £220 million a year. That is a very stiff figure. Motoring is talked of as though it was a luxury and a pastime only. It is very different from beer and tobacco. The majority of motoring is to provide public services and for business purposes. Pleasure motoring is only a small part of the matter. Business and public services use 85 per cent. of the fuel; only 15 per cent. is used for pleasure purposes. The Chancellor skated very lightly over this in his Budget speech. He said that it would be only a 2 per cent. rise and there would be no need to raise fares. Let him listen to what the ordinary people who know say about it. The director of public relations for the major provincial buses, privately owned, says that it is going to cost them £4 million, and that will mean an application for increased fares. This is on top of the 9d. put on last year, when again it will be remembered that the bus industry were asked to carry the burden and not to put up fares. Lord Hurcomb said that it would cost the Rail Executive £3¾ million and that does not include their provincial buses. The British Transport Commission, according to the "Economist," say that their costs will rise by £3 million and the Road Haulage Association are willing to join with them immediately in putting forward a demand that road haulage rates should go up. The "Economist" estimate that out of the £35 million which this tax is to raise this year, £30 million will be passed on to the consumer. I hope that the Chancellor has not persuaded himself that this will all be hidden away somewhere and is not going to add to the cost of living, because he has given one more little twist to the cost of living which is going up. One point has been overlooked. What about the people who use the light hydrocarbon oils as a raw material? They were originally the users of this oil. Industries concerned with paint, plastics, rubber, lino, etc., use light hydro-carbon oil. It was purely an accident that their raw material became fuel for the road user. They have to pay the tax. They think that it is hard that their raw material should be taxed because of this accident. We have an extra 33⅓ per cent. on private cars. It will not seriously affect the major manufacturer who has a large export business, but it will hurt the specialist firms who must have a home market. They were hit by the tax put on a car of over £1,000 two or three years ago. These people have now got going again. I would point out that we do not now lead in this field. We are proud of the fact that we produce "the best car in the world," but many people overlook the fact that we are nowhere when it comes to these high speed and high efficiency cars and that it is the French and the Italians who lead. Our specialist producers are trying to get into this field. They are the pathfinders in this sort of development. The high speed and high efficient engine is more highly developed on the Continent. These cars have a great bearing on the efficiency and progress of the ordinary car, and we are today making it harder for these people. Then it is very hard on the people who have had cars on order for four and five years, people who have waited patiently and have not tried any wangling. I have advised the people in the past to put their car on order and then to put on the pressure after waiting two years or so. They now say that after taking my advice they have to pay this 33⅓ per cent. extra tax There are also Members of the House who have come to me and have said it is very hard. Do not let the Chancellor persuade himself that it will not hurt, because it will. I now turn to the Chancellor's attitude towards industry over the Profits Tax. As we have said before—and we do not apologise for saying it again—we think it is a bad tax both from the point of view of the national interest as well as our own interest. The Chancellor is too sensible a man to believe what some of his friends behind him say, that industry exists for the benefit of the nation. That might be true if industry had been granted as a gift by the Almighty. But that is not the case. It has been created by personal effort, and those who hold this view are completely ignoring how industry was created. This is an old point that I have made before, but when I look back over my experience of the last 50 years, when I have seen inventions developed in industry, employing hundreds of thousands of people as a result, by personal effort and not merely as a present from someone, I sometimes wonder whether Members opposite imagine that we have reached finality and that there will be no more development in the next 50 years so that we can now be static and take the fullest advantage of what there is. But progress is going on all the time. Look at the United States and read the reports of the Anglo-American Productivity Council. I am connected with that organisation, and so my view may be prejudiced, but this is what I found yesterday in the "Observer":
That gives an idea of the effort that is going on to expand and develop, and of the approval for it. Members should remember that workers as well as management go over there under this scheme, and they are coming back and saying how much they were struck by the support the American workers gave to a system for making profits and paying dividends because they knew that this was the way in which they would be better off. In this country we seem to be trying to kill the spirit of adventure in industry, whereas our industry is the result of the sort of adventurers who created our Empire and Colonies in older times. Young men of later generations have been adventuring out into industry and have made us what we are. We shall need risk-taking capital in the future, but if these people are to be treated as robbers and parasites and denied an adequate return, what hope is there of getting it? We all know businessmen who have started in business and failed, and then started up again. There is not only the return on the money that they have begged, borrowed or stolen for the second attempt, but they have to take into account the money they have lost, and a 1 per cent. or 2 per cent. interest above Government securities is not going to tempt them. They will play safe, which is the one thing we cannot do if we are to regain our position. There must be a real profit instead of a bare return. The Chancellor approves of profits in a modified way, but he condemns dividends unless they are very limited. He has complained of the rise in dividends recently, but he should remember that there has been a "freeze" for three years. There was a wage freeze, and we volunteered that so long as it was in operation we would do our best to hold back on increases in dividends. That has been done to a large extent, but we now see the result. Wages are going up—we do not begrudge that after three years of the wage freeze, because they were bound to do so—but the freeze is still to apply to dividends. This additional tax will be a tax on dividends, whatever their size. My hon. Friend the Member for Flint, West (Mr. Birch), gave some figures which a Member opposite did not like. The hon. Member for Flint, West, said it was £3 million as against £1,500 million. I will give percentages. Dividends have gone up by 65 per cent. between 1938 and 1950, which is considerably less than the rise in the cost of living. But wages and salaries have gone up by 147 per cent. When you deduct taxation, it means that people who are trying to live on dividends have less and that those living on wages and salaries have more. Good luck to them, but do not penalise the other side. I maintain that shareholders have a perfect right to be considered just as much as the workers and the State when we come to look at the proceeds of business. We directors have not only a moral but a legal right to see that the shareholders are not ignored—it is part of our duty. They are not just a few wealthy men as some seem to suggest. If Members look at the lists, they will find that the majority have holdings of under £500. The bigger ones are institutions, insurance companies and pension funds, and they are only holders of small savings which they invest, so again it is the small people who benefit. At one of our annual meetings some years ago a shareholder got up and proposed the usual vote of thanks to the chairman for presiding and said: "I know that the first interest of our directors is for their customers." We do not apologise for that, and we should not be in business if we did not do so. He then said that our second interest was for the workers, and our third interest for the shareholders. He said, "I am glad, at any rate, that we get a place." As long as I am there I am going to see that they have their place because, as I have said, it is in the interests of the nation that they should."The contrast between the feeling in this country and the mood of expansive risk-taking optimism which pervades American industry has been the constant theme of the reports brought back by the teams which have gone over to study the American methods under the Joint Productivity Scheme."
We expected from the Press that the Opposition, after reflection, would take a rather more critical line today than in the first few days of the debate. But we have not had a venomous attack today; and there has been a distinct shortage of alternative proposals to the policy the Government are pursuing. The hon. Member for Edgbaston (Sir P. Bennett) referred to the Profits Tax. He seemed to suggest by his argument that the distribution of the national income between the shareholders and wage earners before the war was fair and just and that therefore the shareholders should be given an increase today. We on this side consider that it was not fair and just, and to suggest that we should now go back towards the 1938 distribution by leaving untouched the rising rate of dividends is something we cannot tolerate.When it comes to making over-all alternative suggestions to those put forward by the Chancellor of the Exchequer, the only speaker on the Opposition side who comes into the picture at all is the hon. Member for Chippenham (Mr. Eccles). He is the only one who has made a sufficiently large proposal to enable anyone to say that if he were Chancellor of the Exchequer we should be considering something completely different from what we are now, not merely in administrative economies, increased efficiency and so on, but something that would lead to results on a big scale. I am sorry that the hon. Member for Chippenham is not in his place, but no doubt his hon. Friends opposite who are present will intervene if I am being unfair to him in what I say. He did suggest a 10 per cent. cut in defence expenditure and all other expenditure other than that on the Consolidated Fund. He tried to make this proposal attractive not only to the Conservative classes and to the wealthier people, but also even to the ordinary workers. He did this by telling us that we are now debauching the currency. It is true that prices are rising in this country and all over the world. It is equally true that in quite recent months they have been rising faster both in this country and in the whole world than was the case in earlier months. This is indeed a new situation. The hon. Member for Chippenham deals with it by saying
By those words he is endeavouring to conjure up before our eyes those occasions in such countries as France and Germany when runaway inflation started through the debauching of the finances by the Government, which wantonly printed paper money and created a purchasing power far in excess of the goods available for consumption. These Governments met their expenditure not by honest taxes on the people, but by using the printing presses. That is what is meant by debauching the currency. The hon. Member for Chippenham intends his hearers to believe that the one single reason for rising prices is the financial policy of the Labour Government. I really wonder whether he seriously believes that that is true? He can say, of course, that devaluation has contributed to rising prices. I do not believe that has ever seriously been denied, though the speech by my hon. Friend the Member for Stechford (Mr. Jenkins) has put beyond dispute the fact that devaluation has now spent its force in comparison with the rise in prices brought about by world buying, partly since Korea for defence and partly before Korea by the re-appearance of boom conditions in America. Hon. Members opposite are quite right in saying that Korea began to make its effect quite recently, but the increased world buying started early last year with the upward trend in the level of American production, which began to show itself before the war in Korea broke out. I have listened in vain for any proposal from hon. Members opposite as to what they would do to stop the upward trend of world prices. It seems to me that the only measures which can be taken are measures—I will not use the words "of international Socialism" because it might lead to some misunderstanding—of international planning. There is certainly nothing in the whole armoury of private enterprise or of big business which could in any way reduce the rise in world prices which has gone on since early in 1950. It is in this situation that the hon. Member for Chippenham, after having accused the Chancellor of dishonesty and immorality, puts before this Committee, as I have no doubt he puts before the many public meetings which he has addressed, for he is now widely regarded as one of the propaganda wizards of the Torp party, the suggestion that the choice before us was—and I quote his words—"This situation is new. That is, it is new for Britain, though it has happened often on the Continent."
What is the mechanism by and through which there might thus be brought about a reduction in prices? It is a mistake to think that by making a 10 per cent. cut in our expenditure the rise in prices would be brought immediately under control. The process—as the hon. Member would be the first to insist—would have to work itself out under the laws of supply and demand; and a 10 per cent. cut would not affect supply, or the prices directly expected by producers. A reduction of 10 per cent. in Government expenditure would, of course, affect demand; it would mean that the War Office would order fewer tanks, the Air Ministry order fewer planes, the soldiers would get less pay, clothes for the soldiers would not be made on the same scale as now, children's allowances would be reduced, there would be a reduction in old age pensions while less schools would be erected. All these things are involved in the proposal made by the hon. Member for a 10 per cent. cut in Government expenditure. Demand would be reduced in all sorts of fields, but that would not lead straight away to any reduction in prices, because the manufacturer, the merchant and the shopkeeper would in the first instance still expect to receive the prices which they are expecting now."either rising prices or cutting civil expenditure."—[OFFICIAL REPORT, 11th April, 1951; Vol. 486, cc. 1129 and 1138.]
I am trying to follow the argument of the hon. Member but I cannot follow why, if he believes that a cut in Government expenditure would not have an effect on prices, it is necessary for the Chancellor of the Exchequer to have such a large surplus in his Budget in order to bridge the inflationary gap? It is because the Chancellor will not do the one that he has to have the other.
Hon. Members opposite have been advancing the argument that prices are being forced up not by world buying for defence purposes, but by alleged unbalanced Budgets. I am trying to argue that if Government expenditure is reduced and it does not reduce taxation, nothing is done to relieve the inflationary pressure. All that happens is that spending power is transferred from one group of people to another and there is no reduction in regard to demand. I am asking what is the process by which a 10 per cent. cut in demand would reduce prices because the shopkeepers and the manufacturers expect to receive the present day prices, and shortly they will want higher prices, because the goods then coming into the shops will be produced from raw materials which are more costly.In such circumstances prices will only come down through a reduction of demand as a result of business stagnation with shopkeepers' unable to sell their goods and refusing to order more goods, while factories close and bankruptcies begin—a process which includes an outbreak of large-scale unemployment. Such a policy might undoubtedly bring about a reduction in prices, but at a tremendous social cost. On this side of the House we can congratulate the Chancellor wholeheartedly that he has not followed that policy at all. I now want to ask the Chancellor whether in this Budget he has gone far enough in the opposite direction to that recommended by the hon. Member for Chippenham and his friends. Have we turned sufficiently towards a deliberate planning of our economy instead of hoping that fiscal measures will do the work? Have we gone far enough in lifting and saving the poor from the burden that may fall upon them? Have we sufficiently estimated the duration of the contest in which we may now be engaged? On this point I want to contrast two statements, one made by the Chancellor of the Exchequer and the other made by the hon. Member for Monmouth (Mr. P. Thorneycroft), and I want to express my agreement with the statement made by the hon. Member for Monmouth, and my very considerable disagreement with the statement made, or that I understood him to make, by the Chancellor. It was made in a broadcast on 6th March, not on the Budget but the one before that, upon the defence programme. After warning us of difficulties ahead, he ended with one or two optimistic comments and, among others, with the words:
He conveyed the impression that we were engaged in only a temporary spasm of effort, which will achieve a result and then will allow us to advance to the easy times of increasing our own standard of living as the main preoccupation of our own Ministers. I am bound to confess that on this matter I prefer the words used by the hon. Member for Monmouth who said in this House on 14th February:"This will leave us free to get on after a time with our interrupted work of building up prosperity and our own standard of living."
This is a theme on which I have laid emphasis and which some hon. Members may be weary of hearing. During the Budget debate last year I quoted the words of Mr. Bedell Smith, who was American Ambassador last year, and who said:"The basis of my argument—and it seems to me that it ought to be the basis of our discussions—is that, not for a short time, but for a very long time indeed, we are to be faced with the same sort of perils which confronts us today."—[OFFICIAL REPORT, 14th February, 1951; Vol. 484, c. 508.]
I believe that that is true. I possibly differ from the hon. Member for Monmouth in that he believes, or appeared to believe in the speech which he made on 14th February, that the nature of the effort that we have to make is always to be primarily an armaments effort. I hope and believe that we can escape from that, but I believe that we shall only escape from it in proportion as we begin to treat with immense seriousness, our obligations under such conceptions as the Colombo Conference. Here I say something in which I might be in agreement with part of what was said by the right hon. Member for Ormskirk (Sir A. Salter), when he asked the Chancellor on Thursday last whether we were not going to encounter difficulties with our balance of payments inside the sterling area. I want to ask whether we are not already running into that danger by the extent to which we depend economically upon receiving from our Colonial Dependencies a much greater value of goods than we now return to them? If we escape from the armaments burden I believe that it will only be by shouldering a greater responsibility of what we owe both morally and materially to millions of backward peoples all over the world. It is precisely because I believe that the contest in which we are engaged is not of a transient character, not something which has come upon us now and from which we may escape in 1953 or 1954, but something which will remain with us at least at all times relevant to our present economic or political calculations—that I must ask the Chancellor and his advisers: Are we not relying too much on fiscal measures and too lightly turning away from the difficulties which are involved in deliberate, positive, qualitative planning of our economic, social and industrial life? I want to give a couple of examples. If this is an effort for two years only, then perhaps rationing of clothes through the purse is the easiest way of doing it, but if this is to be a prolonged and sustained effort, then clothes rationing ought to come back; and the pegging of the price of utility clothing. If this is a short spasm of effort, then the present rather chaotic distribution of iron and steel may be the easiest way of doing it, but if this is a prolonged contest I think we have to learn the difficult business of deliberately distributing iron and steel where it is socially and economically—and for re-armament work—most needed. So one could go on, showing how, if this is a short term crisis which is encountering us, we can leave it as far as possible to the ordinary laws of supply and demand, and can afford to turn aside from the difficult problems of learning how to introduce more effective positive controls. It is only when one recognises that we are perhaps at the beginning of a contest which may vary and change greatly in its form but will not leave us at any time which is materially relevant to our calculations, that one realises also, against that background that, as a community, we must take the trouble and pains necessary to perfect all sorts of instruments of positive control, techniques of rationing and so on, which, in easier times, the right hon. Member for Woodford (Mr. Churchill) might encourage us to reject in the name of setting the best people free and enabling them to cut themselves whatever slice of cake they would desire."We have to face the fact that we were engaged in a contest of indefinite duration."
I shall not follow the hon. Baronet the Member for Gravesend (Sir R. Acland) in everything he has said, but I think he is right in saying that people are considering rather too lightly the length of the struggle upon which we are embarking and the steps that we may have to take.There is one aspect of the Budget to which I wish to draw the Committee's attention, and that is in regard to the manpower situation of the country. Listening to this debate, I have been astonished at the little attention which has been paid to what I believe is the real national wealth of the country. In this matter we are all talking about full employment. We are all glad that there is full employment but, at a time like this, does full employment really mean the maximum production which is necessary? Are the terms synonymous? I am not sure. In regard to the re-armament programme alone, it is interesting to note that 60 per cent. of the cost will go in salaries and wages. As we are rightly expanding our effort to maintain our export drive, which is vital for the country, and on top of that there is the re-armament programme, it must surely be of some importance that we should consider in this House—I know that it is not popular; in fact, it is most unpopular—whether we are really taking into account the fundamental facts of our present manpower situation. There are about 23 million people who come under the category of "fully employed," but a very small proportion of them are engaged in actual manufacturing operations. The real burden is falling upon the skilled men of the country.
It always does.
How are we facing the problem of the lack of skilled labour, which I believe to be the greatest menace the country has to face? One of the reasons for it is that in the past we did not have more technical schools. The direction of education in this country has not been along the right lines; it should have been designed to provide the willing individual who wants to get on—at an age when he can absorb it—with the knowledge that he ought to possess if he is to compete with the skilled men of the country.We are all agreed—I imagine we are, quite irrespective of party politics—that the eventual strength of the country either in the preparation for war or in war, depends entirely upon its industrial capacity. It is no use talking about formations and armies and all the rest of it; what counts in modern conditions is the industrial capacity of the country to maintain those forces. On the most mundane side it is important to ensure that we are not throwing money away, but I believe it to be far more important that we should be certain that the equipment of our men will be more than equal to whatever they may have to meet. As the President of the Board of Trade told us today, it means that this country is faced with the need for a most terrific effort, which I do not believe the country will be able to make unless we in the House of Commons do all we can to tell the brutal truth and hide nothing. If we have such a decrease in manpower as this and we want to increase our production, surely the time has come for us to consider not only machines and management but also men. Those three things, taken together, will give us the product that we need if production is to be developed on proper lines. As the President of the Board of Trade said, very recently there has been a tremendous change in the outlook of a great many of those engaged in industry as a result of their visiting the United States and seeing what modern methods are. A large proportion of our most expensive machine tools are today being manned by only one shift. Some of these tools cost as much as £10,000, and in order to meet the required re-armament production we are proposing to spend the taxpayers' money in duplicating those machines simply and solely because they are being worked for only one shift instead of two. If we are to meet the situation, we must face the need for an increasing amount of shift work. I am against night work if it can possibly be avoided, and there are disadvantages in double-shift working on expensive machines unless maintenance is extremely good, because if one man hands his machine over to another operative and anything then goes wrong, it is always the fault of the other man, whereas if anything goes wrong when only one man operates the expensive machine, there is nobody to blame except him. If this problem falls on management it can be got over. There are other points to which someone ought to draw the Committee's attention. There is the decline in the number of young men. How many people realise that in the next 10 years the field of recruitment to the Services will fall from 300,000 to 200,000. The figure of 200,000 is insufficient to meet the needs for which we are spending all this money. Where are we to get the extra manpower? It is time to think about it. Is it possible to help the backward people in some of our Colonial Territories by giving them the technical education to prepare them to help to supply the manpower necessary for any considerable increase in production?
That will take a long time.
It is a long-term problem. We must remember the last war. Some of these men became highly efficient. They returned to the Colonies and they are now the leaders of progress in their villages. That is a very fine thing. One of the things we ought to consider very carefully is how we can proceed on those lines.Still more serious than that is the decline in the number of the younger men in industry. The burden is falling on the older men. Since the end of the war there has been an increase of roughly three million people in work as the result of full employment. It is interesting to go into the figures. From the monthly statistics I find that there are 225,000 more in basic industries, 1,600,000 in manufacturing industries, 100,000 in agriculture, 50,000 in the building trade, 700,000 in national and local government, and 270,000 in the Services. Roughly 500,000 out of the total are engaged in producing equipment for the Services. In 1939 there were 1,250,000. I should like to ask the President of the Board of Trade this question: If we remove the 1,250,000 who, I believe, will be solely engaged in the task of providing stores and equipment for the Services by 1953 or 1954, how many will that leave in industry in order to maintain the export drive? I am very much concerned about one thing. I do not know where the manpower will come from. I should very much like someone to tell us before the debate ends that somebody is thinking about that. The bulk of the big manufacturing industries concerned with rearmament are concentrated in the Midlands and there is nowhere from which to draw more manpower except the Potteries, but we want to maintain the Potteries because their's is one of the most valuable exports that we have. The President of the Board of Trade spoke of the importance of maintaining our position, especially in dollar countries, in areas where our exports have established themselves and where we dare not lose the market. It is of the greatest importance that we should do everything that we can to maintain the export trade with dollar countries, especially where we have got into the market after a very great struggle. If it is true that in the age groups about which we are talking there will be a diminution of about 500,000 workers in the next 10 years owing to what I call the "re-entry bulge," how are we to get the labour until we have considered what sort of labour, such as women labour, we can get. Is it not time to begin considering how we are to use it and, even more important, how we are to make our new tools of such a type that they will be more fitted for women to use? How many hon. Members remember going round an armaments works during the war and seeing women straining themselves to reach out on a machine tool because there was a fixed seat? It is very simple. All that is wanted is an adjustable seat so that a woman's arm can reach out without fatigue. Those are all enormously important problems which ought to be tackled now before it is too late. I believe that the increase in the number of people in industry between the ages of 50 and 60 will be 20 per cent. during the next 10 years, while the fall between the ages of 20 and 40 will be in the nature of 6 per cent. These are matters of supreme importance and are part of the Budget, as I see it. I think the manpower budget in the Economic Survey is most useful, but I regret that this year, for the first time in seven years, the statement on defence has not been published. That was a valuable document, for it gave a picture of the three Services together and their requirements. I think hon. Members ought to know, whatever the figures are for the Services, that it looks now as if we shall need to have at least 25 people employed in maintaining adequately one person in the field. That is an enormous figure and it is, therefore, high time that reconsideration was given to the size of our formations and the maximum effort we can carry through. Are we quite sure that we can sustain this effort with our population trends as they are? I believe a quarter of a million foreigners have come to this country and are now engaged in industry; 100,000 are Poles and the balance are European Volunteer Workers. It is unlikely that we shall get more. What are the industries from which we can draw? We cannot draw from housing; indeed, we must put more into housing if we are to man many of our dispersed factories. Is that being worked out? We cannot draw from transport. We cannot spare a man from agriculture. The country does not know today what dire straits we shall be in unless the weather changes. It will throw this Budget completely out. It is the most serious situation, as most people in agriculture realise. I believe that increased productivity is the only way ultimately to reduce the cost of living. Are we absolutely certain in these days that most people would not prefer to give a little more time to work and pay a little less in taxes? If a little more time is given to work, a man will not be bored stiff because of enforced leisure. In the old days when people were good craftsmen they liked their work. We must try to increase incentives for a voluntary increase of productivity. The British are a peculiar people in many ways, and not least in the fact that the average family in this country spends more on things other than food, such as tobacco, drink, gambling and entertainment. The people of nearly every other country spend relatively more on what they eat and drink—the latter in moderation—than on these other things. Think of the enormous sums which go to football pools and so on, in this country. I suggested 20 years ago in this House that we should forget our conscientious qualms and consider a defence premium bond scheme. Such a scheme brings in large sums of money for the French Treasury. In those days it was considered a bad idea, but it has the advantage that nobody can lose his money. It is perfectly safe, but people get a lower rate of interest, while the extra half per cent. amounts to a large sum if there are 500,000 or a million in a premium bond issue. That little extra gives people the premium which is far more attractive than what they may get from some of these firms where their money is at risk. It would canalise into the national purse something which I hope we are honest enough today to admit is popular with the British people, that is, having a "flutter" occasionally. Then, how far are we sure that all our efforts will be proof against what is known as "Fifth Column" sabotage? Unfortunately, it is an obvious fact that those people who are responsible for all our difficulties today, who are at the bottom of all our troubles in preventing the advance of the standard of living of this country, will not lightly stop their efforts to frustrate all we do. The industries which are most affected by these things happen to be the industries most vital to our existence, especially transport—particularly docks and harbours—some sections of the engineering trade, and some other kindred industries. Each hon. Member of this House knows quite will—although he does not say so publicly—that it is now obvious that there is a definite plot against the trade union leaders of this country in those industries. It is no use ignoring the fact. I believe it is our primary duty to be vigilant about these things and to consider how far they can be checked. I was in the House when Sir Aucland Geddes carried out his "axing." Nobody wants a Geddes "axe" again, but we want to reduce expenditure, we want to increase production, and we want to encourage men to do an honest day's work and earn honest pay. To do that we must consider whether we are right in these days to pay more to a man engaged in repetitive work than to a highly skilled engineer who is doing an individual job. That would have to be dealt with by labour itself in consultation with management. I find it difficult to believe, however, that under modern mass production methods a man who screws in nuts—heaven knows how many nuts each day—should be paid more than a man making equipment for a machine tool, which is like making a watch, something delicate and strong at the same time and so good that it is a work of art. That is wrong. If we could get highly skilled work rewarded better than dull routine work, that would do more than almost anything else to encourage production. There is nothing so dull for anyone as doing the same thing every day and knowing that he can never be rewarded for showing a little more of his personal skill on the task on which he is engaged. These things are psychological, and it is very important to encourage young people to go into industries which are interesting. It is highly important that all who are engaged in management should do everything to encourage technical education within their own industry, and through the assistance, where need be, of the education authorities. It is heartbreaking to have a young apprentice trained and, just when he has become efficient to see him called up for National Service. That may be right, but in a time like the present we are losing the young skilled men, and they do not come back into industry, which is crying out for their help.
I am very glad that you have called me, Sir Charles, to follow the hon. Member for Abingdon (Sir R. Glyn). He has delivered a thoughtful speech and his argument upon manpower will commend itself to the whole Committee. I want to discuss a topic which is in a way closely related to that dealt with by the hon. Baronet. Before doing so, however, I should like to say that where there are so many applicants—or suppliants—I am fortunate in catching your eye, Sir Charles. During three days as I waited listening and waiting to speak, I have pruned and reshaped my notes in the cause of brevity, and I do not know whether at this moment they are legible even to me.I want to speak about retirement pensions, concerning which I hope to make a few constructive suggestions. Before I do so. I must deplore and repudiate the speech made last Thursday by the right hon. and gallant Member for Leicester, South-East (Captain Waterhouse), in which he advocated a policy of cuts on school meals and social services and on other things. I should like to see that speech repudiated, not only on this side, but by hon. Members opposite also. That speech was not only most reactionary but was the longest back bench speech that I have heard in the House. I shall not, however, allow it to divert me from the one topic that I want to discuss. The whole Committee—except perhaps the right hon. and gallant Member for Leicester, South-East—are, I am sure, glad that the Chancellor has recognised in his Budget speech the claims of the elderly to better treatment. It is necessary to tell the right hon. and gallant Member that they are the people who, when younger, were the workers of the country, were the wealth producers, who, now in their old age, are entitled to relax and to have access to the good things of life just as fully as they had it when they were actually producing those things, and just as fully as the younger people now enjoy to a large extent the fruits of the labours of those old people. I join with the hon. Member for Abingdon in saying that possibly the services of the elderly may again be required because of the shortage of manpower from which we are at present suffering. For these old people, time is fleeting. They cannot afford to wait, as the young and the middle-aged can wait. I am sure that the Committee will join with me in my pleasure that the Chancellor in his Budget has taken notice of their requirements and their deserts. For the purpose of the constructive suggestions which I hope to put before the Committee, I propose to divide the beneficiaries under the old and new schemes into those old people who can work, and those who are unable to do so. In this connection, I was glad that the House on Friday last unanimously decided
I was glad that the Minister when replying to the debate on that occasion made it clear what was his opinion. He declared that in former times"that active steps should be taken by His Majesty's Government to encourage the retention of the middle-aged and elderly in employment."
In these days of full employment, that is so no longer. The Minister went on to make it clear thatit was almost an act of patriotism for older people to retire to make way for the young…"
That brings me to my first suggestion: That the ratio of male to female mortality should be reconsidered in relation to pension rates. Pensions are based on a later retiring age for men—namely, 70—than for women—namely, 65. This is on the assumption that men live five years longer than women, are that much stronger, retire that much later, and die five years later than women. That is quite contrary to the fact; that assumption is completely wrong. First, men do not live longer than women. Men die earlier than women, and statistics prove that that is so. Secondly, whatever be the difference in mortality between men and women, it is not a five years' difference, and it is neither regular nor certain enough to justify disparity in fixing pensionable age. Statistics show quite a number of things in this matter, and I shall trouble the Committee with only a few. They show that in most countries the male death rate exceeds that of females. This has been accurately determined in this country and elsewhere for the last 100 years. Statistics also show that the fact that dangerous occupations are pursued mainly by men increases earlier death rate amongst men. But apart from dangerous occupations, men are biologically inferior to women and die earlier. In 1926, the death rates for males in England and Wales were higher than for females in every age group except that from 10–15, at which the rates were equal. From the ages of 35–45, male mortality was about 33 per cent. higher than that of females and from age 45 upwards the difference was about the same. I have with me a table showing percentages of mortality from 1876 to 1926, which gives the respective ages of death of men and women per 1,000 of the population and bears out the argument which I have ventured to address to the Committee. I shall not trouble hon. Members with details of this table. If I were a Minister answering a Question, I might be able to say that the table would be circulated in the OFFICIAL REPORT, but I understand that this is not done by mere back benchers when making their speeches. The view I am putting before the Committee has authoritative scientific support. Recently, Mr. Martin, a member of the Medical Research Council's Statistical Research Unit, read a paper on it which pointed out:"it would be the height of foolishness for any Government to try to force people to remain in industry against their wishes.…"—[OFFICIAL REPORT, 13th April, 1951; Vol. 486, c. 1394.]
If, as I think it is, this is accurate, it surely shows that the pension rates for women should not be paid earlier than for men, but rather the reverse. This is a very important topic, which could be pursued at much greater length than that for which I have opportunity now. I will pass on to my second submission, that the increases in contributory pensions are not enough, particularly for those who cannot supplement them by working. The Chancellor undoubtedly proposes great improvements, better than anything known before in this country. To men over 70 and women over 65 he offers to increase pensions from 26s. for a single person to 30s., and from 42s. for a married couple to 50s. He allows them to earn up to 40s. instead of 20s. a week as hitherto. These figures will work out like this: a single person will have a pension of £78 and could earn £104 a year, making a total of £182 a year, or £3 10s. a week, while a married couple will have a pension of £130 and could earn £208—I believe I am right in supposing that they would both be allowed to earn—making a total of £338 a year, or £6 10s. a week. The greatest improvement of all is the provision for the widowed mother who gets three benefits. If she has one child her pension increases from 33s. 6d. to 40s., she gets 2s. 6d. for every extra child after the first, plus family allowance, and her right to earn is increased to 40s. a week. These are undoubtedly great improvements and, in normal circumstances, they would be enough, but we are not living in normal circumstances. I submit that these pensions are not enough for the old people who cannot afford to wait and have no other means. They look to the Chancellor now for salvation from hardship before they die. My third submission is that the basic pension should be increased to sums equal to the rise in the cost of living. I suggest that each old couple and every old person is entitled to have his or her separate home. They should not be forced to live with a son or daughter and the son or daughter should not be forced to have them. Doing so endangers the happiness of the old person as well as that of the son or daughter, but, with the present cost of living, they cannot afford their own homes without Public Assistance, having regard to the cost of the rent, food, clothing, transport and luxuries—if they are luxuries—such as radio, cinema, tobacco and other relaxations. Moreover, the standard of life has risen for everyone and the old people are entitled to take advantage of the improved standard of living just as much as the young. The old should not be treated as a class apart. They are part of the community, part of us. If I may venture, not exactly on a personal argument, but on an argument which is personal to my constituency of Aberdeen, I would point out that the facts I have adduced apply with particular force in the far north of Scotland where transport rates increase the cost of living more than they do in the south. There is not a flat rate for transport, there is not a flat rate for the cost of living, but there is a flat rate for the old age pensioners and their condition should be improved in this respect. My fourth suggestion is that the pension should be paid according to a sliding scale. The Chancellor recognises that pensioners fall into the class of persons dependent on small fixed incomes, dependent on price variations and that they are ready victims of an upward trend. To use his own words, he admits they"Men may wish to attribute their higher mortality to their harder work but, in the last two decades, when conditions of work have greatly improved and hours of work shortened, the sex mortality rates, instead of favouring the male—or at least showing a smaller difference between the male and the female—actually show a faster rate of decline for female mortality."
In order to meet this could he not devise a sliding scale? The idea of a sliding scale has long been used in the collection and imposition of Income Tax and I am informed that it is used in the iron and steel industry for fixing wages according to the price of steel. I suggest that this should be done in the case of pensioners. A pension is valuable, not only as money, but as a means of access to the good things of life. Once again I say the pensioners are entitled to have that access. I have two more points to make, and, as I have taken so much time, I shall not labour them, but just mention them to the Committee. One is that pensions should be paid to men at 65 instead of 70 for the reason that a man has earned the right to pension at that age. The Civil Servants and others get it and policemen get it very much earlier. Why should industrial and commercial workers not have the same consideration in their old age? To act otherwise is invidious and illogical. At 65 a man's faculties require rest, particularly if he has been engaged in heavy industry. I do not say that a man is beyond working—far from it. At that age a man begins to require some rest and this should be recognised in any assessment of pensions. My last point is that the increases in pensions should not be postponed to 1st October, 1951. They should be made payable at once because the old age pensioners need it now. They are now paying the increased cost of living and the increased pensions should be paid now so as to give them the opportunity of adapting themselves to the environment in which they live. I commend the Budget to the Committee. I think the proposals are fine proposals, but I hope the Chancellor will look in a somewhat more generous way at the proposals in regard to the old age pensioners and give them some of the advantages I have advocated."suffer most from the price increases imposed upon us from outside and aggravated by a rise in costs internally."—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 848.]
Much as I should like to do so, I do not intend to follow the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) into the intricacies of the ratio of mortality figures. All I could understand from what he had to say was that he seemed to think we should do something about it, but what we could do about the fact that some women live longer than men I really do not know. As I have agreed to a very strict time limit, I will come straight to the topic with which I wish to deal.In the course of his Budget speech, the Chancellor of the Exchequer made specific reference to the bank credit arrangements which affect the financing of plant and machinery and all the other commodities, many of which are acquired under hire-purchase arrangements. This is a subject of immense importance, both socially and economically, today. In the course of my profession I meet this problem in many ways and those interested in these things tell me that the Government make a wrong approach to the matter altogether. The Committee no doubt know that the financing of hire-purchase agreements is strictly controlled by the Treasury, who have laid down a policy by which the hire-purchase companies have to be guided. It seems that the old idea still exists in the minds of those responsible that hire-purchase is used merely for the purchasing of unproductive luxuries. It may well have been so in the earlier days; motor cars for pleasure and radios were perhaps the two outstanding examples for which hire purchase was used. But under modern economic conditions these finance companies have become part of the banking institutions of the country. A large amount of plant and machinery for factories is acquired by hire-purchase, and it is particularly illogical that the Government should call for higher productivity and at the same time make it more difficult for those factories to acquire by hire-purchase arrangements the new plant they require. An enormous amount of plant and machinery is acquired by this method, and I am told that the hire-purchase companies are having to turn down applications to the extent of hundreds of thousands of pounds at a time made by people who come to them requiring advances to start factories, many of which are required for armament work. One example relates to a concern which has been asked to provide parts for jet machines. It has applied for hire-purchase facilities which the hire-purchase companies are unable to provide because of the Treasury control which limits the finance in an instance such as this. The idea that there must be an overall control over hire-purchase companies is really quite wrong. I ask the Government to have a new look at this problem. One of the matters much affected by hire-purchase agreements is the provision of furniture. It is quite unnecessary for the Treasury to exercise control of the hire-purchase companies in that respect because the provision of furniture is already controlled by the allocation of materials and by price control. I am told that non-utility furniture hire-purchase contracts are really of no importance because they are usually undertaken by the more expensive firms, who are able to do their own hire-purchase financing. So far as the financing of utility furniture hire-purchase contracts is concerned, the Government are exercising a quite unnecessary fetter, and are in many cases preventing young people from getting married. Young people can only set up a home—if they are fortunate enough to find a house—by furnishing it under hire-purchase arrangements. If they go to the hire-purchase companies and try to do that they find a very strict Treasury control has been imposed, so they cannot get the furniture they require and they cannot get married. That is totally unnecessary because all the necessary control for hire-purchase agreements in the furniture business is effected by reason of the fact that the materials are allocated and the prices are themselves controlled. Therefore, there is an absolute maximum that can be supplied. The whole object of Treasury control is to check inflation, but that control is not needed in respect of utility furniture hire-purchase agreements because that business is already under control by the check on materials and prices. Then there is the motor car business, in respect of which I think that the approach of the Government is also rather out of date. It is still based on the assumption that people who want the purchase of motor vehicles financed intend those vehicles only for pleasure. That really is not true. The present state of affairs is that some 85 per cent. of the vehicles supplied are either commercial vehicles or are private cars used for business purposes. It should be made easier for people to get vehicles of either kind which are required for business and commercial use. Here again, this Treasury control of hire-purchase, in a field in which the Government are asking for increased production and activity and an increased carriage of goods in the business world, is limiting that effect. I understand that this problem has been widely considered in America, where hire-purchase is a far more extensive feature of the economy than it is here. They have there a scheme which they call the W Plan, which I am advised would completely meet the Government's requirements in this matter. There must be some check if inflation is to be prevented. I am told that this plan, by which there is a minimum deposit and a short period of repayment, is really sufficient to provide all the control that is required. What is needed today is to ensure that hire-purchase contracts are not inflationary by allowing a very small deposit at the beginning and a very long period of repayment. The American system meets that requirement completely by requiring a minimum deposit and stipulating a short period of repayment. I am told that if the Treasury would really reconsider these problems with that in mind, they could get all the necessary protection they need to prevent inflation while at the same time they would greatly assist production by allowing the financing of plant, machinery and vehicles used in business, and also ease that social problem relating to furniture to which I have referred. I hope that the Government representative now on the Front Bench will convey to the Treasury the necessity for an entirely new approach to this problem. It is not enough merely to continue the Treasury control which they have exercised in this matter heretofore. It needs further and new investigation, and if such an investigation is undertaken it will prove profitable to the community.
The whole Committee is indebted to the hon. Member for Abingdon (Sir R. Glyn) for the thought-provoking speech which he has made tonight. I was particularly interested in what he said about productive manpower. One of the matters with which we have to deal if we are to get more men actually engaged in productive work is to overcome that snobbery which has hitherto attached to black-coated jobs. In fact, I sometimes think that what we need in this country is a new standard of values altogether as to the usefulness of human effort, and unless we get it we shall not be able to overcome the problems, some of which have been stated tonight by the hon. Member for Abingdon.Perhaps the greatest contribution made in that direction has been that made in recent years by my right hon. Friend whose passing we are mourning today. He gave an altogether new dignity to manual labour and to the manual labourer. Much more needs to be done in that direction, in which my right hon. Friend led, so that we shall be able to achieve the objectives which the hon. Member for Abingdon set before us. In listening to the Budget debate, I have been surprised, as indeed I have often been surprised before, by the extent to which hon. Members opposite hold the Government responsible for every untoward contingency, it would seem, that arises in the life of our nation. We are responsible for the rise in the cost of living. We are responsible for the trains being late. We are responsible for the economic effects of the weather. On the subject of late trains, I was interested, in travelling to my constituency last Friday, to hear some of my fellow passengers say that the trains had always been late since we had a Labour Government and the railways had been nationalised. They seemed not the least nonplussed when the train ran into North Road Station, Plymouth, five minutes before time. Turning to the question of the cost of living, and the Government's responsibility for it, it seems to me that hon. Gentlemen opposite, or some of them, have completely forgotten that half our food has to be imported from abroad; that there are only two industrial raw materials of which we have sufficient in our country for our needs, namely coal and china clay; and that we have to import from overseas a large proportion of the rest of our industrial raw materials, and in many cases the whole of them. They apparently lose sight altogether of the fact that nothing that this Government can do within this country can control the prices of those raw materials which we have to bring in from abroad. Nor do they take account of the fact that the cost of living in many other countries has gone up much more than in this country. It has gone up in those countries where there are Governments more near to the hearts of hon. Gentlemen opposite than the kind of Government which we have today in Britain. That is so not only in countries in Europe, to which reference has been made, but also in some countries of the Commonwealth. I wish to deal with one or two problems arising out of that part of the Economic Survey which has to do with this year's building and civil investment programmes. No one will deny the need for retrenchment in civil investment in view of the need of re-armament for the preservation of peace. But we need to be careful to see that this policy of retrenchment operates in the fairest and least harmful way to our community. Everyone in the Committee will welcome the decision to maintain the rate of 200,000 new houses to be constructed this year. We welcomed the announcement earlier today by the President of the Board of Trade about supplies of softwood becoming more easily available than in the past. We all regret that the number of houses to be built cannot be extended at the present time. On the other hand, we have to face the fact that there is a large number of local authorities who are not at present able to build up to their allocation. Many of those local authorities are situated in Conservative-dominated areas. The point I wish to make is that in this period of retrenchment the Government should take steps to see that the houses which are built go where they are most needed. All areas are not equally in need of new homes. There are four types of areas which seem to me to demand special consideration; areas of new industrial development, mining and agricultural areas and areas of major war damage. In these days when we cannot have the number of houses built which we would like because of other needs, I want the Government to see that the special needs of those areas are given a high priority. In order to do this, it may be necessary to attract building labour into those areas, and I suggest there are ways by which that can be done without resort to direction of labour. There is the possibility of a limitation of building licences in nearby areas which are not in such great need of houses. There could be improved incentive schemes within that part of the building industry engaged on house building and a larger allocation of scarce raw materials to the areas where houses are most urgently needed. What matters so much is not how many houses are built, but that the houses which are built shall be built in those areas where they will render the greatest possible relief to those in need. I should like also to draw the attention of the Committee to the particular need of war-damaged areas in relation to the civil investment programme. These areas have suffered very badly, not only during the war years, but in the years since the war. It is imperative that the rearmament of our country should not impose a new and heavier burden upon those areas where war damage has already made the life of the people so difficult. I do not apologise for a little special pleading in this regard. The courage and endurance of these towns, both during the war and since, has been magnificent. Those cities and their citizens are still badly disabled, both financially and physically. Consequent upon the damage caused by the war, there has been a considerable reduction in the rateable values within the areas concerned. Up to this year the Treasury has been helping the worse damaged of those towns by grants to assist the rates; but those grants have been diminishing as the years passed, and this year they have been stopped altogether, except in the case of the Borough of West Ham. What these war-damaged areas want, however, is not so much continued rate aid as an opportunity to build up their rateable values once again. The Committee may not realise that a large number of those towns have not yet been able to restore their rateable value to the pre-war figure. I have here a list of such towns and the degree to which their rateable values today fall short of what they were before the war. In the case of Bootle, the rateable value is still down by 5.6 per cent.; in the case of Manchester, 5.5 per cent.; Plymouth, 7.6 per cent.; Southampton, 5.9 per cent.; Swansea, 4.5 per cent. These war-damaged towns should have an opportunity through reconstruction of regaining this rateable value and so relieving the population of some of the heavy financial burdens imposed upon them because of the destruction caused by enemy action. It is, therefore, important that these reconstruction programmes should be continued and, if possible, extended. It is important not only that buildings at present going up should be allowed to continue—I believe that is the intention of the Treasury and the Minister of local Government and Planning—but that there should be no break in the programme of reconstruction throughout these areas. I ask the Government to consider particularly in relation to both housing and the civil investment programme the needs of these particular areas and to take steps to see that everything is done this year that can be done in order that their housing and reconstruction programmes shall not suffer as a result of any economies which we are forced to make today.
I am sure the hon. Lady the Member for Plymouth, Sutton (Mrs. Middleton), will forgive me if, in the interests of others who wish to speak, I do not follow her in her most interesting and thoughtful contribution. There is a great deal I should like to say about this Budget. I join with those who congratulate the Chancellor on a most skilful job of presentation, but believe that many of us, thinking over this Budget in the weeks and months to come, may realise that it has fallen far short of what is really necessary for our country in the period in which we are living.It is rather shaking to one who knows little about economics and is most amateur on higher economics, to realise that last year we had a surplus of £720 million and still found ourselves living in inflationary conditions. It looks as if Budget surpluses and high taxation are not necessarily an insurance against inflation. I should like to develop that point at some length, but I have not got the time this evening. I want to concentrate, on the implications of one small part of the Budget statement where the Chancellor announced his decision to suspend initial allowances. Most of what I wish to say must concern many industries, but all of it is of immediate and critical importance to two great industries which I think everyone will agree are of high importance to the economic life of our country and of vital importance to its defence. I hasten to declare an interest which I have had to declare before when about to speak about shipping or shipbuilding. If the points I propose to raise seem more suitable to the Committee stage of the Finance Bill, I should explain that I raise them now because the Chancellor's statement is causing real disturbance and alarm, and a good deal of uncertainty and confusion throughout the whole shipping and shipbuilding industry. It is an uncertainty which could be really serious in its results if it was allowed to continue even during the weeks which must elapse before we debate the Finance Bill. The Committee will recall that the special initial allowance of 20 per cent. was introduced by Sir John Anderson in 1944. When he introduced that allowance he said that it was for the purpose of helping industry in carrying out its post-war re-equipment. That allowance was increased to 40 per cent. in 1949, when Sir Stafford Cripps referred to the need for helping to bridge the gap between allowances given on old plant and costs of replacement at the higher costs then ruling. The trouble is that that was in 1949, and costs are continuing to rise. Needless to say, a great many firms, and above all shipping firms, whether dry cargo, passenger or tanker owners, have laid out their long-term replacement programmes and arranged their finance on the assumption that the initial allowance will continue at least for some years to come. I should point out that the period which elapses between drawing up a replacement programme, placing the contracts, beginning to build, and the actual delivery of a ship may be a very long time indeed. I can only emphasise that the Chancellor's statement as it stands is already causing many firms to look with considerable alarm at the programmes they have already started, in some cases even having signed contracts and having keels laid for new ships. Of course, we agree that the suspension of the initial allowance is an ingenious and effective method of restraining new capital expenditure. In present circumtances we concede that some restraint may be necessary or desirable. I have no time to comment, as I should like to, on the implications of that over the whole of our economic life. But certain points emerge relating to the shipping industry which I suggest require most urgent consideration. Since 1945 the British Merchant Marine has been rebuilt to the extent that the total tonnage is now equivalent to what it was in 1939. It is important to realise, however, from the point of view of our national defence that the distribution of that tonnage is very different from what it was in 1939. There has been a considerable increase in tanker tonnage but the number of dry cargo ships and also passenger ships which will be in urgent demand if trooping is necessary on a big scale, are not by any means rebuilt. My first main point is to ask whether the Chancellor really intends by this Budget to place a further restraint on the rebuilding of the British Merchant Marine. It seems almost incredible that that should be so. We have only to look at the Economic Survey to realise the importance of shipping earnings in our economic structure. I do not think anyone will disagree when I say that the Merchant Marine stands equal in importance with the three great Services in the question of national defence. There should be no doubt about it, if these initial allowances are suspended at a time when costs are excessively high already and still rising, it must have a profound effect on new British construction. What is more, other nations will jump in just as fast as they can to take advantage of any slowing down in the rebuilding of the British Merchant Marine. I hope that the Chancellor will be able to make it clear that the position of shipping and shipbuilding in relation to defence is recognised by the Government, and that he will indicate his readiness to meet this industry at the earliest opportunity to consider the full implications of the position. My second main point applies not only to shipping. It has a much wider application. The Chancellor has given a year of grace on this question of initial allowances. He said that expenditure incurred on or after 6th April, 1952 would qualify only for the ordinary annual depreciation allowances. The question that arises is what will happen to contracts already signed under which work may already have been begun and instalments paid but under which delivery will not take place until well after April, 1952?
Why not pay in advance?
No. One cannot do that, unless the Chancellor will agree. If one suddenly altered the payment it would be open to very great suspicion, especially in the eyes of a tax inspector. At this point I must emphasise, so that no hon. Member will think I am under any illusion about it, that over the lifetime of a piece of equipment, whether it is a ship or anything else, provided the venture proves financially successful, initial allowances do not make any difference. The whole point is that in present conditions of steadily rising prices, with the inability to obtain fixed price contracts and uncertainty as to delivery dates, the question of initial allowances is a determining factor in making decisions which must in any case involve serious risks, and it is an important factor in arranging the necessary finance.The fact that the Chancellor has given a year of grace shows that he recognises some of the problems involved. I should like to ask whether we can be assured by the Chancellor when he replies, or at some early date afterwards, that he will make it clear that whatever else may happen on this question, special consideration will be given to exceptional cases where contracts have already been signed but delivery and final payments will not take place until well after April, 1952, because that will be the case with many shipping companies. Without some assurance of that kind there is every reason to fear very serious complications in various projects which are already under way and which are of vital importance to the defence effort. It is not only shipping which is affected. I can think of two big dry docks which are under construction and which are urgently needed to accommodate the new, huge tankers, reaching up to 22,000 tons and even to 28,000 tons, which are building and which will be vitally important in the event of war. Finally, I turn to one other point affecting not only shipping. I think I know the answer, but there is a good deal of doubt about this point outside. In his statement the Chancellor said:
That could be taken to imply that there will be a yield of £170 million in the next fiscal year 1952–53. It has been taken to mean that. Could we get it absolutely clear that the yield can appear only in the fiscal year 1953–54, because if that is not so it must imply that expenditure incurred between now and April, 1952, will lose the benefit of the initial allowances. I think there is real doubt about this. My reason for raising these points this evening is that if these doubts are left for the weeks which must elapse before the Finance Bill is debated in detail, then serious mischief may result not only to the shipping industry—that is important enough—but also to a good many other vital industries."…there will be no yield this year from the suspension of the initial allowances. In a full year the yield will be £170 million."—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 843.]
I shall limit my remarks to a few main headings and, if the hon. Member for Renfrew, West (Mr. Maclay), will pardon me, I shall not follow him into the points which he has put before us tonight on the subject of the initial allowances, except to say that anybody who is interested in the commercial development and the future security of the country must appreciate the virtue of what he said and the necessity at least for making a firm decision on this matter so that those engaged in construction and commerce may know where they stand.We listened to the President of the Board of Trade with some apprehension this afternoon because he drew attention in a very frank manner to the difficulty which is likely to arise if certain raw materials are not available to us in the later months of the year and in future years. He mentioned, in particular, cotton, zinc, copper and sulphur. We hope that what he said today will be heard in America and that the Americans will give us what assistance they can to avoid what could be a very serious position. It could result in some unemployment in this country, if a favourable decision were not made and supplies not made available. The hon. Baronet the Member for Abingdon (Sir R. Glyn), in a very useful speech, referred to the question of manpower, and I want to say a few words on this subject. In the course of his remarks he pointed out how important it was that we should maintain our industrial production. He said it would be a complete waste of effort and time, even if we were only preparing for war, if there were not adequate resources in the civilian life of the country. I think we all agree on that point. The hon. Member for Abingdon mention, in passing, that in the North Midlands the manpower position was already tight. He spoke of the contribution which the Potteries are making to the exports of this country. We have a very serious problem in North Staffordshire, where great anxiety exists about the manpower position, because upon our doorstep we have two great Royal Ordnance factories which many industrialists and trade unionists fear will compete for the manpower available in the area. What is happening there is happening elsewhere in the country. We must maintain our exports in these valuable commodities, and if we are to do that, we must reassure the people who are doing the job that they will be able to carry on. If they are to be asked to expand their production they must be given further assistance. When we look at the manpower position throughout the country we see that there is scarcely any "slack" at all. Some 300,000 people are not employed, but if we examine the figures, we find that many of them are elderly or disabled, as was stated in the House on Friday. In my own area of North Staffordshire we have little unemployment, but such unemployed as we have are people who because of some disability have come out of the mines, out of industry, and out of the potteries, or who suffer congenitally from some sort of disability, and who are not 100 per cent. fit. The ordnance factory people are going to be satisfied with only 100 per cent. fit people, and it seems to me that while we are in this tight position of manpower, we should be providing opportunities for men—and women, too, if they are willing to go—to do some useful work, which they are capable of, although disabled, and who have been walking about for months and even years without getting a job. To employ these men would have a twofold effect. It would help the country in the jam it is in, by helping the industries which are doing a good job in terms of exports; and it would also—and from my point of view it is the more important—help to improve the standard of life of the men, who would have work to do and a better income. There are many men willing to work who ought to be given an opportunity—men between 60 and 70 and even of 75. I hope that this matter will be looked into. While I think the Budget is a very good job of work, while the burden has been placed where it can be best borne, and while many of us on these benches are grateful for what is to be done for the worst-off sections of the community, and particularly for the old age pensioners, we do think that, excellent as are the proposals, they ought to be looked at again in some respects, with a view to seeing whether some anomalies can be removed and whether something better can be done. I appreciate the motive which has led to an increase of payments to men who continue in work, but, as has been said so often from these benches, there are plenty of people between 65 and 70 who cannot, for various reasons, continue working, although many of them are able to do a limited amount of work. Those people are having a very difficult time and many of those over 70 no doubt go to the National Assistance Board to get some supplementary benefit. Does it mean that by the increased statutory benefit in October, they are going to have just the same amount of money that they are getting now? Because if that is the case it does not meet the position of the old folk. Incidentally, I hope that the date will be brought forward. I hope it will be brought to July or even sooner, because people are having a very hard time. The amount available to meet such cases and the discretionary allowances should be increased and the lot of the old folk in this regard should be improved. It should not be the case that they are to have only the same amount of money, whether it is called a statutory benefit or whether it is a supplementary allowance. I feel that in that regard, something must be done. There are other people who want to take part in the debate, and so I shall sit down in a minute or so, but I want to say something more. When we were asked to recast the Budget for rearmament, when we were asked by America to say how much money we could spend upon building up defence forces in this country, we were given two figures. At least, we were told in the first place that it was going to cost £3,600 million. Later, under pressure, the figure was revised, and we were told it was to be £4,700 million. In the meantime, the position of the country under this wicked Socialist Government had so improved that we felt that we could do without Marshall Aid. The gap had been pretty well closed; full employment continued, and there was in front of us a decent prospect for lifting the standard of life. We were told that when Marshall Aid in terms of civilian production dried up, some help would be forthcoming in this re-armament programme under the North Atlantic Treaty arrangements. I and many of my hon. Friends take the view that the sooner and the longer we stand on our own feet, independent of America or anyone else, the better for us. We think that in terms of political advantage we stand more strongly when we are independent in that respect. We have been given the impression that under the North Atlantic Treaty arrangements some help Will be forthcoming, and the other day the hon. and gallant Member for Chelsea (Commander Noble) put a question to the Government, which was followed up by the right hon. Member for Woodford (Mr. Churchill) who asked what was happening in this regard. Perhaps we can be told what the position is likely to be because, as we have been reminded today, this is not a matter of one or two months, but a matter which is likely to go on for some time. The people of this country, sick and tired as they are of war and rumours of war, anxious as they are to devote their energies to the making of a good life in a constructive way, will, if the position is properly explained to them, pull their weight and pay their price. On the other hand, they must be assured that we are doing everything possible, by diplomatic and other means in a positive way, to avoid war. We must make the peace of the world secure by lifting the standard of life through means of such schemes as the Colombo Plan, and by co-operation with other countries of good will. If our people are assured that this is done they will co-operate, and we might avoid war.
I propose to talk about taxes, because it seems to me that the Budget debate is an appropriate occasion to do so. There are three types of taxes. There is the vindictive version which does not aim at doing anything to improve the economy of the country but rather at pleasing the many by hurting the few. The Chancellor is certainly not guilty of that, and I think that is a tribute to his heart, which I know is good, and also to his head, which I am sure is good, too, because I do not believe that that type of tax—sometimes called for by the extreme Left-Wing Press—is really at all acceptable to the average man and woman of this country, of whatever party they may be.I thought the Chancellor was very fair in his views on profits, but I am bound to say that there are other hon. Members behind him who, in this and other debates, have not taken quite such a fair view. I do not know whether they have been attacking profits out of a malicious point of view because they think it will bring them personal popularity, or whether it is out of a real ignorance of the position. Those to whom the latter applies, I would refer to the White Paper on National Income and Expenditure, which shows in Tables 9 and 11 that the increase in wages in 1938 terms is 158 per cent. and the increase in distributed profits is 48 per cent. If those figures are adjusted to allow an increase in the cost of living, it means that the wage earner is 22 per cent. better off and the shareholder is 33 per cent. worse off. I am not quarrelling with that; I am not saying it is unfair; but I am saying that it is not reasonable to attack excessive profits if we bear in mind what are the exact figures. For the first quarter of this year, the company reports in the "Financial Times" show that 50 per cent. went in taxation, 35 per cent. in depreciation and reserves, and only 15 per cent. was distributed. The second type of taxation to which I wish to refer is that to check inflation. That, of course, the Chancellor has tried to do in mopping up purchasing power. If only his predecessors had been wise enough to leave some taxable capacity in reserve for an emergency, he might effectively have done that. As it is, taxation is at such a level that I think he must consider that we are very near the point when further taxation can only cause dissaving. The third type of taxation is redistribution of income. The Chancellor has not tried to do very much on that and now, with taxation on the bigger estates at 19s. 6d. in the £ and the heavy Death Duties, there is not very much that he can do. According to the same White Paper, there are in this country today only 5,000 people with a net income of £4,000 a year. If everything of that were taken, it would collect £2 million, or finance the country at the present rate for five hours. There are 80,000 people with incomes of over £2,000 a year net, and if all of that were taken—and without taking account of the dislocations which would occur—that would collect £62 million, or finance the country for six days. Therefore, it seems to me to be clear that we have got pretty well to the end of re-distribution until we can vastly increase the National income. In this century there have been enormous improvements in the way of living and in social services, and great re-distribution, which all reasonable people must welcome. We welcome it chiefly, and firstly, on the grounds of humanity. We must welcome it, secondly, because if it had not taken place the practical results would have been very different indeed. It would have caused industrial trouble which would have adversely affected production and made all of us poor. Hon. Gentlemen on the other side of the Committee are very apt to take credit for the improvement which they claim in conditions today compared with those earlier in the century. Indeed, the older hon. Gentlemen are, the further back they go in their comparisons. It would be an astonishing thing, with all the enormous technical improvements that have taken place, if that were not so. It would be like being surprised because the cheapest motor car made today shows a faster performance than one made in 1901. What I think hon. Members opposite should remember is that the pace with which we can afford to re-distribute wealth must be measured by its effect on production. Quite obviously, if we tried to make complete equality of wealth, there would be no incentive, and the only way of getting work done would be by direction of all the forces of the country, as in a totalitarian regime. We know well that that leads to low production as well as low consumption. I believe that there is an optimum point to which at any one moment re-distribution can go. I believe that the Government have gravely miscalculated, to the great cost of the country. I believe that if we are not to damage the welfare State, there have to be drastic cuts in Government expenditure. I have no doubt that much could be saved by better administration, but I am not going to claim that anything like that which is necessary could be attained by economies in administration. I believe it has to be attained by changes of policy. I suggest to Members opposite that if the three assumptions I am going to make are justified, then these cuts are called for. I suggest, first, that prices rise when demand exceeds supply, and in demand we have to include, which Members opposite are apt not to do, Government demand as well as private demand. Some Members opposite may well say that we can prevent prices from rising by controls. I would remind them that if they start controlling essentials, then men and materials are diverted to unessentials, and therefore the net has to be spread even wider. If there are controls upon all things, then at a time of scarcity it is vitally necessary to ration in order to get fair shares and avoid black markets. I ask those Members who advocate preventing prices from rising by control whether they are prepared to have wholesale control on almost everything and rationing of almost everything, because if so, where do they differ from those who advocate complete totalitarianism?
Is the hon. Member in favour of the abolition of all controls?
Certainly not. I think that controls are helpful where they prevent abnormal and temporary rises.My second assumption is that prices are bound to rise, and listening to the speech of the President of the Board of Trade today I felt that the chance of achieving a 4 per cent. increase in production over last year are pretty poor indeed, in which case the rise may be very alarming. My third assumption—I am afraid I must cut it short—is that today production could be much greater. We have full employment today, but the men in the factories are not fully employed. Wherever one goes around the country, one finds factories that could well do with far fewer men. One factory manager told me that, without affecting production, they could do with 500 fewer men, but they were not getting rid of them because the benefit was so little to them to do so. Under present conditions, these men are wasted from the country's point of view. We want, if possible, to have full employment and profit, but both of them must be rather harder to get and must be obtained by making profits more worth while and wages more worth while. We must have more competition and increased incentives and re-equipment of industry. If my first two assumptions are right, then cuts, and very severe cuts, in the welfare services are bound to come, and it is just a question of whether they come haphazardly or by planning. Surely it is better to plan them. If they come haphazardly, they hit that section which can least afford to bear them, and that is those on fixed incomes, either in the form of pensions or past savings. If my third assumption is right and we can produce more, then the cuts need be only temporary. I suggest that the job today is much more one of expanding production than contracting consumption.
Which cuts does the hon. Member want to make?
There is a lot about cuts which I proposed to say, but I promised to sit down at five minutes to nine, so I cannot give them. [An HON. MEMBER: "What cuts?"] I would cut civil investment, and I would follow up the Chancellor's proposals and make charges in the Health Service. I should like to discriminate so that those who cannot afford it can get the best service, as good as the service that the richest man in the country can enjoy, while those who can afford to pay something towards it, will do so.The solution to the problem is an increase in production. The amount available for all of us is not to be measured by how much past savings can be grabbed—that does not really help—but by how much production can be increased. Whereas those who are interested only in catching votes are concerned mainly with today's consumption, those who are truly interested in the welfare of the nation are much more concerned with tomorrow's production.
There has been no doubt from the start of the Budget debate about the sincerity with which the Chancellor of the Exchequer has approached his task. He invited us to indulge in constructive criticism in a spirit in which, he hoped, we would be enabled to put forward our ideas definitely but without bitterness, and I trust that this is the spirit in which the remaining part of the debate on this great issue will be conducted.Before I proceed to express any views I may have to the Committee, I should like to welcome, I am sure on behalf of the whole Committee, the maiden speech of my hon. Friend the Member for Handsworth (Sir E. Boyle). Now that he has plunged into the fray, I hope we may hear him often on this subject before the debates on the Finance Bill end. We also had a speech from my right hon. Friend the Member for Ormskirk (Sir A. Salter) who was described by himself as an elderly maiden. May I say how glad we are to receive him as a recruit to our ranks, for he gets younger every day. In order that hon. Members opposite may sit quietly in their seats and look forward to the pleasure of hearing the Chancellor of the Exchequer again, I may now say that we do not propose to vote against this Budget Resolution tonight. I am referring only to the present. I would never forecast anything beyond a day in these difficult circumstances in which we are. In view of the fact that the Chancellor of the Exchequer has to address us again, hon. Members may wish to be completely at ease to do as they like, even to leaving the Chamber, in the next hour. Hon. Members may be interested in what happens on the Budget Resolutions on Report. It would certainly be the worst possible taste in this Parliament or in any other to announce beforehand exactly what we are going to do on the Budget Resolutions on Report. We feel that these Resolutions on Report do not give us an opportunity of adequately stating our case and, therefore, it is difficult to launch what may later develop into a frontal onslaught on individual taxes without being able to explain in detail the reasons for opposing them. Therefore, if we happen to oppose one or two it will be by way of a token rather than by way of illustrating the intense antagonism which some of the taxes arouse in our minds, and to which we shall give mental and physical expression at a later date. This is just to indicate what lies ahead of us in the controversies over the Finance Bill. Before I become any more controversial I want to say a word about the claim of hon. Members opposite that the Tories are never generous when things go right, which is quite untrue. I should like to deal with that particular argument first. In the midst of the quite unrivalled "inspissated gloom" of the speech of the President of the Board of Trade, the like of which I never heard since I have been in this House, I should like to say that his reference to the balance of payments improvement was very much welcomed on all sides of the Committee. The fact that these will be used by the right hon. Gentleman in order to balance the Budget next year is in the circumstances not unreasonable. Without in any way considering Lord Beaverbrook and his minions, I should like to welcome the right hon. Gentleman's reference to the development of trade within the Commonwealth. His reference to the increase of imports and exports to Commonwealth countries was extremely satisfactory, and is evidence of an increasing closeness between us and our own family overseas. I propose temporarily to forget the President of the Board of Trade, but I shall be obliged to refer to him later. The right hon. Gentleman the Chancellor of the Exchequer himself has received a great deal of praise. I only hope that he is not in any way suffering from a swollen head, but I feel that he is able to take his oats. I thank that my hon. Friend the Member for Edgbaston (Sir P. Bennett) who is probably one of the most respected speakers in this House on industrial subjects, was right when he said that this Budget has one great defect, and that is that it limits itself to a one-year outlook when we are attempting to finance a three-year rearmament programme. There is no doubt that anybody who feels particularly optimistic tonight may well think of the great burdens which future Chancellors of the Exchequer will have to impose upon the citizens in the next two years. This makes me feel quite certain that the right hon. Gentleman, when budgeting, was realising that this is his first and last Budget as Chancellor of the Exchequer, that he considered that a bright and breezy honeymoon is quite a reasonable thing to have and that he could leave afterwards and—apres moi le déluge. That, we are convinced, is the atmosphere in which the right hon. Gentleman has framed so happily his Budget. I do not think that the honeymoon will remain quiet for very long. So far as we can judge from those antennae that we have put out into the political corridors, and from our readings in the Press which is addicted to the point of view of right hon. Gentlemen opposite, we find in the "New Statesmen" of last week that the Budget has brought about the most serious Cabinet crisis since 1945. I cannot, unfortunately, read what the "Tribune" has to say on the matter since, I suppose, owing to a shortage of newsprint due to the machinations of right hon. Gentlemen opposite—to our satisfaction but to their great regret—the "Tribune" is reduced to appearing only once a fortnight. We have only the issue of the "Tribune" which precedes the Budget and not the issue which will no doubt reflect the deep feeling of animosity and resentment of the right hon. Gentleman the Minister of Labour. It seems that the Cabinet, if it is already split on spectacles and dentures, is not likely to have any vision or bite in the future. I am convinced that these quiet beginnings may well lead to tempestuous endings, either on the Finance Bill or upon one of those short Bills—I can only call it by its possible name, the Health (Charges) Bill—that is bound to be introduced very shortly in order to give effect to some of the proposals of the right hon. Gentleman. I have no alternative but to repeat the observations I made in opening the debate on the last Budget. I will trouble the Committee by quoting my own words, which were:
I said also:"I do not believe that the terms of the Budget…give us the assurance that this happiness in the country will last for a very long time."
I believe that those words apply actually and literally to the position in which the Chancellor finds himself now. The Budget, by a series of expedients, gets us over this year, but we have two more years of re-armament in a period of rising costs, and practically no reserves of taxation to draw upon. When the Financial Secretary said in his speech that it might be possible to draw upon £1,000 million of reserves, as he called them, by restoring the level of Income Tax generally to the 1945 level, that is, by taking away all the allowance concessions made since that date, I must say that I was deeply shocked. With the rise in the cost of living, and remembering that the pound is now worth 15s. compared with what it was in 1945, if those allowances are the reserve upon Which the right hon. Gentleman is budgeting, he will cast doubt, gloom and confusion into every small home in the country. It is up to him to deny the suggestion—I agree that it was only a suggestion—made by the Financial Secretary. One of the fundamental defects of the Budget seems to be that it puts the main burden on productive enterprise and prejudices the risk capital of industry on which our future employers and workers and our national survival depend. I agree with my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman) in that, after the statement about raw materials made by the President of the Board of Trade this afternoon, I cannot believe that a 4 per cent. increase in productivity can easily be reached by this country however great the efforts we may make. I do implore the right hon. Gentleman in his closing speech to give us a rather more hopeful outlook for industry and productive enterprise than was given by his right hon. Friend. The Budget makes no attempt to readjust our fiscal system to the great burdens of our time, and, despite the action in regard to the Health Scheme, it fails to ensure sufficient economy in Government expenditure; and, what is perhaps felt by every Member of the Committee to whatever side he may belong, it has practically shelved—from the point of view of the ordinary citizen, not the economist—the whole question of the rising cost of living. The Chancellor has ignored the appeals of his supporters and the appeals of many people in the country to attempt to shield the public from the rising costs in one way or another. It is very small consolation to the housewife if she is told that the new taxes will check monetary inflation. What does the housewife know about monetary inflation? What she does know, if she can understand the Economic Survey—I must congratulate the right hon. Gentleman, for it is a little clearer this year than it was last year—is that a rise of 7 to 10 per cent. in the cost of living is virtually certain and that an extra £600 million will have to be spent by consumers. The Chancellor is evidently aiming at a sort of fine balance between inflation and disinflation. He wants to get the good results, to him, of rising prices and not the bad; more revenue but less inflation. Just as the Chancellor now condones profits—for the good reason that he wants to take them away—in the same way he ignores the rising cost of living to the housewife but says, in his economic exercise, that he has relieved inflation, when everybody knows that a severe cost inflation is going on. I was working myself up very well on this point when I very wisely reverted to the speech of the right hon. Gentleman. I must pay him the tribute if we are to debate with him fairly and squarely, that he has put out almost every difficulty in his speech of two and a quarter hours, and I am trying to raise these points in a very short time. I see that in the last issue of "Tribune" it is described, in regard to myself, as "a pretence to intellectualism." I have sufficient intellectual qualities at least to understand that the right hon. Gentleman has posed most of these questions. He said in column 829 of the OFFICIAL REPORT on 10th April, 1951, that he cannot, through a tough Budget, give more than limited help in the problem of rising costs with which we are faced. But there is no doubt that, whether we are facing the matter properly or not, we must realise that the ordinary citizen of the country does feel the rise in costs as the major political and economic problem of our time, and that that is felt throughout the whole economy at the present moment. Various hon. Members have given their version of the rise in costs. It has been given by nobody better than by my hon. Friend the Member for Flint, West (Mr. Birch), who made one of the best speeches that he has contributed to these finance debates. I have comparable figures from the London and Cambridge School which give a similar figure to his, namely, that if we have the possibility of a 15 per cent. rise next year, the rise over the years of the Socialist administration has been between 8 per cent. and 9 per cent. If, of course, we take the next year as being lower, the general average will be lower. At the same time, we see in our evening paper today that coal is to go up again simply because fares rose because coal rose before fares rose. That is typical of the circle and cycle of the inflationary rise which is going on throughout the country. This can be seen throughout the whole range of costs which are felt by the ordinary household of this country. It can even be seen by the right hon. Gentleman the Minister of Labour, who said recently in a lecture to the Fabian Society, published in the "Plan for Britain" rather before the election at which the Labour Party had such a great victory:"We believe that a rigid economy…and a precariously balanced Budget, without any latitude or elasticity, cannot meet the undoubted shocks to which we are heir."—[OFFICIAL REPORT, 19th April, 1950; Vol. 474, c. 146 and 149.]
The position today is that the Rolls Royce has been put up by the right hon. Gentleman, I suppose as some consolation to the Minister of Labour, and bread has continued to rise up and above from the price it had risen to by an extra farthing, and is likely, as far as we can see, on the 14 oz. loaf to be increased as a result of rising prices, to which I hope the right hon. Gentleman will pay some attention this evening. There is no doubt, therefore, that the Chancellor has in the eyes of the ordinary citizen failed to deal with the price rise. I want now to devote a few minutes to suggesting what I think is a fresh and alternative approach to the economic problem which will enable us—not to to solve this problem, because I think it would be quite wrong for any speaker on this side of the Committee to suggest that this problem can easily be solved owing to world causes—but to improve the position and to face it with more courage than the right hon. Gentleman himself has done. I say first of all that we must review and, if possible, revise the method of distribution of public money so that there is no extravagance in Government expenditure, and that those whose need is greatest are cared for first. The second proposal is that we must limit demand, or rather, equate demand to our resources in such a way as not to create the losses or unemployment which the Chancellor regards as inevitable and to which he referred in his speech. Third, and most important—to which the Chancellor made practically no reference in his speech—we must by every means in our power increase productivity and make it far better than it is, if we possibly can. Let me take those three points, upon which I shall just have time to animadvert before I sit down. The first is on expenditure. It is quite obvious that the Chancellor in his speech was trailing his coat in this subject, but I think he has had already, through my right hon. Friend the Member for Aldershot (Mr. Lyttelton), some indication of the type of extravagance which we think can be reduced. My right hon. Friend mentioned the figure—taking the details of Government expenditure and attempting to treat the public money as if it really were one's own—of some £50 million which he thinks might be achieved as a saving. The right hon. and gallant Gentleman the Member for Leicester, South East (Captain Waterhouse) went further. It is true he spoke longer, but it is true that his speech deserves from every hon. Member of the Committee the utmost study and the closest attention. I hope we shall have from the Government now an answer to an attempt made by a right hon. and gallant Gentleman on this side of the Committee to set out some of the extraordinary increases in our bureaucracy, some of the rises in cost of administration, some of the increases in transport charges and some of the apparent—I say apparent—abuses which were mentioned in his speech. I would not myself, and neither would my right hon, or hon. Friends, be ready to regard the speech of my right hon. and gallant Friend as official. [HON. MEMBERS: "Oh! "] For the very good reason that I had no contact with my right hon. and gallant Friend before he made it, and that I studied it only after he had made it. As proof of my bona fides I want to say to my right hon. and gallant Friend that much as I admired his speech—[An HON. MEMBER: "He is not here."]—he informed me that he did not think he could be here—I am afraid I, and I believe my hon. Friends on this side, could not accept, to take one example, his reference to the need for cutting off the national expenditure on school meals. I could certainly not accept that suggestion, and I certainly should not stand at this Box on behalf of my hon. Friends and pay tribute to the intense care and detail with which that speech was made and demand an answer from the Chancellor and from the Government, and at the same time allow anything in it to pass with which I did not agree. My own past has been associated with the development of school meals, and I do not believe that the right hon. and gallant Member would expect me to stand here and to say that I agreed with everything he said if I did not agree. That leads me to the subject of education. I agree temporarily with the Chancellor that the references he made to either starting the school age later or stopping it earlier are right. It would be a mistake to try to save money in that direction. The school age has only just been raised, and we must give it a chance to prove itself in the right way. But the right hon. Gentleman could have gone much further—I say this as one whose life has been devoted to education—in achieving administrative economies in the education service. I think that the education service in its administration is top-heavy and swollen. The method of county administration, particularly in the manner that divisional executives have been created and then given budgets to spend whether they want the money or not, is one of the reasons why our county finances today are strained to the utmost. That is felt by all administrators who are deeply engaged in this subject. Therefore, I do not agree that there is no saving to be made in this direction, because I think that that is a legitimate saving which could be made. I further think that many of the standards are too high for the times in which we live and that we had much better get on with the practical job in education of reducing the size of classes and re-establishing the relationship between teacher and taught, than with some of the fineries and snobberies which have been brought into the education service. I want to make a passing reference to another big expenditure: that is, farm prices. I thought that the hon. Member for Wednesbury (Mr. S. N. Evans) was far less happy on this occasion than he was on a previous occasion."We can no longer allow a state of affairs in which bread and milk can go up in price and Rolls Royce cars can fall in price."
It is the weather.
As an hon. Member has suggested I think he was a little under the weather. He told me that he was too much interrupted by the Tory agricultural brigade. Whether that be the case or not, we wish to say from this side that we are absolutely behind a system of guaranteed prices for agriculture, and that in so far as the guaranteed prices this year have been brought in, we see considerable advantage in the scale. But we believe that the prices given for milk and eggs will prove that milk perhaps, may run short and that eggs may have to be severely rationed. That is our first impression of the price review. I confine myself tonight to asking the right hon. Gentleman what will be the effects of putting many of these prices upon the consumer. Will that be yet an extra addition for which we have to budget in considering how he has allowed prices to fill the inflationary gap for him?I pass now to the position of subsidies in general. One consolation that hon. and right hon. Gentlemen may have in looking at the guaranteed prices for agriculture, is that efficiency is secured by the fact that a successful farmer, if he makes a large income, has a large portion of it removed in tax, whereas the farmer on marginal land who is struggling to pay his way, retains a large part of the subsidy payment for his own personal income. That is a reasonably fair method of ensuring a successful price system for agriculture, and I ask whether we could not apply that system more to the general administration of the distribution of public money and to subsidies in particular. I noticed that Mr. Austin Robinson said recently in the "Financial Times" that what is urgently needed in a Budget before long, if we did not find it in this Budget, was a revision of the manner in which the public money is paid out and then drawn back away from the taxpayer in taxes. Hon. Members will remember that the E.C.A. Mission to this country from America published some rather remarkable figures of the average family of four with an income below £500 a year who in 1947 were getting no less than 67s. a week against a social expenditure per family per week of 57s. So the process of giving and taking back has been achieved to an extraordinary degree in our general financial and fiscal system. The social expenditure from which this family benefited comprised food subsidies, education and health expenditure. I say quite clearly to the Committee that it is no part of our policy as long as we are facing, within the limitations imposed by this Budget, the rise in prices, that we can reduce these food subsidies in any easy way because I am convinced that that would lead to a very serious rise in the ordinary cost of living of the taxpayer. But I want to tell the Committee that I consider that a revision in the method of paying these subsidies is vitally necessary. I have always thought that the family allowances system was the best method of giving subsidies because, by adding to personal income, it is possible to recruit from taxation from those who do not need the sums, some part of the claims made and to leave with those who really need the sums the totality of the payments. That seems to me to avoid all the difficulties of a means test and yet to ensure that those whose need is greatest are cared for first, which is the principle upon which we work on this side of the Committee. I want to ask the Chancellor whether he does not think that the greatest weaknesses in his Budget, which he knows from reading the criticisms from his own side—not least the criticisms in the famous "Pictorial" column of the hon. Member for Coventry, East (Mr. Crossman), with which I do not intend to trouble the Committee at this late hour—are the weaknesses which mean that the poor and lowest wage earners and scores of old people are going to get no benefit from the Budget at all, while the cost of living continues to rise in the alarming way he has suggested. If the right hon. Gentleman does not attempt to apply his mind to this subject tonight, I ask him how he proposes to distribute public money, in particular subsidies, in order to deal with prices and housing—which matters as much as anything—to see that those whose need is greatest get cared for first. I further say to him that I should like him to put to his right hon. Friend—if he still remains his friend—the Minister of Labour, how the Minister of Labour squares his conscience with the fact that, undoubtedly, the risk to the social services today is that, owing to galloping inflation, their value is being removed from those who need them most and that at the same time he is not ready to come out in the open and acknowledge, as the Chancellor has acknowledged that charges for dental work and spectacles are a real contribution unless the service is to suffer disaster. We believe that the real danger to this service is from the policy of his party. The Government have refused to face the cost of inflation and I ask whether there is not an element of certainty and decision in the policy of allowing inflation to deal with our monetary problems in this country on purpose. If so, I think it is a most inhumane and a disastrous policy for the people of this country who depend on social payments. Time is running out and I have only to deal with the last two points with which I said I would deal. One was the need to equate our demand with our resources. The other was the vital need to encourage production. In this connection I simply have to ask the right hon. Gentleman whether he has anything further to add to his remarks about the rate of interest. There are some cryptic references in the Economic Survey and in the right hon. Gentleman's speech to the rate of interest and to the question of an effort being made to reduce the balances of the clearing banks at the central bank. The right hon. Gentleman, and much more his party on the hustings, have intimated that if this weapon be used, the result will be a deflationary policy which will lead immediately to grave unemployment. As my hon. Friend the Member for Flint, West, said today, so much have the theories of Lord Keynes and those we agreed to, with Mr. Bevin and others in the Coalition Government, been turned over, that instead of keeping home and capital investment for difficult times, when there is no proper full employment, the right hon. Gentleman has turned economic doctrines topsy-turvy and has now pushed the whole of his resources into keeping full employment with very little in reserve. Will the right hon. Gentleman tell us whether he proposes to use this weapon in a sensible way in order to equate our demand with our resources? I come finally to the third method which I think should be used—the imperative need to encourage productivity. The Chancellor has paid tribute to the Tucker Committee, and the first thing he has done is to sin against their main recommendation and abolish the initial allowances for depreciation. I wish to draw the Chancellor's attention to the speeches of the hon. Members for Renfrew, West (Mr. Maclay) and Barnet (Mr. Maudling) on the shipping industry, and to express the hope that he will give us an answer on those points. Will he also pay attention to what the Tucker Committee said about authors' earnings, and permit them perhaps to average out their earnings over a number of years? What is most important, will the right hon. Gentleman realise that his tax on undistributed profits adds to the already severe burdens which industry has to face in increased Profits Tax, increased raw materials costs, extra freight and fare charges and the petrol tax. Those are burdens upon industry which will be very hard to bear in view of the pessimistic speech made by the President of the Board of Trade earlier today. How does the Chancellor expect, in view of these burdens, to reach the 4 per cent. increase in productivity on which the whole of his plan would appear to depend? Taking statistics, there is now in undistributed profits less provision for stock appreciation—about the same figure as in 1938—despite the rising costs we have to face. The Chancellor has dealt a severe blow at industry by this action, and I beseech him to listen to the serious speech made by my hon. Friend the Member for Edgbaston (Sir P. Bennett) and to the arguments he put about the rise in dividends being 65 per cent. between 1938 and 1950, and that of wages and salaries being 147 per cent., and realise that there is a moral case felt by serious directors of companies for the payment of preference dividend and ordinary dividend at the recognised rate, which appears to have been discouraged by the economic theorists on the other side of the Committee. It is on this moral case that the strength and well-being of British industry depends. What is needed if we are to produce more, is encouragement born of confidence and hope, and that is what we have not had today. What flickering light was shed by the Chancellor has been plunged in Stygian gloom by the speech of the President of the Board of Trade. It is the record of the Government which has sharpened this crisis and destroyed confidence. It is not only this Budget that we have to envisage tonight. We have to envisage this Budget against the record which has gone before—a record of devaluation; of monetary and fuel crises; of notable mistakes here and overseas; of a determination to affront enterprise by continuing with a policy of nationalisation at this critical time particularly on steel; a lack or foresight, as shown by the right hon. Member for Ormskirk, about the purchase of raw materials, and the apparent indifference to the rising costs which affect every household. That is our criticism and why we believe that new men and new methods are necessary today. We do not underestimate the responsibilities which office would bring. Unlike hon. Members opposite we are a united body. We are ready and keen to fight. We are fully aware of, and fresh and ready for, the responsibilities which lie ahead.
I should like to thank right hon. and hon. Gentlemen who have said kind and generous things about my Budget statement. I do not mean about the substance of it, to which some of them object, but about the manner in which it was presented. I think this has been a very good debate at a high level, with a number of excellent speeches from both sides of the Committee.I shall endeavour to reply to the major points made by Members opposite, but I should like at once to compliment two maiden speakers, the hon. Member for Belfast, West (Mr. Teevan)—unfortunately I was not in the Chamber at the time he spoke, but I was able to read his speech afterwards—and the hon. Member for Handsworth (Sir E. Boyle) whom I was fortunate, enough to hear this afternoon. I thought his was an extraordinarily interesting and sensible speech which gave promise to the Committee and the House of a great deal. I know we shall all look forward to hearing him again, and I would return to him the graceful compliment he offered to me when he said that he never hoped to hear a Budget better presented. I never hoped to hear a maiden speech as good as his. I would also mention particularly the good speeches of my hon. Friends—though it is always invidious to single out individual hon. Members—the Members for Gloucestershire, South (Mr. Crosland), Stetchford (Mr. Jenkins), and Sowerby (Mr. Houghton). They made extremely penetrating speeches and relieved me of the need to say much of what I otherwise would have had to say this evening. Despite the criticism of the right hon. Gentleman, the Budget has been reasonably well received. I shall come to the criticism later on, but on one thing there has been very little comment; that is on what is generally called the size of the gap—£150 million, or £170 million when we count the £20 million odd for pensions. On that there is pretty general agreement. Some people, it is true, have suggested that the figure might be on the low side and that we ought to have budgeted to withdraw rather more in taxation or somehow or other found the money by cutting expenditure. I may say that nobody—and this is the important point—thought the figure too high. I mention that because, of course, as always happens after a Budget, one is faced with a number of pressures for reducing this or that tax. A number of candidates have been put forward already in the course of the debate. At the same time there is pressure for increasing expenditure here and there; that is natural and one expects it. It is, however, important that we should realise we cannot do that if we accept, as I claim we do in the light of this debate, the fact that somehow or other we have to find that £150 million, or £170 million. There are a few minor points with which I wish to deal before I come to the major criticisms. I was asked by one or two hon. Members why we had not managed to introduce a flat-rate car tax for all cars, including pre-war cars. The answer is very simple. To have had a flat £10 rate on all cars would have cost us £6 million this year. It would, of course, have been for the benefit primarily of owners of pre-war cars of more than, shall we say, eight horse-power, and particularly for those with large pre-war cars. I did not feel in the circumstances of the country that one could afford £6 million for that class this year, or, to put it in another way, that one could do this merely because it would be convenient to tidy up this slightly anomalous position. I was also asked why I had done nothing about post-war credits. Here again, there is only one reason, and that is that it would have been costly to do so. So far as I have been able to estimate, I think we should have to reckon that something like three-quarters of any extra that we paid out would be spent. All the schemes suggested to me by various hon. Members are very expensive in that way. Again, one had to ask oneself, "Is it a good thing to spend, say, £12 million or £14 million in increasing the rate at which post-war credits are repaid, or had we not better use that money in some other way?" I came to the conclusion on this occasion that it did not rank so high in the list of priorities as, for example, the increase in pensions. My hon. Friend the Member for Sowerby referred to tax evasion. I assure him that the drive against that is gathering momentum. I have taken a good deal of personal interest in this, and I think that he will find when we come to the Finance Bill this year that a number of Clauses in that Bill are designed to assist our efforts to clear up these evasions. I must, however, warn the Committee that perhaps more important than fresh legislation is an increase in the number of inspectors who are able to tackle the problem. We are increasing them slowly. My hon. Friend pointed out that we were very short of people in the Inland Revenue, but we are increasing them slowly and, despite the increased size of the bureaucracy that is necessary, I hope that we shall be able to get the right people. I should like to pay my tribute to the skill and pertinacity of the Inland Revenue staff in their work, not only on evasion but generally in the whole field. I come to a matter to which the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) referred and which I know is exercising the minds of one or two hon. Members. I refer to the question of initial allowances. On the whole, the case that I attempted to make to the Committee for suspending these initial allowances now, at a time when we have to do everything possible to find capacity for defence and export commodities in the engineering industry, was broadly accepted. I am bound to say that I do not think it would be at all consistent for anybody who is saying now, "You ought to control credit more strictly; you ought to do something about the rate of interest" to say at the same time, "You ought to leave the initial allowances as they were." Of course, the initial allowances are neither more nor less than an interest-free loan from the Exchequer to the industrialists. However, one point has been made by several hon. Members, and that is that the suspension of these allowances would have a particularly serious consequence so far as shipbuilding is concerned. It has been said that there may be ships already in course of building which will not be finished by April, 1952, and, therefore, that the one year's notice of withdrawal that I have given would not be adequate. I realise that this is a case which merits special consideration, and I undertake to look further into that point. I may say to the right hon. Member for Saffron Walden, who accused me of budgeting only for one year, or only for a short period, that this is a clear case where I have not been doing anything of the kind. There is little or no benefit, even from the investment angle, in the first year, and there is no benefit whatever to the Revenue in the first year. The additional receipts to the Revenue will only come in, I think, in the second or third year. I turn to one of the major points of criticism which was brought forward both by the hon. Member for Flint, West (Mr. Birch), and by the right hon. Member for Saffron Walden. I will base my reply primarily on the speech of the hon. Member for Flint, West, but if I may I will bring in the various points made by the right hon. Member for Saffron Walden. The hon. Member for Flint, West, argued that I had relied on closing the gap by further price increases. He himself said there was some difficulty in understanding exactly what was meant by "closing the gap," and I am bound to say that in the sense in which he appeared to be using the phrase, I became very confused indeed. If he simply meant that prices would rise and would go on rising because of higher import prices and possibly wage increases as well, certainly I thought I had made that abundantly clear in the opening part of my Budget statement. It was, indeed, specifically brought out, as far as I was able to do so, as the background to the Budget, as in part the justification for the measures I was later to propose, but I would not myself describe that as "closing the gap." If he means, on the other hand, that I have allowed for the inflationary pressure of demand to push prices up, then I must absolutely disagree. I do not think anybody in the Committee has seriously contested my argument, which I mentioned earlier, that by these means we are closing the gap so far as inflationary demand goes. I thought, too, that I had explained the difference between these two types of inflation—the cost inflation and the demand inflation. I thought it was generally accepted—and, if I may say so, the right hon. Member for Saffron Walden seemed to understand it this evening [Laughter]; there is no offence intended—I thought it was generally accepted that a severe Budget could not do anything much to reverse rising prices which were caused by rising costs, and I would ask the right hon. Gentleman and the hon. Member for Flint, West, whether they seriously think that their recipes for the situation—for instance, a tighter credit control; monetary policy, as they called it—whether that kind of policy, applied more intensively than has been the case up to now, would bring down prices. I claim that it would not unless it was pushed so far that it created losses and unemployment. That is our argument. I cannot see that if we were to tighten credit further we should have any perceptible effect on the price of wool, on the price of rubber, on the price of tin. As a matter of fact, the probable consequence of doing that would be that we should make our own merchants unable to buy the goods. We should be doing precisely what the right hon. Gentlemen opposite are accusing us of doing. I must say, therefore, that I think the credit policy as a recipe for rising prices, if it is intended also to secure us the raw materials we need, is a pretty poor starter. One must also point out that if rising prices here were caused by too easy a credit policy or too great a Government expenditure or too high a general level of taxation, it would be impossible to explain why prices are rising in exactly the same way in virtually every other country in the world, including, of course, America. Hon. Members opposite may, of course, imagine that there are wildly inflationist Governments everywhere pursuing very extravagant policies on the expenditure side; but certainly they are not seeing very clearly if that is their view. The plain fact is that if we are looking at this cost inflation, there are only three ways of dealing with it. One of them is international action, and I suggest to the Committee that that is probably the most important way of all. As the Committee knows, we are pursuing that policy and have played a large part in initiating it. The second way is increasing productivity—and I entirely agree with the right hon. Gentleman that as far as we can increase productivity, it offsets the effect of the rise in import prices; but we are held up there by this scarcity of raw materials, about which I shall say more later in my speech. The third way—and the only other way I know—that we could deal with this problem would be by increasing subsidies. Now, the right hon. Gentleman was not altogether clear on this. I am not sure whether it is the policy of the Opposition to increase subsidies, to reduce subsidies, or to leave them as they are. It is a remarkable thing that, throughout the whole of the debate, on this crucial issue of policy we have had no indication whatever from—I think four or five—right hon. Gentlemen opposite of what their view is.
If it would help the right hon. Gentleman, our view is that food subsidies should not be reduced at this time.
Well, all I can say is, bang goes their main argument for reducing taxation. There is little time, otherwise I should like to pursue this particular subject a good deal more. But now I come to the question of the Profits Tax.
Would the right hon. Gentleman allow me? I am sorry to take up time. Will the right hon. Gentleman refer, either on this or another occasion, if he has not time tonight, to my suggestions for the better distribution of public money, so that those who really need the money get it, and those who do not need it do not get it?
I assumed that the right hon. Gentleman, in putting that question, was, as a matter of fact, thinking in terms of the food subsidies, because the argument which the right hon. Member for Warwick and Leamington (Mr. Eden) used to use for arguing in favour of a reduction was, of course, precisely the same. I really think that if the right hon. Gentleman has abandoned that policy now, I am not particularly called upon to explain why I am not adopting it.
The right hon. Gentleman paid me a compliment, saying that I understood what was happening on this occasion. May I ask him to read what I said, so that he may understand what I have said, too?
I should like to pass now to the Profits Tax, which, I think, is the Budgetary measure to which hon. Members opposite take the most exception. The main criticisms here, as I understand them, are, first, that this will not affect dividends—that has been suggested by a number of hon. and right hon. Gentlemen opposite—second, that it will discourage investment, and third, that it is unfair because it lowers the return on capital too much. So far as these various criticisms are concerned, they are, of course, slightly inconsistent one with another, because clearly in so far as dividends are maintained, then there is no argument that the return on capital is too low.But I should like to ask the Committee in all seriousness to consider the background of this problem. Here we have a situation where profits are rising. That is really not contested. They have risen quite sharply in the last year. I do not think that there is any doubt whatever that they will rise even more sharply this year. Second, we have the further fact that dividends are increasing—leaving aside for the moment whether it is justified or not, in relation to the past; one could go into a long argument about that. But the fact is that they are going up fast. I quoted the figures in my Budget statement, and I need not remind the Committee again of them. What we have to consider as a Committee is whether we should do anything to discourage this increase in dividends—14 per cent. in March over the previous year's level. It may go up to 20 per cent. in April, and goodness knows what it may be later on in the year. Let us assume, if hon. and right hon. Gentlemen like, that it does not go on so for a long time; but that for the year as a whole it settles to about a 20 per cent. increase over the previous year's figure. Are the Opposition really saying to me that they think that as Chancellor I should ignore that?—that I should do nothing about it? At a time when the country is being asked to carry a great many burdens that the right hon. Gentleman has been talking of—and he talked, quite fairly, of the rise in prices that is going to affect the lower income people—is he asking me, at the same time, to do nothing about rising dividends? [HON. MEMBERS: "Answer."] I am bound to say that I find it difficult to take the Opposition very seriously on this. What do they really suppose the attitude of the trade union movement is likely to be if we allow this thing to go on and do nothing about it? It is simply an invitation to claims for higher wages; it is an invitation to intensify cost inflation. As I say, I do give the right hon. Member for Saffron Walden the credit of saying that he does not really mean what he says on this matter. The Opposition may say "Do something else." Are they in favour of placing a control over dividends? I imagine not. They are obviously not likely to favour taxing undistributed profits. One is therefore left with a tax upon distributed profits. I am bound to say that I should have thought that the case for enlarging the differential between the tax on distributed profits and the tax on undistributed profits was a very powerful one indeed at the present moment, because, despite what hon. Members opposite have said, it is likely to have some influence on boards of directors in making their decisions whether to increase the rate of dividend. I am not asking or suggesting to them that they should reduce them to below last year's level. The question is whether out of the profits they will undoubtedly earn this year they pay out increased dividends or put more to reserve, and if we say "We will tax you at 50 per cent. if you pay it out but only 10 per cent. if you leave it in" I should have thought a good many of them will leave it in, and that is just what we want them to do. I come now to the other main subject for discussion in the list of criticisms, and that is public expenditure. I should like first of all, if I may, to make clear my own attitude on this matter. First, of course, I am in favour of getting the best possible value for money. Secondly, I shall continue to do my best to get economies where we can without doing more harm than they are worth. Thirdly, I shall scrutinise—and I repeat what I said in my Budget statement—defence expenditure very carefully. Fourthly, I do not want to give hon. Members in any quarter of the Committee the impression that I may have made up my mind and that I will not look at any example or proposition that is put before me. That is certainly not so. I will look at any suggestions that are made, but I do stand by what I said in my broadcast, which I might perhaps quote again. I said:
I threw out that challenge, and I must say I got a better response to it than had been the case in previous years."Maybe you could chip away another little bit here or there. Somebody else's judgment about whether some detail of expenditure is justified in the public interest might differ from ours. I know that. But what I do say is that apart from defence we have now got to the point where any substantial saving, any saving that would make a real difference to the taxpayer, must mean big changes which would hit and hurt a lot of people, unfairly, and therefore, as I think, against our real interest."
A small prize.
The right hon. Gentleman does not get much of a prize out of this, I am afraid. All he was able to suggest was that we could save £50 million. I have an idea that if I in fact managed to get the estimates down by another £100 million, the right hon. Gentleman would still say "You can save another £50 million."
I would remind the right hon. Gentleman that we were told in the past, both by his predecessor and by himself, that no savings were possible, since when they have saved £130 million.
Anybody can always say in this airy way "Save another £50 million." I have no doubt that in 1938 some of my hon. and right hon. Friends could have said the same thing when the Conservative Party were in power, but it really does not mean anything. There is no basis in it for arguing whether one could or could not.I must very briefly refer to the right hon. and gallant Member for Leicester, South-East (Captain Waterhouse), because he made a very welcome, serious and honest attempt to put before the Committee economies which could be made; but in doing so be proved exactly the point I was making in my broadcast. He said he could save £70 million or £80 million. How was it made up? Over half was, of course, through changes in major policy. One of them has already been discarded by the right hon. Gentleman. It was suggested we could save £20 million in education, mostly through a saving on school meals; another £20 million on the Health Services, including a 1s. prescription charge. The right hon. and gallant Gentleman is entitled to say we should do that, but he is not entitled to say that is something we missed, because we considered that very carefully. We came to the conclusion that we could not do it. We decided instead to apply charges to dentures and spectacles, as the Committee know, but we turned down the 1s. prescription charge. I do not know what the view of the Conservative Party is on that; we have never heard it. Five million pounds are to be saved by cutting down Colonial Development and Welfare. All parties have agreed in fact to the sum of £140 million for Colonial Development and Welfare up to 1956. We really cannot go back on pledges to the Colonies of that kind. We are entitled to ask of this as of very many other things—B.B.C. broadcasts: we had a taste of that from the Opposition not long ago—whether the Front Bench opposite do or do not support the right hon. Gentleman. I gather that they do not. I say that if they do not, then they have no right to trade on the suggestions he has made, as though these were the specific ways in which they would get their reductions. The plain fact is that the Opposition have now got to the stage where they can no longer base their policy on the need for cutting Government expenditure heavily. A few honest members of the Opposition, such as the hon. Member for Scarborough and Whitby (Mr. Spearman), come forward and say, "Right, we will slash the social services." I understand that point of view. That is honest and straightforward, although I disagree with it. But it will not do for the Opposition to try to pretend, at the same time, that they want to maintain the welfare State and also accuse us of extravagance in public expenditure.
I cannot give way. I know that the hon. Member knows that I do not want to be discourteous to him, but it is three minutes to ten. I want to say one or two other things to the Committee.We have had a very good debate, and it has, I think, exploded completely the pretensions of the Opposition of having any policy whatever. It has exploded one other thing. All they now say is, "Of course, you have had such a difficult Budget"—they are very nice to me about it—"because of what happened in the past." That is precisely the opposite of the truth. We have had a relatively easy Budget this year because of what has been achieved in the past. Because of those achievements and because we had a surplus in our balance of payments last year, we can run it down this year. Because we had put so much in investment in the past, we can afford to scale it down this year. Because we have had tremendous increases in production and productivity since the war, we can go into this defence programme with confidence, hope and certainty that whatever the burdens may be, we can carry them.
Question put, and agreed to.
Resolution to be reported Tomorrow.
Committee to sit again Tomorrow.
Considered in Committee of the whole House under Standing Order No. 84 (Money Committees) [ King's Recommendation signified].
[Major MILNER in the Chair]
That it is expedient to authorise the issue out of the Consolidated Fund of the sum of five hundred and thirty-five million pounds for the permanent annual charge for the National Debt for the current financial year, instead of the sum of three hundred and fifty-five million pounds.—[Mr. Gaitskell.]
Resolution to be reported Tomorrow.
School Meals (Charge)
I beg to move,
The fact that I am able today to move this Motion is an illustration of the old maxim of "three times lucky," inasmuch as on the first occasion when this Prayer appeared on the Order Paper it was forcibly postponed by the Government and on the second occasion was voluntarily postponed by myself in response to a request from the Government. We have also noticed that this is the only Prayer within the last few weeks to which no Member opposite has attempted to add his name, but so intricate are the mental processes of Members opposite that we are unable to deduce whether they approve of this Prayer any more than of the others. I should like to start by assuring the Minister of one thing. The fact that we find it necessary to pray against these Regulations does not mean that we are against an increase to 7d. of the charge for school meals, particularly in view of the fact that Circular No. 235, in which this charge was announced, showed a clear awareness of the need for making particular exceptions in cases of hardship, which in this service is obviously of the greatest importance. Nor am I personally concerned with the provisions contained in paragraph 3 (a), which simply seeks to add the day special school to the privileged class of nursery schools and nursery classes. It is explained in Circular No. 235 that this change is made because the school meal is considered as an integral part of the school curriculum in the case of day special schools. I think it is true to say that mainly the population of these schools come from the lower income groups and that there is therefore a good case for this; but we should welcome some explanation from the Minister on whether in fact this makes any real change in the procedure which has so far been adopted, because I understand it does not make much difference. The main part of what I have to say is directed towards the provision in paragraph 3 (b). It is the wording of this provision which I wish to discuss. I know that I should not be in order in discussing the Explanatory Note to these Regulations, since it does not form part of the Regulations, but it is very difficult to deduce from reading the Regulations the fact that they are increasing the charge to 7d. The announcement of the increase in the charge was made in Circular 235 and it stated that directions would be sent to local education authorities on the matter. I take it that those are taken under the Ministry's Memorandum No. 392, unless there is a more secretive method to which I have not access. The change made in paragraph 2 (b) of these Regulations is very significant and deserves the attention of the House. It seeks to substitute the following words for paragraph 3 (a) of Regulation 10:That an humble Address be presented to His Majesty, praying that the Regulations, dated 1st March. 1951, entitled the Milk and Meals (Amending) Regulations, 1951 (S.I., 1951, No. 340), a copy of which was laid before this House on 2nd March, be annulled.
The words to be deleted are:"For any dinner supplied the parent shall be charged according to an approved rate."
In effect, it seems to me—and I should be most grateful for the Minister's explanation about this—that this removes a very important restriction on the ability of the Minister to raise the price of school meals. What we are entitled to ask is why this change is made, for it is a substantial change, in my contention. There is a paragraph in Memorandum 392 which is relevant and interesting. It says:"For any dinner supplied, the parent shall be charged according to an approved scale of charges, and in approving a scale of charges the Minister shall secure that no charge for a dinner shall exceed his estimate of the average cost for any dinner of the food supplied by authorities in dinners for all-day pupils in maintained schools;"
In that circular, which first raised the price, that increase is directly attributed to the need to reduce the contribution from public funds to the cost of school meals. We are entitled to assume that, unless something is said to the contrary, the price of 7d. to which the present price of 6d. was increased from 1st April, is above the average cost of the food in school meals throughout the country. I notice that the Parliamentary Secretary nods his head, so that that is a reasonable assumption. If it were necessary to raise the price of school meals to 7d., it was also necessary to change the provisions of the 1949 Order, which imposes these restrictions. What I want to point out is that the way in which this change is made not merely enables the Minister to increase the price to 7d., but enables him to increase it to anything he likes at any time without even tabling an Order in this House. In a word, that is carefully concealing the very wide power which, unless one looks for the Order involved and notes precisely what the amendment is, is unsuspected. There is no suggestion in the Order that the Minister is asking for power to raise the price of school meals, if necessary to 5s., next week, even without making an Order which Parliament can, by Prayer, annul. I do not know whether costs of food vary very widely among authorities. If they do, it may be true that some authorities could not cover the cost of food at 7d., but we are entitled to ask why costs vary widely and what is done to reduce them where they are most expensive. The Regulations raise in the minds of most hon. Gentlemen on this side, and I should have thought in the minds of many hon. Gentlemen opposite, a distinct fear that the original intention of these proposals might be jeopardised in the future. I am not suggesting that the present Minister of Education will raise the price unduly within the next few months, but there is a danger that some Minister might do so. It is now very much easier for him. It has always been generally understood that this service was introduced by a Conservative Government. I do not share the views of my right hon. and gallant Friend the Member for Leicester, South-East (Captain Waterhouse) about the future of the school meals service. During the debates on the Butler Education Act, it was agreed that this service was vital, must not bear hardly upon the beneficiaries of it, and that in the interest of education as well as nutrition, it deserved the support of all parties. Regulations of this kind cannot be allowed to pass without comment. If the price is to be substantially increased in the future, the House ought to have an opportunity of discussing the matter. If the Ministry is afraid of the effect of the rising cost of food, there can be no objection to retaining in some form the restriction which the Regulations seek to remove. Under the old Regulations, however much food cost to the authority, they could not raise the charge so long as the cost did not exceed the average of all school meals throughout the country. There was no fear that the Minister would be tied to a static charge with rising costs of food. What the Ministry seek to do is to give power in such an emergency and to have carte blanche to raise the price of food as much as it likes without tabling any Order or giving us an opportunity of discussing it. That is a dangerous precedent to allow any Ministry to have in regard to a social service of this kind."With regard to the food costs, it will be understood that the increase of the charge to 7d. does not imply that there should be any increase in the authorities' expenditure on food for meals at present-day prices."
I beg to second the Motion.Those of us who on two previous occasions have been prepared to bring this subject to the notice of the House are flattered by the attention which our success at last has achieved in the number of hon. Members opposite who are here to listen to the debate. It is perhaps a tribute to the co-operation of my hon. Friends and myself with the Government in this matter. As my hon. Friend the Member for Ealing, South (Mr. Angus Maude), reminded the House, we were somewhat roughly stopped from moving the Prayer on the first occasion. Then, out of consideration for the neurotic condition in which the Government party was by then, we undertook to move the Prayer when we thought the House would rise early, on Budget day. To our surprise, our considerate attitude was rebuked by the Government Chief Whip, who sent a special message to ask us to move it not earlier in the afternoon, as we had intended, but late in the evening of another day such as this. However, I have no doubt that in due course hon. Gentlemen opposite, having watched the clock as has been their custom for so long, will walk out at 11 o'clock and we shall be left to the normal procedure under which these Prayers take place. Although one says that in perhaps a slightly rebuking spirit, I am sure that hon. Gentlemen opposite will realise that this was the only way in which any backbencher from either side of the House could bring to the attention of Ministers the importance and effect of this Statutory Instrument. Like my hon. Friends who have a particular interest in the problem of education, I hope that the Parliamentary Secretary will answer some of the questions which we shall put to him and that in doing so he will remember that we are speaking not merely for ourselves on a matter which interests a few of those concerned with education but on a matter which has wide repercussions throughout the length and breadth of the country. I should like to read to the House a letter which I received recently from one of my constituents. She said:
It is with regard to the problem of that lady, Mrs. Cranfield—I am sure she will not mind her name being mentioned—that I want to ask the hon. Gentleman questions. My hon. Friend mentioned Circular No. 235 of 2nd March in which the increase in prices is put into effect. It says:"I am writing to ask if you think it is fair that the price of school dinners should be raised again. My grievance is this. My husband is an agricultural worker, and our rent is high. I cannot add to the weekly wage in any way owing to lung trouble and have been under a doctor for four years. I find the ever-rising cost of living a great worry, as indeed do most housewives. When one thinks back to the last Election, a Labour handbill put through my letter box read, 'Vote Labour, and keep the cost of living down'; and just see how everything keeps soaring in price. It is disgusting. I am sorry to trouble you, but if you ever get an opportunity I wish you could speak up for we mothers who have to pay while plenty get dinners free and are much better off financially."
Perhaps the Parliamentary Secretary will say whether, in a case like Mrs. Cranfield's, the difficulties will be met in accordance with what we assume, I hope rightly, to be the spirit of the circular. The Opposition feel strongly that one of the principles of social legislation should be to ensure, as my right hon. Friend the Member for Saffron Walden (Mr. R. A. Butler) said earlier, that those who most need the assistance of the community should get it. We find by this example of raising the price of school meals, that only too often the Government seem to have taken the crude and sometimes quite unjustifiable step of making a block, sweeping rise in prices or cuts in the social services, as indeed this amounts to, without giving full justification to the House. I might take this opportunity of reminding the House that the school meals service and its price is part of the system of family allowances as was agreed at the time of the Second Reading debate on the Family Allowances Bill. In that debate the present Lord Chancellor, who was then Minister of National Insurance, said that whereas the noble Lord who at that time sat for Berwick-upon-Tweed had suggested that the family allowance should be 9s., of which 1s. should be provided in kind—and indeed, was already being provided in kind—the Government intended to make the family allowance only 5s. because he hoped that within a short time there would take place:"While the present level of Authorities' income scales remains broadly adequate, proposals for some measure of adjustment may be considered on their merits."
I think the House will recollect that at that time it was freely recognised that 3s. of the 8s. recommended by Lord Beveridge in his famous Report as being part of the system of family allowances and which should be paid in kind, would be provided in the shape of school meals and milk. What has really happened? This seems to me to be the vital point which the Parliamentary Secretary has to answer. What is the justification for what is another step in the dismantling of the structure of the social services that have been erected with great tribulation, great effort and imagination, contributed by all parties over such a long period of years? It may seem that the addition of 1d. to the cost of school meals is a small item, but let hon. Gentlemen opposite remember that we were expecting in 1945 that school children in this country, so far from their fathers and mothers having to pay 7d. a day for school meals, would by now be getting those meals free. Indeed, if one were to go into the calculations as far as they affect the total of family allowances, one would find that the increase in charge which is effected by these Regulations has reduced the value of family allowances—taking into consideration the views held in 1945 and the recommendations of the Beveridge Committee—to a figure of 2s. 11d. as against 8s. And that does not take into consideration the fall in the value of money which, if it is taken into consideration, brings down the value of family allowances now to 1s. 7d. or 1s. 9d. I make this point against this big background of family allowances and school meals because obviously another important issue in this is the whole question of population policy. Perhaps it may appear to be a small matter to the right hon. Gentleman and the Parliamentary Secretary and hon. Members opposite, but I believe that this House should allow nothing to be taken away from our ideas of what a proper system of social security in this country should be without having it justified in detail by the Ministers who are responsible for it. I think we are right to ask the Minister whether he made quite certain before he took this step that there was no other way of meeting the present immense cost of school meals. If I may give some figures from the county in which my constituency lies, they illustrate the problems of the administration and the comparative costs of food and administration in the school meals service. It will be remembered that when the Lord Chancellor was speaking on the Family Allowances Bill, he said it was estimated that the cost of school meals would be two-thirds for the cost of food and one-third for the cost of administration. Let us see the situation as it exists in Essex today. The estimate for 1950–51 was that the cost of food for school meals would be £732,000. The cost of overheads for the school meals service, exclusive of food, was put at £819,000, the proportions being 48 per cent. for food and 52 per cent. for providing the food. That is a long cry from the original estimate in 1945. It is also, I think the Minister will agree, a very disturbing fact, because if one tried to calculate it, one would find, I think, that it would be cheaper, instead of making parents pay 7d. per head for their children per day at school, to let them off that payment entirely and to add 2s. 6d. to the family allowances and to let them provide the meals at home themselves. I do not for one moment say—and I hope that my hon. Friend the Member for Ealing, South, who moved the Prayer, has already made it clear—that we on this side are in any way against—indeed, we are very much in favour of—the continuance of the school meals system. Our party, as we have been reminded, was largely responsible for bringing it in, and we look upon it as an integral part of the routine and life of the school. Unless it can be administered with reasonable economy, however, it will become a burden upon ordinary families and will not only destroy the value to the child of the improved nutrition, but will also destroy some part of the atmosphere of the community life of the school which we all hope to provide. Again, I am taking my figures from the county which I know—Essex—in pointing out that of the 178,500 children, only—and I am right in saying "only"—106,000 actually take school meals. I should like to see a great many more do so. I realise that in some cases they may not do so because they live very close to the school and, therefore, it is easier for the child to go home, but at the same time, the more that take the school meals, the better. One of the main reasons—I have this on evidence from headmasters and headmistresses—why more are not taking school meals is simply the price. When the last rise, from 5d. to 6d., took place, a substantial number of children ceased to take school meals. A certain number subsequently returned, but now that the price has been raised from 6d. to 7d., a considerable number more will cease to take school meals; and of those, so the headmasters and headmistresses tell me, fewer in their estimation will subsequently return to enjoy them. Therefore, the Minister, because all sections of the community are gravely hit by the whole problem of rising prices, by his action, which may be justified, has certainly hit at the principle of improved nutrition and improved community life. Another point is that we regard the school meals service as taking some of the burden off the housewife. Let me take the point of the reaction on the housewife and mother. For the majority of mothers the task of providing two hot meals a day, luncheon for the children and an evening meal for the husband, is a difficult one. Hon. Members, and particularly hon. Ladies opposite, will realise that it is not only hard work to do the cooking and washing up, but it is also extremely difficult to find sufficient food. At the present time in very many houses, particularly those of manual workers, the meat, such as it is, is kept for the husband's evening meal. It is going to be difficult for these mothers to provide adequate nutrition for the children. At the same time as they are faced with that problem, they are going to be less able to pay the money which is required to allow their children to enjoy school meals. A penny may seem a small amount after our five days' talk of hundreds and thousands of millions of pounds, but when added up for a family of four, the cost is something like 12s. a week. Out of the housekeeping money of the average working-class family, which does not fall within the rules for free meals laid down by the local authorities and approved by the Ministry, that sum is a quite considerable burden. I believe we have to think here not merely in terms of large sums of money but also in terms of the small sums that mean far more in the lives of the ordinary people who are our constituents than the millions we talk about so glibly. I feel that the Minister, when he replies, has to justify this increase. I offer no excuse to the House for joining my hon. Friend in moving this Prayer, because I believe that, whether comfortable or otherwise to the Government in power, it remains the duty of the House to watch every action of the Executive, however small it may be, to ensure that if they take an action which affects hundreds of thousands of people, they come before this House and justify it to us."…a great increase of meals and milk, which are to be free for all children in grant-aided schools."—[OFFICIAL REPORT, 8th March, 1945; Vol. 408, c. 2262.]
I am astonished at the attitude of the Opposition on this subject. I feel that it is so much hypocrisy on the benches opposite towards mothers. I am sorry that they did not show this great consideration when I was bringing up my boys. The hon. Member who seconded the Motion talked about the great difficulty mothers have in finding sufficient food. In the days I speak of, the good old Tory days, there was plenty of food because nobody had any money to buy it. In those days I happened to get one shilling a week for each of my boys. That was the amount I got wherewith to feed my family of growing boys. It would appear that hon. Members opposite did not have any consideration of the costs, yet I well remember when the ex-Minister of Education rose to announce the commencement of free milk in all schools she was immediately assailed by the right hon. Member for Woodford (Mr. Churchill) who asked:
They were concerned about the cost then, but today they are not. They have, however, discovered that there is a way of meeting this charge. The seconder of the Motion says, "Add 2s. 6d. to the family allowances and let them prepare the meals themselves.""Can we be told…the cost of these desirable benefits? and in view of the imminence of the Budget can we have the amounts specified?"—[OFFICIAL REPORT, 28th March, 1946; Vol. 421, c. 588.]
May I interrupt the hon. Lady? I am sure she will not wish to misrepresent me in any way. I said it would be cheaper to do it that way, but I did not say it would be a good thing. She will remember that I said school meals are an essential part of the improvement of nutrition and the maintenance of proper environment in schools.
I am glad the hon. Gentleman is trying to make himself a little more clear, but he still contradicts himself. I noticed that he said, "Is there no other way of meeting this charge?" and suggested we should add 2s. 6d. to family allowances. [Interruption.] He cannot even agree with himself, so how can he get his hon. Friends to agree? I should like to know where they propose to get the money for this additional 2s. 6d.? At the week-end there was a meeting of the Scottish Junior Unionists, addressed by the hon. and gallant Member for Pollok (Commander Galbraith). He said—and perhaps this is the way they would get the money—
That might be one of the ways in which this extra family allowance of 2s. 6d. could be obtained. Do hon. Members agree? Yet this was said at the meeting of the Junior Unionists. When we ask hon. Members opposite what is their policy for food subsidies, they are as silent as the Stone of Destiny. The hon. Member for Ealing, South (Mr. Angus Maude) said that whatever happened they did not wish any change to bear hardly on the beneficiaries. This school meals service is surely a supplementary to the home service and, if the home food service becomes immeasurably dearer—dearer eggs, milk, bread, cereals, potatoes and sugar—and if the mother, because the subsidy is withdrawn from butter, has to buy margarine, that will bear hardly on the beneficiaries. It is more important that the children should be well fed at home and that we should have our eyes primarily on the children's meals and on the nourishment they can get at home. What they get at school never satisfies any children—they come in saying that it makes them hungry and that it sharpens their appetite. We ought to know whether the policy the Tories are urging now is to deprive the mother at home and to give the school children a little more on the school plate. I think the Motion is inspired by political propaganda and reeks of hypocrisy and treachery."The need to abolish food subsidies as a means of cutting expenditure was advocated by Commander T. D. Galbraith, M.P., speaking on the social services from the economist's point of view. Food subsidies represented 3s. on the standard rate of income tax. Food subsidies had been perverted from their original point."
I am sorry that the hon. Lady should have thought fit to impugn the motives of the mover of this Motion. I do not believe that in her heart of hearts, unless appearances are very deceptive, she believes what she says. During the last few minutes of her speech, I first thought she was dilating again on the old days of Tory misrule, but I do not now think she was. I believe that of all the Prayers that have been moved in recent weeks, very few have been more justified—and I believe they have all been justified—[Interruption]—I am not going into my reasons now—
Will the hon. Member tell us that he believes what he is saying now?
I believe very few have been more justified than this one. We are not denying the value of meals in school. After all, it was a Conservative Act which introduced them originally and, if the hon. Lady casts her mind back to 1934, she will remember that it was her party which voted against milk in school—
I can cast my mind back even further than 1934 and I am reluctantly compelled to admit that I go back to 1906, when it was urged in this House by Labour Members.
I was only asking the hon. Lady to remember the date in 1934 when her party voted against milk in schools. We are not attempting to argue that it is not a good thing that the children of this country, particulary today, should have their dinners in school. All we are doing—and I believe that is not only the right but the duty of the Opposition—is to ask the Minister to justify, not only the increase by a penny, but also the Regulation which will enable him at any time in the future to increase, or for that matter to reduce, the price of school meals by any amount he likes without reference to the House at all.Surely it is one of the primary duties of the House of Commons—and I am sure the hon. Lady will agree with me in this—to scrutinise legislation and expenditure. That is the only motive we have in bringing forward this Prayer tonight, and I ask hon. Members opposite to consider that and not to impugn our motives, which were not hypocritical, as I am perfectly certain they all know. I ask them to consider what we are doing and if the issue is put to the vote, to vote accordingly.
I had no intention of speaking tonight until I heard the speech of the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann), which seemed to have no relation whatsoever to the matter we are discussing. If we look at the front of these Regulations we find it stated:
in earlier Regulations—"the substitution of the following paragraph for paragraph (2):—"
and for some reason "or day Special School" is printed in heavy type—"In the case of a pupil in attendance at a Nursery School, Nursery Class or day Special School"—
The next amendment is:"the parent shall be charged according to an approved scale of charges for meals or refreshment, but so that the charge shall not exceed the Authority's estimate of the cost of the food or drink supplied".
"the substitution of the following sub-paragraph for sub-paragraph (a) of paragraph (3):—
(a) for any dinner supplied, the parent shall be charged according to an approved rate".
Well, I happen to belong to the Church of England—in choirs and places where they sing, here followeth the Anthem. In order to explain this document I turn over to the other side, and as the bulk of hon. Members opposite have not read this document—
How does the hon. Member know?
Well, I can only judge by their attitude. On the other side there is the Explanatory Note—and there would not have been an Explanatory Note but for the activities of myself and my hon. Friends during the war—
I agree it has not been delivered but I am entitled to it. The Explanatory Note says:
"(This Note is not part of the Regulations, but is intended to indicate their general purport.)
Well, I think that is an increase from 6d. to 7d. I tried to explain this document to some hon. Members when we were standing outside the Chamber—although I suppose I should not refer to that—but I am perfectly certain that nobody who has read this document has the faintest idea what its purpose really is.The main purpose of these amending regulations is to enable effect to be given to the decision to raise the charge for school dinners to 7d."
I want to know who approves the scale. I do not know whether it is the right hon. Gentleman the Minister of Education. Outside the House I call him my right hon. Friend but inside I must refer to him as the right hon. Gentleman. Who approves the approved scale, and where is the approved scale in this document? Sub-paragraph (a) of paragraph (3) says:"The parent shall be charged according to an approved scale".
I think we are entitled to know what the approved rate is. Who approves it? Does Parliament approve it? Does the Minister of Education approve it? This is something putting up by 1d. what parents have to pay for children's school meals, and it is according to an approved rate."The parent shall be charged according to an approved rate".
I am only quoting a document which I do not suppose the hon. Gentleman has read. Who approves the rate? If it is an approved rate, surely that approved rate ought to be submitted to this House. This is a most vague, indefinite document. In the first amendment of the earlier Order, it twice refers to "an approved scale of charges for meals," but in the second it refers to "an approved rate." I hope that when the Minister of Education replies, he will, for the information of his supporters who have not read the document, tell me who approves the rate. [Interruption.] I think that we ought to know who does approve it. After all, when the General Election comes—I hope at an early date—hon. Gentlemen opposite will have to defend their action in having approved an increase in this charge.There is a proposal to increase a charge by an approved rate. Approved by whom? When he replies, I hope that the right hon. Gentleman, who may have an adequate explanation, will tell us what I want to know, which is, who approves the approved rate. [Interruption.] I really thought this House was a legislative assembly; but apparently hon. Members opposite, who do not believe in the slightest degree in democracy, are quite willing to hand all decisions to the bureaucrats. Therefore, I hope someone will explain who approves the rate.
I am sorry that the only contribution to this Debate which has been made from the other side of the House did not concern itself with the Regulations which are before us. At least that complaint cannot be made against the speech which has just been delivered by my hon. Friend. As my hon. Friend who moved the Motion pointed out, these Regulations are not merely concerned with a matter of detail, namely, the alteration of a charge by one penny.They involve an important point of principle. That point of principle is that by these Regulations the limitation upon the cost of school meals which exists at present is removed. At present the limitation is that the parent may not be asked to pay more than, broadly speaking, the cost of the food which the child gets. My hon. Friend pointed out that the removal of that limit has an important constitutional effect, in that a further increase could be made without reference to this House. But there is another side to the matter. This ceiling was based upon rational considerations, and I think we ought to hesitate long before we agree to its being removed in this way. It is perfectly proper that we should regard the provision of a mid-day meal in school as an essential part of the education service, as it ensures that the children are in a condition, and in a frame of mind, to benefit from their instruction. But it is quite a different thing to open the possibility that a parent may have to pay more for that meal than the cost of the food involved. If we do this, we lay ourselves open to this retort. The parent may say to the Minister of Education, or to the local education authority, that he or she can buy this food at the same price and prepare it at home and serve it there to the children. The parent may say that it is not reasonable that he or she should be called upon to pay more than the actual cost of the food because the overheads involved when the school serves the meal are not involved when the meal is prepared at home. There is, therefore, a perfectly sound, logical reason behind this limitation of the cost of the school meal which this Order removes. But let us suppose, for a moment, that the Minister is only going to make the fractional increase above the present average cost of the food which is involved in raising the price to 7d. Let us be under no misapprehension that to increase the price from 6d. to 7d. will mean a sharp and permanent reduction in the number of school meals taken by children. I have made inquiries into the effect in my own borough of Wolverhampton of the increase made previously in the price of school meals, from 5d. to 6d., which became operative on 1st January, 1950. In the first nine months after that date, a quarter of a million fewer meals were served than in the corresponding nine months of the year before. Of course, at the same time, the Minister may say, there was a move going on to prune down the number of school meals served without charge at all. I have tried to see if the effect of that made any real difference; but I find that it accounts in no way for the sharp reduction in the number of meals taken following the previous price increase. We can, therefore, assume that this action will reduce sharply and considerably the number of children availing themselves of the school meals service. Incidentally, this will further raise the cost of that service by increasing the proportion of overheads per meal served. Therefore, in connection with this increase from 6d. to 7d., I put two definite questions to the Government. I understand that, at present, the average cost of the food is about 6¾d. If that is so, it would appear that this Order would not be necessary at all if the Minister had been prepared to impose a fractional charge—if he had been satisfied with raising the cost to 6½d. or 6¾d. He would then not have been answerable for this Order to-night. May I ask, therefore, why it was necessary to have this Order at all if the present cost of the food is still appreciably below 7d. per child? Secondly, is the Minister satisfied that he has taken all the measures that he can to keep down the cost of school meals? From what I learn of the relationship between Ministry instructions and the school meals service, I am far from sure that that is the case. The House will be aware that the operation of the meals service in schools is closely regulated by the Ministry of Education. This close prescription of the contents of meals, in some cases, unnecessarily raises the cost of the service. I should like to give the House one concrete example of how this happens. It is a Ministry regulation that one ounce of dried milk shall be served with each meal for each child. Now, that ounce of dried milk increases the cost of the dinner by 1d. gross; but if instead the equivalent amount of fresh milk were served, it could be given for a ½d. less per child. So the increase due to the insistence upon dried milk, under Ministry instructions, is responsible for a ½d. out of the 6d. or 7d. charged for the meal. Incidentally, I may say that the children dislike the dried milk; and it makes the preparation of the meals more difficult, as in the case of custard making. That is what is said by those who prepare the meals: I am assured that there is more risk of custard, and similar dishes, "turning." There is one instance in which I should hope that if the Minister looked into the instructions that he issued to the school meals service, he could find ways and means of still keeping the cost per head of the food below the proposed figure of 7d., and thus avoid the two evils which this Order involves. Those two evils are, first, the actual increase, with its repercussion upon the diffusion of the service, and secondly, the abolition of a principle which is important and valuable in itself.
It is very gratifying to those of us who sit on this side of the House to hear this eulogy of the school meals service tonight. In fact it will seem that it has almost been a love affair when one reads it in HANSARD.During the Budget debate the right hon. and gallant Member for Leicester, South-East (Captain Waterhouse) had something to say which does suggest that this admiration for the school meals service is a very fickle thing indeed. The right hon. and gallant Member called upon the Chancellor of the Exchequer to effect a saving in expenditure of some £22 million—which, by the way, is an inaccurate figure—on school meals. He said:
Actually the cost is £25 million—"…the local authorities have no incentive, or virtually none, towards economy at all. I think I am right in saying that this service will still cost £22 million."—
I understand, too, from what has been said tonight in this curious eulogy of the school meals service that this was a service introduced by a Conservative Government. The service was, in fact, first started by the passing of the Education (Provision of Meals) Act, 1906, which, as has already been pointed out, the new-born Labour Party introduced into Parliament and which received the support of the big Liberal majority. The opposition to this Bill came earlier from the representatives of the party opposite."Hon. Members who have seen this service working—I have seen it at work both in city and country districts—will know that hundreds of thousands of children get these meals, at the reduced price of about one-third the actual cost, who do not need them at all."—[OFFICIAL REPORT, 12th April, 1951; Vol. 486, c. 1271.]
That is that.
I have rarely heard such a solemn parade of verbal hypocrisy and I will try to explain to hon. Members opposite why these Regulations have been made and say something in detail about the provision of meals for school children and about the cost of those meals.Before doing so, I think it is important to remind the House that the cost of meals was regulated by Act of Parliament up to 1945. That meant that at least the cost of the food had to be extracted by payment from the consumer. From 1945 that charge could not be more than the cost of the food. The purpose of this Order is, as the Explanatory Note suggests, to enable the charge for school dinners to be raised by 1d. from 6d. to 7d. The charge to be payable—except where remissions on the ground of financial hardship have been granted—has therefore gone up from 1st April of this year. At one time the full charge to the consumer was 5d. There was an increase to 6d., which we regretted; and we regret the necessity of making the increase from 6d. to 7d. as is suggested in this Order.
Can the hon. Gentleman help me? I have tried and failed to find what part of the Order prescribes this increase.
If the hon. Gentleman will wait a moment, I will try to explain it to him in the simplest terms I can command. In looking at this increase of 1d., it is important to realise the cost of the school meal, the normal charge for which is 14.9d. Allowing for all remissions, the net estimated cost per meal chargeable to public funds is 9.9d. The number of total remissions is 300,000, and the number of partial remissions approximates to the same figure.
Does that figure of 9.9d. include the food subsidies, because the hon. Gentleman said that it was the total cost.
The total cost per school meal is 14.9d., and the cost which is chargeable to the funds of the Exchequer is 9.9d. which includes all administrative costs and overheads. It includes everything until we come to this increase from 6d. to 7d. for the consumer. All charges up to 1st April of this year have been below the average cost of the food, but the current cost of food per dinner is a little less than 7d. It is not 6.75d.; it is 6.85d. per meal; and it is proposed to increase the normal charge by an extra penny.This increase cannot be made without this amending regulation because at present, as has been pointed out, the Minister has no power to increase the price to the consumer above the average cost of food without bringing to this House these amending Regulations. It is perfectly clear that these Regulations sever the approved charge from the cost of food, and are related to the present economic situation of the country and the needs of the defence programme.—[An HON. MEMBER: "Hypocrisy!"]—In other words, here is a need for each Department to make what saving it can, and to make a saving with the background figure of 9.9d. per school meal subsidy from public money. The proposed increase is an economy—an economy in expenditure running to £25 million a year out of the public purse, £11,500,000 of which is being subscribed in payment by the consumer, bearing in mind all the time the various remissions numbering 600,000 which I have already mentioned. The immediate effect of this is a saving of £1 million. The suggestion has been made that this increase will mean a further decline in the number of children taking school meals. There is no evidence whatsoever for that suggestion. It is true that the increase was dated from 1st April, but already we have some data in the Department, and there is no evidence of any decline in the number of children who are taking school meals. [An HON. MEMBER: "The children were on holiday."] No, they were not. This is data we have from 1st April. All free meals and partial remissions will continue in spite of this Order, and the Minister has already asked local authorities to pay particular attention to families on the borderline which cannot afford to pay more than they are paying. He has made it clear that he will look with favour on adjustments to local hardship scales for this purpose. So there is no reason why the increase should accentuate hardship cases. The hon. Member for Croydon, East (Sir H. Williams) asked what was the significance of the amendment affecting day special schools. If he turns to Circular 235, paragraph 2, he will see the reason. As he said, the main purpose of sending a delicate child to an open air special school is that the child should benefit from the school meal. The treatment which the delicate child receives would be largely defeated if he did not remain at school for dinner and for the special period of rest which follows the midday meal. Thus, different considerations arise regarding the charge for dinners, special schools being in a different category so far as charges for meals are concerned, and charges for such meals are separately approved by the Minister. The reference to the decline in number of those who took the school meal after the charge had been raised from 5d. to 6d. prompts me to give the actual figures. The demand for school meals in October, 1949, represented 53.2 per cent. of the school attendance, and when the charge was raised the demand went down to 50.4 per cent. in October, 1950. In February of this year, which is the latest date for which we have figures, there had been an improvement of 1.2 per cent., making the percentage of those attending school taking the midday meal 51.6; and the month of February is not the best for taking statistics referring to the school meals.
What the hon. Gentleman has said is absolutely true. Would he not agree that he has been comparing 1st April with a day in February, and that the illustration he gave that the numbers did not fall off is erroneous, because there was much sickness?
The point I am making is that there was a decline when the cost of school meals rose from 5d. to 6d. The present increase from 6d. to 7d. has shown no indication as yet of a decline; in fact, far from a decline, the figures for February of this year show there has been a reasonably steady rise towards the original position.The hon. Member for Colchester (Mr. Alport) referred to the Government pledge in regard to free meals. In Circular 96 the Minister stated that the Government had decided to make school dinners free at the earliest possible date, but this could not be until canteen facilities were sufficient to meet expected demand. The condition that canteens are available at schools where they are required is far from having been reached at the present time. In any case, this rise in price has nothing to do with the Government's pledge on free meals. We could not possibly embark on such a policy unless we were certain that full provision had been made and meals themselves could be provided. My last point concerns the analysis of the cost of school meals. I think this has a most important bearing on the discussions we have had tonight. The hon. Member for Colchester referred to costs and overhead charges. In 1947–48, the gross cost per meal was 11.8d., of which food was 5.5d. and overheads were 6.3d. In 1950–51, the cost was 14.9d., of which food was 6.85d. and overheads 8.1d., making an increase in the cost of food of 1.3 per cent., and in overheads of 1.8 per cent. The hon. Member for Colchester laid the emphasis on the cost of overheads. We have, and I think rightly so, tried to meet the constant representations of the teaching profession over the incessant supervision of school meals. The teachers do not wish day in and day out to do the administrative work and supervision of the school meals service. Representations have been made and local authorities, following advice by my right hon. Friend the Minister of Education, have engaged supervisors and clerical assistance to help in running the school meals service. Has any Member of the Opposition any objection to this?
A number of members of the teaching profession have.
Is the hon. Gentleman aware that the National Union of Teachers have been asking for the appointment of supervisors for school meals, because we do not consider that teachers should be required to undertake that duty when supervisors can be employed?
I am perfectly prepared to believe that is true, but there are many sorts of supervisors. The supervisors who come out to inspect school meals are regarded with a considerable amount of distaste by teachers.
My right hon. Friend and I entirely support the view put forward by the hon. Member for Cardiff, West (Mr. G. Thomas). I have yet to come across representations to the contrary from teachers. At conferences representations have been made by way of resolution and at other times by correspondence to my right hon. Friend to give every help possible in the appointment by local authorities of helpers in the administration and supervision of school meals.There is something else to be said about the actual cost of the food used in school meals, the 6.8d. as compared with 5.5d. in 1947–48. It must be borne in mind that all food for the school meals service is bought by tender and contract. In other words there is no question of trying to get food other than by ordinary commercial channels, and we have found that throughout the country contractors have been prepared to tender and to rival one another in tendering for the supply of food in the school meals service. There is no question that the school meals service fulfils a most important need in the life of the schools. It is run extremely efficiently, and there are cases where local authorities co-operate with private contractors and in these cases we have the greatest difficulties in keeping the school meals costs at a reasonable level which we have propounded from the Ministry. Teachers themselves would far rather have the school meals run on the lines on which we are running them now than have this kind of dual control. From the point of view of efficiency, I suggest that this service could bear examination of the most ruthless and penetrating kind. It is one of the very finest pages that anyone could refer to in the report of the Ministry of Education.
Before the hon. Gentleman resumes his seat, could I invite his comments on the central point of the Regulations, that they remove from the Minister his one restriction against raising the prices without consulting the House?
May I raise a point with the hon. Gentleman, who promised to answer my question but has not done so?
That is frequently the case, as the hon. Gentleman knows.
I will keep the House for only three minutes but it seems that my plans have brought off a remarkable treble. It is the third Prayer that we have brought before the House and we have been accused of blatant hyprocrisy because, as Conservatives, we talk on social services. But the Minister has completely missed the point. I am sure the hon. Lady, the Member for Coatbridge and Airdrie (Mrs. Mann), who I am sorry to see has left her place in the Chamber, will not mind my saying that if she wishes to attribute two statements to my hon. Friend the Member for Colchester (Mr. Alport), neither of which he made, she will not find it odd if there are certain differences.The central point of this Prayer is this: Does it give to the Minister the power to raise the cost not to 7d.—because that is not in the Order—but to 9d. if he wishes, 10d., 1s. 0d. or 1s. 3d. The answer is: Yes, it does. There cannot be any hon. Member who does not feel deeply concerned about this. We have raised this question and put down the Prayer to get an answer. Is this power exercisable without an Order being tabled? We asked that question, and we got no answer. The answer is, of course, that the Minister can put the price up to 1s. without any reference to the House. Can he give any assurance that if the price is to be put above the notional figure of 7d., he will come to the House and not rely on these powers, and will put another Order before us on which the matter can be discussed? That is the least one is entitled to ask. When in one moment one is accused of blatant hypocrisy and immediately afterwards the Minister says this is part of re-armament, I wonder what would have been the reaction if the Conservatives had put 1d. on the kids' school meals to pay for rearmament.
I think we should get things straight. Is it a fact or not that this Order gives the Minister power to put up the price of meals not simply to 7d. but, if he wishes, to 8d., 10d. or 1s.? That is the real point. Here is an Order which does not mention 7d., but gives the Minister that power. All we ask is that the Minister shall give us the straight answer. Does it give him power to increase the price of school meals above 7d.?
The Order as drafted gives the Minister power to raise the price to 7d. and it would enable him to raise it to any amount, but that is neither the thought nor the intention. If any other Order had been presented to the House raising the price to 7d., it would have been out of order; consequently this one has been drawn in this way so that it should be in order.
Question put, and negatived.
Transport, Rural Essex
Motion made, and Question proposed, "That this House do now adjourn."—[ Mr. Delargy.]
As my right hon. Friend the Minister of Transport knows, Essex can be described as the least spoiled of the Home Counties. Once you get away from the arterial roads and the shanty towns—the worst defilement of England since the heyday of the industrial revolution—you find a peaceful countryside, within 30 or 40 miles of London, almost entirely free from the inter-war speculative jerry-building and the "stockbroker's Tudor" which have largely ruined the once-beautiful counties of Surrey and Sussex and even Buckinghamshire.This agreeable phenomenon has a much less agreeable cause. Rural Essex is largely unspoiled because rural Essex has always had the worst communications, certainly the worst train service, of any comparable area near London. I say "always." This is not a new problem. Nobody could have expected the British Transport Commission already to have provided services like the electric railways to Sussex, or to have replaced the hell-hole of Liverpool Street by a terminus as relatively genteel as Victoria or Marylebone. Even there some improvements have been made; and the Shenfield electrification is welcome, so far as it goes—though, in passing, I may say that I wish some way could be found of reducing the violent oscillation or vibration of those electric trains: at speed, they shake us like dice. None the less, the problem is serious and urgent—urgent, I suggest, most of all because there is a considerable current decline in agricultural manpower. I need not labour the point that good transport—a decent bus service to the shops and the movies for the farmworker's wife, decent train services, on branch lines as well as main lines—does help to check any drift from the countryside that there may be. It is perhaps second only to good housing and everything that goes with that. One of the immediate causes of this short debate tonight was an exchange of letters that I had some little time ago with the Railway Executive on a subject that had caused some concern locally—a rumour that it was intended to close the station at Kelvedon, on the main line between Witham and Colchester. Kelvedon is a small station which, however, serves a considerable rural area, including places of substantial size such as Coggeshall, Tollesbury, Halstead, Tiptree and Earls Colne. Halstead is in the constituency and is the home of the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler), who wrote to me at the time:
I am glad to say that the rumour which had disturbed the Kelvedon Parish Council proved false. This station is not to be closed. But I was almost as deeply disturbed by the general attitude implied in a letter sent to me on 29th December last by Mr. A. J. Pearson, the Chief Officer (Administration) of the Railway Executive, who wrote:"I see that changes are already being made in our branch line here which connects with Marks Tey, so Kelvedon becomes still more important."
In other words, the service to Kelvedon and the large number of countryfolk in that area is deliberately to be worsened in order to provide a better service for two large places which are already pretty well served. I took the trouble to check this point with my right hon. Friend the Member for Ipswich (Mr. Stokes) and my hon. Friend the Member for Norwich, North (Mr. J. Paton), knowing from my own experience that one's constituents are, quite rightly, never slow in bringing complaints about the railway service to one's attention. No doubt in due course they will learn to take them to the area transport consultative committees instead, but those are not working properly yet, as my right hon. Friend will be only too well aware. My right hon. Friend the Member for Ipswich has had only one complaint in the last year about railway services. My hon. Friend the Member for Norwich is good enough to write to me to say that he has "never had a single complaint at all," and that he thinks the service to Norwich "good except on Sundays." Now, obviously I do not object at all to the provision of a better service for the people of Ipswich and Norwich, so long as it is provided as part of a general improvement. But I object very strongly to its being provided at the expense of my constituents living in rural parishes which are all too lacking, anyway, in many of the facilities and amenities generally considered necessary nowadays. Kelvedon, I may add, is not only a main-line station. It is also one end of a line famous among enthusiasts for the kind of rural railway line depicted so endearingly by Mr. Emett—the Kelvedon and Tollesbury Light Railway, popularly known locally as the "Crab and Winkle." I learned with great regret this weekend that this line is to be closed for ever on the afternoon of Saturday, 5th May, when a mournful ceremony will no doubt be enacted as the gallant little engine puffs out of Kelvedon for the last time, pulling its load of one or, it may be, even two coaches. I wonder if I might make a modest plea tonight for the "Crab and Winkle." Could my right hon. Friend see whether it is possible to reprieve it, even for a few months? I have an idea that, purely as an authentic Edwardian curiosity, it might attract quite a few summer visitors. No doubt there is not a very strong practical case for retaining this particular picturesque relic permanently, though I am not sure that some steps might not have been taken to run it more profitably. But the main special point which I want to make to-night is that many of these branch rural railway lines which are now threatened could, in fact, be run far more economically than they are if there were a thorough overhaul everywhere—not only in this one area—of timing and co-ordination. I would suggest, indeed, that no branch line should ever be closed until the Executive has been able to convince the local interests concerned—the local authority, the coal merchants, or whoever they may be—that at least as good an alternative service can be provided by road. It must be remembered that buses usually cannot carry passengers' heavy luggage, and that they provide much less accommodation than trains can on market days and other occasions on which large numbers of village people want to travel to special events. But I would go further, and suggest that these branch lines could be run, if not at a great profit, then at least much less un-economically than they are today. I want to challenge the almost universal and, as it seems to me, defeatist assumption that they are inevitably uneconomic and doomed. I do not want to weary the House with timetable details, but I can supply the Minister with a host of examples of thoroughly bad timing and connections which must drive away potential passengers. I am referring to connections both at main-line junctions and with road services. I will quote just one or two instances. By running more through trains on the Witham-Bishop's Stortford line, a useful link would be provided between two East Coast main lines. At present, a train leaving Braintree at 2 p.m. reaches Bishop's Stortford 34 minutes before the departure of the next train for Cambridge. (My hon. Friend will appreciate that it is important for people from Essex to go to Cambridge sometimes. It is extraordinarily difficult for them to do so by rail.) A train from Witham reaches Braintree half-an-hour after the 2 p.m. train for Bishop's Stortford has left. One would suppose that it would be possible to run the train from Witham through to Bishop's Stortford just in time to make the Cambridge connection. Again, the Cambridge-Marks Tey branch line is one of the most important cross-country links in the Eastern Counties. It could attract valuable traffic if the service were built up. I must confess to a special interest in the branch line which runs to Southminster, because I happen to live near it. I may mention, in passing, that on a recent not untypical journey it took me just on three hours to travel by public transport from my house, little more than 50 miles from London, to Westminster. On this Southminster branch line, as my right hon. Friend will be aware, the Executive recently and, I maintain, thoughtlessly, cut out all Sunday services. It is true that they are now restored. Those Sunday services were cut as part of the general fuel-saving cut in railway services. It was, in fact, a uniform, routine application of what, I suppose, was a percentage cut—and as grossly unfair to a rural branch line like this, whose people are ill-served on Sundays by bus services, as it would be to levy an equal tax on a millionaire and on an old-age pensioner. Can the Minister tell us what has been done so far—if anything has been done—by way of modernising these branch lines and running them more economically, apart from the purely defeatist action of closing them? Is it possible, for instance, to expect any Diesel cars, such as are in use in the Western Region, in our area? They certainly, among other advantages, save staff. Then, have there been consultations with the trade unions to consider possible staff savings even without Diesel cars? I believe that there are many such savings which could be made. In speaking on Essex rural transport, I must at least touch on the question of bus services, and particularly those running from Maldon through that part of Essex known as the Dengie Hundred. These compare most unfavourably with those of comparable rural areas elsewhere. Take, for instance, the Maldon—Burnham-on-Crouch route, serving Southminster, with a population of 1,500, and Burnham, with a population of about 4,000, as well as smaller places. That, one would suppose, would warrant an hourly service, but there are gaps of as much as three hours when no bus goes at all. On such routes, of course, many relief vehicles have to be run: this is surely, in the long run, more extravagant and unsatisfactory than the provision of a better-balanced regular service. Even so, many passengers are still left stranded by the wayside as the buses race past them, full up. So far as timing is concerned, as with the trains I have mentioned, many of the services are ill-co-ordinated. The last bus out from Braintree and Witham, on the road between these two fairly big towns, is at about 8.50 p.m.; so that people living in the villages near this route can never go to an evening cinema or meeting in the town. I am not one of those who favour the complete urbanisation and mechanisation of the countryside—far from it; but we have to face the fact that people do want these amenities and transport services, and if we want agricultural workers to stay in the country, we shall have to provide more of them. Whether it is road or rail services that we are considering, there is this lamentable inadequacy, and even, as it seems, some discrimination against the rural areas. A gentleman from Crouch End, I gather, wants to bring an outing to Maldon in the summer—20 adults and 200 children: a laudable ambition. But Maldon is on one of these branch lines, and British Railways have refused his proposal, saying that there is not the rolling-stock available. Next year I suppose we shall be told that this line is to be closed because there is not enough traffic to warrant keeping it open. After the recent correspondence which I have described, I had a letter from the Minister in which he impeccably disclaimed responsibility, saying that "the decision as to what service shall be provided in particular areas" is "entirely a matter for the British Transport Commission," and that it was not his policy to intervene. But it is a question of general principle which I have ventured to put to him tonight. I realise that any public service must be based on the principle of the greatest good of the greatest number; but that principle can be pressed too far and is, perhaps, being pressed too far now, to the disadvantage of the rural areas. There must be some special consideration for people in these smaller and more scattered communities; and in the particular district of which I speak, the people are worse off both in comparison with the more urban areas and in comparison with comparable rural areas. In any case, deliberately to diminish the services available, as is threatened at Kelvedon, is a retrograde step and a false economy. I hope that my right hon. Friend will agree that this is not merely a matter of day-to-day administration but a problem with major policy implications in which he ought to interest himself actively."We do not contemplate the closing of Kelvedon Station, but we have under consideration the introduction of improved services to and from Ipswich, Norwich and branches next summer. The planning of the services will necessitate the withdrawal of certain local trains, including a number serving Kelvedon."
I am much obliged for the very clear and explicit way in which my hon. Friend has put his case tonight, and I want at once to assure him that I have every consideration and sympathy for his general case of the need for maintaining adequate transport facilities for the rural areas.Like the hon. Member, I fortunately know a good deal about the County of Essex. I was born in Essex and have lived in Essex all my life, so I am not unfamiliar with many of the problems that he has raised. I certainly agree with him that Essex is the most unspoiled of all the Home Counties, and I can remember, with him, the discussion that has taken place over many years whenever we were considering the railway facilities, because my mind goes back even to the period of the old Great Eastern. Probably we have to decide between efficient transport facilities and maintaining the rural amenities of Essex. I fully admit the final point that he has put to me—that it is not a question of deciding here between two extremes of policy, but that this is a matter of getting the right balance. I must confess that, in looking at the problem which the Railway Executive has to face in many of these districts, it is not an easy problem to solve. There seems to be an inherent conflict between satisfying the demands of the great urban areas with the larger populations and their demand for improved facilities and more rapid train services and meeting the interest of the more scattered communities. If it were possible for the Railway Executive at the present moment to modernise their transport system—and I fully agree with my hon. Friend that probably that is at the root of the difficulty—and although the Diesel car is much more expensive initially than the steam locomotive, I recognise with him that in many of these areas we must look to a new form of motive power for the purpose of contributing towards a solution of this problem. While dealing in a general way with these questions, I think I should point out that the restrictions that have been imposed on the Railway Executive by the general policy of restricting the investment of capital in this immediate post-war period have not enabled the Railway Executive even to replace and to maintain the pre-war standards of their railway stock, quite apart from any new reconstruction proposals, such as the introduction of Diesel cars in scattered areas or the electrification of lines in our large urban areas. My hon. Friend knows that the only part of our system that has been electrified in the post-war period is the Liverpool Street—Shenfield line in Essex. I agree that it does not meet the rural problem, but it certainly has been of great benefit to the people in that area. So far as Kelvedon is concerned, it is quite true, as he has pointed out, that the number of trains has, I am informed, been reduced from 19 to 14 a day in both directions serving that particular station. Although it is to be regretted that in certain directions these services are to be restricted, nevertheless I feel that, taking the circumstances of that line as a whole, that adjustment possibly is necessary. With regard to the closing of branch lines, if one takes the Tollesbury—Kelvedon branch line there was an average of 67 passengers daily in the five trains that were run. I quite admit the case of my hon. Friend that if it were possible to modernise and introduce new form of locomotion, that might be effective; but that is not possible at the present moment, and the Railway Executive are faced all over the country with the need to overtake arrears of maintenance. In many instances this means an expenditure of a considerable sum of capital to bring these branch lines up to modern conditions. The public have more or less deserted these lines for the road services, and it is not an economical proposition. I want now to refer to the road services, and as far as Essex is concerned, the licensing authority for Essex informs me that the bus mileage for Essex as a whole is now 31 per cent. over what it was in 1939.
Does that include metropolitan Essex?
That is for Essex as a county. I have a further supporting figure which I think demonstrates that the increase is largely in rural Essex. If one takes the Maldon area, which the hon. Gentleman represents, and which he stressed particularly, the increase of bus mileage over 1939 is 40 per cent. I should be the last person to underestimate the value of my hon. Friend's case because I have lived for a period in an Essex village served by one private bus operator in which we had a service to the market town only on two days a week. I know very well the inconvenience it represents. But that percentage of 31 over the whole county, and 40 in the Maldon area does not tell the full story, because there has been a steady increase in the double-decker buses replacing the old single-deckers, so that carrying capacity is even greater.I recognise that my hon. Friend has given a good deal of thought and consideration to the case he has presented, and while it is not possible for me to give a reply on every detailed point, I give him the undertaking that I will read carefully all that he has said and will take it up with the British Transport Commission. I want to take this opportunity of emphasising that I have now established the area consultative committees which, in my view, are the bodies that can best get down to an examination of these detailed services, particularly in the rural and scattered districts. I have endeavoured, in building up the personnel of these committees, to see that the less populated areas are fully and adequately represented. No one recognises more than I do the peculiar problems of the rural areas, and it is only people who live in these districts and have experience of the difficulties who can adequately and forcibly put their case. I take this opportunity of inviting all bodies that are concerned in using the services to take advantage of these committees, because their powers are so framed that they can have full access to all the information required to form a proper judgment. I look to this kind of machinery to bring steadily to the British Transport Commission, the Railway Executive and the regional officers the importance of the issues my hon. Friend has submitted to me tonight.
Question put, and agreed to.
Adjourned accordingly at Five Minutes to Twelve o'Clock.