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Orders Of The Day
06 April 1954
Volume 526

Ways And Means

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

Budget Proposals

3.31 p.m.

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A year ago I laid before this Committee a series of proposals which were designed, as I then said, to get us

"out of the slack water, lighten the ship, and give her way."—[OFFICIAL REPORT, 14th April, 1953; Vol. 514, c. 50.]
My first duty today must be briefly to review the marked progress we have made since then.

Review Of 1953–54

The objective of my first Budget was to rectify and strengthen our balance of payments. This was done. The tasks for the 1953 Budget were to continue to fortify our overseas account and to seize every opportunity for expanding production at home. In the last Budget we restored initial allowances, to encourage investment. We reduced taxes, to increase economic incentives and to stimulate demand and production.

But since our balance of payments, though it had improved, was still insecure, and since we could not risk any renewal of inflation, I decided that there must be limits to the extent to which we could deliberately expand the economy. We had to steer a middle course. Looking back over 1953, I think we can fairly say that our policy has been justified by events. In that year industrial production reached heights never before recorded in our country's history.

Balance Of Payments

A year ago I told the Committee that the sterling area must as a whole be at least in balance with the rest of the world. As the Committee already knows, the sterling area converted a huge deficit in the year ending 30th June, 1952, into a surplus of over £400 million in the following year. This was a remarkable achievement, of which we members of the sterling area, who gathered together recently at Sydney, felt justly proud.

This recovery was due mainly to the adoption of sound internal measures. But it was also, in part, due to the drastic import restrictions imposed by all sterling area countries following the crisis of 1951. As these emergency restrictions are, rightly, being removed, we must expect the surplus to fall from this high rate, especially in the second half of the year, which for seasonal reasons is usually less favourable to the sterling area's earnings, and also contains the capital and interest payment on our debts to Canada and the U.S.A. The surplus in the second half of 1953 has now been provisionally estimated at about £100 million, and for the year as a whole at some £320 million.

Gold And Dollar Reserves

As a result of the sterling area's achievement, the gold and dollar reserves rose during 1953 by £240 million, to a total of £899 million. The Committee should know that in the first quarter of this year the reserves rose by another £60 million. The result was that at the end of March they stood at £959 million. Here, too, we may feel modestly satisfied—but not complacent. The level of £959 million is a little more than half as much again as the lowest figure to which the reserves fell in 1952; so that there is a long way to go before they reach an adequate level.

The United Kingdom's own balance of payments with the rest of the world yielded a surplus of about £225 million on current account in 1953, after receiving about £100 million of aid from the United States. In the second half of the year, our total current surplus had risen to an annual rate of £300 million, after taking account of U.S. aid.

Exports

One of the most significant developments affecting our own balance of payments has been the further movement of the terms of trade in our favour. One result of this has been—and the Committee should have all the facts placed before them—that during 1953 the United Kingdom was able to buy a volume of imports 9 per cent, higher than in the previous year at 4 per cent, lower cost. This has been a considerable help to us. But we must also remember—and this is sometimes forgotten—that a movement of this kind also tends to reduce the purchases of some of our best overseas customers from us.

I shall have more to say later about our export performance, but I would simply note here that we cannot expect to enjoy both favourable terms of trade and easy export markets at the same time. It is, therefore, encouraging to record that we increased our exports to those areas, particularly North America and Western Europe, where economic activity remained high and trade was not beset by import restrictions. Some countries in the sterling area found it possible to relax their restrictions during the year, and have made progress in this direction since our talks at Sydney. Our exports have responded to this treatment.

Meanwhile we have to note the manifest increase in the confidence which the world has placed in sterling. This is shown by the strengthening of the reserves, the marked strength of the sterling-dollar rate, and the small gap, over a long period, between the official sterling rate and the unofficial rates for transferable sterling. This confidence has enabled us to make two important moves forward towards a freer system of trade and payments. One is the unification of what is called non-resident sterling and the other is the re-opening of the London gold market. We hope and expect that this will increase still further the strength of sterling and the world's use of it. Certainly the first reactions to these moves have been cheering.

The Home Front

What is more encouraging is that we have been able to combine this external progress with a considerable expansion in production and improvement of living standards at home. Over 1953 as a whole industrial production was 6 per cent, higher than in 1952. This increase has continued into 1954. This welcome surge forward is partly due to a natural reaction from the period in 1952 when consumers' expenditure was abnormally low and investment in stocks had been cut back. The resumption of investment in stocks accounts for some of the increase in production.

But the recovery has also been due to some more fundamental influences. Nearly half the increase in industrial production was brought about by higher investment and higher defence expendi- ture. Personal consumption, assisted by the tax concessions which we made last year, also rose in volume, by about 4 per cent, over the previous year. It has sometimes been said that this increase of personal consumption is a sign that we did, after all, overdo things last year; even that we brought back inflation.

For my part, I take pride in the increased freedom of choice which the citizen now feels that he can enjoy in his or her daily life. The truth is that we must not be frightened of a little more ease and happiness or feel that what is pleasant must necessarily be evil. We must realise that we shall be able to increase our standard of living through an expansion of production only if that expansion is a balanced expansion, benefiting each sector of the economy, including personal consumption, in its proper degree.

In the earlier part of the year exports contributed little to the growth of production; but in the later months they increased more rapidly than production, and outstripped the increase of home demand, so that by the end of 1953 the volume of exports was 10 per cent, higher than it had been a year earlier.

Employment

The expansion in output has been accompanied by a high and stable level of employment. The total of unemployed in Great Britain fell from 453,000 in January, 1953, to 373,000 in January, 1954. At the same time, unfilled vacancies rose from about 230,000 to 270,000. So it can be said that, broadly speaking, there are, at the moment, neither too many workers for the jobs, nor too many jobs for the workers. Moreover, output rose a good deal, and rose more than employment. This recovery in productivity marked a return, in most industries, to the 1951 level.

The resources at our disposal were, of course, enlarged not only by this rise in productivity but also by the improvement in the terms of trade, whose support to our external balance of payments I have already mentioned. We have been asked what advantage we have to show at home from the improvement in the terms of trade. This is the answer to that question. In brief, these improved terms have enabled us to increase our imports of food and raw materials, without impos- ing a corresponding extra strain on our balance of payments or our reserves, in spite of the fact that exports were, unfortunately, slow to increase. This made it easier for our economy to carry its heavy burdens, including the defence programme; and it also contributed, together with our sound financial policy, to the welcome stability of prices throughout the year.

The developments which I have described are encouraging, but it will be our duty today and during these debates to search out the less satisfactory features of 1953. That is what I did over the last year and then diagnosed as a result. In my last Budget Statement, I pointed out the decline in production in 1952 and recommended means of dealing with it. This year I point to productivity. We cannot be complacent about its increase, when we remember that output per man in manufacturing industry in 1953 was, on the average, little above the 1951 level and that our rate of increase is far too often below that of our overseas competitors. I point also to exports. These have expanded over the year, as I have shown, but we need to obtain a substantially larger volume of exports if our balance of payments is to be secure.

Moreover, taking the year as a whole, there has been an insufficient increase in investment in private manufacturing industry. It is true that the volume of fixed investment increased in 1953 by about £200 million. But most of this was accounted for by the larger number of new houses built, and virtually all the rest by higher investment by the basic industries. The level of our industrial investment is still too low; it is still too far below the corresponding achievement in the United States, and the trend compares unfavourably with the effort of some other countries, who are becoming our keen rivals in world markets. The moral for ourselves is serious; and I shall have more to say on this subject at a later stage of my speech.

In framing plans for next year we must therefore start from this simple truth. Our objective is expansion without inflation. If we are to achieve this, we must continue to raise productivity, to expand exports, and to increase productive investment. So much for the Revenue and how we got along last year.

Exchequer Out-Turn

I will now summarise the main items of the Exchequer Accounts in traditional manner for the past year. Total revenue amounted to £4,368 million. This, I may point out, is, in total, exactly the figure I forecast, though a suitable sense of modesty compels me to admit that it is not composed exactly as I thought it would be.

Revenue

Inland Revenue duties amounted to £2,340 million against the estimate of £2,436 million, that is £96 million less. The shortfall occurred in Income Tax, Profits Tax and Excess Profits Levy, and was primarily due to the fact that company profits in the textile and allied trades declined as a result of the 1952 recession rather more than we could foresee. In addition, the suspension of initial allowances from April, 1952, produced a somewhat smaller increase in revenue than we had hoped. On the other hand, the general buoyancy of the economy in 1953 was reflected in an increase in the value of Stock Exchange securities and other property, with the result that the yield of both Death Duties and Stamp Duties was larger than the estimate. The yield of Surtax was also slightly greater that was expected.

But if Inland Revenue fell short of expectations, Customs and Excise Duties exceeded them. The total yield of these duties was £1,764 million, or £39 million more than the estimate. Tobacco yielded £627 million, or £12 million more than the estimate. Beer, wines and spirits, as usual, returned a score second only to tobacco, providing £383 million or £11 million more than the estimate. Import Duties yielded £54 million or £16 million less than the estimate. Purchase Tax produced a total of £299 million, no less than £39 million over the estimate.

Non-tax revenue yielded more than the estimate. For example, receipts from Sundry Loans amounted to £38 million, compared with the forecast of £25 million, practically the whole of the difference being accounted for by an advance repayment of part of our wartime loans to the Netherlands Government. Miscellaneous Revenue has produced £136 million, or £41 million more than the Budget estimate, an increase largely due to the trading surplus of the Ministry of Materials.

Expenditure

Now for expenditure. Consolidated Fund Services, at £674 million, were £1 million more than I estimated in the Budget. Expenditure on Supply Services was forecast at £3,586 million, and amounted, in fact, to £3,600 million. This was only £14 million wide of the estimate. But, considered separately, the elements of this total, defence expenditure and expenditure on civil supply, took different courses.

I estimated defence expenditure at £1,497 million, after allowing for £140 million of appropriations in aid from the sterling counterpart of economic aid from the United States. In fact, expenditure on defence amounted to £1,365 million, or £132 million less than the estimate, in spite of the fact that the appropriations in aid from sterling counterpart were £125 million, or £15 million less than the forecast. There are many reasons for this shortfall, but perhaps the most important is the slower rate of deliveries of certain items of defence equipment, slower than we had allowed, or, indeed, hoped for, in the past year.

Civil expenditure, on the other hand, at £2,235 million, was £146 million more than the Budget estimate. The Committee have already seen details of the supplementary provisions which cause this excess; it consisted mainly of the additional requirements of the Ministry of Food and of the Ministry of Agriculture and Fisheries for the support of home agriculture, for the financing of sugar stocks, and for flood relief.

The total expenditure under all heads amounted, therefore, to £4,274 million, against my estimate of £4,259 million, an excess of £15 million.

Summary Of Out-Turn

My Budget estimate, the Committee will remember, was a surplus above the line of £109 million. The actual result was a surplus of £94 million, within £15 million of the estimate. Below the line, we have done better than the estimate as regards both receipts and payments. On the receipts side, we have had £42 million in repayment of advances from the Raw Cotton Commission, compared with the estimate of £10 million; and on the payments side, we have issued £299 million by way of loans to local authorities, compared with the forecast of £400 million.

As the Committee know, this does not mean that the local authorities have reduced their capital expenditure. On the contrary, they have energetically maintained their investment in houses and other capital assets. It does mean that they have also shown energy and skill in raising their capital from outside sources. It is now 15 months since they were given their freedom to raise loans in the stock and mortgage markets, and from other non-Government sources. The figures show that many of them have made good use of their opportunities; and their action has assisted the Exchequer. This is a movement that I expect to continue, as the Committee will see when I come to my estimates for the year ahead.

In all, therefore, as compared with the estimate of £549 million for total net outgoings below the line, the actual figure was £391 million, or a saving of £158 million. Thanks to the fall in payments below the line combined with the surplus above the line, the net overall outgoings have been reduced to £297 million.

National Debt

This sum has, of course, had to be met by Exchequer borrowing. The National Debt at 31st March last stood at a total of £26,583 million, an increase of £531 million over the year. The main factors contributing to the increase are, first, the net Exchequer outgoings, which I have already mentioned, and, second, the transfer to the Treasury, under the Iron and Steel Act, 1953, of liability for £244 million of British Iron and Steel 3½ per cent. Guaranteed Stock. The Committee will, of course, also remember that the Act transferred the securities of the nationalised companies to the Holding and Realisation Agency. The Debt was also increased by the issue of £47 million of Coal Compensation Stock, which is likewise balanced by the corresponding liability of the National Coal Board to the Exchequer.

The state of the Debt reflects also, of course, our satisfactory progress in dealing with our obligations which matured during the year. We converted no less than …552 million of 1¾ per cent, serial Funding Stock, 1953, and £738 million of 2½per cent. National War Bonds, 1952–54, into securities maturing in later years. No more than £96 million of the £1,386 million of the two original loans remained to be paid off on maturity. New issues in the year consisted of a second tranche of £100 million of 3 per cent. Exchequer Stock, 1960, and £341 million of a new 3 per cent. Exchequer Stock, 1962–63. I will not detain the Committee further with details of the Debt. The other changes in its composition will be seen in the Financial Statement.

National Savings

It is right, however, that I should at this point acknowledge the valuable support which the Exchequer received in 1953 from the National Savings Movement. I assure their leaders and voluntary workers that the Exchequer has benefited greatly from their support, and that they have made a notable contribution to our economic stability. They have brought us good tidings. The National Savings record shows that in the last three months new sayings exceeded withdrawals by £40 million; that is £30 million better than in the same period last year. The savers must not relax in the coming year. A Budget cannot succeed by fiscal measures only; and I rely on the skill and enthusiasm of the Savings Movement to continue to encourage personal savings, guiding the money into National Savings securities to the advantage of the State and of the savers themselves.

Summary Of 1953–54

That, I think, is sufficient of figures for 1953–54. But in bidding farewell to that year, I think I may claim that its results, as I have tried to summarise them, provide ample justification of the policy on which last year's Budget was based. The success of a Budget should be judged, not by the narrow arithmetic of the Exchequer accounts, but by its wider effects on the economy. What were these effects?

Production has expanded; we have reduced taxes and enjoyed an increase in consumption, the benefits of which have been very widely spread; our external balance of payments and our gold and dollar reserves have been strengthened; the economy has been able to respond rapidly to the revival of export demand as it occurred in the later part of the year; we have enjoyed greater stability of prices; and we have been able to free from control many commodity and agri- cultural markets. Indeed, the fact that we have been able to foster expansion and go ahead with decontrol without a general rise in prices shows that we have held a fair balance between inflation and deflation. That, I suggest, is not a bad record of a year's voyage. It is a fair indication that, after the measures which we took 12 months ago, the ship really did make good progress and get out of slack water. But I have not shirked the problems which 1953 has still left us to face, and we had better now examine, first, the arithmetic, and then the wider prospects of the year ahead.

Prospects For 1954–55

In looking at the prospects for 1954–55, let me begin with the conventional above the line Budget, in ordinary Exchequer terms.

Revenue For 1954–55

I estimate that revenue on the basis of existing taxation will amount to £4,537 million, an increase of £169 million over the out-turn in 1953–54. Inland Revenue duties in 1954–55 are expected to yield £2,385 million, an increase of £45 million compared with the out-turn for 1953–54. This increase is wholly attributable to Income Tax, from which I expect to collect £1,800 million, or £69 million more than last year. This is partly due to the recovery in profits during 1953 and partly to increases in wages and salaries. The increase is after allowing for the cost— about £50 million—of the restoration of initial allowances, which I announced at this time last year.

Profits Tax, on the other hand, is expected to yield only £172 million this year, a reduction of £16 million compared with 1953–54. This is because part of last year's collection consisted of arrears of tax at the higher gross rates applicable up to the end of 1951. I put the yield of Excess Profits Levy in 1954–55 at £60 million—a fall of £6 million on the previous year; and the yield of Surtax at £132 million, or approximately the same as the 1953–54 out-turn. Death Duties at £165 million, Stamp Duties at £55 million and Miscellaneous Inland Revenue duties at £1 million are also expected to bring in about the same amount as last year.

I put the revenue from Customs and Excise duties on the existing basis of taxation at £1,785 million in 1954–55, compared with £1,764 million last year. The principal items in this total are: tobacco, £633 million; beer and other alcoholic drinks, £381 million; oil, £300 million; Purchase Tax, £295 million; Import Duties, £56 million; entertainments, £44 million; and betting £30 million.

Allowing for a small increase of £4 million in the yield of motor duties, I estimate, therefore, that total tax revenue will amount to £4,247 million, an increase of £70 million over the corresponding yield last year. From non-tax revenue I also expect a considerable increase—£4 million more from broadcast licences, a result mainly of the higher charges which were announced a month ago; and £109 million more from Miscellaneous Revenue, which reflects, among other things, the proceeds of the expected liquidation of trading stocks by the Ministry of Food, and brings the total of Miscellaneous Revenue up to £245 million.

Expenditure For 1954–55

I put total expenditure above the line for 1954–55 at £4,523 million, an increase of £264 million on the original estimate for 1953–54. This, of course, allows for the reduction in the Ministry of Food Estimate as a result of the Annual Review of agriculture and the consequent price settlement. Consolidated Fund Services amount to £667 million, or £6 million less than last year's estimate. They need, I think, no detailed comment.

There is no change in the amount provided for the service of the Debt, but I do propose to alter the form in which that provision is made. Ever since the Finance Act of 1928, this has been the Permanent Debt Charge, which was a sum fixed in advance to cover the service and reduction of Debt over a period of years. But every year Parliament has authorised, instead of the sum prescribed in 1928, the actual amount required to service the Debt in the coming year. The fact is that the growth of the Debt, particularly during the last war, has made the existing provisions for the Permanent Debt Charge ineffective. I propose, therefore, to repeal them, and so bring the law into accord with the established practice.

The increase of total expenditure over last year is more than accounted for by Supply Services. Defence expenditure at £1,555 million, as compared with the £1,497 million estimated a year ago, rises by £58 million. Civil expenditure at £2,301 million shows an increase of £212 million over last year's original estimate of £2,089 million. In sum, therefore, the above-the-line account shows a surplus of £14 million.

To complete the picture in broad outline, I need only mention that the below-the-line estimate shows an increase of £16 million in the provision of capital for the National Coal Board; a reduction of £52 million in the provision for War Damage, partly due to the clearing up last year of the Business Scheme; and, in the light of last year's experience, a reduction of £100 million in the provision for loans to local authorities. We may also have to finance certain compensation payments under the Town and Country Planning Bill now before Parliament; but it is too early to name a figure for them. After allowing for the offsetting receipts, I put the net payments below the line at £388 million.

Such, then, in outline, is the Budget picture for 1954–55 on the existing basis of taxation. Its essential features are revenue of £4,537 million, expenditure of £4,523 million, and a small surplus of £14 million above the line.

The Committee will see that we have before us, therefore, the picture of a Budget broadly in balance—the picture of a Budget which showed a moderate surplus on last year's out-turn and seems likely to show a virtual equilibrium in the year which lies ahead. This is not a bad record for a country which has been carrying a defence load double that of five years ago and an ever-enlarging system of social services.

What then, shall be the pattern of this year's Budget? Are we to leave things as they are, or are we to make changes this way or that? The measures proposed in last year's Budget seem still to be working themselves out broadly according to plan, and to be providing the right sort of general climate in the economy. So far as I can judge, they are likely to continue to do so, and they ought, therefore, to be given more time to produce further beneficial effects.

But I must remind the Committee of some powerful forces of wind and weather which may well blow us off course. Three of them are very much in my mind—the more so since they are by no means wholly under our own control. The first is the formidable mass of Government expenditure. The second is the level of world trade, and of our own share of that trade. The third is the possible effect on the sterling area and ourselves of the current decline in American production. I will examine these in turn.

Government Expenditure

I will take Government expenditure first. The continuing rise in Government expenditure is serious enough in itself. On the income side we must recall that by next year most of the revenue from the Excess Profits Levy will have ceased, and we shall no longer be able to count on a large receipt from the sale of food stocks. We must also face a considerable reduction in U.S. aid which we have got used to appropriating in aid of our defence expenditure—and exceedingly grateful we are for it. The hard truth is that, much as we all want greater relief from taxation, even our present high rates will not save us from a serious threat to the balance of future Budgets if the growth of expenditure is not controlled. Of course, that balance may be disturbed by causes other than a rise in expenditure and an ending of particular receipts. If, for example, trade slackens, owing to a recession either here or overseas, the effects will be reflected in the revenue figures, mainly in the following year. Thus a slackening in economic activity may also lead us to a Budget deficit.

The aim of the Budget must always be to maintain the balance of the economy as a whole, whatever the mathematics above or below the line. Its aim, in short, must be to maintain employment, as indeed we have done, to encourage production, which we have done, while avoiding inflation, which we have done, and ensuring a healthy balance of payments, which we have succeeded in doing. The realities of our situation may therefore call either for a surplus or a deficit on the conventional Budget.

But these general considerations provide no excuse for not adopting a strict and sober attitude towards Government expenditure. The claims of the Government on the national resources leave us far too little freedom of movement for economic health. In the past year we have secured substantial administrative economies, particularly as a result of staff reductions made possible by decontrol. We shall continue to make these economies wherever we can. But they do not, in themselves, suffice to offset the increases hi expenditure which are dictated by considerations of policy. This is strikingly true of the three major heads of expenditure—defence, food and agriculture and the social services.

Defence Expenditure

Defence expenditure, before crediting United States aid, is estimated at £1,640 million, or roughly the same as the corresponding figure in the original Estimates for last year. But the budgetary support from American aid is expected, this year, to be only £85 million, as compared with £140 million for which last year's Budget could take credit. The net cost of defence to the Budget this year will, therefore, be £1,555 million, as compared with £1,497 million 12 months ago —the increase of £58 million which I have already mentioned. Moreover, our defence commitments impose a considerable strain on our balance of payments. The overseas element in defence expenditure is probably at least £350 millions a year.

The general policy governing our Defence expenditure this year has already been explained in the White Paper "Statement on Defence, 1954." I shall not go into it in detail again but, as that White Paper said,

"It will be the Government's aim to take advantage of all new developments which appear likely to increase fighting strength and to promote economy of effort."

We must be up to date; but we must have economy too. During the coming year we must see to it that we obtain some definite relief from the Defence burden.

Food And Agriculture

Now for the outlook in food and agriculture. On food there is expenditure of £229 million and, as I have already indicated, revenue which amounts to £110 million. This year consumer subsidies will apply to milk and bread only, at a cost of about £87 million. This is, as the Committee will have noted, very broadly the expense to the Exchequer resulting from the fixing of consumer prices insufficient to cover costs. The reduction of the scope of the consumer subsidies has, of course, widened the area over which assistance to our agricultural policy is given in the form of direct undertakings to producers.

Agricultural guarantees in this year's Estimate amount to just over £150 million. The total provision which corresponds to what we have hitherto called food subsidies—that is, it includes the welfare subsidies and such of the production grants as have hitherto been included in the total of food subsidies—is £325 million. We intend to carry out our undertakings to the farming community to maintain a system of guaranteed prices settled at the Annual Review.

Last year's experience has given both the farmers and the Government a good deal to think about—notably the fall in market prices abroad and at home, the return of plenty, and the curious effect of abnormally warm weather at seasons when the wit of men had fixed a price to suit a cold climate. In fact, the hens simply would not graduate in any of our schools of political economy. The Government and the farmers have therefore been conferring together on a variety of schemes designed to reconcile two needs —the need to secure a greater measure of financial control and the need to preserve the broad stability of the farming industry. The introduction of Deficiency Payments Schemes is an improvement, but our arrangements will have to vary from commodity to commodity.

We may, for example, quantify or limit the extent of Exchequer help to a particular commodity. Thus the guaranteed price may be related, in the words of the recent Annual Review White Paper,

"to levels of output of particular commodities, as in the case of the new financial arrangement for milk ";

or there may be an arrangement for sharing some part of the effect of changes in market prices. But I am sure that in one way or another we must establish, in consultation with the farmers' representatives, some limit to the open-ended Exchequer liability. Of this we shall hear more during the year.

Social Services

The next large group is that if the social services. The provision here amounts to no less than £1,327 million— an increase of £63 million over the corresponding provision in the original Estimates for last year. It takes the whole of the taxes from tobacco, beer, spirits and Purchase Tax to cover this total.

Of this increase of £63 million, the Education Departments, which rise from £259 million to £279 million, account for £20 million. This is largely due to the increase in the school population and in teachers' salaries. Housing subsidies account for £10 million, increasing from £70 million to £80 million. This illustrates the cost to the Exchequer of the success of the Government's housing policy. The National Health Service has gone up by £19 million, from £411 million to £430 million. National Assistance accounts for another £5 million by a rise from £128 million to £133 million; and Exchequer contributions to local revenues for a further £9 million, with an increase from £68 million to £77 million.

I think even hon. and right hon. Members opposite will agree with what I am about to say now. It is quite clear that progress in social reform, far from being neglected by this Government, has been well maintained. It is equally clear that this progress carries heavy obligations with it and that there is no miraculous and painless escape from these obligations. We cannot, in good conscience, put the clock back; but we must make sure that in the administration of this vast outlay humanity goes hand in hand with economy.

I am not unmindful of the many other claims on the Exchequer, which the Government would wish, in equity, to satisfy. Some of these—for instance, the problems of the old people—are very much in the minds of every Member of this Committee, not least myself. But I have described the already heavy and growing burdens on the Exchequer and I must say this to the Committee: that I cannot bring my conscience to sanction further advances in social reform, involving increases in public expenditure, until we have the growth of our existing commitments well in hand. Only then can we make further progress in meeting some of the claims which are pressing upon us.

My right hon. Friend the Minister of National Insurance, and indeed the whole Government and all Members of this Committee, have continually in mind the needs of the old people. But no one who reflects for a moment on the immense burden which the working population, and particularly the younger generation, will have to carry in the interests of elderly retired people, could think it right to reach a decision about the future welfare of the old without the fullest consideration of the effect on the cost which future generations will have to meet. This is the year in which a review of the National Insurance Fund is taking place —the first comprehensive review under the new legislation. Moreover, the Phillips Committee is investigating the problems of an ageing population. It will be useful to have the results of those reviews. But our urgent task, in the interests of the old, is to ensure that the outlook for public expenditure as a whole is less menacing than it is at present.

Another reform which is also very much in our minds is that of equal pay for equal work. In fact I was serenaded here this afternoon with the familiar tune of "Equal Pay." There has been a development. Leading staff organisations in the public services have now circulated a statement to right hon. and hon. Members in which they ask me to authorise "talks which will result in agreed steps for introducing equal pay." I certainly think that a gradual solution of this problem will prove to be the right one; and so far as the Civil Service is concerned— for which alone I can speak as an employer—I should like shortly to meet the National Staff Side representatives myself and discuss with them the manner in which we are most likely to make progress and the basis upon which further Whitley talks should rest. But here, too, of course, I cannot ignore the prospects for the Exchequer as I have described them.

I have said enough to illustrate the magnitude of the burdens which will fall upon the Exchequer in the current financial year and in the years ahead. It is an essential part of my Budget statement this year that I should make this warning clear. If—but only if—we control expen- diture, and increase the national product at a faster rate than the growth of our commitments, can we afford the benefits which that expenditure confers on us.

External Prospects

Our first task, then, is to control our expenditure at home. But I come now to the other purpose which I mentioned and which I now examine. The aims of the Budget must take account also of our liabilities overseas. The internal expansion which the Budget fosters must be one which reinforces our external balance of payments as well.

There is no need for me today to dwell at length on the vital need to maintain confidence in sterling, of increasing our gold and dollar reserves without accumulating corresponding short-term debts, and of winning a surplus which will enable us to make a worthy contribution to overseas development. I was most deeply impressed, during my recent visit to Australia, by the extent to which the members of the Commonwealth look to us for a lead in developing their and our vast resources. This is the true and up-to-date conception of Commonwealth unity in the economic sphere. These purposes compel us to do all we can both to increase our earnings, particularly from exports, and to enlarge the volume of world trade and the freedom of currencies, especially sterling.

I said just now that we had to increase the national product. There is one particular aspect of our policy which I must mention today, namely, finance for exports. There have been complaints from time to time that British manufacturers are being unduly handicapped in many cases by having to finance, either from their own resources or from such credit as they can raise, any credit which they themselves have to give in order to secure export orders for capital goods.

We have decided, therefore, that henceforward, the Export Credits Guarantee Department will make rather freer use of guarantees to the banks for major capital goods exports—for those goods which are one of the most valuable types of our traditional exports and which I found on my tour are of particular importance for overseas development. To the extent to which such a guarantee is given the City will find the finance, from the stage of accept- ance of the goods, without recourse to the manufacturer himself. For the time being a limit of up to 85 per cent, of the credit given to the overseas buyer, instead of the 90 per cent, usually available under an ordinary Export Credits Guarantee Department policy, will be set in those cases where this procedure is used. We shall review this in the light of developments, and meanwhile I hope the arrangement will help our exporters at an important point.

But any initiative of this kind which the Government can take can only support and reinforce the efforts which industry itself must make to increase output and to capture foreign markets. And here industry must combine enterprise with restraint. It must be enterprising in the vigour and imagination with which it meets the challenge of sharpening competition; it must be restrained in the extent to which it loads the final price by its demands for wages and profits. We are near the point—and in some cases we may have passed it—where further increases in wages and profit margins will price us out of our export markets. All-round increases in wages have clearly played a large part in the upward movement of prices since 1945. Both stability at home and competitive power abroad require that wage increases should not outrun productivity; any improvement in productivity should show itself also in the form of lower prices.

But, for the reasons which I have often given, industry must also beware of excessive distribution of profits. In all these questions we do better to rely on voluntary moderation than on any form of compulsory limitation. But at no level of the industrial process can we afford either denial of personal effort or indulgence of personal motives, if, in the sharply competitive world which we now face, our exports are to maintain and to expand their share of world trade.

Us External Economic Policy

Our task will be all the easier if world trade itself expands. Since the meeting of Prime Ministers on economic policy at the end of 1952, the Commonwealth as a whole has been working steadily to enlarge the volume of international trade and commerce. We have sought to do this in company both with the U.S.A. and with Europe.

My right hon. Friend the Foreign Secretary and I explained our policies both in Washington and in Paris early in 1953. We now have good reason to be glad that we took this initiative, because since then, we can look back on steady progress and on a general move towards more liberal trade and financial policies in the major trading countries of the world. Moreover, the Committee will, no doubt, have read the Randall Commission Report in the United States and the Message which President Eisenhower has recently sent to Congress.

It is not for me to prejudge or predict the action which the Congress may see fit to take. But I am encouraged, and I think that the Committee will be encouraged by the spirit of the President's message, and by his clear recognition that the United States has a vital interest in working towards the removal of restrictions on trade and towards the convertibility of currencies. This declaration of the Administration's attitude towards its long-term external economic policy is particularly heartening at a time when the current state of the United States economy is one of temporary decline— a decline on which the Committee will expect me to comment for a moment if we are to have a clear idea of what weather we are moving into this year.

So far production in the U.S.A. has fallen about as far as it did during the recession of 19487ndash;49; and we do not know whether it will fall further before it recovers. The sterling area could be affected in two ways. It might suffer some direct loss of dollar income; or, if a fall in activity in the United States were to lead to a reduction in commodity prices, a decline in prices and in comes might result in a general fall in trade and activity.

At Sydney, in January, the Commonwealth Finance Ministers were unanimous that we should try to ride the inevitable fluctuations of world trade without a return to restrictions on trade and payments. We also agreed that if all played their part in endeavouring to maintain a high level of trade, activity and employment—and it seemed reasonable to assume that they would—a moderate decline of activity in the United States could be prevented from having serious repercussions elsewhere. The implications of the present decline in United States activity for the rest of the world must, however, be closely watched. A Chancellor of the Exchequer is liable to have held against him any views which he may voice, however carefully he may qualify them. But I think it my duty to the Committee to give my impressions on this subject.

My own opinion, then, is that business confidence, both in the United States and elsewhere, has been remarkably robust, and that the decline which has taken place has been so orderly and gradual as to support the view that the recession is predominantly due to stock—or as the Americans call them, "inventory "— adjustments. A decline so caused should be self-correcting if there are no secondary effects, of which as yet there is little sign. If, however, secondary effects should begin to show themselves, then I believe that the United States Government would take steps to check any serious decline, just as I would expect any Government in this country, faced with similar internal developments, to take such steps. In short, while I believe that we should be prepared for any changes, I think that neither the facts up to now, nor the balance of probabilities, should lead us to expect the worst.

The world-wide damage caused by some previous recessions has been due mainly to the cumulative effects which a contraction of economic activity in any one sector exerts, with multiplying force, as its centre of infection spreads. But the effects of the current decline on the rest of the world have so far been much less severe than previous experience would have led us to expect. There are two reasons for this. The effects have undoubtedly been softened by the continued flow of U.S. military and other expenditure, and by the remarkable stability of commodity prices generally. But a good share of the credit is due to the policies adopted by the Sterling Area as a whole, following our various Finance Ministers' meetings, to check inflation and to promote sound development. In the event, progress in the sterling area has so far been slowed down rather than halted or reversed. Exports to the dollar area have shown some reduction; but our central reserves, along with those of many other countries, are still rising.

The Committee will no doubt have been heartened, as I was, by the increase in the gold and dollar reserves in March, the largest increase that we have had for a year. But this does not justify our discounting the various forces which, as I have explained to the Committee, may develop to the damage of our external account. It may be only in the second half of the calendar year that their effect will be felt; and it is then, in any event, that we normally have to face seasonal pressure against the balance of payments, of both the United Kingdom and the whole sterling area, with the rest of the world. Our best insurance against any such risk is to be prepared to take action, if necessary, both internationally and at home. Overseas, we must act, together with our friends and the great organs of international economic co-operation, to maintain our mutual credit and trade. At home we accept the responsibilities, defined in the White Paper of 1944, to keep up employment and, with due regard to the needs of our balance of payments, to use our resources to the full. Nor should I hesitate to reconsider my budgetary policies if I thought that this was required. We should therefore view the future with resolution rather than despondency.

Budget Objectives

I must now make my judgment of the prospects for 1954 as a whole. Although what happens in other countries may affect us vitally, it is the level of our internal demand which exerts the major influence on the course of production in this country. Speaking now in the broadest terms, it is my view that the general level of demand should be well maintained.

Home Prospects

Let us look at the main elements of demand at home. In real terms, Government expenditure on goods and services in 1954 will be rather higher than in 1953. The volume of consumers' expenditure also is likely to be higher in 1954 than during 1953 as a whole. As for fixed investment, work on new housing is expected to be about the same as in 1953, while the investment of the nationalised industries, both in buildings and in plant, should show some rise. These increases in demand will give considerable support to the course of production this year. Exports will depend, in part, on the level of world trade: and I hope that over the year as a whole they will be maintained.

If so, the most uncertain element in demand is investment in stocks. The level of stocks at present does not appear to be excessive in relation to the level of activity. If, as I hope, there is reasonable stability in other sectors, we can hope for stability here also. Thus, while conditions at the end of 1954 are necessarily uncertain, there are good prospects that, over the year as a whole, production should be higher than in 1953.

Monetary Policy

Now for a word on monetary policy. In considering the measures which we need to take, I have made my dispositions this year, as I made them last year, in the knowledge that my Budget will have the support of monetary policy. A year ago I said that conditions in 1953 were likely to require broadly a continuation of the monetary measures then in operation.

That, in the main, is how it turned out. Interest rates generally fell during the year. But few have made the mistake of interpreting those movements as a change of direction in monetary policy; they have been generally and correctly viewed as evidence of the continuous adjustment that must go on if the monetary mechanism is to be kept in effective operation. I shall not offer any predictions on the role that monetary measures are likely to play in the coming year. Bank rates and the rates that depend on it will be kept flexible and free for use in either direction as circumstances may require.

Final Appreciation

My judgment is, therefore, that we shall continue to maintain a very reasonable balance in the economy. But I think also that we should not commit ourselves too far in advance. The economy should be well able to respond to any increases in demand, in particular of overseas demand, which may occur. Thus, there is no cause for making this Budget especially tough or more disinflationary. We need not impose harsh new taxes, since an increase in the level of taxation on initiative and enterprise would hold down and impede, rather than stimulate and spur on, our drive for productivity and exports.

On the other hand, as my analysis has shown, production is likely to be higher this year than last, and I judge that it would be unwise at present to stimulate purchasing power by remissions of taxation designed to increase personal consumption. Although each of us may have personal reasons for regretting this conclusion, a sober appreciation of our economy must conclude that it would be premature to adopt policies which might prejudice our future liberty of action. This is the more true while we are necessarily uncertain about developments in the United States of America and about our own ability to take the full measure of our competitors in external trade.

Moreover, the man in the street knows well that the real value of a Budget lies in its contribution to those things which are really important to him—full employment, stable prices, a steady growth of production. By all these tests, last year's Budget was successful. It must be the task of this Budget of 1954 to carry on this good work, and as far as I can tell, at this moment in time neither tax increases nor major tax remissions are possible or called for.

While, this year, we should avoid a deficit on our final out-turn, we need not strain after any significant surplus. My judgment, therefore, is that this Budgetary policy will secure a continuance of the achievement which characterised the last financial year—a healthy balance in the economy as a whole. I shall make no changes for change's sake. So for the second year in succession I shall raise no new taxes. Such remissions or adjustments as I am now going to describe are necessarily concentrated on granting certain special claims to relief and on increasing the incentive to productive investment.

Post-War Credits

Like every Member of the Committee, I receive constant appeals for a more generous release of post-war credits. Behind many of these letters lie circumstances of personal distress which the payment of the credits, however modest they may be, would do a little to relieve. And even the Chancellor of the Exchequer must be moved by some of the individual cases which come to his notice.

And so I have searched my conscience yet again in this matter; in particular, I have considered once more whether payment of the credits might not be made in cases of hardship. But I have found no means by which genuine and continuing "hardship" could be defined for this purpose, at least without creating as many anomalies as it would remove. The question which really faces me, therefore, is whether some general release of the credits is now possible and advisable, over and above the existing arrangement whereby the credits are paid at the age of 65 for a man and 60 for a woman.

Let me remind the Committee of the circumstances in which post-war credits were originally introduced in 1941. During the debates on that year's Budget Resolutions, my predecessor, the late Sir Kingsley Wood, said in connection with the credits—and I quote his words:

'…one of our principal post-war problems will be to regulate the rate of expenditure under all heads, with a view to maintaining good employment over a prolonged period, without overdoing it, in the sense of facilitating more expenditure than we have physical resources to provide, and thus producing postwar inflation."—[OFFICIAL REPORT, 9th April. 1941; Vol. 370, c. 1662–3.]

The amount of post-war credits outstanding at this moment is about £564 million, very widely distributed among all sections of the people.

In an economy of the kind which I have just described to the Committee— an economy on a pretty even keel, with no immediate prospect of any lack of consumer demand and no immediate need for any large stimulation of individual purchasing power—can I, or can any responsible Member of this Committee, honestly take the view that the time is ripe for the release of the credits on anything approaching this scale? The answer is, I fear, "No, not yet." It is therefore my duty to consider what is practical and realistic.

But although it is not possible for me to propose, as yet, any general release of the credits, even for particular groups of people, there is one type of case with which I can deal—the more gladly since it is a case in which the present law is often represented as producing injustice and anomaly. I wish to remove a deeply felt grievance that a family is often, under the present law, deprived by death of a reasonable expectation of having the benefit of the credits in a short time. This point has been put by the hon. Member for Sparkbrook (Mr. Shurmer) and many other hon. Members in the course of our debates.

At present if an individual dies under the age of 65, or 60 if a woman, the credits can be paid to a beneficiary under his will or intestacy only when the beneficiary becomes 65 or 60, as the case may be. I now propose to give the beneficiary also the right to claim payment of the deceased person's credits when the deceased person would have reached the required age had he or she lived. My proposal will, in addition, allow payment where a man has died over the age of 65 without actually claiming his credits.

It will not, of course, be possible to make payments under my proposal until after the Finance Bill becomes law; details of the arrangements will be announced as soon as they have been worked out. There will, at the start, be a large number of people who will become entitled to claim at the same time, and dealing with all these claims may have to be spread over a period. The claims will be paid in cash; but I ask all who get this money not to spend it unless their need is really urgent, but to put it into National Savings if they can. This proposal will add £19 million in the first year, and £2 million a year thereafter, to the payments of about £17 million a year which are already being made, below the line, under existing arrangements.

I will deal next with the few adjustments I propose to make in the field of indirect taxation.

Entertainments Duty

I am aware of the need for some modification of the Entertainments Duty. Most of the revenue from this duty comes from the cinemas, which account for some £37 million out of a total, of £44 million a year. The maintenance of this revenue depends on the ability of the cinemas to provide the public with the standard of comfort and service which they have come to expect; this is the more important now that they have to compete with television.

Remembering the undertaking which I gave during the debates on the 1953 Finance Bill, I have examined very carefully the statistics showing trends in admissions and takings over the past few years; and I have been impressed by the difficulties which many cinemas have recently been experiencing as a result of increasing costs which are not matched by increasing receipts. Right hon. and hon. Members on both sides of the House have drawn my attention to cases of this kind in their constituencies.

I have accordingly decided to make some reduction in the Entertainments Duty on admissions to cinemas. The cinema exhibitors have represented to me that, in order to maintain their cinemas in good order and to keep pace with technical developments, they need to be relieved of duty to the extent of £7 million a year. I do not think it necessary to go as far as this, and in any case, I could not afford to do so.

The changes which I propose to make will cost the Exchequer about £3½ million in a full year. They will mean reductions in duty ranging from ½d. to 1½ per admission and will result in some improvement in the form of the scale. Full details of the new scale will be given in the White Paper.

There is no reason why cinema proprietors should not use this relief to reduce admission prices, where they can afford to do so. But I recognise that the industry in general will need the money, both to enable exhibitors to maintain the amenities of their cinemas and the attractions of their programmes, and to assist the revenues of producers. It is on these things that the prosperity of both the producing and exhibiting sides of the industry, and of the men and women employed in it, depend.

I have also been keeping a careful watch on other entertainments, particularly sports, as I undertook to do in the debates on the Finance Bill last year. I find that there has been some further deterioration, and I have decided that a measure of relief is called for. These other entertainments, mainly sports and the living theatre, already pay/lower rates of duty than cinemas; but I consider that relief to the extent of ½d. per admission is justified in present circumstances.

I am therefore reducing both the first and second scales of Entertainments Duty at a cost of £450,000 in a full year. This should help to put the finances of the football clubs, particularly the smaller ones, on a sounder footing. The total cost of those changes will therefore amount to about £4 million in a full year. They will operate from 30th May and the cost in the present financial year will be £3½million.

Chicory

I am also raising the Customs duty on imported chicory by 5s. 9d. a cwt. Full details of the change are given in the White Paper. This increase in duty is not concerned with revenue considerations. It is to give support and protection to the chicory growers in this country which have been shown to be necessary. The new rate will operate from 7th April.

Purchase Tax

On this occasion, as I said some time ago, I do not propose making any changes in the rates of Purchase Tax. I gave due notice of this, and I do not regret the action which I took. But one of the Resolutions to be laid before the Committee this afternoon will enable certain defects in the legal machinery of the tax to be remedied.

Key Industry Duty

I also propose to continue for five years the Key. Industry Duty which would otherwise have come to an end next August.

Company Reconstructions

In the field of Inland Revenue there are some details to which I wish to refer. I propose, first, to counter a device whereby company reconstruction has been used to obtain taxation advantages. The essence of the proposal is that, as from today, the provisions of the Income Tax Acts relating to the cessation of one trade and the setting up and commencement of another shall not apply in cases "where three-quarters or more of the interest in the trade belonged to the same persons before and after the change.

Estate Duty

I undertook last year to review anomalies in the Estate Duty, particularly anomalies arising in connection with what is known as the "assets basis" of valuation for controlling interests in private companies. Proposals for dealing with a number of these will appear in the Finance Bill. The Bill will also make provision for cases where part of a controlling shareholding, which has been valued on the assets basis, is sold to an independent purchaser; my proposal here, in broad terms, is that the Estate Duty valuation of the shares actually sold shall be brought into line with the sale price. The general principle of the assets basis, however, must, in my view, be maintained.

Nevertheless, I think that business assets are a type of property on which the Estate Duty can bear with special severity, particularly in the case of family businesses, whose traditional activities mean so much for the stability of our social and industrial life. Accordingly, where industrial premises or plant and machinery are used for the purposes of a trade carried on by the deceased—or, where the assets basis applies, by the deceased's company —the Estate Duty on these assets will be reduced by 45 per cent. This is the rate of relief which is already given in respect of agricultural land. This is a reform which hon. Members have often pressed on me in Finance Bill debates. I estimate the cost of the relief at £½million this year and £1½ million in a full year.

I have also examined a considerable number of anomalies, and alleged anomalies, in other parts of the Estate Duty field, though I have not been able to cover the whole subject this year. For example, the principle of aggregation of free and settled property has come in for a good deal of criticism on the ground of the hardship which it can cause to the deceased's family in certain circumstances. There is already a provision under which, broadly speaking, the deceased's own property is not aggregated with settled property if it is under £2,000. I propose to raise this figure to £10,000. I believe that with this amendment the great bulk of the hardship cases will be eliminated. This concession will cost £125,000 this year and £250,000 in a full year.

Lastly, I propose to deal with the doubts and anomalies which have arisen in regard to the treatment of policies of assurance which do not form part of the deceased's own estate.

Tucker Committees

I propose also to implement some more of the minor reliefs recommended by the first Tucker Committee. The second Committee which was set up under Mr. Millard Tucker's chairman- ship to deal with the taxation treatment of provisions for retirement has also now reported. I should like to thank Mr. Tucker and his colleagues for the difficult and valuable work which they have done on this complicated branch of the tax code.

There has not been sufficient time since the publication of the Report for me to reach any conclusions on the complex issues involved. In any event, the cost of the proposals would make it impossible for me to implement them in present circumstances. I shall not, therefore, propose this year any change in this part of the Income Tax system.

Investment Allowances

I now wish to end, as I began, with our primary need: that is, to improve our competitive power. In my survey of last year I have already commented on the inadequate level of investment by private industry. Our rate of industrial modernisation is strikingly less than that of America, and it seems probable that the Germans are now moving ahead of us. We shall not long continue to compete successfully in the export field with these, our principal rivals, unless our plant and equipment is completely up-to-date.

In accordance with my pledge last year, I have reviewed the whole question of company taxation. I have tried to devise some fresh encouragement to industry to put money into productive investment. This is the more essential since the physical and financial resources at our disposal are now sufficient to allow a substantially higher rate of investment than we are undertaking. Last year I restored the initial allowances to 20 per cent. This was a step in the right direction, but a limited one, since its effect is essentially that of an interest-free loan. As the cash resources of companies increase, this incentive becomes of less importance.

After considerable reflection, therefore, I have decided to take a further step, and to replace, subject to a few exceptions, the present initial allowances by a new system, which I call investment allowances. At present, the cost of investment in plant, machinery, industrial building or mining works may be offset against gross profits during the life of the asset by means of depreciation allowances. The initial allowance merely anticipates a part of the annual allowances, so that tax liability is less in the year in which investment takes place, but may be larger later on.

The new investment allowance will do more. It will give a tax-free allowance equal to a part of the cost of investment in the assets which I shall describe as qualifying for it. It will be given in addition to the full annual depreciation allowances. Thus, the initial allowances gave some extra help in the year in which the investment was undertaken, but at a cost of smaller allowances for that investment in later years. In contrast, the new investment allowance gives similar help in the first year, but with no reduction in subsequent allowances.

In general, the field over which the new investment allowance will operate will be the same as that of the initial allowance, which applies to plant and machinery generally and to new industrial buildings and mining works. But in view of the purpose of the new allowance, which is to encourage fresh investment, and of its nature, which is to give a tax-free allowance over and above the cost of the qualifying assets, there must be both additions to, and deletions from, the initial allowance list.

I propose that agricultural buildings and also plant and buildings used for scientific research, neither of which attracts initial allowances, shall rank for the new investment allowance. Investment in up-to-date buildings can assist farm production no less than industrial production, and the importance of scientific research to our economy can hardly be over-estimated. The new allowance should also help the shipping industry to carry out the big replacements which are necessary in the years ahead, and thus to maintain its vital contribution to our economy.

On the other hand, I do not think that this tax-free benefit should be available either for secondhand plant or machinery which does not represent new investment, or for ordinary motor cars which can and often do serve both business and private purposes. These assets will, however, continue to rank for the existing initial allowance at 20 per cent.

I propose that the new investment allowances shall apply, in the case of qualifying assets, to capital expenditure which is incurred—that is, which becomes due and payable—after today. In respect of expenditure on such assets, the initial allowance will in general cease from today. The rates of investment allowance will be 20 per cent, for expenditure on new plant and machinery and new mining works and new scientific and research work, and 10 per cent, for new industrial and agricultural buildings.

For plant, machinery and industrial buildings, these are the same as the existing rates of initial allowance, but they will be more favourable in the long run. The 20 per cent, investment allowance for mining works is not immediately so favourable as the existing initial allowance of 40 per cent. But since it will be given over and above allowances up to the cost of the works, it will practically always be better in the long run. However, I will allow any mining undertaking to choose between the new investment allowance and initial allowances at the 40 per cent. rate. There will have to be provisions safeguarding the new allowance from abuse. But these and other details must wait for the Finance Bill.

The cost of changing from initial allowances to investment allowances will be negligible in 1954–55, and about £4 million in 1955–56. Thereafter, the cost will increase year by year, and although the actual amount will, of course, depend on the level of new investment, I expect it to reach a considerable figure in the future. But in so far as this new allowance succeeds in its object of creating additional assets, those assets will, of course, be yielding additional revenue for the country, for their owners and for me.

Conclusion

Let me now make the final review of our national accounts. The Committee will already have realised that my proposals, which yield a surplus of £10 million, will still leave the Budget as it should be this year, broadly in balance. The estimate below the line will, it is true, have to take account of the concession on post-war credits.

But, in general, the changes which I have proposed have been much fewer and less spectacular than last year—deliberately so, for the reasons which I have already given. Just as, in 1952, I introduced an emergency Budget, and last year, an incentive Budget, so, this year, I am proposing a carry-on Budget, a Budget conceived as reaffirming our basic policies, rather than as marking any major change of emphasis or direction. That I can, with good conscience, do so is a tribute to the achievement of the measures which I introduced last year. They have brought us a good way along our road; they should be given the chance to carry us still further. Moreover, it would have been the easier and —I say this quite openly to the Committee—perhaps the more agreeable course to make sweeping reductions in taxation. But substantial tax remissions, would, in fact, have been premature, and unjustified in our present circumstances.

It is the duty of the Chancellor of the Exchequer, at such a time as this resolutely to reject temptations of this kind, and not to concede, to either the hopes or the fears of the future, what a dispassionate judgment of our economic prospects does not immediately require. But, although the scope for change was less this year than previously, I have tried to distribute what I can fairly, to ease some anomalies which have been felt to be unjust and undignified, and to enlarge, in a slightly novel way, the incentives to which industry responds. And I repeat that if, later in the year, circumstances should so demand, we shall not hesitate to take more radical measures at a later date.

It must, then, be a vigilant, poised and confident Britain which turns to face the new financial year—with an economy resilient to absorb whatever shocks and setbacks the fluctuations of world trade may inflict on us, but also alert to reach out for each and every opportunity for expansion and enterprise which circumstances may offer, and our own initiative may devise. So resolved, we have nothing to fear, and much to hope.

Customs And Excise

1. Entertainments (Excise)

Motion made,

That as respects payments for admission to entertainments held on or after the thirtieth day of May, nineteen hundred and fifty-four, the three scales of entertainments duty provided for by section two of the Finance Act, 1952, shall be those set out in the Tables at the end of this Resolution.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

TABLES
FIRST SCALE

Amount of payment

Rate of duty

Where the amount of the payment, excluding the amount of duty— exceeds 1s. 0d. and does not exceed 1s. 5½d½d.
exceeds 1s. 5½d.½d. for the first 1s. 5½d. and 1d. for every 5d. or part of 5d. over 1s. 5½d.
SECOND SCALE

Amount of payment

Rate of duty

Where the amount of the payment, excluding the amount of duty— exceeds 1s. 0d. and does not exceed 1s. 2d1d.
exceeds 1s. 2d.1d. for the first 1s. 2d. and ½d. for every 1d. or part of 1d. over 1s. 2d.

Third Scale

1. Where the amount of the payment, excluding the amount of duty, is an amount mentioned in the following Table, the rate of duty shall be the amount therein specified in relation to that payment.

Table

Amount of payment, excluding amount of dutyRate of dutyAmount of payment, excluding amount of dutyRate of duty
s.d.s.d.s.d.s.d.
½110¼1
101110¾1
10½111½1
112111¾1
11¼21
11½21
1042115
121
121
11621
121
12318
121
121
12519
121
141026110
110¼2110½
110½2111¼
16112111¾
111½22
111¾22
181022
112922
1122
1121023

Amount of payment, excluding amount of dutyRate of dutyAmount of payment, excluding amount of dutyRate of duty
s.d.s.d.s.d.s.d.
210½241041
21124410½4
211½241142
3025411½4
325043
312654
325144
322754
3254
332854
3254
325446
3254
36295547
3254
3254
3821054
3210½54
392115849
3211¾54
3359410
310¼35410½
310½3510411
31132510½411½
311½351150
4033511½5
436051
413465
436152
4365
4365
436353
443665
4365
453765
436654
463865
4365
436855
4365
4310½65
483116957
4311½65
494065
44

Where the amount of the payment, excluding the amount of duty, is an amount not specified in the foregoing Table, and exceeds ninepence but does not exceed six shillings and ninepence-halfpenny, the rate of duty shall be the same as on a payment of the next higher amount specified in the Table.

3. Where the amount of the payment, excluding the amount of duty, exceeds six shillings and ninepence-halfpenny, the rate of duty shall be five shillings and eightpence-halfpenny, increased by a halfpenny for every halfpenny or part of a halfpenny by which the amount of the payment exceeds six shillings and ninepence-halfpenny.— [Mr. Butler.]

The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 86 ( Ways and Means Motions and Resolutions.)

Question agreed to.

The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

2. Chicory (Customs duties and drawbacks)

Resolved,

That, with effect from the seventh day of April, nineteen hundred and fifty-four,—
(a) the full rates of the customs duty on chicory under section three of the Finance Act, 1924, and the preferential rates within the meaning of section eight of the Finance Act. 1919, shall be—
for chicory, raw or kiln-dried—the cwt. 19s. 0d. (full) and 16s. 9½d. (preferential);
for chicory, roasted or ground—the 1b. 3d. (full) and 2⅔d. (preferential);
and mixtures of roasted coffee and roasted chicory shall be chargeable at the like rates as roasted chicory;
(b) the rates provided by subsection (4)of section three of the Finance Act, 1924, for the drawbacks allowable on roasted chicory, and on mixtures of roasted coffee and roasted chicory, shall be—
in the case of roasted chicory, 17s. 0d. per 100 1b. or, if duty on the chicory was paid at the preferential rate, 15s. 0d. per 100 1b.;
in the case of mixtures of roasted coffee and roasted chicory 14s. 0d. per 100 1b.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

3. Key industry duty ( Continuation)

Resolved,

That the duties of customs chargeable under Part 1 of the Safeguarding of Industries Act, 1921, for a period expiring on the nineteenth day of August, nineteen hundred and fifty-four shall continue to be chargeable for a further period of five years from the said day.

Purchase Tax

4. Purchase tax (Miscellaneous amendments)

Resolved,

That the law relating 10 purchase tax be amended as respects—
  • (a) goods held by a person who ceases to be required to be registered on or after the first day of May, nineteen hundred and fifty-four.
  • (b)the operations which are to be treated as processes of manufacture,
  • (c)the treatment of unfinished or incomplete goods as if they were finished and complete,
  • (d)the conditions on which persons may hold certificates of registration or enjoy benefits corresponding to those accorded to persons holding certificates of registration,
  • (e) the registration of persons who manufacture goods to be let out on hire,
  • (f) any matters incidental or supplemental to the foregoing amendments,
  • and that the extent and incidence of the tax may be varied so as to give effect to such amendments.

    Income Tax

    5. Charge of income tax for 1954–55

    Resolved,

    That income tax for the year 1954–55 shall be charged at the standard rate of nine shillings in the pound and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess over two thousand pounds as Parliament may hereafter determine.
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

    6. Income tax ( Initial allowances)

    Resolved,

    That any Act of the present Session relating to finance, in connection with any further provision for income tax allowances in respect of capital expenditure on new assets, may impose restrictions on the making of initial allowances under Part X of the Income Tax Act, 1952, to prevent duplication with the new allowances or otherwise, and may amend that Act to provide for cases where no initial allowance is made, whether or not in consequence of any such restriction.

    7. Income tax ( Company reconstructions)

    Resolved,

    That it is expedient to authorise all such charges to income tax (including charges for past years of assessment) as may arise from any provision as to changes in the persons carrying on a trade which is being or has been carried on by a body corporate, or in the persons carrying on activities comprised in a trade which is being or has been carried on by a body corporate.

    8. Income tax ( Income against which losses and capital allowances may be set)

    Resolved,

    That any Act of the present Session relating to finance, if it enables business losses, and allowances under Parts X and XI of the Income Tax Act, 1952, to be carried back against income of previous years on the cessation of a business and in other cases, or enables such allowances to be set off against general income, may contain provision to prevent duplication of the relief whether in favour of the same or another person.

    9. Income tax ( Treatment for capital allowance purposes of demolition cost)

    Resolved,

    That it is expedient to authorise all such charges to income tax as may arise from any change in the way in which demolition costs are to be treated for the purposes of Parts X and XI of the Income Tax Act, 1952.

    10. Income tax ( Effect of certain sales on capital allowances, etc.)

    Resolved,

    That as respects allowances and charges under Parts X and XI of the Income Tax Act, 1952, for the year 1954–55 and subsequent years of assessment, provision shall be made for securing—
  • (a) that an election may not be made under paragraph 4 of the Fourteenth Schedule to that Act (which relates to sales between companies under common control and other cases) if any of the parties to the sale is not resident in the United Kingdom at the time of sale, but except for that the Schedule shall have effect in relation to a sale notwithstanding that it is not fully applicable by reason of the non-residence of a party to the sale or otherwise;
  • (b)that the operation of paragraphs 3 and4 of the Schedule shall not be restricted to cases where the property is sold at a price other than that which it would have fetched if sold in the open market.
  • Profits Tax

    11. Profits tax ( Charges consequential on income tax amendments)

    Resolved,

    That it is expedient to authorise all such charges to the profits tax (including charges for past chargeable accounting periods) as may result from amendments of the law relating to allowances, deductions or charges for income tax purposes.

    Estate Duty

    12. Estate duty ( Valuation of certain company shares or debentures and assets)

    Resolved,

    That the provision made by section fifty-five of the Finance Act, 1940, for valuing shares or debentures by reference to the value of the company's assets ought to be amended, notwithstanding any resulting charge to estate duty, and section fifty of the Act ought also to be amended so as to provide that in valuing a company's assets (whether for the purposes of section fifty-five or of section forty-six of the Act) an allowance may in certain circumstances be made for taxation falling on the company after the death.

    13. Estate duty ( Aggregation of settled property with other property)

    Resolved,

    That it is expedient to restrict the provision made by subsection (3) of section sixteen of the Finance Act, 1894, as amended, for not aggregating settled property with other property.

    14. Estate duty ( Policies of assurance)

    Resolved,

    That new provision ought to be made for charging estate duty on policies of assurance on the life of the deceased.

    15. Estate duty ( business assets)

    Resolved,

    That, if any Act of the present Session relating to finance provides for charging estate duty at reduced rates in respect of particular types of business assets, it may in connection therewith contain provision as to the manner of apportioning the liabilities of the business between the assets thereof, notwithstanding any resulting increase in the charge on some of the assets.

    General

    16. Amendment of law

    Motion made and Question proposed,

    That it is expedient to amend the law with respect to the National Debt and the public revenue, and to make further provision in connection with finance, so, however, that this resolution shall not extend to giving any relief from purchase tax otherwise than by making the same provision for chargeable goods of whatever description or by reducing any of the several rates of the tax generally for all goods to which that rate applies.—[Mr. Butler.]

    5.10 p.m.

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    The Chancellor of the Exchequer has expounded his Budget with his usual lucidity and clarity, and in a very pleasant manner. I am sure that all the experts were able to follow all the figures. Personally, I want a little time to digest them, so the remarks I propose to make will be very brief.

    I do not think that this Budget can be considered to be a very exciting Budget, but I am sure that there will be plenty of clamorous demands voiced during the next few days. The right hon. Gentleman will certainly have disappointed some newspapers that have been loudly demanding 6d., as if it was the "dockers' tanner," off the Income Tax. He will, I am sure, have disappointed many who hoped for some alleviation of the lot of the old-age pensioners. I am quite sure that he will hear of that from my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) and others.

    The right hon. Gentleman has not made any very startling changes. This has been, as he says, a carry-on Budget, but I think he will be the first to admit that if his ship is to carry on, how it carries on will depend on the weather. I rather gathered from the right hon. Gentleman, despite the tributes that he naturally paid to his own management of our finances, that, on the whole, during the last year he has experienced fairly calm weather, and I think he was right to draw attention to the fact that we may not, in this next year, be experiencing just that kind of condition.

    There is the great unknown factor of a possible big recession in the United States of America. It is, I think, very difficult for any of us to estimate what that will be like. We all hope, with the right hon. Gentleman, in the interests not only of this country but of the whole world, that that recession will not go very far.

    The right hon. Gentleman has made some concessions. They were rather small. I think we should have liked to see something rather more on post-war credits. We welcome the very small Entertainments Duty reliefs, but I think he has not done quite enough to please the sportsmen. We shall have to review these proposals very carefully in the next few days, and when my right hon. Friend the Member for Leeds, South opens the debate tomorrow he will, no doubt, deal with the wider issues of finance in which experienced financiers revel. Far be it from me that I should make any voyage into the financial field. I again thank the right hon. Gentleman, on behalf of the House, for the very clear statement that he has made.

    5.13 p.m

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    When the Chancellor of the Exchequer read the lesson at Greenstead Green Church on Sunday the congregation prayed that if any criticism was made of the right hon. Gentleman it should be tempered with sympathy and understanding. I am sure that all of us wish to proceed in that spirit this afternoon, and I should like to echo the words of my right hon. Friend the Leader of the Opposition and congratulate the Chancellor on the lucidity and the good humour with which he presented this carry-on Budget. Indeed, his good humour was, in the circumstances, quite remarkable.

    The right hon. Gentleman drew upon a number of nautical metaphors in the course of his speech, and I hope that the Committee will not feel that I am departing from that spirit when I say that he himself reminded me of a water creature, Lewis Carrol's crocodile, who had a very cheerful grin
    "And welcomed little fishes in With gently smiling jaws."
    I am sure that many members of the public, because this is a standstill Budget, will feel that they have had a pretty fair crack of the whip because no new impositions have been placed upon them. I hope very much that members of the public will not be taken in in that way. My right hon. Friend the Leader of the Opposition was quite right to stress the indignation which we feel on this side of the Committee that the Chancellor was unable to do something more for the old people, and not only for the old people but also for the disabled and the sick—and I would add to that class the spinsters as well.

    The right hon. Gentleman said that it is because of the situation that we are in that we cannot do more for these classes of people. It seems to me that if the Chancellor is right, he is willing that the country should travel forward to economic stability on the backs of those members of the community who are least able to bear the burden. I think it is wrong that he should neglect these legitimate claims at the present time, but I would add one word of congratulation to the Chancellor on having resisted the temptation to cut Income Tax or to take any other step which would, by contrast, have emphasised the growing hardship of the old people and the other members of the community who are on hard times at the moment.

    That this is a disappointing Budget— and I think the Press will tomorrow echo the views of the Committee that this is a disappointing Budget—arises from the fact that our progress towards economic recovery is itself disappointing. The right hon. Gentleman was right to remind us that we must not be complacent about what has been achieved, and I am glad that the right hon. Gentleman, in the midst of a good deal of optimism this afternoon, from time to time struck a realistic note. It was a note which was struck in the Economic Survey itself, and I should like, in the interests of brevity and for the convenience of the Committee, to quote the summing up of the Economic Survey which appeared in the Board of Trade Journal for 3rd April.

    That paper, published by the Board of Trade, said:
    "… the Sterling area ended the year in a stronger position than 12 months before. But there were some less satisfactory features. The United Kingdom's balance of payment surplus was lower than in the previous year in spite of an improvement in the terms of trade which is estimated to have benefited us to the extent of £200£250 million; and although our exports recovered with the revival of overseas demand towards the end of 1953, there were no signs that we were winning back the ground lost to our overseas competitors in recent years."
    The same number of the Board of Trade Journal quoted a speech made a few days earlier by the Minister of State for Economic Affairs, whom I have referred to upstairs as my second favourite Minister, when the Minister of State was addressing the National Union of Manufacturers. In the course of that speech the Minister of State gave two main warnings to industry. He said that Japan and Germany were still not doing as big a share of the world's trade as they were before the war and that both of them were likely to intensify their efforts in that direction. He added the warning that, in a situation in which the United States' production is two-and-a-half times in volume what it was before the war, even a very slight overspill from the United States would create a serious new source of competition for this country.

    I am afraid that for those reasons, the balance of payments figures of the Chancellor this afternoon may produce an optimism which is not justified by the facts. It is true that the Chancellor did hedge himself by referring to the American situation. I should like, if it is any comfort to the Chancellor, to say that my assessment of the American situation largely coincides with his own. I believe, that any recession there is more likely to be on the 1949 scale than on the scale of the recession in 1929 and 1930.

    But in addition to this very serious shadow which lies over the world economic scene, there is another complicating factor, especially for this country. That is, that there is a world tendency for the terms of trade to run against us in the industrial countries. That is inevitable in a world in which we have had a steadily rising population, going up since 1939 at the rate of 20 million a year, and in which, until 1953, we have had the world production of foodstuffs and raw materials remaining broadly what it was in 1939. Under those circumstances, in which we get greater demand for raw materials and, at the same time, increased production of manufactured goods, I do not see how, in the long run, the terms of trade can fail to run against manufacturing countries like our own.

    It would be a great tragedy if anything that the Chancellor has said today should lead members of the public to what I believe is the quite false conclusion that our balance of payments problem is anything but serious or likely to remain so for the foreseeable future. One of the rather discouraging factors for the people of Great Britain is that our success seems to be entirely disproportionate to the efforts which we make.

    If I may come back once again to Alice I would remind hon. Members of the time when she, having run very hard for a very long time, found herself where she was when she started—
    "'In our country' said Alice, still panting a little, 'you generally get to somewhere else— if you run very fast for a long time as we have been doing.'
    'A slow sort of country' said the Queen. 'Now, here, you see it takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that.'"
    That, I am sorry to say, is really the stage in our economic development which we have reached.

    At present, unfortunately, in the markets of the world we are not even holding our own in relation to our new and thriving competitors. The Treasury issue every month their Bulletin for Industry, of which I have a copy in my hand, and which was admirably summarised in the "News Chronicle" yesterday in these words:
    "Among the 18 nations of the Organisation of European Economic Co-operation—all West Europe, Greece and Turkey—German exports have raced past Britain's in spite of a rise in our share. And in places like South America, Egypt, and parts of the world outside the dollar and sterling areas, German exports are ahead of Britain's and are still going up while ours slip back. Even in the dollar area, where our share of trade is still ahead of the West Germans, they are putting up a fierce chase. And in the sterling area—including our own Commonwealth—while British exports are rising again after a fall West Germany's are going ahead quicker."
    That is a most alarming state of affairs. The reason for it is twofold. First, we have failed to make that investment overseas that the state of the world and our own economy called for from us. Secondly, there has been insufficient investment in private industry during the past year, and, indeed, for some years past.

    The Chancellor spoke about the effect of rising wages upon our competitive prices. Far more serious than rising wages is the fact that we are not keeping our industry at the maximum pitch of efficiency and productivity. I hope, whether my hope will prove to be justified or not, that the new investment allowances that the Chancellor announced will go some way to encourage greater investment than we have seen during the past 12 months.

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    The hon. Gentleman is, rightly, complaining that our position in the export market is difficult. He is complaining that we are not spending enough on re-equipment and that our position is precarious. How can he, in those circumstances, also demand that we give more away in the form of social services if we have not got it to give away?

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    We shall not get the money necessary for an expansion of the social services unless we have got industry running at the maximum pitch of efficiency. It is no good taking the purely short-term view and starving industry of the capital it needs in the next year or two. What we have to do is to make the sacrifices so that in five or 10 years' time we may have the efficient industry that we require.

    I am sorry that in the last 12 months the incentives which the Chancellor gave a year ago have not had the effect that everyone hoped they would have. We know that during that time industry has been piling up quite nice reserves which could have been used for new plant and new machinery, as the Chancellor implied during his speech.

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    Will the hon. Gentleman tell us what people do with their reserves?

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    The hon. Gentleman will know better about that than I do. No doubt he can develop that point in his speech. As I understand the position, one of the complaints of the Chancellor is that the money has not been used in productive industry as he would like it to be used.

    I come to three further points to which I wish to draw attention. The first relates to the fuel tax. I was sorry that the Chancellor was not able to announce any concession, even a slight one, in that direction. Before 1950, the tax on diesel oil fuel, which is known as Derv, was 9d. a gallon. In 1950, it rose to 1s. 6d.; in 1951, it increased to Is. 10£½ and, in 1952, it went up to 2s. 6d. Today, the tax is no less than 214 per cent, which I believe to be at a wicked and punitive level. The untaxed cost of Derv is 1s. 2d. a gallon. When tax is paid it is 3s. 8d. a gallon.

    In January, a memorandum was presented to the Chancellor on behalf of four passenger transport associations. I wish that the Chancellor had paid more attention to the representations made to him on that occasion. But we should not assume that this is a question only of passenger transport. It is true that the extra imposition upon our passenger transport is one of the considerations which is making for more wage demands; but we should not blind ourselves to the fact that the tax on fuel is also putting up the price of the goods that we produce and so adding an extra burden to our efforts to compete in export markets.

    The second point refers to Purchase Tax. The Chancellor told us that this year we collected £39 million more than he estimated a year ago and that during the next 12 months he estimates that we shall collect £295 million. I do not want to weary the Committee by going into the arguments about Purchase Tax all over again, but I should like to say. very briefly, that I believe that this is a fradulent tax which was put on during the war in circumstances very different from the circumstances of today. It was never intended to be a permanent tax. It is today an inflationary tax because it puts up the cost of living. It makes the development of our export lines more difficult. And it means, because of the operation of the D scheme, that there is a lowering of the quality of many of the goods that we produce.

    Representations have been made to the Chancellor along those lines in the last few months and I am sorry that he brushed them aside with the same brusqueness that the Government in variably show in dealing with the problems of the textile industry.

    The last point relates to post-war credits. Like other hon. Members, I welcome the slight concession which the Chancellor has made in this direction; but it is a very slight concession. The right hon. Gentleman told us something about the origin of post-war credits. What he did not tell us was that when Lord Keynes originally propounded a scheme of post-war credits the intention was that they should be paid off at the end of the war out of the proceeds of a capital levy.

    We are now nine years after the end of the war, and out of £800 million of post-war credits that accumulated there are still £564 million left to be paid off. As we are paying them off at the rate of £16 million or £17 million a year, it will still take us nearly 40 years before we have wiped out the post-war credits. Yet, in 1946, the Government announced that it was hoped to liquidate credits, between then and, say, the next five, and certainly 10, years. The Financial Secretary of that time added that the bulk of them would have been paid within four or five years.

    That time has passed, and I think it is most unfortunate, from the point of view of both parties, that the House of Commons has not lived up to the expectation which the public had when the post-war credits were collected during the war. It is unfortunate, when the public have handed over money to the Government on a clear understanding that the time during which the Government will retain that money is limited, that we should now face the prospect of the money remaining in the Government's hands for another 25, 30 or 40 years.

    I am not making a party point, because we put this argument over and over again to my right hon. Friends when they were the Government. From the long-term point of view, it is very sad if the confidence of the public in the word of the Government is destroyed in this way. I should have liked to hear the. Chancellor today announcing some scheme not for the minor concession which he has made but for the gradual wiping out of post-war credits, so that we could honour the undertakings which were originally given. I should also have liked, while the Chancellor was making concessions, to hear him make concessions so that people on National Assistance could be allowed to draw their post-war credits rather than rely on assistance.

    In conclusion, the test of a Budget is whether it measures up to the needs of the time. I think the needs today are two-fold. In the first place, there is the need to look after those members of the community who are most in need of help; and the Budget fails to do that. The second requirement of a Budget is that it should make a real contribution to the expansion of our industry and to the solution of our balance of payments problems. In my view, the Budget also makes an inadequate contribution in that direction. On both those grounds I believe that this is a disappointing Budget and I hope that as the Finance Bill passes through the House it may be possible to make at any rate some minor improvements in what otherwise would be a thoroughly bad Budget.

    5.33 p.m.

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    I have never before listened to such concentrated nonsense in a speech as that which was contained in the speech of the hon. Member for Rossendale (Mr. Anthony Greenwood). The hon. Gentleman made the allegation that industry has failed to re-equip itself. He says it has placed money to reserve. I wonder whether he has ever looked at the profit and loss account of a balance sheet. Reserves do not consist of money put into a box to stick under the managing director's table. Reserves are almost invariably found in new assets on the other side of the balance sheet. The hon. Gentleman does not seem to understand that; he has not a clue.

    In addition, the hon. Member deplored the fact that the Chancellor has failed to provide all sorts of benefits involving in creased expenditure. Next, he deplored that the Chancellor has not reduced taxation. I do not know whether he learned any arithmetic. He regretted that various classes of the community who are retired from work have not been given greater benefit from the Budget. He went on to deplore the high level of Purchase Tax —and I agree with him, for it is much too high. He deplored the rate of petrol duty—and I agree with him because that, too, is much too high. But we cannot spend more money and simultaneously reduce taxation. The hon. Gentleman should do a little arithmetic.

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    I said that I recognised that the Chancellor had to produce such a disappointing Budget and could not do many of the things we wanted him to do because our economic progress has been so slow; and I said that our economic progress has been so slow largely because of the lack of investment in new equipment. That is not my view alone; it is also apparently the view of the Chancellor of the Exchequer and certainly the view of the Economic Survey.

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    I think I know as much about the inside of a factory as do both the Chancellor of the Exchequer and the hon. Member—indeed, far more than the hon. Member knows. The engineering businesses with which I am associated are all the time fighting to get the wherewithal with which to pay for new equipment. The hon. Member should look at the published accounts of the company of which I happen to be a director.[An HON. MEMBER: "How much do you get?"] I work fairly hard and I earn what I get. I see that the provision for taxation in respect of the year to which this report and accounts relate was £61,000. The shareholders received £15,000, so the Chancellor of the Exchequer—the sleeping partner in the business—whose representative is on the Front Bench now, draws four times as much as do the shareholders.

    What was left over to carry forward will be used, as far as it will go, to pro- vide the new equipment which is necessary. We are always after new equipment and always finding it exceedingly difficult to get new equipment. I resent the fact that somebody with no experience at all of industrial matters, as far as I know, should accuse those who are engaged in industry of failing to provide new equipment.

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    That is what the Chancellor said.

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    I do not care what the Chancellor said.

    Once upon a time I was interested in the machine tool industry, and that industry provides a very large part of the equipment of other engineering works. The machine tool industry has been working all out ever since the war. Indeed, it was working all out during the war, of necessity. If hon. Members tried to buy large items of equipment from the machine tool industry they would have a long time to wait. How long do we have to wait? It is anything from 18 months to two years, and sometimes even longer for big machines.

    One machine which I have in mind will cost £25,000, which is a lot of money to spend when the capitalisation of the company is only £160,000. That machine was ordered two years ago.

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    It is a small company.

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    It is spending £25,000 for one machine and it will take over two years to get it because the machine producing industry is so far behind with orders. To suggest that industry is not spending money on re-equipment is grossly unfair to those engaged in industry. We are doing our very best to finance re-equipment. I happen to be mixed up with two engineering companies.

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    I bet you are.

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    Did I understand the hon. Member for Croy-don, East (Sir H. Williams) to say that he is mixed up with a lot of industries?

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    What is wrong with that? They are two engineering companies—one in Middlesex and one in Lancashire.

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    rose

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    There is no one more willing than myself to give way, but I think I might be allowed to make my speech.

    On Friday, I am taking a day off and going to Lancashire. I am the only non full-time director of the company, and I always ask my colleagues, "What about the progress of new equipment?" I am always asking them about re-equipment. I am always asking, "What do you need?" It is vital that we should keep up to date.

    This particular branch of industry is not a branch of precision engineering. Our stuff is on the heavy side and high precision is not very much in demand. I am always asking my colleagues, "Are we up to date? Is our equipment satisfactory?"

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    I am not asking this in any controversial mood at all, but the hon. Gentleman says he is connected with a company which is about to buy a machine which will cost the company— in effect, this is what it will cost the customers of the company—£25,000. If he is so efficient, will be tell us the exact number of hours that machine tool will work when he gets it?

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    As far as I am concerned it will work all day and, when necessary, all night. That is the only proper and efficient method. If one has a valuable machine, if one cares to put a night shift on, one does. But one cannot always get men for the night shift, particularly in a district where the demand for engineering labour is high. I do not see that that point is relevant.

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    Certainly it is relevant.

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    We have had comment, too, about extravagant businesses. But what is the ratio of wages and salaries to dividends, tax free, in the case of a large number of companies? Wages and salaries are about 17 times as much as dividends. The hon. Member for Rossendale wants us to make lower profits and, at the same time, wants us to buy a lot of new plant, and then he accuses us of being incompetent because we have not done it. It does not make sense.

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    In a last desperate attempt to make the hon. Gentleman realise what we are saying and what the Chancellor has been saying, may I read to him paragraph 42 of the Economic Survey? It states:

    "Expenditure by industry on new building was slightly higher in real terms than in 1952. The increase was mainly concentrated in the fuel and power industries; there does not appear to have been any corresponding rise in new building work done for private manufacturing industry, but this was running at a higher level at the end of 1953 than at the beginning, following the relaxation of licensing restrictions in the spring. Similarly, with plant and machinery there were increases in 1953 in investment in the basic industries, particularly coal and electricity, but no increase in manufacturing industry."
    That is the point which the Chancellor, other hon. Members and myself have been making.

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    I do not know where the back room boys of the central statistical office get their information. When they used to produce their original Economic Survey, I used to describe it as "Old Moore's Almanac," because their forecasts were invariably wrong. Now, it merely attempts to be a survey of what has happened As anybody with any experience of statistics will find out, if they get one calculation right to the degree of accuracy of one in 10,000, it is remarkable. Everybody knows perfectly well that the original information on which these statistical surveys are based may have an error of 5 per cent, plus or minus.

    I base my calculations and gain my experience from the factories I have visited, and I just do not believe this statistical evidence, whether it comes from the hon. Member for Rossendale or from the Chancellor of the Exchequer. I do not listen to it. All companies are doing all they can, within the limits of the money they have, but even ordinary companies are taxed up to roughly 70 per cent, of their surplus. Out of what is left, they have to provide some reward for their shareholders, to which they are entitled, and the rest goes to reserve, to be invested in new plants and buildings when circumstances call for it. This is what happens in actual fact, and when I hear people talking with no particular experience of industry I get a little upset.

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    What about expenses sheets?

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    Well, what about them? I do not know why a remark like that, which is inclined to be offensive, should not be withdrawn, because the implication is that I am getting something to which I am not entitled. I do not conduct my affairs in that way, and I never have done. I make a complete declaration of all the allowances I get for expenses, and I charge against them the expenses which I am entitled to charge, and I make a full return.

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    We are getting a little remote from the Budget.

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    I sometimes wonder whether everybody who appears on the B.B.C. or on television, or writes articles for publication, makes a full disclosure.

    The situation revealed by the Chancellor is very grim in one respect. His first Budget was a deliberately grim one, designed to save us from inflation, and, a year later, he was able to introduce his second Budget to stimulate efficiency. It had that result, because industrial efficiency, as the Chancellor said today, is now running at a much higher level than ever before, and showed an advance of 6 per cent, on only a year ago. Meanwhile, the volume of employment in the country is higher than ever.

    It is also true, however, that expenditure has increased, and increased top much. There is a vast increase in expenditure of a kind that ought to have been avoided. I am by no means satisfied that we are getting full value for our expenditure on the National Health Service. The Estimates are far in excess of what was anticipated when it was started.

    There has been no diminution in mortality as a result of that expenditure, despite the fact that there has been a vast drop in infantile mortality as a result of measures which have nothing at all to do with the National Health Service, an enormous drop in the mortality from tuberculosis—60 per cent, in the last 16 or 17 years—also due to causes which have nothing to do with the Health Service, but to the discovery of new treatments and mass radiography. There has been a tremendous drop in the mortality of children due to certain infectious diseases, particularly diphtheria, which, again, has nothing to do with the Health Service.

    The reason for all this is quite obvious. The doctors are cluttered up with unnecessary patients, they have not the time to deal with them before sending them for hospital treatment, when, in many cases, they could be dealt with satisfactorily without going to the hospital. As a result of that happening, there are long waiting lists at the hospitals and people get worse treatment than before —

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    The hon. Gentleman chided my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) for talking about business when, supposedly, he knew nothing about it. May I, as a member of the South-Eastern Regional Hospital Board, say to the hon. Gentleman that he does not know what he is talking about?

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    For nearly 50 years I have studied problems of medicine in various aspects and in a non-expert capacity, and what I have said about infantile mortality is absolutely true. The figures were static until 1900, then they started to drop. They used to average 160 per 1,000 of the population, but, last year, the figure was less than 30, and Croydon has the lowest figures in the United Kingdom.

    When I mentioned diphtheria, the hon. Member for Bermondsey (Mr. Mellish) says that I do not know anything of what happens in regard to tuberculosis. Is it not true that every hospital has a long waiting list? What are the members of the South-Eastern Regional Hospital Board in Portland Place doing about that?

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    I do not think we can go into the details of the National Health Service.

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    The Budget is the result of expenditure, and I was discussing one aspect of expenditure, while hon. Members opposite are very anxious that I should not. However, I will continue with the rest of my speech.

    I have always taken the view that there is a great restriction on our freedom which ought to be abolished. I refer to the General Agreement on Tariffs and Trade. Even in this rather humble Budget, we can see its effects, and, if hon. Gentlemen will look at page 16 of the Financial Statement which has been issued today, they will find that it is proposed to increase the rates of duty on chicory and on chicory and coffee mixtures, and just as much extra duty has to be paid on Empire chicory as is paid on foreign chicory.

    We have lost our economic freedom under G.A.T.T., and I want to restore our economic freedom. I think it is absolutely vital that we should get rid of G.A.T.T. I know it is said that certain parts of the Empire, such as Canada, being under the economic influence of the United States, will not agree, but that is no reason why we should not take unilateral action. If we did so, we should find a great part of the Empire coming in with us. It is true that we cannot now dominate the economic situation quite as we did in the past, but let nobody run away with the idea that we are unimportant. With all our friends joining with us we are, indeed, vastly important.

    Already, we have almost disposed of our balance of payments problem, but we still have the dollar shortage. I am convinced that the £ ought to be allowed to go free, because we cannot have a disturbed balance of trade if we have a free currency. If we have one lot of pieces of paper which we call pounds and another lot which we call dollars, and if we try to fix a relationship between them, which is fixing the value of the £ in terms of the dollar, that is a completely non-sensical economic theory. We can either have paper pounds to exchange with other currencies on a purchasing power of parity, to use one of the technical terms, or we can have gold, but, if we have a paper currency, it is complete nonsense to fix a rate of exchange between two bits of paper.

    We went off the Gold Standard at the beginning of August, 1914, and for the first time in the history of anybody now living we had paper money in the form of £1 and 10s. notes. We went on like that throughout the war till we came to the time when America joined in. Then was established a fixed rate of exchange between the £ and the dollar, and the Americans went on lending us enough money to preserve a fixed rate of exchange.

    On 18th August, 1919, the then Prime Minister, the late Mr. David Lloyd George, gave in the House of Commons a most interesting survey of the economic situation of this country. If anybody wants to read current events in 1919 I advise him to read the speech made by Mr. Lloyd George that day. It is most interesting. He said that from tomorrow morning they would let the £ go free. The result was that the adverse balance of payments was cured in six months. There were other adverse effects due to the fact that, with the assent of all political parties, we decided to pursue a policy of deflation.

    Time went on, and we carried out deflation by reducing the currency so much each year. I think it inflicted great hardship, all for the purpose of restoring the £ to gold parity. It was no good going back to the old parity. If we had restored it at a new parity the result would have been a return to the Gold Standard without deflation.

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    The gold sovereign came back.

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    The late Philip Snowden, who was Chancellor of the Exchequer, appointed a committee to consider by what method the Gold Standard could be restored. When the present Prime Minister found himself at the Exchequer he received the report of that committee. In his first Budget he announced the restoration of the Gold Standard from the following morning. It was the first Budget speech I had ever listened to. All the political leaders said that it was a spendid idea. Certain precautions were taken at the time. Assurances were given by the Bank of France and by other people in the banking world. The trouble was not in our going back to the Gold Standard, but in forcing us back to the old parity by means of deflation. The mutiny of Invergordon in 1931 put us off the Gold Standard again.

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    In 1922, gold sovereigns were in circulation.

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    If the hon. Gentleman —

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    I take it that the hon. Member for Croydon, East (Sir H. Williams) is developing this historical interlude in order to connect his argument with the Motion before the Committee?

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    Certainly, Sir Rhys. I am doing so for the purpose of urging convertibility, which, I understand, has been the subject of discussion in every Budget we have had since 1945. I want to show that on two occasions it came off. We were pushed off the Gold Standard, and the £ had to find its own level when we were face to face with a very heavy adverse balance of payments. It is true that a few months later we introduced a general system of protective tariffs. The two things in combination wiped out the adverse balance of payments.

    The first occasion when we had a free £ was when there was full employment. The second was when we were subjected to a very high degree of unemployment. The same remedy, therefore, produced similar results. The £ is self-defending if allowed to go free, but if, when we allowed it to go free, the exchange value of the £ was low, we would have an increase in commodity prices. I hope that my hon. Friend the Financial Secretary to the Treasury will look up these things. If freeing the £ has done well on two occasions it might be worth while to try it again. So much for my general theme of the restoration of convertibility.

    What was done in 1947 under the American loan was not convertibility at all. We allowed sterling balances in this country to be used to buy dollars at a fixed rate of exchange but that has nothing to do with what I am now discussing. People talk of convertibility in two different senses. What happened in 1947 and what I am now urging are two entirely different things.

    The Chancellor of the Exchequer has made something which should be of very considerable advantage to industry and will help to re-equip it. That is, his new investment allowance. I am not quite clear from his speech, or from what I read in the Financial Statement, how it will work out, and I should like a little clarification. So would one of my hon. Friends who is interested in accountancy and, in due course, will find it his professional duty to explain how it will work out. The Chancellor of the Exchequer said that the initial allowances is a tax-free loan and would have to be paid back later on.

    I take it that it is a grant of 20 per cent, depreciation in the year in which we buy, and that we shall definitely save Income Tax on that 20 per cent. I hope that the Financial Secretary will clear up that point, so that we shall know what the proposal is. Quite a number of us are not clear about it. We should like to have an explanatory note to tell us exactly how it will work.

    I take it that it is an initial depreciation of 20 per cent, in the year of purchase, in addition to the normal depreciation attributable to the class of goods concerned. The rates of depreciation vary very much in accordance with the probable life of various commodities. Everybody knows that there is an arrangement going back to the Finance Act, 1921, by which a trader can get into negotiation with the Board of Inland Revenue and put up his case for an agreed rate of depreciation for this class of machinery and that. I take it that the 20 per cent, is initial depreciation, called the "investment allowance," and that on top of it the normal depreciation allowance will be granted.

    I hope that the Financial Secretary will be able to catch your eye, Sir Rhys, and will benefit hon. Members and a lot of people outside by telling us exactly what is intended. I suppose the Chancellor will broadcast to the nation tonight and will elaborate this point, which will attract a great deal of interest among those who are responsible for the conduct of industry. I hope it will also attract the attention of the hon. Member for Rossendale, who ought to assimilate it.

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    If I have the good fortune to catch your eye in the course of tomorrow's debate, Sir Rhys, I should like to address to the Committee a few remarks on this subject. I prefer not to do so merely as a reply to a question at this stage, because this is a complicated matter.

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    I am most grateful to my right hon. Friend. I hope, Sir Rhys, that he will catch your eye and retain it sufficiently long to deal with this matter. I know that I have taken some time. I do not normally speak at great length unless provoked by unnecessary interruptions. They do not worry me in the least, but I do like occasionally to complete a sentence.

    As I said in a previous financial debate, the present Chancellor is face to face with a problem that does not cease. On the one hand, he has to try to ensure full employment, and, on the other, to avoid inflation. It is quite true that employment can be created by inflation, but an appalling price has to be paid later. The Germans did that in, I think, 1926. They allowed the printing machine to get completely out of control, with disastrous results.

    We were on the verge of getting out of control in the same way, and the Chancellor of the Exchequer's first method was deliberately designed to check inflation. He asked the banks to restrict credit, and he asked the Bank of England to raise the Bank Rate with the object of checking speculation and inflation. He succeeded. He was doing it at a rather difficult time because, for reasons which had nothing to do with him the textile trade was suffering rather badly then.

    It was an indirect sequel to the war in Korea. America ran up raw material prices to absurd levels and then there was a collapse. Then a previous Chancellor of the Exchequer, the right hon. Member for Bishop Auckland (Mr. Dalton) made a silly speech in which he asked people not to buy. That put thousands out of work.[HON. MEMBERS: "No." People's memories are short, but if they go to Leeds and Bradford they will get the most adequate confirmation about conditions there two or three years ago. Some hon. Members have conveniently short memories.

    The Chancellor deliberately sought. first, to check inflation and that had a most marked effect on the adverse balance of payments. I would remind hon. Members that an adverse balance of payments is an unfailing sign of inflation. The Chancellor checked inflation. It is true that he removed certain food subsidies and replaced them in other ways which gave rise to an apparent, though not real, rise in the cost of living. Within a year he was able to achieve stability of prices. I know that we have frequent questions on the subject —

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    The price of tea is going up again.

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    It is no use picking out one item. The balloon may be going up for all I know.

    One has to take the general range of commodities. Household budgets are certainly up, because people are doing themselves so much better. Of course they are. I think one hon. Member has mentioned old-age pensioners, but I remember Mr. Ernest Bevin, as Minister of Labour, being pestered to increase old-age pensions. He declined because, he said, "Two-thirds are in employment— so do not talk to me about that." His words are recorded in the OFFICIAL REPORT.

    The Chancellor of the Exchequer has succeeded in walking the tightrope with great skill—preserving full employment and preventing inflation. I think he is entitled to every praise and credit for his great success in that direction. I only hope that he will be a little more careful in publishing his Economic Survey and saying that industrialists are not buying more machinery. I think that his purpose has been very good, but unless he cuts expenditure—and there are plenty of directions in which he can do that —

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    I cannot make another half-hour speech, but if the hon. Member will come into the Library I shall show him where cuts can be made. The Admiralty, the War Office, the Air Force—the whole lot; there is not one in which there is not waste. Waste is characteristic of Governments.

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    The Tory Government.

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    Tory, Liberal or Labour—and the whole history of Socialism is profligacy. If any hon. Member wants to study economy I shall be only too glad to spend an hour in the Library for his benefit.

    I hope that the Chancellor will continue bis success in general economic affairs, but that he will cut expenditure because, quite honestly, the burden on industry today is such that many prosperous firms may go out of business through lack of liquid resources.

    6.6 p.m.

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    I hope that the hon. Baronet the Member for Croydon, East (Sir H. Williams) feels the better for getting that off his chest. I am glad, first, that he was not speaking for the Chancellor of the Exchequer this afternoon, secondly, that he did not write the Economic Survey, and thirdly, that he was not called upon to be Minister of Health, or we would have had a very much poorer Health Service than we have. I am sorry that he did not tell the Committee his remedies for reducing expenditure. That would have been most useful. We all know that any significant change in expenditure now means a change in policy. It would have been to our advantage if he could have detailed to us the kind of policy changes in the social services that he wished to bring about.

    After listening to the Chancellor of the Exchequer giving his excellent economic lecture with his usual Olympian calm I began to wonder, at the end, whether his Budget speech was really necessary. Perhaps he could have said, as, in effect, he did, "Last year's Budget was so good that, apart from one or two trivial changes, I propose to do nothing more." He called it a "carry-on" Budget; I would call it an "As you were Budget." Believe me, there will be a "carry on "among the 4½ million retirement pensioners and those supporting their claim to increased pensions.

    The urgent need for something to be done immediately to assist the old-age pensioner cannot be disputed. We know that of more than 4 million pensioners there are well over 1 million in receipt of National Assistance. From our own day-to-day investigations in our constituencies we know that very few of them have any room at all for any exceptional expenditure. If something goes wrong they have very great difficulty in meeting the additional expense. Many of them are living perpetually on a bare margin of subsistence. They have a precarious existence.

    What the Chancellor of the Exchequer does not seem to realise is that in such circumstances every penny or half-penny matters. When the prices of different items of food go up a half-penny, a penny or 4d. or whatever it may be, it is no use telling such people that the retail prices index has not altered over the last few months. We know that, as a result of the Chancellor's last Budget, these people have been the hardest-hit section of the community. In assessing their position we have to take into account not the effects of this present Budget but of the previous one. When the Chancellor had sums to disperse in reliefs of one kind and another it was not to those who fall outside Income Tax payments, not to the old-age pensioners that the reliefs were given but to the more well-to-do sections of the community.

    I am profoundly disappointed that nothing has been done this year to ease the position of old-age pensioners. I should have gambled on this as an absolute "must" for any Chancellor; indeed, I made a prophesy in my constituency, only a fortnight ago, that the one certain thing about this Budget would be an increase in the basic rate of the pension. I regret to say that that has not come about, and I believe that the Chancellor will hear much more about it later. We know full well that the position in which these pensioners find themselves is due, in the main, to the deliberate financial policies pursued by this Government, and that the rising food prices have hit those who are in the weakest position to bear them.

    The poor and the old—especially old-age pensioners—spend a far bigger proportion of their income on food than do other sections of the community, and we know from all the surveys that many of them, after paying their necessary expenses, have less than 2s. a day to spend on food. I regard it as verging on criminal neglect to leave out of account the position of these old-age pensioners. We cannot wait—and we cannot allow them to wait—until the review of the National Insurance Act takes place. There is no reason why, as an interim measure, we could not restore to the retirement pension the same purchasing power it had in 1946. This is an absolutely essential step, and I very much regret that the Chancellor has not seen fit to take it.

    Post-war credits are one of the unique and outstanding financial liabilities of this and past Governments. We know that of the £800 million collected in the war years, £564 million still remains in the Chancellor's hands. We know that it is spread over 10¼ million holders, and that it is calculated that one in three of the adults over the age of 25 holds a post-war credit of one kind or another. The annual repayment rate is £17 million, and unless something more is done than is suggested in the Budget statement it will take 33 years to complete payment. Until the announcement made today, short-lived families, who died off one after the other before they reached retirement, would never have obtained their credits. They would have been handed down more or less as family heirlooms. That position will be slightly improved by the present arrangements.

    People feel that they will never receive these credits, and that is a very bad state of mind for them to be in. They cannot use their certificates in place of cash, or negotiate them in any way. The only change that takes place in their holding arises upon death. The proposal put forward by the Chancellor today will do a little to improve the position, but it does not go far enough. It will cost £2 million each year after the first year. I should have thought that this payment, the delay in which has been a long standing source of annoyance and complaint, could be made far more quickly than that, and I shall give one or two proposals for meeting this requirement.

    First, it should not be paid out in cash. It should be paid either into a Post Office savings bank deposit account or in National Savings Certificates bearing a rate of interest. That would enable people to realise that they had something worth having, and they would not be induced to cash these certificates at the first opportunity. If the whole lot were paid out at once it would have an inflationary effect, but if it were done in a sensible manner, by way of Sayings Certificates, the bulk would remain in the hands of the Government while the interest payments went to benefit the holders.

    During the past few years we have had many requests from our constituents for the payment of their post-war credits in cases of grave hardship. We know that the receipt of £20 or £30 in post-war credits would assist someone who has been ill for a long time to obtain well-deserved holiday, or to re-equip himself in furniture, clothing or whatever it may be. I have put forward schemes for sums to be placed at the disposal of the National Assistance Board for use in these cases, but on every occasion proposals for repayment on hardship grounds have been rejected because of so-called administrative difficulties. I should not have thought that it was beyond the wit of the Treasury to devise a scheme whereby the Assistance Board could investigate cases and make payments of post-war credits where necessary.

    Another problem arises when a holder of post-war credits dies before he reaches the qualifying age for repayment. Under the present law, the beneficiary cannot claim until he or she reaches the specified age. Some people benefit because the credits happen to accrue to them when they are over the necessary age, but in most cases repayment is postponed, and it may be postponed again and again.

    I can go quickly through four main proposals for the repayment of these credits. First, the Chancellor could repay them on the death of the holder, what ever his or her age might be. That would be an arbitrary way of dealing with the matter, and it would not provide justice between one claimant and another. The accident of death might benefit someone who is not in need. Secondly, the Chancellor could make payment after the death of a holder when he would have reached the qualifying age had he lived. That is the method which the Chancellor has chosen, and it will cost £17 million in the first year and about £2 million in each succeeding year. That will not reduce the holding of post-war credits at any appreciable rate, although I welcome it as a beginning. Thirdly, the Chancellor could lower the age of qualification—65 for men and 60 for women—perhaps by five years, or any period which is agreeable to the Committee. A five-year reduction would cost £84 million in the first year, and to reduce it by one year would cost an extra £15 million, roughly.

    I should not set about the task in that way. I should start repayment of the post-war credits on the basis of the payments incurred, year by year, throughout the period in which they were in operation. We could make a start by paying out the credits incurred in 1941–42. I believe there are about £100 million of those still to be repaid. If we wanted to start with a smaller sum, we could start with the year 1943–44, hi respect of which only about £40 million is outstanding. That would be a fairer way of proceeding. Spreading it over every recipient—not giving him the whole lot at once, but in a series of payments; 50 per cent, of the first year to begin with, or whatever the Treasury thought it could afford—would be a more sensible and practical way of handling this problem.

    I am convinced that the Government should proceed along those lines. Postwar credits were created upon the assurance that they would be made available so soon as may be after the end of the war. The whole scheme is in danger of being discredited unless a further major step is taken in this matter.

    One small anomaly has been brought to my attention by a lady who is over 65 years of age and is married to a man who is under 65. It was the result of their joint working efforts in the war that their post-war credits were amassed, but she did not take advantage of the provision which allowed them to be split between herself and her husband. She raises the point that although she is over 65 years of age her husband has a few years to go before he reaches that age. That is an obvious anomaly, and I hope that between now and the further stages of this debate the Chancellor can give some consideration to the desirability of allowing payments to be made where either the husband or the wife is over 65 years of age. I do not think that this would cost very much, and it would be well worth doing.

    We must avoid any complacency in our general considerations of the Budget. There are two parts of it the seriousness of which we cannot overestimate. The first is one the hon. Gentleman the Member for Croydon, East feels so strongly about, investment. I would refer him to a statement published by O.E.E.C. on economic conditions in the United Kingdom, which says that this country is falling seriously behind Germany and the United States in the amount they are setting aside for fixed investment.

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    How can we set money aside if we have no money to set aside? When 70 per cent, of a surplus is taken in taxation there is nothing left to set on one side.

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    I refuse to believe that industry is in such a parlous state that it cannot do more than it is doing in this respect. I cannot believe it because of the increased dividends that have been paid in the past year. That survey is absolutely correct in saying that we are more or less mortgaging the whole of our future for some kind of present easement. If we are to hold our position in a competitive world, when the terms of trade may turn against us sooner than we think, we must re-equip our industry.

    The nationalised industries have been re-equipping themselves. The bulk of the money that has been spent on re-equipment has been spent by the fuel and power and other nationalised industries. It has always been one of our major arguments in favour of nationalisation that nationalisation enables the Chancellor of the Exchequer to direct the economy and investment in the national interest.

    If our survival depends on investment, as I believe it does, and if it is proved that private industry cannot provide the investment, there is an obvious need for the State to step in, in specially selected industries, the heavy engineering industries and the aircraft industry, for instance, and do the job itself. That seems to me to be one of the main principles we have to consider. The Chancellor is trying to help by giving some easement by this Budget. I hope he will succeed, because we cannot go on letting our industry run down in the face of the intense competition that we must meet from overseas.

    None of us can feel happy about the situation of our export trade. My belief is that too much of the increased production in the past year has gone into home consumption. That has two very serious effects. First of all, it provides those exporters finding difficulty overseas with a soft option, so they give up trying to expand their markets abroad or recapturing markets they have lost. Secondly, it prevents any flexibility in our investment programme. For instance, if the home consumption of an article is high, people will invest in the means to produce that article, and not invest in heavy industry or anything else that will give the best returns on exports. We are not increasing our exports enough, so that an adequate surplus will be very difficult to obtain. Increased investment is essential, particularly in heavy capital equipment and in aircraft if we are to succeed in our balance of payments problem in 1954.

    The question of the future of the American economy overshadows our deliberations on the Budget. It is generally admitted that there is some kind of industrial recession in the United States. The level of industrial activity there has been declining since the middle of 1953. The United States Index of Production fell from 137 to 128 between July and December, and, at the same time, unemployment there has been increasing substantially.

    The question to which we all want to know the answer is, is this a major recession, a major slump, or is it one of those agonising reappraisals of American industrial policy? The Chancellor seemed to think it was something that would work itself out fairly soon. I hope he is right, because if he is not it will upset all the calculations upon which the Budget is based.

    It would have incalculable effects on our economy. With all the steps we could take, I am doubtful whether we could insulate ourselves against a major American recession. It would have a double effect on our imports from and our exports to the United States, and it would have a disastrous effect upon the sterling area countries. So we must make our policies on the assumption that things may not improve. We must seek wider co-operation within the Commonwealth. We must have a plan to build up buffer stocks in the sterling area of raw materials, so that we can hold our own against this recession. Above all, we must try to bring imports from sources other than the United States of America.

    I believe that this Budget will not create any wild enthusiasm in any part of the country. I was wrong about one prophesy I made about the Budget, but I think I may make another. Yesterday's events may lead to a change in the leadership of the party opposite, and I think that the prospects of an early General Election must be receding in the view of the party opposite because in no sense of the term can this be said to be an electioneering Budget.

    6.26 p.m.

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    I should like to add a word of praise to my right hon. Friend, and I would do so for the clarity of his speech. I have not had the advantage of a university education yet I can find it a pleasure to listen to my right hon. Friend speaking about economic affairs. I would especially congratulate him, not on what he has put in, but on what he has left out. Some hon. Members seemed rather amused when he said that, for the second time running he had included no new taxes. I was extremely grateful, and I think the people of the country will be equally grateful. It is a quite new experience for them to have a Budget with no new taxes, and until last year it was one they had not enjoyed for a long time. We are all grateful for the small easements my right hon. Friend has been able to make of the burden of taxation. Of course, we all wish for more. I suppose we wish that every Budget, whatever the political complexion of the Chancellor may be. However, I still think we should be grateful for small mercies.

    The hon. Member for Stockton-on-Tees (Mr. Chetwynd) made some reference to old-age pensioners. Perhaps he will forgive me if I defer referring to that subject until later. I was most interested and impressed by his observations about post-war credits. The hon. Member for Rossendale (Mr. Anthony Greenwood), who is no longer in his place, made some allusion to our not spending enough in investment overseas. I am inclined to agree with him, but there is not much use in talking about investment unless there are savings to invest.

    One of the facts mentioned in the Statement on National Income and Expenditure from which we may derive a great deal of satisfaction is that there was a marked increase in National Savings in 1953. Those of us who listen to the news on the wireless on Sundays have noticed that since the first week of this year it has been reported Sunday by Sunday that new savings have exceeded withdrawals each week. That had not happened for a fairly considerable time before this year, and it is a striking fact, especially when it is remembered that there has been a great increase in the amount of consumer spending. Not only are we eating more food and spending more on food, but we are also spending a good deal more on what we might describe as luxuries, or at any rate semi-luxuries, such as tobacco, alcohol, television sets and football pools.

    There were record sales at the stoops just before Christmas and again in January. In spite of all this we have been able to save a great deal more, which seems very markedly to disprove the allegations so often made by hon. Members opposite that the people of this country are on the whole worse off as a result of my right hon. Friend's financial policy. I do not see how we can be so much worse off if, in addition to spending more, we are also saving more.

    Allusions have been made to the need for investment at home, but I do not propose to get into an argument about this with my hon. Friend the Member for Croydon, East (Sir H. Williams). In any event, my hon. Friend has now left the Chamber. I want to turn to another matter—to saving and investment overseas, particularly in the Commonwealth and Empire. This brings me back to what the hon. Member for Rossendale said about overseas investment.

    Hon. Members will recall that in paragraph 81 of the 1954 Economic Survey there is a reference to the decision of the Conference of Commonwealth Finance Ministers last year to continue the special efforts made to provide additional capital for Commonwealth development. The following paragraph, paragraph 82, goes on to refer not only to the need for the United Kingdom to earn a surplus on its balance of payments for this purpose, but also to the fact that this surplus must be matched by internal savings. Those two paragraphs merely repeat what was said in almost the same words in the communique issued at the end of the Commonwealth Conference held in November, 1952. That communique spoke about the need of internal saving in the United Kingdom to provide capital for Empire investment.

    After reading that communique of 1952, and further inspired, I freely admit, by what I thought was a striking article in the "Daily Mail," I put down a Question to my right hon. Friend the Chancellor of the Exchequer asking whether he would consider issuing special Empire certificates and bonds, as I described them, similar to National Savings certificates, to assist in financing Empire development. In his written reply, my right hon. Friend said:
    "I am satisfied that there are at present adequate facilities for National Savings and I commend these to all small investors who may rightly wish to play their part in Commonwealth development."—[OFFICIAL REPORT, 16th December, 1952; Vol. 509, c. 163.]
    My right hon. Friend used practically the same words some 15 or 16 months later in a written reply on 23rd February to a Question about colonial savings put to him by my hon. Friend the Member for Barry (Mr. Gower).

    Nevertheless, despite this rather discouraging view, as I said in the debate on the Budget Resolutions last year, I do not believe that the average small investor sees much connection between National Savings and investment in the Commonwealth. On the other hand, I believe that it would be possible to make a call to him for savings for Common-wealth and Empire development which would make an emotional appeal to him —one to which he might respond. Despite my right hon. Friend's lack of encouragement, I make no apology for returning to this matter once again in the hope that, if this proposal were adopted and if it proved successful, it might open the door, later, to a broader scheme. In fact, I have a slightly different proposal to make.

    The Committee will recall that the United Kingdom has paid £83,600,000 in sterling into the International Bank for Reconstruction and Development, which is 18 per cent, of our capital subscription. That 18 per cent, can be used by the Bank for lending purposes only with the permission of Her Majesty's Government. Last year we agreed to make £60 million available for loans within the Common-wealth and Empire over a period of six years. In addition, the Bank raised £5 million in London in 1951 by the sale of bonds. The proposal which I want to put to my right hon. Friend is that the Government should provide facilities for small savers to invest in the Bank's bonds, which should be earmarked for specific Commonwealth projects.

    The Committee is well aware that the Bank is a United Nations agency, so that by helping the Commonwealth through the Bank we should also be helping the United Nations which, to some extent at any rate, may be regarded as a development of the Commonwealth idea. I suggest that if there is a further sale of the Bank's bonds on the London market, the Government might buy them, to the value, say, of £1 million, and offer them for resale to the public in small denominations through such organisations as the National Savings Movement, the Post Office, the Trustee Savings Bank and voluntary bodies like the United Nations Association.

    If that were to be done, it would be desirable to prepare special certificates and to relate those certificates to specific projects such as development schemes in British Guiana, Jamaica, Nigeria, the Gold Coast or East Africa, and so on. Above all, it would be most desirable to relate them to the Colombo Plan for development in South-East Asia which so badly needs increased public interest and support. I do not think anyone would deny that these and other vitally important Commonwealth projects would be greatly helped by much more widespread interest and support from the general public than they are receiving at present. People do not know enough about them.

    It may well be said that this proposal is quite unnecessary. It could be said that the Bank is not short of capital, that it can raise all the money it needs through the normal financial channels and that this would merely complicate a perfectly simple market operation. I am bound to recall that my right hon. Friend has said more than once that there are already adequate facilities for national savings. I recognise, as I must, the force of those arguments, and I also recognise that a scheme of this kind might not produce an enormous amount of savings, but I believe that there would be a sufficient increase in savings to make it worth while from the purely financial point of view.

    Furthermore, and what is probably more important in the long run, the scheme would provide a practical expression of the desire of ordinary people to help the poorer countries to improve their standards. I think the plan would do even more; it would provide public education on the Commonwealth and Colonies and it would give thousands of ordinary people a chance to feel that they had a stake in the development of the Commonwealth—which is something they do not feel at present.

    If these facilities could be provided on the lines which I have suggested, they might easily be sponsored by the Government and assisted by voluntary bodies through having a combined educational and savings week rather on the lines of "War Weapons" and "Wings for Vic- tory" weeks, which we had during the war. I therefore hope that my right hon. Friend will give consideration to a plan of this kind. I believe that it has great possibilities. It would have the support of the public and, at the same time, would render a considerable service to the Empire.

    I want to say a word on the subject of Entertainments Duty. My right hon. Friend has already dealt with the matter of the cinemas and the smaller football clubs. I confess that I have not been able to digest the figures, and I do not know exactly what effect it is going to have, but I suggest that the reduction made in Entertainments Duty might be even greater if he would consider recouping himself by increasing the tax paid by those people—I am referring to sport— who merely gamble on various kinds of sport instead of giving the sport their active support by paying to see it.

    In the case of football, may I again make the proposal which many of us made on both sides of the Committee last year, and which, I think, was made again only last week, that the tax on football pools might be increased and the Entertainments Duty on football matches reduced? I do not think that anyone would mind that, although I do not know the views of the promoters. But I do not think that the winners would mind; the losers would not care any way—and they are the great majority.

    I do not know how the proposals made by my right hon. Friend in regard to Entertainments Duty are going to affect sports like horse racing and dog racing. To get a revenue out of gambling is made rather more complicated on account of our somewhat old-fashioned laws on this subject. There is, I think, in the case of the totalisator an unfair discrimination against dog racing. Here the tote contributes both to the Exchequer and to the racecourse executives. But on horse racecourses the tote contribution is only to racing and not to the Exchequer at all.

    Much the same thing applies to bookmakers, who have to pay a heavy licence to bet on dog tracks where a tote is in operation, but on horse racecourses they pay the executive for the bookmakers' badges to allow them to bet and their only contribution to the Treasury is through the Entertainments Duty which they pay for admission, although it is only fair to say that they probably pay for three or four employees besides themselves.

    I think that there is a strong case for bringing taxation on betting on horse racecourses and greyhound racecourses more into line. But I would urge that this must not be done by reducing the money received from betting by horse racing itself. The cost of maintaining a horse racecourse and of providing adequate stakes is very much greater than in the case of greyhound racing, and one of the great problems in horseracing is how to increase the stakes and reduce the cost of racing to owners who are finding it increasingly difficult to maintain their stables and studs.

    There is one form of betting which takes vast sums out of the two sports of horse and dog racing and makes no contribution to the sport or to the Exchequer either. I refer to starting price betting away from the course. I believe that if starting price bookmakers were to be licensed it would be possible to reduce the Entertainments Duty on both horse and greyhound racing to a very marked degree.

    I know that this is a dangerous subject to bring up and a highly controversial one, and it is a subject which, I think, no Government has so far been willing to tackle. It does bring in the whole absurdity of our betting and gambling laws. Whatever one's views on the moral issues or otherwise of betting, I do not think that anyone can argue in favour of a system which allows one to put £1,000 on a horse by telephone, on credit, but says that it is a crime if one puts a Is. on in cash with a street bookmaker. The answer is, of course, to license all bookmakers and to make ready money betting legal, thereby getting a larger revenue from it and making it possible to reduce the Entertainments Duty at the same time.

    My final point is about old-age and retired pensioners. We are, of course, profoundly disturbed by their difficulties, and equally by those of people like retired officers and others trying to live on small annuities and small fixed incomes derived from invested savings. I think that class of people have been harder hit than anyone else since the war. We all wish, and I think my hon. Friend as much as any of us, that he had been able to do more for them. But we cannot avoid an unpleasant economic fact by refusing to look at it. We are all, I know, anxious to help the pensioners. The hon. Member for Stockton-on-Tees has told us what he would like to do to help them. I should like to do the same thing, and I think that we would all like to do it, but no one has told us how to do it.

    It has been said that the Insurance Fund will no longer be self-supporting in a very short time; indeed the cost of retirement pensions alone at their present level will exceed the total income of the Insurance Fund. That is the problem which we are up against. I have great hopes that the Committee now investigating the whole question of doing something to help the old people will be able to find a solution. In the meantime, much as I should like to see something done, I cannot help thinking that my right hon. Friend is right in saying that he must wait a little longer.

    I know that it is easy enough for us to tell old people that they have to wait longer, but we have to be realistic, and I do not think that there is any other choice. I know, of course, that help is available to them through National Assistance, but I know, equally, as we all know, that many old people are extremely reluctant to rely on National Assistance to keep them going. I should like to suggest a very modest proposal and one which I have made before. I am quite certain that they would prefer to earn more by their own efforts than by obtaining National Assistance.

    We have recently had an interim report of the Committee appointed by my right hon. and learned Friend the Minister of Labour, which is looking into the whole question of the employment of older men and women. I think that we shall have read that report with profound interest. I suggest, therefore, that it would be consistent with the proposals in that report to increase the amount which old-age pensioners can earn without deduction from their pensions. I do not think that that is very much for which to ask, and it would be very little to give, but it would be something.

    It would not cost the Exchequer very much, because the amount by which the cost of pensions would be increased would be offset by the saving on National Assistance. I hope that if I make the same suggestion that I made last year my right hon. Friend will look into it, namely, to see if he cannot consider raising the 40s. limit to 60s. as the amount they can earn without deduction from their pension. If he cannot go as far as that, perhaps he would consider deducting 6d. instead of 1s. for every shilling earned between 40s. and 70s.

    I apologise for detaining the Committee longer than is my usual practice during the short time that I have been here. I am not an economist, and I recognise that most people will be able to pick holes in the things which I have ventured to say, but I hope that my right hon. Friend and hon. Members on both sides of the Committee will at least think that the matters which I have brought forward are worthy of consideration.

    6.49 p.m.

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    As I understood the beginning of the speech of the hon. Member for Blackley (Mr. E. Johnson), he seemed to be grateful that the Budget was no worse than it is. I think that the general feeling of Members on both sides of the Committee will be one of considerable disappointment, particularly with regard to the last point the hon. Member mentioned, namely, the question of old-age and other pensioners. The hon. Member for Blackley touched on other matters, including the question of colonial development. Interested as I am in colonial development, it is not my intention this evening to follow him on that subject. He also touched upon the question of Entertainments Duty and betting tax, and I think that discussion on those particular matters might well be left until the Finance Bill.

    I have come to the conclusion that I am a rotten prophet. It is not often that I have indulged in prophecy, and it had better be a long time before I indulge in it again. I was fairly convinced that there would be three things in the Budget: first, something for the pensioner; second, a reduction in the tax on Derv—the technical name, I think, for diesel oil; and third, a concession on post-war credits. The only respect in which I have been even a little near to correct has been in connection with post-war credits, but I cannot say that the Chancellor of the Exchequer has done very much.

    Everyone will realise that it is not the holders of post-war credits but the people who inherit, who will get the benefit. With regard to the old-age pensioners, I am very disappointed. Everyone in the Committee realises the serious difficulties which pensioners are now having. Inspite of the difficulties that face us, I am not convinced that the Chancellor could not have found something to relieve their position.

    If it is not presumptuous for a back bencher to do so, I congratulate the right hon. Gentleman on the clear and lucid manner in which he put across a dull and disappointing Budget. My hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) mentioned that when the Chancellor was at church last Sunday there was a certain prayer. I understand also that the right hon. Gentleman read the lessons, and I believe that the first lesson began with the words:
    "And Moses said unto the Lord,
    O my Lord, I am not eloquent.…"
    That cannot apply to the Chancellor of the Exchequer. If he is not eloquent, at least he has the facility of putting over a very bad case and making it sound fairly reasonable.

    On one or two points today, I thought that the right hon. Gentleman had a good case and sounded a little pleasanter than usual, but he seems to be able to make even a bad case sound reasonable. One could detect in his phraseology this afternoon something of the same kind of expressions as we have found in the reports of the Commonwealth Economic Conferences. One thing for which I am grateful to the right hon. Gentleman is that he called attention to the present precarious condition of our economy. I was very pleased to hear his note of warning, because I have been worried about the spirit of complacency that seems to have taken hold of Members on the other side of the Committee.

    It is generally possible to make a good case by choosing one's basis of comparison. The year 1952 was a bad year. By comparing 1953 with 1952, it would appear to some extent that we have done reasonably well in 1953. But to compare 1953 with 1951, we find that the total receipts for exports and re-exports were less and that the volume of exports was also less. That is a matter of serious concern to all of us. To compare 1953 with 1950, we find that consumers spent more on food for less consumption. The hon. Member for Blackley was wrong.

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    indicated dissent.

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    The Economic Secretary shakes his head. I think he would take some responsibility for the Economic Survey and also for the Preliminary Estimates of National Income and Expenditure. From this latter document, covering the years 1948 to 1953, we find that consumers spent £843 million more on food in 1953 than in 1950. From Table 11 on page 21 of the Economic Survey, however, we find that the average daily intake per head was less in 1953 than in 1950. The total energy value in calories also was less. From the figures of annual consumption in pounds per head, we find that for practically every item quoted, with the exception of sugar and fresh vegetables, the consumption was less.

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    If, on the other hand, the hon. Member looks at the table above that one on page 21, he will find that consumers' expenditure on food in 1953, valued at constant 1948 prices, was the highest since the war. That is the important figure.

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    The important figure is not the money spent, but what people are able to eat.

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    That is precisely what the figure of constant prices shows.

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    But the quantity is different.

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    I admit that the table to which the hon. Gentleman refers is brought down to 1948 figures. I was quoting the amount of money spent on food in 1953 and the fact that, although we spent £843 million more, we yet had less food than in 1950.

    Turning to the question of the balance of payments, I think we have been living on luck. Some sections of the House have been very complacent, but are we not still in a very vulnerable position? Is the improvement due to our own policies and efforts, or to the more favourable terms of trade? In comparison with 1951, we paid £603 million less for practically the same volume of imports. If we had had in 1951 the terms of trade which we have today, there would have been no crisis.

    The Economic Survey recognises, quite rightly, and the Chancellor recognised this afternoon, that the balance of payments problem is stall with us. It is our most vital problem. As the Economic Survey says,
    "The rise in the reserves continued in the first two months of 1954, bringing them to £923 million at the end of February. This was £329 million above the low point of April, 1952, but still only about half way back to the peak reached in June, 1951."
    Therefore, in the event of a world economic crisis, we are today in a much more vulnerable position than in 1951. Again, on page 37 of the Economic Survey we find:
    "The outstanding economic problem facing the United Kingdom is still that of paying its way abroad, and the needs of the balance of payments must continue to govern the pace of internal expansion.… The maintenance of a rising level of international trade is a matter of particular concern to the United Kingdom, which is so heavily dependent on imports and looks to exports of goods and services to provide something like one-quarter of its national income."
    There the relationship between exports and imports is shown to be the vital problem before us, and if we are to achieve that degree of stability that will enable us to withstand any vital up-heavals in world trade, we must increase our exports.

    The Chancellor emphasised the need for a great concentration on exports, and the Economic Survey points out that internal policies must be designed to lend full support to the attainment of external objectives, that it must be continually borne in mind that we should do our utmost to increase our exports. The Chancellor said that it was possible in 1954 to maintain the same level of consumption that we have had in 1953, but is there not the danger that we are going to concentrate too much on internal consumption to the detriment of our exports? What does the Chancellor think of the Television Bill? Surely if ever there were a Bill specifically designed to increase internal consumption, it is the Television Bill. The Government should be consistent in their policy. The proposals under this Bill must inevitably affect consumption, otherwise the commercial advertisers are not going into the business. They are certainly not going to participate because they want to provide an alternative television programme. They are going into it to make something out of it, and the only way they can make something out of it is by increased sales.

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    Would the hon. Gentleman agree that the American example has shown that a large domestic market is the best way to sustain an efficient overseas market?

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    Yes, and the American film market has shown us something, too. We have not reached the same stage of production in this country, whereas American films have captured the markets of the world. There is a great danger that that is what might happen if commercial television becomes operative in this country, for the films there might all be American.

    I do not think that that affects the main argument I have put forward, that there should be consistency in the Government's policy, and if we concentrate on exports, as is vitally necessary if we are to put ourselves in a secure position, then we cannot afford to have Bills of the nature of the Television Bill designed to increase internal consumption.

    The whole thing is totally linked up with the question of increased production and productivity and, therefore, with the problem of exports and with the question of capital investment. I do not understand the anxiety of the hon. Member for Croydon, East (Sir H. Williams). If he had read the Economic Survey and listened carefully this afternoon to the Chancellor of the Exchequer, he would agree that the points made by my hon. Friend the Member for Rossendale were quite correct.

    On page 35 of the Economic Survey reference is made to capital investment, and we find this:
    "There was a further increase during 1953 in investment in the basic industries, but investment in private manufacturing industry remained at about the same level as in the previous year in spite of the relaxation of licensing restrictions on factory building and the special measures taken to stimulate investment in the Budget, when the initial depreciation allowances were partly restored."
    Again, on page 44, the Economic Survey calls attention to the fact that:
    "The development of basic services like fuel and power and transport is just as important as investment in manufacturing industry, but it is in the latter particularly that the United Kingdom appears to be lagging behind its main competitors."
    I think everyone will agree that the United Kingdom cannot afford to lag behind its main competitors in this matter, and that it is private industry that is letting us down. It will be seen that we have had investment in the nationalised industries last year. The Chancellor of the Exchequer, as he said, made certain concessions expecting an increase in capital investment. That did not take place. This year he is making a further concession in the hope that the private manufacturers will now re-equip their mills. If this does not take place, the only solution is to make it a matter of compulsion, because it is so vitally important to the industry of this country.

    Before I leave this point, I should like to make a passing reference to the question of Government expenditure, which this year is the highest that has ever been known in the history of this country. I wonder what has happened to the Tory campaign of pre-election days, when there seemed to be competition amongst Tory politicians and national newspapers in telling us as to how much Government expenditure was going to be reduced when the Tories took office.

    We have heard little about that from hon. Members opposite or from the national newspapers. I think they have come up against the facts of life, and they are realising there are certain matters of expenditure which cannot be dispensed with. In fact, I am one who would have liked national expenditure increased in this Budget because—and here I am coming back in conclusion to my main point—of the benefits it would have brought to the old people. There are many hon. Members in this Committee who wish to speak, and so I propose to bring my remarks to a close by expressing once again my very great disappointment that, in spite of all that the party opposite have been saying about improved conditions today, the Chancellor has not found it possible to do anything to alleviate the very serious position in which the old-age pensioners and other pensioners find themselves at the present time.

    7.8 p.m.

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    I should first of all like to add my congratulations to those already voiced to my right hon. Friend the Chancellor of the Exchequer upon the Budget which he presented this afternoon, and on the very lucid way in which he presented it. He called it a carry-on Budget; I would much prefer to call it a Budget of stability, because I believe that as a result of this Budget we are going to get what we as supporters of the Conservative Party have maintained should be the policy to adopt, that first of all there should be stability to enable the cost of living in general to be reduced; and that no reduction in the cost of living will ever be brought about if inflation is allowed to unfold.

    This is the first time since 1945 that a Chancellor of the Exchequer has seriously faced up to this problem. What was the result last year? There was more employment and a higher level of employment than ever before in this country. The unemployed was only 04 per cent, of the working population. That is indeed something of which we can be proud, and I believe we have stopped this threat of inflation and can look forward to something even better happening in the future. I know of no responsible person, in the House of Commons or outside, who expected to hear the Chancellor make any great concessions, nor did they anticipate that he would reduce taxation to any great extent.

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    The hon. Gentleman is claiming that Government policy has stopped inflation. How does he square that with the fact that practically every trade union in the country is coming forward with increased wage claims because the increased cost of living is hurting their members, and that many of those wage claims are conceded on the basis of the case put forward by the trade unions?

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    The Chancellor has dealt with the issue of the increased cost of living on many occasions. The cost-of-living index is in exactly the same form as it was when the party opposite were in power. What has happened is that people are spending more money on food and petrol than when the party opposite were in power, because both are off the ration. Whatever commodity is mentioned, people are spending more money on it because they can get it. I am spending more in my house than I was when the party opposite were in power, because I can now get things I want.

    We have had a little concession with regard to post-war credits, but no one seriously expected much. If it is easy to do, why did not hon. Gentlemen do something when they were in power? I welcome the reduction in Entertainments Duty, especially with regard to cinemas. I hope that when my hon. Friend the Economic Secretary is drafting the Finance Bill with his right hon. Friend, he will see to it that the cinemas in small boroughs, of which I have two in my constituency, holding between 200 and 400 people, are treated in the same way for Entertainments Duty as those in rural areas.

    I believe that this new industrial allowance will have the effect of bringing about higher production in industry. I am convinced that, if we are to continue to enjoy the various privileges that we are enjoying now, we must expand production because only by that means can we improve our standard of living. Mention was made by the hon. Member for Stalybridge and Hyde (Mr. Blackburn) of the Television Bill and of the home market in television sets. It is not only the consumer at home who will be affected by the increased manufacture of television sets. If we manufacture sufficient of them we can go into the export market. Furthermore, if we get commercial television established here we shall be in the same position over television films as Hollywood is now with cinema films.

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    I think the hon. Gentleman has misunderstood what I said. I was not referring to the increased consumption of television sets but to the increased consumption that is the logical sequence of advertising under the Television Bill.

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    But unless we have commercial television in this country we shall not have the facilities to make television sets and programmes for the export market. I welcome the Television Bill because I believe we shall be able to export British culture and the British way of life as we have never been able to do before.

    Now I want to turn from the general to my particular subject, the position of agriculture under the Budget. I welcome the statement of the Chancellor that this Government stand wholeheartedly behind British agriculture. The farmers have never at any time had anything to fear from the present Government. The subsidies for food will amount to £325 million, but the British farmer will get only half of that amount.

    I want to correct the Chancellor a little with regard to what he said about eggs. Various people have attributed the large increase in the amount of home-produced eggs to the warm weather last autumn, but I do not believe that this had anything to do with it. I believe that great and welcome increase in the number of eggs coming off British farms was due to two things. One was that for a long time our pedigree breeders had been improving gradually the quality of poultry stocks and so year by year the hens had been laying more eggs. The more important factor, however, was that the feedingstuffs available last autumn, as a result of the Government freeing them from control, were of a better quality than had been available previously. Never before have we had such high quality poultry food.

    There was one thing about the statement of the Chancellor which disturbed me. My right hon. Friend said that the Government would have to put a limit on their commitments. This is a challenge to the industry which it should take up and which it is capable of taking up. The answer to that challenge is a still higher standard of farming. I cannot believe that it is beyond the wit of our agriculturists to increase production still further by using better methods of production and so bringing down the price of their commodities. I feel sure that the farmers will accept this challenge and will make proper use of all the facilities available. They can accept that challenge as confidently as they can accept the assurance of the Chancellor that the Government and the Conservative Party are standing wholeheartedly behind British agriculture.

    7.20 p.m.

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    It is a rather negative position when the hon. Member for Dorset, North (Mr. Crouch) has to defend the Government's agricultural policy by assuring the farmers of England that they need not be afraid of the Government.

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    That fear has been injected into them by the party opposite.

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    The experience of anyone who has been speaking in the countryside during the last two years is that the Government ought to be afraid of the farmers if and when an election comes about.

    Yesterday's debate and today's debate have been to me curiously similar. We thought yesterday that both sides of the House would unite on the need for peace and on dealing with the new problem that has been thrown into the world by the remarkable progress that has been made in experiments with the hydrogen bomb. We felt that yesterday the chief Government spokesman might have come across the Floor of the House, accepted the gesture of the Leader of the Opposition, and united both sides on the things that concern people of all parties, because all of us are desperately anxious about the problems which we discussed yesterday. In the same way, many of us thought quite sincerely that the Chancellor in his Budget speech would be expressing in a practical form the concern that the best elements on both sides of this Committee have been feeling in the last few months for the old, the sick, the disabled and the children.

    It may have been a romantic illusion on our part, but some of us thought that we had begun to permeate the minds of hon. and right hon. Members opposite with new ideas on these matters. The Prime Minister disillusioned us yesterday on the much graver issue of the hydrogen bomb, and the Chancellor has certainly disillusioned us in our hope that something would come from the Budget for the five million people who need most help.

    It would be impertinent for a back bencher to bandy compliments with the Chancellor on the undoubted technical skill with which he delivered his Budget speech, but even a back bencher can complain of his complacency. One of the irritating things about Molotov and his col- leagues is that the Communist Party, according to its chief spokesmen, is always right. Whatever happens has been predicted and foreseen by the Communist Government. We had a touch of this attitude in the Chancellor's Budget speech, when he spoke of whatever has been good in the country's economic progress and claimed it for his Government.

    We are all delighted at the increased production that has taken place in the last year, because increased production and increased productivity are the life-blood of the country and affect us whatever are our political opinions. Our only regret is that the rate of increase of production in the first five years after the war had to dip under the present administration before it began to ascend again during the last year. We are all delighted that the Government have managed to maintain the policy of full employment which was pursued by the Socialist Government in the post-war years. We are glad that the increase in unemployment that took place when the Government came into power seems to have declined.

    The Government are entitled to take credit for the fact that we have not had the kind of unemployment that we on this side of the Committee have associated with Tory Governments throughout this century. The cost of living has been stabilised more or less in the last 12 months, but the Chancellor, representing a Government who promised to reduce the cost of living, has no right to be complacent about the fact that all that he has done, on his own figures, has been to decline the value of the £ to 19s. 2d. and prevent it going lower, as a way of carrying out his election pledge to reduce the cost of living.

    But according to the Chancellor's speech, whatever was good in the national situation was due to the policies which he had adumbrated and the consequences which he had foreseen, and whatever was bad was due to world conditions over which he had no control or, he was almost tempted to say, due to six years of Socialism. I am very seriously alarmed that we are still not facing adequately the great problems that confront us and that at Budget time, which ought to be a time of national soul searching on the most important problems of all, the Government are steadily lifting themselves out of the position of direct control and handing more and more over to free private enterprise, and on grave issues can only express a wishful hope that things will turn out all right in the long run.

    It would be unkind to compare the Chancellor with Gladstone, of whom somebody said that nobody minded his producing an ace of trumps out of his sleeve but what was objected to was that he pretended that God had put it there. But there were touches of Gladstonian complacency in the Budget speech.

    I want to address myself to the problem of five million people who will not regard this Budget as dull and pedestrian and who will not regard it as whatever the Chancellor meant by a "carry-on Budget," because these are the people who are rinding it difficult to carry on in present circumstances and who wanted this Budget to be not a carrying-on Budget but a change Budget. This may be a dull Budget as regards the main problems of the taxpayers—the battle between Income Tax and Profits Taxpayers and the rest of the working tax-paying community. It may mark a lull before one side or the other gets back to securing benefits for one income group or other in the country, but for some five million people this Budget will be as exciting as famous Budgets, even the Lloyd George Budget, which introduced old-age pensions, or those Budgets which financed great advances in the social services.

    This Budget is exciting for a different reason, for the reason that it does nothing for the five million poorest people of the country. Whether Income Tax is reduced or not means or does not mean slight changes in the pattern of living for millions of comfortably-off people. A change in the incidence of Income Tax determines whether they have a new car or carry on with the old one, whether one has a television set or not, whether the family budget will rise to a mink coat or some other kind of fur coat, whether holidays will be spent in France or at an English seaside resort, and whether one can add a little to one's savings in the bank. They are all minor changes in the standard of living.

    Whether the Purchase Tax is reduced or not, important as it may be to industries that are occupied in creating luxury goods, only makes minor changes in luxury living. Even changes in duty on beer and tobacco are not vital, although I believe that we are paying far too much indirect taxation and that the job of some Chancellor very soon will be to readjust the balance between direct and indirect taxation.

    The farmer and the farm worker, the millionaire and the lowest wage earner pay roughly the same in taxes on the beer and tobacco which they consume. Both, incidentally, carry an unfair share of the burden of taxation as against the non-smoker and non-drinker. They have the additional injustice of being roundly abused by the teetotaller, whose taxes they help to keep as low as possible. Even Entertainments Duty might be called a luxury tax, although it would be a crazy way of looking at things if we regarded entertainments, particularly the broad entertainments of the people, as luxuries.

    This Budget is exciting for those people to whom the slightest concession would have meant, not a change in luxury, not a change in the minor pattern of living, but an improvement in the standard of living which has been condemned from both sides of the Committee and was condemned by Beveridge himself, the founder of the Social Insurance Scheme, as inadequate for decent living. These people are the old-age pensioners, those living on fixed incomes, those having to supplement their income by going to National Assistance, married men with large families and growing children, the disabled ex-Service men and widows. I estimate this group to be at least five million people at the bottom of the social scale, people with no powerful organisation behind them. These people expected help and they had a right to expect help by a raising of the basic rate of pension and a raising of various allowances to be financed by this Budget.

    From the speech of the Chancellor it seemed thai his policy and that of the Government is very direct and very simple—that we must wait for the quinquennial review and for the Reports of the various Committees inspecting pensions problems. I say with all the force I can—I wish it was with the eloquence of the Chancellor or the Prime Minister—that the people for whom I am speaking cannot wait until the quinquennial review is made. The groups of people for whom I am pleading want help now; and they want it in this Budget.

    In his speech the Chancellor suggested—I hope I am not doing him an injustice—that the reason why we cannot put the pensioners' position right until the quinquennial review takes place is that he envisages those reforms and those improvements in basic pensions as being paid for out of the income of the workers. In other words—I may be wrong in attributing this to him—he is assuming that the only way of raising basic pensions is by raising insurance contributions made week by week. Everyone will agree that, actuarially, various pensions and insurance schemes have leaped out of any actuarial reality because of the rise in the cost of living. But Lord Beveridge has said, and hon. Members on this side of the Committee believe, that if the basic pension is to be raised it should not be by raising the contribution of the worker—whose contribution would meet any benefit he got under the old pattern if there were no rises in the cost of living—but out of taxation, because taxation distributes the burden more equitably.

    I have said all that ought to be said about this in a recent debate when both sides of the House supported a Motion I moved. I urge both sides of the House, in debates on the Finance Bill, to unite againsit the Chancellor, to demonstrate against the Chancellor and not only to give lip service to the pensioners such as was paid earlier in the debate by the hon. Member for Bromsgrove (Mr. Higgs), who said that he felt for the old age pensioners. He reminded me of the story of the Quaker to whom someone said, "I fed for the poor." The Quaker asked, "But do you feel in the right place; do you feel in your pocket?" The only way in which we can make our lip service to the pensioner more than lip service is by feeling in our pockets and by making provision for them in the Budget.

    What about the debt of honour which all of us have said we were going to pay to the disabled ex-Service man? In the last 12 months debate after debate has shown unanimity among back benchers on both sides of the House about the need to raise the basic rate for disabled pensioners to what it was in 1946. I plead with back benchers on both Slides of the Committee to unite to compel the Chancellor to do something about it.

    I am afraid the women will be disappointed about the inadequacy of the reference in the Budget statement to equal pay. I am glad that the misunderstanding which seemed to have crept up between the Chancellor and members of the Civil Service association has been straightened out and they are to meet and discuss some ways of beginning to implement a policy on equal pay. But it is no good the Chancellor meeting them unless he has made adequate financial provision in the Budget for a really bold advance towards equal pay in the Civil Service. I hope we shall be assured that such financial provision has been made, although I doubt it from the speech of the Chancellor this afternoon.

    Apart from the pensioners, I think the worst off are the married men. In all the arguments about equal pay we compare the single young woman with the married man to the disadvantage of the single woman, as an argument against equal pay. That is a fallacious argument, because the simple difference is the difference in standard of living between the single man or woman and a married man earning the same income. Anyone from his own experience can agree that when two people are earning the same money, one married and one single, there is a terrific difference in the standard of living; the standard of living of the single person is much higher.

    We could tax allowances for married women for the earnings they actually make by eliminating their tax concession on the first £100 or so of their earnings. I asked a Question of the Chancellor about this two years ago and found that it costs about £60 million a year. I am alarmed at the extent to which we are encouraging married women to go to work. I am not sure that, having started this policy for drastic reasons during the war, we should continue it at a time when we need good homes more than anything else, and whether the place of the married woman, if she has children, should not be at home looking after those children. In any case, I have always believed that all income which goes into a home ought to be taxed, and the amount which could be a benefit to the Exchequer by taking off the tax relief on married women's earnings might very well be used to give better benefits and better allowances to married men in respect of their wives and children.

    I shall not go into the question of postwar credits, because my hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd) dealt brilliantly with that matter this afternoon. I would merely say that many of us think the Chancellor has not gone far enough, although we are delighted with what he has done. There are technical difficulties in differential payments of post-war credits, but we think they could be overcome if the right hon. Gentleman would consult back benchers on both sides of the Committee. Most of us during Budget debates ask for money, though it would be quite improper and illegal for us to suggest ways of raising money by taxes. Our job is to resist the Crown in its efforts to extract money from the commoners of this country.

    I am interested in the records of old Parliaments, and during my researches recently I discovered that the Chancellors at the end of the last century but one had pleasant duties besides the painful one of extracting taxes. As late as 1790 the Chancellor could present a report to this House—which may be found in the Journals—about the income of a State lottery which raised £790,000; gave £500,000 in prizes; had expenses of only £13.009—which I think would compare favourably with the football pools —and made a profit for the State of £277,606 3s. 1d.

    In a country such as ours where so much is spent on betting, I think the Chancellor might investigate ways of setting up a national system of football pools, so that people who wish to bet and have their little flutter on the football pools might do it inside a Government set-up. The profits there from could be used to benefit the income of the country. This could be done by the Government at a much lower administrative cost than people outside could do it, and we could earmark the profit for some specific purpose. I am sure that hon. Gentlemen who go to France every year for their holidays buy their lottery ticket from the State post office, knowing that the whole of the profits will go to disabled ex-Service men and feeling very happy about the whole transaction whether they win or lose.

    I was glad to hear the defence of the Chancellor, against the more reactionary element which still exists in the Tory Party, of the great social services and health legislation. It is fair to point out that I am one who believes it a great pity that the Chancellor did not remain Minister of Education. Then, instead of resisting demands for expansion in education expenditure he would still be the one to make the demands of some other Chancellor. But it must be pointed out that the whole of the increased expense of health and education is more than accounted for by the rise in the cost of materials and wages and the increased number of children.

    The reduction in the food subsidies has increased the cost of meals in hospitals and schools. This Government cannot claim any expansion of the Health Service and education. At the moment we are merely hanging on by the skin of our teeth to what we have so far managed to achieve. It is idle to boast about increased expenditure on health and education when every regional health authority in the country is anxious about what service it will have to cut to keep its expenditure inside the ceiling imposed by the Minister of Health.

    Disaster faces secondary education in the next three years unless we do more than we are doing at present to provide school accommodation and teachers. The Government ought not to be complacent about this. I urge the Chancellor not to think that he has done all that he should have done for education by merely in Creasing—as he has done to some extent—the amount spent on education. But my main purpose in speaking tonight is to protest against the betrayal by the Chancellor of the ex-Service men. the old-age pensioners and the widows, and to urge the Government to do something about it before it is too late, and in this Budget.

    7.45 p.m.

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    I believe that the Chancellor was right in the proposals which he announced this afternoon in that he has no elbow room which would enable him to give the large concessions we should like to see, including an increase for old-age pensioners and other such benefits. The Chancellor announced a reduction of £3½ million in the Entertainments Duty, when the cinema industry is giving £2 million to the production side. I do not think that is a sufficient concession to get them out of their difficulties, and that he should provide the other £3½ million for which they asked. Industry must be grateful for the initial allowances on investment capital, but I do not think it is enough. The Chancellor ought to take a wider view of this matter.

    I suggest that we must have economies in Government expenditure. I do not mean, as hon. Members opposite might conclude, that we should cut down on services and benefits. I recently received a letter from a constituent which will illustrate what I have in mind. This constituent of mine plays a bassoon in an orchestra. He informs me that his instrument cost him under £20 yet children in secondary schools are being provided with bassoons and wind instruments costing £100 each. That sort of thing is nonsense at a time like this. If school children are being provided with instruments costing £100 the Chancellor should ask for an explanation from his right hon. Friend the Minister of Education.

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    Whatever may be true about the case to which the hon. Member has referred, I can assure him that in nearly every school orchestra in the country, the children pay for their instruments.

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    I will give the Committee an example of what happened some years ago. In an elementary school the children were asked if they would like to learn to pay the violin. A firm of violin makers was willing to sell to the parents of the children violins costing 25s. each. These instruments were quite good enough for the children to use when learning to play, and the parents paid so much a week to buy them. Today, we are chucking away £100 here on this instrument and £100 there on another, and I know that hon. Members opposite will not disagree with me when I say that that is waste.

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    Has the hon. Gentleman checked the facts?

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    The information was given to me and if it is not correct I will withdraw. I have no reason to doubt the man, who is a constituent and who has asked me to raise the matter. It is my duty as a Member of Parliament to raise it. If there is any doubt surely the Chancellor can find out from the Minister of Education whether or not the statement is correct.

    Another example has been sent to me. When a man is unemployed he cannot draw unemployment pay until he has been put of work for three days; so he is entitled to go to the National Assistance Board to get immediate help over that three days. He gets a loan of money.

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    I do not think that the hon. Gentleman would want to misrepresent. The three days is a qualifying period before unemployment pay is given, but the hon. Gentleman has been wrongly informed if he has been told that somebody went to the Assistance Board and got assistance. I cannot get assistance for some people who have been out for over a week. The hon. Gentleman has been wrongly advised.

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    I do not accept that correction. In this matter I have had the opinion of a good authority who has quoted several cases where the money from the Assistance Board has to be repaid when the men get their unemployment pay. I suggest that an inquiry into the administration of National Assistance would be well worth while, and I hope that the Chancellor will order an investigation.

    I read in the Press recently of a case where a man was prosecuted and fined. He was asked how much he could pay and he offered a certain amount. The magistrate asked him how much he earned and he said that he was unemployed. When asked for how long he had been unemployed he replied, "For nearly 18 months." That man was drawing about £5 16s. National Assistance for himself, his wife and children. It is absolutely wrong that a man in work should get very little more than a man in receipt of National Assistance. There ought to be a bigger differentiation to encourage people to work.

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    Would the hon. Gentleman explain whether, if a man with seven or eight children is unemployed, he is willing to make the children go hungry to satisfy his political point of view?

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    I do not suggest that anybody should go hungry. I suggest that the administration should be such that if a man is able to repay money he should be made to do so instead of being allowed to retain it. I should say that probably millions of pounds would be involved if this matter was carefully handled.

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    Surely the hon. Gentleman realizes—or at least he ought to realise—that an individual goes to the Assistance Board because of need. That is the qualification.

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    Certainly, but when he gets unemployment pay he draws the money on the understanding that he repays the assistance.

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    The fact is that a man does not receive benefit for the first three days and when he receives benefit he does not draw anything with which to repay the Assistance Board.

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    It is very strange that a man who probably earned £10 or £14 a week can go to the Assistance Board on the first three days when he is out of work. [Interruption.] I expected a lot of interruption. The party opposite will not face this matter, and I am asking the Chancellor to face it.

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    What the hon. Gentleman is saying is not true. Last week, with the general secretary of the Durham Miners' Association and my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton), I met the chairman of the National Assistance Board in connection with this sort of thing, where men cannot get benefit —

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    Order. Interventions cannot be developed into speeches.

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    Thank you, Sir Rhys.

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    The hon. Gentleman will not disagree with the view I expressed that, whether or not I am right, the Chancellor should inquire into the matter.

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    The hon. Gentleman is not right, anyway.

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    I am. The reason why there is so much opposition to the proposal is that it is touching you where you do not like to be touched.

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    Order. The hon. Gentleman should remember that he is addressing the Chair.

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    I am sorry, Sir Rhys. I thought that there would be a little opposition. Nevertheless, I should like the Chancellor to look into the matter.

    Industry is being burdened with heavy taxation, as is the whole country. No Government Department ought for a single day to waste money. If we are to get relief in taxation it will come as a result of economy in Government Departments. I beg the Chancellor to call together his colleagues from all Departments. Let us have a thorough investigation. I am sure that not only will they get a surprise but that when hon. Members opposite are told they, too, will be surprised.

    7.58 p.m.

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    At least we have had a little light relief from the hon. Member for Hallam (Sir R. Jennings)—without Entertainments Duty. I am afraid that he produced no argument worth replying to, and no doubt he will forgive me if I do not follow him in what he says.

    The smaller reliefs which the Chancellor has been able to offer the country are interesting as far as they go, but I do not think that anybody opposite, including the Chancellor himself, would pretend that they were of major interest. I myself am interested in the slight relief which he proposes to give to the cinema industry. He mentioned that the relief might be used to lower prices, though it is so small that I can hardly suppose that it would have any effect at all on attendance.

    The right hon. Gentleman suggested that it might be used to maintain the amenities of cinemas, but he hardly stressed what surely must have been the main purpose in his mind—that the granting of the relief should enable the cinematograph exhibitors to have no difficulty in meeting their full commitments under the Eady Levy. I hope that that point will be taken by the cinematograph industry and that possibly either the Economic Secretary or his right hon. Friend the Financial Secretary will take occasion to stress the point in their subsequent speeches in these debates.

    The concession on equal pay cannot really be called a concession. It is merely permission to talk. Although I do not pretend that I share the gift of prophecy in which my hon. Friend the Member for Stalybridge and Hyde (Mr. Blackburn) indulged, I had thought that at least on this matter the Chancellor would have been a little bit more forthcoming. Clearly, we are in for some very tight negotiation between the Civil Service associations and the Treasury, and I fear that they may be very considerably prolonged.

    The other small relief is in connection with post-war credits. I cannot understand why the Chancellor has gone only so far in the case of post-war credits, because it seems to me that in almost all instances a death in the family is in itself something which leads to some sort of hardship. I cannot see that it is inequitable to repay the post-war credit at the time of death instead of waiting until the time when the person to whom it was due would have reached pension age.

    The suggestion made by the Chancellor has the serious practical disadvantage that one is not able to wind up the estate. In most cases, I agree, the amount involved is very small, but I should have thought that for practical reasons the right hon. Gentleman might have gone a little further and said that post-war credits would be paid to the beneficiary on the death of the person to whom they were due instead of making that beneficiary wait, possibly for a long time, before the estate can be finally liquidated. Naturally, all of us would much prefer to have something more substantial in regard to post-war credits, but, as I say, that extra step would have cost very little indeed. It might, perhaps, be reconsidered on the Finance Bill.

    Having dealt with these minor matters in the Budget, I wish to say that we on this side of the Committee, together with a great many hon. Members opposite—whatever they may say in public—are seriously disturbed at the Chancellor's failure to do anything whatever for the old-age pensioners, the disabled, and so forth. We realise perfectly well that this is one of the major social problems of our time, and we all recognise that the burden upon the community of supporting what we believe to be reasonable and civilised standards of living for the disabled, the aged, and so on, is something which presents any Government with a very difficult problem. It is something which I do not think has yet been fully faced by anyone.

    We realise that for practical purposes there is something to be said for waiting until the quinquennial review has taken place, but when one is dealing with a matter of such urgent human importance I think that such arguments are largely academic. The time may come when a major reassessment will have to be made of this whole problem, including the very difficult problem of dealing with the changes in the value of money in relation to statutory benefits of all kinds. That is one of the major problems that may have to be faced, and it may take time to find a correct solution to it.

    However, I cannot see why those people who, at the moment, are suffering from the effects not of this Budget, but of the last Budget and of the increase in prices which has taken place since the last improvement was made in their pension position—increases in the price of articles which are of most interest to them—should be obliged to wait while these important questions are discussed at high academic and financial levels.

    According to the figures that were given to us a little earlier by my hon. Friend the Member for Southampton, Test (Dr. King), which I think he took from answers given by the Government, the present rate of pension for a man and wife of 54s. a week ought now to be 60s. a week if it is to retain the purchasing power originally intended under the National Insurance scheme. In the same way, the pension paid to a widow with one child of 52s. 6d. a week ought to be 62s. 6d. a week.

    These figures are conclusive evidence that something ought to be done now. and in support of this argument I will mention two things. The first is that the Chancellor has said that general consumption is increasing and is likely to be at least maintained and probably some what increased during the present year. That shows that the rest of the community are not suffering from any lowering of their standard of living at the present time, whereas old-age pensioners and others in similar circumstances. including those living on small fixed incomes, are suffering at a time when they see others around them enjoying a reasonably comfortable standard.

    If one has any doubt about that, one has only to look at the advertisement column of "The Times" in order to see that many people can afford to pay high rents for houses and flats and are able to afford expensive clothes. That proves that the community in general is not at the moment suffering any severe restriction as compared with the group of persons of whom I have been speaking. These facts are quite well appreciated by many hon. Members opposite, and I only wish that they would have the courage to say today what they were quite prepared to say during a Friday debate when my hon. Friend the Member for Test raised the matter.

    The other thing which concerns me is the fact that at present there is a very considerable increase in the number of pension and superannuation schemes promoted by business firms of one sort or another. The number has increased enormously since the war. I am sure that the Economic Secretary is fully aware of all that has been said and written on this matter in recent months. I need hardly refer him, for example, to the works of Professor Titmuss.

    Professor Titmuss stressed very graphically in his articles in "The Times" at the end of last year that because of the additional provisions now being made for pensions and superannuation schemes by business firms for those in their employ we are now witnessing a position in which, while the living standards of those at work, both manual and professional people, have been brought within much closer limits than they were in previous generations, when it comes to retirement we are in danger once more of being split into two nations, one consisting of those who are trying to subsist on their statutory pension with possibly some slight supplement from National Assistance, and the other of those who have the benefit of superannuation schemes which to a considerable degree are paid for by the taxpayer.

    Professor Titmuss gave an example, which he said was a typical one—I am prepared to take his word for it, because he has studied this matter with some thoroughness—in a salary range of £4,000 to £5,000 a year. That would be the salary of a fairly highly-paid executive. Professor Titmuss suggested that it would be quite possible for an employer who is making the full contribution—under many of these schemes the employee is not called upon to make any contribution at all—of £1,600 a year, which, of course, is allowed to rank for tax relief, to provide a life cover for his employee of £28,000 should he die before retirement, a tax-free lump sum on retirement of £7,000, and a pension for life of £1,900 a year. Towards this the taxpayer has contributed £25,600.

    Professor Titmuss goes on to say that such schemes are very popular. I do not doubt it, but I would suggest that as this kind of arrangement is now being resorted to by considerable numbers of firms, surely these sums which the taxpayer is contributing towards the pensions of these very highly paid people might have gone towards some slight in crease at least in some of the benefits available to those who are really desperately in need.

    I quite understand that the whole question of the treatment of superannuation provisions and pensions has possibly to await the consideration in future of the Millard Tucker Committee Report. The Chancellor himself said that, and I realise that he has not had this Report in his hands very long. Nevertheless, from reading that Report I thought that there was one small contribution which the Chancellor might have made and which would have helped not the statutory pensioners, but those living on small fixed incomes.

    I refer to the suggestion in the Report concerning the taxation of annuities. I cannot see why this subject could not have been treated on its own without having to wait for the consideration of all the complex suggestions that are made in the rest of the Report. If one accepts the conclusion in paragraph 503 of the Report on the taxation of life annuities it would have had the effect of helping some of those who are trying to live on an income from past savings, which, again, is one of the major problems which face us in modern society. If need be there could be a ceiling above which the provision might not operate, although I should have thought that the principle, if it is accepted at all, ought to be accepted at all levels.

    If we are asking people to save for their retirement—because at no time is the statutory pension likely to be fully adequate for everyone—then, again, we have this problem of how to deal with small savings that lose their value owing to changes in the value of money. It is a very difficult subject to deal with. Some of us have tried to work out methods by which it could be solved. It could hardly be dealt with by Post Office savings because that is so much in-and-out with some people, but there might be some form of Government savings which would have a guarantee of increase with the changes in the value of money.

    That, also, raises some very tricky points, but on this minor matter which would be of some immediate help I cannot see why the Chancellor could not have taken this opportunity of instituting a minor reform, even though the main recommendations of the Millard Tucker Committee quite clearly need a good deal more consideration. On this point, I can only repeat what everyone on this side of the Committee, and, indeed, everybody in the country, is going to say. We are disappointed at the complete failure of the Chancellor to do anything whatever for the pensioners or the people on small fixed incomes.

    There is, of course, another side to the Budget, and that is the treatment of industrial investment. On that, in general terms, I would suggest that most hon. Members would support the proposals of the Chancellor, although the result of the proposals would of course depend very much on how far the industrialists in this country are going to take their responsibilities for investment seriously. The initial allowances restoration did not seem to be very encouraging to private industry, and one can only hope that the industrial investment allowances will be more encouraging to industries which obviously are facing and will continue to face extremely acute competition, particularly from Western Germany.

    I cannot pass from this subject of industrial production without just saying one word about Purchase Tax. I have a textile interest in my own constituency, and I must say that those of us who have any interest in textiles feel that this is a problem which has not been solved. I do not pretend that it was solved by previous Chancellors, but the effect of Purchase Tax on the export of high quality goods has not been solved by the present Chancellor.

    The emphasis in the Budget is on capital goods, with which I would not quarrel. I certainly grant that that is the most important section of industry and the one in which special steps must be taken. But, nevertheless, I think that there is a very strong case for re-examining the effect of the D scheme on the quality of textiles and on their chances in the export markets, including the dollar market which, after all, is still very important.

    I do not want to detain the Committee on textiles, but any of us who have any close association with the textile industries are seriously disturbed at the long-term effects of this method of taxation on our prospects in markets which we can hope to conquer or retain only with quality goods. We keep telling Lancashire and the other textile areas that their one chance is not to compete with Japan with cheap stuff but to go in for the quality markets, and we find that when our manufacturers send their representatives to those markets, as a result of the incidence of tax at home it is difficult for them to produce the range and variety demanded in the American market, for instance.

    It is very galling to the manufacturers of high-quality textiles when they send their representatives to these markets and have to apologise, because they cannot carry a full range of colours, to be told that the Italians are doing so. I hope that this other problem which is very important to a section of our industry will be seriously considered by the Chancellor and that he will use some boldness in trying to solve it. He is clearly not trying to do it this year. One can only hope that he will try to do it next year.

    8.17 p.m.

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    Before and after a Budget debate Members of Parliament are frequently subjected to pressure of different kinds from powerful groups of one sort or another lobbying them in favour of this or that interest. But there is one section in this country who feel deeply about these things but who are silent, perhaps because they are not skilled in lobbying or have no aptitude for it. We call them by the not very complimentary title, "middle classes."

    These are generally people who are not rich and who, in the course of their lives, have asked little but have frequently done a great deal for their country. They are going to be extremely grateful to the Chancellor for what he has done during the last few years in re-establishing the soundness of the value of our money. They knew, probably from wider experience, what the great mass of the people do not ever realise, and that is the appalling danger and misfortune which can follow an inflation if it gets out of control. We in this country had a steady, though none the less slow, inflation over a number of years, bringing considerable hardship with it, but we never had anything such as the people of Greece had to suffer, nor what the people of France had to suffer to a lesser degree.

    The people of whom I am speaking, particularly the elderly, realise that. They would have suffered more than those who have an interest in industry as employees or owners. They had a vision of great misfortune, and they will be very grateful to the Chancellor what he has done. They make few claims on society, they took risks during their active lives, and in their retirement they do a great deal of voluntary work for which they get very little thanks. Therefore, I hope that in the years to come these people will not be forgotten by the Chancellor when he has some margin for taxation reliefs merely because they do not exert the same pressure as some other groups.

    The Chancellor dealt a blow at these people when he was Minister of Education, when he made it hardly possible for the grammar schools to continue an independent existence. I should like these people one day to get a modest Income Tax relief in return for their saving the general taxpayer the cost of educating their children. That will not be much, but it will be some recognition of the fact that they have been shouldering a certain burden themselves instead of expecting their neighbours and fellow citizens to bear it for them.

    There is one curious situation today. If one's child is not a good examinee at the age of 12, he may miss the chance of an education carrying on stage by stage to the university. Yet if the parent can afford the full fees for a boarding school education—that is a very considerable sum of money today—one may be able to help the child make up the lost ground. If, on the other hand, one cannot afford these fees there is little hope for the child today.

    For generation after generation, many of the people of the class about which I am speaking have sent their children to the magnificent grammar schools where education of the highest order could be obtained at very small cost thanks to the endowments of many people in the past. Now that has changed. Whereas one can spend as much money as one likes on holidays, on the racecourses and on doing all sorts of other things, it is now almost impossible to help in the education of one's child unless one happens to be able to spend several hundreds of pounds a year upon it. This is an extraordinary anomaly which we have seen develop over the last few years.

    I am glad to say that the Chancellor devoted more than a small part of his speech to savings. It is important for us to recover the habit of saving which used to be part of our nature. The people about whom I am speaking had the tradition of saving probably more strongly than any other class, but that tradition has been sorely shaken over the last few years for one simple reason—it has not required much arithmetical knowledge to see that money invested in Government securities after 1945 lost its purchasing power faster than it was made up by the interest due. The wise men saw that there was no profit in buying Savings certificates if at the end of five years they would represent less than the 15s. originally paid for them.

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    There were some patriotic people during that time.

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    I am glad to say that a change has now taken place, as indicated by figures published by the Savings Movement, particularly in the last few months.

    The Principal of Cumberland and Westmorland Farm Institute was speaking in the Midlands the other day about saving and the common belief that it is impossible to start farming unless one has a considerable sum of capital. He said that the farm worker has a good opportunity of saving. I can see how a man who is a bachelor and has no heavy family commitments ought to be able to save in 10 years £ 1,000 maybe, and start farming, and many have started farming with less.

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    The hon. Member has not replied to the point that I made. He implied that there was less confidence in savings between 1945 and 1950. I remarked that there were a few patriotic people between 1945 and 1950 who were prepared to invest in National Savings.

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    I did not hear what the hon. Member said. If he had risen, I should have given way to him. There were indeed a number of people who invested in National Savings, but the fact remains that faith was shaken during those years, and for very good reasons. Over the last two or three years the shaken faith in our £ has become much firmer again, to the great advantage of the country as a whole.

    It has always interested me that while hon. Gentlemen opposite were pursuing a policy which they thought was helping to reduce the distinctions between classes in this country which had become so marked in the last century, they were not in fact creating an egalitarian society but merely a new one with class differences just as marked as those which they were trying to eliminate. I should like the Chancellor to think of this point. It is commonly said that this country was, and still is to some extent, divided between rich and poor. It is now divided between private and official-and-business. The high rate of taxation that we have borne over the last few years has made perquisites of one sort and another far more valuable to a taxpayer at any high level than small additions in hard cash.

    Next time hon. Members travel on a Parliamentary warrant and have a meal, which will be at their own expense, in the first-class dining car of a train, let them look round and try to work out how many people are likely to be paying for the meal out of their own net income and how many will be recovering something through taxation allowances. If they think that 10 per cent, of the people in the dining car have paid out of their net income, it will be a pretty high score.

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    Most will have expense allowances.

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    That is what I am saying. It is an awful reflection that we run our first-class carriages for the benefit of an official or business class. In the Communist world, the distinction is well known. And now here as a result of the policy of hon. Gentlemen opposite, we are achieving not a classless society but a society with an upper class living on allowances. I wonder how many of those who had lunch at the Savoy hotel today paid for their meal out of their net income? I am only giving these examples to show the sort of thing that grows quickly—and it is a bad growth— in a country which year after year has to bear such a heavy burden of taxation as ours.

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    The hon. Member is making the point that most of the people who travel in first-class dining cars are officials. Has he any evidence of that? Has he asked such people whether they were business representatives, private business people, or Government officials?

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    I thought I said I did not mean only those employed by the State but rather "business or official." Only they can enjoy such conveniences and comforts because they do not have to pay for them out of their net income. I suggest that the next time the hon. Member has the chance he has a look round. I am sure that he will come to the same general conclusion as I have come to.

    I greatly welcomed one point in the Chancellors' speech—the exclusion of motor cars from what he calls the "investment allowance." For many business purposes transport is essential, but I have often felt that the interpretation of what transport is necessary in business has been treated as very elastic.

    I have mentioned the danger of the country becoming divided into two. Whether we are shouldering the defense burdens or later when the Chancellor can offer some relief, we must be sure the nation is one. The most powerful weapon to ensure this is the budgetary policy.

    8.32 p.m.

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    I am sure that the hon. Member for Westmorland (Mr. Vane) will not expect me to treat very seriously the argument which he advanced about first-class travel. One has only to think of the number of people who can possibly engage in that type of travel to realise how trivial his argument is.

    I should like to refer to a viewpoint which was the basis of the argument put to the Committee by the hon. Member for Croydon, East (Sir H. Williams). I am sorry that he is no longer in his place. He advanced the view that one of the crippling factors in retarding development in the country was lack of capital. He welcomed the investment allowance, as I think those who sit with me on these benches also do.

    I find the speech of the hon. Member for Croydon, East hard to reconcile with certain things that have taken place in the investment world quite recently. Imperial Chemical Industries went to the lending public a few days ago for £30 million of investment capital. Within 10 hours, that £30 million was over-subscribed 10 times by the people who are said to be short of capital. In other words, I.C.I, asked for £30 million of new capital, and within 10 hours they were offered £300 million. I find that fact hard to reconcile with the shortage of capital which the hon. Member for Croydon, East deplored.

    I also find the argument about shortage of capital difficult to reconcile with much that is going on in recent declarations of profits, as, for example, by Vauxhall Motors, Ltd. Last week, the Vauxhall Motor Company declared a bigger gross profit than ever before in its history. Just two years ago—on 14th June—a shareholder of one of our great aircraft companies could have gone to bed carrying with him, metaphorically, a 5s. ordinary share. In the morning that 5s. had become £1. Evidently the days of miracles are not yet past. I notice that the Economic Secretary to the Treasury shakes his head in the wrong way. I presume that he does not agree with what I am saying, but it was published in the "Financial Times," whose editor used to be a leading ornament of the present Government when in Opposition.

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    Does the hon. Gentleman really mean that there were shareholders who awakened in the morning four times as rich as the night before?

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    If one goes to bed with a 5s. share and in the morning it has become £1 that, to the ordinary person, means that he has gained wealth.

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    The question is what the ordinary person could sell the share for—whatever its nominal value.

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    I am sorry that I cannot quote offhand the market value of the shares in the aircraft companies. When we take the general rate of dividend, running at about 17½per cent., 20 per cent. —in the case of the company to which I have referred it threatened to be 40 per cent, in that year—we shall not, I hope, quarrel about the market value of aircraft shares.

    I am sorry that the hon. Member for Hallam (Sir R. Jennings) has left his place. After hearing him talk about the Assistance Board, I am perfectly convinced that he represents a division entirely different in character from mine. He does not know anything about the workings of the Assistance Board. He does not realise that if there is any criticism that many on this side have to make of the Assistance Board it is that it is far too harsh and penurious in its attitude to the individual applying to it. I have had innumerable cases of that.

    Not a penny passes over the counter that is not looked at twice. Every transaction, every payment made by the area manager has to be justified to the regional officer. In addition, at any moment without warning the auditors from the regional office may step into the area board offices and ask the area manager to justify any single payment that he may have made that day, that week or at any period since the previous visit. The area boards are closely supervised in their operations. The Economic Secretary knows perfectly well that there is no particular call for any investigation —any May Committee—into the transactions of the Assistance Board at present. I would rather see a little more flexibility than a tightening up in the operations of the local offices at the area level.

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    Has my hon. Friend had any cases where local offices have made clothing grants to people applying for assistance and have then forced them to pay back the money at so much a week?

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    I have often had cases of that kind.

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    Were they supplied with kilts?

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    I hope that I am not immune to humour, but to those who apply for assistance this is not a very humorous subject. Every time they get a little clothing—and that, unfortunately, is usually only as a result of the intervention of a Member of Parliament or a local councilor—they receive a letter telling them that although they are receiving this grant, in the shape of boots, socks, stockings or overcoats, they must realise that the expenditure involved must be met out of any future moneys which they draw.

    I should like to add my voice to the plea which has been made by so many of my colleagues today on behalf of the old-age and other pensioners. There are three very strong organisations in my area, and I know that in the hearts of their members tonight, and in the hearts of old folk all over the country, there will be a sense not merely of deep disappointment but of frustration. When the industrial worker fails to get what he demands he can do something about it. Machinery has been created for that purpose, and, in the end, if he chooses he can use his industrial might to help him. But the old folk can only plead with us. They have ceased to be of any industrial, account. They can use their votes, but the happenings of yesterday and today seem to indicate that the time for doing that is now much further ahead than many of us had hoped a few days ago.

    Knowing the distress which has entered into most of their homes, I am sure that hon. Members on this side of the Committee, and many hon. Members opposite, in view of the opinions they have expressed, will bring tremendous pressure to bear upon the Government to think once more about this matter. It is merely hiding behind a comfortable hedge to tell us that this matter will be dealt with in the quinquennial review. If one is drawing the miserable pittance that many of these old folk are drawing today, even with the help of the Assistance Board, it is no great comfort to them, in their declining years, to be told, "Just go on starving for a little while longer. We are coming to your aid some day." When? Can the Economic Secretary tell us when the report of the quinquennial review will be completed? Will it be this year, or next year? If we ask the old folk to wait, as we are doing, at least we can in mercy tell them definitely how long they are to be expected to wait.

    I regret that nothing has been done about equal pay. Parliament has expressed its mind on this matter. I know the difficulties of the Chancellor, but, nevertheless, I am sorry that nothing has been done about this problem. We are told it is to be left to some future meeting. We have been told that for years. For years we have been considering it. Surely the time is now ripe for at least the initial action of starting equal pay in the Government service. I hope that during the Budget discussions there will be sufficient pressure on the Government to compel them to think again on this matter.

    The Chancellor is taking shelter behind the fact that the nation is in economic difficulties at present. Before he finished his speech his Budget was being described as a standstill Budget. We could say that the ship of State is hove to, because there are difficult winds blowing. The Chancellor said there were three winds he seemed to feel.

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    He is in the doldrums.

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    I do not know, but may be some day he will be.

    The Chancellor told us that one of the three bad winds was rising Government expenditure. Another bad wind was the problems associated with world trade. There was the bad wind of what, I think he agreed, was a decline in American production. However, he has to set a course somewhere. He cannot lie to all the time. He has to make up his mind what to do. I hope he is not going to describe rising Government expenditure as a bad wind, because the problems allied to that will affect increased production.

    In my constituency, for example, there are engineers, ship workers and dock workers, men who believe in the need for the Health Service that is being deplored by many Members opposite. They are men who believe in the need for more expenditure on the Service. They believe that there should be some protection, through subsidies, against the rising cost of living.

    They are living with their families in houses of the most appalling description and they are being forced by the Government to face an increased demand on their earnings through an increase of 40 per cent, in the rents of the miserable dwellings in which many of them live. If we are to get increased production, it is surely evident that we must keep the minds of these people at peace, keep them happy and see that their housing and living conditions and their wages are all good. If we do not do those things we shall retard the increased production which the Chancellor said was such a dire need.

    The Chancellor referred to the fact that American production was tending to fall. That poses another problem with which the Government have been playing for a long time. The end of 1953 saw America achieving a production such as she had never reached at any period in her history. In our money, she produced £ 130,000 million worth of goods. She had an employed army of 64 million people. She employed so many people and she produced so much wealth that this year she is glutted with it. She finished the year with £ 2,000 million worth of wheat unsold.

    This is happening as a result of policy. It is happening because we are piling up wealth in the West and are not distributing it throughout the world. We are restricting the channels of distribution while, at the same time, the granaries of the West are overflowing with wealth of which we cannot dispose. As the Economic Secretary knows, this will affect the economy of this country. Last year, we sent to America about £ 450 million worth of goods as exports. If the American recession develops, as the Chancellor seemed to infer that it might, we shall lose from our exports to the West a large part of that £450 million.

    I agree that the situation is serious, but it can be remedied by an alteration in Government policy. The Chancellor has just as big a stake as anyone else in doing that. If we can get a freer flow of trade, then I am certain that we shall improve the economic condition not merely of this country but of the entire world and we shall make it easier for the Government to meet the legitimate demands of the old-age pensioners and of those who believe, as I think most hon. Members now believe, in the principle of equal pay for equal work.

    I should like to say "Thank you" to the Government for one thing. I am not going to speak too long because I have been here since 2.20 p.m. I am thirsty and hungry and that will prevent me from making a speech in any way equal in length to that made by the Chancellor. But I want to close with this word of thanks. The Economic Secretary will remember that last June the Chancellor promised to many of us, who were then and had been for a long time advocating a reduction in the cinema tax, that the cinema industry would be the first in the queue for consideration this year. I thank him for keeping his word. We appreciate what he has done, though it has not been so much as we had hoped it would be.

    We felt that £7 million was the least sum that was necessary to put the industry on its feet, and the Chancellor has given us £3½ million for which, of course, we are grateful. I would say, with respect, that when we come to the Finance Bill I hope that the Chancellor will give consideration to a revision of the application of the £3½ million. I should like to draw the attention of the Economic Secretary to the incidence of the tax as shown in the White Paper.

    I agree with the hon. Member for Westmorland (Mr. Vane) that we do not want to help two classes. We want to help one class—the working-class to which everyone should belong. But here Chancellor is creating two classes, because on the payments of admission from 10d. to Is. 9d. he is giving a reduction of ½d.; from Is. lOd. to 2s. a reduction of ¾d.; from 2s. to 2s. 6d. a reduction of Id.; and from 3s. 2d. upwards a reduction of 1½d. In other words, the small cinemas in the small towns to which most of the working people go and the cheaper seats in the cinemas in the larger towns to which again most of them go, are the seats which will get the smallest rebate in tax, and the costly seats of 3s. 2d. and upwards are the seats which will get the big rebate in duty, if l½d. can be called a big rebate.

    I would, in conclusion, make the suggestion to the Economic Secretary—and I hope that he will convey it to the Chancellor—that a 1d. reduction hi Duty should apply to all seats from 10d. to 2s. 6d. I think that could be achieved without any great increase in the very welcome £3½ million which he has devoted to the industry. That is my suggestion, and I hope that it will not be without some help so far as the problems of an important section of the community are concerned.

    If the Chancellor and the Government are prepared to look at the general solution along the lines that I have indicated—lines that will enable trade to flow more fully and freely throughout the world and will improve relationships among countries and peoples—they will be able to carry out these steps of social reform, of raising the status of, and payments to, old-age pensioners, and of introducing the principle of equal pay for equal work. They will be able to do these things if they agree to carry out a policy which creates the economic basis on which those social changes can be effected.

    9.1 p.m.

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    It has always seemed to me somewhat futile that one should speak on the same day the Chancellor of the Exchequer has delivered his Budget and before one has had an opportunity of reading and digesting his statement and general survey of the economic situation. I certainly had no intention until about an hour ago of speaking this evening. There are, however, one or two aspects of my right hon. Friend's statement which seem to me to be of considerable importance and on which I should like to touch.

    Two aspects of his statement which are of vital significance: first, the fact that if we are to improve the standard of living of our people, we must increase industrial productivity; and second, that if we are to increase the standard of living—I believe that, ultimately, we can do that only by a considerable reduction in taxation—we must direct our minds to the present high level of Government expenditure. I am fully aware of the difficulties, but I should like to touch on these two points.

    No one in the Committee would disagree that productivity depends largely upon the efficiency of industry, which in turn depends to a great extent upon the capital equipment with which working men and women have to carry out their daily tasks. My right hon. Friend has done a great deal to encourage the re-equipment of industry by his introduction of what he has termed investment allowances.

    I was a little surprised when the hon. Lady the Member for Flint, East (Mrs. White) said that there was nothing of major interest in the Budget. I have every sympathy with hon. Members on both sides who would like, if it were possible, to see an increase in old-age pensions, and I fully appreciate the sentiments of the hon. Member for Trades ton (Mr. Rankin), but it is neither fair nor right to say that the Budget contains nothing of major importance.

    It was indicated by the Chancellor of the Exchequer this afternoon that the old system of granting initial and annual allowances was, perhaps, somewhat defective in that the initial allowance was in effect merely a tax-free loan to the industry concerned. But now industry is to have an investment allowance of 20 per cent, in respect of plant and machinery and 10 per cent, in respect of industrial buildings. In addition to the new investment allowance—and I think it is vital that those in industry should know and appreciate the full significance of what the Chancellor is doing—a business will be entitled to annual allowances on the full capital expenditure that is involved, and not merely on the balance after taking into account the new investment allowances. I believe this will do a considerable amount of good, because re-equipment in industry breeds efficiency, and the system which the Chancellor has announced today gives immediate financial reward and is directly related to the efforts of any particular factory or works to increase efficiency and so productivity.

    I believe that the new investment allowances will be welcomed not only by those directly concerned, but by all those people throughout the country who think seriously of these matters, because it must be apparent to any one who has directed his mind to this sort of thing that the welfare of any individual citizen depends upon our ability to produce goods cheaply and efficiently and to compete successfully with countries like Western Germany and Japan.

    Another matter to which the Chancellor directed his attention was the position of small private companies and family businesses. It may not be true to say that the small family business is the backbone of our economy, but it is certainly true to say that it constitutes a vital limb. The death of a shareholder of one of these small family businesses, on which we rely so much, often leads to serious trouble. If Estate Duty has been assessed, on the valuation of the deceased's shares, on an asset basis, the Estate Duty payable frequently bears no relation whatsoever to the value of those shares in the open market. The result is that, in many cases, a prudent man decides to make provision for the Estate Duty exigible in respect of his shareholding in the family business, and can only do that at the expense of the re-equipment of that business. I might add that one of the shocking things about this particular system is that nobody knows until the man has died whether or not the Estate Duty Office are going to value the deceased shares on an assets basis or on the normal basis of what they would fetch in the open market.

    I should like to make a suggestion to the Chancellor of the Exchequer, of which I hope he will take notice, because it is a matter of great practicable importance. It is that when there has to be a valuation of shares for Estate Duty purposes there should be some provision, in the event of a dispute between the executors or administrators, on the one hand, and the Estate Duty Office, on the other, for a cheaper form of appeal. At present, in the event of a disagreement, it frequently happens that the only remedy open to the deceased's personal representatives is an appeal to the High Court.

    If the deceased were a wealthy man the estate might well make it worth the while of the personal representatives to appeal to the High Court. On the other hand, it places the personal representatives of small estates in an extreme difficulty. They have to ask themselves, "What shall we do? If we appeal to the High Court and lose we will have to pay the costs of the Crown." The thought of that potential burden has deterred many from going to the High Court because the estate is so small that they dare not risk the cost.

    I would suggest that the system which operates in respect of Income Tax, Surtax and Profits Tax should operate here. In those cases an appeal can be made to a most efficient body, the Special Commissioners, and justice is done with expedition, efficiency and cheaply. I would suggest in the case of valuation of shares, and indeed other property, for Estate Duty purposes that it ought to be possible, at any rate in respect of small estates of say £10,000, to appeal to somebody like the Special Commissioners, or perhaps the Special Commissioners themselves, who would do the job extremely well, and ensure that justice was done both quickly and cheaply. I throw out the suggestion for the consideration of the Chancellor, and I hope that, if not on this occasion, it may be possible on some future occasion to insert a Clause in the Finance Bill to give effect to it.

    The other major aspect of the speech of my right hon. Friend which struck me forcibly was the high level of Government expenditure. I should be one of the last persons to ask the Chancellor not to fulfill this country's obligations to our allies in the sphere of defense, or to our own people in the sphere of social services. I do not propose to follow my hon. Friend the Member for Sheffield, Hal-lam (Sir R. Jennings) in giving examples such as those which he gave about the cost of trombones for use in schools, but I feel strongly that some intensive effort should be made in the coming year to ensure that we are not wasting money in the public services.

    This year the Estimates are up by about £12 million, and I sincerely believe that this cannot go on for ever. I know the difficulties, and I am sure that the Chancellor would be the first man who would be delighted if he could save money somewhere. If it is not possible for the Departments, at the instigation of my right hon. Friend, to cut down their Estimates and, particularly, their administrative costs, I hope that the Chancellor and the Government will not exclude altogether from consideration the possibility of an independent inquiry consisting perhaps of men with long public service and with business experience.

    Finally, I cannot believe that any hon. Member of this Committee can say honestly that he is not, in general, reasonably satisfied with the progress made by this country during the past financial year. Great credit in this regard is due to the Chancellor and to those who work with him. Perhaps I may be permitted to quote one or two figures which were given recently by my hon. Friend the Economic Secretary, and which I think are extremely significant.

    In 1951 wages rose by 12 points while prices rose by 14 points. That was the year when we took office. In the next year, 1952, both wages and prices rose by about the same amount. In 1953 wages rose four points, but prices rose by only two points. Nobody can deny those figures, and the basis on which they are calculated is the same basis as that accepted by the previous Government. Whatever hopes we in this Committee may have of improving the lot of those people who are finding it extremely difficult to live on meagre fixed incomes, the fact remains that in general through out the country we have been successful in slowing up the rise in the cost of living.

    Last year productivity was up, employment was up and food consumption was up. I have every confidence that in the coming year, as in the past two and a half years, we shall continue to make steady progress towards that complete recovery which all of us desire.

    9.14 p.m.

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    I have listened to so many speeches that I feel rather confused as to which hon. Member I ought to refer before I go on to say what I think of this "wonderful" Budget. I would point out to the hon. Member for Doncaster (Mr. Barber), who had something to say about prices, that the change in the cost of living has been so great that wages have been increased in almost every industry in recent years, and there is still a demand for higher wages.

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    The only point that I was making, and I assume that the hon. Member is not denying this, was that last year wages rose by four points but prices rose by only two points. I assume that the hon. Member is not denying it, because those figures have a basis which has been agreed between both sides of the Committee.

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    I am not denying the fact that index figures record certain things, but my point is that the ranges of articles in the retail price figures include coats of all kinds, television sets, and so on. Clothing is included, and so are household goods and beer and tobacco.

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    The figures which my hon. Friend the Member for Doncaster (Mr. Barber) was quoting, as is well known to the Committee, are based on the normal expenditure of working-class houses, as revealed by a very large number of statistical observations.

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    They are not based on that at all. The hon. Gentleman need not "come that" on me. The Interim Index of Retail Prices includes many things that are luxuries to most families.

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    The hon. Member is completely confusing two quite distinct indices.

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    I am not confusing any thing. I am dealing with index figures which include clothing, drink and tobacco and those kind of things. I said to the hon. Member for Doncaster that workers in every industry not only demanded higher wages in the past, but are still demanding those wages and that that indicates the great changes that have occurred in the last year or more. The hon. Member said that we were eating more food. The fact is that we are eating less and paying more.

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    I am sorry, but I really must point out that the figures that have been published by the Government show precisely the opposite of what the hon. Member is saying. The figures in the Economic Survey show that more money was spent on more food last year than in any year since the war.

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    I think the hon. Gentleman is wrong. It is true that considerably more money was spent, but less food was actually bought. Whether it was consumed or not, I do not know.

    I am sorry that I did riot have the opportunity of interrupting an hon. Member who spoke two hours or more ago, so long ago that I have forgotten his name. He was advancing the old cry of, "Let us have more assistance from the Government for private education." We have heard that cry in previous Budget debates. He was grumbling because when somebody is sent to a private school, usually because his parents prefer that he should go there, the Government make no tax concession for that purpose.

    All Governments have done jolly well for education on the higher levels. A few weeks ago I pointed out that the Government pay between 60 per cent, and 70 per cent, by way of grants towards the cost of university education, even in Oxford and Cambridge. In the case of Oxford 56 per cent, of costs are paid in grants and, in the case of Cambridge, 49 per cent. I think the Government do well for people who can afford fees in those places. They worry about that, but do nothing for old-age pensioners.

    A lot has been said about post-war credits. I think there is still time for the Government to have second thoughts about that question. A Measure could be introduced to effect changes in the distribution of post-war credits. I suggest that the Chancellor has time in which to consider the desirability of making a change similar to that which I tried to get Chancellors of the Exchequer to make from 1946 onwards—to lower the age each year.

    As hon. Members have said over and over again today, whatever else is done with post-war credits, instead of waiting until the individual who has died would have reached the qualifying age, the desirable thing to do is to pay the amount on death. That would get over the great disappointment caused by previous Governments. I was always disappointed that the previous Government did not do something about it. The payment could start at age 64 and could be made lower each year. It would cost only £17 million or £18 million in any one year.

    A large number of hon. Members have been very worried about there not being a reduction in Income Tax. I did not expect it. I knew from the figures we had that the Chancellor was not in a position to do much in that direction, but I think we can justifiably say that the sections of the community which have been well treated by the Chancellor will still benefit. Although we talk about increased productivity, when we read company meeting reports we find that dividends are still too high. I noticed in the Financial Statement that the Exchequer receipts from Surtax have been £5 million over the estimate. That does not indicate that dividends are down. It is costing a little more to die because the figure for Death Duties is up by £4½ million.

    Yesterday the Minister of Pensions and National Insurance was asked what it would cost to increase old-age pensions. I think something should be done in this matter, not because the Government are generous or considerate but because the situation demands an increase in basic pensions, no matter how small that increase may be. If we had an increase in basic pensions of 5s. a week it would not cost more than about £60 million and would affect between 4¼ million and 4¼ million pensioners. I wish to draw the attention of the Committee to an incorrect statement made by the Parliamentary Secretary to the Ministry of Pensions and National Insurance during Question time yesterday, when he was asked if he would state the basis on which he calculated that a basic retirement pension rate of £2 10s. a week would cost £570 million. I remember arguing this matter with officials of old-age pensioners' organisations and calculating what it would cost. It appeared to me that if their demands were met it would mean an average increase of £1 per week above the present figure. That does not amount to £570 million. It is about £270 million.

    It emerged from Questions asked yesterday that there are 2½million persons in this country of a pensionable age who have no claim to a pension. There are fewer than 4½ million contributory and non-contributory pensioners and, in addition, we have these 2½ million people who have no claim to a pension, but who are probably well provided for. We should remember that when we are discussing the difficulties resulting from an ageing population. In 20 years' time the problem will be twice as great as now. Already, there are 2½million people who are much better off than the old-age pensioners for whom we are pleading.

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    Is my hon. Friend aware that when the Minister of National Insurance tells us how much old-age pensions cost and how much they will cost in 25 years' time he invariably speaks as though every person of a pensionable age would be receiving a pension? Therefore, his figures are grossly inflated.

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    I accept that. As a matter of fact, it appears to me that the officials of the Ministry of Labour and National Service cannot count. I was invited by the Parliamentary Secretary to bring my figures to the Ministry so that it could add them up for me, because it was suggested that I could not count. I dispute that, but it seems to me that the officials in that Ministry are unable to count. Nothing has been done for the old-age pensioners. I remember that we voiced the same complaint at the beginning of this Parliament. If the Government had agreed to do something for the pensioners it would have been about September before anything could have been put through. By the time that a new Bill had been introduced and the Ministry had been able to change the pension books, it would have been next September before new rates could have been put into effect.

    As the Government have no intention of doing anything, the pensioners can resign themselves to the fact that what they get now they will get for the next 12 months or more. That is the position. Most hon. Members opposite have wives, just as we have. Any man whose wife does the shopping knows perfectly well that the actual cost of food has increased in the last year by about 25 per cent. I know that my wife has had to have a lot more from me than she used to get for household purposes. I am sure that the Economic Secretary, if he has a wife — and I daresay he has from the way in which he seems to be enjoying what I am saying— is in the same position.

    The fact is that the pensioner is not able to find the extra money as some of us have been able to find it. Only about a million pensioners get supplementation. The reason is that they still suspect what the hon. Member for Hallam (Sir R. Jennings) was talking about a few hours ago. He complained that the National Assistance Board was too generous or that it did not make sufficient inquiry and allowed people to get money on loan. Back to the Board of Guardians and the Poor Law was his idea. I am afraid that that point of view expresses the obvious satisfaction— at least there is no dissatisfaction— that nothing has been done for the pensioners.

    That alone is an indication of what is thought by hon. Gentleman opposite about the conditions of old people. I have been closely associated with the old-age pensioners organisations. I know the tragedy and hardships which have been inflicted on them by the increased cost of living. Nothing has been done for them and it does not look as if any-think will be done for a long time.

    I was surprised that the hon. Member for Croydon, East (Sir H. Williams) failed to talk about the National Debt. He is not here now, but we could hardly expect him to wait so long to hear criticism of what he said. I want to say something about the National Debt because it has always worried me. The interest on the National Debt has climbed to over £600 million a year. That is more than we pay to the old-age pensioners on contributory and non-contributory pensions. That is something we shall have to look at one day. I am not suggesting that we should repudiate the National Debt. I see hon. Gentlemen on the Treasury Bench smiling at me, but they know that what I am saying is true.

    The interest rates on the Debt are considerably higher this year than they were before. The Debt is now standing at about £26,500,000 and the interest is more than £60 million a year. I remember that Mr. Chamberlain, when he was Chancellor of the Exchequer, did something towards reducing the rates of interest upon the Debt. We are not far away from the time when something of that sort will have to be done again. We have to pay interest on the Debt for services and wars that took place 100 and more years ago, yet we cannot adequately look after 4½ million of our old people who have served the nation in their younger days. There is something wrong with our administration. In spite of a Budget of this size, we cannot pay more to the old-age pensioners than 32s. 6d. per week for a single person and 54s. per couple. It is time something was done about it.

    I remember Mr. James Maxton being told, during the War, that members of the Government, including the present Prime Minister, had been sent to Parliament to do a job for the workers. He asked the Government to do something for the old-age pensioners and said "We shall never get a chance again. If we do not take action now, a force greater than ourselves will come along and do it for us."

    People will not tolerate the present position indefinitely. If we cease to make progress I believe that a force greater than either side of this House will cause something to be done better than it has been done before.

    9.38 p.m.

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    Before I say a few words which I have prepared for this meeting of the Committee, I would like to comment on the speech to which we have just listened from the hon. Member for Kirkdale (Mr. Keenan). He referred to the quantity of food consumed in this country during 1953 and said that we had paid more for less food. The hon. Member will find the answer to that statement on page 21 of the Economic Survey, a copy of which I happened to have with me. I will read out what it says.

    "The volume of food consumption rose in total by 4½ per cent. More meat, bacon, sugar, fats, cheese and fruit were eaten than in the previous year and less of most of the starchy foods."
    Might I emphasise that? We ate more meat, bacon, sugar, cheese, fat and fruit and less of the starchy foods. In other words, we have moved further away from the bread-and-potato economy of the Socialist Administration and more towards the meat-fruit-egg-milk-protein economy in which we believe. If the hon. Member cares to see the analysis, he will find the table immediately underneath.

    Converted into terms of calorie intake, in 1953 the calorie intake per day per person was 3,030, an improvement of 80 calories per day over 1952 and an improvement of 30 calories per day even on the pre-war average. In other words, in 1953 the average calory intake was 30 points up on our pre-war diet. I think that effectively disposes of the hon. Member's comments on that aspect.

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    Am I right in saying that the actual cost of that increased food is something like 5 or 6 per cent.?

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    So far I have not dealt with the hon. Member's remarks about the costs but have confined myself to his remarks about quantity. I am trying to dispose of his statement that we had less food. I think that I have been successful.

    I want now to refer to the hon. Member's comments about the old-age pensioner. I entirely agree with everything that has been said about the almost unanimous wish in this House that the Chancellor had found it possible to do something for the old-age pensioner. But there is another side to it. First of all, even the old-age pensioner is better off for food today than under the late Administration in 1951.

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    They have not the money to buy it.

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    The B.M.A. has a formula based on calorie intake. A report was published not long ago. I do not have it with me. but it is probably obtainable in the Library, and I can remember the figures. The figures were that in the months of January and February, 1951, under a Socialist Administration, the old-age pensioner's daily calorie intake was 7 per cent, below the minimum requirements. In 1952, under this Administration, his daily calorie intake was equal to his minimum requirements, and in 1953— again under this Administration— it was 4 per cent, above his minimum requirements. Quite conclusive proof, I think, of the justification for the statement I made a little while ago.

    No one pretends that the old-age pensioner is living in luxury. He never could and never will. But I would take much more kindly to the campaign being waged on this issue from the benches opposite if hon. Members had raised a similar campaign during the years 1946 to 1951. I wonder how many of them during those years made the type of speech to which we have just listened? During those years, under their Administration, the cost of living rose by 40 per cent, and the cost of food by 60 per cent. The old-age pension rose not at all.

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    That is absolutely fantastic.

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    Perhaps the hon. Member will allow me— I have not finished. In 1946 old-age pensions were fixed at 26s. for a single person. They did not go up until after the date of the last General Election had been fixed. Does anyone want to challenge that? No, I thought not.

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    I am not challenging that, but I should like to point out to the hon. Gentleman— who had the impudence to say that the pension did not go up under the Labour Government and that hon. Members on this side did not campaign for it— that in the first 12 months of our Socialist Administration there was a tremendous agitation— almost exclusively from Members on this side— which resulted in this more than 100 per cent, increase in these pensions.

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    I remember the details of that, too. I remember that the previous Administration had fixed an increase, I think to 20s., and it fell to the Socialist Administration to implement it in 1946. It is to that period from 1946 to 1951— five years— that I am referring. If the hon. Gentleman looks at HANSARD tomorrow he will see that I said "from 1946 to 1951." In that period the cost of living rose by 40 per cent. and the cost of food by 60 per cent. I did not hear that kind of speech then. Had they made that type of speech then I should have listened with more sympathy to the speeches they have made tonight. Unfortunately, they are using the old-age pensioner argument as a political weapon, to serve their own political ends, and it reflects discredit upon them, but that is a matter for their own consciences.

    A Budget speech from the Chancellor is rather similar to the "State of the Nation" speech of the President of the United States. I think we all have reason to express sober pleasure at the results of the past year, and sober confidence at the prospects for the forthcoming year, as a result of the Chancellor's speech, In the few comments he made, the Leader of the Opposition uttered a moderate warning note, with which I do not quarrel: I think he was quite right to do so. If no other right hon. or hon. Member opposite does more than that during this debate, I shall be very pleased, but I do not expect it. I have a shrewd suspicion that in this respect at any rate, the debate will follow the form it has followed in the last two years, and that hon. Members opposite will try to discredit the progress we have made, purely because they do not want this Government to take too much credit for it.

    Before they do so, I should like to quote from a purely independent source, the Report of O.E.E.C., published about three months ago. That Report said:
    "There has been appreciable progress towards balance of payments equilibrium after the unmanageable deficits incurred in 1951."
    There are two phrases which I want to stress— first, the "appreciable progress," for which I hope we shall all take credit, and, secondly, the "unmanageable deficits." When I listen to financial, economic and Budget debates, I cannot forget those unmanageable deficits of 1951, or that the Members of the Administration which incurred them are now telling us, the Members of the Administration which have managed them, that we do not know the answers and they do. They must forgive me if I accept that argument with a little incredulity. The evidence is against them. It was they who incurred the unmanageable deficits, and we who were called upon to manage them, and the Report of O.E.E.C. pays a tribute to the way in which we have done so.

    I want to underline that by quoting the words of a noble Lord who was once a Socialist Minister. On 29th April last year, in another place, he said:
    "… today the pound sterling stands, in exchange with the dollar, close to the upper limit of the gold points, and therefore the prospect of sterling holding its own may be regarded as quite satisfactory. These are extremely healthy facts, and they are all of the utmost importance. I say, quite unreservedly, that Mr. Butler and the people of this country are entitled to the highest congratulation. For without such recovery we should have been today in imminent peril of bankruptcy, if not of starvation."— [OFFICIAL REPORT, House of Lords, 29th April, 1953; Vol. 182, c. 59.]
    I suggest that that tribute is fully justified by the results of the past two years. The noble Lord was quite justified in paying tribute to my right hon. Friend and the people of this country, and I wish that more hon. and right hon. Gentlemen opposite could find it possible to do the same.

    That is not all. Mention has been made of the cost of living. I find it very difficult to understand why hon. Members opposite should continue the fairy story that the cost of living is still going up and up. The evidence is all against them. They have only to look at the Official Index of Retail Prices to see that it is not so. They refuse to believe the official cost-of-living index. They are rather like the hypochondriac who is only happy when the thermometer shows that he has a temperature and insists that there must be something wrong with the thermometer if his temperature is shown as normal. That is like hon. and right hon. Gentlemen opposite. The thermometer is the cost-of-living index, and they ought not to try to discredit it, because it is their own index.

    I know the difficulty of hon. Members opposite. It is that they place so much stress on those items that have gone up in price and ignore those items that have gone down. So does the average housewife. I do not blame her in the least. The hon. Gentleman mentioned his wife. I have a wife, too. I get the same complaint from her, and I have to point out to her that when meat was rationed she was limited to spending 8s. 8d. a week on it. Last week she spent 13s—.

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    She is better off than I am.

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    —not because meat is any dearer, but because she can now buy much more than she could before. That is the problem with which hon. and right hon. Gentlemen opposite are faced. There are many articles that have gone down in price, many articles of food, most articles of clothing, everything subject to Purchase Tax, and many household goods. I have a list here.

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    Will the hon. Gentleman tell us what food prices have gone down?

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    Yes. I will not bore the Committee with the whole of my list, but here are some commodities that went down in price during 1953. Bacon, cheese —

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    Gone down?

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    During 1953, yes. Shredded suet, canned fruits, pepper, stewed steak and luncheon meat in tins, boiled gammon, kippers —I am not aware that they went down in our Tea Room, but they went down outside —and slab cake. There are a few examples.

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    Old-age pensioners cannot afford all those.

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    I imagine that old-age pensioners eat, and that they eat some of those items of food. Other things that have gone down in price are linen, furniture, curtain materials, sheets, pillow cases, hand towels, bath towels, table cloths, tea cloths. Old-age pensioners wash and wash up, do they not? Men's, women's and children's clothing all went down in 1953; men's suits, pyjamas, nightdresses, sports trousers, slippers. Even ladies' vests and nylon slips came down in price in 1953; and of household goods, saucepans, soap, talculm powder and many other toilet articles. These all came down in 1953.

    While some articles went up in price the net result is that the cost of living has remained remarkably steady, in a way we have not witnessed since before the war, and I think we are entitled to take credit for it. I do wish sincerely that hon. and right hon. Gentlemen opposite would treat this matter with greater political honesty. Let them make their valid arguments, by all means, but let them face the facts.

    Now a word about the future. To hold the cost of living steady is very satisfactory. To bring it down will be even more satisfactory. I suggest to those who are disappointed, as I am, that the old-age pension has not gone up that there is another solution to that problem. The hon. Lady the Member for Flint, East (Mrs. White) suggested that for a married couple the old-age pension ought to go up from 54s. to 60s. to compensate them for the increase in the cost of living since the present Government came into office. I believe that it would be possible to increase the value of the existing old-age pension to the same extent if we could solve some of the problems of productivity.

    Here I propose to ride a favourite hobbyhorse of mine and to tilt at restrictive practices, not only at the workshop level but at all levels. It is customary, when dealing with topics of this kind, for hon. Members opposite to attack the management, the bosses, and to assume, I do not know with what justification, that we on this side think in critical terms only of the workers. That certainly does not apply to me. I am conscious of the restrictive practices all round.

    May I mention two kinds of restrictive practice in order to show the Committee how my mind is working? I am a victim of one form of restrictive practice. In private life I am a paper merchant, and if I want to buy a certain kind of paper and go to any of ten or a dozen mills in this country, they all quote me the same price, no matter how eager one or more of them may be to quote a lower price.

    Similarly, having bought the paper and ordered it to my customer, I have to put on a controlled margin of profit, the margin being 6 ¼ per cent, for lots of one ton. No matter how willing I may be to put only 5 per cent, on, I dare not do so — I must put on 6 ¼ per cent. If I put on less and it became known, I should be in danger of being blacklisted, and all the mills concerned would be forbidden to supply me with that type of paper in future. If that process continued, I should eventually be forced out of business. This is the kind of restrictive practice which I have in mind at one end of the scale and it is making no contribution whatever to the solution of the problem of the cost of living. It is ruling out competition and it is not my idea of private enterprise.

    At the other end of the scale there are restrictive practices on the workshop level. We all know examples of this. The latest example which I read in the Press was of a woman who was penalised by her union for making 93 cushions in a day instead of 40. But let us remember that for every example of which we learn, as a result of such a disclosure in the national Press, there are thousands and possibly hundreds of thousands of similar examples of which we never learn because the workpeople dare not contravene these rules. They are held down to something below their maximum output for fear of being penalised. That makes no contribution to the solution of the problem of the cost of living.

    I am quite certain that if we could solve that kind of problem we could bring the cost of living down by at least 10 per cent., which would be quite sufficient to solve the problem of the old age pensioners without increasing their pensions. Not only would it help in that direction but it would also assist us to compete with other countries, such as Germany and Japan, in our overseas markets. It would solve both problems at the same time.

    I know it is not easy to deal with this kind of problem and I do not suggest that it can be dealt with by legislation, but it is a problem which we must face if we are to overcome all the other problems which beset us. Somehow or other we must get rid of this mentality of the 1930s, as I believe it is; for all these things are a legacy of the mentality bred during those years when work was scarce and therefore had to be rationed. That mentality is out of date. It has no place in the economy of the 1950s. We can beat Germany and Japan and every one else if we can use both hands, but to try to beat them with one hand tied behind our backs, which is what we are doing now, is folly of the first water. Solve that problem and all the rest, or most of the rest, will fall into place.

    Whereupon, Motion made and Question, "That the Chairman do report Progress and ask leave to sit again," —[Mr. Kaberry] —put, and agreed to.

    Resolutions to be reported Tomorrow; Committee also report Progress; to sit again Tomorrow.

    National Coal Board (Ex-Employee)

    Motion made, and Question proposed, "That this House do now adjourn." —[ Mr. Kaberry.]

    10.1 p.m.

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    I apologise to the Parliamentary Secretary for keeping him waiting all day for this Adjournment debate, but this case concerns a Mr. R. W. Simpson, of Glenrothes, for whom this debate will be more important than the Budget debate which has just been adjourned.

    Mr. Simpson is a comparatively young man, in his early 40s. In 1949, he got a first-class mine manager's certificate. I should like to run very quickly through the events that have taken place since then which have now placed him in the position of being unable, although he has this certificate, to get a job in the coal mining industry, although he lives in one of the most important coalfields in the whole of Britain.

    Subsequently to getting his certificate, in 1949, he was appointed a training officer at the Valleyfield Colliery, in Fife, and there he became responsible for dust suppression work, in which he was keenly interested, and in which, he tells me, he did very good work. I should say that all the information I have on this case is from Mr. Simpson himself, and it may well be a one-sided story. I have not heard the other side, but perhaps the Minister may be able to provide more information than I have.

    In 1951, after Mr. Simpson had held this job for some time, the colliery manager, Mr. McAllister, was promoted agent in the East of Fife and later, in 1951, Mr. Simpson was transferred to die same area, where he again became a dust suppression officer. In July, 1952, he had added to his duties those of control and supervision of shot-firing and explosives in the mine in East Fife.

    In August, 1952, Mr. Simpson was invited by the agent to take charge of the development of a new section which required to be speeded up, and Mr. Simpson tells me that the work there went ahead after he was invited to take charge of it. In October, 1952, he again returned to his duties as a dust suppression officer. It seems to me from that story to date that Mr. Simpson had evidently given some satisfaction; indeed, there is no evidence of any complaint having been made against him up to that time.

    In March, 1953, he was appointed by the agent as the group dust suppression officer for two collieries, Michael and Lochhead, in East Fife, where his duties were to be of a supervisory nature. Mr. Simpson is a man of not too strong physique, and it was understood by the agent that he would not be involved in any work requiring lifting and that kind of thing.

    Two days after his appointment to that work, Mr. McAllister, the agent, was given further promotion to be area production efficiency engineer, and a Mr. Finnie replaced Mr. McAllister as agent. Mr. Simpson alleges that the new agent was not an enthusiastic supporter of dust suppression, and, to cut a long story short, there was very little co-operation by Mr. Finnie in giving Mr. Simpson the necessary workers to transport the water pipes which are evidently necessary for dust suppression work. Simpson, rightly or wrongly, reported this lack of co-operation, so he thought, on Mr. Finnie's part to the area safety engineer, who wrote to the manager pointing out that Simpson was getting little co-operation from the agent.

    Subsequently, word got back to the manager that Simpson had sent the letter. He was called to the manager's office and it was quite clear that both the manager and the agent were annoyed that he had written complaining of their non-co-operation on dust suppression. Simpson was then ordered to do laboring work, although physically he was quite unfitted for it. He protested to the agent and was then, I understand, recommended for a course on explosives. Shortly afterwards, he was invited to become an assistant teacher at shot-firing classes in a training centre at Muiredge, near to the collieries concerned.

    Apparently, the agent personally told Simpson to report at these classes for nine o'clock in the morning on Mondays, Tuesdays and Thursdays. Simpson attended the explosives course and expected to be appointed explosives supervisor in the area. Five weeks after commencing the shot-firing classes, Simpson was called to the agent's office and was given his notice.

    Evidently the area production manager, to whom Simpson had written earlier complaining of the non-co-operation in the matter of dust suppression, had written again to Mr. Finnie complaining of the dust suppression measures at the Michael Colliery; and Simpson, rightly or wrongly, was blamed for those defects. His defence was that he had had to attend the shot-firing classes and that another dust suppression officer had been appointed at the colliery where the complaints were being made. Nevertheless, he got 15 days' notice as a result, and no reason was given.

    At that juncture, Simpson wrote to me and I made representation to various quarters. I wrote to the Ministry of Labour in Fife asking for the National Coal Board reasons why Simpson was given his notice. The Ministry refused to give me those reasons. On 24th October, 1953, Simpson was given a clearance certificate which stated that he left of his own accord. He has tried subsequently to get a job at other pits in the area, but with no success.

    On 18th November I wrote to the Scottish Division of the Coal Board, and the chairman told me that the reason why Simpson could not get a job was that he could not start his duties at six o'clock in the morning. Simpson points out that he could not do that because he had been asked by his agent to attend as a teacher at the shot-firing classes at the instruction centre for nine o'clock in the morning. Simpson still maintains that if need be he could start at 6 a.m. In fact, his present job in a linoleum factory in Kirkcaldy involves his starting at 6 a.m. Therefore, that argument does not hold water.

    Having received no satisfaction from the Coal Board in Scotland, I wrote on 11th March, and again on 15th March, to the Coal Board headquarters at Hobart House, London. On 19th March, I had a reply which said that although Simpson had had jobs at Valleyfield, Blairhall and other collieries in the East of Fife, he was not really suitable for the jobs he had held, although so far as I know no complaint was made by these collieries. It also infers that Simpson was not prepared to co-operate fully with the management, and that his poor health was another factor which added to the difficulties.

    Simpson, of course, alleges—and I have no reason to agree or to disagree with the allegation—that he has been victimised. The Scottish Coal Board headquarters deny this, and, in fact, after this whole question had been raised by me here with the Minister and with the Coal Board interesting developments took place. On 25th March Simpson got an invitation from the Scottish Coal Board to apply for a vacancy as warden at the residential training college at Sauchie, in Scotland. In Simpson's view the educational qualifications that were needed for the job were such as to rule him out completely, but Simpson feels, rightly or wrongly, that this invitation was sent out to destroy the argument that he had, in fact, been victimised.

    I appreciate the Minister's courtesy in sending to me the letter that he sent earlier. I realise that he has a limited responsibility in this, but I ask him to consider these points. In the first instance, the Coal Board is continually crying out for men with technical qualifications and experience of all kinds, because there is a dearth of men of that calibre all over the coalfields of this country.

    While it may be that Simpson has been a difficult man in some respects and may be he has not always co-operated— although I must say that co-operation is always a two-way traffic—there may be faults on both sides. In any case, he is a highly qualified man and Fife is a tremendously important mining area. It is one of the most important mining development areas in the whole of the United Kingdom. I myself know Simpson personally, would vouch for his sincerity and would say he is a conscientious worker and an able man with a splendid character.

    I would urge the Minister to use his good offices and the influence which he must have with the Coal Board to get this man a job in the coal industry. It need not necessarily be in Fife. I believe that he is willing to take a job in England, and I would respectfully ask the Parliamentary Secretary to give me a sympathetic reply tonight, because this man and his family are desperately anxious that he should take his place again in the coal industry and help to give the country what it needs.

    10.14 p.m.

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    I can well appreciate the desire of the hon. Member for Fife, West (Mr. Hamilton) to try to help his friend and constituent whose case he has raised in the House this evening, and I should like, in all sincerity, to express my admiration of the determination with which he has pursued the case of this miner. I am not sure whether he started at pit level, but it went up through the divisional board level to the National Coal Board. Now he has brought it to the national forum.

    One cannot but be impressed with the encouraging way in which this gentleman is so anxious to remain in the coal industry. That is a good sign and one which we have not always seen in the coal industry in the past. There have been times when people have been only too glad to take an opportunity of leaving the industry to seek their fortunes in an alternative form of employment.

    I am anxious to help the hon. Gentleman in any way I can, but my difficulty this evening is to see how I can help him. The responsibility of my right hon. Friend as Minister of Fuel and Power is limited by the statute. One of the things over which he has no direct control given to him by Parliament is the day to day administration of the nationalised industries, one part of which is their staffing arrangements. Indeed, it is difficult to see how it could be otherwise, for the question of the employment and engagement of their staff must inevitably be the responsibility of the employer, who is, in this case, the Coal Board.

    If it gets upon wrong lines there are industrial arrangements by which the matter can be pursued, and the Coal Board is fortunate in having an exceedingly comprehensive system of trade union representation throughout all levels of the employees of the Board. I do not think there can be any difficulty, if a question of employment got upon the wrong lines, in finding a way in which it could be brought by the representatives of the employers and employed to a satisfactory method of negotiation. But that, again, is outside the sphere of my right hon. Friend.

    I have followed closely what the hon. Gentleman said because I wondered whether there had been a case of wrongful dismissal or anything of that sort— but I did not understand from what he said that this was alleged; that there may have been a matter of difference of opinion as to the merits of the decision by the employer in the case, but, clearly, that is not a matter upon which my right hon. Friend could intervene. If there was a case of wrongful dismissal, that could be settled at law, but, there again, that is a different channel from the one which the hon. Gentleman is seeking to follow.

    Then the hon. Gentleman mentioned that he had been in communication with the Chairman of the Divisional Board. That in itself is evidence that at his instigation the case was reviewed by high authority in that area. Not content with that, he had taken it up to the national level as well and the case must evidently have been reviewed by the deputy-chairman—I think he said—of the Coal Board. There, I began to wonder whether there might be a case in which my right hon. Friend could intervene, because he is responsible for the appointments of the Coal Board and the Act has given him power of dismissal of those whom he appoints.

    But the hon. Gentleman made no complaint of the reception which the deputy-chairman had given to his letters, and there is no complaint of the reply which he received. In any case, I do not think that the hon. Gentleman would seek to press my right hon. Friend to use such drastic action as to invoke powers under the Act against a member of the Coal Board in the circumstances of this case.

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    The complaint I make is that the letter I received from the Scottish area was to the effect that the reason why Simpson lost his job was that he could not start at six o'clock. The reason that came from Hobart House—I think I am interpreting aright —was that he had not really been suitable in his previous job. So there seemed to be some kind of attempt to explain away something, which I think smells just a wee bit.

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    That, of course, is a matter of opinion, but one on which I cannot express any opinion because clearly I have no knowledge of the circumstances which led to the dismissal, if dismissal it was. I understood that a letter which he received indicated that he left of his own accord. Howsoever it may be, that is clearly a matter for the Coal Board to deal with as opposed to its being a matter for the Minister.

    It occurs to me that there is no question here of the gentleman being debarred or victimised—I think was the expression used—to the extent of being unable to seek employment. We heard that he has received the opportunity of applying for a job actually in the same division of the Coal Board. In addition, he has a variety of qualifications. Among other things he is a qualified dust suppression officer, and it occurred to me that when he said that he was employed in the linoleum industry he was probably employed there as a dust suppression officer or in some capacity where he could utilise his knowledge and training in that respect, because that is a dusty industry in which that knowledge might prove useful.

    I understand that he has also acquired some qualifications in shot-firing and the use of explosives. That, again, is an occupation which is by no means limited to the coal mining industry and he might find an outlet for his experience in quarrying or some other industry. My difficulty is that I do not know, and even if I did know I doubt whether it would be within my province to say, why this gentleman was unsuccessful in holding down any of the jobs which he had with the Coal Board.

    It is true that the Board has a very wide need for skilled men but, as the hon. Member indicated, one must realise that the holding of a certificate or any other form of degree or qualification of a technical character by no means necessarily carries with it a qualification of suitability for an executive post. It may be that with the highest qualifications in the world people are not suitable for some kinds of jobs. I do not know, but possibly that applies in this case.

    I do know that the Board is very fully alive to the need to make the best use it possibly can of people with the necessary qualifications. There is a shortage of qualified people and it would be very surprising to me if, with the qualifications which the hon. Member has indicated that this gentleman possesses, the Board should decline to make use of him without some satisfactory reason. The fact that he has now been offered the opportunity of applying for a position as a warden in a training centre rather indicates that that may well be the view of those who are in a superior position and who have to decide the rights and wrongs of people who hold executive positions under them.

    That job, responsible and important as it is, may well not be the type of job which at first sight would appear to be a suitable one for a person carrying the qualifications outlined. On the other hand, it is a job which would enable the gentleman to remain in the industry and also enable him to keep in touch. Possibly, as time goes on, he might find that the experience which he has gained in technical ways might be given an outlet, if not in that division, in some other division of the Board, or in some other industry able to make use of his services.

    I have not been able to assist the hon. Member to any great extent, but I do hope that I have indicated that, as far as lies in our power, there is really nothing we can do. I have every sympathy with him. He has had the opportunity of raising the case in the House. I can only wish him success and good fortune in the task in which he is engaged in trying to help his friend.

    Question put, and agreed to.

    Adjourned accordingly at Twenty-six Minutes past Ten o'clock.