House of Commons
Wednesday, April 15, 1942
Private Business
London County Council (Money) Bill,
"to regulate the expenditure on capital account and lending of money by the London County Council during the financial period from the first day of April, one thousand nine hundred and forty-two, to the thirtieth day of September, one thousand nine hundred and forty-three, and for other purposes"; presented; read the First time; and referred to the Examiners of Petitions for Private Bills.
Oral Answers to Question
Questions
League of Nations (State Contributions)
asked the Secretary of State for Foreign Affairs, what were the amounts paid to the League of Nations, for the year 1941, by Great Britain, the British Dominions and foreign countries, respectively?
Since the Reply is long and contains a number of figures, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.
Does not my hon. Friend think that, in view of the stringent control which the Treasury exercise on our exchange reserves, it is time we should cease contributing alone of all the countries in the world to this defunct organisation?
I think my hon. Friend had better study the Reply which will be circulated before he asks questions upon it.
Surely my hon. Friend will agree that we alone of all the, countries of the world, except a few of the Dominions, are contributing a substantial sum to the upkeep of these buildings, and does he not think it is time that we should cease doing it?
No, I would not agree, and if my hon. Friend studies the Reply, I do not think he will.
Has not this organisation done enough harm without our still subscribing to it now?
Is not this organisation still doing a great amount of good?
Following is the Reply :
The following countries paid their contributions in full, and the amounts were as follow: —
Gold francs. United Kingdom … 1,558,257.86 India … 692,559.05 Canada … 504,990.98 Australia … 331,851.22 South Africa … 180,853 New Zealand … 115,426.52
The following three States paid part of their contributions: —
Gold francs. Iraq … 24,543.54 Mexico … 79,355.74 Netherlands … 86,569.86
Two States who were not called upon to contribute in 1941 made token payments: —
Gold francs. Norway … 28,856.62 Poland … 14,386.69
Four countries paid certain sums in respect of arrears, namely:
Gold francs. Egypt … 25,169.40 France … 1,113,657.46 Iraq … 24,543.54 Eire … 185,609.58
One country, Argentina, made a voluntary payment which was accepted as such, of 35,516.26 gold francs.
These figures exclude payments amounting to 599,936.70 gold francs made by members of the International Labour Office who are not members of the League.
Royal Air Force
W.A.A.F. Police
asked the Secretary of State for Air whether he has now given further consideration to the question whether women, who are total abstainers, are to be considered equally eligible as police in the Women's Auxiliary Air Force as women who are moderate drinkers; and whether he will make a further statement?
Yes, Sir. The Order was amended accordingly, and an announcement was made on 27th March.
Will my right hon. Friend see that more publicity is given to this correction, in view of the correspondence that many Members of this House receive from their constituents?
I hope that my hon. Friend's Question will have that effect.
As some of us did not hear the Reply to this very important Question, would the Minister mind repeating it, with your permission, Mr. Speaker?
The Answer was: "Yes, Sir. The Order was amended accordingly, and an announcement was made on 27th March."
British Overseas Air Corporation (Loss of Aeroplane)
asked the Secretary of State for Air whether the inquiry being conducted by Group Captain Brown into the circumstances under which the aeroplane of the British Overseas Air Corporation was lost about the 15th February has been completed; and what was the cause of this happening?
As, at the material time, the aircraft was operating under R.A.F. control, the inquiry to which my hon. Friend refers was held under R.A.F. auspices. The inquiry has now been completed, but it would not be possible to state the findings without giving information of value to the enemy.
Without wishing in any way to endanger the safety of the nation, can my right hon. Friend say whether it was through enemy action or due to other causes?
That was the subject of the inquiry.
Operational Air Crews (Refreshments)
asked the Secretary of State for Air what refreshments, solid and liquid, are available for our airmen upon their return from night raids; and whether the variety, quantity and quality are comparable at all Royal Air Force stations?
Provision is made at all operational R.A.F. stations for refreshments for air crews at any hour of the day or night on their return from operational flights. Individual tastes are consulted as far as possible, and the standard of catering is broadly the same in all cases.
Will my right hon. Friend see to it that something other than cold stewed tea is given?
A man can have anything he requires, from a cup of tea or a cup of Bovril and biscuits to a meal, and if my hon. Friend knows of any cases in which operational air crews returning from their flights have not had proper food available for them in full variety, or anything they like, I wish he would let me know, and I will look into it.
I will certainly let my right hon. Friend know of the case of the airmen who told me about the cold stewed tea.
Uniforms (Brass Buttons)
asked the Secretary of State for Air, whether, in view of the shortage of metal and the waste of time, labour and metal polish, involved in cleaning brass buttons, he will abandon their use on Royal Air Force uniforms?
Plastic buttons will be worn on Royal Air Force uniforms. Garments with the new buttons will be issued to airmen and airwomen when the stocks of brass buttons are exhausted. The change-over will be gradual.
Is my right hon. Friend aware that last November I put down a Question to the Minister of Supply and I was informed that they had decided to issue nothing but plastic buttons to the Army? How is it that there has been such an interminable delay in reaching a decision in the Royal Air Force; does it not show a lack of co-ordination in the three Services; and is it not typical of the way that the Government have always delayed reaching decisions? May I have an answer?
Aircraft Production
Factory Amenities (Cost)
asked the Minister of Aircraft Production what was the cost of the provision and erection of the entertainment stage, dressing-rooms and other accessories and also of the specially laid dancing floor at a shadow factory, the situation of which has been notified to him; and on what grounds it was decided that such costly amenities are necessary to war production?
The factory in question is not a shadow factory, and the amenities referred to were provided by the company at their own expense.
Is my right hon. and gallant Friend aware that the people employed at this factory strongly resent the implication that their patriotism and loyalty are to be purchased by the provision of such costly luxuries?
I do not know. A good canteen has been erected, and the firm has seen fit to put up, at its own expense, a stage, on which, I understand, from time to time entertainment is given, and I think that the amenities will be welcome to a number of employees.
Factory Workers' Complaint
asked the Minister of Aircraft Production whether he has considered the statement from a factory of which he has been given notice; whether he is aware that in this factory the works superintendent informed the representatives of the workers that he was running the factory and did not want any assistance from the men; and what steps has he taken in the matter?
I have arranged for a full investigation to be made.
Is the Minister clearly aware that in connection with this Question the day of the big boss at the top and the mass of untouchables below has gone for ever, and that the workers, who are the main producers, must be taken into full consideration on matters appertaining to the factory?
Manufacturers' Bank Loans
asked the Minister of Aircraft Production, in how many cases his Department has guaranteed bank overdrafts in respect of businesses manufacturing for his Department; and what is the amount of loans so guaranteed and the rate of interest paid on such loans?
No such guarantees have been given by my Department.
Temporarily Closed Factory
asked the Minister of Aircraft Production whether he is aware of the arrangement made by an aircraft firm in the South of England to close their works for one week in order that their employees may have an opportunity of digging their gardens; and whether he will take steps to prevent this delay in the production of aircraft?
The arrangement to close the works for a week was made with the concurrence of my Department. In the circumstances of the particular case, this is better for production than the alternative of spreading the holidays over several months. If the workpeople choose to add to their national effort by working in their gardens during their holiday, they deserve every encouragement.
Is the Minister aware that the sub-contractors of this firm are all busily engaged and working at the highest pressure, and that the type of aircraft manufactured there is badly required to-day?
This factory is doing repair work mainly on trainer types. They are up to their schedule at the present moment and have spares in hand. We expect more repairs during the days of longer flying weather in the summer, and it is far better that the factory should shut down completely for one week now rather than have the holidays spread over the whole of the summer months.
Is my right hon. and gallant Friend aware that this factory is producing a very important type of aircraft which is very badly required at the moment? I have made full inquiries and know the facts.
So have I. The factory has been engaged on repair work of a very important type, but its main work is repair work on a trainer type.
I shall put down a further Question on the subject.
War Transport
Surplus Army Goods Vehicles (Acquisition Permits)
asked the Parliamentary Secretary to the Ministry of War Transport whether he is aware that the delay, in some cases of a period of four months, in the issue by his Department of licences to acquire the commercial vehicles which, surplus to Army requirements, are being reconditioned by the motor industry for the purposes of essential civilian use, is causing congestion of workshop space required for the maintenance of essential road transport vehicles, militating against the efficient transport of essential materials and foodstuffs and failing to relieve the necessity for the manufacture of new vehicles for essential civilian use; and will he give an assurance that these licences will in future be issued with the utmost despatch?
I am not aware that there has been such delay as my hon. Friend suggests in the issue of permits for the acquisition of reconditioned goods vehicles released by the Army, but I am making inquiries, and perhaps my hon. Friend will let me have details of any instances of which he is aware. Applications for these vehicles are dealt with by Regional Transport Commissioners, and my hon. Friend will realise that before a permit is granted the Commissioner concerned must satisfy himself as to the operator's need for the vehicle.
Is not my hon. Friend satisfied that there is considerable delay in issuing these permits and that it is holding up the reconditioning and repair in the workshops and is affecting the efficiency of the Army and the Royal Air Force?
I am in touch with trade organisations and other people with a view to bringing supply and demand as closely together as possible, but, roughly, in the last five months, about 2,400 of these vehicles have been collected from the Army, and the vast majority have already been disposed of to users.
Will my hon. Friend call for a census of commercial vehicles which have been delayed in these workshops for two months or over?
I have called for that.
Will my hon. Friend consider the case and its application from the point, of view of persons engaged on work of national importance? Cannot we get a proper system, and will he see that such a system is brought into being?
I am most anxious to have such cases, and if my hon. and gallant Friend will send me some, I will look into them with all care.
Travelling (Holiday Periods)
asked the Parliamentary Secretary to the Ministry of War Transport to what extent the public followed the advice given by the Government not to indulge in unnecessary travel during the Easter period; whether he is satisfied with the response; and whether he proposes to take any different action in connection with Whitsuntide?
As the House is aware from the message broadcast by my Noble Friend, preliminary reports indicate that the response of the public was good. Arrangements for Whitsuntide are under consideration; meanwhile the duty of refraining from unnecessary travel continues to be of vital importance to the successful prosecution of the war.
Travel Priority (Workers' Luncheon Hour)
asked the Parliamentary Secretary to the Ministry of War Transport whether his attention has been called to the inconvenience caused to working-men returning home for lunch by the congestion of omnibuses and tram-cars; and will he arrange for workers to have preference over shoppers and pleasure-seekers in all public conveyances?
Schemes for giving priority of travel to workpeople going to and from their places of work in the morning and evening are in existence in many districts where the need, has been proved and where the conditions are suitable. It would be more difficult to make such arrangements at the luncheon hours, but if my Honourable Friend will let me know of any particular instance of serious inconvenience that he may have in mind, I will look into it.
Are the facilities referred to in operation in the Wolverhampton district?
I believe not. The difficulty there, I believe, is very largely with regard to Guy's Motor Works. The local authorities are pressing them to enlarge their canteen to relieve pressure at the luncheon hour.
Railway Station Staffs (Canteens)
asked the Parliamentary Secretary to the Ministry of War Transport whether his attention has been drawn to the position of the railway workers, who are working on the various station staffs in the country, and the inability of these workers to obtain any refreshments while on continuous duty; and will he make inquiries with the idea of getting arrangements made whereby reasonable opportunity can be offered to the staff to obtain such refreshment?
At many of the larger stations, canteens and other facilities are already available for members of the station staffs, and these arrangements are being extended as rapidly as existing conditions permit. My hon. Friend will, however, recognize that it would be in-practicable to provide special facilities at all stations.
Is my hon. Friend aware that at many large stations it is impossible for people who have been working long hours in all sorts of weather to purchase even a cup of tea on the coldest night, either at a military canteen or a refreshment room?
If my hon. Friend will give me details of the stations where this particular hardship exists, I will immediately look into the matter. He will, however, recognise that the difficulty of securing labour and materials for the construction of canteens is considerable.
Is my hon. Friend aware that the difficulty exists at nearly every large station, where the men are not allowed to buy tea in the refreshment rooms because they are railway workers?
If my hon. Friend will write to me on that point, I will have it looked into.
Ministry of Information
"Never Again" Association
asked the Minister of Information which of the aims of the "Never Again" Association are regarded by the British Broadcasting Corporation as controversial?
According to its published literature, the Association was formed with the aim of promoting certain definite views with regard to the terms of peace and the way in which Germany should be treated after the war. The B.B.C. consider that they must regard as controversial the views of any organisation formed for such a purpose.
Is my right hon. Friend aware that the two main aims of this Association are to win this war and to make Germany powerless to wage future wars? Is there anything objectionable to the B.B.C. in that?
I do not think there is anything objectionable in that. The B.B.C. are doing their best to promote the objects my hon. and gallant Friend has in mind, but just because a few persons form themselves into an association they have no claim to use the broadcasting machinery of the B.B.C.
In view of the unsatisfactory nature of the reply, I beg to give notice that I will raise the matter on the Adjournment at the first opportunity.
Departmental Motor-Cars (Lifts to Service Men)
asked the Minister of Information whether he is aware that his Department's motor-cars passing from place to place are not allowed to give lifts to Service men; and will he remove this ban?
Authority was given on 21st March for drivers of Ministry-owned cars and vans to offer lifts to Service men in uniform when no extension of the official journey is involved.
I am glad to hear that, because I raised this matter two years ago.
Does that include cars owned by the Political Warfare Department?
The affairs of that Department are wrapped in impenetrable mystery, and their cars are camouflaged.
Political Warfare
asked the Minister of Information, whether he will give the names of the principal officials of the Political Warfare Department?
asked the Minister of Information whether he can make any statement as to the present arrangements of the Government so far as the carrying out of propaganda and political warfare is concerned?
I am unable to make any statement on the details of arrangements for carrying on political warfare, but single executive authority is now vested in the Director-General of Political Warfare, Mr. R. H. Bruce-Lockhart. He is assisted by Mr. R. A. Leeper, Brigadier R. A. D. Brooks and Mr. I. Kirkpatrick, who form under his chairmanship an advisory Propaganda Policy Committee.
While I do not question the loyalty of these gentlemen in carrying out any policy with which they may be specifically charged, ought not the principal officials to include men who are more fitted by temperament and conviction for the task of stirring up revolution against Hitler in Europe?
The hon. Gentleman was a colleague of these people, so I do not think he should suggest for one second that these gentlemen are incapable of trying to stir up revolution in Europe. They have all the qualifications for the job.
Is it the responsibility of the Political Warfare Executive to erect and operate broadcasting stations in the Crown Colonies, such as Malta, Cyprus and Gibraltar, and, further, in reference to this Department, does one consult my right hon. Friend directly on matters on which one wants information, since this is supposed to be a secret organisation?
The only way in which information about the Political Warfare Executive can be obtained is by consulting with me, and I shall always be glad to give my hon. and gallant Friend the information he desires. As regards broadcasting stations, the Political Warfare Executive are not responsible for their erection.
B.B.C. (Parliamentary Repre Sentation)
asked the Minister of Information what Parliamentary representation there is at present on broadcasting committees of the British Broadcasting Corporation?
Certain B.B.C. advisory committees on which Members of Parliament served have not engaged in any regular activity since the war began. Among the personnel of the specialised committees which still meet regularly there are two Members of Parliament. There are also two Members at present serving on the Board of Governors.
Can my right hon. Friend say for what reason the advice of Members of Parliament on these broadcasting committees has been discontinued? Would it not have been very useful at the present time?
It happened long before my time. I believe one of my three predecessors was responsible, and I imagine that what happened was that at the beginning of the war the Board of Governors was abolished, and with them all committees disappeared except one, namely, the Religious Advisory Committee for the benefit of Wales, the Chairman of which, is, I think, the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). If, however, my hon. Friend feels, and other Members agree, that these committees should be reformed, I am perfectly willing to put it up to the B.B.C.
The right hon. Gentleman referred to Members of Parliament and mentioned one. Who was the other?
The hon. and gallant Gentleman the Member for Lonsdale (Sir I. Frazer) and the hon. Gentleman who represents West Leicester (Mr. Harold Nicolson) with such distinction.
May I ask my right hon. Friend whether there is any Parliamentary representation on the technical committees, or am I to understand that as regards any suggestions made in the House on technical Broadcasting matters the Minister has to accept as final an adverse decision taken by the engineering department of the B.B.C. without any further reference to an independent opinion?
I do not quite see myself how a Member of Parliament can really assist in deliberations of engineers. I have no doubt that they would be impressed by a Member's power of expression, but these are scientific matters, which can only be dealt with by experts.
Will the right hon. Gentleman impress upon the officials of the B.B.C. that it is important, when reporting Parliamentary Debates, to represent the views of Parliament and not the views of a particular Minister?
"Arabic Listener."
asked the Minister of Information the number of persons engaged in the publication of the "Arabic Listener" and what is the sum total of salaries paid for the production of this publication?
The "Arabic Listener" is produced in the Near Eastern Department of the B.B.C. by persons who are engaged concurrently on this and other work. Its editor is engaged half-time on the "Arabic Listener" and half-time on other work. He has one full-time assistant and three other persons who regularly devote a small part of their time to the production of this journal. The salary costs are estimated at £1,200 a year.
Does that figure of £1,200 include half the salary of the editor?
I do not know, but I will look up that point if the hon. Gentleman so desires.
News Bulletins (Foreign Languages)
asked the Minister of Information why news bulletins are transmitted in English several times daily on medium wave on the European services of the British Broadcasting Corporation, when European listeners could equally well pick up the Home or Forces programme; and whether he will consider, in view of the shortage of transmitters, allocating these periods to news bulletins in other languages for which at the moment there is inadequate provision?
It is not the fact that listeners in all parts of Europe can pick up the news bulletins in the Home or Forces programmes as easily as those which are transmitted in the B.B.C. European service. While I appreciate my hon. and gallant Friend's suggestion, I think there is a great deal to be said for including English among the languages in which special broadcasts are made to European listeners.
Is my right hon. Friend aware that these transmissions in English in the European service of the B.B.C. perform a very useful service, and that despite the great amount of enemy jamming it is sometimes received in certain pockets of Europe? Before he thinks of suppressing this service will he consider utilising the many silent periods which are now unused on the European service medium wave?
I am obliged to my hon. and gallant Friend for his compliments to the B.B.C., and I will certainly tender his suggestion to them.
British War Effort (Information to Russia)
asked the Minister of Information what steps he is taking to acquaint the Russian people with the magnitude of the effort made by the people of this country?
British news is transmitted daily to U.S.S.R. through Reuters and British Official Wireless, and a wide range of facilities is given to Soviet correspondents in London to acquaint themselves with the British war effort. In addition, the Ministry of Information sends daily, by wireless telegraph, news items, photographs, background information and articles. Newsreels and short films are sent and radio programmes are being produced on records for despatch to Moscow. A weekly publication in Russian entitled "British War News" will soon be published in Moscow. We are working in full co-operation with the Soviet authorities in this matter.
Will my right hon. Friend take all steps to bring to the knowledge of the people of this great land Power the importance of sea warfare at present?
Yes, Sir.
Is not the Minister aware that what the Soviet people and the people of this country want to hear about is Britain's effort at a second front in Europe?
Has my right hon. Friend's Department given consideration to the suggestions I made in my speeches of 6th July of last year and 4th March of this year, that the Soviet Union should place at our disposal a medium wave broadcasting station which would re-broadcast our short wave transmissions in order that Russian people with ordinary sets might hear about what we are doing?
My hon. and gallant Friend is a great expert on broadcasting, and I assure him that I read his speech carefully and that after the question he has asked, I shall, as one says, re-peruse it.
British Press Officer, Moscow
asked the Minister of Information whether the Press Attaché to the British Embassy in Moscow has now taken over his duties; and whether he is satisfied that the reciprocal exchange of information about our war efforts with Russia is now working efficiently?
The Press Officer and his staff are expected to arrive in the Soviet Union soon. I hope that they will be able to bring to fruition a variety of schemes designed to intensify the exchange of information and publicity.
Are they on their way?
I hope they are well on their way now. In these times, travel facilities are not very extensive.
Will broadcasting come within the purview of the Press Attaché?
Yes, Sir.
Questions
Armed Forces Overseas (Out Ward Air-Mail Rates)
asked the Postmaster-General whether he has considered a letter from Mrs. Margaret Inglis, of Glasgow, on the question of air-mail rates on letters to men serving abroad; and whether he is prepared to grant the same concession in rates to the wives and dependants of men serving abroad as have been granted to the men themselves?
Yes, Sir, I have considered this letter, and replied to it. Mrs. Inglis asked why an air letter-card service similar to that available from His Majesty's Forces in the Middle East to this country is not provided in the outward direction. The air letter-cards used by the Middle East Forces are issued to them by the military authorities on a rationed basis of one per week, thus enabling strict control to be kept on the mail loads. A similar rationing system is impracticable where the general public is concerned and I regret that owing to the very limited aircraft accommodation available for mails in the outward direction I am not at present in a position to offer an unrestricted air letter facility to the public in this country. There is already an Airgraph and an air postcard service, for which the charge is in each case 3d., from this country to the Forces in the Middle East.
Would it not be possible when the allowance is being sent to the wife or other dependant of the soldier to send also a rationed letter-card that would enable the people here to communicate with their sons, husbands or other relatives in the East, and thus save this heavy expense of sending letters which do not often go by air mail?
There are the 3d. airgraph and air postcard services available. I will consider what the hon. Member has said, but obviously if the soldier were to include an air letter-card with every letter that he sent home, the load would be doubled.
The authorities here should send the air letter-card to the dependants.
Scrap Metal
Historic Antiquities
asked the Parliamentary Secretary to the Ministry of Works and Buildings whether he will make it clear that the Government do not desire metal antiquities of historic interest to be melted down for scrap?
Yes, Sir. Whilst voluntary gifts of metal for scrap are urgently required, it has never been contemplated that metal objects of genuine historic or antiquarian interest should be gathered as scrap for melting down.
Are not a great many things which are of little value as scrap, but which have very considerable historic interest, getting melted down?
I do not accept that.
Garden Rollers
asked the Parliamentary Secretary to the Ministry of Works and Buildings whether he will cause it to be widely disseminated throughout the country that iron garden-rollers are welcomed by his Ministry as being salvage very useful to the State?
Yes, Sir. Iron garden-rollers and indeed any surplus iron and steel are urgently required for scrap. A circular recently issued to all local authorities in the United Kingdom emphasised the importance of intensifying efforts to recover all forms of potential scrap metal.
Railings Removal
asked the Parliamentary Secretary to the Ministry of Works and Buildings whether he has considered a protest from the Sedgley Urban District Council about the wasteful methods employed in that area to collect iron railings and the damage to masonry, which in most cases far exceeds the value of the scrap obtained; and will he see that in future as little damage as possible is caused in carrying out this work?
Yes, Sir. A reply has been sent to the Council. As regards the second part of the Question, contractors are under an obligation to repair damage and I have given instructions that when masonry walls are being repaired they should be finished with suitable cement and that when brick walls are being made good they should, as far as is practicable, be completed with a top course of brick on edge. As I have previously stated, every effort will be made to avoid damage to property.
Will the Government make it quite clear that those instructions must be carried out?
Is it not the duty of the local authorities to see that when scrap iron is taken away and the walls are cemented over, the work is done properly?
The local authorities do the scheduling, and then we collect the things. We have an arrangement with a contractor that it is part of his obligation to reinstate anything which is damaged caused by him. Where a wall is not capable of being repaired by him and the damage is not caused by him, my Department take responsibility, and we have our own inspectors to see that the work is efficiently carried out.
What steps can a private person take to see that the contractor carries out his obligations?
That should be reported to me.
Royal Navy
Anti-Corrosive and Anti-Fouling Paints
31 and 32.
asked the First Lord of the Admiralty (1) in view of the fact that the fouling of ships by marine growths reduces speed and increases fuel consumption, whether the Admiralty has employed any biologists during the several years 1939, 1940, 1941, and 1942, to investigate means of diminishing this evil; and, if so, whether the Contracts Department of the Admiralty has been guided by the results of their investigations when placing orders for anti-fouling paints;
(2) Whether he is aware that British manufacturers, employing chemists and biologists to study the effectiveness of anti-corrosive and anti-fouling paints, have accumulated much important technical knowledge of the subject; and whether he proposes to take over such knowledge on the basis of adequate compensation for the expenditure incurred and for the loss of prospective profits?
The Admiralty does not directly employ biologists to investigate the fouling of ships, but Admiralty technical experts co-operate actively with a special Sub-Committee of the Corrosion Committee of the Iron and Steel Institute. This Committee employs full-time investigators into the marine-biological and corrosion aspects of the problem, and has the part-time assistance of a number of biologists, chemists and metallurgists. Their investigations are not yet by themselves sufficiently conclusive to be used as a guide for placing contracts, and purchases of proprietary compositions are made as a result of periodical competitive trials. I am aware that information has been accumulated by British manufacturers. The Association of Ships Compositions Manufacturers has been invited to co-operate in the work of the Sub-Committee of the Corrosion Committee, but has not done so up to the present.
Does that mean that full and adequate steps to prevent the corrosion of His Majesty's ships are still not taken, or that they have not been perfected?
No, Sir. The Admiralty experts co-operate actively with a special sub-committee who are engaged on this work.
Does not the Minister think that it is time the Admiralty made more direct use of the great scientific knowledge available, and employed scientific experts on important work of this kind?
Co-operation has been asked for, and in most cases it has been forthcoming.
Sea Cadets (Uniform)
asked the First Lord of the Admiralty whether he has any further statement to make regarding the issue of uniform to the Sea Cadet Corps?
Free uniform will be supplied to sea cadets of 14 years of age and upwards. It will be of naval pattern and quality, though it will not comprise all the articles included in the naval kit. It is regretted that sea cadets cannot be singled out for special treatment by the issue of greatcoats, but an issue of oil skins will be made to units for the use, of cadets who are practising in boats or otherwise in conditions involving exposure.
Constantinesco (Watercraft Invention)
asked the First Lord of the Admiralty whether the services of Mr. George Constantinesco are being used in connection with inventions, the nature of which have been communicated to him?
In 1939 Mr. Constantinesco stated that he had a scheme for water craft in respect of which he made high claims as to their expected performance. He was asked to supply in confidence certain technical information connected with his design without which the Admiralty could not proceed with its examination but the information has not been received. Mr. Constantinesco is not being employed by the Admiralty.
In view of Mr. Constantinesco's very high standing, is it not remarkable that a pure technicality of procedure of this sort should have prevented a tremendously useful invention from being investigated for over two years, and is the Minister aware that Mr. Constantinesco is perfectly prepared to demonstrate working models of this invention to anybody whom he feels can be trusted?
My hon. and gallant Friend will realise that in this particular case about which he has asked, Mr. Constantinesco has been asked for certain specific information, but up to now has not given it.
Is it not a fact that the only reason Mr. Constantinesco refused to submit his designs and proposals was that he was asked to give them to Lord Cherwell and did not think him a competent judge?
I am afraid I cannot answer that question.
Coal Industry
Open Cast Mining
asked the Secretary for Mines whether he is now in a position to make a statement on open cast mining; to what extent it is being operated and under what control?
There are at present three deposits being worked, two under the direct control of the Mines Department and one by private enterprise. Three further sites have been proved and production will begin in the near future. Other sites are being examined with a view to extending this method of working to the utmost.
In the case of any new sites which are opened out, will they be under the control of the Government and apart from private enterprise?
They will be under the control of the Government, but the Government will have to call in private enterprise for privately-owned machines to develop schemes at the most rapid rate.
Has not the time come when we ought to let the Government develop these schemes? Do not let private interests get hold of this and cause bother.
I would point out that two of the sites are under State control.
Does the existing mining legislation apply in these workings?
No, Sir, I do not think it will apply, because these schemes do not employ men underground; they are all on the surface.
Absenteeism, County Durham (Proceedings)
asked the Secretary for Mines whether he is aware that, under the Employers and Workers Act, 1875, miners employed in Consett, County Durham, collieries have been summoned at the local courts for improper absenteeism, and fined the court costs, together with the heavy damages claimed by the colliery companies, the court authorising the retention of the men's wages by the companies in payment of the fines; and why action was not taken under the Essential Work (General Provision) Order?
I am aware that action under the Act in question has been taken in certain cases by certain employers in County Durham. Whether, in a particular case, action should be taken under the Essential Work Order is a matter for consideration in the light of all the circumstances. As it is customary in Durham for the District Production Committee to deal with cases of absenteeism, it would be advisable in the first instance for all employers in that district to carry out the procedure approved by both parties in the industry. If workmen refuse to pay fines imposed under this procedure, it is aways open for employers to resort to the courts.
Is there any expert inquiry made as to whether the amounts claimed from the men are reasonable?
I do not think we can interfere with the courts in this matter.
Will not the Minister of Mines and the Minister of Labour give serious consideration to the possibility that we can get the good will and loyalty of these men much better by not prosecuting them and sending some of them to prison?
Everyone is anxious to obtain the good will of the men, and they know that a very great effort is made to secure that good will.
Trade and Commerce
Retail Trade Committee
asked the President of the Board of Trade whether he will press for an early conclusion of the investigations of the Retail Trade Committee, in view of the large number of persons whose plans depend on the action taken in this matter?
The Retail Trade Committee are well aware of the importance which my right hon. Friend attaches to their recommendations being made as soon as possible.
Price Control
asked the President of the Board of Trade whether he proposes to take any action to adopt the proposals of the Central Price Regulation Committee to control public auction sales where there is a danger that fixed prices may be grossly exceeded?
asked the President of the Board of Trade whether he can make any statement resultant upon his recent meeting with the chairmen of the Price Control Committees; and whether he is now prepared to alter the machinery of price control so as to fix maximum profits at all stages on the lines recommended by the North Midland Regional Committee?
It is my right hon. Friend's intention to pursue a dynamic policy in controlling prices, and to this end he has discussed with the chairmen of the Central and Local Price Regulation Committees plans for improving the machinery and extending the scope of control, and, in particular, for dealing with the two matters mentioned.
Is my hon. and gallant Friend aware that there has been a tremendous delay in coming to a decision on this matter? Is he further aware that the present Minister called the chairmen of these committtees together and took their views, and will he in order to protect the public put an end to this continual procrastination?
My hon. and gallant Friend is completely wrong in thinking there is any procrastination. These extraordinarily complicated matters are being worked out in conjunction and in consultation with the Central Price Regulation Committee, and the decision, when taken, will be a joint decision arrived at by them and the Board of Trade.
If I put a Question down later, can I have an explicit answer?
Wireless Valves
asked the President of the Board of Trade whether he is aware of the shortage of wireless valves, chiefly rectifier valves, which is holding up the repair of thousands of wireless sets often for many months; and, having regard to the desirability of the public having their wireless sets in working order so that they may hear the frequent public announcements made by wireless, whether immediate steps will be taken to release as large a number as possible of these valves to enable the necessary repairs now being held up to be carried out?
The increasing use of radio by the Services has resulted in a very heavy demand for valves. The capacity of the valve industry is being increased as quickly as possible and steps have been taken to obtain supplies from the United States of America. Rectifier valves present special difficulties, but it is hoped to increase the supply of these in the near future.
Does not my hon. and gallant Friend recognise the very great urgency of the matter, not only in connection with calling-up notices being given out on the wireless, but in the event of invasion? Is he aware that many wireless sets have been waiting for valves for four or five months?
I am aware of this, and we are taking steps, as I have indicated in my answer, to deal with it.
Questions
Non-Commissioned Officers, Glasgow (Assault Charge)
asked the Under-Secretary of State for War whether he can give any information in connection with the charge made against Sergeant E. Collin and Lance-Corporal J. H. Burton, who were charged on Monday, 6th April, at Glasgow, for ill-treating prisoners?
I presume that my hon. Friend is referring to Sergeant Catton and Lance-Corporal Beaton. These two non-commissioned officers were charged with assault on a soldier under arrest.
Will the Financial Secretary inform the House of this man's pre-war civilian record?
I am afraid I cannot give any further information to the House until the case has been reviewed by the Judge Advocate-General.
Home-Grown Timber
asked the Minister of Production whether he is aware of the growing difficulty relating to the importation of timber required for this country's industrial needs from distant ports partly due to the shortage of shipping; that there is a prospect of a shortage of timber required for mining props, railway sleepers, wagons, telegraph and transmission poles; and if, in view of this probable shortage, any assistance or protection is being given to stimulate this country's timber production to meet probably increasing demands during the current year?
Yes, Sir. The right hon. Gentleman can be assured that the imperative need of saving shipping is fully realised. The Home Timber Production Department of the Ministry of Supply is making every effort to increase production of home-grown timber both directly and through the timber trade. This year we hope to have half a million tons more than in 1941.
Tonic Company, West Kensington
asked the Minister of Health whether he can give any information in connection with the charge made against the proprietor of the Tonic Company, West Kensington, for selling useless tonics at 5s. 9d., which only cost a 1d., which contained 99 per cent. of water; and what action he intends taking in the matter?
I have seen reports of proceedings against the firm referred to, and I understand that they were taken by the food and drugs authority for the area in question. My right hon. Friend is making inquiries of the authority.
Ministry of Supply
Newsprint (Voluntary Cut)
asked the Minister of Supply how much shipping space is being saved by the 10 per cent. voluntary cut in newspapers?
The cut of 10 per cent. in permitted newsprint consumption by newspapers is equivalent to a reduction of 26,000 tons a year in imports.
Does it not follow that, as display advertisements take up approximately 25 per cent. of the space of a newspaper, there will be a saving of something like 60,000 tons of shipping space if display advertisements are discontinued? Will the Minister consider taking steps to stop display advertisements?
Is the Minister aware that he will stop newspapers if he stops these display advertisements?
Coated Paper and Cardboard
46 and 47.
asked the Minister of Supply (1) whether he can state the tonnage of paper and cardboard licensed by the Paper Controller for coating from the introduction of Control of Paper (No. 14) Order, on 2nd June, 1940, to the termination of the eighth licensing period on 28th February, 1942, and which, after coating, it is possible to resell without any control of price;
(2) whether he has any information as to the tonnage of coated paper and cardboard which has been used for necessary war purposes; whether he is aware that much of this material has been sold at £50 to £60 a ton; and whether he will take steps to prevent these high prices?
I regret that I cannot give without much labour the statistics asked for. I have no reason to suppose that the prices charged are unreasonable, but I shall be glad to consider any evidence that my hon. Friend can give me.
Kitchen Waste, Slough
asked the Minister of Supply whether he is aware that, under instructions issued by his Ministry since 21st January, the Slough Borough Council has been directed to hand over all kitchen waste to the Smithfield Animal Products, Limited, at Stanwell; that this arrangement is resented by the farmers of South Buckinghamshire, who had, since May, 1941, collected the swill for pig-feeding and been urged to instal plants for its sterilisation; that the system is wasteful as it involves additional haulage; that users are by it compelled to pay considerably higher prices to a company which has recently declared a dividend of 16 per cent. as compared with 12½ per cent. in the previous year; and will he look into the matter and permit the farmers to revert to the previous practice?
The direction was given in September last in accordance with the Government's policy of ensuring, so far as possible, that kitchen waste should be sterilised and concentrated before distribution to stock feeders so as to minimise the risk of animal disease. It is considered that the necessity for preventing disease outweighs the transport disadvantages. As from 1st May next, concentrated kitchen waste of standard quality will be on sale at a reduced price which the Ministry of Agriculture regard as reasonable. I am informed that only a very small proportion of the company's profits last year were derived from kitchen waste, their main activities being in other directions.
Is my right hon. Friend aware that this firm now charges the users of this concentrated swill as much as £5 a ton, whereas they used to get it from Slough for 36s. a ton?
As I have said, the price is now being reconsidered.
Manufacturers' Bank Loans (Guarantee)
asked the Minister of Supply, in how many cases his Department have guaranteed bank overdrafts in respect of businesses manufacturing for his Department; and the amount of loans so guaranteed and the rate of interest paid on such loans.
Ten, Sir; of which seven, aggregating £116,500, are outstanding. The rate of interest normally payable by the contractor in such cases is 3 per cent.
Is the right hon. Gentleman taking steps to reduce the rate?
Within this interest rate there is a good deal of work done by the banks on behalf of the Ministry of Supply which is quite beyond ordinary banking business, and the rate in all the circumstances is regarded as eminently reasonable.
In view of the fact that under this arrangement apparently industries can pay only 3 per cent. on their loans, will a general instruction go out to the banks that all work should be done on the basis of 3 per cent.?
Tyre Control Scheme
50 and 51.
asked the Minister of Supply (1) why no consultation took place with representative tyre dealers, factors, repair agencies and road transport undertakings before announcing the Tyre Control Scheme;
(2) why the most efficient tyre sales and maintenance firms have been refused licences for the sale of new tyres and preference given to those who have previously dealt primarily in new motor-cars and tyres, and have little experience in repairing and servicing tyres?
The outline of the Tyre Control Scheme was communicated to the representatives of the seven associations in the tyre trade before being brought into force and was not objected to by them. The list of authorised tyre depots was issued in order that the scheme of distribution might be brought into operation forthwith, and the associations are being consulted as to whether any revision is desirable.
Will the right hon. Gentleman carry out a revision if it can be shown that a better scheme can be brought into operation?
Certainly.
Food Supplies
British Restaurants and Cooking Depots
asked the Parliamentary Secretary to the Ministry of Food how many British Restaurants there are in Lancashire; the number of meals being served weekly; how many applications for other restaurants are being dealt with; and when will they be completed?
There are now 50 British Restaurants, serving approximately 125,000 meals per week, operated by local authorities in Lancashire. Plans for a further 21 British Restaurants have been approved, and 36 additional schemes are under consideration. Local authorities are also operating 18 cooking depots providing approximately 72,000 meals per week. A further 3 cooking depots have been completed but are not yet in day-to-day operation, and sites for additional 15 cooking depots have been arranged. Sites for a further 12 cooking depots which it is intended to establish have yet to be found. The restaurants and cooking depots now under construction are in varying stages of completion. The dates on which they will be ready for operation cannot be stated.
asked the Parliamentary Secretary to the Ministry of Food whether he is aware of the quickly-growing needs of the people in the North Staffordshire area for additional feeding facilities; and what action is being taken in consultation with the local authorities?
I am aware that there is an unsatisfied demand for British Restaurant facilities in the North Staffordshire area. Officers of the Ministry of Food are co-operating with local authorities in order to secure at the earliest possible date the opening of six British Restaurants and one cooking depot for which plans have already been approved. Schemes for British Restaurants in two additional towns are also in preparation.
asked the Parliamentary Secretary to the Ministry of Food whether he can make any statement as to the progress of his recent efforts to speed up the supply of equipment for British Restaurants?
I have been in close consultation with my Noble Friend the Minister of Works and Buildings, and we have taken active steps to co-ordinate all demands for restaurant equipment, to achieve standardisation of specifications, and to ensure a steady flow of production. The pool of equipment established by this Ministry is being increased from 22 to about 160 items and will now include practically everything necessary for fitting up a British Restaurant. Owing to very heavy demands for equipment for British Restaurants and canteens and to the general difficulty of production in war-time, the supply position is not yet altogether satisfactory, but is improving. My Noble Friend and I are keeping the position under continuous review.
Cheese Ration (Inshore Fishermen)
asked the Parliamentary Secretary to the Ministry of Food whether he has come to any decision regarding the extra cheese ration for inshore fishermen?
It has been decided to grant the special ration of cheese to fishermen who do not hold seamen's ration books, and for whom the provision of canteen arrangements is impracticable, as soon as a method for identifying the individual fishermen has been determined.
Milk Marketing Board
asked the Parliamentary Secretary to the Ministry of Food what changes are contemplated in the status and authority of the Milk Marketing Board?
I would ask my hon. Friend to await the statement on milk policy which my Noble Friend proposes to make at an early date.
Will the right hon. and gallant Gentleman bear in mind the desirability of keeping in existence an organisation representing the producers in this very important industry?
National Wholemeal Bread
asked the Parliamentary Secretary to the Ministry of Food whether any calcium is at present added to, or artificially present in, national wholemeal bread; and, if not, whether his Department has come to a conclusion on the question of its addition in future?
I would refer my hon. Friend to the reply given to my hon. Friend the Member for London University (Sir E. Graham-Little) on 13th April, 1942.
Why is it done?
I am not sufficient an expert to say, but the advice comes from scientists and members of the medical profession.
Is not this a fad on the part of a few scientific advisers, and is it not against the experience of most experienced general practitioners? Why should every man, woman and child have forced on him calcium which is likely to be injurious?
That, of course, is a matter of opinion. We are advised that it is essential to increase the intake of calcium, and it is not the advice of faddists but of eminent medical men. The decision was made in consultation with my right hon. Friend the Minister of Health.
Perishable Foodstuffs (Rail Consignment)
asked the Parliamentary Secretary to the Ministry of Food whether his attention has been drawn 10 the fact that the Great Western Railway Company was recently unable to deliver a large quantity of highly perishable foodstuffs because the premises of the firms for whom the consignments were intended were closed, or because the firms were otherwise unable or unwilling to accept delivery; whether he has satisfied himself that there was no desire to create an artificial short supply to preserve high prices for other vegetables; what steps have been taken to deal with these circumstances; and what further steps are being taken to prevent a recurrence?
I have made inquiries into the circumstances to which my hon. Friend refers and am informed that the only occasion when produce, arriving in London by the Great Western Railway, has not been accepted in the London markets recently was on Easter Monday. All the main markets remained open on that day except the Brentford market, which was closed by order of the market authorities. Fresh arrivals of produce to the other markets were held over until the following day, but there is no evidence that this caused any serious deterioration.
Social and Ceremonial Meals
60 and 61.
asked the Parliamentary Secretary to the Ministry of Food (1) whether he is aware of the considerable amount of food which is being consumed at meals organised for social or ceremonial purposes; and what steps he proposes to take to deal with the matter;
(2) how many meals were organised in public restaurants and hotels for social or ceremonial purposes in the most recent week for which the figures are available; and how many persons were so supplied with a meal?
No statistics are available or could be obtained as to the number of meals served in public restaurants and hotels for social or ceremonial purposes. While the consumption of food at such meals is too small to have any appreciable effect on the supply position, various restrictions on the service of meals in hotels and restaurants are at present in force, and my noble Friend proposes shortly to introduce further measures for controlling the service of food in these establishments. I am sending my hon. Friend a copy of an announcement which was made on the subject earlier this week.
In the absence of the information that I ask for, how can the right hon. and gallant Gentleman have any idea of the magnitude of the problem? Also is he aware that the popularity of his proposals will depend on their sincerity and upon the rigour with which they are applied? Does he deny the statement that 5s. is to be the maximum price of controlled meals?
I would ask the hon. Member to await the statement which will be made later. Of course, it is not possible for me to give figures of the exact numbers of meals consumed at these functions, but we know the amount of food available. Rightly or wrongly—I think rightly—my noble Friend has come to the conclusion that he will further control the service of food at such hotels and restaurants.
Is it not a fact that every local food control committee has to issue a licence to any caterer who provides meals for ceremonies or for functions such as take place in every week in every town? Are not those figures available? Also is the right hon. and gallant Gentleman not considering other interests in the trade than the vested interests of restaurant and hotel proprietors in fixing the price of meals?
Until the statement is made I cannot discuss that. With regard to the first Question, I do not deny that he might make a searching inquiry, but, in view of the reply I have given, it does not seem worth the trouble involved at the present time.
Police Investigation
asked the Parliamentary Secretary to the Ministry of Food whether he can give any information in connection with the charge made against Seymour Sidney for obtaining 22 cwts. of sugar without a licence; where he got the sugar; and whether he has taken charge of it?
The case referred to by my hon. Friend is under investigation by the police, and it would, therefore, not be proper for me to furnish any information at this stage.
Questions
Invasion Committees
asked the Secretary of State for the Home Department what steps were taken to consult with, and seek the co-operation of, local authorities in the setting up of invasion committees; and how and to what extant local authorities are kept informed now of the formation of invasion committees in their respective areas?
In towns where there is an emergency committee of the local authority, the emergency committee forms the nucleus of the invasion committee; and where committees are constituted in smaller places by a Regional or District Commissioner, the county council is kept in touch with developments and consulted as necessary.
Is the right hon. Gentleman aware that certainly in some parts of the country invasion committees were set up without the slightest consultation with local authorities, that they are being set up now, that local authorities are not being told what is happening, and that this is causing considerable dissatisfaction in the area?
I understand that in the county for which the hon. Member speaks there is consultation with the county council. It will be appreciated that in sparsely populated rural areas it is not very easy to apply electric machinery, but Regional Commissioners are keeping in touch with the county authorities.
I beg to give notice: that I will raise the matter on the Adjournment at an early opportunity.
Russia (British War Materials)
asked the Secretary of State for Foreign Affairs whether the quantity of war materials of all kinds sent from the British Empire to the Union of Soviet Socialist Republics during the first three months of 1942 was greater or less than that sent during the last three months of 1941?
Greater, Sir.
New Member Sworn
Right Hon. Sir Percy James Grigg, K.C.B., K.C.S.I., for the Borough of Cardiff (East Division).
Orders of the Day
Ways and Means
Considered in Committee [ Progress, 14th April ].
[Sir DENNIS HERBERT in the Chair.]
Amendment of Law
Question again proposed,
"That it is expedient to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance."—[ Sir K. Wood .]
I think I should be right in referring to our proceedings to-day as the morning after the night before. Yesterday, the Chancellor received the congratulations of the Committee, not only on the substance of the Budget, but on the vigour and splendid voice with which he carried the explanation of it to the very end of his long and interesting speech. I am sure he will not begrudge it or take it amiss from me if the congratulations which I propose to offer are not so much to him as to the vast numbers of taxpayers, the great bulk of them in all walks of life, who manfully, without grumbling and without complaint, have faced up to the enormous burdens which the Chancellor himself and this House in conjunction with him have imposed upon them. They have met the burdens which were imposed last year, and I am sure that the additional burdens which the Chancellor is imposing this year will equally find them with their heads erect, unafraid and willing to will the means as they already will the end.
When the Chancellor announced his figures yesterday my mind went back to a person who will not be forgotten to-day—Lord Randolph Churchill—who only some 50 years ago resigned his position as Chancellor because he objected to the size of the estimates of the total expenditure under the Budget. The revenue which he was called upon to face fell far short of £100,000,000. Here to-day we have his son as Prime Minister sanctioning a Budget expenditure more than 50 times that amount. I remember that it was only in the present Parliament that one hon. Member called attention to the fact that our Budget figure was rising above the £1,000,000,000 mark, and he thought it was unlikely it would ever fall below that figure again. Already in a few years Members sitting in the House have seen it rise from £1,000,000,000 to over £5,000,000,000 and, if we include the expenditure under the Lease and Lend proposals, as the Chancellor told us yesterday, to something like £6,500,000,000. Of this enormous sum the amount which it is anticipated to raise in taxation is over £2,600,000,000. To most people these are astronomical figures, and the feat which the Chancellor is performing may be regarded almost in the nature of a conjuring trick.
Perhaps the experience of a man who years ago was a young friend of mine may be of some interest in this matter. He and some of his friends were engaged in planning a number of social reforms and other things which they knew would cost a great deal of money. Somebody said to him, "Before you go any further you had better go to some financial expert and find out his view of it all." They thought who was the best man to see, and they chose Sir Ernest Cassel. This young man went with some trepidation to the great man to lay his difficulties before him. Cassel said to him, "What are the points you want to bring before me?" He mentioned one point, and Cassel said, "I will answer that." He mentioned eight points altogether and then waited for the great man's reply. This was, "When the country has decided what it regards as necessary to be done, I have no doubt the money will be found. You can go!" The young man has now attained considerably older years, and it has taken nearly all his life to discover the real meaning of the financier's remark.
In fact, the truth is only just becoming realised in this House and the country as a whole that it is not finance but the physical means of production which limit the productive capacity of the nation. In this way it is to some extent not the Chancellor himself, but the President of the Board of Trade on the one hand and the Minister of Food on the other, who are in a sense the real tax collectors so far as both the rich and the decently paid wage-earners are concerned. For that reason I welcome the announcement, which came out as a kind of supplement to the Budget, of the sumptuary proposals which the noble Lord who controls the Ministry of Food made almost simultaneously with the statement of the Chancellor. With regard to the people who are outside those two categories, the rich and the well-paid workers, I shall have a word to say about them before I sit down.
That does not mean that the task which confronts the Chancellor has become in any sense unimportant. It is he who harnesses the people to the totality of the war effort; it is he who is ultimately entrusted with the task of warding off inflation; it is he who is responsible for seeing that everyone does his share in pulling the chariot of State; it is he whose business it is to prevent the harness itself from chafing unduly on those who are drawing the burden.
That brings me to the actual proposals of the Chancellor of the Exchequer. One of the most important of the changes he has made concerns the Income Tax on the weekly wage-earner, and in that respect I should like to reinforce what I said just now, that I have been gratified at the amazing way in which this exceedingly heavy and new burden has been borne by the wage-earners with very little complaint. I give every opportunity to my constituents to come in person to complain to me of their circumstances, and I have a great many letters from them, as, no doubt, do other Members of Parliament, but only two persons have complained, and then only in very moderate terms, of the burden of the Income Tax, and that, out of something like 40,000 constituents, is a remarkable tribute to the determination of our people.
But what they have objected to, and I think everyone has recognised the reasonableness of their complaint, has been the time of the collection, and here they have demanded a considerable readjustment, a demand which the Chancellor has endeavoured to meet. Like others, I was very much impressed with the desire which has been expressed to have the whole assessment and collection of the tax based on a different method from that which actually prevails, and I had thought that in some way or another it should be based week by week on the actual earnings of the worker, but I am bound to say that the explanation of the Chancellor has convinced me of the undesirability of that change. The reason which has most influence with me is that if the change were made so that the whole assessment of the tax rested upon the weekly income, a number of wage-earners would be paying far more than they ought to and would be treated unfairly as compared with other Income Tax payers whose assessment was on a yearly basis. And if the payment of the tax were based upon their weekly wages whereas the assessment was still on the yearly income, we should get a very large number of overpayments, which would mean that the wage-earner was paying money which he would not get back for a considerable time and only after readjustments of a complicated character had taken place. Therefore, the explanation of the Chancellor did convince me, subject to further consideration, of course, that he was wise in refusing to alter the whole basis of assessment and collection, and I think that he has, to a very large extent, by his two distinct proposals met the gravamen of the criticism.
With regard to the minimum I think he has taken a step which cannot hurt the revenue, or only in a very few exceptional cases, and has considerably alleviated the hardship upon a person who is receiving a low wage and is being called upon to pay a very considerable amount of tax out of it. I think it probable that he will agree that the increase of 2s. 6d. on the £1 17s. 6d. for the single man and the increase of 2S. 6d. on the £2 17s. 6d. for a married but childless man does not amount to very much, but the really essential thing is that in the case of the man with a wife and one child the minimum is pushed up to £4 and in the case of a man with a wife and two children it is pushed up to £5. It has been suggested to me that there is no particular reason why the Chancellor should stop there, and it may be that a man with a wife and several children may reasonably ask for a higher minimum than this £5, especially in view of the fact that unless his average wage greatly exceeds £5 he does not become liable to tax at all. No doubt that may be considered in the later stages of our debates. In explaining this it may be desirable that it should be made perfectly clear that the workman has not asked for and is not receiving any reduction in the whole burden of his tax. I did not hear the whole of the broadcast by the Chancellor last night, but there was one statement earlier which certainly gave the impression that the workman was getting an actual alleviation of taxation which, of course, is not true.
With regard to the post-war credits, I think that what the Chancellor is doing is certainly a great advance, but we shall have to consider that and find out whether, in fact, it does meet the wish of the wage-earners. I am sure that the Chancellor would not stand on a mere punctilio, and that if a better method were suggested he would be willing to consider it. There is still undoubtedly a great deal of misunderstanding about Income Tax and I am glad to hear that the Chancellor is not content with the "Income Tax Quiz" but intends to issue a still more simple explanation. There is one point with regard to that to which I should like to draw attention, because I have had experience of it myself. If the Chancellor were to go to the ordinary wage-earner, whether a manual worker or a white collar man, and were to say to him, "Out of your overtime money on which you are paying the full rate of Income Tax how much of every pound do you retain?" I believe he would find, as I have found, that the answer in every case would be 10s., whereas the real answer is 11s., because of the provision that before his pound becomes subject to tax there is a 10 per cent. reduction. That point should be made clearer in any future statement.
I pass from that to the question of the alleviation of the burden on wives. Here, of course, there is a definite reduction in taxation, and I think it is a very wise step which the Chancellor has taken. I am not sure how a spinster will regard the table which appears on the last page of the Chancellor's pamphlet, I am not sure that she has not some grievance as a result of what the Chancellor is doing; but that is a matter for more detailed examination. There is one question with regard to that table which I should like to ask. The burden is shown, as to the aggregate tax, on two single people, and with that is compared the tax payable before and after the change by husband and wife. It is shown that in the lower ranges the husband and wife get off actually better than the two single people. That applies to the tax which is being imposed upon them. I should like the Chancellor or the Financial Secretary to explain how these two classes of people are affected in relation to post-war credits. I should like to know whether the postwar credit of the married couple is the same, or is higher or lower in respect of the various scales of wages, than the postwar credits of the two single persons. It may be that the answer will be somewhat complicated and will involve a statement in tabular form, but I think it would be interesting to see whether the apparent advantage which the married couple get in the lower ranges of income as regards tax, will be borne out when they receive the credits to which they will be entitled at the end of the war.
There is one other point in this connection which has been brought to my attention only this morning. I think we are all aware that the Chancellor of the Exchequer, in making this concession to the wife who goes out to work, is not acting solely on humanitarian grounds. He is also directly concerned about this question, because it was found, from practical experience, that the previously existing position was acting as a deterrent upon married women going to work. A case somewhat similar in character has now been brought to my notice. It has been pointed out to me that a number of elderly men are being asked to go back to work and in some cases are willing to do so. These men and their wives are in receipt of contributory old age pensions, and it is suggested that the effect of the rather small wage which they would earn in addition to the two contributory pensions, would be to bring them over the Income Tax level, and they would therefore be called upon to pay a sum on that account. I wish the right hon. Gentleman would just look into the matter to see what truth there is in that statement and, if that position is acting as a deterrent upon elderly people going back to work whether he could not see his way to give them some alleviation by excluding the whole or part of these contributory old age pensions from account for Income Tax purposes.
Now I come to the Purchase Tax. I played a part, as the Chancellor of the Exchequer knows, in having the Purchase Tax presented eventually in a form in which the House was willing to accept it. I did so, though the tax was opposed by some of my hon. friends and was a great burden upon certain sections of the community, but I recognised that it was, nevertheless, very desirable that consumption should have some limit set upon it. I thought the Purchase Tax, greatly resented as it was by many of my friends, would achieve that purpose and was perhaps, in some respects necessary for that purpose. Now I venture to, suggest that two things have greatly changed since the Purchase Tax was originally produced and since it was carried through the House, in its amended form, by the present Chancellor. In the first place, the Income Tax has been brought to bear upon the very class of persons who were largely aimed at in the original Purchase Tax proposals. That burden of direct taxation has been put upon them as well as the indirect taxation of the Purchase Tax. Therefore, to that extent, the argument that you could not touch the lower ranges of income, except through this sumptuary tax, has disappeared.
Another point has arisen which is, in some ways, of even greater importance. Many of the articles which are subject to the Purchase Tax are now subject to limitation in quite a different way. The President of the Board of Trade has produced Orders limiting the amount of certain goods available to the public. In some cases he has gone further and has controlled the prices of these articles. In that way, the main danger which the Chancellor had to meet two years ago has been removed, because it is not possible for the public to purchase these articles in unlimited quantities. The actual amounts which they can purchase are being definitely limited by the action of the Board of Trade. In some cases that has actually been done already, and in other cases I understand the matter is coming before the Board of Trade and consideration is being given to the question of how far this principle of limiting supplies by Order should be enlarged. In those circumstances some of us have represented to the Chancellor that, as regards certain articles, which are, in effect, necessaries, the main object of the Purchase Tax has passed away.
It is for that reason that I welcome what the Chancellor has done in regard to utility fabrics and clothing. I think he has gone some way towards meeting the reasonable demand of myself and my hon. Friends. I do not think it makes any real difference to the war effort, and if he desires to tax those who buy these things, he has other methods of doing so, and has done so, to some extent. Therefore, I welcome the extent to which he has gone, but he has not gone anything like the whole of the way which my hon. Friends and I would wish, and I hope he will not close his mind to extending a principle which I believe to be thoroughly sound. I daresay that others of my hon. Friends will at a later stage deal further with this question, but I have indicated this point of view, as one who came in for a good deal of criticism for not opposing the later stages of the Purchase Tax. With regard to the new taxation which has has been added to the Purchase Tax, I need say nothing, because, clearly, the articles on which the Chancellor is imposing the additional burden are articles of pure luxury, and I do not believe that anyone of any party in this Committee will seriously object to those increases.
I come to the other proposal of the Chancellor, which is, after all, his main proposal for raising revenue, namely, what I may describe as the new taxes on drinks and smokes. In ordinary times, we on these Benches object to the principle of indirect taxation on the ground that it passes over those with substantial means and falls almost exclusively, or mainly, on those in humbler circumstances. This objection, of course, remains true to-day. Nevertheless these are exceptional times, and the Chancellor has put it to us that it is not from the incomes of the very rich that much, if any, additional taxation can be obtained. We accept that, on that basis, without, however, failing to point out that this is an additional burden which is, definitely, being put on the middle and working classes of this country.
The fact is that the well-to-do will not suffer seriously from this burden, because to many of them, as compared with thousands of our workers, the increases will seem very small. The fact is that many of them are living on capital, being practically compelled to do so by their commitments. They will not be prevented from spending on these articles if they desire to do so. Apart from the rationing of goods and the sumptuary laws, the abstinence of the well-to-do is largely voluntary because, so far as they are able to spend money, they can always do so by the sale of their capital. It is to the credit of the people who have invested wealth that so small a proportion of them live extravagantly in a way that would be detrimental to the well-being of the State. Many of the workers are in receipt of good wages and do not feel the pinch of having these prices put up. I do not think they will take any different view in regard to them than in regard to a great deal of the other taxation which they are so magnificently bearing without complaint at the present time.
Below those two classes are people to whom these increases represent a real deprivation. I am sure that the Chancellor of the Exchequer will not deny that the poorest section of the population will have to go short of little luxuries, which in some cases is all that they have, in order to meet this burden. There are the old age pensioners. Further, there are people in receipt of fixed small pensions, either as a result of their Government service or of service with some private employer. When the matter of these pensioners comes under review I hope that the Chancellor of the Exchequer will bear in mind that these are the people who will feel the pinch of this taxation, not the rich or the well-paid workers, who, I agree, will pay the bulk of the new imposts. It is the other people who will really go short, and I hope we shall not forget them when the right time comes. It does not meet the case to say that everybody must sacrifice, because the sacrifice demanded of them is far greater, even though it seems small to us who have other means of meeting it.
In regard to the Entertainments Duty, I regret the tax upon the living theatre has to be increased at the same time as the tax upon the cinema, but these are exceptional times. I hope that we may have an assurance that this taxation on the living theatre will be removed among the earliest, when war burdens come to be removed. We have the consolation, in regard to the poorest section of the population who go to the cinema for one little treat occasionally, that the 7d. seats are free from new taxation.
A number of small points will no doubt arise at later stages and will have to be considered. I do not propose to weary the Committee now by reciting them, but I want to make one observation upon a rather larger field. I believe that it is the business of the Chancellor of the Exchequer to think on still wider grounds and still further afield to-day, and to bring into consultation not merely financial advisers but the Government as a whole. He has to think in two directions: concerning the duration of the war and concerning the situation which will arise after the war is over. With regard to the duration, he has always to bear in mind that it must as far as possible be his object to create equality of sacrifice. The Government have not borne that in mind quite to the extent which could have been done in their attitude to the war and to the various difficulties which confront different sections of the population. It will be remembered that at the beginning of the war the Government did not propose to do anything about war damage. They persisted in the idea that each man whose house was destroyed had to bear the burden of it. I was always against that idea, and I was very glad when the Chancellor of the Exchequer brought in a scheme to make some compensation so that bomb damage would not fall upon the particular individuals who happened to be the subject of enemy attack.
I am not sure that even now war damage arrangements are in their final and most equitable form, and I hope that the fact that it has not been necessary to do anything during the period from August, 1941, does not mean that the whole scheme will not come under review at some time. I hope that it is already being reviewed and that we may have an opportunity of making further amendments in a scheme which was as equitable as it could be at the time it was introduced but which, as time has gone on, has been shown to have some defects.
I am not at all satisfied that the Government have dealt equitably between different classes of trader. One has gone under as a result of the war and another has been prosperous. I know it is the theory of private enterprise that everybody takes his chance; one man swims into improved conditions and another has to face loss. I never thought that that was wholly good, but in war-time conditions are much worse than in ordinary times. I am not sure that the Government have fully faced the responsibility of looking after the position of people in this country or are endeavouring to make the sacrifices shared equally between different sections.
I have already spoken of the old age pensioners. I noticed a suggestion put forward the other day that we must reach some conception of a minimum income. Of course, we have got away from the idea that each of us is a unit on his own. We are coming to recognise the truth of the view that we are all "members one of another," that we are all our brothers' keepers to a certain extent, and that we cannot afford to allow individuals to fall below a certain standard of life. That idea applies particularly to the children. The Committee will have realised that my party have now come into line, and that it is part of our party attitude that children's allowances should be promoted. Though I am not surprised that the Chancellor of the Exchequer has not introduced that idea into his present Budget, yet, in war-time, the importance of children is more than ever realised, and I believe he will have to face that problem before very long.
I should like to ask him—if he does not care to answer in the course of this Debate, perhaps he will do at some other time—for the revised estimate of the additional cost in this matter. The Committee have to remember that the Chancellor of the Exchequer is making a grant to some parents of much more than 5s. a week. Every taxpayer paying anything like the standard rate of tax on the larger slice of his income—10s. in the £—is getting well over 10s. a week in relief per child. In addition to that, every man in the Forces is getting an allowance for his children that amounts to well over 5s. per week. It would be interesting to know what is the residue of the population, not now receiving benefits under Income Tax or under the Army, Navy and Air Force Service allowances, which would be brought in if the Chancellor were to say that an allowance of 5s. a week per child should become universal.
There are also other matters which ought to be considered during the war in order to give greater punch to the war effort. I have tried to make my speech to-day not on a party basis, and I would ask that certain matters which hitherto have been regarded as party matters should be considered from a different standpoint. There is, for instance, the question of transport, and whether it ought to be left in private hands. That, of course, has been regarded purely as a party cry up to now, but I think Members in all parts of the House ought to recognise that it is now becoming a subject which will have to be viewed from the public point of view. There is another very controversial subject, and that is the coal mines. There is considerable unrest in the coal mines at the present time, and looking at it from the point of view of the proper prosecution of the war, I myself feel that the present position in the coal mines is very unsatisfactory. I hope the Government will not be averse from taking steps which may be unusual but which are essential to get the maximum output from the mines.
Another large subject, which it is time the Government began to face up to in real earnest from the financial point of view, is the post-war position. We all remember what happened after the last war; disaster piled on disaster in all kinds of ways, being largely responsible, in the international aspect, for the outbreak of the present war. We have not had a great deal of information in regard to the postwar arrangements which the Government have been making, but I want them to go beyond any such minor questions as the rebuilding of cities and take the larger questions into account. There is a great deal of complaint at the present time that some industrialists, instead of putting their back into the war effort, are thinking in terms of what their position is going to be after the war. I think it is a very serious matter, but I cannot altogether complain about it. A man must face the future both for himself and his company, but at the same time it is highly important that the State should also be thinking about its attitude towards these businessess.
In that connection I think it is a matter of very grave concern to the nation as to whether certain large concentrated industries which are in fact monopolies are to be in a position to dominate the State. Quite clearly, no one who has the interest of the community as a whole at heart can allow that to take place. Neither can vested interests be allowed to dominate the future of the country as, to a very large extent, they were allowed to do after the last war. We often hear people say that he who pays the piper calls the tune. I have pointed out that what are called the "lower orders" are facing a considerable part of paying the piper at the present time, and I think it is natural and right that as a consequence they should have a right to call a much greater proportion of the tunes played after this war than after the previous war.
I should like, in that connection, to recommend to hon. Members of this House a most interesting article which I have been reading in the course of the last few days. It is written by Samuel Courtauld in the "Economic Journal" for April. He faces up quite openly to many of the questions which I have been raising to-day. He faces up to the limitation of profits, to national control of industry, to workers' participation in control, and he faces up even to national ownership. Not only does he face up to all these things, but he sees very little objection in principle to any of them, provided they are carried out in the way he thinks right. He makes this very interesting comment:
Perhaps the right hon. Gentleman will not misunderstand me, and will not mind my making use of his speech for making an observation for purposes of the conduct of this Debate because I think he has given a very useful list of a number of matters which it would be out of Order to discuss. I should like to explain to him quite frankly and clearly that I did not see any reason for calling him to Order. The subject of the Debate is the Resolutions—the one which is actually before us and the other Resolutions which were passed yesterday—and the general Budgetary arrangements for this year. It is perfectly right and proper in a survey of the Budgetary position for matters of that kind to be referred to, but this is not an occasion for a Debate on matters of detail as to how to carry out the matters dealt with in Mr. Samuel Courtauld's memorandum, nor on post-war reforms generally, old age pensions, children's maintenance, State control of transport, or coal mining.
May I add my voice to the many both in this House and outside which have been praising the Chancellor for this Budget? He has an unenviable reputation for having taxed this country more than any previous Chancellor, but his enviable reputation is that he has got his Budgets not only through this House but through the country mainly with approval, or at least with acquiesence. He has got this one on its legs to the general satisfaction, I believe, of Members of this House and, on the whole, of our fellow citizens outside. Indeed, the speech to which we have just listened indicates that a great body of opinion is accepting the new and heavy burdens which have been put upon them in a spirit which is going to help and make it certain that we shall win the war.
First of all, I wish to add my voice to what has been said on the point that taxation alone will not stop the great body of our citizens from spending. You have two classes, both of them limited no doubt, but both of them with money which they can use for the purpose of acquiring what they want. Bitter experience has shown me that it is quite impossible to assume that these classes will give up purchasing something which is expensive, but which belong to a small category of goods, consumable or otherwise which they want, while they have got the money to spend. Taxation alone will not do that. Of course, if they spend, it is quite right that a large part of what they spend should come back to the Chancellor in the form of one or other of his taxes. On that we are all agreed, but from the national point of view and from the point of view of helping to win the war, it is such spending that we want to stop and to divert the money which is so spent into war savings in one form or another. That has driven me to the conclusion which the Chancellor himself fully recognised in his speech yesterday, that the other Members of the Cabinet have to run absolutely in the same step and in double-harness with the Chancellor to make the policy implicit in his Budget really effective.
That means that limitation of supplies and the rationing or the appropriation of goods has to be applied, and applied more drastically every month as time passes. It is not sufficient to limit this means of controlling the spending of the people only to those goods which are absolutely essential. We have very largely limited rationing to what are the essential foodstuffs of the people, but there are always certain consumable articles, both food and otherwise, which come on the market, and then undoubtedly the reckless spender, from whatever class he comes, is determined to have them, and will have them. It is not just that the reckless spender does harm to the national effort, but it means that a great many other people who would like those goods, whether food or something else, complain that they do not have a chance of getting them because they are gone, bought, have disappeared, before they have a chance of getting them. Therefore, while I welcome the taxes which the Chancellor has imposed, I want to urge his colleagues, through him, that they need to extend their restrictions to make this principle of his Budget really effective.
May I say a word about Income Tax on workers? I am still not satisfied that it would not have been possible to have devised a scheme which would enable wage-earners to discharge their tax up-to-date from the wages of the week being taxed. I am one of those unhappy beings who, all the time they have been paying Income Tax have had to pay on this terrible basis of the previous year's assessment which has to be met out of income for the current year. That is all right so long as one's income is going up, but it is perfectly terrible when the year's remuneration varies, and a bad year follows a good year. Sometimes bankers are kind, sometimes not. Sometimes we have not bankers or capital to deal with the position. This system leaves you, when you fall out of your profession or employment, or indeed when you die, with a very nasty debit due to the Revenue which has to be met. I do not like the idea that this system should be regarded as the only one. I feel, however, that there is a great difficulty unless it is possible to devise a system which will not make the employers the assessors of their employees. I can quite understand difficulties arising through an employee telling his employer that he is a married man with 10 children, and that therefore what has to be deducted is so much per week, whereas he is in fact a bachelor. In such a case the employer would only make a small deduction, whereas he ought to make a much larger one. To make the basis of assessment knowledge on the part of the employer of the circumstances of his employees might be difficult to carry out in practice. It therefore seems to me that the assessment has somehow or other got to be by the Revenue officials with the workman direct, but I still cannot believe, in spite of the objections which the right hon. Gentleman indicated, and which obviously would occur in certain cases, that it is not possible to devise a table of what should be the financial deductions, that assessment should take place while they are being made, and that there should be a settlement once a year.
I have only another point to make. It goes rather wider than anything I have said yet. It is the question of the Excess Profits Tax. Last year I raised the point that I believed that the Excess Profits Tax was bad for the country in that industrialists and others were deprived of funds with which to maintain their plant or their ships, or whatever it was, in a condition so that at the end of the war they would be able adequately to compete with competitors overseas. I was told, and I accepted it, that allowances for depreciation were generous. All the same, the allowances for depreciation do not yet seem to me really to meet what I have in mind. If you have machinery working day in, day out, seven days a week except for a breathing space on Sunday, that machinery is necessarily getting more and more worn out, and the time does come, and the time is coming as the war goes on, which will require that machinery not just to be maintained but to some extent to be renewed. There is great difficulty about that, I know, because the materials required and so forth are difficult to obtain at the present time. As things are, you cannot, as far as I know, experiment with new machinery unless you come to a special arrangement with the Government. If you are doing Government work you are handicapped in a way in which, in peace-time, employers are not handicapped. I am assuming that there is general knowledge and agreement that the type of work I have in mind is nearly always done out of excess earnings of the firm which are not distributed—exactly the fund which the Excess Profits Tax touches.
There has been a similar complaint during the course of the year from landowners. They have said, "We are directed by agricultural committees to use our land in a certain way for the benefit of the nation. We use it, but the result of this use of the land necessary to produce the food of the country during the war is taking more out of our land as the war goes on than can be good if you look at the future of the country when the war is over." Whether land comes under national ownership or control, or whether it remains in individual ownership, it cannot be right that it should be in a worn-out condition at the end of the war. Nobody suggests that either the landowner or the industrialist can expect to have his land or plant in as good condition at the end of the war as if there had never been a war, but men whose opinions are of great weight have warned us that there is a danger in this state of things being allowed to continue. While I realise, from the Chancellor's speech, that the matter has not escaped his attention or the attention of his advisers, I still wonder whether we ought not to have some sort of body inquiring into what is happening in industry and in agriculture in this respect.
The industrialist who is doing work for the Government is, as a rule, working his plant all-out, for as many hours as possible, but not all industrialists in each branch of business are being treated in the same way. There are instances in, I think, a great many branches of business of one firm doing all it can for the war effort, while another is going cannily—if I may use that expression—so that at the end of the war its plant may not be so exhausted as that of its rival. If undertakings are to be controlled, they should be controlled by the Govt. just as much because they are not doing all that they might be doing to help the war effort as because they are not doing their work as efficiently as the super-experts at the War Office think that they should be. Insufficient effort is just as much an offence as inefficiency. Welcoming the Chancellor's Budget, as I do, as a great effort, I think that a good deal depends on his colleagues working in with him. If they do that—and I know no one better able to persuade them than my right hon. Friend—this Budget will go a great way beyond merely raising a portion of the money required for winning the war.
The right hon. Member for South-West Bethnal Green (Sir P. Harris) described the Budget yesterday as being a humdrum Budget. It struck me as being more of a battle-drum Budget than a humdrum Budget. There is no question that it organises the whole country, financially, to the maximum, for the purposes of the war. I think that by the country generally, and certainly by Members of this House, that has been accepted in that spirit. While everyone could take portions of it and suggest some variations, the House will accept it as a business-like method of taxing the country and financing the war. I agree with the hon. and learned Member for Ashford (Mr. Spens) and my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence), that it is impossible to separate the war period and the post-war period. A great deal has been said about the scorched-earth policy, but it is not realised that this country, to some extent, is pursuing a scorched-earth policy by exhausting machinery, exhausting land, and exhausting a great deal of the facilities that we require for maintaining our standard of life. Among the working class, there is no question that nerves and tissue are being exhausted, and years are being taken off the working lives of the people. One is inclined to think that this policy can be pursued regardless of what happens after the war; but there will be no victory if we finish up with a universal graveyard. We must continue life after the war, and, therefore, in considering the war measures we must consider the post-war period.
While some firms are getting too much out of the war, large numbers of the staple firms of our country—the small, specialised industries—are sacrificing everything in the way of machinery in order to turn out products, and are in danger of no longer being in existence after the war. While I am in favour of a general system of public control, I realise that unless these industries are in being after the war the working people, as well as the employers, will be faced with disaster. I hope the Chancellor will take into account the question of justice between firm and firm, as well as justice between individuals, and will find some system to ensure justice for those firms which are sacrificing themselves to produce, in contrast to the few selfish ones who are preserving their machinery for the post-war period.
I wish to confine myself to one point of fundamental importance. It concerns the war period and the peace which is to follow. I am going to deal with a suggestion which has been discussed frequently in the House. It is the fundamental issue of inflation and money itself. Last November I asked the Chancellor: banks create the credit for the purpose of loans of money to the Government. It might be read into that that the banks do not create the credits. That is what it implies. It is a long time since Hartley Withers and other economists, long before the last war, made it clear that not only do the banks create money, but explained in detail the process by which they do it. It is surprising that 25 or 30 years after that time statements are made that this does not exist. The Macmillan Committee in 1929, appointed by a predecessor of my right hon. Friend, went into the whole question of money and industry and laid down certain principles and established certain facts in the public mind. The Macmillan Report said: creation of machinery for payments and transactions of all kinds in commerce and industry, and therefore involves work in the banks and clearing houses of the country. Before any profits can come out of the interest paid on the creation of credits costs must be deducted. If banks are not to be paid for the transactions they do for the public they must pay these out of the interest they collect on these created deposits. I am not in any way objecting to that in principle. It may be wrong in principle that the banks should have the power of creating money. It might be argued and I would be prepared to subscribe to it, that the creation of money power in the country should be in the hands of a body responsible to the public for its action.
How much does the hon. Member think that the banks should be paid for their services? Does he think 2½ per cent. is a little too much?
If my hon. Friend will kindly be patient, I hope to come to that particular point. It might be argued as my hon. Friend has suggested that the banks charge too much for the services they render, but that is merely a matter of argument at the moment, just in the same way as it is a matter of argument whether some people are making too much out of munitions that they produce. There is to be said for the banks in that connection the fact that they have made themselves strong and reliable and reliability is a fundamental feature of our banking system and moreover I can speak with some little national pride in regard to this matter. The British banking system has made itself the example for the rest of the world in its technical efficiency and general reliability. I have never understood the attacks made upon the banks that they deliberately cause unemployment by withholding the creation of credit. Obviously, that would be to cut off their noses to spite their faces. As they make profits by creating credit there would be no justifiable reason for them deliberately to cause unemployment by withholding the use of money and in this way deplete their own incomes. Even a nationalised bank would not lend money or create credit for the purpose of maintaining shaky or undesirable financial adventures. The banking system of this country in the previous century had enough experience of that to last it for the rest of its history.
Surely the central bank, the Bank of England, by its policy of deflation after the last war and in 1929–30 and 1931 created colossal unemployment in this country and throughout the world?
That may be true.
It is.
The point is that you have to take that fact into account with the conditions that existed at the time. I am not justifying what the banks did then or their policy; there are pros and cons which I am not discussing at the moment. The next point I would like to make clear is that it is sometimes assumed that the banks themselves in a voluntary way issue credits just as if handing cut tickets at a bazaar. The system generally is that the banks do not take the initiative in that matter at all. They have to convince customers willing to operate credits in order to make use of them. Therefore the initiative comes from the economic system, the needs of industry and of the people. If a new producer sees a profitable market in which he can utilise labour and material he will go to the bank and borrow credit in order to make use of it. In normal times the problem of the banks has been to get enough customers to use all the credit that they were willing to lend. I am stating these things because there are some misconceptions, and I do not want it to be thought that I do not realise these points. Now, the war changes the whole position because instead of there being difficulty in finding customers to borrow credit, war creates a demand for the maximum creation of credit that the system will stand.
I think there are two main reasons for people wanting to possess money. The greatest incentive is to control other people—the feeling of power. If you have £100 you can send to an Employment Exchange and they will send you a man who, because you pay him £2 a week, will stand outside your door and salute everybody who passes. If you pay £4 a week you can get somebody a little more skilled and if you pay £1,000 a year you can perhaps get an editor to run a little paper for you, to write that you are the greatest man in history and perhaps convince the public in a particular locality that you ought to be returned to the House of Commons. Control of money is control of people.
Nonsense. It is the land that controls people.
Well, the control of money gets control of land.
Nonsense.
Give me enough money and I will get you enough land. Other people want money so that they can remain outside control. In the words of Burns, they want:
Before the war the system of society under which we live was breaking down for the fundamental reason that private enterprise was rapidly becoming exhausted, in so far that it was unable to find sufficient profitable markets to absorb the potential production of modem industry. Instead of saving leading to production, people were gradually thrown on the unemployment market, not because anyone wanted them to be unemployed, but because there was no profitable way of using their labour. The obvious thing would have been for public enterprise to have taken up the slack and utilised that labour for public purposes, but instead of doing that we let people rot and go to ruin, producing nothing and paying them for being unemployed instead of creating the things that could have been created by a proper utilisation of labour. I hope that after this war such a thing will never happen again. When war breaks out, however, the whole thing changes. The Government want to use all the labour and material which can be set free for war purposes. Therefore, the maximum of saving becomes desirable in order that the minimum or private consumption should take place and the maximum amount of labour and material is set free for the Government to use.
I regret some of the statements which have been made in this House in regard to savings from the point of view of the war effort, because I am convinced that whether we like it or not it is a question of how far we can reduce the proportion we consume in private consumption and increase the proportion used by the Government in war production which will determine the amount of material available for fighting the war. Criticism has been made that saving is transferred money and that money has been transferred merely from one person to another. Well, it would not be savings if it was not transferred money. Therefore, all the saving we ought to be talking about in this House is transferred money—that is, transferring money from purposes to which it might be put to purposes for which the Government wants it. The State is faced with various possibilities. It can commandeer materials, conscript persons and land and force them to do what is required.
Without money?
Yes, it can do that, but the more convenient way is to use the tickets we call money. There are two or three methods of transferring money power from the public to the Government. The first is by taxation and I think we can agree that the Government, by direct taxation, have gone almost to the limits that are advisable in the interests of the community. The workers, in the main, have always advocated direct taxation as opposed to indirect taxation as being just and fair, but I think we must agree that this is a little less popular at the moment than it was when it was at the theoretical stage. It may be found that the convenience of some indirect taxation will outweigh the justice of direct taxation. At the moment it appears to me that we have about reached the extreme. If we have taxed people in general to what seems a just limit we come to the particular people who might have further resources which can be obtained by getting them to lend the extra resources. That is borrowing and the transfer of income to the State on a voluntary basis. It might almost be called voluntary taxation. Indirect pressure helps this process because if you remove the possibility of spending, by coupons, rationing and other restrictions, you are automatically leaving people with nothing to do with their money except to lend it to the Government. That process is going on steadily and this year's Budget will contribute towards that end.
Everyone regrets that so many burdens or sacrifices must fall on or come from the ordinary people. I think everyone would fairly say that people who are the best off should carry the heaviest burden, but the trouble is that if you cut down imports of food and clothing in order to transfer ships to war purposes you cut down material which is not necessarily consumed by the rich to the same extent as by the workers. Many workers have far better appetites than some of the rich. If food is cut down, naturally they will suffer more, because they are doing harder work and need more food.
As I have said, the Government have been taxing, reducing and transferring money at a great rate. I think the Chancellor and the Government are to be congratulated on the fact that during this war they have reduced the average rate of interest on all borrowed money to less than 2 per cent. Ten years ago, few of us would have prophesied that this would have been accomplished, and even in the case of those people who are receiving 2 per cent. or 2½ per cent. interest, if they have to pay Income Tax on it, the rate is in effect reduced to I or 1¼ per cent. In the last War, interest rates went up on the auction-sale principle, and reached about 5¾ per cent. Therefore, the Government are to be congratulated on having reduced interest rates. I am not sure that there has been the same success on the spending side. I think a large amount of expenditure that could have been avoided has taken place, and that many of the high profits made by some of the armaments firms just before and since the war could have been avoided. But the damage is done, and it cannot be wiped out even with a 100 per cent. Excess Profits Tax.
When all transfers of money power are exhausted, there is still a gap which has to be filled by the creation of new money power. That is created by the banks. The power of creating credit, normally used for expanding and developing private industry, is now used for the service of public enterprise in the war effort. Instead of the banks having difficulty in finding people to borrow money, credit is being created to the limit. As to whether the banks do create credit for war purposes, we learned how in the last war City firms and business firms received from the banks, at the beginning of the war, a circular offering to lend them credit at 3 per cent. for investment in the War Loan at 4 per cent. In other words, the banks created bookkeeping entries, and the customer got 1 per cent. for lending his name to the bank for the purpose of creating credit which went to the Government at 4 per cent. After the War, there was a Committee on currency which published a first interim report in 1918. It stated: cut out, and the banks now lend direct to the Government. The Chancellor, in reply to a Question put by me on 18th November last, said that, broadly speaking, the money which the banks lend to the Government is derived from deposits made by customers in the ordinary course of business. If that were true, there would be no extra money in the country. There would be the same amount, but it would be in the hands of the Government and not in the hands of the banks or the public. What are the facts? In two years of this war the bank deposits of the London Trading House Banks have increased by £750,000,000. Treasury deposit receipts have increased by £646,000,000, and investments by £409,000,000. Other advances have increased by £165,000,000. The floating debt has increased by £1,811,000,000. In the March, 1942, issue, the "Bankers' Magazine" stated:
I recognise that the banks perform a great public service and must receive the costs of that service. The cost of running the organisation is met out of these interest charges, but the banks have been transferring these Treasury deposit receipts at the rate of many hundreds of millions from interest at 1⅛ per cent. to War Loans at 2½ per cent., and of course, that means a tremendous increase in their remuneration. According to a reply which the Chancellor gave on 27th January, there is already increased interest payable at the rate of something under £4,000,000 a year. I should like to ask what is the justification for more than doubling the interest on bank-created credit. What investigations took place into the working of the banking system before this enormous increase was granted? If increased remuneration is necessary to cover the extra work involved in handling the extra money, there might be a justification, but we ought to know the circumstances before extra millions are poured away in this manner. I am prepared to assume for the moment that the banks are more than meeting their costs, and that the 100 per cent. Excess Profits Tax takes during the war all that is necessary from them, but I want particularly to raise the question whether these payments are to be temporary for the war period, or whether they are to be a perpetual drain upon the productive resources of this country. In war time, for instance, the Government might require a largely increased number of railway wagons to work for it, and it might be justified in paying a hire rate for these wagons.
When peace returns and these wagons go back to perform their normal service, everyone would agree that it would be fantastic to continue paying in perpetuity for their hire. Money is merely a medium for using goods and facilitating production and distribution. It is true that in war we have transferred the use of the money institution from private enterprise to the Government, and, when we use the banking services, it is justifiable that we should pay the cost of running those services. On the other hand, when the war is over and these services return to private enterprise, banks having their normal facilities for obtaining income from private enterprises, it is undesirable and unjustifiable that we should go on paying the cost of running their war-time services.
The State should immediately reduce the cost of payments on credit creations in the war loans. After the last war the money of certain groups of people of this country was increased to the extent of £5,065,000,000. That was new money which had been created by this process, and the tragedy has been that we have continued paying interest on money facilities which were created for war purposes and which ceased to be used during peace. I ask the Chancellor of the Exchequer whether anything has been done to take into account this problem which will arise again after this war. Are we to be faced with the same problem? All sorts of commissions were set up to deal with it after the last war. Capital levies were proposed as one solution to liquidate the debt, and I believe that the time has now come for us to make our plans for the period which will follow this war. I have no objection to paying for services rendered, but it is ridiculous to pay for services when they are dead and gone. It may be that the population will be able to stand the strain and stress of war, but, unquestionably, if burdens like these are to be fastened on them when it is over they will not be able to withstand the strain of peace.
If we do not want to see the collapse of our institutions, we must make our plans for the future now. I do not propose to offer any simple solution. We can nationalise the banks, or we can make the payment for new money on a cost plus a reasonable fee basis, or we can come to a business-like arrangement as to how much we shall pay during the war, that payment being decreased when we reach normal times. There should be a separation between genuine borrowing and the bank creation of new money, which is not borrowing but the creation of new money power. We are now using that money for public enterprise, but I suggest that we must avoid carrying on the burden of paying on mere bookkeeping entries when they cease to involve services. There must be a costing for the banks as well as for industry. Industry will have something to say if a different system is applied to the banks and to them.
The hon. Member who has just sat down has given the Committee a most comprehensive dissertation upon the creation of credit, from which I trust the Financial Secretary has duly profited. The Chancellor of the Exchequer is to be congratulated on the extraordinary buoyancy of the revenue, as shown by the out-turn of the last financial year, and also upon the fair spreading of the new taxation announced yesterday. There would appear, however, to have been a lamentable decline in the popularity of Income Tax now that it has spread over a much larger section of the population. I wish to devote a few minutes to the other side of the balance-sheet and to say something on expenditure. There are two ways of bridging a gap and balancing a Budget. We are told that our expenditure at the moment is running at something like £14,500,000 per day, and that therefore our war effort is making great strides. But this does not follow. I think it is reasonable to make the suggestion that probably £2,000,000 per day of that expenditure is unnecessary. This represents £730,000,000 per year, the figure at which the Budget balanced seven years ago. I submit that the increased taxation announced yesterday would have been avoidable if reasonable economy had been enforced within the Departments.
I know that it is the task of the Chancellor to find the money voted under the Estimates, and the Budget is an opportunity for making a review of these matters. I find in my constituency that those who come to see me for personal interviews consist of business men, often in a small way, who are being stifled in their efforts to assist this country to win the war. We are not getting efficiency for our money. All we are getting is a multiplicity of officials, many of whom regard themselves as the masters rather than the servants of the public. Many of them have been known locally as various kinds of rolling stones in happier days. They are not the sort of people who are competent to conduct the vast machinery of this war. The result is that initiative and incentive are being buried beneath mountains of paper. People are beginning to feel that this war is becoming a Government monopoly, run on the principle of the closed shop. John Bull, that legendary figure, is stout at heart and sound in wind and limb, but, like Gulliver, he is pegged down and enmeshed by an army of pygmies. For years now the Budget has been something more than a tax-gathering machine. It has developed into a political instrument for social and other purposes, such as redistribution of wealth and the provision of various public services.
May I remind the hon. and gallant Member that Lord Simon when he was Chancellor of the Exchequer, stated that that was the definite policy of high taxation—to redistribute wealth throughout the community?
I was not querying what was said by Lord Simon or anyone else. I was stating, before the hon. Member interrupted me, that the Budget is a political instrument as well as a tax-gathering machine. We have had many Debates in past years on such topics as equality of sacrifice and the "haves" and "have nots," but we are entitled to ask this question even in the midst of this struggle. What is the present social objective of the Government? I have called attention before to the discrimination in reward between those in His Majesty's Forces and those in industry. What is the Government's basis of remuneration now that they have power to control wages? There are three ways of computing a man's reward: firstly, according to his services; secondly, according to his need; and thirdly, according to his nuisance value. I should have thought that the rank and file of the Forces had a strong case under the first two, while failing lamentably under the third. Why have the Government decided that the nearer you are to the enemy the less you get paid, because that is obviously the policy which has now been evolved?
We have raised the matter so often that it is now quite clear. We are told it does not matter, so long as the goods are delivered, what they cost. Will the Government apply that principle to the naval ratings who day by day bring in huge convoys safely with the goods? Why create, as the Government have done and are doing, fresh sections of "haves" and "have nots" within the ranks of the working classes, where they live in the same street, next door to one another, with their wives going out shopping, with this tremendous gap in remuneration? Why not apply the machinery which Parliament approved, the Excess Profits Tax machinery, to increase wages? We said that profit must not be made out of the war. Is that principle to apply universally or is it not? If you apply the Excess Profits machinery to largely increased wages, you will increase saving, check inflation, and take the profit out of war, because at the moment let us face the fact—it is a fearful thing to say, but it is true—that we have created in certain sections of the community a vested interest in war. There are certain people who, though they would naturally not say it, must dread the day when there is an outbreak of peace, in view of the remuneration which they are now getting. That is the sort of thing that the House ought to correct.
Will the hon. and gallant Gentleman expand his remarks and bring in the question of unearned income?
The question of unearned income should, of course, be dealt with by severe taxation. I am not here to defend unearned income. I have very strong views on the matter. I would apply a special rate of taxation to unearned income, so long as the hon. Member and I mean the same thing—inherited wealth. But do not let us be led on to that at this stage. I suggest that the Excess Profits machinery might well be applied to wages which have increased just as to profits. Let the extra wages be treated on the nest-egg principle if you like, but take the money out of circulation for the duration of the war. Discrimination against the Forces would still exist, but at least the pocket money available for spending would be roughly equalised.
It has been stressed that it is not too soon for the Treasury to be thinking and planning in terms of recovery after the war. Indeed other Departments are already doing it. The Board of Education and the Ministry of Works are engaged on post-war planning. What financial policy does the Chancellor envisage after the war? I want to speak quite frankly, as one who has been for 20 years in the City of London. I also have always believed that the British banking system is the finest in the world, and I still think so, as far as its machinery is concerned. But that is not to say that British bankers have always pursued the finest policy. In the immediate aftermath of the last war bankers were quite content to define recovery in terms of a boom in the gilt-edged market and 2,000,000 unemployed. I will have nothing whatever to do with that at the conclusion of this war.
You must open up the land.
I will not anticipate the hon. Member. Deflation may be theoretically desirable, but, in terms of humanity, it is indefensible. But that is only half the story. While ex-servicemen sold matches and played barrel organs in the immediate aftermath of the last war, the Big Five Banks were vieing with one another as to which could lend most millions to the Hun. "Put Germany on her feet" was the slogan. They certainly succeeded. No one can deny that. Indeed, the Prime Minister once prophesied, when sitting below the Gangway benches, that this money would return to the City of London, though in a different form, very much more rapidly than it went. Witness the devastation of the Guildhall and the surrounding area. Are we going to do that again? There has been a hint of it in one or two of the Foreign Secretary's speeches. I was somewhat disquieted to-day, when, in reply to a Question of mine, the Minister of Information told us that there is being excluded from the microphone a view which wants to see to it that the recovery of Germany on those terms is never allowed to occur again. Any Government which allows a similar process after this war will be flung out of office with contumely if this House faithfully reflects the opinion of the country. We are told that there would be something improper, if not indecent, about a khaki election at the conclusion of hostilities. Are the men in the Services to be studiously kept away from the polls until these matters have been settled without their having a voice at the ballot box? Is that the intention? These financial matters should be referred to them before decisions are made.
I ask the Chancellor to set our minds at rest on these points; first, that the Government will do their best to set free the war effort from the strangling effect of a multiplicity of unnecessary Government officials; second, that they will seek to equalise spending power between the Forces and industry; third, assure us that unemployment will be tackled at the conclusion of hostilities; and fourth, that British money is not to be used this time to restore the Hun to a prosperity which will enable him to prepare quietly, grimly, and deliberately for his Third Punic War. If these assurances are given, there will be such an up-surge in our war effort as will hearten our friends and confound our enemies. The Chancellor will then be remembered not as a mere tax gatherer, but as a statesman who threw open wide as the sun the gateway to the promised land.
I do not intend to follow the hon. and gallant Gentleman who preceded me, although I welcome some of his criticisms of the Government. So far the Chancellor of the Exchequer has been receiving practically nothing but compliments. The hon. and gallant Gentleman has provided me with a sort of halfway house, because I differ from the opinions that have been expressed and think that the Budget is fundamentally bad. I listened with great interest to the right hon. Gentleman when he was presenting it. We have heard during the war about a new order. I have been sometimes a little doubtful whether a new order would come, and as I listened to the right hon. Gentleman I did not come to the conclusion that he would prove to be the grave-digger of the economic system of capitalism. The Chancellor evidently seeks in his Budget to do three things: first, to provide the finance for carrying on the war; second, to prevent, as far as possible, inflationary possibilities which may become particularly dangerous in a war period; and third, so to try and run the financial machinery of the country that when victory comes a small section, the rich, will be able to return to the position they occupied in pre-war times with their privileges and their opportunities for the exploitation of millions of their fellow countrymen and of the subject peoples in the Colonial Empire.
The Chancellor of the Exchequer's efforts to prevent a large measure of inflation will prove futile. He has taken on a job pretty much like that which was taken on by King Canute when he went to the seashore to bid the tide not to come in. The right hon. Gentleman is possibly not a kingly figure, but his efforts will prove equally futile in trying to prevent the tide of inflation. In spite of all that he does, however, I do not think he will be able to achieve his object of securing an ending of the war which will leave the rich few in a position of privilege and with the opportunity of exploitation that they enjoyed when the war began. The Chancellor should be careful about giving too great an emphasis to the views that have been expressed here that the big majority of the people will be willing to accept this Budget and to feel that after all it is not a bad Budget. I think that there will be the utmost disappointment in the minds and hearts of the great mass of the working people with regard to it. It is obviously a rich man's Budget, a Budget of lost opportunities, and throughout the country there will be disappointment at the way in which the Chancellor has acted.
As I go about the country, I find that people are putting three questions. The first is, "When do you think the war will end?" There is an intense desire for the early ending of the war, and, to be frank, there is along with that desire a great determination on the part of the majority of people that, come what may, the war must be carried on until Hitlerism is destroyed. At the same time, I would point out that as we have tested the feeling of the country in by-elections by the policy of the Independent Labour Party, the figures show that 25 to 30 per cent. of the electorate are very much in agreement with that party on the ending of the war by the achievement of a Socialist régime . It is true that the polls are small, and there are various circumstances which account for that, but I think that the figures in a by-election generally represent the feeling of the whole of the electorate. While there is only one Member in 200 in the House of Commons who holds this point of view, it is represented in the country by something like 25 per cent. to 30 per cent. of the people.
The second question in the minds of so many people is," Why should the men and women in the Services, on the land, in the factories, mines and workshops go on making all these sacrifices without being given a real stake in the country? "I would like the Chancellor to realise that that question is urgent in the minds of the great mass of the people. Professor Clay, who is economic adviser to the Bank of England, has stated: change is taking place. In spite of what an hon. Member sitting behind the Chancellor of the Exchequer said about the land being called upon to bear more than it can stand at the present time, I believe it is a very general opinion that the land is in a better condition today and more valuable from the point of view of production than it was at the beginning of the war. The industrial potential of the country is also much greater. There are the mines, there are the factories and the workshops—ever so many more than there were at the beginning of the war. The land and the industries of the country in the possession of their owners to-day are in a better position and are more valuable than they were at the beginning of the war. Alongside that, those people have also become richer in capital by the increase in the national loans from £7,247,000,000 to practically £13,000,000,000. So that the people who own all this land and own the factories and the workshops own in addition £6,000,000,000 more than they did at the beginning of the war. Is that not an extraordinary position of affairs?
We are told that we have practically had conscription of wealth through taxation, and yet the people who own property own £6,000,000,000 more than they did at the beginning of the war. Members of Parliament and the Chancellor of the Exchequer may try to ride away with the statement that taxation to-day amounts practically to the conscription of wealth, but those are the facts of the situation, and the people outside who are called upon to make the great sacrifices they are making realise that all this talk about the conscription of wealth is only an attempt to humbug them and that they are being badly let down.
How does the hon. Member arrive at those figures?
I do not want to speak for as long as some of my predecessors in this Debate, but the figures I have given are the figures of the National Debt in the White Paper and the Chancellor's speech yesterday.
Why attribute that as increment to property owners?
The properly owners are the people who own property and they have got so much in the national loans, and that is a form of property.
Property owners have no income to put into the national loans.
Well, I will leave the hon. Member to look at this in the OFFICIAL REPORT, and then perhaps he will understand it. I do not want to be offensive to him, but I think he is perhaps feeling a little bit sleepy and did not get the point I was making. The other question which ordinary people are asking is, Why do not the Government take steps to secure something approaching to equality of sacrifice? The idea which is prevalent in the House, and which was expressed by the Chancellor yesterday, that taxation of the rich has practically reached its limit is not getting home in the country, because the people see the rich alongside them. They read the advertisements in the Sunday newspapers. They see there the advertisements of furs costing 400 to 500 guineas, and they know that people are buying them. If taxation were so high that wealth had been practically conscripted there would not be the people with money to buy 400-guinea fur coats. They also read of people buying things at auctions which cost thousands of pounds. Where are the persons with thousands of pounds to spend on things if the rich had been taxed out of existence? The people know perfectly well that the rich are there, and they also realise that in spite of this taxation the rich are growing richer. -The rich are richer to-day than they were when this war started, as the figures with regard to the National Debt show. The country has increased its National Debt; collectively the community are in debt to that extent; but that is internal debt and it is owned by individuals in the community—2 per cent. of the community on the basis of the figures of Professor Clay. Those 2 per cent. are richer by the extent that the national loans have increased.
If I lend the hon. Member £5, am I the richer?
If you lend me £5, you are just in the same position as you were before, but I have explained that the people who have subscribed the loans are in very large measure the people whose wealth was in the form of the land and the industries of the country, and they still own those. They are still in possession of the land and the industries which were their wealth. They have that still, and, in addition, they have given to the Treasury that loan which is represented by the figure of the National Debt.
I should like to interrupt again.
I am sorry, but it is a question of time. In view of the desire of other Members to have their say, I have really exceeded the time I intended to take. The Chancellor of the Exchequer tried to meet the agitation that has gone on about payment of Income Tax by the workers by tackling it in an entirely wrong way. I do not believe in the alternative methods which he proposed yesterday. You should treat weekly wage earners as other citizens are treated and take Income Tax from them in the same way. I know about the deductions from civil servants, but the ordinary wage-earners are not civil servants. If you like to make them civil servants and give them a pension at the same rate as the civil servants, I have no doubt they would be willing to have their Income Tax deducted by the employers—as it is being deducted to-day. If you are not willing to treat them as civil servants, treat them like ordinary citizens. Take your chance of getting your Income Tax, as you are willing to do with the other citizens of the country.
One of the great difficulties which have arisen in this connection comes from the way in which the Chancellor has lowered the exemption limit. He would be well advised, in view of the amount of money involved, to extend the exemption from £80 to £150 for a single man and to the corresponding figure for a married man. The Income Tax being imposed at present upon the worker is absolutely unfair, compared with that upon other members of the community. The workers are being called upon to work night and day to provide munitions of war, yet they see their employer being allowed sums for depreciation of his capital, because of the work that is being done in his factory or workshop. Does the Chancellor not realise that the capital of the employee is his labour power, and that an allowance should be made for the depreciation of the labour-power capital of the worker? He is suffering from that depreciation to-day, especially because of the excessive hours of work and energy he has to put out in the workshop. If that suggestion can be taken into account, I hope the Chancellor will give reconsideration to the whole question and put the figure up from £80 to £150 for a single man and to a corresponding figure for the married man.
I am thoroughly disappointed that the Chancellor of the Exchequer has nothing in his Budget to give hope to the old age pensioner. At the conclusion of his argument yesterday he told us that he had to find £150,000,000; he is taking the bulk of that sum from the ordinary working people, who are 98 per cent. of the community and are practically landless and propertyless. It reminded me of the story of the woman who went to get a medicine bottle to give medicine to her little boy. She said, "Johnnie, where has your medicine gone?" He replied, "I thought of that poor boy round the corner who has no medicine, and I gave it to him." The Chancellor has handed on the medicine in this Budget to the ordinary working people of the country, He has increased their burden very greatly, after telling us that the rich could not afford to pay any more.
As I see it, this is a Budget by a Chancellor of the Exchequer who has had the cynical audacity to come to the Committee and say that the rich in this country cannot afford to pay any more and that we have to get our money from the working people. Millions of people in this country have been thrilled by the way in which the Russian people have thrown back the German hordes and by the tremendous spirit in Soviet Russia to-day. The Russian people have a stake in their country. It is their land, and they are their factories and workshops in Russia. In framing his Budget, if the Chancellor of the Exchequer had shown vision and imagination and had sought to bring the economy of this country into line with the economy of Soviet Russia, he would have given hope to the working people in this country who have been called upon to make all the sacrifices, and to the workers in various parts of Europe. He would have struck a tremendous blow also at the tyranny of Hitlerism in Germany.
The hon. Member for Camlachie (Mr. Stephen) described this Budget as a rich man's Budget. If it is so, it must apply to very few people. The Budgets we have passed during the last two-and-a-half years have reduced the gap between the rich and the poor in this country in a way which we would never have thought possible a few years ago. The Chancellor of the Exchequer has received many congratulations on this Budget, and they are well deserved. He has made concessions where the shoe has pinched and he has added taxation to luxuries and other things which we should be far better without, certainly in war-time.
I am inclined to wonder whether we shall ever achieve our maximum war effort so long as we continue to retain the principle of profit-making in war-time. A few weeks ago we heard a speech during the Debate on Production informing us that it was essential for the Government to pay attention to self-interest, that it was not reasonable to expect managements to pull their full weight unless they were given concessions about Excess Profits Tax and that they would refuse to overwork their machinery unless they received suitable compensation to satisfy them about their prospects after the war. All those considerations are extremely important in peace-time, but they surely cannot matter at a time like this. The only thing that can possibly worry us at the present time is winning the war as quickly as possible. We ought not to allow private interests to stand in the way of the only interest which is of any importance at all—the interest of the nation.
But these are not the only profits which, I think, are standing in the way of our war effort. I have spoken before in this House on the subject of wages. We were assured before the war—and the demand was made most vehemently by Members of the party opposite—that nobody should be allowed in war-time to make a profit out of the national need. Now we know that there are many millions of men and women in this country who are infinitely better off to-day as a direct result of the war, and in fact it is being said by some thoughtless people who are receiving these high wages that they hope that the war may go on for a long time in order that they may continue to receive them. [HON. MEMBERS: "No."] I said by a few thoughtless people, who hope that the war may go on long enough for them to continue to enjoy high wages.
It seems to me that this is a very grave mistake. We are piling up for ourselves a load of indebtedness as a result of this procedure which will be a very serious handicap to us when we have to get down to the business of post-war settlement. Many hon. Members have urged before in this House that the Government should set up a scale of wages which should apply to everybody in the country, whether they are employed in a military or civil capacity, and that no overtime rates of wages should be paid. I have always found it difficult to understand why a civilian, whether in the Civil Service or in industry, should be paid overtime rates when those rates do not apply to persons serving in the Armed Forces. I would go further and suggest that it would be a very good thing if, while leaving industry in the hands of those who control it at present, all the capital of industry were taken over by the Government as trustee for the duration of the war. Some agreed rate of interest, say, 2½ per cent., would be paid on it during that time. This, at any rate, would have the effect of ironing out many of the inequalities of the Excess Profits Tax about which we have heard so much for the last year or so There is no doubt that there are anomalies in the Excess Profits Tax, which presses hardly on certain branches of industry. Those who are fortunate enough to have enjoyed a high standard during the relevant period are paying less Excess Profits Tax than those who have a low standard during that time. After all, a great many of the firms who had that high standard had it as a direct result of the rearmament policy undertaken by the Government at that period, and it seems grossly unfair that they should have benefited in this way through causes directly related to the war. If we were to adopt a national scale of salaries and wages and to pay a low agreed rate on all share capital, it is evident, of course, that a certain amount of hardship would be involved. I do not, however, see that that can be considered as a drawback, because, after all, surely none of us are so optimistic as to expect that we shall survive this war without enduring a very considerable measure of hardship before it is over.
The Chancellor told us yesterday that he was very mindful of the fact that, while it was his duty to raise money for the prosecution of the war, he was also very directly interested in whether we were getting value for that money. It is very little use for him or anybody else to stand at that Box and tell the House that we are spending £14,000,000 or £15,000,000 a day on the prosecution of the war unless we have some assurance that we are getting full value for the money. Many of us are inclined to wonder whether we are indeed getting that value, and many of the Reports of the Select Committee on National Expenditure increase our doubts. The Chancellor paid a tribute to the work of that Committee in his speech yesterday, a tribute which, I think, is very well deserved, and I say that without bias, as I am not a member of that Committee. I hope the Chancellor will pass on his appreciation to the heads of some of the other Departments, because one does get the impression that many of the Government Departments resent the work which has been done by that Select Committee and the criticisms which they make. I hope that some means may be found for insisting that more attention is paid to the recommendations of the Select Committee than they appear to have received during the past.
If the Chancellor will forgive me for saying so, I do not think he was very fortunate last year in the publicity which he gave to the incidence of Income Tax on the weekly wage earner. After all, last year we brought many millions of men and women into the range of Income Tax who had never had to pay it before, and it was essential that there should have been far more publicity, devoted to giving explanations to working men and women in order to avoid the misapprehensions which many of them felt. I play a very small part in the Savings Movement in the rural area in which I live, and I have found this year among agricultural labourers, many of whom have been or will shortly be obliged to pay Income Tax for the first time, very grave alarm about their future prospects as regards Income Tax. Many of our group secretaries have found that they were not receiving the amount of savings from them just now that they were receiving a little while ago. It is an unfortunate effect of this lack of publicity that there have been cases of men engaged on vital work work deliberately absenting themselves from their work because they feel that it is unjust for them to have to pay tax on their overtime. All this could have been avoided if suitable publicity had been forthcoming from the Treasury.
I have never pretended to be a great admirer of the systems which prevail in Russia or in Germany, but I do feel that we have something to learn from them. They have a very forthright way of dealing with their slackers, whether they are the heads of industries or workers in them. They have no demands for more profits or for more wages, and they get ahead with the job, because they realise that if they do not, the consequences are likely to be extremely painful. I think that we need more ruthlessness from the Government in their dealings with managements and with men. I agree, of course, that the people who are slacking and shirking constitute a very small minority, but it is a large enough minority to do a great deal of harm. In spite of the fact that during the last 20 years or more the political leaders of all parties have taught us to look upon the State as the universal provider of material good things, without ever suggesting for a moment that the individual had any duty to the State, we have not allowed ourselves to be corrupted by that bad leadership. That, I think, is a great tribute to the British character. The war has come in time, I believe, and only just in time, perhaps, to save us from the fate of France, who rotted through materialism.
There is throughout the country to-day a very real willingness to make sacrifices, but I think it is true to say that Brown wants to feel that any sacrifices called for from him shall be equally shared by Smith, Jones and Robinson. I believe a great deal of the demand for higher wages is due to a suspicion on the part of the weekly-wage earner that his efforts in the workshops and factories are helping to make his employer richer. It is no good telling him that that is not true, because he will not believe it. Incidentally, he has perhaps some reason for not believing it. But if we were to institute national scales of wages and of salaries, and a fixed low rate of profit on all share capital, that suspicion would, I think, be very largely done away with, and we might feel that we had really effected a mobilisation of the whole of our resources, both in man-power and in wealth. This, of course, must involve a reduced standard of living, but we need to reduce our standard of living. It will be an extremely good training for us when the war is over. It has been suggested by those optimists who have spoken about conditions in the post-war world that it will be a very pleasant and easy world to live in. My own feeling is that it will be very much the reverse. It will be an extremely hard world to live in, unless we are prepared to suffer and to sacrifice.
Is the hon. and gallant Member suggesting that this limitation of profits should apply only in war-time, or permanently? If permanently, surely the amount of risk that an undertaking has to take must vary the amount of profit that it should be possible for it to obtain?
My suggestions are confined to the war period only, in order that we may have some assurance that the whole of our resources in man-power and wealth are effectively mobilised for the prosecution of the war. I was speaking about the post-war world and suggesting that it would be an extremely difficult place to live in unless we are prepared to continue sacrifices which are being called for from us to-day. After all, we live almost entirely on our export trade, and although many people appear to imagine that the rate of wages is fixed by the employer, we know very well that the fellow who fixes our wages is the man who buys our goods overseas. In the post-war world, certainly for the first few years after the war, it will be essential for us in this country to accept a lower standard of wages and profits if we are to have any hope of regaining our position in the export trade.
Will not our greatest competitor be the United States of America, and do they not pay far higher wage rates than we do here?
I suppose that America will be a competitor, but there will also be competitors from elsewhere, and it will be essential, I think, for us to be able to compete with any rivalry we may have in the export trade. I feel very strongly, and I know that many other people feel, that we badly need in this country a far greater sense of urgency. Owing to the fact that the theatre of active operations has shifted away from these shores during the past year to Russia and to the Far East, we seem to have acquired again what I can only describe as the collective security complex. Collective security was always attractive to its advocates because it led them to believe that the sacrifices and the effort would be made by somebody else and that we would get the security. The unfortunate thing was that other countries thought the same way, and that is the reason for the mess we are in to-day. We shall not show ourselves worthy of winning this war unless we are prepared to make many further sacrifices and to suffer a great deal more than we have done in the past. There is no question that the willingness to suffer and to sacrifice is pretty well universal among the people of this country in all classes. No doubt many hon. Members listened to the broadcast which was made one Sunday evening after the news by the Lord Privy Seal, shortly after his return from Russia. The theme of that broadcast was sacrifice, and I do not think it is any exaggeration to say that that broadcast had a greater effect among people in this country than any other since the war began. That is an indication, I think, that most people in this country want to have the opportunity of doing a great deal more than they have yet been asked to do, and I suggest to the Government that if they feel it is necessary to call upon our people for greater efforts and more sacrifice, they will find that the response will be from the whole country immediate, generous, and whole-hearted.
The hon. and gallant Member for Preston (Captain Cobb) will perhaps forgive me if I do not immediately follow the arguments he has been addressing to the Committee. It may be that when I make one or two observations about the Excess Profits Tax, I may refer to something that he has seen fit to say. For some time, in a number of our financial discussions in this House, it has been my fortune, at the direction of the Chair, to follow, at a greater or lesser interval, the observations of the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence). I have generally heard them with a large measure of agreement, sometimes with only partial agreement, rarely with disagreement. To-day I could not agree more than I have done with the observations he made to the Committee in his opening sentences with regard to the discourse which the Chancellor of the Exchequer gave us.
It was a remarkable performance; and the Chancellor did a great service to the House, because, in language which will be understood even by those least interested in financial matters, he displayed faithfully the position of our finances and what we have yet to do. I was heartened, as my right hon. Friend the Member for East Edinburgh proceeded, to hear him refer to a number of topics, on which I found myself in agreement with him, and about which I proposed to comment; but the Chair, by what I can only regard as an unfortunate coincidence, said that these observations must not be taken up by Members who wished to avoid being called to Order; and that shortens my speech.
The Chancellor did well to recall to us, and to put into the picture of our finances, the part which is being played by the Lease-and-Lend arrangements and by the generous gift of the Canadian Government. For these things we should be abidingly grateful, the more so because the recent exchange of views between our Government and the Government of the United States, which have been put into a White Paper, indicate that after the war these resources will not be used to poison and corrode our financial relations. It is important from another point of view, because unless that aspect of our affairs is put into perspective it will be difficult, if not impossible, to measure our war effort against that of our enemies. I do not wish to go into that in any detail, but we can rest assured that our effort has approached, and must soon surpass, that of our enemy. Last year the Chancellor produced a White Paper dealing with our financial resources and their dispositions. He said that, while he hoped in future years to issue similar information, he could not promise, as circumstances might arise to prevent him from doing so. I am glad that circumstances have not prevented him from doing so. This is a very important addition to our financial knowledge; and it is of great value to people who have not taken much interest in our national finances, but whom it is of great importance to interest in the subject. The number of people who do take an interest in our national finances is lamentably small. Finance is regarded as a matter for a few experts; and those experts are generally regarded as being cranks. The sooner the mass of our people begin to study financial affairs, the better for the country and for themselves.
The general ignorance displayed about our finances was never so much impressed upon my mind as it was following the lowering of the Income Tax level to include wage-earners. I found, to my great surprise, that an immense number of my fellow-citizens were unaware that the right of subscribing to the Income Tax was part of the inalienable birthright of every British citizen. I agree that that ignorance, with its unfortunate effects, would have been much obviated if there had been a preparatory explanation, not only of the nature of the tax and of its justice, but also of the purposes to which it was to be devoted. That extension led to something like a taxpayers' strike. I should be the last to exaggerate its extent, but it had some effect on production in a good many centres. That effect, I think, is passing away, but I am glad to hear that the Chancellor contemplates further explanation on this matter. I refuse to believe that there is any section of my fellow-countrymen who would refuse to do more work simply because a certain proportion of their increased earnings might be taken for purposes most of which would meet with their wholehearted approval.
I listened with very great interest to the Chancellor's proposals to deal with the difficulties and the hardships—which have been considerable and numerous—in connection with the levying of this tax. Most reluctantly, I must abandon the attractive idea of a weekly deduction from the current earnings of the wage-earner. There is a great deal to be said for the idea, but, having heard what my right hon. Friend said, and having had a little opportunity of looking at the White Paper, I find his argument convincing on the surface, however reluctant I am to be convinced. With regard to the new arrangements for the benefit of married women, I approve of them without reserve. The only doubt I have is whether there will not be repercussions among married women in the higher ranges of income. There is only one possible escape for them from the burden of this tax, and that is one which I hesitate to put forward in this House. Hon. Members will understand if I say that it was suggested some time ago, in not so serious a vein, by the hon. and gallant Gentleman the senior Burgess for Oxford University (Petty Officer Herbert). [ Interruption .] An hon. Member presses me to say what it was. The only escape, of course, from this unfortunate financial position is via the divorce courts.
I come to the point mentioned by my hon. and gallant Friend the Member for Preston, about Excess Profits Tax. It is quite true that there are fundamental anomalies. In the present Budget there is nothing to remove those anomalies. There is the well-known case of companies which have an exceedingly poor standard. I think the proposal to make the 20 per cent. rebate available as a right is a step in the right direction. It might be considered whether in some cases, which I will specify, the rebate, or part of it, might not be made available at once. There were precedents for such a course in the last war. There are companies to-day whose financial standards are low. Their resources are limited, but they are now, perhaps through the organisation and finance of war and other reasons, paying Excess Profits Tax but are still unable to accumulate funds for various purposes. They are called upon at this time to make certain statutory additions to their plant and are obliged to provide canteens. They are put to the necessity of converting their plant so as to enable them to employ a large quantity of female labour. This necessitates important alterations and rearrangements of their plant and factories which they are quite unable to meet. They have no escape from spending money, and their only resort is to the bank, if it is willing to accommodate them. This was done during the last war, though I think on too wide a scale, but in cases of that kind 20 per cent. might be allowed with which to pay for expenses in this direction. If these people cannot afford to put up canteens or to alter factories and to make additional accommodation for carrying on their work, it is said that they may get a loan from the Treasury. That is a very different proposition; the other would be much more expeditious. At any rate, the suggestion, for what it is worth, is in the minds of some people and it is one that might well be considered.
I pass for a few moments to the general subject of the Budget and to one or two conclusions which seem to arise from it. The Budget which my right hon. Friend laid before the Committee yesterday was in fact a second volume or a second chapter of the Budget which he presented at this time last year, and certainly not an abridged edition. It did not involve any striking principle or revolutionary change in the scheme of finance, but it registered a further stage in our financial resources for the processes of total war. It brings us very much nearer to that point, and for that reason no great financial revolution can be expected. But it also raised the point—and the point was also made by the hon. and gallant Member for Preston—that any further extraction of goods and services for the purposes of the war can only be made at the expense of the people of this country or by the reduction of amenities. It will not have escaped the attention of hon. Members that last week or the week before there was a large reduction in the rations of a very considerable number of materials in Germany. Edible and other substances have been cut down. One thing that these changes show is that our staying power, if we behave with wisdom, is much more likely to stand the strain than that of the Germans. Germany is relying more upon borrowing all the time, and the percentage of the war paid for by taxation is reduced. It may well be that they are borrowing on the same lines upon which they borrowed in the last war, when they borrowed enormously and at an increasing rate and subsequently disposed of the lot by a process of inflation. These matters should not escape the attention of those who are responsible for directing the political warfare of this country. These further cuts and inroads upon the life of the people of Europe mean progressive misery for the people of Europe, and a potentially revolutionary system will grow there all the time with increasing intensity.
I associate myself with the statement of the Chancellor of the Exchequer that the purpose of this Budget is in no sense a final act. It merely marks a stage. The fact that in the past we have been able to pay these taxes does not for a moment absolve any one of us from the responsibility of carrying on the work of converting our resources to the processes of total war. As we approach the total mobilisation of our resources, it is obvious to all who stop to think what is the additional increased production at which we must aim and all continue to work for. There are probably very few of us who could not do one or two per cent. more than we are doing, and others perhaps a little more than that, towards the increased production that is necessary for victory. It has become a question of marginal effort and we must be certain that all such recommendations as those of the Select Committee on National Expenditure must be adopted, and, if possible, with greater assiduity. We must be certain that we are doing everything possible, individually and collectively, to put an end to waste. Individually and collectively we should not use one pound of material or one extra hour of man-power on anything which could be directed towards the main prosecution of the war. We must make sure that our methods are the most up-to-date. If we have a sound idea which is productive of economy or better processes, we should immediately pass it on to our neighbours. We should be a clearinghouse for all information which could in any way improve the war effort. We have reached a stage—it is only a stage—where we must make now every effort we possibly can so that our finances are such as to withstand the strain.
I generally find myself in a considerable measure of agreement with my hon. Friend the Member for East Birkenhead (Mr. Graham White), and to-day is no exception to the rule. I would like to say that I agree particularly with him in his own agreement with the speech made by the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence). I thought as my hon. Friend the Member for East Birkenhead was speaking that I would disagree with him on one point because he appeared to indicate that the only way in which we could intensify our war effort was by making further sacrifices in ordinary consumption. I agree that we do need still to make further sacrifices in ordinary consumption, but I would like to emphasise, as he himself emphasised in the last passage of his speech, that there is still a coniderable margin for improvement in our organisation from the Government downwards, in our own methods and in what we all do in our daily lives.
To return to the Budget, I have no complaints to make about my right hon. Friend's proposals. I believe his Budget is, generally, on very sound lines, and anything I have to say to-day is concerned with the methods adopted by my right hon. Friend and his Department in handling our finances in so far as they react on the war effort. We are faced, we all know, with a desperate task, and I think we must judge financial policy as an instrument towards the fulfilment of that task and not as an end in itself. It is much more important—as I am sure my right hon. Friend will agree—to win the war than to avoid inflation, and there is no conceivable economy that we can achieve in ordinary expenditure which will balance the economy achieved by shortening the war by anything like six months.
I would like to say, as many others have said before me, that I am very grateful to my right hon. Friend for the way in which he has again presented the financial issues as part of the general economic policy of the country. I welcome his White Paper, but I would ask whether he could see his way to amplify it in one or two ways? Following the speech made by the hon. Gentleman the Member for Camlachie (Mr. Stephen), I would like to ask whether he could not produce to the public a statement showing exactly how the extra £6,000,000,000 of National Debt has been taken up. I think that would be a very valuable piece of information.
Beyond this, I want to ask him whether he could not do a considerable amount more than has been done in order to let the country know where the money we are spending has gone. I am concerned, above all, with the question: Are we getting good value for our money? We never see an informative analysis of our national expenditure. I may be asking for the impossible but, never mind, it is worth while saying what one would like to see. I would like to see a statement of our national expenditure, classified under certain important heads. I would like to see a distinction drawn between expenditure on valuable capital assets and on normal current outgoings. The Government are spending money on a very large scale on capital assets yet we never have any statement on that position. We are building factories that are owned and worked by the Government—Royal Ord-dance Factories and so on—and factories that are worked by others, agency factories of the Ministry of Supply, shadow factories of the Ministry of Aircraft Production, and a vast amount of plant is being put into premises owned by private undertakings, and is financed by the Government. We are also spending much on merchant shipping. It is important, for many reasons, that the public should know how much is going on that kind of expenditure. Borrowing money to meet that kind of expenditure is a very different thing from borrowing money to meet current outgoings. Not only that, but the public ought to know how these capital assets are handled. Is proper provision being made for maintenance and depreciation and how is the utilisation of these capital assets to be handled afterwards? The light of public knowledge should be shed on these matters.
To turn to current outgoings I would like to see a statement putting together Department by Department, what is spent on administrative overheads and comparing that year by year. I would like to see a statement showing in greater detail what we are spending on things like subsidies—to which I will refer again in a few minutes—and on social services too. I think we ought to see a statement put together both for central Government expenditure and for local government authorities. It is impossible to get such a statement except by very careful and elaborate work and I do not see why the Government should not put that before the country. Then as regards current war expenditure I would like to see a statement separating pay of personnel from what goes on munitions and instruments of war. And the latter expenditure ought to be shown under separate headings. There are munitions and instruments of war which we make in this country and use ourselves; there are munitions and instruments of war which we use ourselves and which are supplied by others, and as to that I would like to follow the hon. Member for East Birkenhead in saying that all of us ought to take the occasion to express our gratitude and appreciation for the Lend-Lease policy of the United States and also of the policy of the Canadian Government. I particularly mention the latter, for I do not believe that the generosity of the Canadian Government has ever been sufficiently recognised. Then there is expenditure on weapons of war, made from our own resources, which go for the benefit of others, chiefly, of course, Russia.
I suppose it is too much to ask that we should know the exact value of what we are doing in that respect but still it is an important part of our effort and if we are thankful for the efforts of Lend-Lease. help on the one side, I think we are entitled to take a considerable amount of credit for what we are doing for Russia on the other. And there is a particular item in that connection to which I wish to refer and to which reference has not anywhere been made. We are not only supplying very important war munitions to Russia but we are, in fact, bearing a very substantial part of the war expenditure which is being incurred by, and which is passing through the books of, the Government of India. We have never been told about this, although I obtained a vague statement once in a Debate on Supply from somebody on the Government Front Bench. Recently, however, the Finance Member of the Government of India in his Budget speech this year gave some clear figures. He said that of the total expenditure in India for the financial year just concluded, passing through their books on war account, amounted to 300 crore of rupees or £225,000,000. Of that, about two-thirds, or £150,000,000, is actually refunded to them by the British Government. In addition, the British Government, at their own expense, are erecting something like 20 factories for munitions of war in India at, I believe, a capital cost of something under £10,000,000. All that expenditure represents no draft on our own resources in this country, except as a book transaction, and I wonder where in that elaborate statement of the White Paper that very substantial sum is included? I hope my right hon. Friend will be able to give us that information. It does, of course, raise other questions of political significance but I do not propose to touch upon these now.
I want now to turn to the wider aspect. As the "Economist" put it last week: adequately consider the reactions of their deeds on the wider field—and I want to put some special questions with regard to that—and secondly, where does the responsibility for handling economic policy rest? Does it rest squarely on any Ministerial shoulders in a way which Parliament can understand? What say has the Chancellor in this matter which so vitally affects his own budgetary and financial problems?
I will deal with the second question first—where does the economic responsibility rest? I do not know if I am right, but I imagine that the locus classicus on that question is still the speech made in August, 1940, by the right hon. Gentleman who was then Minister without Portfolio. He gave us then a wonderful account of an amazing mass of committees which were carrying the weight of this economic responsibility, and at the top of all was a small Committee presided over by the Lord President of the Council. That speech, by the way, makes very interesting reading to-day. Some of the things in it, I suggest, might very well be selected by the "Times" for putting into its admirable series of quotations, "Old and True." I want to read one statement which the right hon. Gentleman made: These are failures which affect both the result of the war and the cost of the war. Who is responsible? When we debate the coal situation, we have the unfortunate Secretary for Mines in the dock, but he is not really responsible for the general direction of this policy. I want again to refer to that speech by the late Minister without Portfolio. He referred to coal specifically—to show how valuable was the work they were doing—as one of the matters which, in August, 1940, was receiving the attention of the Economic Policy Committee over which he presided. He said that the Committee were studying:
As another illustration, let me turn to the question of wages policy. There, again, one must say that there has been no consistent policy. In some cases wages have gone up according to one factor, in some cases according to another. In talking about wages, I want particularly to dissociate myself from a good deal of the loose talk that goes on about women earning £6 a week for handing round tea at factories. That sort of thing ought not to be referred to by responsible people, as evidence of a general state of affairs because those cases are very exceptional. Certainly, if one studies the average figures published by the Ministry of Labour, I do not think it can be said that, whether one looks at wages rates or at average earnings, there has been an undue increase in rates as a whole. I am not criticising the negotiated wage increases, but rather the failure to control employers in particular cases where they have been bidding against each other and paying very high rates. There is, of course, no time fully to discuss this now, but I suggest that it is one of the things on which the light of truth should be shed. I am sure hon. Members opposite will agree that there are certain special cases where there are unduly high rates being paid.
That depends upon what the hon. Member calls high wages.
Just to give illustrations of points which I consider raise questions for inquiry, I would say that rates for general labourers in public works contracting, the building of aerodromes, ordnance factories, and so on, have been too high, and particularly the rates for juveniles in that form of employment; and the Ministry of Labour's figures bear this out. To give another case, I would say that the sheet-metal workers in Coventry, say, are, on the whole, making unduly high rates of earnings.
Will the hon. Gentleman tell us what those high earnings are?
According to the latest Ministry of Labour returns, the average earnings for juveniles in public works contracting are 63s. 6d. a week, against a general average for juveniles of about 40s. a week.
How much of that amount is represented by overtime? What is the measure per hour and what is the actual working week in the cases the hon. Members has quoted?
I cannot answer those questions. I want to make it clear that I am doing no more than trying to make a prima facie case. I only say that this is a thing which ought to be gone into. The Ministry of Labour has published a list of average earnings, made up only to July of last year, and it is an interesting thing that juvenile workers in public works contracting are making an average of well over 20s. a week higher than the general average.
Is it not true that the employers are exploiting brawn, bone, and muscle, rather than recognising that these lads do not want to work these hours? The employers force them to do so.
I daresay that my hon. Friend is right. I want to make it clear that I am not making any charge against wage-earners. I made it clear that I think the general rate of earnings is not too high. What I have been trying to emphasise is that, somehow or other, conditions have grown up under which, in certain cases, high rates of earnings are being shown, and that if we regard ourselves as holding a general line against inflation, that is the type of thing which represents an attack on that line by a method of infiltration which may become extremely dangerous. I may be wrong, but I am bringing it up for one reason and one reason alone—because I want to know where rests the responsibility in the Government for surveying and raising questions of economic policy of this kind. The House appears to regard the Minister of Labour as responsible for these matters generally, but I do not think he is responsible as Minister of Labour for this kind of thing.
I wish to turn to another illustration from this field of general economic policy, and that is the question of subsidies. In this case I imagine that the Chancellor of the Exchequer regards himself as more directly responsible. At any rate, he took a certain amount of credit to himself for this policy. But many other Members of the Government are concerned as well. I do not want to criticise the general policy of holding a line against inflation, but I do think the House should examine carefully what is being done. It seems to me that we are getting into a great mix-up over this, with our right hand doing certain things which very often our left hand counteracts. For instance, taking farming. We want to make farming profitable, and the Chancellor of the Exchequer tells us that, owing to the measures we have taken to make farming profitable, we shall have to increase the amount we spend by subsidies so as to keep down the cost of living. But on the other hand, he also says in effect now that farming is so profitable that he must treble the rate of Income Tax on farms rated at £100 per annum or less.
Not necessarily. It is open to any farmer to ask to be assessed on his profits.
I agree, but none the less the right hon. Gentleman has in effect put up the basic rate of Income Tax three times.
I should like to say, as one who represents an agricultural constituency, that I regret my hon. Friend has made that statement, which is not in accordance with the facts.
I am not making any statements on the merits of the case, but merely stating the fact that on the one hand we say it is necessary to make farming more profitable and thereby increase our subsidy payments for consumers, and on the other, we say farming has become so profitable that we have to take measures to deal with it. However, let me turn from that to another and clearer point. We tax sugar which is a necessity of life and at the same time we subsidise bread, and in one case, in the case of tea, we actually tax and subsidise the same article. I doubt very much whether that fact is generally realised. There is no time to go into the details of all these matters, but I think the Committee should seriously consider this policy at some time. I believe in particular that the subsidy on bread which is an unrationed article, costing very nearly £50,000,000 a year, is definitely leading to a waste of bread. There was a case the other day where one local authority prosecuted a woman for putting 2 lbs. of bread into a dustbin. Also if one looks into the figures of bread consumption in various parts of the country one finds the variation in the rates of increases in different places strongly suggests that there must be a very substantial waste of bread in certain cases. I want to say one thing further on this question of the bread subsidy; I feel that we ought to examine its implications very carefully. Are we trying permanently to maintain the retail price of bread at a level which represents un-remunerative prices for the growers of wheat, whether they be in this country or in Canada? If we are doing that, there are some serious implications of considerable long range importance. Any question of subsidies deserves serious consideration, and again I ask who in the Government is really responsible for determining and laying down a policy of this kind.
Let me sum up my conclusion from these cases. The Government, as a result of pressure from this House, has recently told off one Member of the War Cabinet, as a Member of the War Cabinet, to be responsible for supervising production. I think that the Government, as a parallel to that measure, should also tell off one Member of the War Cabinet to be responsible for the general supervision of economic policy, so that we in this House may know when we want to criticise and raise questions upon whose shoulders the overriding responsibility rests.
I now turn to my question about the Treasury, as to whether they sufficiently consider at all times the economic reactions of their own deeds; whether they are interpreting widely and realistically enough the scope of financial policy and the methods of their own control and whether they are considering the effects on our war effort. Are there not some cases, at least, where they tend to take too narrow a view, either to kill the goose that lays the golden egg or spoil the ship for a ha'porth of tar, or mistake the shadow for the substance?
Which is the goose that lays the golden egg?
I am coming to that.
Remember, it is the workers.
Lastly, and most important, I want to ask whether at all times the Treasury recognise and take into account the human effects of what they do. I want to give the Committee some examples of possible charges under these heads. First let me take the method of Treasury control in relation to contract prices. This is a point which has been made many times but it deserves repeating. The Treasury are paying far too much attention to the margin of profits and far too little attention to actual costs. In most of these costing inquiries you only have to prove that you have spent the money; you do not have to prove that you were justified in spending it. All the Treasury look at is the margin of profits. We are told that these cost plus profits contracts are being reduced as far as possible, but there are a great number of contracts still being handled on that basis. There is in fact still a tremendous amount of business done on the basis of so-called fixed price contracts, which, however, contain a clause that these so-called fixed prices are subject to review after cost investigation, and the cost is then adjusted so as to show a profit of so much on the capital employed. There are many grounds for criticising this method, but I will do no more now than suggest that it is causing a great deal of unnecessary trouble and tending to destroy all incentive to efficiency.
I put it to my right hon. Friend that it is a point into which he should inquire. I believe that after 2½ years of war we should have developed a very good system of cost accounting methods and a very good knowledge of what each particular process should cost. Here is one of the cases in which we might, perhaps, take a lesson from Germany. There, according to reports, this question of cost accounting has been brought to a fine art and the Government has laid down a standardised form of accounting for every kind of manufacture so that it is possible to say at once what a particular process ought to cost, and not have these constant inquiries going on, wasting every one's time and extending retrospectively in many cases to the beginning of the war. There are many people who do not know yet where they stand about business done two years ago. I believe that in these methods of using the power of financial control the Treasury are mistaking the substance for the shadow and really damaging the efficiency of the war effort.
As regards killing the goose that lays the golden eggs, the Chancellor knows my views on the methods of Excess Profits Tax and assessing Income Tax. He knows that I do not object to the burden as a sacrifice to be borne by individuals. But what I have asked is that he should have an impartial inquiry into the effect of present methods of taxation on the financial structure of business in general. I believe it is doing great harm. I should be only too delighted if I were proved to be wrong. But I do want to know the truth, and I believe the House wants and ought to know it. My right hon. Friend has refused my request before but I suggest again that he should have the matter inquired into impartially.
Turning lastly to the question of human reactions, we have only to think of the Income Tax on weekly wages to see what trouble can be created by introducing a purely financial measure without thinking out in advance what its social and human effects are going to be. The Chancellor has gone a long way to meet complaints in that matter but I am afraid I am unconvinced. I believe it would have been possible to have had a simple weekly tax on wages. I do not agree that the wage-earner should be subjected to our very complicated system of Income Tax. I believe he could have got substantially the same amount of money by a moderate tax on wages, and you could off-set the effect of that in the case of the lower paid wage-earners, who deserve help, by giving a generous children's allowance. I believe that if instead of spending about £45,000,000 on a bread subsidy, 75 per cent. of which benefits people who do not need it, he used the money for giving children's allowances, he would be doing something really beneficial to the country.
In conclusion I would say this. We all realise now that money is not the most important matter. In olden days princes could not go to war unless they had collected a certain quantity of hard coin in their coffers to pay their troops. Now we realise that we can create money for ourselves. It is not the money that matters but men and material and machines. It is very important, of course, having recognised that we can create the money, that we should be very careful as to the way in which it is allowed to be created, but having also recognised that it is materials and machines which matter, do not let us mix the men up with these factors and treat them as of equal importance. Human efficiency and human spirit are the determining factors. If, by producing the right incentive, we can inspire the human effort needed for the maximum measure of our ability and energy there is no limit to what this country can do. But if we treat human beings as mechanical units without considering psychological reactions, we run the danger of grave mistakes.
If I do not follow the hon. Gentleman it is entirely for brevity's sake. He has raised matters of more than ordinary interest, and opportunities will come to us to go further into those most absorbing subjects. I think the Chancellor of the Exchequer has placed us in his debt by his method of exposition and the wealth of explanatory material that he provided. He has done a great deal to lift the discussion of national finance from the financial plane, as it were, to the plane of real things; I think it is of very great importance that people should think, not in terms of money, but in terms of things. I rather deplore the continual use of the phrase "equality of sacrifice." Properly looked at, the payment of taxes in present circumstances is not a sacrifice. It is a contribution of some unnecessary goods and services to the war effort, which we all wish to bring speedily to a victorious end. I think the Chancellor has done well in making his Budget Statement on that plane. I believe that the development of an understanding of the reality of financial problems may be one of the good things that come out of the war. It may save us from many disasters in days to come.
I share the regret that has been expressed on all sides that the Chancellor has given up his search for an equitable method of levying a tax on weekly wages at the time of their payment. I am not convinced that he should not reopen his inquiries, for I cannot believe that there is not a way. I quite agree that there is no way if you insist on keeping within the framework of our present Income Tax system, but that system has become so complicated and cumbersome. It was designed a very long time ago for a quite different state of affairs—a very limited amount from a very limited number of persons. This complicated system of returns, assessments and allowances, now involving the employment of accountants and lawyers and innumerable weighty books has got beyond its proper bounds. We might well start a reform of the whole conception of Income Tax collection by thinking out and applying in the first place a new method to the wage-earner. There is no reason that I can see, although I have not the Chancellor's information, why he should not, in the first place, treat weekly wages quite differently from other forms of income, and levy upon them a special wages tax not expressed in the terms of standard Income Tax but as a penny or more per shilling per week as earned, deducted at the time of payment.
The disadvantages which have been urged that the employer needs to be in possession of the most intimate family secrets and that he has to be both employer and tax-gatherer disappear if the system is thus simplified. I suggest that the Chancellor's exemptions of wages of no more than £2 for a single man and £3 for a married man, adding £1 per week for each child, might be continued up to five or six children, and that the exemption should be for the current week's wages and that the matter should then be closed. Any week's wages which fall below that limit should not be taxable then or later. Would it not be possible to tax wages over those limits by a penny in the shilling or more. The number of children, which is all the employer needs to know, should be provided for by way of family allowances paid through the Post Office. It would be an immense advantage if the Chancellor would look at this problem again, because it is having some very undesirable effects. One of the most far-reaching is that it is poisoning the minds of the workpeople against the principle of direct taxation, whereas it is to their advantage more than to that of anybody else that direct, equitable taxation should be substituted for inequitable forms of indirect taxation.
Having said these few words in criticism, may I welcome the decision to make more reasonable the allowances for married women in employment? I am glad that the Chancellor has seen the wisdom and justice of meeting that claim. Again, may I thank him for the provision to make an allowance for travelling expenses for workers, whether they have moved their place of work or otherwise? As representing a London division, I know what an expensive business travelling to work in this great wen can be, and the fact that the Chancellor has recognised it and provided this allowance goes a long way towards righting that wrong. I was glad also to hear his statement with regard to certificates for the post-war credits. I would like to ask him whether he cannot see his way to go a little further. It would be most welcome and convincing to the workman who is paying Income Tax to receive his post-war credit in the form of National Savings Certificates. If that could be done for weekly-wage earners a great deal of the hostility to the payment of weekly Income Tax would disappear. I do not think it would involve the Treasury in a great deal more work. It would certainly involve the payment of interest on the certificates, but the extra tax and the good will which would come with it would amply justify the change.
May I say a word about Excess Profits Tax? I am one of those who regard it as a bad tax. Its effects are bad, and the justification for it has largely disappeared in present circumstances. I am not suggesting that a tax on profits is a bad thing—far from it. What I am suggesting is that hardly anything is left of the moral justification for discriminating between so-called war profits and what are not regarded as war profits. If we think back, we will recall that the conception of Excess Profits Tax was that it was a tax upon a particularly odious form of profitmaking, the profit that came out of the manufacture of war materials. We thought about that in the days when to our eternal shame some manufacturers were making war material for export to those who are our enemies. It was the international traffic in arms which brought the proper passion of public indignation, and it was in that atmosphere of the international arms racket and the profits arising from it that the idea of a special tax on the profits of this odious business, the business in war material, gained a grip on the public conscience. Out of it grew a hatred of war profits.
To-day, however, in a nation fighting for its life, the most honourable service anyone can give, next to serving in the Fighting Forces, is to do his utmost to manufacture war material in the largest possible quantity. To levy a specially penal tax upon profits arising from that activity in a less degree than on profits arising, say, from the furnishing of cosmetics or the running of breweries, is without moral justification. It is profit and income of all forms which should equitably bear the tax without regard to arbitrary pre-war standard.
Will the hon. Gentleman explain how a manufacturer who wants to do his duty by his country is prevented from producing all the war weapons that are required by the fact that there is a tax on war profits?
I did not suggest that he is prevented from doing his duty; what I suggested was that the moral background and basis for a discriminatory tax on war profits no longer apply. This would be unimportant, perhaps, if it were not for the fact that the effects of the Excess Profit Tax are in many regards undesirable. Will any member of the Committee who has some experience of industry in war-time deny that there are many cases where the incidence of the Excess Profits Tax has led to wasteful expenditure? It is surely a common experience. One was mentioned in the Committee to-day. We see in our Sunday papers, in "The Times" and in other papers, an unjustified waste of paper, skill and printers' time in prestige advertising, all of which is a form of wasteful expenditure arising from the incidence of the Excess Profits Tax. There are many examples of that kind which must be familiar to hon. Members, arising from the fact that the cost is borne, not by the profits of the company, but by the tax which is payable to the Chancellor.
I would suggest that the Chancellor might immediately consider giving instructions that expenditure upon advertising in war-time should not be allowed as a trading expense for tax purposes. The harmful effects are not confined to the wastage of materials and labour; it undoubtedly produces a sense of public injustice. Many of the expensive luxury articles which are advertised are really not available for sale. You cannot buy a Rolls-Royce motor car, but they are advertised weekly. It is not a very reputable action on the part of these companies to waste labour and material and excite public envy by advertising things which they have not got for sale. The trouble in this matter, as in so many others in a competitive world, is that if one does it the others feel they must. The same is true of the somewhat lavish personal expenditure on the part of directors, travellers and officials of companies. We all know that a very large amount of the luxury expenditure in restaurants and places of amusement is coming out of company expenses and, ultimately, out of Excess Profits Tax.
One suggestion which I would make to the Chancellor in that regard is that he should require his inspectors to see that the expenses charged are properly vouched for. I believe that they rely upon auditors' certificates, but these, as they are now drawn, are rather useless. They say, in effect, "We have looked at the figures they have chosen to show us and so far as we can see they seem to be all right." I do hope the Chancellor will look further into the effects of Excess Profits Tax. He has done something in the right direction by giving statutory force to the 20 per cent. repayment. That will provide some inducement to curb unnecessary expenditure, and I think he might go through the catalogue of trading expenses which are properly allowed for tax purposes. I also strongly appreciate the exemption of utility clothing and footwear from the Purchase Tax. It is a move in the right direction, and I sincerely hope that it will be extended. If the Purchase Tax can be removed from necessary articles then the fundamental objection to it would largely disappear.
I agree with much of what the hon. Member has said, but will he suggest to the Chancellor that the furniture which is purchased by a newly-married couple should be exempt from Purchase Tax as a general encouragement towards marriage?
One thing which left a sense of very deep regret indeed was that when the Chancellor had finished his statement he had done nothing to remove two very great hardships. The first arises from the very inadequate allowances which are made for dependants other than wives. In the great magnitude of war expenditure it may seem a small thing, but in the many households that are affected it is very important indeed. The Committee will be well aware that a widow or a widower may claim an allowance of £50 for a housekeeper, but this is allowed only to single persons for female relatives who have to take care of young brothers or sisters. Is there any real necessity to continue that very narrow proviso? Except in those cases only £25 is allowed, and then only for a dependant relative whether living with the taxpayer or not.
There are elderly relatives, sometimes sick, and very often other persons, like old family retainers, who do not fall within the category of relatives but are nevertheless dependents in a very real sense of the term. Aged people in war-time often need especial care, and the fact that there is practically no provision for a tax allowance for the support of these aged mothers and aged fathers and others by single persons is a very real hardship. I will quote one case as an illustration. I have a constituent who showed me his weekly budget. He is a single man earning £3 8s. a week. He maintains his aged mother by an allowance of £1 a week. She is evacuated, as she should be, into the country. His board and lodging cost him another 25s., his fares and his meals in his works' canteen cost him 14s. a week. He has to pay 7s. a week in tax, and that means that he is left with 2S. a week to meet all his other expenditure, including clothes. That man is loyally paying £1 a week for the support of his mother and we should not wish to discourage him from doing that. I think we should recognise that the dependents of single men and single women—and women are just as hardly hit in this regard as single men and there are perhaps many more of them affected—should receive sympathetic attention in this matter of allowances for dependents.
Finally, there is the very hard case of the old age pensioners. The very proper taxes which the Chancellor has imposed upon all kinds of luxuries fall very heavily upon the old age pensioner in respect of tobacco and, in some cases perhaps, beer and other things. If we could find some easy way of exempting the old age pensioner from these new taxes, all of us, I feel, would do so, but there is no such way, I think, except by raising his pension, and I put it to the Chancellor that unless the life of the old age pensioner is to be quite unduly hard, he ought to consider very soon a raising of old age pensions. I would say in conclusion that I hope these minor criticisms which I have made will not be felt to detract in any way from the tribute which I sought to pay to the Chancellor when I opened my speech. I feel that he has done an immense service to the understanding of this great subject, and that we have now got rid of the nonsense of asking each other how, when the war is over, we shall ever pay for the war. We know, what perhaps we did not fully know before, that we are paying for the war as we go by transferring from civilian consumption goods and services to the service of the war. Real things are the things that matter, and I do not think we shall ever again flounder into those terrible mistakes which haunted us in the post-war years last time. I trust we shall realise that there is no limit to the satisfaction of human needs but human capacity, and that we shall learn, what Mr. Keynes laboured so long to teach us, that what we can do we can afford to do.
I should like to add my humble congratulations to those which have been offered to the Chancellor of the Exchequer, for producing a Budget which, so far, has had neither criticism nor complaint. I assure my right hon. Friend that he will have neither from me, in regard to any of the burdens which he has felt obliged to lay upon us. I want to follow the line taken by the hon. Member for Kennington (Mr. Wilmot) and to endorse with all the force I can the appeal which he made to the Chancellor in the early part of his speech not to dismiss as closed entirely the very difficult question of assessing and levying the Income Tax of weekly wage-earners. During the last 12 months or so, it has been my privilege, as a member of the Select Committee, to travel in various parts of the country and to visit a large number of factories and other industrial establishments. Without exception, the workers' representatives whom we have met in all those establishments have put first, and almost as most important of their complaints and troubles, this question of Income Tax.
Yesterday, my right hon. Friend seemed inclined to dismiss that trouble with the general statement, which is unfortunately true, that no one likes to pay taxes. I believe, with the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence), that to leave the matter there is to do less than justice to the working men and women of this country. I am convinced that those men and women are just as ready and willing as any other section of the community to bear their lull part in paying for the war. Their trouble is not a complaint against the tax, but against the method by which the tax is assessed and collected. To the more prudent minority, the whole principle of assessing tax on the basis of past earnings is wrong. They have a vision of a time after the war when their wages may be low, or indeed not existent at all, and when they may be faced with a heavy bill for Income Tax in respect of wages earned in the better days that will then be gone. This is a real source of anxiety added to people who are already borne down by many other troubles and tribulations. For the rest, the big majority are new Income Tax payers who do not understand what it is all about. They do not understand the operation of allowances and the difference between the full and the effective rates. They take their stand on the simple fact—and it is, indeed, a fact—that once they are paying the tax, if they do £2 worth of overtime one of those pounds, roughly, goes into their pockets and the other into the Treasury. We all know that that is a distorted view of the position, but what matters is that that is the view which the working people hold. It robs them of much of the incentive to make that further and extra effort which is vital if we are to get full war production. I know that there is no need to attempt to convince the Chancellor of the Exchequer—I am sure he is convinced already—of the great desirability of simplifying the whole process and of making the collection, perhaps, along the lines suggested by the hon. Gentleman who has just sat down, out of current earnings week by week.
I thank the Chancellor for the study which he has given to this subject. The fruits of it are embodied in the White Paper. I have studied that White Paper very carefully. It is an admirable document of its kind. It is written in commendably simple English—for a White Paper. It marshalls with convincing logic all the reasons why it is impossible to make any alterations in the present system of assessment and collection, that weird and wonderful structure, which, as the hon. Gentleman has just said, is encrusted with the growth of modifications over many years, of architects and—shall I say?—jerrybuilders. I am afraid that I remain unconvinced, partly because the whole document seems to lack real understanding of the point of view of the ordinary workman and partly because some of the arguments which are set out so clearly seem to point in a very different direction from that in which they are intended to point. Perhaps I might take the arguments which are advanced against the very system suggested by the hon. Member for Kennington. They are set out on pages 10 and of the document. The principal argument is: the tax liability of a fluctuating wage and of the steady wage. If we examine this case, it leads to a very interesting conclusion. First of the two cases quoted is that of a man, a taxpayer, with certain family conditions. He earns £208 in a year, at a steady rate of £4 per week, and he pays no tax at all. The second case is of another taxpayer with like family conditions who also earns £208 in a year, but according to a scale which is set out in some detail. The contemplation of that scale indicates the type of case the Chancellor has had in mind. This man starts the year with two months of unemployment. Two months follow at £2 10s. per week. It sounds to me very much like the case of the new entrant to industry coming from unemployment. It take two months to train him, and then he gets on to piece-work, which gives him a steadily rising rate of wages, until, in the last six months of the year, he is earning £8 a week. That is the case put in the White Paper.
That man's total earnings for the 12 months amount to £208, and he has a tax liability of just over £15. His net earnings are £192. We are asked to shed a tear of pity for this poor unfortunate man who gets only £192 net as against the £208 received by his fellow-worker, who earns £4 a week all the way through the year. Presumably, therefore, the latter is a man of a certain amount of skill and experience, probably working on a time rate and doing a semi-skilled job. What is the case for these tears of pity? The second man, the new entrant to business, in fact gets £192, not for a year's work, but for 10 months' work, because he was unemployed during the first two months. Part of that time is certainly not particularly productive, because it represents an initial period, but at the worst he is paid an average of over £19 a month for the work he does. The man who is set up as enviable by this person, the more skilled man, works for 12 months and gets an average of only £16 a month. Surely, if there are any tears to be shed, they should be for the semi-skilled steady worker, who gets a much less favourable deal than the new entrant. In other words, the lesson of this particular instance is the very opposite of the lesson which is drawn in the White Paper, and to follow that example by saying that such a grave disparity between the tax bill of wage-earners with the same total income and same family circumstances could not be justified on the ground that it was a necessary ingredient for a simple system, seems to me to be a very serious misrepresentation of the lesson to be learned from the example which the Chancellor himself has set before us. Therefore, I suggest that this matter does require further consideration. The Chancellor's own example disproves his case as conclusively as it can be disproved.
One other objection is raised. It is that the abolition of the allowances for tools, travelling expenses, subsistence, etc., would be unwelcome to those wage-earners at present entitled to them. Of course it would, quite obviously. It goes on to say that the granting of flat overall allowances to everybody, whether the expenditure was incurred or not, would not be regarded as an adequate substitute. Of course it would not, but as far as I am aware neither my hon. Friend the Member for Kennington nor I would have thought of suggesting either that the man who normally receives an allowance for his tools should lose it or that there should be a flat-rate allowance for tools whether the man has tools or not. I think the simple suggestion would be merely that in such circumstances the individual taxpayer would have a right of claim for a rebate in respect of his tools, again at a fixed, pre-determined rate.
There are, I realise, other objections to a suggestion such as my hon. Friend made. In some cases this method might operate against the interests of an individual. To a small extent, it might, but that extent would depend entirely on whether my right hon. Friend, in the interest of obtaining a workable scheme which would be understood by the workers, was prepared perhaps to abate a little of the strict demand of the present Income Tax law, to adjust the fixed rates of taxation in such a way as to produce, perhaps, a little less income than he will otherwise get. My right hon. Friend is shaking his head, perhaps not consciously, at the bare thought of losing revenue.
Not at all, but I beg my hon. Friend to understand that I have been advised both by the representatives of the employers and of the men that this scheme would not be acceptable to or regarded as fair by them. I would ask him what he would consider that I should do in circumstances like that.
It would be presumptuous for me to advise the Chancellor, but as he has invited me, I would certainly try again.
I am quite willing to.
I am convinced that this particular problem is one of the most serious handicaps to a full war effort in the factories and workshops. It is not that there is any objection to paying a full share of the war burden. It is simply an objection to the complication of machinery which these people do not understand—indeed, they are not alone in that—which strikes them as inequitable, and which emphasises for them the fact that the extra effort in the way of overtime which will earn them extra wages appears at any rate to be heavily penalised.
I would not have stressed this point so much had it not been for the experience which I know I can say that all Members of the Committee who have been visiting the factories have had. Attention has been drawn to it repeatedly in reports to this House. On every hand one hears the same complaint, and it seems to be worth almost any risk, even that of inflicting minor injustices or of losing a certain amount of revenue, if we can secure a system which will satisfy the ordinary working man as being common sense and understandable, which will remove his anxiety for the future, and will leave him free whole-heartedly to put his back into the maximum war effort of which he is capable.
Before the hon. Gentleman sits down, will he explain how a system of weekly assessment and collection would give the impression that overtime was less heavily taxed than appears to be the case under the present system? It is a point I am seriously worried about.
Under the system as I contemplated it, and as I think the hon. Member for Kennington contemplated it, there is no difficulty whatever. The tax would depend simply on the family circumstances of the man and his total weekly wage packets. It would be a deduction broadly equal to the effective rate, and instead of the worker thinking, as he does now, that if he has £2 overtime money £1 has gone to the Chancellor because he reads in the papers that Income Tax is at 10s. in the £, he might get an entirely different reaction in thinking that whereas the ordinary man paid 10s. in the £, he was getting out of it very well. How many people do we meet—every one of us—who groan under the burden, as they put it, of a 10s. in the £ Income Tax, who have never paid 10s. and who never will pay 10s.? But at the moment the worker thinks that he is paying 10s. of his overtime. Instead, he might think he was getting a very good bargain because his pay sheet would show that he had lost only 2s. 6d. or 2s. 9d. I hope I have given some answer, although I do not know if that will satisfy my hon. Friend.
In the course of his interesting and able speech yesterday, my right hon. Friend the Chancellor made one remark which I was very glad to hear. That was when, referring to the very heavy burdens of the present time, he said it behoved us more than usual to see that there were no injustices. I have one small injustice to which I would like to draw my right hon. Friend's attention. In connection with the Excess Profits Tax, as the Committee is well aware, not only have the results of the accounting period to be compared with the standard period on which the basis of Excess Profits is arrived at, but calculations have then to be made as to whether the amount of capital employed in the business has been greater or less in that accounting period than it was in the standard period. It is in that connection that the Inland Revenue Department's present attitude would, in my opinion, be very unjust. In the case of a business whose properties suffered during the enemy raids they have put forward the view that the amount of capital employed in that particular business must be reduced during the accounting period to the extent by which the property was damaged during the raids. If I might give the Committee and my right hon. Friend a simple example, in the case of a firm which has had £100,000 worth of its plant and buildings destroyed during raids but which has managed to rent other properties and has made a special effort to carry on, the Inland Revenue's present attitude is that £6,000 of the retainable profits must now be disallowed because £100,000 of their assets have been destroyed by the enemy and are therefore not employed in the trade or business. The proprietors' capital was sunk in the assets destroyed. They have not drawn out a penny of it, but because so much of their assets have been wholly or partly destroyed they have to suffer, not only that loss but also have their allowable profits reduced by 6 per cent. on £100,000, that being the amount of damage caused to the business assets by the raid. If the Chancellor will inquire into it I hope this manifest injustice will—I will not say be remedied—but will not be imposed on the taxpayer.
Certainly I will inquire into it.
It has been the custom that I should intervene somewhere in the middle of these Debates in order to take up a few of the points which have been made. Of course, my right hon. Friend will wind up, at the conclusion of the Debate, on some of the larger issues. I must say that if I were he, I should be very delighted at the reception which his proposals have received, because there have been no fundamental criticisms or objections to them. In fact, all the speeches have been congratulatory. If I may be allowed to do so I may perhaps add my own appreciation of the splendid speech he made yesterday.
It is always difficult to know whether one should take up the points which are made in the Debate by answering the Members in turn or by taking the subjects raised. I suppose the most important point which has been made, at any rate that made by more hon. Members than any other, has been on this question of the deduction of tax from wage-earners' weekly payments. We have just heard from the hon. Member for the Abbey Division (Sir H. Webbe), following the hon. Member for Kennington (Mr. Wilmot), a repudiation of the arguments which my right hon. Friend addressed to the Committee yesterday on this subject. This point began with the hon. and learned Member for Ashford (Mr. Spens), who said that he was still not satisfied and convinced that some better method could not be devised by which the tax could be more closely related to the week-by-week earnings. While it is a fact that a very large number of schemes have been produced and brought to the notice of my right hon. Friend and his advisers during the last year along a whole variety of permutations and combinations by which this could be done, not one of them has up to now provided a satisfactory method. I stress "up to now" because if anyone could devise a perfectly good scheme, my right hon. Friend would be the first to wish to look at it, but it has not turned up yet, and if the hon. Members for the Abbey, Ashford and Kennington Divisions can provide us with something new, we shall be most grateful.
It was in order to show hon. Members the inherent difficulties of any kind of scheme of that nature that we have this year published a White Paper dealing with it. I am sure that not all Members will have had time yet to study the arguments contained in that White Paper, as it was only published at 5 p.m. yesterday. Speaking for myself, I think that at this stage these arguments are quite convincing. As my right hon. Friend has said, he has discussed this matter with the organised representatives of the workers and employers, who, no doubt, like everyone else, want to try and evolve the most simple arrangement, yet they have both accepted the position that it is along the lines of the existing arrangements that the matter can best be handled. We must not overlook the point—I do not know whether it has been specifically made yet—that there are great numbers—not all; I cannot say that, but great numbers to my knowledge—of workpeople who wish that, if they are to be taxed at all, they should be taxed on the same basis as other people, that there should not be, so to speak, class distinctions. We have received resolutions on that point. If that is a widespread feeling it is one to which my right hon. Friend obviously has to have regard.
A particular instance, that on page 11 of this White Paper, has been referred to by one hon. Gentleman. He very ingeniously deduced that it was a case of someone just starting on a job. He was too ingenious. It was printed like that for simplicity's sake. It was only to make it look tidy in the White Paper. He must not overlook that there would be great administrative complexities if we were to have a system in which, so to speak, a shot is to be made at the beginning of the period as to what has to be paid, and at the end of the period the whole thing is to be regularised. That would mean that the tax authorities would have to go through innumerable cases twice. Quite apart from the fact that there might be over-payments, the fact of having to look through these payments at the end of the period to see that they are rightly deducted would, with the present shortage of clerical staff both in the factories and in the Inland Revenue offices, make a very appreciable burden. It would mean a demand on man and woman-power for clerical work which, if it can be avoided, should be avoided. That is one of the most important considerations in this affair.
Before my right hon. and gallant Friend passes from that, would he explain what happens when a man has two months' unemployment? Is he not drawing public assistance?
I cannot go into that. I am talking about money liable for taxation and which at present is evened out for the whole period. There are two theories, one that tax should be paid in two six-monthly periods, and the other that it should be on a week-to-week basis. If hon. Members will study that White Paper they will find that at present the full weight of argument is in support of the general proposals of my right hon. Friend and the administrative action which follows there from. Consideration will certainly be given if better schemes can be produced which will withstand the test of specific criticisms set out in this White Paper—not forgetting the very great importance, which, perhaps, some people who are not wage-earners overlook, that workpeople do not want their employers to know any more about their private affairs than they necessarily have to. That is reduced to an absolute minimum under the present system. That is something we have to watch.
If better schemes can be produced, they will be looked at in order to relieve the position, if, indeed, there is any grievance. I would say to Members when they say that there has been a great deal of misunderstanding among wage-earners in the past year about the Income Tax system that it is true that Income Tax is a most complicated instrument, but hon. Members could help perhaps if they would do a bit of explaining themselves. I know how hard it is to find time to make public speeches up and down the country and in constituencies during the war, but there is a field of good public service to which a number of hon. Members might devote themselves. I think that, having accepted this system, and in view of the fact that, as my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) said, he and those for whom he speaks do not like indirect taxation but prefer direct taxation, representative persons in the labour world might also help. A number of trade union secretaries and others in the labour world have done good work in explaining to their colleagues what it is all about. If that could be done, in addition to the further propaganda to which my right hon. Friend referred yesterday, through publications such as a revised form of the Income Taxpayers' "Quiz," we may in the next few months dispel some of these difficulties which arise from ignorance and misunderstanding.
Another point arises from an interjection yesterday by the hon. Member for Hems-worth (Mr. G. Griffiths), who asked what happened about post-war credit if the person to whom it was due died. Of course, it goes to whoever is his heir, his widow, in the case of a married man. It is property which passes at death; it does not disappear. So far as this House is concerned, we have made that as clear as may be, because that particular form of property was exempted from any kind of Death Duties. We have recognised that it is something which can, and will, pass at death. I think I have said all I need to say upon that point. The right hon. Gentleman asked what the effect on postwar credit might be of increasing the wife's earned income allowance. It is rather a technical little point, which I will not explain in detail at this stage, but if I say something about it it will give a pointer to anyone who reads what I say, so that he can look in the appropriate place for the full answer. The credit is measured by reference to the Income Tax ultimately borne by the taxpayer which is attributable to the reduction in the allowances referred to in Section 6 of last year's Finance Act. The post-war credit is in direct relation to what the reduction in the allowance is worth. The right hon. Gentleman asked, What is the difference between the post-war credits of two single persons and that of a married couple with the same earnings? In most cases the post-war credit for the two single persons would be larger than that for a married couple; because the reduction of the single personal allowance last year was from £100 to £80, whereas the reduction in the personal allowance for a married couple was from £170 to £140. If they have the same earnings, the reduction for the married couple is £30; and for the two single persons it is £20 each, a total of £40. The working out of the post-war credit obviously depends on the circumstances of each particular case; and, as my right hon. Friend said, a certificate is going to be given, so that the taxpayer may know, quite clearly, what his postwar credit is. If there is any query, the ordinary means of dealing with such queries will be available to him.
Will the Financial Secretary explain—
No, Sir.
Is the right hon. and gallant Gentleman in a hurry?
Yes.
How long is he going to speak?
I said that it was a very technical point, and that I did not want to weary the Committee with any detailed explanation. If the hon. Gentleman wants further explanation, I will give to him; but I have learned from experience how difficult it is to keep straight if one is drawn off on a subject like post-war credits. My hon. and learned friend the Member for Ashford thought that it was possible for rich and reckless spenders to snap up a lot of non-rationed articles, or articles in short supply, which were not available to the general mass of the citizens. He asked whether it was the intention to extend rationing further. If he and other hon. Members will look at column 131 in yesterday's OFFICIAL REPORT, they will see the definite statement on behalf of His Majesty's Government: Therefore, the assurance for which my hon. and learned Friend asked was, in fact, given yesterday. We had from the hon. Member for East Stirling (Mr. Woodburn) a very considerable disquisition on the subject of banking, on the theory of banking and bank credit. I should like to study very carefully what he said before embarking on a reply, whether controversial or otherwise. But I could make one or two comments on what he said which may be worth putting on record, even at this early and comparatively uninstructed stage. First of all, whatever may have been the case in the last war, the banks to-day are not lending money to customers to enable them to take up loans. Ever since the Savings Campaign began in this country it has always been made quite clear that anything of that kind would be contrary to Government policy, and most distasteful to my right hon. Friend. I have no reason to think that the advice and recommendations given on behalf of the Government on that point have not been carried out.
The hon. Member went once more into that little field, which we have often traversed in this House, about "What is the advantage to the State of borrowing at longer term than the six monthly Treasury Deposit Receipts?" My right hon. Friend has answered that question very frequently; but, of course, the short reply is that there is an advantage to the State in tying up moneys in different periods, some short, some middle, and some long. I do not think anyone has really any fundamental objection to that, taking the long view. Then he made some suggestions about post-war affairs, which were not at all clear to me, but which sounded in some parts as if he were envisaging some sort of way in which a repudiation should take place. I should like to make it quite clear that what the Government have done in connection with these loans during the war has been to borrow for X years—shall we say?—and that the Government will go on paying interest at 2½ per cent., or 3 per cent., or whatever the rate is, according to the contract entered into. There is no suggestion of any other course. So much for the banking speech.
Then we had the speech of my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite), to which I listened with very great interest, but part of which I was a little sorry to hear. He started by saying that he thought we ought to be able to save by some forms of economy to the tune of £2,000,000 a day, or £700,000,000 a year. He had a great number of people who came to see him, telling him how money was being wasted here, there and everywhere. My hon. and gallant Friend, who is fortunate enough to be of an age to be in uniform and serving the country elsewhere than in this House, will not, therefore, have followed perhaps so closely as the rest of us have to do some of the speeches and Debates which have taken place. We have had a good many occasions upon which hon. Members have made just that type of general submission, and on each occasion it has been either the Chancellor of the Exchequer's duty or mine to say that, if only we were given specific examples of these allegations of waste to the tune of £2,000,000 a day, we would be very glad to investigate them. Moreover, there is the Select Committee on National Expenditure, colleagues of ours, who spend all their time investigating just that kind of problem.
If my right hon. and gallant Friend will read in the morning what I said, he will find that my criticism was that the multiplicity of officials made it difficult for business men to get results. These examples have been sent to the Departments concerned and not to the Treasury. I have sent many of them.
So much the better. I am glad to hear it, because I am always asking people to give specific instances which can be investigated. The multiplicity of officials is one of the complaints that I get; that there are too many of them. We have gone into that time and time again, because, owing to the increasing demands upon man-power and the drag which is inevitably being passed right through the Services to take hold of everybody who might help the war effort more directly, the reductions in our clerical staffs make it all the more important that they should be fully investigated. I had a whole lot of questions only this week on that problem, but when hon. and gallant Gentlemen speak of possible economies in the region of £2,000,000 a day, it makes one wonder whether their informants have really sufficient details for them to make such claims as that. That is a very large sum and a very considerable proportion of our daily expenditure.
There is one other point. The hon. Member for Rusholme (Mr. Radford) was speaking about E.P.T.; and the question of damaged houses is not one that I can answer offhand, but, of course, I will look into it. But I would like to take up one point made by the hon. Member for Wal-sall (Sir G. Schuster) which I very much regret. He made some statement about the farmers' Income Tax under the new proposals, and, as far as I heard him, he got the whole thing quite wrong, which is very strange in one who always speaks so correctly and accurately. It is not that farmers or any farmers are going to pay three times more than anybody else, but in fact a certain number of them will be left under existing arrangements in Schedule B. They are those the annual value of whose land is under £100, and those who still remain in Schedule B will have the option, as now, of claiming relief on the basis of actual profits. That therefore means that such a farmer cannot pay Income Tax except on actual profit. As far as I know, that is likely to be welcomed by farmers because they would not wish in these grievous times to be in any more favourable a tax position than any other citizens of the country. That is the position into which they are to be put; they will not pay on more than their actual profits. That is quite a different interpretation. That is how I understood the hon. Member, and I am sorry that he is not here in case I am interpreting him wrongly. Anyhow, that is the position and the result of the change which my right hon. Friend has made.
The Debate has shown that we are in a region of very vast expenditure. Though the burdens are going to be heavier, because this year hon. Members must not forget that this is an aspect which we sometimes overlook, we get the full burden for the whole year of the taxes that were imposed last year. On the other hand, the fresh taxes foreshadowed in this Budget in the doubling of the rate of the Purchase Tax on many luxury articles, things which cannot by any stretch of the imagination be called necessities, and upon the other indirect taxes on beer, tobacco, spirits and entertainment, are certainly semi-luxury taxes, but they are taxes which, by and large, people do not have to pay. They can refrain—I do not like to use the word "abstain," because that has a technical meaning with reference to drink—from drinking, smoking and going to cinemas. To that extent they are not paying so much tax and they can put the resultant money into War Savings. My right hon. Friend pointed out in his speech that an analysis of the White Paper indicates that genuine personal savings last year were in the nature of £200,000,000 more than the previous year. Well, that is a very large figure, but, on the other hand, earnings have gone up among great sections of the community, and an increase of £200,000,000 in genuine personal savings represents about £4,000,000 a week or, if you work it out per head of the population, only six more certificates each. If it is put in that way, I think one can see that there is still more scope for further savings.
The Budget which we have just closed showed a very large increase in income from taxation on what was estimated 12 months ago. It may be that after this Budget the picture will be different. One cannot tell, when these enormous taxes are put on; ordinary sources of estimating may not be so good. But supposing for the sake of argument that my right hon. Friend did not get all the money he anticipates from beer, tobacco and the rest of it, I do not think he would be very grieved, because it would merely mean that this Budget, which, to a large extent, is not so much a mirror of finance to-day as an economic weapon, has worked better as an economic weapon than as a financial weapon. It would mean that there would be restricted consumption, thus saving transport, labour and material and all the rest of it to the advantage of the war effort. So it would not be a great calamity if my right hon. Friend did not get the full amount he expected, because there would be a saving on the other side of the account.
Having turned a page, I see something which I meant to re-emphasise about Income Tax and which was mentioned by the right hon. Gentleman the Member for East Edinburgh, who asked that it should be made quite clear. The proposals made by my right hon. Friend about the amounts to be paid weekly by wage-earners—that is to say, the concession that Income Tax should not reduce weekly incomes below £2 in the case of a single man and £3, £4, and £5 in the case of married men—merely mean that that is the received amount of wages and no less. It has nothing to do with the incidence of the tax. It is not a tax concession; it is merely a concession as to how the tax is paid. I think it is very important that there should be no misapprehension about that.
I think I have covered all I wanted to say, and I would like now to give Members a rather delightful quotation which is apposite to what we are doing to-day. If they read "The Times" and look at the feature "One Hundred Years Ago," they may have seen it. It is not uninteresting and is from the issue of 15th March, 1842. Incidentally, "The Times" cost 5d. then, and I hope it will not get to that in the future. The quotation is: of to-day. We are going hard to the top. It may be that at the moment we are still only in the undergrowth and jungle of the foothills, but we are on the way, and I am certain that the proposals of my right hon. Friend will help us and the country along the road which we want to climb.
Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[ Major Sir James Edmondson .]
Committee report Progress; to sit again upon the next Sitting Day.
National Expenditure
Ordered,
"That Mr. Erskine-Hill be discharged from the Select Committee on National Expenditure, and that Mr. Storey be added to the Committee."—[ Sir J. Edmondson .]
Church of England Assembly (Powers) Act, 1919
Resolved,
"That in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Ecclesiastical Commissioners (Powers) Measure, 1942, be presented to His Majesty for Royal Assent."—[ Mr. Denman .]
The remaining Orders were read, and postponed .
Adjournment
Resolved, "That this House do now adjourn."—[ Sir J. Edmondson .]