House of Commons
Thursday, April 16, 1942
[Mr. SPEAKER in the Chair.]
Women Civilians (Compensation for War Injury)
I beg to present a Petition from inhabitants of Lancashire and Cheshire. The Petition
"showeth that the civilian women of this country who face the same dangers and are liable to the same injuries from enemy action as civilian men suffer great hardship by reason of the unequal rates of compensation for war injury payable to injured women civilians. Wherefore your petitioners humbly pray that your honourable House will be pleased to grant them such relief as to your honourable House may seem fit."
This Petition has been signed by 10,155 petitioners.
Oral Answers to Questions
National War Effort
Man-Power
asked the Minister of Labour, whether, with a view to releasing for other war purposes any redundant labour, he will cause regional surveys to be made on the employment of manpower throughout the country?
The labour position is continually under review nationally, regionally, and locally.
Works Dispute, Birmingham Area
asked the Minister of Labour, whether he has made himself fully acquainted with the proceedings and decisions arrived at as a result of the dispute at certain works in the Birmingham area, on and about 25th October, 1941; whether he can say that the decision of the National Service officer was not to recommend the shop steward's return to No. 2 factory, or whether it was decided by the tribunal that the appeal of one of the shop stewards concerned be upheld, but that his return to the works be not recommended; and, if so, why, when an appellant's appeal has been upheld, he is still penalised by the loss of his job in this particular factory?
Yes, Sir. I am fully aware of the circumstances. There were two cases of appeal against dismissal on the ground of serious misconduct. In one case the Appeal Board dismissed the appeal, in the other they stated that they gave the appellant the benefit of the doubt and allowed the appeal but recommended that the worker concerned should be employed elsewhere. The power to order re-instatement is discretionary, and to have employed it in the second of the two cases would have been contrary to the recommendation of the Board.
Is my right hon. Friend satisfied that the proceedings were plain and fair in each case?
Yes, Sir. I think they were quite all right.
Then will my right hon. Friend tell me why the appellants themselves did not know exactly where they stood after the proceedings?
I think they knew perfectly well where they stood, but I do not think they were quite satisfied with the decision.
Service Men's Wives (Work Direction)
asked the Minister of Labour whether he will refrain from directing the wives of Service men into factories when it would necessitate the closing down of a small shop or family business which she is maintaining for her husband whilst he is on active service?
I should be very reluctant to direct a woman in the circumstances described. If in an exceptional case I felt bound to do so, the woman would be able to appeal against the direction to a local Appeal Board.
Shops (Good Friday Closing)
asked the Minister of Labour whether he is aware that many shops closed on Good Friday contrary to the Government's injunction that they should remain open, thus causing serious inconvenience to many war workers in important factories; and whether he will take steps to prevent a recurrence of similar behaviour on future occasions?
The Government did not issue any general injunction on the subject to shopkeepers this year. It is rather n matter for consideration by particular shopkeepers or groups of shopkeepers, having regard among other things to the probable number of customers needing to buy their goods on the day in question.
Would the right hon. Gentleman bear in mind that these days which turn out to be half working days and half holidays are thoroughly unsatisfactory and inconvenient to everybody, and will he press that point of view upon all the people concerned?
It is only possible on two days in the year—Good Friday and Christmas Day. On ordinary Bank holidays the direction applies all round.
Does not the right hon. Gentleman think there would be far more production if people had normal holidays instead of being driven?
Joint Production Committees
asked the Minister of Labour, whether production committees are in existence in all factories controlled by the Government and working on war production work and, if not, what has prevented this; whether the necessary steps have been taken to see that opportunity for the election of these committees has been provided at factories where Government orders for war work have been placed, and which are run under private control; and will he state the composition of these committees in regard to the proportion of workmen and management and the function and powers of such committees?
So far as Royal Ordnance factories are concerned, my hon. Friend will recall that an agreement was recently concluded with the trade unions concerned for the establishment of joint production committees. As regards private industry, a similar agreement has been reached between the Engineering Employers' Federation and the trade unions concerned in the engineering industry.
The contracting Departments are communicating to their contractors their desire that immediate action shall be taken to set up such committees. It will be appreciated that the setting up of these committees is a matter for joint voluntary arrangement between management and workers' representatives. The constitution, functions and method of election of the committees is laid down in the agreements but the composition will necessarily be determined by mutual agreement in the light of the circumstances of each estalishment.
Will my right hon. Friend impress upon both parties to this agreement that the committees should be practical working organisations and not board-room committees?
I think that is laid down in the agreement, and as my hon. Friend is, I think, a member of his federation, he will probably assist me in carrying on the educational work.
Can my right hon. Friend inform us whether these committees have power to go outside the management of their own particular works to, say, the Minister of Labour?
No. Sir, These production committees are for the purpose of dealing with matters in their works. If matters arise which affect other works or groups of works, they must be dealt with through the proper machinery which exists between the two sides.
Absenteeism
asked the Minister of Labour, what procedure has been arranged in connection with the Essential Work (General Provisions) Order, No. 583, concerning absenteeism, so that when the National Service officer receives the report of the works committee prompt action will be taken?
There will be no avoidable delay on the part of the National Service officer in carrying out any action required from him after the works committee has made its report. I should point out, however, that one of the reasons for the reference to the works committee is to make it unnecessary in most cases for further official action to be taken.
asked the Minister of Labour whether a works committee can, in order to reduce the number of hours its members would otherwise lose from productive work, appoint a subcommittee of an approved minimum number of persons to deal with absenteeism and persistent lateness under the Essential Work (General Provisions) Order, No. 583?
The precise arrangement of the work of a works committee must be the responsibility of the committee itself, but I have no doubt that those who set up such committees will make full use of the sub-committee method wherever that is considered appropriate. So far as the requirements of the Essential Work Order are concerned, there is no objection to this course.
Coal Miners (Disciplinary Action)
asked the Minister of Labour the number of occasions, since 15th May, 1941, on which the Essential Work (Coalmining Industry) Order, 1941, has been infringed by men taking part in illegal strikes; and on how many occasions the disciplinary provisions regarding attendance at works have been applied,
I do not understand the first part of the Question, since an illegal strike is not an infringement of the Order referred to. As regards the second part, from 15th May, 1941, until 28th February, 1942, 6,475 workers were reported to National Service officers under the disciplinary provisions of the various Essential Work (Coalmining Industry) Order, 1941. In 2,134 of these cases the issue of directions specifying when, where and how the men concerned should work was found to be necessary. In a number of cases prosecution has taken place for failure to comply with these directions. It is not possible without a good deal of inquiry to give the precise number but an appreciable proportion of the 287 prosecutions of this kind which have taken place in respect of the Essential Work Orders are known to relate to coalminers.
Is the right hon. Gentleman satisfied with the powers he possesses in regard to this matter, or is it that the National Service officers, in consultation with trade unions and employers, ought to show a little more initiative?
Is it not a fact that a lot of these miners have been sent to a temperance hotel during the last three months? They are not getting any coal while they are there.
Could my right hon. Friend say how many mines are losing output through the action of their managements? What action does my right hon. Friend take in these cases?
I am quite satisfied that I have all the powers necessary to deal with this problem. Actually the mining industry was the first to adapt itself so as to give greater powers to the pit production committees, and experience has shown that the method we are adopting of dealing with the men personally in the first instance is producing far greater results than rushing into prosecution. I have no figures to answer the point made by my hon. Friend the Member for Morpeth (Mr. R. J. Taylor).
Is it not a fact that the pit production committees have made strong representations that National Service officers were not backing up these committees?
That is not correct.
As an old trade union man, I take it that my right hon. Friend knows that men do not come out on strike for the fun of the thing?
Scottish Women Mobile Workers
asked the Minister of Labour whether he is aware that girl labour is being recruited in Scotland and sent to Birmingham and other industrial centres in spite of the fact that there is a shortage of labour in Scotland; that, in many cases, promises of high wages do not materialise: that this particularly applies to girl turners and grinders; and whether steps can be taken to protect the interests of the workers concerned?
Under the general plan for meeting the most urgent labour demands, mobile women are first recruited for the most difficult labour supply areas in Scotland and then for the most urgent demands in the Midlands in England. I cannot agree that, taking Scotland as a whole, there is a shortage of female labour. Indeed, I am making every effort to secure for Scotland as much additional work and new capacity as possible with a view to utilising the reserve of woman-power in Scotland not at present employed in the war effort. I have no information confirming the suggestion in the second and third parts of his Question, but I should be glad to investigate any cases of which he would send me particulars.
Pottery and Cotton Industries (Hours of Work)
asked the Minister of Labour whether he can now announce his decision as to the continuance of his Order of 23rd December, 1941, as to working hours in the potteries?
This Order, as my hon. Friend is aware, was made in connection with my appeal at the end of last year for the release of further workers from the potteries for other urgent work, and I should like to take this opportunity of expressing my appreciation of the co-operation and help which I have received from the industry in meeting that appeal. The Order was made to enable men, women and young persons remaining in the industry to work longer hours than those normally permissible under the Factory Acts in order to maintain the necessary output with the reduced labour force; and as I naturally do not wish to authorise such relaxations of the ordinary law to a greater extent than necessary I have had the position under close review. It now appears that the industry has been able to adjust itself to the new situation without a general resort to overtime and, in view of altered conditions in the industry itself, I have come to the conclusion that a general Order of that kind is no longer necessary or appropriate. I am therefore revoking it as from 3rd May; but I should make it clear that some relaxations of the Factory Acts may still prove necessary in special cases, in order to secure the output required.
While I am very grateful to the right hon. Gentleman for having seen fit to do this, is there any chance of doing the same thing in the cotton industry?
Not until I have made the necessary adjustments.
Was the; purpose of this Order to obtain foreign exchange under pressure from the Treasury?
No, Sir; we did not go into that.
asked the Minister of Labour whether the views of the Industrial Health Research Board, on the extension of hours of employment of young persons, were ascertained before the Orders dealing with hours in the pottery and textile trades were made?
No, Sir. The function of the Board is to advise upon or carry out suggested schemes of scientific research on the basis of actual conditions and of a kind which may be expected to occupy a long period of time. In the cases referred to by my hon. Friend I had to decide quickly whether war requirements necessitated a temporary change of conditions. As stated in reply to another Question to-day, I am terminating the Order relating to the pottery industry. In the case of the cotton industry I am arranging for some inquiries in Lancashire, through the factory inspectors, as to whether any general signs of fatigue are manifesting themselves among the juveniles as a result of the longer hours in cotton spinning mills.
Through what agency is the right hon. Gentleman making those inquiries?
Through the factory inspectors.
Will this include expert medical advice?
We do not rely too much upon experts. We have to apply some common sense.
Disabled Ex-Service Men
asked the Minister of Labour whether the employment of limbless and other seriously disabled ex-Service men is to continue on a wholly voluntary basis, or whether it is the intention of his Department to reserve certain appropriate occupations for them and to extend the scheme of special workshops for the employment of those whose disabilities render them unfit for work under ordinary industrial conditions; and what specific steps are being taken to ensure that employment exchanges do not direct seriously disabled men to jobs for which they are unsuited?
In reply to the first part of the Question, this matter is under consideration. In reply to the last part of the Question, I can assure my hon. Friend that in cases where there is doubt as to the capability of a disabled person for a particular employment, he will be dealt with sympathetically and an opportunity will be provided for medical examination and advice, apart from his right of appeal against any compulsory directions.
Military Service
E.N.S.A. Artistes
asked the Minister of Labour whether the artistes employed by Entertainments National Service Association who have been granted deferment of calling-up for military service are full-time employees of that Association?
Deferment of calling-up of artistes employed by the Entertainments National Service Association has, with a very few exceptions, been granted only to whole-time employees. I would refer my hon. Friend to the Reply given on 17th March to the hon. and gallant Member for East Leicester (Major Lyons).
Can the Minister say when he expects to have the report of the inquiry, which he told me last time was being made into the whole matter?
I cannot give the date, but I will hurry it up.
Dispensers
asked the Minister of Labour whether he is satisfied that the claims of trained skilled men as dispensers in pharmacy and medicine are receiving full consideration in the making of Service appointments, and that this work is not now being done by unqualified dispensers?
Only suitably qualified men are posted to the Forces by my Department for service as dispensers, and the demands from the Services for such men have been substantially met. I am informed that it is not the practice of the Services to employ unqualified men in the Service trade of dispenser.
Is my right hon. Friend aware that in the Royal Air Force women are being trained to fill these positions?
I assume that if they are trained and pass a certain standard, they become qualified.
Questions
Unemployment Benefit and Assistance
18, 19 and 20.
asked the Minister of Labour (1) whether he will give the amount of money paid from the Unemployment Insurance Fund and by the Assistance Board to persons in Wales and Monmouthshire, for each year since the establishment of both funds; and will he give the figures for Glamorganshire and Monmouthshire separately;
(2) the cost of unemployment benefit, transitional benefit and unemployment allowance for each year since the inception of the Unemployment Insurance Fund;
(3) the number of days lost for each year due to unemployment since the inception of the Unemployment Insurance Fund; and the number of days lost for each year because of strikes and lock-outs during the same period?
I am obtaining the available information and will communicate with my hon. Friend.
Trench Accident, West Kensington
asked the Minister of Labour whether he can give any information in connection with the rescue squad of firemen and others who worked for five hours, on 10th April, to save the life of a man who was working in an 18 feet trench at Talgarth Road, West Kensington; and whether the trench was properly timbered to prevent the earth from failing upon the man?
I have obtained a report on this incident, from which it appears that owing to the unexpected thinness of a layer of clay the man in question, who was in charge of the timbering and who had long experience of such work, was trapped by a collapse of soil. His release, about which exaggerated accounts appeared in the Press, took about four hours, owing to the need for precautions against a further collapse of soil, but he was found to be uninjured, though detained in hospital for two days with a view to avoiding any ill-effects from shock. I am advised that the timbering was quite well done and that the man does not appear to have been to blame.
Education
Single-Type Schools
asked the President of the Board of Education whether as a preliminary to post-war educational reforms he will consider making a start now by taking the necessary steps to make it compulsory for all children up to the age of II years to attend the same schools?
No, Sir. My right hon. Friend is not prepared to initiate the legislation that would be needed for this purpose.
Does not my right hon. Friend think that the suggestion outlined in my Question would be a practical instalment of post-war educational reforms and would be welcomed by the whole country?
I fear that it might be a first instalment on the road to a Fascist State.
Secondary Schools (Maintenance Allowances)
asked the President of the Board of Education whether he is aware of complaints by parents of secondary school scholars that present maintenance grants are now inadequate owing to the rise in the cost of living; whether higher education committees are, or will be, empowered to increase maintenance grants proportionately; and whether recommendations to make this in crease in order to avoid hardship have been circulated to appropriate authorities?
Yes, Sir. I am aware that in many areas the scales of pre-war maintenance allowances have proved inadequate under present conditions, and in a large proportion of areas the Board have approved revisions in the income scale or in the value of the awards. No formal recommendations have been made by the Board, but local education authorities are fully aware that reasonable proposals will be favourably considered.
As some parents are still complaining of the inadequacy of the maintenance grants owing to the increase in the cost of living, and as in many cases they appear not to have had this information, will the Minister see that it is circulated among all the education committees?
I have no doubt that this Question and Answer will inform any people who do not know of the willingness of the Board to consider this matter.
Public Health
Pre-Packed Drugs (Sale)
asked the Minister of Health what representations he has received from the Pharmaceutical Society in respect of the dangerous practice of the sale of pre-packed drugs by persons without any knowledge of drugs?
I cannot trace the receipt of any such representations.
Is my right hon. Friend aware that Woolworth's and other chain stores have stacked counters of these pre-packed drugs, and that they are sold by assistants who have no knowledge of these things, thus defeating the purpose of the Act which was passed last summer?
If my hon. Friend wants ah answer to that Question, perhaps he will put it on the Order Paper.
Scabies
asked the Minister of Health what is the cause of the increase of scabies among the civil population; and what steps are being taken as preventive?
The causes of the increase in scabies are not fully understood. Special war-time conditions undoubtedly conduce to the spread of the disease, but a steady increase in incidence was noted for some years before 1939. Research for which I arranged over a year ago is now being continued by the Medical Research Council, and curative and preventive measures based on this research will, I hope, help to reduce the incidence. Local authorities, under an Order which I made in October last, received additional powers the object of which was to secure the early ascertainment and treatment of cases of scabies which would otherwise have gone undetected and would have acted as reservoirs for the parasite causing the disease.
Can the Minister give any indication as to the increased percentage of scabies among the population?
I should like to have notice of that question, but I would point out that there was a steady increase some years before 1939.
In view of the most serious possibilities which may follow from this, would it not be as well for my right hon. Friend to make an authoritative statement and publish a leaflet on the subject?
I have here a list of curative and preventive methods, and I should be glad to circulate it in the OFFICIAL REPORT for the information of the House, if there is a wish for it.
Is not the best curative and preventive method the exercise of cleanliness by the people themselves, who should not rely too much on people outside?
Mental Deficiency (Board of Control)
asked the Minister of Health why a principal assistant secretary to the Board of Control is being provided for at a time when the Board has ceased to carry out the obligations laid upon them by the Mental Deficiency Acts?
The appointment referred to does not involve any addition to the staff of the Board of Control. It is part of an arrangement under which a Principal Assistant Secretary of the Ministry of Health is seconded to the Board in exchange for the Secretary to the Board who is seconded to the Ministry. I cannot admit the implication contained in the last part of the Question.
As the visits have been cut down by several thousands throughout the country, is there not much less work for the Department?
My hon. Friend will remember that the table of figures referred to a date some time past.
Birth and Death Rates
asked the Minister of Health what were the crude birth and death rates for England and Wales for 1941; and what would the death rate be if the present expectation of life at birth and present health conditions were to continue?
The crude live-birth and death rates in question are 14.2 and 12.9 per 1,000 population respectively. The answer to the latter portion of the Question would require the special construction of a life table; and in view of the unsettled wartime conditions upon which it would need to be based, I do not think that its value would justify the labour involved.
Is not the present expectation of life perfectly well known, and cannot the Minister give the figures to the House?
They would not reveal the whole of the information required for full deductions to be made.
I do not ask for that. I am asking for the facts.
I have nothing to add to the answer I have given.
asked the Minister of Health what is the net reproduction rate of women, aged 15 to 50 years, in this and in some other chief countries, as compared with that required to maintain present numbers?
I am not at present in a position to supply the desired information, but I am having the point investigated by the Registrar-General's Department, and will communicate with my hon. Friend as soon as possible.
Are not the facts commonly known? Is not the rate of reproduction three-quarters of that required?
asked the Minister of Health what would be the estimated population of England and Wales in 40 years' and in 100 years' time if birth and death rates were to continue at present levels?
I am sending my hon. Friend a copy of a memorandum prepared by the Registrar-General's Department with respect to the estimation of the future population of this country. My hon. Friend will, I think, appreciate from its perusal that the subject is not one which could be adequately treated within the limits of a Parliamentary Answer or, indeed, by means of a simple computa- tion on the basis of the bare data specified in the Question.
Will the Minister do his utmost to get these facts known to the general public, as they are of most serious importance to the nation and Empire?
For those who wish to have the advantage of this memorandum, I will do my best to see which is the best way to circulate it.
Will my right hon. Friend see that the memorandum is made generally available?
As I have said, I will consider the best way to do it.
Can the Minister give an indication of the scope of the memorandum to be circulated, in view of the great importance of the subject?
When the report was printed some time ago the memorandum was not printed with it. I will consider the best way of making it generally available, as the subject is of very great importance.
Questions
Children's Camps
asked the Minister of Health what is the total accommodation provided in the 30 camps erected under the Camps Act, 1939; to what extent that accommodation is utilised; and by what classes are the camps occupied?
These camps contain accommodation for a maximum of 7,296 children and their teachers. At the latest date for which complete figures are available 5,569 children were in occupation. With the exception of one camp let to an orphanage the camps are occupied by senior and secondary schools, with the necessary teachers and staff, under the control of, or grant-aided by local education authorities.
Is the Minister satisfied with a position in which so large a proportion of the accommodation in these camps is not utilised at a time when there is a pressing demand for housing facilities in the immediate neighbourhood of many of them?
I should like to see the camps fully occupied.
Is it really true that we have 1,500 empty places in this greatest secondary education experiment which has taken place in this country for years? Let these schools be handed over to the Board of Education, and let the President answer for them in the future.
Local Authority Members (War-Time Posts)
asked the Minister of Health the position with regard to the acceptance by elected members of local authorities of war-time positions in their own areas; and to what extent this is permissible and has occurred?
The provision in the Local Government Act, 1933, which disqualifies for membership of a local authority a person holding a paid office under that authority, was modified by Section 10 of the Local Government Staffs (War Service) Act, 1939, so as to enable councillors to accept posts under the Civil Defence Acts, 1937–9. I have no information showing how far advantage of this has been taken. There is no statutory bar to a councillor's accepting a post at the disposal of an authority other than his own council.
Armed Forces (Pensions and Grants)
asked the Minister of Pensions under what circumstances the widow of a Service man can obtain a pension if the man dies while he is still in receipt of a disability pension; whether there is any appeal against the decision if a pension is refused; and, if so, what steps must be taken to get a hearing at the appeal board?
The conditions for the grant of a pension to the widow of a Service man of the present war are set out in Article 39 of the Royal Warrant of 29th June, 1940, which, on account of its length, I am circulating in the OFFICIAL REPORT. In any case in which pension is refused because it cannot be certified that death resulted from service as indicated in that Article, I am always prepared to consider carefully an appeal on the production of fresh evidence or a reasoned statement of the grounds of appeal, and in a case of serious doubt or difficulty I have the benefit of the advice of independent medical experts.
Will the Minister consider setting up some appeal tribunal for this limited type of case, even if he will not agree to it for all applications?
I announced the Government's policy in regard to tribunals on 19th March. In the meantime I am asking my war pension committees throughout the United Kingdom who hear any cases of complaint to investigate them and report them to me.
39. Pensions to widows .—Subject to Articles 2 (6) and 41, the widow of a soldier may be granted a pension at the appropriate rate laid down in Article 40 if it is certified that her husband's death:—
provided that death was not in any substantial measure due to or hastened by his own serious negligence or misconduct; and provided further that the soldier's death took place within seven' years of the receipt of the wound or injury, or of the first removal from duty on account of the disease which caused or hastened his death, or, if there was no such removal from duty, of the date of termination of his war service, except that this latter proviso shall not apply to any claim which fulfils the requirements of any regulations which may be made by the Minister with the approval of the Lords Commissioners of Our Treasury.
India (Political Prisoners)
asked the Secretary of State for India whether he will ascertain the number of prisoners in India charged with offences arising from political agitation and the number of these who are alleged to have committed acts of violence; and whether there has been any consideration of the desirability of an amnesty for certain types of the re- maining political prisoners who have not been guilty of premeditated violence?
I will communicate with the Government of India, but must warn the hon. Member that, as the information he desires would entail examination of each individual charge sheet in eleven different Provinces, an early reply is not to be expected.
In regard to those who have had no charge made against them of political violence, will the Secretary of State consider an amnesty for that type of prisoner?
I will communicate my hon. Friend's suggestion to the Viceroy.
Women Police
asked the Secretary of State for the Home Department whether women candidates for entry to the Metropolitan police force who are moderate drinkers are preferred to those who are total abstainers?
No, Sir; no preference is given one way or the other.
Newspapers (Shareholders' Names)
asked the Home Secretary whether he will take steps to require that the names of shareholders of newspapers and other journals shall be made available to the public?
The names of registered shareholders of companies which publish newspapers or other journals may be ascertained by inspection of the company's file at the office of the Registrar of Companies, or by inspection of the register of members at the registered office of the company itself.
Would the Home Secretary be willing to circulate in the OFFICIAL REPORT the names of the owners of the "Daily Mirror"?
Yes, Sir.
Is it possible to ascertain also who are the alleged shareholders of this newspaper acting as agents for others behind the scenes?
I am afraid I could not answer that without notice.
Following is the information:
I, of course, am under no responsibility to provide particulars as to shareholding in public companies, but the following information relating to the 1940 return is available in the Home Office. I understand that there have been no substantial changes in shareholdings since the information was tabulated:—
Civil Defence
Women Ambulance Drivers (Pay and Hours of Work)
asked the Home Secretary whether he is aware of the dissatisfaction prevailing among women ambulance drivers by reason of the fact that, whereas they previously received £2 7s. for a 48-hour week, they are now receiving £2 12s. for an 84-hour week, which represents a considerable reduction in their rate of pay; and whether he will take steps to remedy this grievance by increasing their pay in proportion to the increase in the number of hours they have to work or by reducing the number of hours worked?
Steps have been taken to correct the misapprehension that the working week for women ambulance drivers has been increased from 48 to 84; the increase is to 72 where the 24-hour shift system is worked, otherwise it is 60. There is no hourly rate of pay in the Civil Defence Services and I cannot accept the argument of the hon. Member that the recent increase of hours of standby duty in the women's services, justifies a proportionate increase of pay. The increase in duty hours was independent of the weekly pay and would have been instituted in any event because of the pressing man-power problem. As to the operation of the increased minimum duty hours for women I would refer my hon. Friend to the reply which I gave on 26th March to the hon. Member for East Wolverhampton (Mr. Mander).
Personnel (Uniforms)
asked the Home Secretary whether he is aware that air-raid precautions uniforms have been issued to wardens and others who did not apply for them or desire them; and will he state the cost of each uniform and equipment?
I have no information to suggest that the provision of uniform is not. generally acceptable to the personnel of the Civil Defence Services. The cost of serge battledress, greatcoat, beret, boots and anklets is £6 10s. including Purchase Tax. The cost of the corresponding outfit for women is slightly less.
The right hon. Gentleman has not answered my Question whether he is aware that in certain cases these uniforms have not been desired.
I think that I have answered the Question. I said that I have no information which would lead me to think that that is the general view. You can always find minorities which have minority views among the Civil Defence Services, as in this House. We are treating the Civil Defence Services much the same as the Home Guard in this respect, and I do not see why they should not be so treated.
Have the wardens who do not desire uniforms nevertheless been supplied with them?
I daresay they have, but it is a matter for the local authority. I think that the Civil Defence personnel should appear alike and not be a ragged and varied lot.
Surely my right hon. Friend's jurisdiction goes further than merely a question of whether people desire these things or not. Is not the question rather whether they are necessary? From cases that I know personally there are a large number of people who are doing very little work but are receiving uniforms that are quite unnecessary.
It is not obligatory on the local authorities to supply uniforms, but I think that the spirit of this Service is helped by a proper uniform, and I do not see why the Civil Defence should be regarded as on a lower level than the Home Guard.
Is the right hon. Gentleman aware that those persons who refused uniforms did it out of patriotism?
asked the Home Secretary whether members of air-raid precautions services are now to receive Home Guard uniforms; and what will then be done with the air-raid precautions uniforms for which they were measured and which have recently been supplied?
Part-time members of the Civil Defence General Services who enrol in the Home Guard list II under the arrangements which I announced on 12th February will receive Home Guard uniform. Their Civil Defence uniform will be withdrawn and cleaned, for reissue to other personnel when required. When acting as Civil Defence personnel they will wear a Civil Defence armlet on their Home Guard uniform.
Detainees
asked the Home Secretary how many persons of British origin are still detained under Regulation 18b; how many of these are members of the British Union; and whether he will consider releasing all persons against whom there is no evidence that they have broken the law?
The number of persons of British origin detained under the Regulation is 229, of whom 135 are detained on the ground of membership of or activity in furtherance of the objects of the British Union. The persons in question are detained not because they have broken the law, but because their detention for preventive purposes is necessary in the interests of national security; and the last part of the Question does not accordingly arise.
Is the right hon. Gentleman satisfied that if these unfortunate people were released they would be a danger to the State?
The reason they are detained under preventive detention is that in our judgment they might be a danger to the State. They are subject to constant review and, as the House knows, I have already released a large number where I am satisfied that they would not be a danger.
May I ask my right hon. Friend, who, I believe, is well disposed in this matter, whether he can give an indication when these elementary principles of British justice will be restored?
Invasion Arrangements (Information to Members)
asked the Home Secretary why the arrangements made in case of invasion, which have now been communicated to Members of this House by regional commissioners, were not so communicated at the earliest moment; and what reason there was for withholding this information?
I presume that my hon. Friend refers to certain measures for facilitating collaboration between the civil and military authorities in the South-Eastern Region. Apart from special arrangements made in selected areas some time ago, these proposals were communicated to local authorities generally on 12th March, and the Members concerned were informed of this circular on 28th March. I do not think there has been any avoidable delay.
Sir Warren Fisher and Colonel Blatherwick
asked the Home Secretary whether he will consider setting up an inquiry, with an independent chair man, at which witnesses will give evidence on oath, into all the circumstances connected with the dismissal of Sir Warren Fisher and Colonel Blatherwick?
I would refer my hon. Friend to the answer which I gave to his Supplementary Question on Monday last.
May I ask the Home Secretary how much longer he thinks the public will stand these Gestapo methods?
Following my right hon. Friend's new and much graver charge which he made on Monday against Colonel Blatherwick, has he had any further request from Colonel Blatherwick for an independent inquiry?
All I have seen is an interview in the Press, which does not seem to add to the facts of the situation.
Has my right hon. Friend filled the vacancy caused by the departure of Sir Warren Fisher?
No, Sir.
In view of the unsatisfactory nature of the reply and the principles involved, I beg to give notice that I will raise this matter on the Adjournment.
Invasion Committees
asked the Home Secretary how many invasion committees have been set up and are in operation; and whether he is satisfied that these will be adequate for the direction of the civil population in the event of invasion?
asked the Home Secretary how many invasion committees are to be set up throughout the country; how they are being chosen; and what specific powers they will have in directing persons in their areas to do special work in the event of invasion or the imminent threat of invasion?
Some thousands of committees have been or are about to be set up, but I am unable to give exact figures. As my right hon. Friend the Lord President explained on 24th March, committees are set up wherever they are considered necessary. Their work is mainly of a preparatory and co-ordinating character and they are designed to bring together for this purpose local representatives of the various civil and military authorities concerned. The usual procedure is for the constitution of the committees to be determined by the Regional Commissioner after such consultation with civil and military authorities as may be necessary and desirable. In most matters committees will not themselves issue directions: such directions as are needed will normally be given by the representatives of the services on the committee. Excellent work has already been done by many committees and I am satisfied that they will fulfil a very useful function.
Is this matter being treated as a question of urgency? We have been told that invasion is imminent, and will my right hon. Friend give an indication when he will be able to answer a question about the number of invasion committees?
The House has not been told that invasion is imminent. The House has been told that invasion is always possible and that we must be prepared for it. I can assure my hon. Friend that this is regarded as a matter of importance. We have not just begun it, for we started months ago, and I have asked the Regional Commissioners, in conjunction with the military authorities, to send me progress reports, so that we can keep the matter constantly under observation.
Will the members of these committees be appointed by virtue of their social positions or by virtue of ability and merit?
Where practicable regard is had to the representative character of the persons in relation to their local authority or other functions, but I can assure the House that social position will not enter into the appointments.
When the right hon. Gentleman says that the Regional Commissioners, in consultation with the military and civil authorities, will arrange for these committees, do we take it that that will apply generally, because in Scotland the local authorities were not consulted?
I do not think the hon. Gentleman is right. In his own county the county council has been consulted.
Shelters
asked the Home Secretary what action he proposes to take where private individuals of moderate means have relieved local authorities of expense by building air-raid shelters for themselves and others at their own cost?
I presume my hon. Friend has in mind reimbursement of expenses incurred by private individuals who although now eligible for free air-raid shelter have provided themselves with such shelter at their own expense. I have no power to authorise payments from public funds in such cases.
Personnel (Home Guard Service)
asked the Prime Minister whether he will consider incorporating all the Civil Defence services into the Home Guard so that all able-bodied men may become weapon-minded and weapon-trained while still capable and ready to carry out their own specialised services as required?
The terms under which members of the Civil Defence Forces may join the Home Guard' were announced in this House by my right hon. Friend the Home Secretary and Minister of Home Security on 12th February, 1942. A further statement bearing on this subject was made by my right hon. Friend the Lord President of the Council on 24th March, 1942. As resources in equipment and training capacity expand, it will be possible to give all able-bodied men in the Civil Defence Services who can be spared the desired opportunities.
Will the right hon. Gentleman bear in mind that this is a matter of urgency and that unless something in the nature of my suggestion is adopted, there will be 2,000,000 to 3,000,000 uniformed and disciplined men who will be unable to defend either themselves or their country should invasion come?
Egyptians (Restrictions)
asked the Home Secretary whether he is aware that Egyptians living in this country are not exempted from restrictions in the same way as other friendly aliens and that much inconvenience is caused in this respect; and whether he can take steps to rectify the matter?
As I stated in the House on 12th February, it has been decided, as a matter of policy, that general exemption from the special war-time restrictions should be conferred only on the nationals of those States which are at war with the Axis Powers, but individual applications from Egyptians for exemption will, as heretofore, receive careful and sympathetic consideration.
Regional Commissioners (Powers)
asked the Home Secretary what are the powers of Regional Commissioners for Civil Defence under conditions other than those of emergency; and whether they are empowered to issue orders to scheme making and other local authorities and on what subjects?
It is impossible within the compass of a Question and answer to enumerate all the powers of Regional Commissioners. They derive from the Defence Regulations and from specific delegations by Ministers and include such matters as the establishments and operations of Civil Defence Services, the provision of shelter, fire-prevention schemes, debris clearance and salvage after air raids and movements of population. These powers necessarily involve in certain circumstances the issue of orders to local authorities.
Can my right hon. Friend say whether the Regional Commissioners have the power to issue orders to local authorities for the movement from their own district of whole-time personnel?
I could not say without notice, but I think it is possible.
asked the Home Secretary whether Regional Commissioners are empowered to approve expenditure on matters connected with Civil Defence by scheme-making authorities, on what matters, and up to what amount; and whether regional representatives of Ministries other than the Ministry of Home Security are under their orders, or otherwise subject to their authority?
In the interests of simplicity and expedition in administration, Regional Commissioners and their staffs have been given authority to sanction expenditure on a wide variety of matters arising out of Civil Defence. The amounts which may be so sanctioned vary according to the nature of the service. Any major project would be referred to headquarters. In regard to the second part of the Question, the regional representatives not only of the Ministry of Home Security but of all Ministries would come under the direction of the Regional Commissioner if communications with their headquarters broke down; and under existing conditions there are some subjects connected with Civil Defence on which departments, notably the Ministry of Health, have delegated power to Regional Commissioners which give them a measure of control of certain activities of the department's regional representatives.
Far East Operations
Naval Forces (Command)
asked the Prime Minister whether Air-Marshal Sir Robert Brooke-Popham was Commander-in-Chief in the Far East of the naval forces as well as of the Army and Air Force units?
Sir Robert Brooke-Popham was responsible for the operational control and general direction of training of all British land and air forces in Malaya, Burma and Hong Kong, and for the coordination of plans for the defence of these territories. It was laid down that, where appropriate, he should consult and co-operate with the Naval Commanders-in-Chief in the Far East, but he was not responsible for naval operations.
Would it be correct to say that His Majesty's ships at Singapore were under an independent command and were subject to no direction other than from the Admiralty?
That is so; they were under Admiralty and naval control.
Strategic Dispositions
asked the Prime Minister whether he will cause evidence to be collected and collated with a view to apportioning correctly responsibility for the strategic dispositions made prior to the opening of the Far-Eastern campaign?
I have nothing to add to the statements which have already been made on this subject.
Is the right hon. Gentleman aware that public opinion has not accepted with fortitude this greatest of all military disasters, which would appear, as far as the public can see, to be largely due to the worst strategy since Ethelred the Unready, unless we have some guarantee that either the system or the men responsible is changed?
Who was responsible for withdrawing our submarines from Far Eastern waters?
Those Questions should be put down on the Paper.
How can you gauge public opinion?
We do our best. Some people seem to think they know all about it.
Does not the right hon. Gentleman consider that the questions that are being asked inside and outside the House show the desirability of setting up a committee to inquire into the disaster at Singapore?
That point has already been put to the Prime Minister, and he has replied to it. I have nothing to add.
Questions
Minister of State in the Middle East
asked the Prime Minister when the Minister of State in the Middle East is likely to take up his duties there?
The Minister of State in the Middle East is at present in London on his way to take up his appointment. He will resume his journey at an early date after completing his consultations with Ministers and others concerned with Middle East questions.
Was it not possible to find an occupant for this post in the whole of the British Isles, to say nothing of this House, and so avoid upsetting so many Australians?
That does not seem to arise out of the Question at all.
Combined Operations (Staff Officers)
asked the Prime Minister whether he will assure the House that only British-born subjects act as staff officers or advisers to the Commander Combined Operations?
I see no occasion for any special ruling in this case.
We are fighting for our existence. Why take any risks at all in these operations, the essence of which is secrecy?
I am glad to say that we are not the only people who are fighting for our existence.
Naval Operations (Responsibility)
asked the Prime Minister whether, in view of the experience gained during the present war, he will now restore to the Board of Admiralty the collective responsibility for the conduct of naval operations which it enjoyed before the Order-in-Council of 1904?
So far as it concerns the subject of my hon. and gallant Friend's inquiry, I cannot recognise that the Admiralty Order-in-Council of 1904 effects any change in the theory and practice of administration by the Board of Admiralty.
Is it not a fact that prior to the Order-in-Council the First Sea Lord was only first among equals, whereas under present conditions the other Sea Lords have nothing whatever to say in regard to the conduct of operations?
I have studied the Order-in-Council, which does not seem to bear out the hon. and gallant Gentleman's suggestion.
Whether it comes under that particular Order or not, is it not the case that since the war the Patent of Admiralty has been in abeyance, and, as a result, the chief responsibility to His Majesty the King for the defence of this Realm is no longer in the hands of the Lords of the Admiralty?
I should like to see that Question on the Paper.
Is it not the fact that the Board of Admiralty is still responsible for the organisation and the fighting capacity of the Navy?
Certainly, and the First Lord is responsible to the House.
Is it not the case that the Lords of the Admiralty are a law unto themselves? When the last Minister of Production was appointed the six Lords of the Admiralty were going to resign if they came under his jurisdiction. Does not that prove that they are a law to themselves, that they are still priority No. 1 and will take instructions from nobody?
Agriculture
Milk Recording Societies
asked the Minister of Agriculture whether any steps are contemplated to revive the grants to the milk recording societies, in view of the importance of raising the yield of milk in the country?
No, Sir.
Does the right hon. Gentleman realise that several of these societies will not be able to continue unless they get Government support?
I do not know about that, but I am sure that every farmer by now should realise the desirability of milk-recording in his own interests.
Long-Term Policy
asked the Minister of Agriculture whether he is encouraging the proposal made at the recent convention at Ottawa, supported by the United States agricultural representative adjustments administrator, that an English speaking producers' conference should be held in the near future to evolve a long-term agricultural policy, to provide an adequate diet from a national standpoint for all the peoples in the countries concerned?
The question of long-term agricultural policy is necessarily bound up very closely with the wider problem of post-war economic policy generally, and these are matters primarily for the various Governments concerned. I doubt, therefore, whether any useful purpose would be served by a formal conference of English-speaking agricultural producers' organisations at this stage.
Land Cultivation, Cheshire
asked the Minister of Agriculture of how much land the Cheshire War Agricultural Executive Committee have taken possession under Defence Regulation 51; how much of that land is farmed by the committee or under its management and how much of it has been let to tenants; and whether any account of the cost of farming the land, of which the committee is retaining pos session, is being kept and will be published, or whether this information will be made available to the public in any other form?
The area of which the Cheshire War Agricultural Executive Committee has taken possession under Defence Regulation 51 is 2,115 acres, of which 1,437 acres are farmed direct and 678 are let to tenants. As to the last part of the Question, I would refer my hon. Friend to the answer I gave to him on 12th March.
Will costing accounts be prepared on an annual basis, and will they appear in the records?
I would refer my hon. Friend to what I told him last time.
Working Hours
asked the Minister of Agriculture whether, in view of the urgency of food production and the willingness of farmers to help, he will arrange for a compulsory 54-hour week during the summer months, the extra four hours to be paid at overtime rates; and, as work now ends at 12 o'clock on Saturdays, whether he will rule out the Saturday afternoon half-holiday for the duration of the war and so fall in line with many Government Departments?
As I informed my hon. Friend in reply to his Question of 25th March, I am sure farmers and farmworkers will not hesitate to work all possible hours, when necessary, on their vital task of food production, and I hope consequently it will not be necessary to consider any compulsory measures with regard to the hours of work.
Is my right hon. Friend aware that the men are willing to work on Saturday afternoons but they require an instruction from the Government, and the situation is urgent?
Will the right hon. Gentleman not consider, in order to encourage the workers to give increased efforts, the suspension of all payment of rent?
Old and Infirm Horses (Disposal)
asked the Minister of Agriculture whether he will now empower war agricultural executive committees to order the disposal of horses which are too old or infirm to be useful?
I am not yet in a position to add to the reply given to my hon. Friend on 26th February last.
When does my right hon. Friend expect to be able to give a decision?
The position, of course, has been complicated by the fact that the basic petrol ration is to be abolished on 1st July, and there will no doubt be a large demand for horses then.
Women's Land Army
asked the Minister of Agriculture the present employed strength of the Women's Land Army; and whether new recruits are coming forward in sufficient numbers to meet the demand?
On 31st March the employed strength of the Women's Land Army for England and Wales was just 28,000. During March 2,576 new members were enrolled, while 3,876 were placed in employment—the highest monthly placing figure yet readied. The Land Army has only a small reserve of volunteers not yet called up and a steadily increasing number of new recruits of good physique will be needed during the coming months.
Can my right hon. Friend give an approximate idea of the proportion of these women and girls who are accommodated in hostels?
I think, speaking from memory, that about 5,000 are in the employment of the committees.
Will the right hon. Gentleman make it sufficiently known to women that if they do not wish to join the Land Army but wish to work on the land, they should apply through the ordinary employment exchange machinery for rural work in their own areas?
I have repeatedly said that we are very short of labour in the country, and anyone who can volunteer for work in his or her own neighbourhood will be doing extremely patriotic work. I hope that if my hon. Friend can help in that way, she will do so.
Is the Minister satisfied that the pay of the women in the Land Army and the canteen facilities are sufficient to induce large numbers to come in?
Yes, Sir, I think so.
Questions
Illegal Alcoholic Spirits
asked the Home Secretary whether his attention has been drawn to the growing distribution and consumption of wood alcohol or similar spirit substitute, which presumably are being marketed through illicit channels in labelled bottles and under trade names well known to the public and thereby reaching normal avenues of sale, resulting in cases of illness and death; whether he will take further powers to detect and deal with the culprits; and what steps he is taking to protect the public from this growing danger?
asked the Home Secretary whether his attention has been called to the growing number of instances in which people have been poisoned by raw or adulterated spirit inserted into bottles carrying the labels and seals of reputable firms; whether any persons have yet been convicted for such sales; and whether he will seek powers under which it will be a capital offence to purvey poisonous liquor in this way?
I have been in consultation with the Board of Customs and Excise and the Commissioner for Police, and I find that there has been one case in which a workman stole some wood alcohol and used it to strengthen homemade wines which he produced on a small scale. He was convicted and sent to prison. There have been stories in the Press suggesting the prevalence of such practices as are mentioned in these Questions, but there is no evidence so far forthcoming to support these allegations. The situation must obviously be very carefully watched, and I am assured by the Board of Customs and Excise and by the Commissioner of Police, who are in touch with the military authorities, that every vigilance is being exercised. On present information it would not appear that any further powers are required, but if my hon. Friends can send me any information beyond the Press statements I shall be glad to make further inquiries.
If I send the right hon. Gentleman a sample of this stuff which was handed to me during the week-end, will he take up the question with the people who are manufacturing it?
Yes, Sir, but I will not promise to sample it.
Is my right hon. Friend aware that there is a large increase in jaundice due, I understand, to the consumption of this illegal product?
Welsh Church Commission (Trust Funds)
asked the Home Secretary whether he is aware that a deputation representing the county and county borough councils of Wales and Monmouthshire recently waited upon the Welsh Church Commissioners to lay before them representations of a conference, held on 13th January last, of the beneficiaries under the Welsh Church Acts; and what are the proposals with regard to distribution of assets which were then explained to the delegation by the Commissioners?
The answer to the first part of the Question is in the affirmative. I understand that at the meeting in question the Welsh Commissioners confirmed their offer to transfer to the beneficiaries as an interim measure the land and build- ings to which under the Welsh Church Acts they are entitled. They also explained the accounting problems involved in making a distribution of invested funds, but indicated that they anticipated being in a position to make a substantial distribution in the autumn of this year.
Is the right hon. Gentleman aware that the Welsh Church Commission, in 22 years of office, have expended more than £250,000 in endeavouring to carry out the Welsh Church Acts, and that they have failed; and will he take steps to bring to an end this gross waste of trust money and, if necessary, introduce legislation to make the Welsh Church Acts workable?
I am very anxious that the work of the Commission shall be completed as early as possible.
Is the right hon. Gentleman aware that local authorities in Wales are very much concerned about this matter, and will he accelerate the progress of this Welsh Church Commission?
I have already said that I am anxious that its work should be completed as early as possible.
Prisoners of War (Red Cross Organisation)
The House will recollect that some anxiety was caused in the minds of relatives of prisoners of war about the effect of certain recent changes in the management of the Prisoners of War Department of the War Organisation of the British Red Cross Society and Order of St. John. In view of this anxiety, I felt it desirable to obtain a fresh opinion upon this question. I accordingly asked my right hon. and learned Friend the Lord Privy Seal if he would personally look into the matter and advise me of his conclusions. The Lord Privy Seal readily agreed to make the necessary inquiries. He was, however, prevented from doing so, owing to his departure for India. As the House was informed before the Recess, my right hon. and learned Friend the Paymaster-General undertook to carry out this task in his stead. My right hon. and learned Friend has now completed his inquiries and has fully discussed' with me the conclusions which he reached.
The Paymaster-General has informed me that, in his view, the affairs of the Prisoners of War Department of the British Red Cross Society are being conducted with efficiency and that, so long as existing conditions prevail, the organisation is well able to continue, as hitherto, to discharge the important functions in relation to prisoners of war which have been entrusted to it by His Majesty's Government.
My right hon. and learned Friend felt it, however, his duty not merely to ask himself whether the organisation was carrying on its work efficiently to-day, but also whether he could feel satisfied that it was possessed of the; necessary flexibility and reserve of strength to enable it to surmount future difficulties which might arise. He did not feel so satisfied, and whilst appreciating that the answer to this latter question must necessarily be a matter of opinion, since the Department had not yet been put to this test, and that the War Office viewed the matter in a somewhat different light, the Paymaster-General thought it right to discuss these future problems with the British Red Cross Society and to make to them certain practical suggestions, to which I shall refer in a moment.
The despatch of food parcels to British prisoners in Germany and Italy involves many difficult and complicated processes. After being packed by the British Red Cross Society, the parcels are handed over to the General Post Office, who are responsible, in conjunction with the Ministry of War Transport, for their shipment to Lisbon. Between the United Kingdom and Portugal the ships carrying parcels are subject to all the normal war risks of Allied shipping on the high seas. From Lisbon they are conveyed to Marseilles in ships chartered by the British Red Cross Society, under the control of the International Red Cross Committee, with a safe conduct from the enemy Governments. The International Red Cross Committee arrange for transport onwards from Marseilles to Geneva by means of the French and Swiss railway and postal services. On reaching Geneva the parcels are stored by the International Red Cross Committee, who have also undertaken the task of despatching them on to the various prison camps in the quantities needed. During this last part of the journey we are, of course, entirely dependent upon the transport facilities provided by the German and Italian authorities.
The House will, therefore, appreciate that the prisoner of war parcel service from this country to the camps on the Continent of Europe is already liable to interruption owing to a variety of causes, many of which are entirely beyond the control both of the British Red Cross Society and of His Majesty's Government. The difficulties hitherto experienced are likely to increase as the war proceeds. At some stage in the future the existing parcel route may well become impracticable and the opening up of an alternative route is not likely to be easy.
The task of sending supplies of food and clothing to British prisoners in Japanese hands presents, of course, an entirely different and still more difficult problem. Detailed plans have been made to establish in the Far East a prisoner of war supply service, but all action is for the time being held up, pending the consent of the Japanese authorities, which has up to the present not been forthcoming.
In order to meet these increasing difficulties, which must be anticipated both in Europe and in the Far East, the British Red Cross Society have lately been considering measures, designed to give additional strength and flexibility to their organisation. The Society recently added to their Prisoners of War Department a new Far Eastern Section. In addition, they have, upon my right hon. and learned Friend's suggestion, secured the services, in a consultative capacity, of Sir William Currie, Chairman of the Peninsular and Oriental Steamship Company. For this purpose Sir William Currie has become a member of the Executive Committee of the War Organisation.
My right hon. and learned Friend further suggested that it might be an advantage if means could be found to bring the relatives of prisoners of war into closer consultation, so that they might be kept informed of the day-to-day difficulties and of the steps taken to surmount them, and be given an opportunity of making practical proposals. The British Red Cross Society welcome this suggestion and are taking immediate steps to give effect to it.
While thanking the right hon. Gentleman for that very comprehensive statement, may I ask him two questions? Do the Government still consider it possible for the Red Cross Society, from their own resources and the resources of charity, to meet the need that has arisen in connection with the provision of prisoners of war parcels? Secondly, will the right hon. Gentleman, in order completely to remove the apprehension that was felt by relatives of prisoners of war, give an even fuller account than he has given of the purport of the consultation that the Paymaster-General has had with the officials of the Red Cross Society?
As regards the first question, the financial arrangements between the Government and the Red Cross Society are complicated, and I do not want to go into them here; but the hon. Gentleman can rest assured that the Red Cross Society are not left to bear the whole financial burden of these services alone and that there is a very substantial Government contribution. As regards the second question, I have, to the best of my ability, given a comprehensive and full statement of the purport of the consultations with the Paymaster-General.
I do not want to raise any controversial issues with my right hon. Friend on the day of his maiden speech. I should like to offer him our hearty congratulations and our best wishes for the future. His statement is one on which I would like to say just one thing. I thank my right hon. Friend for what he has said, but I should like, in the circumstances, to reserve judgment until after I have had an opportunity of consulting—
rose —
May I just ask a question? May I say that—
rose —
It is a very difficult situation. I very much regret that I shall have to reserve to myself the right to raise the matter on the Adjournment, owing to the fact that the statement of my right hon. Friend contained no single word of thanks to Mr. Stanley Adams for the extremely valuable and admirable work—
rose —
Will the right hon. Gentleman cause a White Paper to be issued giving the details containing his statement?
It will be printed in the OFFICIAL REPORT to-morrow morning.
Would it not be better if he made something available for the general public?
Business of the House
May I ask the Leader of the House whether he can make a statement on the Business of the House for the forthcoming Sitting Days?
On the first Sitting Day we propose to move Mr. Speaker out of the Chair on first going into Committee of Supply on the Civil and Revenue Departments Estimates. We shall take also the Report stage of the National Loans Money Resolution.
On the second Sitting Day, we propose to take the Report stage of the Budget Resolutions and all stages of the National Loans Bill. We shall ask the House, on grounds of urgency, to agree to pass the National Loans Bill through all its stages on one day.
As regards the third Sitting Day, my right hon. Friend the Prime Minister hopes to make his promised statement on the War Situation in Secret Session. I must, however, just enter one caveat . As the House knows, we have at the moment two very distinguished visitors here, Mr. Hopkins and General Marshall, with whom the Prime Minister and other members of the War Cabinet are carrying on very important discussions and whose time is limited. I therefore cannot give an absolute guarantee that the Prime Minister will be in a position to make this statement on that day. He very much hopes to do so, and I undertake to give the House absolutely definite information when we meet again.
If it proves to be impracticable for the Prime Minister to make the statement on the third Sitting Day, is there a prospect of the India discussion taking place then? What progress has been made with the preparation of the White Paper? If the secret Debate on the war situation takes place on the third Sitting Day, does the Leader of the House think that one day will be adequate time for discussion of all the points that are bound to arise on a large number of issues?
I much hope that this discussion will take place on the third Sitting Day, all the more so as I do not think we can be ready for the India discussion on that day, on account of the geographical reasons of which my right hon. Friend is aware; As regards the White Paper, we are in communication with the Lord Privy Seal, and I hope that the White Paper will be laid next week. As regards the length of the Debate, I should like to consider that question. As it would be in Secret Session, we should rather hope it could take place on one day, but I shall be prepared to consider the matter.
What is likely to be the subject for discussion on the first Sitting Day?
The Amendments which are on the Paper.
Will the right hon. Gentleman give very serious consideration and make such representations to the Prime Minister as are necessary on the subject of the length of the Debate on the War Situation? He will no doubt appreciate that a large number of Members want to address themselves to the subjects that will be raised, and I believe more time will be required than one day. May I ask whether the right hon. Gentleman appreciates that, if we are to have a Secret Session dealing with matters that have arisen in the Far East, Singapore and the like, we are likely to be precluded afterwards from making any reference to the subjects that have emerged in the course of the Debate? I am trying to put it in the form of a question, but it is a little difficult to do so. The point is this: If the Government disclose facts about Singapore in a Secret Session which naturally the House will expect them to do, we cannot make any reference in public to what has been said in the course of the secret Debate Consequently, I ask whether the Government might not consider it more appropriate to have two Debates—first one in public, when the Government might be, to some extent, inhibited from making a full disclosure, but the House could express itself on the subjects before it, and then a secret Debate, or vice versa, have the secret Debate first, and then, at the discretion of the Government on representations made to them by the House, have a public Debate.
I think, in any event, the right course would be for the Government to give all the information they can in Secret Session first. The fact that information has been given in Secret Session would exclude, of course, discussion of the actual information, but it would not exclude discussion of the topics in respect of which the information had been given. I think hon. Members would be wiser to wait for the Secret Session before they decide what they require, or what they want to put forward for a later stage. I would only add that I think that, when that Secret Session has been held, we shall all be in a better position to decide what we want to say in public.
May I ask my right hon. Friend whether he will represent to the Prime Minister the feeling of the House—I am sure it is general—that we should have this Debate as soon as possible? Everyone appreciates the Prime Minister's position, and no one wishes to press him unduly. At the same time, it is now something like six weeks since the House has debated the War Situation, and during those six weeks very serious events have occurred, particularly in the Far East, and there has been a very serious setback to our prestige there. I would ask my right hon. Friend, therefore, to represent to the Prime Minister the urgency of the need for a Debate and the desirability that sufficient time should be given to the House to discuss the whole question.
I have already discussed that point with my right hon. Friend, who does understand, clearly, the very natural and proper desire of the House to have this Debate at the earliest possible moment. My hon. Friend, I know, also understands that the time of our visitors is also limited and that these discussions are most important. I have every hope that the Debate will take place on the day already indicated, and I only put in a caveat because, if a postponement were found necessary, I did not want the House to feel that they had not been fairly treated and informed of the whole position. As regards the length of the Debate, that also is a matter which has to be considered. It may be that a suspension of the Rule on the one day would meet the case, but that point can be considered also.
If I ask the right hon. Gentleman a Question on the next Sitting Day, will he be able to tell us quite definitely about the date of the Debate on the War Situation?
Yes, Sir. That is an undertaking which I can give.
Arising out of the question of the points to be met by the Prime Minister in the Debate, will my right hon. Friend, in the rather unusual circumstances, allow us to submit proposals through the usual channels as to the kind of information which we want? For example, some of us want to know about what I may call the chain of causation leading to the decisions taken, and whether those decisions were taken on the spot or were taken by the Prime Minister as Defence Minister? Will my right hon. Friend allow matters of that kind, as questions for debate, to be submitted through the usual channels, so that the Prime Minister may come here prepared to answer them?
My Noble Friend knows from his long experience that the Prime Minister would be only too glad to receive representations. On the other hand, he would not expect me to anticipate what the Prime Minister would say in reply.
With regard to the length of the Debate, will the right hon. Gentleman say whether, in the event of its being decided that one Sitting Day is insufficient, the remainder of the Debate will be taken on the Sitting Day immediately following?
I said that I would consider these matters. I do not want to go beyond that.
May I ask the right hon. Gentleman, in view of the undertaking which he gave three weeks ago when this -matter was raised, and the fact that the public of this country has some right to know what has happened in Singapore, whether he will give full consideration to the representations that have been made that part, at least, of this Debate should be held in Public Session?
The Prime Minister dealt with all that the other day, and I have really nothing to add.
May I ask whether, in view of the fact that we now have double Summer Time, the Government propose to give consideration to extending the Sittings of this House?
The Government are prepared to extend the Sittings where necessary, but even double Summer Time does not give Ministers less to do.
Bill Presented
Pensions (Mercantile Marine)
"to amend the Pensions (Navy, Army, Air Force and Mercantile Marine) Act, 1939, as respects mariners and other seafaring persons; and to make a consequential amendment of Section three of the Personal Injuries (Emergency Provisions) Act, 1939"; presented by Sir Walter Womersley, supported by the Attorney-General and Mr. Noel-Baker; to be read a Second time upon the next Sitting Day, and to be printed [Bill 21].
National Expenditure
Ordered,
"That a Message be sent to the Lords to request that their Lordships will be pleased to give leave to the Lord Kindersley to attend to be examined as a witness before the Sub-Committee on Finance and Establishments appointed by the Select Committee on National Expenditure."—[ Mr. Woodburn. ]
Orders of the Day
Ways and Means
Considered in Committee [ Progress, 14 th April ].
[COLONEL CLIFTON BROWN 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. ]
The Debates on the Budget Resolutions this year, perhaps because of the fact that those Resolutions contain no very great surprises, have been of great general interest. The Committee has taken the opportunity of putting forward general considerations as well as those closely connected with the Resolutions. That arises, I think, from the enormous drafts which the State is now making on the resources of this country. It is inevitable in those circumstances that a review of the effect of those great drafts should take place, as well as a consideration of the mere machinery by which they are being made. In his White Paper, the Chancellor of the Exchequer indicates that the proportion of the national revenue which is being absorbed by Government expenditure is 52 per cent. That figure is reached by taking the national income, all the resources which normally come in within the year, and in addition, all the drafts made on capital during the year. A recent estimate was also given by the Minister of Production which showed an even higher figure. He estimated it at 62 per cent., and he reached that figure by taking Government expenditure as a percentage of the resources which normally come within the year alone, and leaving out capital drafts. That also is a perfectly fair comparison, because it gives the effort directed by the Government during the year, as a percentage of the effort put out by the nation during the year. But it is a very large figure. One thing both those estimates have in common. It is that next year the percentage will be even higher. The Chancellor's new figure is 53 per cent., and the figure of the Minister of Production is one reaching 70 per cent., representing a very large part of the whole national effort.
The Chancellor is making up this enormous sum along two main channels, the channel of taxation and the channel of savings. He has to get £4,500,000,000 for expenditure requiring domestic finance, and he proposes to get £2,400,000,000 of that by cold, hard taxation and £2,100,000,000 in savings and from other sources. He thinks—and I think the Committee agree—that that estimate is perfectly safe, because he got within £100,000,000 of it last year, and the national income is rising. He proposes to get this great sum by management of what one might almost call two currencies. There are two currencies by which our affairs are now regulated, one the currency of banknotes and the other the currency of coupons. We have had a great extension of the second currency in the last year. Already a large proportion of our food expenditure was controlled in this way, but last year, by the inclusion of clothing alone, an item representing nearly 20 per cent. of the total personal expenditure of the nation, apart from food and drink, was brought within the regulations. It is by means of controlling the amount released for consumption by the second currency, the currency of coupons, that he forces the savings upon which he is relying to avoid the danger of inflation, which, as the Committee has unanimously agreed, is a danger which must be averted at all costs.
The Treasury, in its widest sense, is the Department which scrutinises and regulates the note currency, and it is of necessity closely concerned with the scrutiny of the second currency, the currency of coupons. The Chancellor in fact is a "Minister of Consumption," and when we are passing into siege economics, as we are now, it seems clear that the Chancellor—the Finance Minister—must be in the central controlling body, the War Cabinet. The Minister of Production is there; the Minister of Production and the "Minister of Consumption" are the two sides of the ledger; you cannot review one without taking the other into account also. There is nothing new about this contention that the Chancellor of the Exchequer and the Treasury should be, and must be, represented in the body governing the war effort of the country. The Lord Treasurer—that is the origin of all these offices—was originally one of the most important officers of State. In fact, he was so important that he was turned into a Commission, the First Lord and four junior Lords. Whenever the First Lord was in the Commons he himself was both First Lord of the Treasury and Chancellor of the Exchequer, and the Chancellor of the Exchequer was certainly then in the Cabinet. Even though the present structure of the Cabinet recalls more the structure of an 18th century Cabinet—in which, it is interesting to note, the War Ministers were not necessarily included—there has always been a figure in the Cabinet representing the supreme command, and there has always been a figure representing the supreme management of the consumption of the nation and of the amount being drawn in by the central authority from the resources of the citizens. If the Chancellor of the Exchequer is out of the Cabinet, the responsibility falls back on the First Lord of the Treasury, and that is doing exactly what we do not want to do—increasing the burden on the Prime Minister. I say again that to have the Chancellor of the Exchequer outside the War Cabinet in these days is not good administration. It may well be that the function of the Chancellor as cashier, as keeper of the cash box, has developed at the expense of his position—
Would my right hon. and gallant Friend allow me to remind him that money does not matter? That is the reason.
Money may not matter, but the case I am trying to put before the Committee is that consumption matters a great deal, and that the "Minister of Consumption" must some how or other be represented in the highest councils of the nation. As this has been true throughout all history, it is unlikely that the need has suddenly disappeared in our present times. If I may say so, I think the reason for the exclusion of the Chancellor of the Exchequer was a feeling that Treasury control had reached too great a stringency and that somehow the grip of Treasury control ought to be broken. The position of the Chancellor of the Exchequer as cashier, as keeper of the cash box, had overshadowed his position as finance Minister. But the remedy for that is not to leave the Minister out altogether. The remedy is to recall him to his true duties, to re-establish his position, and it is interesting to note that that is the position which the Chancellor is coming to fill. The Budget Debate shows, the Chancellor's statement shows, and, more interesting than either of those things, pressure from the House shows, that there is a general desire to re-establish the position of the Chancellor of the Exchequer as a policy-directing Minister, and not to concentrate solely upon the relatively smaller points of the day-to-day management of the nation's cash.
That is not to say that the functions of the Chancellor as cashier are not important. They are very important. For instance, the Debate has reviewed very carefully the imposition "of Income Tax on wage-earners, a matter which has caused all of us to receive a great many communications and representations, and a matter which is certainly not settled yet. It is true that the Chancellor of the Exchequer has indicated that his consultations with the representatives both of employers and of employees have led him to feel that the proposal for a weekly collection from wages is an impracticable one. We all quite realise the strength of the argument that the employer should not be made into a tax collector, and should certainly not be given the enormous amount of information as to the affairs of his employees which the position of a tax gatherer would give him. But for all that, the industrial constituencies of the North do not feel happy about the present position, and even though a case can be made out that on a weekly collection they may over-pay and that injustices thereby will be committed against them. The Chancellor of the Exchequer has himself created a very great suspense account—the post-war credits—and it should not be past the wit of man to conceive some scheme by which, if an over-payment has been made, a certain part at least of the post-war credit might be converted into a Savings Certificate which it would be possible for the owner to realise if necessary.
Both the Chancellor of the Exchequer and, in his interesting speech yesterday, the Financial Secretary to the Treasury said that they had an open mind and were willing to consider anything that was put up to them, but it is impossible for the Members of the House of Commons to bring forward schemes involving the enormous complexity of Income Tax legislation and its administration to-day. Much as I am opposed to the multiplication of committees, I think that the Chancellor might well consider whether an inquiry might not be held on which the wage-earners might be represented, by which the matter could be thrashed out and where more detailed consideration could be given to it than it is possible to give it in this House. Would not the report or opinion of such a committee of inquiry carry a great deal more weight than the mere statement that the Treasury finds it impossible to devise such a scheme, and leaves it to Members to suggest something which would be more satisfactory than the work of the Treasury? I feel, as an old Financial Secretary to the Treasury, that if any Member or group of Members of this House could produce a scheme of that kind, then they would be of such outstanding merit that the present holders of office on the Treasury Bench should gracefully give way to them. I do not believe that there are such Members, and I do not believe that they command the necessary technical skill and experience to work out a scheme, but I think that such skill and experience could be put at the disposal of a committee, and at any rate the case would be argued out.
We all know that there is nothing more irritating in life than to have to pay, when one is hard up, expenditure which one had incurred—and, to the best of one's belief, legitimately incurred—in the days when one was rather more flush with cash. I know myself, having experienced the vicissitude of descending from an income on a more lavish scale to the income of a private Member, that the subsequent demands for Surtax on the money which I had spent were extremely galling. I can quite well believe that they are just as galling to the worker who finds demands coming in the winter for money which he had obtained—and, to the best of his belief, properly obtained—and expended in the summer. There is one person who certainly should be on such a committee, and that is the housewife, who is more annoyed than anybody when suddenly the pay-packet is brought home containing far less money than she had reason to expect, and when the husband explains that that is due to the fact that in the summer when he was doing very well he received wages to which, it has turned out, the Chancellor now thinks he has a better claim than himself.
Would not the suggestion of the right hon. and gallant Gentleman possibly cause mortal trouble in households?
I should say that surely the housekeeping aspect of the repayment of these sums should be considered, because it is one of the main burdens which the wage-earners represent to us when they come on to deputations or write us letters. Anyhow, I throw out that suggestion to the Chancellor for consideration, and I would be very glad if he would consider it. Wage-earners also bring up to us the point of pay for overtime work. Some of them represent that, as allowances are made for extreme strain in running machinery for longer periods and at a greater rate than is the ordinary normal practice, similarly an allowance should be made for overtime in the case of men. There is something of the kind in Germany, I believe. There the worker is allowed to invest his overtime pay in war savings without any deduction [ Interruption ]. I am not holding up Germany as an example to be copied in any way in this country.
I reject the analogy between the overtime work of men and the overtime work of machines, because the effects are shown so quickly in the case of a man and are so disastrous, resulting in a diminution instead of an increase in output, that the proper answer is that overtime on that basis should not be permitted at all. Then again it seems to me that a "Minister for Consumption" is the natural and logical counterpart to the Minister for Production. I am not at all sure that the lessons which have been hammered, one would have thought, into industry of the evil of undue hours of overtime are being fully appreciated at the present time. Certainly one receives representations from the workers that they are dragging bone and muscle out of themselves which ought to be compensated for just as taking the quality of a machine out of it has to be compensated for. We have got to a point where a survey by a Minister not immediately concerned would be an advantage to the State. These I give simply as examples of the smaller questions—smaller in comparison with the great issues we are at present considering—which come under the immediate review of the Chancellor of the Exchequer.
There are other questions to speak of, which are in all our minds. There has been mention, for instance, of direction of demand. I think we are agreed that in the conditions which are arising, which are likely to arise, the direction of demand in the post-war period will be of great importance. It is known to many who have given a good deal of attention to the matter that the provision of adequate food, adequate housing and adequate employment to the populations of the war areas, which includes our own, will be a task demanding the highest resources of statesmanship for years to come, and plainly a consumption policy is more likely to be comprehended by people and likely to lead to a proper production policy than vice versa .
It will require great efforts. In the case of food an adequate supply of such simple things as milk, eggs and fruit will mean, in the United States, an expansion of their agriculture ranging from 15 per cent. in some items to 100 per cent. in others. For Britain, figures at least as high will be required. For other countries very much higher figures will be required. Again, housing will be a very challenging issue. In Scotland we needed some 300,000 houses before the war. To make a job of it, you would need a programme of 500,000, but we never built before the war more than 20,000 houses a year. If you got a 50 per cent. expansion, 300,000 houses would be a 10 years' programme.
If the right hon. and gallant Gentleman knew of a demand for 300,000 houses, will he say why he built only 20,000?
I am willing to go into that with the Minister of Labour, though I am rather astonished at that observation from one with his experience. He will find in the records of his Department that there were vacancies every day for a considerable number of skilled housing operatives for which no people came forward. If he wishes to go into it further, he can do so with the Parliamentary Secretary for Works and Buildings, with whom I had many conferences on this matter. In a word, I would say that in Scotland there was a lack of skilled labour. There were jobs available every day through the whole year for skilled building operatives, even during the height of unemployment. On no occasion were those jobs taken.
We are discussing finance, not building.
I am sorry I was led away from my point. Let me return to what I was saying. It is simply that a programme which would require 10 years to carry out is clearly a programme which you could not ask the ordinary people of this country to tolerate—to wait for to years under the housing conditions which exist in Scotland. Therefore, when we are considering our schemes and developments, we should require something like 100,000 houses a year, which, as the Minister of Labour knows, means five men in the trade for every man in it previously. I merely put it before the Committee as a problem to be considered among all the problems put up by the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) yesterday, and to say that this is a problem which will require the closest examination and the highest statesmanship. It can be appropriately considered by a Government such as we have now, in which all sections of the community are equally concerned and equally trusted by those whom they represent. But these are matters for the future. At present we have the war, grim, inescapable. We should not do more than glance at these problems, but they certainly need to be considered. We have here a Budget which shows the Government working to an idea, working to a plan, working towards stabilisation, the avoidance of inflation. They are taking steps, they show that they know where they wish to go and that they have a clear idea of the means by which they are reaching that goal. If the nation felt equally sure about their progress in the field of war, it would be a great deal easier in mind than is the case to-day. In this Budget we are making progress. For that we thank the Minister and all those responsible, and for this Measure we assure him of our utmost support.
In addressing the Committee for the first time, I hope that I shall have extended to me that measure of kindly indulgence which, from my reading and conversation, I have learned that it has been the very happy custom of this House to extend to Members making their maiden speeches. I listened to the Chancellor's Budget speech and to the whole of the Debate yesterday. In the course of the Debate, my hon. Friend the Member for Kennington (Mr. Wilmot) rather deplored the use of the expression "equality of sacrifice" when referring to matters of taxation. He preferred the expression "contribution towards the national effort." But I think there is something in the expression "equality of sacrifice." The hon. and learned Member for Ashford (Mr. Spens) almost touched yesterday upon the point and scheme which I wish to put forward to-day. It is a matter of seeking further to limit and equalise individual expenditure. If there is a commodity available, people who have the money can undoubtedly buy it. My view is that we should take further steps in the direction of levelling individual expenditure, and of bringing about greater equality in the dipping-in, as it were, of individuals into the common pool. We have read, ever since the war started, slogans which have been plastered up and down the country, such as "Lend to Defend" and "Food is a Munition of War; do not waste it." These are good, useful exhortations to the public; but that kind of appeal really affects only the more decent, or more patriotic, type of people. There is no question that those slogans do not influence everybody's expenditure and saving. Something more should be done. Surely it should be made obligatory upon people who are not playing the game to conform to a decision which the Government regard as of some importance. Since my election, a surprisingly large number of people—men and women of the Forces, and not only political friends, but social friends and constituents—have begged me to tell the Government that the people of this country will stand a good deal more discipline if only the Government will give a lead in that direction.
The suggestion which I would put, with all modesty, before the Committee, the Chancellor, and, if he were here, my right hon. Friend the President of the Board of Trade, is to extend the points coupon system to its logical conclusion. The right hon. and gallant Gentleman the Member for Kelvingrove (Lieut.-Colonel Elliot) referred to the two kinds of currency now in circulation—not only ordinary currency, but also coupon currency. I would delete the word "points," and talk in terms of money coupons. The scheme is fraught, possibly, with administrative difficulties—I will not refer to them at the moment—but the scheme, roughly, is that any person who wants to buy anything, whether it be a book, food, cigarettes, drink, or anything else, should not only have the money in his pocket and put that down, but should have coupons for a corresponding amount in a book, which would be issued to him periodically. The book would be of a value to be decided by people much more expert than myself. The result would be much greater equality of individual spending, and it would also give people the same kind of choice that money does. It would also be an effective way of establishing a general scheme of rationing for all goods.
I understand from the Parliamentary Secretary to the Ministry of Food, and from what I have read in the newspapers, that there is some possibility of the introduction of a limit to the amount that people may pay for meals in restaurants and hotels. At any rate, it is in the air. If it is the Government's desire to do something about it, sooner or later, it seems to me that they are giving me my case. That is the kind of limitation I want to see. I am certain that that question of meals is trivial compared with the general matters which might arise. Clearly, there must be exceptions to this scheme. A newly-married couple, who are prepared to put down £250 to buy furniture, must not be expected to put down £250 worth of coupons as well, because that might use up all their coupons for the year. They should be able to go to some person, such as the Town Clerk, who would certify that they should be allowed to have the furniture. Then there would be invalids and others who need specially expensive foods. There are other exceptions, too. I should not object to people being allowed to play billiards for 2s. 6d. a 100 up, any more than I should object to the Chancellor of the Exchequer continuing his contributions to the Primrose League; those forms of expenditure would do no real harm.
I see a number of advantages which would result from the scheme I have proposed. The surplus cash which one could not spend would, I think, go, as a matter of course, into War Savings. That would remove the alleged necessity of Warship Weeks. If people had money in their current accounts for which they had no use, I imagine that they would, as a matter of course, put it into War Savings. We know that if a rumour spreads that there is going to be a shortage of, let us say, soap, in the near future, many people, without any unpatriotic motive, will, if they have the money, purchase enough to carry them over a certain number of months or years, as the case may be. That expenditure by people who happen to have the money might advance or precipitate a scarcity of that commodity. I think that if people had to consider whether they would use their coupons before they bought so much of that commodity the scarcity, imaginary or real, which was foreseen would not be precipitated. The scheme also, I think, would have a salutary effect on the black market. People go into the black market only because they want to get rich. Under this scheme, the motive would be removed altogether. Also, I think it might be, if I may be so bold as to say so, 9, perfect safeguard against inflation, which arises when credit and money circulate more quickly and the quantity of goods remains the same, or when credit and money remain the same and the quantity of goods decreases.
Another, and cognate, result would be to keep down prices. The only commodity which is rationed according to its money value at present is meat. When each person has is. to spend at the butcher's each week, everybody, according to what I have heard from butchers, asks, "What is the cheapest meat you have?" They do not want the most expensive cuts. They obviously find that their money goes further, and that is why meat is cut up into such extraordinary shapes at the present time. It would have the effect of keeping down prices. There would be no desire for any seller to raise prices artificially, because he would know that it would have the effect of restricting the amount of money-coupons he would get or that people would be likely to hand over. The scheme would have a salutary effect upon the members of the Forces and the poorer paid sections of the community, who know well that there is a great disparity between their moderate expenditure per week and the luxury expenditure of others, and it would also have a salutary effect upon those indulging themselves in this luxury spending. They would be surprised to find that they might get more real satisfaction from leading a more austere life than they are at the present time. The poor know well that there is a great disparity between their moderate expenditure per week and the luxury expenditure of others, and it would have a salutary effect upon those indulging themselves in these luxury wares. They would be surprised to find that they would get more real satisfaction from leading a more severe life than they are at the present time. It would also curb the unnecessary efforts of many people who are supplying goods which are not otherwise rationed.
I appreciate that the scheme is complicated. I have no Brains Trust to advise me, but I know that the right hon. Gentleman has one and that the President of the Board of Trade has another. I realise that there are tremendous difficulties, but the scheme is worthy of consideration. The only objection that can be raised against it is that it might remove the incentive of people to put in an extra amount of work. It might be argued that people would not go in for overtime because they would ask what was the good of the extra money to them. It might be said that people would not do so much work because the incentive of getting money in order to spend it would be removed. My answer to that is that, if goods are reduced at the present rate, this time next year there may not be any goods except bare necessities. If people are not likely to work because they cannot spend their surplus money on luxuries, the war may very well be lost. This might make certain people realise the importance of the difficulty in which we find ourselves to-day, and if the Chancellor of the Exchequer and the President of the Board of Trade would examine the scheme, they would, if that were possible, enhance their reputations, not only in this Committee but in the country.
I am sure that I am voicing the opinion of every Member of the Committee when I say how much we have enjoyed the clear and excellent speech to which we have just listened and the easy and natural manner in which my hon. Friend delivered it. For most Members the hardest Parliamentary task is the delivery of their maiden speech, but one of the most likeable things about the House of Commons is that it has a short memory for a bad speech but a long memory for a good one. My hon. Friend has made an excellent beginning, and we shall look forward to his contributions in the future whenever he cares to take part in the proceedings of this House.
I would like to offer the Chancellor of the Exchequer my congratulations on the competent way in which he has presented another Financial Statement to the House and also to thank him for his action in regard to post-war credits. Beginning in the first week in January, I had a number of opportunities of putting questions to workers' councils as to the advisability of giving the post-war credit more tangible form and the beneficial effect which such a step might have upon production. All were unanimous about the wisdom of the proposal, and, following the question which I put to the Chancellor of the Exchequer at the beginning of February, the Budget contains this generous provision. The post-war credit was introduced by my right hon. Friend last year not to bribe people to make them work harder, but as a contribution to stability in the post-war years. It is a great pity that it should be made a subject of derision, and, in some cases, even of contempt. The stability of the post-war years will be just as essential as our military qualities during this war, and to begin to treat the contribution made by my right hon. Friend with derision is to make certain the continuance along that rather dangerous path of cynicism which did so much harm to national welfare during 20 years of false peace.
I was glad also that the Chancellor of the Exchequer qualified what he said about the post-war years by stressing the condition of the export trade as the governing factor. But even after the ending of the war, even if we were to get our export trade back to where it was in 1939, it would only solve our problems in so far as they have been solved in the pre-war years. Great domestic problems which centred upon the coal trade or the Lancashire cotton industry still have to be settled if we are to avoid an evil as bad as war itself—that of unemployment. After the last war no effective steps were taken with regard to Lord Haldane's report upon the machinery of government, and in the years preceding this war we had the most excellent report from Sir Montague Barlow on the distribution of the industrial population. Perhaps when this war is over effective steps along these lines may be possible, but in his Budget Statement my right hon. Friend stressed his anxiety by posing to the Committee this question: "Is the money being carefully and wisely spent?" Surely in the future that will be governed by the success or otherwise of the general staff of war production set up by the Minister of Production. In his Financial Statement on waste and extravagance, my right hon. Friend said: planning and execution, but little was said about supervision. The planning and execution of the programme of our war effort will spend money, but supervision is the real efficiency bar and that is the point where the answer will be found as to whether or not money is being carefully and wisely spent.
I would ask my right hon. Friend to consider setting up an independent tribunal to review the whole of our war production. I think a far more effective outside audit, independent of Departments, must come into being. The work which is being done by the Select Committee on National Expenditure, good as it is, is not now sufficient to give to the House of Commons and to the nation the special information which it ought now to enjoy. Many factors face the Government, some of them exceedingly difficult. Many are not discussable on the Floor of the House. Three months ago the Prime Minister gave us a time-table measurement of our expenditure and production effort—the first year, nothing at all; the second year, not much; the third year, quite a lot; and the fourth year, all you want. Nobody will quarrel with that illustration but what did surprise me was that the Prime Minister began his time table from the outbreak of war on 3rd September, 1939. I have always considered that the introduction of the first Defence Loans Act for £1,500,000,000 in February, 1937, marked in the sharpest possible way the dividing line between the years of peace and war. If the nation had really faced up to its responsibility, we should now be at the stage of getting all we want, and the nation would be now at the full stage of total war.
In giving us that time table of expenditure and production the Prime Minister also said that the crisis of equipment was largely over. I question his wisdom in using that phrase. Apart from human life wastage on a modern battlefield is simply enormous. In Libya both sides have had to stand aside on numerous occasions to refit and reorganise. A Fleet action can be broken off in a few hours, but a land operation is continuous for days, weeks and sometimes months. In my opinion when the figures in connection with the battles in North Africa can be announced those who think too much about the Prime Minister's optimism in regard to equipment are likely to get something of a shock. I think we are coming to a time when calling up will be substantially in excess of the means of equipping oceans, battlefields and the skies with the munitions of war. Surely our real task is to place the maximum amount of destructive power in the minimum number of hands. In those circumstances numbers are really less important than equipment. I would ask my right hon. Friend to direct his attention to the Army in this respect; it must have a greater flow of weapons of the right kind and at the right time. To improve the liaison between the battlefield and the factory my right hon. Friend ought to consider the setting-up of the old office of the Master-General of Ordnance.
In August of last year the Chancellor issued a White Paper dealing with the problem of wages and prices. I have a lot of general information on the subject, like most Members, but it could have been collected by any ordinary citizen who was aware of the dangerous tendencies which are now proving, I think, to the country that inflation may not be avoided. My right hon. Friend has done much over the last two years to prevent inflation. I have no liking for the new Treasury label-controlled inflation. It seems to me a direct contradiction in terms. We shall have to take far more drastic steps on the basis of a wages and prices policy. Price stabilisation and industrial policy, by its title, indicates that it is a key not only to the war years but to the post-war years as well. I do not want our people to return to the industrial conditions of the years of peace. Therefore, I think the important battle for all of us is the battle against inflation. The House of Commons can make its best subscription to the war effort by taking care of the domestic tasks at home and leaving the tasks of the battlefield, the oceans and the air to their chosen commanders. If we can do that we shall render the greatest service to the course of the war and what might follow this war.
I see it has been printed in certain papers that this is likely to be my right hon. Friend's last Budget. Evidently my right hon. Friend has not seen it. I do not subscribe to that view at all. I think my right hon. Friend as Chancellor of the Exchequer has done a good job of work for the nation. To take him away from the Treasury now, in the midst of his complicated task, about which he has learned so much in the last two years, would be an unfortunate and unhappy event for the House of Commons. I hope it will not happen. When he comes to make his next Financial Statement, which I hope may be next year, he will perhaps be able to do a little more to improve the circumstances of the post-war credit. He has gone as far as he possibly can at the moment by the issue of a certificate. Let us accept that credit as a serious thing for post-war years and let us make a success of it. I thank my right hon. Friend for the step he has taken.
I wish at once to tender my congratulations to the Chancellor of the Exchequer on his feat—there seems to be no other word for it—in precenting this Budget with the agreement, so far as I can see, of everyone concerned. Although it hurts abominably, I agree with my grandfather, who used to say, "You cannot get the thing, but there it is." But when the right hon Gentleman talks about the method of taxation of working men I, who was sitting among my Conservative friends to keep myself in a proper state of mind and balance, said to myself that I did not agree with it. If it is not possible to tax the working man week by week, then somebody is not trying. The procedure he suggested to the Committee, I take it, will be the method shown in the White Paper. It states on page 4 how the system has worked. It has not worked easily or smoothly, nor is there any great haste about it. It says in paragraph 12, as if it was something to be grateful about, that something less than three months' trial is required. All the vitamins of the Budget, so to speak, are included to show the method that is adopted of getting taxation from the working man. Obviously, then, it is no simple matter, but I agree with the Financial Secretary that it is no use simply demurring unless one has some suggestion to make.
I have taken the pains to look up the system of weekly taxation of workmen's wages which has been in existence for some years in Queensland, Australia. I have obtained a copy of the Queensland Year Book for last year, and I will tell the Committee how the system functions there. It is called the Income (State Development) Tax. It was called the State Development Tax presumably in order to get over the antipathy of the Labour party to a wages tax. When the Chancellor said that he could not get the employers or the trade unions to agree to any such simple method, I was not surprised. Why should the employers agree to have another clerk to deal with this specific matter? Why should they be bothered to make two deductions, first for the Unemployment Fund, and secondly, for the Income Tax?
According to the Queensland Year Book, the State Development Tax Fund is administered by the Department of Labour and Industry. The Income Tax Acts, 1930–35, were repealed by the Income (State Development) Tax Act, 1938. I have seen the provisions of that Act. A special tax is levied on income from employment, through employers, and as defined in the Acts; and secondly, on other income directed by the Commissioner of Taxes. That is to say, the income tax on a workman's wages is assessed week by week according to certain specific rates to the £, but other income is never disclosed to the workman's employer, this other income being assessed in the ordinary way. When allowances due to a man have not been given to him and he is overcharged, he can make a recovery. I am told that the system works smoothly and well. There is a differentiation in what is considered the taxable income in four parts of the State. I cannot imagine why there should be this differentiation, unless it is because in some districts industry is more developed and wages are higher. It may be a question of the agricultural districts as compared with the industrial districts. The rates of tax in operation from 31st March, 1941, are as follow, in pence per £: 3d. on incomes from £232 to £247; 6d. on incomes from £248 to £499; 9d. on incomes of £500 and over. Special rates apply to certain casual and seasonal workers. The taxation is collected through employers by means of stamps obtainable from Labour Agents or from the Director of Labour. Employers of 10 or more employés may remit by cheque fortnightly as per the schedule supplied. As regards the yearly assessment of other income, the ordinary assessment is made, and collection is made through the Commissioner of Taxes on returns supplied for income tax purposes. Thus, private information which an employé does not want his employer to know is not disclosed to the employer.
Does not my hon. Friend agree that what he has said comes to this, that those people who obtain the least wages and, therefore, have the right to reclaim afterwards, are paying to the State something which they ought never to have paid, and they have therefore to get it back?
That is, of course, the function of the assessment for income tax. This scheme has been working for some years in Queensland, and the fear of the Labour party concerning the incidence of a wages tax has been done away with altogether. What is the result of this scheme? Two-thirds of the income tax of Queensland is secured from the fund created by the taxation week by week of wage-earners. The income tax receipts amounted to £3,452,000 in 1939–40, and this fund amounted to £2,255,000. I suggest that that is a scheme which the Treasury might well consider. If it can be carried out in Queensland, it could be carried out here. The scheme was introduced in Queensland for the purpose of raising money for the development of the young State of Queensland, a very laudable object, but not so laudable as our aim of fighting for our very existence. The scheme works smoothly and well in Queensland because all other income of the wage-earner is assessed separately and considered.
I agree with much that was said by hon. Members yesterday, who spoke against the method suggested in the White Paper. I can assure the Chancellor of the Exchequer that there is serious discontent among the workers in the North-East. I know what is happening in Tyneside, and what is being said there. The men always ask why the Income Tax cannot be deducted as they receive their wages, instead of being deducted three or six months later. If such a scheme were adopted, the psychological effect would be tremendous. I am sure it would stop absenteeism and would produce a remarkable effort in favour of the war. I was told by friends of mine to wait and see what happened to war savings when Income Tax had to be paid by the workers. To the credit of the working men, the result has not been as bad as some thought. War savings do not seem to have lessened at all, but how much more might have been done if they had known precisely where they stood in regard to taxation? I suggest that there should be a further inquiry into the matter. I am glad to hear that the Chancellor has not closed his mind on the subject. Such an inquiry as I suggest should not be undertaken by big business men or by trade unions. Let some small committee be composed geographically with members from different parts of the country, and let them make a report to the Chancellor as speedily as possible, so that we can see whether there is anything in this project or not.
It is not often that I address the Committee, and I do so to-day with more than ordinary diffidence, because, as I was trying the other day to compose my annual oration on the Budget, it seemed to me that the urgency of discussing such matters as rates of interest, post-war credits and so on was somewhat unreal against the background of the loss of the "Dorsetshire" and "Hermes" and the spectacle of a Japanese fleet at large in the Indian Ocean. However, in spite of all this, we must continue to pound out our daily stuff; the work of the fields, the chores of the home, and the labours of the tax-gatherer must carry on, whatever betides.
I should like to offer a few remarks upon the general subject of faith and confidence. For confidence is not only the basis of private lending and therefore of Government borrowing and Government solvency; it is also the mainspring of every human activity in every sphere of life and a fortiori it is the mainspring of our war effort in this conflict. It is confidence between man and man that makes a Prime Minister: it is confidence between a man and a woman that makes each say to the other, "I trust you" and so makes a human being; it is confidence which enables an Auchinleck or a Rommel to grasp victory out of disaster. It may be said that situations, such as those which have arisen in Libya on both sides, are never desperate in themselves, but that sometimes individuals are found to despair of them. For this reason I feel that criticism of ourselves, of the Government, and of all things English has been one of the most deplorable factors in our national life during the past few months, both inside and outside Parliament and in the Press. It would be a terrible thing if we lost faith in ourselves, and such continuous attempts to run ourselves down are liable to have that effect. If we should lose faith in ourselves, the whole structure of things would fall, and with it the mere detail of currency.
It is for this reason that my admiration of the Chancellor's Budget is so whole-hearted. His speech, in its record of what has been accomplished in the fields of taxation, of savings, of financial arrangements with our friends in North America, of price control, and of rationing of essentials and in addition the supporting figures, particularly in Command Paper 6347 which has been issued, combine to offer abundant evidence of the fact that the Government know their job in these technical fields. The Budget is so clearly founded on the essentials of the situation that there is no doubt that it generally commands support. I think that my right hon. Friend's Budget is a very great and important contribution to maintaining our faith in ourselves and our confidence in ultimate victory. I am glad that for the past few months there has been less talk about inflation. It is a pity we use, that term so much. It defines nothing; it is merely a characterisation of a condition we are afraid of, of a run-away currency. The seeds of what is called inflation are sown when the decision to use credit is made. That decision was inevitable; and in any case is irrevocable; but the condition associated in the minds of most of us with what is called inflation, namely, a run-away currency, does not arise and will not arise until and unless we lose faith in ourselves and in each other. The problem of avoiding inflation is therefore not solely fiscal, but is partly psychological. That is another reason why we should all, in our words and actions, try to build up rather than destroy confidence and towards maintaining our faith in ourselves and our admiration for each other as fellow members of a mighty army which believes in the freedom of the human spirit.
There is no reason why there should be any loss of confidence arising, for instance, our of the present size of the National Debt. If, as a result of the war, the National Debt should be increased by, say, £10,000,000,000, the increased tax tax burden resulting therefrom would only amount to about a fifth to a sixth of the national tax burden of 1936. That in itself is not an insupportable prospect. It is not an unmanageable problem. The potential exhaustion of our foreign assets, or the possibility of a permanent diminution in our trade with the outside world, would present us with far more serious financial problems than an increase of the debt by £10,000,000,000.
I think the Government approach during past years to the problem of war finance has been on the whole conceived on sound lines. The weight has been really, as I see it, more upon the use of physical than of fiscal means to deal with the problems which arise. War finance differs from peace finance in that war, which knows only the present tense, is concerned not so much with the recording of transactions as with carrying them out. It is concerned much more with the application of men and materials to a given task and at a given time and place than with the records of such happenings in books of account. While, therefore, nothing is absolutely anything, nevertheless war-time finance tends to be consequential rather than causal. I have heard it described—it may be somewhat of an exaggeration—as what you write on a piece of paper after you have decided to do something about men and materials. Provided that the decision about men and materials is right and timely, it does not matter so much what you write on the piece of paper. I do not say it is not important, but it does not matter so much whether you add a nought nor what is the colour of the paper. What matters is that the decision about the men and materials should be right and timely, and all the other things will come into place.
These may appear strange doctrines in the mouth of orthodox finance. I do not mean to suggest that we should not strive to keep proper accounts, nor strive to keep down expenses, but rather that when we are considering matters of taxation, whether Income Tax or Excess Profits Tax, when we are considering profiteering, whether in enterprise or in wages, our anxieties should centre not so much on how much money a man has or is getting and how he is spending it, as on how much time he has and how he is spending that. For that reason the physical measures that are taken outweigh in their importance the fiscal measures. After all, the reflection that time is money brings us back to orthodoxy by another and a more practical route. Provided, therefore, that we can succeed in making the rationing of essentials effective—an important proviso—we need not fear the effects of a rise in prices in those articles which fall into the category of non-essentials. On the contrary, I think we can allow such a rise to take its course as being what Mr. Keynes has described as "nature's cure for inaction."
The hon. Member for Walsall (Sir G. Schuster) asked in effect who is the Great Panjandrum of economics in the Government. Who is it who really gathers the whole "sorry scheme of things entire" together and sorts it out and tells all his colleagues in the Government what they ought to do? In developing this idea, the hon. Member showed a desire for greater consistency between different aspects of Government policy. I think his aspirations are in line with the orderly habits of mind and the great personal industry which we have all learned to associate with him, but I do not think they are quite practical. He implied how much better that kind of thing is done in Germany, and how much tidier things are in Germany; but perhaps we have a sense of proportion and a saving grace here which tells us that nothing is an end in itself, neither economics nor administration, let alone consistency. But it was an interesting question, particularly because it was addressed to the Chancellor of the Exchequer, and it found a reflection in some remarks by a right hon. Gentleman who spoke earlier to-day. The answer to the question of the hon. Member for Walsall is that the mind which must conceive and understand the economic structure of the country must, of necessity, reside in the Treasury. It is, by the nature of things, there that the activities of the nation are photographed in terms of money. There it is that the picture can be understood. It is a very different matter who shall have power to act upon that information. That must necessarily be a practical compromise between different Members of the Government in the Cabinet as a whole: but the true answer to the hon. Member's question is the Budget itself, which brings out the undoubted fact that the whole of the nation's activities, photographed in finance, are here brought to a focus. In that process the mind of a Catto, a Keynes and a Henderson are complementary to each other, each covering a different field. The Chancellor is able to pick the brains of all three, and of others. There can be no super-economist who could grasp the whole scheme, but there in the Treasury resides the collective mind which photographs the activities of the nation. It is for that reason that I was so much interested in' what my right hon. Friend said to-day when he suggested that the Chancellor of the Exchequer ought to be in the War Cabinet. I do not know that it very much matters whether he is inside the door or not, provided that at any rate he is just outside and can come in when he is wanted, which I think must be the whole time.
A good deal of the speech of the hon. Member for East Stirling (Mr. Woodburn) was taken up with a reference to the rates of interest on Government debt and to the idea, which is very prevalent, that the Government are being unnecessarily extravagant in allowing conversion to take place from Treasury certificates which carry only 1¼ per cent., to longer term debt carrying higher rates of interest. Most of his argument was based upon a conception which is widely current, but which, I suggest, is slightly inaccurate. It is that the banks create credit.
Hear, hear.
I seem to remember my hon. Friend the Member for Lowestoft (Mr. Loftus) making a speech some time ago in which he quoted Mr. McKenna as saying that. It may seem an awful thing to suggest that Mr. McKenna may have been wrong, but I take upon myself to suggest that, if he is correctly quoted as having said that the banks create credit, he is guilty of a slight terminological inexactitude. I think that the exact statement should be that banks exchange credit with their customers. That may seem to be a very slight difference. It is almost impossible to develop such a subject in a Debate across the Floor of the House because of the impossibility of exact statement. One has to sit down round a table with pencil and paper and work it out. If, however, there is anything in what I have suggested, namely, a distinction between the banks exchanging credit with their customers and the idea of banks creating credit, much of the prejudice and misconception about this subject will fall away.
The quotations I made were not only from Mr. McKenna but from the "Encyclopaedia Britannica," latest edition, which gives the late Sir Edward Holden, chairman of the Midland Bank, and the President of the Federal Reserve Bank, as saying definitely that when a bank makes a loan that loan creates a corresponding deposit, and that banks do not lend their customers money as commonly understood to any great extent.
I am not sure now whether my hon. Friend is agreeing or disagreeing with me, but his intervention illustrates the difficult of conducting a discussion on this matter across the Floor of the House.
In expressing to the Chancellor my whole-hearted support of his Budget, I hope he will not mind if I venture to express disagreement on a purely administrative detail. I am disappointed at the conclusion he has come to with regard to the deduction of Schedule E Income Tax. I have carefully read Cmd. Paper 6348, in which the reasons for sticking to the present policy, with slight amendments, are set forth. Without making a long story of it, I must say that the arguments in this Cmd. Paper do not entirely convince me. The suggestion that others in this House who have different ideas should work out a scheme is not practical. We have not at our command sufficient facts to enable us to put forward a workable scheme. If some of us had a period of time, I have no doubt we could produce something, but alternative schemes have been put forward by bodies well qualified to do it. I believe that one was put forward by the Inland Revenue Staff Federation, who issued a booklet the other day which contained several schemes. It was put forward by a body of men who are closely connected with the actual working of the scheme of Income Tax collection. That suggests that some such scheme is practicable. I am bound to say that as I read Cmd. Paper 6348 the impression created on my mind was that it was a piece of special pleading; it was a case for not doing something made out by somebody who did not want to do it. I am sorry to put it in those terms, but that was the impression created in my mind.
I hope, therefore, that my right hon. Friend will reconsider this matter and see whether it may not be possible to make in respect of Schedule E the period of assessment, the taxable year, and the period of deduction all coincide. I believe that it can be done. It seems that the problem centres upon the fact that at some time in the year the taxpayer has to sit down with the tax gatherer and reach a final determination of his liability for tax. It does not seem very important whether that sit-down takes place before or after deduction of tax has started. If it takes place after, we want the deductions to approximate to the ultimate liability as nearly on average as it is practicable to estimate. The principal argument in Cmd. Paper 6348 against a change of the present system centres upon two things. One is the responsibility of the employer, the other is the desire not to make it necessary for the individual taxpayer to disclose his private affairs to his employer.
Those are weighty objections, but I believe there are ways in which they can be got round. Speaking for myself, I have long ceased to regard the second objection. I have long ago realised that there is no such thing as privacy about private affairs. I am subject to an annual and most exhaustive means test to determine how much I shall pay the Government, and I have no longer any awkward feelings about disclosing my circumstances to the tax gatherer. It is, however, a weighty objection that we should, if possible, respect privacy. I think that there is a way in which it can be done and a way in which the difficulty with regard to the responsibility of the employer in respect of the deduction of tax can be overcome. I hope, therefore, that my right hon. Friend will look into these matters again and see whether he can do something to meet what appears to be a general wish in every quarter of the Committee for a simplification of the collection of tax. My right hon. Friend will, I am sure, appreciate that I am talking solely of a detail in the Budget and that my mention of it in no way qualifies my whole-hearted admiration of what he has done and the tremendous background that lies behind this Budget, showing that my right hon. Friend commands the services of people in the realm of finance and economics who really understand what they are about.
I should like to add a word of congratulation to those which were pleasantly expressed by my hon. Friend the Member for Eccles (Mr. Cary) on the maiden speech delivered to-day by my hon. Friend the Member for Nuneaton (Mr. Bowles). I have listened to many maiden speeches in the House, but I do not think I have ever listened to one that had a better blend of knowledge, confidence and warmth. My hon. Friend made, in my view, a real contribution to Parliamentary Debate, and, if I may say so to the Financial Secretary, a contribution that needs some day, if not to-day, a considered reply from the Government Front Bench. I sometimes think the Government are in need not so much of the advice of skilled economists as of skilled psychologists. There is a growing resentment, expressing itself in all sorts of ways, against the continuance in a period of desperate warfare of grave and wide disparities in our social life. A former hon. Member of this House who is now a Member of the other House said many years ago in moving an Amendment to the King's Speech dealing with single Chamber Government,
This encourages me to underline the plea made by my hon. Friend the Member for Leigh (Mr. Tinker) on the first day of this Debate. Many of his friends in this House are considerably indebted to him for the persistent way in which he pursues the subject of old age pensions. I cannot believe that even in a period of grave financial difficulty, which I would not for a moment minimise, it is necessary for the successful prosecution of the war to condemn several hundred thousand people to a life of poverty and penury. I do not wish to elaborate the point this afternoon, but I would ask the Financial Secretary to the Treasury to look at it in this sense. The maximum income of a couple of old age pensioners from public sources is 32s. a week. Out of that amount must be found rent, food, clothing and all other requirements. The War Services Grants Advisory Committee has now established an entirely different standard, allowing 16s. for every adult for food and clothing and other comparable necessities, with added payments for standing charges. If the same standard were applied to old age pensioners an old couple would get 32s. a week for food, clothing and other necessities and an added payment of anything from 10s. to £1 for other standing charges. In one form or another, either in the form proposed by my hon. Friend the Member for Nuneaton or in some other form—perhaps by the even more stringent use of the instrument of direct taxation or so using death duties as to extinguish inherited wealth—there must be a narrowing of this intolerable gap in disparity.
I really rose to say a special word on another matter altogether: it was referred to in the Chancellor's speech and is within the purview of this Debate. Some six weeks ago my hon. Friend the Member for Chesterfield (Mr. Benson) raised the question of the direction and the conduct of the National Savings Movement. I wish to say nothing about its conduct but something about its direction. The Financial Secretary to the Treasury purported to reply to the criticism of my hon. Friend, but he did not satisfy me. In my view the real purpose of the National Savings Movement is being seriously perverted for the sake of purely spectacular display. The whole thing is being treated as though we can finance the war with a programme of competitive carnivals. We have just had a war savings week in London which has reached the figure of nearly £150,000,000. I know that many people regard that as very fine indeed. I make no bones about my view: I regard it as a piece of culminating nonsense. The greater part of the money was transferred savings, money which through the banks would have gone into war investment in any case, and very probably it came in one form or another out of Government deposits. But this is the serious part of it, that only a very small part of that astronomical figure represented a voluntary restriction of spending.
This point must be seized by the National Savings Movement and the Treasury, that it is the multitude of small savers and small investors that really count and matter. Even the Chancellor of the Exchequer appeared definitely to share that view. I strongly urge that the use of these astronomical, almost meaningless, figures tends to discourage the important small saver, because he cannot believe that his small weekly saving of 5s. or 10s. is worth anything alongside the figure of £45,000,000 for a county or £150,000,000 for London. In my view this is very dangerous indeed, because the very reverse is the case. I repeat that it is the multitude of small savers that matter. I yield to nobody in my admiration for the many voluntary helpers in connection with this work. Without reflecting upon what other Members may do, I doubt whether many hon. Members have succumbed more often to the appeals for assistance with war savings weeks. My personal association with officers of the National Savings Movement has been most happy. It is said now that we are to have airship weeks. I would not in the least discourage them, but I do hope that a new target will be found, a target of regular savers. A regular saving of 5s. a week by a miner in my constituency is worth more than any cheque that I can think of. The organisation of regular saving means a constant restriction of consumption and expenditure upon consumption, and therefore contributes to financial stability far more than does the transfer of astronomical figures from one form of savings to another.
There is another and most important aspect of this matter. It never seems to have dawned, so far as I can discover, upon the National Savings Movement that in this movement you can have two advantages and two virtues. It is curious that, while it is now very important to save, in the post-war years, consistent with the availability of supplies, it will then become just as important to spend. If we are to demobilise, not from the regiment to the employment exchange but from the regiment to employment, there must be an effective economic demand. The man who regularly saves 5s. a week is far more likely to use his accumulated savings in expressing an effective economic demand for food, clothing, furniture and boots than the man who makes a contribution of £5,000. In my view it is more important than the Financial Secretary to the Treasury seems to recognise that we should stimulate and encourage, and organise, regular savings in small parcels.
I do not know why the hon. Gentleman says that I fail to recognise that fact. I have never made a speech since the campaign started without that being the whole theme.
The Financial Secretary need not look at me with such profound contempt. I do not deserve it. All I said was that the speech he made in reply to my hon. Friend the Member for Chesterfield (Mr. Benson) did not carry with it, to my mind, the hall-mark of conviction. Nothing that the savings movement has ever said or issued has showed that it recognises those two fundamental truths, that in the main the small contribution is the savings certificate, is the restrictions of spending and therefore the restriction of consumption in the main, and the large cheque is nothing of the kind; and the second point about effective economic demand in the early post-war years. The man who now saves in small parcels is much more likely to spend those small parcels in expressing an effective economic demand than the man who makes a mere transfer of £10,000 from one form of saving to another. I hope that this matter will be most carefully considered by the Treasury and by the National Savings Movement, so that if we are to have an airship week's campaign this summer we shall have a new target that will encourage the small saver and not discourage him, as I believe these meaningless figures now do.
If we disregard the consequences of the Budget and regard the Budget as a piece of machinery for restricting consumption, we can say that the Budget has been a success.
That is all it is.
I believe it has already been said this morning that money does not count.
It never did.
Nevertheless, its direction is most important. In the Command Paper which has been issued, some idea is given of what the Chancellor of the Exchequer is trying to achieve. We are dealing with a Budget of £4,500,000,000, and we are to make that good by a revenue of £2,400,000,000. The balance, to be provided from "savings and other sources," is£2,100,000,000. I am glad to see in the analysis that savings are referred to, but I should have thought the order would be reversed and put this way:
I will tell the Committee what I believe to be the other sources, and perhaps the Financial Secretary to the Treasury will say whether I am right or wrong. Number one I take to be investments, or open- market operations, which mean that the banking system has purchased Government securities upon which interest is paid to them. In accordance with the latest records, that total is no less than £725,000,000. Item number two under the heading "other sources" is bankers' deposit receipts. These at the moment total £725,000,000. Number three is the short-term money, which is invariably subscribed from Treasury loans. To-day that figure is approximately £2,500,000,000. Those are the other sources which I conclude are referred to in the analysis.
All the items to which I have referred are financed by bank money. What is bank money? It has been suggested that it comes into existence by a bookkeeping transaction. Let us see exactly what it is. There is one way of creating bank credits. I hope that the Financial Secretary to the Treasury will contradict me if I am wrong. The Bank of England decide, say, to have an open-market operation, and purchase Government securities. The vendors of those securities will receive, in due course, a draft from the Bank of England and will place that draft, in due course, into their joint stock bank. When that draft goes through the clearing house, money is not displaced at all. It merely creates cash in the Bank of England to the credit of the joint stock bank in which the vendors of the securities have placed that draft. Therefore, on that cash which is in the Bank of England to the credit of the joint stock bank, the joint stock bank can properly—I am not taking any exception to it, but I want people to understand that it is upon their credit that the war is being financed and not upon the facilities of any banking system.
On the people's credit?
Yes, on the people's credit. Therefore, the banking system have got that cash to their credit. If they have £1,000,000 from vendors' securities at the Bank of England, the joint stock banks will then pyramid that up and produce the sum of £10,000,000. These are the resources, I submit, which are referred to in the analysis and which I think should be made more clear in order to satisfy the public. What does this mean from the point of view of income as far as the banking system is concerned? I estimate that at the present time the banking system is receiving, from the securities held and the facilities given by it to the Government at the present time, an annual income of no less than £60,000,000. I do not object to that, because that is the system, it is what we accept as being the orthodox method of finance, but I would like to draw the attention of the Committee to the fact that in September, 1939, the Monetary Committee of the Federation of Master Cotton Spinners and the Parliamentary Monetary Committee issued a circular to every Member of the House of Commons. This is what that circular said:
One of the points regarding the Budget itself to which I should like to refer is this: I would like to compliment the Chancellor of the Exchequer for continuing price stabilisation. It cost us last year £125,000,000, but the important thing is that everybody has to contribute his share. Obviously there are occasions when something occurs, either externally or internally, which would normally be reflected in the price level, and I think it is quite right that the State should shoulder the responsibility. After all, it is only a balancing factor and does not necessarily mean that the State will definitely be the loser by adopting this, as I hope it will, as a part of its permanent policy, because there would be occasions where they might get the benefit of the adjustment of prices in the opposite direction.
Speaking not only as a Member of Parliament who has a heavy correspondence with his constituents, but also as an industrialist who is concerned in the employment of several thousand workpeople, I have found that the workers do not object to paying their share of the cost of the war. They are most loyal in this war and will do everything they can, but they feel that there is an amount of uncertainty, a certain amount of advantage being taken of their position in this matter, and this creates a suspicion which I would say quite definitely to the Financial Secretary has interfered with production. Two classes of workers are affected. Those who are in receipt of a fairly even weekly income, year in and year out. With that section, the objection to the method adopted by the Treasury has not been very great. The other section are the seasonal workers, and from that source the complaints have been very severe. The right hon. and gallant Member for Kelvingrove (Lieut.-Colonel Elliot), who spoke earlier, seemed to think that there is nobody in this House who has either the experience or the ability to devise, a system which would be practicable and equitable. What do the workers want? They want to pay their share, but they want to feel that in paying their share they are doing so under a just system, which takes proper account of circumstances, whether they are in regular employment or not. It seems to me that questions of the allowances due under various heads are only drawn in to make the position unnecessarily complicated, and I think that such items could be dealt with separately.
I said that the Budget was designed with the idea of limiting consumption. I would now like to stress the importance of limiting consumption. True, the working people to-day are in receipt in the aggregate of the largest wage packet that the workers of this country have ever experienced, and numerous methods have been designed for the purpose of getting that out of their pockets and loaned to the Government, a very proper course to adopt, but I really do not think that we have now advanced far enough. Inflation has definitely taken place up to a point. I would put inflation at 17 per cent., but it is controlled inflation, and I am not in the least concerned or worried about it, but I do feel that there has to be some greater force used to extract from the workers a bigger percentage of purchasing power.
Would the hon. Member say what he means in stating that he puts inflation at 17 per cent.? How does he measure it?
What I mean is that the purchasing power of the £ is 17 per cent. less than on 3rd September, 1939.
Do I understand the hon. Member to mean by that that one can buy to-day for £1 what one could have bought before the war for 16s.? Does he give that as an acid test of inflation?
Not necessarily. Probably the hon. Member has in mind a bottle of gin or whisky.
Any commodity.
A certain amount of inflation has taken place. I would like to say to those who are responsible for carrying out the process of extracting money from the public for war savings that it would be advisable for them to adopt a different method of fixing the target. The present method puts an entirely wrong aspect on the situation. You should go into a large or small community and make it clear to the people there that it is their savings which are the only real savings that count, and fix the target on that basis, instead of saying, "Your target is £1,500,000," as it was in my constituency, in which not 10 per cent. was real money. If you had gone out for your 10 per cent. and made the position plain and clear to your people, you would probably have got a much greater percentage than 10 per cent. I hope that a different method of arriving at the target will be adopted.
I have congratulated the Chancellor of the Exchequer more than once on the way in which he has handled the present financial situation. I do not think that during the course of the war we need have very much fear of inflation. The position seems to be well in hand, but I have very grave doubts as to what might be the position at the conclusion of the war. That is the time, I think, when we have to fear a greater measure of inflation. We have now had an alteration in the Excess Profits Tax so far as the post-war credit is concerned. We already know the position regarding the post-war credit taken from wages. A situation will be created which might have very serious consequences. I would ask the Chancellor of the Exchequer whether it is the intention of the Treasury that those sums of money which come under the heading of post-war credits are to be liquidated by launching very heavy loans at a time when the savings may not be there, or shall we liquidate them by the creation of some form of new money which would not in itself create a burden upon the community and the taxpayers as a whole? I ask this, because the method which is adopted to liquidate these post-war credits will be vital. There has been a hesitancy on the part of the Treasury to state what will be the position of post-war credits after the war, but it would be inadvisable to propose an indefinite postponement of the method by which it is intended to liquidate these credits.
The next item to which I should like to refer is that of farmers' Income Tax. I would say to the Chancellor of the Exchequer that this is a matter which requires very grave consideration. After all, we are approaching the winter, which will be perhaps the most critical winter this country has ever experienced, and we want as much food from the land of this country as it is possible for us to produce. Therefore I ask the Chancellor of the Exchequer to announce as early as possible what proposal he intends to submit for the valuation of farmers' stocks—livestock—because it may well be that the whole of a farmer's profits might come under the heading of increased capital value and that his trading profits might be nil. What is to be the position if that is the case? I submit it will be the case in respect of a very large number of the farmers, and it will mean that they will have to sell their stock. We shall then be approaching the position that we shall be short of meat. I would say to the Chancellor that when he comes to an- nounce his method of valuation of livestock he will have carefully to consider that.
In connection with Excess Profits Tax, the farmer can take stock either at cost or market value, whichever is the lesser. Does that apply to Income Tax?
I do not know. The Chancellor has not yet disclosed what the method is to be. I wish to refer to the Lease-Lend arrangements, because I wish to put on record my tribute to the American people for what they are doing in this war. True, it took them a long time to become realists in this world war, but now that they have become realists the services and help which they are giving in the cause of the freedom and liberty of the people of the world are immeasureable. I should like also to refer to what Canada is doing for us. A small country, one of the members of the British Commonwealth of Nations, with a population of approximately 10,000,000, is making a present in effect to the Mother Country of £250,000,000. I think that this is very magnificent help by one of the sister nations in this British Commonwealth of Nations. I should not like to conclude without paying my tribute to America and Canada.
I propose to leave the realms of economic, monetary, and banking theory, and to undertake the more difficult task of trying to soften the stony heart of the Treasury and to obtain a small concession from the Chancellor. The small community for which I hope to obtain this concession is that part of the Mercantile Marine which is engaged in the coast-wise trade. No section of the community displays more heroism, undergoes more perils, or deserves better of the State, than the Mercantile Marine. The Mercantile Marine, for this purpose, may be divided into two parts, the coast-wise and the ocean-going ships. In common with those of the Royal Navy, officers and men of the ocean-going ships get their tobacco duty-free. Those engaged in coast-wise trade do not. The Committee will agree that that is a manifest injustice. The men run the same dangers, the same perils, and they have the same Service conditions; but those engaged in coast-wise trade carry an extra financial burden. The coast-wise seamen have the same taste in tobacco and everything else as their ocean-going comrades. What I ask is that they shall be allowed to buy their tobacco duty-free, or partly duty-free. Before last Tuesday I should have hesitated to ask for this concession, because I should have expected the Chancellor to reply that it would be impossible to grant it; but, since he has announced that he is making a similar concession to members of the Armed Forces, other than the Royal Navy, it is only reasonable that he should be asked to make it in the case of these men. That is all I have to say. In giving consideration to this plea, I hope that he will count it to my credit that I have not taken up the time of the Committee for long.
There seems to have been running right through this Debate an undercurrent of suggestion that finance really does not matter; that the figures are so stupendous that they have no meaning; that we are concerned not with the figures, but with the things. It may be true that we are concerned about things: it may be true that we can neglect finance; but we can do so only provided somebody is not neglecting it. Finance is no less important than ever it was. The fact that we are handling it far better, that we have now a monetary and financial technique incomparably better than we had in the last war, has enabled us to say it is things that matter, and not finance, but we must not run away with the idea that we can neglect finance. Finance is very much like fire: an extraordinarily good servant, but a bad master. It must be kept under control. The larger the figures, the more important it is that we should understand finance, and see that it does not run away with us. The figures now are so enormous, and, what is more important, they constitute so high a proportion of our national resources, that it is very essential that we should keep continual track not only of what we are doing this year, but of the effect of our financial transactions this year on next year, the year after, and the year after that. We are dealing with such a big proportion of our national resources that we must look ahead. In 1938 I suggested that it was about time we started considering a policy of war finance. Nothing was done, and the result was that it took about four Budgets before we got our real financial policy started, in the Budget introduced by the right hon Gentleman last year.
My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) pointed out, what we are rather apt to forget, that there will be only one other Budget between now and 1944. This may be the penultimate Budget of the war—I hope so, though I do not know. We may have peace after one more Budget. It is time that we started thinking very carefully indeed about our peace-time change-over in financial policy, and seeing how far the things we are doing to-day are likely to help or to hinder that changeover. If it is possible, without hindering the war effort and unduly increasing our own difficulties, we ought to be shaping our financial policy now with a view to the fact that peace may come in two or three years, years which will be effected by what we are doing to-day. We have, for example, a floating debt at present of some £3,000,000,000. Sooner or later, that floating debt will have to be funded. The funding operations will probably coincide with an enormous demand for industrial money, as was the case in 1919 and 1920. We are paying about one per cent. for our floating debt. In 1919 the floating debt cost us six per cent., or more. Frankly, I do not think we shall succeed in funding economically unless we are prepared to make very drastic changes in our banking system. Are matters like that being thought out now?
What I really wanted to talk about was E.P.T. and its effect. The 100 per cent. E.P.T. has been a very bitter pill to industry and industrialists, and the country has been flooded with propaganda against it. How far that propaganda is justified it is very difficult to say. What we want is not so much propaganda as facts. There is enormous uncertainty in industry with regard to the effects of E.P.T. It has been stressed several times in this Debate. One has only to look at the financial columns of the newspapers or the circulars of the Federation of British Industries and trade organisations to see this. That uncertain 13 may be justified or it may not, but the E.P.T. propaganda which has been poured out has gone a long way in increasing industrial uncertainty.
Is it not the facts which have done most?
We do not know the facts; all we know is the propaganda.
I would venture to draw the hon. Member's attention to the White Paper issued by the Chancellor, which clearly indicates that over £100,000,000 less is being put into reserve now than before the war.
Yes. But the real problem which we have to face, and about which I have seen very little information, is, What is going to be the effect of E.P.T. on the total reserves of industry? Will the payment of E.P.T. reduce industrial reserves to such a point that industry will not be adequately liquid to meet the problem of the peace-time change-over? I believe that the effect of E.P.T. on the liquidity of industry has been fantastically exaggerated, and I go as far as to say that the liquid effect of E.P.T. on industry as a whole is practically negligible. I am talking now about the peace-time changeover and not referring to the question of any incentive and war-time effort, which is an entirely different problem.
As this is a point upon which I do not entirely agree with the hon. Member, will he explain to the Committee where industry is expected to get reserves with which to ensure the future under the present system?
I will try to explain. I am afraid that there are no estimates, but I think we can on this point make reasonable guesses. Let us start off with the pre-war liquid reserves of industry, and I am referring to liquid reserves of either bank deposits or government securities. There has never been any real estimate made. The only estimate in regard to the holding of Government securities of which I know was made by the late Lord Stamp, who estimated that of £7,000,000,000, £2,000,000,000 was held privately, the other £5,000,000,000 being held inside the country institutionally, by banks, insurance companies, commerce, industrial reserves and the like. Of that £5,000,000,000 held institutionally, I do not think I shall be exaggerating if I say that industry and commerce held £3,000,000,000 in reserve funds. It is a guess, but I think it is a reasonable guess. In addition to that, bank deposits amounted to £2,000,000,000 in the five big banks. Practically the whole of that was held by industrial and commercial concerns. Private individuals do not keep large sums in the banks. We can take £2,000,000,000 of bank deposits as representing the first line of industrial and commercial reserves, so that industry started the war with liquid reserves amounting to £5,000,000,000. What has happened since? There has been a growth of bank deposits of. £1,000,000,000, and there has also been £2,000,000,000 invested in long-term Government securities, and neither of these totals represents private money to any extent. That gives £5,000,000,000 of reserves with which to start the war, and an increase in these reserves of another £3,000,000,000 makes £8,000,000,000. We have to write down that £8,000,000,000 as a result of sterling payments on account of investing orders, the heavy accruement of taxation and the running down of stocks, but £1,500,000,000 ought to cover that. If you deduct that sum from the £8,000,000,000 it leaves £6,500,000,000 as representing the reserves of industry and commerce.
Is the hon. Gentleman aware that, in all cases where factories are Government-controlled, the Government take over the stocks and the industries have to retain their liquid assets, representing their normal stocks, in the form of Government securities until the end of the war?
I am not concerned how industry holds these reserves providing they are held in liquid form. I was asked by my hon. Friend the Member for Ipswich (Mr. Stokes) as to how far industry had liquid reserves, and I suggested—and I have given the reasons—that industry and commerce together have liquid reserves, if you include bank deposits and Government securities, amounting to £6,500,000,000. I further suggest, to be on the safe side, that if we credit industry with a bare half of that sum, the liquid reserves of industry at the present moment—reseryes which are increasing—amount to something like £3,200,000,000.
Accepting my hon. Friend's figure that the reserves were £5,000,000,000 before the war started, does he seriously suggest that the ordinary manufacturer engaged on war production at the moment has been able to lay aside in the form of liquid reserves up to date the sum of £1,500,000,000?
I do not know, but I do know that bank deposits have grown by £1,000,000,000 and long-term investments by £2,000,000,000 since the war started. Does anybody suggest that much of that £3,000,000,000 is represented by private holdings? [An HON. MEMBER: "Yes."] Nonsense; one knows perfectly well that when the war is on private individuals are not in a position to save any large sums. Income Tax and Surtax see to that. The bulk of private savings are small savings, and the long-term savings are industrial and commercial savings. If you make allowance for tax accumulation, vesting orders and the running down of stock, you cannot reduce the present holding of industrial and commercial reserves to much less than £6,000,000,000. I think that it is a fair assumption to make that of that, one-half belongs to industry. What is the effect of E.P.T. to-day? So far we have collected £350,000,000 or £360,000,000 on E.P.T., and the Chancellor estimates the collection this year at £425,000,000. As industry is more or less approaching its maximum output and as costing improvements are introduced, we shall not get a very much larger annual yield of E.P.T. in 1943–44. Assuming that the war will last another three years and that the estimate of E.P.T. for the present year is made for the next three years, that will give a total payment of E.P.T. of something like £1,750,000,000. Had the Chancellor not introduced E.P.T. but merely relied on the 10s. tax, that would have allowed industry and commerce to accumulate another £850,000,000. The total effect of the abolition of E.P.T., assuming that industrial reserves do not grow by another penny during the war—and that, of course, is a ridiculous assumption—would have been to increase industrial reserves from £3,000,000,000 to £4,000,000,000.
These figures may require relating to industry. We get a very fair idea of the value of industrial plant if we turn up the last report of the Board of Inland Revenue. Wear and tear allowances amount to £150,000,000. It is not a very elaborate calculation to suggest that on these figures we can assume that the balance-sheet value of industrial plant that has been subject to wear and tear amounts to about £1,500,000,000, and that the original cost was £300,000,000,000. Industrial reserves at the present time, quite apart from future accumulations, are now double the balance sheet value of plant and equal to the original cost of plant. I am well aware that, although these figures apply to industry as a whole, they do not apply to individual firms. Moreover, if anybody gets up and says that I am at least £1,000,000,000 wrong in my calculation, I shall not for a moment deny it, but I think that these calculations are sufficiently reasonable to give some background or picture.
But what applies to industry as a whole does not necessarily apply to an individual firm. What the Chancellor ought to do is to accede to the request of the hon. Member for Walsall (Sir G. Schuster), who suggested that a committee should be appointed to investigate the effects of E.P.T. and to evolve some method of mitigating hardship on individual firms where these arise from war conditions. If it be true that there is a good deal of uncertainty and unrest in industry to-day owing to E.P.T., and if it is doing harm, the way to deal with it is not to hand back a large amount of E.P.T. to wealthy firms who will require no assistance, but rather to investigate the problems that are likely to arise in special cases and see whether it is not possible to evolve some method whereby the Treasury can facilitate the change-over by those firms who require it as a result of war-time conditions and changes. That is far more important to the nation and a far better method of re-establishing certainty than handing back a few millions of E.P.T.
What will this 20 per cent. gross and 10 per cent. actual rebate on E.P.T. amount to in post-war years? A mere bagatelle. To suggest that that will cure our industrial troubles, if they arise, is to suggest that pills can cure earthquakes. Difficulties of private firms arising as the result of excessive investment for war purposes ought, I think, to be investigated and some assurance given to industry that that type of firm will not be allowed to founder as a result of the war. That is all I think I have to say. I have tried to answer my hon. Friend the Member for Ipswich as to what was my estimate of industrial reserves. At any rate I have tried to give some picture instead of merely indulging in propaganda which gives no facts and figures at all. I maintain that, rough and inaccurate as the figures I have given may be—and I do not pretend that they are anything else but guesses—they do show that, so far as industry in this country is concerned, the claim that E.P.T. will result in very grave industrial difficulties on a large scale is an entirely unfounded exaggeration.
I am sure the Chancellor must be very gratified with the reception which has been given to his proposals, not only by the Committee but in the country generally. I would like to pay my tribute not only to the proposals themselves but to the speech which accompanied them and to the explanatory information which was given us in that long speech which gave us so much insight into the financial background of the country. I think it is true to say that in this third year of the war our financial objectives are entering a new phase. During the first two years of the war our objectives as regards war-time finance were to measure, guide and control our war effort. It has been a commonplace of financial speeches during the last two years to hear expressions of national expenditure as being terms measuring our war effort. But we now know that because we propose to spend tremendous sums of money on waging war, it does not automatically mean you will get the war effort that necessity demands. We have gone past the stage where we could reasonably assume that by spending large sums of money we were necessarily expressing the will to wage war in a way which is in all our minds.
When we consider finance as a guide there are two examples which readily spring to mind. There is the way in which E.P.T. has been introduced in order to take the profit out of war and the way in which the Purchase Tax has been introduced in order to dissuade people from unnecessary expenditure. But perhaps the most essential war-time purpose of national finance has been to control, to endeavour to keep the relationship between Government expenditure and Government revenue on a reasonable basis and to provide for the difference between national expenditure and national revenue—in other words, to bridge the gap through non-inflationary borrowing. All that has been done, but I suggest that now in this new phase those requirements are no longer necessary.
We all know what inflation is. It is difficult to define but easy to distinguish. Its major symptom, however, is pressure of excessive purchasing power on prices. Now that we have so many of our national requirements controlled in price and regulated by rationing—and the Chancellor has said he is determined to carry that system further if national requirements necessitate it—I think we can feel reasonably satisfied that the urgent necessity of control which, in the interregnum period between passing from pre-war and peace-time requirements to the full whole-time war economy was essential, is no longer so obvious and so insistent.
Even if there is a further increase in purchasing power, as undoubtedly there will be, it seems reasonable to suppose that, through rationing and price control, we can prevent the pressure of that increased purchasing power resulting in higher prices, and thus inflation can be controlled. Therefore, I suggest—and there is nothing that I heard in the speech of the. Chancellor which would contradict this view—that we can now feel reasonably confident in saying that, in this third year of the war, it is no longer necessary to use national finance in order to measure, to guide, or to control our war effort.
If that be so, how shall we use national finance? I suggest that in this year 1942 it should be used, not in any positive way, as was necessary before, but in a negative way; that it ought to stand out of the way of our war effort, and take off the restrictive shackles which were necessary in the transitional period. Now we might safely take the view that if a particular item of policy or a particular requirement showed some divergence, on the one hand, between waging the war to the maximum extent and, on the other hand, between financial rules and regulations, it should be the war effort which should govern the decision and not the financial considerations. That view, I think, has been taken by the Chancellor.
As an instance of this policy, I greatly welcome his decision to improve the method of collecting the Income Tax from weekly wage-earners. Yesterday I listened very carefully to the speeches of several hon. Members, whose opinion I greatly value and respect, who rather demurred from the proposals for improving collection put forward by the Chancellor and explained in the White Paper. I was, in theory, inclined to agree with those hon. Members, but having read the White Paper, I feel that the Chancellor's view is the correct one. I feel that the advantages of adopting what is, in fact, a wages tax are completely outweighed by its disadvantages. In my experience, the major difficulty has been the one arising from delay in assessment. Now that we are to be given a break of one month, an assessment holiday, as it were, I am confident that those arrears will be overtaken, and that the major difficulty in dealing with this very difficult question of Income Tax on weekly wage-earners will be overcome. In any circumstances, I am convinced that the Chancellor is right in sticking to the existing though modified system for another year, even if it has to be altered in the light of future experience. I further welcome the alterations which have been made in respect of the allowances to married women, who previously were assessed with their husbands and whose assessment with their husbands resulted in their feeling that the sacrifices they might be making in going into temporary employment during the war were inadequately rewarded by any increased remuneration which the family might have. I think that is a great step forward.
But just as the Chancellor has recognised that we must cause finance to move out of the way of our war effort in respect of obtaining the maximum productive effort from the individual, so he ought to recognise, I think, that it should stand out of the way of preventing the maximum productive effort of the company or firm. This raises the question of the Excess Profits Tax. I do not want to go into this matter at any length. Certainly, I do not want to raise a plea for an alteration of the existing rate of Excess Profits Tax, but I do say that the fixation of the standard on which the Excess Profits Tax works is one which, in the national interest, might very well be reviewed. The determination of the capital employed in the industry is one of very great difficulty, and I think it creates cases of grave injustice. The mere fact, as is quite clearly shown in the White Paper published by the Chancellor, that this year ordinary limited liability companies have put to reserves £100,000,000 less than in the year before the war indicates the effect of the Excess Profits Tax in reducing the amount of reserves, which limited liability companies have to use in order to carry on their business. In regard to this matter of the Excess Profits Tax, the real point is whether it is right, just, and necessary. With that observation, I leave it.
There is a further way in which national finance may be considered to stand in the way of getting the maximum war effort. It arises out of the concentration of industry proposals. I think everybody in the Committee is acquainted with the grave injustices which arise between one company or another or one trader and another, each in similar circumstances, one of whom is concentrated and the other of whom is not concentrated. I think the solution of this problem lies in some moderate degree of compensation, and now that we have moved out of the field of fear of inflation, I hope that the question of compensation will not be ruled out.
I have indicated some ways in which national finance in this year can move out of the way of our war effort, but I would like also to follow certain remarks that were made by the hon. Member for Chesterfield (Mr. Benson), and suggest that there are some ways in which national finance can cease to act as a deterrent to post-war capitalistic revival. I am well aware of the fact that there are hon. Members on the other side who may consider that when the war is over we shall not have a capitalistic system. If I knew of a better system I would support it, but as far as I know, no other system—State capitalism as against private capitalism, Socialism or Communism at its extreme limit—would be able to support us in the standard of living which we enjoy in this country and to support the legitimate expectations of our people. The background of the maintenance of the capitalistic system in this country is very well known. In a reasonably good year, we save approximately £400,000,000, and out of the £400,000,000, we use approximately £260,000,000 per annum to revivify existing joint stock companies and to invest in new enterprises. We cannot keep the private capitalistic system up to date without some funds from which these necessary new investments can be drawn. These funds for maintaining the capitalistic system are, in the main, obtained from the savings of the middle class.
I think the Chancellor will not disagree with the statement that the middle class, under present circumstances, cannot save. With taxation at 10s. in the pound, the savings of the middle class are extremely small. Of course, it is true, as my right hon. Friend knows, that the savings of the country as a whole have gone up. That is shown in Table 2 of Command Paper 6347. It shows that in pre-war years something like £125,000,000 is saved, and that now we have £665,000,000. But these savings during war-time are of a very different type. They are, in the main, savings of the working classes—small savings invested in war savings and Government debts of one kind or another, not savings which go into industry.
This change in what I might describe as the saving complexion means that the individual who can save now relies on the stability of the country through the security of its debt. They are not people who are prepared to invest in speculative capitalistic enterprise. They are not people who promote production. The situation is again illustrated in the White Paper—Cmd. 634, 7, Table I, which the Chancellor has published. In passing, I should like to express my gratification and appreciation for the information which this White Paper gives to people interested in these matters. It shows—taking an average pre-war year, namely, the year ending December, 1938—there were then private investments necessary to maintain the health of the capitalist system in the nature of £402,000,000. We find the situation now has entirely changed, and that there is capital disinvestment of something like £500,000,000. These are impressive facts, and I ask my right hon. Friend to bear them in mind. I know that he is the last person in the world to endanger or undermine the system of capitalistic enterprise. I suggest, however, that the result of his policy—the policy of very high Income Tax—is gradually to shift savings to a section of the community who do not indulge in speculative capitalistic investment. If I am right in my view, it follows that what the Chancellor should have done this year was to reduce the Income Tax:
Otherwise the capitalist system goes by the board.
How is the Chancellor to get the revenue if he does what I suggest? I believe that he can more adequately provide for the future, as well as safeguard the present, by lowering the standard rate of Income Tax, and making up the loss by an annual tax on capital. The object of this would be, of course, to shift some of the burden from the active producing sections of the community to the inactive and non-producing sections of the community. Of course, that is not the only way in which what I have in mind could be done. It could be done by recasting the legacy duty on a sliding scale. We should then get the analagous results. You would have the inactive section suffering at death, and the active sections obtaining a relief from taxation. These are observations which, I think, are worth considering. Another way is to increase the Death Duties, although I think we have gone far enough in that direction. The method is not important; the principle is. What is most important is to maintain the private capitalistic system, upon which, in my view, the prosperous future of this country depends. I, as a Conservative, believe that the private capitalistic system is the best system for the country. I believe that the future of this country depends on its ability to produce competitively. I am anxious to make the point that total war demands the use of all our resources, and that our resources include capital as well as income. The danger is that we may finish the war with depleted earning power, high wages and undiminished aggregations of capital in the hands of comparatively few owners.
Would the hon. Member help the Committee by stating what capital tax he would propose to compensate for the reduction in Income Tax?
Speaking from memory, I would propose a capital levy of one per cent. I would not tax any aggregations of capital under £5,000. Over £5,000 the levy would be one per cent., and over £10,000 two per cent., which, speaking from memory, would produce something like £100,000,000. These aggregations of capital, bearing in mind that they invariably contain a considerable proportion of Government debt, constitute a first charge on the community. This, with the high Income Tax, will make it very difficult for young men of energy and with brain, but without capital, to obtain the position they ought to obtain in the country after the war. There will be a tendency for bright young men to leave the country—probably they will go to the Colonies. Just as a company cannot have any health in it if the positions at the top are denied to those underneath, so a country cannot have any health if the positions at the top are obtained by prescriptive rights. I do not see why the slogan of "Liberty and equality" should not be applied to finance, as we hope to apply it to the rest of our national life. In the meantime the war has got to go on. Everything has to be sacrificed to maximum war effort. We have asked for austerity, and we have got it. I think it is a great achievement that so large a proportion of our expenditure in this third year of war should be obtained from revenue. I should like to congratulate the Chancellor of the Exchequer for his firmness and courage in imposing these burdens, and the country for its determination to carry the burdens without complaining.
This Debate has been one of great interest, and I should like to add my voice to the chorus of congratulations to the Chancellor of the Exchequer. The way in which our money affairs have been handled in this war is an enormous advance on the last war. Previously the Budget was a method of raising revenue, but now it has the additional object of being also an instrument of policy. That is something which may have a great effect in future years. I think the Government and the Chancellor have used their powers very wisely, not merely in raising money, but also in avoiding the danger of inflation, reducing consumption, and "generally turning over our peace-time industries to war-time industry. The Chancellor cannot be too highly praised for the way in which he has handled our affairs.
I should also like to pay a tribute to the American nation for the assistance they have given us in Lease-Lend. On this occasion a great President and a great country have shown that they can use the almighty dollar for beneficent objects and in the interests of the world. It may be that it was to their own advantage, but that does not make the benefit which they have conferred on mankind and on this country any the less. I think we ought also to pay a tribute to the Canadian people for their very generous assistance.
The people of the country as a whole are prepared to an extraordinary degree to face up to this enormous burden of taxation, provided they are satisfied that there is no waste. The Chancellor explained the difficulty, which is a very real one, that if he exercises too great Treasury control, people immediately say that the war effort is being hindered, and if he does not control, he is accused of waste. This is a question which is affecting the minds of a very large number of people. My right hon. Friend would also agree that a pound saved is very much better than a pound got by taxation. I hope he will try to consider whether (there cannot be greater devolution to the Departments and whether it would not be possible to get immediate decisions on any debatable point without having to await the investigation of committees.
I have had considerable correspondence pointing out various matters in which waste is alleged. It is said that there is an unnecessarily large staff in Government Departments not fully employed. That is a point on which an outsider or even the Select Committee, which is doing such excellent work, cannot express an opinion, but I get letters from people who have been in industry and have been taken into the Departments mostly for clerical work, and they are shocked at the little work that they are being called upon to do. I think reform must come from the inside, and if the Chancellor could get the Departments themselves to realise the necessity of cutting down staffs to the minimum compatible with efficiency he would be doing a good piece of work. There have been many complaints about cost plus contracts. These have to a large extent gone, but there is another form of contract which I think equally objectionable. It is the type of contract in which there is a fixed price with a right of review later on. These contracts have been definitely placed at a considerably higher figure than the market price at the time, and the Departments are relying on subsequent investigation of the books to bring them down to a normal figure. To give an example, two firms are given the same work to do. In one case the costs amount to £50,000 and the employer charges 10 per cent. profit. That is accepted as satisfactory. Another man is more economical and efficient, and his costs amount to £40,000 for the same job on which he charges 12½ per cent. He is much more likely to be criticised, although his fee is exactly the same, because he is charging 12½per cent. as against 10 per cent. and yet the saving to the country compared with the other man is £10,000. The Departments and the Treasury are more concerned with the rate of profit than whether the business is being conducted economically and without waste.
Will my hon. Friend explain how he would deal with a case where a Department takes three, six or 12 months to make up its mind what it is going to do and then wants to adhere to the original contract, though in the meantime the price has got beyond his control?
My point is that there should be a different approach to the subject—it is for the Chancellor to think how it can best be done—and that there should be more check on the expenditure rather than concentrating entirely on the profit. If a man knows that his profit is to be fixed on the amount of his costs, there is no inducement for him to cut down expenses. I know an actual case of a contract where the market price was £4, but it has been placed at £6, and the Department thought they were doing nothing wrong because there was to be a subsequent investigation. There is not that keenness in controlling expenditure that there would be if the price agreed was the final price.
Another point, with regard to Surtax that I hope the Chancellor will consider in a future Budget is that of reducing the period between the receipt of the emoluments and the date of payment of Surtax, which is, of course, a year behind Income Tax. This may be a great hardship on an individual. I was pleased to hear what the Chancellor said about Tax Reserve Certificates, because I may claim to be the first Member to raise this question. I did not get a very encouraging response, but I am glad to see that they brought in £200,000,000. If the Chancellor can extend the idea to Estate Duty it would be to the benefit of the Treasury and the country generally.
There are a few questions I should like to ask the Chancellor. I should like to know to what extent, in considering his estimates for this year, he has allowed for the loss of revenue due to our losses in the Far East. One has seen various estimates in the Press and elsewhere, and I believe that the losses in capital and revenue are considerable. Perhaps he could give us some idea of what the loss in revenue to the Exchequer is likely to be from this cause. In the useful Command Paper 6347 there is a rather unpleasing term "overseas disinvestment." Does this include the sale of investments overseas as well, or is it mere surpluses? How much, if any, of these figures represent realisation of overseas investments? I think that the loss of overseas investments is a serious problem.
We all approve of the concession which the Chancellor has given to men and women in the Services with regard to tobacco, but how does the Chancellor propose to prevent the non-smoker buying for resale? It seems that to a small extent it will create the danger of a black market. I do not suppose it is possible to work out a rationing scheme, nor for purchasers to be required to prove that they are smokers, but there will be a danger of a certain amount of hanky-panky. Incidentally, by his taxation the Chancellor has penalised drinkers and smokers and thus benefited teetotallers and non-smokers. Doctors say that teetotallers and non-smokers are greater users of sweets, and I wonder whether in fairness the burden could not be equalised to some extent by making them pay increased taxation on sweets.
The Chancellor did not mention anything about bad debts and overdue payments in regard to Surtax and Income Tax. I should like to ask him whether he has many bad debts or overdue payments and how this compares with prewar. If there are not many, it is a tribute to the taxpayer and the country generally, but one would have thought that as much of this taxation has to be met out of capital there might be a considerable amount of bad debts and overdue payments. There is a point with regard to Excess Profits Tax which I do not follow. The Chancellor said that the 20 per cent. credit which was to be paid after the war was not to be distributed as profits or as bonus. There is no subject on which there is more misconception than with regard to bonus shares. Some people are under the misconception that the issue of bonus shares increases the intrinsic value of a man's holdings, but the only effect is to capitalise a particular sum which would otherwise be available in the issue of dividends. Surely there is no objection to the credit being capitalised so as to bring the market value of the shares more into relation to the intrinsic value.
There is much in our national finance to cause gratification and satisfaction, but the position of our present and future balance of trade deserves close attention. By the action of the Japanese and our forced sales of investments overseas our overseas investments must have fallen considerably. Our invisible exports after the war will not be the asset they were before. Our feeling to-day, however, must be one of great pride in the financial stability of the country. We should all be proud, too, of the people of all classes in this country who have borne these enormous burdens of taxation so patiently. By their conduct they have contributed to our ultimate victory, as they did during the bombing raids of a year ago, when they displayed the same qualities that they are displaying today in meeting heavy taxation—the qualities of courage, sacrifice and good humour.
This happens to be the first Budget I have had the privilege of hearing my right hon. Friend open, as I was not able to-be here a year ago. I take almost a fraternal interest in it, because my right hon. Friend and I came into the House at the same time 25 years ago, and we happen to sit for adjoining constituencies. I am glad, therefore, to see the general welcome given by all sections to his Budget. At the same time, I approach it from another angle. When he comes upon our reserves he is almost in the nature of a poacher. I happen to be a gamekeeper, because I am the only Member of the House who sits on the Public Accounts Committee and on the Select Committee on National Expenditure. It is for me, therefore, to do what I can in both capacities to see that the large sums which my right hon. Friend takes from us, quite legitimately, are spent to the utmost advantage.
A great many points have been touched upon in this Debate, and there is only one special point about which I want to say a few words. I do not think it is generally recognised by the country how extraordinarily well our financial opera- tions from the point of view of borrowing have been conducted during the war. There is a simple barometer, and that is the price of Consols. I take Consols, because they are virtually irredeemable and amount to hundreds of millions of pounds. Therefore, they are a fair criterion of the borrowing market. In 1930 Consols averaged about 67. The quotation yesterday was over 83. In other words, although we have borrowed thousands of millions of pounds, although we have about doubled our debt, our credit from a borrowing point of view is one-quarter higher than it was in 1939. That is a wonderful tribute to the way our finances have been administered. Another remarkable tribute can be paid on the same note. In 1917, when the war then raging had lasted two and a half years, we made a very big issue of 5 per cent. War Loan at 95, a rate of interest which is more than double the rate at which we can borrow money now. That in itself speaks volumes for what has been done not only by the Treasury but also, no doubt, by the Board of Governors of the Bank of England, by the big banks, and others, to see that the money we borrow now is borrowed far less dearly than it was 25 years ago. That gives us hope for the future when the war does eventually end.
There is another fact that is often not realised. At the end of the last war, partly owing to the high rates of borrowing, we had to meet an interest charge of more than £300,000,000 per year on our war debt. By conversion and other means we had got that war interest down to a little over £200,000,000 by 1939. In other words, although the country was appreciably wealthier in 1939 than in 1919 we had reduced by one-third the interest on the National Debt. That, coupled with our present cheap borrowing, does give us much hope concerning interest charges after this war. We are now borrowing at the rate of some £2,000,000,000 to £3,000,000,000 a year. It is' an immense sum. In the two days since my right hon. Friend opened his Budget we have incurred debts to the tune, roughly, of £15,000,000, and that is a rate at which, apparently, we shall be going on for a long time to come.
There were some interesting figures with regard to post-war taxation in the "Economist" last August. Of course, much of what was said was hypothetical, because we cannot say how long the war will last and what our debt will be at the end of it, but allowing for a total war debt of £10,000,000,000 or £12,000,000,000 the "Economist", with full facts and figures as far as they could be given last August, was of the opinion that Income Tax might come down appreciably to the 1939 level. When we hear pessimism expressed about the position of Income Tax payers—and there are many millions more of them now than before the war—after this war it is consoling to think that as a result of what the Treasury and others have done to keep down interest rates there is every prospect that Income Tax may again come down to a reasonable figure. That, of course, presupposes that there is no inflation. Once we get into the vicious circle of inflation, in money rates or otherwise, anything may happen, as was seen in Germany in 1923. But it is a matter of comfort to those interested in finance—and it is the only theme I wish to mention this afternoon—that there is a reasonable chance of getting back to something like pre-war Income Tax in the years to come.
We have had three days of opportunity to review the finances of the nation, and the Chancellor must be feeling gratified that no great division of opinion has developed between the Committee and himself over his Budget. The speeches which we have heard have shown a general acknowledgment of the magnitude of the task which he has to face and an appreciation not only of his courage but, I should like to add, of his astuteness in the way he has handled his financial problems. My appreciation must, however, be qualified by at least some criticisms. The first point I want to raise concerns the deduction of Income Tax from wage packets. It is true that the provisions made for those with wages or £2, £3, £4 or £5 a week represent a considerable easement of the problem, and the Chancellor has not indicated that they are a final solution. We are confronted with 5,500,000 people called upon to pay Income Tax, the vast majority of whom have not been Income Tax payers previously. Their general conditions of life had led them to assume that Income Tax was something to be borne by other people, and there was a natural resentment when they found it falling upon themselves, because their means of livelihood did not place them in the category of those who receive regular weekly wages or monthly salaries. That is a consideration which has led to irritation over Income Tax and has given us an important psychological problem. I would ask—I am speaking for myself, it is not an official suggestion—whether it would be practicable for the Treasury, in consultation with the Trades Union Congress and with employers' organisations and firms in various industries, to try out a series of experiments in the current year.
We are up against this problem, that wages are drawn weekly and that there is always a tendency for one's expenditure to rise with one's income. One can easily spend up to one's income. Wage earners have become accustomed to a very desirable improvement in their conditions of life—more comforts; more opportunities for enjoying life—and when they are suddenly called upon for lump sum payments of Income Tax they feel that it is a definite hardship and a definite nuisance. At the same time it is a problem that we must face, and I am the more interested in it because I have been opposed to indirect taxation except upon articles whose consumption it is desirable to discourage for social reasons. I do not take the view that all indirect taxation is undesirable, but generally I am opposed to indirect taxation, because I think direct taxation is more equitable and produces more at less cost. I should prefer to see this experiment with Income Tax working out to the general satisfaction of the community, in the hope that we shall never go back to the taxation of food supplies and articles of common consumption. I do not join in the general approval of the Chancellor for raising the whole of his extra revenue this year from indirect taxes. I do not delude myself about the situation. I recognise that if in war-time individuals cannot control their own selfish desires and habits taxation must be used as a lever. The consumption of tobacco has increased, despite the heavier taxation imposed. All tobacco has to be imported from abroad, and I realise that the Chancellor is entitled to put a swingeing additional tax upon it in view of our experience of the past 12 months.
I have not much sympathy with the brewers. I have had to protest on the Floor of this House against the brewers paying exceptionally high prices for barley, forcing up the price of barley and bringing into cultivation a large acreage of land that it would be more desirable to use in other directions. I think we have to look at entertainments in a slightly different way. We have to recognise that war strain becomes increasingly acute. This has been a very serious war, and everybody is in it. The pressure of State requirements is extensive. The blitzing put a very great strain on the people, and so do services like fire watching. They represent new circumstances in the life and psychological conditions of the people that were not present in the struggle of 1914–18. It appears to me that, to keep the poise of the community, we must not become so serious and so austere that we cannot retain some of our English humour and sense of enjoyment. My general view is that, while the Chancellor can show definite justification for the imposition of these taxes, it was bad in principle that he should raise the whole of this sum by indirect taxation.
Now I come to a point to which I should like the Chancellor to give consideration. When we are facing a very substantial increase in indirect taxation for a general purpose and a sound general policy, we have to recognise that it presses exceedingly severely upon particular groups in the community. In view of the fixed, modest pay of the Services, the Chancellor himself immediately met that position by seeking to devise a method whereby the increased taxes on cigarettes and tobacco should not fall upon Service personnel. I claim that the admission of that principle compels the Chancellor and this Committee to go one step further and to secure a kind of bonus, compensation or rebate for that section of the community which receives a fixed pension from the State. The most obvious section is, of course, the old age pensioners. They should be given some compensatory relief from burdens of this description, which might be borne by the general community but which fall with considerable severity upon those categories.
I should like to pass a few observations on the Purchase Tax and upon the decision of the Chancellor—this is where I think he has been particularly astute—to meet the opposition that has always been very definite on this type of tax; I refer to utility clothing. I want to warn the Chancellor that his decision is not quite sufficient. No one recognises more than he that I and others who have been opposed to the Purchase Tax have not rested our opposition purely upon our objection to indirect taxation. Whether we are right or wrong, we claim, and I think we have considerable evidence, that it was definitely an inflationary tax, whereas the whole policy of the Government and of this Committee has been to discourage any inflationary tendency. We claim that we have been justified because, if we examine the problem and the pressure of expenditure as against supplies in this country, we observe that the frenzy of buying power was first stimulated and released in the whole range of dry goods and domestic requirements by the effort of the public to anticipate the incidence and the operation of the Purchase Tax. In our view that tax was definitely harmful in a variety of ways upon the war effort. Our opposition did not rest entirely upon our objection to indirect taxation.
As often happens in these matters, especially in the present critical conditions, after a period of reflection, and when we cannot upset the Government, we endeavour to find a basis of compromise. It looks as though the Government at last, in the step that they are taking, which is belated and represents two and a half years of delay in the evolution of this policy, are moving to relate the amount of goods that the people consume to the economic problems of the war. I do not congratulate the Government upon it; it is not a matter of congratulation, because it ought to have been done before. We have at last reached the stage when we have an acknowledged policy from the Government Benches that taxation is not a sufficient deterrent under present conditions. The Government are now to follow a policy of rationing not only the food supplies but all domestic and other requirements. I want to put a question to the Chancellor. Is it the intention of the Government to extend this principle continually? That is the essential point. I welcome definitely the concession which the Chancellor has made in the Budget in regard to utility clothing. It is a sacrifice of £15,000,000, but it does not represent much of a financial sacrifice. The Chancellor has not put on 33⅓per cent.—it is no use the right hon. Gentleman making those dramatic facial expressions—the matter of fact of the Chancellor's Budget is that he is getting £80,000,000, whereas, apart from this, he would have got £85,000,000. I am not stating that to belittle the importance of the decision. What is vital to know is whether the policy is to be extended.
The range that we object to very substantially is the whole schedule of 66⅔ds. If the Chancellor is prepared to go on, and cover all footwear and utility lines, and extend it in other directions, he will meet very substantially the view that we have taken. It is no use the Committee belittling this issue. Statements have been made to-day that the inflationary process, that is, the rise of prices, means that the £1 will purchase only what 17s. previously purchased. The Chancellor stated that our food prices have increased by only 18 per cent. It is all very well for Members of Parliament or Ministers to make statements of that kind on the Floor of the House of Commons, but if you told that to the average housewife, she would greet you with derision. If you take the vast majority of commodities, the experience of the average housewife is that most articles have doubled in price. Take domestic crockery. A cup and saucer such as went into the average working-class home, and for which one used to pay 4d., 5d. or 6d., is now 2s.—and in many cases prices are greater than that. This week-end greens, which used to be purchased for l½d. a lb. at one time, were 10d. a lb. Go into any shop and look at a cauliflower, for which one used to pay 3d. or 4d., and you will find that it is 1s. or 1s. 2d. to-day. That applies to a vast range of goods. Take things like sauces, pickles, jams and preserves. You will find that the prices of all kinds of such commodities are going up day by day. I would like to ask the Chancellor whether these utility lines will be extended to domestic crockery. Will they be extended to an important range of domestic hardware and furniture, because these are vital matters?
Another point I want to put to him is whether he is prepared to meet the case which I have raised repeatedly of those citizens who have their homes destroyed by air attack. I think it offends the sense of fair play of this country when, after a person has suffered a disaster of that kind, he has to suffer the imposition of the Purchase Tax when replacing his goods, for which the Government allowance is only a bare minimum. I hope the Chancellor will be able to meet us in that direction.
I would next like to make a few observations on the Government's general price policy, both in the realm of food supplies and of clothing, boots and shoes. I have felt that the Government first of all allowed prices to rise to too high a figure before they introduced a policy of control. When we examine the policy of the Government with regard to bread, and to fats, meat, and bacon—the first group of rationed commodities—for the expenditure of the not very large sum of £125,000,000 the Government have demonstrated that it is possible to keep a range of primary commodities relatively stable in price. In view of that experience, one must put the question to the Government, Why has the remaining vast range of commodities been allowed to reach excessive figures before the policy of control has been introduced? The utility lines are becoming very acceptable. They are proving their value, and the Government might extend that policy very considerably. What I have said in regard to prices applies, I think, to agricultural policy. The Chancellor has waited two or three Budgets before recognising the very considerable improvements that have taken place in the income of the farming community. Here again we have followed the policy of first allowing certain groups of the community to achieve a certain ratio of profit and of taking a portion of it back in taxation. I should have thought that it would have been better, from the point of view of national economy, to have a more conscious, intelligent and sensible price policy running through the whole structure.
My final point is the matter of post-war credits, both for wage-earners and in connection with the Excess Profits Tax. The Chancellor pointed out that the 5,500,000 wage-earners who have now been brought into the field of taxation have paid £125,000,000, of which £60,000,000 represents their post-war credit. This again raises the question of the relative positions of these in the Armed Services of the Crown and of the civilian community. Will the Chancellor indicate in his reply whether the nest-eggs that are being built up for the Services will be in any way comparable to the post-war credits which are accruing to wage-earners through their payments of Income Tax? I do not feel that this Committee would be justified in allowing a situation to develop after the war in which we should find that the civilian community, which will include a considerable proportion of relatively aged persons, will have been well provided for in the post-war period, while those who have borne the brunt of this struggle are relatively handicapped with regard to their financial reserves. In my view the Government ought to increase the pay and allowances of the Services to a much more generous figure, and if part of it could then be used for the purpose of balancing and making more equitable the post-war distribution of taxation reserves, we should maintain a system of equity whose absence might cause a good deal of ill-feeling.
With reference to the 20 per cent. postwar credit for those who pay Excess Profits Tax, the Chancellor indicated that the only condition which he proposed to impose was to the effect that the money should not be distributed after the war in bonus shares or dividends. I think the Chancellor ought to indicate clearly how he proposes to enforce that restriction, because it appears to me to be a rather difficult job. If the money is repaid either in a lump sum or in instalments after the war, it is difficult to see how its passing into the general resources and accounts of the company is to be avoided. When he was dealing with this point the Chancellor indicated that he had already gone a very long way towards meeting the original objection which applied to this tax. I want to quote his own words. He said:
My final word is that this Committee must resolve the problem of where we want the responsibility to rest for the prevention of waste in public expenditure. My view is that it is a Treasury responsibility, but I think there should be no division of opinion No one wants economy in the quality or quantity of equipment for the fighting Services. What we want is economy in the waste of administration that almost everyone with experience can see in a variety of directions. At least I join with all those other Members who have expressed their gratification at the strength of our financial system at this stage of the war. I think it is a clear indication that financially, economically and militarily we can see this conflict through to a successful conclusion.
There is one formal matter I should like to mention before replying to the general Debate. The Committee will remember that my Budget Speech dealt in general terms with our borrowing programme for the year 1942–43. It will be necessary, as in previous years, for the Treasury to be given the statutory powers necessary to implement that programme, and those powers will be sought in a National Loans Bill which we shall ask Parliament to pass in the next week or 10 days. The Bill will be in common form. I do not imagine that it will be in any way controversial. It has to be preceded by the Ways and Means Resolution already on the Order Paper; to this I hope the Committee will agree to as soon as the Budget Resolution is agreed to to-day. I mention this because it is necessary to get this business through.
I must first thank the Committee and the country for the instant and willing response they have made to the Budget proposals generally. In my judgment that instant and willing response will encourage our friends all over the world. I certainly hope it will discourage our enemies. I will, of course, carefully consider all the matters that have been mentioned in the Debate. I hope, in the short time available for me to-day, to mention one or two of the more important of them. But I do not want anyone to think, because I may not be able to deal with every one of their points, that I shall neglect those points in any way. I have no doubt that I shall have an opportunity in the discussions to follow of mentioning a number of the things that I cannot deal with to-day.
Turning to the Debate, I wish first to congratulate the hon. Member for Nuneaton (Mr. Bowles) on his maiden speech. It gives me special pleasure to do so, for reasons of which he and I are aware. I thought, if I may say so, that he spoke with fairness and persuasion. He was bold enough to take a very difficult and controversial matter as the theme of his speech—equality of sacrifice. I claim that I have made some contribution to equality of sacrifice in my last two Budgets, and will not discuss that particular matter further to-day. Rather, I take warning from a discussion which, I notice, took place a few days ago, when the Brains Trust attempted to deal with this difficult subjcet. I am not quite clear what the conclusion was at which they all arrived; nor do I know what has happened to the monetary contributions of that very famous body. I desire to supplement what my right hon. Friend the Financial Secretary has said. Perhaps the Committee will allow me to say how much I owe him for the assistance and help he always gives me and which he always gives to the House.
There are three or four matters which were touched upon by my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence). He is a very expert Parliamentary debater, and seems to have got away with mention of a few topics upon which it was stated afterwards that nothing further should be said. I shall, therefore, reply only briefly on points which he raised. For instance, he raised a question which I know is of interest to the hon. Lady, the Member for the Combined English Universities (Miss Rathbone), namely, that of family allowances. The Committee will remember that I undertook to make some investigation of this question for the information of the House; that investigation should be completed very shortly. I hope soon to be able to give, probably in the form of a White Paper, some information, as well as perhaps also some figures of costs which have been asked for. The right hon. Gentleman referred also to war damage. Again, in a short time, I hope to be able to present a Bill dealing with certain amendments of the War Damage Scheme which have been shown to be necessary by the experience we have gained in the last few months.
Before the right hon. Gentleman leaves the subject of family allowances, will he tell us whether he does not intend to do something more than produce a report? He must realise how greatly public opinion has been enlightened on this matter, and has not the time come now for action?
I must ask my hon. Friend to await the report and see what the bill may be. We shall have to consider all matters relevant to that subject.
What kind of bill is the right hon. Gentleman referring to?
I am referring to cost—that sort of bill. I would like now to add a few words to what I said about the weekly wage-earner and the deduction of tax. I have not altogether agreed with some of the emphatic reference which has been put by my hon. Friends to general complaint. I agree with my right hon. Friend the Member for East Edinburgh that, in fact, there had been very little complaint. He mentioned his experience with his own constituency. I represent an industrial constituency, and, like the right hon. Gentleman, I have not received a single letter of complaint on this subject. I am not by any means attempting to minimise some of the difficulties with which we are confronted; but when you consider this matter, there is one thing which you must bear very much in mind, although I have not noticed any reference to it. As I said in my opening observations, there are at present—using approximate figures—above 5,000,000 wage-earners affected by this deduction. Four million of these are people who receive regular wages, without much variation from week to week. As far as I am aware, no complaint has been advanced by them, or in the House, during these discussions.
If I were a man in receipt of regular weekly earnings, I would, undoubtedly, much prefer the present arrangements. I should be in a position, first, to exercise all my rights of appeal, and to have it definitely fixed how much I was to pay. When that had been settled between me and the Inland Revenue, I should prefer, being a person in receipt of regular earnings without much variation, that the deduction should be made under the present system. Then no further trouble would arise, and I should have settled my liability. It is only in respect of, let us say, 1,000,000—actually the number is not so great, but we must have a rough figure—chat this difficulty arises, with regard to seasonal earnings. Some of these people have experienced hardship. I have to be careful, in dealing with them, not to disturb a reasonable arrangement for the other 4,000,000 wage-earners. It must be remembered that, in any arrangement I make, I must not land a large number of other people into considerable difficulties. I have particularly in mind the position of, let us say, 2,000,000 wage-earners, who, because of the deductions which they are able to make, under Income Tax law, are out of this thing altogether. Those 2,000,000 are not subject to any deduction at all. Therefore, when I am confronted with a proposal to switch over the whole 5,000,000 to a system of deduction from current earnings, I find that by doing so I should immediately bring in a couple of million people, from whom I should simply take the money, keep it for a time, and hand it back afterwards. I could not contemplate subjecting a considerable body of people to that sort of thing.
The matter is not so easy as it appears. I am bound, as the responsible Minister—and so is the House of Commons—to have regard to the opinions and the judgment of the people chiefly concerned. This does not mean that the House of Commons should abrogate its rights: the House of Commons is supreme; but it must have regard, and so must I, to the opinions expressed by the representatives of the workers and of the employers, whom this scheme mainly affects. When the Trades Union Congress and the employers come to me, it is right for me, and for the House of Commons, to have some regard to what they say. Neither the T.U.C. nor the employers are lacking in proper advice. The T.U.C. have very competent officials, who are quite able to understand a matter of this kind. Both they and the employers say to me, "We are attracted, like everybody else, by a scheme of deductions from current earnings; but we have looked into the matter, and have given it a great deal of examination—more than you could give by a cursory examination of a White Paper—and no scheme at the moment is such that we would care to venture upon it or to ask you to do so. The scheme which has been suggested would bring so much unfairness and hardship in its train that we cannot ask you to adopt it." If any scheme were presented which was based on a principle of that kind, it would have the most careful and sympathetic attention, I am sure, of the T.U.C, the employers, and myself. But I cannot embark on a proposal of that kind because the scheme has at the top of it the words, "Deductions from current earnings." I have to see what the scheme would bring in its train.
My right hon. and gallant Friend the Member for Kelvingrove (Lieut.-Colonel Elliot) suggested that I might appoint a Committee to investigate the matter. He suggested, with great optimism I thought, that one member should be a housewife and another a workman. I should be very sorry, indeed, for those two members. This matter requires the most expert examination. When you talk about the complexity of the Income Tax law, and expect a housewife and a workman to delve into this subject, and give a reasoned opinion upon it, you are asking too much of human nature. I will keep in close touch with the T.U.C. and with the organised employers, as I have done all through, with the object of seeing whether, in fact, anything does emerge. The Committee may take it from me that such a scheme would be much more likely to be produced by experts than by anybody else. In the meantime, I want to put the whole scheme on much more equitable lines, and because of that I make the proposals that I am making to the Committee to-day. I believe personally that the proposals which I have made will go a very long way indeed towards meeting the difficulties which have been mentioned. That is the opinion of everybody who has had the responsibility of examining my proposals. These proposals have not simply been thrown out after very little consideration. They are the outcome of a very careful examination of the whole problem, and the suggestions of experts and qualified persons.
Do they include the Trades Union Congress?
Yes, Sir. I want to try the schemes that are available to me at the present moment, and I want to begin this next midsummer. I want to put into operation the proposals intended to help the seasonal worker and so on; I want also to put upon the Statute Book as soon as possible—because the people concerned have to be satisfied that Parliament has given sanction to these proposals—the proposals for married women's Income Tax. It is important from the point of view of the war effort that women who are entering industry should know that Parliament has approved what I am proposing. For that purpose it would be well worth while—and this I propose to do—to try and bring forward the introduction of the Finance Bill in order that these proposals, which are affecting the war effort and output, can be brought before the House and considered, and, I hope approved by them.
My hon. Friend the Member for Gateshead (Mr. Magnay), who is not here just now, mentioned the scheme in operation in Queensland. That is a very different proposition altogether from what we have been considering here to-day. It relates to certain unemployment relief taxes. Naturally these taxes are no more than small additions to the ordinary Income Tax, which is assessed and collected after the end of the year in which the income is earned. They are charged only a few pence in the £, and if the rates were larger, as they would be here, the collec- tion by this means would be open to just the same objections as are referred to in the White Paper, and, in particular, where wages fluctuate, excessive amounts would be collected. It is just the same sort of flaw as is pointed out in the White Paper. I must emphasise that they have their Income Tax in the ordinary way, and they collect it in the ordinary way.
There are one or two other matters to which I want to refer for a minute or two. Quite rightly, my hon. Friend the Member for East Ham, South (Mr. Barnes), raised the question of his own point of view about the Purchase Tax, and the position of the poorer sections of the community, old age pensioners and others, with fixed incomes. I have not, nor have the House and those associated with me in all these matters, been unmindful of people who are in a very difficult position just now. I have a great deal of sympathy with people with fixed incomes at the present time, but we have not been unmindful of them either in this Budget or the last Budget. The old age pensioner has the opportunity of obtaining a supplementary pension, and in my Budget Statement this year, as in my Budget statement last year, the Government have taken a considerable number of measures, such as the imposition of maximum prices and the extention of the policy of stabilisation, to meet the case of these people, I do not say that these measures meet the difficulty of these people to the extent that they would like it to be met—but to a very considerable extent indeed. No section of the community have been more helped by the stabilisation policy of the Government, which is costing over £120,000,000 a year, than has this particular section of the community, with whom we all have a considerable amount of sympathy. It is of particular importance to people in that section of the community that the general price level of a very large number of staple articles of food is actually lower to-day than it was 12 months ago.
I could enumerate a number of other things in that connection, but I would ask my hon. Friend, realising his position in this matter, not to forget the other side of the balance-sheet. I thought when I heard him speak what an ungrateful world this is, because if anybody has done pretty well, having regard to his own beliefs and his own policy in connection with this Budget, it is my hon. Friend, with all his well-known views on the Purchase Tax. He is the man who is going to walk away with some of it, and then, to turn round on me to-day and rather trail his coat as though he wanted to pick some sort of quarrel with me about what my policy in the future shall be, was a little unfair in all the circumstances. I want him to take my proposals as they are to-day. I cannot indicate what the future proposals of the Government will be in relation to the Purchase Tax. But I want him to see that, at any rate as far as a very considerable section of goods are concerned, I am taking the Purchase Tax away altogether, and I am doing it for a very good reason. I admit at once that I am not doing it particularly to please my hon. Friend, much as I admire him. I am doing it for the very serious purpose that the Government want to encourage the use of utility clothing. Therefore he must be content, as everybody else is, with the proposals of to-day, and he must treat this matter on its merits and not deal with it on the lines of some statement I might make about future policy. I was very glad indeed to observe that he did not at all quarrel with the proposals that I am making to increase the tax as far as luxury articles are concerned, and he would have expected me to have taken that particular line.
He also put some questions to me about the Excess Profits Tax and asked how I would be able to enforce the conditions that I have laid down. I am advised that we do not anticipate any difficulty, and I feel that the value of the new arrangement I have announced, as far as E.P.T. is concerned, for repayment after the war has not been fully appreciated. It is subject to the right and proper condition—I do not think that industry is criticising or quarrelling with me about the conditions at all—that repayments are not to be distributed in the form of dividends or bonus shares. I may say to my hon. Friend the Member for North East Leeds (Mr. Craik Henderson) that I have noted his observations and the question which he put to me about bonus shares, but it is equally true that the machinery of the issue of such shares is often substituted for the distribution of dividends. If that is to be forbidden, we must also close the door against bonus shares. Subject to these conditions, it is important to industry that this allowances of 20 per cent. is to accrue as a matter of statutory right, without any danger that it may be withheld owing to the imposition of other conditions with which any individual company or business might not be able to comply. Therefore it follows that those directors and managers who are genuinely concerned about the handling of post-war problems, and who were disturbed about the vagueness of last year's Finance Act in that respect, can now feel that, always providing they do not contravene basic conditions and attempt to distribute repayment as a windfall, they can plan its useful employment in the business.
My hon. Friend the Member for Walsall (Sir G. Schuster) raised the question of the control of economic policy and referred to a statement made by the right hon. Gentleman the Member for Wakefield (Mr. Greenwood) when he was Minister without Portfolio. I would like him to turn to a later statement which was made by the Prime Minister on 24th February last, when dealing with the reconstruction of the Government. The Prime Minister then pointed out that as regards economic policy we had the Lord President's committee which was assisted by a number of Ministers of Cabinet rank who are regular members and others who are invited from time to time as may be convenient. It is there, very largely, that economic policy and economic problems are considered. They do in fact, constitute a very considerable portion of the matters which we discuss. It is that body which supervises our approach to the economic problems connected with the most effective prosecution of the war; and there that resides that coordination of economic policy which must be, and is, an essential feature of government to-day. My hon. Friend will be the first to appreciate that if there is any important question of major policy, such as the wages policy of the Government, it is considered, as he would anticipate, by the War Cabinet and a decision made by them.
There is also the equally important body dealing with post-war economic problems which come under the jurisdiction of my right hon. and learned Friend the Paymaster-General and, again, we have another important body of Ministers who deal with those particular questions. Both these committees have the assistance of the economic section of the War Cabinet Secretariat—a small central staff of economists whose services are available to the Government as a whole. We have been able by that means, as I was able to demonstrate in the course of my opening remarks on the Budget, to get very close association and working with the economic policy of the Government to-day.
There is one other matter to which I would like to refer and which was raised by the hon. and gallant Member for South East Ham. It concerns the "nest-eggs" of the civilian and Armed forces. Postwar credits for the Forces are at the rate of 6d. a day, or £9 a year. It is, of course, difficult to make any exact comparison with Income Tax post-war credit which varies in accordance with the level of earnings and the amount of Income Tax paid. But post-war credit for wage-earners is about £60,000,000 and as there are nearly 6,000,000 taxpayers the average credit for them is between £9 and £10 a year which does not differ materially from the amount we receive from men of the Forces.
I have not been able to deal with a number of questions that have been raised by hon. Members, especially questions about details in connection with the Excess Profits Tax. I will try to find an opportunity to deal with those questions in the course of our further financial Debates. I want to thank hon. Members for the consideration which they have given to my proposals. The proposals both of the last Budget and the present Budget, which have been so freely accepted, give to the whole world plain and tangible evidence of our firm resolve in the financial sphere, as in other spheres, to leave nothing undone by which victory can be achieved.
Question put, and agreed to.
Resolved,
"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."
National Loans
Resolved,
"That the power of the Treasury to raise money under section one of the National Loans Act, 1939, shall include power to raise any money required for raising any supply granted to His Majesty for the service of the year ending the thirty-first day of March, nineteen hundred and forty-three, and in addition a sum not exceeding two hundred and fifty million pounds."—[ Sir K. Wood. ]
Resolutions to be reported upon the next Sitting Day; Committee to sit again upon the next Sitting Day.
The remaining Orders were read, and postponed .
Adjournment
Resolved, "That this House do now adjourn."—[ Mr. James Stuart. ]