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Commons Chamber

Volume 379: debated on Tuesday 5 May 1942

House of Commons

Tuesday, May 5, 1942

[Mr. SPEAKER in the Chair.]

Death of a Member

MR. SPEAKER made the following communication to the House:

I regret to have to inform the House of the death of Patrick Munro, Esq., Member for the County of Glamorgan (Llandaff and Barry Division), whilst on military duty with the Palace of Westminster Home Guard, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the honourable Member.

Private Business

PRIVATE BILLS [Lords]. (STANDING ORDERS NOT PREVIOUSLY INQUIRED INTO COMPLIED WITH.)

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bill originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into which are applicable thereto, have been complied with, namely—

Railway Companies (Thomas Cook and Son Limited Guarantee) Bill [ Lords ].

Bill to be read a Second time.

London County Council (Money) Bill

Read a Second time, and committed.

NEWCASTLE AND GATESHEAD WATERWORKS BILL [Lords]

Read a Second time, and committed.

Oral Answers to Questions

Questions

Petrol Rationing (Church-Going)

asked the Secretary for Petroleum whether the petroleum permit for church-going covers all denominations, also Sunday schools; whether there is any distance limit; and what precautions have been taken to prevent misuse of the permit?

Yes, Sir. The purposes for which allowances of petrol may be granted include attendance at Sunday schools and at places of worship of all denominations, subject, of course, to the conditions indicated in my statement of 21st April.

Is the hon. Gentleman satisfied that he has taken sufficient precautions against religious joy-riding?

Yes, Sir. In general, of course, people should walk to church. All I am doing is to provide discretion for the divisional petroleum officers in particular cases of old age, infirmity or particularly long distances.

Should not the position of those who have always had to walk to church be borne in mind?

Trade and Commerce

Clothes Rationing

asked the President of the Board of Trade, whether, in view of the representations made to him by the National Joint Industrial Council for the retail food trades, he will give further consideration to the claim for additional coupons for overalls made on behalf of shop assistants handling groceries and provisions supplied to the public?

Yes, Sir, I am giving further consideration to this claim.

Will the right hon. Gentleman bear in mind the high standard of cleanliness which the trade and the public rightly demand from these people, and will he also consider the high coupon value of overalls?

Household Furniture (Price Control)

asked the President of the Board of Trade, whether, in view of the excessively high prices now charged for household furniture, he will consider fixing prices for same, so as to protect persons compelled to refurnish their homes after losses caused by enemy action?

Yes, Sir. I signed yesterday an interim Order prohibiting increases in prices above the current level. This Order will be published on Thursday. I have asked the Central Price Regulation Committee to submit further recommendations on this subject.

Is the right hon. Gentleman aware that the public will welcome his attempt to put a stop to this racketeering in furniture?

What does the right hon. Gentleman mean by current prices? In any case they are already too high.

My first intention is to prevent their going any higher. I have said that an interim Order preventing further increases will be made. The Central Price Regulation Committee are advising me how we can bring about reductions below the present level.

Does the right hon. Gentleman contemplate taking any action where prices are already proved to him to be exceptionally high?

Yes, Sir. That is the point about which I am taking advice from this very representative Committee.

Are any arrangements afoot by which good substantial furniture at a reasonable price will be provided for the public, under Government control?

We are advancing in the direction of the production of more utility articles of various kinds, but I cannot say that we have yet got as far as furniture.

Coupon Offences

13 and 14.

asked the President of the Board of Trade (1) whether he can give any information in connection with Greenfield, ladies hat manufacturer, Mora Street, E.C., who was charged at Old Street Police Court on 29th April for using 30,309 coupons to obtain rationed goods; and what action was taken in the matter; and

(2) whether he can give any information in connection with the case brought against Alfred Levy, of Forest Gate, West Ham, for unlawfully transferring 30,000 coupons, who was charged at Old Street Police Court on 29th April; and what action was taken in the matter.

The coupons used by Maurice Greenfield were wrongfully obtained from Alfred Levy. At Old Street Police Court on 28th April, Levy was sentenced to nine months' hard labour, plus a fine of£100 or a further three months' imprisonment. On 29th April, at the same court, Greenfield was fined£7,985 plus 100 guineas costs, and M. Greenfield, Ltd., were fined£3,330.

In the meantime, has the right hon. Gentleman completed the investigations?

Electrical Advertisements

asked the President of the Board of Trade whether he has considered the complete abolition of advertisement by electricity for the duration of the war, with particular reference to advertisements dealing with commodities generally unobtainable by the general public; and whether he has any statement to make.

Yes, Sir. As I stated on 28th April in reply to my hon. and gallant Friend the Member for Holland with Boston (Lieut. Butcher), I am preparing an Order restricting many unnecessary types of lighting, including commercial advertising.

Questions

Fuel Rationing Scheme

asked the President of the Board of Trade whether in any suggested scheme of fuel rationing, he will give consideration to the needs of people living in houses whose windows owing to enemy action have been destroyed and as a result of first-aid repairs are compelled to use artificial light all day, and in many cases need fires to counteract draughts occasioned by insufficient substitutes for glass?

Yes, Sir. This is one of the special cases which I already have in mind.

Will everybody whose windows have been broken be given a special priority?

We must try, with the help of my hon. Friend, to make the most effective possible administrative arrangements.

5 and 6.

asked the President of the Board of Trade (1) whether it is proposed to make any extra ration of fuel available for the sick, especially workers temporarily disabled by rheumatism or bronchitis; and

(2) whether, before arranging the final details of the Beveridge Fuel Rationing Scheme, friendly societies will be consulted?

Special provision will certainly be necessary in the case of sickness. I shall be glad to consider any suggestions on this or other matters affecting fuel rationing which friendly societies may wish to make to me.

Will it not be necessary to provide more light for people living in Manchester as compared with those living in Torquay?

asked the President of the Board of Trade whether the proposed Fuel Rationing Scheme has the support of the gas and electricity undertakers, the Mining Association and coal distributors?

Sir William Beveridge and certain of my officers have consulted, on my behalf, the representatives of these and other interests which would be directly affected by fuel rationing. Many assurances have been received from those consulted that, in the event of such a scheme being introduced, they would cooperate in securing its successful working.

Will my right hon. Friend state quite specifically whether the representatives of the undertakings think the present scheme would be helpful or not?

That would take rather a long answer, because there are a number of others besides those mentioned.

Will the right hon. Gentleman say whether under any circumstances the representatives of company and municipal gas and electricity undertakings have ever assured him that the scheme was workable?

asked the President of the Board of Trade whether, in any scheme for rationing coal and paraffin, he will take into special consideration the position of large farms and country mansions who will need to cart their winter coal supplies in bulk in May so as not to interfere with harvest and autumn sowings and who need bulk supplies of paraffin from time to time for milking, ploughing and lighting purposes; and whether he will receive a deputation, representing owners and farmers from rural districts, to put their needs before him?

The special needs of farms for coal and paraffin have already been brought to my notice by the National Farmers' Union. I am in consultation on the matter with my right hon. Friend the Minister of Agriculture, and suggest that in the first instance my hon. and gallant Friend should get in touch with him.

Will the right hon. Gentleman also take into account not only farms, but other places a long way from railways stations, because of the difficulties of transport from the railway stations?

Government Departments

Board of Trade (Staff)

asked the President of the Board of Trade the total number of staff employed by his Department throughout the country, and what percentage, men and women separately, is of military age?

The total staff employed is 6,687. Of this total 11.3 per cent. are men of military age and 5.4 per cent. are women liable for service with the Forces under the National Service (No. 2) Act.

Advisers, Board of Trade

asked the President of the Board of Trade whether he will give names of advisers working with his Department; the firms with which each one of them is associated; and the amount paid to each of them by his Department or the source of their incomes?

I assume that my hon. Friend's Question does not relate to the holders of executive posts in my Department or persons who from time to time render technical advice. With his permission, I will circulate in the OFFICIAL

Name of adviser.

Duties.

Firm or body with which associated.

Bailey, R. G.

Trade Adviser on Wool

R. G. Bailey & Co. Ltd.

Carter, W

Insurance Adviser

Royal Insurance Company.

Clay, Professor H.

Economic Adviser on Post-war Reconstruction

Bank of England.

Evetts, G.

Adviser on Gas Supply

Fottrell, E. J.

Adviser on Gas Supply

National Gas Council.

Innes, Sir C.

Adviser on Post-war Reconstruction

Mercantile Bank of India Ltd.

Mysore Gold Mining Co.

Oriental Telephone and Electric Co.

Mathias, F. A.

Adviser on Diamonds

Sierra Leone Selection Trust Ltd.

C.A.S.T. Trustees Ltd.

Meynell, F.

Adviser on Consumer Needs

Mather & Crowther Ltd.

Ramsay, J. F.

Trade Adviser on Jute, Flax and Hemp

Robertson Ireland & Co.

In addition, the following business members of the Industrial and Export Council:

Name of adviser.

Firm with which associated.

Remarks.

Beale, Sir Samuel

Guest, Keen & Nettlefolds Co. Ltd.

Barlow, Sir Thomas

Barlow and Jones Ltd.

Also Director-General of Civilian Clothing.

Campbell, Sir Nigel

Helbert Wagg & Co. Ltd

Also Fuel and Power Controller for Scotland.

Stewart & Lloyds Ltd

Cunliffe, Hon. G.

British Aluminium Co. Ltd.

Also Director of Office Machinery.

Forres, Lord

Balfour, Williamson & Co. Ltd.

Lee, Sir Kenneth

Tootal Broadhurst Lee & Co. Ltd.

Weir, Sir Cecil

Schroder, Mitchell & Weir

Also Controller-General of Factory and Storage Premises.

NOTE.—The business members of the Industrial and Export Council place their whole-time services at the disposal of the Chairman and act as an Executive Committee of the Council. The work is divided by industries between the business members.

REPORT a statement showing the names of the advisers working within my Department, their duties and the names of the firms with which they were associated. None receives an official salary, and I have no information about their incomes from other sources.

Are we to understand from that Reply that the right hon. Gentleman is continuing the pernicious habit of the Ministry of Supply in allowing people to-work in his Department while they are still being paid by their trade associations?

I believe in getting as much advice as I can on this and other matters.

Following is the list of advisers in the Board of Trade:

Contractors (List)

asked the Chancellor of the Exchequer whether he will place in the Library of the House a full list of contractors on the various Government Department lists for the convenience of Members?

My hon. Friend will realise that there are so many contractors employed by the various Government Departments—in some industries, all the contractors in the country—that the compilation of such a list would be a formidable undertaking, and it is doubtful whether its usefulness, when compiled, would justify the amount and diversion of labour and manpower that would be involved in its composition.

Is the right hon. Gentleman aware that the position can easily be overtaken if he applies to the Civil Engineering and Public Contractors Association, who are willing to present the Chancellor of the Exchequer with a complete list of public contractors in the different areas, and will he consider that suggestion?

Will the Chancellor consider placing two or three of the contractors in the Library, so that we can have a look at them?

Committee of Public Accounts (Report)

asked the Financial Secretary to the Treasury, what action has been taken on the last Report of the Committee of Public Accounts with particular reference to the question of dual capacity and the future of the large capital equipment provided by the Government and installed in privately-owned or shadow factories?

In accordance with the usual practice, the Treasury has considered the last Report of the Committee of Public Accounts and has communicated its views on the matters contained therein to the Department, or Departments, concerned. The Treasury Minute is under consideration by the Public Accounts Committee in its current proceedings. As regards the question of dual capacity, the Treasury has expressed its complete agreement with the Committee's comments as to the basic principles which should be observed and has asked that in each Department the attention of the officers in question should be specially drawn to the terms of the Committee's Report. As regards the last part of the Question, I have been unable to trace a reference in the Committee's Report to the subject to which the Hon. Member refers.

Ministry of Food (Trade Directors)

asked the Parliamentary Secretary to the Ministry of Food, the names of the 12 trade directors paid by his Ministry together with the amount paid to each of them and the source of income of the remaining 26 unpaid directors?

As the answer involves a tabular statement, I will, with permission, circulate it in the OFFICIAL REPORT.

Can the right hon. and gallant Gentleman assure the House that these persons who are not paid by a Department are not deriving their incomes from trades they are being asked to administer?

I believe that some of those who are not being paid by the Ministry are deriving their incomes from pre-war sources.

Are they better off or worse off since their appointment?

Following is the statement:

Name

Director of

Salary ££

Sir Bryce Burt, C.I.E., M.B.E.

Animal Feeding Stuffs

1,300

Howard Hughes

Cakes and Biscuits

1,200

F. Wilkinson, M.B.E.

Canned Fish

1,200

C. D. B. Ellis

Cereals, Home Grown

1,200

C. H. Lewis, O.B.E.

Fresh Fruit and Vegetables.

1,500

G. T. Shipston

Fruit Juices and Pectin

1,000

H. S. E. Turner

Meat and Livestock

1,500

J. C. Kidd

Meat Home Production.

1,200

R. S. Forsyth, C.M.G.

Meat Imported Meat

1,200

Captain John Mollett.

Potatoes

1,500

J. Roberts

Starch

1,300

C. E. Davies

Wholesale Co-ordination.

1,500

I have no official information as to the other sources of income of commodity and other directors, nor do I regard this as a matter which concerns my, Department.

British Army

Pay Corps

asked the Secretary of State for War whether he will abolish the condition that a man who passes the requisite intelligence test cannot be assigned to the Army Pay Corps unless he has had at least a secondary school education?

Yes, Sir. An instruction is about to be issued under which men with an elementary school education will become eligible for enlistment into the Royal Army Pay Corps.

Is the right hon. Gentleman aware that only two weeks ago, or just over two weeks ago, somebody was refused because he had not had a secondary school education?

I think that may be very likely. This announcement that I have made follows on a review of the previous practice. It was necessary at one time to introduce some kind of educational qualification because of the quality of the material available. Now there is a shortage, and for that reason as well as for any other reason it has been necessary to relax the conditions.

Will it be possible for those who were refused only a few weeks ago to enter the Army Pay Corps now, if suitable?

ManœUvres (Farm Damage)

asked the Secretary of State for War whether he is aware of the serious damage to food production in a certain area caused by manœuvres last week by tanks breaking through wire and farm fences thereby letting loose cattle, and by troops pulling down hay and straw ricks for bedding, etc.; and what steps he is taking to prevent a recurrence of this unnecessary destruction?

This case is being investigated at present, and until I get a report on it I cannot tell what measures may be necessary to prevent a recurrence.

In view of the importance of food production in war- time, will the right hon. Gentleman see that the orders given are passed on about not damaging unnecessarily farm land? He will remember that last January notices were issued which farmers could put up on the farms. Will he do something of the same kind now?

There is machinery in the War Office and in the Army to minimise the damage to farm land, and generally speaking, farmers are extremely well satisfied with what the War Office has done in the matter. As regards this particular case, I cannot tell, until I have investigated, whether there is some gap in the instructions.

Is the right hon. Gentleman aware that to say that farmers are well satisfied is hardly correct?

Officers (Termination of Employment)

asked the Secretary of State for War how many officers have been reverted to unemployment since 1st April on grounds of age?

As I have explained in answer to previous Questions, no strict age-limits for retirement are at present being applied. The determining factors in deciding whether an officer shall continue to be employed are his ability to discharge his duties successfully in all circumstances, the extent of his knowledge, qualifications and experience and the current needs of the Service.

Can the right hon. Gentleman tell me how many have been reverted to unemployment as a result of the recent Army Council Instruction?

I cannot give a number offhand. What I can give the hon. Gentleman is some figures of the people over 45 to whom alone the instruction applies—something like one in ten, and, over 55, something like one in three.

Could the right hon. Gentleman answer the question as to how many are involved?

Is the right hon. Gentleman satisfied that some senior officers in the Army have not taken advantage of this order to get rid of officers who are competent but a trifle independent?

I take it that the right hon. Gentleman will take up any such case in which it is alleged that that has happened?

Every officer has the right of appeal to the Army Council, and whenever a case comes on appeal it will be considered extremely carefully.

Engineering Corps

asked the Secretary of State for War whether he has now any statement to make with regard to the organisation of the Civil Engineering Corps?

An Army Order authorising the formation of the new Corps will be published shortly. I am not yet in a position to announce details of organisation, which are being worked out now by a special committee.

Has the right hon. Gentleman got so far as to give this new organisation a title?

Food and Clothing (Cost)

asked the Secretary of State for War what is the average cost per day for food, clothing and boots for each soldier serving in this country and overseas?

The average daily cost of the ration issued in kind in this country is approximately is. 5d. for a soldier living in mess; that of his clothing and boots is 1s. 0d. Comparable figures for abroad are not readily available.

Home Guard

asked the Secretary of State for War whether he approves the continuance of the Home Guard pickets which the hon. Member for Streatham has brought to his notice, as the loss of a proper night's sleep to men who are fully employed in civilian duties each day can only be justified by essential pickets of military value, and as the men are deficient in weapon training which they urgently desire?

Yes, Sir. The military commander in the area in question considers these pickets to be of military value. I am making inquiries into the state of training of the unit referred to and shall communicate with my hon. Friend.

Is the right hon. Gentleman aware that the men patrolling on these useless pickets are challenged by Regular soldiers who maintain guards at these places, and that these Home Guards, who are so fully employed during the week, and who are most anxious to do more work if it is worth while, lose a night's sleep which they require?

If the hon. Member has any further points beyond those mentioned in the Question which he wishes me to look into, perhaps he will let me have them.

Is the right hon. Gentleman aware that I brought this matter before the Financial Secretary and waited for some time for a reply, and it is only because I did not get a reply that I have asked this Question?

asked the Secretary of State for War why Home Guard battalions of which he has been notified are permitted to appeal for recruits to make good deficiencies in their numbers, as such appeals bewilder the public and men already in the Home Guard, and bring the laws and. the machinery of Government into contempt?

Compulsion for the Home Guard applies only to men between 18½ and 51, while men of 17 and between 51 and 65 are also eligible to join. Moreover compulsion was applied later in some areas than others and its application inevitably takes a certain time.

Having regard to the fact that it has been the law of this land since January that there should be conscription for the Home Guard, does the right hon. Gentleman think it proper that appeals should be made from cinemas and parades of Home Guardsmen, and that a comedian and his son should be featured in a movietone newsreel voluntarily joining the Home Guard two years after its formation?

Are we to understand that the War Office conduct is based mainly on opinion and that they do not come to a decision themselves?

asked the Prime Minister whether he is aware that a certain weapon has been preferred by the authorities for issue to the Home Guard in place of another weapon, of which he has been informed; and whether he is satisfied that a right choice has been made?

I have been asked to reply. This is not a matter which I can properly deal with in answer to a Question. If the hon. Member will get in touch with me, I shall be glad to furnish him privately with the information for which he asks.

Can the right hon. Gentleman assure the House that the one instrument is not preferred to the other merely in order to suit vested interests?

Modern Scientific Knowledge (Adviser)

asked the Secretary of State for War whether he is aware of the concern in the engineering industry at the discouragement of the application of modern mechanical science by the Army authorities; is there a representative of modern mechanical science on the Army Council; what is the policy adopted in regard to mechanical experience gained in the battles; is there a satisfactory arrangement to benefit by the experience; and what further action is it intended to take to deal with his aspect of our war effort?

I am fully aware of the importance of applying modern scientific knowledge to the solution of military problems. I have recently decided to appoint a special scientific adviser to the Army Council and shall be making an announcement on this subject very shortly. Officers with the necessary scientific and technical experience are attached to General and Formation Head- quarters in theatres of war, and these officers furnish very valuable reports on the experience gained under active service conditions. I am proposing further to extend these arrangements.

The right hon. Gentleman said he was aware of the importance of mechanical scientific development. Will he take steps to see that the Higher Command in the Army are made aware of this, as the Air Ministry and Admiralty are?

The hon. Member seeks to create a distinction between myself and our Higher Command. I cannot accept such a distinction.

Is not the chief problem the fact that there are not enough people of engineering competence in the Government?

Land Requisitioning

asked the Secretary of State for War what arrangements are in progress and prospect on lands taken over for military training areas to dispose of fencing so as not to crush it into the soil, to preserve as far as possible sites of historic interest, to facilitate the evacuation and resettlement of land and other workers, and to preserve property and buildings?

The arrangements for requisitioning land for the Army are in the hands of officers of the War Department Lands Branch who are fully qualified land agents. They consult the Land Commissioners, War Agricultural Executive Committees and farmers and do all they can to avoid needless interference with food production. On the South Downs, to which I think my hon. and gallant Friend refers, a great deal of fencing has been removed but a certain amount is being left at the farmers' request, until the date when training will actually begin. I regret that it will then be too late to remove it. As I said in answer to my hon. Friend the Member for Bilston (Mr. Hannah) on 28th April, we are taking steps to reduce the risk of damage to sites of historic interest. I am not aware that agricultural workers moved from army training areas have had any difficulty in finding new employment.

Can the right hon. Gentleman give an assurance that the wire fencing in the area he has mentioned, that is, the South Downs, will actually be removed before the War Office take over?

I am very sorry, but I cannot give an absolutely 100 per cent. pledge. A certain amount of the fencing has been left at the request of the farmers. It will be impossible to remove that before training begins.

Royal Parks (Barbed Wire)

asked the Secretary of State for War for what purpose the Royal parks are being surrounded with barbed wire?

The Royal parks are not being surrounded with barbed wire, but barbed wire entanglements are being erected in certain parts of some of the parks as part of the general defence plans of the area.

Does the right hon. Gentleman not think that the enemy would find it easier to cut down this barbed wire than the iron fence which in many cases it replaces? Does he realise that so long as the public see this kind of waste going on they will not really believe that the Government are in earnest about waste?

Luckily, the removal of iron fencing is one of the few responsibilities which are not part of the duties of the War Office.

Was the barbed wire made from the railings taken down by the Office of Works?

Home Defence

asked the Secretary of State for War whether he will consider recreating the Territorial Army, for home defence only, by transferring 500,000 fit men from the Home Guard, thus providing a Territorial Army representative of every county, in complete and well-equipped divisions located in each command, leaving over 1,000,000 men in the Home Guard for static defence duties, relieving at least 250,000 Regular troops for service overseas, permitting 15,000 ex-miners in the Regular Army to return to the mines, without jeopardising home or Commonwealth defence, and utilising the experienced services of officers recently retired from the Regular Army?

No, Sir. Nothing would be gained by transferring 500,000 men from the Home Guard to a new Territorial Army unless this were embodied for full-time service, which would simply be equivalent to calling up 500,000 civilians to the Army.

I put this Question down to the Prime Minister, and it has been transferred, without my consent, to the Secretary of State for War. Having regard to the importance of the Question, which goes far beyond the scope of my right hon. Friend's answer, I beg to give notice that I will raise the matter at the earliest opportunity.

Camp Chattels (Inquiry)

asked the Secretary of State for War whether he is aware that a Board of Officers was assembled on 19th August, 1941, for the purpose of taking over the chattels at a camp, the name of which has been communicated to him; that they were unable to proceed with their investigation until certain documents had been placed at their disposal, and so adjourned their proceedings until 10th September, that the documents might be prepared for them, including a schedule of the chattels that could not be accounted for; and why the Board was dissolved on 9th September, the day before it was to have reassembled?

In view of the doubts which my hon. Friend continues to express regarding the accuracy of the answers which have been given him on this subject, I am sending an officer to investigate this matter fully on the spot and report to me. When I have received this report I will communicate with my hon. Friend.

Scotland

Central Medical War Committee

asked the Secretary of State for Scotland what is the function of the Central Medical War Committee in Scotland; and how long is it since the committee met?

The functions of the Scottish Central Medical War Committee are to advise the Government on the allocation of doctors in Scotland to His Majesty's Forces and to civilian services connected with the war, and generally to represent the profession in Scotland in any negotiations with the Government affecting questions of medical personnel. The Scottish Central Medical War Committee last met on nth February, 1942. Certain of its sub-committees, of course, meet more frequently.

National Fire Service College

asked the Secretary of State for Scotland whether he is prepared to grant facilities for Scottish Members to visit the National Fire Service College, since the Minister of Home Security has already issued an invitation for this purpose?

Yes, Sir. If Scottish Members who wish to visit the college will communicate with me within, say, the next 10 days, I will gladly arrange for them to do so.

While I quite accept my right hon. Friend's suggestion, will he take care that, on future occasions, after joint consultations joint invitations are issued? We should not have to apply to him in this fashion for what is, after all, not a privilege, but a right.

Will my right hon. Friend consider consulting Members, so that they can accept the invitation on the date suggested?

I do not know what date is suggested. I am leaving it to the usual channels.

Will my right hon. Friend make it clear that the Scottish Members do not desire to be saluted on this occasion?

Forest Fires, Borgie

asked the right hon. and gallant Member for Rye, as representing the Forestry Commissioners, whether he can make any statement about the recent fire in the Commission's plantation at Borgie, Sutherland, the amount of damage, and the probable cause of the fire; and whether the person or persons who caused it were inside the Forestry plantation with or without authority and for what purpose?

Approximately 514 acres of Forestry Commission plantations at Borgie, Sutherlandshire, were recently destroyed by fire which started several miles away in the direction of Strath Naver, probably the result of heather-burning which got out of control. There is some evidence that, after the fire had reached part of the plantations, two subsidiary fires were started inside the plantations by some means unknown.

Is my right hon. and gallant Friend aware that the forester at Borgie refused all offers of assistance from the inhabitants of Borgie and district, and is he satisfied that all reasonable steps were taken to put out the fire and minimise the danger?

Coal Industry

Absenteeism, West Yorkshire

asked the Secretary for Mines why absenteeism in the West Yorkshire district has increased from 12.76 per cent. on 10th January, 1942, to 13.47 Per cent. on 7th March, 1942, and the output per man per shift at the coal face has decreased from 3.27 to 2.83 tons during the same period; and what steps are being taken to stop this decline?

The hon. Member is aware that it is not in the public interest, and is therefore contrary to Government policy, to discuss detailed figures of this kind.

Is the hon. Gentleman aware that in the opinion of Mr. John Kane, an eminent consulting engineer, the main cause of the trouble is the working of the Essential Work Order and the pit committees? Will he examine and review the working of that Order?

Is my hon. Friend aware that the figures given in the Question completely misrepresent the position in West Yorkshire, and that this is another example of the old saying that, while figures cannot lie, liars can figure?

Miners (Release from Armed Forces)

asked the Secretary for Mines whether there is a uniform payment to miners returning from the Army to work in the mines; and what form the remuneration takes?

I would refer my hon. Friend to the Reply given to my hon. Friend the Member for Caerphilly (Mr. Ness Edwards) on 28th April, in which full details were given. I am sending my hon. Friend a copy of this Answer.

Can my hon. Friend say when the returned soldier is likely to get a civilian suit or the cost of a civilian suit from the Army; is he aware that men are returning and have to work two weeks before they receive their pay, and that when they approach the managements and ask for a sum to tide them over they are only laughed at? Although the Answer of my hon. Friend implies that instructions have been sent, will he say what steps he will now take to ensure that these men have the wherewithal to live during the fortnight that they are at work without pay?

I think that the best way is to have the cases reported to me, and then I will communicate with the people who have not carried out the instructions in the circular.

Lost Time (Guaranteed Wage)

asked the Secretary for Mines the amount of money paid to provide the guaranteed wage for time lost when work has not been available under the provisions of the Essential Work (Coal Mining Industry) Order, and the total amount raised by the levy to meet this cost, giving figures for each district in the British coalfields?

I am circulating in the OFFICIAL REPORT figures of receipts and payments in connection with the levy paid up to 31st March, 1942.

Are any steps taken to ascertain the causes of this lost time and how far the coalowners or employers are responsible?

I hope that we shall get a full report. The House is entitled to a full report from time to time. These reports will contain the amount of the disbursements that have been made, and I can get the other information, if it is asked for.

I think that there must be a record of the accounts made up at each pit in regard to the guaranteed week, and we will ask for further details if we do not get an answer this time.

Following are the figures:

ESSENTIAL WORK (COALMINING INDUSTRY) ORDER, 1941.

GUARANTEED WAGE PAYMENTS FUND.

Statement of Receipts and Payments for each District to 31 st March , 1942., 1942.

District.

Contributions.

Payments

£

£

Northumberland

67,585

53,483

Durham

152,479

84,612

Cumberland

6,915

5,586

Lancashire and Cheshire

69,403

52,996

Midland Amalgamated

472,149

190,748

Shropshire

3,487

1,093

North Staffordshire

37,261

6,740

South Staffordshire

6,456

1,176

Cannock Chase

26,609

9,639

Warwickshire

27,615

6,165

Forest of Dean

6,310

3,278

Bristol

342

99

Somerset

3,968

427

Kent

8,128

2,058

North Wales

12,294

6,308

South Wales

155,087

85,957

Scotland

158,368

135,254

1,214,456

645,619

NOTE.—The payments shown above are subject to adjustment.

Consumers' Registration

asked the Secretary for Mines whether he is aware that a staff has been employed by the Ilkley Urban District Council to make out index cards in connection with coal rationing; whether this has been done, or is being done by any other local authority; whether it was authorised by his Department; how much time this work is expected to take and the estimated expense?

All local fuel overseers were instructed on 13th March to compile, from lists of registered customers obtained from licensed merchants, district registers of the premises controlled under the Fuel and Lighting Orders. These registers are essential in connection with arrangements for improving retail distribution and eliminating uneconomic transport of coal. They are not being compiled in connection with rationing though they will certainly be useful in the administration of any rationing scheme that may be adopted. Completion was asked for by the end of April, but small consumers previously exempted are now being required to register and will have to be added. The cost is not separable from that of the general administration of the Fuel and Lighting Orders.

As this is certainly a special undertaking that has been placed upon these committee, does not the hon. Member think that a separate item should be entered of the cost of making up these registers?

This is an emergency measure, as the hon. Member understands, and if this arrangement is to be continued in the light of any further decision by this House, then perhaps the matter will come in for a general supervision like all other matters.

Questions

Sir Patrick Dollan

asked the Prime Minister what was the Government post offered to Sir Patrick Dollan; the salary to be paid; and the reasons Sir Patrick gave for declining the offer?

The only such invitation of which my right hon. Friend the Prime Minister is aware was one extended in the summer of 1939 to assist the District Commissioner for Civil Defence in the West of Scotland area. The salary of the post in war-time was to be£750 per annum. My right hon. Friend understands (hat the reason given by the Lord Provost for not accepting the post was that the Glasgow Emergency Committee decided he could best assist by devoting himself to Glasgow.

Atlantic Charter

asked the Prime Minister whether the Government will confer with representatives of the United Nations with a view to augmenting and clarifying such clauses of the Atlantic Charter as refer to economic development, in order to enlist the sympathy and understanding of peoples of all nations.

Is my right hon. Friend not aware that Government spokesmen have frequently alluded to this war as a people's war; and would it not hearten the peoples of all the United Nations to have a declaration free of ambiguities about economic development after the war?

Lord Beaverbrook

asked the Prime Minister whether any salary and/or expenses are paid from State funds to Lord Beaverbrook for the informal work he is performing for His Majesty's Government in the United States of America?

How is it possible to control this gentleman's activities on behalf of the British Government?

Is it not a fact that Lord Beaverbrook was on his way home at the time that my right hon. Friend answered a Question on this subject last week?

Are we to understand that my right hon. Friend does not know anything about the whereabouts of this plenipotentiary?

The question that I was asked was, whether I knew his whereabouts at the time I answered the Question. The answer was, that I did not.

China (Supplies)

asked the Prime Minister whether, in view of the disturbance of communications with China, as a result of the Japanese advance in Burma, any negotiations will be opened with the Union of Soviet Socialist Republics to evolve alternative means and methods of supply to China through Union of Soviet Socialist Republics territory?

Naturally, all possibilities of alternative routes for supplies to China are being examined, but it would not be in the public interest to give details.

The following Question stood upon the Order Paper in the name of Captain P. MACDONALD:

52. To ask the Prime Minister whether he is satisfied that adequate credit facilities have been placed at the disposal of the Chinese Government; and, if not, whether he will consult with the United States authorities as to what more can be done?

I understood that this Question was going to be answered by my right hon. Friend the Chancellor of the Exchequer.

I have not seen the Question. Perhaps my hon. and gallant Friend will put it down again.

National Finance

Family Allowances

asked the Prime Minister whether he is aware that all the existing schemes of children's allowances, whether directly, paid or in the shape of rebates on Income Tax, tend to discourage large families by granting larger allowances for the first than for the second, and for the second than for the third and subsequent children; and if, in view of the impending danger of a steeply declining population, and of mothers of one or two children families being better able to wage-earn than those with larger families, he will direct an inquiry to be made by the relevant Ministries, or by a specially appointed committee with a view to reversing this tendency?

asked the Chancellor of the Exchequer whether he is in a position to indicate when the report on Family Allowances will be published?

I have been asked to reply. The issues raised by these Questions cannot, I think, be usefully considered apart from those that arise on the wider question of family allowances, on which I am publishing a White Paper. I hope to do this on Thursday.

Is the right hon. Gentleman aware that this particular form of provision is unique in this country, and that it is contrary to all the scientific conclusions, which show that it is the larger families, and not the smaller ones, which suffer most from malnutrition, and which most need assistance?

Government Contracts (Comptroller and Auditor-General's Report)

asked the Chancellor of the Exchequer whether his attention has been called to the Report of the Comptroller and Auditor-General on the Civil Appropriation Accounts (Unclassified Votes, 1940), and especially to the contract for guns; and what action does he propose to take?

I would refer my hon. Friend to my answer on this matter last week. Since then I have spoken with the Chairman of the Public Accounts Committee, who, I understand, are to consider to-day the question of expediting their inquiries into this and other matters raised in the Report to which my hon. Friend refers.

Will the Chancellor take steps to ensure that penalties similar to those imposed for black market offences are imposed for offences such as this?

asked the Minister of Supply what exactly is involved in the statement, in paragraph 54 of the Appropriation Accounts, that the services of consultants have been dispensed with entirely by his Ministry; to what extent this covers all fields of his Departmental activities; and who will perform the expert work in the place of the consultants?

I would refer my hon. and gallant Friend to the reply given by my right hon. Friend the Chancellor of the Exchequer on 30th April, 1942, to previous Questions concerned with matters arising from the Report of the Comptroller and Auditor-General.

Old Age Pensions (Administrative Costs)

asked the Chancellor of the Exchequer whether he is aware that it is estimated that it takes 7,000 persons to administer the supplementary old age pensions at a cost of£2,225,000 annually; and will he now consider increasing the flat rate of old age pensions so that the labour employed could be used for some other purpose?

The amount disbursed by way of supplementary pensions is about£30,000,000 a year, and in relation to this sum the cost of administration does not appear to me to be excessive. Moreover, the Assistance Board's staff are available for, and, in fact, employed on, the other duties performed by the Board, such as the making of immediate advances in respect of War Damage and various duties in connection with the Service Departments and the Ministry of Pensions. The satisfactory performance of these duties may make heavy and sudden demands on the Board's staff at any time, and even if the duty of administering the supplementary pensions scheme were removed from the Board there would be no such saving in man-power as my hon. Friend suggests. I might add that to raise the basic pension to an amount which would remove entirely the necessity for supplementation would cost over£100,000,000 a year.

Does the Chancellor not think that that amount would be well spent if it were given to the old people, and that these 7,000 persons could be doing useful work in other directions?

Do not the figures just given prove conclusively that the present scale of supplementary allowance is entirely inadequate?

Is the Chancellor aware that he will get no parliamentary rest until this job is settled?

Is not the number of civil servants employed in any Department related to the work involved rather than to the money which is distributed?

Railway Control Agreement

asked the Chancellor of the Exchequer what precedent there is for the Treasury appropriating the profits of any industry to its own use before interest has been paid upon the fixed charges of that industry; whether he can state the amount of railway preference stock that has not received the fixed rate of interest, and the amount of capital that has received no return; and, in view of the fact that the. Treasury has secured a profit of over£21,000,000 under the Railway Control Order, will he consider a revision of the terms, in justice to the large number of shareholders throughout the country?

The Joint Parliamentary Secretary to the Ministry of War Transport
(Mr. Noel-Baker)

I have been asked to reply. The Railway Control Agreement closely resembles in principle that made during the last war. Under this Agreement, receipts and expenses are pooled and the controlled undertakings are secured fixed annual payments which considerably exceed their immediate pre-war net revenues. These payments are guaranteed during the period of control. In the Government's view, it is a fair and reasonable corollary of such an arrangement that, if the total of the actual earnings exceeds that of the fixed annual sums payable to the undertaking under the Agreement, the excess should inure to the Exchequer. No revision of the Agreement is contemplated. In addition to the receipts under the Control Agreement, the undertakings have other receipts not within the Control. The rates of dividend paid out of these net revenues are a matter for the respective boards. In 1941 full rates of dividend or interest were not paid on approximately£92,000,000 of railway preference stocks and London Transport "C" stock. About£79,000,000 of railway ordinary stocks received no dividend.

Do not the figures demonstrate clearly the real financial value of the railways as a national asset, and also reflect the great contribution in work which the railway companies have made towards the war effort, and does not he consider that it is hard that unfortunate shareholders should be denied any small share in the increased prosperity of this property?

Stag Hunting

asked the Minister of Agriculture whether, as there is a conflict of evidence relative to a recent stag hunt in North Devon, he will hold an inquiry before which witnesses could be heard?

No, Sir. My fight hon. Friend is satisfied that no useful purpose would be served by such an inquiry.

Is the hon. Member aware of the grievous way in which his chief has been misinformed of the facts of this business and that there is ample testimony available to prove how cruel were the injuries inflicted upon that unfortunate animal?

Factory Absenteeism (Sentences)

asked the Secretary of State for the Home Department whether his attention has been called to the sentences of 28 days' imprisonment passed on Miss Jean Addison and Miss Jean Fotheringham, at Coventry; and whether he will consider remitting or reducing their sentences?

asked the Home Secretary whether his attention has been drawn to the case of two Scottish girls, Jean Addison and Jean Fotheringham, who were sentenced to 28 days with hard labour, at Coventry, for absenteeism from work; and whether he is prepared to order their release forthwith?

I have made inquiry and am informed that the facts are as follow. These two girls, who volunteered for work last summer, were given a choice of jobs and employment was arranged for them with a firm in Birmingham which it was understood they had selected—

On a point of Order. The Question that is being answered now is not the Question, surely, that is on the Paper?

They refused to start work with this firm, however, and subsequently turned up at Coventry, where employment with another firm engaged on work of national importance was found for them. Their record with that firm has been one of persistent lateness and absenteeism, and as neither warnings nor formal directions had any effect, and as they were obviously setting a very bad example to the other workers in the factory, it was decided to take proceed- ings against them. My right hon. Friend regrets that after full consideration of the circumstances he would not feel justified in advising any interference with the sentence which the Court thought it right to impose.

Is the hon. Gentleman aware that these sentences have caused indignation throughout Scotland and that people consider the sentences to be savage and brutal? The hon. Gentleman has given a resumé of something that happened before the sentences were imposed. Is there no way of dealing with girls who are sent from Scotland to work in England other than sending them to prison?

In view of the fact that this is the first case of its kind where a penalty has been inflicted, would not the hon. Gentleman ask his right hon. Friend—

I am not taking my instructions from the hon. and gallant Gentleman. Would not the Under-Secretary ask his right hon. Friend to give the matter further consideration, because this has caused a lot of feeling? After all is said and done, there are probably many people in the country who are absenting themselves and turning up late and getting away with it, and we ought not to single out people of this kind.

My right hon. Friend's duty is to consider whether there are circumstances which would entitle him to recommend interference with a sentence duly imposed by a court of law. In these cases, which are cases of persistent and prolonged absenteeism and lateness from work, my right hon. Friend has had no circumstances brought to his notice which entitle him so to interfere.

Will the hon. Gentleman ask the Minister himself to consider the fact that this system of sentencing people all over the country, not generally these two girls, for absenteeism, is arousing a great deal of animosity among a good many people? Will he ask him to consider some method of punishment other than sending people to prison?

Was there not justification for reconsidering these sentences, in view of the consideration that was shown last week to employers who held up the supply of guns? Will the Minister consider that?

Owing to the unsatisfactory nature of the reply and the attempt made by the Under-Secretary to colour the case against these girls, I give notice that I will raise the matter on the Adjournment at the first available opportunity.

Questions

Amusement Arcade (Shooting Gallery)

asked the Home Secretary whether his attention has been called to the case in which two men were fined for shooting in a shooting gallery at a fun fair as they were not in possession of the necessary shooting licence; and whether, in view of the desirability of people getting as much shooting practice as possible, he will take action to legalise this practice?

My hon. Friend has, I think, been misinformed. My information is that the summonses against two members of the public who were shooting were dismissed under the Probation of Offenders Act. The persons who were fined£1 and 10s. were the proprietors of the amusement arcade.

Does that mean that under this very ancient law other persons can be brought up for not having a licence to shoot when they go to practice in an amusement park?

The administration of the Act of 1870 is not in the hands of my right hon. Friend. It is in the hands of the local authorities and police, but I think the sentences imposed in these cases will show that the court did not entertain a very high opinion of the merits of the prosecution.

Having regard to the fact that there were prosecutions, does not that mean that all these arcades are illegal?

My right hon. Friend would not like to rule on the law generally. In these cases the summonses against members of the public were dismissed under the Probation of Offenders Act, and the proprietors were fined.

Will the hon. Gentleman make perfectly certain whether one member of the public was not fined?

I am quite clear about that, but I will look further into the matter to see whether any alteration of the law is required.

Dismissal under the Probation of Offenders Act means "Guilty, but do not do it again."

Does not the hon. Gentleman's answer show that these men were punished for not having licences to use a gun at a shooting gallery?

Charity Trust Deed (Proceedings)

asked the Attorney-General when it is proposed to bring Case T.1193/6/38 before the court for a ruling as to powers under the Charity Trust Deed?

In this matter the Westminster Bank have issued a summons for the construction of the relevant deed to which my right hon. and learned Friend the Attorney-General is defendant. It has been intimated to the Bank that further evidence should be filed thereon, and subject to this that this summons should be disposed of as soon as possible. A writ has been issued on behalf of my right hon. and learned Friend against Sir William Mallinson and the Westminster Bank claiming accounts, further proceedings under which will be taken when the construction summons has been disposed of.

Has the hon. and learned Gentleman any information as to when the case is likely to come on, in view of the fact that since June, 1938, it has been under consideration?

The question at the moment depends on the filing of evidence by the Westminster Bank. My right hon. and learned Friend the Attorney-General has taken every step he can to expedite the filing of evidence, and it is his desire to get the question of construction disposed of with the utmost speed, so that his own action for accounts may also come on and be dealt with.

Can the hon. and learned Gentleman say whether the information which I personally lodged with the Chancellor of the Exchequer will be placed before the court, as the decision of the court depends entirely on what is placed before it?

I cannot discuss the merits of a matter that is sub judice , but I can assure the hon. Gentleman that everything he has placed before the Chancellor has been most carefully considered, not only in deciding to take proceedings, but in what form the proceedings will take.

Will the hon. and learned Gentleman kindly say how long the case has been pending? Is he aware that the evidence which has been forced on my attention was very serious indeed and ought to have wide publicity?

With regard to the last part of the hon. and gallant Gentleman's supplementary question, it would be obviously quite wrong to comment at this stage on a matter that is sub judice . With regard to the first part of the question, once the matters have been considered every possible celerity will be exercised.

Singapore and Hong Kong (British Prisoners)

asked the Secretary of State for Foreign Affairs who is the Protecting Power who is acting on behalf of the British nationals in Japanese hands in Hong Kong; and whether he is satisfied that the most strenuous possible efforts are being made to obtain permission for supplies of food and medical requirements to be sent to Hong Kong to relieve the privation and sufferings of British prisoners?

asked the Secretary of State for War whether he can give any further information as to the treatment of British prisoners of war in Singapore; whether efforts are being made to obtain permission for supplies of food and medical requisites to be sent there; and when he expects a list of prisoners names will be received?

I will answer Question No. 76 with No. 26 to which I have been asked to reply. As regards the protection of British interests, the House is aware that the Japanese Government have not been willing to recognise any Power as protecting British interests in Hong Kong or other territories recently occupied by its forces. The Argentine Government, however, as the Power in charge of our interests in Japan, has shown admirable perseverance and has made some progress in its endeavours on behalf of British prisoners, for which His Majesty's Government are sincerely grateful. His Majesty's Government have now requested the Swiss Government, which is in charge of our interests in all other enemy and enemy-occupied territories, to undertake this duty also in Japan. The change will make for greater uniformity in dealing with the crucial question of prisoners of war.

No visits by the Protecting Power or by the International Red Cross Committee have yet taken place either to Hong Kong or to Singapore. The Japanese Government have promised to send full lists of the British prisoners in their hands, but, although continuously pressed to do so, they have not fulfilled this undertaking. The latest reports from unofficial sources, however, suggest that the position in the camps in Hong Kong has somewhat improved and that the prisoners are receiving more food, though living conditions still remain far from satisfactory. His Majesty's Government have no information about conditions at Singapore.

Repeated representations have been made to the Japanese Government through the Protecting Power and through the International Red Cross Committee for a safe conduct to enable food ships to be sent both to Hong Kong and to Singapore, together with medical supplies. The necessary arrangements for the despatch of food ships are in train and can be completed as soon as the Japanese Government agree to grant a safe conduct for their passage. Negotiations are continuing and I cannot say more on this point at present.

Since supplies sent by sea cannot in any case arrive for some time, arrangements have been made through the good offices of the Vatican for the purchase by local missionary organisations of such supplies as may be procurable at Hong Kong and Singapore and for their distribution in the camps. Arrangements have also been completed for the establishment of a postal service for correspondence with prisoners of war and internees. Its inception, however, awaits the consent of the Japanese Government and meanwhile relatives should refrain from writing since letters cannot yet be handled. A statement will be made as soon as the service is open.

I would assure the House and through the House all those in anxiety about relatives in Japanese hands in the Far East, that the welfare of all prisoners of war and internees in that area is one of continuing concern to His Majesty's Government, who are sparing no effort to improve their lot by every means in their power.

Can my right hon. Friend say whether, in regard to the Japanese promise to send names of prisoners, the information will be sent by air mail, surface mail, or by what means?

They did undertake to send a full list of the names, but I have not yet got any details. The easiest and swiftest method would, of course, be through the Protecting Power.

In view of the anxiety of relatives, will the Foreign Secretary see that his answer to-day is put over the wireless to satisfy them?

I have taken what steps I can to obtain publicity, and I am grateful to the House for listening to so long an answer.

As many county regiments associated with particular towns in this country are involved, especially as regards Singapore, when full information is received will the Foreign Secretary set up some offices or information bureaux to give the fullest possible help and guidance to those folk who are in urgent need of information?

That is really a matter for the Secretary of State for War. I know, however, that he has taken steps so that immediately we get the information it will be made available to those concerned as soon as possible.

Munition Factories (Health Precautions)

asked the Minister of Health whether the necessary supplies of commodities for the keeping of infectious diseases down to the lowest possible minimum in aircraft factories, ordnance factories, and other munition works are issued by each separate Government Department or by one central Government Department?

My right hon. Friend is not aware what commodities my hon. Friend has in mind. If he will give him more specific information, he will be glad to look into the matter.

Is the hon. Lady aware that I had in mind particular cleansing materials for factories? Will she bring it to the notice of her right hon. Friend that Scottish firms, with facilities, find great difficulty in obtaining contracts from the various Departments for this type of important war work?

Business of the House

( by Private Notice ): May I ask the Lord Privy Seal whether any decision has been reached as to the form which the Debate will take on the third Sitting Day?

The Debate will be in the form in which it was originally announced—on a Vote of Supply covering all the material Departments which will be concerned in the question of fuel rationing—and the House will discuss the matter generally with a view to assisting the Government.

Supposing reference was made in the course of the Debate to the proposal made by the National Council of Labour for the requisitioning of mines and the setting up of a National Board, would that be in Order?

In what form will the Vote be? Will it be necessary to move the reduction of many salaries or only one salary?

I think that is a matter for the discretion of the right hon. Gentleman.

It is not for the discretion of the Chair; the Chair can only deal with Motions before it.

It is for the discretion of the individual who desires to put on the Order Paper a Vote for reduction.

Will the Standing Order be suspended so that longer time can be taken for the Debate?

Will the Lord Privy Seal be good enough to explain more clearly what he means when he says the House will be asked to help the Government? Does he mean that the Government have not decided upon the form in which the fuel rationing proposals have been put before the House by the President of the Board of Trade?

I understand the President of the Board of Trade has made it clear that that form does not bind the Government at the present time.

New Members Sworn

George Leonard Reakes, Esq., for the Borough of Wallasey.

William John Brown, Esq., for the County of Warwick (Rugby Division).

Privilege

I take this the earliest opportunity of raising a matter concerning the Privileges of the House. As it will involve the disclosure of proceedings in Secret Session, I shall not be able to deal fully with the matter in open Session.

I wish to do the same thing, but' the hon. Member for Shettleston (Mr. McGovern) whose speech I wish to bring to the attention of the House is not able to be present. I have done my best to contact him. If I let the opportunity slip, shall I be ruled out of Order if on the first appropriate occasion when he is present, I refer to it? It would again involve the House going into Secret Session.

Before you give your Ruling, Sir, I wish to ask two questions. The first is whether there is any precedent for raising a question of Privilege affecting a Member in Secret Session? The second is whether it is competent for the Member who raises the matter himself to request a Secret Session? Is not the question whether the House should proceed to conduct its Business in Secret Session a matter to be initiated by the Government?

I want an answer on the first point, whether there is any precedent for raising a question of Privilege affecting a Member in Secret Session?

No, I do not think there is any precedent for raising a question of breach of Privilege in Secret Session.

With regard to the question of the hon. Member for Norwich (Mr. Shakespeare), would it not be very gravely prejudicial to a Member of the House to mention his name and then proceed to debate something concerning him in secret? Would it not have been more discreet to refrain from mentioning his name?

My point is slightly different. If it is open to a Member of the House to mention the name of another Member and then move to discuss his conduct in Secret Session, it is a little prejudicial because the public will never know what the charge against him may be.

On that point. The Rules of the House put Members in an extremely difficult position. The Rule is that the question must be raised at the first available opportunity, and if it is not raised now, it goes by default and cannot be raised again. That is why I asked your Ruling, Sir.

Would not the first available opportunity be that on which the hon. Member who is going to be challenged attends in the House?

Would it not have been more proper to refer to the fact that it concerns a Member of the House and not mention his name? Once his name has been mentioned it is most unfair to him to have the matter discussed in secret.

It is a very well known Rule in regard to questions of Privilege that they must be raised at the earliest possible opportunity—everyone agrees to that—but perhaps it would have been as well in the circumstances if the hon. Member had not mentioned his name.

In view of the fact that the name has been mentioned and that the House will hear the discussion in secret, would it be within your power, Sir, to see to it that whatever decision the House comes to, without referring to the discussion or the facts, is made public?

Has not the House already determined, on your advice, Sir, that you shall be permitted to make a statement after a Secret Session on what has been decided?

I think that would be possible, but I should not like to give an undertaking without a little further consideration.

May I ask the Loader of the House whether he knows the facts of the case, and, if so, would it

not be advisable to have the matter debated in open Session?

I should have thought it was quite obvious that any matter that occurred in Secret Session could not be debated in open Session.

Now that the hon. Member's name has been mentioned, is it possible for us to go into Secret Session and discuss the matter in his absence?

It would not be right to raise the question in the absence of the hon. Member concerned.

In these circumstances may I draw your attention, Sir, to the fact that Strangers are present.

Secret Session

Whereupon , Mr. SPEAKER, pursuant to Standing Order No . 89, put the Question ," That Strangers be ordered to withdraw."

Question agreed to.

Strangers withdrew accordingly .

The following report of the Proceedings was issued under the authority of Mr. SPEAKER:

The attention of the House having been called by a Member to an alleged disclosure by another Member of a portion of the proceedings of the Secret Session of Thursday, 23rd April, 1942, the Question was put, "That the matter of the complaint be referred to the Committee of Privileges."

The House divided: Ayes, 137; Noes, 58.

The following is the list of Members dividing:

Division No. 7.]

AYES.

Adamson, Jennie L. (Dartford)

Cary, R. A.

Denville, Alfred

Adamson, W. M. (Cannock)

Chapman, A. (Rutherglen)

Doland, G. F.

Alien, Lt.-Col. Sir W. J. (Armagh)

Charleton, H. C.

Donner, Squadron-Leader P. W.

Banfield, J. W

Christie, J. A.

Douglas, F. C. R.

Beamish, Rear-Admiral T. P.

Clarry, Sir Reginald

Duckworth, W. R. (Moss Side)

Benson, G.

Cobb, Capt. E. C.

Ede, J. C.

Bird, Sir R. B.

Colegate, W. A.

Erskine-Hill, A. G.

Boles, Lt.-Col. D. C.

Colman, N. C. D.

Evans, E. (Univ. of Wales)

Bower, N. A. H. (Harrow).

Conant, Capt. R. J. E.

Foot, D. M.

Braithwaite, Major A. N. (Buckrose)

Cooke, J. D. (Hammersmith, S.)

Fox, Flight Lieut. Sir G. W. G.

Brocklebank, Sir C. E. R.

Cooper, Rt. Hon. A. Duff

Furness, S. N.

Brooke, H.

Crookshank, Capt. Rt. Hon. H. F. C.

Fyfe, Major Sir D. M. P.

Brown, Brig.-Gen. H. C. (Newbury)

Daggar, G.

George, Maj. Rt. Hn. G. Lloyd (P'mbr'k)

Campbell, Sir E. T.

Davidson, Viscountess (H'm'l H'mst'd)

Green, W. H. (Deptford)

Grenfell, D. R.

Marlowe, Major A.

Selley, H. R.

Grey, Captain G. C.

Mathers, G.

Shepperson, Sir E. W.

Gridley, Sir A. B.

Mellor, Sir J. S. P.

Smith, Sir R. W. (Aberdeen)

Grimston, R. V.

Mills, Sir F. (Leyton, E.).

Smithers, Sir W.

Gunston, Capt. Sir D. W.

Mitchell, Colonel H. P.

Spens, W. P.

Henderson, J. J. Craik (Leeds, N. E.)

Mitcheson, Sir G. G.

Storey, S.

Henderson, T. (Tradeston)

Montague, F.

Strauss, H. G. (Norwich)

Hollins, J. H. (Silvertown)

Moore, Lieut-Col. Sir T. C. R.

Strickland, Capt. W. F.

Hopkinson, A.

Morrison, Rt. Hon. W. S. (Cirencester)

Sueter, Rear-Admiral Sir M. F.

Horsburgh, Florence

Naylor, T. E.

Tate, Mavis C.

Hudson, Capt. A. U. M. (H'ck'y, N.)

Neven-Spence, Major B. H. H.

Taylor, H. B. (Mansfield)

Hughes, R. M.

Nicholson, Captain G. (Farnham)

Taylor, R. J. (Morpeth)

Hunter, T.

Orr-Ewing, I. L.

Thorne, W.

Hurd, Sir P. A.

Owen, Major G.

Touche, G. C.

Isaacs, G. A.

Paling, W.

Tufnell, Lieut.-Comdr. R. L.

Jagger, J.

Palmer, G. E. H.

Walkden, A. G. (Bristol, S.)

Jeffreys, Gen. Sir G. D.

Pethick-Lawrence, Rt. Hon. F. W.

Waterhouse, Captain C.

Johnston, Rt. Hon. T. (Stl'g& C'km'n)

Peto, Major, B. A. J.

Watkins, F. C.

Johnstone, H. (Middiesborough, W.)

Pickthorne K. W. M.

Westwood, J.

Jones, Sir G. W. H. (S'k Newington)

Power, Sir J. C.

White, Sir Dymoke (Fareham)

Kerr, H. W. (Oldham)

Pownall, Lt.-Col. Sir Assheton

White, H. (Derby, N. E.)

Kerr, Sir John Graham (Scottish U's)

Price, M. P.

White, H. Graham (Birkenhead, E.)

Leach, W.

Pym, L. R.

Wickham, Lt.-Col. E. T. R.

Llewellin, Colonel J. J.

Reed, Sir H. S. (Aylesbury)

Wilmot, John

Lloyd, Major E. G. R. (Renfrew, E.)

Reid, Rt. Hon. J. S. C. (Hillhead)

Womersley, Rt. Hon. Sir J.

MacAndrew, Colonel Sir C. G.

Ridley G.

Woods, G. S. (Finsbury)

McConnell, Sir J.

Ritson, J.

York, Capt. C.

McCorquodale, Malcolm S.

Robertson, D. (Streatham)

Young, A. S. L. (Partick)

Macdonald, Capt. P. (Isle of Wight)

Rothschild, J. A. de

Young, Sir R. (Newton)

McEwen, Capt. J. H. F.

Royds, Admiral Sir P. M. R.

McNeil, H.

Russell, Sir A. (Tynemouth)

TELLERS FOR THE AYES. ——

Makins, Brig.-Gen. Sir E.

Scott, Donald (Wansbeck)

Sir Brograve Beauchamp and

Mander, G. le M.

Scott, Lord William (Ro'b'h & Selk'k)

Mr. Keeling.

NOES.

Aciand, Sir R. T. D.

Griffiths, G. A. (Hemsworth)

Savery, Professor D. L.

Albery, Sir Irving

Hannah, I. C.

Shakespeare, G. H.

Barr, J.

Hardie, Agnes

Shaw, Capt. W. T. (Forfar)

Beechman, N. A.

Hollins, A. (Hanley)

Shinwell, E.

Bellenger, F. J.

Horabin, T. L.

Sloan, A.

Bennett, Sir P. F. B. (Edgbaston)

Hore-Belisha, Rt. Hon. L.

Smith, E. (Stoke)

Bowles, F. G.

Jewson, P. W.

Stokes, R. R.

Brown, W. J. (Rugby)

Leslie, J. R.

Summers, G. S.

Burke, W. A.

Levy, T.

Thomas, I. (Keighley)

Butcher, Lieut. H. W.

Lipson, D. L.

Thomas, Dr. W. S. Russeil (S'th'm'tn)

Cape, T.

Loftus, P. C.

Tinker, J. J.

Challen, C.

Logan, D. G.

Walkden, E. (Doncaster)

Chorlton, A. E. L.

McEntee, V. La T.

Wardlaw-Milne, Sir J. S.

Cove, W. G.

Oldfield, W. H.

Welsh, J. C.

Davidson, J. J. (Maryhill)

Oliver, G. H.

Wilson, C. H.

Davies, R. J. (Westhoughton)

Rathbone, Eleanor (English Univ's.)

Winterton, Rt. Hon. Earl

De Chair, S. S.

Reakes, G. L. (Wallasey)

Dunn, E.

Reid, Capt. A. Cunningham (St. M.)

TELLERS FOR THE NOES. ——

Edwards, A. (Middlesbrough, E.)

Rickards, G. W.

Sir Henry Morris-Jones and

Foster, W.

Robinson, W. A. (St. Helens)

Mr. Aneurin Bevan.

Granville, E. L.

Sanderson, Sir F. B.

The House subsequently resumed in Public Session .

Standing Orders

Resolution reported from the Select Committee, "That in the case of the London Passenger Transport Board, Petition for Bill, the Standing Orders ought to be dispensed with."—"That the parties be permitted to proceed with their Bill."

Resolution agreed to.

Public Accounts

Ordered,

"That the Committee of Public Accounts have power to sit notwithstanding any Adjournment of the House."—[ Lieut.-Colonel Elliot .]

Orders of the Day

Finance Bill

Order for Second Reading read.

I beg to move, "That the Bill be now read a Second time."

In moving the Second Reading of this year's Finance Bill, it is not necessary for me to make any exhaustive review of our general financial position. Only three weeks have elapsed since the date of my very full Budget Statement and since the general discussion which took place on the two succeeding days. To summarise the general purpose of my Budget and of the Budget of 12 months ago, I would repeat the words which I used in my 1941 Budget speech when I said:

Nothing that has happened—and certainly nothing in my Budget proposals—must be allowed to detract from the vital importance of more and still more saving. During the coming months the National Savings Movement will be engaged upon an intensive campaign to raise the level of regular weekly savings out of income, a campaign which has already started with a special drive to increase the number and membership of street savings groups. The encouragement of small savings of this sort has always been the chief aim of the Savings Movement, and in view of the success of Warship Weeks, which have strengthened the whole machinery of the movement, we can look forward with confidence to a successful issue to the new campaign. That the value of individual contributions is fully appreciated by our people is shown by the continuous stream of loans free of interest and of gifts, both large and small, which reach me at the Treasury. They are sent quite spontaneously and in recent months have increased greatly in volume. Gifts sent to the Exchequer since the beginning of the war now amount to£19,517,000, and loans free of interest to no less than£47,885,000. I am indeed grateful to all those who have helped in this way.

I will now turn to the actual Clauses in the Bill. In the main they are, of course, concerned with the carrying-out of the various proposals for increases in taxation or for amendments of the law as announced in my Budget speech. In so far as they do that, it is perhaps unnecessary for me to comment upon them to-day, but there are certain points in the Bill to which I should like to draw the attention of the House. In the first place Clause 6, which together with the Fifth Schedule deals with the increases in the Entertainments Duty, differs in some respects from the announcement in the Budget speech. The original proposal was a straight doubling of all existing duties on admissions to entertainments costing above 7d. Representations were subsequently made both by the cinema and theatre interests that this apparently simple scheme did not fit in with the admission prices that could most conveniently be charged. The duties have accordingly been slightly readjusted to meet this situation, without seriously departing from the spirit of the Budget proposals, and I shall have some further minor Amendments to propose.

Two other small concessions have been made. One is to postpone the dale of commencement of the higher duties from 10th May, as originally proposed, to 17th May, in order to give more time for the people concerned to make their arrangements—largely in respect of printing tickets—for charging the higher duties. The other concession is to exempt from the increases in duty all advanced booking paid for before 15th April, that is, on or before the date of the Budget speech, as proprietors would probably be unable to recover the additional duty from the purchasers of tickets bought before the increase in duty was known. Since the printing and publication of the Finance Bill, further discussions have taken place with the representatives of the cinema and theatre industries, and, as a result, certain additional minor adjustments in the scale of duties are contemplated, in order to make them fit in with the convenient prices of admission. I intend to table these Amendments today, and I trust that, in due course, they will meet with the approval of the House. These Amendments, while they are not expected to affect to any appreciable extent the yield from the increased duties, will ease the actual application of my proposals. I should like to take this opportunity of expressing my appreciation of the helpful way in which the representatives of the main interests affected have approached the problem. These changes do not require any alteration in the Budget Estimates.

Clauses 10 to 15 provide for certain temporary concessions on account of the war in the charge of Liquor Licence Duty, and also make certain provisions in regard to justices licences, which are the concern of my right hon. Friend the Home Secretary. Detailed examination of these Clauses will show that their application is restricted to conditions in which it is clearly equitable that some relief should be granted. Certain concessions have already been put into operation by administrative action, but I have thought it right to seek statutory authority in the Finance Bill. It is for this purpose that Clauses 10, 11, 12 and 14 are included. Clause 13 is somewhat different and arises from the fact that the publicans, who, unlike other classes of licensee, receive relief under the concessions which I have mentioned only on the basis of a diminution in their beer sales, suffer also from the general and severe shortage in supply of wines and spirits for sale. It has, therefore, seemed right to me that some flat-rate reduction to take account of this factor should be made in the amount of the Licence Duty, and Clause 13 accordingly provides for a 5 per cent. reduction during the continuance of the present emergency. This reduction is not, of course, by any means proportional to the fall in supplies, and therefore in the volume of trade, but it will cost the Exchequer approximately£150,000 per annum. In the existing financial circumstances I am afraid that that is the largest reduction that I feel able to justify.

Before I leave the Customs and Excise Clauses, there is one point I should like-to mention. I said in my Budget Speech that I was prepared to exempt utility cloth and clothing from the Purchase Tax early in September next and that a similar concession would be given for boots and shoes at a later date. I have since received representations from both the wholesale and retail trade that it would be a great convenience if the exemption of utility cloth and clothing from the Purchase Tax could be advanced to a date before the autumn stocks began to arrive in the shops. I am therefore proposing to make the exemption operate from 3rd August, which is the first Monday in August. With regard to utility footwear, it has been represented to me that, since there are no existing stocks of utility footwear in the shops on which Purchase Tax has already been paid, there is much to be said for removing the tax on those goods right from the start. In order to provide for this, I am proposing to exempt utility footwear from Purchase Tax as soon as they appear on the market, which will probably be about 1st June.

As regards the Inland Revenue Clauses, the provisions in the Bill are in the main concerned with matters with which the House is already familiar. Clause 23, for example, provides the necessary authority for the alteration in the period of assessment for certain weekly-wage earners in the seasonal industries, which was one of the proposals included in the Budget Statement. Since we discussed this subject, the Chairman of the Trades Union Congress, in the course of his broadcast talk on the Budget, referred to this matter in the following terms, which will be of interest to the House:

"We would have liked to have put to the Chancellor some method of enabling the tax liability to be computed on and deducted from the wage as received, but we could not find a scheme that would do this without at the same time imposing even greater hardships and. mind you, some very serious injustices, upon wage-earners, as compared with other taxpayers. We tried, therefore, to meet the difficulties by improving the present methods. I think the Chancellor has gone a long way towards meeting our point of view."

Clause 26 continues the allowance for repairs that is ordinarily given from the gross Schedule A assessment on property in arriving at the net Schedule A assessment on which the tax is payable. This provision is necessary because the existing provision was for the five years ended on 5th April, 1942. In Clause 36, I have translated, I hope to the satisfaction of those concerned, the promise regarding the 20 per cent. post-war rebate on Excess Profits Tax into a statutory right on the conditions there laid down. Clause 41 authorises certain methods for the simplification of the machinery for assessment and collection of Income Tax and Land Tax. The modifications proposed have resulted from discussions that have taken place between the Commissioners of Inland Revenue and the Clerks to the Commissioners representing the various bodies of local commissioners throughout the country, with the object of securing economy in administration. I should like to take this opportunity of thanking the Clerks to the Commissioners for their valuable co-operation in this matter. The sole object of these modifications is economy in administration, and they do not affect in any way the amount of any person's liability to tax, or the independence of the local or special Commissioners in their important functions as appellant tribunals in determining disputes between the Revenue and the taxpayer.

Clause 43 effects a minor modification of the Stamp Duty law that is of importance to companies. The existing law requires certain transfers to be adjudicatcd, as to liability to Stamp Duty before registration by a company, and the Clause removes this obligation. No question of revenue is involved, but merely a matter of procedure, which none the less seriously concerns the commercial community. Clauses 32 and 33 are primarily designed to strengthen the hands of the Revenue authorities in dealing with cases of fraud in relation to Income Tax. They call for a special word of explanation. Let me say at the outset that the inclusion of these provisions is not due to any increase in the number of such cases; the Commissioners of Inland Revenue advise me that there is no evidence of that. The provisions are necessary because the powers of the Inland Revenue in dealing with fraud cases have been found to be much weaker than they bad been thought to be and than they must be if Income Tax fraud is to be dealt with effectively.

I will refer first to Clause 33, which is necessitated by a recent decision of the courts which affects seriously the longstanding practice of the Commissioners of Inland Revenue in dealing with such cases. This practice was set out in a well-known statement made by the Financial Secretary to the Treasury in reply to a Question in the House of Commons on 19th July, 1923, in which he explained that where the taxpayer took the initiative, and voluntarily disclosed the fact of his past frauds and their full extent and was also prepared to facilitate investigation and to furnish as full evidence as might be required to ascertain the correct liability, the Board of Inland Revenue undertook not to institute criminal proceedings but to accept a pecuniary settlement. But cases have occurred in which taxpayers, having promised full disclosure, have deliberately withheld essential information, and hitherto criminal proceedings have been taken in such cases and convictions secured. In a recent case, however, after a conviction had been obtained in the first court, the Court of Criminal Appeal quashed the conviction on the ground that the evidence on which the case for the prosecution was based was inadmissible. That evidence consisted of the books and other documents produced by the taxpayer. The Court held that those books and documents formed part of a confession, and that as this confession had been induced by a promise of immunity from proceedings, the books and documents could not be tendered in evidence.

I am advised that the effect of this decision of the Court of Criminal Appeal is to make it practically impossible to institute criminal proceedings in any case in which a taxpayer, purporting to act on the basis of the announcement made in 1923, has undertaken to make a full disclosure but deliberately holds back information and makes only a partial disclosure. In those circumstances the continuance of the practice of the Board of Inland Revenue, as described in the statement of 1923, can no longer be justified, and I have, therefore, formally to announce the withdrawal and cancellation of the statement made by the Financial Secretary in the House of Commons on 19th July, 1923, as representing the practice of the Commissioners of Inland Revenue in dealing with any case involving fraud.

The practice in future will be governed by the general powers of the Commissioners, under which they may accept pecuniary settlement instead of instituting proceedings. Though no undertaking can be given as to whether or not the Commissioners of Inland Revenue will accept such a settlement in the case of any particular person, it is the practice of the Commissioners to be influenced by the fact that the person has made a full confession of any fraud or default to which he has been a party and has given full facilities for investigation. The Commissioners, in order to ascertain whether the confession is a full one, require investigation to be made into the affairs of the taxpayer concerned, and such an investigation involves not only an examination of such books, papers, documents or information as the taxpayer agrees to disclose, but also an examination of such other books, papers, documents or information as the Commissioners may consider necessary for the purpose. Therefore, if any taxpayer in future, in the light of this statement of practice of the Commissioners, furnishes information in relation to any fraud on the Income Tax, he must clearly understand that such information will be available, if necessary, in order adequately to deal with the case in which the taxpayer undertakes to make a full disclosure but deliberately holds back information with the intention of deceiving the Revenue as to his true liability. For this reason, the Finance Bill makes express provision in Clause 33 as to the admissibility in evidence of any disclosure.

Clause 32 provides that in case of fraud the ordinary time limit of six years shall not apply for the purposes of assessment or penalties, and I think the House will agree in principle that any person who is guilty of fraud on the Revenue should not enjoy any protection from the fact that in ordinary cases the making of assessments is governed by a statutory limitation. The delay in discovering the fraud is due to the taxpayer's dishonesty, and in complicated cases this is not discovered for a considerable time owing to the steps which he has taken to conceal the true position. There is a precedent for this course in the special provisions that were passed in relation to the Excess Profits Duty in Sub-section (6) of Section 38 of the Finance Act, 1926, and the removal of the Income Tax time limit in cases of fraud was one of the recommendations of the Royal Commission on Income Tax.

Clause 34 empowers the Commissioners of Inland Revenue, or Commissioners sitting on appeal, to require taxpayers to produce books and records relating to their business transactions in any case in which the Commissioners are not satisfied with the information furnished by the taxpayer. This Clause also follows a recommendation of the Royal Commission on Income Tax, and it is necessary because experience has shown that special cases arise from time to time in which the taxpayers correct liability can only be ascertained by a detailed examination of the records of business transactions.

I will get the Law Officer to deal with that point. That concludes my detailed observations on the terms of the Bill, but before I conclude, there is one further observation of a general character which I should like to make. The economic effects of war upon the civil life of the community gather momentum gradually as war proceeds. A survey of our economic policy, whether in the financial sphere or over the whole field of Government activity, shows the constantly increasing regulation of civil life to fit it to growing scarcity, to increasing restraint and the even greater concentration of effort upon a single object. After the war, we are likely to be faced with many difficult economic problems. In some respects, indeed, the economic problems of the early post-war years may be more difficult than those of war-time. But our difficulties will, at the same time, be our opportunities, and we must approach the post-war problems with determination to establish economic conditions based on justice, security, and a greater degree of social unity than we have hitherto enjoyed. A great deal of work has already been done in thinking out these problems and preparing suitable measures, but it is not too early to say certain things.

One of our main objects in the post-war period must be so to direct the changeover from war to peace conditions as to maintain conditions of full and active employment and thus to avoid the foolish waste of our productive resources. For this purpose it will be essential to avoid anything in the nature of deflation, but it will be no less essential to avoid what is likely to be the more immediate danger, namely, a serious inflationary movement. In order to secure these objects, it will be essential, as I have already said, to continue into the peace, with suitable adaptations, much of our war-time system of control. I think it is generally recognised that we made a mistake after the last war in sweeping controls away too rapidly. We must not make that mistake again.

I thank the House once again for the reception it has already given to the main proposals embodied in this Bill. Direct taxation played its full part in the last Budget, and indirect taxation in this one, and in connection with both these methods of utilising the financial weapon we have not been unmindful of those less fortunately circumstanced in the community. Our policy has been plain. It has not only been to raise money but to reduce consumption so as to concentrate on the war effort. Certainly it may be said that no country has voluntarily imposed upon itself such heavy burdens. They have been willingly accepted as part of our full determination to leave nothing undone to achieve victory.

My remarks shall be brief, as befits the late hour at which we are starting this discussion. The interval that has elapsed since the Budget was introduced by the right hon. Gentleman has been quite long enough to get some idea of the reactions in the country, and it is significant that there has been no opposition and hardly any grumbling at the very heavy additional burdens which the Chancellor has imposed on the country. It shows, I think, that we in the House of Commons rightly interpreted public feeling when we stated that we believed that that would be the case. That has been so in spite of certain very significant facts. The Budgetary provision for this single year exceeds, I think, the whole cost of the Napoleonic War, and it is something like 10 times the amount which was spent on the Boer War in the early years of this century, which was considered a tremendous sum. Of course, it may be said with truth that money has changed its value since those days and that the income of the people has very much increased. But if we look at the proportion, not merely at the amount, I think it remains true that we are witnessing a very remarkable year because the taxation revenue forecast in the Budget for the ensuing year will, I believe, be well over one-third of the whole income of the country.

I think it is, as I have already said, remarkable that in view of this tremendous burden there should be a general acceptance of the weight that has been put upon the country by the preceding and present Chancellor of the Exchequer, and I think it says a great deal for the splendid qualities of our people and for the virile way in which they are standing up to face the consequences of war. There is no need in this country, as there apparently is elsewhere, to tell people to be civil to one another and that they should go about their business with cheerful faces, because there is no deterioration to be witnessed in manners in this country in consequence of what is happening abroad. In my view that makes it all the more necessary—I am quite sure that the Chancellor will agree with me—that the burden should be adjusted fairly. The fact that the people as a whole are not complaining makes it all the more important that we in this House of Commons and the Chancellor of the Exchequer himself should see that there is no undue pressure on certain sections of society. I venture to suggest that there is room for improvement in a certain field in that matter.

I have had a considerable postbag since the Budget was introduced, and I made a speech in Committee and afterwards in the House on Ways and Means Resolutions. Though it is true, as I said just now, that broadly speaking there have been no complaints from the mass of the people, there have been very serious complaints from one section, namely, elderly people, and particularly from elderly spinsters, and I think there is a great deal of ground for their complaints. These people feel the full weight of the burden and of the increases the Chancellor is imposing in the present year, and, speaking generally, they are afforded none of the special reliefs which he is proposing. As I said, I shall not detain the House long, but I think it desirable that I should read a few sentences from a letter I have received from a lady who has worked all her life and who tells me that her working day now lasts from 7.30 a.m. on one day until I a.m. the following day. She says that she writes from a burning sense of injustice, and she continues:

What are the other cases which seem to me to call for special attention? There is the case of the old-age pensioners, both those who are getting contributory pensions and those who are getting non-contributory pensions. They are affected in somewhat different ways, which I need not elaborate. If they go out to work, in response to the country's appeal, they have to bring all their contributory pensions and their earnings into account for the purpose of Income Tax, and they find that when they have allowed for their expenses, many of which they are not allowed to deduct, they gain very little by the added toil which in their old age they are giving to the service of the community. They, too, present a problem for the Chancellor to face up to in these days when the rate of Income Tax is a very heavy consideration. There are other pensioners drawing small pensions from firms, or it may be from the Government, for services they have given all their lives, who find that the present Income Tax presses most heavily upon them. Finally, there is the case of the old-age pensioners, not going out to work, who find the extra taxes on the little luxuries which they have been in the habit of consuming, a very serious burden upon their slender means. What do I ask the Chancellor to do? I ask him to see whether he cannot make some alleviation, however slight, in the lot of these people. The young and the middle-aged, who have life before them, the old who have substantial resources, can bear these burdens and look forward to a future in which they will enjoy the result of their sacrifice. But these people, coming to the very end of their lives, who had built up, as they thought, a secure future for themselves, are going to be weighed down and overpowered by the taxes which they are so unable to meet.

What are the Various things that the Chancellor of the Exchequer might do? In view of the heavy Income Tax, he might reconsider what I know has been opposed by Chancellors in successive years, the allowance for Income Tax purposes in respect of dependants who are not relatives. I do not believe that that would cost a very great deal. The Chancellor can look again, if he kindly will, at the question of whether the allowance made for dependent relatives is adequate; whether the proportionate reduction which is given to old people is sufficient, particularly in the case of humble people who are going out to work, in order to serve their country. Those are provisions which come strictly within the range of this Finance Bill; I should be out of Order if I went into other means of assisting those who are in receipt merely of the slender old age pension.

There is another course the Chancellor might take. He has, very properly, as I think, imposed certain taxes and undertaken to use part of them to create a postwar credit. I would like the Chancellor to consider whether in the case of the elderly persons there might be some relaxation of the rule as to postponement. I can see some difficulties, but some of these old people will not live to enjoy the benefit of their post-war credits if these credits are postponed until some time after the war is over. Even if the Chancellor cannot relax the rule entirely for these people, he might see whether they cannot have a special priority after the war. I appreciate what he said about the danger of inflation after the war. It is easy to see that the payment of the post-war credits might be delayed for some months, and possibly years, after the war, but the Chancellor might see his way, if he cannot do anything else, to give these old people a priority in this matter. Those are, broadly, the suggestions that I wanted to make with regard to Income Tax. I hope that the Chancellor of the Exchcquer will not turn them down but will seriously consider how far he can meet their case. I do not believe that it will cost him a great deal of money, and the heavier the burden of taxation becomes the more essential it is to see that it should not press too heavily upon that section of people who are least able to bear it.

I will only say a very few words with regard to the rest of the Finance Bill. On previous occasions I have spoken of the Purchase Tax, and I took the view a few weeks ago, and I repeat it to-day, that a great deal of the usefulness of the Purchase Tax has passed away. When it was first instituted it was important, because it was almost the sole means of preventing the consumption of unnecessaries; to-day there are several other methods that we have adopted, such as rationing and the Limitation of Supplies Orders of the Board of Trade, to bring about that end. The Purchase Tax brings in a useful revenue and to that extent limits consumption, but I am sure that the Chancellor of the Exchequer himself will see to-day that that is not nearly as important as the limitation of supplies and the rationing which are the work of other Ministries. Therefore, though I do not expect him to abolish the whole of the Purchase Tax, I and my friends who are associated with me in this, welcome most heartily the substantial step that he has taken with regard to utility clothing, and the announcement that he has made today with regard to utility footwear is an added cause of gratitude to him. But, having said that, I still hope that he will not shut his mind to further extensions of that principle wherever the Board of Trade is able to make an Order limiting supplies and fixing a price. When these two steps are taken by the Board of Trade it opens a field in which the Chancellor of the Exchequer, particularly in the case of necessaries, may find himself disposed to make some forward move. I said a few words when the Budget Resolutions were going through the House on Report with regard to the Schedule for the higher rate of tax, and I have nothing to add to what I said then, except to inquire whether the Chancellor of the Exchequer has looked at the particular articles I mentioned. One of them was "made partially of silk," which I thought might apply to ordinary goods with a modicum of silk in them, and there was one other matter and I shall be glad if, when the time comes, the Chancellor will give me a reply upon them.

The only remaining matter to which I wish to call attention is the Tenth Schedule. I have once or twice before in this House asked the Chancellor of the Exchequer to give his careful consideration to proposals for the simplification of the assessment and collection of Income Tax. I notice that in the Tenth Schedule, at the bottom of page 40 and at the top of page 41 of the Bill, there are certain proposals which seem to work towards that end. I shall be glad to have some few words of explanation later on with regard to these paragraphs as to why if, as I suppose, these paragraphs considerably relieve the cost and time of assessment, the City of London has been singled out to form an exception. Why should not they suppose that what is good for the rest of the country may in this case also be good for the City of London? No doubt we shall have an explanation of that later on in the course of the Debate.

The Chancellor of the Exchequer is to be congratulated upon having produced a Budget which has been so loyally accepted by the heavily burdened taxpayers of the country, and I hope that he will consider very carefully the remarks that I have made with regard to one small section of the population paying only a very small part of the taxes of the country, and see whether he possibly can give them some relief this year, and still more be able to give them some relief in future Budgets, because they are the ones to whom consideration is justly due.

I would like to add a humble word of congratulation to the many which the Chancellor of the Exchequer has already received on the way in which he has dealt with our war finances. It may well be that there are a few, despite the general acceptance of this Finance Bill, who do not yet appreciate some of the reasons for the increased, taxation. I hope, therefore, that those who are in a position to do so will emphasise what the Chancellor of the Exchequer has himself emphasised on a former occasion and has reiterated to-day, namely, that the instrument of taxation must be regarded as much from the point of view of reducing spending power as from the point of view of raising revenue. Before the war Import Duties were imposed against American motor cars, and it was not uncommon for people who bought such cars, and notwithstanding the British unemployed and the slogan to "Buy British," to justify their action by pointing to the revenue which they were able to bring to the Treasury on account of such purchases. I hope that those who find themselves unable to curb their customary habits in this war will not seek to justify their actions by pointing to the increased revenue which they themselves are bringing to the indirect duties which it is now their lot to bear. I suppose that it is only right for the Chancellor of the Exchequer of a nation of shopkeepers to say how important it is, having regard to waste, to quote his own words, be straightforward. It does not necessarily follow that the money is most wisely spent in buying the cheapest goods. I have not in mind the motives which would actuate an individual imbued with a coupon complex and therefore considering perhaps buying expensive goods which last a long time as opposed to cheap goods which may disappear quickly, but I regard it rather from the point of view of production. It frequently happens that it is in the best interests not to have things made in the cheapest and most efficient way because by so doing machinery may be used which can be used for some other purpose, and, therefore, it may be desirable to pay more for a particular type of work, thus leaving the most efficient and labour-saving devices for those goods for which only they are suitable. I am not suggesting that in practice this point is ignored but merely illustrating the point that, in using taxation to the best advantage, it does not necessarily follow that cash values alone should be taken into account.

I am one of those who drew attention to the brake on production and to the recruiting of women into industry by reason of the way in which taxation on married women was formerly handled, and I am indeed glad that the Chancellor has thought fit to deal with this matter. In the appendix to the White Paper there were figures given purporting to show how much less disadvantageously placed were married women at work than the public commonly believed them to be, but in those figures comparison was made between a man and wife on the one hand and, maybe, a brother and sister on the other. But I do not believe it was that comparison which the public usually made. They were much more concerned to compare the position of a married woman on her own account with that of a single woman on her own account and, therefore, now that a married woman at work is able to have an allowance of£80 on the same basis as her single colleague she will be in that happy position, at any rate so far as finance goes, of having the best of both worlds.

I have read with great interest the exposition of the existing system whereby taxation is related to earnings in the past rather than to the present. Significant, perhaps, is the wealth of argument and trouble which was taken to show why it was not desirable or practical to make a change at the present time. The first main objection shown to a change-over to what for simplicity's sake I might call "Pay as you ear" was that there would be a substantial over-deduction of tax by treating it each week on its own feet. I find it difficult to understand why it should be expected that there should be such a great protest at a course where tax may be deducted for a few months and returned at the end of the year, because the tax is now deducted not for a few months but for the remainder of the war. If that principle has been so laudably accepted, as it has, it seems to me that the fear of over-deduction for a short time has been grossly exaggerated.

The other main objection which was raised to the change in principle was that it would not, in fact, be very much simpler than the existing system. It was said that simplicity was one of the main objectives in the minds of those who sought the change. I think this criticism is brought about by a false approach to the whole problem. It does not necessarily follow that all the existing allowances must be maintained, that the three types of income which a number of people have must be continued, and I hope, therefore, that, if further study is given to this point, as I trust it will, a genuine attempt will be made to simplify many of the tax points which make it difficult to understand, and only confuse, the position. For instance, I see nothing of paramount virtue in the idea of there being three types of income—that which is deducted at the full rate, that which is deducted at the reduced rate, and that from which no tax is deducted at all. If the middle category is eliminated and no other changes were made, there might well be created anomalies and hardships but I think many of those could be removed if, simultaneously, an increase in children's allowances was brought about. That would have an important effect namely, to put in better balance in comparison with single people the position in which married people find themselves.

We have seen in the Press lately many references to the lamentable effect which we may expect by our failure, as yet, to arrest the falling birth-rate. I am not suggesting that by monetary methods alone that problem can be dealt with. But I do suggest that the financial considerations inherent in that problem cannot be ignored, and it is, therefore, rather surprising to those who fear the very serious consequences of this matter to find a complete failure among the speakers on the Budget Resolutions to allude to the subject at all and, even worse, to find no single Clause in the Finance Bill, so far as I can see, calculated to have the effect of arresting this decline. I hope that when further opportunities present themselves that all-important subject will not be overlooked. There are two objections in the White Paper to this change from relating taxes to the past as opposed to the present which, necessarily, prompt one to pause and hesitate. There must be a great increase in the man-power at the command of the Treasury if it is really necessary to inspect the books of a firm for a deduction of tax on workmen's wages each week to each individual, and that does seem to me to be one of the greatest problems in connection with this matter on which attention should be focused. It is inevitable, no doubt, that additional work will fall on the employer, and I am sure it is inevitable that there should be an increased time lag between work done and wages paid for that work if the new system advocated is to be introduced. But while those are genuine difficulties, and may be of greater importance in war than in peace, I think the time will come when the difficulties of future Chancellors will far outweigh the technical and administrative difficulties which as yet remain unsolved.

In a recent speech the hon. Member for South Croydon (Sir H. Williams) predicted that after the war there would be grievous unemployment, dislocation and so forth, but whether such a gloomy view is taken of the future as that or not, there will surely be a lowering of the incomes of a very large number of people in this country. Basic rates may or may not remain, but there will surely be a reduction in the number of hours worked and the length of overtime. Then will come many of the fundamental problems connected with this question of taxation on workmen's earnings. While I welcome very much the increase in the minimum below which the net income of a man may not fall on account of taxation, that of itself must tend to make the collection of that tax debt more difficult in the future than would otherwise be the case. Debts which may be doubtful may well be turned by that reason into bad debts. I hope the seriousness of that postwar position will not be overlooked in applying further thought and consideration to this subject.

I should like to say a word or two in connection with the very controversial subject of Excess Profits Tax. Such criticism as has come the way of the Chancellor of the Exchequer has, I think, been on account of omission rather than commission. There are two important aspects of E.P.T. which, if left unaltered, will, I believe, lead to very serious repercussions. I refer first of all to the problem of wasting assets. Hon. Members will no doubt be familiar with the effects of the operations of E.P.T. on mines and oil-winning projects, when the rate of production is materially increased for the war effort and the profit of that increased production is taken away by the Excess Profits Tax. This point has been realised for some time, and in Section 13 of the Finance Act, 1940, a first attempt was made to deal with it. Power was given to the Board of Referees to increase by a percentage the standard of the trade if it could be demonstrated that capital was being exhausted faster than was the case in other trades. In practice it has been found that that concession has been largely illusory, owing to the difficulties of treating this matter from the point of view of a trade. In the succeeding year, in Section 31 of the Finance Act, 1941, a further attempt was made when the matter was dealt with not by trade but by an individual company. Much of the advantage of the intention then indicated has been lost by the grouping of properties in different parts of the country, and properties concerned with different minerals being lumped together. Moreover, it is to be noted that the Regulations which were contemplated had not seen the light of day a year after that Act was passed, with the result that it was extremely difficult for companies affected in this manner to know exactly where they stood. But, even then, the problem was approached solely from the point of view of the life of the undertaking.

I venture to suggest that there are other very important considerations. It may well be that in the interests of war pro- duction the easiest minerals to acquire are those which should now be acquired in maximum quantities, but the effect of that may be to leave the most difficult and least economical for development after the war. I am not suggesting that companies are deliberately refraining from doing what is best in the war interest through lack of adequate relief, but I am suggesting that, if such undertakings are to do their full share in restoring our economic prosperity after the war, it is very necessary that adequate reserves should be left for them to develop resources which will not be as good as the result of the war as would otherwise have been the case. In addition there are cases where companies with limited financial resources are not able to raise adequate capital for maximum development because of the lack of clear and concise regulations governing this question of relief. I sincerely believe that important production of raw materials, and particularly iron ore, is affected to-day for want of proper provision, and I hope the Chancellor may see fit to include additional Clauses in this Bill at the appropriate time to enable the situation to be dealt with.

Would the hon. Member develop what he said in regard to ironore? He stated that in certain cases he knew production of iron ore was being affected by E.P.T. That can only mean, as far as I can see, that certain companies are not producing as much as they could were they given what they considered was an adequate percentage. If my interpretation is correct, I think we ought to know something more about it.

As far as I am informed, there are companies which could employ their resources to better advantage from the point of view of the war if they could raise the additional capital, but which, owing to the lack of relief under present regulations, are finding difficulty in acquiring that additional capital. It is not a question of incentive, but the mere basic earnings of money for that capital. I do not think this is the time to go into details, but I should be glad to have a talk with the hon. Member later.

The other point is in connection with trade associations. There are a number of associations which, by a levy on their profits, have built up funds to assist them to develop export trade in the future. Substantial sums have been accumulated, but, owing to the operations of the present E.P.T., they are in grave danger of having such funds almost completely dissipated. The purposes for which these funds were originally accumulated cannot be discharged, and, very rightly, the Government have seen fit—and other considerations have added to it—to prevent them exporting. I suggest that it is very reasonable to say that, if the Government have wisely prevented such associations from using their funds for the purpose for which they were intended, these funds should be frozen for a reasonable number of years after the war when the conditions originally contemplated would be prevailing once again.

In covering both of these points, I should like to make it abundantly clear that I am not in any way seeking to retain for distribution any profit which at present is going in taxation. That is not the point at all. I suggest that it is of the utmost importance that industry should have left in its coffers after the war full and adequate resources and reserves to build up the trade by which so many people will be dependent afterwards. It is absolutely essential that in our attempts to sec that we take the profit out of war we do not in so doing take the trade out of peace.

The terms of this Bill, as was the case with the last one, will undoubtedly mean a very material change in the standard of living of a considerable number of people. That change is indeed inevitable and, from many points of view, desirable, but I think the manner in which it has been accepted is highly commendable and is not the least part of the country's war effort. We are passing through a major social revolution as well as fighting for our lives, and it may well be that in that process we shall come to assess many of the conditions and practices of our social system less from the point of view of cash values than of human values and their intrinsic merits, and that in itself is something which will do us no harm and to which we may look forward with no apprehension. But there are still very large numbers of people whose material position in the world will be greater and better than they have ever known before. I sincerely hope that they will not forget that property and possessions, whether large or small, carry with them responsi- bilities and that they will discharge those responsibilities to their families and their neighbours and their country faithfully so that the greatness to which England attained in the past may be carried forward into the future.

I agree entirely with what was said by the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence), and by the Chancellor of the Exchequer himself, about the reception which the House and the country have given to the Budget and to the Finance Bill. It is difficult to recall any Finance Bill to which there has been less opposition or of which there has been less criticism. It is not because the Bill and the Budget cannot be criticised. If that were so, they would be some of the first human institutions which were above criticism. They are, of course, to be criticised on various grounds. The Bill as it stands proposes to levy tax upon some things which we are in fact subsidising. We took steps to improve the condition of agriculture throughout the country, and the Bill comes along, and we take steps to see that some of the work we have been trying to do shall be undone by other means.

The hon. Member for Northampton (Mr. Summers) has referred to the limited allocation under E.P.T. and the amount allowed for wasting assets for leaseholds, for deferred maintenance and the like. The Chancellor has already recognised to some extent the force of that argument, because he has agreed to a 20 per cent. rebate which shall not be devoted to distribution of dividends but to purposes of that kind. Here we are perpetuating the restriction of these allocations which are essential to the well-being of industry. The hon. Member for Northampton has done well to draw attention to it again. At the other end of the scale we are proposing to give a rebate of 20 per cent. to remedy the situation which has already been created. It is on that sort of ground that the Bill is subject to criticism. On the other hand, it is not subject to opposition, because it is the first Budget which is in line with public opinion. It is the first Budget which enables the people to realise that we are approaching our maximum war effort, and it enables us for the first time to discuss our war effort in terms comparable on economic and financial grounds with that of Germany. It is on these broad grounds and also for the additional reason that the clearly-drawn distinction between subsidised necessities and heavily taxed luxuries is felt not only to be just but also, as is sometimes the case, to be practicable. We find, thanks to the way in which our finances have been conducted, that the position in the midst of this war is as good as could reasonably have been anticipated. There is no question at all that our finances today are vastly better than they would have been if we had adopted the same methods of finance that we adopted in the last war.

Looking to the future, about which the Chancellor has spoken so wisely and about which the hon. Member of Northampton also spoke with such good effect, we must in our present financial affairs avoid, as far as we possibly can, making post-war finance more difficult. I am inclined to think that we may even learn lessons from our war finance which may help us in the future. When reading the national accounts, my mind went back to the days when my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) proposed to raise a loan of£100,000,000 for the purpose of conquering unemployment. That project did not go forward. I forget what attitude the present Chancellor of the Exchequer adopted towards that proposal, but it was condemned on the ground, among others, that it would lead to inflation and other difficulties. That was in peace-time, and I do not wish to suggest that the comparison is quite accurate, but the right hon. Gentleman, who by providing money for his colleagues in the Cabinet to spend has won for himself the title of the greatest spender of almost all time, has applied the doctrine of the right hon. Member for Carnarvon Boroughs on a very much larger scale. He has kept interest rates down and, setting off the increased interest charges raised against the unemployment money that is saved, has actually made money on the deal. That would not be true exactly of this particular year, but it will certainly be true over a number of years. On all these broad grounds the Budget has commended itself to the House and the people.

I think there is room for some doubt whether we may hope to escape without a further measure of inflation. I think it is true to say, as the right hon. Gentleman said, that inflation has not been able to establish a bridgehead in our national finances at the centre. At the same time it is beyond question that there have been very substantial inflationary rises in prices, specially in household goods, and if it is true to say that inflation has not made a bridgehead, there have been some very sharp commando raids into the outskirts of our financial structure. Having regard to the high rate of public expenditure which may increase and the continued decrease of stocks, it is open to doubt whether we may not have to take special measures to avoid further inflation. I would like to underline what my right hon. Friend has said about this matter and to draw attention to what I believe is a very prevalent tendency in the public mind with regard to expenditure. The Government have taken pretty strong measures against inflation. They have rationed certain articles and controlled others, and people think that if there is anything which is not rationed or controlled it is right and proper and a fair thing to do to spend as much as they can on it. We want a more precise definition from the saving authorities as to the things on which people ought or ought not to spend their money. That is a matter of some importance.

The Chancellor has had a good deal of advice on the Excess Profits Tax. It has come from various quarters and has been well-informed advice, although some of it he may consider to be tainted. This year he has received advice from an entirely new quarter, namely, the Institute of Chartered Accountants. This is a non-political body of financial technicians. They render notable service to individual taxpayers, large and small, and also to the revenue authorities in facilitating assessments and the even flow of revenue into the Exchequer. They are not concerned whether taxation should be direct or indirect, but this year they have been moved by the anomalies that continue to exist in connection with E.P.T. Income Tax has been described as the foundation of our financial system. The E.P.T. is not a foundation; it might be more accurately described as the crazy pavement of our finances, because one's treatment under the tax depends on whether one happens to stand on this segment or that. It is on the ground that some of these anomalies remain that the Chan- cellor will continue to receive respectful advice and, I hope, helpful criticism. One of the points raised by my hon. Friend the Member for Northampton was the extraordinary restriction of the scope of the allowance for wasting assets and the like. There are a number of others which are felt to be unjust, and I will mention only two by way of examples.

Let me say in passing that I am not opposing the E.P.T., nor am I opposing it at 100 per cent. It is felt to be unhelpful and unjust, for example, that capital which is represented by buildings, plant and the like which have been destroyed by enemy action should be excluded from the calculations for computation of the tax. It has been represented to me that if a firm or business wish to set aside money for purposes of reconstruction after the war and invest their money in War Loans for that purpose, that sum is excluded from calculation when the tax is computed. I cannot speak from my own knowledge but I understand that that is the case and that it hampers the war effort. These are matters which I hope may receive further consideration from my right hon. Friend, because we all want to work in the greatest measure of harmony that we can.

I would like to come to another aspect of our financial transactions and to refer again to the influence which the Lease-Lend Act of America and the United Kingdom Finance Act of Canada are having upon our finances of the current year and to what I consider the overwhelming importance of these transactions in relation to co-operation in the economic sphere in the present and the future. The help that we are getting from the Canadian Act to our current finances is substantial, and it registers a historic change in the relations between this country and Canada. We are ceasing to be a creditor of Canada although we still maintain a substantial volume of financial interest in that country. This proposal to give to this country 1,000,000 dollars is very important. It lightens our immediate burdens, and it is a recognition that it would be a monstrous thing if the common war effort of the United Nations and, in particular, of ourselves and Canada were limited by the fact that we had not a sufficient supply of Canadian dollars. It is a co-operation of practical business realism and idealism. What is more important, the step which is being taken will prevent the international indebtedness between Canada and ourselves from reaching difficult and inconvenient proportions when the war is over. Those of us who remember the financial embarrassment left by debts after the last war recognise that this is an important step to prevent anything of that kind and to strengthen the economic comradeship between the two countries. I hope that in further arrangements between our own finances and those of the United Nations, whereby whenever there is an economic surplus, some means will be found of making it available for the rest and of bringing it to bear on whatever front is most essential in the common effort for victory.

My right hon. Friend again reminded us of the need for economy in expenditure. One of his illustrious predecessors said that the duty of the Chancellor was to make money fructify in the pockets of the people. The duty of my right hon. Friend is to do precisely the reverse, and I wish him every success in the effort. Last year he told us that the Ministry of Supply had set up a director of economy and that the War Office and the Air Ministry had set up director-generals of economy. I hope that these officers are still engaged on carrying out their duties and that they are making a constant effort to reach successful results. I am not sure how far their sphere reaches. Not so very long ago I was told of an aircraft factory in which there was an incinerator for the purpose of consuming waste paper and packing material, which in one week had consumed more paper than a neighbouring town had been able to collect in one month in the course of a salvage campaign. I hope these directors of economy will so function that there will be no possibility of a repetition of that state of affairs.

Will the hon. Member let us know privately the name of that firm?

It is a precaution I had already taken, and I understand that the practice has stopped. I wish to express appreciation in the fewest possible words of what has been done to meet the difficulties of Income Tax collection, which are by no means over, though they are very much modified. Certainly the concession to married women is one which, I think, does much to cure an evil which was felt to be substantial. In general, I think we must wait for practical evidence of the working of the scheme on the new basis in order to see whether a further modification can and ought to be made. At first sight I was strongly in favour of the suggestion made in several quarters, influential quarters, for weekly deductions from wages, but on examination of the White Paper and on further consideration I cannot conceive how such a scheme could be carried out without inflicting injustice. However, I am grateful for what has been already done in this respect, and I have not the slightest reason to suppose that the Chancellor and his advisers will not watch the situation' to see whether, as time goes on, further modifications may not be necessary for the common good.

My right hon. Friend closed his speech with a reference to what may happen after the war. I should like to express my conviction that there is no reason whatever why this country should be overwhelmed with unemployment at the end of the war. It depends upon the wisdom with which we conduct our finances now and upon the leadership and the wisdom with which we conduct our affairs when the war comes to an end. It also depends, and this is vital, on whether or not the people will pay the price for full employment. If we are to return to prewar conditions of a strict rigidity between one industry and another, then we shall have unemployment. Let us bring to the problem minds which are free from prejudice and if we do so I am certain that we can avoid that scourge which everybody professes to be determined shall not inflict us again. The atmosphere is in a sense favourable. During the last war and for some time afterwards people were looking over their shoulders all the time hoping to get back to normal, hoping to get back to the good old days. I do not to-day find anybody who is looking back. If there are any such people I do not know where they are, the number cannot be considerable. People are all looking forward. They recognise that things have changed and are changing. They are all looking forward to change of some kind, and they are ready to accept change, and in that fact alone there lies a certain danger, because people in that frame of mind are likely to follow anybody who comes along with a slogan or a shibboleth. It is a fact that the slogans which are most powerful in arousing people's emotions are also those which make the least contribution to the solution of the problems in hand. Let us beware of people with slogans, beware even of those who come to us with plans. There are a large number of people who will follow anything if it is called a plan. It does not seem to have occurred to them that there are bad plans just as often as if not more frequently than there are good plans. I would end on this note, that if this country is prepared to pay the price there is no reason why we should be overwhelmed with unemployment. It will require hard work. It cannot be done in this House by means of adroit legislation and still less by slogans and shibboleths. There is no easy road. It calls for considerable sacrifice and hard work.

At this hour I will not attempt to cover ground which has already been covered, and as regards Excess Profits Tax I would only like to say that, as far as I can gather, industry very much appreciates the statutory right to the postwar credit which the Chancellor has put into the Bill in accordance with his promise. But it is not for those who are likely to have the benefit of that concession that I am concerned. I am concerned with those who are not likely to have any post-war credit given to them, the people who are not earning a standard. I referred to them at length when I spoke on the Budget last year. Birmingham is the centre of the small industries. We have a large number of small firms and a great many of them are in difficulties, and throughout the country there are the industries which have been telescoped. They are not going to earn any excess profits, and therefore the post-war credit will not apply to them. I am particularly concerned with the businesses which will fight for our export trade after the war. Few people realise how much we depend upon the smaller industries for our export business. A little while ago a deputation was discussing matters with the Minister of Supply when he was at the Board of Trade. They informed him that in 1938 65 per cent. of our export trade was done by firms with fewer than 200 employees. The Minister doubted that and had inquiries made, and I am informed that his own officials said the statement was correct. That is the class of people about whom I am concerned. The big people will find somebody to look after them, but I do not think anyone is going to look after the little people, and unless they are looked after we shall lose a large part of that efficiency which we shall need if we are to get back our export trade and employ our people. The Chancellor knows my arguments on the point by heart, and I will not go over them again. What the Revenue calls capital we have to write off as expenses, and they stand against us on the balance-sheet to be charged and treated as capital when they have gone. I also want to support the hon. Member for Northampton (Mr. Smumers) in his appeal that the funds of associations that are being earmarked for the export trade after the war should not be subjected to E.P.T. I know the argument of the Revenue authorities about reserves. They say "We must never allow the principle to go forth that reserves can be exempted from tax." But it should not be beyond their wit to enable us to keep the necessary reserves to get back our export business.

The real point on which I wish to speak, however, concerns the Income Tax on weekly wage earners. It is a subject in which I have taken an interest and have watched very closely from the moment when the Chancellor announced last year the very large addition he proposed to make to the number of those who would be called upon to pay Income Tax. I asked my own people if they would watch the matter and see what effect they thought it would have. It was a very big increase, and a large number of people who never thought they would ever come into the circle of Income Tax payers have been brought into it. In August last year I had this note sent to me: We waited. The forms went their course. In due course the assessments were made, and the tax began to be paid in January. Then, as hon. Members will recall, there was an outcry in the Press about the tax. We were told that all sorts of things were happening, that workpeople were slowing down in their work because they regarded the tax as a tax upon overtime. We were told that assessments had not reached the workers in time and that the result was that instalments would be shortened in number and the amount that had to be paid would thereby be increased. We were told that a very bad atmosphere was being created. I happened to go down to Birmingham to attend a meeting in connection with production matters at which there were employers and trade union officials. I put this question of Income Tax to them, and they agreed, particularly the trade union members, that it was an innovation. They said that the alleged slowing-down was nothing, that we need not worry about it, and that if we left it alone, it would right itself in due course. They objected to the delays in starting to pay the tax because they were causing irritation, and they brought forward the question of the seasonal workers and men who were changing jobs. The question of the married women was also referred to, and the representatives present asked that a simplified pamphlet should be provided. They stated that the post-war credit to the worker was not being taken very seriously and that it would be a very good thing to issue a Savings Bank book, certificate or a card with stamps. They asked us to put these suggestions before the Chancellor of the Exchequer and to ask for a simplified scheme based upon current earnings. I visited Birmingham again during the last weekend, and I made inquiries from some of the same people. I found that matters had turned out exactly as they had expected. The workers have settled down and have got used to the new conditions. I am assured that, in our own district at any rate, there is no interference whatever in the war effort of the ordinary individual.

The Chancellor of the Exchequer has met many of the points that were raised and were put before him. Spreading payments over seven-month and five-month bases will go a long way to meet the difficulties of the seasonal worker. He has improved the position of the married woman, which presented very real difficulties. Women were not taking up work because they said their earnings were subject to a tax of 10s. in the£. The husbands did not give them any benefit from their own allowance, and it was simply a matter of, "You have earned so much, and it is subject to the tax of IOS. in the£." The Chancellor has given an added allowance from£45 to£80, and I am told that the concession is very much appreciated. It ought to, because it will cost us£25,000,000, and that is something. The Chancellor has given us a promise about the certificates, which he has told us will not be raided for any arrears of Income Tax in after years. That concession is also worth something, because the scheme will cost the nation£60,000,000 per annum. It will be better for the worker to have something in his hand representing his share of the£60,000,000 than to have a vague promise such as he had before. The Chancellor referred in his statement to the fact that a simplified booklet had been produced. It has provided a considerable amount of information which was necessary, and it has cleared up many of the doubts in the minds of those who have been called upon to pay.

Lastly, the Chancellor has taken steps to overcome the greatest of all the difficulties, which is the lag in calling for the first instalment. This is a very important matter, although in a number of cases the delay may have been people's own fault because of the large number of incorrect statements, which, I am told, were made in the first instance, and which had to be corrected—as is only natural, with people filling in Income Tax forms for the first time. The Chancellor's proposal of a month's tax holiday should mean that assessments will come forward at the right moment and that there will be no more delay. That may be the greatest contribution to overcome the existing difficulties.

The only thing which the Chancellor has not been able to do is to change the system and to find one of those simple and easy schemes that people have said are possible. I wish he could have found a simple and easy scheme. When I looked into some of the schemes they seemed attractive and easy to put into operation, but they could not have been so easy as they looked. The Inland Revenue Department would have jumped at them, if that had been the case, because I am sure they are not anxious to have a lot of extra work. The Chancellor paid a tribute to the way in which employers had tackled the extra work; I should like to speak about this matter from the other side and to say how much we appreciate the tremendous amount of work done by the Inland Revenue officials in getting all these new assessments through in the shortest possible time. We hear about the troubles and the breakdowns, but very few people make it their business to refer to the millions of cases that were handled without trouble. The officials have done a very good job of work.

In his statement the Chancellor gave his reason why he had not been able to adopt a simple wages scheme. I have carefully studied the White Paper, and, much as I should like to see such a scheme, I am afraid I must agree that he has made his case out very clearly in the White Paper—all too clearly. When he made his statement I was impressed with the fact that the Trades Union Congress and the employers' associations agreed that schemes which have been submitted so readily by many people will not stand investigation. I have seen some of those schemes, and I could see the difficulties. Some of the people who submitted schemes have become quite annoyed and have written saying that the Chancellor and his advisers have made a great mistake in not adopting one of those particular schemes. Those people have oversimplified the problem, which is not so simple as they make it. I have had much experience in business with people who have come forward with schemes and inventions. They have said, "Agree about this matter in principle and work out the details afterwards." When we came to settle the details, we found the difficulties. In many cases which we have tackled in this way we have accepted a scheme in principle, but quite a number of difficulties have cropped up in regard to its practical application, and the majority of the schemes or inventions have never gone any further because the difficulties of detail proved to be too great. That is so with these schemes. It is easy to say that Income Tax can be taken from wages and repaid later, and the White Paper deals with this very clearly. Personally I think the White Paper has put up a number of ninepins in order to knock them down, but that often happens in statements like this, and generally the White Paper has dealt with it from every angle. I agree that it would mean a great deal more work for the employers if some of these schemes were put into operation. It would also mean more work for the Revenue, for I do not want to see the employers made into assessors in any shape or form.

There is, however, a simpler scheme which some people have been working out and which suggests the adoption of a wages tax, which the worker will be quite willing to pay when the going is good so long as he does not have to pay during the bad times. I do not think that that would work, neither do the Chancellor's advisers. If you had two people working side by side, one of whom had to pay a considerable amount of Income Tax when he had good weeks, this man would make comparisons with someone else who had a steady income and paid no Income Tax, although in the long run he might earn as much, or even more. That would introduce a factor more serious than the one we are trying to overcome. At the present time there are difficulties which mean hardships in certain cases, but it is mainly a question of irritation; I would not like to advise the Chancellor to exchange a scheme which may cause irritation for one which would introduce definite unfairness and injustice. I feel that that is what would happen in cases such as I have just described, so I am afraid that we shall have to make the best of the present scheme. We have to accept it—" better the devil we know than the devil we don't know "—not that I am making any aspersion on the right hon. Gentleman, who is usually known as the "Cherub." We have to stick to the present scheme and concentrate on making it work as smoothly as possible, unless and until somebody comes along with a scheme which is simple and which would do what we should like to see done without all this trouble.

There is, however, a suggestion I would like to make to the Chancellor with a view to simplifying this scheme, and it is that he should investigate the possibilities of mechanisation. Government Departments have never been very keen, as far as I can make out, to take advantage of the mechanical devices which have come along in the last 20 years. When I was on the Prime Minister's Advisory Panel before the war we found that out, and a committee was instituted to look into the up-to-date methods of using accounting machines, addressographs and other devices used in industry, but the war came along, and I do not know what happened. I should like the Chancellor to get his people to look into it, because I am quite certain that if I were given the job of introducing anything of this sort into our own organisation, the first thing I should do would be to see what help could be obtained from that quarter. There may be people who do not like these methods, but most remarkable success has been attained by the use of up-to-date mechanical accountancy devices. I should like to see a scheme investigated, worked out, and put into operation in one district, and then a travelling team sent round to the various districts to give them the benefit. I believe that in that way we could speed up the calculations, make it easier for the worker, and reduce the number of mistakes. In this way it would be possible, instead of sending the worker a new form to fill in every year, to send him a statement showing what he filled in the previous year.

Of course, the man who is used to filling in Income Tax forms keeps a duplicate of one for the previous year. I am certain that a great many workers have not done so. To some of us who have made a study of these matters, it seems that a form might be sent to the worker setting out what he stated in his last return and telling him that if his conditions have not changed, the same thing would be right again. The average worker is not likely to have a lot of additional income. His condition does not change. If he gets married he can make the necessary alteration in his Income Tax return. If he has an extra one in the family, again he can make an alteration in the return, but, roughly speaking, the form could be sent to him, based on what he had in the previous year, with a note telling him to send it in with any modification that had taken place. I think it is on those lines that we can help to make this scheme simpler, but until something better turns up, the Chancellor would be well advised to stick to his present scheme, because the worker is getting used to it and is not grumbling.

The House and, I think, the country will have heard with some satisfaction of the Chancellor's aspirations for the financial position arising at the conclusion of the war. While I think we can entirely accept the assurance that he wants our finances to be based on justice and to achieve stability and security, I think it would be more convincing to the country and to the House if there were some indication of a definite approach to a consistent financial policy which aimed at leaving behind many of the anomalies of the past, and securing not only that justice is done but that there is a sense of justice in the country. I think it is more urgent now, because there is a good deal of feeling throughout the country that everything is not well. There is a feeling that has been expressed in this Debate that funds are expended without proper economy and care. Now the time has come when millions of people have come into the arena of the operation of Income Tax and, as the previous speaker said, they have had the worries of filling in forms and so forth. He suggests that they are getting used to them. It is marvellous what we do get used to.

Are my hon. Friend and the previous speaker aware that only to-day Scottish Members have received a memorandum from the shop stewards of the whole of the Scottish shipyards complaining bitterly of the incidence of Income Tax on wages and overtime earnings?

If my hon. Friend had been a little more patient he would have found that I was not agreeing with my predecessor, but I was suggesting that, if forced long enough to do so you can get used to many things, even though they are distasteful. What is more important is that a feeling is rising among the people that we are departing from what was recognised in financial policy in this country as something of importance. This is the recognition that there is a fundamental difference between earned and unearned income. We are tending to absorb earned income into the same category as unearned income. It is being done very carefully and steadily, but nothing can overcome the injustice of it. A miner who goes down the pit every day, and spends practically all his working life cutting coal, knows that he has made a 100 per cent. contribution to the war effort—it is not a question of the arguments of economists, he knows it himself. After he has struggled, and made his contribution to his trade union, in order to maintain his wages, if he works a bit of overtime, and forgoes some of his pleasures to do so, he has to pay Income Tax. When he gets time off, if he goes to a road-house he sees the whole front taken up by expensive cars. He goes to his own part of the premises, and pays extra taxation on his drop of beer, and he naturally asks himself what those others have done. I should like to see an easing of the burden of direct taxation on lower incomes. The Chancellor may suggest that his concession to married women who have gone to work has landed him into difficulties with the spinsters. But he was only doing the fair thing with regard to married women. Now he should do the same for the spinsters. Many of these women have to have companions of their own sex, perhaps because they have not had the taste for companions of the opposite sex.

Now I want to speak about indirect taxation. There is very little evidence of a consistent policy in this respect. I do not want to say much about beer and tobacco; but the average man, who knows that we are here for only one earthly pilgrimage, develops a taste for beer and tobacco, and he wants to knows why he is being called upon to pay so much for these little privileges. The Chancellor has made a concession to Service men. Now there is considerable complaint because he has done nothing for old age pensioners. Many of these are eaten up with rheumatics. The old man, perhaps, can only sit in his chair and smoke his pipe; and the pipe is a blessing to the old lady, because it keeps him quiet. The Chancellor could say that certain categories of Empire-produced tobacco of the most ordinary kinds, would be made available for such people, and there should be a graded tax, so that those who want the more expensive grades of tobacco—which in many cases are of no better quality but have been increased in price because of the cost of advertising—should pay higher rates of taxation.

The one thing in the Finance Bill which has given many of us considerable satisfaction is the concession with regard to the Purchase Tax on commodities con- trolled by the Board of Trade. I was very glad to hear the Chancellor of the Exchequer inform the House that, instead of making the concession on clothing apply to September, he has brought it forward to 3rd August. But why bring it forward only to 3rd August? The same argument, very largely, applies to boots. It will be much easier and save a lot of bother and trouble if the tax is removed before they get into circulation. There is only a very small amount of the utility clothing in the shops and every day's delay in applying it will mean that a large amount will go into the shops and will not be disposed of. It is logical, if the principle is sound, that application should be made straight away. I would remind the Chancellor of the Exchequer that, without awaiting the Finance Bill, he removed the Purchase Tax from motor tyres. I understand that it was done automatically and straight away. If the tax could be removed from tyres, then the working man, who cannot afford a motor-car, but who must have boots, will not understand why it cannot be removed from boots. I ask for a consistent policy. We have been asking for a long time that the necessaries of life should not be burdened with indirect taxation. It is inconsistent with the general policy and the policy of subsidising basic foods and of putting a burden on luxuries. It puts all into one category.

I understand that my hon. Friend the Member for East Ham, South (Mr. Barnes) appealed to the Chancellor of the Exchequer to consider the general policy of removing the tax from those things which were considered by the President of the Board of Trade to be of vital importance and which it is absolutely necessary to produce at the lowest cost. The policy adopted in the case of boots and clothing should be progressively applied. I understand that the Chancellor of the Exchequer was reluctant to accept any such policy. That attitude is not helpful. If the country has the assurance that the Government are carrying out a policy of keeping down the cost of living so that whatever the workers are earning it will secure to them a minimum standard of living, then, that will help very considerably in maintaining the general morale. There is an upward grade in luxuries and I do not think that any one will complain of the doubling of the standard rate for specialised luxuries. Here again, although it is not perhaps primarily the Chancellor's pigeon, many of these things, instead of being allowed to come on the market, ought to go out of production altogether. Their production is not justified and their existence only aggravates those who are working hard for the successful prosecution of the war.

There is one further change in the Purchase Tax which I think is most inconsistent and out of line with the argument I am putting forward about general policy. Clause 18 deals with the extension of the Purchase Tax to commercial stationery, and books unlined and unruled. I believe this has been necessary, to some extent because of the difficulties that arose out of an earlier policy that was inconsistent with the general policy of keeping down the cost of living and so preventing inflation. It was difficult to discriminate between books used in schools and books used in offices. Instead of perpetrating another evil so as to be consistent, I think it would have been far better to have removed the Purchase Tax on school and office stationery. We are now in the anomalous position that a business firm which is to collect the Purchase Tax for the Chancellor has to pay Purchase Tax on the books which are necessary so that accounts can be kept. It should be a general principle in finance that no unnecessary burden is placed on industry. There would be a riot among the masses of the people of the country if you started taxing the tools with which many of them did their jobs. A concession was made to miners that their pit boots should be exempt from this tax and a concession was made to the housewife in the recognition that the scrubbing brush is one of the tools for her job. You cannot carry on business without books and stationery. It is quite wrong to say that because people must use stationery, the Chancellor should make them pay. It creates a sense of injustice. Not a day goes by but Members of Parliament receive large quantities of printed paper, much of which is dumped into the waste paper basket because it is of no interest. That paper is free. Instead of putting a tax on commercial stationery we should put a tax on unnecessary publications by people who have money to spend on getting a printer to cover paper with print. A genuine business has to keep letters and so forth and issue receipts and now they will have to pay this extra 33⅓ per cent. Purchase Tax. It is a tax on actual industry and business necessaries.

If the Chancellor is properly concerned with the winning of the war I nope he will look at this question of Purchase Tax as applied to furniture. There is an attempt now to sweeten the bitter pill of direct taxation by promising a nest-egg for the lower-paid workers. I can imagine many of them taking that quite seriously. Many young men and women in the Army will be looking forward to setting up their homes alter the war out of these nest-eggs. But how will the position work out? A report of the Council for Art and Industry was published by His Majesty's Stationery Office in 1937. It was shown in that report that in 1936 the minimum cost for furnishing and equipping a house of five rooms—floor coverings, utensils, cutlery, etc.—was£52 10s. Hon. Members will realise that that figure provided for only the absolute minimum necessary for people to live under a roof with the adequate necessities of life. An inquiry has been made by the same gentleman who compiled the figures in this report. It is not possible to budget for every item, because not all of them are now available. Where certain articles are not now available the nearest substitutes have been provided, and the figures show the price to have gone up from£52 10os. to£159, or more than three times the amount. I may point out that these figures include IS. dividend, because we have bought the articles at the "Co-op."

We know how the hon. Member feels, but I think at the bottom of his heart he knows that these figures are absolutely reliable. If he purchases these articles from the Co-op, he will also get a dividend. Out of that£159, Purchase Tax amounts to£32 3s. 8d. After the war a young couple who go out to buy furniture with their nest-egg will probably find that prices are even higher. As I say, these figures provide for the absolute minimum, and, therefore, anything additional which is purchased will increase the Purchase Tax proportionately. Therefore, the Chancellor of the Exchequer will be absorbing by taxation what has been promised to these young people. I suggest that he is storing up trouble, and that there will be a sense of bitter resentment when people find they have been deceived and that he is giving something with one hand and taking it back with the other. Although I know that is the last thing he wishes, it is the position which we are reaching. I appeal to him to listen to our plea, and to take all these things which are necessary for maintaining the life of the people out of this new form of indirect taxation.

I have listened to all the speeches in the Debate to-day, and, with the exception of the last, which was somewhat critical, they have all been in praise of the Chancellor's proposals. I feel therefore tempted to remind him of the warning to which I drew his attention last year, that he should "Beware when all men speak well of you." The reception that the Budget proposals have had, both in the House and in the country, has ensured an easy passage for the Bill. The Chancellor of the Exchequer has had appreciation paid to the policy that he has pursued, and I think he has done certain things for which the country owes him a great debt. He has told us that in the last year he has succeeded in stabilising both wages and prices, and he has maintained interest at low rates and, in consequence, he has been able to keep inflation in check. I think he is right in reminding us that inflation is still a danger and that although, because of the policy that has been pursued, it is not so much in evidence as it might be, we still have to remember that it is an enemy with which we have to deal. In fact, if the Chancellor had not been successful in his policy of preventing inflation, the Budget that he would have had to present to us this time would have been of a very different order, and its reception would itself have been different. The reason why it has been well received is that it is attuned to the mood and the needs of the country and because the people are reasonably satisfied that financial policy is in safe hands.

But the Chancellor himself recognises that, in demanding from the people the record sums that he is doing, he carries with it a very definite responsibility to see that the money is wisely spent and that there is no waste. I was very glad to note what he said on this matter in his Budget Speech and again to-day. I think he would be very well advised to see that the country was reminded more frequently of the positive steps that are taken by the Treasury to see that there is as little wasteful expenditure as possible. When so much money is involved there is bound to be a certain amount of waste, and there is also the danger, when so much money is being spent, and the need to spend it is so obvious, that people will say, "We cannot trouble very much about the cost." On the other hand, in going about the country, one comes across frequent criticism of Government waste, and I think one is doing a friendly act in reminding my right hon. Friend of the fact that this criticism exists. He told us in his Budget speech that the Treasury and the Government Departments have set up machinery to ensure that the establishments are kept within reasonable limits, and I think it is very necessary that the country should be told how this is done. But something that was proposed by a Minister the other day has given a good deal of support to the view that many Government Departments are employing much larger staffs than they need. When the President of the Board of Trade announced that he proposed to introduce a Fuel Rationing Scheme, he said it would mean a staff of something like 10,000 to 15,000 for six or eight weeks, and he said he expected to get part of that staff—I think the assumption was, a very large part of it—either by transfer or loan from Government Departments.

When the ordinary citizen hears that the Departments are prepared to put at the disposal of a Minister for a new scheme members of their staffs which run into thousands, they will feel that they have considerable support for the view which they have held that these Departments are over-staffed. I therefore hope that the Chancellor, in the pursuit of his campaign to see that Government staffs are kept under close review and are not unnecessarily large, will inquire from his right hon. Friend from which Departments he proposed to take these staffs and see whether they cannot be dispensed with. The Chancellor would be the first to agree that wasteful expenditure is harmful to the war effort. I am not speaking merely of the wasteful use of money, but of the wasteful use of man-power. The manpower in Government Departments which is not being fully used should be put on better service for the war effort.

I would draw the attention of the Chancellor to another criticism in the country, that, while it is true that he has imposed heavy taxation, there are apparently a great many people who appear to be able to maintain a high standard of life. That is recognised by the Minister of Food when he is compelled to take steps to limit the price of meals in luxury hotels. I would ask the Chancellor whether he is satisfied that firms in their accounts are not in some way avoiding the intentions of the Government and that there are not a great many people taking allowances free from Income Tax which enable them to maintain a higher standard of living than appears justified by existing taxation. I hope that the Chancellor will bear in mind that though the number of people doing this may not be large, the psychological effect of it is very great. It makes it very difficult for him to preach a campaign of austerity and sacrifice on the part of the community when it is obvious that there are certain sections of the people who are able to avoid doing anything of the kind.

For this reason I am one of those who are glad that the Chancellor has remained firm over the question of the Excess Profits Tax. The pledge that profits should not be made out of the war was made by the late Mr. Neville Chamberlain to this House and was generally accepted. If the Chancellor were to give way to all the requests that are made to him on this matter, he would find that the moral basis of his appeal to the workers to keep down their demands for increases in wages was cut beneath his feet. If those who are appealing for one reason or another for a reduction in the E.P.T. standard were to succeed, the Chancellor would have to face the fact that the workers would not be prepared to limit their demands for increases in wages. The Chancellor has been successful in doing this largely because of his policy of price controls and subsidies on certain foods. The£125,000,000 which he is spending on subsidising food is money well spent, and it has saved him a considerable amount of money in other ways. He is successful also because I think there is a feeling that the Chancellor is trying to maintain such equality of sacrifice as he can during the war. The Chancellor has succeeded in conquering unemployment, at any rate for the duration of the war, and I hope that the determination which he and other Members of the Government have ex- pressed that there shall be no recurrence of mass unemployment after the war will be realised in fact.

I do not know whether my right hon. Friend listens to the speeches of his colleagues, but on the last two Sundays there have been broadcasts by members of the Government representing different parties. A week last Sunday there was a speech by my right hon. Friend the Minister of State and last Sunday a speech by my right hon. Friend the Lord Privy Seal. Those two speeches seemed to be very much alike, and confirmed the view which, as an Independent, I perhaps naturally hold, that too much importance is attached to political labels. In fact, I am not sure that the Minister of State did not go further than the Lord Privy Seal would think it prudent to go, because the Minister of State, speaking of wishful thinking, said that if we desired something sufficiently strongly, though we might not always be able to get it, at any rate we should be taken a long way towards it. I agree entirely with that sentiment, because that is the right spirit in which to approach the question of employment after the war. If we make up our minds, if we are determined, that after the war there shall be no mass unemployment, we shall find a way in which that problem, which has baffled us in the past; can be solved.

The Chancellor has succeeded during the war in finding employment for everybody and has brought into the field of employment a great many people who are normally not employed; and at a time when supplies of food and other things are limited owing to enemy destruction there is less want in this country, probably, than in normal times. I suggest that if that can be achieved under the handicap of war, it ought not to be beyond the wit of our statesmen to see that at least as high a standard is maintained after the war. But our people are very much interested in what is to happen after the war, and would feel much more confidence that the hopes which they had at the end of the last war, and which were then disappointed, would be fulfilled this time if they could see practical evidence that where there is want during the present war it is being removed. For that reason I wish to support the appeal made by my hon. Friend the Member for Leigh (Mr. Tinker) and others that some additional help should be given to old age pensioners. There is a great deal of hardship and suffering among them. I am sure the Chancellor will never suggest that money spent in giving additional help to old age pensioners is likely to add to the danger of inflation, and it would show that we are in earnest when we say we intend to abolish want after the war. Let us see that the old people get this concession during the war. For the same reason I hope that my right hon. Friend will give consideration to the question of children's allowances. We have learned during the war that what matters is not so much the amount of money as the purpose for which that money is being spent. I therefore hope that, arising out of the financial policy of the Chancellor—

I hope that the hon. Member will not develop his argument relating to the spending of money upon other things. We are discussing the Finance Bill, which proposes means of getting money to pay for the things which we have already voted.

I apologise. Sir, if I went beyond what is in Order. I was under the impression that, at a previous sitting, we were told that it would be in order during discussion on the Finance Bill to refer to the position of the old age pensioners. I believe that the Leader of the House suggested, when he was asked to give a date for the discussion of old age pensions, that we should be able to raise the matter on the Finance Bill. For that reason I was drawing attention to the matter, but I submit to your Ruling, Sir, that I should not have done so. Generally speaking, there are some problems which can be settled more easily during the war because there is a greater union of classes, greater knowledge and greater sympathy, when we are all sharing similar dangers, and when we realise our common humanity perhaps more than we do in ordinary times. It is the duty of a Government to look ahead in their financial policy, to cash-in on this situation, and to see that, out of the present closer union and sympathy between class and class and out of the common struggle in which we are engaged, we secure not only liberation from the ills which surround us now but get well on the road to that greater freedom to which people of all parties look forward.

I am not going to ask the Chancellor to spend more money, but I want to give him an opportunity to save a good deal of money. He will be aware of some of the cases to which I propose to refer, but I shall cite one or two that will be new to him. I want hon. Members, and the Chancellor of the Exchequer in particular, to consider an alteration in what is known as the Charity Trust. As I understand them, charity trusts were instituted at a time when Income Tax stood perhaps at 1S. or 2S. in the£. I do not quite know. At least, Income Tax at the time when charity trusts were introduced was very low as compared with what it is to-day. The object then, I should say, was a very good one. It was to induce people who had considerable amounts of money to make charitable gifts to properly constituted charities by giving them a concession with regard to the payment of Income Tax. Those properly constituted charities are quite emphatically and definitely defined in the Income Tax Act, 1918. I am glad to see the Attorney-General present, for like many hon. Members I have difficulty in interpreting the law, and I have been surprised to hear that a charitable trust can be used in ways other than that which the law permits.

The way in which the law defines charitable trusts is very clearly laid down in the Income Tax Act, 1918, Section 37. I do not want to read it, or to trouble the House with a long speech; but this Act lays it down that the purpose for which a charitable trust may be formed, and donations given from it, must be a properly - constituted charity. That charity is strictly defined as an organisation with one object only, and that object a charitable object. It must have a charitable purpose, and further, money contributed to a properly-constituted charity must be used for that charitable purpose and in no other way. That being so, I would like the House to consider some of the means that have been used to avoid taxation, and I want to quote one particular case which I understand the Income Tax people know very well. In fact, I have heard one very high Income Tax official say that if this case were brought into court, a decision would have to be given in favour of the person concerned because of the state of the law.

This is the case. A very rich man arranged with a genuine charity that the charity should give to him£10,000. In return for the payment of£10,000, he agreed to pay to the charity a sum of£8,000 per annum. As the charity trust law says that the payment must be for a period. I believe it is for seven years, this man receives£10,000 and in return has to pay£8,000 per annum for seven years, making in all£56,000. From the point of view of the charity, that is a very good arrangement, but what in fact happens? The man, or at least the charity, can in fact obtain 19s. 6d. in the£ in remission of taxation. Consequently, the rich man each year actually pays not£8,000, but 8,000 sixpences—in other words, he pays£200 per annum himself and recovers, in the form of remission of taxation,£7,800 annually. At the end of the seven years he will himself actually have paid to the charity a sum of seven times£200—£1,400 in all, and he will have induced myself, all the hon. Members of this House and all of us in the country who pay taxes, to give him through the Exchequer in remission of taxation the sum of£54,600.

That is a very good deal for him. Actually, he has the£10,000. He pays out in seven years£1,400. The charity gets the advantage of what is from their point of view a very good bargain. He has the use of the£10,000 during that period of seven years. He pays out£200 a year, and if he invests the£10,000 at 2½ per cent., he can actually get back£250 a year. In any case, at the end of the time he will have paid only£1,400 for a gift of£10,000. I am told that the Income Tax people are very well aware of that. They are afraid to take it into court, though they know the persons who have practised it. No action has been taken with regard to it. I ask the Chancellor whether he thinks, or whether any Member of this House thinks, that that was the intention of the people who framed the original Charity Trust to induce people to give donations to charity? I think everyone will agree that it is a gross abuse of the Charity Trust. I am asking the Chancellor to take some steps in future to prevent it.

I asked a Question to-day with regard to a case that has become known as T.1193. I have asked many Questions with regard to it since the case first came before the notice of the Income Tax people and became known as Income Tax case T.1193/6/38. It has become somewhat involved, very involved. If I may say so, it is a case which, frankly, I do not like. I think that the steps that have been taken with regard to this case do not reflect credit on the Income Tax Commissioners or on someone who is behind them and is responsible for their policy. What is the case? I never mention names in regard to it. Names are being mentioned now. It is not for me to say whether the name is the right or the wrong name. I know no names in these cases, but I know facts. What has been the practice of certain people with regard to this Charity Trust? Here are some examples. They are operated not with the connivance, but through the instrumentality, of clergymen of various churches, and they can only be operated in such a way as this. A man goes to a bazaar—let us assume it is a three days' bazaar—and on the stalls he purchases a number of expensive gifts which he proposes to make to his friends. These gifts are not paid for, in cash. He takes his friends round or buys and sends a gift to them.

I do not want, nor does my hon. Friend, to stop the investigation of this matter, but he is now referring to a case in respect of which certain proceedings are pending, and whether it would be right that details and merits should be discussed is a matter I should like to submit to you, Mr. Speaker.

I submit that there is no dispute about the facts. You have not heard them yet.

This is a matter which is being investigated. It would be better not to refer to it.

May I refer to an answer which was given in the House today? The Solicitor-General said:

"In this matter the Westminster Bank have issued a summons for the construction of the relevant deed, to which my right hon. and learned Friend the Attorney-General is defendant."

Will the hon. Member read all the answer?

It continues:

"It has been intimated to the Bank that further evidence should be filed thereon, and, subject to this, that this summons should be disposed of as soon as possible. A writ has been issued, on behalf of my right hon. and learned Friend, against Sir William Mallinson and the Westminster Bank claiming accounts, further proceedings under which will be taken when the construction summons has been disposed of."—[OFFICIAL REPORT, 5th May, 1942, Col. 1210, Vol. 379.]

All that is before the Court at present is not the facts, but the construction of the deed. I submit that a charity trust deed can have only one construction: that is, if it is framed and carried out within the law.

The law seems to be entering into the discussion. The hon. Member has already referred to it. It must be a question for the law to decide.

May I submit that there can be no question about what the power of a charity trust is under the law? I do not want to have to read the law, but the Attorney-General will be aware that, under Section 37 of the Income Tax Act, there is only one way in which charitable gifts can be used; and to make gifts to friends under a charitable trust deed cannot be brought, by any stretch of imagination, into the category of a charitable gift. Loans which are completely and fully paid up cannot, by any stretch of imagination, come within the construction of a charitable deed for remission of taxes to be obtained; the Attorney-General and the Leader of the House will be aware of that. I submit that I have a right to give the facts of this case.

It is true that the summons by the Bank relates only to the construction of the deed, but that depends on what actually took place. The writ issued on my behalf raises the whole question of how this trust has been administered.

Will not the court give a decision on what is submitted to them? If these facts are not submitted to the court, the court cannot give a decision on them. I have made every effort, without any success whatever, to find out whether they are to be submitted. I have asked my right hon. and learned Friend on more than one occasion; and he has always declined to say. This House is not a court, but it is a place where a Member has the right to draw attention to evasions of Income Tax law.

If I am not permitted to refer to it, I very much regret the fact; but I want to say that the right hon. Gentleman the Chancellor of the Exchequer, whom I have seen personally on more than one occasion, and the late Chancellor of the Exchequer, Lord Simon, are well aware of the facts of this case. I have made every possible effort to bring it to the notice of the Chancellor and of the Income Tax Commissioners, and other people have done the same. I am very sorry that, after four and a half years, during which every effort has been made to draw attention to a public scandal in connection with a person who now holds a position as financial adviser to one of the controlling boards, that person is still permitted to hold a position where a salary may be paid—although I am told that he is not drawing the salary—when the information that he can obtain can be, and possibly is, of very great financial advantage to him. I am sorry that this matter is not permitted to come out here. The facts I could give would, I think, convince the House that gross fraud has been going on for a number of years. The Attorney-General has drawn your attention, Sir, to something which prevents me from giving facts which I think the public should know.

I do not intend to follow the hon. Gentleman the Member for West Walthamstow (Mr. McEntee), who has shown the aptitude of his race for the law, but I would like to assure him that a legal battle which is only four and a half years old is still in its infancy, and there is plenty of time. Like the majority of hon. Members, I wish to congratulate the Chancellor of the Exchequer on his Finance Bill, and-the Financial Secretary and his skilled assistants at the Treasury who have handled national finance in such a masterly manner. There is, however, one omission from the Bill to which I feel compelled to draw attention. It has been mentioned in general terms by hon. Mem- bers. I refer to the anomalies of the Income Tax standard years.

The House will not mind if I give exact particulars of a case which has occurred in a constituency in Scotland, which I am looking after in the absence of the Member. I am raising this case in the interest of the engineers employed there and of the company concerned. This highly-skilled engineering firm was commenced by two working engineers at about the beginning of this century. They carried out high-grade engineering work, and during the last war they proved very valuable to the Admiralty, and, in fact, they claim to have revolutionised submarine craft. When the last war came to an end and they were left to their own resources, they developed a general trade in engineering and carried on successfully until the time came for the cessation of the dismemberment of the British Navy round about 1935–36. Then the Admiralty came to this firm and asked them to co-operate in the creation of catapults and arresting gear and other necessary Navy weapons required in this war. In that connection it may interest the House to know that the aeroplanes that found the "Bismarck" and the "Graf Spee" were launched from catapults made at this engineering works. In the years immediately before the war, which are the basis of the standard years, of Excess Profits Tax, the firm took three contracts for making catapults. While engaged on that work engineers from the Admiralty were in constant attendance at the works. The plans were changed from week to week, and instead of the firm making a profit they made a loss of about£10,000. They turned to the Admiralty and said, "You ought to make this good," and the Admiralty people rightly replied, "This is only experimental work; you will get plenty of orders later on." They did get plenty of orders, but the Excess Profits Tax came along and took the lot, so that not only are the firm paying the loss of the experimental years but they will be paying for the subsequent years as long as E.P.T. remains. That is a grave injustice which should be put right.

I have been working at this case for 18 months in trying to get the Admiralty or the Treasury to make amends. I approached the Chancellor of the Exchequer through his Parliamentary Secretary and I brought down the managing director of the firm. We were referred to the Finance Act, which is the barrier, and told that nothing could be done. It will interest the House to know that this firm, in the last years before the Admiralty favoured them with their business, had a turnover of about£50,000 and earned£5,000 or£6,000 profit. They did that in subsequent years until the dismemberment of the Navy stopped. In those years, in 1936 and 1937, the turnover rose from£50,000 to£140,000, and they made a profit of only£1,522.

In the following year the turnover was raised to£281,000 and again in the following year to£376,000. In the first of these two years they were left with£645 after paying taxation. How can any business live under such conditions? The following year they were left with£1,000. In their efforts to help the State at a time when nobody else was helping, they borrowed money which they hoped to repay out of their profits. The Admiralty said, "You must prepare for bigger work," so they built buildings at a cost of£40,000. If they had waited until after the war came they would have had a substantial grant from the Admiralty. Because they did the work before the war they received no grant. This was a firm which kept on a highly-skilled staff of engineers in years when everybody else was letting them go and which worked with the Admiralty in an effort to provide the Navy with the means of saving the country. Yet the net results of their efforts was financial bankruptcy—

I have given the figures for two years. These have been agreed by the Admiralty. I have stated the turnover on£300,000, not on Woolworths goods, but on the highest grade work, Barr and Stroud work.

These are standard years and these were taken into account. It was as a result of the losses made in those years that they are penalised now. This House is very much against war profits and I am entirely in sympathy with that idea. I bitterly resent war profits but equally bitterly I resent unfairness. The Finance Act has no power to put things right and I urge the Chancellor, as an act of justice, to put into the hands of the referees some means of meeting cases like this. You cannot pass an Act and expect everybody to be treated fairly. There must be other cases like this and I thing it would be the wish of the House that no citizen should be so grossly penalised as this firm has been penalised. I urge the Chancellor to put things right in this Bill.

I feel, having listened to the Debate, that there is a certain depressed class whose interests have not been represented. Perhaps it is one of the functions of a representative of a University constituency to voice the grievances of such classes. I speak for a very small minority of the population, which has very little voting power and consequently has very little consideration. I would like to say a few words on behalf of the higher Income Tax payers. The Chancellor has fallen short of his estimate this year. He estimated that the Surtax would produce£5,000,000 more than it has actually done. Last year, again, the Surtax produced£7,000,000 less than the estimate and I think I am justified in coming to the conclusion that the Chancellor is killing the goose that has laid the golden egg, especially as this enormous taxation must be taken in conjunction with the duty on estates.

For many years I sat under the clock in the old House of Commons, and I heard Sir William Harcourt introduce his Budget in 1894, when, for the first time he applied Death Duties to landed estates. This Measure was opposed by the Conservative party, and was rightly opposed, but the opposition would have been very much greater if they had realised the " facilis descensus Averno ." To what an extent has this taxation now reached? During the past year I ventured to put some conundrums to the Chancellor of the Exchequer. I drew his attention to the case of a gentleman, subject to the highest Income Tax and the highest Surtax, who patriotically invested£1,000 in 2½ per cent. National War Bonds, and derived from this£1,000 a nett income of I2s. 6d. But that is not all, because he rendered his estate liable to an additional £650 in Death Duties. I put another question to the Chancellor of the Exchequer. Take the case of a gentleman who wishes to pay a very normal fee of five guineas to his dentist. In order to save up for this fee of five guineas, he has to put by the whole of the income on£3,800 in three per cent. War Saving Bonds. Suppose that the dentist is also liable to the highest rate of Income Tax and Surtax, then out of the five guinea fee he will retain only 4s. 10d.

A case which came before the courts during last week illustrates the point I am trying to make. Sir Philip Sassoon provided in his will that his housekeeper should have a nett income of£11,000, which was necessary to maintain the estate. But it was found that in order to produce this nett income it would have been necessary to have had a gross income of£312,750, and the capital sum required would have been£10,425,000. The whole of the estate, after payment of Death Duties only amounted to£600,000, and, therefore, it was impossible to carry out the will of the testator. As the judge pointed out in court, the unfortunate residuary legatee was left in a bad position, because it was necessary under the law for the executors to do their utmost to pay as large a proportion as possible of this annuity of£11,000.

I am also thinking of a gentleman who all his life has devoted himself to doing purely honorary and gratuitous work. He was chairman of his county council, chairman of the education committee of that county council, chairman of petty sessions and chairman of the county Territorial Association. In fact, the whole of his life has been devoted to the good of his county without any payment or fees. His income was estimated at£50,000 per annum, but the Chancellor, by his recent legislation, has reduced it to£4,500. [An HON. MEMBER: "Scandalous."] Certainly it is scandalous, because the estate which he has maintained is nothing more nor less than a public museum, thrown open day after day to troops of tourists who pass through its park with its fountains and lake. It has been maintained as a public park, open to anyone who liked to stroll through it. Instead of this park being maintained by the county council or the municipality, it has been maintained at the expense of this gentleman. Now you are forcibly reducing his income to £4,500, with the result that he is compelled to live upon his capital. He has had to withdraw his sons from the public school which they were attending and his wife from the nursing home to which he had been compelled to send her.

When, last year, the Chancellor of the Exchequer raised the Income Tax to 10s. in the£ perhaps sufficient consideration was not given to the enormous taxation caused by the addition of the very increased Income Tax to the original Surtax. I feel that further legislation has increased the hardship. In 1940 the War Damage Insurance scheme did not include ground rents, and wisely so, because it was as the result of careful inquiry by a committee that that exemption was maintained. But last year a new Act was passed which applied to ground rents. Many ground landlords are widows, or aged single ladies, unable to work for themselves any longer—men and women who have deserved well of the community. They find that the contribution they have to make on ground rent—which, in itself, is a very small proportion of the rack rent, of which they never see a penny, and perhaps will not for 70 or 80 years—is enormous. 1£ they were allowed to deduct this contribution from Income Tax the case would not be so bad, but it is rather hard to be compelled to pay Income Tax and Sur-tax on an income which you never receive. I could give cases where the nominal income is comparatively large but the real income works out at between 2s. and 4s. in the£.

Of all the taxpayers in the country these are the most cheerful. They are the ones who have supported this taxation almost without a murmur. If they could feel perfectly well assured that these vast sums which they are contributing to the Exchequer were well spent they would not feel that their case required such special consideration. But when I read in the report of the Accountant-General that last year the nett loss on food subsidies amounted to£63,000,000 I begin to think of the enormous cost to the Exchequer. The Chancellor told us on Thursday that the wages of 40,000 young women working in the Royal Arsenals had been raised, and admitted, in answer to a question from me, that the cost would be£600,000. I would not deny that those women are deserving of their increased wages. I am only pointing to the immense expenditure. Again, you have proposed to exempt "utility clothing" from taxation, and it is reckoned that the cost this year will be£10,000,000, and next year£15,000,000. These sums are enormous and, taken in conjunction with the fact that the total amount produced by Sur-tax is only£74,000,000, contrasted with between£900,000,000 and£1,000,000,000 produced by Income Tax as a whole, one wonders whether the hardship imposed upon this deserving class of higher Income Tax payers is really necessary. I put a Question a short time ago to the Parliamentary Secretary to the Ministry of Food with regard to eggs. He admitted that the loss to the Exchequer caused by the fact that the Ministry of Food pays through a licensed packer 3s. 1d. per dozen for eggs and sells them to the consumer at 2s. per dozen, was no less than£11,500,000. The reduction in the cost of an egg from 2½d. to 2d. involved the Exchequer in a loss of£3,750,000. The allocation of eggs during March was only three per person. That involved the individual in expense of only 1½d. a month or 1s. 6d. a year.

I did not hear the beginning of the hon. Gentleman's argument, but this seems to me to be rather a Debate on the Board of Trade or the Ministry of Food.

The point I am trying to make is that, whereas the Surtax payer is making immense sacrifices, the Government seem to be spending money, to use a mild term, somewhat recklessly on these various items. One cannot help feeling that an expenditure of£3–750,000 to save the individual 1S. 6d. a year is out of all proportion to the immense cost to the Exchequer. When the large Income Tax payers and Surtax payers have most nobly and cheerfully submitted to the severe taxation, and in many cases have been forced to live upon their capital, they have a right to ask that the Chancellor should very carefully look into this enormous expenditure, arising to immense sums which would far more than double or treble the comparatively small amount produced by the Surtax.

The hon. Gentleman the Member for Belfast University (Professor Savory) was quarrelling in the early part of his speech not so much with the Chancellor as with the simple rules of arithmetic. In case any simple-minded people outside should be impressed by what he said, I should like to say a few words about the people who are paying such heavy taxes and for whom he has spoken. Anybody with a few million pounds at their disposal can afford to give most of their incomes to the country that is fighting for its existence and for their property, and they can afford to live on their capital for quite a long time and not feel it. It is time people stopped talking about the financial sacrifices of those who are left with millions of capital to live upon. I had hoped the Chancellor would have introduced some legislation to make it impossible for people to live on their capital in these times.

The hon. Gentleman is misinterpreting me, because what I said was that the increased Income Tax should be taken in conjunction with the enormous Death Duties which are a direct tax on capital, amounting in certain cases to as much as 65 per cent.

The first case the hon. Gentleman quoted was that of a person who used to be in this House and who admitted that he never earned anything in his life, yet had an income of£50,000. People are bound to ask themselves where he got this vast fortune and what right have people of this kind in days like these, when everybody is working hard to produce the things with which to save the country and other people's property, to maintain a high standard of living. They have no right, and it is time that the Chancellor said to people that they should have a standard of life in these times commensurate with what they are putting into the war effort and no more. Freeze their fortunes, if you like, and let them take after the war the proportion that they are entitled to—if there is a proportion left.

There is one other point I had hoped to raise with the Chancellor. If he has got credit for one thing more than another, it is for his great battle against this giant inflation. I think he has been given a little too much credit for that. I will put it in the form of a challenge, and say that it is not his policy at all to avoid inflation, but that he is deliberately fol- lowing a policy of inflation. If the Government say, as they have said, that their policy is to stabilise prices and the cost of living and so avoid inflation, there is nothing on earth to stop them from doing it. People talk about inflation as though it were some mystical influence outside our control, something, beyond us like disease. It is nothing of the kind, It is absolutely within the control of the Chancellor and the Government, and he is deliberately operating a policy of inflation, only he, or at least his advisers, take pride in the fact that it is a controlled inflation. They say that the Government have it in check. If a milkman were to adopt the same attitude as the Chancellor of the Exchequer and say that to put only a little water in the milk is all right, he would be put into gaol. The Chancellor had far better admit that what he wants is controlled inflation and not pretend that he is avoiding inflation, because it just is not true. If the Chancellor or the Financial Secretary can give us any evidence that what I am saying is incorrect, I shall be pleased to hear it.

Let me give an instance of what I mean in connection with the commodity with which I am most familiar—steel. I could give examples of a dozen different commodities; I have quoted them to the House before. When war broke out the price of steel was £10 a ton. Events have caused the price of steel to be raised to, let us say, £15 a ton as the average price. If the Chancellor had wanted to do so, he could have paid all the war cost which has been added to the price of steel and spread it over the entire community. Instead of that he has said to each particular industry, "You must stand on your own foundation and pay your own costs." For instance, the port charges at Liverpool have been increased by 60 per cent., and I do not know how many commodities are thereby affected. It is an absolute waste of public money, and it disorganises and uses up a tremendous amount of extra labour. He has also increased the prices for coal and electricity. If he were operating a policy of stability, he would not do those things. I have mentioned the increase in the price of steel from £10 to £15 a ton. The amount of steel we turn out is, I will say, 10,000,000 tons a year—it is nowhere near that figure, but I will not mention the exact figure. With this increase in the price of steel, of which he has the entire output, he is paying over 10,000,000 times £5. It is no use telling me that that is not inflation; it is inflation, and deliberate inflation, because there is the same amount of material. I hope the Government will not pretend any longer that they are really endeavouring to operate a policy which is opposed to inflation.

I have a word to say on the Excess Profits Tax, a subject with which a good many speakers have dealt to-day. The hon. Member for Streatham (Mr. Robertson) quoted a very important case in which a firm, by doing Government experimental work in the vital years on which their standards are based, lost an enormous amount of money in the hope of recovering it at a later stage. He tells us that the Government encouraged them to go on at a loss because Government orders at a later date would bring the profits. As a result, when they are earning big profits, they have hardly anything left. Take the case of other firms who, in those vital years, were trading with the enemy, selling munitions of war and raw materials to Germany and thereby building up enormous profits. What a ludicrous position we are in; firms which built up the might of Germany made big profits in those vital years 1935–36–37, and because they built up that might, which is now endeavouring to destroy us, they are guaranteed those enormous profits for the period of the war, while other people who developed our own might and deliberately lost profits have to suffer, and are now working practically at a loss.

Is the Chancellor proposing to ignore cases like that? Last year I cited the actual cases of two firms with the same capital and with almost the same turnover. They made almost identical profits of £12,000. One firm paid £10,000 E.P.T. and kept £2,000, while the other firm paid £2,000 and kept £10,000. People can put up with that kind of thing for a year or two, and may not grumble. They will think it was bad luck and their share of the war effort, but if it is to go on year after year for a good many years, it is not fair. It is not playing the game that some of these people should be guaranteed their enormous profits. The Chancellor will have to try and find a better basis for his excess profits system.

I should like to put on record another case of real hardship. A certain firm started with hardly any profits in 1937. In 1938 they made very substantial profits through a very useful invention. In 1939 they made still larger profits. They have no pre-war standard, but just a profit standard. Last year, in order to cope with the increasing demands of Government Departments, they incurred£9,000 capital expenditure. All they had between three directors to provide the new capital was£5,500. That was a terrible gamble for a comparatively small company. Some firms, if asked to increase their production, would have declined to do any extra work for the Government, but this firm did not. The correspondence is available. Then the Inland Revenue Department demanded payment of Excess Profits Tax. The firm said they could not pay. They were threatened, so they said, "You can have your Excess Profits Tax, but we shall close down about half our output, so that we can collect some money; or you can have 100 per cent. output from our factory and wait for your E.P.T." Fortunately, the Department showed good sense and decided to wait for the E.P.T. That is the proper way to deal with such matters; but how unfair it will be if such firms find they have no capital left at the end of the war. Many of them may be made bankrupt. They might not object to that if it were not for the fact that other firms who traded with the enemy in the vital years built up vast fortunes and have great advantage now from doing so.

I have only one other point. It is an old theme. I would asked the Financial Secretary to give us, if not now, at a later date, precise figures upon a matter connected with war savings. I have never said a word against small savings, speaking either in this House or outside, but what I have said outside, and say again now, is that big savings are a most cruel fraud upon the community. It is cheating, nothing but cheating, and fortunately people are waking up to the fact now that these are not savings in any sense of the word but are merely enormously increased payments to people who have immense funds available. I have heard—Lord Kindersley gave me the figures himself—that the cost of these savings is really small, and amounts to only 1s. 5½d. per£100. That is so small that it is not worth making all this fuss about. But it is admitted that only one-third of the total is small savings, so that it becomes 4s. 6d. per£100, and if the actual saving is only 10 per cent., the cost of the War Savings Campaign is pretty high. I wonder if the Financial Secretary could give us some idea of what the cost of raising this money is. If I am told that it is 1s. 5½d. per£100 for the immense sums that have been raised, then the cost for actual savings is a very high one and ought not to continue.

One other thing I would like to mention in that connection: the disgusting spectacle of the B.B.C. taking a lot of time every week to tell us of children who have given up their coppers to help the war effort, and of people who have made little sacrifices in the belief that they are helping to get more munitions. It is not fair. The poor things are doing nothing of the kind, and when big interests are getting big returns on their money it is not fair to leave these poor people to make what, to them, are really sacrifices. It is very misleading, and it is a scandalous thing that these long lists should be reeled off every week as evidence of patriotic effort. It is patriotic, but it is a fraud on the poor people, and I hope it will be stopped.

Finally, I cannot understand why, during the war, people should be allowed to make capital profits. I have asked the Chancellor before, and I want to ask him again, if he cannot give some consideration to this question for the duration of the war at least. If people make capital profits—realised profits as distinct from paper figures of appreciation—he should tax them, in exactly the same way as other profits are taxed. I realise that there are difficulties and complications, but when I recall that in the last war one individual alone made£7,000,000 out of shipping, on which he paid no tax, invested that money and converted it into£35,000,000—perhaps the biggest fortune ever accumulated in this country—on which hardly any tax can have been paid, I think it is time that the Chancellor should seriously consider whether, at least for the duration of the war, he cannot make it quite impossible for fortunes to be accumulated through capital appreciation.

Perhaps I may be allowed to make just a few comments upon the Debate, and I think it would suit the right hon. Gentleman and other Members that I should do so now. The Debate on the Second Reading of the Finance Bill is always a very remarkable thing, because so many very varied topics are raised, but, so far as I have heard to-day, no reference whatever has been made to the fact that this is the legislative form of the Budget of the year and that it involves very large figures. I do not think anybody has mentioned the words "pounds, shillings and pence" except in very casual references, and a stranger coming into the House would certainly have had no idea that what we were asking the House to approve, by the Second Reading of this Bill, were, fundamentally, beyond the machinery and the Clauses, proposals for raising the sum of£2,361,000,000 this year by taxation. That figure may be compared, if you like, with the total tax revenue of the last pre-war Budget, which was the first Finance Bill which I had to defend from this box, of£916,000,000. Hon. Gentlemen can easily see that there is an enormous difference, which is some measure of the burden now imposed.

Now, the heavier the burden becomes the more careful one has to be that it does not pinch unduly anywhere. That was the burden of the speech of my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence), and it was for that reason, I imagine, that other speakers in this Debate unless, of course, they are reserving themselves for our subsequent Committee stage, did not touch upon the two startlingly large increases of this year's Budget, that is, the duties on beer and tobacco, both of which are estimated to bring in more than three times the a mount they did in 1938–9, just before the war. That is to be found in the general acceptance by everybody that the plan of my right hon. Friend is sound, that this year it was right to concentrate on getting such further revenue as can be squeezed out of various articles and commodities which are not in the necessity class. That is why there has been a great increase proposed in the Purchase Tax for luxuries, which I think even the hon. Member for Finsbury (Mr. Woods), though he dislikes the Purchase Tax as a whole, was forced in these circumstances to accept.

I must say that when he went on to say he would like to see an easing-up of direct taxation, at the same time as his known dislike of this form of indirect taxation, I was left to wonder where the Chancellor of the Exchequer was to get the money from. He did not carry his argument to its logical conclusion. In opening the Debate the right hon. Member for East Edinburgh said he would like to see whether something could be done in the places where the shoe pinched. He instanced two or three specific classes. He said, "What about elderly spinsters?"—though in the class which he was quoting he was not dealing with all elderly spinsters but with the case of an elderly spinster supporting a chronic invalid who might have been a friend of hers, and the spinster had to go out to work. The particular case he instanced seems to work out very hardly, for he gave her hours as from 7.30 a.m. one day until 1.30 a.m. the next.

I did not mean that she was actually working those hours. It was her working day, as she had to get her own housework done as well.

I thought that was what the right hon. Gentleman must have meant, because the hours he quoted would otherwise indicate that she was being employed contrary to the law. On the question of allowances of that kind, there are up to now only two kinds of allowance. Under the Income Tax Acts we are confined first of all to relatives of the taxpayer, relatives for whom the taxpayer has a legal or very direct moral responsibility, and no allowance is given in the case of the voluntary support of persons who are not in any way related to the taxpayer. There is the other class where there is a relief, again for relatives, by reason of old age or infirmity. It would be very difficult to go beyond the limits set, on the one hand, by the relationship to the taxpayer, and, on the other hand, by incapacity. These two groups of relief are easy to administer, but once you get outside that to the stage of saying that a friend who lives with somebody should be treated as a relation, you then get into the field of allowances for what you might call voluntary, charitable benevolence of the taxpayer. That is a very difficult field to embark upon, because you might then get the next development, that you do not actually live in the same house but that you have lived so long as intimate friends that you feel a sort of moral obligation though you are not in the same room, and so on and so forth. I quite understand the feelings which are aroused by these sad cases; but I think that an extension of assistance beyond the fields which can be classed either as legal relationship or infirmity would be very difficult to propose to the House.

The other case which my right hon. Friend asked us to look at was, as I understood, that of the old age pensioner—whether, I suppose, contributory or not—who, as a result of the war, was finding employment. It was suggested that it was hard that the old age pensioner going to work should find himself paying Income Tax on the same basis as other people. It is true that, as a result of the war, many kinds of pensioners, besides old age pensioners—using the term in the technical sense—have very willingly gone out to work, to help the war effort. The general Income Tax law is that Income Tax is chargeable upon total income from all sources. From that point of view, there seems to be no reason for exempting a pension if the pensioner has sufficient income to render him liable to Income Tax on his total income. Suppose that he has£1 a week pension and is earning£4 a week by what he is doing for the war, making a total of£5 a week: there seems to be no particular reason why he should not be liable to be taxed on that£5 a week, just like anybody else who has no pension and is earning a full£5 a week. It would be very difficult to distinguish a contributory old age pensioner from a Post Office pensioner, or from someone receiving superannuation from his firm or anywhere else. Hard though it may be in some cases, we have to keep to the principle that it is the whole income which is chargeable.

The right hon. Gentleman seemed to recognise that that was the difficulty. He said that, in the case of some old people, who may not live long enough to enjoy their post-war credits, something might be done so that they could anticipate their credit before the end of -the war. I find it hard to see how something which is a credit for the post-war period could be paid before the end of the war. It would be the same thing as reducing the impositions upon that section of the community during the war. It would knock the bottom out of the whole theory of the post-war credit, which was intended to create a nest-egg for use at the appropriate time after hostilities. We specifically made the post-war credit a possession which can be handed on, and, in the unfortunate event of a person dying before his post-war credit falls due, he could leave it in his will. We have also exempted it from any Death Duty imposition. Parliament has recognised that it is something that can be handed on. The right hon. Gentleman asked, What about the Tenth Schedule? My right hon. Friend did not expatiate on that, and when we come to the Committee stage we could talk more about it. I will merely say that the Schedule is intended to cut out a lot of dead wood from the procedure of both the Income Tax and the Land Tax assessments. There is not really any radical change involved, but a number of formalities have been agreed upon in these lengthy discussions, and they are entirely agreed by both sides.

If I may for sake of example show the sort of thing involved in this Schedule, church-door notices are to be abolished. There is no useful purpose in these at all. There is the abolition of the requirement that assessors and collectors have to make oath on certain matters. In future a certificate will be good enough for that. An assessor will have to transmit a certificate of assessment to the Commissioners instead of appearing in person. The facilities for transmitting are very different from what they were when this sort of arrangement was first brought in. Schedule D assessments are to be signed by one body of Commissioners only instead of by two. There will be one Commissioner's signature on the assessment; at present two must sign. These are difficulties which arise out of difficulties of travel and of getting a quorum and so forth during the war. I shall be prepared at the proper time to give a further explanation, if it is required, but this is the sort of thing with which the Schedule deals.

One or two speeches, which have not been made, were intended to refer to Clause 34 and other Clauses dealing with fraud. Perhaps it may help such hon. Members who wanted to raise the point if I answer what they did not ask. There was some anxiety with regard to the power in Clause 34 to call for books. Hon. Members of this House have always been very chary about giving' anybody that power. There is no intention whatsoever of using the power to call for books as a general practice. The Inland Revenue have no complaints at all about the way ordinary businesses keep in touch with them on the whole question of Income Tax. Anyhow, this power will not be delegated to inspectors but will be reserved to the Commissioners of Inland Revenue alone.

There is really no cause for any anxiety on the part of the honest taxpayer and he need not fear that as such he will be put to any unnecessary trouble. It is the dishonest man whom we seek, and I am sure that the House will be prepared to give the Commissioners the power to deal with him in view of what has emerged as a result of the recent decision under the criminal appeal. It is, perhaps, of interest in passing to point out as regards what is called the "legal avoidance" of tax, that a problem with which this House has had to deal year after year, has been that of clever people who have found loopholes to get out of their proper legal obligations. This is the first Finance Bill of the year—I except the No. 2 Bills, because they did not amend the law—since 1935 in which it has not been found necessary to propose any Clauses to deal specifically with that problem. Perhaps we may hope that we have blocked up all the loopholes, but, in case there are some ingenious minds working on the problem, it is just as well to remind them that the warnings given by my right hon. Friend and his predecessors still hold good and that, if people try and find loopholes, the Chancellor of the Exchequer considers himself free to take action retrospectively in those cases.

There were certain questions about the Excess Profits Tax which raised a number of difficult issues which have been with us for a very long time. I do not propose to make any comment upon them, because it is the Chancellor's experience that the period between the Second Reading of the Finance Bill and the Committee stage of the Bill is very prolific of suggestions on all kinds of topics, both from people outside and from hon. Members, and I think he would cer- tainly consider now, as in the past, anything which was put before him. Therefore, it would not be wise for me to make any comment now, except perhaps upon one point which was raised by the hon. Member for Northampton (Mr. Summers). It referred to the Regulations under last year's Act dealing with wasting assets. It has proved that those Regulations are very complicated and difficult to frame. They require a great many conferences and a great deal of consideration. I do not think the hon. Member was quite justified in saying that in any particular case relief will be small, because no one has yet had a case under the Regulations—they have not yet been made—and it is not known what the relief will be. I think, however, that the reliefs will probably turn out to be quite adequate for the purposes intended. I think it would be better if we waited to sec exactly how the regulations emerge from the drafting process.

The hon. Member for East Birkenhead (Mr. Graham White) said it was time some advice was given to the people of this country as to the things upon which they might legitimately spend their money. Well, I am not prepared to give any advice other than to say that in our view people should not spend their money unnecessarily at all. They should be spending money in order to keep themselves alive and warm, if they can succeed in doing that, and in wearing what old garments they have, with the new utility suits. If they have any superfluous cash after the exactions of the Inland Revenue, it should be put into one or other form of war savings. That is the only answer I can give by way of advice on how to spend money. On war savings I am not prepared to resume the battle with the hon. Member for East Middlesbrough (Mr. A. Edwards) beyond telling him that the B.B.C. announcements of the patriotic endeavours of children to save money give many people a glow of pride and satisfaction as showing that the principles of thrift are being inculcated. If he finds it a disgusting thing to listen to, he need not listen. No one need listen to the B.B.C. It always leaves me quite cold that that sort of comment should be made. Apparently the hon. Gentleman likes listening to it, in order to be able to say how disgusting it is. It is not really disgusting at all; it is a praiseworthy thing to do, and I should be sorry if it was thought that his view was prevalent.

Is it wise to tell these poor people that their efforts and sacrifices make a difference to the amount of munitions made for the war effort?

Every little helps. I think the hon. Member's enthusiasm against the campaign has gone a little far when he uses such words as "disgusting," "cruel fraud" and "deliberate cheating."

The only other comment which requires to be made is that certain speeches were made to-day with reference to the taxation of wage earners and the proposals which are in the Bill for seasonal workers. The hon. Member for Northampton is still not satisfied that we should carry on as we are doing. He says that he sees no need for existing allowances of Income Tax being carried down to lower incomes or that there should be three rates of Income Tax. The fact remains that as we are advised, the great mass of the wage-earners of the country wish to be taxed upon the same principle as anyone else. They have made that point on several occasions. They do not want a special wage tax for themselves. They would prefer, provided you can make such minor modifications to ease the burden as will be done in regard to seasonal work, that the Income Tax law should, in general, apply to them in the same way as it does to anyone else.

As regards what was said by the hon. Member for Edgbaston (Sir P. Bennett) following the discussions he has had with employers, workpeople and at joint conferences, his evidence is very much borne out by a great deal that we have received on that subject. It is true that when the system was first introduced there were certain difficulties. There were, as my right hon. Friend pointed out in his Budget Speech, unfortunate delays at the start, because of the very great magnitude of the problem, but these have been caught up, and, having been caught up, there is no reason why the general administrative flow of the various dates and processes for collecting this tax should not be quite easily taken in their- stride by those concerned in Inland Revenue and tax collecting. There was a certain amount of agitation at the time, but, on the other hand, I think that very few hon. Members in this House received any communication from their constituents on the subject. I should have thought I was a pretty good target for my constituents by virtue of the position I hold, but, in fact, I have not had a single letter on the subject. I may have been lucky, but, on the other hand, it may be a proof that my constituents have complete confidence in what I do. Be that as it may, the improvements which my right hon.' Friend announced will certainly go a long way towards removing some of those difficulties, as a study of the White Paper will show to those who have an open mind upon the subject. Criticism of the expedients which have been put forward, none of which have been able to hold water, has not been made from the point of view of downing any scheme, but from the point of view of the best way of dealing with this matter, and, until something which is better is put forward, I think that we shall have to carry on along these lines.

No doubt between now and the Committee stage we shall hear a great deal from hon. Members on some smaller points which we shall be able to discuss in detail when we come to the Clauses. At the moment I hope that the House will give us our Second Reading without a Division, showing once again that, heavy though the burdens are, we are determined to carry on with them—burdens which fall some upon the rich, and some upon the less rich sections of the community. The hon. Member for Queen's University (Professor Savory) made a point about the very wealthy sections of the community. The only comment I have to make upon that is this: It is rather remarkable that, in spite of the increased rate of tax, the combined estimated revenue from Death Duties and Surtax this year is£168,000,000, which one can compare with the last pre-war figure of£150,000,000. It shows there is not much resiliency in that field. But it is over a very much wider field that the burden has had to be distributed as the result of the war, and one can say with pride and confidence that the many millions of people who are now finding the burden of taxation very heavy have not complained.

I am not satisfied with the speech we have just heard on certain specific points. I will confine myself to three. They are all cases which concern my constituents, or certain categories of them. First of all, the Finance Bill and the Budget Resolutions have caused a situation among old age pensioners which will have to be met in some other way. It is unfair that the small comforts which they are able to have in their old age should be taxed at this rate and that nothing should be done to relieve them. I think certain Members have been right, and I support them in calling attention to this very serious additional burden.

The second point is one on which I have had some correspondence with the Chancellor of the Exchequer. Certain firms in my constituency and in other parts of the country have been in contact with me and others in regard to the effects of the Excess Profits Tax. The home-grown timber trade is very much concerned. Under the stress of war it has been exerting itself to the utmost, taking on big contracts for the carrying-out of Government orders. If things go on much longer in this way, the whole of the capital on which the trade depends for continuing business will be destroyed, and the trade has been very much concerned with trying to see whether something cannot be done to alleviate the position and to ask the Chancellor if he could see his way to put it into the same category as businesses with wasting assets. I think they undoubtedly have a case. But I am also inclined to take the view that this is a matter which concerns a great many other businesses. The planter of the trees, the woodland owner, the farmer who farms on a big scale and is paying Excess Profits Tax and wearing out his implements, and has not the capital with which to replace them, will be left in a difficult situation after the war. There are other businesses of various kinds, which I will not specify now, which are also concerned. On the other hand I support the Chancellor's view that Excess Profits Tax must be maintained. I think he is right to resist the efforts that have been made in various quarters to induce him to lower the tax and to allow indiscriminately a greater amount to go into the revenues of business.

I am certain that the moral effects of the Excess Profits Tax throughout the country are desirable. In the last war a large number of people made profits out of the war, and the effects were disastrous in the years that followed. I would go so far as to say that it had some connection with the extraordinary pacifist wave that swept over the country in the period between the two wars. The feeling was that profits were being made by people who stayed at home while those who went out to fight suffered in every way. It was right to meet that position by saying that in this war, even though injustices may be done, there should be no chance of war profits being made. I am certain that the effects were so bad after the last war that they created a desire to have nothing to do with war preparation, a desire which landed us in the position in which we have been in the last three or four years. At the same time, it is necessary to look at the postwar situation for many industries. The timber trade is only one of many. There is, as I say, the forest owner, the large farmer and the industries which are seeing their stock-in-trade and assets wasted as a result of their being unable to put back into their businesses money for legitimate wear and tear.

I am, therefore, encouraged by Clause 36 in the Finance Bill and by the speech of the Chancellor on the Budget Resolutions, which held out some hope that at the end of the war a proportion of the Excess Profits Tax will be available for re-equipping industry. It will be possible, one hopes, for the woodland owner to replant his trees and for the timber trade to tide over the difficult time when there will be little timber in the country, and to give help to other businesses, including agriculture, which will require the reinstatement of implements worn out during the war. One hopes that Clause 36 will show some light in the darkness for them. The wording is somewhat ambiguous, and I am not clear what are the conditions referred to. Are they conditions which Parliament will lay down, such as that this money may not be used for dividends or bonus shares? If so, that is laudable. But there may be firms which will not need it and firms which have not had any wear and tear of their machinery. There may be firms which have not suffered as a result of the war. My hon. Friend the Member for East Middlesbrough (Mr. A. Edwards) has given cases of those who, before the war, were selling goods to our enemies, whose pre-war standard is, therefore pretty high and who are not paying out anything. There may have to be some discrimination between firms, and I hope that on the Committee stage we shall be able to elicit more information on what the conditions are. I support, however, the 20 per cent. repayment after the war, for it will go a long way to meet the point which I have been making in regard to wear and tear and wasting assets. At the same time, I do not want to see the money going where it should not go.

With regard to workmen's Income Tax, I am not satisfied with the speeches that have been made from the Government Bench to the effect that it is impossible to change the system. I am impressed by the statement in the memorandum of the Inland Revenue Staff Federation that the present deferred system of tax is unsuited to the habit of life and psychology of the worker. That, I believe to be correct. Our Income Tax law has been made on the assumption that only well-to-do people will have to pay Income Tax. All of us with fluctuating incomes know that we have serious difficulties at times and have to go to our banks for accommodation when a bad year follows a good year. The same situation arises now that the Income Tax is spread so widely among all classes of the community. I have had cases in my own constituency of workers who earned fairly good wages during the summer last year but whose earnings during the winter were low who now have to pay out of those low earnings Income Tax assessed upon their earnings in the six months before, and I am afraid that the Chancellor's allowances in this Finance Bill are not adequate to meet that position.

I agree with those who take the view that now that Income Tax is so much more widely spread it is necessary to consider whether it is not possible to simplify the whole arrangement. I cannot see why there should not be a flat rate on all wages—at a low level, certainly—to be readjusted later with the various allowances which are granted. If that were done, I think it would alleviate a great deal of the unevenness, unevenness which it is no doubt impossible to avoid altogether. It does seem that the Treasury does not wish to get out of the tradition which grew up when Income Tax was paid only by those who were regarded as well-to-do. The Financial Secretary said rightly that there is not much resiliency now in this class of tax-payer. In fact, the Chancellor may look round upon the fiscal arena and, noting the bodies of the large taxpayers, say, "O mighty Cesar, dost, thou lie so low ". Now it is elsewhere that the reserves of taxation lie; they are partly with the working classes, and we are making things too difficult for them. They cannot go to the banks and get credit, and that is the difficulty. I do hope that the Chancellor, in spite of all the difficulties, will still see whether it is not possible to relieve the present situation by removing the friction which at' present exists.

I should like to make one comment before I come to the point which I really want to make, and to say that the Chancellor has introduced into this Bill what seems to me to be a most dangerous principle. The possibility of punishment is held over a citizen of this country for a great part of his lifetime, after the committal of an offence. That, I think, is deplorable. A man should not live in fear for the best part of his life. I do not believe that that is in accordance with the principles of law under which we in this country have lived for so long.

Many people have made a point of speaking about unemployment after the war. The hon. Member for East Birkenhead (Mr. Graham White) said that we must avoid making the financial position difficult after the war and that -unemployment must never occur again. I do not believe that there will be unemployment after the war, for the reason that we shall be a debtor nation. We have always been a creditor nation. We have always lived largely on the backs of other nations. Large quantities of food and other materials have come in here free, gratis and for nothing. We used to have foreign investments amounting to£4,000,000,000, but after the war we shall have none of these investments. Our people will have to work very hard indeed in order to get the necessary foodstuffs and raw materials. They will not be working for themselves, but for the foreigner. Unemployment will probably be a thing of the past with any care or foresight at all.

We have already borrowed over£5,000,000,000 during the war. We are trying to obtain£2,200,000,000 this year. It is not such a comparatively large amount. The national income has gone up considerably. There is a very large increase in the number of people who are in work, and wages have increased since the war by 20 per cent., while investments in building societies and insurance companies are largely closed down. The Chancellor of the Exchequer has not obtained so large a proportion of the real national income by borrowing, and he might well get more if he took the necessary steps. The borrowing by the Chancellor of the Exchequer, over which we are passing so lightly at the present time, is merely the postponement of taxation. It means that there will be a huge charge on the future production of the country. People will have to work in order to pay other people's interest. We skate over this question much too lightly. If we borrow£1,000,000,000, it means£30,000,000 a year in interest. In 25 years, one generation, the interval between the two wars, that interest would amount to£750,000,000. If we borrowed£10,000,000,000 it is obvious that we should have to pay£300,000,000 a year interest or£7,500,000,000 in the 25-year period. The newspapers say that that will be quite all right, because the Treasury will obtain half the money back in taxation, and that the Government actually will pay only 1½ per cent. or 1¼ per cent. in interest. But that is not going to be the level of future taxation; indeed, if it was, I fear that trade would be hindered altogether, and if 10s. in the£ is not going to be the future rate, then indeed the interest paid in future will be so colossal that we cannot ignore it now. We must bear this in mind.

In addition, this Finance Bill includes the burden of the last war, which is still upon us. The National Debt in 1919 was between£7,000,000,000 and£8,000,000,000. By the end of 1938 we had paid between£5,000,000,000 and£6,000,000,000 in interest, and yet the National Debt in 1938 was about£8,000,000,000. We had not repaid one penny of the capital sum. We have added to this the cost of this war, and it is quite likely that if we add the two wars together, the total amount of borrowing will amount to£20,000,000,000. That it will be more, I think, is very likely, because the Chancellor in his generosity is going to repay the taxpayers some of their money, which I have always thought is a great mistake, and either he or his successor will no doubt raise large loans for national reconstruction. At the end of this war, therefore, we shall have to pay the total interest of no less than£600,000,000 a year. This will have to be provided by the taxpayers of this country before they pay for an Army or a Navy, and before they indulge in any social services. Let us bear these things in mind.

The Chancellor has always said how necessary it is to have long-term loans. I am not sufficiently learned in these matters to know exactly why, but I do know that, examining the National Debt return up to the end of March, we find that during March, which I believe included the London Warships Week, Treasury deposit receipts had fallen off by£181,000,000. Only£85,000,000 fell due, so the banks had probably invested about£96,000,000 during that month on behalf of themselves or their customers. They did not wish to give that money to the Treasury at 1⅛th per cent., they preferred a long-term loan, to give them 2½ or 3 per cent. In passing, I would say that it is very curious that while the banks used to discount bills before September, 1939, at about 10s. or 12s. per cent., they laid down, when the war broke out, that they would not discount anything under£1 per cent., because they had to pay for A.R.P. and other things. When the First Lord of the Admiralty made his appeal in Trafalgar Square, from the£600 or£700 battleship erected for him, I hope he realised that he was adding not to the size of his fleet but was adding£1,000,000 a year extra interest on to the back of the country which hardly need be paid.

The Chancellor in this Budget is trying to control matters by rationing and price control. There is no doubt that one object in this is to make it impossible -for people to spend their money in other directions, so that they must lend it to the Government. That is the idea of the severe rationing and price control. But unless it is complete—which is unlikely—if there are loopholes in the scheme, the Government may well not get what they expect. If, however, they did succeed completely the amount of loans would be so colossal that the burden laid upon future generations will be simply unthinkable.

So I would come to my last point. So far we have endeavoured to finance this war by orthodox methods; the Chancellor has proceeded in an old-fashioned way. Undoubtedly a big burden has been laid upon us. We have been told today of no future scheme or plans. We have been told about the control which will be laid upon us after the war but about no scheme to cope with this great millstone which will hang around the neck of the people. I remember saying in my speech last year on the Third Reading of the Finance Bill that war finance and postwar finance were not even interlocked or intertwined but fused together, that you cannot tell where one begins and the other ends. The Treasury should be considering this now and should be giving the House some idea of what it has in mind. Some people say this problem could be solved by the nationalisation of the banks. I do not agree with them. I believe the joint stock banks fulfil a very useful function, and that they should be paid for what they do, as indeed should everyone, and, I believe that no one should get much in this world unless he is prepared to give service or accept responsibility. So I do not accept that method.

There are many theories put forward as to how this might be solved. No doubt Mr. Keynes who has had so much to do with the Budget proposal, will, as usutl, bring forward some scheme. Mr. Durbin has a scheme of progressive inflation as the war goes on. Major Douglas has a social credit scheme. I do not believe that any of these schemes are foolproof. There is another scheme frequently associated with the hon. Member for East Edinburgh (Mr. Pethick-Lawrence) to whose speeches we listen with such delight on this matter but who afterwards seems to end his dissertations with a smile of complacency as he mounts his lame and sorry nag the capital levy. I have heard monetary doctrines, the multiplicity of which I have marvelled at and the complexity of which I have never been able to unravel by the hon. Member for Clackmannan (Mr. Woodburn). I do not believe that any of these will solve the difficulties we shall have to face.

I would ask the Treasury however and I do not intend to commit myself about it, whether they would consider a statement which has been made in this House and which has been made by many eminent men like Abraham Lincoln, Mr. McKenna who was once Chancellor of the Exchequer, men like the President of the Reserve Bank of the United States of America, supported by Mr. Hawtrey of the Treasury, and by the Encyclopædia Britannica? I am not qualified to give judgment on this. I possess neither the ability nor knowledge to give judgment one way or the other but it does seem to impress the mind of these men that banks make and destroy money—the Financial Secretary has probably heard all this before—or as the Encyclopædia Britannica puts it, banks lend by creating credit and that they create the means of payment out of nothing. I think that the Treasury should consider and go into these matters.

I am not in a position to come to a conclusion myself—as I have said—I have not the ability or the knowledge. I am not a financial expert, I hope not a pundit and I trust in Providence, I shall not become a crank. So I would say this, in much more serious vein, that our young people are now perhaps to be called upon this year to make the supreme sacrifice. Let us see to it that they do not come back and find a great millstone hanging round their necks, because if they do, they will be disillusioned and will soon consider that, perhaps, their sacrifice has been in vain. So I will end by quoting the words of the Prime Minister of one of our greatest Dominions, a Dominion which stretches from ocean to ocean, which contains great mineral wealth, great agricultural capacity, a Dominion which, as we are sinking in population and will have to work hard to get our raw materials abroad because we are a debtor country, may be the one to carry the flag of British culture and British civilisation, that is, the Dominion of Canada. So let me give the words of Mr. Mackenzie King to his electors in 1935:—

The Chancellor of the Exchequer has been overwhelmed with congratulations, both on his Budget and on his speech to-day; but he would be the last to object to anyone passing on the congratulations to the people as a whole. The people have been marvellous. No matter from what point of view you approach the subject, the people of this country have been magnificent in their reception of the bombs of the enemy and of the taxes which are imposed upon them. One thing is pretty certain to come out of this war. The policy of saving has been inculcated into the youth of this country as never before. A very excellent thing that is; for our young people were growing up not understanding the meaning of saving. It is wonderful what the people are doing in their backyards and schools all over the country-My hon. Friend rather surprised me by saying that there would be no unemployment after the war. That has not been our experience in past wars. Hundreds of factories will be derelict after the war. Those factories at present are filled with employed workers. How those people are to be employed after the war, remains a mystery. No doubt, poverty will be alleviated, as it was after the last war; but the Savings Campaign, to my mind, will really be the thing which will help the people.

The point is, what are they going to sell? If they cannot make anything that is capable of being sold, there will be more and more unemployment. That was the difficulty after the last war, and so it will be after this war. Old age pensions have been referred to, but it is not in Order to deal with that subject. I would just say that if ever the Chancellor, or whoever succeeds him, brings up the question of old age pensions, the matter cannot stop there. There are so many other pensioners who require consideration. But we agree that old age pensioners should be very zealously considered. There have been, in this Debate and in the Budget Debate, humour and tragedy. One of the tragedies was brought out in the speech of an hon. Member, who referred to depreciation of finance in a certain individual concern as a result of their war effort. I am surprised that the question of the board of referees has never been mentioned on such a point. I understood last year that something special was going to operate in this war which did not operate in the last war. That was the board of referees by whom those who had a poor pre-war record could be considered and have their case adjusted. We were told that this particular concern had applied to the board of referees. We ought to have more information as to the utility of the board of referees. We were certainly led to believe that it would mitigate the position of those who had very small pre-war profits.

The subject of Excess Profits Tax is one upon which there is a great difference of opinion. I am still of the opinion that the Chancellor of the Exchequer would get as much money from the Excess Profits Tax at 80 per cent. as he has got out of 100 per cent. I know the story that is told, namely, that this 20 per cent. is being reserved for these concerns until after the war. That reservation does not help these people to replace, their machinery or to buy up-to-date machinery. If they could have that 20 per cent. as they go along, it would be most useful in their businesses.

I need not go through all the arguments that have been used time after time with regard to the Excess Profits Tax, but I was struck this morning to find that I had to pay an additional tax in this country and one that many people in this country have not to pay. People of my country have an extra tax to pay. It is a small thing. I went into a telegraph office this morning in order to send a telegram to my wife, and the operator behind the counter told me that I had to put my surname at the end of the text. I asked why, and I was told it was a new order. I told him that that would mean an additional cost to me. I inquired of Post Office officials here, and they showed me the order authorising this additional tax. It was received by them among other Post Office circulars. The Postmaster-General said that he had nothing to do with it. I wonder whether the Chancellor of the Exchequer had anything to do with getting an additional penny from me. The Postmaster-General said that he was only too pleased to have the extra additional tax, and I suppose that the Chancellor of the Exchequer will have his receipts from the Post Office increased. I asked the post people how it was that I was called upon to pay the extra penny, and they said that they had to make this charge upon foreigners. I am not a foreigner. The result of it is that we in Northern Ireland are treated differently from the rest of the people in the country. Somebody said, "Why could not I leave the word "love" out of the telegram?"

I am afraid the hon. and gallant Member' is getting beyond the scope of this Debate.

I am craving the indulgence of the House in talking like this, because nobody else rose. In any case I must say that I could not possibly have left the word "love" out of the telegram. However, I am glad to have the opportunity of ventilating this little grievance, and I hope the Chancellor will say who is responsible for this additional tax. If it is the Minister of Home Security, he ought to mind his own business. As regards the Bill, all I would add is that we in Northern Ireland are prepared to bear the brunt of whatever may come to us to assist in victory.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House, for the next Sitting Day.

Unemployment Insurance Acts

Resolved,

"That the draft of the Unemployment Insurance (Contributions) (Agriculture) Order, 1942, proposed to be made under the Unemployment Insurance Act, 1935, a copy of which was presented to this House on 26th March, be approved."—[ Mr. McCorquodale .]

The remaining Orders were read, and postponed .

It being after the hour appointed for the Adjournment of the House , Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order .