House of Commons
Tuesday, April 24, 1945
The House met at a Quarter past Two o'Clock
Prayers
[Mr. SPEAKER in the Chair ]
Private Business
Warrington Corporation Bill
As amended, considered; to be read the Third time.
London County Council (Money) Bill
Read a Second time, and committed.
Oral Answers to Questions
British Army
Requisitioned Property (Release)
asked the Secretary of State for War the number of houses requisitioned by his Ministry in Northern Ireland during the war; the number de-requisitioned up to the present; the number of requisitioned houses at present vacant; and when these houses will be handed back to their owners, in view of the shortage of houses in Northern Ireland.
asked the Secretary, of State for War for what purposes numbers of medium sized private dwelling-houses, in the neighbourhood of London and in country districts, are still requisitioned by the military, although long unoccupied and frequently without any caretaking arrangements.
asked the Secretary of State for War how many dwelling-houses, the property of the Liverpool Corporation, are at present requisitioned by his Department; and whether he will assist the Corporation by releasing all such premises for the purpose of alleviating the acute housing shortage in the city.
asked the Secretary of State for War how many buildings in the county borough of Eastbourne are requisitioned by his Department; how many of these are normally hotels, boarding-houses and private dwellings respectively; approximately how many rooms are involved in each category; and how many requisitioned rooms are at present not occupied by troops.
A good deal of empty accommodation is being reserved by the Army against the needs of the release period and for housing, temporarily, returned prisoners of war. Every effort is made to provide caretakers but owing to the shortage of man-power it is impossible to provide one for every house. As I have said on a number of occasions I am at present undertaking an exhaustive review of the requisitioned accommodation in the hands of the Army, and its holdings will be balanced against its needs now and in the future. Buildings which can be spared will then be released. I am circulating the particulars asked for about Northern Ireland, Liverpool and Eastbourne in the OFFICIAL REPORT.
Will the Minister consider the early de-requisitioning of church halls, in order that they may be prepared for religious and social work in the autumn? They have been greatly missed.
I think the first two categories in priority are small houses and schools and colleges. I think church halls come after those.
Is the Minister aware that it is not merely a question of one caretaker per house? There are many houses without caretakers, and considerable damage is being done which will require labour and expense to put right.
That may be so. As I say, we do our best to provide caretakers, but it is not possible to provide them in all cases.
Would it not be better, in the meantime, to allow someone to occupy the houses and take care of them?
I do not think so. The suggestion has a certain superficial plausibility, but I do not think it is really a valid point. If one de-requisitions houses, one can only do so once and for all, not for a short time.
In view of the large number of empty properties held by the War Department at Eastbourne, will the right hon. Gentleman carry out a weekly, or at least a monthly, survey to see what can be de-requisitioned?
I should have thought that the first requisite was an exhaustive survey of the whole field. Until that is done, the question of a weekly or monthly survey is quite irrelevant.
Is the right hon. Gentleman aware that the attitude of his Department in this matter is completely at variance with the circular letter previously issued on the subject by the Ministry of Health; and will he see that the particulars given in that letter are either contradicted or borne out?
The hon. and gallant Member had better bring to my attention the particular circular of the Ministry of Health to which he refers. In the meantime, I am prepared to admit nothing.
Will the right hon. Gentleman also have a survey made of the magnificent camps which have been absolutely unoccupied since D-Day? Could not he use those camps, instead of so many small houses?
If the hon. Member will give me indication of magnificent camps which have been unoccupied, I will certainly take them into consideration in the re-allocation of accommodation.
Could not my right hon. Friend give the local authorities some indication of how long these houses will be required? That would help them, to a considerable extent, to plan for the future.
What does my hon. Friend suppose are the purposes of the general review I am undertaking?
Will the right hon. Gentleman give special consideration to the de-requisitioning of dwelling houses in Northern Ireland, on account of the extreme shortage of housing accommodation there?
I have already said on more than one occasion that the first two priorities, in my view, in the consideration of the possibility of de-requisitioning, are small dwelling-houses and schools and colleges, so the answer to the hon. Member is, shortly, "Yes."
rose —
I think we had better get on. We have spent a long time on the problem.
Following are the particulars:
Northern Ireland: 251 houses are requisitioned. 63 of these are at present not occupied.
Liverpool: 391 houses are requisitioned.
Eastbourne: 543 buildings are requisitioned. 80 of these are normally hotels and boarding houses and 396 private dwellings. The approximate number of rooms involved in each category is 1,930 and 3,930 respectively of which about 285 and 520 respectively are not occupied at present.
asked the Secretary of State for War why it was necessary, in the sixth year of war, to requisition, without previous notice, a field in the centre of Market Harborough owned by the Market Harborough Town Estate, a charitable institution, which had been scheduled by them as an open space for the use of the townspeople; and to what use the field is to be put.
This land was requisitioned for use by a driver training battalion, and it was necessary that it should be close to the headquarters of the unit. The grazing tenant and the owners' secretary were approached before requisition, and neither raised any objection. Representatives of other Government Departments were advised, including the regional planning officer, but no objections were received. After requisition the owners raised objection and alternative sites suggested by them were inspected but they were not considered as suitable for the proposed use. Arrangements have been made for the preservation of the turf and top soil and for protection of the trees. The field will be released to its present owners as soon as it is no longer necessary for military purposes.
May I ask my right hon. Friend if he is aware that there is a field adjacent which would have been much more suitable for this institution, and, secondly, that the tenant who had the grazing of the field has only been informed to-day that the requisitioning took place, and that the trustees of this institution were not informed at all about it?
As regards the first part of the question I am unable to say. Naturally, I have not inspected the site myself, but I have been informed that the alternative sites suggested, which were only suggested after requisitioning had taken place, were not suitable. So far as the second part of the question is concerned, my information, again, is that the grazing tenant and the owners' secretary were approached before requisitioning, and neither raised any objection.
Owing to the unsatisfactory nature of the reply, I beg to give notice that I will raise this matter on the Motion for the Adjournment.
Building Operatives (Release)
2. To ask the Secretary of State for War if, as the shortage of building trade operatives will delay the production of houses, he will try to find out whether persons in the Forces prefer to have these operatives demobilised immediately European hostilities cease or adhere to the existing demobilisation scheme.
Mr. Bossom.
I understood that this Question had been withdrawn.
This Question and Question 23 are almost the same.
Perhaps the hon. Member will allow me to answer the Question in connection with Question 23.
Later —
asked the Secretary of State for War if he will cause an investigation to be made as to whether persons in the Forces would prefer to have the existing A and B schemes for demobilisation rigidly maintained or whether they would rather have building trade operatives released in greater numbers immediately European hostilities cease.
It would be impracticable to address such a question to each and every serving soldier and I do not think that it would be desirable to do so. It would be a bad thing at this stage to raise doubts in the minds of the Forces as to the Government's intentions in the matter of release.
Is not my right hon. Friend aware of the tremendous concern of all serving men to have a home, and will he inquire not of every serving man, but of representative groups, as I am sure he will be informed that they would much prefer to have houses than that they and their wives and children should have nowhere to go when they come out of the Service?
Of course, they would, but I am quite clear that the important thing in this release scheme is to continue the scheme in such a shape that the soldiers are satisfied that there is no possibility of a racket over it.
"Beetle" Device (Experiments)
asked the Secretary of State for War the date when a British "Beetle" was demonstrated before the Prime Minister, the General Staff and General Pope, and the date when the Germans first used a "Beetle"; is he satisfied with the action taken after the letter sent to the Prime Minister by the hon. Member for Stoke, dated 7th December, 1941; and what action was taken in response to the suggestion made later that the "Beetle" would make a good mine detector.
My hon. Friend is probably referring to the comprehensive demonstration which was given on 16th August, 1941. The answer to the second part of the Question is "Yes, Sir." Trials continued until September, 1942, but the device proved unsuitable either as a carrier of an explosive charge or as a mine detector. The Germans first used a similar device in 1944, and it proved to be a failure.
Cadet Force
asked the Secretary of State for War how many Regular officers and N.C.Os. are now doing duty with the Army Cadet Force; and what establishment has been authorised for the purpose.
Officers who are temporarily surplus to Army requirements are being used to help with the training of the Army Cadet Force, and permanent staff instructors at present retained with Home Guard units for clearing up purposes and other non-commissioned officers who may be temporarily surplus to Army requirements are being similarly used. Authority has been given for the employment of up to 86 officers and 616 noncommissioned officers, if available, but no precise establishment has been issued. No officer or man will be retained in the Army specifically for this purpose if he is entitled and willing to be released.
May I ask my right hon. Friend if he will give an assurance that the adding of regular officers to the Cadet Force will not cause removal of officers who have done yeoman work during the period of the war?
I am very sorry, but I did not quite understand the question. Perhaps my hon. and gallant Friend will put it down.
B.L.A. Leave (Extension Announcements)
asked the Secretary of State for War whether he is aware that many soldiers fail to hear announcements of extensions of B.L.A. leave; and whether he will cause greater publicity to be given to such announcements in the future.
These extensions are usually due to bad weather in the Channel. As soon as it becomes clear that sailings must be suspended an announcement is sent to the newspapers and to the B.B.C. Railway traffic officers at stations display the announcement and make every effort to advise the men. Soldiers are told of these arrangements in a pamphlet which is given to them when they go on leave. I will see if these arrangements can be improved but in the circumstances it is quite impossible to ensure that every man is advised in time.
While realising the difficulties, may I ask my right hon. Friend if he is aware that, in a recent case, B.L.A. leave men who had arrived in England heard an announcement by the B.B.C., the very day after their arrival, that their leave had been extended; that no further announcement was made whatsoever and that many of the men who had not heard that single announcement, on arrival at the station, were turned back and had to spend the night wandering around? Is he also aware that I am informed that this is not an unusual occurrence?
With regard to the first part of the supplementary question, I would be extremely glad to have specific and identifiable particulars of the incident. I would be very unwilling to believe that there was sufficient foundation for the second part of the supplementary question.
I will send my right hon. Friend particulars.
Hospital Cases (Notification to Relatives)
asked the Secretary of State for War what procedure is adopted in notifying next of kin when a soldier is admitted to an isolation hospital for illness or for observation; and if the nature of the illness or suspected illness is mentioned on the notification card.
When a soldier is admitted to any military or E.M.S. hospital a card is sent to his next-of-kin giving his address. In the case of wounds it gives particulars but not in the case of illness. If soldiers are sent to civil hospitals for infectious diseases the procedure which applies in the particular hospital is no doubt followed.
Would it not be possible to mention certain complaints, such as mumps and measles, so as to save the next-of-kin anxiety due to thinking that the illness is something worse?
I will consider that suggestion but I understand that the practice, at the present moment, is, in the case of notifiable diseases, to tell the local authority concerned.
Is the Minister aware that many mothers are badly upset by the kind of postcards which are sent? I met one who got a notice yesterday that her son was in hospital, and who was in a state of great anxiety until her husband had inquired into it.
If the hon. Member will reflect a little, I think he will see that this question is not as simple as it sounds. I gather that the previous practice was to give the particulars, but the new procedure is, on the whole, one which runs less risk of creating alarm and despondency than the old.
Leave (Journey from Scotland)
asked the Secretary of State for War whether he is aware that soldiers returning from leave in Scotland have to report to depots in Southern England at 9 p.m. and that this makes it necessary for them to leave home the night before they are due to report; and whether he will extend the time of return to 12 p.m., which would make it possible for them to do the journey the same day.
For some years officers and men travelling long distances have usually been allowed to return late on the day on which they have to be back but a specific instruction on the lines of my hon. Friend's suggestion has now been issued.
Haifa-Beirut-Tripoli Railway (Land Compensation)
asked the Secretary of State for War whether compensation has now been paid to the expropriated owners of the land on which the Haifa-Beirut-Tripoli railway was built in 1942.
I regret that it has not yet been possible to pay this compensation. The land was expropriated by a local French decree. A very large number of landowners are concerned, and the necessary legal machinery for settling compensation requires further local legislation.
Does not the Minister think it is very bad for British prestige that the Army should be in possession of land taken three years ago and not paid for yet?
My position, and the position of the military authorities, is that they are ready and anxious to pay, but the machinery for payment is not available, and it is machinery that cannot be improvised by the military authorities alone.
Wounded Soldiers' Relatives (Concession Fares)
asked the Secretary of State for War if he is aware that many relations visiting wounded soldiers are unaware of the reduction in train fares to which they are entitled; and what steps he is taking to make this concession better known.
The concession fares granted by the railway companies to certain relatives visiting soldiers in hospital have been available for nearly 5 years and should be well known. In this connection I would refer my hon. Friend to the reply I gave my hon. Friend the Member for Cheltenham (Mr. Lipson) on 29th March. I am considering whether any further steps are necessary to make the concession better known.
May I ask my right hon. Friend whether it is necessary to get some documents from the hospital, and whether it would be possible for near relatives to travel to the hospital and then get the documents?
That seems to me to be a different question. The Question originally asked related to publicity for an existing concession, and, as I understand it, what my hon. Friend proposes is to change conditions under which the concession is granted. I think he had better put that question down.
Does the concession also extend to relatives who want to visit returned prisoners of war in hospital or rehabilitation centres?
I cannot say off-hand and I shall be grateful if the hon. Member will put that question down.
Will my right hon. Friend consider granting free travel for relatives to visit wounded and sick?
I think that the position is that, in the case of soldiers who are dangerously ill, free travel is granted; this question deals only with cases of people who are really not dangerously ill.
Skilled Tradesmen (Transfer from R.A.F.)
asked the Secretary of State for War if he is aware that skilled tradesmen transferred to the Army from the R.A.F. are concerned at no longer being employed where their special trade skill can be used; and will he take steps to remedy this.
The Army's present need is mainly for reinforcements for the fighting arms and most of the men transferred from the R.A.F. are therefore not tradesmen. But any such men who are transferred may apply to register as potential tradesmen provided that there is a current demand for their trade in the Army.
Is it explained to these men at the time why they cannot be employed in their particular trades, and, if not, can it be arranged to do so?
I cannot answer that question without notice.
Infantry (Pay)
asked the Secretary of State for War whether, in view of the fact that the infantry is now acknowledged to require the most highly skilled men and is the most arduous and dangerous occupation in the Army, he will consider raising the pay of the infantry to the highest level in the Service.
I am fully aware of the considerations which my hon. and gallant Friend has in mind, and I can assure him that full weight will be given to them in any future revision of Army emoluments.
While thanking my right hon. Friend for his answer, may I ask if "future" means that he will give immediate consideration to the skill of the infantry and that the infantry will be paid the same rates as other branches of the Service who have not had such dangerous occupations?
I would be deceiving my hon. and gallant Friend if I led him to suppose for a moment that my answer was intended to apply to anything but the post-war structure of the Army.
Is it not high time that the skill and courage of the infantry were given some adequate recognition and cannot my right hon. Friend assure the House that immediate consideration will be given to this question?
I do not think, quite frankly, it is possible to revise the whole structure of the pay system of the Army at the present moment. A great many changes were introduced not long ago in the direction of giving due weight to service and to service in the Far East. I cannot at the moment say anything which would lead hon. Members to suppose that any further fundamental and material provision is contemplated during the continuance of the war.
Discharged Personnel (Pay and Allowances)
asked the Secretary of State for War whether he will consider the granting of 28 days' additional pay and allowances to all ranks discharged from the Army through wounds or sickness, who received only 28 days' pay and allowances, so that all discharged men shall be upon the same basis.
I would refer my hon. and gallant Friend to the reply I gave the hon. Member for Frome (Mrs. Tate) on 19th December last.
Could my right hon. Friend say to what capital sum such a payment would amount?
Certainly not without notice but I know that the best part of 100,000 people are involved.
Does not my right hon. Friend agree that the additional payment should be granted to dispose of the feeling of injustice which now exists in the minds of those who have been discharged through wounds and sickness?
The only way to meet the contention which my hon. and gallant Friend puts forward is either that no concession should be retrospective or that it all should be, and I think that neither of those propositions would command universal acceptance.
C.M.F. (Compassionate Leave)
29 and 30.
asked the Secretary of State for War (1) what is the policy of his Department in respect to the granting of compassionate leave to soldiers in C.M.F. in the case of the serious illness or death of a wife in England;
(2) why No. 14503479 Sapper G. Davies, C.M.F., was refused compassionate leave to come home and see his wife who died in July, 1944, after many months' serious illness following childbirth, when her life was known to be in danger throughout; if he is aware that Sapper Davies was admitted to hospital after his wife's death suffering from shock; and whether compassionate leave can now be granted so that Sapper Davies may see his child and settle his personal affairs.
In view of the length of the answer to these Questions, I will with permission circulate it in the OFFICIAL REPORT.
In view of the fact that speed is extremely important in the case of soldiers whose wives are dangerously ill, will the right hon. Gentleman make representations to see that when they are granted compassionate leave by commanding officers aircraft facilities are available to take them home?
Will the hon. Member be good enough to read the answer before he asks supplementary questions, because after doing so, he will see that there is no evidence of the application having been received in the War Office until the soldier's wife was dead?
Following is the answer:
There is no compassionate leave granted from the Central Mediterranean Force to this country, though, as I stated in reply to a number of hon. Members on 6th February Commanders-in-Chief may in certain cases take compassionate circumstances into account in making up the ordinary leave quota. Men may, however, be posted home on compassionate grounds. Such postings are a matter for the Commander-in-Chief concerned, and a statement of the general policy followed in this matter was circulated in the OFFICIAL REPORT in answer to several hon. Members on 7th November, 1944.
In the case of Sapper Davies, I am unable to discover any trace of application having been made for his return to this country before the death of his wife on 3rd July, 1944. As a result of a subsequent application, investigations were made which showed that his child was being well cared for by the soldier's parents. His mother receives guardian's allowance for the child. A full report on the case was made to the Commander-in-Chief to assist him in making his decision. He has not yet felt himself able to send Sapper Davies home. I have no information whether or not Sapper Davies was admitted to hospital suffering from shock after his wife's death. The circumstances would, however, be known to his commanding officer and would be taken into consideration when deciding whether Sapper Davies should be sent home.
Women Auxiliaries Abroad (Insurance)
asked the Secretary of State for War, in respect of which voluntary organisations sending women personnel abroad to service the Army, authorisation has been agreed for the premium to be accepted as a charge to His Majesty's Government in respect of individual insurance policies up to £500.
Public funds have accepted this charge directly or indirectly in the case of the Women's Voluntary Services, First Aid Nursing Yeomanry, Soldiers', Sailors' and Airmen's Families Association and Incorporated Soldiers', Sailors' and Airmen's Help Society.
Can my right hon. Friend say why, when I put that Question down in more general terms last week, he withheld that information?
After some experience of the hon. Lady, I would rather like to refresh my memory in the matter of withholding information. At the moment, I feel completely innocent about the matter.
Questions
Flooded Areas, Holland (Restoration)
asked the Secretary of State for War if arrangements have been made and approved for the provision of pumping and dredging machinery which will be required for the relief of flooded areas in Holland.
Yes, Sir. Considerable quantities of machinery are being provided for this purpose.
Have the Government considered the suggestion that an equal area in Germany should be allocated in respect of—
This Question deals with pumping machinery and not the allocation of territory.
German National (Internment)
asked the Secretary of State for War on whose authority Alfred Ignatz Maria Kraus, who came to this country from Paris in September 1944, was given permission to leave France; and whether he arrived in uniform and came by air.
So far as is known, this individual was not given permission to leave France; he arrived in British uniform which he was not entitled to wear, and came by sea. The officer responsible has been court-martialled.
May I ask the right hon. Gentleman if he can say whether this man brought various proposals with him, if he made certain contacts in this country and whether he is a member of the Reichstag?
That I cannot say. I think the Home Secretary or his representative will answer those questions. I am concerned only with the breach of military discipline by which he was brought here.
German Prisoners of War
Anti-Nazis
asked the Secretary of State for War whether he is aware that a Nazi court at prisoner of war camp No. 22 in this country recently sentenced a prisoner of war to death by hanging for anti-Nazi propaganda, for membership of the Free German movement and for leading a working party; that he narrowly escaped being hanged accordingly by S.S. men; whether he is aware that two other anti-Nazis in the camp were attacked and injured; whether any other such courts have been operating; and what steps he is taking to stamp out Nazi activities in prisoner of war camps and to protect anti-Nazis.
I assume the hon. and learned Member is referring to Camp 21 where one prisoner of war was murdered. At any rate I have no information as to any such incidents at Camp 22. I referred to the incidents at Camp 21 in the answer I gave a number of hon. Members on 20th February. The suspected culprits in this case are being interrogated and so far four have been charged with the crime and will be brought to trial. A prisoner of war who was a witness in the case narrowly escaped being murdered and other witnesses were attacked and injured. Camp 21 has since been carefully screened and all known anti-Nazis removed. Ardent Nazis are segregated from other prisoners as soon as they are discovered and nearly a third of the German prisoners in our hands in this country have so far been removed from the rest as ardent Nazis.
Will the right hon. Gentleman accept my assurance that I am asking a question about Camp 22, and not about Camp 21? Probably the best course will be for me to put down the Question again, and let him have, unofficially, certain particulars.
I would be grateful to the hon. and learned Member if he would let me have more particulars. So far as my information goes, I am unaware of any such incidents at Camp 22.
In view of the concern shown in these matters both in the House and in the Press, can the right hon. Gentleman inform us when he is likely to meet the deputation, which I understand he is prepared to meet?
My difficulty about that deputation is that the question of segregation is only one of the matters mentioned in my hon. Friend's request for a deputation, and the rest of the questions he raises concerns other Departments, with which I am in communication. With regard to segregation, I have been pressing on in the meantime very earnestly. As the hon. Member will see from the figures I have given, we have done a great deal towards it already.
Rations
asked the Secretary of State for War if he will issue a statement showing the scale of rations received by German prisoners captured by the British and American Armies, respectively, and comparing them with British civilian rations.
asked the Secretary of State for War if, at the conclusion of hostilities with Germany, German prisoners of war will be fed on the same scale of rations as British prisoners of war have been fed and the balance of the rations the Germans prisoners of war are now getting may be made available to the people of Europe whom the Germans have starved.
26 and 27.
asked the Secretary of State for War (1) if agreement between the United States and British authorities has been reached regarding the scale of rations issued to German prisoners of war so that a uniform scale of ration may be issued in place of the existing arrangement under which a German soldier taken by U.S. forces is given the U.S. ration, thus exceeding that provided for British troops; what is the approximate total number of German prisoners in the United Kingdom, and what is the depot ration demanded by the Geneva Convention, and how this compares with the U.S. ration and British civilian scale of food, respectively;
(2) whether, in view of the shortage of food supplies for the liberated populations on the Continent, immediate steps will be taken to reduce the scale of rations supplied to German prisoners of war to that which is considered adequate for British civilians and which approximates to the Army depot troops ration indicated in the Geneva Convention.
There are 196,000 German prisoners in this country, 27,000 of whom are in American hands. I am circulating in the OFFICIAL REPORT the daily quantities of food given to such prisoners in British hands in this country and on the Continent as well as the quantities of rationed items drawn by civilians here. No account is taken in the latter table of the foods which civilians buy on points, foods which are unrationed, or foods which are procurable in canteens and restaurants. I am not responsible for the arrangements made by the American Army but I am informed that the ration given to the German prisoners in American hands in this country and on the Continent is not dissimilar in total food value to the ration they receive if they are in British hands.
I should like to repeat that in this matter we are adhering to the Geneva Convention which lays down that the food ration of prisoners of war shall be equivalent in quantity and quality to that of the depot troops of the Detaining Power. This was not a treaty concluded by the British Government with the German Government, but is a multilateral International Convention accepted by a large number of Governments. Moreover, in considering suggestions to abandon the Geneva Convention in so far as it applies to German prisoners in our hands it is necessary to bear in mind that a large number of our prisoners are still in German hands. On the other hand I am clear that we must not do more than we need and I am examining the whole matter from this point of view.
Does the Geneva Convention hold only until a declaration has been made that the war in Europe is at an end?
I am not much of an international lawyer, but, speaking offhand, I think that prisoners of war retain their prisoner-of-war status until the conclusion of a peace treaty, and not only until the end of the war.
Has the right hon. Gentleman answered that part of one of the Questions which dealt with a common form of ration for German soldiers taken prisoner, which would be the same if they were taken by the British or by the American Forces?
I did not answer that specifically: I said that the two rations were not dissimilar in food value. I do not think it is worth while embarking on the extra refinement of having a precisely similar ration. As my hon. Friend knows, the supply systems and the administrative systems of the British and American Armies are absolutely different.
As the feeling about this matter has arisen largely because of the fear about what is happening to our prisoners in German hands, can the right hon. Gentleman give any assurance to the families of those prisoners that the Germans are observing the Convention to any large degree?
That is a very large question; it imports the capacity of the Germans to carry out any particular standard.
In view of the unsatisfactory condition disclosed, is it not possible to see if the Geneva Convention can be altered as soon as possible, in view of the gathering of the nations at San Francisco?
It will not have escaped my hon. Friend's attention that the Germans are not to be gathered at San Francisco.
Are the Japanese now abiding by the Convention? The right hon. Gentleman will remember that, although they signed it, they never ratified it in 1931.
I have made it clear on frequent occasions that whether the Japanese regarded themselves as bound by the Convention or not, they never made the slightest attempt to observe it.
Will the right hon. Gentleman take note of the strong feeling in various parts of this House that we should make ourselves as much like Germans as we possibly can?
When a Convention has been deliberately broken by one party, ought the other party to consider themselves bound by it?
— German Prisoners of War. British Civilian. In U.K. On the Continent. Working. Non-Working. Working. Non-Working. Daily. Daily. Daily. Daily. Daily. oz. oz. oz. oz. oz. Meat fresh or frozen (bone-in) … … 6 2 4/7 5 19/21 2 4/7 2d. worth Bacon … … … … … 1 2/7 4/7 4/7 4/7 4/7 Butter … … … … … — — — — 2/7 Margarine … … … … 1½ 6/7 6/7 6/7 4/7 Cooking fat … … … … — 2/7 2/7 2/7 2/7 Cheese … … … … … 6/7 2/7 2/7 2/7 2/7 Tea … … … … … — — 2/7 2/7 2/7 Sugar … … … … … 2 1 1/7 1 1/7 1 1/7 1 1/7 Jam … … … … … 1 4/7 4/7 4/7 4/7 Milk, fresh … … … … — — 5 (fl.) 5 (fl.) 7 1/7 (fl.) Milk, powder … … … … — — ¼ ¼ On points Milk, condensed … … … … 3 3 — — Herrings, tinned … … … … — — 4/7 4/7 Rice … … … … … 3/7 3/7 13/14 3/7 Dried Fruit … … … … 6/7 6/7 4/7 4/7 Dried peas, beans, lentils … … 6/7 4/7 1½ 1½ Split peas … … … … … 4/7 4/7 — — Bread … … … … … 12½ 13 20 18 Non-rationed Offal or Sausages … … … … 1 5/7 1 5/7 1 5/7 1 5/7 Vegetables, fresh … … … 5 5/7 5 5/7 8 8 Potatoes, fresh … … … … 14 20 10 10 Fruit, fresh … … … … — — 2 2 Oatmeal … … … … … 6/7 1 6/7 — — Macaroni … … … … … — — 3½ 3½ Flour … … … … … 2 2 2 2 Cake, slab … … … … 4/7 4/7 — — Coffee … … … … … 1½ 1½ — — Cash element … … … … 1¾d. 2d. — — —
British Prisoners of War, Germany
Information
asked the Secretary of State for War if he can give any information about prisoners of war confined in Stalag XXB, near Marienburg, and Oflag 79, near Brunswick.
asked the Secretary of State for War if he can give any information regarding camps XIA attached XVIIA and XVIIIA, both south of Vienna, working camps attached to XVIIIA and of Oflag VIIB at Eich-stadt, in Bavaria.
That is a very large, moral question, on which I would not like to enter here. But it is very doubtful whether this House would wish to imitate the Germans, or the Japanese for that matter, in the repudiation of international obligations.
Following are the quantities:
The two most important new items of information are those to which reference is made in this morning's newspapers, namely, the warnings issued by the Prime Minister, the President, and Marshal Stalin to Germans who ill-treat Allied prisoners of war and the agreement made through the Swiss with Germany that Allied prisoners close to the fronts should be left in situ to be recovered by the advancing armies provided that the Allies agree that they should not be returned to active service at the front. The number of British Commonwealth prisoners liberated by the Russians is 3,662, of whom 2,932 have sailed from Odessa. The number liberated in North-West Europe is about 30,000, of whom 23,000 have arrived in the United Kingdom. Of the 23,000, 6,400 are from the Dominions. The House will therefore see that the great bulk of our prisoners are still in Germany, most of them probably in Bavaria.
It is becoming increasingly difficult to get accurate and early information about individuals whether they have been released or are still in captivity. The tenuous signal system in forward areas is certain to be heavily strained with operational messages and the military authorities, in my view rightly, concentrate on sending back the recovered prisoners themselves rather than information about them. So far as those still in captivity are concerned we have to take into account the breakdown of communications and the constant movement of prisoners in unoccupied Germany. Moreover, we have recently captured the German Prisoners of War Information Bureau. I am afraid therefore that inquiries as to the whereabouts of individual prisoners of war cannot be fruitful at least for the time being. Such new information as I have about particular camps I am circulating in the OFFICIAL REPORT, but it is given subject to the reservations I have just mentioned.
Does that mean that in the part of the reply that is circulated reference will be made to Stalag XXB? Oflag 79 has since been overrun; and we know about that, as a result of Questions that have been put down.
There is a reference to Stalag XXB in the circulated part of my answer.
Is it not possible for the right hon. Gentleman to make periodical statements, say, twice a week, giving the names of camps which have been liberated? It would save a lot of trouble to Members, who are constantly receiving letters.
I have already undertaken on more than one occasion, to give to the House any significant new information which comes into my hands. It is important that I should make clear the conditions under which that information is given.
Cannot my right hon. Friend arrange for the B.B.C. to publish in the 9 o'clock news, or at some other suitable time, every day during these tense periods, some information on these prisoner-of-war camps, in order to bring comfort to the relatives?
I will certainly consider whether it is possible to give information which can bring comfort, but the trouble is that a good deal of the information does not bring comfort. Unfortunately the majority of our prisoners are still in German hands.
Following is the information:
Oflag VA was evacuted by train on 31st March, the destination is stated to be Oflag VIIB, Eichstaedt.
Stalag XIIF has been moved to Wehrkreis VII in Bavaria.
Stalag XVIIA was evacuated on 1st April, the destination is stated to be Braunau on the Austro-German frontier.
Oflag IVC has been overrun and the prisoners liberated, except for certain selected officers who had been transferred before the arrival of the Allied Forces.
Four hundred and eighty prisoners from Stalag XXB were recovered in Marienburg by the Red Army. The rest were removed westwards, but no news has been received of where they are now except in the case of a few who reached Stalag IIE in Schwerin.
Oflag 79 was reached by the Allied Forces on 12th April. Close on 2,000 officers and 400 other ranks, most of them from the British Commonwealth, were released.
No information has been received with regard to Stalag XIA since the International Red Cross reported on a visit to this camp by one of their delegates on 6th February, 1945. The report stated that the camp was somewhat overcrowded.
There is no recent information about Stalag XVIIIA nor the work detachments dependent on it. I have received no information about Stalag VIIB since the reply I gave to the hon. Members for Maldon (Mr. Driberg) and Twickenham (Mr. Keeling) on 10th April.
Repatriation (American Assistance)
asked the Prime Minister whether he will convey to, the American military authorities the gratitude of relatives in this country for the rapid way in which the American Army is repatriating by air British prisoners of war whom they have liberated during their advance and for the consideration and attention they have given them.
Yes, Sir. Our gratitude for all that has been done by our American Allies for our prisoners released from captivity is being conveyed to General Eisenhower.
Questions
Enemy Prisoners of War (Employment)
asked the Secretary of State for War how many prisoners of war are now employed in work in connection with housing; and what use it is proposed to make of the large number of prisoners recently captured.
Over 2,000 Italian prisoners are employed on work directly or indirectly connected with housing; 45,000 Germans are already employed, mainly on agricultural and forestry work and the employment of more is under consideration. As already announced my right hon. Friend the Minister of Works is looking into the possibility of using prisoners of war particularly in connection with site preparation and other civil engineering work. My hon. and gallant Friend will, however, appreciate that this entails considerable problems particularly in the matter of providing guards and accommodation.
Surely it is possible to employ a much larger number of these prisoners, instead of keeping them in camps, eating their heads off and doing nothing?
If it is possible to employ them, they will be employed. I would like to remind my hon. and gallant Friend that it was he who, on one and the same day, demanded extended use of prisoners and complained bitterly of the number of prisoners who escaped because of inadequate guard.
Is it not possible to give them adequate guards?
Scotland
Tummel-Garry Hydro-Electric Scheme
asked the Secretary of State for Scotland why, in the case of the Tummel-Garry Hydro-Electric Scheme, he failed to carry out the recommendation of the Amenity Committee in view of his assurance of 6th May, 1943, that he would give this committee the strongest possible support.
The Government pledge to give support to every reasonable recommendation of the Amenity Committee has not been departed from; but whether or not any or all of the objections of the Amenity Committee should be supported, and to what extent, must be decided after the report of the Tribunal appointed to inquire into the whole scheme has been received. My right hon. Friend has transmitted copies of the reports of the Amenity Committee and the Fisheries Committee to the Tribunal.
Does my right hon. Friend recollect that the Secretary of State promised that he would appoint the strongest possible amenity committee, and that every reasonable recommendation made by the committee would be strongly enforced and backed by the Scottish Office; and is he satisfied that he has got the strongest possible committee and will he see that their recommendations are strongly backed before the public inquiry which opens to-morrow?
Housing Sites (Roads)
asked the Secretary of State for Scotland to what extent the preparation of roads for housing sites in Scotland is being delayed, due to the shortage of labour.
My right hon. Friend is advised that contractors' demands for labour for site preparation are being met with little delay except in one or two areas. The difficulty in these areas arises, he understands, from lack of accommodation for directed workers, but the Department of Health for Scotland and the Ministry of Labour are doing everything they can to overcome these difficulties through their welfare officers and by securing the use of some accommodation in hostels occupied by other Ministries.
Can my right hon. Friend tell me whether Kirkcaldy is one of the areas?
Yes, Sir, Kirkcaldy happens to be one of the areas. Labour shortages were almost negligible there up to 15th March, when the outstanding demand had jumped from 15 in the previous week to 73, and at the moment there are 120 vacancies.
Coal Industry
Output (Statistics)
asked the Minister of Fuel and Power whether he will reconsider his decision not to publish the figures for the number of manshifts and tonnages lost by various causes; and for what reason he cannot have the figures revised to bring them into line with those of previous years instead of suspending publication altogether.
The decision to which my hon. Friend refers applies only to manshifts lost. Tonnages lost by various causes, and by districts, will be published in the usual way. Publication of the figures of manshifts lost has been suspended only until comparable series have been established.
On a point of Order, Mr. Speaker. May I draw your attention to the fact that if the hon. Member for Motherwell (Mr. McIntyre) had been here the House would not have got away with only one supplementary question on Scottish affairs?
The hon. Gentleman is in error in raising this as a point of Order.
asked the Minister of Fuel and Power whether he is aware that the output per manshift worked for the year 1938 is given in the Statistical Summary of the Mines Department for that year as 22.96 cwts., and in the Digest issued by his Ministry as 22.40 cwts.; and whether, as this makes it impossible to draw a comparison between the output per manshift worked in pre-war years with the corresponding figures issued since the formation of his Ministry, he will have them revised so as to restore the basis of comparison.
The reason for the difference between the two figures was set out in detail in the note appended to Table 5 of the digest published in July last. Returns for earlier years do not cover the whole industry and there is always the difficulty of excluding the shifts worked by men in coal mines who are engaged on minerals other than coal. In the table which has been prepared for the next issue of the Statistical Digest the figures for 1938 to 1942 have been recalculated on a different basis, i.e., from the statutory annual returns made by collieries with an allowance for manshifts not worked on coal.
Hostel, Rotherham
asked the Minister of Fuel and Power if he is now able to make a statement as to the further use of the hostel at Rotherham; and whether, in view of the shortage of housing in that area and the general overcrowding in the district and the failure of his Ministry to make use of the buildings, he will hand them over to the local authority.
After further consideration of all the circumstances, I have come to the conclusion that the Rotherham hostel will not now be required for the accommodation of miners. The disposal of the hostel is a matter for my right hon. Friend, the Minister of Works, who is, I understand, considering using it for the accommodation of Dutch refugee children.
Silicosis and Pneumoconiosis
asked the Minister of Fuel and Power if he has any statement to make concerning the progress of the efforts to combat the disease of pneumoconiosis among coalminers.
Following the report of the Advisory Committee on pneumoconiosis, I am pleased to be able to inform my hon. Friend that arrangements have been made between my Ministry and the Medical Research Council for further investigations into the cause, prevention and treatment of pneumoconiosis. The Council in conjunction with my Ministry have undertaken to establish and maintain a research centre in South Wales, and have appointed Dr. C. M. Fletcher to direct the work. He will take up his duties on the 1st June, 1945, and it is hoped to provide a small number of beds at a selected hospital. Additional physical and chemical investigations and reports will be made by H.M. Inspectors of Mines and other members of my staff. A joint committee of the Ministry and the Council has been appointed to assist in the development and co-ordination of the whole scheme of research.
asked the Minister of Fuel and Power what is the number of underground workers lost to the coal industry by reason of silicosis and pneumoconiosis from 1939 to date; and what is the number certified as disabled and as having died as a result of these diseases.
Figures are not available of the number of workers lost to the Industry by reason of silicosis and pneumoconiosis, but I am informed that the number of new cases of silicosis and pneumoconiosis certified by the Silicosis Medical Board for total disablement and suspension from the industry on account of these diseases, between 1st January, 1939, and 31st March, 1945, was 6,483, and that during that period 647 death certificates were also issued by the Board. These figures include a relatively small number of surface workers certified under the Coalmining Industry (Pneumoconiosis) Scheme, 1943.
Transport Workers' Wages
asked the Minister of Fuel and Power if he is aware that industrial discontent is being caused because coal merchants are contending that they are unable to meet increases of wages, which are paid to other road transport workers, through their margins being insufficient; and will he be prepared to meet representatives of the Transport and General Workers' Union on this question.
No evidence has been brought to my notice of industrial discontent among employees of coal merchants. Wage questions are, of course, a matter for negotiation between representatives of employers and employed in which it would not normally be proper for my Department to intervene.
If the Transport and General Workers' Union submits some evidence that there is discontent as a result of the smallness of this margin, would the right hon. and gallant Gentleman then consider meeting the representatives of that Union in order to avoid any trouble in the future?
If I may say so, surely the first step would be for the employees to approach the employers and it is after that that the employers approach me if the margin is too small.
Does the right hon. and gallant Gentleman know that during the war the gross margin of the distributors in the South Eastern Region increased only by 8 per cent., while the wages they have had to pay have increased by something like 40 per cent., and prices by something like 100 per cent.?
The hon. and gallant Gentleman is giving information, not asking a question.
Questions
Petrol Allowance
asked the Minister of Fuel and Power whether he is aware that men who lost a leg in the last war are being refused petrol to get to and from their work; and whether he will authorise an issue of petrol in such cases forthwith.
Where a person furnishes a medical certificate that he is suffering from a disability which makes it impossible to travel by public transport, a petrol allowance is granted for the journey from his home to his place of work.
Is my right hon. and gallant Friend aware that a man in this category furnished a medical certificate but was refused petrol, and as the number of one-legged ex-Servicemen with cars must be very small, could he do something to remove the feeling they have that their country has forgotten them when they see much younger men driving home from their work in cars?
I do not accept the last part of my hon. Friend's supplementary question. I have no knowledge at the moment that a medical certificate was forwarded to me but I will have the matter inquired into.
asked the Minister of Fuel and Power why the allocation of leave petrol by his Department is static and has no relation to the length of overseas service of the applicant.
The object of the Active Service Leave Allowance is to grant petrol to men on leave from overseas with the minimum of delay after their arrival and it has not been found practicable to provide a scale based on the length of service abroad.
But here is a master in the Merchant Navy who has had continuous service for over four and a half years. Why cannot he get a proper sliding scale for all that service abroad, and who decided that practice?
As far as the Services are concerned, my hon. Friend will appreciate that I am the agent for giving the petrol, and it has not been found practicable to have a sliding scale of that kind.
Oil Fuel
asked the Minister of Fuel and Power, in view of the shortage of coal, whether any provision is being made for the greater use of oil fuel before next winter.
The use of oil fuel to assist the coal position must depend on Service demands, and I am not at present able to say what measure of assistance it may be possible to provide in this way.
In view of the bleak prospects for coal in the coming winter, are any preparations being made, when the war in Europe terminates, to switch from coal to oil?
A great deal has been done during the present war to switch from oil to coal and back from coal to oil as the situation develops, and I can assure my hon. Friend that I have this very much in mind.
Proposed Power Station, Durham (Inquiry)
asked the Minister of Fuel and Power whether he is yet in a position to publish the decision arrived at as a result of the inquiry which was held in December last respecting the establishment of a power station at Kepier, near Durham.
The inquiry to which my hon. Friend refers was held jointly by the Ministry of Town and Country Planning and the Electricity Commissioners, and an announcement will be made shortly.
Trade and Commerce
Cotton Industry (Conditions)
asked the President of the Board of Trade to what extent the opportunities for improving the amenities and working conditions in the cotton industry have been used during the war.
Licences for equipment to improve the amenities and working conditions in the cotton industry have been granted to the maximum extent which war-time demands on labour, capacity and materials have permitted. During the ten months ended the 31st January last, 98 applications to acquire dust removal and air-conditioning plant were granted and only four refused; since then all applications have been granted.
Is it not a fact that all applications which have been granted have been used to full advantage, and in these circumstances can the right hon. Gentleman say in what way he considers his recent speech at Chesterfield, as reported in the Press, in which he made an attack on conditions in the clothing industry, can be said to be helpful in obtaining the necessary labour at the present time?
I said, what is quite true, that cotton operatives are reluctant to go back from munitions to cotton spinning.
Photographic Films
asked the President of the Board of Trade when photographic films of the types usually sold to the public will again be available.
Owing to the heavy demands by the Services, only small quantities of film can as yet be released for civilian use. But I have made special arrangements whereby members of the Forces and their families can be photographed.
Commercial Buildings (Rents)
asked the President of the Board of Trade what action he proposes to take to prevent an abnormal rise in rents for offices and workshops in the future, in view of the great shortage of these buildings due to enemy action and the cessation of building construction during the war period.
I would refer my hon. Friend to the reply given him by my right hon. and gallant Friend on 12th April, to which I have nothing to add.
Does that reply mean that it will be possible for landlords to raise the rents of offices and buildings to any level, without any restriction at all? In view of the great shortage of office accommodation now, and the still greater shortage that will come about at the end of hostilities, does not the right hon. Gentleman think such action would be very undesirable?
We have at the present time no powers to deal with these rents. Legislation would be required, and I doubt whether at this stage of the Session we could count upon the possibility of obtaining time for it.
Women's Shoes and Stockings
asked the President of the Board of Trade when it is proposed to increase the supply of shoes and stockings for women over the average or normal size.
I have asked manufacturers to arrange their production of the different sizes of shoes and stockings to meet their customers' requirements. Additional leather is being supplied to manufacturers of women's broad fitting low heeled shoes, and I have recently taken steps to increase the production of women's stockings in the larger sizes.
Is it not a fact that if the shops begin to supply the requirements of women customers it will certainly be the first time since the beginning of the war?
Is it not true that women do not wear low-heeled shoes any longer?
Working-class women do.
Could the Minister say what is the average size of a woman?
Aircraft Works, Lancashire (Use)
asked the President of the Board of Trade what steps he proposes to take to ensure the utilisation of factory space and continued employment of men and women in the Lancashire aircraft works, the name of which has been sent him.
This factory is now being used by the Ministry of Aircraft Production, who have not yet declared it surplus to war requirements. When it is so declared, I am confident that I shall have no difficulty in allocating it for civilian production.
Do I understand from that answer that the Minister has no plans whatever for utilising this factory, seeing that it is well known that aircraft production is to be seriously curtailed? Has the Minister any plans and, if so, will he tell me what they are?
As I have already informed the House, we have a long list of good industrial applicants for all these factories, and I am quite confident that from this list there will be no difficulty in finding a very good tenant for this factory as soon as my right hon. and learned Friend declares it to be surplus to war production.
Will there be any control of rent, as so many want these factories?
This matter has also been fully explained to the House. There is to be no competitive bidding for these factories. The initial rent of the factories will be fixed by the Inland Revenue on the basis of 1939 values, and will be subject to revision, up or down, after a few years.
Questions
Service Men Overseas (Proxy Votes)
asked the Prime Minister if his attention has been drawn to the fact that the amendment to the Franchise Act, 1945, whereby officers and men posted to Indian and other units are entitled to vote by proxy has become inoperative, as there has not been time to get the proxies registered in the existing registers; and whether he will take the necessary steps to safeguard the votes of these men serving in His Majesty's Forces.
The duty of His Majesty's Government is to do their utmost to secure the maximum voting facilities for the largest numbers of all classes and parties at the earliest moment. The difficulties which have been brought to light as regards the class mentioned and other classes are being urgently examined. I cannot promise that it will be found practicable to overcome all of them, but a further statement on the matter will be made as soon as possible.
Germany
Food Supplies
asked the Prime Minister whether, as many German districts are supplied with more food than the inhabitants need, he will ensure that any surplus is requisitioned to feed all liberated prisoners of war and slave labourers.
I have been asked to reply. I would refer my hon. Friend to the reply I gave my hon. and gallant Friend the Member for Ayr Burghs (Sir T. Moore) on 17th April.
How does my right hon. Friend justify the fact that our liberated friends are under worse conditions to-day as regards food than when they were under German tyranny?
I do not think that is in the least true, but in any case the Supreme Commander has complete discretion to allocate any surpluses he may find in Germany to any deficient area.
Is it not a very mischievous and dangerous statement to make that those who have been liberated are being more harshly treated by us than they were by the Nazis?
I think it is mischievous; I know it is inaccurate.
Guerilla Warfare
asked the Prime Minister if he will consider recommending to our Allies that all German commissioned officers and known Nazis of lower rank should be kept in internment so long as any guerilla warfare is carried on against Allied troops in Germany after we have declared that the war is ended.
I have not heard that the Allies have ever had any other intention.
Questions
Armed Forces (Austrian Nationals)
asked the Prime Minister whether he will now instruct the Service Departments to authorise the use of an Austrian flash to be worn by Austrian nationals serving with the British Forces, as has already been approved for the Danes and others.
I have been asked to reply. I would refer my hon. and gallant Friend to the answer I gave him on 17th October last.
Could my right hon. Friend refresh my memory? No doubt he has the answer before him.
I will send my hon. and gallant Friend a copy.
National Finance
Food Subsidies
asked the Chancellor of the Exchequer, in order that industry may have the opportunity of estimating its post-war labour costs of production, how long the Government intend to retain the subsidy on food.
I have nothing to add at this stage to what is said in paragraph 16 ( b ) of the White Paper on Employment Policy (Cmd. 6527).
War Damage Repairs (Advance Payments)
asked the Chancellor of the Exchequer if he is aware that, owing to the persistent refusal of the Treasury to designate a Government Department to deal with applications for advance payments under Sub-section 3 ( b ) of Section 70 of the War Damage Act, 1943, in the case of brick works, the owners of such works who have suffered war damage have been obliged to defray the cost of the repairs themselves and after 12 months are unable to obtain any payment on account from the War Damage Commission; and how much longer he requires to come to a decision as to which Government Department should deal with such cases.
Pending further legislation, certain classes of undertaking, including brickworks, have neither a liability to pay war damage contributions nor a right to receive war damage payments under the general provisions of the War Damage Act, 1943. That Act confers a power to make payments towards the cost of works certified by the appropriate Department to be urgently required for meeting circumstances created by war damage to properties of such undertakings. Payments, however, are not made under this power as a matter of course, but only where the undertaking is in need of funds to meet the cost of the necessary works, so that essential services can be maintained until claims for the cost of making good the war damage can be made. To appoint an appropriate Department to give for brickworks the certificate required by the Act would serve no useful purpose unless there were brickworks which would qualify for a payment under the rules to which I have referred, and I have not hitherto been satisfied that this is the case. I am, however, having the position re-examined.
As my right hon. Friend has had this under review for two years, how much longer will it be before these people are able to recover the money to which the War Damage Commission say they are entitled?
It is not a question of their being entitled; the matter is discretionary, and I must wait until I am satisfied that a case has been made out.
Questions
Hansard, House of Commons (Sales)
asked the Financial Secretary to the Treasury what were the average daily sales of HANSARD, House of Commons edition, for February and March, 1945.
The average sale was 5,869 copies for February, and 6,683 copies for March.
Can my right hon. Friend give me an assurance that he is taking steps to keep abreast of this ever-increasing demand for HANSARD?
All demands have so far been satisfactorily met, and I hope that that happy state of affairs will continue.
Can the right hon. Gentleman tell me exactly the date to which this concession goes back?
This is not a concession; we are not talking about a concession.
Civil Service (Married Woman's Retention)
asked the Chancellor of the Exchequer whether he has yet reached a decision regarding the retention in a permanent capacity in the Civil Service of a married woman, whose name has been supplied to him, and whose husband, as a result of war service, has contracted tuberculosis of the spine.
The employing Department is in communication with the civil servant concerned. When a decision has been reached, I will inform my hon. Friend.
Business of the House
Proceedings of the Committee of Ways and Means exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House).—[ The Prime Minister. ]
Orders of the Day
Ways and Means
Considered in Committee.
[Major MILNER in the Chair]
Financial Statement
3.18 p.m.
Circumstances compel me to open my Budget at a moment when tremendous events are happening and impending all over the world. As a consequence, I have no firm basis for many of the calculations I have to make. No-one can tell me exactly when the fighting in Europe will end, and I do not know what the course of the Japanese war will be. I have no means of estimating precisely the rate at which our fighting men will return, or the speed at which our industries can be brought back to a peace footing. Therefore while I shall do my best to present a realistic picture, I must ask the Committee to recognise the peculiar difficulties of my task on this occasion, and to regard this Budget as one which may possibly have to be superseded before the year is out.
Expenditure in 1944–45
In the year that has just closed our total expenditure exceeded for the first time £6,000,000,000. The precise total was £6,063,000,000, or £126,000,000 more than my Budget estimate of a year ago. That excess is entirely attributable to the Vote of Credit for which, as the Committee may remember, I took the very round sum of £5,000,000,000 and which, in the event, required £5,125,000,000. A large proportion of the excess in fact arises from the year's expenditure on war damage which, as I explained at the time, was excluded from my Budget estimate. My Budget figure has thus been substantially justified. On items other than the Vote of Credit, the amount required for Debt interest proved to be £5,000,000 less than the Debt charge provided and left that amount towards the Contractual Sinking Funds. Expenditure out of the Civil Supply Votes was almost exactly the same as the Budget estimate, although that was the result of compensating Supplementaries and savings. Of the Supplementaries of some £12,000,000, the most notable items were security expenditure in Palestine, Supplementary Pensions, Colonial development and welfare, and the extra Votes in all were exactly balanced by savings on a number of different services and by an increase in Post Office revenue which reduced the excess of Post Office expenditure over the self-balancing revenue.
Revenue in 1944–45
On the revenue side also my expectations were exceeded. For Inland Revenue the estimate was put at the record total of £2,000,000,000, and this has been passed by a margin of £29,000,000. The main items of increase were Income Tax, which at £1,317,000,000 showed an excess of £17,000,000; Excess Profits Tax and National Defence Contribution, which realised £510,000,000—£10,000,000 above the estimate; and Estate Duties which at £111,000,000 showed a surplus of £11,000,000. The increased yield of Estate Duty was mainly in the lower ranges of estates, and is a reflection of the more equal distribution of wealth. On other Inland Revenue items there were deficiencies amounting in all to £9,000,000.
The Customs and Excise Duties yielded £1,076,000,000, compared with the Budget estimate of £1,038,000,000, that is to say, a surplus of £38,000,000. There were two main reasons for this surplus. First, in spite of the departure during the year of many consumers on military service abroad, there has again been a substantial rise in the home consumption of beer. The Beer Duty receipts have in consequence exceeded Budget expectations by nearly £20,000,000. In the second place, there has been a large increase in the turnover of aviation spirit. This is, however, on Government account and the consequent yield of the duties on imported oil means a transfer from one pocket to another. This accounts for a surplus over the estimate of a further £20,000,000. There were smaller differences above or below the estimates under other Customs and Excise headings, but these almost cancel out.
Miscellaneous Revenue was £66,000,000 higher than the estimate, the excess arising in part because receipts from war damage contributions and premiums, were as usual excluded from the estimate.
Revenue and expenditure thus exceeded the estimates by £136,000,000 and £125,000,000 respectively. As a result the amount by which expenditure over the year exceeded revenue was £2,825,000,000, or £11,000,000 less than the Budget estimate. But the really significant feature of 1944–45 is that the proportion of our total expenditure met out of revenue was 53 per cent., a higher proportion than in any previous war year. Such a result, in the sixth year of war, is a striking manifestation of the steadfastness and resolution which have helped to bring this country to the eve of victory.
Borrowing in 1944–45
During the past year we exercised the option to repay, on 1st May, the 5 per cent. Conversion Loan, 1944–64, amounting to £317,000,000. Including provision for that transaction and for various other items, the cash borrowed during the year was £2,931,000,000, or £181,000,000 more than in the previous year. The amounts and proportions which we raised by small savings and by the sales of the various issues of Bonds to the public were slightly less than in the previous year, but that is largely to be attributed to the fact that in the closing weeks of the past year we did not have the assistance of any special drive in the Savings Campaign.
Hear, hear. It is all humbug.
On the other hand, we borrowed more from extra-Budgetary funds than during the previous year and in the result the proportion of our total borrowings which took the form of floating debt in the hands of the market was rather less than in 1943–44. It was, in fact, 37 per cent. as against 39 per cent.
Totals of War Finance
The Committee may at this point like to have a few details of our total expenditure on all services, war and civil, during the five and a half years of war up to 31st March of this year. Total expenditure was £27,400,000,000. Of this £13,300,000,000, or no less than 49 per cent., was met out of current revenue. To provide for the balance, for debt repayments during the period and for other capital purposes, we borrowed in all £14,300,000,000, and that total was raised in this way: through small savings, 22 per cent.; by the sale of other war loans to the public, 33 per cent.; by floating debt in the hands of the market, 31 per cent.; from various extra-Budgetary funds, 6 per cent.; and from various other sources, 8 per cent. I think that as part of an up-to-date record of our financial effort during the last five and a half years these figures speak for themselves. I would add only this comment. It is estimated that during the war period the amount provided by way of taxation and saving towards financing the Government's expenditure and thus no longer available for expenditure on personal consumption has been no less than 42 per cent. of the whole of the personal income of the community during the period. Behind that simple percentage lies a striking record of individual sacrifice and effort. Moreover, if we look behind the financial record at its economic counterpart, it serves to remind us that we shall always have to make a deliberate choice as to how our available national resources shall be used. In so far as it is deemed necessary or desirable to devote those resources to services of a national character, whether it be defence, or houses, or schools or anything else, or to the provision of capital equipment for industry, it cannot also be available to satisfy personal demands for consumable goods or services.
Sources of Finance in 1944
But to return to the figures for 1944, the Committee may remember that in my last Budget speech I made certain estimates of the kind that have become customary during the war as to the funds available to cover our expenditure during 1944–45. The outcome for the calendar year 1944 will be found in Tables 17 and 19 of the White Paper on National Income and Expenditure. The amount of overseas disinvestment appears to have been very close to the estimate. The only other item on which I need comment is the figure for private saving. In spite of some further increase of private income after payment of taxation, private saving in all its forms was a little less than in the previous year. This is because there was some increase in expenditure on personal consumption. If reference be made to Tables 21 and 22 of the White Paper, it will be seen that this increase is mainly accounted for by expenditure on food and clothing. In the case of food both the actual expenditure and the quantity consumed, after falling in 1943, have risen slightly and returned to about the 1942 level. In the case of clothing, the increased expenditure in 1944 appears to have been largely due to the incidence in the calendar of the opening of new coupon periods. In the case both of food and of clothing the increase in expenditure was the direct consequence of the rationing arrangements made by the Government Departments concerned and was not due to any inflationary factors. In less essential directions, such as drink, tobacco and entertainments, the increases in expenditure which have occurred are appreciably smaller.
Various Taxation Questions
What I have said so far relates to the year just completed. Before I review our general position and as I look ahead into the future and before I attempt to fit the Budgetary prospects for the coming year into that picture, there are a few special matters relating to taxation which I must mention. Many of these will require provisions in the forthcoming Finance Bill. The first—which will not, as it happens, require either a resolution or legislation—concerns the duties under the Safeguarding of Industries Act and the Import Duties Act. During the war, as a matter of convenience, an extensive range of goods predominantly imported for Government purposes has been exempted from duty. This special arrangement will, of course, have to be terminated before private importations are resumed on any considerable scale. Although large Government importations will no doubt continue to be necessary in connection with the war with Japan, the general position will be substantially changed when victory over Germany has been achieved, and it is consequently proposed to restore these duties to their former level by Treasury Order about that date. Exemption from duty will be continued, however, for a further period in respect of a limited range of finished military supplies.
Hydro-Carbon Oils
In my Budget speech last year I referred to the intention of my right hon. Friend the Minister of Fuel and Power and myself to appoint a Committee to study certain questions of great industrial significance in connection with the duties on hydro-carbon oils. The Committee which we set up was presided over by Sir Amos Ayre, and hon. Members will find a full disquisition upon this important and intricate subject in the Committee's most able and useful Report which was published as a White Paper on 11th April. I propose to accept the recommendations of the Committee. The Finance Bill will include a provision freeing from Customs duty imported hydro-carbon oils used as raw materials for chemical synthesis. Provision will also be made for an allowance of an equal amount to the Customs duty in respect of indigenous oils used in these processes, in order that the competitive position in respect of home-produced materials shall not be worsened by this change.
There are many who believe, notably in the United States, that synthetic chemical processes based on the use of hydrocarbon oil are going to be of rapidly growing industrial importance, and will affect the traditional manufacturing methods of many industries which lie outside the field of synthetic chemistry. Research on these problems has been active in several countries during the last five years. I hope, therefore, that the double gift I have found myself able to make, towards the cost of research in my last Budget and now in respect of the raw materials of this important new industry, will lead to an intensive and co-operative effort, so that we can quickly establish ourselves in a worthy position in relation to these new developments.
Further Customs and Excise Matters
Still in the field of Customs and Excise duties there are one or two other matters on which I will touch very briefly. I have to propose a Resolution covering the repeal of certain allowances which have been payable for many years to users and exporters of spirits arising from the fact that the Excise law imposes certain restrictions on the distillers' operations. The repeal of the allowances is a corollary to another proposal which I shall introduce in the Finance Bill to modernise the Excise law and to remove restrictions which I am advised are no longer necessary in the interests of the Revenue. The interrelation of these two proposals is complex, and an explanatory White Paper on the subject is being issued today.
The duty of £4 per cwt. on hops, which has been in existence since the control introduced during the last war ended in 1925, expires in August next. Those concerned are in agreement that it should be renewed, and after consultation with my right hon. Friend the Minister of Agriculture I propose to renew it for a further four years, subject in all respects to the same conditions as before.
I have also to propose a small modification of the law relating to the exemption of partly educational entertainments from Entertainment Duty. As the law stands, it requires the Commissioners of Customs and Excise to be satisfied not only as to the character of the society providing the entertainment, but also as to the cultural quality of each individual entertainment. This latter requirement, as the Committee will readily understand, has involved invidious distinctions between different works, and the difficulties have not been entirely overcome even with the assistance of the Committee which, as I announced in the House on 19th October, 1943, I appointed to advise the Commissioners. I therefore propose to make the exemption depend on the character and activities of the society, without the necessity for classifying any particular works as cultural or non-cultural. I do not regard this as necessarily a final solution of a somewhat difficult question, but I hope it will improve the existing position.
Finally, there will be a short Resolution dealing with procedure in connection with Purchase Tax and utility goods.
Motor Taxation
I now turn to the duties on motor vehicles. In a statement in the House on 19th December last I announced that I had been in consultation with the motor industry, in fulfilment of the promise which I made in my Budget speech last year that I would be ready to listen sympathetically to representations if it was thought that a change from the present horse-power tax to some other basis of taxation on the vehicle, yielding about the same amount of revenue, was desirable. In that statement I said that I had concluded that there would be appreciable advantage in altering the basis of calculation from the cross-section of the cylinders, as now, to their cubic capacity, and that the rate to secure about the same amount of revenue as is produced by 25s. per horse-power would be £1 per 100 cubic centimetres.
There have now been further consultations with the industry on the details of this proposal, particularly as regards the steps by which the new duty is to be graduated. This is a matter on which there is substantial difference of opinion and I have found real difficulty in deciding what is the right course. After considering the various views expressed, my Noble Friend the Minister of War Transport and I have come to the conclusion that it would be best to make as little change as possible in the scheme of graduation, and we propose therefore that the duty shall proceed, subject to a minimum as at present, by steps of 100 cubic centimetres.
This new scheme of duties will apply only to vehicles first registered after the date of its introduction. As there is necessarily uncertainty as to when cars will be coming forward from production which have been manufactured with knowledge of the new basis of taxation, the date of introduction will have to be fixed later. It certainly cannot be as early as 1st January next, which I mentioned last year in my Budget speech. I should naturally propose to consult the interests affected before the date is fixed. What the rate of duty will be at that time I cannot now prejudge.
In the case of omnibuses and coaches and goods vehicles I propose to introduce scales which progress by one seat and one quarter ton steps respectively. Details will be found in the White Paper. This change will apply to all such vehicles after 1st January next.
I hope these changes will be of some assistance to the motor industry in preparing for post-war production. I know, of course, that what this industry would really like is a reduction of taxation, but that I am not at this moment in a position to concede. The new proposals, however, do not in any way determine the future rate of taxation. That must clearly be a matter for consideration from time to time in the light of circumstances.
Pay-As-You-Earn in Practice
The new system of deducting tax from salaries and wages known as Pay-as-you-earn has now been in operation for a full year. In my Budget Statement last year I indicated that the scheme had been successfully launched, and I am now glad to be able to inform the Committee, at the end of the first year of working, that it has operated in this first year with remarkable success. When the scheme was first presented to Parliament some doubts were expressed whether it was not too complicated. But events have shown that the late Sir Kingsley Wood was amply justified in taking the bold course and deciding on a scheme which not only relates the tax deductions to the weekly pay-packet but ensures within narrow limits that the correct amount of tax is paid at every point of time over the course of the year, despite fluctuations in pay. At all events there can be no doubt that Pay-as-you-earn is a boon to the employee who has to live on a weekly or monthly budget and I believe it has been generally welcomed by him as such. He is up to date with his tax payments and no longer has an arrear of tax hanging over his head if his wages fall or cease. On the contrary not only does the tax deduction fall or cease in sympathy, but the cumulative principle, as it has come to be called, on which the system is based has the effect of giving back to him if this happens some or all of the tax deducted in the earlier part of the year.
Here are some figures which illustrate the magnitude of the task involved in the introduction of Pay-as-you-earn. About 16,000,000 persons come within the scope of the scheme, of whom the number liable to tax is about 12,000,000, consisting of 7,500,000 weekly wage-earners and 4,500,000 other employees or office holders. About 1,000,000 employers are concerned in operating the scheme. In the year just concluded the total amount collected under the scheme was about £540,000,000, an increase of about £100,000,000 over the corresponding yield for the previous year. Of this yield £250,000,000 was paid by manual wage-earners, compared with a yield of £200,000,000 in the previous year.
Are any women included?
All employed women are included. The increase of £100,000,000 in the yield over the whole field is mainly due to the fact that where earnings are increasing the Exchequer gets the increase on them immediately instead of levying the tax on the lower earnings of some past period; but some part of the £100,000,000, perhaps a quarter, is due to the efficiency of Pay-as-you-earn as a means of collection, which has succeeded in bringing into the net large numbers of individuals whom the old arrangements were not sufficiently swift and flexible to catch.
These figures illustrate the importance of the Income Tax reform reflected by Pay-as-you-earn, and I think a tribute is due to all those concerned in working the system for the success achieved. I should like first of all to thank employers and employees for their co-operation. The working of the system has meant a considerable burden of work for employers, work of a new kind which has been cheerfully borne despite war conditions, but the worker, too, has played his part. The success of our Income Tax system has always depended upon the willingness of the taxpayer to pay.
This spirit has been evident in the ranks of the workers in the operation of the new system. The administration of Pay-as-you-earn has placed an enormous burden on the Inland Revenue Department, which had to face not only the taxation of largely increased numbers but the application of an entirely new system of taxation involving, by its very nature, new complications and new methods. The Department has had to face the task under war conditions, with an acute shortage of the trained staff necessary for such an important reform, and the success that has been achieved has meant very heavy pressure of work and a great strain on a staff already fully employed in the war effort. I am sure the Committee will agree that a special tribute is due to the Inland Revenue staffs.
Excess Profits Tax and Small Businesses
In reviewing the incidence and effects of war-time taxation I have again received many representations regarding the incidence of the 100 per cent. Excess Profits Tax on new and expanding businesses which may enjoy only a low prewar standard. I explained last year the reasons why, so long as the war in Europe continues, there can be no question of reducing the rate of Excess Profits Tax or of making any general alteration in its basis of charge. I am sorry to say that those reasons still hold. It is, no doubt, true that the 100 per cent. rate weighs heavily on concerns which have had a big expansion in turnover for, subject to the provision that an allowance is made in respect of additional capital employed in the business, the 100 per cent. takes away the whole of the additional profit arising from the expanded turnover, including any increase due merely to a change in the standards of values. But it must not be forgotten that the law provides for a post-war credit which will in effect reduce the 100 per cent. rate retrospectively to 80 per cent. and that this credit, less the Income Tax attributable thereto, is accumulating and will be available as a fund to enable industry to face the task of transferring from war production to peace production.
In the case of small businesses, however, there is a special case for consideration; a case which, I think, is recognised on all sides. As the Excess Profits Tax continues from year to year, it cannot but have a cramping effect on the growth of small and young enterprises, an effect quite disproportionate to the Revenue involved. In my Budget of last year I provided, for that reason, a special relief for small businesses. It took the form of increasing practically all types of standard for small businesses by the sum of £1,000. The exception to this relief was the profits standard, and the result has been that small businesses which had only a low profit standard, but may now, as part of the war effort, be producing on a much larger scale, obtained no immediate relief.
I think, on further consideration of the matter, that I should now widen somewhat the scope of what I did last year. I propose to give a further relief to small businesses, which will be in such a form as to extend to profits standard cases as well as to other cases. The relief that I propose is based on a principle already applicable to small businesses in connection with the National Defence Contribution. That Contribution, as the Committee may remember, which represents an alternative charge to the Excess Profits Tax if it is greater in amount than that tax, is a tax of 1s. in the £ on the total profit. But where the total profit is less than £12,000 an allowance of one-fifth of the amount by which the profit falls short of £12,000 is deducted from that profit before National Defence Contribution is levied on it. I now propose applying that principle similarly to Excess Profits Tax, that where the existing standard is less than £12,000 there will be an addition to the standard of one-tenth of the amount by which the existing standard falls short of £12,000. Thus, where the standard under the existing law is, say, £4,000, the effect of my proposal will be to make the standard £4,800 by the addition of one-tenth of the £8,000 by which the existing standard falls short of £12,000. This relief will apply to all existing standards, whether the minimum standard, the capital standard or the profits standard. Its effect will be to raise the exemption limit of the Excess Profits Tax to £3,000 and to raise the personal standard for the single working proprietor from £2,500 to £3,450. The relief dwindles to nothing as the present standard approaches £12,000 and it has, of course, no effect at all where the existing standard exceeds £12,000. Taking into account the gain in Income Tax which will result by reason of the abatement of Excess Profits Tax charge leaving a higher amount to be charged to Income Tax, the cost of this proposal for relief for small business I estimate to be about £12,000,000, a sum which is of course also a measure of the benefit to the taxpayer.
Double Taxation
I come now to a subject of the greatest importance which has been occupying the thoughts of myself and my advisers for many months past—the question of double taxation. The Committee will be glad to hear that I am able to report very substantial progress. The Income Tax Bill, which is at present under the consideration of Parliament, is directed to carrying out important changes of Income Tax policy designed to help industry to face the modernisation and re-equipment which will be so vitally necessary in the post-war period. I have regarded the relief of double taxation as a second main step in the same direction, designed this time to help in particular that part of industry which will in future be so vital to the well-being of this country, namely, that concerned with our exports.
Under our existing Income Tax Law a system of relief from double taxation is provided within the Empire but, for technical reasons into which I need not now enter, the system does not provide full relief against duplicating charges even within the Empire. In the case of foreign countries we have no general arrangement for relief of income from double taxation, though there are special provisions of a very limited character concerned with shipping and aviation and with agency businesses. Apart from these small exceptions it is true to say that British trading concerns earning profits in foreign countries and paying tax in the foreign countries on the profits so earned can at present obtain no relief from double taxation. There can be no question that this state of affairs must not be allowed to continue. With the present high rates of taxation and the prospect of taxation remaining high for some years to come we can no longer acquiesce in a system which places burdens that are neither just nor tolerable on those who take part in the over-seas activities which are essential to our economy.
We could, of course, deal with the problem by ourselves if we liked. There is no reason why this House, if so minded, should not provide that income or assets coming under charge to tax in foreign countries should be charged in this country only to the extent that the appropriate British charge might exceed the foreign charge. Such an allowance, no doubt, provides an appropriate solution over part of the field, but the unilateral approach is not in my view the way to tackle the question. Double charges of this kind ought to be eliminated in a regulated fashion which will distribute the cost equitably between the Governments concerned and for that purpose we have to proceed by agreement with like minded foreign Governments.
Accordingly, as the Committee knows, we embarked some time ago on discussions with the United States on the general question of providing relief from double taxation in respect of income coming under charge to tax both in the United States and in the United Kingdom, and I am glad to be able now to announce that those negotiations have resulted in a double taxation treaty between the two countries. The terms of that treaty are being published to-day and will be available to Members in a White Paper.
The Treaty covers all income liable to tax in both countries. Its provisions are, therefore, complex and I cannot do more than indicate some of its major features. In the case of trading profits, the United States is one of the countries with which we already have an agreement for the relief of shipping profits and the Treaty confirms that agreement and extends it to include the profits of air transport which, like shipping profits, will in future come under charge only to the tax of the country to which the company running the air transport belongs. As regards trading profits generally, the Treaty adopts the system of crediting the foreign tax against the home tax. The United States already has this system in force for its own trading concerns and the United Kingdom will now adopt the like principle and allow the United States tax paid on profits made in the United States to be credited against the United Kingdom tax payable by the concern on the same profits. A similar credit will be given for the United States Excess Profits Tax against the United Kingdom Excess Profits Tax.
There are also provisions for profits made through agencies which are similar to the arrangements already made with various countries under the existing limited powers. And there are provisions for the settlement on favourable terms of old arrears of United States tax due from United Kingdom residents.
These arrangements about trading profits are perhaps the most important for the purpose of freeing commerce between our two countries. But fruitful economic relations cover a wider field than direct trading alone, and the Treaty contains important provisions in regard to dividends, interest, royalties, rents and income from employments. At present dividends flowing from the United States to this country are subjected to a "withholding tax," as it is called, of 30 per cent., and United Kingdom tax is then levied in full on the balance of 70 per cent. that remains. Under this agreement the rate of withholding tax is reduced from 30 to 15 per cent. in the ordinary case and to 5 per cent. in the case of dividends received by a United Kingdom company from a subsidiary in the United States. The tax withheld under this arrangement will in future be set against the United Kingdom liability as in the case of trading profits. Furthermore this set off will extend also, in the case of ordinary dividends, to the tax paid by the United States corporation, which is generally at the rate of 40 per cent. on the profits out of which the dividend is paid.
As regards interest and royalties, provision is made on a reciprocal basis for complete exemption from tax in the country from which the interest or royalties are derived in those cases in which the recipient is not trading in that country. So far as interest is concerned, it will be recalled that many British Government securities already carry tax exemption where the interest flows to a non-resident, and this principle is now extended to cover all interest on both sides. The exemption of royalties includes literary as well as industrial royalties. It also applies to royalties received by British film producers for the exhibition of their films in the United States, thus bringing American taxation of films into line with the existing treatment of foreign films exhibited in this country.
Our discussions with the United States also resulted in the preparation of a treaty to cover double taxation arising in the field of Estate Duty. Under it the two countries agree to adopt a common code of rules for determining the situation of property where both countries have a prima facie claim for tax; and where the code admits of double taxation, provision is made for relief by means of tax credits. The administration of the reliefs and exemptions provided in these treaties will necessitate the confidential exchange of information between the Revenue authorities of the two countries and the provisions for this exchange extend to information necessary for the prevention of fraud and avoidance:
For technical reasons Resolutions will be required for both the Income Tax and the Estate Duty Treaties, and the legislation to be included in the Finance Bill will be wide enough not only to give statutory effect to the United States Treaties, but also to enable similar agreements to be concluded with other countries. First and foremost, we desire to come to an arrangement with the Dominions which, in place of the existing partial relief, will give complete relief from double taxation within the Empire. We have already informed the Dominions of the general sense of our agreement with the United States, and I hope that in the course of the summer we may be able to open discussions with them with the object of adjusting the existing measures of relief with effect from the beginning of the present Income Tax year.
Overseas Finance
So much for these particular questions of taxation policy. I should like now to examine some of the major factors in our general financial situation before I turn to the details of finance for the coming year. We have fought this war without stinting any part of our effort on grounds of cost. Whatever was physically possible as an aid to victory was provided. The limits to our efforts were physical and not financial. We are now near reaping the reward of our single-mindedness, but the phase of not counting the cost has to come to an end or we may find ourselves unable to enjoy much of what victory might have been expected to secure for us.
Everyone knows that the war will not be over with the defeat of Germany. It may not be so well realised that a great measure of our present war effort will still be required to finish off Japan as quickly as possible. We must concentrate upon that task. Every Member of the Committee knows that in an expansion of effort and of organisation as vast as we have undertaken, all sorts of what I may call vested interests in free spending grow up. That spending was well justified while it was an essential part of the total war against Germany and Japan, but we need to revise our war policies and decisions, and to reduce establishments with the minimum of time lag, to cut away ruthlessly what no longer serves the essential purpose of defeating Japan, whatever good part it may have played in the past. On this nonessential field Treasury control must now in one form or another immediately assert its effective authority. If we are slow in this we may lose tens, if not hundreds, of millions. Everyone, I know, will approve of this policy in general, but its detailed application may not be so popular in all quarters. I therefore appeal to this House for help in the task of severe and searching scrutiny.
Overseas War Expenditure
In this connection, it will be particularly necessary to pay attention to expenditure overseas, for it is our overseas financial position which is our main immediate cause for anxiety. In my last Budget Statement I told part of a story of the growth of our overseas indebtedness. This indebtedness began to accumulate owing largely to our military expenditure in the Middle East and India. For five years we alone provided practically the whole cash outgoings for the war over the territories from North Africa to Burma. With that expenditure we stopped Rommel in the battle which history may well regard as the turning point of our military fortunes. Moreover, we have in the Burma theatre waged war against the Japanese on a scale which has only recently been surpassed anywhere in the Far East. No one will grudge such expenditure, but to obtain the results achieved we inevitably had to dispense with the detailed control of expenditure which might have checked the prosecution of the war. The principles of good housekeeping scarcely apply when you are fighting for your lives over three continents far from home. We threw good housekeeping to the winds, but we saved ourselves, and we helped to save the world.
A large part of the area was not only a battlefield, but it was also part of our lines of communication. In modern war it is inevitable that behind the bayonet strength there should be a vast ancillary military organisation. That organisation is now spread over North Africa, South Africa, East and West Africa, Egypt, the Levant, the Middle East and India, as well as in the territories bordering the Pacific scene of operations, such as Australia and Ceylon.
Because of supply and shipping difficulties, it has been necessary to make large local purchases of supplies and to buy local services, for which we have had to pay in many cases very high prices. We have had to borrow local currency for these local purchases. High prices are, of course, reflected in the size of our indebtedness.
Now, as we shift our military effort from the territories which were bases against Italy and Germany to the territories which will be the bases against Japan, we must take great care that, consistent with military safety for our lines of communication, we reduce local expenditure as far as the operational needs and the welfare of our troops allow. We must be careful not to create in the bases which were used against Germany any of those vested interests in free spending of which I have spoken. When we cease having to fight Germany we must not maintain the overseas apparatus which was necessary for that fight.
Let me tell the Committee the total of our war expenditures in the fields and bases of operational lines of communication in Asia and Africa, apart altogether from what we have spent in North and South America and in Europe. Exclusive of the food and raw materials which we have purchased from these areas, and exclusive also of the munitions of war and other supplies for the troops which we have sent to those areas, we have incurred local cash expenditures estimated at £584,000,000 in 1942, £689,000,000 in 1943, and £716,000,000 in 1944. Nor does there seem to be much prospect of a substantial reduction in this expenditure in the coming year. It will be seen that it is largely this expenditure which is responsible for the war indebtedness and loss of overseas assets which we have suffered.
The total of these expenditures over the three years runs to £1,989,000,000. A reference to the White Paper will show that our total disinvestment throughout the world during the same period amounted to almost an identical figure. It follows that, apart from these local war expenditures, our balance of payments, including payment for everything we have imported from the areas now in question, as well as from elsewhere, has broken even over the last three years, for though some growth in our overseas liabilities has been incurred otherwise than for the overseas local expenditure just mentioned, this has been approximately covered by an increase in our reserves.
The physical resources of the Empire have, of course, been pooled throughout the war. But on the financial side the arrangements within the sterling area have necessarily taken a somewhat different form from the Mutual Aid arrangements in force with Canada and the United States. It would have been impossible, for example, for countries like Australia and New Zealand to have provided us on a basis of Mutual Aid with all our requirements of foodstuffs and raw materials on which so large a part of their whole economy is built. With these countries the principle was adopted that each member of the Commonwealth in the sterling area would be financially responsible for the maintenance of its own Forces, wherever they might be serving and also for such supplies as it might need from other parts of the area. It thus comes about that, broadly speaking, we pay for local war expenditures incurred on our account.
In addition, each member of the Commonwealth which receives Lend-Lease from the United States is incurring expenditure in providing reciprocal aid for the United States Forces, apart from the expenditure on its own war effort. Great, however, as has been the financial burden which they have shouldered, each in their own way, in pursuance of the common task, our partners in the Empire would, I feel sure, be the first to admit that, partly as a result of the arrangements I have described, and partly as the result of other factors, their external position has in fact been improved, indeed, in some cases transformed, whereas our own has become increasingly grave.
Relations between the sterling area and the dollar countries raise a fresh set of problems. The Mutual Aid that we ourselves accord to the United States and to our European Allies, which is now on a vast scale, is more than matched by the liberality of the American Lend-Lease and Canada's Mutual Aid. This does not mean that the whole of our expenditure in those countries is covered in this way. Last year, for example, we incurred United States dollar expenditure—cash expenditure—of the order of a billion dollars on items not covered by Lend-Lease. This, however, we have met out of various sources of dollar income, in-eluding the substantial personal expenditure of the American Forces in this country. Virtually everything that is required here by the American military authorities is provided by us free of charge as Mutual Aid, and their expenditure in this country is negligible, whether on billets, air fields, transport, hospitals and miscellaneous supplies, including food obtained in this country. But this, of course, does not apply to the personal expenditure of the troops.
Our Overseas Liabilities
As is now well known, our liabilities to overseas creditors by the end of last year had reached, and now exceed, £3,000,000,000. Including the expenses of clearing up arrears and of demobilisation, the total is likely to reach at least £4,000,000,000 before we are finished, and this liability takes no account of the assets we have sold. The best means of liquidating these financial consequences of the part we have played in the war, so as to free the flow of international commerce and to allow to the sterling balances the minimum possible freedom of use, is an outstanding problem of the postwar settlement.
I cannot now enter on a discussion of this settlement an which others besides ourselves will have a part to play, and which must be undertaken in consultation with the United States and Canada and the holders of sterling. Many factors are relevant and will have to be taken into account in the final reckoning. We have incurred these liabilities as an expression of the burden of the war for the help, and indeed on behalf of, most of the holders of the balances. It would be utterly contrary to the reputation of this country for fair dealing that we should settle this matter by some unilateral act without preliminary consultation and an attempt to arrive at a settlement which all concerned will be able to regard as reflecting the true facts of the position. At the same time, it would be contrary to the elementary principles of justice and fair dealing between nations that obligations incurred in this way should be treated as an ordinary commercial debt. But it need not be thought by anybody, either in this House or elsewhere, that the final burden upon us of the settlement will be light.
Whatever means are found for clearing up the past, we shall still be faced with the formidable problem of developing a volume of exports sufficient to pay for what we need from overseas and to meet our financial obligations in the new conditions which will exist after the war. For the first three years after the war I foresee a very heavy deficit on current account in the balance of payments. In other words, for the imports which will be absolutely essential to feed our people, and to provide raw materials for industry, we shall have to incur further indebtedness. How large that indebtedness is and how long it lasts, depend on two questions to which in large part we ourselves can provide the answers. The first is the sense of urgency with which we treat the expansion of our export trade, even if that means waiting a little longer before we satisfy our personal wants in full. I do not want on this occasion to speak in detail about the expansion of our exports, but I do want to say to the Committee with all possible emphasis that for the next five years much of the creative intelligence in industry, which has come so splendidly to the assistance of the Government during the war, will have to devote itself to this issue, and we shall all have to accept the discipline which this urgency involves.
The second question is how far we shall be willing to enforce a strict economy in external cash expenditure. Our overseas cash expenditure will not, of course, come to a sudden end even when the Japanese war finishes. There will be large numbers of troops abroad and their return will take time and will of course cost money. What we must avoid is unnecessary commitments which might be beyond our continuing strength, and we must closely limit external expenditure which does not produce a fairly quick return.
In the home field if we match prudence with courage, and particularly if we curb impatience and recognise beneath any political controversies the need for national solidarity in tackling the fundamental economic issues of the peace as we have tackled the issues of the war, then I shall have comparatively little anxiety. But I am anxious on the external side about demands which may come from all sides of the House for expenditure on this or that form of political or personal satisfaction. We shall have to undertake heavy obligations in the interests of the security of the world. I think everyone will agree that this must remain a prior charge upon our economy. But we must be very careful to see that these obligations are accurately defined, that they represent in fact full, but no more than full, acceptance of the obligation, and we must see to it that our position and power in the world are represented by effective strength which we know we can maintain physically and financially. We must also aid in the reconstruction of our overseas dependencies towards which we have special obligations, thus enabling them to build up their own income in order to improve their own standard of living and to enable their products, some of which are essential for the economy of the world, to be put at the disposal of the world as soon as possible. Beyond these pressing needs, all external expenditure will have to be severely limited and to be looked upon in nearly all cases as a luxury, to be increased only as we increase our net external income.
Home Finance: the National Income White Paper
Returning to our domestic affairs, I should like to say a word about the White Paper on National Income and Expenditure which I mentioned earlier. The Paper circulated to hon. Members to-day covers the same general ground as the paper issued on Budget day for the last four years. But the technique of this Paper is novel and is developing, and this year the form of it has been a good deal altered and expanded in order to make the underlying logic and the analysis of the statistics more generally intelligible. I cannot expect that this White Paper will ever be a best seller. I fear that the new form of presentation is inevitably somewhat lengthy. But I am hopeful that it will enable a wider public to understand the main lines of a national statistical study which will be of primary importance for us as the factual basis of sound policy particularly during the next few years.
It would take too long on this occasion to explain all that the new version of the White Paper aims to do. I must leave it to speak for itself to a large extent. In a word, it seeks to measure the national income, that is the total money value of all the goods and services produced by the community, and to show how that income has been spent. We must interest ourselves in this analysis, for the standard of living can only be maintained from the community's output of goods and services. If we wish to study fluctuations in economic activity, with the object in particular of taking timely action to prevent fluctuations in employment, we must discover not only what is happening but what seems likely to happen in the future to our total output of goods and services.
But we must also see how we spend our income as well as how we earn it. It is the capacity to earn income which makes expenditure possible. But it is not less necessary to maintain adequate expenditure under one head or another if our potential capacity to earn income is to be actually realised. This will be of particular significance in the swiftly changing circumstances of the years immediately after the war. The main charges on the national income will be the expenditure of the Government and other public authorities on goods and services, the consumption expenditure of individuals and capital re-equipment. As a consequence of the war we have heavy arrears of capital equipment to make up. Provision must also be made for the improvement of the capital equipment of industry and for capital programmes of such primary social importance as housing and education. For the improvement of our standard of efficiency and standard of living it will be essential to provide adequately for these needs. This will only be possible, without risking either inflation on the one hand or unemployment on the other if we can provide a proper balance between the scale of aggregate investment and personal expenditure on consumption. It will be part of the duty of Parliament to watch the broad tendencies that show themselves.
There is another major statistical recording that we shall need both for general post-war purposes and for the policy of full employment, and that is what I might describe as a continuous census of production. An improvement in the real standard of living will depend on an increase of efficiency output and we must devise methods for measuring this at regular and more frequent intervals than in the past.
I therefore commend this White Paper to the attention of the Committee. It is no doubt inevitable and proper that there should be lively discussion and controversy on all major issues of economic policy. Politics would lose much of their vitality if it were not so. But it will be essential that the assertions of controversy should be checked by recognition of indisputable and objective facts. In managing the delicate and difficult economy with which this country must support itself and its external responsibilities, we shall have little margin for avoidable mistakes or for frequent and dramatic reversals of fundamental policy.
Burden of National Debt
I have already said something about the external debt resulting from this war; but we shall of course be left also with a greatly increased internal debt. I must emphasise how much the task of my successors in dealing with this will be lightened by the successful establishment and maintenance of cheap rates of borrowing by the Treasury. At the end of the Napoleonic wars the interest burden of the National Debt took a little more than 7 per cent. of the taxable income of the nation. After the first world war the figure was about the same. At the end of this war the aggregate volume of the debt will be more than 25 times as great as after the Napoleonic wars and more than three times as great as after the first world war. But it seems likely that the annual interest as a percentage of taxable income will be no higher at the end of this war than on the two previous occasions, though this time, of course, the opportunities for subsequent saving by conversion to a lower rate of interest will be much less ample.
This is because we have not only maintained the relatively low rates of interest which were ruling just before the war but we have actually improved on them. The average rate of interest on the National Debt in 1938 was 3.1 per cent. It is now 2.3 per cent. Few people before the war would have believed the possibility of what has been actually achieved. With this experience behind us I reiterate the practical possibility as well as the advisability of low interest rates after the war, although I believe it is wise to move gradually and to avoid sensational changes in a factor so interwoven as is the rate of interest with our social as well as our economic fabric. The favourable effect on the finance, for example, of the housing programme is obvious. But that is no more than one impressive example of the beneficent effects which will be felt in many directions.
Some authorities have thought of a fall in the value of money as something which will become almost inevitable if the National Debt rises too high. There are indeed many examples in history to show that where the burden of the national debt involves a level of taxation which is higher than is tolerable, that way out is the one most likely to be found. Now, it seems to me, a much better means has been discovered, in the shape of a low rate of interest, for mitigating the real burden of the National Debt incurred in time of war. It has been the establishment and maintenance of low rates which have helped to remove that particular threat to the maintenance of the purchasing power of money. We shall aim, I hope, at low rates of interest and stability of prices without deflation.
Prices and Wages
I have to repeat what I said last year about the use of subsidies to maintain stability in the cost of living. I made it clear to the Committee in my last Budget speech that I was not prepared as a matter of course to offset increases in cost automatically by corresponding subsidies, although I would aim at preventing the cost of living index from rising above 135 per cent. of the pre-war figure.
In fact, we have been able to maintain almost complete stability, and the index which stood at 129 a year ago is still only a fraction above 130, although the indications are that we shall not be able to hold that figure much longer. The position remains that it will be unwise, in my opinion, to look to subsidies as the appropriate remedy for all increases of costs, though, as before, I am hopeful that the figure can during the coming year still be kept within the limit of 135. This will still remain a low figure, especially when compared with the general level of wage rates, which to-day stand at 146 per cent. of pre-war and with average earnings which stand at 182 per cent. of pre-war, though these may be expected to fall with the reduction of overtime. Moreover, this figure of prices for essentials is much below the ruling price level in the outside world. We are paying at a price level of about 185 per cent. for our imports. The national product and income, as a whole, must, I suggest, be thought of, in terms of the value of money, as being of the order of 150 per cent. pre-war rather than the level of 130 per cent. at which the cost of living index still stands. In the long run the domestic price level is necessarily mainly a function of what we pay for our imports and of the ruling rate of wages and output. A stable price level will be compatible with a slow and steady increase of wages if that increase corresponds with an increase of efficiency of output. Disciplined and orderly progress in the determination of wage rates should be recognised as a prime interest of the wage-earning class as well as of the community as a whole. For it is the level of efficiency wages which mainly determines, in the last resort, the purchasing power of money.
Expenditure in 1945–46
I must now consider the immediate Budgetary prospects of the year which has just begun. The Committee will, I am sure, realise how slender is the evidence on which I have to build my estimates of revenue and expenditure. We may expect that hostilities in Europe will soon come to an end, but the precise date at which the end comes is of importance to our estimates of expenditure and, to some extent, to the revenue estimates. Military forecasts are, fortunately, no part of the responsibility of the Chancellor of the Exchequer. On the other hand, in framing the Budget, I must take as realistic a view of the position as possible. I think the best I can do is to assume—not to forecast—that the war in Europe will come to an end some time in the early summer.
I shall put the Debt charge at £465,000,000, which is £50,000,000 more than the cost of interest on the Debt in 1944–45. I propose to ask, as usual, for power to borrow, if necessary, to provide for the contractual sinking funds. Other Consolidated Fund Services will require £19,000,000. Civil Supply Votes will require £581,000,000, which is some £68,000,000 higher than the total Votes for the past year. Details of this total have already been published, but, in view of the size of the increase, I think I should recall its main causes. The Education Act reforms and teachers' salaries, pensions and training account for £22,000,000; training schemes for demobilised or disabled Service personnel for £12,000,000; new works of various kinds in preparation for post-war developments £8,000,000; supplementary and old age pensions £7,000,000; Civil Service war bonus £6,000,000; new and increased grants to universities and colleges £4,000,000, and a number of smaller items.
The provision to be made for Votes of Credit is naturally the most uncertain of all the Budget figures. Even if a precise date could now be set to the end of hostilities in Europe, there would still be a number of uncertain factors, such as the rate of our war expenditure in the Far East, the rate at which commitments arising out of the war in Europe will be liquidated, and so on. I am, therefore, compelled, in this Budget, to have resort to the provision of a very round sum for Votes of Credit, and I propose to take the figure of £4,500,000,000. I imagine that this may bring disappointment in many quarters, but I have had to base myself on the usual computations of the spending Departments, and while imagination has been given some rein, I am sure the Committee will realise that I cannot afford to indulge in excessive optimism. But I assure hon. Members that the Treasury will not, as the months pass, be content with evidence that the estimated figure is not going to be exceeded. We shall make the most strenuous and sustained efforts to ensure better results, and I have great hope, though I cannot give any guarantee, that the outcome will prove much more favourable. On this occasion we shall take no pride in establishing the accuracy of our forecasts, so long as the deviation is in the right direction.
Taking this figure of £4,500,000,000 for Votes of Credit, total expenditure will be £5,565,000,000, or about £500,000,000 below the total for 1944–45.
Revenue in 1945–46
On the Revenue side, I estimate the yield of Income Tax at £1,350,000,000, an increase of £33,000,000 over the outturn of 1944–45. The yield of Excess Profits Tax I put at £500,000,000, which is £10,000,000 less than the amount actually received from this source last year. The decrease is largely due to the effect of the provision made in last year's Finance Act by which all standards except profit stanwards were increased by £1,000. As I explained last year, only a small part of the cost fell into the year 1944–45, but practically the full annual cost will fall into the year 1945–46. The Estimate also takes into account the effect of the further change which I mentioned earlier. The remaining Inland Revenue duties I put at £215,000,000, or £13,000,000 more than last year's receipts. The total for Inland Revenue will then be £2,065,000,000.
It is difficult to forecast what will be the consumption of the various dutiable articles on which the Customs and Excise revenue depends. Obviously, the end of the war in Europe will bring considerable changes. The return of troops on leave or for demobilisation or in transit to other battle fronts will increase the number of consumers, and so far as supplies can be made available for the home market there will no doubt be a rise in consumption in many directions. The receipts of duty will, however, in most cases, continue to be limited by the shortage of supplies.
Tobacco consumption has lately been equivalent to a revenue of nearly £400,000,000 a year, and I have adopted this convenient figure as the Budget estimate for 1945–46. Similarly, I put the estimate for Customs and Excise duties on beer at the round total of £300,000,000.
I have already referred to the proposed restoration of certain duties under the Safeguarding of Industries Act and the Import Duties Act which have been suspended during the war. The estimates for 1945–46 include a sum of £15,000,000 on this account. The actual receipts will depend largely on the date at which this change comes into operation, which will be determined by the course of the war. On the other hand, I must expect a considerable fall in the revenue from oil, through a reduction in the consumption of the Royal Air Force from duty-paid supplies in this country.
Taking account of all these factors and the minor adjustments I mentioned earlier, the total Customs and Excise estimate is £1,130,000,000, that is to say, £54,000,000 more than I received last year.
All other heads of Revenue should produce £70,000,000, making the total revenue £3,265,000,000. The resulting excess of expenditure over Revenue, which we shall have to borrow, is £2,300,000,000, some £525,000,000 less than the corresponding figure for 1944–45.
As in previous years, we shall need borrowing powers to cover this deficit and I shall ask the House to pass the necessary National Loans Bill at an early date.
Need for Economy
Though the estimates I have just given to the Committee show a considerable reduction as compared with recent years in our total expenditure and in the Budget deficit, both are still very large and must necessarily remain so while we have to play our full part in the war against Japan. We must not, therefore, let the present slight easing of the position blind us to the need for all possible economies in our expenditure. I have already spoken about our war expenditure overseas, but I hope that at home, as well as overseas, the process of liquidating our European war commitments in a businesslike way will be carried out as speedily and economically as possible, and that all expenditure not absolutely essential will be quickly brought to an end. That must be done, not only on financial grounds, but because we shall need the speediest possible liberation of man-power for the purposes of civilian reconstruction and development. In the civil departments expenditure on war activities must similarly be terminated as quickly as possible. As regards their peace-time functions, activity and expenditure during the war have been, to some extent, determined by the staff available, and it is important that the easing of the staff position which will follow the end of hostilities in Europe should not in any Department be made the occasion for any relaxation in the pursuit of economy in its existing administration, or the carrying out of whatever new duties fall to it in the future. The total cost of our normal peace-time services and the new developments of policy which the Government are pledged to follow after the war will be very heavy, and it is essential that the burden on the taxpayer should not be increased by unnecessary expenditure in any direction.
Sources of Finance in 1945
It has been customary to give the Committee some estimate as to how far we may expect to rely on the various sources of finance to cover our borrowings in the year to which the Budget relates. In this respect, as in others, I am this year faced with considerable difficulty. The end of the war in Europe will affect, in varying degrees, all these sources of our borrowings—the deficit on our external balance of payments, the various extra-Budgetary funds, private saving, and so on. In present circumstances, I do not think it would be profitable to try to estimate these various items for the current year in money terms, and I do not propose to make the attempt.
But I should like to say this: the primary object of our statistical studies of the sources of war finance has been to establish how far our methods of financing the war may have led to inflationary developments. No statistics are necessary to underline the truth of the warning already so often given—that, with the end of the war in Europe, we shall approach a period which from the anti-inflationary point of view will be more difficult than any we have yet experienced. In the absence of a further curtailment of purchasing power by the increase of taxation—a course which I hasten to assure the Committee I do not propose to adopt—we shall, in fact, be able to support our continuing high rate of expenditure as soundly as we have done during the war only if, for the time being, the greatest restraint should continue to be maintained in personal expenditure. That may seem a hard doctrine on the morrow of a great victory and as a sequel to five and a half years of great sacrifice, but it is none the less true, and I am relying on the Savings' Movement to bring home to our people, more directly than I can, the fact that it is necessary in both the immediate and more distant interests of this country. There is one further point to be borne in mind in this connection. The yield of taxation and saving will depend on the size of the national income. The higher the national income, the higher will be the yield of taxation and the level of saving. It is therefore essential that those men and women who are in due course released from the Forces and war industries should be reabsorbed as quickly as possible into productive civil employment.
Future of Taxation
I have already said that I do not propose any major increase in taxation of this Budget. Equally, I do not propose any major reduction. Apart from the minor alterations to which I referred earlier in my speech, I think that our present rates of taxation should remain unchanged for the present.
I reach this conclusion for two main reasons. First of all, the burden of the war is still upon us, and it would be highly dangerous that there should be greater pressure of purchasing power on the market before there can be any corresponding increase of supplies. In the second place, I do not think that we have reached a stage at which the task of the Chancellor of the Exchequer in relation to post-war taxation can yet be begun. I have been able, in the figures I have given to the Committee, to forecast some reduction in war expenditure this year. But I am convinced that major reductions in taxation must be made as part of a comprehensive review by the Chancellor of the probable course of post-war expenditure and of our system of taxation as a whole in relation to it. We shall have to survey the whole field in the light of known needs and of the alternative methods of meeting those needs which present themselves. Only so, in my opinion, can justice be done all round.
I should like to remind the Committee of two figures which I gave in the early part of my statement, that 42 per cent. of the whole of the personal income of the country since the outbreak of war has been taken in taxation or saved towards financing the central Government's expenditure, and that of the total expenditure 49 per cent. has been met out of current revenue by taxation. We have been able to draw on savings, partly through the willing sacrifice of the country, and partly, of course, because the things on which income might be spent were not there, as labour could not be spared for them. This includes industrial replacements, renewals and re-equipment which have had to be postponed, as well as the running down of all household stocks. It is this sacrifice and deep privation, added to the country's great productive effort, that makes it possible to spend so many millions a day on the war.
But on taxation I hope that no one in the Committee will, as a result of what I have said, take too pessimistic a view. We must not let the readiness with which all classes have borne the relentless pressure of taxation during the war delude us into thinking that it would be either possible or desirable to maintain that degree of pressure into the peace. I should indeed be fearful of allowing a psychology to grow up in the country based on such an expectation. The present level of taxation is unquestionably oppressive to the spirit of enterprise and industry. It is of the first importance that when the compelling incentive of working for victory is no longer present there should be an early alleviation of the existing heavy obstacles to the normal incentives to work.
The taxation levied on private taxable income is running to-day at about 36 per cent. overall, of which about 3 per cent. is represented by Excess Profits Tax, after allowing for the additional Income Tax which would be payable in the absence of Excess Profits Tax. Thirty-three per cent. of taxable income, apart from Excess Profits Tax, is much above the level which the country should be expected to sustain in time of peace. It is my own conviction that taxation cannot, and should not, be continued without material relaxation. Nor will this be impracticable if we build a world in which we can avoid continued expenditure on defence on a vast scale, and in which employment is maintained and efficiency progressively increased. If we can do these things we can reduce taxation, as well as carry out the programmes of social improvement to which we have set our hands.
I have already indicated that I regard this as an interim Budget. The calendar obliges me to present it on the eve of victory, but before the smoke of battle has cleared away, and before our financial future can be seen in detail, even by such an ex-officio prophet as a Chancellor of the Exchequer. For the reasons I have just given, I think we must postpone any attempt to draw practical conclusions from an examination of the future until another occasion—which in my opinion may well arise after less than the yearly interval which customarily separates these occasions.
1. Hops, Etc., and Beer (Customs)
Resolved:
"That the period for which the following duties of customs are chargeable (which expires on the fifteenth day of August, nineteen hundred and forty-five) shall be extended by four years, namely:
2. Spirits (Excise)
Resolved:
"That no allowance shall be paid—
3. Entertainments (Excise)
Resolved:
"That in lieu of the exemption from entertainments duty of entertainments provided for partly educational purposes by a society, institution or committee not conducted or established for profit, there shall be an exemption of entertainments which consist of all or any of the following items, that is to say, the items mentioned in Sub-section (3) of Section one of the Finance Act, 1935, and the exhibition of a cinematograph film, being entertainments provided by a society, institution or committee which is not conducted or established for profit and the aims, objects and activities of which are partly educational."
4. Mechanically Propelled Vehicles (Charge of Excise Duty by Reference to Cylinder Capacity Instead of Horse-Power)
Resolved:
"That—
5. Purchase Tax (Amendment as to Definition of Chargeable Goods by Reference to Use of the Utility Mark)
Resolved:
"That the provision made by Section nineteen of the Finance Act, 1942, for authorising the definition of classes of goods for the purposes of certain Purchase Tax orders under Section twenty of the Finance (No. 2) Act, 1940, by reference to the utility mark mentioned in the said Section nineteen shall be extended so as to apply to other marks the use of which the Board of Trade has power to regulate and to any such orders."
6. Income Tax: Charge of Tax
Resolved:
"That—
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
7. Higher Rates of Income Tax for 1944–45
Resolved:
"That Income Tax for the year 1944–45 shall be charged at rates exceeding the standard rate in the case of individuals whose total incomes exceed two thousand pounds, and those rates shall be rates in the pound which respectively exceed the standard rate for that year by the amounts specified in the second column of the Table in Sub-section (1) of Section seven of the Finance (No. 2) Act, 1940.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
8. Charges in Connection With Schemes for the Rationalisation of Industry
Resolved:
"That, subject to the provisions of any Act of the present Session making further provision in connection with Finance—
9. Agreements for Relief from Double Taxation
Resolved:
"That where any agreement between His Majesty's Government in the United Kingdom and the Government of any other territory makes provision for granting relief in cases where the same income in chargeable to United Kingdom Income Tax and to the Income Tax payable under the laws of that territory—
10. Extension of Time for Making Assessments in Certain Cases
Resolved:
"That assessments to Income Tax may be made at any time, if required in consequence of—
11. Estate Duty (Agreements for Relief from Double Duty)
Resolved:
"That where any agreement between His Majesty's Government in the United Kingdom and the Government of any other territory makes provision for granting relief from double taxation in relation to estate duty payable under the laws of the United Kingdom and any duty of a similar character payable under the laws of that territory—
12. Excess Profits Tax
Resolved:
"That the extent and incidence of Excess Profits Tax (for past and future chargeable accounting periods) shall be varied so as to give effect to—
13. National Defence Contribution
Resolved:
"That the extent and incidence of the National Defence Contribution (for past and future chargeable accounting periods) shall be varied so as to give effect to—
14. Amendment of Law
Motion made, and Question proposed,
"That it is expedient to amend the law relating to the national debt and the public revenue, and to make further provision in connection with finance."—[ Sir John Anderson. ]
5.3 p.m.
I should like, with great heartiness and sincerity, to compliment my right hon. Friend the Chancellor upon a very masterly speech. I have never, so far as I can recollect, even when I was a member of a Government, agreed with a Chancellor's Statement more than I have agreed with that of my right hon. Friend to-day. But he must draw no succour necessarily from that—I must cover my tracks. The right hon. Gentleman's analysis of the situation in which we find ourselves now was, in my view, a very brilliant statement, which shows that we are not a broken country, but a country with very substantial potential assets; that we have our difficulties to face in the near future, but that if we face our problems honestly there is no need to fear the consequences.
I would like also to congratulate my right hon. Friend upon the new form of the White Paper. I think that in the coming years this is going to be perhaps the most important document published in any Session of Parliament, because it gives the background to the nation's economic life, and tells us not merely how much we owe, and how much we have spent in the past year, but how much we really do possess. I have not had time yet to study the document, but the statement with regard to capital accounts, for example, is a very great improvement on the very poor and miserable and skinny statement which used to be issued by the Chancellor on the day of his Budget speech. It is a most astonishing thing, in which we can take great pride, that we have not paid our way, but we have made our way, during this war, and have done it very substantially out of taxation. I think the nation is to be congratulated, as my right hon. Friend said, on its spirit of sacrifice in this matter; for it has enabled us to meet the future in better heart than we should otherwise have done. Another matter for congratulation, I think, is the closeness with which my right hon. Friend made his Estimates. There is something uncanny about it. He has sources of information, obviously, which are not open to me in these matters, but it is extraordinary that he has come so near to realising his income.
What is the real problem of this Budget? I do not believe that any Chancellor, even in 1918, was faced with the problem that my right hon. Friend is faced with this Session. The Chancellor, in the Spring of 1918, was contemplating a situation where there had been very substantial and serious British reverses, and he had not got his mind on the possible end within that calendar year of the first world war. My right hon. Friend knows—at least, he has a very shrewd idea, although he does not pretend to be a prophet—that he can assume that the war will cease in the Autumn of this year, or even earlier. He has to make a Budget which may prove to be unreal in a sense, because in a few months conceivably there will be a different situation—we can take a closer grip on the war situation. My right hon. Friend is not yet in a position, he indicated, to make a close estimate of the future, but he indicated, what seemed to me to be the root of his speech—I attach very considerable importance to it, and I am sure my hon. Friends do, too—that we must make a deliberate choice as to how our resources will be used. He referred to schools and other needs of our social life, to the need for practical development, and said more or less that if we had them money would not be available for personal expenditure. That is the issue which we must face, and it will create a considerable amount of controversy. My right hon. Friend naturally would like to get taxation down. Everyone would arise and call him blessed if he did get taxation down. We all want it. But he realises the difficulty about that.
The real problem—and I have put it to the House before—is not the volume of taxation; as my right hon. Friend has expressed it to-day, it is the volume of the national income, the volume of our total output and services. That is the primary wealth of our nation. That depends in the last resort upon its human power and the quality of its citizens. If we are to think merely in terms of taxation, we shall get into a period of petty, vicious economies, which never reflect any credit on any Parliament. That happened a year or two after the last war, when, after an orgy of expenditure, the pincers closed, and the House found itself in the grip of an economy movement of great power, and when great national objectives were forsaken, when great social undertakings which had been given to the people were betrayed. That is the situation which, I gather from my right hon. Friend to-day, he would be no party to himself. I gather that he would look with the greatest disfavour upon it if this nation were to let down the people of this country in the promises which have been made. [ Interruption. ] My hon. Friend refers to the "Geddes axe." The "Geddes axe" was, in fact, what I was referring to myself. It came a year or two after the last great war, when enterprises which had been put forward in fulfilment of electoral promises in 1918 were abandoned. There were many wild promises made. In my first fight I probably made some myself, but at least I did not get back to the House, so I could not be held to them. Suddenly there came this enormous wave of economy, because of inflation and high prices. My right hon. Friend does not desire to see inflation now, and I gather that he does not desire to see, one of the aftermaths, of the last great war, a period of terrible deflation.
Spending our resources is one problem, but I come back to what is really the major problem, of how much are our resources going to be? That is the one problem of overwhelming importance. Expenditure must have regard to the amount of cloth you have got, admittedly; but expenditure can always depend for an upward turn, for social purposes, on schemes of social development, on an increase of the amount of cloth. It is a case that I have put during the last three years and more, since I was released from any obligations on that side, that the outstanding need is an increase in the productivity of our people and the utilisation of our different resources, and the development of the resources of lands abroad. My right hon. Friend referred to the Colonial Development Act; that is a case in point. The utilisation of such resources as we can realise out of savings—because that is what it amounts to in the long run—for purposes of that kind abroad will help us to improve our standard of life at home. On that I think my right hon. Friend is sound, but it is clear to me that if we are to get over this period of transition as successfully and as smoothly as we should all desire, the direction of our national resources into the right channels ought to be proceeding fairly quickly.
I am very apprehensive with regard to the changeover from war to peace industry. I do not believe that we are sufficiently forward with all the plans that are necessary, and I can conceive only chaos unless these plans are made beforehand. Unless we can get a smooth transition in this way, and turn the ship from war production to peace production on a large scale, swiftly and smoothly, then we shall enter a period of mess and muddle incomparable, perhaps, in our economic history. That is a very great problem. It is a great problem for the Conservative Party. It would be a graver problem for my party. [An HON. MEMBER: "Why?"] Well, if we get into this mess and muddle, I am sure that what is called free enterprise is going to be blamed for it. Who gains out of mess and muddle? It is quite clear that my right hon. Friend has insisted on tightening Treasury control over expenditure. I have no complaint to make against that, particularly as regards those overseas forms of expenditure to which he referred and on which we must agree.
But that does not end the question. There are other forms of control which, I submit, must be maintained so long as war conditions persist in the peacetime transition period, whether we like it or not. I am not arguing about control. Nobody likes being controlled if he can avoid it, but it is quite clear, whatever may be the broad future of this country on a long-term policy, that during the transition period there must be an orderly direction of our national resources to those objects which are of the greatest social service. I see no reason whatever why our resources should be frittered away in luxury hotels at seaside towns or in super-cinemas, whilst people need houses and while we want to build the shops in which people may purchase the goods they need, goods which, I hope, will then be in fuller supply. It is quite dear that we shall have to use all the resources we have in the first instance, for the things which are most gravely needed in the national interest, rather than divert our resources to forms of luxury production and luxury expenditure.
If we can do that in the interim period, then, I think we may say that we are set for good weather. If we fail to do that, but go back to the old conditions, I am satisfied that the Conservative Party's free enterprise has gone for good, because what little free enterprise exists will be swallowed up by large-scale monopolies and cartels which will work against the public interest for their own narrow interest, and will—even as they did in the inter-war years—sell themselves and their souls to foreign Powers against the interests of this country. If we arrive at that situation, clearly, we shall have gone far to losing what we might have won out of the war. I do not want to embark on any political speech. I might say something about what the former Financial Secretary to the Treasury said last week, but I will take the earliest opportunity of doing so when speaking outside this House.
Do not let us get befogged into thinking that this is a war of "isms" and ideologies. In changing from war to peace production, this situation will be one of a vast number of changes, affecting not only the Chancellor and his colleagues but those holding responsible positions in industry, whether workers or managers. We have heard what the Chancellor said about efficient wages; I wish he had said a bit more about efficient management. It is people of the character I have indicated who will steer the nation through this period of colossal changes in the character and direction of the nation's economic life. My hope is that my right hon. Friend, by his wise financial policy, on which I have already congratulated him—and I trust he will live up to it—and by a wise economic policy, which must be linked with his financial policy, may steer this old ship into the waters of new progress.
5.20 p.m.
I should prefer to postpone my examination of the Budget to another occasion. During the last five years, on every Budget occasion, I have had the satisfaction of congratulating the Chancellor of the Exchequer, and, last year, I had the satisfaction of congratulating my right hon. Friend on his maiden effort in that office. My right hon. Friend has more than lived up to his promise on that occasion. His speech was precise, business-like, free from ornament or decoration—a plain statement of the financial position of the country. Some of us had hoped for some revelations or concessions. I think the heavy burden of taxation falling upon the country has made people feel that the ingenuity of the Chancellor might have found some way, in the light of present conditions, of making concessions. But the right hon. Gentleman is nothing if not Spartan. I think that, on the whole, he is wise to keep to his present position, except for a few concessions to the small business man. Apart from that, he has followed the precedent of last year.
I noticed that, at the beginning of his speech, the Chancellor referred to this being an interim Budget. I think there is a precedent for a second Budget, with possible alterations, and, if the war goes well, I think the public can feel that, before the financial year is over, the Chancellor may be able to come down, not to ask for additional burdens, but to offer us some present or concession. That is all to the good, but, while I still congratulate my right hon. Friend, I think the greatest congratulations should be given to the people of the country. They have been wonderful in the manner in which they have borne the burden, not only the business people, but the small people who have paid up on the basis of Pay-as-you-earn, without a squeal or murmur of complaint, because they felt they were helping the national effort. I think the Chancellor would be the first to agree with me that the major credit, in connection with this remarkable Budget, with its terrific burden of nearly £6,000,000,000—a figure which staggers one—must go to the common people and the business people in every section of society. They, I think, are deserving of every praise. The fact that 53 per cent. of this tremendous burden is being borne in taxation may well make the British people hold up their heads in pride. I think, too, that some credit should be given to the people who so willingly lent their money at a low rate of interest as compared with the last war. I think we should cry from the house-tops and tell the whole world that this country which, since 1939, has suffered the worst, strains of this appalling conflict in loss; of life and physical effort, is also carrying this tremendous financial burden.
I am not worried about the future, because I think that the people who can do such things in war will be able, under proper guidance and wise leadership, to get through post-war difficulties. But I think the Chancellor will be wise to warn the people, when the armistice comes, and not only the armistice in the European war, but also the armistice in the East, against any inclination to think that, after these six years of strain, they may have an orgy of expenditure. The temptation will be terrific. People are short of clothes; they want to re-equip their homes and kitchens. In fact, people are already thinking that, now that the lights have gone up, the day should soon come when they will be able to go to the shops and spend. I think the right hon. Gentleman is quite right to warn the people that, in the first place, the goods will not be there. I think we ought to recognise that there will still have to be a period of scarcity of raw materials, not only in our own country, but throughout Europe. I believe that the capacity of recovery of our people will be great. I should not be surprised if the nation's recovery, without the aid of special machinery, but, wisely guided, switching over rapidly from war to peace production, and especially in co-operation with the United States, is much quicker than some of us have anticipated. But we have to face the fact that it may be months, or even a year or two, after the war before this situation is reached.
Our problem is not so much to face that immediate post-war period but to look forward to the time when we have got over that stage and reached a period of abundance. We have to plan ahead, and prevent a recurrence of the evils of the years following the last war. I think we have been much helped by this remarkable document which has been issued, and for which, I suppose, we must give credit to the late Sir Kingsley Wood, although I have a shrewd suspicion that Lord Keynes may have had something to do with it. I refer to the statement on war finance and expenditure. I attach more importance to this document than to the actual Budget. I can visualise a time when the Chancellor, or the Minister of Finance or whoever is responsible, each year will present to Parliament an estimate of the national resources of the country, and a report on how they are being used, whether they can be better organised and whether we are making the full use of our national resources and manpower. I have no doubt that the Chancellor has been much helped by this document, and I should like to see half a day, or a whole day, devoted to its examination and discussion. I should be very much tempted to go into it now, but this is not the occasion. In conclusion, I congratulate the Chancellor on the success of his Statement. I hope that, before many months have passed, he will be able to come down to us with another story and, in a further Budget, tell us that the sorely tried taxpayer is going to have some relief.
5.30 p.m.
References made by the Chancellor of the Exchequer are very similar to those made by so many previous Chancellors; they intimate that taxation must be provided in order to supply revenue. It was disappointing that the Chancellor did not take the occasion to rectify injustices and to restore to the people of this country some of the liberties which they hitherto enjoyed. If there is one characteristic of this country, it is the love of liberty. Every Budget must of necessity curtail some of those liberties. We have relinquished so many because of our determination to see this war through that apparently the powers that be have assumed that we are never going to regain any of our liberties and freedom.
This Budget only lightly touched upon one thing which to my mind is most important—the recovery of export trade in order to meet some of our liabilities. One cannot go through the whole of the various businesses concerned in exports. Let me mention one particular business in my constituency as typical, as one which would be helpful in restoring some volume of revenue to the Exchequer. I refer to that very highly skilled section of the jewellery trade for the products of which there is no demand in this country, though there is considerable demand for them abroad. When, however, the foreigner is faced with 100 per cent. Purchase Tax he declines to buy, with the result that these highly skilled men become unemployed. It is difficult for one who is not accustomed to it to realise what exceedingly fine work is done. On one occasion I watched a gold wire being drawn and inquired its thickness. It was expressed to me in these terms: "This is wire which you cannot see and which goes though a hole which is not there." There is evidently a demand for that delicate kind of work and we ought to encourage it. Encouragement should be given to finding employment for highly-skilled operatives in order that the products of their ingenuity and skill can be exported and so furnish revenue for the Chancellor of the Exchequer.
There was one statement made by the Chancellor of the Exchequer which worried me very much. He said that revenue from Estate Duties, due to contributions from very small estates, had greatly increased, and he gave the figure of £10,888,000. But that should not be a subject for congratulation. Those who have had the misfortune to be trustees have realised from various orders and regulations issued by the Treasury why these figures have so greatly increased. They know that it is due to regulations of which the House of Commons knows nothing but for which the House of Commons ought to be responsible. It has permitted the Treasury to assume entire control. On bill after bill you find the words, "Subject to the consent of the Treasury," and the like. When a Budget is presented vague words are inserted which transfer power to the Executive, who make rules and regulations, which, in effect, enable them to exact taxes of which this House knows nothing. In actual fact it means that the House of Commons has surrendered its right of control. The general public ask: "Are Members idle, indolent or indifferent; how do these things come about?" And when we Members of Parliament are asked why this, that and the other order, rule or regulation is imposed, we just do not know, and we begin to make inquiries. The Treasury are the financial officers of the State, each Department a miniature Chancellorship of the Exchequer; combined they fix and collect the taxes.
As a result of one of my inquiries there was revealed to me "Form A.2," a voluminous document relating to Death Duties on small estates. The Chancellor of the Exchequer has done nothing in this Budget to redress a great wrong, and here is the opportunity to do it. I suppose there can be few hon. Members who have acted as trustees for small estates of between £1,000 and £5,000. They would expect to be charged with Death Duties of no more than three or four per cent. In point of fact there was demanded and paid more than £350 on a small estate not valued at more than £4,000. It is done in a very ingenious way. The Government encourage thrift by saying that through the Post Office you may purchase annuities, and the ordinary insurance companies do the same. There is a scale and one would have thought that that scale would be applicable to the value of an annuity with respect to Death Duties; but no. When that was brought to the notice of the Inland Revenue, it was pointed out that for the purposes of the Revenue, it is one thing for the living and for the purposes of the dead something quite different. I know of one estate where there was an annuity of £210 and the Inland Revenue assessed the value at £1,300, yet for an annuity of £90 they assessed the value as £1,553.
What is the remedy in theory? The valuation is dealt with by the district valuer, and if disputed they are told redress may be obtained by arbitration. Four or five per cent. on a few hundred or one thousand pounds does not justify any trustee in going to arbitration, because it would cost from four to ten times as much as the amount charged as tax. If you say: "This is an injustice and I will not pay," the Inland Revenue will prosecute you and you will be taken to the High Court. That is termed the remedy. It is a purely theoretical remedy in practice. The whole of the estate could be squandered in law costs. Your remedy, to contest the Inland Revenue in the Divisional Court, is visionary. The Inland Revenue will go to the Court of Appeal; if they lose there, they will go to the House of Lords.
In answer to one of my Questions asking how many cases have been contested in the House of Lords, I was told 17 over a given period, in nine of which the Inland Revenue have been successful. Since then there has been another case, making 18 actions, of which the Inland Revenue lost nine and were successful in nine, so that it is fifty-fifty basis. What man would attempt to do his business on such lines where, out of 18 actions, he won only one-half? This system and method are wrong. The system is indefensible. In my view the theory that there is redress is worthless, because in practice there is none. So it is with regret that I look at this Paper to find that another £10,888,000 has been extracted, mostly from small estates. I think it is unjust and the Chancellor should give it a proper and thorough examination. Do the Committee realise than there are 2,800,000 owner-occupiers in this country? There are millions of others interested in attempting to purchase their homes. What more laudable object could a man have than to own the home in which he lives? I could conceive of very few. We are thus discouraging thrift. Our taxation ought to be directed towards assisting those who desire to assist themselves—I mean the man who, by his energy, his industry, his ability succeeds in making good. My right hon. Friend the Member for Wakefield (Mr. Greenwood) stated a very great truth when he said the volume of human output should equal income. So it should, but this Budget is doing nothing to encourage energy, ability and industry—nothing at all. This Finance Bill does nothing to repair mischiefs committed by other Budgets—unwittingly, it may be. Nevertheless, human nature being what it is, we resent injustice, and however much we may try to achieve something for the benefit of the community, there are few people who realise that one of the most difficult things in the world is to do good without, at the same time, incurring the risk of doing a certain amounts of evil.
There was an expression used by the Chancellor of the Exchequer which, alarmed me very much. He referred to "restoring duties by Treasury Order." Does the Committee realise what that means? To me it was an admission that the Treasury were the real rulers, not the House of Commons. I have contested more than once this delegation of power. Principle and policy should be a matter for this House of Commons. Let no man think that I have not the utmost respect and regard for the old type Civil Service; no one knows better than myself that they are incorruptible; but the Civil Service to-day is not the old Civil Service of some 200,000—it is an army of more than 1,400,000. Let every hon. Member ask himself this question: Why? What does that serve? I think the answer must be this: No useful purpose. Under our system, I should be ruled out of Order if I were to discuss economies; I can only discuss expenditure. Every item in this Budget should be most carefully and scrupulously examined, but to pretend it can be done after we have been handed these documents only half an hour ago—they number over 100 pages—is just too nonsensical for words. I certainly have no intention of picking out a little bit here and there which might lead to a very false conclusion.
We are exhorting people to save and what are we doing? We are taxing those who do save. We are talking about houses, but what are we doing? We are taxing land—and that includes houses—to a greater extent than any other form of investment. Let every hon. Member ponder upon that. Let him compare any form of investment with the investment in property. I find on reference to HANSARD great tenderness exhibited towards the Stock Exchange, for instance. If hon. Members will refer to the OFFICIAL REPORT for 24th May, 1944, Vol. 400, cols. 757 and 758, they will find that the concessions made to the Stock Exchange cost the Exchequer £11,426,297. But it does not end there. When a person invests £100,000 on the Stock Exchange he does not pay more than £5 in stamp duties, but let him invest in property and his £100,000 will cost him £1,000 in stamps alone. And there is, in addition, the extra tax which the Chancellor enjoys in a very indirect manner which, I agree, in proportion is trivial in comparison, but I mention it in passing—the law costs associated with transfer of property.
I do urge this Committee to consider where we are going. There is no provision in this Budget, that I can discern, to encourage the building of shelter for human beings. Believe me, we cannot live without it. There cannot be a constituency where the evil is not crying out loud and there can be no constituents who do not expect their representatives to come before the House and make an appeal. This is an appeal to the Chancellor, in his Budget, to make concessions, to give redress of taxation which already exists, to relieve and encourage those people who will provide shelter to work to that end. I have interrogated my right hon Friend as to value, and he said that the value of the land is the value of March, 1939. That is for the War Damage Act, and for public authorities who seek to purchase, but when it is judged for purposes of taxation at death it is not the 1939 value but the value at the date of death. That surely is inequitable. That, to my mind, is indefensible. All these things tend to discourage people from providing something which is wanted so badly in this country, namely, housing.
I have ventured to address the Committee upon two or three things only on which I can speak with some authority. I know that my facts cannot be challenged. So far as land is concerned, of course I know that the disciples of Henry George and other fuzzie-wuzzies will speak from a little isolated case here and there, but, believe me, I am speaking with a knowledge of over 50 years of practice. It does not affect me personally, but I urge this Committee to take away the control they have handed over to the Executive, to reassert itself authoritatively, and to make quite sure that the authority which is their's shall be held from now and from henceforth.
5.57 p.m.
I join with the right hon. Gentleman the Member for Wakefield (Mr. A. Greenwood) and the right hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris) in congratulating the Chancellor upon his Budget speech to-day. I am sure we all found it both interesting and profitable, and that when we are able to-morrow to read it through once more, and consider the White Paper at the same time—obviously we have had no opportunity to grasp it so far—we shall realise that we have heard a Budget speech to-day which has not been excelled for many years. In fact, the Chancellor has more than carried on the superb financial arrangements made by successive Chancellors of the Exchequer during the present war. From time to time, men in business in the City have criticised what the Treasury have done, the restrictions they have put on, and so forth. But taking it by and large, the result of the policy of the Treasury—keeping down the rate of interest on money, preventing prices from soaring, keeping inflation well in hand—has been quite a remarkable one, and I venture to suggest that the Chancellor himself would be the first to say—and I know my late friend Sir Kingsley Wood would have said—that acknowledgment must be given to the advisers at the Treasury, who have been able to assist the Chancellor in his work.
Although we do not mention civil servants in this House by name, because they are not responsible to the House and cannot reply to the House if their names are mentioned, I feel it would not be improper for me to-day to refer to the retirement of Sir Richard Hopkins, who has only recently retired from being the head of the Civil Service and the Permanent Secretary to the Treasury. To many of us who have known him for years, it is obvious that he has rendered service to the State which cannot be properly reckoned up at the present time. I feel sure that, despite his retirement from active service, means will still be found of using him, to give advice in various ways, so that his great services may not be lost to the nation at the present time. I feel, too, that the effort which has been made by the nation deserves a tribute, especially the National Savings Movement, over which Lord Kindersley presides, and still more all the people who, week in and week out, have assisted in the collection of savings, especially the heads of street groups and the women who have tramped around in all sorts of weather in order to get the money, to stimulate people and to make them go on saving. It is obvious that we shall have to go on saving.
The part of the Chancellor's speech which particularly interested me was that in which he said that when the war is finished we must take a comprehensive view of the situation, and fit it in with things as they are. For the sake of those who have saved, we must not allow the pound sterling to depreciate. It would never do for a man who had saved £10, by a few pence every week, to find that when he got it back eventually it was worth only £5, or even less, in the purchase of goods. We shall be short of many things for a long time, and it will be essential to use what we have in the most lucrative way, from the point of view of the nation. For instance, the export trade should be first supported in getting new factories erected, and present factories re-equipped, after the exhaustion of the war. Then there are districts in the country which will be likely to have more unemployment after the war than others—I know the Board of Trade has this in mind—and it is essential that those districts should have priority in the erection of new factories, and in getting old factories brought up to date. There are many other ways in which it will be necessary for control to be continued, and for the Treasury to continue financial control, however little people may like it. I submit that if the Chancellor is left to do it with his advisers, and to take a comprehensive view of the whole thing, we shall have a wise plan put before us which will help us to recover when the war with Germany is over.
There are one or two points I would like to put to the Chancellor. The first is with regard to the Excess Profits Tax, which, obviously, is a most unfair tax today. People are being allowed to retain such profits as they made on the average of two years between 1935–37. It was, I suppose, a rough and ready way in which this standard was arrived at, and it has been carried out during the war, but it is grossly unfair to-day that people can only retain profits according to that standard. There were many people who happened, during the years 1935–37, to be putting their factories in order, re-equipping them, erecting new buildings, and who reduced their trade and consequently their profits, in that period, in order to create an up-to-date factory. What happened? Those factories have been of the greatest value to the country during the war because of their up-to-date machinery. But the people concerned have retained only a small proportion of their profits because during the standard year period they were re-equipping. As regards new businesses, the Chancellor partly last year, and partly this, has made slight concessions, but E.P.T., from the beginning, has never been a fair tax. It happens that the particular company I am connected with had three good years from 1935 to 1937 inclusive, and that we cannot grumble with regard to our standard. I am not pleading for myself, but for businesses which will need money for re-equipment after the war. British industry has been built up by people making money and putting it back into the business, not by spending it. That is not possible under E.P.T. at present. A tremendous amount of money will be required for re-equipping, and this will only be forthcoming if the Chancellor gives priority to those most in need of it.
Lastly, I want to refer to Pay-as-you-earn and sincerely to congratulate all the officials of the Inland Revenue for the magnificent job they have done. The way in which they prepared the codes and sent them round to all taxpayers is worthy of praise. I am glad too that the Chancellor paid tribute to the employers and clerks who have done such an enormous amount of work in our factories and offices. There is no question whatever that men and women receiving wages and salaries are beginning to understand the system, and that it will work still more easily in the coming year than in the past year. There is another matter to which I wish to refer. From time to time people say to the Chancellor, "Cannot you pay this salary, or pension, free of tax?" And the Chancellor always says, "No." I can quite understand his point of view in saying that, because if he gave way in one case he would probably have to give way in another, and in most cases he would not be able to calculate what he would lose. But I must confess that arising out of Pay-as-you-earn there is one particular payment from which I dislike the deduction of Income Tax, and that is a Christmas box. In the old days one was accustomed to giving a man a golden sovereign or a £5 note. To-day you cannot give a golden sovereign, but you can give a £1 note. Last Christmas when you called a man in, you said to him, "I am going to give you your usual £1, but I have to deduct tax." That meant that the man got 14s. 3d. if his code number was, say, 17. That does not mean so much to him as £1, nor does £3 4s. 6d. mean the same to a man as a £5 note—
Could not the hon. Member in his generosity have said to him, "Here is £1; I will pay the tax"?
I recognise that the Chancellor cannot do anything of this sort without a limit, but I want to plead for the Christmas box, because it is something quite different from everything else. In many cases, of course, the tax is not deducted. If I go to my usual restaurant and give the waiter who usually looks after me a £1 note, I have not to deduct the tax. The man himself is supposed to account for it in his wages, but whether he does so or not, is another story. There are a great many Christmas boxes which do not bear tax at the present time, and I suggest that a Christmas box up to £5, should be allowed free of tax.
6.12 p.m.
I join with my right hon. Friend the Member for Wakefield (Mr. Greenwood) and other speakers in congratulations to the Chancellor on his Budget speech. This is the third one I have listened to in this House, and certainly it was the clearest of them all. I would like to raise only one point which is bothering me and many thousands of small employers, and which was touched upon by the last speaker, namely, the question of the Excess Profits Tax. Let us talk about it from the point of view of the concession which the Chancellor has made to-day. The right hon. Gentleman said that any firm with a standard profit of £12,000 or less—and he used as an example a firm with £4,000 standard—would receive an additional benefit of 10 per cent. of the difference between £4,000 and £12,000. That would give an additional benefit, therefore, of £800. That is very good, and it will be appreciated, but let us use the example of companies with a capital of, say, £100,000, who had no pre-war standard profit at all because they were not in business during the years on which the standard was based. Their standard of profit will be £8,000 per annum on their capital, or 8 per cent. On that they have to pay 10s. in the £ in Income Tax, and out of the £4,000 left they have to meet compulsory charges which are not allowable for Income Tax.
I wish to give the Chancellor examples of one or two companies who have this kind of profit standard, and who have finished their years with a net loss. What is the difference between £8,000 and £12,000 going to mean to companies like that? A miserable £400 which cannot possibly reinstate such a company on to a modern peace-time high productive basis. It is essential to the finance of this country that something should be done to give some greater relief to the smaller firms than the Chancellor has offered them to-day. There are thousands of medium-sized and small engineering firms who have contributed so much to the productivity of this country, and unless they can have an opportunity to put their businesses on to a more modern basis by the purchase of more modern machinery, with a greater output, this country will lose a tremendous amount of trade abroad and the Government will lose a lot of revenue. You cannot expect people to find more and more money, to find additional hundreds of thousands of capital in order to get £400 profit. It would be totally unreasonable and very foolish to expect that.
A few months ago I was in the United States of America and met many people there. They have a big admiration for us and for our war effort, but from my talks with them I know there is one thing that is certain. They are out for the world markets, in competition with anybody else who wants to get into the field. This country will not be able to make a trade agreement or a deal with the United States which will allow us so much territory for certain goods without their competing with us. Not for a moment. The United States are the biggest productive country the world has ever known. They manufacture good materials and they manufacture them at lower prices than we can do over here, owing to their tremendous bulk output. What are they doing today? They have got an ease of taxation in the United States that we have not got, and they are putting their factories in order. They are getting even better productive machines than they have had before. What are we doing? We have not the capital, we have not had a chance; we have no capital at all to help us to reinstate our factories.
The Chancellor has said that we are to get a post-war credit of 20 per cent. It is not so. In the first place, that 20 per cent. will be subject to taxation at 10s. in the £, which brings it down to 10 per cent. Then, when you deal with certain Ministries, and like myself you have had a row with them once upon a time, they allow you 1.09 per cent. profit. What in the world is 10 per cent. of that going to mean? Nothing whatsoever. Thousands upon thousands of employees in this country will suffer low wages unless the Chancellor, in his next Budget, gives some easement and an opportunity for these many thousands of small firms to make a little bit of reasonable profit so that they can put their businesses back on to a really sound economical basis. Unless that is done, there will be a great deal of unemployment and low wages in this country. Of that I am convinced.
The big companies are not bothered by 100 per cent. Excess Profits Tax, because their standard of profit in the years that were allowed was so great. The firms who made a profit of £1,000,000 before the war have still been able to make that profit during the war. Hon. Members on all sides know of two or three firms of that description. It is the little firms that have suffered, the men who have come into business after 1938 or during that year; the firms that have never had a reasonable profit standard are the firms for which I am pleading. It is of the utmost importance to give them an opportunity to get little bit of profit so that they may re-establish themselves for foreign trade and for competition with the United States, as well as for domestic business in this country. I ask the Chancellor, with all the sincerity at my command, to do something as soon as he possibly can to give some real practical relief on the 100 per cent. Excess Profits Tax.
6.22 p.m.
I listened with interest to the speech of the hon. Member for Grantham (Mr. Kendall). I would remind him that in the last war the Excess Profits Duty was in the ratio of 8 per cent. to 20 per cent. Those of us who have only a slight acquaintance with either big business or little business know that there was a spate of extravagance among those who had the 20 per cent. to play with and did not know what to do with it. The hon. Member for Holborn (Sir R. Tasker), who spoke in a minor key, so that I could not follow every word of what he said—it was almost a dirge—seemed to be making a plea for the poor stockbroker. He referred to the 21 items of income referred to in the White Paper, 17 of which are plus increases, and only four of which are minuses where the estimated income has not reached the Chancellor's expectations, and he went on to moan: "What are we going to do about it? How are we going to find the money to finance our peace policy of reconstruction?" The hon. Member can take comfort from the fact that the income has almost come up to the whole expectations of the Chancellor. That income has been reached owing to the production of actual goods by Britain—I quite agree that most of those goods are munitions of war—and as a result, 53 per cent. of the money expended on the war has been raised by revenue, which is in striking contrast to what was raised in that way in the last war. Therefore, the hon. Member for Holborn need not sing the " Nunc Dimittis, " because there is life in the old dog—and in the old country—yet. I am sorry that there is only an increase of £7,000,000 in supplementary pensions to the aged. It is down in black and white that there is that increase in expenditure on that account. I do not want to get out of Order too much, but that beggarly—
We can only discuss the collecting or the borrowing of money to-day, so the hon. Member must not go into that any further.
May I point out, Mr. Williams, that the Chancellor did deal with that point in his statement, and surely hon. Members have a right to talk about what he said in his statement. Surely, that comes within the purview of this Debate.
The hon. Member for East Hull (Mr. Muff) has already said that he regretted there was only that increase. That is all that is permissible. He may not develop it into a speech.
I will content myself with stating that I regret there is only a beggarly increase of £7,000,000 on that account. The Chancellor was rather proud of the increase of £22,000,000 in expenditure on education and increased salaries to teachers. No far-seeing Member will regret any reasonable expenditure on the younger generation for the purpose of equipping them better for the terrific problems that will face them in the postwar years. I am thankful that we are making greater preparations in this respect. The hon. Member for Harwich (Sir S. Holmes) regretted that he could only give 14s. 3d. as a Christmas box. I almost shed tears with him when he was speaking. He could only give 14s. 3d. when his heart would fain have given a golden sovereign. But he could have increased it pro rata to make it into a sovereign.
He would still have to pay tax on it.
I remember that 15 years ago the Parliamentary Labour Party sat in solemn session upstairs and heard the late Philip Snowden, as he then was, say: "We are in great difficulties; if in my next Budget I increase the basic rate of Income Tax beyond 4s. 6d., I tell you frankly that our producing capacity will have been reached." Our producing capacity during the past year is something to be proud of, especially as a 10s. basic rate of Income Tax has been accepted, and accepted with fairly good grace. There are 16,000,000 people paying Income Tax, and while they have the freedom to grouse without fearing any Gestapo, they pay up, even if it is with somewhat of a grimace.
There is another thing in which we can take pride—and here I am going to be self-righteous. When the National Government was brought into being, the back-benchers on this side said that there must be introduced into the Loans Bill a provision that the basic rate of interest on any loans should be three per cent. Again, I want to give a little comfort to my hon. Friend the Member for Holborn with whom I sympathise. We can be glad that the basic rate has been 2.3 per cent. For the comfort of the hon. Member for Grantham, if we can have cheap money continued he will be able to go forward with his projects, which are for the benefit not simply of himself but for 10,000 people in the vicinity of Grantham.
This has been no grand occasion to-day such as we used to have 14 or 15 years ago, when the Distinguished Strangers' Gallery was crowded and we had the pundits of high finance from the City decked in their morning coats. This is almost a humdrum occasion, because the Chancellor has told us that it is "the prescription as before." If I were a patient, and the right hon. Gentleman was a doctor, he has such a lovely bedside manner that I should place myself in his hands feeling quite secure. He did not tell us what his prescription was, but I knew. [ Interruption. ] My hon. Friend is wrong. He is a doctor and he should know that salts and senna are a wholesome if somewhat searching medicine. The prescription really was financial salts and senna, made more palatable by liquorice and prescribed by the Treasury dispensers. We have had a warning. The right hon. Gentleman tells us that there is to be another Budget, I presume in the newly elected House of Commons. I would remind the country of what happened when we had a second Budget in a new House—that "hard-faced" House that was sent here in 1918. The Chancellor of the Exchequer of that day introduced it, because there was not only a Geddes axe hanging over the people to cut down the social services, but there was an axe wielded from the City to tell him what he had to do. I do not know what will be the complexion of the new House. I could guess and I think I should be pretty nearly right, but if the new House of Commons acquiesces in a drastic cutting down of social services, if we disillusion the men in the Forces when they come home, as they were disillusioned by the Geddes axe, and all its consequences, first of all inflation because they took off the controls which were essential to give a square deal for the common man and woman, then you will not have merely disillusionised the country but you will have revolution.
6.35 p.m.
I should like to make my tribute to my right hon. Friend for his brilliant speech. I find it even more difficult than usual to speak, so soon after a speech of that nature, without a chance of reading it and the accompanying White Paper. The Chancellor gave us his anticipation of expenditure and of the revenue which he hoped to get and we all join with him in hoping that, for once, he will be wrong in his anticipations of what is going to be spent in the current year. But there was a far more important balance sheet which I hoped he was going to disclose—that is, the total expenditure, I mean all that is spent in consumption goods, for capital equipment and by central and local government—that is to say, the total expenditure and all the resources in the country. I should have liked him to give us some idea of what he thinks total expenditure is going to be, and, on the other side, what he thinks are the resources available to meet that expenditure, because that is a balance that has to be struck. He anticipated a large deficit in his revenue account. I do not think we were very much worried by that. The experience of the last few years has shown that a deficit is not such a catastrophe. Some people may say, but it would be hotly disputed elsewhere, that a Budget deficit does not really very much matter provided the increase in the national income is in excess of the interest burden on the deficit. That is a very different thing from the other balance sheet to which I have referred because unless we have further investments that we can sell abroad, or unless we are prepared to borrow abroad and are able to do so it is clear that we cannot spend more than the resources that are available, any more than you can take a quart out of a pint bottle.
During the last two years we have had a good many projects put before us, and I hope that our resources are such that we can not only afford them but can afford others now under consideration. If so we should welcome it because those that we have been considering, improvements in the social services and so forth, are quite admirable. But, clearly, the time must eventually come when a halt has to be called. I should like to remind the Committee of the wise words of one of its most distinguished former Members who said about 15 years ago: for my right hon. Friend to knock down. A quite well-known economist, Mr. Kaldor, recently estimated that the national income in 1948 might well be just under £6,000,000,000.
I am talking about 1938 prices. In 1938, it was just over £5,000,000,000. He anticipated an increase of nearly £1,000,000,000. He made certain assumptions which I look upon as unduly optimistic. He assumed first of all that the hours of work per week would be the same. As an objective I should welcome that but I think that it would be very premature now to have a shorter working week though I understand that there is pressure to get it. Secondly, Mr. Kaldor assumed that there would only be 3 per cent. of the insured population unemployed. I just do not believe that it is possible to get down to that level without complete direction, not only of industry but of labour, which I should think quite intolerable in a free country. Mr. Kaldor also assumed that there would be a 13 per cent. increase in productivity. That of course is a question which I am quite incompetent to judge, but I am bound to say that I do not feel very confident about it. We all know that there has been a great increase in productivity in many directions—for example in agriculture and there has been a huge increase in the rate of armaments production. Tanks and guns have been produced at a far greater rate than in 1940. But I am not yet convinced that there is a substantial increase in productivity throughout industry as a whole. There certainly does not seem to be in the coal industry. I am not sure that there is in the cotton industry or in many others. Finally he assumed that the terms of trade—I mean the quantity of exports that we should have to exchange for a given quantity of imports—would be the same as in 1938. I am afraid I am not so optimistic. Our main imports are, of course, primary products, food and raw materials. We know that they fluctuate in price far more than do the manufactured goods which are our main exports. In 1938 we had a buyers' market. We had conditions when primary products were relatively cheap. For a few years after the war it is going to be a sellers' market. It is going to be much easier to sell than to buy and we may find that those things that we want to buy have gone up in terms of what we want to sell.
I hope it can be shown that I am wrong but as a layman looking at it superficially I do not feel convinced that we can rely upon an increase of the national income to that extent. That excellent journal, "The Economist," suggests £5,500,000,000, that is half-way between the 1938 figure and Mr. Kaldor's estimate. I should be moderately content if I were quite sure we could assume that. However, I will assume that £5,500,000,000 is the figure. Out of that has to come private expenditure on consumption goods, expenditure by the central and local governments—our real resources, not transfer payments and private expenditure on capital goods.
May I take each of these three? Before the war we were spending on maintenance and on new equipment £700,000,000, and at least half of that was on housing. Clearly, we have to spend a great deal more than that on housing in the future, and I hope that we shall spend more on new equipment than we did in the past. There is no getting away from the fact that in some respects our output per man hour did not compare favourable with that in America and other countries. Therefore, it does not seem to me to be an excessive figure to suggest that, as against £700,000,000 before the war, we may have to spend £1,000,000,000 at 1938 prices on maintenance and new equipment, including housing, after the war. Before the war Government expenditure, including local government, was £800,000,000, of course, excluding transfer payments. We are all, I think, convinced that there has to be a great increase in our expenditure on armaments. In addition, we have all these new projects, some of which we are committed to, and others of which are before us now. My right hon. Friend, in reply to my hon. Friend the Member for South Croydon (Sir H. Williams), gave an estimate of the expenditure on these in the OFFICIAL REPORT for 28th March. If we add those up and take into account the increased expenditure that we must make on the Armed Forces, it does not seem excessive to suggest that the £800,000,000 that we spent before the war must be £1,100,000,000 after the war. These two together come to £2,100,000,000.
That means that out of the national income there is a balance of £3,400,000,000 available for consumption goods. Before the war we spent £3,500,000,000 on consumption goods. If my figures are correct, therefore, we must cut down the pre-war expenditure on consumption goods by £100,000,000. That might be the right thing to do, but I would like to stress that the natural and spontaneous consumption after the war will be enormously increased unless it is controlled, for four reasons. The first is that the national income we are estimating will be larger; second, we confidently expect a much larger employment; third, there has been an enormous redistribution of wealth in this country. I will give two examples of it. Before the war, there were just over 2,000,000 people with an income of from £250 to £1,000 a year. Now there are just under 6,000,000. Before the war, the combined nett income of everybody under £500 a year was about £3,000,000,000. Now it is nearly double, whereas the rich with nett incomes of over £2,000 a year have got half of what they had before, namely, £250,000,000. There has thus been a great transfer from the well-to-do to the less well-to-do, that is to say, very largely from the saving class to those who are less able to save. Because of that we must expect a greater demand for goods. Finally, we have a huge piled-up demand as the result of six years of austerity. The total nett savings amount to something in the neighbourhood of £8,000,000,000, and there will be a great pressure to spend a large amount on the innumerable things we have had to do without during the war. I am hoping to be told that my figures are completely wrong, but if they are anywhere near right, we are not only committing ourselves to controls of the nature we have had, but very severe rationing indeed if we take on further commitments.
In my hon. Friend's interesting figures, there is one point that was not quite clear. He spoke of an anticipated increase in ordinary Budget expenditure of £800,000,000 to £1,100,000,000. Did he mean the last figure to be at 1938 prices?
Yes, I am talking about 1938 prices all the time. What I am suggesting is that if these figures are anywhere near right, we have pretty nearly reached the limit of what we can reasonably afford. I am hoping that the Financial Secretary will say that the resources available are much larger than those I have suggested or that the Government expenditure will be much smaller than I suggest. I do not think he can say that the amount to be spent on new capital equipment should be smaller. Obviously the real way out of this difficulty, in so far as one is possible, is not to cut down what we want to spend wisely, but to increase the resources out of which we can spend it. At all times that must be the great concern of the Chancellor, but never more than at this moment. His other concern, of course, is the question of regulating total expenditure. In 1938 conditions it was his job to stimulate increased expenditure by the consumer generally. Now it must be the reverse of that. He must do all he can to restrict expenditure. I therefore suggest that at the present time a good tax is one that restricts expenditure to the minimum and encourages production to the maximum; and that a bad tax is one that does not restrict expenditure but restricts output. It seems to me that the Excess Profits Tax comes under the latter heading. My hon. Friend the Member for East Hull (Mr. Muff) gave his blessing to the Excess Profits Tax because he deplored the high and wasteful profits which he thought were made in a previous period. I have such an admiration for my hon. Friend's fluency that I hesitate to cross swords with him, but I suggest that it is not so much on high profits that this tax is waged but on the growth of profits. Surely that is exactly what we want now; we want profits to grow.
Perhaps I might venture on the rather descriptive story of the three business men who had had an expensive dinner at the Savoy. One of them said, "I am a Super-tax payer, and I can put this down to costs, so let me pay the bill as it will cost me only a few shillings." The second man said, "Let me pay it because I can put it down to expenses, as I pay Excess Profits Tax, so that it will cost me nothing at all." The third man said, "You must let me pay because I am on a cost-plus basis, and I can make money out of it." There are times when the indulgent parent can reasonably and justifiably give his child a sugar plum, but there are times when it is unwise to do so. There are times when the Chancellor can no doubt afford to do what is politically popular, even though it is impoverishing, but I suggest that this is not a time when he can levy taxes because they may please the multitude. He must have one primary object in view, and that is to increase output and decrease expenditure. He has talked about another Budget in the course of the year. I hope that he will show himself then very reluctant to levy taxes which discourage enterprise by employers and hard work by employees unless they materially restrict expenditure.
6.56 p.m.
The speech to which we have just listened was one of the most interesting and thoughtful contributions we have heard on the Chancellor's speech. I thoroughly sympathise with my hon. Friend in the difficulty in speaking on this subject before one has had time to read the Chancellor's speech carefully. At the same time, I am glad that a habit seems to be growing up which I gather is relatively new in the customs of the House, of making some observations on the Chancellor's speech on the same day as it is delivered, because, if one sticks to some of the broad principles which emerge from the speech and the questions which they open up, there is much that can be usefully said. With respect, I would like to join in the tributes that have been paid to the Chancellor for the clarity of his speech, the breadth of vision shown therein, and the orderly manner in which the whole thing was laid out. I remember remarking on Budget day last year that it struck me very much that the Chancellor's speech was obviously the first chapter of a volume which he had in his mind, and I imagined that if he was still in his place this year we should get a second chapter. I think we have now had that second chapter, and that if one takes the trouble to look at the Budget speeches of the past and considers them with the speeches last year and this year, one will see a significant difference in the character of the speeches. The last two speeches are an attempt to see our economic problems, not on a year to year basis, but on a long-term and continuous basis.
That seems to me a sensible way of approaching the economic problems of a nation which has a continuous existence. As the Chancellor is not particularly wedded to any particular party point of view, he finds it singularly easy, and probably agreeable, to approach our problems in this scientific and long-term manner. His speech was a picture of the background of economic facts against which we have to consider the whole policy of the country. Economic facts have a peculiarity which seem to surprise some people, namely, that they really are facts. Although people pretend at certain periods that they will ignore these facts and pretend they are not facts, the facts invariably catch them out in the long run. There is nothing more important than that the electorate of this country should be encouraged in every way to become acquainted with these basic economic facts, and I very much welcome this analysis of the resources of the country which I, like other hon. Members, have just been able to glance over. When the Chancellor referred to it he seemed slightly to apologise for it; he apologised for it being rather a difficult job to understand.
I would assure the Chancellor, and the Treasury, that they need not be frightened of putting these things in front of the public. There is a much larger demand by the public for serious publications produced by the Government than the official mind appears to recognise at the present time. I will not labour the point, but we have heard to-day that the sales of the proceedings in this House have increased in the past month more than they have ever done before, and I can assure the Chancellor that there is no need to apologise for producing documentary facts about our economic situation because there is a very large public desirous of learning about these things, and at the same time a good deal more can be done to encourage and to meet the demand of the people who want to know about monetary problems. No doubt there are paper difficulties at the present time, but a document of this character could, I think, be made rather more attractive if some of the statistics in it were illustrated in synoptic form and diagrams of different kinds were used. Secondly, there is at present a gap in the literature issued by the Treasury, They could well, possibly in conjunction with the banks, encourage the issue of some more simple literature simply describing the basic economic facts about what money actually is.
At the other end of the scale, hardly anything said by the Chancellor to-day could really be unrelated to the international economic and financial position, and I am going to say something which the Chancellor could not possibly say, and that is that knowledge of monetary and economic affairs in the United States of America is about 20 years behind thought in this country on the subject; it is therefore absolutely vital that an educational process should take place in that direction, and anything we publish should be made available on the other side. [An HON. MEMBER: "The other side of the House?"] On both sides of the House; I was referring to the other side of the Atlantic.
Another point of the Chancellor's speech attracted me. The word "realism" is rather over-worked at the present time, but he pointed out plainly that one of the things we should have to stand up against was vested interest expenditure and that there might have to be five years of discipline. As my hon. Friend, who spoke last has said, if his Estimates are anywhere near the truth there will have to be strict control of expenditure. Also, the facts which the Chancellor put before us make nonsense of the supposition that you can have, as the Chancellor put it, "dramatic reversals of policy." The whole terms of the Chancellor's speech seemed to be: "I am going to give you the facts whether they are pleasant or unpleasant," and I sincerely trust that whoever takes his place, if anybody does—and I shall regret if he is not there to take charge of this series of operations to which he referred—will follow his example in that respect.
He touched for a brief moment on the question of expenditure on the Armed Forces. I remember a Debate a few days ago in this House, and whenever anybody got up and talked about the necessity for this country remaining very strong he was greeted by applause from all quarters of the House. I do not object to that so long as people know what they are talking about. Armed Forces are relative, and if people imagine that it is within the financial capacity of this country to have a Navy the same size as the American Navy, all I can say is that they do not know the size of the American Navy and they will get a big shock when they do. To say that we must have strong Armed Forces without consideration of the Armed Forces of other Great Powers is completely "boloney" and means nothing at all, although it sounds very impressive no doubt when it is said in the course of Debate.
The hon. Member for Harwich (Sir S. Holmes), and the Chancellor himself, referred to the Savings Movement. From time to time during the past three or four years I have been at loggerheads with the Treasury on this matter for exactly the same reason, that I have always believed the right thing is not to bamboozle the public but to give them the facts. A good deal of bamboozling of the public has gone on in the Savings Movement during the past two or three years and I could give plenty of chapter and verse for it, if called upon to do so. A lot of people have been deluded into supposing that when they were asked to save money they were actually buying weapons of war. That, of course, was complete nonsense; I told the Savings Movement at the time, and I have said so three or four times in this House: "You will get away with it for a short time, but your chickens will come home to roost when the war is over and it will become more than ever necessary to carry on saving." The man in the street will say: "I have been told to save in order to buy ships and tanks and aeroplanes, but surely it is now no longer necessary." The best thing the Savings Movement can do is to own up frankly that they have sailed close to the wind so far as economic and intellectual honesty is concerned, and explain frankly and accurately to the people why savings are necessary, not only now but for several years to come. In the long run, I am sure they will get better results by that method than by trying to put up a story such as: "Save now in order to buy a house."
I would like in a sentence to add my tribute to the yeoman and stout work which has been done especially by women in street groups, who have carried on year after year in all kinds of weather with this Savings Movement in a small way. I am not in the least interested in the savings of insurance companies and banks; that is mostly "phoney" too. The things that really matter are the small savings groups. Those are the people who should be praised and encouraged. Before I sit down I have one more thing to say. I suppose I shall be told that I am making a personal political point, but the more one listened to the Chancellor's speech this year in relation to last year the more it seemed to me that if we are to get through these difficult problems that lie ahead of us we must do our utmost to maintain national unity. When the Chancellor says there is going to be no room for dramatic reversals of policy I do not think there is a great deal of margin for even the beginnings of a very different policy. The facts are what are going to govern our policy, and the facts are very plain for all those who have the honesty to see them. I recommend the Government, before they break up, to give themselves a course of reading the document they have just published, and a course of reading the document on full employment, and to see whether they can form two policies based on those two documents. If they have any intellectual honesty, which I am sure they have, they will see it is an extremely difficult thing for their members to diverge one from another and tell opposite stories. Let the Government do a little more thinking on the basis of the facts which they have put out before they come to any decision about breaking up.
7.10 p.m.
It is not my intention to follow the arguments advanced by the hon. and gallant Member for Ormskirk (Commander King-Hall). I will devote myself to the position arising from the Chancellor's statement. I desire to add my word of praise and congratulations to the Chancellor for the way in which he delivered his speech. There is one outstanding feature which I noticed in it, and it is that the financial stability of this nation is as great to-day as it has ever been in its history. The Chancellor's statement was a combination of the Estimates which have recently been presented to this House, and I desire to draw the attention of the House to what was said by the three Ministers who have charge of the three largest Departments of the nation. The Secretary of State for Air, speaking on 6th March, 1945, when presenting the Air Estimates, paid glowing tribute to the men of the Royal Air Force. He eulogised them for their bravery, devotion and sacrifices, and rightly so. One passage of his speech appealed to me very strongly, when he said that with extraordinary courage and determination the bomber crews were pioneering and blazing a trail for those who are now carrying on their work. That was a significant passage from the Secretary of State for Air. In my opinion, it is impossible to find words to describe the bravery, courage and devotion of those young men. The following day we had presented to us by the First Lord of the Admiralty the Naval Estimates. In presenting these Estimates the First Lord of the Admiralty, too, paid glowing tribute to the bravery of the Royal Navy, the Merchant Navy and all the other Services connected with that Department. He said that the work of the men of the Royal Navy on the great D-Day could be aptly described as the greatest amphibious operation in all history. Then there came from his lips these words:
Later on, we had presented to us the Army Estimates. Those were submitted in the usual way by the Secretary of State for War. He, too, paid tribute to the men of the Armed Forces. He paid a great tribute to the women in all branches of the Army, a tribute to their bravery and devotion in the fight for freedom, and, in the concluding stages of his speech, he said:
I hope that we shall not only remember the men and women of the Armed Forces who have led this country to the approaching victory, but that we shall remember those from whom they had their being, those who brought them into the world, who nursed them and who trained them in the school of citizenship. I hope we shall remember as we approach the post-war period, the grandmothers and the grandfathers, the mothers and the fathers of those brave men and women who endured all the hardships and dangers of war. Old age pensioners and many who are nearing pensionable age are also entitled, in my judgment, to be remembered by the Government. I was disappointed as I listened very attentively to the speech of the Chancellor. I was waiting for some ray of hope to be given to our old age pensioners who are now living on a miserable pittance, many of them on 10s. a week. We are liberal in our eulogies and admiration of our men and women of the Forces. We should remember—and I make no apology for putting forward my plea—the old people and to see that there is some improvement in the lot of our old age pensioners. They, too, have borne the brunt of the war, in anxiety and strain. They, too, are entitled to some consideration and improvement in their economic status of life. If we are sincere in the eulogies that we pay to the brave men and women in the Forces, what better way can this country celebrate the approaching victory, than by conceding adequate pensions to their grandfathers, grandmothers, fathers—
I am sorry to have to interrupt the hon. Gentleman, but he knows quite well that we are now in Committee of Ways and Means, and the question is not how the money should be spent, but how it should be raised. I hope the hon. Gentleman will consider that aspect of the matter.
I appreciate that, Major Milner. I knew I was skating on very thin ice, but I am obsessed with the thought that something should be done for our old age pensioners. Might I very kindly call your attention to the fact that the Chancellor, in his speech, did make reference to supplementary pensions, and I think that you ought not to be too severe on me on that score. However, in view of the fact that you have ruled on this point, I cannot prolong the argument for old age pensioners. But when the opportune moment comes, I shall have something very strong to say in regard to the position of these pensioners, particularly those who have never had an increase since 1925, and are still living on their 10s. a week.
7.20 p.m.
There are just two points to which I should like to call the attention of the Committee in connection with this Budget. The first is that the present system of taxation, on the level that it has now reached, is hitting very severely the working men and women who are providing—and in the future will continue to provide—the greatest amount of Income Tax for the Exchequer. The Pay-as-you-earn system is a very good one, but, unfortunately, it is now regarded as being a reduction of wages, not a contribution to the Exchequer. Whereas in times past the working man had his Income Tax deducted after a period, it is now deducted as he receives his wages, and he regards the amount he receives as his weekly wage. In my opinion, taxation, as it affects the wage earner, is far too high. When I started to learn the trade of engineering and the standard rate of wages was 36s. a week, it was possible to get five cigarettes for a penny; a packet of good quality cigarettes cost only 2½d. Beer cost 2½d. a pint, coal was 8d. a cwt., milk 1½d. a pint, eggs 12 for a shilling.
To-day we are apt to look at wages as the amount of money that is paid to the working-man. At the time I am speaking of, a man got 9d. an hour but for one hour's work he could buy three packets of cigarettes, or 3½ pints of beer, Or one and one-eighth cwt. of coal, or six pints of milk, so that although his nominal wages were low his real wages were high. To-day, if a man earns 2S. an hour, he can for that hour's work buy less than 1 lb. of butter, less than one packet of good cigarettes, less than two pints of beer or only half a cwt. of coal or six eggs. This loss of purchasing power is due to the calls on the Chancellor which have piled up taxation. The cost of social services has been paid for by the working man. I venture to remark that we would do a great service if we could reduce this taxation. I know quite well that we cannot raise it from the wealthy. They are taxed out of existence. We have liquidated them. The total amount we should get if we took the whole of the Surtax from the rich people would be some £30,000,000 a year, and you cannot pay for much social service out of that. Therefore, I ask the Chancellor to devise ways and means whereby the productive capacity of this nation can be so utilised and encouraged that commodities such as food and clothing can be considerably increased. What is required is not so much increase in money wages as an increase in the real wages of the people. One of the means to attain this result is to reduce the Excess Profits Tax in the case of companies and of Surtax where a business is not a company, but carried on by one man.
I happen to be a director of a company which is making a profit of some £50,000 a year, but all it is allowed to keep is £4,000. Only two of the directors are paid—there is no money to pay them. Many businesses to-day are acting as unpaid tax collectors for the Government. Capital cannot be attracted to make industry go, unless profit-making is encouraged. Nobody will start a new enterprise if they are going to be taxed out of existence, should they make a profit, while if they make a loss, they have to stand the full 100 per cent. of that loss. I hope that we will get back to the old principle of finance set up by a great Chancellor—not of my party—W. E. Gladstone, who said that money should be permitted, as far as the Treasury is concerned, to fructify in the pockets of the people. We are faced with increased taxation, and we have pressure groups all over the place putting on the screw to increase this or increase that without any consideration as to cost or the realisation that it will impose new burdens on the working men and women. Many people have got the "gimmies"—"Give me this and give me that." People are being encouraged to hold out their hands to the Chancellor to give them something. The Chancellor can give nothing except out of the earnings of working people. We want to get back that spirit of self-reliance, to give encouragement to the little men who start with very little but build up great enterprises. Small manufacturers have built up great works, which have benefited Lancashire and the rest of the country. In those days they had the chance to get on, because they could plough their profits back into their business. To-day the Treasury gives them no chance. The Chancellor takes so much there is little left for new machinery.
We have been speaking about our returning men, and our desire to find them jobs or to start them on their own. As we can never beat America in mass production, and must rely on the quality of our goods, the Chancellor should encourage the little man with big ideas to expand his business. This means a less rate of taxation on business. If he gives this encouragement then he will help to achieve a greater prosperity and a greater revenue than we have had in the past.
7.30 p.m.
I listened to the Chancellor's speech with what might be called variable interest. It was a different speech from the usual Budget speech, which is generally very cleverly prepared and leads up to a revelation for which this Committee and the country are eagerly waiting. But on this occasion there was no revelation expected and no revelation made. Therefore, the Chancellor had to concern himself with general observations on policy, and one or two of his general observations were very dangerous. First, in passing, let me remark that he held out a bit of bait for the coming Election when he said that there could be no automatic reversal of policy. That was directed toward the Labour Party. That is permissible, but when the Chancellor comes before us and offers a bribe to the ruling class of this country, that is another question. He made it as clear as possible that if he and his gang are returned at the next Election those people can look for a bigger hand-out in the form of a reduction of taxation. He made that as clear as anything could be.
He also gave considerable attention to an idea that is very prevalent—it has been mentioned once or twice on the other side of the Committee—control of spending. This is very serious and very dangerous, because we have always been faced in this country with the fact that accumulation of capital has increased year by year at a greater ratio than the spending power of the masses of the people. In the latter part of the 19th century the Fabians in this country, a shallow-pated group of intellectuals, who have done immeasurable damage to the Labour movement in this country, made a great discovery. They saw that during the 19th century the wages and conditions of the workers were improving year by year, very slowly but continually, and they said that this process would go on indefinitely; nothing could stop it. Out of this they developed the theory of "the inevitability of gradualness." But the one thing they failed to notice was that during that period, although there was a continual increase in workers' wages, capital was increasing at a far greater ratio than were the wages of the workers, and so, sooner or later, the crash had to come, and from cycles of unemployment, through the continual increase in the accumulation of capital, a stage was reached where there was permanent mass unemployment in this country.
That is what the Chancellor and his friends on the other side of the Committee want to go back to—investment capital at the expense of the spending power of the people of this country. That is the road to ruin for the people in this country. There has been a reference by the Chancellor, which has been taken up by one or two hon. Members, to a "vested interest" in spending. That is a new one. We know what vested interests are. We know the evil character of vested interests and the harm they have done to this country. We know that time and time again they have sucked the lifeblood of this country. The Chancellor has applied that evil term to the spending power of the people. I say: "Let the people spend, and this country will prosper. Control spending in order to maintain and encourage investment, and this country is ruined." It was in the process of being ruined before the war. It was the war that provided the opportunity for gathering together our resources, developing them and putting the productive forces into operation.
The Chancellor, of course, wishes to keep down wages. He talks about the cost of living, but the cost of living is very deceptive. Only certain articles are taken into account in the cost of living index. Many things enter into the cost of living. For instance, an ordinary worker goes out with his wife and child, or couple of children, and the children see somebody coming out of an ice-cream shop with an ice cornet or wafer. They clamour for an ice cream. Are they to be denied? What has he to pay for two ice-cream wafers? Sixpence each.
The hon. Member would do without his cigar that night.
A lot of things could be done without. In West End hotels and country houses one can see hundreds of things that could be done without. One of the lads in the Lobby asked me how this Budget was going to affect me, and I said: "I will have to give up my polo ponies." That is the sort of thing that goes on—polo ponies, hunters and the rest of it, and the masses of the people are to have their spending power cut. To return to the question of an ordinary ice-cream wafer, which now costs 6d. It used to cost 1d. These items are not taken into account in the cost of living. People can, of course, do without tobacco, they can deny themselves everything. There is whisky, which I do not drink, though many people do, or beer. And the Chancellor talks about the cost of living being 130 in relation to 1938 prices. It is all wrong, it does not give a correct picture at all.
Engineers' wages must be increased. The only thing that has prevented the engineers from facing real hardship, even while they have been working, is the overtime and Sunday work, but the wages at present are deplorable. It is essential that the wages of engineers, and other workers as well, should be put on a proper basis, so that the mass of the people are in a position to be able to spend at the expense of investment capital. But if the expenditure of the people is cut down in favour of investment capital—
I am sorry to interrupt the hon. Member, but is it not a fact that when Russia brought in the Five-Year Plan it was done by the principle of cutting down consumer goods in order to increase the capital expenditure of the country? Do I understand that he is objecting to that as a principle, because that is very largely what the Chancellor was saying this afternoon?
The hon. and gallant Member makes my case for me. When considering the question of the internal economy, it may be very valuable and desirable to economise on one thing in order to produce another that will give a greater amount of that particular commodity to the mass of the people. But there was never a suggestion that the mass of the Russian people should tighten their belts and go short in order to build up investment capital—no, to build up capital itself, industrial undertakings.
If in this country we needed completely new engineering factories, and if the resources of the country were under Government control, all of us would say, "We must have new engineering factories, we will go short of this or that in order to get them." That is an entirely different thing from building up investment capital and searching round the world for opportunities of investing that capital in order to provide luxury for the few. That is an entirely different thing. What relation has that to the Soviet Union, where everything that went to those industries was to come back to those who had gone short? But when the spending of the workers in this country is curtailed, and instead of going back to them it is going into the pockets of the investors, and the investment is not necessarily taking place in this country but in another country, that is an entirely different situation.
Let me take another phrase of the Chancellor's speech. He said that we would have to get back to good housekeeping, that we had given up good housekeeping as a consequence of the war. As a matter of fact, the Chancellor is absolutely wrong. He does not seem to understand what has been happening in this country. Although the Chancellor is not a member of the Tory Party, it is only the fact of his Tory associations and Tory education that could cause him to talk in such an utterly ridiculous and stupid manner. I did not suppose it was possible for anyone to get up and make such a stupid, indefensible statement as that we have to get back to good housekeeping, and that owing to the exigencies of the war we had to give up good housekeeping. Good housekeeping before the war—a few people in this country, comparatively few, with abundance on top of abundance, masses of wealth which they could not use, one luxury on top of another, money wasted. I remember reading in an evening paper before the war of a fellow picked up in one of the West End clubs. He and several women along with him were drunk, and they were enjoying themselves emptying bottles of champagne over one another's heads. Then they started smashing the bottles, and were arrested, and the case came up in court. Good housekeeping in the West End—money wasted, poured down the drain. Gambling hells over in the South of France, where people from this country threw money on the gambling tables, wasting money they had never earned, while the masses of the people in this country were starving. Is that good housekeeping?
The hon. Member for the Scottish Universities (Sir John Boyd Orr) has recently produced a report on infantile mortality in Scotland up to 1939. Infantile mortality was higher there than in any country in Western Europe—France, Belgium, Holland, Denmark, Sweden, Germany with the exception of Spain and Portugal. Great housekeeping! And since 1939, because the fathers are working and earning wages, and have spending power, and because of the rationing system introduced by the Government, the process has been halted and slightly reversed, and the children of the working class in Scotland at any rate, and I believe the same applies all over, the schoolchildren, as the result of the parents earning wages, and the controls of the Government, have been increasing in height and weight since the beginning of the war. It is an amazing fact that they are getting more now, when there is a scarcity, than they were getting when there was an abundance in every store in the country.
The Chancellor says, "We must get back to good housekeeping"—back to the starvation of the children, back to increased infantile mortality, back to the unemployment of the masses. How is it possible for anyone to talk in such a manner? That arises from the fact, not that we are economising to build up our industry—our industry is built up—but from the fact that always, under this system, unless the Government take control, investment capital is bound to accumulate at a greater ratio than the spending power of the working class. That is why we get mass unemployment. Any Chancellor who takes on the job of building up prosperity in this country must see that the spending power of the people increases at a greater ratio than investment capital increases. This will mean prosperity for the people, but it will also mean the end of profits and the profit making system.
The Chancellor says that the soldiers will be coming back soon, and that we must see that they are re-absorbed into industry as soon as possible. Will the Chancellor and Members on the other side be prepared to accept the proposition: Out of the factory into the Army, out of the Army into the factory? Will they be prepared to see that the lads who have fought for their country have the right to work in their country when they come back? If that is to happen the Government must be in a position, through controlling the factories, controlling the resources of the country, to direct these lads back into work.
Is the hon. Gentleman pleading in favour of directing the worker, making the factories a new army, regimenting and bossing the worker about, as they do in some other countries?
Listen to all this twaddle about the working man and the small man. What do they care about the working man? For years before the war men and women, by hundreds of thousands, were going to the labour exchanges day by day and begging to be directed to jabs. Does the hon. Member know that? [An HON. MEMBER: "Directed by poverty."] Yes; but now we want sensible direction. We want to see that when a lad is taken out of the Army there is a job waiting for him in the factory. It is all a question of organisation. You do not get masses of lads, after walking about the streets, going to the labour exchange and saying: "I have tried to get into the Army and cannot," and then being asked, "Did you try to get into the artillery?" "Yes, there was no opening there." "Did you try to get into the tanks?" "Yes, there was no opening there." "Did you try to get into the infantry?" "Yes, there was no opening there." But when they come out of the Army, and, after walking about the streets, go to the labour exchange, they are asked, "Did you try John Brown's?" They say, "Yes, I have tried that." They are asked, "Did you try Beardmore's?" and they say, "Yes, I have tried them all."
If the Chancellor wants to build up a proper economy he must see that the whole of the forces of production are kept in operation. That can be done only if the Government are in control. Hon. Members talk about profits as an incentive. How much profit was there in the Mulberry? There was initiative; there is one of the outstanding facts—hon. Members talk so much about facts. How much profit is being made by the lads who are showing initiative over there? There is a lesson to the gross, hard materialism of the other side that cannot believe in anybody doing anything unless he is going to make money out of it. What sort of spirit is that? How could we have got anywhere if profit had been our incentive? It is not profit, but desire to see the nation progressing, to see the masses of the people living as they should, that will spur people on to do great things. We want to see the lads, when they come back, getting the right to work. They can do that only if the Chancellor and those associated with him are in a position to direct the resources of the country. Are they going to leave the lads to the mercy of the monopoly capitalists? Is the small man to be left at the mercy of the monopoly capitalists? We hear so much talk about the small man; had it not been for Government control and Government rationing of supplies there would not have been a small man left in this country. The big monopolists would have wiped them all out, because of the shortage of supplies. They would have grabbed them all. If we are going to build up a real Budget for the future it must be based on the productivity of this country, and the productive forces must be given the fullest possible opportunity to develop.
In Scotland we have a particular interest in this matter. Our industries were taken away, our economy was left barren. What could we contribute before the war to the wealth of this nation with our industries mostly closed down; what could we do towards building up a strong budgetary position, without our industries? Now our industries are all busy. But we have had a Distribution of Industry Bill introduced into this House. There is a Schedule to it. What part of Scotland is scheduled for new industries? The industrial belt of Scotland. Why? Because there was mass unemployment there before the war; and, obviously, they expect mass unemployment there after the war. The last place in Scotland that should be scheduled in this Bill is the industrial area, where there is the greatest variety of industry. It is scheduled because they are looking forward to the closing down of industries wholesale in Scotland. If Scotland is to get the opportunity it should have to contribute towards the wealth of this nation there has to be a great development of Scottish industry and of Scottish transport.
Much of the wealth expressed by the Chancellor in his Budget has come from the fact that in Scotland we pioneered, on the Clyde, the great shipping industry of this country. We developed enormously the shipbuilding and sea transport of this country. To-day, in Scotland, sea transport, road transport and air transport are essential. Yet we are threatened with the loss of our air transport, through the loss of Prestwick. How is that going to help a balanced economy? We must have trans-Atlantic air transport in Scotland. We cannot get the Forth Road Bridge. That is essential for road transport. The Chancellor of the Exchequer knows all about the necessity of linking the North with the South. We do not know if Rosyth, the naval base in Scotland, is to be closed down. We cannot get any understanding as to its maintenance. These are the things that matter.
Let us get rid of this idea of profits, for a few people in this country to live in idle luxury while masses suffer unemployment and poverty. Let us build from the bottom. Export trade is not the first question. The first question is that the masses of the people in this country must have all that they require to maintain a proper standard of life. That, and not export trade, is what concerned them in the Soviet Union. A friend visited me last week. He said: "If I save up money am I not entitled to leave it to my boy, so that he can live on it?" I said, "No, because if your boy, when he grows up, is able to live without working, it means that another boy is condemned from birth to do the work necessary to keep your boy alive." We have to get rid of this idea of investment to enable men and women to live without service to the community. Unless the Chancellor and those associated with him can understand this, we are in for a very tough time when this war is over; but if this is understood, if the real economy on which the prosperity of the country is based is developed, as it can and should be, if we control and direct our resources in the war to prevent poverty and disease, as we have used those resources in order to overcome the terrible crisis of war, if we organise and use our resources in the same way for building up the health and the well-being of the masses of the country, we need not fear the future nor any Budget that may be brought in on any future occasion.
Before the hon. Gentleman sits down, may I ask him whether we are to understand that he disapproves of the arrangements now in force in Russia, by which persons are allowed to leave their property to their descendants?
We cannot go into that.
I would like to say a word on that matter.
If we debate what people are allowed to do in Russia with savings, we shall cover a very wide ground.
May I make the point clear that I have no objection to people in this country leaving property to their children, but I object to the children being put in a position where they do not have to work?
I think that that settles that point.
8.0 p.m.
I do not intend to follow the hon. Member for West Fife (Mr. Gallacher) in his arguments, even if I could—and I think very few people could—but I am not going to confess that I love my country any less than he or that I am any less anxious to provide work for the people coming back from the war. I think we have heard in this and previous Budget speeches by the Chancellor the gradual unfolding of the basis for plans for the employment of these men, and I should like to thank the Chancellor very much for the very informative exposition he gave us to-day. I am glad to see that the Chancellor has accepted the report about hydro-carbon oils, but with some sorrow, because it means that the right hon. Gentleman realises, and the country realises, that we have a very serious competitor. The hon. Member for Seaham (Mr. Shinwell) said the other day that he would welcome the time when coal would be used in a proper way so that we could get those vital commodities which the Chancellor is now going to admit free of duty under this hydro-carbon oils scheme. We must, I think, while looking forward to a new chemical industry based on hydro-carbons, regret that we are not making a greater effort to do the same thing with coal, and I think largely because of the uncertainties surrounding coal.
With regard to the Chancellor's speech generally, we are to have no new taxation, but we do get some slight remissions. The hon. Member for Scarborough and Whitby (Mr. Spearman) discussed and speculated upon the future income of the country. I am not going to do that. I do not think we can do that with any certainty until we can get to know what the remainder of the world is going to do, and, particularly, what sort of a level for primary produce is going to be fixed. The hon. Member for Scarborough and Whitby pointed out that, in the years before the war, it had been a buyer's market, and that, after the war, it would probably be a seller's market. It is a tremendous pity that, in the years before the war, it became such a buyer's market. Many of us could point to things being bought in this country at prices below the cost of transport from the country of their production, which was a bad thing for this country and simply meant that we could not sell goods in return. I trust that that will not happen in the future.
I should like to refer to one thing which has been mentioned several times to-day and that is the Excess Profits Tax. The hon. Member for Grantham (Mr. Kendall) pointed out how it affected the company with £100,000 capital. I would like to point out how it affects one of my constituents, who has expanded his business during the war, and, during the last two years, has made smallish profits of some £3,000 with a nominal capital of £1,000. Like the case mentioned by the hon. Member for Grantham, he is, I believe, entitled to some 8 or 10 per cent. on that capital. They get £100 on which they pay 10s. in the pound Income Tax, and it comes back to the parent company and entirely disappears in Excess Profits Tax. This is a case of a company with a subsidiary company doing almost entirely new business, though I admit that it cannot be argued that it is totally new, and every penny goes back in Excess Profits Tax. It is a small business, just like any other small business, and I would ask the Chancellor to give these particular cases his sympathy. They are by no means few.
Then, with regard to the Excess Profits Tax, I represent Heywood and Radcliffe, and Heywood was a depressed area. How could people in that depressed area have any standard of profits? I do think the cotton trade, in particular, is a trade which might be singled out for special treatment. It is a trade which was not competing in fair world conditions. It was a trade competing with Japan, which was selling her cotton goods at below the cost of production to provide armaments to fight this war, just as I might tell the hon. Member for West Fife that Russia built up her economy by tightening her belt and reducing her people's spending power in order to do something which she wanted to do—accomplish her Five Year Plan. I do not object to it; I am just pointing it out, when people point their finger at the Lancashire cotton trade, and to many other trades, and say: "You are behind America; why do you not re-equip and buy new machinery?" The reason, largely, is that industry, for a long time past, has been looked upon as a goose which lays a golden egg, and previous Chancellors have done their best to kill that goose and have very nearly succeeded.
But the country should be grateful for the fact that Budget speeches in the last few years have shown an entirely new attitude. It is not an entirely new attitude only towards industry, but an entirely new attitude towards everyone in this country. It should be made perfectly plain to everybody. The hon. Member for Ince (Mr. T. Brown) said he believed that our wealth and conditions were better than ever they were. I agree that our prestige and our capacity for doing things are better than ever they were, but, if we are to raise all these enormous sums, there is one thing necessary and that is that all in this country should show toleration on every side and pull together. We have got to be dependable in order to make things in this country and to sell things from this country, and those of us who went abroad trying to sell things before the war remember that we were always faced with one particular problem. A man 7,000 miles away buys goods hoping to get them any time he wants them delivered. I suggest that the general trend of past Budgets has been to put industry upon a better basis for supplying these export markets, which I believe we must have.
We cannot feed ourselves here. We have to import certain materials. If we spin cotton, we have to import raw cotton, and if we are going to make rayon, we have to import wood, since the Government will not listen to my proposals about straw. But, most of all, we have to see to it that everything is done to make this country efficient. We cannot equip and buy new machinery unless the industrialist or manufacturer is left with some little profit. All sorts of industries have been started during the war which have been Revenue producers but, owing to the arbitrary way in which the Revenue sometimes works, they are not in any condition to carry on.
The Chancellor congratulated the workers and employers upon Pay-as-you-earn and said how very well they had done this year. I do not know how he got his information, because I spent my Sunday struggling with my Pay-as-you-earn form which I ought to have returned on 19th April. I find the Pay-as-you-earn form by no means easy to fill in. My form was in respect of farm workers and in answer to the question, "Have you paid anybody more than £10 a year for casual labour?" I filled in "Yes." It also asked: "Have you paid anyone anything without deducting tax?" and I said "Yes." I will explain what happens. I had up to 1st April only one land girl, a splendid, hard-working girl. Some three weeks after Pay-as-you-earn was instituted she came along with a paper from the Land Army and said: "If you contract to keep me, I escape tax." I have had the thing out with the inspector of taxes and I contract with this girl's mother to pay her £1 a week, and she escapes tax. She gets 28s. 6d. in one envelope and £1 from her mother in another envelope, and she escapes tax. It is not only wealthy people, such as used to take out a single insurance and give away money to their children in order to escape Death Duty, but all sorts of people are escaping tax, especially among the farming community. It has been admitted that everybody is entitled to pay no more taxation than the law compels them to pay.
There is a class of man springing up—and I may have been unfortunate, for I have had one or two—who says: "I will only work so many days a week and then I become casual labour." I want to draw the Committee's attention to that point. I do not think it is generally realised what the poor industrialist has to do for the Government to-day. I can only describe what my friends tell me. They say that they largely pay their accountants and auditors to see that the Government get all the taxes they possibly can, and they seem to think that that is the general function of the accountants and auditors. Then there are other people they employ collecting Purchase Tax for the Government, and somebody else is collecting National Health and Unemployment Insurance, also money for the 2d. in the £ scheme, and then there is Pay-as-you-earn. It is all very well people saying: "Give the people money to spend," but these burdens are not merely burdens on industry; they are just like the price of coal, they must inevitably come back to the consumer. They are inescapable. To-day the Revenue authorities ought to be extremely grateful for what employers generally are doing in collecting these taxes for them.
I have still one more point. The hon. Member for Kingston-upon-Hull, East (Mr. Muff) mentioned a thing which I have been trying to raise with various Financial Secretaries for a long time, and that is the question of stamps. I once asked the late Chancellor if he would do away with stamps on cheques for small amounts. This burden of stamps on various documents is considerable in all sorts of commerce. There is a definite tax of 2d. on every receipt over a certain amount, and I have taken some trouble to find out how this sort of thing works. At my club they say: "We place this thing to your account" and I do not pay the 2d. stamp. If my wife buys an expensive coat and pays cash for it, it is a cash transaction and there is no 2d. stamp. The late Financial Secretary to the Treasury once told me that there was no offence in law so long as one did not refuse to give a 2d. stamp. A man might be doing big business in articles costing from £2 to £3. If he does as he ought to do or thinks he ought to do, he puts a 2d. stamp on the receipt. If he builds a battleship costing £6,000,000, or a liner for the Cunard Line like the "Queen Mary," when it is completed he puts a 2d. stamp on the receipt. That is a point the Chancellor might look into. The honest people give him too much, and the people who do not put on the 2d. stamp take away a lot from him.
I am afraid that I have detained the Committee for a long time but I did not see why the hon. Member for West Fife should be the only one to have a day or a night out. There are not many Members here and I have missed an important dinner, a free dinner too, and I am sure that if the Chancellor came down on free dinners he would get less acclamation. In conclusion I believe that under the direction of the Chancellor we are going a long way to provide good dinners and more work and better conditions to our people. Not only this Committee but everyone in the country, however, should keep one thing in their mind, the point to which the hon. and gallant Member for Accrington (Major Procter) referred, and that is that what we want are real wages, real purchasing power. It is a terrible thing to go on increasing the shillings unless they are worth while.
8.20 p.m.
I do not think the hon. Member for Heywood and Radcliffe (Mr. Wootton-Davies) need make any apology to the Committee; his speech was a most interesting, instructive and helpful one. With regard to the speech of the hon. Member for West Fife (Mr. Gallacher), whom one might call the windmill orator of the House, I do not think it would be very wise on the part of the Government to follow his advice. With all the vehemence in his power be said, "Do away with profit." Well, if there were no profits, it would be delightful to think that there would be no Income Tax or Surtax to pay; in fact, there would be no Government and there would be no country. That is the logical conclusion to which I come, on the proposition of the hon. Member with regard to doing away with profits.
The right hon. Gentleman deserves to be congratulated, and has been and will, no doubt, be congratulated on his Budget speech. I have heard many Budget speeches in my 37 years' continuous membership of this House. No Budget speech or Budget introduction is an occasion for much hilarity, but the pills have been gilded by the right hon. Gentleman's lucid explanation of the burdens that we have to bear. After all, it is one of the most difficult subjects to make interesting, but the genial manner of the right hon. Gentleman has triumphed. I was very glad that the right hon. Gentleman gave credit and honour where credit and honour were due, namely, to the people of the United Kingdom, men, women and children in all ranks of life, in the avenues, the parks, the streets, the schools, the workshops, the factories, the warehouses—where there is an ever-increasing number of savings groups, saving and lending to the nation. Then, of course, there is the hard work of all the men and women, their laborious and long working hours, mending and making do when they cannot get coupons for clothing or for household materials, rationing their food supplies even when we are told—I do not know how true it is—that prisoners of war get double the supplies we get at home. I want to speak of the heavy taxation that is borne more or less willingly, and the realising of foreign investments, often at very great sacrifice. All is given for the honour and freedom of our people and our country. For these and many other reasons credit must be given to people of all classes and all ages throughout the country.
In a war like this, when expenditure is at such a high rate, there are bound to be certain things which we do not like. There is great extravagance. We know there is great wastefulness of the income of this country. It would not surprise me if, out of the £15,000,000 a day we are spending, one-third was wasted. Let me turn again to that burden of which a great many hon. Members and the business men of the country complain—Excess Profits Tax. In referring to it last year, the Financial Secretary said:
I would like particularly to draw the attention of the Committee to a passage in an article which appeared in "The Times" yesterday concerning Excess Profits Tax. It is as follows: because their machinery will be destroyed, but those nations will recover in a number of years as Germany recovered after the last war, and we shall be up against their competition, which means that it will not be so easy to sell our manufactured goods.
I would like to say a little about my part of this Empire, Northern Ireland. By the expenditure of various Departments, unemployment has been reduced. Since the war, our people have saved £114,000,000, and have lent the money to the Government, and, after providing for local requirements, have made a contribution of £128,850,000 in taxation. Great Britain has also benefited by our production of pigs, poultry, eggs, milk and vegetables. We have shared in the destruction of property and loss of life. Four thousand houses and 30 churches have been obliterated, and 46,000 houses have been damaged. All this has been done and borne because we live under the British flag, and because we are determined to remain under that flag. No greater tribute could be paid to any people than that paid by the British Prime Minister when he wrote to our ex-Prime Minister, and said:
8.35 p.m.
Several hon. Members have mentioned to-day the question of Pay-as-you-earn, and the hon. and gallant Member for Accrington (Major Procter) stated that workers viewed it as a reduction of their wages. Undoubtedly a man looks at his pay packet, but it is as well to remind the Committee why Pay-as-you-earn was introduced. It was found that shipbuilders, who earned good money during the summer months, had to pay Income Tax in a lump sum in the winter when they were on short time, and that this was a hardship. I do not think that the average worker objects to that Pay-as-you-earn, because he knows he has to contribute his share like everyone else, and that it is much easier for him to do so by means of Pay-as-you-earn than by having to pay a lump sum. Then the hon. and gallant Member for Accrington contrasted the prices of certain goods in his young days with what they were now. He mentioned eggs and beer, but he also might have mentioned the prices in the golden age, when one could get 40 eggs for one penny and a gallon of beer for a halfpenny, with no fear of being poisoned by arsenic. Further, the craftsman's wage of that period was equivalent to £600 a year at present-day values.
The Chancellor's speech might be summed up as "As you were." Those who looked for concessions were no doubt disappointed, but we cannot fight a war of this dimension, for nearly six years, without having to pay a very high price. It no doubt came as a surprise to the Committee to hear of the enormous sum which had been raised by the beer and tobacco taxes. When the Chancellor mentioned it it flashed across my mind that old-age pensioners had been deprived of the luxury of both beer and tobacco because they could not afford present day prices, and I hoped that the Chancellor might have made some concession to them. My hon. Friend the Member for Grantham (Mr. Kendall) was very concerned about the position of small engineering firms by reason of E.P.T., and asked for a concession on their behalf. I am afraid that if the Chancellor made any such concession he could hardly earmark it for any particular class of firm, because the firms making millions of pounds profit would naturally participate in any concession. Further, the small firms would still be at the mercy of big business. They cannot hope to compete with big business or with American firms and their mass production. My hon. Friend said he had been to America recently, and had seen what American firms could produce with their efficient machinery, which small firms in this country were unable to procure. Whatever may be said on behalf of small firms—and we sympathise with them—they cannot hope to compete with big business here, or with the great mass production firms in America.
The hon. Member for Grantham was quite correct in what he said about the big firms making provision for after the war. Some time ago I read in a newspaper about the representations that American firms had made to Russia and how they were able to do business with Russia on long-term credit. We may be left far behind in that respect unless the Government and the firms of this country are more alive to our interests.
Another matter to which I wish to refer, and which I raised some time ago, is the position of Service men's widows who have to pay Income Tax on their pensions. Let me give the contrast that I mentioned at that time. A Service man's widow is working in a munitions works; alongside her is a soldier's wife. The soldier's wife not only gets her earnings at the works, but she gets the allowance from her husband, and she is taxed only on her actual earnings. On the other hand, the widow of the Service man is taxed not only on her earnings but on her widow's pension as well. I think that is very unfair, and I hope the Chancellor will make some concession to the Service men's widows.
8.42 p.m.
It is something approaching common form on these occasions to preface one's remarks with congratulations to the Chancellor of the Exchequer. I do, indeed, congratulate my right hon. Friend personally on having surmounted his principal Parliamentary fence of the year. I congratulate him also on producing a Budget that will be generally acclaimed to be hard but fair. But there is a large section of the nation, not an influential section and almost a voiceless and unvocal section, that will not think it such a fair Budget, and it is on their behalf that I ask the attention of the Committee. I propose to speak on behalf of the people with fixed incomes in the middle income range, people with incomes of a few hundred pounds up to £1,000 a year. They are retired officers of the Fighting Services, retired civil servants, retired municipal servants, annuitants, pensioners, the clergy, people living on their savings; and the same plea might be extended even to include the higher ranks of the Civil Service who have not benefited from any of the war increases. They are not an influential section of the population, they have no great electoral value, their case is liable to go unheard, and yet of all sections of the population they are the people who have suffered most from the crippling taxation which is the price of waging a long and successful war.
Generally speaking, their commitments have remained the same. Their rents and rates have gone up, the gardener's wages, if they have one, have gone up, taxation is higher, and it is higher for a particular reason, apart altogether from paying for the war; and that reason is that the Chancellor is anxious to prevent there being large sums of money going into the market when goods are in short supply. Therefore, these people lose by reason of taxation being high. And they also suffer inevitably from the heavy increase in the cost of living, an increase which must be approaching 50 per cent. It is not really correct to say that the cost-of-living increase for this type of people is accurately estimated by the official Ministry of Labour figures. These people are paying the price more than any other part of the community. Contrast their conditions with the conditions of the weekly wage earners. In the case of the weekly wage earners, wages have risen very considerably, and quite rightly so—no one grudges it. Contrast their position with that of the miners. As a former representative of a mining constituency, the last people to whom I would grudge an increase in wages would be the miners. The miners, at any rate, have not suffered financially through the war. Contrast their position with that of the class which the party opposite call the large capitalists. Admittedly the income of the rich capitalist, the industrialist, is limited by Excess Profits Tax to his income before the war, but generally he has some capital to fall back on, whereas the class of people for whom I am now speaking have limited capital to fall back on or none at all. They have done their work, they have made their contribution to national prosperity and national security.
Does the hon. Gentleman include the old age pensioners, who have fixed incomes?
They have had a certain supplementation, but certainly I would include them. I include all those whose earnings have not been increased as a result of the war, or who have not some capital resources to fall back on. To a very large extent this includes the old age pensioners. I want to rope in all the support I can from every part of the Committee for those who have fixed or relatively fixed incomes, and against whom the cost of living and taxation are rising. Their case is never represented in the House. The Treasury and the Government have negotiations with the trade unions and the wage earners, but the people for whom I am now speaking have no pull. A man in receipt of a pension cannot go on strike. The Government have negotiations with industry. Those who are producing, whether they be capitalists or workers, are represented and have their pull. The people who have made a contribution in the past, or their widows, are not represented, and their case is not considered.
I feel bound to make this plea because in the constituency which I represent there are very many retired officers and many retired people generally who are in receipt of fixed incomes. My attention has been particularly directed to this question by the case of the retired officers. Their pensions or retired pay were stabilished in 1935 at 1935 levels. Certain of the lower paid pensioners received an increase of 10 per cent. up to £200 a year, and for the next £400 7½ per cent. as a result of an Act that was passed last year, but the higher ranks above that level received no increase. That increase was on what one might call ex gratia grounds or eleemosynary grounds, but the increase does not anywhere near meet the increased cost of living or the increased taxation, and the fall in their standard of living has been only slightly mitigated by those concessions. Take the case of retired officers. I am convinced the Treasury's case is correct. I am convinced that on legal grounds the Government are under no obligation to increase the rate of pension.
I have listened to every word the hon. Member has said. I do not think we should be able to go into the case of raising pensions of that kind on the Budget. I have allowed the hon. Gentleman to go on as long as he was claiming that there were hard cases of taxation. The weight of taxation falls on them, but we cannot go into the question of raising their pensions now.
I was just going to explain that I was not going to plead that there should be an increase in the pensions, because I consider that there is no legal case for it.
That is what I was objecting to. The hon. Member says there is no legal case. He is not in Order in doing that. He can mention the other side of it, but he must not go into the rights or wrongs of the actual pension.
I apologise if I have transgressed, but I was endeavouring to explain that here you have men who had given their lives to the service of the State—and I include the retired miner as much as the retired general—and given service all their life to the community and, just because they have not any great electoral or industrial or bargaining value, because they are on the shelf, they get no attention though they pay more heavily for the war than any other class. I think it is wrong and I think it is extremely short-sighted. If you only look after people who are actually rendering service at the time, it may be all right for you, but I think the next generation suffers, because it does not get the same disinterested and devoted service. Take the case of these retired officers.
I am sorry, but we really are making this too much a Debate on what we are paying retired Army officers. The Debate can only really deal with the taxation they have to pay. If I allowed it to go with officers I might have to allow it to go on to other things. The hon. Member can give an illustration that this class are hard up, and that all forms of taxation affect them, but we must not go into the question of the Government increasing their allowances.
I had not seen the implications of my argument. The argument must be kept general. If you let people who have retired suffer unduly and disproportionately when the cost of living goes up, it is short-sighted from the point of view of the future, as well as narrow and hard at present. I leave it at that. But I want to ask my right hon. Friend what a Member of Parliament can say to his constituents, old age pensioners, retired officers, or retired people living on their savings. Are we to say that there is no representation that they can make in the House because their time of usefulness is past, and that we cannot reasonably ask the Government to do anything for them? I do not see that we can. We must ask the Government to take certain steps, and I enumerate those steps under the following heads. I think certain concessions ought to be made to certain income groups and certain classes of taxpayers. If you want an example, it might be considered whether post-war credits could not be paid straight away. Secondly, a general plea must be added to that of the Chancellor himself. Let him remember that, though the piling up of high taxation may almost be a virtue in time of crisis in order to avoid inflation, there is a certain section of the community who are hit a good deal harder than others. Our plea must be reinforced that concentration must be made upon production. It is lack of production and lack of goods for sale that leads to the danger of inflation, and hence to high taxation and high prices in the shops.
There are two still more important points. We who have had the case of the fixed income people at heart must stress the vital necessity not only of not letting the cost of living go any higher but of bringing it down. I have noticed a tendency in the Government recently to let the cost of living go higher. I can think of the price of coal and things like that. They are not only dealing with people in receipt of wages or profits from industry, but people whose work is passed and whose income is fixed and who cannot by any possible train of events be increased by increased national prosperity. I believe it is a severe indictment of our taxation system, of successive Cabinets, and of the Treasury and of the Board of Inland Revenue, that the ultimate long-term social consequences of our system of taxation are disregarded. After all, there is more in the Budget than the simple issue of raising enough money to pay for the year's expenditure, and raising it in the fairest method possible. You may do all that. You may balance your Budget and you may be fair, however hard you are, but at the same time the action that you are taking may be extremely deleterious to the higher interests of the country as a whole. It may lead to the exclusion of a whole class which is valuable. It may lead to a disinclination to go into the State service. It may have all sorts of harmful consequences. I am not only asking for sympathy for retired officers, annuitants, pensioners and all descriptions of people living on their savings. I believe I am recommending a course which is in the highest long-term interest of the country as a whole when I say that it is to the long-term consequences of the national system of taxation that attention must be directed. This is the first time that I have risen to plead this cause. I shall go on doing it. We are doing severe injustice, to my mind, to some of the most deserving of the population and I ask the Committee to consider what I have said and to bear it in mind.
9.0 p.m.
I get a certain amount of pleasure from the fact that for many years now back-bench Members have taken the opportunity of speaking on the first day of the Budget Debate. It is very difficult to get a chance later unless one happens to be a Front Bench man. The Chancellor mentioned Pay-as-you-earn, and he took the credit to himself and the late Chancellor for having introduced it. We on these benches think that it is the best way to deal with Income Tax. Last year the Treasury sent out experts to trade unions and other organisations to explain the Pay-as-you-earn method, and it eased the situation for the workers. I got glowing accounts of the way these experts had done their work and the satisfactory impression they had left. I would put in a plea for further visits from these experts to the workers. Some further notes have been issued dealing with cancellation of tax for 1943–4. They deal with the 11/12ths and the 10/12ths, and the matter is rather complicated. I would ask the Financial Secretary, therefore, if he will arrange to send experts to address trade unionists and explain the meaning of these notes.
With regard to lower rates of interest, we on these benches have always argued for them, and when 5 and 6 per cent. were paid in the last war we fought against it. I remember moving an Amendment on one Budget that not more than 2½ per cent. should be paid on any borrowed money, and the Chancellor compromised by making it 3 per cent. This meant a great saving to the State. Attempts are being made to get the people to continue with their savings, and I agree with that. I would like, however, to draw attention to the fact that a lot of money is being wastefully spent, for it has a bad effect on the working people. I saw in "The Times" recently a paragraph stating that high prices continued to be paid for jewellery and that at Christie's £2,500 was paid for a diamond flexible bracelet. A brooch fetched £2,200, and the day's total for jewellery was £36,000. It is an anomalous situation, when the Government are asking poor people to put their savings into Government funds, that money is being thrown about in this way. When working-class people see statements like this they ask themselves: "Why should we be asked to save money when Sums like this are being paid for trinkets for the idle classes in society?" I want it to be known how the working-class feel about these things. I noticed in the Financial Statement that the proceeds from Estate Duties have increased by over £10,000,000, which shows that the duty is still bringing in large sums of money. There is no lack of money in any part of the country, and it is hard on the poorer classes when they have these big estates flaunted before them. I am glad to hear from the Chancellor that the foodstuffs subsidies are not to be taken away, because I believe that they have gone a long way to stabilise prices. Any attempt to remove them will have an ill-effect on the people.
I am disappointed that there is no relief given in the Budget to aged people. We have been waiting for many Budgets to see whether the Chancellor would make any reference to old-age pensioners, but he has not done so to-day. Yet this enormous taxation has to a certain extent to be borne by the aged people. Therefore, when a Financial Statement is given to the House, they have a right to ask, "Where do we come in? Our income is fixed, there is nothing extra coming in, and yet we are called upon to contribute to the Budget. We cannot do it because we do not get any increased benefit." I hoped that the Chancellor to-day would give some hope that, either in this Budget or in his supplementary Budget, he would do something for these people. It will not be only the Excess Profits Tax that will be talked about in the next Election. The Government have given credence to the plea that if hon. Members opposite shout hard enough the Excess Profits Tax will be taken away. The next Election will have something else to deal with. The old people will ask Members what they have done for them. We have been promised for a long time that something will be done, and the Chancellor has been very disappointing in giving out no hope for the future. The present situation cannot continue for much longer. There is an increase of £11,000,000 for supplementary pensions, and there may be some slight benefit there for the old people. As that item appears, I think we have a perfect right to raise this question in its wider aspect. Cannot we prevail on the Committee to challenge the Government on it when we deal with the appropriate Resolution, because I feel very keen about it? I agree with the hon. Member for Farnham (Mr. G. Nicholson) in the line he took that fixed incomes are not getting the redress they ought to have. It is a matter that will have to be dealt with very soon.
I will not say that the Chancellor was vague to-day, because it may have been myself who could not follow him closely, but he spoke about double taxation. I thought he meant that taxes were put on in other countries and that some arrangement had to be made between this country and the other country so that double taxation would not take place. I would like the Financial Secretary to tell us whether it means that some people will get out of paying their due quota, or whether it means that some other Government, having taken the tax, will have to pay some of the money back, or that we shall have to pay some other country some additional taxation. Candidly I could not follow what it did mean, or whether it would be of any benefit to the country or to any individual taxpayer. I hope that when the Financial Secretary replies he will try to deal with that point and will make it more clear than the Chancellor did.
Taking the Budget Statement as a whole, one is bound to agree that there is very little to complain about because there has been no increase in taxation. Therefore, one has to accept the position that there is a stalemate for the time being; those who expected some reduction have not got their way, and those who expected some increase did not get the satisfaction they sought. So, on the whole the House of Commons finishes to-day with the feeling that things have not altered at all.
Ordered: "That the Chairman do report Progress, and ask leave to sit again."—[ Mr. Mathers. ]
Resolutions to be reported To-morrow; Committee also report Progress; to sit again To-morrow.
Requisitioned Schools (Release)
Motion made, and Question proposed, "That this House do now adjourn."—[ Mr. Mathers. ]
9.15 p.m.
During the years in which we have been engaged in one of the most appalling wars that the world has ever known, we have repeatedly been told that we have been fighting this war against forces of evil in order to build a world in which the horrors which we have experienced may never again be known. All of us, I think, will agree that no better world can ever be built, unless it is built upon the foundations of a healthy, sound, happy, educated youth. Therefore, I make no apology this evening for raising the question of the release of requisitioned school buildings. All of us are aware that in the hour of conflict it is essential that the Army should requisition premises which, otherwise, one would not wish to see requisitioned. All kinds of people have had to make do with premises which were inadequate for the purpose for which they were used. But those days, I venture to think, are in part over. There are in this country to-day large numbers of school premises which have not been used since D-Day.
In the course of the last few weeks we have heard on more than one occasion from the Secretary of State for War, that a survey is to be made in order to ascertain the possibility of the release, first of small houses, and secondly of school premises. I suggest to the House that the matter of these school premises is one of exceptional urgency, because those who have schools and have to make places for the children who are to be taken into them, are unable to make any plans whatever for the approaching term, or even for the autumn term until they know when those school premises are to be derequisitioned In many cases it will be at least three months before the released premises can be made ready or put in a condition to take in scholars.
A short time ago there appeared in "The Times" a letter about St. Paul's Boys' School in London. That school was evacuated to the country in the early days of the war and 570 boys were moved to Easthampton Park, near Wellington College in Berkshire. The premises of St. Paul's School have not been used by the Army since D-Day, and one would have imagined that before there was any question of their being used for purposes other than a school, the War Office would have got in touch with the school authorities, but in this letter which appeared in "The Times" the school authorities say they have been told that, without any reference to the governors, the Polish Government, which for several years past has been housed in a hotel near Victoria Station, and which I am told is perfectly satisfied with those premises, is to leave the hotel near Victoria Station and to move into St. Paul's School. I do not know whether those are facts, but they are what the school governors of St. Paul's School believe to be the facts. It is not possible for them to remain in their evacuation premises, and in any case they could only take 500 boys. They would like to return to London and could take 1,000 boys in the next autumn term. I do not think anyone in this House would question the immense importance of those boys being accommodated in London, and the school authorities and the parents being made aware as to whether or not it is going to be possible for the boys to be educated at St. Paul's School. That is a matter which simply cannot wait. Parents must know whether the schools for which they have put down their boys' names, are going to be able to receive them.
I turn to another matter. Downside Abbey is situated in my constituency. It had a preparatory school at Crawley in Sussex. Worth Priory was requisitioned by the military authorities and was occupied by them until D-Day. It is now falling into a deplorable state of disrepair because there is no one there to care for the building and the conditions at Downside Abbey under which the boys are compelled to live to-day would not be tolerated in any poor law institution in this country. I am not of the Roman Catholic faith, but every day I live, the longing that I have to see freedom of speech, freedom of religion and freedom of political opinion grows, and none of the experiences that I have lived through in the past few days has lessened the intense desire in my heart to see that state achieved. In Downside Abbey to-day the boys who ought to be at Worth Preparatory School are sleeping in a long corridor on Army bunks, three tiers deep, with ventilation which I consider wholly inadequate. There are four lavatories for 140 boys. No mother who has had to bring up children is unaware of the fact that it is difficult to make high-spirited little children regular in their habits even in ideal conditions, but under conditions which prevail at Downside Abbey to-day it is absolutely impossible to be sure that the state of health of those children may not be permanently impaired. Since those boys have been so provided for at Downside Abbey, there have been epidemics of measles, scarlet fever and cases of diphtheria such as were wholly unknown in that school before the present conditions prevailed.
It is very natural that the Abbot and the monks of Downside Abbey should not wish permanently to lose many of the pupils who ought to be coming into their school, but parents who will tolerate certain conditions for their children in the inevitability of war conditions, will not be content to wait an indefinite time—knowing the conditions under which their children are living—without any certainty of when the school for which they have put down their children's names is to be released. It is intolerable that such conditions should prevail in this country today. We cannot allow them to prevail and talk at the same time of building a better world. None of us has the right to suffer the policy of procrastination and self-satisfaction which seems to prevail in the War Office at this time on this all-important subject.
9.25 p.m.
I want to enforce the appeal that is now being made for the release of these schools. In Stoke-on-Trent, for which I am the senior Member in this House, we have some of the finest structures in the country for schools, but two of them have been requisitioned. Owing to land subsidence our High School boys have had to go to a new school erected at the far-off end of Stoke-on-Trent. In this district, where we have gone to great expense to erect a new elementary school, we find that we cannot occupy that school because these boys from the Hanley High School have had to be sent there. In other parts of the city there are two large schools which have been requisitioned, not for the Army, but for the Navy. We are, therefore, in the hopeless position that we cannot meet the necessities of the moment, and there is no city that I know of in this country which is clamouring more for better conditions for its school children than Stoke-on-Trent. I appeal to the Navy and the Army to release these schools at the earliest possible moment because there is a very high temper rising in the constituency over this matter. We have one school there into which elementary school children are being crammed, and the sanitary conditions and teaching conditions are all about 60 years out of date. I went to that school the other day and saw one school teacher with a large number of sub-normal children in a small room trying to bring those children into line with the rest of the children in the school. This school was built in the early part of the reign of Queen Victoria and across the road is the new school, built at great expense, which we cannot use.
I want to enforce all that has been said by the hon. Lady opposite that something expeditious should be done to relieve these conditions at once. I cannot help feeling that there is procrastination here. I realise the necessities of the moment, but, in spite of them, I think that accommodation could have been found for the Services in the hostels around some of the great Government works in the vicinity. They would have suited quite well for the Army and the Navy. The conditions for the children in Stoke-on-Trent were serious before the war, but the requisitioning of these schools has made the position acute. I appeal to the Government and the Government Departments to release these schools at the earliest possible moment. When I visit these old-fashioned schools at Stoke-on-Trent and see them overcrowded and without any heating arrangements at all, and the conditions under which the teachers are attempting to educate the children, and know that he have excellent new schools held against our usage, I think it is about time that I said something in this House.
Big Ben Tower (Lantern Light)
9.30 p.m.
If I might make a slight interruption in the proceedings at this stage, I would remind the House that in peace-time it was the custom that the lantern light above Big Ben always shone out, after sunset, in order to show that the House of Commons was at work. For five years, seven months and 23 days, this light has now been extinguished. When I press the switch beside the Chair, as I am about to do now, our lantern light will shine once more.
Hear, hear.
In so doing, I pray that, with God's blessing, this light will shine henceforth, not only as an outward and visible sign that the Parliament of a free people is assembled in free debate, but, also, that it may shine as a beacon of sure hope in a sadly torn and distracted world.
I now turn on our lantern light.
Hear, hear.
On this unique occasion, may I be permitted to move, "That the words which you, Mr. Speaker, have addressed to the House relating to the light on the Clock Tower be entered on the Journals of this House."
Agreed.
Question put, and agreed to.
Mr. Speaker's words to be entered upon the Journals of this House.
Requisitioned Schools (Release)
Question again proposed, "That this House do now adjourn."
9.32 p.m.
In resuming the interrupted Debate on the Adjournment, may I offer congratulations to you, Mr. Speaker, as I am sure I can do on behalf of the whole House, on finding yourself in this happy position, to switch on the light on this auspicious occasion? May I remind the world that the House of Commons has never forsaken Westminster?
I want to support the hon. Member who spoke earlier as probably one of the few persons in this House who was educated at Downside. I do not dispute that the hon. Lady's statistics as regards arrangements at Downside are approximately correct. I made representations on this matter privately to the Noble Lord, who sits on another place, and who, I understand, regulates these proceedings, some four or five months ago. The Noble Lord at that time had an interview with me and explained that it was being used specially, and in such a way that it could not be released at that time, particularly because it was arranged as a headquarters of a special nature; and having regard to circumstances that then existed in Western Europe it was out of the question to discuss its release. Naturally enough, I took that assurance and did not reveal the reasons he gave—now no longer secret—and did nothing. I was perfectly aware of the difficult position, as was the hon. Lady, in which the authorities of Downside found themselves. There they were with frightfully congested accommodation, and with parents wanting to send more boys than they could take, and imploring that something should be done to see when the premises could be made available.
If the Financial Secretary likes to see the correspondence I will gladly show it to him The sole question was whether those premises would be needed for the continued conduct of military affairs in Europe. There was no question of whether they were to be used after the war for different purposes. That is quite a different thing, but that question was never raised with me. The implication, obviously, was that with the end of the war coming to Europe, and with the unlikelihood of reinforcements now arriving from elsewhere, these premises would not be required for the purpose originally intended. I want to put a special plea, not on behalf of this school in particular, but on behalf of school premises generally. We have heard of hotels which have been de-requisitioned before schools. What nonsense. Surely, the thing that matters is that the educational establishments of the country shall be put to work at the earliest possible moment.
I ask that, if the Financial Secretary cannot give us a positive answer to-night, he will give us an unqualified assurance that he himself will pay attention to this particular subject and that he will receive the representations of the hon. Lady and myself with regard to these particular instances, and as soon as possible make known to the authorities the position of the War Office.
rose —
May I—
I am sorry; I have to reply, and I have only a few minutes left.
Private Members can make speeches, as well as Ministers.
That is rather an unfair remark. May I deal with the case of St. Paul's School first? Perhaps my hon. Friend read more into the remarks of the hon. Lady than was intended. It is quite untrue that the hotel which formerly housed the Polish Government has been de-requisitioned. The hotel is now being used as a hostel for troops on leave from overseas. That meant that other accommodation had to be found for the Polish Government. That is why St. Paul's School has been handed over to the Polish Government, for use as an administrative centre for their War Office and other Departments connected with their Services.
Why?
It may be a matter of opinion whether this was the right place to give them—
Who gave the hotel?
The fact is that the Polish Government have to have accommodation for their War Office, just like our own Government.
Take the Piccadilly Hotel.
I am giving the facts. That is why St. Paul's School has been handed over for the use of the Polish Government.
Who decides the allocation of the school for this purpose?
I have a certain amount to say; I have six minutes left, out of 30 minutes, and I hope Members will allow me to make my speech. The Secretary of State has constitutional responsibility for any decision, and he will accept that responsibility. It would not be right for me to say which military officer has the day-to-day responsibility for dealing with requisitioning. The hon. Member may make his criticism against the Secretary of State, or against myself, as his representative. Worth School was requisitioned only in January, 1941, after it had been evacuated, when invasion appeared to be imminent. During the time it has been requisitioned it has been in use as a corps headquarters, both for British and Canadian corps. At times the buildings have been empty, in between the movement of the particular corps to other parts of the country or overseas.
They have not been occupied since D-Day.
It is true that they are empty at the moment. Living conditions at Downside, of course, are not the responsibility of the War Office, and I am not in a position to make any comment upon them. The War Office are not in occupation at Downside; they are in occupation at Worth School. I very much doubt whether the Ministry of Education have any responsibility, because this happens to be an independent school.
Let me deal with the general position regarding requisitioned properties. My right hon. Friend fully appreciates the need to de-requisition properties which have been requisitioned for the purposes of the war. There is, however, a good deal of accommodation reserved by the Army against the needs of the release period and for housing temporarily returned prisoners of war, British, Dominion and American. In addition, other accommodation commitments would cover such matters as the build-up for the Far East at the end of the present war in Europe, and the transit of Dominion or American troops from Europe back to their own countries in due course of time. These cannot be met entirely by the accommodation now the property of the War Department, nor by the available hutted camps, and so recourse will have to be made to requisitioned accommodation.
I may inform the House that, between July, 1944, that is, subsequent to D-Day, and March, 1945, 22,313 properties were released. Of the total released during February and March, 2,360 were dwelling-houses and flats, 76 were schools and 132 were hotels. The number of houses under requisition by the War Office in England, Scotland and Wales at the end of March was approximately 29,000, the number of schools was approximately 550, and the number of hotels was approximately 1,900. My right hon. Friend has stated on a number of occasions that an exhaustive review is at present being undertaken of all requisitioned accommodation now in the hands of the Army, and its holdings will be balanced against its needs now and in the future. Buildings which can be spared will be released. I cannot say positively to-night what can be given up until the review is completed, but my right hon. Friend has said that dwelling-houses come first on the list and schools second. My right hon. Friend is most anxious that these categories of properties shall be released to the maximum extent possible at the earliest possible moment, and he hopes to be able shortly to make a general statement on the release of dwelling houses, schools, colleges and other buildings. I think I can say that he is hopeful that, as a result of this review, it will be possible to release a large proportion of the small dwelling houses and schools now requisitioned. As regards the particular school to which the hon. Lady has referred, I am not in a position to give a definite decision tonight with regard to it, and I am afraid that she must wait and hope that it will be included in the proportion that my right hon. Friend hopes to release following the review.
May I ask my hon. and learned Friend if he denies that the specific assurance given to me was that the school was required for a special purpose in connection with the conduct of the war in Northern Europe, and will he assure me that he will give this matter his personal attention?
I am certainly willing to give my personal attention to the matter. With regard to the first part of my hon. Friend's Question, I am afraid I am not in a position to express a view one way or another, but I do not wish to deny what he has said.
Could my hon. and learned Friend say whether, in future, in all cases, schools shall be released in preference to hotels, because it is of vital importance to the whole country?
My right hon. Friend has said several times that dwelling houses come first, schools second and all other buildings subsequently.
But more hotels than schools have been released.
Question put, and agreed to.
Adjourned accordingly at Sixteen Minutes to Ten o'Clock.